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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, 1997
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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
VIRGINIA 13-5652423
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(State of Incorporation) (I.R.S. Employer Identification No.)
1600 VALLEY ROAD WAYNE, NEW JERSEY 07470
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(Address of Principal Executive Offices) (Zip Code)
TELEPHONE: (201) 628-2000
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 [ ]
69,260,365 shares of Registrant's Common Stock, par value $1 Per Share,
were outstanding as of the close of business on April 30, 1997.
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UNION CAMP CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
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Part I. FINANCIAL INFORMATION*
Item 1. Financial Statements. 2
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations. 6
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security-Holders. 8
Item 6. Exhibits and Reports on Form 8-K. 9
</TABLE>
* A summary of the Registrant's significant accounting policies is contained
in the Registrant's Form 10-K for the year ended December 31, 1996 which
has previously been filed with the Commission.
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PART I. FINANCIAL INFORMATION
Item I. Financial Statements.
UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
($ in thousands, except per share)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------------
1997 1996
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<S> <C> <C>
Net Sales $ 1,057,125 $ 978,255
Costs and other charges:
Cost of products sold 812,133 674,685
Selling and administrative expenses 122,527 103,034
Depreciation, amortization, and cost of timber harvested 77,638 72,875
------- -------
Income from operations 44,827 127,661
------- -------
Gross interest expense 31,062 28,232
Less capitalized interest (2,153) (860)
Other (income) expense -net (2,935) 3,540
------- -------
Income before income taxes and minority interest 18,853 96,749
------- -------
Income taxes:
Current 2,706 22,449
Deferred 4,006 13,349
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Total income taxes 6,712 35,798
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Minority interest (net of tax) (2,523) (2,448)
Net Income $ 9,618 $ 58,503
=========== ===========
Earnings per share: $ 0.14 $ 0.85
Dividends per share $ 0.45 $ 0.45
</TABLE>
Earnings per share are computed on the basis of the average number of common
shares outstanding:
1997: 69,240,938 1996: 69,108,949
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,
1997 1996
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<S> <C> <C>
ASSETS
Cash and cash equivalents $ 57,666 $ 44,917
Receivables-net 560,066 544,320
Inventories at lower of cost or market:
Finished goods 287,056 270,123
Raw materials 104,725 110,569
Supplies 114,830 115,741
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Total inventories 506,611 496,433
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Assets held for resale 1,803 6,650
Other 39,368 41,790
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Total current assets 1,165,514 1,134,110
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Plant and equipment, at cost 6,614,055 6,562,465
Less: accumulated depreciation 3,222,810 3,161,450
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3,391,245 3,401,015
Timberlands, less cost of timber harvested 352,544 351,334
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Total property 3,743,789 3,752,349
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Other assets 222,455 209,848
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Total Assets $ 5,131,758 $ 5,096,307
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 846,166 $ 779,869
Long-term debt 1,250,052 1,252,475
Deferred income taxes 726,856 723,431
Other liabilities and minority interest 243,787 246,938
Stockholders' equity (Shares outstanding
(1997: 69,254,153; 1996: 69,217,119) 2,064,897 2,093,594
----------- -----------
Total Liabilities and Stockholders' Equity $ 5,131,758 $ 5,096,307
=========== ===========
</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,
--------------------------------
1997 1996
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<S> <C> <C>
Cash Provided By (Used For) Operations:
Net income $ 9,618 $ 58,503
Adjustments to reconcile net income
to cash provided by operations:
Depreciation, amortization, and cost of company
timber harvested 77,638 72,875
Deferred income taxes 4,006 13,349
Other 5,393 7,887
Changes in operational assets and liabilities:
Receivables (21,336) (6,769)
Inventories (14,007) 8,146
Other assets 2,535 4,389
Accounts payable, taxes and other liabilities (29,812) (17,766)
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Cash Provided By Operations 34,035 140,614
--------- ---------
Cash (Used For) Provided By Investment Activities:
Capital expenditures:
Plant and equipment (67,720) (53,155)
Timberlands (5,141) (74,043)
Payments for acquired businesses (6,750) (31,850)
Other (5,338) (13,410)
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(84,949) (172,458)
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Cash (Used For) Provided By Financing Activities:
Change in short-term notes payable 98,071 82,230
Repayments of long-term debt (2,989) (20,845)
Dividends paid (31,160) (31,103)
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63,922 30,282
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Effect of exchange rate changes on cash (259) 74
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Increase (decrease) in cash and cash equivalents 12,749 (1,488)
Balance at beginning of year 44,917 30,332
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Balance at end of period $ 57,666 $ 28,844
========= =========
Supplemental cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $ 34,685 $ 33,847
Income taxes $ 4,145 $ 7,147
</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.
