Annual Report (Form 10-K), fiscal year 1993

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 12 to the Consolidated Financial Statements on pages 33 and 34 of the 1993 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,
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*
1993 444,005 1,254 1992 425,087 1,266 1991 433,352 1,308 1990 454,342 1,327 1989 457,638 1,386
*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 1992 and 1993, approximately 42% and 45%, 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 1992 sold at approximately 30% over the price of unbleached linerboard while in 1993 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 72% of the Company's mottled white linerboard production in 1993 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 $38.6 for the 1992 capital and maintenance expenditures. The 1994 budget for maintenance and upgrade at the paper mill is $23.4 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 1993 fuel oil and natural gas accounted for 34.4% of mill energy requirements. Black Liquor solids and biomass supplied the balance of mill requirements. Approximately 41% of the biomass burned at the mill in 1993 was harvested from lands owned by the Company or by-products of the Company's timber harvesting and woodchipping operations.
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 1993 produced approximately 7.1 billion square feet of containerboard. In 1993, 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 87% of the container plants' requirements for linerboard and corrugating medium for 1993 which was up from the 84% that was supplied in 1992.
The Company's container plants accounted for approximately 1.9% of the total national industry shipments during 1993 down from the approximately 2.1% in 1992. The Company's corrugated container business services approximately 2,750 customers. The single largest customer accounted for approximately 4.2% of the Company's corrugated container shipments for 1993 and the ten largest customers accounted for approximately 16.9% of the Company's 1993 corrugated container revenues.
The Company considers its container plant facilities to be in satisfactory condition. To maintain and upgrade these facilities, the Company spent $6.3 million in 1993 and has adopted a budget of $7.5 million for its 1994 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.
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 598,000 acres have been planted as managed plantations to facilitate harvesting and reforestation and to maximize timber yields. During the current planting season, November, 1993 through the end of February, 1994 the Company planted 18,305,000 seedlings on 24,775 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 1,071,398 tons or 56% of mill wood requirements in 1993, compared to 60% in 1992. 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 1993 and 1992, recycled or secondary fiber supplied approximately 17% and 15% respectively of the mill's total fiber requirements. We expect to use approximately 22% recycled fiber in our 1994 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 1993 and 1992 capital expenditures in the forestry operations were approximately $5.3 million and $5.1 million, respectively. The Company has adopted a capital expenditure program for 1994 to reinvest approximately $6.7 million in these operations. These expenditures include our nursery expense and includes our tree planting.
In 1993 the mill at Port St. Joe spent $1.2 million on environmental related items. These were in the area of asbestos removal and disposal, recovery boiler precipitator, and the heat exchanger on steam stripper. The Company has budgeted $3.9 million in 1994 for predominantly capitalized environmental items. The main items in 1994 will be for additional asbestos removal and disposal, Phase II - replacing recovery boiler precipitator, disposal of equipment containing PCB and upgrade, and installing system to remove solids and enlarge effluent ditch in the recovery boiler area.
The mill at Port St. Joe is in compliance at this time in all environmental areas under the present existing laws, rules and permits as far as we know. 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 the last half of 1994. Compliance with the final rules as presently drafted will be required by 1998. Our greatest 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 we have no major environmental problems that we are aware of at this time. In 1993, we had some expense at several plants, mostly for tank removals, with the total for all plants being less than $0.2 million. We anticipate spending approximately $0.8 million in 1994 on similar items.
The forestry operation continues to have no major environmental problems. The one area of expense in 1993 was at one of the forestry units in connection with fuel contamination of soil. Approximately $0.1 million was spent on this in 1993 and it is estimated that $0.3 will be spent in 1994 for clean-up and monitoring the ground water. We do not expect any problems at any of our 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.
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,
1993 1992 1991
Operating revenues $ 162,318 $ 138,736 $ 138,212 Operating income 28,843 18,876 11,900 Operating margin 17.8% 13.6% 8.6% Tonnage 14,709 13,772 16,107 Revenue ton miles 4,257,000 4,157,594 3,862,377
The FEC had capital expenditures in 1993 of $19.8 million in addition to maintenance expenditures of $53.7 million. This compares to 1992 capital expenditures of $17.9 million and 1991 of $14.6 million. The maintenance expense in 1992 was $33.8 million and 1991, $56.0 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 1993, 67.5% of its carloads were carrying coal. The carloads of coal carried in 1992 and 1991 were 67.8% and 67.3% 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 1993 carloads, 24.1% in 1992 and 24.3% in 1991. 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,
1993 1992 1991
Operating revenues $ 12,685 $ 12,366 $ 12,865 Operating income 1,969 2,614 2,558 Operating margin 15.5% 21.1% 19.9% Tonnage 4,187 4,047 4,149 Revenue ton miles 401,907 380,696 389,418
Capital expenditures by the ANRR in 1993 were $4.2 million which compares to 1992 capital expenditures of $3.4 million and 1991 of $3.0 million. The ANRR has budgeted $4.7 million in 1994 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 managements 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 $1.8 million in 1993 for both capital expenditures and expense and are budgeted for $1.0 million in 1994.
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 1993 owned approximately 47,900 acres of agricultural land and leased approximately 7,200 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 1993-1994 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
