UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF
1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1994
OR
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission File No. 0-12001
S T. J O E P A P E R C O M P A N Y
(Exact name of registrant as specified in its charter)
Florida 59-0432511
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 400, 1650 Prudential Drive
Jacksonville, Florida 32207
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 396-6600
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, No par value New York Stock Exchange
Indicate by check mark if the 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 the 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. [X]
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 [X] NO [ ]
The aggregate market value of registrant's Common Stock held by non-affiliates
based on the closing price on March 15, 1995 was $560,474,346.
As of March 15, 1995 there were 30,498,650 shares of Common Stock No par value
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
(Specific pages incorporated are identified under the applicable item herein.)
Portions of the Registrant's Annual Report to Stockholders for 1994 (the 1994
Annual Report to Stockholders) are incorporated by reference in Part I and
Part II of this Report.
Portions of the Registrant's definitive Proxy Statement dated March 31, 1995
(the "Proxy Statement") are incorporated by reference in Part III of this
Report. Other documents incorporated by reference in this Report are listed
in the Exhibit Index.
PART I
ITEM 1. BUSINESS
As used throughout this Form 10-K Annual Report, the terms "St. Joe",
"Company" and "Registrant" means St. Joe Paper Company and its consolidated
subsidiaries unless the context indicates otherwise.
GENERAL
St. Joe was incorporated in 1936 under the laws of the State of
Florida. The general purposes of the Company at incorporation were (1) to
manufacture, buy, sell, import, export and deal in pulpwood, woodpulp, paper,
paperboard, all raw material thereof, and products and by-products therefrom
and to establish, operate and maintain mills, plants and factories for such
purpose and (2) to buy, hold, own, work, develop, improve, divide or sub-
divide, sell, convey, lease, mortgage, pledge, exchange and otherwise deal in
and dispose of all kinds of real and personal property.
The Executive Offices of St. Joe are located in Suite 400, duPont
Center, 1650 Prudential Drive, Jacksonville, Florida, 32207, and its
telephone number is 904/396-6600.
St. Joe is at present primarily engaged in two industry segments: (1)
the growing and harvesting of timber, and the manufacturing, distribution and
sale of forest products and (2) transportation of goods by rail. The
Registrant also is engaged in three other industry segments in which it
derives income: (1) growing and processing of sugarcane into raw sugar, (2)
telephone communications and (3) real estate. Other income was derived from
Company investments in securities, gains on disposition of property and other
miscellaneous items.
Financial information as to revenue, operating profits and identifiable
assets by industry segment is set forth in footnote 11 to the Consolidated
Financial Statements on pages 28 and 29 of the 1994 Annual Report to
Stockholders of this Report. Below is a description of each of these
industry segments with information to the extent necessary and material in
order that the Company's business taken as a whole can be understood.
Forest Products
The Company is a vertically integrated producer of corrugated
containers. It owns approximately 700,000 acres of timberland (most of which
is located in northwestern Florida), a paper mill located in Port St. Joe,
Florida, and 16 container plants located throughout the eastern half of the
United States. The Company's timberland and forestry operations supply wood
chips and pulpwood to the mill, which produces linerboard, some of which is
bartered for corrugating medium. The container plants convert the linerboard
and corrugating medium into corrugated containers. The Company produces and
sells a wide variety of corrugated containers to processors and manufacturers
in the food, agricultural, paper, petrochemical, plastics, electronics,
(2)
electrical equipment and machinery industries. Demand for corrugated
containers is cyclical and correlates closely with real growth in the United
States gross national product and also with population and other demographic
factors.
The corrugated container industry is highly competitive, with over
1,500 container plants in the United States. When demand for corrugated
containers falls, the ability to maintain prices by adjusting inventory
levels is limited because container plants and paper mills operate most
economically at or near full capacity. In addition, although corrugated
containers are the dominant form of transport packaging nationally,
corrugated containers compete with various other packaging materials,
including paper, plastic, wood and metal.
The Company's operating strategy for its Forest Products sector has
been to reduce unit production costs by increasing operating efficiency and
maximizing capacity utilization. In addition, the Company emphasizes the
marketing and production of higher margin products such as the Company's
mottled white linerboard and high performance linerboard, over unbleached
linerboard.
The Company's paper mill, located at Port St. Joe, Florida, produces
mottled white and unbleached linerboard, a principal component of corrugated
containers. The mill can produce linerboard in a full range of grades and
weights. Set forth below is certain information as to mill linerboard
production for the years indicated:
Linerboard Production
(In tons)
Total Average Daily
Year Production Production*
1994 477,990 1,375
1993 444,005 1,254
1992 425,087 1,266
1991 433,352 1,308
1990 454,342 1,327
*Average daily production is computed by dividing the total production of
each paper machine by the number of days on which such paper machine operates
each year.
In 1993 and 1994, approximately 45% and 52%, respectively, of mill
production in tons was mottled white linerboard marketed by the Company under
the trade name "Crest White." Demand for mottled white linerboard has
increased significantly in recent years. Mottled white linerboard, which is
more aesthetically attractive than unbleached linerboard, in 1994 sold at
approximately 39% over the price of unbleached linerboard while, in 1993,
(3)
this upcharge was 49%. Since mottled white linerboard offers significantly
higher profit margins than unbleached linerboard, the Company has emphasized,
and expects to continue to emphasize, the production of mottled white over
unbleached linerboard. Approximately 58% of the Company's mottled white
linerboard production in 1994 was traded to other producers under trade
agreements in exchange for corrugating medium or kraft liner.
The capital expenditures at the paper mill in 1993 for maintenance and
upgrade were $18.5 million which compares to $20.3 million for the 1994
capital and maintenance expenditures. The 1995 budget for maintenance and
upgrade at the paper mill is $21.1 million.
The Company has sought to lower its energy costs at the mill by using
increasing amounts of timber harvesting and pulp mill by-products as energy
sources. The mill's boilers use "biomass" fuel (scrub wood, bark and timber
wastes) and "black liquor" solids (a by-product of the wood pulping process)
to meet a substantial percentage of the mill's energy requirements. In 1994
fuel oil and natural gas accounted for 35.1% of mill energy requirements.
Black Liquor solids and biomass supplied most of the mill requirements.
The Company owns 16 container plants located throughout the eastern
half of the United States. Linerboard and corrugating medium are the
principal materials used in the manufacture of corrugated containers. The
container plants have an aggregate production capacity of approximately 8
billion square feet of containerboard per year. The plants in 1994 produced
approximately 7.9 billion square feet of containerboard. In 1994, fourteen
of the container plants operated on two shifts, one on one shift and one on
three shifts. The Company could increase capacity by running the one plant
that is on one shift, two additional shifts, as well as adding a third shift
to the fourteen plants presently on two shifts. The Company's paper mill
production resulted in supplying of approximately 78% of the container
plants' requirements for linerboard and corrugating medium for 1994 which was
down from the 87% that was supplied in 1993.
The Company's container plants accounted for approximately 2% of the
total national industry shipments during 1994 up from the approximately 1.9%
in 1993. The Company's corrugated container business services approximately
2,700 customers. The single largest customer accounted for approximately
3.3% of the Company's corrugated container shipments for 1994 and the ten
largest customers accounted for approximately 15.6% of the Company's 1994
corrugated container revenues.