Note 2. Results for the first quarter of 1997 include sales of $158
million related to Alling & Cory, a paper distribution business
acquired by the company in August 1996.
Note 3. Included in "Other Income/Expense" for the first quarter of 1997
is a $1.9 million pre-tax gain from the sale of company property
previously recorded in "Assets held for resale".
Note 4. Included in "Current Liabilities" are $198 million and $114
million of commercial paper borrowings at March 31, 1997 and
year-end 1996, respectively.
Note 5. Included in "Other Liabilities and Minority Interest" at March 31,
1997 and year-end 1996 are $81.6 million and $79.3 million,
respectively, representing the minority interest in Union Camp's
68% owned subsidiary, Bush Boake Allen.
Note 6. Certain immaterial amounts in the Consolidated Statement of Income
have been reclassified for 1996 to conform with the 1997
presentation.
5
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Net income for the first quarter of 1997 was $9.6 million or $.14 per share,
compared to $58.5 million or $.85 per share for the first quarter of last year.
The significant earnings decrease reflects the continued unfavorable pricing
climate in the company's principal paper product markets. Operating income for
the quarter was $44.8 million, a 65% decrease from the $127.7 million reported
for last year's first quarter.
Net sales for the first quarter were $1,057 million, 8% above the previous
year's comparable quarter. Included in the first quarter sales is $158 million
from The Alling & Cory Company, a paper distribution business acquired in August
1996. The impact of that business on first quarter operating results was not
material. Despite weak market conditions, total paper product shipments
(excluding Alling & Cory) for the quarter were approximately 879,000 tons, a 3%
increase from last year's first quarter shipments of approximately 854,000 tons.
Operating income for the paper and paperboard segment was $20.4 million, an 81%
decrease from the $105.4 million reported for the first quarter of last year.
The decline in earnings was primarily attributable to lower average selling
prices for both domestic and export linerboard and uncoated business papers.
These prices weakened in the fourth quarter of 1996, and continued to move
downward as the year 1997 began. However, some upward movement in pricing, as
well as improved order backlog, were noted in certain uncoated business grades
at the beginning of the second quarter of 1997. For the first quarter, average
prices for the company's domestic linerboard and uncoated business papers were
down 33% and 18%, respectively, compared to last year's first quarter. As a
result of the softness in the market, the company took approximately 30,000 tons
of linerboard downtime during the first quarter. However, during the quarter,
results for the company's primary mills reflected favorable operating costs.
Packaging segment operating income was $10.3 million for the first quarter of
1997, compared to $12.4 million for last year's comparable quarter, although
demand remains healthy. The domestic corrugated container operations were
primarily responsible for the lower level of earnings for the segment. Average
selling prices for these operations decreased by 21% and volume decreased
slightly. First quarter earnings from the company's overseas container
operations increased substantially over last year's comparable quarter due to a
modest increase in volume and improved margins. Earnings for the flexible
packaging operations were down modestly compared to the first quarter of last
year, due to increased manufacturing costs and decreased volume. During the
first quarter of 1997, the company closed its Denton, Texas flexible packaging
plant and consolidated its operations into other plants. Additionally during the
quarter, the company acquired a majority interest in Puntapel S.A., a multiwall
packaging plant in Argentina.
The company's non-paper businesses reported a combined increase in operating
income, compared to last year's first quarter. Operating income for the wood
products segment increased by 139% to $12.9 million for the quarter, compared to
$5.4 million for last year's comparable quarter. The increase is primarily
attributable to a 28% increase in lumber prices combined with a 3% increase in
volume. Operating income for the chemical segment was $15.9 million for the
6
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quarter, compared to $17.2 million for last year's first quarter. Unfavorable
foreign exchange rates were a major factor in this difference.
Depreciation expense increased 5% in the first quarter of 1997 from last year's
comparable period. The increase is due to a higher level of capital investment
and depreciation expense for Alling & Cory.
Cash flow from operations for the first quarter of 1997 was $34.0 million,
compared to $140.6 million for last year's comparable period. The decrease was
primarily due to lower earnings for the first quarter of this year, and
increased investment in working capital. Capital expenditures for the first
quarter totaled $72.9 million, compared to $127.2 million in the same quarter of
last year, which included a large timberland acquisition. Total debt increased
$95.1 million during the first quarter of 1997. The ratio of total debt to total
capital was 36.8% at March 31, 1997, compared to 35.3% at year-end 1996.