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 1,227,000 tons of sugarcane in 1991, approximately 1,296,000 tons in 1992 and approximately 1,321,000 tons of sugarcane in 1993 from Company operated lands. The amount of sugarcane ground in the years 1991, 1992 and 1993 from prior years was greatly increased due to good weather conditions, and 1991 was the first year we had sugarcane from the additional lands purchased in 1989 and 1990. The Company ground an additional 170,000 tons in 1991 for other sugar growers in exchange for a percentage of the sugar and molasses obtained from this sugarcane. In 1992 and 1993 the Company did not grind any cane grown by or for others. Total raw sugar production for the Company was approximately 134,000 tons in 1991, 117,000 in 1992, and 119,000 in 1993. These amounts include 10,000 tons in 1991, that were delivered to the other sugar growers with whom the Company had the grinding arrangement explained above.
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 is extended 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. 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.
The Florida Department of Environmental Regulation with other state and federal agencies continue to assess all farming operations, especially the sugar operation in that area, for its effect on Lake Okeechobee. These state and federal agencies currently are concerned with the phosphate in fertilizer used by vegetable farmers and sugarcane growers, running into the Everglades. These agencies want the farmers to reduce the amount of phosphate in the storm water run-off from their property. As with the Forest segment of the Company, the concern in the Sugar segment is 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.
Capital expenditures by TSC in 1993 were $2.9 million and compares to $7.4 million in 1992 and $1.0 million in 1991. The capital expenditures budget for 1994 is $2.4 million.
The Company had only minor expenditures for environmental problems, less than $0.2 million, in 1993. The only environmental problem TSC has, at present, is in the removal of water from our property. The Water Management District (WMD) required TSC to install equipment to monitor the quality and quantity of water being pumped out of our pumping stations. We are, at present, installing this equipment and this project should be completed by the end of April, 1994.
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 13% to 51% and are to provide cellular telephone service in their operating territory. These four partnerships operate in the (1) Tallahassee - - Perry, Florida area and serve six counties in Florida (2) Port St. Joe, Florida and serve four counties in Florida (3) Fort Walton Beach, Florida area and serve five counties in Florida and (4) southeast Alabama serving twelve counties in Alabama. These partnerships operated 50 cell sites at December 31, 1993 having added 21 cell site in 1993 and we anticipate adding 16 more in 1994.
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. We also own 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 290 miles. This network is used exclusively to serve intercompany and intracompany routes. The intracompany routes are wholly within each company and 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.
SJCI has a policy to invest in the latest, most advanced equipment and technology. In keeping with this policy SJCI expended $5.3 million on capital improvements in 1993 which compares to $7.6 million that was spent in 1992 and $6.3 million in 1991. SJCI has budgeted $5.0 million for 1994 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 setting up of the Real Estate segment was done to make 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.
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. The state'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.
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 Land Development Regulations 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, 1993 was 100% leased. Site work needed to start the next building at this location was completed during 1993 and construction will start in the second half of 1994. Southwood, in 1993, sold the remaining 16 lots in Woods I, 42 of the 44 lots in Woods II and 7 lots of the remaining 8 lots in the Woodmere subdivisions, all being in Panama City. The Company sold 47 of the 67 lots for sale at Old Florida Beach subdivision, Walton County, Florida. One lot was used for a swimming pool and pool house which was completed in 1993. In 1993 design and permitting began in Phase III of the Woods for 50 lots with construction to begin by midyear and sales expected by late 1994. The Retreat, which will be a 100 lot, gulf-front subdivision near Old 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 1995. Design is currently taken place and permits being sought for a 200 lot subdivision in Panama City Beach. Phase I of this project being 45 lots will start this year with the first sales taking place in late 1994 or early 1995. Southwood had approximately $1.5 million in capital expenditures in 1993 compared to $1.3 million in 1992. The Company has budgeted $2.8 million in capital expenditures for 1994.
The development properties owned and managed by Gran Central total approximately 19,300 acres. All of these properties have a situs in thirteen counties and are 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 3.2 million square feet of buildings constructed or purchased under management. Approximately 88% of this leasable space was under lease at year-end 1992 compared to 90% in 1992 and 91% in 1991. These are generally at its business/distribution parks, using only a small percentage of its acreage. In 1993 Gran Central completed six buildings with a total square footage of 743,000. Gran Central had capital expenditures of $34.1 million in 1993 compared to $36.0 million in 1992 and expects to spend $19.8 million in 1994.
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 market value of these is set forth in
the consolidated schedule entitled Marketable Securities - Other Investments, on page S-1 of this Report. 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 1993, 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.
Sources and Availability of Raw Materials
During 1993 and 1994 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 1993. 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, 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 5,160 employees at December 31, 1993. 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, 1994), 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 65 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 55 President since 1991; Vice President 1981-1991; Director since 1989.
Howard L. Brainin 64 Vice President and Director since 1992.
Edward C. Brownlie 56 Vice President - Administration Director since 1982.
E. Thomas Ford 61 Vice President since 1981; Director since 1989.
Stanley D. Fraser 69 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 10, 1994.
ITEM 2.