The Company considers its container plant facilities to be in
satisfactory condition. To maintain and upgrade these facilities, the
Company spent $9.5 million in 1994 and has adopted a budget of $10.2 million
for its 1995 capital maintenance and upgrade program. The Company maintains
a laboratory facility located in Louisville, Kentucky, which tests container
components, materials and workmanship to ensure quality control for container
products.
(4)
Company-owned timberlands are the principal source of woodchips and
pulpwood for the paper mill. Cellulose fiber which is produced primarily
from wood chips and pulpwood is the principal raw material used in the
manufacture of linerboard. The Company owns approximately 700,000 acres of
timberland, of which approximately 665,000 acres are situated in northwestern
Florida and the remaining 35,000 acres are situated in southern Georgia.
Presently, approximately 624,000 acres have been planted as managed
plantations to facilitate harvesting and reforestation and to maximize timber
yields. During the current planting season, November, 1994 through the end
of February, 1995 the Company planted 18 million seedlings on 24,500 acres.
The Company owns, in total, approximately 1.1 million acres of land.
Six forestry units and a wood procurement unit manage the timberlands.
The timberlands are harvested by local contractors pursuant to agreements
which generally are renewed annually. Timber harvested from Company
timberlands accounted for 1,119,632 tons or 54% of mill wood requirements in
1994, compared to 56% in 1993. The Company has wood chipping facilities
located at the paper mill, Lowry and Newport, Florida.
Recycled fiber is obtained in part from third parties and in part from
mill operations. In 1994 and 1993, recycled or secondary fiber supplied
approximately 17% of the mill's total fiber requirements. We expect to use
approximately 22% recycled fiber in our 1995 production.
The Company operates a nursery located in Capps, Florida. The nursery
conducts research to produce faster-growing, more disease-resistant species
of pine trees, and produces seedlings for planting on Company-owned
plantations. In addition, the Company in cooperation with the University of
Florida, is doing experimental work in genetics on the development of
superior pine seed orchards. In 1994 and 1993 capital expenditures in the
forestry operations were approximately $5.5 million and $5.3 million,
respectively. The Company has adopted a capital expenditure program for 1995
to reinvest approximately $5.5 million in these operations. These
expenditures include nursery expense and tree planting.
In 1994 the mill at Port St. Joe spent $3.0 million on environmental
related items. These were for asbestos removal and disposal, and repair of
the recovery boiler precipitator. The Company has budgeted $5.6 million in
1995 for predominantly capitalized environmental items. The main items in
1995 will be for additional asbestos removal and disposal, and modifications
to meet proposed Environmental Protection Agency Cluster Rule Regulations.
The mill at Port St. Joe is in compliance at this time in all
environmental areas under the present existing laws, rules and permits. The
Company's concerns at this point are with proposed new regulations for
permits in the area of both air and water under the new "Cluster Rule". The
"Cluster Rule" is a proposal to combine the air and water regulations into
one. The U.S. Environmental Protection Agency (EPA) is also considering
adding the new solid waste rule to the "Cluster Rule" umbrella. The proposed
"Cluster Rule" was issued in draft form in the fall of 1993. Additional
changes to the air rules will be announced in mid 1995. Compliance with the
final rules as presently drafted will be required by 1998. The greatest
(5)
concern remains in the area of dioxin and other toxins in the dioxin family.
If the industry continues to be allowed to bleach via chlorine substitution
as proposed in the new rule, the industry will be able to comply. If,
however, the proposed regulations are changed to require total chlorine free
bleaching, then the paper industry, as well as, a number of other industries
and cities will be faced with major expenditures in order to comply.
In the container plants, there are no known major environmental
problems at this time. In 1994, the Company had expenses at several plants,
mostly for closure of a lagoon, with the total for all plants being less than
$0.4 million. Anticipated spending is approximately $0.8 million in 1995 on
similar items.
The forestry operation continues to have no major environmental
problems. The one area of expense in 1994 was at one of the forestry units
in connection with fuel contamination of soil. Approximately $0.3 million
was spent on this in 1994 and it is estimated that $0.1 million will be spent
in 1995 for clean-up and monitoring the ground water. No problems are
anticipated at any other forestry units.
Transportation
The Company owns 54% of Florida East Coast Industries, Inc. which in
turn owns 100% of Florida East Coast Railway Company (FEC). The Company also
owns and operates Apalachicola Northern Railroad Company (ANRR). The common
stock, par value $6.25 per share, of Florida East Coast Industries, Inc. is
registered pursuant to Section 12(b) of the Securities Exchange Act
(Commission file number 2-89530).
Both FEC and ANRR are subject to regulation by the Interstate Commerce
Commission and, in some areas, the State of Florida. These governmental
agencies must approve, prior to implementation, changes in areas served and
certain other changes in operations of FEC and ANRR.
The principal business of FEC is that of a common carrier of goods by
rail over 442 miles of main and branch line track all in the state of
Florida. The mainline extends 351 miles from Jacksonville on the north, to
Miami on the south, with 91 miles of branch line extending west from Fort
Pierce to Lake Harbor. Principal commodities carried by the FEC in its rail
service include automotive vehicles, crushed stone, cement, trailers-on-
flatcars, containers-on-flatcars and basic consumer goods such as food. FEC
is the only railroad serving the area between Jacksonville and West Palm
Beach on the east coast of Florida. Common motor carriers are competitors
throughout the entire transportation system and CSX Transportation, Inc. is
a competitor over that section of track extending southward from West Palm
Beach to Miami for rail traffic, excluding that of trailer-on-flatcar and
container-on-flatcar traffic.
(6)
The operating statistics set forth below reflect FEC's performance for
the latest three years:
Operating Statistics
(In thousands except percentage data)
Years Ended December 31,
1994 1993 1992
Operating revenues $ 163,098 $ 162,318 $ 138,736
Operating income 28,506 28,843 18,876
Operating margin 17.5% 17.8% 13.6%
Tonnage 13,693 14,709 13,772
Revenue ton miles 4,487,401 4,257,000 4,157,594
The FEC had capital expenditures in 1994 of $21.3 million in addition
to maintenance expenditures of $55.8 million. This compares to 1993 capital
expenditures of $19.8 million and 1992 of $17.9 million. The maintenance
expense in 1993 was $53.7 million and 1992, $33.8 million.
ANRR is a short line railroad that operates exclusively within the
state of Florida, over 90 miles of main track and 6 miles of rail yard track
extending from Port St. Joe to Chattahoochee where it connects with an
unaffiliated carrier. All 90 miles of the main line are 100% concrete
crossties. Although it is a common carrier, most of ANRR business consists
of carrying coal and items related to wood. In 1994, 68.1% of its carloads
were carrying coal. The carloads of coal carried in 1993 and 1992 were 67.5%
and 67.8% respectively of the total. The other main commodity carried is
wood products, consisting of pulpboard, woodchips and pulpwood. These
products totaled 24.6% of the total 1994 carloads, 24.6% in 1993 and 24.1% in
1992. The other items carried by ANRR are tall oil, chemicals, stone and
clay products and recyclable items. Certain operating statistics for the
latest three years are as shown:
Operating Statistics
(In thousands except percentage data)
Years Ended December 31,
1994 1993 1992
Operating revenues $ 12,886 $ 12,685 $ 12,366
Operating income 1,398 1,969 2,614
Operating margin 10.9% 15.5% 21.1%
Tonnage 4,227 4,187 4,047
Revenue ton miles 407,197 401,907 380,696
(7)
Capital expenditures by the ANRR in 1994 were $3.8 million which
compares to 1993 capital expenditures of $4.2 million and 1992 of $3.4
million. The ANRR has budgeted $2.2 million in 1995 for capital
expenditures.