Net working capital was $319.3 million at March 31, 1997, compared to $354.2
million at year-end 1996. The decrease in working capital was primarily
attributable to an increase in short-term debt at the end of the first quarter.
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings per Share".
The company plans to adopt this statement for interim and annual periods ending
after December 15, 1997, which is the statement's effective date. The statement
is not expected to have a material impact on the company.
Statements in this report that are not historical are forward-looking statements
that are subject to risks and uncertainties that could cause actual results to
differ materially. Such risks and uncertainties with respect to the company
include the effect of general economic conditions, fluctuations in supply and
demand for the company's products including exports and potential imports, paper
industry production capacity, operating rates and competitive pricing pressures.
7
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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 29, 1997.
At the annual meeting the Company's stockholders voted on six
proposals: (1) the election of four nominees to serve as
directors for three year terms and one nominee to serve as a
director for a one year term; (2) the ratification of the
appointment of Price Waterhouse as independent accountants for
the year 1997; (3) the approval of the Restricted Stock
Performance Plan; (4) the approval of an amendment to the 1989
Stock Option and Stock Award Plan; (5) a stockholder proposal to
establish a timetable to eliminate organochlorines; and (6) a
stockholder proposal to endorse the CERES Principles. The voting
of the Company's stockholders as to these matters was as follows:
1. Election of Directors.
Votes
Nominees Votes For Withheld
-------- --------- --------
Sir Colin Corness 59,747,740 2,072,949
Robert D. Kennedy 59,786,546 2,034,143
W. Craig McClelland 59,724,609 2,096,080
James M. Reed 59,789,668 2,031,021
Jeremiah J. Sheehan 59,753,916 2,066,773
2. Ratification of Appointment of Accountants.
Votes
Votes For Against Abstentions
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61,675,688 58,056 86,945
3. Approval of the Restricted Stock Performance Plan.
Votes
Votes For Against Abstentions
--------- ------- -----------
55,354,813 6,139,657 326,219
4. Amendment to the Stock Option and Stock Award Plan.
Votes
Votes For Against Abstentions
--------- ------- ------------
51,441,454 10,005,105 374,130
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5. Stockholder Proposal to Establish a Timetable to Eliminate
Organochlorines.
Votes Broker
Votes For Against Abstentions Non-Votes
--------- ------- ----------- ---------
2,241,432 50,677,548 4,224,478 4,677,231
6. Stockholder Proposal to Endorse the CERES Principles.
Votes Broker
Votes For Against Abstentions Non-Votes
--------- ------- ----------- ---------
4,166,368 47,990,672 4,986,418 4,677,231
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits.
No. Description
-- -----------
10.1 Restricted Stock Performance Plan.
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 1997.
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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 13, 1997 /S/ Dirk R. Soutendijk
------------ ------------------------------------
DIRK R. SOUTENDIJK
VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
Date: May 13, 1997 /S/ James M. Reed
------------ ------------------------------------
VICE CHAIRMAN OF THE BOARD AND
CHIEF FINANCIAL OFFICER
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EXHIBIT INDEX
SEQUENTIALLY
NUMBERED
NO. DESCRIPTION PAGE
10.1 Restricted Stock Performance Plan 13
11 Statement re computation of per 31
share earnings
27 Financial data schedule 32
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EXHIBIT 10.1
UNION CAMP CORPORATION
RESTRICTED STOCK PERFORMANCE PLAN
I. PURPOSE
The Union Camp Corporation Restricted Stock Performance Plan is intended
to (i) provide an incentive and reward to selected officers of the
Company, who have contributed to and who are, in the future, likely to
contribute to the long-term performance of the Company and (ii) assure
current Federal income deductibility by the Company of Awards to the
officers whose compensation might not otherwise be deductible under
Section 162(m) of the Code. The RSPP is also expected to enhance the
Company's ability to attract and retain outstanding individuals to serve
in executive capacities.
II. ADMINISTRATION
The RSPP shall be administered by the Committee which shall consist of
not less than two (2) directors appointed by the Board, each of whom is
an "outside director," within the meaning of Code Section 162(m) and, to
the extent necessary for the RSPP and/or Awards hereunder to satisfy the
requirements and conditions of Rule 16b-3, a "non-employee director" as
defined by Rule 16b-3; provided, however, that if one or more members of
the Committee does not qualify as such an "outside director" or a
"non-employee director," if applicable, at the time any Award is granted
hereunder, such Award nevertheless shall be deemed to have been properly
authorized and issued under the RSPP and shall remain in full force and
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effect subject to the other terms and conditions contained in the RSPP.