ITEM 2. PROPERTIES
The principal manufacturing facilities and other materially important physical properties of the Company at December 31, 1993 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.
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, 91 miles of branch line track, 157 miles of yard switching track and 184 miles of other track. FEC owns 79 diesel electric locomotives, approximately 2,810 freight cars, approximately 1,750 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 47,900 acres of land and leases approximately 7,200 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
The Company in its corporate and Southwood holdings 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, 1993 are as follows:
County Acres
Bay 25,835 Franklin 7,049 Leon 9,759 St. Johns 4,321 Wakulla 1,153 Walton 2,012
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.
Gran Central at December 31, 1993 owned approximately 17,900 acres of land held for lease development and/or sale. The largest holdings by counties are as follows:
County Acres
Brevard 2,478 Dade 1,595 Duval 1,482 Flagler 3,462 Manatee 884 St. Johns 3,321 Volusia 3,136
Gran Central also owned at year-end 1993 forty-one 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/ -18-
Gran Park at Melbourne Office/Showroom/ Melbourne, FL 1 Warehouse 28,000 1989
Gran Park at Lewis Terminals 1 Office/Showroom Riviera Beach, FL Warehouse 62,000 1987 2 Rail Warehouses 176,000 1982/ 2 Cross Docks 29,000 1987 2 Cross Docks 46,000 1991
Gran Park - McCahill Miami, FL 1 Rail Warehouse 302,000 1992
Gran Park at Miami Miami, FL 4 Office/Showroom/ 291,000 1988/ Warehouses 1990/
4 Office/Warehouses 382,000 1990/ 1991/ 1992/
3 Rail Warehouses 258,000 1989/ 1990/
5 Front Load Warehouses 604,000 1991/ 1992/
1 Double Front Load Warehouse 239,000 1993
Hialeah, FL 1 Cross Dock 20,000 1987
Pompano, FL 1 Rail Warehouse 54,000 1987
TOTAL 41 3,200,000
Realty's holdings include lands adjacent to Railway's 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.