FEC is a party to various proceedings before state regulatory agencies
relating to environmental issues. In addition, FEC, along with many other
companies, has been named a potentially responsible party in proceedings
under Federal statutes for the clean up of designated Superfund sites at
Jacksonville, Florida and Portsmouth, Virginia. FEC has made an estimate of
its likely costs attributed to sites for which its clean up responsibility is
probable and a liability has been recorded. Such liability is not material
to the financial position of the FEC. Based upon management's evaluation of
the other potentially responsible parties, the Company does not expect to
incur additional amounts even though the Company has joint and several
liability. FEC is not aware of any monetary sanctions to be proposed which
in the aggregate, are likely to exceed $100,000, nor does it believe that
corrections will necessitate significant capital outlays or cause material
changes in its business.
ANRR has environmental problems involving stormwater run-off and
contaminated soil from fuel oil and gasoline. These items cost approximately
$1.4 million in 1994 for both capital expenditures and expense and are
budgeted for $0.3 million in 1995.
Sugar
In 1971, the Company acquired a 60% interest in Talisman Sugar
Corporation (TSC) which is a grower of sugarcane located in the fertile Belle
Glade area in south central Florida. In addition to growing sugarcane TSC
harvests the cane and processes the cane into raw sugar. In 1984, the
Company acquired the remaining 40% interest in TSC, thereby owning 100% of it
today.
The Company at the end of 1994 owned approximately 48,600 acres of
agricultural land and leased approximately 7,000 acres for use in its
sugarcane growing operation. Sugarcane production and processing is seasonal
in nature. Sugarcane plantings generally yield two harvests before
replanting is necessary. The Company harvests its sugarcane crop in one-year
cycles, as do other Florida producers. The Company generally plants
sugarcane in the fall of each year. Harvesting of a crop generally commences
in October of each year and continues into the following March. During the
1994-1995 crop the TSC grew sugarcane on approximately 43,000 acres of land.
The majority of the Florida sugarcane producers, including TSC,
harvests sugarcane using mechanical cane harvesters. This is a change from
harvesting sugarcane by hand as was the historical practice. Cane cutting
and loading are performed with mechanized harvesters which reduces
significantly the labor requirements, resulting in substantial cost savings
and permits the grinding of the sugarcane more quickly after harvesting,
resulting in improved efficiency. Mechanized harvesting, however, is less
(8)
precise than manual harvesting, resulting in greater amounts of chaff and
trash being mixed in with the harvested sugarcane. As a result, a minimal
amount of sucrose is lost through leaching into the trash and chaff. In
addition, mechanized harvesting causes more damage to cane fields than manual
harvesting, resulting in slightly lower cane yields in subsequent crops.
Consequently, yields of sucrose from harvested sugarcane and its crop yields
per acre are generally slightly lower than those cut by hand. These negative
effects are far outweighed by the labor cost savings and other efficiencies
resulting from mechanized harvesting.
The Company's sugar mill has a grinding capacity of approximately
11,500 tons of sugarcane per day. The Company ground approximately 1,296,000
tons of sugarcane in 1992, approximately 1,321,000 tons in 1993 and
approximately 1,184,000 tons of sugarcane in 1994 from Company operated
lands. Total raw sugar production for the Company was approximately 117,000
tons in 1992, 119,000 in 1993, and 114,261 tons in 1994.
The sugar mill is virtually energy self-sufficient, with almost all of
its energy requirements supplied through the use of bagasse, a by-product of
the mill's cane grinding operations. The Company harvests and processes its
sugarcane into raw sugar and sells its entire production to Everglades Sugar
Refinery, Inc., a wholly-owned subsidiary of Savannah Foods & Industries,
Inc., pursuant to a contract which was to expire in 1996. In 1993, this
contract was amended and extended through the 1997/1998 crop year and is
automatically renewed each crop year thereafter. Either party can decline to
renew by giving notice to the other party no later than October 1 of the
fourth year prior to the termination date. Under the contract, the Company
is paid for its sugar based on market prices.
The sugar industry is highly competitive. The Company competes with
foreign and domestic sugarcane and sugar beet processors, as well as
manufacturers of corn sweeteners and artificial sweeteners such as aspartame
and saccharin. Sugar is a volatile commodity subject to wide price
fluctuations in the marketplace. Sugar prices have been supported by the
United States Government through the Agriculture and Food Act of 1981 which
restricts sugar imports in order to support the domestic sugar price. This
Act was scheduled to terminate in 1990. The United States Congress in 1990,
passed the Food, Agriculture, Conservation and Trade Act of 1990, which
extended this price support program to cover the 1991-95 crops of sugarcane.
In 1994 the State of Florida enacted the Everglades Forever Act which
significantly affects agriculture in the Everglades Agricultural Area
(EAA).The Act calls for the creation of six Stormwater Treatment Areas (STA)
as buffers between the Everglades Protection Area and the EAA. The Act
imposes substantial taxes on TSC and other agricultural interests to pay for
construction of the STAs. As with the Forest Products segment of the
Company, there is concern in the Sugar segment with the new Clean Air Act and
not knowing at this time what will be the complete impact of the Act on this
operation. The sugarcane growers, as well as, TSC will need to get Title V
permits as required under the Clean Air Act. These permits presently are
required prior to November, 1995.
(9)
Capital expenditures by TSC in 1994 were $3.4 million and compares to
$2.9 million in 1993 and $7.4 million in 1992. The capital expenditures
budget for 1995 is $4.3 million.
The Company had only minor expenditures for environmental problems,
less than $0.4 million, in 1994. The only environmental problem TSC has, at
present, is in the removal of water from its property. TSC has installed
equipment to monitor the quality and quantity of water being pumped out of
its pumping stations as required by the local Water Management District.
Communications
St. Joe Communications, Inc. (SJCI) provides unregulated tele-
communications services such as the sale of communications systems and of
telephone equipment to commercial and residential customers and in addition
owns three regional operating telephone companies. The operating companies
provide local telephone communications services in 12 northwestern Florida
counties, 2 southern Alabama counties and 1 Georgia county through 19
exchanges located in the region which service approximately 36,900 access
lines. In addition to providing local exchange telephone service, the
Company's facilities are connected with other telephone companies and the
nationwide toll networks of long distance carriers. The Company also
supplies telephone and other communications service to Tyndall Air Force Base
pursuant to a long-term contract.
In addition to its regular telephone services, the Communications
segment participates in four limited partnerships with major telecommun-
ications companies as partners. These interests in the four partnerships
vary from 12% to 51% and are to provide cellular telephone service in their
operating territory. These four partnerships operate in the following areas:
(1) Tallahassee - Perry, Florida (serving six counties in Florida); (2) Port
St. Joe, Florida (serving four counties in Florida); (3) Fort Walton Beach,
Florida (serving five counties in Florida) and (4) southeast Alabama (serving
twelve counties in Alabama). These partnerships operated 66 cell sites at
December 31, 1994 having added 16 cell sites in 1994. The Company
anticipates adding 20 more in 1995.
