<PAGE>
<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission File
DECEMBER 31, 1996 NUMBER 1-4001
UNION CAMP CORPORATION
A Virginia Corporation 13-5652423
I.R.S. Employer
Identification No.)
1600 Valley Road
Wayne, New Jersey 07470
Telephone (201) 628-2000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- --------------------
Common Stock, $1 par value.................. New York Stock Exchange;
Pacific Stock Exchange
Preferred Stock Purchase Rights............. New York Stock Exchange;
Pacific Stock Exchange
8 5/8% Sinking Fund
Debentures Due April 15, 2016............. New York Stock Exchange
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 (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes |'ch'| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |'ch'|
On March 4, 1997, 69,244,830 shares of Registrant's Common Stock, $1 par
value, were outstanding. On March 4, 1997, the closing price per share for the
Common Stock as reported on the Composite Tape for issues listed on the New York
Stock Exchange was $48.375 and the aggregate market value of the Common Stock
held by non-affiliates of the Registrant was $3,349,718,651.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Annual Report to Stockholders for the fiscal
year ended December 31, 1996 (the "Union Camp 1996 Annual Report") are
incorporated by reference in Parts I, II and IV of this Form 10-K.
Portions of Registrant's Proxy Statement, dated March 21, 1997 (the
"Union Camp 1997 Proxy Statement"), are incorporated by reference in Part III of
this Form 10-K.
================================================================================
<PAGE>
<PAGE>
COPIES OF THE EXHIBITS MAY BE OBTAINED BY STOCKHOLDERS UPON WRITTEN
REQUEST DIRECTED TO THE SECRETARY, UNION CAMP CORPORATION, 1600 VALLEY
ROAD, WAYNE, NEW JERSEY 07470, ACCOMPANIED BY A CHECK IN THE AMOUNT OF
$10.00 PAYABLE TO UNION CAMP CORPORATION TO COVER PROCESSING AND MAILING
COSTS. COSTS OF INDIVIDUAL EXHIBITS ARE AVAILABLE UPON REQUEST TO THE
SECRETARY.
<PAGE>
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
Union Camp Corporation is a Virginia corporation resulting from a
merger in 1956 of Union Bag and Paper Corporation and Camp Manufacturing
Company, Incorporated. Predecessor businesses were started in 1861 and 1887,
respectively. As used in this Report, the terms "Union Camp" and the "Company"
mean Union Camp Corporation and its subsidiaries unless the context otherwise
requires.
Union Camp's principal business segments are the manufacture and
sale of paper and paperboard, packaging products and wood products and the
production and sale of chemicals, including flavors and fragrances. Information
about developments during 1996 relating to Union Camp's business appears in the
following portions of the Union Camp 1996 Annual Report and is incorporated by
reference in this Item 1: the text under the captions "Fine Paper" on page 18
(other than the pie chart and caption describing the photograph on that page);
"Packaging" on page 19 (other than the pie chart and caption describing the
photograph on that page); "Chemicals" on page 20 (other than the pie chart and
caption describing the photograph on that page); and "Forest Resources" on page
21(other than the pie chart and caption describing the photograph on that page).
Information about the Company's research and development costs appears under the
caption "Research and Development Costs" in Note 1 of Notes to Consolidated
Financial Statements on page 34 of the Union Camp 1996 Annual Report and is
incorporated by reference in this Item 1.
Revenue, operating profits and other financial data for the
principal business segments and for the foreign and domestic operations and the
dollar amounts of export sales of Union Camp for the years ended December 31,
1996, 1995 and 1994 appear in Note 17 of Notes to Consolidated Financial
Statements on pages 41 and 42 of the Union Camp 1996 Annual Report and are
incorporated by reference in this Item 1. The international operations of Union
Camp and its subsidiaries are subject to the risks of doing business abroad,
including currency fluctuations, foreign government regulation and changes in
political environments.
1
<PAGE>
<PAGE>
During 1996, Union Camp's consolidated sales and operating profit
were generated primarily by domestic operations.
PAPER AND PAPERBOARD
Union Camp's Fine Paper Division produces bleached paper and
paperboard and its kraft Paper and Board Division produces kraft paper and
paperboard. Those products are its largest contributors to profits. Union Camp's
total production of bleached and kraft paper and paperboard in 1996 was
approximately 3,436,000 tons, of which about 57% was kraft and 43% was bleached.
The Company operates four large paper mills at Savannah, Georgia,
Prattville, Alabama, Franklin, Virginia and Eastover, South Carolina. They are
fully integrated in that all pulp required to support paper manufacturing is
produced at the mill sites. Combined operating capacity is estimated to be
approximately 3.7 million tons in 1997.
The Savannah, Georgia mill produces kraft linerboard and paper,
including saturating kraft, a specialized paper which is used by others as a
backing material for decorative and industrial laminates. Kraft paper is used
primarily in the manufacture of multiwall bags and kraft linerboard is used
primarily in the manufacture of corrugated shipping containers (see the next
section entitled "Packaging Products"). There are six machines at the Savannah
mill.
The two paper machines at the Prattville, Alabama mill produce
kraft linerboard.
In 1996, the Company converted about 62% of its kraft linerboard
and paper production into packaging products and sold essentially all of the
rest to others for conversion into similar products.
2
<PAGE>
<PAGE>
The Franklin, Virginia mill produces uncoated free sheet which is
sold in roll and sheet form. These sales are to converters who use uncoated free
sheet primarily to make envelopes and forms, to merchant distributors and major
end users who use it in business and printing papers and to retail distributors.
The mill also produces coated and uncoated bleached bristols which are sold for
a variety of end uses, such as publishing, greeting cards, book covers and file
folders. There are four paper machines and two board machines at this mill. The
Franklin mill includes a recycled (deinked) pulp facility. The deinked facility
removes ink from office waste paper and produces recycled pulp for the
manufacture of recycled content white paper and board. Recycled content paper is
sold as Union Camp branded products such as Collage('tm') and Great White('tm').
Deinked pulp not used for recycled products is sold to others.
The Eastover, South Carolina mill produces uncoated free sheet
which, like the Franklin product, is sold to others in roll and sheet form for
the same end uses. The two-machine Eastover mill has an excess of pulp capacity
which is used together with an on-site pulp dryer to produce bleached pulp for
sale to others in domestic and international markets.
In 1996, Union Camp sold about 30% of its fine paper and
paperboard production in converted or sheet form. This includes approximately 1%
converted by its own plants into folding cartons and bags.
The four integrated mills use sulfate pulping chemistry, also
referred to as the kraft process. Both hardwood and pine timber are used at all
four mills. Approximately 27% of the Company's wood pulp production utilizes
timber harvested from lands owned or controlled by the Company. Timber use at
the Prattville, Savannah and Franklin mills is supplemented with recycled waste
paper acquired from others and the Company's converting plants (see the next
section entitled "Packaging Products").
3
<PAGE>
<PAGE>
PACKAGING PRODUCTS
From its mill production of paper and paperboard, Union Camp
makes bags and sacks and corrugated and solid fibre containers.
Union Camp produces multiwall and consumer bags used to package
cement, feed, fertilizer, clay, pet food, chemical and mineral products and
specialty bags used in packaging pet food, charcoal, produce, sugar, flour,
seed, coffee, cookies, microwaveable popcorn and other miscellaneous items.
Union Camp also produces linear low density plastic products including film for
consumer applications and for industrial applications, such as plastic shipping
sacks to package salt, bark, soil, insulation, resins and chemicals. In March
1997 the Company acquired seventy-five percent of the capital stock of Puntapel,
S.A., a manufacturer of multiwall bags used primarily to package cement, flour
and sugar. Puntapel's plant is located in San Luis, Argentina.
Union Camp produces corrugated and solid fibre containers used to
ship and store canned, bottled and packaged products for a wide variety of
customers, including food processors and textile, furniture, chemical and
automotive manufacturers. In April 1996 a new corrugated container plant in
Hanford, California began producing heavy duty corrugated products including
laminated bulk packaging and triplewall to serve the general industrial,
agricultural, petrochemical and material handling markets. In January 1996,
Union Camp's Container Division acquired the operating assets of O'Grady
Containers, Inc., a Fort Worth, Texas based manufacturer of corrugated boxes,
multicolor direct print graphics packaging and point of purchase displays.
The Company's Folding Carton Division operates three plants which
produce cartons with high quality gravure and lithographic printing, which are
used principally by the cosmetics and pharmaceutical industries for shelf
packaging in retail stores.
The International Packaging Division manufactures corrugated
containers at wholly-owned, consolidated subsidiaries in Chile, Spain, the
Republic of Ireland and Puerto Rico. Union Camp holds a 30% interest in Zucamor
S.A., Argentina's leading independent corrugated container company,
4
<PAGE>
<PAGE>
which it purchased during 1994. In March 1996, the Company entered a joint
venture in Turkey with KAV Orman Sanayii A.S., a subsidiary of KOC Holding
Company, one of the world's largest industrial companies, to operate a
corrugated container plant serving agricultural and industrial markets in
Turkey. Through a joint venture, a corrugated container plant is under
construction in Guangzhou, Peoples Republic of China.
WOOD PRODUCTS
Union Camp produces southern pine lumber, plywood and
particleboard. Its wood products mills have the capacity to produce 500,000,000
board feet of lumber, 234,000,000 square feet (3/8" basis) of plywood and
117,000,000 square feet (3/4" basis) of particleboard annually. Union Camp's
wood products mills produced at 95% of capacity in 1996. Its wood products are
used in home construction and industrial markets such as furniture, cabinets and
fixtures. The wood products mills also produce significant quantities of wood
chips for use in Union Camp's papermaking operations.
The Company will commence construction of a new facility adjacent
to its existing veneer plant in Thorsby, Alabama which will produce laminated
veneered lumber and wood I-joists for engineered wood product markets. The
facility is scheduled to be completed in 1998.
CHEMICAL GROUP
The Chemical Group consists of two operating units: Chemical
Products Division and Bush Boake Allen Inc.
The Chemical Products Division produces a variety of wood-based
and non-wood-based chemicals. Wood-based chemicals, which are by-products of
pulp mill operations, include tall oil and turpentine chemicals. Tall oil is a
mixture of rosin and fatty acids which are by-products of the pulping process.
Tall oil rosins are converted into rosin-based resins and fatty acids are
converted into dimer acids and polyamide resins. These products are used in
coatings, adhesives, printing inks, paper sizing and oil field chemicals.
Non-wood-based chemicals, which are complementary to Union Camp's pulp-derived
tall oil fatty acids, are produced by converting vegetable oils into a variety
of esters and other derivatives. These are sold primarily for use in cosmetics,
lubricants, plastics,
5
<PAGE>
<PAGE>
surfactants and rubber. The Chemical Products Division has five processing
facilities, three of which are in the United States and two of which are in
England.
In June 1994, Bush Boake Allen Inc. completed an initial public
offering of 32% of its outstanding common stock. Union Camp continues to own the
remaining 68% of the stock.
Bush Boake Allen Inc. is a producer of flavors (including
essential oils, seasonings and spice extracts) and fragrances and aroma
chemicals. The flavor products impart a desired taste and smell to a broad range
of consumer products, including soft drinks, confections, dietary foods, snack
foods, dairy products, pharmaceuticals and alcoholic beverages. The fragrance
products are used in a wide variety of items, including fine fragrances, soaps,
detergents, air fresheners, cosmetics and toiletries and related products. The
flavor and fragrance compounds are sold primarily to major consumer product
companies which use these products in conjunction with other natural and
synthetic ingredients to make their products more appealing to consumers. The
majority of the aroma chemicals produced by Bush Boake Allen are used by major
multinational consumer product manufacturers and other fragrance and flavor
compounders as fragrance raw materials. The remainder is sold to agrichemical
and specialty chemical manufacturers or internally used by Bush Boake Allen in
its production of fragrance compounds. Bush Boake Allen has developed a
broad-based global presence with operations in 41 countries in North and South
America, Europe, Asia, Australia, The Middle East and Africa.
PAPER DISTRIBUTION
In August 1996 Union Camp acquired The Alling & Cory Company, a
distributor of business communications and printing papers, industrial packaging
and business products with its headquarters in Rochester, New York. Alling &
Cory operates 15 distribution centers and 21 retail paper shops in Maryland, New
Jersey, New York, Ohio, Pennsylvania and West Virginia. Alling & Cory's wholly
owned subsidiary, the Alcor Envelope Company, Inc. operates an envelope
converting facility in Hamburg, New York. Alling & Cory employs approximately
1,200 people.
6
<PAGE>
<PAGE>
LAND DEVELOPMENT AND HOUSING
Union Camp's real estate subsidiary, The Branigar Organization,
Inc., is engaged in the sale and development of land in Georgia, South Carolina
and North Carolina for residential, recreational and commercial use. Another
subsidiary, Transtates Properties Incorporated, sells and develops sites for
commercial properties at highway interchanges in Georgia and South Carolina.
CAPITAL EXPENDITURES
Information about Union Camp's 1996 and estimated 1997 capital
expenditures appears on page 28 of the Union Camp 1996 Annual Report in the text
under the caption "Capital Expenditures" and is incorporated by reference in
this Item 1.
MARKETING
Most of Union Camp's sales, other than its chemical sales, are
made in the United States east of the Rocky Mountains through a variety of
distribution methods. Paper and paperboard are sold both directly to converters
and through merchants. Packaging materials are sold directly to the industrial
and agricultural trades primarily by Union Camp sales representatives and, to a
lesser extent, through distributors. Wood products are sold through building
supply dealers and directly to industrial users.
Union Camp chemicals are sold worldwide with most sales being
made to customers in the United States and European Economic Community
countries. Through various overseas subsidiaries and related companies of Bush
Boake Allen, Union Camp sells in the worldwide markets for flavors and
fragrances and related products. Chemical products generally are sold directly
to industrial users and to a lesser extent through agents and distributors.
During 1996, Union Camp's chemical exports from the United States were about 7%
of the total chemical sales of Union Camp and its subsidiaries. In addition,
approximately 54% of such total chemical sales originated from the production
facilities of subsidiaries located outside the United States.
7
<PAGE>
<PAGE>
In 1996, Union Camp sold in the export market approximately 18%
of its production of paper and paperboard.
COMPETITION
All of Union Camp's products are sold in highly competitive
markets in which there are many large and well-established companies, of which
Union Camp is one. Competition in each of Union Camp's markets is based on
price, quality of product, service and product innovation.
TIMBER RESOURCES
The basic raw material for Union Camp's business is timber, a
renewable resource. Union Camp controls approximately 1,589,000 acres of
timberlands in Georgia, Alabama, Virginia, Florida, North Carolina and South
Carolina, of which approximately 1,550,000 acres are owned by the Company and
the balance is held under long-term leases. In 1996, Union Camp obtained
approximately 30% of its total timber requirements from its own timberlands and
purchased the balance from others.
During the second half of 1996 the Company shut down its wood
harvesting operations in southeast Georgia which had supplied the Savannah,
Georgia mill. Four woodyards and three maintenance garages in Georgia were
closed and the equipment used in these wood harvesting operations was sold.
Independent harvesting contractors, who prior to the closure of the Company's
operation had supplied most of the Savannah mill's raw material requirements for
virgin fiber, now supply 100% of those needs.
Union Camp operates its timberlands on a sustained yield basis.
Union Camp began reforestation on its timberlands in the mid-1950's and now has
approximately 964,000 acres in plantation growth. It planted about 42,000 acres
under the plantation program in 1996 and expects to plant approximately 50,000
acres in 1997. These plantation programs result in increased yield per acre. The
current growing cycle for most of Union Camp's plantations averages between 20
and 25 years. Union Camp anticipates that for the foreseeable future there will
be an adequate supply of timber for its operations from its own lands and other
sources.
8
<PAGE>
<PAGE>
ENVIRONMENTAL PROTECTION ACTIVITIES
Union Camp is committed to complying with applicable
environmental protection control laws. Wastewater treatment facilities and/or
atmospheric emission control equipment at various Union Camp locations, which
currently comply with applicable restrictions, may have to be upgraded to comply
with new limitations. Such new limits may be imposed when federal and state
permits are renewed or as regulations are promulgated implementing revisions to
federal and state air and water pollution control laws.
Union Camp invested approximately $33 million in environmental
control facilities in 1996 and approximately $122 million over the past five
years. Over the next two years, it is estimated that environmental control
expenditures will average approximately 11% of projected capital spending.
Environmental control expenditures divert capital and may increase operating and
financing costs. To that extent, they have an adverse impact on earnings.
During the next several years, the cost of compliance with
environmental control laws will depend upon the application of existing and new
regulations and on revisions to existing statutes. Union Camp believes such
costs will not adversely affect its competitive position within the paper and
chemical industries since most paper and chemical companies have similar air,
water and solid waste disposal concerns.
In August 1992, Union Camp entered into a Consent Order with
Region V of the U.S. Environmental Protection Agency (the "EPA") to conduct an
investigation to ascertain existing conditions at the Company's Dover, Ohio
facility under the Resource Conservation and Recovery Act. The site
investigation and risk assessment report was initially submitted to the EPA in
December 1994. After responding to comments by the EPA, the Company submitted a
final risk assessment and site investigation report in late 1996 which were
approved with modifications by the EPA. All outstanding issues regarding the
need for further investigation and ascertaining risk to human health and the
environment have been satisfactorily resolved. On the basis of the information
presently available to it, Union Camp believes that remedial action required as
a result of the investigation will not result in a material adverse effect on
its financial condition.
9
<PAGE>
<PAGE>
EMPLOYEES
Union Camp and its subsidiaries employ approximately 19,000
people, approximately 40% of whom are represented by a total of 66 unions under
collective bargaining agreements. Contracts involving approximately 2,200 hourly
employees were concluded during 1996 and contracts involving approximately 900
hourly employees remain in negotiation. Contracts involving approximately 1,700
hourly employees are subject to renegotiation and renewal in 1997. Union Camp
believes that its relationship with its employees is favorable and it has not
experienced a strike at any major facility since 1974.
ITEM 2. PROPERTIES
Union Camp's mills and plants, domestic and foreign, are at the
locations listed below and primarily produce the items described in the heading
for each group. Union Camp's corporate headquarters is in Wayne, New Jersey and
its principal research facilities are located at its corporate technology center
in Princeton, New Jersey. The Company's converting operations, the Container
Division, the Flexible Packaging Division and the International Packaging
Division, opened a Customer Resource Center in Spartanburg, South Carolina
during 1996 which has technical facilities to develop and test packaging ideas,
training facilities to educate employees and customers about packaging and
graphics facilities where designers work with customers to produce packaging.
Except for a few facilities which in the aggregate are not material, Union Camp
owns all of the following mills and plants, in some cases subject to financing
leases or similar arrangements.
PAPER AND PAPERBOARD INDUSTRY SEGMENT
Paper and Paperboard
The four paper mills located at the sites listed below are the Company's
principal facilities. Reference is made to Item 1 of this Report for information
regarding their general character, including the products they produce, their
productive capacity and the extent of utilization.
Eastover, South Carolina
Franklin, Virginia
Prattville, Alabama
Savannah, Georgia
10
<PAGE>
<PAGE>
Paper Finishing
The two converting plants listed below are part of the Company's Fine Paper
Division. They convert large rolls of paper produced by the division into folio
sheets for commercial printers and office size sheets for home and business use.
Franklin, Virginia
Sumter, South Carolina
PACKAGING PRODUCTS INDUSTRY SEGMENT
Multiwall and Consumer Bags
The plants listed below produce multiwall and consumer bags of various
substrates for packaging products such as cement, seed, feed, pet food, sugar,
cookies and popcorn.
Hanford, California Seymour, Indiana
Hazleton, Pennsylvania Sibley, Iowa
Monticello, Arkansas Spartanburg, South Carolina
St. Louis, Missouri Tifton, Georgia
San Luis, Argentina
Plastic Products
The plants listed below produce polyethylene packaging and roll stock for
packaging a variety of agricultural and industrial products and such consumer
items as ice, salt, insulation, fertilizer and pet food.
Griffin, Georgia
Monticello, Arkansas
Tomah, Wisconsin
Corrugated Containers
The plants listed below use a corrugator to manufacture corrugated sheets
by gluing a fluted paperboard material called medium between two or more flat
facings of linerboard. These corrugated sheets are then sold or made into boxes
or corrugated containers in a separate operation at these plants.
Ashbourne, Republic of Ireland Lakeland, Florida
Atlanta, Georgia La Laguna, Tenerife, Spain
Auburn, Maine Las Palmas de Gran Canaria, Spain
Bayamon, Puerto Rico Madrid, Spain
Chicago, Illinois Morristown, Tennessee
Decatur, Alabama Newtown, Connecticut
Denver, Colorado Rancagua, Chile
Gandia, Spain Richmond, Virginia
Hanford, California San Antonio, Texas
Houston, Mississippi Savannah, Georgia
Kalamazoo, Michigan Spartanburg, South Carolina
Lafayette, Louisiana Washington, Pennsylvania
11
<PAGE>
<PAGE>
Finishing
The plants listed below use equipment that converts corrugated sheets into
boxes or laminates a printed sheet of paper to one panel of a box or applies a
wax coating to a finished box.
Conway, Arkansas
Eaton Park, Florida
Edinburg, Texas
Fort Worth, Texas
Los Angeles, California
Statesboro, Georgia
Graphics
The plants listed below use a process that adheres medium to a single
linerboard sheet to produce singleface and then glues a printed label to the
singleface. These sheets are then made into boxes at these plants.
Cleveland, Ohio
Conway, Arkansas
Stockton, California
Solid Fibre Products
The plant listed below manufactures solid fibre sheets by gluing two or
more flat linerboard sheets together. These solid fibre sheets are then made
into boxes or slip sheets in a separate operation.
Lancaster, Pennsylvania
Folding Cartons and Gravure Printing
The plants listed below produce folding cartons with high quality gravure
and lithographic printing which are used to package cosmetics, toiletries,
pharmaceutical and food products.
Clifton, New Jersey
Englewood, New Jersey
Moonachie, New Jersey
12
<PAGE>
<PAGE>
WOOD PRODUCTS INDUSTRY SEGMENT
Lumber
The sawmills listed below produce wood chips, small timbers and/or
dimension lumber.
Chapman, Alabama
Folkston, Georgia
Franklin, Virginia
Meldrim, Georgia
Opelika, Alabama
Seaboard, North Carolina
Plywood
The plants listed below produce veneer and/or plywood panels for sale
primarily for industrial applications including furniture, truck trailers and
sound equipment.
Chapman, Alabama
Thorsby, Alabama
Particleboard
The plant listed below uses wood shavings and other wood residues to
produce particleboard which is cut to size and sold primarily to the furniture
industry.
Franklin, Virginia
CHEMICAL INDUSTRY SEGMENT
The chemical industry segment has two operating units, Bush Boake Allen
Inc. and the Chemical Products Division.
The facilities listed below are part of Bush Boake Allen Inc. which
produces aroma chemicals, flavors, fragrances, essential oils, spices and
seasonings. The process used and products produced by each facility are shown
below.