The Committee shall have the sole authority to establish and administer
performance goals in connection with any Awards, including award levels
for individual Participants, and to certify whether, and to what extent,
any such performance goals have been attained for purposes of Section V
hereof. The Committee's decision, in making any determination or
construction under the RSPP and in exercising any discretionary power,
shall in all instances be final and binding on all persons having or
claiming any rights under the RSPP.
III. DEFINITIONS
Except as otherwise specified or as the context may otherwise require,
the following terms shall have the meanings indicated below for the
purposes of the RSPP. As used in the RSPP, the masculine pronoun shall
be deemed to include the feminine, and the singular number, the plural,
unless a different meaning is clearly indicated by the context.
Award means an annual incentive award made to a Participant in
accordance with the terms of the RSPP.
Award Date means the date on which the Committee certifies in writing
that the performance goals applicable to an Award and any other material
terms are satisfied and authorizes the payment of such Award to a
Participant in accordance with the RSPP.
Award Level means a percentage of a Participant's Base Salary,
determined in the discretion of the Committee within 90 days after the
commencement of the Performance Period, which is established as a
competitive award for achievement of fully
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satisfactory performance in support of the objectives of the RSPP;
provided, however, that the Award Level of a Participant who becomes a
Participant after the start of a Performance Period shall be determined
by the Committee within the first 25% of such Participant's period of
service with the Company during such Performance Period.
Base Salary means the Participant's annual base rate of pay in effect at
the end of a Performance Period.
Board means the Board of Directors of the Company.
Cause means 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: (i) the Participant has
misappropriated any funds or property of the Company or any affiliate
thereof; (ii) the Participant 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 an affiliate
thereof; or (iii) the Participant has sold or otherwise imparted to any
person, firm, or corporation the names of the customers of the Company
or any affiliate thereof or any confidential records, data, formulae,
specifications or any other trade secrets or other information of value
to the Company or any affiliate thereof derived by his association with
the Company or such affiliate.
Notwithstanding the foregoing definition of Cause, for purposes of
determining whether a termination of employment subsequent to a Change
in Control of the Company is for "Cause," Cause shall mean termination
of employment (a) upon the willful and continued failure by a
Participant to perform substantially his duties with the Company (other
than (i) any such failure resulting from such Participant's incapacity
due to physical or mental condition or illness or (ii)
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any actual or anticipated failure after the issuance by the Participant
of a Notice of Termination), after a written demand for substantial
performance is delivered to such Participant by the Board, which demand
specifically identifies the manner in which the Board believes that such
Participant has not substantially performed his duties, or (b) the
willful engaging by the Participant in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise. For
purposes of the definition of Cause contained in this paragraph, no act,
or failure to act, on the Participant's part shall be deemed "willful"
unless done, or omitted to be done, by the Participant not in good faith
and without reasonable belief that such action or omission was in the
best interest of the Company. Notwithstanding the foregoing, a
Participant shall not be deemed to have been terminated for Cause unless
and until there shall have been delivered to such Participant a copy of
a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a meeting
of the Board (after reasonable notice to the Participant and an
opportunity for the Participant, together with his counsel, to be heard
before the Board), finding that in the good faith opinion of the Board
the Participant was guilty of conduct set forth above in this
subparagraph and specifying the particulars thereof in detail.