The Company owns and leases to MCI on a primary term of ten years, with
renewal option provisions, a fiber optic transmission network extending from
Fort Walton Beach to Tallahassee of approximately 150 miles. The Company
owns fiber optic routes from Port St. Joe to Blountstown, Carrabelle, and
Tyndall Air Force Base, Blountstown to Bristol and Perry to Keaton Beach and
one-half of the distance from Perry to Tallahassee. These locations are all
in Florida and total over 326 miles. This network is used exclusively to
serve intercompany and intracompany routes. The intracompany routes are
major feeder routes between exchanges and/or electronic remote facilities
associated with the various exchanges. The companies will continue to
install fiber optic cable for these same basic transmission functions.
(10)
SJCI has a policy to invest in the latest, most advanced equipment and
technology. In keeping with this policy SJCI expended $5.4 million on
capital improvements in 1994 which compares to $5.3 million that was spent in
1993 and $7.6 million in 1992. SJCI has budgeted $3.9 million for 1995
capital improvements. The Communications operations are subject to
regulations by the Public Service Commissions of the states of Florida and
Alabama with respect to intrastate services and the Federal Communications
Commission with respect to interstate services. The operating companies are
limited to certain specified rates of return on its regulated operations and
in 1990 and 1991 exceeded these permitted rates of return and were required
to rebate the excess revenue to its customers.
Real Estate
The Real Estate segment of the Company consists of two operations, one
a division of St. Joe known as Southwood Properties (Southwood), and Gran
Central Corporation (Gran Central), a subsidiary of Florida East Coast
Industries, Inc. The Company reorganized into industry segments in 1985 and
at that time put most of St. Joe's investment and developable real estate
into Southwood. Gran Central was incorporated in 1981, but was not very
active until 1984 when, by reorganization, it received all Florida East Coast
Industries, Inc. non-operating real estate. The Real Estate segment was
established for more efficient management and for better planning of future
development, sales and/or leasing of various parcels of property. The
property in this segment is suited for development in all areas, commercial,
industrial, residential and resort. The Company began in the mid 80's to
actively pursue plans to develop these real estate properties. The Real
Estate segment became a significant business operation and for the first time
in 1987 was reported as a separate segment of the Company.
The Company has not and does not intend to enter into any debt
financing arrangements in connection with its development activities.
Rather, the Company intends to fund those projects with cash from operations
and from sales of certain properties. Because the Company will not incur
significant financing costs, the Company believes that it will bring a long-
term perspective to its development strategy and will be better able to
withstand any cyclical downturns in the Florida real estate market. In
addition, the Company intends to take a conservative approach to development
and to develop projects only to the extent market conditions and internally
generated funds permit. Accordingly, it can be expected that it will take
many years before the Company may be able to complete developments covering
significant portions of its developable properties. The Company's objective
is to emphasize the long-term capital appreciation of its real estate assets
and as a consequence, the Company expects that substantially all of the cash
flow generated from real estate development activities will be reinvested in
these activities.
(11)
The growth of the panhandle area, where the Company owns significant
acreage, is expected to continue, although at a much lower rate than is
generally expected for the rest of the state. Florida's fastest population
and employment growth areas are expected to be along both coasts (excluding
the panhandle region) and in central Florida. Gran Central owns sizable
acreage within several high-growth areas along Florida's east coast,
including, but not limited to, the West Palm Beach, Melbourne-Titusville,
Daytona Beach, Miami-Hialeah and Fort Pierce areas. The focus of Gran
Central's activities has been the Miami and Jacksonville area.
Although this growth has provided, and is expected to continue to
provide, significant real estate development opportunities, there is
substantial concern among state and local authorities about the impact that
this development may have on the environment and facilities and services
provided by municipalities. As a result, land use and environmental
regulations are becoming more complex and burdensome. Development of real
property in Florida entails an extensive approval process which involves
regulatory agencies with overlapping jurisdictions. The process requires
compliance with the Local Government Comprehensive Planning and Land
Development Act (the "Growth Management Act"). In addition, development
projects that exceed certain specified regulatory thresholds require approval
of a comprehensive Development of Regional Impact (DRI) application by a
state-appointed regional planning council. Compliance with the Growth
Management Act and the DRI process is usually lengthy and costly and can be
expected to have a material effect on the Company's real estate development
activities in the area of land use and its application to wetlands.
Southwood manages the extensive properties that the Company owns and
has identified as suitable for development in the Florida panhandle and in
St. Johns county. These wooded properties include substantial gulf, lake and
riverfront acreage and, therefore, are well suited to residential and resort
development, including development as large residential and mixed-use planned
communities. A portion of the Company's property along the northwestern
coast of Florida is suitable for commercial or industrial development.
Southwood's general strategy for developing its residential and mixed-use
properties will be to install infrastructure improvements, such as sewers,
utility hookups and roads, and to sell lots to other developers or
individuals for building in accordance with the master development plan
formulated for the community. At present, the Company does not intend to
build individual homes.
In 1991, Southwood completed the construction of its first office
building containing 11,700 square feet. This building is in the Southwood
Center Office Park, Panama City, Florida and at December 31, 1994 was 100%
leased. Architectural design for the next building at this location was
completed during 1994 and site design and permitting are currently active.
Southwood, in 1994, sold the remaining 12 lots in Woods II, and the remaining
lots in the Woodmere subdivision, all being in Panama City. The Company sold
the last 21 lots at Old Florida Beach subdivision, Walton County, Florida.
In 1994 design and permitting continues in Phase III of the Woods for 50
lots. The Retreat, which will be a 100 lot, gulf-front subdivision near Old
(12)
Florida Beach in Walton County is currently in the design and permitting
stage. Phase I of 50 lots will be completed this year with the first sales
anticipated for 1996. Final engineering and permitting for Summerwood, a 200
lot subdivision in Bay County, is expected to be completed by mid summer.
Construction will start this year with the first sales taking place in early
1996. Final permitting is expected by mid year for Camp Creek subdivision,
an 18 lot gulf-front subdivision in Walton County, with sales possible by
year-end. Southwood had approximately $0.3 million in capital expenditures
in 1994 compared to $1.5 million in 1993. The Company has budgeted $1.8
million in capital expenditures for 1995.
The development properties owned and managed by Gran Central total
approximately 17,900 acres. These properties are in thirteen counties
situated in a corridor running along the eastern seaboard of Florida between
Jacksonville and Miami. They include both urban and rural properties on
sites that range in size from parcels of under one acre to a tract of over
6,000 acres. Many of the properties are located on strategic urban streets
or are easily accessible by major highways such as Interstate 95 or U. S.
Route 1 and several are located adjacent to mass transit facilities.
Approximately two-thirds of Gran Central's properties are located in or
adjacent to industrial and commercial corridors, and are well suited to the
development of office buildings, office/distribution parks and industrial
parks. Gran Central has been pursuing planning, permitting and
infrastructure development and now has approximately 3.8 million square feet
of buildings. Approximately 89% of the leasable space was under lease at
year-end 1994 compared to 88% in 1993 and 90% in 1992. In 1994, Gran Central
completed six buildings with a total square footage of 686,000. Gran Central
had capital expenditures of $28.0 million in 1994 compared to $34.1 million
in 1993 and expects to spend $35.3 million in 1995.