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. The Company reported last year that it was having meetings with EPA to resolve the alleged permit violations at the City of Port St. Joe Wastewater Treatment plant during the last half of 1989. The Company has reached an agreement with the U. S. Department of Justice and EPA to settle this suit with the Company paying $325,000. The Judge in the case issued an order for dismissal of the case in January, 1994. In February, 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 we had material from our mill dumped at this site and therefore, we should not have been named as a party in this matter.
In the Transportation segment FEC has a suit pending against CSXT Transportation, Inc. (CSXT) for their violations of the 1978 Agreement between CSXT and FEC and in part, violations of the Sherman Act. This complaint was filed as a result of General Motors Corporation moving their automotive traffic from FEC to CSXT. FEC contends that CSXT has placed FEC in a position that it cannot fairly compete with CSXT. In February 1993, the U. S. District Court found that contract rates were included in the 1978 Agreement, but that CSXT cannot be required to establish an equal joint-line contract rate since the Court views such action as a form of illegal price- setting. This Order is being appealed to the U. S. District Court of Appeals.
In 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 merger conditions set by the ICC, CSXT is required to cooperate with the FEC in matters of rates, routes and service covering traffic to and from West Palm Beach south. The request of CSXT before the ICC is still in the opening evidence and argument stage.
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 obeyance, 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 1994.
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.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of the Company's 1993 fiscal year to a vote of security holders, whether by solicitation of proxies or otherwise.
PART II ITEM 5.

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Incorporated by reference to the 1993 Annual Report to Stockholders on page 15.
The Company has established a regular quarterly cash dividend of $.05 per share. The dividend of $.05 per share for the first quarter of 1994 was payable on March 31, 1994 on record date of March 24, 1994.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
Incorporated by reference to the 1993 Annual Report to Stockholders on page 15.
ITEM 7.

ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Incorporated by reference to the 1993 Annual Report to Stockholders
Balance Sheet - Page 17 Statement of Income - Page 19 Statement of Cash Flow - Page 23
ITEM 8.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements on page 16 to 34, inclusive and the Independent Auditors' Report on page 35 of the Annual Report to Stockholder for 1993 are filed as part of this Report and incorporated herein by reference thereto.
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10.



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 10, 1994 (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, 1993, 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.
On December 27, 1993 the Alfred I. duPont Testamentary Trust, which owned prior to that date 21,291,900 shares of the Company's common stock or 69.8%, transferred 222,799 shares of this stock to The Nemours Foundation (Nemours). Nemours is a beneficiary of the Trust. The Trust did not file Form 4, Statement of Changes of Beneficial Ownership of Securities and Nemours did not file Form 3, Initial Statement of Beneficial Ownership of Securities. The Trust and Nemours both timely filed Form 5, Annual Statement of Changes in Ownership, which was due by the 45th day after the end of calendar year 1993.
ITEM 11.

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.

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.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
PART IV
ITEM 14.