Location Products Process
- -------- -------- --------
Carrollton, Texas Seasonings Compounding, i.e., mixing
and blending
Chicago, Illinois Flavors, Vanilla Extraction and Compounding
Extract
Guangzhou, China Flavors, Fragrances Compounding
Jacksonville, Florida Terpene derivatives Chemical Processing
and aroma chemicals
13
<PAGE>
<PAGE>
Location Products Process
- -------- -------- -------
Johannesburg, South Flavors, Fragrances Compounding
Africa and Seasonings
Jurong, Singapore Flavors and Compounding
Fragrances
London, England Flavors and Compounding
Fragrances
Long Melford, England Spices, Essential Extraction and
Oils and Seasonings Compounding
Madras, India Flavors and Compounding
Fragrances
Melbourne, Australia Flavors, fragrances Extraction and Compounding
and seasonings.
Norwood, New Jersey Fragrances and Compounding
Essential Oils
Sydney, Australia Flavors Compounding
Widnes, England Aroma chemicals Chemical Processing
Witham, England Flavors Compounding
The chemical processing facilities listed below are part of the Chemical
Products Division which produces a variety of wood-based and non-wood-based
chemicals. Shown below are the principal products of each facility.
Location Products
-------- --------
Bedlington, England Ink, adhesive and coatings resins
Chester-le-Street, England Tall oil derivatives, ink and
adhesive resins
Dover, Ohio Ink & adhesive resins,
plasticizers and esters
Savannah, Georgia Tall oil derivatives, ink
and adhesive resins
Valdosta, Georgia Printing ink resins
In addition, in the chemical industry segment, Union Camp has
small consolidated subsidiary manufacturing (compounding and mixing) facilities
at the following locations: Kingston, Jamaica; Auckland, New Zealand; Istanbul,
Turkey; Knislinge, Sweden; Bangkok, Thailand; LaSalle, Canada and
14
<PAGE>
<PAGE>
Bogor, Indonesia. The aggregate 1996 revenue from these small facilities was
approximately $34 million.
Also see Item 1 for a discussion of Union Camp's timberland
holdings used in Union Camp's Paper and Paperboard and Wood Products industry
segments.
Paper Distribution
The Alling & Cory Company, a wholly owned subsidiary of the Company,
distributes business communications and printing papers, industrial packaging
and business products. Its headquarters is located in Rochester, New York.
The Alcor Envelope Company, Inc., a wholly owned subsidiary of Alling &
Cory, manufactures envelopes in a plant in Hamburg, New York.
The facilities listed below are distribution centers which handle the
distribution of more than 20,000 products and retail paper stores which sell
fine writing and printing papers, janitorial products, magnetic media supplies
and other selected office supplies under the name "The Paper Shop". All of the
properties listed are leased by Alling & Cory except for the distribution
centers in Buffalo and Syracuse, New York and Harrisburg, Pennsylvania.
Distribution Centers
Albany, New York Harrisburg, Pennsylvania
Allentown, Pennsylvania Marlton, New Jersey
Baltimore, Maryland Pittsburgh, Pennsylvania
Bellaire, Ohio Rochester, New York
Buffalo, New York Scranton, Pennsylvania
Cleveland, Ohio Syracuse, New York
Erie, Pennsylvania Toledo, Ohio
Fairmont, West Virginia
Retail Paper Shops
Albany, New York Maple Shade, New Jersey
Allentown, Pennsylvania Middleburg Heights, Ohio
Bridgeville, Pennsylvania Philadelphia, Pennsylvania (2)
Cheektowaga, New York Pittsburgh, Pennsylvania
Cleveland, Ohio Rochester, New York
Cranberry, Pennsylvania Trenton, New Jersey
East Syracuse, New York Utica, New York
Edison, New Jersey Westbury, New York
Havertown, Pennsylvania Willow Grove, Pennsylvania
Malvern, Pennsylvania Woodside, New York
15
<PAGE>
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
In addition to the proceedings described below, the Company is a
party to other legal proceedings incidental to its business which the Company
does not believe are material to it.
Union Camp has been designated a potentially responsible party at
a number of hazardous waste sites pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA") and similar state laws. At
the present time the Company is actively involved with proceedings at
approximately 14 sites including the three sites described in the three
paragraphs immediately below. The Company is unable to estimate environmental
costs and liabilities for several reasons. In some cases, it has not been
established that the Company is a potentially responsible party. In other cases,
it is uncertain whether the Company will seek, be offered or accept a settlement
with payment of a premium over otherwise estimated liability in order to secure
full release. In many instances, the cost of remediation is speculative because
remedial investigations and feasibility studies have not yet been contracted
for, have not been completed or, alternatively, have been completed but an
acceptable remedy has not been chosen. Some settled cases also have "reopeners"
for contamination discovered after full implementation of the remedy. Finally,
insurance reimbursement is usually uncertain until matters are finally resolved.
In May 1996 the EPA filed a civil suit against the Company and
several other potentially responsible parties in the U.S. District Court for the
District of Louisiana under CERCLA for recovery of past and future response
costs incurred by the EPA at the Bayou Bonfouca Superfund Site at Slidell,
Louisiana which operated as a wood treatment facility from 1882 to 1972.
Subsequently, the State of Louisiana filed a similar suit against the Company
seeking to recover the share of the response costs for which it is responsible
under CERCLA. EPA records indicate there have been expenditures over a number of
years of approximately $100 million for remediation at the site. The EPA
estimates that future response costs will be approximately $30 million. In 1956
a subsidiary of Union Camp acquired the assets of American Creosoting Company
which included the stock of a subsidiary which had owned and operated the
Slidell facility
16
<PAGE>
<PAGE>
since 1933. The subsidiary sold the Slidell facility in 1958. The subsidiary was
sold in 1964. The EPA alleges that Union Camp has owner and/or operator status
under CERCLA arising from its ownership of the subsidiary which owned the
Slidell facility. Union Camp denies it ever owned and/or operated the Slidell
facility. While it is not possible to estimate the likely outcome of these
proceedings, Union Camp believes it has meritorious defenses based upon the
facts and longstanding principles of corporate law and shareholders' liability.
Union Camp is also a party to an action in the U.S. District Court for
the District of Connecticut in which private litigants are seeking contribution
associated with past and future costs of remediating property used for
creosoting operations from 1921 through 1964. Such remediation costs are
currently estimated at approximately $6 million. A subsidiary of Union Camp
conducted activities at the property from 1956 to 1964. Union Camp had been
dismissed on summary judgment from the lawsuit in June 1995, but on appeal the
summary judgment order was vacated in March 1996 and the matter was remanded to
the District Court to determine whether Union Camp could be held liable as an
operator under federal and state superfund laws. It is Union Camp's position
that the facts do not support a claim that Union Camp was an operator of the
site.
In 1994 Union Camp was made a party to an action brought in state court
in Forest County, Mississippi by the Hattiesburg Public School District seeking
future remediation costs for property previously used in creosoting operations.
In the second half of 1996 a suit was commenced in the U.S. District Court for
the Southern District of Mississippi, Hattiesburg Division by car dealers who
lease the property from Hattiesburg Public School District. These plaintiffs
seek damages for diminution in the value of the property, lost profits and
potential relocation expenses based upon the alleged pollution of the property.
No remediation of the property has begun or been ordered. Like the matter
described in the second preceding paragraph, this case and the case in the
previous paragraph allege that Union Camp should be responsible for the
activities of its subsidiary at the properties. Union Camp disputes these
allegations because Union Camp did not own or operate the facilities. Although
Union Camp believes it has a strong legal position with respect to the above
described claims involving the creosoting activities of its former subsidiary,
an estimate
17
<PAGE>
<PAGE>
of the likely outcome of these proceedings cannot be made at this time.
In the second quarter of 1995 the Company was named as one of
approximately 60 defendants in a lawsuit filed in Jefferson County, Texas state
court on behalf of approximately 2,400 plaintiffs who allege that they were
exposed to asbestos while performing work at various plant sites in Alabama.
Subsequent amendments have brought the number of plaintiffs to approximately
5,100. The defendants named include asbestos manufacturers, distributors of
asbestos-containing products, insurance companies, a manufacturer of safety
equipment, parties who allegedly misrepresented the dangers of asbestos
exposure, and the owners of the premises where the plaintiffs allege they were
working when they were exposed to asbestos. Union Camp is included in the
premises owner category of defendants and the amount of damages sought is
unspecified. Approximately 160 of the plaintiffs allege exposure to asbestos
while on Union Camp premises.
In its Quarterly Report on Form 10-Q for the quarter ended June
30, 1991 the Company reported that a subsidiary of the Company was added as a
defendant in approximately 7,000 asbestos-related cases which had been pending
in Mississippi state court for several years. Subsequently, this subsidiary was
named as a defendant in additional asbestos-related consolidated actions so that
the total number of such cases was in excess of 10,000. The subsidiary was named
in these cases because it allegedly was part of the chain of distribution of
asbestos-containing products to facilities where the plaintiffs worked. The
period of alleged exposure ranges from 1930 through the present. The subsidiary
did not manufacture asbestos or asbestos-containing products. The number of
defendants named in these suits ranges from approximately 40 to 170, and
includes asbestos manufacturers, distributors of asbestos containing products,
an insurance company and a manufacturer of safety equipment. In March 1993, the
Company's subsidiary reached agreement to settle approximately 10,500 of these
cases, with the settlement being funded by the Company's insurance carrier. The
Company's subsidiary recently reached agreement to settle approximately 2,600
additional cases to be funded by the Company's insurance carrier. This
subsidiary is a defendant in approximately 7,500 remaining cases.
18
<PAGE>
<PAGE>
Although the final outcome of any legal proceeding is subject to
many variables and cannot be predicted with any degree of certainty, the Company
presently believes the pending legal proceedings alleging liability on account
of exposure to asbestos to which Union Camp or its subsidiary is a party will
not have a material adverse effect on the financial position or results of
operations of the Company and its subsidiaries taken as a whole.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
Not applicable.
EXECUTIVE OFFICERS OF UNION CAMP
The executive officers of Union Camp as of March 1, 1997 were as follows:
Name Age Position & Offices With Union Camp
- ---- --- ----------------------------------
W. Craig McClelland....... 62 Chairman of the Board and Chief
Executive Officer; Director
Jerry H. Ballengee....... 59 President and Chief Operating
Officer; Director
James M. Reed............ 64 Vice Chairman of the Board and
Chief Financial Officer; Director
John C. Albert........... 51 Senior Vice President
Jerome N. Carter......... 48 Senior Vice President
Charles H. Greiner, Jr... 49 Senior Vice President
A. William Hamill........ 49 Senior Vice President
John T. Heald, Jr........ 51 Senior Vice President
Willis J. Potts, Jr. .... 50 Senior Vice President
Dirk R. Soutendijk....... 58 Vice President, General Counsel
and Secretary
Donald W. Barney......... 56 Vice President and Treasurer
John F. Haren............ 49 Controller
19
<PAGE>
<PAGE>
The Company's Articles of Incorporation provide that the Board of
Directors shall be divided into three classes, as nearly equal in size as
possible. Each year the directors of one class are elected to serve terms of
three years. Executive officers are elected for one year and until their
successors are elected. There are no family relationships among directors and
executive officers.
All of the executive officers listed above have held their
present positions with Union Camp for the past five years, except as follows:
Mr. McClelland became Chairman of the Board and Chief Executive
Officer in July 1994. Previously, he had been President and Chief Operating
Officer since December 1989.
Mr. Ballengee became President and Chief Operating Officer in
July 1994. Previously, he was an Executive Vice President since November 1988.
Mr. Reed was named Vice Chairman of the Board and Chief Financial
Officer in April 1993. Previously, he had been an Executive Vice President and
Chief Financial Officer.
Mr. Albert became Senior Vice President, Forest Resources Group
in December 1995. Prior to that, he had been Vice President and General Manager
of the Forest Resources Group since January 1991.
Mr. Carter became Senior Vice President in January 1997.
Previously he had been a Vice President since December 1995. Prior to that, he
had been Kraft Paper and Board Division Manager of Industrial Relations.
Mr. Greiner became Senior Vice President and General Manager,
Fine Paper Division in December 1993. Previously, he had been a Vice President
and General Manager of the Fine Paper Division.
Mr. Hamill joined the Company in June 1996 as Senior Vice
President, Finance. From March 1993 to June 1996, he was a partner in SCI
Investors Inc., an investment firm in Richmond, Virginia, and a stockholder and
director of Custom
20
<PAGE>
<PAGE>
Papers Group Inc., a specialty paper producer which was privately held during
this period. Prior to March 1993, he was Senior Vice President and Chief
Financial Officer of Specialty Coatings International.
Mr. Heald became Senior Vice President, Converting Group in June
1993. Prior to that, he had been a Vice President and General Manager of the
Container Division since November 1988.
Mr. Potts became Senior Vice President and General Manager, Kraft
Paper and Board in December 1995. Prior to that, he had been a Vice President
and General Manager, Kraft Paper and Board since June 1994. He was Vice
President and General Operations Manager, Kraft Paper and Board from December
1992 to June 1994. Mr. Potts was the Resident Manager of the Prattville, Alabama
mill from December 1988 to November 1992.
Mr. Barney became Vice President and Treasurer in December 1992.
Previously, he was the Treasurer since November 1988.
Mr. Haren became Controller in November 1996. Previously, he was
an Assistant Controller.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Information in response to the disclosure requirements specified
by this Item 5 appears under the captions and on the pages of the Union Camp
1996 Annual Report indicated below and is incorporated by reference in this Item
5.
21
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
========================================== =========================== ===========
REQUIRED INFORMATION ANNUAL REPORT ANNUAL
-------------------- CAPTION REPORT
-------- PAGE
----
------------------------------------------ --------------------------- -----------
<S> <C> <C>
Principal markets for Common Financial 29
Stock; high and low sales prices Review-Quarterly
Information
------------------------------------------ --------------------------- -----------
Dividends per share declared Financial 29
Review-Quarterly
Information
------------------------------------------ --------------------------- -----------
Approximate number of Financial 29
shareholders of record--December Review-Quarterly
31, 1996 Information
========================================== =========================== ===========
</TABLE>
ITEM 6. SELECTED FINANCIAL DATA
Information in response to the disclosure requirements specified
by this Item 6 appears on pages 44 and 45 of the Union Camp 1996 Annual Report
and is incorporated by reference in this Item 6.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Information in response to the disclosure requirements specified
by this Item 7 appears in the text under the caption "Financial Review" on pages
25 to 29 of the Union Camp 1996 Annual Report and is incorporated by reference
in this Item 7.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information in response to the disclosure requirements specified
by this Item 8 appears on page 29 and pages 31 to 42 of the Union Camp 1996
Annual Report and is incorporated by reference in this Item 8.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
22
<PAGE>
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information in response to the disclosure requirements specified
by this Item 10, with respect to (i) the directors of Union Camp appears under
the caption "Proposal 1 -- Election of Directors" on pages 1 to 6 of the Union
Camp 1997 Proxy Statement and (ii) the executive officers of Union Camp, appears
under the caption "Executive Officers of Union Camp" in Part I of this Annual
Report on Form 10-K. Such information is incorporated by reference in this Item
10. No disclosure pursuant to Item 405 of Regulation S-K regarding compliance
with Section 16(a) of the Securities Exchange Act of 1934 as amended is required
with respect to fiscal year 1996.
ITEM 11. EXECUTIVE COMPENSATION
Information in response to the disclosure requirements specified
by this Item 11 appears under the captions "Board of Directors and Committees"
(excluding all but the first, seventh and eighth paragraphs), "Executive
Compensation", "Retirement Plans" and "Severance Arrangements" on pages 6 to 7,
9 to 11 excluding the section entitled "Report of the Personnel, Compensation
and Nominating Committee on Executive Compensation", 16 to 17, and 17
respectively, of the Union Camp 1997 Proxy Statement. Such information is
incorporated by reference in this Item 11.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information in response to the disclosure requirements specified
by this Item 12 appears under the captions "Security Ownership of Certain
Beneficial Owners" and "Security Ownership of Management as of December 31,
1996" on pages 7 and 8 of the Union Camp 1997 Proxy Statement and is
incorporated by reference in this Item 12.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
23
<PAGE>
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Index of financial statements
The following financial statements are included at the indicated
page in the Union Camp 1996 Annual Report and are incorporated by reference in
this Annual Report on Form 10-K:
Page
----
Consolidated Income for the years ended
December 31, 1996, 1995 and 1994..................................31
Consolidated Balance Sheet--December 31,
1996 and 1995.....................................................32
Consolidated Statement of Cash Flows for
the years ended December 31, 1996,
1995 and 1994.....................................................33
Notes to Consolidated Financial Statements.....................34-42
Report of Independent Accountants.................................30
(2) The following schedules, for the three years ended December
31, 1996, to the Financial Statements are included beginning at the indicated
page in this Annual Report on Form 10-K:
Page
----
Report of Independent Accountants on
Financial Statement Schedule.................................... 30
Schedule VIII--Valuation and Qualifying Accounts................ 31
All schedules other than those indicated above are omitted
because of the absence of the conditions under which they are required or
because the required information is set forth in the financial statements and
their notes.
24
<PAGE>
<PAGE>
(3) All exhibits, including those incorporated by reference:
NO. DESCRIPTION
- --- -----------
3.1 Articles of Incorporation of Union Camp, as amended February 26,
1996 (filed as Exhibit 3.1 to Union Camp's Annual Report on Form
10-K for the year ended December 31, 1995 and incorporated herein
by reference).
3.2 By-Laws of Union Camp, as amended September 24, 1996 (filed as
Exhibit 3.2 to Union Camp's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996 and incorporated herein by
reference).
4.1 Union Camp hereby agrees to furnish copies of instruments
defining the rights of holders of long-term debt of Union Camp
and its consolidated subsidiaries to the Commission upon its
request.
4.2 Rights Agreement, dated as of January 25, 1996, as amended and
restated as of June 25, 1996, between Union Camp Corporation and
The Bank of New York as Rights Agent (filed as Exhibit 1 to the
Company's Registration Statement on Form 8-A/A filed July 3, 1996
and incorporated herein by reference).
10.1 Union Camp's 1982 Stock Option Plan, as amended November 29, 1988
(filed as Exhibit 10(b) to Union Camp's Annual Report on Form
10-K for the year ended December 31, 1988 and incorporated herein
by reference).*
10.2 1989 Stock Option and Stock Award Plan, as amended October 29,
1996.*
10.3 Executive Annual Incentive Plan (filed as Exhibit 10(c) to Union
Camp's Annual Report on Form 10-K for the year ended December 31,
1988 and incorporated herein by reference).*
25
<PAGE>
<PAGE>
10.4 Policy Group Long-Term Incentive Plan (filed as Exhibit 19(b) to
Union Camp's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1993 and incorporated herein by reference).*
10.5 Union Camp's Directors' Fees Deferral Plan (filed as Exhibit
10(d) to Union Camp's Annual Report on Form 10-K for the year
ended December 31, 1982 and incorporated herein by reference).*
10.6 Union Camp's Retirement Plan for Outside Directors as amended
November 26, 1991 (filed as Exhibit 10(g) to Union Camp's Annual
Report on Form 10-K for the year ended December 31, 1991 and
incorporated herein by reference).*
10.7 Form of Severance Agreement between Union Camp and certain
executive officers of Union Camp.*
10.8 Union Camp's Stock Compensation Plan for Non-Employee Directors
as amended February 25, 1997.*
10.9 Agreement between Union Camp and James M. Reed dated May 14, 1991
(filed as Exhibit 19(c) to Union Camp's Quarterly Report on Form
10-Q for the Quarter ended September 30, 1991 and incorporated
herein by reference).*
10.10 Union Camp Corporation Supplemental Retirement Income Plan for
Executive Officers as amended and restated June 24, 1996 (filed
as Exhibit 10 to Union Camp's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996 and incorporated herein by
reference).*
10.11 Description of post-retirement office arrangements between Union
Camp Corporation and Raymond E. Cartledge (filed as Exhibit 10.2
to Union Camp's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1994 and incorporated herein by reference).*
11 Statement re computation of per share earnings.
26
<PAGE>
<PAGE>
13 The portion of Union Camp's 1996 Annual Report to security
holders which is incorporated by reference into this filing.
21 List of subsidiaries of Union Camp.
23 Consent of Independent Accountants.
27 Financial Data Schedule.
*Denotes a management contract or compensatory plan or
arrangement required to be filed as exhibits pursuant to Item
14(c) of Form 10-K.
(b) Reports on Form 8-K.
No Current Report on Form 8-K was filed by the Registrant during
the quarter ended December 31, 1996.
27
<PAGE>
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) 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, IN THE
TOWNSHIP OF WAYNE, AND STATE OF NEW JERSEY, ON MARCH 27, 1997.
UNION CAMP CORPORATION
By /S/ W. Craig McClelland
---------------------------
(W. CRAIG MCCLELLAND)
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities stated below on March 27, 1997.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/S/ W. Craig McClelland Chairman of The Board and
- ----------------------------------- Chief Executive Officer and
(W. Craig McClelland) Director (Principal Executive
Officer)
/S/ Jerry H. Ballangee President and Chief Operating
- ----------------------------------- Officer and Director
(Jerry H. Ballengee)
/S/ James M. Reed Vice Chairman of the Board,
- ----------------------------------- Chief Financial Officer and
(James M. Reed) Director (Principal Financial
Officer)
/S/ John F. Haren Controller
- ----------------------------------- (Principal Accounting Officer)
(John F. Haren)
</TABLE>
28
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
Director
- -----------------------------------
(George D. Busbee)
/S/ Raymond E. Cartledge Director
- -----------------------------------
(Raymond E. Cartledge)
/S/ Sir Colin Corness Director
- -----------------------------------
(Sir Colin Corness)
/S/ Robert D. Kennedy Director
- -----------------------------------
(Robert D. Kennedy)
/S/ Gary E. MacDougal Director
- -----------------------------------
(Gary E. MacDougal)
/S/ Ann D. McLaughlin Director
- -----------------------------------
(Ann D. McLaughlin)
/S/ George J. Sella, Jr. Director
- -----------------------------------
(George J. Sella, Jr.)
/S/ Jeremiah J. Sheehan Director
- -----------------------------------
(Jeremiah J. Sheehan)
/S/ Ted D. Simmons Director
- -----------------------------------
(Ted D. Simmons)
</TABLE>
29
<PAGE>
<PAGE>
Price Waterhouse LLP
4 Headquarters Plaza North
P.O. Box 1965
Morristown, NJ 07962-1965
Telephone (201) 540-8980
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To The Board of Directors
of Union Camp Corporation
Our audits of the consolidated financial statements referred to in our report
dated February 7, 1997 appearing in the 1996 Annual Report to Stockholders of
Union Camp Corporation (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included an
audit of the Financial Statement Schedule listed in Item 14(a)(2) of this Form
10-K. In our opinion, the Financial Statement Schedule presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.