Investments
The Company in addition to its operations has investments in U. S.
Government securities, tax exempt municipal bonds, certificates of deposit,
remarketed certificates of participation, common and preferred stocks, and
other corporate debt securities. The Company's marketable securities include
common stock of E. I. duPont de Nemours & Company, General Motors Corporation
and General Motors Corporation Class-H stock.
New Products
Refinements of existing products are developed and introduced in the
forest products segment of the Company every year. During 1994, no single
refinement or group of refinements was introduced which would require the
investment of a material amount of St. Joe's assets or which otherwise would
be considered material.
(13)
Sources and Availability of Raw Materials
During 1994 and 1995 to date, all of the raw materials the Company uses
were available in adequate supply from multiple sources.
St. Joe owns slightly over one million acres of timberland, of which
approximately 700,000 acres are suitable for growing commercial species of
trees. Such timberland is the main source of supply for its linerboard mill
which in turn supplies a major part of the requirements for the Company's
corrugated box operations. The remaining timber requirements for the
linerboard mill are obtained on the open market under short-term contracts.
Talisman owns or leases approximately 55,100 acres of land in Palm
Beach County, Florida, of which approximately 43,000 acres are being used to
grow sugarcane.
Patents and Licenses
St. Joe did not obtain any new patents or licenses in 1994. The
Company has pending one application for a trademark in the Container Company.
Seasonality
The sugarcane production and processing segment is seasonal with one
sugarcane crop being harvested each year. None to little significant
seasonality exists for products or services in the other segments of the
Company.
Working Capital
In general, the working capital practices followed by the Company are
typical of industries in which it operates. During some periods the
accumulation of inventories in the sugar operations prior to expected
shipments reflects the seasonal nature of this industry and may require
periodic short-term borrowing.
Customers
Major customers exist for each of the Company's industry segments. TSC
has a contract with Everglades Sugar Refinery, Inc. to purchase the entire
raw sugar production. This contract runs through the 1997/1998 crop year and
is automatically renewed each crop thereafter. Either party can decline to
renew by giving notice to the other party no later than October 1 of the
fourth year prior to the termination date. No single customer accounts for
10% or more of the Company's consolidated revenues.
Research and Development
St. Joe maintains a nursery and research facility in Capps, Florida,
which grows seedlings for use in reforestation of its lands. Experiments in
forestry genetics, including research on the production of faster growing,
(14)
more disease-resistant pine species, are also conducted at this facility.
The Company also participates through cooperation with the University of
Florida in their Genetics Co-op program. This experimentation work is in
genetics, plantation and fertilization. The amounts spent during the last
three fiscal years on Company-sponsored research and development activities
were not material.
Employees
The Company had approximately 5,000 employees at December 31, 1994.
Approximately 70% of the Company's employees are covered by collective
bargaining agreements with 9 different unions. These agreements generally
have terms of between one and four years and have varying expiration dates.
The Company considers its relations with its employees to be good.
Executive Officers of the Registrant
Set forth below are the names, ages (at March 15, 1995), positions and
offices held, and a brief account of the business experience during the past
five years of each executive officer.
Name Age Position with Company
Winfred L. Thornton 66 Chairman of the Board and Chief
Executive Officer since 1991;
President 1984-1991; Director since
1968; President and Chairman of the
Board of Florida East Coast Industries,
Inc. since 1984; President of FEC
1964-1984.
Robert E. Nedley 56 President since 1991; Vice President
1981-1991; Director since 1989.
Howard L. Brainin 65 Vice President and Director since
1992.
Edward C. Brownlie 57 Vice President - Administration
Director since 1982.
E. Thomas Ford 62 Vice President since 1972;
Director since 1989.
Stanley D. Fraser 70 Vice President since 1972;
Director since 1982.
There are no family relationships among the persons named above. All
officers serve at the pleasure of the Board of Directors of the Company and
there is no arrangement or understanding between any of the officers of the
Company and any other persons pursuant to which such officer was selected as
an officer. Each officer has been elected to the position shown until the
next annual election of officers, which is to be held on May 9, 1995.
(15)
ITEM 2. PROPERTIES
The principal manufacturing facilities and other materially important
physical properties of the Company at December 31, 1994 are listed below and
grouped by industry segment. All properties shown are owned in fee simple
except where otherwise indicated.
Corporate Facilities
Jacksonville, Florida - Occupies approximately one and one-half floors
of a four story Company-owned building.
Forest Products
Forestry Management Facilities
Albany, Georgia Port St. Joe, Florida
Hosford, Florida West Bay, Florida
Newport, Florida Wewahitchka, Florida
Chip Plants
Lowry
Newport
Nursery and Genetics Research Facility
Capps, Florida
Pulpwood Procurement Offices
Port St. Joe, Florida
Paper Mill
Port St. Joe, Florida
Container Manufacturing Plants
Atlanta, Georgia Lake Wales, Florida
Baltimore, Maryland (subject to Industrial
Birmingham, Alabama Revenue Bond Financing
Charlotte, North Carolina $8.5 million)
Chesapeake, Virginia Laurens, South Carolina
Chicago, Illinois Louisville, Kentucky
Dallas, Texas Memphis, Tennessee
Dothan, Alabama Pittsburgh, Pennsylvania
Hartford City, Indiana Port St. Joe, Florida
Houston, Texas
Marketing Offices
Union, New Jersey
(leased)
Agricultural Lands
The Company owns slightly over one million acres of agricultural lands
in Florida and Georgia and leases an additional 4,800 acres.
(16)
Transportation
FEC owns three four-story buildings in downtown St. Augustine which it
uses for its corporate headquarters. Its transportation facilities include
351 miles of main track, which is mostly 132# rail on concrete crossties, 97
miles of branch line track, 210 miles of yard switching track and 124 miles
of other track. FEC owns 79 diesel electric locomotives, approximately 2,800
freight cars, approximately 1,630 tractor and/or trailer units for highway
service, numerous pieces of work equipment and automotive vehicles. All
property and equipment owned is in good physical condition.
Sugar Operations
Belle Glade, Florida. The Company owns approximately 48,600 acres of
land and leases approximately 7,000 acres. In addition, it owns a raw sugar
mill and various types of agricultural equipment.
Communications - Telephone Exchanges and Offices
Alligator Point, Florida Keaton Beach, Florida
Altha, Florida Laurel Hill, Florida
Apalachicola, Florida The Beaches, Florida
Blountstown, Florida Paxton, Florida
Bristol, Florida Perry, Florida
Carrabelle, Florida Port St. Joe, Florida
Chattahoochee, Florida Tyndall AFB, Florida
Eastpoint, Florida Wewahitchka, Florida
Florala, Alabama Wing, Alabama
Hosford, Florida
Real Estate
Southwood owns approximately 50,550 acres of investment land the
majority of which is located in West Florida. The counties with the largest
holdings at December 31, 1994 are as follows:
County Acres
Bay 25,040
Leon 9,753
Franklin 7,049
St. Johns 4,321
Walton 2,012
Wakulla 1,153
In addition to these holdings the Company has another approximately 20,000
acres in West Florida that it considers investment or developable property.
Southwood owns an office building in Panama City, Florida which was completed
in 1991 and contains 11,700 square feet.