Change in Control means the occurrence of any of the following events:
(a) any "person," as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, any employee benefit
plan sponsored by the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any
corporation owned, directly or indirectly, by the stockholders of the
Company, or any
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corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership
of stock of the Company), is or becomes (other than pursuant to
a transaction which is deemed to be a "Non-Qualifying Transaction"
(as hereinafter defined)) the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 50% or more of the combined
voting power of the Company's then outstanding securities eligible to
vote for the election of the Board ("Company Voting Securities");
(b) individuals who, on October 29, 1996 constitute the Board
(the "Incumbent Directors") cease for any reason to constitute at least
a majority of the Board, provided that any person becoming a director
subsequent to October 29, 1996, whose election or nomination for
election was approved by a vote of at least two-thirds (2/3) of the
Incumbent Directors then on the Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is
named as a nominee for director, without written objection to such
nomination) shall be an Incumbent Director; provided, however, that no
individual initially elected or nominated as a director of the Company
as a result of an actual or threatened election contest with respect to
directors (including, without limitation, in order to settle such
contest) or any other actual or threatened solicitation of proxies by or
on behalf of any person other than the Board shall be an Incumbent
Director;
(c) the stockholders of the Company approve a merger,
consolidation, statutory share exchange or similar form of corporate
transaction involving the Company or any of its subsidiaries that
requires such approval, whether for such transaction or the issuance of
securities in the transaction (a "Business
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Combination"), unless immediately following such Business Combination:
(i) more than 50% of the total voting power of (x) the corporation
resulting from such Business Combination (the "Surviving Corporation"),
or (y) if applicable, the ultimate parent corporation that directly or
indirectly has beneficial ownership of 100% of the voting securities
eligible to elect directors of the Surviving Corporation (the "Parent
Corporation"), will be represented by Company Voting Securities that
were outstanding immediately prior to such Business Combination (or, if
applicable, shares into which such Company Voting Securities were
converted pursuant to such Business Combination), (ii) no person (other
than any employee benefit plan sponsored or maintained by the Surviving
Corporation or the Parent Corporation) will be or become the beneficial
owner, directly or indirectly, of 25% or more of the total voting power
of the outstanding voting securities eligible to elect directors of the
Parent Corporation (or, if there is no Parent Corporation, the Surviving
Corporation) and (iii) at least a majority of the members of the board
of directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) following the consummation of
the Business Combination were Incumbent Directors at the time of the
Board's approval of the execution of the initial agreement providing for
such Business Combination (any Business Combination which satisfies all
of the criteria specified in (i), (ii) and (iii) above shall be deemed
to be a "Non-Qualifying Transaction"); or
(d) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the
Company's assets.
Anything contained herein to the contrary notwithstanding, a Change in
Control of the Company
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shall be deemed not to have occurred with respect to any Participant who
participates as an investor in the acquiring entity (which shall include
the Parent Corporation, where applicable) in such Change in Control
transaction, unless such acquiring entity is a publicly-traded
corporation and the Participant's interest in such acquiring entity
immediately prior to the acquisition constitutes less than one percent
(1%) of both (1) the combined voting power of such entity's outstanding
securities and (2) the aggregate fair market value of such entity's
outstanding equity securities. For this purpose, the Participant's
equity interest shall include any such interest of which such individual
is a "beneficial owner," as defined in Rule 13d-3 under the Exchange
Act.
Code means the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder.
Committee means the Personnel, Compensation and Nominating Committee of
the Board, satisfying the conditions of Section II hereof or such other
committee of the Board to which such responsibilities are delegated in
the future.
Common Stock means the common stock, par value $1.00, of the Company.
Company means Union Camp Corporation and those subsidiaries and
affiliates designated by the Committee.
Earnings Per Share or EPS means the Company's earnings per share, as
shown on the Company's annual financial statements, before taking into
account (i) adjustments to earnings incurred in connection with the
adoption of a new accounting standard and (ii) extraordinary items, as
defined in Accounting Practices Bulletin No. 30.
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Effective Date means January 1, 1997.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Good Reason means, without the Participant's express written consent,
the occurrence after a Change in Control of any of the following
circumstances unless, in the case of paragraphs (a), (e), (f) or (g),
such circumstances are fully corrected prior to the effective date of
the Participant's termination of employment:
(a) the assignment to the Participant of any duties inconsistent
with the position in the Company that such Participant held immediately
prior to the Change in Control (other than in the nature of a promotion)
or a diminution in such Participant's duties, responsibilities,
employment status or authority as compared to such duties,
responsibilities, employment status or authority in effect immediately
prior to such Change in Control;
(b) a reduction by the Company in the Participant's annual base
salary as in effect immediately prior to such Change in Control except
for across-the-board salary reductions similarly affecting all
management personnel of the Company and all management personnel of any
person in control of the Company;
(c) the relocation of the Company's offices at which the
Participant is principally employed immediately prior to the date of the
Change in Control to a location more than twenty-five (25) miles from
such location, or the Company requiring the Participant to be based
anywhere other than the Company's offices at such location, except for
required travel on the Company's business to an extent substantially
similar to the Participant's business
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travel obligations immediately prior to the Change in Control;
(d) the failure by the Company to pay to the Participant any
portion of his current compensation or to pay to him any portion of an
installment of deferred compensation under any deferred compensation
program of the Company within seven (7) days of the date such
compensation is due;
(e) the failure by the Company to continue to provide
substantially the same compensation plans in which the Participant
participated immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative
plan) on a basis not materially less favorable, both in terms of the
amount of benefits provided and the level of such Participant's
participation relative to other Participants, than that which existed at
the time of the Change in Control;
(f) the failure by the Company to continue to provide the
Participant with benefits and coverage substantially similar to those
provided to such Participant under any of the Company's pension, life
insurance, medical, accident, or disability plans in which such
Participant was participating at the time of the Change in Control, the
taking of any action by the Company which would directly or indirectly
materially reduce any of such benefits or the failure by the Company to
provide such Participant with the number of paid vacation days to which
such Participant is entitled on the basis of his years of service with
the Company in accordance with the Company's vacation policy for
salaried employees in effect at the time of the Change in Control; or
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<PAGE>
<PAGE>
(g) any purported termination of the Participant's employment
that is not effected pursuant to a Notice of Termination.