/S/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Morristown, New Jersey
February 7, 1997
30
<PAGE>
<PAGE>
SCHEDULE VIII
UNION CAMP CORPORATION AND CONSOLIDATED SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
For The Years Ended December 31, 1996, 1995 and 1994
(thousands of dollars)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
- --------------------------------------------------------------------------------------------------------------
Additions
-----------------------------
Charged
Balance at Charged to (Credited) Deductions Balance at
Beginning Costs and to Other from End
Description of Year Expenses (1) Accounts (2) Reserves (3) of Year
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996:
Reserves deducted from assets
to which they apply:
Reserve for doubtful accounts... $ 13,740 $ 5,634 $ (25) $ 4,632 $ 14,717
Reserve for discounts and
allowances..................... 2,726 (173) - - 2,553
------- ---------- ---------- ---------- --------
Total....................... $ 16,466 $ 5,461 $ (25) $ 4,632 $ 17,270
======= ========== ========== ========== ========
YEAR ENDED DECEMBER 31, 1995:
Reserves deducted from assets
to which they apply:
Reserve for doubtful accounts... $ 13,995 $ 2,979 $ 116 $ 3,350 $ 13,740
Reserve for discounts and
allowances..................... 2,524 202 - - 2,726
------- ---------- ---------- ---------- --------
Total....................... $ 16,519 $ 3,181 $ 116 $ 3,350 $ 16,466
======= ========== ========== ========== ========
YEAR ENDED DECEMBER 31, 1994:
Reserves deducted from assets
to which they apply:
Reserve for doubtful accounts... $ 12,702 $ 5,489 $ 121 $ 4,317 $ 13,995
Reserve for discounts and
allowances..................... 1,924 600 - - 2,524
------- ---------- ---------- ---------- --------
Total....................... $ 14,626 $ 6,089 $ 121 $ 4,317 $ 16,519
======= ========== ========== ========== ========
</TABLE>
NOTES:
(1) Discounts and allowances are charged to income as incurred and not to
the reserve. The reserve is adjusted at the end of each period, by a
charge or credit to income, for the estimated discounts and
allowances applicable to the accounts receivable then outstanding.
(2) Foreign currency translation adjustments.
(3) Uncollectible accounts written off, net of recoveries.
<PAGE>
<PAGE>
EXHIBIT INDEX
NO. DESCRIPTION
- --- -----------
3.1 Articles of Incorporation of Union Camp, as amended February 26,
1996 (incorporated herein by reference).
3.2 Copy of By-Laws of Union Camp, as amended September 24, 1996
(incorporated herein by reference).
4.2 Rights Agreement, dated as of January 25, 1996, as amended and
restated as of June 25, 1996, between Union Camp Corporation and
The Bank of New York as Rights Agent (filed as Exhibit 1 to the
Company's Registration Statement on Form 8-A/A filed July 3, 1996
and incorporated herein by reference).
10.1 Union Camp's 1982 Stock Option Plan, as amended November 29, 1988
(incorporated herein by reference).
10.2 Union Camp's 1989 Stock Option Award Plan, as amended
October 29, 1996.
10.3 Union Camp's Executive Annual Incentive Plan (incorporated herein
by reference).
10.4 Union Camp's Policy Group Long-Term Incentive Plan (incorporated
herein by reference).
10.5 Union Camp's Directors' Fees Deferral Plan (incorporated herein
by reference).
10.6 Union Camp's Retirement Plan for Outside Directors as amended
November 26, 1991 (incorporated herein by reference).
10.7 Form of Severance Agreement between Union Camp and certain
executive officers of Union Camp.
10.8 Union Camp's Stock Compensation Plan for Non-Employee Directors
as amended February 25, 1997.
10.9 Agreement between Union Camp and James M. Reed dated May 14, 1991
(incorporated herein by reference).
<PAGE>
<PAGE>
10.10 Union Camp Corporation Supplemental Retirement Income Plan for
Executive Officers as amended and restated June 24, 1996
(incorporated herein by reference).
10.11 Description of post-retirement office arrangements between Union
Camp Corporation and Raymond E. Cartledge (incorporated herein by
reference).
11 Statement re computation of per share earnings.
13 The portion of Union Camp Corporation's 1996 Annual Report to
security holders which is incorporated by reference into this
filing.
21 List of subsidiaries of Union Camp.
23 Consent of Independent Accountants.
27 Financial Data Schedule.
STATEMENT OF DIFFERENCES
------------------------
The registered trademark symbol shall be expressed as...... 'r'
The checkmark shall be expressed as........................ 'ch'
The trademark symbol shall be expressed as................. 'tm'
The section symbol shall be expressed as................... 'SS'
<PAGE>
<PAGE>
EXHIBIT 10.2
UNION CAMP CORPORATION
1989 STOCK OPTION AND STOCK AWARD PLAN
1. Purpose
The purpose of this 1989 Stock Option and Stock Award Plan (the "Plan")
is to encourage and enable selected officers and other key employees of Union
Camp Corporation (the "Company") and its subsidiaries to acquire a proprietary
interest in the Company through the ownership of common stock of the Company.
Such ownership will provide such employees with a more direct stake in the
future welfare of the Company, and encourage them to remain with the Company and
its subsidiaries. It is also expected that the Plan will encourage qualified
persons to seek and accept employment with the Company and its subsidiaries.
Pursuant to the Plan, such employees will be offered the opportunity to acquire
such common stock through the grant of options, the award of restricted stock
under the Plan, bonuses payable, in stock or a combination thereof.
As used herein, the term "subsidiary" shall mean any present or future
corporation which is or would be a "subsidiary corporation" of the Company as
the term is defined in Section 424 of the Internal Revenue Code of 1986, as
amended (the "Code").
2. Administration of the Plan
The Plan shall be administered by a Personnel, Compensation and
Nominating Committee (the "Committee") as appointed from time to time by the
Board of Directors of the Company (the "Board"), which committee shall consist
of not less than two (2) members of such Board; none of such members of the
Committee shall be eligible to be granted options or awarded restricted stock
under the Plan or receive bonuses payable in stock or shall have been so
eligible within one year prior to appointment.
In administering the Plan, the Committee may adopt rules and regulations
for carrying out the Plan. The interpretation and decision with regard to any
question arising under the Plan made by the Committee shall be final and
conclusive on all employees of the Company and its subsidiaries participating or
eligible to participate in the Plan. The Committee shall determine the employees
to whom, and the time or times at which, grants or awards shall be made and the
number of shares to be included in the grants or awards.
1
<PAGE>
<PAGE>
3. Shares of Stock Subject to the Plan
The total number of shares that may be optioned or awarded under the
Plan is 2,896,638 shares of the $1 par value common stock of the Company (the
"Common Stock") plus an additional amount of shares on January 1 each calendar
year, from and including 1994 to 1999, equal to one percent (1.0%) of the number
of shares of Common Stock outstanding on December 31 of the immediately
preceding year (the "Additional Annual Increment"), of which (i) 579,327 shares
plus an additional amount of shares each calendar year equal to twenty percent
(20%) of the Additional Annual Increment with respect to such year may be
awarded as restricted stock, (ii) from November 30, 1993 until April 24, 1999,
the current expiration date of the Plan, no more than 750,000 shares may be
optioned to any one executive and (iii) no more than one million (1,000,000)
shares may be awarded as Incentive Stock Options, as defined in Section 422 of
the Code, except that, notwithstanding any of the foregoing limitations set
forth in this Paragraph 3, said numbers of shares shall be adjusted as provided
in Paragraph 12. Any shares subject to an option which for any reason expires or
is terminated unexercised and any restricted stock which is forfeited may again
be optioned or awarded under the Plan.
4. Eligibility
Key employees, including officers, of the Company and its subsidiaries
(but excluding members of the Committee) are eligible to be granted options and
awarded restricted stock under the Plan and to have their bonuses payable in
stock. The employees who shall receive awards or options under the Plan shall be
selected from time to time by the Committee, in its sole discretion, from among
those eligible, and the Committee shall determine, in its sole discretion, the
number of shares to be covered by the award or awards and by the option or
options granted to each such employee selected.
5. Duration of the Plan
No award or option may be granted under the Plan after April 24, 1999,
but awards or options theretofore granted may extend beyond that date.
6. Terms and Conditions of Stock Options
All options granted under this Plan shall be either Incentive Stock
Options as defined in Section 422 of the Code or options other than Incentive
Stock Options. Each such option shall be subject to all the applicable
provisions of the Plan, including the following terms and conditions, and to
such other terms and conditions not inconsistent therewith as the Committee
shall determine.
2
<PAGE>
<PAGE>
(a) The option price per share shall be determined by the
Committee, but shall not be less than 100% of the fair market value at
the time the option is granted. The fair market value shall be the mean
of the high and low sales prices for the Common Stock as reported on the
Composite Tape for New York Stock Exchange issues for the day on which
the option is granted. If there is no sale of the shares on such
Exchange on the date the option is granted, the mean of the bid and
asked prices on such Exchange at the close of the market on such date
shall be deemed to be the fair market value of the shares. In the event
that the method for determining the fair market value of the shares
provided for in this Paragraph 6 (a) shall not be practicable, then the
fair market value per share shall be determined by such other reasonable
method as the Committee shall, in its discretion, select and apply at
the time of grant of the option concerned.
(b) Each option shall be exercisable during and over such period
ending not later than ten years from the date it was granted, as may be
determined by the Committee and stated in the option.
(c) No option shall be exercisable within two years from the date
of the granting of the option, except as provided in Paragraphs 6 (j), 9
and 12 of the Plan.
(d) Each option shall state whether it will or will not be
treated as an Incentive Stock Option.
(e) Each option may be exercised by giving written notice to the
Company specifying the number of shares to be purchased, which shall be
accompanied by payment in full including applicable taxes, if any.
Payment shall be (i) in cash, or (ii) in shares of Common Stock of the
Company already owned by the optionee (the value of such Stock shall be
its fair market value on the date of exercise as determined under
Paragraph 6 (a)), or (iii) by a combination of cash and shares of Common
Stock of the Company. No option shall be exercised for less than the
lesser of 50 shares or the full number of shares for which the option is
then exercisable. No optionee shall have any rights to dividends or
other rights of a shareholder with respect to shares subject to his
option until he has given written notice of exercise of his option and
paid in full for such shares. Payment of taxes, if any, shall be in cash
at time of exercise or on the applicable tax date under Section 83 of
the Code, if later, provided, however, tax withholding obligations may
be met by the withholding of Common Stock otherwise deliverable to the
optionee pursuant to procedures approved by the Committee. In no event
shall Common Stock be delivered to any optionee until he has paid to the
Company in
3
<PAGE>
<PAGE>
cash the amount of tax required to be withheld by the Company or has
elected to have his tax withholding obligations met by the withholding
of Common Stock in accordance with the procedures approved by the
Committee, except that in the case of later tax dates under Section 83
of the Code, the Company may deliver Common Stock prior to the
optionee's satisfaction of tax withholding obligations if the optionee
makes arrangements satisfactory to the Company that such obligations
will be met on the applicable tax date.
(f) Notwithstanding the foregoing Paragraph 6 (e) of the Plan,
each option granted hereunder may provide, or be amended to provide, the
right either (i) to exercise such option in whole or in part without any
payment of the option price, or (ii) to request the Committee to permit,
in its sole discretion, such exercise without any payment of the option
price. If an option is exercised without a payment of the option price,
the optionee shall be entitled to receive that number of whole shares as
is determined by dividing (a) an amount equal to the fair market value
per share on the date of exercise as determined under Paragraph 6 (a)
into (b) an amount equal to the excess of the total fair market value of
the shares on such date as so determined with respect to which the
option is being exercised over the total cash purchase price of such
shares as set forth in the option. Fractional shares will be rounded to
the next lowest number and the optionee will receive cash in lieu
thereof. At the sole discretion of the Committee, or as specified in the
option, the settlement of all or part of an optionee's rights under this
Paragraph 6 (f) may be made in cash in an amount equal to the fair
market value of the shares otherwise payable hereunder. The number of
shares with respect to which any option is exercised under this
Paragraph 6 (f) shall reduce the number of shares thereafter available
for exercise under the option, and such shares thereafter may not again
be optioned under the Plan.
(g) Each option may provide, or be amended to provide, that the
optionee may exercise the option without payment of the option price by
delivery to the Company of an exercise notice and irrevocable
instructions to deliver shares of Common Stock directly to the stock
broker named therein in exchange for payment of the option price and
withholding taxes by such broker to the Company.
(h) If an optionee's employment by the Company or a subsidiary
terminates by reason of his retirement under a retirement plan of the
Company or a subsidiary, his option may thereafter be exercised whenever
two years from the
4
<PAGE>
<PAGE>
date of grant have elapsed until the expiration of the stated period of
the option; provided, however, that if the optionee dies after such
termination of employment, any unexercised option may thereafter be
immediately exercised in full by the legal representative of his estate
or by the legatee of the optionee under his last will until the
expiration of the stated period of the option; provided, further, that
any right granted to such an optionee pursuant to Paragraph 6 (f) of the
Plan, may be exercised by such optionee (or his legal representative or
legatee in the event of his death) whenever two years from the date of
grant have elapsed, but may not be exercised after the expiration of the
period of three years from the date of such termination of employment or
the stated period of the option, whichever period is shorter.
(i) If an optionee's employment by the Company or a subsidiary
terminates by reason of permanent disability, as determined by the
Committee, his option may thereafter be exercised whenever two years
from the date of grant have elapsed until the expiration of the stated
period of the option; provided, however, that if the optionee dies after
such termination of employment, any unexercised option may thereafter be
immediately exercised in full by the legal representative of his estate
or by the legatee of the optionee under his last will until the
expiration of the stated period of the option; provided, further, that
any right granted to such an optionee pursuant to Paragraph 6 (f) of the
Plan, may be exercised by such optionee (or his legal representative or
legatee in the event of his death) whenever two years from the date of
grant have elapsed, but may not be exercised after the expiration of the
period of three years from the date of such termination of employment or
the stated period of the option, whichever period is shorter.
(j) If an optionee's employment by the Company or a subsidiary
terminates by reason of his death, his option may thereafter be
immediately exercised in full by the legal representative of his estate
or by the legatee of the optionee under his last will until the
expiration of the stated period of the option; provided, however, that
any right granted to such an optionee pursuant to Paragraph 6 (f) of the
Plan, may immediately after his death be exercised in full by said legal
representative or legatee for a period of three years from the date of
his death or the expiration of the stated period of the option,
whichever period is shorter.
(k) Unless otherwise determined by the Committee, if an
optionee's employment terminates for any reason other than death,
retirement or permanent disability, his option shall thereupon
terminate.
5
<PAGE>
<PAGE>
(l) The option by its terms shall be personal and shall not be
transferable by the optionee otherwise than by will or by the laws of
descent and distribution. During the lifetime of an optionee, the option
shall be exercisable only by him.
(m) Notwithstanding any intent to grant Incentive Stock Options,
an option granted will not be considered an Incentive Stock Option to
the extent that it together with any earlier Incentive Stock Options
permits the exercise for the first time in any calendar year of more
than $100,000 in value of Common Stock (determined at the time of
grant).
7. Terms and Conditions of Restricted Stock Awards
All awards of restricted stock under the Plan shall be subject to all
the applicable provisions of the Plan, including the following terms and
conditions, and to such other terms and conditions not inconsistent therewith,
as the Committee shall determine.
(a) Awards of restricted stock may be in addition to or in lieu
of option grants.
(b) During a period set by the Committee at the time of each
award of restricted stock (the "restriction period"), the recipient
shall not be permitted to sell, transfer, pledge, or assign the shares
of restricted stock.
(c) Shares of restricted stock shall become free of all
restrictions if the recipient dies or his employment terminates by
reason of permanent disability, as determined by the Committee, during
the restriction period and, to the extent set by the Committee at the
time of the award or later, if the recipient retires under a retirement
plan of the Company or a subsidiary during such period. The Committee
may require medical evidence of permanent disability, including medical
examinations by physicians selected by it. If the Committee determines
that any such recipient is not permanently disabled or that a retiree's
restricted stock is not to become free of restrictions, the restricted
stock held by either such recipient, as the case may be, shall be
forfeited and revert to the Company.
(d) Shares of restricted stock shall be forfeited and revert to
the Company upon the recipient's termination of employment during the
restriction period for any reason other than death, permanent disability
or retirement under a retirement plan of the Company or a subsidiary
except to the extent the Committee, in its sole discretion, finds that
such forfeiture might not be in the best interest of the Company and,
therefore, waives all or part of the application of this provision to
the restricted stock held by such recipient.
6
<PAGE>
<PAGE>
(e) Stock certificates for restricted stock shall be registered
in the name of the recipient but shall be appropriately legended and
returned to the Company by the recipient, together with a stock power,
endorsed in blank by the recipient. The recipient 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.
(f) Restricted stock shall become free of the foregoing
restrictions upon expiration of the applicable restriction period and
the Company shall deliver Common Stock certificates evidencing such
stock.
(g) Recipients of restricted stock shall be required to pay taxes
to the Company upon the expiration of restriction periods or such
earlier dates as elected pursuant to Section 83 of the Code; provided,
however, tax withholding obligations may be met by the withholding of
Common Stock otherwise deliverable to the recipient pursuant to
procedures approved by the Committee. In no event shall Common Stock be
delivered to any awardee until he has paid to the Company in cash the
amount of tax required to be withheld by the Company or has elected to
have his withholding obligations met by the withholding of Common Stock
in accordance with the procedures approved by the Committee.
8. Bonuses Payable in Stock
In lieu of cash bonuses otherwise payable under the Company's
compensation practices to employees eligible to participate in the Plan, the
Committee, in its sole discretion, may determine that such bonuses shall be
payable in stock or partly in stock and partly in cash. Such bonuses shall be in
consideration of services previously performed and shall consist of shares of
Common Stock free of any restrictions imposed by the Plan. The number of shares
of Common Stock payable in lieu of an amount of each bonus otherwise payable
shall be determined by dividing such amount by the fair market value of one
share of Common Stock on the date the bonus is payable, with the fair market
value determined in accordance with Paragraph 6 (a). The Company shall withhold
from any such bonus an amount of cash sufficient to meet its tax withholding
obligations.
9. Limited Rights
Any option granted under the Plan may, at the discretion of the
Committee, contain provisions for limited rights, as described herein. A limited
right shall be exercisable upon the occurrence of an event specified in the
option as an exercise event,
7
<PAGE>
<PAGE>
and shall expire thirty (30) days after the occurrence of such event. Exercise
events may include, at the discretion of the Committee and as specified in the
option, consummation of a tender or exchange offer for at least 20% of the
Company's Common Stock outstanding at the commencement of such offer or a proxy
contest the result of which is the replacement of a majority of the members of
the Company's Board, or consummation of a merger or reorganization of the
Company in which the Company does not survive or in which the shareholders of
the Company receive stock or securities of another corporation or cash, or a
liquidation or dissolution of the Company or other similar events. Limited
rights shall permit optionees to receive in cash either (i) the highest market
price per share for each share covered by an option, without regard to the date
on which the option otherwise would be exercisable, which the Company's Common
Stock traded on the New York Stock Exchange for the sixty days immediately
preceding the exercise event or (ii) if provided by the Committee in its
discretion at the time of grant, the highest market price per share for each
share covered by the option which the Company's Common Stock traded on the New
York Stock Exchange on the date of exercise, less the option price per share
specified in the option. In the event the exercise event is consummation of a
tender or exchange offer, the value per share set by the tenderor or offeror
shall be substituted for the highest market price per share provided in clause
(i) in the preceding sentence. Limited rights shall not extend the exercise
period of any option and, to the extent exercised, shall reduce the shares of
Company Common Stock available under the Plan and the shares of such Stock
covered by the options to which the limited rights relate.
10. Transfer, Leave of Absence, Etc.
For the purpose of the Plan: (a) a transfer of an employee from the
Company to a subsidiary, or vice versa, or from one subsidiary to another, and
(b) a leave of absence, duly authorized in writing by the Company, shall not be
deemed a termination of employment.
11. Rights of Employees
(a) No person shall have any rights or claims under the Plan
except in accordance with the provisions of the Plan.
(b) Nothing contained in the Plan shall be deemed to give any
employee the right to be retained in the service of the Company or its
subsidiaries.
8
<PAGE>
<PAGE>
12. Changes in Capital
Upon changes in the Common Stock by a stock dividend, stock
split, reverse split, subdivision, recapitalization, merger, consolidation
(whether or not the Company is a surviving corporation) combination or exchange
of shares, separation, reorganization or liquidation, the number and class of
shares available under the Plan as to which stock options and restricted stock
may be awarded, the number and class of shares under each option and the option
price per share shall be correspondingly adjusted by the Committee, such
adjustments to be made in the case of outstanding options without change in the
total price applicable to such options; provided, however, 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.
In the event of a "Change in Control" (as hereinafter defined)
(i) all restrictions on restricted stock previously awarded to recipients under
the Plan shall lapse, and (ii) all stock options and stock appreciation rights
which are outstanding shall become immediately exercisable in full without
regard to any limitations of time or amount otherwise contained in the Plan, the
options or the rights. Further, in the event of Change in Control the Committee
may determine that the options shall be adjusted and make such adjustments by
substituting for Common Stock subject to options, stock or other securities of
any successor corporation to the Company or that may be issuable by another
corporation that is a party to the Change in Control if such stock or other
securities are publicly traded or, if such stock or other securities are not
publicly traded, by substituting stock or other securities of a parent or
affiliate of such corporation if the stock or other securities of such parent or
affiliate are publicly traded, in which event the aggregate option price shall
remain the same and the amount of shares or other securities subject to option
shall be the amount of shares or other securities which could have been
purchased on the day of the Change in Control with the proceeds which would have
been received by the optionee if the option had been exercised in full prior to
such Change in Control and the optionee had exchanged all of such shares in the
Change in Control transaction. No optionee shall have any right to prevent the
consummation of any of the foregoing acts affecting the number of shares
available to the optionee.
For the purposes of the foregoing, Change in Control means the occurrence of any
of the following events:
9
<PAGE>
<PAGE>
(a) any "person", as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (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 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 Corporation's then outstanding securities eligible
to vote for the election of the Board (the "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 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 any 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
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 becomes 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
10
<PAGE>
<PAGE>
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 shall be deemed not to have occurred with respect to
any optionee who participates as an investor in the acquiring entity (which
shall include the Parent Corporation when applicable) in such Change in Control
transaction, unless such acquiring entity is a publicly-traded corporation and
the optionee's interests 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 optionee's interest in any equity securities shall include any such interest
of which such optionee is a "beneficial owner" as defined in Rule 13d-3 under
the Exchange Act.
13. Use of Proceeds
Proceeds from the sale of shares pursuant to options granted under
this Plan shall constitute general funds of the Company.
14. Amendments
The Board may amend, alter or discontinue the Plan, including
without limitation any amendment considered to be advisable by reason of changes
to the United States Internal Revenue Code, but no amendment, alteration or
discontinuation shall be made which would impair the rights of any holder of an
award of restricted stock or option or stock bonus theretofore granted, without
his consent, or which, without the approval of the shareholders, would:
(a) Except as is provided in Paragraph 12 of the Plan, increase the
total number of shares reserved for the purpose of the Plan.