(17)
Gran Central at December 31, 1994 owned approximately 17,900 acres of
land held for lease development and/or sale. In addition, it manages
approximately 1,430 acres owned by FEC. The largest holdings by counties are
as follows:
County Acres
Volusia 3,560
St. Johns 3,530
Flagler 3,460
Brevard 2,810
Dade 1,700
Duval 1,530
Manatee 900
Gran Central also owned at year-end 1994 forty-six buildings as
detailed below;
Number of Rentable Year
Location Buildings Type Square Feet Built
duPont Center 1987/
Jacksonville, FL 2 Office 144,000 1988
Barnett Plaza
Jacksonville, FL 1 Office 59,000 1982
Gran Park at
Interstate South Office/Showroom/ 1987/
Jacksonville, FL 6 Warehouses 260,000 1989
Gran Park at
the Avenues 2 Office/Showroom/ 101,000 1992
Jacksonville, FL Warehouses/
2 Office 145,000 1992/
1993
1 Office/Warehouses 139,000 1994
Gran Park at
Melbourne Office/Showroom/
Melbourne, FL 1 Warehouse 28,000 1989
Gran Park at 1 Office/Showroom
Riviera Beach, FL Warehouse 62,000 1987
Lewis Terminals 2 Rail Warehouses 176,000 1982/
1987
4 Cross Docks 75,000 1987/
1991
Gran Park - McCahill
Miami, FL 2 Rail Warehouses 468,000 1992/1994
(18)
Gran Park at Miami
Miami, FL 5 Office/Showroom/ 368,000 1988/
Warehouses 1990/
1992/
1994
4 Office/Warehouses 382,000 1990/
1991/
1992/
1993
4 Rail Warehouses 398,000 1989/
1990/
1993/
1994
5 Front Load Warehouses 604,000 1991/
1992/
1993
1 Double Front Load
Warehouse 239,000 1993
1 Office Service Center 41,000 1994
Hialeah, FL 1 Cross Dock 20,000 1987
Pompano, FL 1 Rail Warehouse 54,000 1987
TOTAL 46 3,763,000
Gran Central's holdings include lands adjacent to FEC tracks which are
suitable for development into office and industrial parks offering both rail
and non-rail-served parcels. Certain other holdings are in urban or suburban
locations offering opportunities for development of office building
structures or business parks offering both office building sites and sites
for flexible space structure such as office/showroom/warehouse buildings.
General
St. Joe considers that its facilities are suitable and adequate for the
operations involved. All facilities are being productively utilized in the
business.
ITEM 3. LEGAL PROCEEDINGS
The Forest Products segment of the Company has suits pending in several
counties in West Florida contesting ad valorem tax assessments. In 1994, the
Company's mill was named as a potentially responsible party under Federal
regulations for the cleanup of a designated Superfund site in Tampa, Florida.
The alleged violation occurred in the late 1970's or early 1980's. The
Company has investigated this claim and has found no evidence that material
from the mill was dumped at this site and therefore, it should not have been
named as a party in this matter.
(19)
The Registrant, through its Transportation subsidiary, Florida East
Coast Railway (FEC), was involved in a legal action versus CSX
Transportation, Inc. (CSXT), alleging, in part, violations of a 1978
Agreement between CSXT and FEC and, in part, violations of the Sherman Act.
The complaint alleged that CSXT has, by its actions, placed FEC in a position
such that it could not fairly compete with CSXT for certain carload traffic
destined to or from South Florida points served by the two railroads. In
early 1992, CSXT petitioned the ICC to reopen the merger proceedings for the
purpose of eliminating the merger conditions set down by the ICC in the 1967
merger of ACL/SAL railroads. Under the conditions set by the ICC prior to
merger, the merged company, CSXT, was required to cooperate with FEC in
matters of rates, routes, and service in a fashion allowing FEC to compete
effectively with CSXT on traffic to and from West Palm Beach southward. A
tentative Order by the U.S. District Court dated February 19, 1993, found
that contract rates were included in the 1978 Agreements, but that CSXT could
not be required to establish an equal joint-line contract rate since the
Court views such action as a form of price-setting which is illegal. As
reported in 1993, appeals were made in the U.S. District Court in Chicago and
before the Interstate Commerce Commission in Washington. Both actions were
resolved in favor of CSXT and the Company will not contest this issue
further.
The FEC is also involved in legal actions against the Florida
Department of Revenue (FDR), and several counties of the state, for its ad
valorem assessment covering the years 1987 through 1991. The FDR received a
favorable decision on this case in 1991 for the years 1987 and 1988 which the
FEC appealed. The years 1989 through 1991 which had been stayed, pending the
outcome of the above case, have now been assessed and form the basis for new
suits. In the third quarter of 1993 the FDR and FEC reached a settlement of
$13.5 million as the total amount of ad valorem taxes due for the years 1987
through 1991.
The FEC and ANRR are involved in various proceedings associated with
environmental issues. See page 8 under discussion of the Transportation
segment for details.
ANRR has filed action in the courts against the FDR and several
counties of the state on its ad valorem assessment covering the years 1987
through 1993. The suit covering the years 1987 and 1988 was being held in
abeyance, pending final determination of the companion case of the FEC
discussed above. Since the FDR settlement with the FEC, they have billed the
ANRR $0.3 million as the amount required to settle the case covering these
two years. The suit for the years 1989 through 1993 which was scheduled to
be heard by the courts in 1993 has been reset for 1994. The amount at issue
for these five years is approximately $0.6 million. The Company expects
these cases will be settled in 1995.
The Company knows of no other pending or contemplated legal proceedings
other than ordinary routine litigation incidental to the business or property
of the Company.
(20)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of the Company's 1994
fiscal year to a vote of security holders, whether by solicitation of proxies
or otherwise.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON
STOCK AND RELATED STOCKHOLDER MATTERS
Incorporated by reference to the 1994 Annual Report to Stockholders on
page 11.
The Company has established a regular quarterly cash dividend of $.05
per share. The dividend of $.05 per share for the first quarter of 1995 is
payable on March 31, 1995 on record date of March 24, 1995.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated by reference to the 1994 Annual Report to Stockholders on
page 11.
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
Incorporated by reference to the 1994 Annual Report to Stockholders
Balance Sheet - Page 13
Statement of Income - Page 15
Statement of Cash Flow - Page 18
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements on page 12 to 29, inclusive and the
Independent Auditors' Report on page 30 of the Annual Report to Stockholder
for 1994 are filed as part of this Report and incorporated herein by
reference thereto.
(21)
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT
Reference is made to the information to be set forth in the section
entitled "Election of Directors" in the definitive proxy statement involving
the election of directors in connection with the Annual Meeting of Stock-
holders of St. Joe to be held on May 9, 1995 (the "Proxy Statement"), which
section is incorporated herein by reference. The Proxy Statement will be
filed with the Securities and Exchange Commission not later than 120 days
after December 31, 1994, pursuant to Regulation 14A of the Securities
Exchange Act of 1934, as amended.
The information required with respect to executive officers is set
forth in Part I of this Report under the heading "Executive Officers of the
Registrant", pursuant to instruction 3 to paragraph (b) of Item 401 of
Regulation S-K.