The right of a Participant to terminate employment for Good Reason shall
not be affected by such Participant's incapacity due to physical or
mental condition or illness. Further, the continued employment of the
Participant shall not constitute consent to, or a waiver of rights with
respect to, any circumstances constituting Good Reason hereunder.
1989 Plan means the Company's 1989 Stock Option and Stock Award Plan, as
originally approved by the stockholders of the Company on April 25, 1989
and as subsequently amended thereafter.
Notice of Termination means a notice delivered by a Participant to the
Company pursuant to which the Participant indicates his intent to
terminate his employment with the Company by reason of Good Reason and
which sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for such termination of employment.
Participant means an officer of the Company approved by the Committee to
participate in the RSPP for a Performance Period in accordance with
Section IV.
Performance Period means a calendar year.
Return On Capital or ROC means, in the discretion of the Committee, the
average of (i) the Company's net income divided by its long-term debt,
stockholders' equity and deferred income taxes or (ii) the Company's
pre-interest after-tax net income divided by the sum of its average debt
plus average stockholders' equity for a Performance Period and the two
preceding Performance Periods; provided, however, that the ROC
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<PAGE>
for the first Performance Period shall reflect only the 1997 financial
results and the ROC for the second Performance Period shall reflect the
average of the determinations from the 1997 and 1998 financial results.
Rule 16b-3 means Rule 16b-3 under the Exchange Act.
RSPP means this Union Camp Corporation Restricted Stock Performance
Plan, as amended.
IV. ELIGIBILITY AND PARTICIPATION
Employees of the Company eligible for Awards under the RSPP shall be
approved by the Chief Executive Officer of the Company from those
employees who are in positions which enable them to make a material
impact on the long-term performance of the Company or one of the
Company's divisions or subsidiaries; provided, however, that an employee
shall not be eligible hereunder until the Committee shall approve such
employee as a Participant. All Participants will be notified of their
participation in the RSPP.
V. AWARD DETERMINATION
Within the first ninety (90) days of each Performance Period, the
Committee shall establish in writing an Award Level for each Participant
which will be earned, in whole or in part, according to the Company's
satisfaction of performance criteria for that Performance Period
measured in terms of:
(1) Return on Capital at or above the median of a group of comparable
forest products companies selected by the Committee for the
purposes of the RSPP, and
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<PAGE>
(2) Earnings Per Share for a Performance Period compared to a
forecasted Earnings Per Share using a smoothed trendline
reflecting the historic EPS performance of the Company.
During each Performance Period, a Participant shall be eligible to
receive an Award based upon his Award Level; provided, that a maximum of
48% of Base Salary may be awarded based upon the Company's ROC for the
Performance Period and a maximum of 32% of Base Salary may be awarded
based upon the Company's Earnings Per Share for the Performance Period.
Notwithstanding the foregoing, the maximum value of any Award that a
Participant may receive under the RSPP for any Performance Period may
not exceed $2,000,000.
The Committee may not increase an Award above the maximum stated above
but, except as provided in Section X hereof, the Committee may reduce
(or not pay) Awards.
Subject to Section X hereof, no Award shall be deemed to be earned, in
whole or in part, unless and until notification shall be received by the
Participant of the approval of the Award by the Committee.
VI. PAYMENT OF AWARDS AND RESTRICTIONS
Subject to Section X hereof, payment of Awards with respect to a
Performance Period shall be made solely on account of the Company's
satisfaction of performance criteria pursuant to Section V hereof for
such Performance Period. Except as provided in Section X hereof, payment
of all Awards shall be made as soon as practicable after the Award Date.
Except as provided in Sections IX and X, Awards will be paid to
Participants in shares of restricted Common Stock. The number of shares
so paid will be determined by dividing the Award's dollar value by the
average of
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<PAGE>
<PAGE>
the high and low sales prices for Common Stock as reported on the
Composite Tape for New York Stock Exchange issues on the Award Date;
provided, however, that if no such prices are reported for such Award
Date, the mean of the bid and asked prices on such exchange at the close
of the market on the Award Date shall be used to determine the number of
shares to be delivered.