11
<PAGE>
<PAGE>
(b) Except as is provided in Paragraph 6 (f) of the Plan, decrease
the option price of an option to less than 100% of the fair market value on the
date of the granting of the option.
(c) Extend the duration of the Plan.
The Committee may amend the terms of any award of restricted stock or
option theretofore granted, retroactively or prospectively, but no such
amendment shall impair the rights of any holder without his consent.
Adopted April 25, 1989
As Amended April 28, 1992
As Amended April 27, 1993
As Amended November 30, 1993
As Amended October 29, 1996
12
<PAGE>
<PAGE>
EXHIBIT 10.7
November 25, 1996
(Name)
(Address)
(City)
Dear (Name2):
Union Camp Corporation (the "Company") considers it essential to the best
interests of its stockholders to foster the continuous employment of key
management personnel. In this connection, the Board of Directors of the Company
(the "Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control of the Company may exist
and that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its stockholders.
The Board has determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the Company's
management, including yourself, to their assigned duties without distraction in
the face of potentially disturbing circumstances arising from the possibility of
a change in control of the Company.
In order to induce you to remain in the employ of the Company, the Company
agrees that you shall receive the severance benefits set forth in this letter
agreement (the "Agreement") in the event your employment with the Company is
terminated under the
<PAGE>
<PAGE>
circumstances described below subsequent to a "change in control of the
Company".
1. Term of Agreement. This Agreement shall commence on November 25, 1996,
and shall continue in effect until the date specified in a written
notice of termination of this Agreement given no less than two (2) years
prior to such date; provided that if a change in control of the Company
occurs prior to the date of termination of this Agreement, but
subsequent to such written notice of termination, this Agreement shall
continue in effect for two (2) years after the date such change in
control occurs, notwithstanding that notice of termination of this
Agreement has previously been given. The foregoing notwithstanding, this
Agreement is subject to earlier termination as provided in Subsection
3(ii).
2. Change in Control. No benefits shall be payable hereunder unless there
shall have been a change in control of the Company, as set forth below.
For purposes of this Agreement, a "change in control of the Company"
shall be deemed to have occurred upon the occurrence of one of the
following events:
(i) any "person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (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 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" under Subsection 2(iii)) 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 (the
2
<PAGE>
<PAGE>
"Company Voting Securities");
(ii) 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 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 any
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;
(iii) the consummation of a merger, consolidation, statutory share
exchange or similar form of corporate transaction involving the
Company or any of its subsidiaries that requires the approval of
the Company's stockholders, whether for such transaction or the
issuance of securities in the transaction (a "Business
Combination"), unless immediately following such Business
Combination: (A) 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"), is represented by Company Voting Securities that
were outstanding immediately prior to such Business Combination
(or, if applicable, shares into which such
3
<PAGE>
<PAGE>
Company Voting Securities were converted pursuant to such
Business Combination), (B) no person (other than any employee
benefit plan sponsored or maintained by the Surviving Corporation
or the Parent Corporation) is or becomes 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 (C) 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 (A), (B) and (C) above shall be deemed to
be a "Non-Qualifying Transaction"); or
(iv) 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 in this Agreement to the contrary notwithstanding, a change in control
of the Company shall be deemed not to have occurred with respect to you if you
participate as an investor in the acquiring entity (which shall include the
Parent Corporation, when applicable) in any such change in control transaction
unless such acquiring entity is a publicly-traded corporation and your 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 your interest in
4
<PAGE>
<PAGE>
any equity securities shall include any such interest of which you are a
"beneficial owner" as defined in Rule 13d-3 under the Exchange Act.
3. Termination Following Change in Control.
(i) General. If any of the events described in Section 2 constituting
a change in control of the Company shall have occurred, you shall
be entitled to the benefits provided in Subsection 4(iii) upon
the subsequent termination of your employment during the term of
this Agreement unless such termination is (a) because of your
death, (b) by the Company for Cause, or (c) by you other than for
Good Reason. Except as set forth below, in the event your
employment with the Company is terminated for any reason and
subsequently a change in control of the Company shall have
occurred, you shall not be entitled to any benefits hereunder.
Notwithstanding anything in this Agreement to the contrary, if
(i) your employment terminates prior to a change in control of
the Company under circumstances that would have entitled you to
the benefits under Subsection 4 (iii) if they had occurred
following a change in control of the Company; (ii) you reasonably
demonstrate that such termination of employment (or Good Reason
event leading to your termination) was at the request or
suggestion of a third party who had indicated an intention or
taken steps reasonably calculated to effect a change in control
of the Company; and (iii) a change in control of the Company
involving such third party (or a party competing with such third
party to effectuate a change in control) does occur, then for
purposes of this Agreement the date immediately prior to the date
of your termination of employment shall be deemed to be the date
of a change in control of the Company. If a termination of your
employment occurs pursuant to the circumstances described in the
immediately preceding sentence, then for purposes of determining
the timing of
5
<PAGE>
<PAGE>
payments and benefits to you under Section 4, the date of the
actual change in control of the Company shall be treated as your
Date of Termination under Section 3(vi).
(ii) Disability. Notwithstanding anything in this Agreement to the
contrary, if, as a result of your incapacity due to physical or
mental condition or illness, you shall have been absent from the
full-time performance of your duties with the Company for six (6)
consecutive months and such period of absence commenced prior to
a change in control of the Company, the Company may give you at
least thirty (30) days prior written notice of termination of
this Agreement and if you shall not have returned to the
full-time performance of your duties by the date of termination
specified in such notice, this Agreement shall terminate on such
date and no benefit shall be payable hereunder.
(iii) Cause. Termination by the Company of your employment for "Cause"
shall mean termination (a) upon the willful and continued failure
by you to substantially perform your duties with the Company
(other than any such failure resulting from your incapacity due
to physical or mental condition or illness or any such actual or
anticipated failure after the issuance of a Notice of Termination
by you for Good Reason), after a written demand for substantial
performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes
that you have not substantially performed your duties, or (b) the
willful engaging by you in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise. For
purposes of this Subsection, no act, or failure to act, on your
part shall be deemed "willful" unless done, or omitted to be
done, by you not in good faith and without reasonable belief that
your action or omission was in the best interest of the Company.
Notwithstanding the foregoing,
6
<PAGE>
<PAGE>
you shall not be deemed to have been terminated for Cause unless
and until there shall have been delivered to you 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 you and an
opportunity for you, together with your counsel, to be heard
before the Board), finding that in the good faith opinion of the
Board you were guilty of conduct set forth above in this
Subsection and specifying the particulars thereof in detail.
(iv) Good Reason. You shall be entitled to terminate your employment
for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean, without your express written consent, the occurrence
after a change in control of the Company (except as provided in
Subsection 3(i) with respect to certain events occurring prior to
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 Date of
Termination specified in the Notice of Termination given in
respect thereof:
(a) the assignment to you of any duties inconsistent with the
position in the Company that you held immediately prior to
the change in control of the Company (other than in the
nature of a promotion), or a diminution in your duties,
responsibilities, employment status or authority as
compared to your duties, responsibilities, employment
status or authority in effect immediately prior to such
change in control;
(b) a reduction by the Company in your annual base salary as
in effect on the date hereof or as the same may be
increased from time to time except for across-the-board
salary reductions
7
<PAGE>
<PAGE>
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 you are
principally employed immediately prior to the date of the
change in control of the Company to a location more than
twenty-five (25) miles from such location, or the
Company's requiring you 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 your business travel obligations
immediately prior to the change in control;
(d) the failure by the Company to pay to you any portion of
your current compensation or to pay to you 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 you
participated immediately prior to the change in control of
the Company, including without limitation as of the date
hereof, a savings and investment plan, a stock option and
stock award plan, a restricted stock performance plan and
an annual incentive compensation plan, unless an equitable
arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to each such
plan, or the failure by the Company to continue your
participation therein (or in any such substitute or
alternative plan) on a basis not materially less
favorable, both in terms of the
8
<PAGE>
<PAGE>
amount of benefits provided and the level of your
participation relative to other participants, than that
which existed at the time of the change in control of the
Company;
(f) the failure by the Company to continue to provide you with
benefits and coverage substantially similar to those
provided to you under any of the Company's pension, life
insurance, medical, accident, or disability plans in which
you were participating at the time of the change in
control of the Company, 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 you with the number of paid vacation days to
which you are entitled on the basis of 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 of the Company; or
(g) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying
the requirements of Subsection (3)(v) (and, if applicable,
the requirements of Subsection (3)(iii)), which purported
termination shall not be effective for purposes of this
Agreement.
Your right to terminate your employment pursuant to this
Subsection 3(iv) shall not be affected by your incapacity due to
physical or mental condition or illness. Your continued
employment shall not constitute consent to, or a waiver of rights
with respect to, any circumstance constituting Good Reason
hereunder.
(v) Notice of Termination. Any purported termination of your
employment by the Company or by you after a change in control of
the Company
9
<PAGE>
<PAGE>
shall be communicated by written Notice of Termination to the
other party hereto in accordance with Section 6. "Notice of
Termination" shall mean a notice that shall indicate the specific
termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the
provision so indicated.
(vi) Date of Termination, Etc. "Date of Termination" shall mean if
your employment is terminated pursuant to Subsections (3)(iii) or
(3)(iv) hereof or for any other reason, the date specified in the
Notice of Termination (which, in the case of a termination for
Cause shall not be less than thirty (30) days from the date such
Notice of Termination is given, and in the case of a termination
for Good Reason shall not be less than fifteen (15) nor more than
sixty (60) days from the date such Notice of Termination is given
(provided, that no advance notice is required in the case of a
termination of employment for Good Reason as a result of events
occurring prior to a change in control of the Company));
provided, however, that if prior to the Date of Termination (as
determined without regard to this provision), the party receiving
such Notice of Termination notifies the other party that a
dispute exists concerning the termination under the terms of this
Agreement, then the Date of Termination shall be the date on
which the dispute is finally resolved (provided, that,
notwithstanding when the dispute is finally resolved, your Date
of Termination shall be deemed to occur for purposes of Section 4
during the term of this Agreement), either by mutual written
agreement of the parties, by a binding arbitration award, or by a
final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to which
the time for appeal therefrom has expired and no appeal has been
perfected); and
10
<PAGE>
<PAGE>
provided, further, that the Date of Termination shall be extended
by a notice of dispute only if such notice is given in good faith
and the party giving such notice pursues the resolution of such
dispute with reasonable diligence. Any such notice of dispute
must be in writing and delivered or mailed to the other party,
and such notice shall set forth the specific reasons for the
dispute. You shall have the right to appeal to the Board or its
delegate in writing any notice of dispute given by the Company
within sixty (60) days of your receipt thereof. Within sixty (60)
days thereafter, you shall be given a written decision of your
appeal from the Board or its delegate, which decision shall
clearly set forth the specific reasons for the decision,
including specific references to pertinent provisions of this
Agreement. If you dispute the decision, such dispute shall be
resolved by arbitration as provided in Section 10 hereof.
Notwithstanding the pendency of any such dispute, the Company
will continue to pay you your full compensation in effect
immediately prior to when the Notice of Termination giving rise
to the dispute was given (including, but not limited to, base
salary) and continue you as a participant in all compensation,
benefit and insurance plans in or by which you were participating
or were covered immediately prior to when the Notice of
Termination giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Subsection.
Amounts paid under this Subsection are in addition to all other
amounts due under this Agreement, and shall not be offset against
or reduce any other amounts due under this Agreement. No amount
payable hereunder shall be reduced by any compensation earned by
you as the result of employment by another employer. This
Subsection 3(vi) shall not apply to any termination of your
employment prior to a change in control of the Company as
described in Subsection 3(i).
11
<PAGE>
<PAGE>
4. Compensation Upon Termination or During Disability. Following a change
in control of the Company, you shall be entitled to the following
benefits during a period of disability, or upon termination of your
employment, as the case may be, provided that such period commences or
termination occurs during the term of this Agreement:
(i) During any period that you fail to perform your full-time duties
with the Company as a result of incapacity due to physical or
mental condition or illness, you shall receive all compensation
payable to you under the Company's disability plan or program or
other similar plan during such period. In the event your
employment is terminated by reason of your death, your benefits
shall be determined under the Company's retirement, insurance and
other compensation plans then in effect in accordance with the
terms of such plans.
(ii) Except as otherwise provided in Subsection 3(vi), if applicable,
if your employment shall be terminated by the Company for Cause
or by you other than for Good Reason, the Company shall pay you
your full base salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given, plus all
other amounts to which you are entitled under any compensation or
benefit plan of the Company at the time such payments are due,
and the Company shall have no further obligations to you under
this Agreement.
(iii) If your employment by the Company is terminated by the Company
other than for Cause or if you terminate your employment for Good
Reason, you shall be entitled to the benefits provided below:
(a) the Company shall pay to you (i) your full base salary
through the Date of Termination at the rate in effect at
the time Notice of Termination is given and the value of
your accrued and "banked"
12
<PAGE>
<PAGE>
vacation as of the Date of Termination, no later than the
fifth day following the Date of Termination, (ii) any
outstanding amounts due and owing to you as of the Date of
Termination under the Union Camp Corporation Policy Group
Executive Annual Incentive Plan and the Union Camp
Corporation Restricted Stock Performance Plan (or any
successor, substitute or additional incentive plans), no
later than the fifth day following the Date of Termination
(or, if later, such date by which such amounts may
reasonably be calculated), plus all other amounts to which
you are entitled under any compensation or benefit plan or
policy of the Company, at the time such payments are due,
and (iii) if such termination of employment occurs during
the remainder of the calendar year in which the change in
control of the Company occurs, no later than the fifth day
following the Date of Termination, a pro rata annual
target incentive under the Union Camp Corporation Policy
Group Executive Annual Incentive Plan and a pro rata
annual target award (payable in cash) under the Union Camp
Corporation Restricted Stock Performance Plan (or any
successor plans thereto), to the extent you are a
participant in such plans (and such pro rata payment is
not made thereunder). Such pro rata payments shall be
equal to the product(s) of (i) the quotient resulting from
dividing the number of days you were employed during such
year through the Date of Termination by three hundred and
sixty-five (365) and (ii) your annual target incentive
under the Union Camp Corporation Policy Group Executive
Annual Incentive Plan and your annual target award under
the Union Camp Corporation Restricted Stock Performance
Plan (or any successor plans thereto) for such year;
13
<PAGE>
<PAGE>
(b) in lieu of any further salary and bonus payments to you
for periods subsequent to the Date of Termination and in
lieu of other severance benefits, the Company shall pay as
severance pay to you, at the time specified in Subsection
4(v), a lump sum severance payment equal to (i) 300% of
the greater of (A) your annual rate of base salary in
effect immediately prior to the Date of Termination and
(B) your annual rate of base salary in effect immediately
prior to the change in control of the Company, plus (ii)
300% of the greater of (x) the amount of your annual
target incentive in effect immediately prior to the date
on which the change in control occurs and (y) your annual
target incentive with respect to the year in which the
Date of Termination occurs; provided, that for purposes of
this Subsection 4(iii)(b) your annual target incentive is,
as of the date hereof, determined pursuant to your
participation in the Union Camp Corporation Policy Group
Executive Annual Incentive Plan, and does not include any
target award under the Union Camp Corporation Restricted
Stock Performance Plan;
(c) the Company shall pay to you all legal fees and expenses
incurred by you in connection with the interpretation or
enforcement of this Agreement (including all such fees and
expenses, if any, incurred in contesting or disputing any
termination hereunder or in seeking to obtain or enforce
any right or benefit provided by this Agreement or in
connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"),
to any payment or benefit provided hereunder);
14
<PAGE>
<PAGE>
(d) for a thirty-six (36) month period after such termination,
the Company shall arrange to provide you with life,
disability, accident and health insurance benefits
equivalent to those which you were receiving immediately
prior to the Notice of Termination (provided, that, any
reduction of benefits which constituted a basis for your
termination of employment for Good Reason pursuant to
Subsection 3(iv) shall not be taken into account for
purposes of determining your continued benefits under this
Subsection 4(iii)(d)). Notwithstanding the foregoing, the
Company shall not provide a benefit otherwise receivable
by you pursuant to this paragraph (d) during any period in
which an equivalent benefit is actually provided to you
during the thirty-six (36) month period following your
termination, and you must report to the Company any such
benefit actually received by you; and
(e) notwithstanding any election you may have made under any
of the applicable plans, and any provisions to the
contrary in any such plans, the Company shall pay to you,
at the time specified in Subsection 4(v), a lump sum
amount, in cash, equal to the sum of (i) all amounts
credited to your book account described in Article V,
Section 3 of the Union Camp Corporation Supplemental
Retirement Plan (the "ERISA Excess Plan"), (ii) the
actuarial equivalent of the supplemental pension benefit
(determined as a straight life annuity commencing at the
greater of age sixty-two (62) or your age at the Date of
Termination) that you have accrued under Article IV,
Section 1 of the ERISA Excess Plan as of the Date of
Termination (for this purpose, "actuarial equivalent"
shall be determined using the same
15
<PAGE>
<PAGE>
assumptions utilized under the Company's Retirement Plan
for Salaried Employees immediately prior to the change in
control), and (iii) the amount due to you pursuant to the
Company's Supplemental Retirement Income Plan for
Executive Officers (the "SERP") determined as if you had
been credited under the SERP with three (3) additional
years of age and service (but not beyond age sixty-five
(65) and twenty (20) years of service) and determined
pursuant to the lump sum payment provisions under Section
2 of such Plan. This lump sum payment shall be in full
settlement of all benefits accrued by you under the ERISA
Excess Plan and the SERP, provided, however, to the extent
such lump sum payment would duplicate any benefits paid to
you under the terms of such plans it shall be reduced to
the extent necessary to prevent the duplicative payment of
benefits.
Notwithstanding anything in this Agreement to the contrary, if
you are over age sixty-two (62) as of your Date of Termination,
(i) the 300% multiplier set forth in paragraph (b) above to
determine your severance benefit shall be reduced by 8.33% for
each full month that your age is in excess of sixty-two (62) as
of your Date of Termination and (ii) your continued benefits
pursuant to paragraph (d) above shall cease at age sixty-five
(65).
(iv) Notwithstanding anything in this Agreement to the contrary, in
the event it shall be determined that any payment, award, benefit
or distribution (or any acceleration of any payment, award,
benefit or distribution) by the Company (or any of its affiliated
entities) or any entity which effectuates a change in control of
the Company (or any of its affiliated entities) to or for your
benefit (whether pursuant to the terms of this Agreement or
otherwise, but excluding any Gross-Up Payments (as
16
<PAGE>
<PAGE>
defined below)) (the "Payments"), would be subject to the excise
tax imposed by section 4999 of the Code (the "Excise Tax"), then
the Company shall pay to you an additional payment (a "Gross-Up
Payment") in an amount such that after payment by you of all
taxes (including any Excise Tax) imposed upon the Gross-Up
Payment, you retain an amount of the Gross-Up Payment equal to
the Excise Tax imposed upon the Payments. For purposes of
determining the amount of the Gross-Up Payment, you shall be
deemed to (i) pay federal income taxes at the highest marginal
rates of federal income taxation for the calendar year in which
the Gross-Up Payment is to be made and (ii) pay applicable state
and local income taxes at the highest marginal rate of taxation
for the calendar year in which the Gross-Up Payment is to be
made, net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local taxes.
In the event that the Excise Tax is subsequently determined (by a
final determination by a court or an Internal Revenue Service
proceeding which has been finally and conclusively resolved or by
mutual agreement of the parties hereto) to be less than the
amount taken into account hereunder at the time of termination of
your employment, you shall repay to the Company at the time that
the amount of such reduction in Excise Tax is finally determined
the portion of the Gross-Up Payment which would not have been
paid to you had the Gross-Up Payment calculation been based upon
such reduced Excise Tax, plus interest on the amount of such
repayment at the rate provided in section 1274(b)(2)(B) of the
Code. In the event that the Excise Tax is determined to exceed
the amount taken into account hereunder at the time of the
termination of your employment (including by reason of any
payment the existence or amount of which could not be determined
at the
17
<PAGE>
<PAGE>
time of the Gross-Up Payment), the Company shall make an
additional Gross-Up Payment in respect of such excess (plus
interest payable at the rate provided in section 1274(b)(2)(B) of
the Code with respect to such excess) at the time that the amount
of such excess is finally determined. Notwithstanding the
foregoing provisions of this Subsection 4(iv), if it shall be
determined that you are entitled to a Gross-Up Payment, but that
the Payments would not be subject to the Excise Tax if the
Payments were reduced by an amount that is less than 10% of the
portion of the Payments that would be treated as "parachute
payments" under section 280G of the Code, then the amounts
payable to you under this Agreement shall be reduced (but not
below zero) to the maximum amount that could be paid to you
without giving rise to the Excise Tax (the "Safe Harbor Cap"),
and no Gross-Up Payment shall be made to you. The reduction of
the amounts payable hereunder, if applicable, shall be made by
reducing first the payments under Section 4(iii)(b), unless an
alternative method of reduction is elected by you. For purposes
of reducing the Payments to the Safe Harbor Cap, only amounts
payable under this Agreement (and no other Payments) shall be
reduced. If the reduction of the amounts payable hereunder would
not result in a reduction of the Payments to the Safe Harbor Cap,
no amounts payable under this Agreement shall be reduced pursuant
to this provision.
(v) The payments provided for in Subsections 4(iii)(b), 4(iii)(e) and
4(iv) hereof shall be made not later than the thirtieth day
following the Date of Termination; provided, however, that if the
amounts of such payments cannot be finally determined on or
before such day, the Company shall pay to you on such day an
estimate, as determined in good faith by the Company, of the
minimum amount of such payments
18
<PAGE>
<PAGE>
and shall pay the remainder of such payments (together with
interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined. In the
event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess
shall constitute a loan by the Company to you, payable on the
fifth day after demand by the Company (together with interest at
the rate provided in section 1274(b)(2)(B) of the Code). All
determinations required to be made under Subsection 4(iv),
including whether and when a Gross-Up Payment is required, the
amount of such Gross-Up Payment, the reduction of the Payments to
the Safe Harbor Cap and the assumptions to be utilized in
arriving at such determinations, shall be made by the public
accounting firm that is retained by the Company as of the date
immediately prior to the change in control of the Company (the
"Accounting Firm") which shall provide for review detailed
supporting calculations both to the Company and you within
fifteen (15) business days following the receipt of notice from
the Company or you that a Notice of Termination has been provided
under this Agreement, or such earlier time as is requested by the
Company (collectively, the "Determination"). In the event that
the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the change in control (or
does not undertake to provide the Determination), the Company
shall appoint another public accounting firm to make the
Determination required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder). All fees
and expenses of the Accounting Firm shall be borne solely by the
Company and the Company shall enter into any agreement requested
by the Accounting Firm in connection with the performance of the
services hereunder.