ITEM 11. EXECUTIVE COMPENSATION
Reference is made to the information to be set forth in the section
entitled "Compensation of Directors' in the Proxy Statement, which section is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Reference is made to the information to be set forth in the section
entitled "Common Stock Ownership of Certain Beneficial Owners" and "Common
Stock Ownership of Management" in the Proxy Statement, which sections are
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
(22)
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT, SCHEDULES AND
REPORTS ON FORM 8-K
(a) 1. Financial Statements
The financial statements listed in the accompanying Index
to Financial Statements and Financial Statement Schedules
are filed as part of this Report.
2. Financial Statement Schedules
The financial statement schedules listed in the
accompanying Index to Financial Statements and Financial
Statement Schedules are filed as part of this report.
3. Exhibits
The exhibits listed on the accompanying Index to Exhibits
are filed as part of this Report.
(b) Reports on Form 8-K
None
(23)
(PAGE)
ST. JOE PAPER COMPANY
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
(Item 14(a) 1. and 2.)
Reference
Annual Report
Form 10-K To Stockholders
Page Number Page Number
Report of Independent Certified Public
Accountants F-1 30
Consolidated Balance Sheet at December
31, 1994 and 1993 12
Consolidated Statement of Income for each
of the three years in the period ended
December 31, 1994 14
Consolidated Statement of Changes in
Stockholders' Equity for each of the
three years in the period ended
December 31, 1994 14
Consolidated Statement of Cash Flows for
each of the three years in the period ended
December 31, 1994 17
Notes to Consolidated Financial Statements 19-29
Consolidated Schedules for each of the three years
in the period ended December 31, 1994:
VIII - Valuation and Qualifying Accounts S-1
XI - Real Estate and Accumulated Depreciation S-2-7
All other schedules have been omitted since the required information is
not present or not present in amounts sufficient to require submission of the
schedule or because the information required is included in the consolidated
financial statements, including the summary of significant accounting policies
and the notes to the consolidated financial statements.
(24)
ST. JOE PAPER COMPANY
INDEX TO EXHIBITS
(Item 14(a) 3.)
S-K
ITEM 601 Documents Page
(3) (a) Articles of Incorporation *
(3) (b) By-Laws *
(10) (b) Agreement between Apalachicola and
Seminole Electric Cooperative,
Incorporated dated October 14, 1982 *
(b) Agreement between Talisman Sugar
Corporation and Everglades Sugar
Refinery dated February 11, 1986 **
(21) Subsidiaries of St. Joe (filed
herewith and attached) E-1
(24) Powers of Attorney E-2 - E-3
*Incorporated herein by reference to Exhibits filed in connection
with St. Joe Paper Company Registration Statement on Form 10 as
filed with the Securities and Exchange Commission on April 30, 1984
(File No. 1-12001).
**Incorporated herein by reference to Exhibits filed with the
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1990.
(25)
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 on February 28, 1995.
ST. JOE PAPER COMPANY
By:
Edward C. Brownlie
Vice President
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 indicated on March
8, 1995.
Chairman of the Board and
W. L. Thornton* Chief Executive Officer
Winfred L. Thornton
Jacob C. Belin* Chairman of the Executive
Jacob C. Belin Committee
President, Chief
Operating Officer and
Robert E. Nedley* Director
Robert E. Nedley
Vice President and
Stanley D. Fraser* Director
Stanley D. Fraser
Vice President and
Howard L. Brainin* Director
Howard L. Brainin
Vice President and
Director (principal
financial officer)
Edward C. Brownlie
Richard H. Dent* Director
Richard H. Dent
(26)
Vice President and
E. Thomas Ford* Director
E. Thomas Ford
Russell B. Newton, Jr.* Director
Russell B. Newton, Jr.
Walter L. Revell* Director
Walter L. Revell
John D. Uible* Director
John D. Uible
Comptroller (principal
accounting officer)
D. Michael Groos
By:
Edward C. Brownlie
Attorney-in-Fact
*Such signature has been affixed pursuant to Power of Attorney.
See Exhibit 24.
(27)
Independent Auditors' Report
The Board of Directors and Stockholders
St. Joe Paper Company:
Under date of February 28, 1995, we reported on the consolidated balance
sheets of St. Joe Paper Company and subsidiaries as of December 31, 1994
and 1993, and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1994, as contained in the 1994 annual report to
stockholders. These consolidated financial statements and our report thereon
are incorporated by reference in the annual report on Form 10-K for the year
1994. In connection with our audits of the aforementioned consolidated
financial statements, we also have audited the related financial statement
schedules as listed in the accompanying index. These financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statement
schedules based on our audits.
In our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
As disclosed in notes 2 and 6 to the consolidated financial statements,
the Company changed its method of accounting for investments to adopt
the provisions of the Financial Accounting Standards Board's Statement
of Financial Accounting Standards (SFAS) No. 115, "Accounting for
Certain Investments in Debt and Equity Securities" at December 31,
1993. As disclosed in notes 2 and 8, the Company changed its method of
accounting for income taxes effective January 1, 1993 to adopt the
provisions of the Financial Accounting Standards Board's SFAS No. 109,
"Accounting For Income Taxes".
KPMG PEAT MARWICK LLP
Certified Public Accountants
Jacksonville, Florida
February 28, 1995
F-1
ST. JOE PAPER COMPANY
SCHEDULE VIII (CONSOLIDATED)
VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31, 1994, 1993 and 1992
(Dollars in thousands)
Balance at Additions
Beginning Charged to Balance
Reserves included in of Year Expense Payments End of Year
Liabilities
1994
Accrued casualty reserves 22,911 9,995 5,122 27,784 (a)
1993
Accrued casualty reserves 22,916 2,443 2,448 22,911 (a)
1992
Accrued casualty reserves 23,043 3,774 3,901 22,916 (a)
(a) Includes $13,250, $11,601 and $11,213 in current liabilities at
December 31, 1994, 1993 and 1992, respectively. The remainder
is included in "Accrued casualty reserves and other liabilities."