Awards of restricted stock will be subject to such restrictions
determined by the Committee and as are set forth in a restricted stock
agreement between the Company and the Participant. Restricted stock will
be considered Common Stock issued with specified restrictions which
render it nontransferable and subject to a substantial risk of
forfeiture until the lapse of the applicable restrictions.
Notwithstanding anything to the contrary contained herein, all
restrictions on restricted stock shall lapse and such stock shall not be
subject to forfeiture upon the occurrence of a Change in Control.
A Participant shall be entitled to vote shares of restricted stock and
shall be entitled to all dividends paid thereon, except that dividends
paid in Common Stock or other property shall also be subject to the same
restrictions. Participants are required to pay applicable taxes to the
Company upon the expiration of the applicable restriction periods,
unless paid prior to such time. Tax withholding obligations may be met
by the withholding of Common Stock otherwise deliverable to the
Participant pursuant to procedures approved by the Committee.
All Awards of restricted stock are subject to such further applicable
provisions as set forth in the 1989 Plan or such new stock option and/or
stock award plan as may hereafter be adopted by the Company.
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<PAGE>
<PAGE>
VII. SHARES SUBJECT TO THE RSPP
Shares of Common Stock have been reserved for Awards under the RSPP in
the 1989 Plan. A total of 5,678,039 shares of Common Stock, such number
to be increased on January 1 in each year to and including 1999 by an
amount equal to one percent (1%) of the outstanding shares of Common
Stock on the immediately preceding December 31, are reserved for awards
under the 1989 Plan, of which not more than twenty percent (20%) of such
shares may be awarded under the RSPP.
VIII. ADJUSTMENTS UPON CHANGES IN CAPITAL
Notwithstanding any other provisions of the RSPP, upon changes in the
Common Stock by a stock dividend, stock split, reverse split,
subdivision, recapitalization, merger, consolidation (whether or not the
Company is the surviving corporation), combination or exchange of
shares, separation, reorganization or liquidation, the Committee shall
have the power to make such adjustments as it deems appropriate to the
class and maximum number of shares of Common Stock or other shares or
property (including cash) which may be awarded under the RSPP; and the
restricted stock agreements under the RSPP may contain such provisions
as the Committee shall deem appropriate for adjustments upon any such
event of change; provided, however, that no such adjustments shall be
made in the case of stock dividends aggregating in any fiscal year of
the Company not more than 10% of the Common Stock issued and outstanding
at the beginning of such year or in the case of one or more splits,
subdivisions or combinations of the Common Stock during any fiscal year
of the Company resulting in an increase or decrease of not more than 10%
of the Common Stock issued and outstanding at the beginning of such
year.
-14-
<PAGE>
<PAGE>
IX. TERMINATION OF EMPLOYMENT
Subject to Section X hereof, a Participant whose employment with the
Company terminates prior to the end of a Performance Period shall
forfeit all rights to Awards under the RSPP for the current or
subsequent Performance Periods, unless the Committee determines
otherwise after the performance criteria for such Performance Period
have been satisfied.
A Participant who terminates employment with the Company prior to the
end of a Performance Period without being subject to the forfeiture of
an Award as described in the preceding paragraph shall (or in the case
of the death of such a Participant, his designated representative or
estate shall) receive, after the end of such Performance Period, a pro
rata payment of any Award which would have been paid in accordance with
Section VI hereof based upon the number of months (or portion thereof)
that the Participant was employed during that Performance Period. In the
event that a payment of an Award is made to a Participant (or to a
Participant's designated representative or estate) under this paragraph,
such payment shall be made in accordance with Section VI hereof, except
that such an Award will be paid in shares of Common Stock that are not
subject to forfeiture.
No Award will be paid to a Participant whose employment with the Company
or an affiliate is terminated for Cause.
X. CHANGE IN CONTROL
Upon the occurrence of a Change in Control, each Participant who
continues in the employ of the Company for the duration of the
Performance Period during which such Change in Control occurs shall be
entitled
-15-
<PAGE>
<PAGE>
to receive an Award (payable in cash) in the amount of such
Participant's Award Level for such Performance Period; and provided
further that the amount of such Award may not be increased or,
notwithstanding its authority under Section V, reduced by the Committee.