19
<PAGE>
<PAGE>
(vi) Except as provided in Subsection 4(iii)(d), you shall not be
required to mitigate the amount of any payment provided for in
this Section 4 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this
Section 4 be reduced by any compensation earned by you as the
result of employment by another employer, by retirement benefits,
by offset against any amount claimed to be owed by you to the
Company, or otherwise.
5. Successors; Binding Agreement.
(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company
to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession which
constitutes a change in control of the Company shall be a breach
of this Agreement and shall entitle you to compensation and
benefits from the Company in the same amount and on the same
terms to which you would be entitled hereunder if you terminate
your employment for Good Reason following a change in control of
the Company, except that for purposes of implementing the
foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in
this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as
aforesaid, or otherwise.
(ii) This Agreement is personal to you and shall not be assigned by
you (other than as a result of your death), except that any
rights that shall
20
<PAGE>
<PAGE>
have accrued prior to your death shall inure to the benefit of
and be enforceable by you and your personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees, to the extent any such
persons succeed to your interests hereunder from time to time. If
you should die while any amount would still be payable to you
hereunder had you continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to such person or persons appointed in
writing by you (provided you have delivered a copy of such
appointment to the Company) or, if no such person is appointed,
to your estate.
6. Notice. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by
United States certified or registered mail, return receipt requested,
postage prepaid, addressed to the respective addresses set forth on the
first page of this Agreement, provided that all notice to the Company
shall be directed to the attention of the Board with a copy to the
Secretary of the Company, or to such other address as either party may
have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
Notwithstanding the foregoing, any notice actually received by the other
party shall be deemed to have been duly given.
7. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and a duly authorized officer of the Company.
No waiver by either party hereto at any time of any breach by the other
party hereto of any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time. Similarly, no such waiver of
21
<PAGE>
<PAGE>
compliance with any condition or provision of this Agreement shall be
deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to
the subject matter hereof have been made by either party which are not
expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the
laws of the State of New Jersey without regard to its conflicts of law
principles. All references to sections of the Exchange Act, the Code or
the ERISA Excess Plan shall be deemed also to refer to any successor
provisions to such sections. Any payments provided for hereunder shall
be paid net of any applicable withholding required under foreign,
federal, state or local law. The obligations of the Company under
Subsection 3(vi) and Sections 4 and 5 shall survive the expiration of
the term of this Agreement, with respect to Subsection 3(vi) and Section
4, to the extent benefits become due and owing under such provisions
and, with respect to Section 5, to the extent the Company continues to
have obligations under this Agreement.
8. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and
effect.
9. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
10. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in
Wayne, New Jersey or such other location to which you and the Company
agree, in accordance with the commercial rules of the American
Arbitration Association then in effect. The Company shall bear all costs
and expenses arising in connection with any arbitration proceeding
pursuant to this Section 10. Judgment may be entered on
22
<PAGE>
<PAGE>
the arbitrator's award in any court having jurisdiction; provided,
however, that you shall be entitled to seek specific performance of your
right to be paid pursuant to Subsection 3(vi) until the Date of
Termination during the pendency of any dispute or controversy arising
under or in connection with this Agreement.
11. Entire Agreement. This Agreement sets forth the entire agreement of the
parties hereto with respect to severance benefits payable to you after a
change in control of the Company, and during the term of the Agreement
supersedes the provisions of all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether
oral or written, by any officer, employee or representative of any party
hereto with respect to such subject matter. Without limiting the
generality of the preceding sentence, the parties acknowledge that this
Agreement supersedes that certain agreement dated (Date) between them
which is terminated in all respects, such termination being a condition
to and in consideration of the Company's execution and delivery of this
Agreement to you.
23
<PAGE>
<PAGE>
If this letter sets forth our agreement on the subject matter hereof, kindly
sign and return to the Company the enclosed copy of this letter, which will then
constitute our agreement on this subject.
Sincerely,
UNION CAMP CORPORATION
By ____________________________________
W. Craig McClelland
Chairman of the Board
and Chief Executive Officer
Agreed to as of the date set forth above.
_______________________________________
(Name3)
24
<PAGE>
<PAGE>
INDEX OF DEFINED TERMS
----------------------
Defined Term Where Defined
- ------------ -------------
Accounting Firm 'SS' 4(v)
actuarial equivalent 'SS' 4(iii)(e)
Agreement Introduction
banked 'SS' 4(iii)(a)
beneficial owner 'SS' 2(i)
Board Introduction
Business Combination 'SS' 2(iii)
Cause 'SS' 3(iii)
change in control of the Company 'SS' 2
Code 'SS' 4(iii)(c)
Company Introduction, 'SS' 5(i)
Company Voting Securities 'SS' 2(i)
Date of Termination 'SS' 3(vi)
Determination 'SS' 4(v)
ERISA Excess Plan 'SS' 4(iii)(e)
Exchange Act 'SS' 2(i)
Excise Tax 'SS' 4(iv)
Good Reason 'SS' 3(iv)
Gross-Up Payment 'SS' 4(iv)
Incumbent Directors 'SS' 2(ii)
Non-Qualifying Transaction 'SS' 2(iii)
Notice of Termination 'SS' 3(v)
parachute payments 'SS' 4(iv)
Parent Corporation 'SS' 2(iii)
Payments 'SS' 4(iv)
person 'SS' 2(i)
Safe Harbor Cap 'SS' 4(iv)
SERP 'SS' 4(iii)(e)
Surviving Corporation 'SS' 2(iii)
willful 'SS' 3(iii)
<PAGE>
<PAGE>
EXHIBIT 10.8
STOCK COMPENSATION PLAN
FOR
NON-EMPLOYEE DIRECTORS
OF
UNION CAMP CORPORATION
1. The purpose of the Stock Compensation Plan for Non-Employee Directors (the
"Plan") of Union Camp Corporation (the "Corporation") is to provide
competitive remuneration to the Corporation's non-employee directors so as to
maintain the Corporation's ability to attract and retain highly qualified
individuals to serve on the Board of Directors and to relate the compensation
of non-employee directors more closely to the interests of the shareholders
of the Corporation by increasing the amount of stock ownership of the
Corporation held by non-employee directors.
2. This Plan shall become effective on April 24, 1990, provided the Plan is
approved by shareholders on such date. If this Plan is not so approved, the
Plan shall not become effective.
3. If the Plan becomes effective, each member of the Board of Directors who is
not an employee of the Corporation immediately after each annual meeting of
the stockholders of the Corporation, beginning with the 1990 Annual Meeting,
shall receive whole shares of Common Stock of the Corporation having a fair
market value of approximately $5,000. The number of shares of Common Stock
each non-employee director shall be entitled to receive following each annual
meeting thereafter shall be the number specified in an amendment to the Plan
adopted as an Appendix thereto by the Board of Directors at any time prior
to, and in the same calendar year as, such annual meeting; provided, however,
if the Plan is not so amended, each non-employee director shall receive whole
shares of Common Stock having a fair market value of approximately $5,000. If
the Plan is so amended, each non-employee director shall receive an equal
number of whole shares of Common Stock the fair market value of which shall
not exceed $40,000 per calendar year. The total number of shares that may be
awarded under this Plan is 150,000, provided that if during any fiscal year
of the Corporation the shares of Common Stock issued and outstanding at the
beginning of such fiscal year increase or decrease by more than 10% by reason
of a stock dividend, stock split, reverse split, subdivision, merger,
recapitalization, consolidation (whether or not the corporation is the
surviving corporation), combination or
<PAGE>
<PAGE>
exchange of shares, separation, reorganization, liquidation or like action,
the total number of shares which may be granted under this Plan shall be
correspondingly adjusted. The shares of stock awarded under this Plan shall
be delivered to each non-employee director as soon as practicable following
the applicable annual meeting.
4. The Plan shall be administered by the Chief Executive Officer of the
Corporation (the "CEO") whose interpretation and decision as to any question
arising under the Plan shall be conclusive. Recommendations as to annual
awards under the Plan may be made by the CEO to the Board of Directors. In
making any such recommendation, the CEO shall consider (a) the performance of
the Corporation and (b) the remuneration paid to non-employee directors by
other corporations of similar size.
5. All shares of Common Stock of the Corporation to be used for purposes of this
Plan shall either be newly issued stock or stock purchased by the Corporation
for the benefit of each non-employee Director or both. The fair market value
of newly issued or purchased Common Stock shall be the mean of the high and
low sales prices for the Common Stock as reported on the Composite Tape for
New York Stock Exchange issues on the trading date preceding the applicable
annual meeting of stockholders of the Corporation or if there is no sale of
the shares on such Exchange on said date, the mean of the bid and asked
prices on such Exchange at the close of the market on such date shall be
deemed to be the fair market value of the shares.
6. This Plan shall be construed in accordance with the laws of the Commonwealth
of Virginia. The Plan may be amended, suspended or terminated at any time by
action of the Board of Directors of the Corporation, provided no amendment
may (a) increase the maximum number of shares which may be awarded under this
Plan, (b) increase the fair market value of awards to an annual amount
greater than $40,000 for each non-employee director, (c) change the
eligibility for awards to individuals other than non-employee directors, or
(d) more than once every six months, change the number of shares of Common
Stock each non-employee director shall be entitled to receive following each
annual meeting.
-2-
<PAGE>
<PAGE>
AMENDMENT
FEBRUARY 25, 1997
TO
STOCK COMPENSATION PLAN
FOR
NON-EMPLOYEE DIRECTORS
OF
UNION CAMP CORPORATION
Appendix Number Six
Immediately after the 1997 Annual Meeting of the Stockholders of the Corporation
each member of the Board of Directors of the Corporation who is not an employee
of the Corporation shall receive under the Plan whole shares of Common Stock of
the Corporation having a fair market value of approximately $9,000.
<PAGE>
<PAGE>
EXHIBIT 11
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net Income ($000) $ 85,308 $ 451,073 $ 113,510
Weighted Average Common
Shares Outstanding 69,220,157 69,940,397 69,954,082
Earnings Per Share $1.23 $6.45 $1.62
Weighted Average Common
Shares Outstanding
Including Common Stock
Equivalents - Primary Basis 69,605,536 70,569,537 70,325,502
Primary Earnings Per Share $1.23 $6.39 $1.61
Weighted Average Common
Shares Outstanding
Including Common Stock
Equivalents - Fully
Diluted Basis 69,605,536 70,569,537 70,326,104
Fully Diluted Earnings Per Share $1.23 $6.39 $1.61
</TABLE>
<PAGE>
<PAGE>
Exhibit 13
18 Union Camp Corporation
Fine Paper
The Fine Paper Division produces uncoated white paper, coated and uncoated white
paperboard, and bleached market pulp at mills in Franklin, Virginia, and
Eastover, South Carolina. About half of the paper and board is sold directly to
manufacturers who convert it into products such as envelopes, computer printout
paper, business forms, greeting cards, and folding cartons. The remainder of the
division's output, primarily printing and business papers, is sold to
distributors who supply commercial printers, book publishers, offices, home
users, and organizations with in-house printing capabilities. We also provide
business paper for consumers through retail outlets such as Office Depot and
Wal-Mart.
Operating Highlights
We continued to make progress in penetrating the SOHO (small office/ home
office) market, a segment showing double-digit sales growth. We introduced
product line extensions of Great White'r', our popular, recycled content
business paper, including coated inkjet paper, pads, and envelopes. The company
also began building a converting plant in Franklin, Virginia, dedicated to
packaging SOHO products for retail distribution. For the second year, TV
advertising increased brand awareness for Great White. Sales growth was made in
another niche market, the corporate information center. Our Express
System--encompassing Express Roll'tm', Express Pack'tm', and FiberNet--was
specifically designed to perform in this high-productivity environment. With
FiberNet, we partner with offices that purchase our recycled content paper to
recover all of their paper through a local recycling company that ships it back
to our mill to make more recycled paper. In the converting papers segment, we
built on our leadership position by increasing our market share in envelope
papers and further penetrated the market for external business communications
papers.
<PAGE>
<PAGE>
Union Camp Corporation 19
Packaging
The Packaging Group integrates the company's Kraft Paper and Board Division
(KP&B) and its packaging businesses. KP&B supplies most of the paper and
paperboard to our packaging plants, which produce corrugated containers and
bags. The Container Division produces corrugated boxes, solid fiber containers
and slip sheets, and display packaging. The Flexible Packaging Division produces
industrial and consumer bags made of paper or plastic film. The International
Packaging Division manufactures corrugated containers at 7 overseas locations.
The Packaging Group also includes the Folding Carton Division, which
manufactures packaging for the cosmetics, toiletries, pharmaceuticals, and food
products industries.
Operating Highlights
We acquired O'Grady Containers, of Fort Worth, Texas, a leading producer of
point-of-purchase displays and containers. Our new container plant in Hanford,
California, began producing heavy-duty corrugated products, including laminated
bulk boxes. Our solid fiber plant in Lancaster, Pennsylvania, earned Star site
status, the highest safety designation awarded by OSHA. Our Hazleton flexible
packaging plant, also in Pennsylvania, has been recommended for Star site
status. We began marketing the UNIPAL'tm' corrugated pallet, a recyclable and
disposable alternative to wood and plastic pallets that is being used by
Nabisco. The Folding Carton Division took on new business from Chesebrough-Ponds
USA, Elizabeth Arden, and Coty, and also installed a new Barco prepress system
at its gravure printing plant in Englewood, New Jersey, that lets us transfer
images directly to printing cylinders. In August, our linerboard mill in
Prattville, Alabama, won the Alabama U.S. Senate Productivity and Quality Award
for outstanding performance in customer satisfaction, process management, and
human resource development. On the international front, we bought out our
minority partner in our corrugated plant in Chile, embarked on a joint venture
for a corrugated facility in China, and entered a packaging joint venture in
Turkey.
<PAGE>
<PAGE>
20 Union Camp Corporation
Chemicals
The Chemical Group comprises the Chemical Products Division and Bush Boake Allen
Inc. (BBA), which operates as a free-standing corporation. The division converts
chemical byproducts from the paper pulping process into a variety of products
including tall oil fatty acids, rosin acid, dimer acid, rosin, and polyamide
resins. These products are used in adhesives, inks, coatings, lubricants, soaps,
and personal care products. BBA is one of the world's leading compounders of
flavors and fragrances and producers of aroma chemicals.
Operating Highlights: Chemical Products Division
We continued moving into growth markets in Mexico, Latin America, Asia, Eastern
Europe, and India. For example, we formed an alliance to produce rosin-based
resins for inks, adhesives, and coatings in Indonesia, and we began producing
rosin-based ink resins in the U.K. Close to 40 percent of our sales are now
outside the U.S. New products included a line of ink resins for the lithographic
industry and environmentally-friendly polyamide adhesives that are non-solvent
based. We continued to make capital investments in key products for the inks,
adhesive, and coatings industries. In the United States, we increased our
capacity to produce polyamides and rosin ink resins. In Europe, we doubled our
capacity for making ink and adhesive resins and, worldwide, dimer acid capacity
was increased by 30 percent.
Operating Highlights: Bush Boake Allen
BBA's Guangzhou, China, plant, producing flavors and fragrances, started up in
September. BBA's flavor blending plant in London now has a fully-automated,
bar-code manufacturing process that blends up to 800 powder and liquid
ingredients. BBA acquired a fragrances business in Buenos Aires, Argentina. n
BBA acquired the outstanding 50 percent interest of BBA Italia and an additional
24 percent of BBA Philippines, increasing its stake to 74 percent.
<PAGE>
<PAGE>
Union Camp Corporation 21
Forest Resources
The Forest Resources Group manages the company's woodlands, wood products, and
land development activities. The Woodlands Division intensively manages about
1.6 million acres in Alabama, Florida, Georgia, North Carolina, South Carolina,
and Virginia, and supplies high-quality, low-cost fiber to our paper mills and
wood products plants. The Wood Products Division produces southern pine lumber,
plywood, and particleboard panels for the industrial and home improvement
markets. Wood Products operates nine facilities in Alabama, Georgia, North
Carolina, and Virginia. The third group, The Branigar Organization, is a
wholly-owned subsidiary which develops land for residential, recreational, and
commercial use.
Operating Highlights
We acquired 46,000 acres of timberland in South Carolina and have an option to
acquire an additional 69,000. A global fiber team was formed to identify
countries with favorable fiber supply and availability. And our intensive
culture and research programs continued to show great promise, as intensively
managed forests significantly outperformed conventional plantings. Union Camp
adopted the Sustainable Forestry Initiative (SFI), a landmark program that sets
a new standard for woodlands management. We started Supplier Quality Management
and Logistical Quality Management programs with our wood suppliers and
transportation contractors to create service, quality, and cost advantages
throughout the supply chain. The Folkston, Georgia, sawmill was modernized and
capacity was increased by 33 percent. The mill features curved sawing technology
that generates a higher quality product from smaller logs. We announced plans to
move into the fast growing market for engineered wood products, specifically,
laminated veneered lumber and wood I-joists. The Branigar Organization continued
to have sales success with its largest residential development, The Landings on
Skidaway Island, near Savannah, Georgia. Only 100 of the 4,250 building lots
remain to be sold.
<PAGE>
<PAGE>
Union Camp Corporation 25
Financial Review
RESULTS OF OPERATIONS
In contrast to the strong market conditions which prevailed during most of 1995,
the markets for paper and packaging products declined significantly in 1996.
Paper product prices, which in the previous year had driven earnings to a record
level, began to soften as 1995 concluded. This decline accelerated through 1996.
As a result, selling prices were severely depressed from year earlier levels,
which had a substantial impact on earnings.
[Chart Omitted:
Income from Operations
(millions of dollars)
1994 $275
1995 $830.1
1996* $241
*1996 includes $46.9 million special charge].
In 1996, consolidated net income was $85.3 million or $1.23 per share, after a
special charge of $28.9 million or $.42 per share after-tax, relating to
restructuring costs and asset write downs. The special charge is part of an
overall profit enhancement program which includes the goal of adding as much as
$100 million to pre-tax earnings through cost reductions and mix improvements
over the next 18-24 months. Before the special charge, 1996's net income was
$114.2 million or $1.65 per share which was significantly lower than the
all-time record reported in 1995 of $451.1 million or $6.45 per share, and
slightly above the $113.5 million or $1.62 per share reported in 1994. Not
including the special charge, which was $46.9 million on a pre-tax basis, income
from operations in 1996 was $287.4 million compared with $830.1 million in 1995
and $274.5 million in 1994. The 1994 earnings included a gain of $.30 per share
on the sale of a minority interest in the company's Bush Boake Allen Inc. (BBA)
flavor and fragrance business; offsetting this gain were non-recurring charges
of $.31 per share, most notably $.26 per share relating to the write down of
assets and disposal of a business.
Despite weak market conditions, total paper product shipments for 1996 were 3.5
million tons, level with the prior year. Total sales in 1996 were $4.0 billion,
a 5% decrease from record sales of $4.2 billion reported in 1995, and an 18%
increase from sales of $3.4 billion in 1994. Included in the results for 1996
were $279 million of sales from The Alling & Cory Company, a paper distribution
business which the company acquired in August 1996.
Operating results and other financial information for the company's principal
business segments are presented on page 42. A discussion of the results of these
segments follows.
PAPER AND PAPERBOARD
The principal operations in this segment are two kraft paper and board mills,
two bleached paper and board mills, and woodlands operations which support these
mills as well as the company's wood products operation. Segment operating income
was $163 million in 1996, compared to $737 million in 1995 and $182 million in
1994. The operating income fluctuations during this three-year period were
primarily the result of sharp changes in the market prices for linerboard and
uncoated business papers. Sales for the segment were $2.0 billion in 1996, a
decrease from $2.6 billion in 1995, and an increase from $1.8 billion in 1994.
[Chart Omitted:
Paper and Paperboard Operating Profit
(millions of dollars)
1994 $182
1995 $737
1996 $163 ].
Kraft Paper & Board: Operating profits for the company's two kraft paper and
board mills declined substantially in 1996, primarily the result of lower
selling prices. Domestic and export linerboard prices averaged 33% and 37% below
1995, respectively. Total linerboard volume declined 7% from the level achieved
in 1995. In response to the drop off in market demand, the company took
approximately 219,000 tons of market-related linerboard downtime during 1996. In
addition to being affected by lower prices and volumes, operating profit
declined due to higher variable and fixed costs, which increased approximately
2% during 1996.
Operating profit in 1995 increased three-fold compared with 1994, primarily due
to the higher domestic and export linerboard selling prices that were
experienced during the first half of 1995. During the second half of 1995,
demand slowed as customers worked down inven tories built earlier in 1995 and
linerboard selling prices weakened. As a result, the company took 130,000 tons
of linerboard downtime.
Bleached Paper and Board: Operating profit declined by approximately 80% in
1996, as the price weakness in the uncoated business papers market, which began
during the fourth quarter of 1995, continued into 1996. Average selling prices
for uncoated business papers were approximately 25% less in 1996 compared with
1995. As a partial offset to this price weakness, total shipments increased 8%
over 1995. Operating profit was also affected by increases in variable costs,
which resulted from higher fiber, fuel and maintenance costs, as well as higher
selling expenses incurred primarily for increased advertising in support of the
company's branded products.
<PAGE>
<PAGE>
26 Union Camp Corporation
Operating profit in 1995 increased sharply over 1994. 1995 began with favorable
pricing conditions in the uncoated business papers market which was supported by
expanded demand. However, as paper distributors adjusted their inventory levels
downward, prices began to weaken during the fourth quarter. In response, the
company took 40,000 tons of downtime in the fourth quarter. Total shipments of
white paper products in 1995 remained level with 1994.
FINANCIAL REVIEW
PACKAGING
The Packaging segment includes corrugated container, flexible packaging and
folding carton operations. Packaging products are produced at 40 locations in
the U.S. and 7 locations overseas. Although shipments for these products
remained strong in 1996, prices declined throughout the year, predominantly in
the corrugated container market. As a result, customer sales were $1.4 billion,
down slightly from the $1.5 billion recorded in 1995 and level with 1994.
Operating profit was $46 million, down from the record $52 million in 1995, and
significantly above $9 million in 1994. Operating profit in 1994 included a
charge of $14 million to write down certain non-strategic assets, and a $3
million charge to close one container plant and relocate another operation.
[Chart Omitted:
Packaging Operating Profit
(millions of dollars)
1994 $ 9
1995 $52
1996 $46 ].
The Container Division is the largest unit in this segment operating 27 plants
in the domestic market. Primary products are corrugated containers and solid
fiber containers. Sales decreased by 14% from 1995, primarily due to a 14%
decrease in average selling prices and a 1% decrease in total shipments. As a
result, operating profit declined by 39% in 1996. In the second half of 1996,
the company sold its Kansas City, Missouri, and Trenton, New Jersey, container
operations. These divestitures did not have a significant impact on the
company's operations.
Revenues for the company's International Packaging group increased by 5% in
1996, following gains of 30% in 1995 and 11% in 1994. The 1996 increase in
revenues was attributable to an acquisition in Spain. Operating profits declined
by 55% from 1995, primarily due to margin erosion in certain markets with excess
corrugated capacity.