S-1
ST. JOE PAPER COMPANY
SCHEDULE XI (CONSOLIDATED)
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1994, 1993 and 1992
(Dollars in thousands)
Initial Cost to Company
Costs
Buildings Capitalized
Encum- & Tenant Subsequent to
Description brance Land Improvements Acquisition
Duval County
Office Buildings (5) 0 1,153 6,200 26,508
Office/Showroom/Warehouse(9) 0 1,502 23,234
Land w/ Infrastructure 0 6,593 6,786
City & Residential Lots 0 371 5 77
Unimproved land & misc assets 0 915 1,548
St. Johns County
Land w/ Infrastructure 0 10 1,045
Unimproved land 0 2,631 411
Flagler County
Unimproved land 0 3,218 1,137
Volusia County
Unimproved land 0 3,651 501
Brevard County
Office/Showroom/Warehouse 0 73 1,900
Land w/ Infrastructure 0 3,797 0
Unimproved land 0 4,846 191
Indian River County
Unimproved land 0 218 189
St. Lucie County
Unimproved land 0 639 5
Martin County
Unimproved land 0 4,671 2,344
Palm Beach County
Office/Showroom/Warehouse 0 113 2,879
Rail Warehouses (2) 0 449 4,110
Cross Docks (4) 0 117 3,763
Land w/ Infrastructure 0 1,259 0
Unimproved land 0 1,596 0
Broward County
Rail Warehouse 0 85 1,701
Unimproved land 0 733 701
Dade County
Office/Showroom/Warehouses (5) 0 1,003 14,782
Office/Warehouses (5) 0 1,747 14,960
Rail Warehouses (6) 0 808 24,607
Cross Dock 0 137 1,018
Double Front Load Warehouse 0 768 5,485
Front Load Warehouses (5) 0 1,943 16,066
Land w/ Infrastructure 0 2,577 7,854
S-2
ST. JOE PAPER COMPANY
SCHEDULE XI (CONSOLIDATED)
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1994, 1993 and 1992
(Dollars in thousands)
Initial Cost to Company
Costs
Buildings Capitalized
Encum- & Tenant Subsequent to
Description brance Land Improvements Acquisition
Dade County (continued)
Unimproved land & misc assets 0 15,725 9,733
Putnam County
Unimproved land 0 2 0
Manatee County
Unimproved land 0 14 78
Gulf County
Unimproved land 0 559 180
Bay County
Land w/ Infrastructure 0 1 121
Office Building 0 1 1,195
Unimproved land & misc assets 0 517 121
Leon County
Land w/ Infrastructure 0 603 46
Walton County
Land w/ Infrastructure 0 120 480
Other Counties
Unimproved land 0 105 1,949
Grand Total 0 65,270 6,205 177,705
S-3
ST. JOE PAPER COMPANY
SCHEDULE XI (CONSOLIDATED)
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1994, 1993 and 1992
(Dollars in thousands)
Gross Amount at Which
Carried as of December 31, 1994
Land & Buildings &
Land Tenant
Description Improvement Improvement Total
Duval County
Office Buildings (5) 3,917 29,944 33,861
Office/Showroom/Warehouses (9) 5,003 19,733 24,736
Land w/ Infrastructure 13,379 13,379
City & Residential Lots 371 82 453
Unimproved land & misc assets 2,289 174 2,463
St. Johns County
Land w/ Infrastructure 1,055 1,055
Unimproved land 3,042 3,042
Flagler County
Unimproved land 4,355 4,355
Volusia County
Unimproved land 4,152 4,152
Brevard County
Office/Showroom/Warehouse 438 1,535 1,973
Land w/ Infrastructure 3,797 3,797
Unimproved land 5,037 5,037
Indian River County
Unimproved land 407 407
St. Lucie County
Unimproved land 644 644
Martin County
Unimproved land 7,015 7,015
Palm Beach County
Office/Showroom/Warehouse 599 2,393 2,992
Rail Warehouses (2) 557 4,002 4,559
Cross Docks (4) 1,262 2,618 3,880
Land w/ Infrastructure 1,259 1,259
Unimproved land 1,596 1,596
Broward County
Rail Warehouse 405 1,381 1,786
Unimproved land 1,434 1,434
Dade County
Office/Showroom/Warehouses (5) 3,150 12,635 15,785
Office/Warehouses (5) 3,518 13,189 16,707
Rail Warehouses (6) 4,837 20,578 25,415
Cross Dock 137 1,018 1,155
Double Front Load Warehouse 1,409 4,844 6,253
Front Load Warehouses (5) 4,326 13,683 18,009
S-4
ST. JOE PAPER COMPANY
SCHEDULE XI (CONSOLIDATED)
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1994, 1993 and 1992
(Dollars in thousands)
Gross Amount at Which
Carried as of December 31, 1994
Land & Buildings &
Land Tenant
Description Improvement Improvement Total
Dade County (continued)
Land w/ Infrastructure 10,431 10,431
Unimproved land & misc assets 25,126 332 25,458
Putnam County
Unimproved land 2 2
Manatee County
Unimproved land 92 92
Gulf County
Unimproved land 739 739
Bay County
Land w/ Infrastructure 88 34 122
Office Building 1 1,195 1,196
Unimproved land & misc assets 524 114 638
Leon County
Land w/ Infrastructure 610 39 649
Walton County
Land w/ Infrastructure 600 600
Other Counties
Unimproved land 2,012 42 2,054
Grand Total 119,615 129,565 249,180
S-5
ST. JOE PAPER COMPANY
SCHEDULE XI (CONSOLIDATED)
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1994, 1993 and 1992
(Dollars in thousands)
Life on Which
Accum- Depreciation in
ulated Date Latest Income
Depre- Started or Statement is
Description ciation Acquired Computed
Duval County
Office Buildings (5) 5,141 1985 3 to 40 years
Office/Showroom/Warehouses (9) 3,484 1987 3 to 40 years
Land w/ Infrastructure Various
City & Residential Lots 59 Various 3 to 40 years
Unimproved land & misc assets 173 Various 3 to 40 years
St. Johns County
Land w/ Infrastructure Various
Unimproved land Various
Flagler County
Unimproved land Various
Volusia County
Unimproved land Various
Brevard County
Office/Showroom/Warehouse 352 1988 3 to 40 years
Land w/ Infrastructure Various
Unimproved land Various
Indian River County
Unimproved land Various
St. Lucie County
Unimproved land Various
Martin County
Unimproved land Various
Palm Beach County
Office/Showroom/Warehouse 647 1986 3 to 40 years
Rail Warehouses (2) 1,034 1982 3 to 40 years
Cross Docks (4) 747 1987 3 to 40 years
Land w/ Infrastructure Various
Unimproved land Various
Broward County
Rail Warehouse 492 1986 3 to 40 years
Unimproved land Various
Dade County
Office/Showroom/Warehouses (5) 1,826 1988 3 to 40 years
Office/Warehouses (5) 1,413 1990 3 to 40 years
Rail Warehouses (6) 1,554 1988 3 to 40 years
Cross Dock 210 1987 3 to 40 years
Double Front Load Warehouse 321 1993 3 to 40 years
Front Load Warehouses (5) 989 1991 4 to 40 years
Land w/ Infrastructure
S-6
ST. JOE PAPER COMPANY
SCHEDULE XI (CONSOLIDATED)
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1994, 1993 and 1992
(Dollars in thousands)
Life on Which
Accum- Depreciation in
ulated Date Latest Income
Depre- Started or Statement is
Description ciation Acquired Computed
Dade County (continued)
Unimproved land & misc assets 1,891 Various 3 to 40 years
Putnam County
Unimproved land Various
Manatee County
Unimproved land Various
Gulf County
Unimproved land 24
Bay County
Land w/ Infrastructure
Office Building 174 1993 3 to 40 years
Unimproved land & misc assets 13 Various 3 to 40 years
Leon County
Land w/ Infrastructure 11 Various 3 to 40 years
Walton County
Land w/ Infrastructure
Other Counties
Unimproved land 41 Various
Grand Total 20,596
Notes
(a) The aggregate cost of real estate owned at December 31, 1994
for federal income tax purposes is $140,875.
1994 1993 1992
(b) Reconciliation of real estate owned:
Balance at beginning of year 222,498 192,466 162,083
Amounts capitalized 28,350 31,691 30,690
Amounts retired or adjusted (1,668) (1,659) (307)
Balanced at close of period 249,180 222,498 192,466
(c) Reconciliation of accumulated depreciation:
Balance at beginning of year 15,475 11,306 8,127
Depreciation expense 5,145 4,169 3,272
Amounts retired or adjusted (24) (93)
Balanced at close of period 20,596 15,475 11,306
(d) Table excludes $25,148 of real estate construction in progress
S-7