Notwithstanding anything contained in the RSPP to the contrary, if a
Participant terminates employment for Good Reason, or if a Participant's
employment is terminated by the Company other than for Cause, prior to
the end of the Performance Period in which a Change in Control occurs,
such Participant shall be entitled to receive from the Company an Award
(payable in cash) determined by multiplying the product of (i) the
fraction resulting from dividing the number of days which the
Participant was employed during the Performance Period by three hundred
and sixty-five (365) and (ii) the Participant's Award Level for such
Performance Period. Any Award to which a Participant becomes entitled
pursuant to this paragraph shall be paid to the Participant no later
than the fifth day after the date of his termination of employment.
XI. MISCELLANEOUS
Within the limitations set forth herein, the Company may adopt and, as
appropriate, revise the procedures necessary to implement the terms and
conditions of the RSPP.
The RSPP does not constitute a contract of employment and the Company
specifically reserves its right to terminate a Participant's employment
at any time, with or without Cause, and with or without notice or
assigning a reason.
Participation in the RSPP for a Performance Period does not imply or
preclude the awarding of incentives for any subsequent Performance
Period.
-16-
<PAGE>
<PAGE>
Except as provided in Section X hereof, in no event shall a Participant
draw upon or have any right to payments which may be earned under the
RSPP until the end of the Performance Period and determination of Award
payments.
Participants who have accrued rights to payments under the RSPP shall be
general creditors of the Company and shall not have any interest in the
income or assets of the Company. Rights to Awards may not be assigned,
used as collateral or otherwise transferred or disposed of voluntarily
or involuntarily without the Company's prior written consent.
The RSPP, and any agreements entered into or Awards made hereunder shall
be governed by the laws of the State of New Jersey, except to the extent
preempted by the laws of the United States.
Neither the adoption of the RSPP nor anything contained herein shall
affect any other compensation or incentive plans or arrangements of the
Company, or prevent or limit the right of the Company to establish any
other forms of incentives or compensation for its employees, consultants
or directors.
XII. AMENDMENT AND TERMINATION
Subject to the provisions of Section X hereof, the Committee shall have
the power, in its sole discretion, to amend or terminate the RSPP at any
time, except that no such action shall increase the number of shares of
stock reserved for the RSPP, (except as specified in Section VII hereof)
nor adversely affect the rights of a Participant to receive an Award
after written notification of participation with respect to a
Performance Period, without the written consent of the affected
-17-
<PAGE>
<PAGE>
Participant. The foregoing, however, shall not be deemed a limitation of
the Committee's authority pursuant to Section V hereof to reduce (or not
to pay) Awards.
XIII. EFFECTIVE DATE
The RSPP shall become effective as of the Effective Date, provided that
in no event shall any payments be made under the RSPP before the RSPP
has been disclosed to, and approved in a separate vote by a majority of
the votes cast on the issue by, the Company's stockholders.
-18-
<PAGE>
<PAGE>
EXHIBIT 11
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1997 1996
<S> <C> <C>
Net Income ($000) $9,618 $58,503
Weighted Average Common
Shares Outstanding 69,240,938 69,108,949
Earnings Per Share $0.14 $0.85
Weighted Average Common
Shares Outstanding
Including Common Stock
Equivalents - Primary Basis 69,531,790 69,507,429
Primary Earnings Per Share $0.14 $0.84
Weighted Average Common
Shares Outstanding
Including Common Stock
Equivalents - Fully
Diluted Basis 69,531,790 69,542,427
Fully Diluted Earnings Per Share $0.14 $0.84
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND THE
CONSOLIDATED BALANCE SHEET AT MARCH 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 57666
<SECURITIES> 0
<RECEIVABLES> 577982
<ALLOWANCES> 17917
<INVENTORY> 506611
<CURRENT-ASSETS> 1165514
<PP&E> 6966599
<DEPRECIATION> 3222810
<TOTAL-ASSETS> 5131758
<CURRENT-LIABILITIES> 846166
<BONDS> 1250052
<COMMON> 69254
0
0
<OTHER-SE> 1995643
<TOTAL-LIABILITY-AND-EQUITY> 5131758
<SALES> 1057125
<TOTAL-REVENUES> 1057125
<CGS> 812133
<TOTAL-COSTS> 1012298
<OTHER-EXPENSES> (2,935)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31062
<INCOME-PRETAX> 18853
<INCOME-TAX> 6712
<INCOME-CONTINUING> 9618
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9618
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0.14
<FN>
<F1> REFLECTS ADJUSTMENT FOR MINORITY INTEREST (NET OF TAX) OF $2523
</FN>
</TABLE>