The Flexible Packaging Division is the second largest operating unit in this
segment, producing a broad variety of industrial and consumer bags, polyethylene
film and other non-rigid packaging at 11 plants in the U.S. Operating profits
were up over 50% in 1996, while sales remained level with 1995. The improvement
was primarily attributable to overall cost reductions stemming from lower raw
material costs, increased manufacturing efficiencies and lower fixed costs.
The company's Folding Carton Division operates three plants which produce
consumer products packaging with high quality graphics, principally for the
cosmetics and pharmaceutical industries. Operating profits increased 19% in
1996, after declining substantially in 1995. Decreased average selling prices
during 1996 were more than offset by increased shipments and decreased raw
material costs.
WOOD PRODUCTS
The Wood Products segment consists of lumber, plywood and particleboard
operations. While revenue for the segment remained level with 1995, operating
profit increased by 33% in 1996 to $43 million, up from $33 million recorded in
1995. Lumber prices increased 4%, and lumber volume increased 3% during 1996.
The favorable lumber operations, coupled with increased particleboard shipments
as well as lower wood and fixed costs, more than offset lower prices for plywood
and particleboard.
[Chart Omitted:
Wood Products Operating Profit
(millions of dollars)
1994 $79
1995 $33
1996 $43 ].
In 1995, operating earnings decreased by $46 million from the level achieved in
1994, primarily due to lower profits in the lumber business. Although lumber
volume increased slightly, margins narrowed due to declining prices and rising
wood costs.
CHEMICAL
Net sales for the Chemical segment were $701 million in 1996, an increase of 5%
over 1995 and 22% above 1994. Operating profit for this segment was $67 million
in 1996, down from the $76 million reported in 1995, and level with 1994.
Bush Boake Allen is the largest operating unit in this segment, conducting
operations on six continents and having locations in 41 countries worldwide.
Union Camp is a majority owner of this global business with a 68% holding. BBA
supplies flavors and fragrances for use in foods, beverages, cosmetics and
toiletries. Sales were $449 million in 1996, up from $425 million in 1995 and
$375 million in 1994. Operating profit was $47 million in 1996, compared
<PAGE>
<PAGE>
Union Camp Corporation 27
to $50 million in 1995 and $42 million in 1994. Higher operating
profits for flavors and fragrances were more than offset by lower results for
aroma chemicals due primarily to higher raw material turpen tine costs. In 1995,
BBA posted a 20% increase in operating profit, due to strong earnings growth in
both its flavor and fragrance business, as well as its aroma chemicals business.
The company's Chemical Products Division upgrades papermaking by-products and
other raw materials into a wide range of specialized chemicals, primarily for
use in inks, coatings and adhesives. Sales in 1996 were $251 million, a 4%
increase over 1995 and a 20% increase over 1994. Operating profit in 1996
declined by 22% from 1995, and remained level with 1994. Although total
shipments increased by 11% in 1996, this was more than offset by an increase in
crude tall oil pricing, a 6% increase in fixed costs due to the Division's
continuing expansion of its global sales and marketing organization and
manufacturing start-up problems in early 1996. In 1995, operating profit rose by
29%, primarily attributable to increased selling prices of upgraded products
from fatty acids and rosins, which more than offset a 20% increase in crude tall
oil prices.
[Chart Omitted:
Chemical Operating Profit
(millions of dollars)
1994 $67
1995 $76
1996 $67 ].
INTEREST EXPENSE
Net interest expense was $112 million in 1996, $114 million in 1995 and $109
million in 1994.
The slightly decreased expense in 1996 resulted from lower short-term interest
rates which more than offset the effects of an increase in outstanding debt
during the year and a decrease in the amount of interest that was capitalized.
The increased expense in 1995 was due to a lower level of capitalized interest.
OTHER (INCOME) EXPENSE--NET
Other income for 1996 was $23 million compared with $14 million of income in
1995 and $5 million of expense in 1994. The income in 1996 includes gains of
$8.0 million attributable to the sale of land and $6.1 million related to other
asset disposals. 1995 other income included a gain of $8.7 million related to
the sale of land. Included in 1994's other expenses was a charge of $11.7
million from the disposal of the retail paper bag business. Also in 1994, the
company recorded a pre-tax gain of $34.7 million from the sale of a minority
interest in Bush Boake Allen, which was presented as a separate line item "Gain
on Sale of Minority Interest" on the consolidated income statement.
INCOME TAXES
The effective tax rate for 1996 was 36.6% compared with 36.8% in 1995, and 36.6%
in 1994.
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
Although its operating results were affected by the paper industry's cyclical
downturn in 1996, the company continues to maintain a strong financial position.
Total assets at December 31, 1996 increased to over $5 billion, reflecting $197
million of assets related to the acquisitions of Alling & Cory and O'Grady
Containers. Net working capital (the excess of current assets over current
liabilities) was $354 million at year-end 1996, compared with $414 million at
the end of 1995. The decline was primarily attributable to higher levels of
short-term debt, which more than offset a $34 million increase in working
capital related to acquisitions. The company's current ratio was 1.5 for 1996
compared with 1.7 at the end of 1995. Stock holders' equity decreased by $28
million to $2.1 billion at December 31, 1996 or $30.25 per share compared to
$30.71 per share at the end of 1995.
[Chart Omitted:
Cash Provided By Operations
(millions of dollars)
1994 $369
1995 $750
1996 $495 ].
Cash flow generated by operations was $495 million in 1996, compared with $750
million in 1995, and $369 million in 1994. The 1996 decline in operating cash
flow was primarily attributable to significantly lower net earnings in 1996,
offset slightly by decreases in working capital items, primarily receivables and
inventories. Investment activities in 1996 included $49 million related to
payments for various strategic acquisitions and an increase in capital
expenditures. Cash flow in 1996 also included a higher level of dividend
payments.
[Chart Omitted:
Capital Structure
(millions of dollars)
1994 1995 1996
Shareholders' Equity $1,836 $2,122 $2,094
Deferred Income Taxes $ 606 $ 710 $ 723
Long-Term Debt $1,252 $1,152 $1,252 ].
In 1996, the net increase in long-term debt was $101 million, primarily the
result of the issuance of $150 million of 7% ten-year debentures. The ratio of
long-term debt to total capital employed (the sum of long-term debt, deferred
taxes and stockholders' equity) was 30.8% at
<PAGE>
<PAGE>
28 Union Camp Corporation
Financial Review
year-end 1996 compared to 28.9% at the end of 1995. The ratio of total debt to
total capital increased to 35.3% at December 31, 1996, from 32.2% at the end of
1995.
CAPITAL EXPENDITURES
Capital spending totaled $386 million in 1996 compared with $267 in 1995, and
$325 million in 1994.
[Chart Omitted:
Capital Expenditures
(millions of dollars)
1994 $325
1995 $267
1996 $386 ].
Included in capital expenditures for 1996, is paper mill spending of $131
million. This figure includes $32 million of a $75 million project to install a
combustion turbine generator and heat recovery steam generator along with
related power plant improvements at the Franklin, Virginia mill. This project
will be completed in the second half of 1997. Investment at domestic and
international packaging plants was $60 million. Chemical sector spending,
including Bush Boake Allen, totaled $54 million and spending at Wood Products
facilities was $26 million. Capitalized costs related to the operation of
timberlands was $23 million and the cost of timberland acquisitions totaled $72
million. The latter in cluded $65 million for the addition of 46,309 acres to
the timberland supporting the Eastover, South Carolina mill.
($ in millions) 1996 1995 1994
- ------------------------------------------------------
Plant and Equipment
(excludes acquisitions):
Expansion & Cost
Reduction $139 $137 $172
Replacement & Other 148 88 110
Capitalized Interest 4 9 22
Timberlands (acquisition
& regeneration) 95 33 21
- ------------------------------------------------------
Total $386 $267 $325
- ------------------------------------------------------
At year-end 1996, purchase commitments related to capital projects in-progress
were approximately $43 million. Capital spending in 1997 is expected to be about
$375 million.
ACQUISITIONS AND DISPOSITIONS
In January 1996, the company acquired the operating assets and assumed certain
liabilities of O'Grady Containers, Inc., a graphics oriented, direct print,
sheet plant located in Fort Worth, Texas, for $11.5 million. This acquisition
provides the company with full spec trum graphics capabilities in the Southwest
and allows for expansion in the growing point of purchase display market.
In 1996, the company invested $22.5 million to acquire a 50% interest in a
corrugated container operation in Turkey, which positions Union Camp in a high
potential international packaging market.
In August 1996, the company acquired the outstanding shares of The Alling & Cory
Company for $88.5 million, consisting of 1.7 million shares of company common
stock and $5.4 million cash. Alling & Cory distributes communications and
printing papers, industrial packaging and business products. The company
operates 15 distribution centers, 21 retail paper shops, mostly in the
Northeast, and an envelope conversion plant in Hamburg, New York. Since the
acquisition, Alling & Cory reported $279 million in sales.
The company sold its Kansas City, Missouri container plant in September 1996,
and its Trenton, New Jersey container plant in December 1996. During 1996, the
company recorded net sales at the Kansas City plant of $14 million and $18
million at the Trenton plant. The divestiture of the two plants did not have a
significant impact on the company's operations.
In October 1996, the company acquired the 30% minority interest in its
corrugated container operation in Chile for $6.1 million, bringing the company's
investment interest to 100%.
In December 1995, the company acquired a corrugated container plant located near
Madrid, Spain for $8.3 million.
In early 1995, the company sold its flexible packaging plant in Asheville, North
Carolina and completed its withdrawal from the retail paper bag business with
the sale of the Richmond, Virginia bag plant and shut-down of its Savannah,
Georgia retail bag operations.
In May 1994, the company's flavor and fragrance subsidiary, Bush Boake Allen,
sold a 32% minority interest to the public. The company recorded a $34.7 million
pre-tax gain on the sale.
DIVIDENDS AND STOCK REPURCHASES
Cash dividends paid in 1996 were $124.7 million. The dividend rate was raised
15% in 1995. This was done in two steps: in April 1995, the quarterly dividend
was increased 5% from $.39 per share to $.41 per share; and in the fourth
quarter of 1995, a second increase of 10% was made to $.45 per share. As a
result, annual dividend payments increased to $1.80 per share in 1996, up from
$1.66 per share in 1995, and $1.56 per share in 1994.
In the second quarter of 1995, the Board of Directors authorized the repurchase
of up to five million shares of the company's common stock. During 1996 and
1995, a total of 2,865,900 shares of common stock were repurchased at a cost of
$146.1 million.
<PAGE>
<PAGE>
Union Camp Corporation 29
ENVIRONMENTAL MATTERS
The company invested approximately $33 million in pollution control facilities
in 1996. Over the past five years, the company has invested approximately $121.8
million in such facilities, which is about 8% of total capital spending. In
1996, the company recorded expenses of $10 million for study, testing and
remediation in compliance with environmental regulations.
Regulations previously scheduled for earlier promulgation by the U.S.
Environmental Protection Agency, and now expected to become effective in the
third quarter of 1997, will require significant capital investment during the
next ten years. It is the company's current understanding that it may have
several compliance alternatives with respect to the timing and magnitude of such
investment. Over the next five to seven years, the company expects to make a
total investment of about $165 million, with an additional $70 million to be
spent almost entirely eight to ten years from now. Although these current dollar
figures are subject to variation with respect to their amounts and timing, there
is no reason to believe that the spending will materially detract from the
company's normal capital investment plans. The company believes that, since its
situation, in relative terms, is similar to that of its competitors, compliance
will not adversely affect its competitive position.
ACCOUNTING MATTERS
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards (SFAS) No.123, "Accounting for Stock-Based Compensation",
which became effective in 1996. In accordance with the alternatives allowed by
this statement, the company has elected to continue to account for its employee
stock option plans pursuant to Accounting Principles Board (APB) Opinion No. 25,
"Accounting for Stock Issued to Employees." Note 12 to the financial statements
provides pro forma earnings for 1996 and 1995 if the costs of stock-based
compensation were accounted for pursuant to SFAS No. 123 rather than APB 25.
In the first quarter of 1994, the company adopted the provisions of SFAS No.112,
"Employers' Accounting for Postemployment Benefits." At January 1, 1994, the
accumulated obligation associated with these benefits 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 $3.7 million after-tax charge
to income.
Statements in this report that are not historical are forward-looking statements
that are subject to risks and uncertainties that could cause actual results to
differ materially. Such risks and uncertainties include the effect of general
economic conditions, fluctuations in supply and demand for the company's
products including exports and potential imports, paper industry production
capacity, operating rates, competitive pricing pressures, and whether capital
and restructuring projects are successfully completed. The company's goal of
enhancing its earnings power during the next 18-24 months is subject to risks
and uncertainties that planned product mix improvements are not implemented, and
that cost reductions expected to result from investing in information
technology, work flow redesign, shared service activities and other activities
do not materialize. The anticipated results of environmental regulations
expected to be adopted later this year are subject to uncertainties regarding
the regulations' final form and their effect on the company vis-a-vis its
competitors.
Quarterly Information
<TABLE>
<CAPTION>
($ in thousands, except share and per share)
- ----------------------------------------------------------------------------------------------------------------
Stock Price*
Gross Net Income (Loss) Dividends -------------------
Net Sales Profit Income (Loss) Per Share Per Share High Low
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1996
Fourth Quarter $1,083,584 $149,248 $ (5,687) $(0.09) $0.45 $50 5/8 $46 7/8
Third Quarter 1,017,310 211,053 14,353 0.21 0.45 51 1/2 46 1/4
Second Quarter 934,048 208,106 18,139 0.26 0.45 55 3/8 48 3/4
First Quarter 978,255 281,736 58,503 0.85 0.45 52 3/8 44 7/8
- ----------------------------------------------------------------------------------------------------------------
1995
Fourth Quarter $1,007,774 $295,185 $ 83,169 $ 1.20 $0.45 $58 1/2 $45 3/4
Third Quarter 1,073,494 386,395 129,746 1.85 0.41 61 1/4 54 5/8
Second Quarter 1,109,295 404,132 133,151 1.90 0.41 58 1/4 47 7/8
First Quarter 1,021,146 345,496 105,007 1.50 0.39 52 3/8 46 5/8
- ----------------------------------------------------------------------------------------------------------------
1994
Fourth Quarter $ 922,231 $265,801 $ 58,319 $ 0.83 $0.39 $50 $44 3/8
Third Quarter 856,271 194,961 21,733 0.31 0.39 50 7/8 45
Second Quarter 827,217 181,013 25,906 0.37 0.39 48 3/8 42 1/4
First Quarter 790,106 164,451 7,552 0.11 0.39 50 3/4 43 7/8
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Fourth quarter 1996 includes a special charge relating to restructuring costs
and asset write downs which reduced income from operations by $46.9 million
pre-tax and after-tax net income by $28.9 million or $0.42 per share.
Net income for 1994 includes a second quarter gain of $.30 per share on the sale
of a minority interest in Bush Boake Allen. This gain was offset by a second
quarter charge of $.16 per share to write down non-strategic assets, a third
quarter charge of $.10 per share to reflect the withdrawal from the retail paper
bag business and a first quarter charge of $.05 per share for the implementation
of SFAS No. 112, "Employers' Accounting for Postemployment Benefits".
*The company's common stock is listed on the New York Stock Exchange and the
Pacific Stock Exchange.
The number of stockholders of record at December 31, 1996 was 8,777.
<PAGE>
<PAGE>
30 Union Camp Corporation
Report of Independent Accountants
To the Stockholders and Board of Directors of
Union Camp Corporation
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income and of cash flows present fairly, in all
material respects, the financial position of Union Camp Corporation and its
subsidiaries at December 31, 1996 and 1995, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1996, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Note 1 to the financial statements, the Company changed its
method of accounting for postemployment benefits in 1994.
Price Waterhouse LLP
Morristown, New Jersey
February 7, 1997
<PAGE>
<PAGE>
Union Camp Corporation 31
Consolidated Income
<TABLE>
<CAPTION>
($ in thousands, except per share)
- ------------------------------------------------------------------------------------------------------------
For The Years Ended December 31, 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 4,013,197 $ 4,211,709 $ 3,395,825
Costs and other charges:
Costs of products sold 3,010,589 2,729,479 2,524,844
Selling and administrative expenses 434,900 386,855 329,087
Depreciation and cost of company timber harvested 280,267 271,696 253,436
Special charge 46,935 -- --
Other operating (income) expense -- (6,423) 13,958
- ------------------------------------------------------------------------------------------------------------
Income from operations 240,506 830,102 274,500
- ------------------------------------------------------------------------------------------------------------
Interest expense, net of capitalized interest 112,286 113,705 109,172
Gain on sale of minority interest -- -- (34,698)
Other (income) expense--net (22,825) (14,460) 4,862
- ------------------------------------------------------------------------------------------------------------
Income before income taxes, minority interest
and cumulative effect of accounting change 151,045 730,857 195,164
- ------------------------------------------------------------------------------------------------------------
Income taxes 55,250 268,895 71,420
- ------------------------------------------------------------------------------------------------------------
Minority interest, net of tax 10,487 10,889 6,518
- ------------------------------------------------------------------------------------------------------------
Net income before cumulative effect of
accounting change 85,308 451,073 117,226
- ------------------------------------------------------------------------------------------------------------
Cumulative effect of accounting change, net of tax -- -- (3,716)
- ------------------------------------------------------------------------------------------------------------
Net income $ 85,308 $ 451,073 $ 113,510
- ------------------------------------------------------------------------------------------------------------
Earnings per share:
Net income before cumulative effect of accounting change $ 1.23 $ 6.45 $ 1.67
Cumulative effect of accounting change -- -- (0.05)
- ------------------------------------------------------------------------------------------------------------
Net income per share $ 1.23 $ 6.45 $ 1.62
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See the accompanying notes to consolidated financial statements.
<PAGE>
<PAGE>
32 Union Camp Corporation
Consolidated Balance Sheet
<TABLE>
<CAPTION>
($ in thousands)
- ------------------------------------------------------------------------------------
December 31, 1996 1995
- ------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 44,917 $ 30,332
Receivables-net 544,320 489,967
Inventories 496,433 468,717
Other 48,440 44,801
- ------------------------------------------------------------------------------------
1,134,110 1,033,817
- ------------------------------------------------------------------------------------
Property
Plant and equipment, at cost 6,562,465 6,304,113
Less: accumulated depreciation 3,161,450 2,918,963
- ------------------------------------------------------------------------------------
3,401,015 3,385,150
Timberlands, less cost of company timber harvest 351,334 274,935
- ------------------------------------------------------------------------------------
3,752,349 3,660,085
- ------------------------------------------------------------------------------------
Other Assets 209,848 144,441
- ------------------------------------------------------------------------------------
Total Assets $ 5,096,307 $ 4,838,343
- ------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current installments of long-term debt $ 95,840 $ 43,926
Notes payable 185,614 148,526
Accounts payable 264,064 220,243
Other accrued liabilities 201,319 174,432
Income and other taxes 33,032 32,986
- ------------------------------------------------------------------------------------
779,869 620,113
- ------------------------------------------------------------------------------------
Long-Term Debt 1,252,475 1,151,536
- ------------------------------------------------------------------------------------
Deferred Income Taxes 723,431 709,850
- ------------------------------------------------------------------------------------
Other Liabilities and Minority Interest 246,938 235,152
- ------------------------------------------------------------------------------------
Stockholders' Equity
Common stock-par value $1.00 per share 69,217 69,078
Capital in excess of par value 41,853 38,344
Other equity adjustments (6,080) (13,744)
Retained earnings 1,988,604 2,028,014
- ------------------------------------------------------------------------------------
Shares outstanding, 1996--69,217,119; 1995--69,078,078
Stockholders' Equity--Net 2,093,594 2,121,692
- ------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 5,096,307 $ 4,838,343
- ------------------------------------------------------------------------------------
</TABLE>
See the accompanying notes to consolidated financial statements.
<PAGE>
<PAGE>
Union Camp Corporation 33
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
($ in thousands)
- -------------------------------------------------------------------------------------------
For The Years Ended December 31, 1996 1995 1994
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash (Used For) Provided By Operations:
Net income $ 85,308 $ 451,073 $ 113,510
Adjustments to reconcile net income to cash
provided by operations:
Depreciation, amortization and cost of company
timber harvested 298,457 287,738 270,850
Deferred income taxes 7,877 105,899 27,268
Gain on sale of minority interest -- -- (34,698)
Special charge 46,935 -- --
Asset write down and business disposal -- (6,423) 25,676
Other 9,513 16,650 13,190
Changes in operational assets and liabilities:
Receivables 43,963 (23,000) (80,593)
Inventories 13,139 (55,325) 15,880
Other assets 1,511 (3,637) 5,175
Accounts payable, taxes and other liabilities (11,556) (22,753) 12,244
- -------------------------------------------------------------------------------------------
Cash Provided By Operations 495,147 750,222 368,502
- -------------------------------------------------------------------------------------------
Cash (Used For) Provided By Investment Activities:
Capital expenditures:
Plant and equipment (291,345) (233,444) (303,840)
Timberlands (95,098) (33,355) (21,099)
------------------------------------
(386,443) (266,799) (324,939)
Acquisitions (49,452) (7,115) (25,006)
Sale of businesses-net 5,318 36,133 8,239
Sale of assets 30,007 18,480 19,114
Sale of minority interest -- -- 88,983
Other (23,716) (11,306) 10,311
- -------------------------------------------------------------------------------------------
Cash Used For Investment Activities (424,286) (230,607) (223,298)
- -------------------------------------------------------------------------------------------
Cash (Used For) Provided By Financing Activities:
Issuance of long-term debt 150,000 22,625 61,725
Repayments of long-term debt (48,954) (69,338) (65,574)
Common stock repurchases (86,499) (59,614) --
Change in short-term notes payable 52,156 (279,999) (57,596)
Dividends paid (124,718) (116,132) (109,137)
- -------------------------------------------------------------------------------------------
Cash Used For Financing Activities (58,015) (502,458) (170,582)
- -------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash 1,739 (81) 347
- -------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents 14,585 17,076 (25,031)
Balance at beginning of year 30,332 13,256 38,287
- -------------------------------------------------------------------------------------------
Balance at end of year $ 44,917 $ 30,332 $ 13,256
- -------------------------------------------------------------------------------------------
</TABLE>
See the accompanying notes to consolidated financial statements.
<PAGE>
<PAGE>
34 Union Camp Corporation
Notes to Consolidated Financial Statements
($ in thousands, except per share)
1. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION AND PREPARATION OF FINANCIAL STATEMENTS: The
consolidated financial statements present the operating results and the
financial position of the company and all of its subsidiaries. All significant
intercompany transactions are eliminated.
In accordance with generally accepted accounting principles, the preparation
of financial statements requires management to make estimates and assumptions
that affect the reported amounts of some assets and liabilities and, in some
instances, the reported amounts of revenues and expenses during the reporting
period.
CASH AND CASH EQUIVALENTS: Cash and cash equivalents include all highly liquid
investment instruments with an original maturity of three months or less.
INVENTORIES: Inventories are stated at the lower of cost or market and include
the cost of materials, labor and manufacturing overhead. Finished goods and raw
materials of domestic operations are valued principally at last in, first out
(LIFO) cost. Supplies and all inventories of foreign operations are valued at
first in, first out (FIFO) or average cost.
PROPERTY AND DEPRECIATION: Plant and equipment is recorded at cost, less
accumulated depreciation. Upon sale or retirement, the asset cost and related
depreciation are removed from the balance sheet and the resulting gain or loss
is included in income.
Depreciation is principally calculated on a straight-line basis with lives
for buildings from 15 to 33 years and for machinery and equipment from 10 to 20
years. For major expansion projects, the company uses the units-of-production
depreciation method until design level production is reasonably sustained.
Accelerated depreciation methods are used for tax purposes.
The cost of company timber harvested is charged to income as timber is cut.
The charge to income is the product of the volume of timber cut multiplied by
annually developed unit cost rates which are based on the relationship of timber
cost to estimated volume of recoverable timber.
GOODWILL: The excess of the cost over the fair value of net assets of acquired
businesses is recorded as goodwill and is amortized on a straight-line basis
over appropriate periods not to exceed 40 years. The company reviews the
goodwill recoverability period on a regular basis.
RESEARCH AND DEVELOPMENT COSTS: Research and development costs are expensed as
incurred. These expenditures totaled $55.9 million in 1996, $55.4 million in
1995, and $49.2 million in 1994.
CAPITALIZED INTEREST: Interest is capitalized on major capital expenditures
during the period of construction. Total interest costs incurred and amounts
capitalized were:
<TABLE>
<CAPTION>
1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Total interest $ 116,748 $ 122,572 $ 130,800
Interest capitalized (4,462) (8,867) (21,628)
- --------------------------------------------------------------------------------
Net interest expense $ 112,286 $ 113,705 $ 109,172
- --------------------------------------------------------------------------------
</TABLE>
PRE-START-UP COSTS: The company defers pre-start-up costs for major expansion
projects until such projects become operational. Following the completion of
start-up, the deferred costs are amortized on a straight-line basis over a five
year period.
STOCK-BASED COMPENSATION: In accordance with the provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation", the company has elected to continue to account for its employee
stock option plans in accordance with Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees", and to disclose supplementally
the pro forma effect of accounting for these plans as if the provisions of SFAS
No. 123 had been adopted.
For disclosure purposes, the pro forma effects of applying SFAS No. 123 are
provided for options granted in 1996 and 1995. (See also Note 12.)
CHANGES IN ACCOUNTING STANDARDS: Effective January 1, 1994, the company adopted
the provisions of Statement of Financial Accounting Standards No. 112,
"Employers' Accounting for Postemploy ment Benefits", which requires companies
to accrue for the cost of certain postemployment benefits including
disability-related health care and life insurance benefits.
In adopting this standard, the company recorded a one-time cumulative charge
of $3.7 million after-tax in the first quarter of 1994.The net periodic expense
for 1996, 1995 and 1994 was $4.0 million, $2.2 million and $1.3 million,
respectively.
ENVIRONMENTAL LIABILITIES: Environmental expen ditures that relate to current
operations are expensed or capitalized as appropriate. Liabilities are recorded
when remedial efforts are probable and the costs can be reasonably estimated.
The timing of these accruals generally coincides with the completion of a
feasibility study or the company's commitment to a formal plan of action.
INCOME TAXES: Deferred income taxes are recorded using enacted tax rates in
effect for the year temporary differences are expected to reverse. Federal and
state income taxes are not accrued on the cumulative undistributed earnings of
foreign subsidiaries because the earnings have
<PAGE>
<PAGE>
Union Camp Corporation 35
been reinvested in the businesses of those companies. As of December 31, 1996,
the total of all such undistributed earnings amounted to $179.1 million. It is
not practical to estimate the amount of tax that might be payable on the
distribution of the foreign earnings. The company has, as required, provided for
tax potentially payable on the distribution of its share of $64.5 million, the
undistributed earnings of Bush Boake Allen Inc. (BBA) and subsidiaries earned
subsequent to 1992. (See also Note 11.)
FOREIGN CURRENCY TRANSLATION: The assets and liabilities of the company's
foreign subsidiaries and affiliates are translated into U.S. dollars at year-end
exchange rates, while income and expense accounts are translated at average
annual rates. The primary factor used to determine the functional currencies of
the company's foreign subsidiaries is the local currency cash flows resulting
from manufacturing, sales and financing activities. Gains and losses resulting
from foreign currency translation are re flected in a separate component of
Stockholders' Equity entitled Other Equity Adjustments. The effect of these
cumulative adjustments was to reduce equity by $4.2 million at December 31, 1996
and $13.2 million at December 31, 1995.
DERIVATIVES: The company hedges foreign currency transactions by entering into
forward foreign exchange contracts. Gains and losses associated with the forward
contracts are matched with the offsetting gains and losses recorded for exchange
rate fluctuations on the underlying assets and liabilities. Gains and losses on
interest rate swap agreements are charged or credited to interest expense over
the life of the agreement. (See also Note 10.)
REVENUE RECOGNITION: The company recognizes revenues upon the passage of title,
which is generally at the time of shipment.
INCOME PER SHARE: Net income per share of common stock is based on the weighted
average number of shares outstanding during the period.
RECLASSIFICATIONS: Certain amounts have been reclassified for 1994 and 1995 to
conform with the 1996 presentation.
2. SPECIAL CHARGE
During the fourth quarter of 1996, the company recorded a $46.9 million pre-tax
charge ($28.9 million after-tax) to operating income. Included in the charge was
$21.0 million for employee severance costs, $18.4 million for asset write downs,
and $7.5 million for other expenses. The asset write downs were taken to
recognize equipment rendered obsolete as a result of replacement equipment and
to reflect the fair value of certain investment properties.
3. OTHER OPERATING (INCOME) EXPENSE
Results for 1994 included a $14.0 million pre-tax charge to write down the
carrying value of a flexible packaging operation. In 1995, the company sold
these assets and recorded a net pre-tax gain of $6.4 million.
4. GAIN ON SALE OF MINORITY INTEREST
In 1994, the company's flavor and fragrance subsidiary, BBA, sold to the public
approximately 6.1 million shares of BBA stock (approximately 32% of BBA's
outstanding shares) at an offering price of $16.00 per share. The company
retains approximately 68% of the 19.215 million shares outstanding after the
offering. As a result of this transaction, the company recognized a $34.7
million pre-tax gain.
5. OTHER (INCOME) EXPENSE-NET
Other income for 1996 includes gains of $8.0 million attributable to the sale of
land, and $6.1 million related to other asset disposals. 1995 other income
included a gain of $8.7 million related to the sale of land. The year 1994
included an $11.7 million charge to withdraw from the retail paper bag business.
6. ACQUUISITIONS
In the first quarter of 1996, the company purchased the operating assets and
assumed certain liabilities of O'Grady Containers, Inc. for $11.5 million. In
addition, the company acquired a 50% interest in a corrugated container joint
venture in Turkey for $22.5 million.
On August 2, 1996, the company acquired The Alling & Cory Company (Alling &
Cory), a paper distribution business, for a consideration totaling $88.5
million, consisting of 1.7 million shares of company common stock and $5.4
million cash. The acquisition was accounted for under the purchase method and,
accordingly, the net assets and results of operations have been included in the
consolidated financial statements since the date of acquisition. The excess of
purchase price over the estimated fair values of the net assets acquired has
been treated as goodwill. Goodwill will be amortized on a straight-line basis
over a period not to exceed 40 years.
These acquisitions did not have a material pro forma impact on consolidated
earnings.
<PAGE>
<PAGE>
36 Union Camp Corporation
Notes to Consolidated Financial Statements
($ in thousands, except per share)
7. SUPPLEMENTAL BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
DECEMBER 31, 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
RECEIVABLES
Trade $514,799 $466,786
Other 46,791 39,647
- --------------------------------------------------------------------------------
561,590 506,433
Less estimated doubtful accounts,
discounts and allowances 17,270 16,466
- --------------------------------------------------------------------------------
Net $544,320 $489,967
- --------------------------------------------------------------------------------
INVENTORIES
Finished goods $270,123 $242,732
Raw materials 110,569 109,181
Supplies 115,741 116,804
- --------------------------------------------------------------------------------
Total $496,433 $468,717
- --------------------------------------------------------------------------------
</TABLE>
At December 31, 1996 and 1995, finished goods and raw materials totaling $254.6
million and $217.9 million, respectively, were valued at LIFO cost. The excess
of current cost over LIFO value was $101.7 million and $101.0 million in 1996
and 1995, respectively.
<TABLE>
<CAPTION>
DECEMBER 31, 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
OTHER CURRENT ASSETS
Prepayments $ 22,745 $ 24,028
Short-term timber leases 19,045 19,484
Assets held for resale 6,650 1,289
- --------------------------------------------------------------------------------
Total $ 48,440 $ 44,801
- --------------------------------------------------------------------------------
PLANT AND EQUIPMENT, AT COST
Land $ 37,151 $ 35,768
Buildings and improvements 561,078 533,236
Machinery and equipment 5,777,737 5,620,303
Construction-in-progress 186,499 114,806
- --------------------------------------------------------------------------------
Total $6,562,465 $6,304,113
- --------------------------------------------------------------------------------
</TABLE>
At December 31, 1996, property (principally machinery and equipment) having an
original cost of approximately $381 million and a net book value of $157 million
is pledged against lease obligations and notes payable to industrial development
authorities (see also Note 8). These obligations and notes payable have
outstanding long-term balances totaling approximately $331 million.
<TABLE>
<CAPTION>
DECEMBER 31, 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
OTHER ASSETS
Goodwill $ 72,646 $ 15,264
Investments in affiliates 46,015 27,192
Other intangibles 30,096 18,256
Pension assets 28,738 47,035
Deferred pre-start-up 5,228 12,891
Other 27,125 23,803
- --------------------------------------------------------------------------------
Total $209,848 $144,441
- --------------------------------------------------------------------------------
</TABLE>
SHORT-TERM DEBT: Included in Notes Payable at December 31, 1996 and 1995 were
$114 million and $90 million, respectively, of commercial paper borrowings. The
weighted average interest rate on these borrowings for the years 1996 and 1995
were 5.6% and 6.1%, respectively.
The company has short-term revolving credit facilities in numerous countries
primarily outside the United States, which provide for aggregate availability of
$164 million. At December 31, 1996 and 1995, approximately $52 million was
outstanding and included in short-term borrowings. Commitment fees are either
nominal or zero.
<TABLE>
<CAPTION>
DECEMBER 31, 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
OTHER ACCRUED LIABILITIES
Payrolls $ 67,892 $ 64,329
Interest 30,758 27,685
Special charge reserve 16,410 --
Other 86,259 82,418
- --------------------------------------------------------------------------------
Total $201,319 $174,432
- --------------------------------------------------------------------------------
OTHER LIABILITIES AND MINORITY INTEREST
Postretirement and
postemployment benefits $128,838 $116,461
Minority interest 86,507 74,917
Minimum pension liability 3,134 24,759
Other 28,459 19,015
- --------------------------------------------------------------------------------
Total $246,938 $235,152
- --------------------------------------------------------------------------------
</TABLE>
8. LONG-TERM DEBT
<TABLE>
<CAPTION>
DECEMBER 31, 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Sinking fund debentures:
8 5/8% due 1998-2016 $ 47,474 $ 51,974
10% due 2000-2019 100,000 100,000
9 1/4% due 2002-2021 117,780 117,780
Debentures:
9 1/2% due 2002 100,000 100,000
9 1/4% due 2011 124,800 124,800
8 1/2% due 2022 100,000 100,000
7% due 2006 150,000 --
Notes 7 3/8% due 1999 50,000 50,000
Medium-term notes due
1998-2001; 7.5% to 9.54%;
weighted average rate 8.82% 84,000 168,000
Industrial Development Revenue
Bonds due 2001-2026; 4.0%
to 8.0%; weighted average
rate 6.03% 41,575 42,636
Pollution Control Revenue Bonds
due 1998-2024; 4.5% to 7.45%;
weighted average rate 6.53% 289,005 290,510
Other notes due 1998-2004 1,841 5,836
Commercial paper 46,000 --
- --------------------------------------------------------------------------------
Total $1,252,475 $1,151,536
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
Union Camp Corporation 37
The current portion of long-term debt at December 31, 1996 amounted to $95.8
million. Amounts payable in the years 1998 through 2001 are $41.3 million, $68.9
million, $28.5 million and $38.1 million, respectively.
At December 31, 1996, $46 million of commercial paper borrowings was
classified as long-term debt, since the company has the ability and intent to
renew these obligations through the year 2000. The effective interest rate on
these borrowings was 8.08%, inclusive of the net effect of an interest rate
swap. (See also Note 10.)
The company has revolving credit and term loan agreements which provide for
unsecured borrowings up to $500 million in the United States through the year
2001. Any borrowings under these agreements would incur interest at the
prevailing prime rate or other market rates. Nominal commitment fees are paid on
the unused portion. No borrowings were made in 1996 under these agreements.
9. STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Capital in Other
Common Excess of Retained Equity
Stock Par Value Earnings Adjustments
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1993 $69,833 $81,491 $1,688,700 $(24,176)
Net Income -- -- 113,510 --
Cash dividends ($1.56 per share) -- -- (109,137) --
Issuance of stock for options and award plans 179 6,406 -- 253
Foreign currency translation -- -- -- 9,262
- ----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 $70,012 $87,897 $1,693,073 $(14,661)
Net Income -- -- 451,073 --
Cash dividends ($1.66 per share) -- -- (116,132) --
Common stock repurchases (1,152) (58,462) -- --
Issuance of stock for options and award plans 218 8,909 -- (203)
Foreign currency translation -- -- -- 1,120
- ----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 $69,078 $38,344 $2,028,014 $(13,744)
Net Income -- -- 85,308 --
Cash dividends ($1.80 per share) -- -- (124,718) --
Common stock repurchases (1,714) (84,785) -- --
Issuance of stock for options and award plans 152 6,964 -- (1,326)
Shares issued for purchase of Alling & Cory 1,701 81,330 -- --
Foreign currency translation -- -- -- 8,990
- ----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 $69,217 $41,853 $1,988,604 $(6,080)
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
The authorized capital stock of the company at December 31, 1996, 1995 and 1994
consisted of 125,000,000 shares of common stock, $1.00 par value, and 1,000,000
shares of authorized but unissued preferred stock, $1.00 par value. Common stock
repurchased is included in the authorized but unissued shares of the company.
SHAREHOLDER RIGHTS PLAN: The company has a Shareholders' Rights Plan pursuant to
which preferred stock purchase rights are issued to the common stockholders at
the rate of one right for each share of common stock. Each right entitles
shareholders to purchase, under certain conditions (i) one one-thousandth of a
share of the company's Series A Junior Participating Preferred Stock at an
exercise price of $175 or (ii) common stock of the company having a market value
of two times the exercise price. Alternatively, the Board of Directors may
permit holders to surrender each right in exchange for one share of common
stock. The rights will be exercisable only if a person or group acquires 15% or
more of the outstanding common stock or announces a tender offer for 15% or more
of the common stock. The rights expire February 26, 2006 and may be redeemed for
$.001 per right by the Board of Directors prior to the time the rights become
exercisable. In addition, if after any person acquires 15% or more of the
company's common stock, the company is involved in a merger or other business
combination transaction with another person after which its common stock does
not remain outstanding, or the company sells 50% or more of its assets or
earning power, each right will entitle its holder to purchase, at the then
current exercise price, shares of the acquiring company's common stock having a
market value equal to two times the purchase price.
<PAGE>
<PAGE>
38 Union Camp Corporation
Notes to Consolidated Financial Statements
($ in thousands, except per share)
10. FINANCIAL INSTRUMENTS
Fair Value of Financial Instruments: The carrying amounts of certain financial
instruments: cash, short-term investments, trade receivables and payables
approximate their fair values. The fair value of the company's long-term debt
varies with market conditions and is estimated based on quoted market prices for
similar financial instruments by obtaining quotes from brokers.
At December 31, 1996, the book value of long-term debt was $1.3 billion and
the fair value was approximately $1.4 billion. The book value of all other
financial instruments approximates their fair value.
Derivative Financial Instruments: The company uses derivative instruments
exclusively to hedge the risk associated with underlying business transactions
such as existing floating rate debt and existing foreign currency commitments.
Derivatives are not used for trading or speculative purposes. The book value of
these derivatives approximates their fair value.
At December 31, 1996, the company had outstanding foreign exchange contracts
valued at $103.4 million. The purpose of $56.1 million of these contracts is to
neutralize foreign currency transaction risk generated by the company's firm
foreign currency business commitments resulting from the sale and purchase of
products. The change in value of these contracts resulting from changes in the
respective foreign currency rates versus the U.S. dollar is accrued monthly and
credited or charged to foreign exchange gain or loss. These foreign currency
commitment exposures are evaluated on an ongoing basis and the amount of the
related foreign currency contracts are adjusted as required to offset the risk
associated with the underlying transactions. Cash settlements are executed
whenever the contracts are adjusted, which occurs at least monthly. The
additional $47.3 million of foreign exchange contracts at December 31, 1996
represent hedges of specific firm commitments for certain capital expenditure
and raw material purchase transactions denominated in foreign currencies. The
company enters into these contracts, from time to time, to establish with
certainty the U.S. dollar amount of the specific firm commitments. All foreign
exchange contracts are limited to currencies with established forward markets
and to counterparties, which have Moody's credit ratings of A1 or better. As a
result, the company considers the credit risk of counterparty default to be
minimal.
At December 31, 1996, the company had an outstanding interest rate swap
agreement, the purpose of which is to convert $46 million of floating rate
commercial paper to fixed rate debt. The swap agreement is based on a declining
principal balance schedule which terminates in April 2000. The differential
between fixed and floating rate obligations is accrued as interest rates change
and is charged or credited to interest expense over the life of the agreement.
Cash settlements are payable semi-annually. The counterparty has a Moody's
credit rating of AA1.
11. INCOME TAXES
The components of income before income taxes, minority interest and cumulative
effect of accounting changes are as follows:
1996 1995 1994
- --------------------------------------------------------
Domestic $ 97,187 $669,487 $155,769
Foreign 53,858 61,370 39,395
- --------------------------------------------------------
Total $151,045 $730,857 $195,164
- --------------------------------------------------------
The provision for income taxes is comprised of the following:
1996 1995 1994
- -------------------------------------------------------
Current:
Federal $34,313 $124,937 $31,744
State and local 3,831 21,880 3,652
Foreign 9,229 16,179 8,756
- -------------------------------------------------------
47,373 162,996 44,152
- -------------------------------------------------------
Deferred:
Federal $ 2,094 $ 96,601 $22,005
State (206) 6,477 1,827
Foreign 5,989 2,821 3,436
- -------------------------------------------------------
7,877 105,899 27,268
- -------------------------------------------------------
Total $55,250 $268,895 $71,420
- -------------------------------------------------------
The company follows the provisions of SFAS No. 109, "Accounting For Income
Taxes," whereby deferred taxes represent estimated liabilities to be paid or
assets to be received in the future and tax rate changes would imme diately
affect those liabilities or assets. The cumulative deferred tax liability at
December 31, 1996 and 1995 was $723.4 million and $709.9 million, respectively.
The significant components of these liabilities (assets) are as follows:
December 31, 1996 1995
- -------------------------------------------------------
Deferred Federal Taxes:
Accelerated depreciation $704,912 $685,155
Alternative minimum tax (43,816) (44,355)
Postretirement benefits (42,706) (39,651)
Other 16,601 24,588
- -------------------------------------------------------
Total deferred federal taxes 634,991 625,737
Deferred state taxes 63,170 63,383
Deferred foreign taxes 25,270 20,730
- -------------------------------------------------------
Total deferred taxes $723,431 $709,850
- -------------------------------------------------------
<PAGE>
<PAGE>
Union Camp Corporation 39
A detailed analysis of the effective tax rate is as follows:
1996 1995 1994
- -------------------------------------------------------
Statutory federal tax rate 35.0% 35.0% 35.0%
State taxes (net of
federal tax impact) 1.5 2.8 2.2
Foreign income taxes (2.3) (0.3) (0.8)
Other 2.4 (0.7) 0.2
- -------------------------------------------------------
Effective rate 36.6% 36.8% 36.6%
- -------------------------------------------------------
12. EMPLOYEE STOCK OPTION PLANS
Under the stock option plans adopted in 1982 and 1989 (as amended), a maximum of
2,175,000 shares and 4,986,000 shares, respectively, of the company's common
stock were made available for the granting of options and stock appreciation
rights to officers and other key employees of the company and its subsidiaries
at prices not less than 100% of fair market value at the dates of grant. Such
options and stock appreciation rights generally become exercisable two years
after the date of grant and expire ten years from that date. No further options
may be granted under the 1982 plan. At the end of 1996, 493,995 options were
available for future grants under the 1989 plan.
Under the 1989 plan, 997,173 shares may be awarded as restricted stock to
selected officers and other key employees of the company and its subsidiaries.
Recipients of restricted stock are entitled to receive cash dividends and to
vote their respective shares. Restrictions limit the sale or transfer of these
shares during a specified period.
During 1996 and 1995, 38,890 and 11,924 common shares, respectively, were
issued as restricted stock under this plan. The weighted average fair value on
the date of grant was $49.50 for restricted stock granted in 1996, and $46.88
for restricted stock granted in 1995. Unearned compensation, equivalent to the
market price of the restricted shares at date of grant, is included within
Stockholders' Equity and is amortized to expense over the five-year restriction
period.
The following table summarizes activity in the company's stock option plans
for 1996 and 1995. The options outstanding that had related stock appreciation
rights attached were 1,067,101 at December 31, 1996, and 1,207,641 at December
31, 1995.
<TABLE>
<CAPTION>
1996 1995
--------------------------------- --------------------------------
Weighted Weighted
Average Average
Shares Exercise Price Shares Exercise Price
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Option outstanding at beginning of year 3,582,626 $43.57 3,213,253 $41.67
Granted 722,000 49.38 664,400 49.45
Exercised (96,427) 38.97 (197,637) 36.03
Forfeited (76,598) 34.24 (78,840) 35.00
Expired (11,175) 47.90 (18,550) 42.98
- --------------------------------------------------------------------------------------------------------------------------
Options outstanding at end of year 4,120,426 $44.86 3,582,626 $42.57
Options outstanding at end of year 2,741,526 $42.57 2,345,510 $41.55
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
For options outstanding as of the end of 1996, the range of exercise prices
was $33.69 to $52.38 per share and the weighted average remaining life was 6.9
years. The weighted average fair values of the options granted during 1996 and
1995 were $9.66 and $9.70 per share, respectively.
Fair value was determined through use of the Black-Scholes options pricing
formula. For options granted in 1996, the risk-free interest rate was 5.74%, the
expected life was 6 years, the expected volatility was 18% and expected dividend
yield was 3.4%, all calculated on a weighted average basis. For options granted
in 1995, the risk-free interest rate was 5.47%, the expected life was 6 years,
the expected volatility was 19%, and expected dividend yield was 3.4%, all
calculated on a weighted average basis.
Total compensation cost recognized in income for stock-based compensation
awards was $0.7 million in 1996 and $1.3 million in 1995. If the company had
elected to adopt the provisions of SFAS No. 123, the pro forma net income and
earnings per share would have been $83.1 million or $1.20 per share in 1996. The
comparable pro forma im pact on 1995 net income and earnings per share would be
insignificant.
<PAGE>
<PAGE>
40 Union Camp Corporation
Notes to Consolidated Financial Statements
($ in thousands, except per share)
13. PENSION PLANS
The company and certain foreign subsidiaries have non-contributory defined
benefit pension plans covering substantially all of their employees. Benefits
are based on years of service and, for salaried employees, final average
earnings. The company funds its plans annually based upon a consistently applied
formula which amortizes the unfunded liability adjusted for actuarial gains or
losses. Assets of the plans are primarily fixed income instruments and publicly
traded stocks.
Pension costs were $16.6 million, $20.2 million and $14.5 million for the
years 1996, 1995 and 1994, respectively. The following table sets forth the
status of all funded pension plans for 1996 and 1995:
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
----------------------------------------- -------------------------------------------------
Domestic Plans Foreign Plans Domestic Plans Foreign Plans
----------------------------------------- -------------------------------------------------
Assets in Assets in Accumulated
excess in excess in benefits in
accumulated accumulated excess of
benefits benefits assets
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation $696,736 $122,859 $436,095 $221,902 $ 99,580
- -----------------------------------------------------------------------------------------------------------------------------------
Accumulated benefit obligation 742,222 123,995 460,842 235,210 100,534
- -----------------------------------------------------------------------------------------------------------------------------------
Projected benefit obligation 821,853 150,340 552,794 235,214 135,480
Plan assets at fair value 859,805 160,213 505,942 215,493 137,281
- -----------------------------------------------------------------------------------------------------------------------------------
Plan assets grater (less) than
projected benefit obligation 37,952 9,873 (46,852) (19,721) 1,801
Unrecognized net (gain) loss (61,864) 20,107 40,346 (3,804) 23,465
Unrecognized prior service cost 10,994 46 (2,441) 13,548 127
Unrecogized transition (asset)
obligation 6,257 (2,302) 250 7,572 (2,789)
Adjustment ot recognize minimum
liability -- -- -- (17,316) --
- -----------------------------------------------------------------------------------------------------------------------------------
Pension (liability) asset recorded
on Balance Sheet $ (6,711) $ 27,724 $ (8,697) $(19,721) $ 22,604
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The company has certain supplementary domestic pension plans that are not
funded. At December 31, 1996 and 1995, the projected benefit obligation for
these plans was $23.0 million and $23.8 million of which $17.4 million and $17.9
million represent the accumulated benefit obligation, and $17.0 million and
$17.4 million represent the vested benefit obligation, respectively. The accrued
pension liability for the unfunded plans recorded on the Balance Sheet at
December 31, 1996 and 1995 was $17.8 million and $17.9 million, respectively.
The minimum pension liability for these plans recorded on the Balance Sheet at
December 31, 1996 and 1995 was $3.1 million and $7.4 million, respectively.
The pension expense for all plans included the following components:
1996 1995 1994
- ------------------------------------------------------------------
Service cost-benefits
earned during
the period $ 28,747 $ 20,643 $ 24,869
Interest cost on
projected benefit
obligations 68,613 64,548 59,889
Actual return on
assets (137,070) (155,838) 17,694
Net amortization
and deferral 56,282 90,824 (87,956)
- ------------------------------------------------------------------
Total pension expense $ 16,572 $ 20,177 $ 14,496
- ------------------------------------------------------------------
The discount rates used to determine the pension benefit obligation for the
domestic plans at December 31, 1996 and 1995 were 7.5% and 7.0%, respectively.
The discount rate used for the foreign plans was 8.0% at December 31, 1996 and
1995.
The compensation progression rate for domestic plans was 4.75% for 1996, 1995
and 1994. The expected long-term rate of return on domestic plan assets was 9.5%
for each year.
The compensation progression rates for the foreign plans were 6.0% for 1996,
7.0% for 1995 and 5.5% for 1994. The expected long-term rate of return on
foreign plan assets was 11.5% for each year.
In 1996, the company recorded a charge for special termination benefits of
approximately $8.2 million, pri marily attributable to the elimination of
approximately 400 positions in connection with an employee severance program. In
1994, the company withdrew from the retail paper bag business. As a result, the
company recorded a plan curtailment charge of $1.0 million and special
termination benefits of $1.8 million.
<PAGE>
<PAGE>
Union Camp Corporation 41
14. POSTRETIRMEENT BENEFITS
The company has a contributory postretirement health care plan covering
primarily its U.S. salaried employees. Employees become eligible for these
benefits when they meet minimum age and service requirements. The com-pany funds
its plan on a "pay-as-you-go" basis, in an amount equal to the retirees' medical
claims paid.
The components of the Accumulated Postretirement Benefit Obligation as of
December 31, 1996 and 1995 are as follows:
1996 1995
- ------------------------------------------------------------
Retirees $ 72,632 $ 63,179
Fully eligible active plan
participants 6,904 9,095
Other active plan participants 44,558 46,826
- ------------------------------------------------------------
124,094 119,100
Unrecognized net gain (loss) 511 (5,812)
Unrecognized prior service cost (2,587) --
- ------------------------------------------------------------
Accrued postretirement
benefit obligation $122,018 $113,288
- ------------------------------------------------------------
The components of the postretirement benefit expense for the years 1996, 1995
and 1994 are as follows:
1996 1995 1994
- ---------------------------------------------------------------------------
Service cost-benefits
earned during period $ 5,311 $ 3,801 $ 3,980
Interest cost on accumulated
benefit obligation 8,819 7,954 7,818
Net amortization
and deferral 185 (155) --
- ---------------------------------------------------------------------------
Postretirement
benefit expense $14,315 $11,600 $11,798
- ---------------------------------------------------------------------------
The discount rates used to determine the accumulated postretirement benefit
obligation at December 31, 1996 and 1995 were 7.5% and 7.0%, respectively.
For measurement purposes, a 9% increase in the medical cost trend rate was
assumed for 1996. This rate decreases incrementally to 5.0% by the year 2003 and
will remain at that level thereafter. It is estimated that a 1% increase in the
medical cost trend rate would increase the accumulated postretirement benefit
obligation as of December 31, 1996 by $13.8 million and the postretirement
benefit expense for 1996 by $1.9 million.
15. SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for income taxes was $52.1 million in 1996, $161.1 million in 1995,
and $32.4 million in 1994. Cash paid for interest, net of amounts capitalized,
was $109.4 million in 1996, $114.2 million in 1995, and $110.3 million in 1994.
The following table summarizes non-cash investing and financing activities
related to the company's acquisitions in 1996, 1995 and 1994.
1996 1995 1994
- -------------------------------------------------------------------------------
Fair value of assets
acquired $235,139 $8,345 $32,788
Less: cash paid 49,452 7,115 25,006
Common stock issued 83,031 -- --
- -------------------------------------------------------------------------------
Liabilities incurred or
assumed $102,656 $1,230 $ 7,782
- -------------------------------------------------------------------------------
16. COMMITMENT AND CONTINGENT LIABILITIES
The company is involved in various legal proceedings and environmental actions.
Although the outcome of these matters is subject to many variables and cannot be
predicted with any degree of certainty, based upon the company's evaluation of
the information presently available, management believes the ultimate resolution
of any such legal proceedings and environmental actions will not have a material
adverse effect on the company's consolidated financial position. However, it is
remotely possible that such legal proceedings and environmental actions could
have a material effect on quarterly or annual operating results when they are
resolved in future reporting periods.
The company has guaranteed loans of up to $20 million made by a financial
institution to non-controlled entities. The guarantees have terms of 5 years or
less and are secured by the borrowers' assets and stock.
17. SEGMENT INFORMATION
Union Camp is a leading manufacturer of paper, packaging, chemicals and wood
products serving both U.S. and international markets. The company derives
approximately three fourths of its sales from paper and packaging products, such
as linerboard, kraft paper, uncoated free sheet, corrugated containers, flexible
packaging and folding cartons. The company's chemical business is involved in
the manufacture of chemicals used in inks, coatings and adhesives, and through
its Bush Boake Allen subsidiary, the manufacture of flavor, fragrance and aroma
chemicals. Chemicals comprise about a sixth of Union Camp's sales. The company
also manages a woodlands base of about 1.6 million acres, supplying raw
materials for its linerboard, packaging and paper making business, as well as
for the manufacture of wood products.
<PAGE>
<PAGE>
42 Union Camp Corporation
Notes to Consolidated Financial Statements
($ in thousands, except per share)
Operating results and other financial data are presented for the principal
business segments of the company for the years ended December 31, 1996, 1995 and
1994. Total revenue and operating profit by business segment include both sales
to customers, as reported in the company's consolidated income statement, and
intersegment sales, which are accounted for at prices charged to customers and
eliminated in consolidation. The amount of the elimination of intersegment
profit on any product that remains in inven-tory at the end of the period is
determined by changes in quantities of inventory and changes in the margins of
profit.
Operating profit by business segment is total revenue less operating
expenses. In computing operating profit by business segment, none of the
following items has been added or deducted: other income, portions of
administrative expenses, interest expense, income taxes and unusual items.
Identifiable assets by business segment are those assets used in company
operations in each segment. Corporate assets are principally cash, intangible
assets, deferred charges and assets held for resale. Included within Corporate
Items are the company's real estate operation, Branigar, and in 1996 the
company's paper distribution business, Alling & Cory. Since the date of
acquisition, August 2, 1996, Alling & Cory had sales to customers of $279
million. Its impact on operating profit for 1996 was insignificant. Capital
expenditures are reported exclusive of acquisitions.
Total revenue and operating profit from the company's foreign subsidiaries
were $538 million and $48 million in 1996, $504 million and $61 million in 1995,
and $417 million and $44 million in 1994. No geographic area outside the United
States was material relative to consolidated revenues, operating profits or
identifiable assets. Export sales from the United States were $359 million in
1996, $418 million in 1995 and $247 million in 1994.
<TABLE>
<CAPTION>
Paper and Packaging Wood Corporate
Paperboard Products Products Chemical Items Consolidated
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1996
Sales to Customers $1,313,226 $1,402,602 $281,467 $700,662 $ 315,240 $4,013,197
Intersegment Sales 659,096 9,930 72 -- (669,098)* --
- --------------------------------------------------------------------------------------------------------------------------------
Total Revenue 1,972,322 1,412,532 281,539 700,662 (353,858) 4,013,197
Operating Profit 162,820 46,411 43,360 66,656 (78,741)** 240,506
Identifiable Assets 3,318,008 702,698 139,040 579,380 357,181 5,096,307
Depreciation, Amortization & Cost
of Company Timber Harvested 225,262 38,056 7,209 22,065 5,865 298,457
Capital Expenditures 235,303 60,393 27,110 54,925 8,712 386,443
- --------------------------------------------------------------------------------------------------------------------------------
1995
Sales to Customers $1,714,009 $1,515,694 $283,594 $666,794 $ 31,618 $4,211,709
Intersegment Sales 852,589 11,317 71 150 (864,127)* --
- --------------------------------------------------------------------------------------------------------------------------------
Total Revenue 2,566,598 1,527,011 283,665 666,944 (832,509) 4,211,709
Operating Profit 736,509 52,416*** 32,697 75,850 (67,370)** 830,102
Identifiable Assets 3,338,311 719,124 118,118 494,865 167,925 4,838,343
Depreciation, Amortization & Cost
of Company Timber Harvested 215,247 35,503 12,012 20,497 4,479 287,738
Capital Expenditures 141,598 55,861 27,775 37,261 4,304 266,799
- --------------------------------------------------------------------------------------------------------------------------------
1994
Sales to Customers $1,123,530 $1,372,084 $292,254 $575,770 $ 32,187 $3,395,825
Intersegment Sales 697,959 7,367 135 153 (705,614)* --
- --------------------------------------------------------------------------------------------------------------------------------
Total Revenue 1,821,489 1,379,451 292,389 575,923 (673,427) 3,395,825
Operating Profit 182,234 9,335*** 78,520 67,182 (62,771)** 274,500
Identifiable Assets 3,385,220 669,039 105,743 437,740 178,836 4,776,578
Depreciation, Amortization & Cost
of Company Timber Harvested 198,074 38,015 10,997 18,464 5,300 270,850
Capital Expenditures 247,781 29,545 14,627 27,013 5,973 324,939
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Elimination of Intersegment Sales.
**Includes intersegment eliminations and unallocated corporate, technology and
engineering expenses of $64,801 in 1996, $61,491 in 1995, and $50,725 in
1994. 1996 also includes a $46.9 million special charge relating to
restructuring costs and asset write downs. If this amount had been allocated
to segment operating profits in 1996, Paper and Paperboard operating profits
would have been $139.7 million, Packaging operating profits would have been
$38.2 million, Wood Products operating profits would have been $43.4 million,
Chemical operating profits would have been $64.9 million, and Corporate Items
operating loss would have been $45.6 million.
***The year 1995 included a gain of $6,423 relating to the sale of the assets of
a flexible packaging operation. Results for 1994 included a charge of $13,958
relating to the write down of the carrying value of these assets.
<PAGE>
<PAGE>
44 Union Camp Corporation
Historical Data (1996-1986)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING RESULTS
Net Sales $ 4,013,197 $ 4,211,709 $ 3,395,825 $ 3,120,421
Costs and Other Charges 3,772,691* 3,381,607 3,121,325 2,908,797
- ----------------------------------------------------------------------------------------------------------------------
Income From Operations 240,506 830,102 274,500 211,624
- ----------------------------------------------------------------------------------------------------------------------
Interest Expense, net of capitalized interest 112,286 113,705 109,172 124,911
Other (Income)-Net (22,825) (14,460) (29,836)** (13,425)
- ----------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes, Minority
Interest, Extraordinary Item, and
Accounting Changes 151,045 730,857 195,164 100,138
Income Taxes 55,250 268,895 71,420 50,095
Minority Interest, net of tax (10,487) (10,889) (6,518) --
Extraordinary Item, net of tax -- -- -- --
Effect of Accounting Changes, net of tax -- -- (3,716) --
- ----------------------------------------------------------------------------------------------------------------------
Net Income 85,308 451,073 113,510 50,043
- ----------------------------------------------------------------------------------------------------------------------
Per Common Share
Net Income 1.23 6.45 1.62 0.72
Dividends 1.80 1.66 1.56 1.56
Stockholders' Equity 30.25 30.71 26.23 26.00
- ----------------------------------------------------------------------------------------------------------------------
Financial Position
Current Assets 1,134,110 1,033,817 951,133 910,718
Current Liabilities 779,869 620,113 883,924 909,372
- ----------------------------------------------------------------------------------------------------------------------
Working Capital 354,241 413,704 67,209 1,346
Total Assets 5,096,307 4,838,343 4,776,578 4,685,033
- ----------------------------------------------------------------------------------------------------------------------
Long-Term Debt 1,252,475 1,151,536 1,252,249 1,244,907
Deferred Income Taxes 723,431 709,850 605,643 583,155
Stockholders' Equity 2,093,594 2,121,692 1,836,321 1,815,848
- ----------------------------------------------------------------------------------------------------------------------
Percent of Long-Term Debt to Total Capital 30.8% 28.9% 33.9% 34.2%
- ----------------------------------------------------------------------------------------------------------------------
Additional Data
Cash Provided by Operations 495,147 750,222 368,502 418,420
Capital Expenditures (excluding acquisitions) 386,443 266,799 324,939 310,113
Depreciation & Cost of
Company Timber Harvested 280,267 271,696 253,436 242,883
Tons Sold-Paper & Paperboard Products 3,473,415 3,485,221 3,452,604 3,291,255
Average Shares of Common
Stock Outstanding 69,220,157 69,940,397 69,954,082 69,740,458
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
*1996 includes a $46.9 million special charge relating to restructuring costs
and asset write downs.
**Includes $34.7 million pre-tax gain on sale of minority interest in Bush Boake
Allen.
<PAGE>
<PAGE>
Union Camp Corporation 45
<TABLE>
<CAPTION>
(in thousands)
- ------------------------------------------------------------------------------------------------------------------------
1992 1991 1990 1989 1988 1987 1986
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 3,064,358 $ 2,967,138 $ 2,839,704 $ 2,761,337 $ 2,660,918 $ 2,361,684 $ 2,092,247
2,883,782 2,692,148 2,469,017 2,266,561 2,167,264 1,979,788 1,844,957
- ------------------------------------------------------------------------------------------------------------------------
180,576 274,990 370,687 494,776 493,654 381,896 247,290
- ------------------------------------------------------------------------------------------------------------------------
136,240 81,750 31,228 47,800 50,527 61,294 59,702
(21,074) (11,748) (26,559) (22,302) (24,882) (22,272) (18,756)
- ------------------------------------------------------------------------------------------------------------------------
65,410 204,988 366,018 469,278 468,009 342,874 206,344
22,755 76,978 136,427 169,878 172,863 135,391 76,410
-- -- -- -- -- -- --
(7,228) (3,220) -- -- -- -- --
40,806 -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
76,233 124,790 229,591 299,400 295,146 207,483 129,934
- ------------------------------------------------------------------------------------------------------------------------
1.10 1.80 3.35 4.35 4.25 2.83 1.77
1.56 1.56 1.54 1.42 1.22 1.14 1.09
27.01 27.88 27.60 25.47 22.66 20.24 18.62
- ------------------------------------------------------------------------------------------------------------------------
1,016,117 909,990 859,532 721,195 769,323 753,683 626,481
892,115 764,916 642,776 366,962 326,079 295,618 275,665
- ------------------------------------------------------------------------------------------------------------------------
124,002 145,074 216,756 354,233 443,244 458,065 350,816
4,745,197 4,697,714 4,403,354 3,413,862 3,094,414 2,919,115 2,776,602
- ------------------------------------------------------------------------------------------------------------------------
1,289,706 1,348,157 1,221,597 690,149 627,928 632,706 651,539
553,871 627,120 589,477 581,835 581,080 538,774 478,829
1,881,878 1,936,256 1,910,643 1,754,524 1,559,327 1,452,017 1,370,569
- ------------------------------------------------------------------------------------------------------------------------
34.6% 34.5% 32.8% 22.8% 22.7% 24.1% 26.1%
- ------------------------------------------------------------------------------------------------------------------------
268,865 375,041 386,036 526,685 518,978 447,261 336,661
219,654 482,638 934,452 556,268 358,671 188,587 212,789
237,531 209,120 217,416 204,572 190,611 180,015 168,457
3,242,511 3,004,980 2,835,549 2,726,105 2,733,205 2,675,541 2,656,920
69,604,174 69,270,992 68,550,315 68,836,229 69,433,734 73,391,106 73,533,126
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF UNION CAMP(1)
<TABLE>
<CAPTION>
Jurisdiction
of
Name of Subsidiary Incorporation
- ------------------ -------------
<S> <C>
ABC Container Corporation...............................................Delaware
The Alling & Cory Company...............................................New York
Cartonajes Union, S.A......................................................Spain
Escort City Enterprises Ltd..............................................England
Union Camp Chemicals Limited.....................................England
Fleetwood Container & Display, Inc....................................California
Forest Land Investments, Inc............................................Delaware
Puerto Rico Container Company, Inc......................................Delaware
Transtates Properties Incorporated......................................Delaware
The Branigar Organization, Inc..................................Illinois
Branigar Credit Corporation..............................Illinois
Union Camp Business Development Corporation.............................Delaware
U.C. Realty Corporation.................................................Delaware
Union Camp Holding B.V...........................................The Netherlands
Union Camp Patent Holding, Inc..........................................Delaware
Bush Boake Allen Inc............................................Virginia
A. Boake Roberts & Company
(Holding) Ltd..........................................England
Bush Boake Allen Limited..................................England
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Union Camp Foreign Sales Corporation....................................Barbados
Union Camp Holdings Chile S.A..............................................Chile
Union Camp Chile S.A...............................................Chile
Union Camp Holdings Limited..................................Republic of Ireland
Union Camp Ireland Limited...........................Republic of Ireland
Union Camp Hong Kong Limited...........................................Hong Kong
Union Camp International Sales Corporation..............................Delaware
Union Camp Technology, Inc..............................................Virginia
Union Camp Trading S.A.................................................Argentina
</TABLE>
- ------------------
(1) The names of other subsidiaries have been omitted, since such unnamed
subsidiaries in the aggregate would not constitute a significant subsidiary.
<PAGE>
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Registration Nos. 2-62214, 33-23952, 33-25455, 33-25454,
33-28396, 33-30599, 2-91519, 33-60428, 33-60426, 33-54335) of Union Camp
Corporation of our report dated February 7, 1997 appearing in the 1996 Annual
Report to Stockholders which is incorporated in this Annual Report on Form 10-K.
We also consent to the incorporation by reference of our report on the Financial
Statement Schedule, which is listed in Item 14(a)(2) of this Form 10-K.
PRICE WATERHOUSE LLP
Morristown, New Jersey
March 27, 1997
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ANNUAL REPORT ON FORM 10-K OF UNION CAMP CORPORATION FOR THE ANNUAL
PERIOD ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
THIS SCHEDULE SHALL NOT BE DEEMED TO BE FILED FOR PURPOSES OF SECTION 11
OF THE SECURITIES ACT OF 1933, SECTION 18 OF THE SECURITIES EXCHANGE ACT
OF 1934 AND SECTION 323 OF THE TRUST INDENTURE ACT OF 1939, OR OTHERWISE
SUBJECT TO THE LIABILITIES OF SUCH SECTIONS, NOR SHALL IT BE DEEMED A PART
OF ANY REGISTRATION STATEMENT TO WHICH IT RELATES.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<PERIOD-TYPE> 12-MOS
<CASH> 44,917
<SECURITIES> 0
<RECEIVABLES> 561,590
<ALLOWANCES> 17,270
<INVENTORY> 496,433
<CURRENT-ASSETS> 1,134,110
<PP&E> 6,913,799
<DEPRECIATION> 3,161,450
<TOTAL-ASSETS> 5,096,307
<CURRENT-LIABILITIES> 779,869
<BONDS> 1,252,475
<COMMON> 69,217
0
0
<OTHER-SE> 2,024,377
<TOTAL-LIABILITY-AND-EQUITY> 5,096,307
<SALES> 4,013,197
<TOTAL-REVENUES> 4,013,197
<CGS> 3,010,589
<TOTAL-COSTS> 3,772,691
<OTHER-EXPENSES> (22,825)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 112,286
<INCOME-PRETAX> 151,045
<INCOME-TAX> 55,250
<INCOME-CONTINUING> 85,308<F1>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 85,308
<EPS-PRIMARY> 1.23
<EPS-DILUTED> 1.23
<FN>
<F1> Reflects adjustment for minority interest (net of tax) of $10,487
</FN>
</TABLE>