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
ST. JOE PAPER COMPANY
AND FINANCIAL STATEMENT SCHEDULES
(Item 14(a) 1. and 2.)
Reference
Annual Report To Form 10-K Stockholders Page Number Page Number
Report of Independent Certified Public Accountants 36
Consolidated Balance Sheet at December 31, 1993 and 1992 16
Consolidated Statement of Income for each of the three years in the period ended December 31, 1993 18
Consolidated Statement of Changes in Stockholders' Equity for each of the three years in the period ended December 31, 1993 18
Consolidated Statement of Cash Flows for each of the three years in the period ended December 31, 1993 22
Notes to Consolidated Financial Statements 24-35
Consolidated Schedules at December 31, 1993:
I - Marketable Securities - Other Investments S-1
Consolidated Schedules for each of the three years in the period ended December 31, 1993:
V & VI - Property, Plant & Equipment/ Accumulated Depreciation S-2
VIII - Valuation and Qualifying Accounts S-3
X - Supplementary Income Statement Information S-4
XI - Real Estate and Accumulated Depreciation S-5-10
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.
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) Power of Attorney E-2
*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.
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 March 8, 1994.
ST. JOE PAPER COMPANY
By: Stanley D. Fraser 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, 1994.
Chairman of the Board and W. L. Thornton* Chief Executive Officer Winfred L. Thornton
Jacob C. Belin* Chairman of the Executive Committee Jacob C. Belin
President, Chief Operating Officer and Robert E. Nedley* Director Robert E. Nedley
Vice President and Director (principal) financial officer) Stanley D. Fraser
Vice President and Howard L. Brainin* Director Howard L. Brainin
Vice President and E. C. Brownlie* Director Edward C. Brownlie
T. S. Coldewey* Director Thomas S. Coldewey
Tully F. Dunlap* Director Tully F. Dunlap
Vice President and E. Thomas Ford* Director E. Thomas Ford
Robert J. A. Irwin* Director Robert J. A. Irwin
R. Eugene Taylor* Director R. Eugene Taylor
W. Taliaferro Thompson, III* Director W. Taliaferro Thompson, III
Comptroller (principal accounting officer) D. Michael Groos
By: Stanley D. Fraser Attorney-in-Fact
*Such signature has been affixed pursuant to Power of Attorney. See Exhibit 24.
Independent Auditors' Report
The Board of Directors and Stockholders St. Joe Paper Company:
Under date of February 28, 1994, we reported on the consolidated balance sheets of St. Joe Paper Company and subsidiaries as of December 31, 1993 and 1992, 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, 1993, as contained in the 1993 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 1993. 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 discussed in notes 2 and 3 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 discussed in notes 2 and 9, 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 Certified Public Accountants
Jacksonville, Florida February 28, 1994
ST. JOE PAPER COMPANY SCHEDULE I (CONSOLIDATED) MARKETABLE SECURITIES - OTHER INVESTMENTS December 31, 1993 (Dollars in thousands)
Name of issuer and Number of shares or Market Carrying title of each issue principal amount Cost Value Value Short-term U. S. Government securities $28,000 principal $27,658 $ 28,214 $27,695 Tax exempt municipals (1) 2,375 principal 2,401 2,376 2,401 Remarketed certificates of participation (1) 5,000 principal 5,000 5,028 5,028 Certificates of deposit (1) 31,063 principal 31,063 31,183 31,183 $66,122 $ 66,801 $66,307
Long-term Common and preferred stocks: E. I. duPont de Nemours & Company 782,100 shares $ 1,051 $37,736 $37,736 General Motors Corporation 500,480 shares 455 27,464 27,464 General Motors Corporation Class H 25,024 shares 13 976 976 Other common and preferred stocks 10,540 13,570 13,570 12,059 79,746 79,746 Marketable debt securities: U. S. Government securities $35,842 principal $35,228 $ 36,341 $35,377 Tax exempt municipals (1) 31,277 principal 31,574 33,988 33,032 Mortgage Backed securities (1) 12,761 principal 7,564 8,160 7,570 Other corporate debt securities(1) 3,740 principal 2,495 3,743 3,798 $76,861 $ 82,232 $79,777 $88,920 $161,978 $159,523
(1) Securities of any one individual issuer do not exceed 2% of total assets of the Registrant.
S-1
ST. JOE PAPER COMPANY SCHEDULE V & VI (CONSOLIDATED) PROPERTY, PLANT & EQUIPMENT / ACCUMULATED DEPRECIATION Years ended December 31, 1993, 1992 and 1991 (Dollars in thousands)
Balance at Additions Balance beginning of at Retire- at end Year cost ments of year Classification: 1993: Land and timber $ 123,548 $ 4,027 $ 1,900 $ 125,675 Land improvements 24,431 247 50 24,628 Buildings 46,801 425 52 47,174 Machinery and equipment 1,068,499 46,893 12,942 1,102,450 Office equipment 6,667 112 422 6,357 Autos and trucks 6,866 1,006 667 7,205 Construction in progress 13,812 4,349 --- 18,161 Investment property 215,685 35,987 1,659 250,013
$1,506,309 $ 93,047 $17,692 $1,581,663 Accumulated depreciation(1)$ 522,885 $ 62,874 $11,818 $ 573,941 1992: Land and timber $ 116,341 $ 9,078 $ 1,871 $ 123,548 Land improvements 23,232 1,222 23 24,431 Buildings 46,039 918 156 46,801 Machinery and equipment 982,733 98,184 12,418 1,068,499 Office equipment 7,017 249 599 6,667 Autos and trucks 6,797 654 585 6,866 Construction in progress 40,773 (26,961) --- 13,812 Investment property 178,601 37,392 308 215,685 $1,401,533 $120,736 $15,960 $1,506,309 Accumulated depreciation(1)$ 474,353 $ 59,757 $11,225 $ 522,885 1991: Land and timber $ 112,984 $ 5,221 $ 1,864 $ 116,341 Land improvements 23,035 292 95 23,232 Buildings 45,587 688 236 46,039 Machinery and equipment 941,234 54,904 13,405 982,733 Office equipment 6,761 638 382 7,017 Autos and trucks 6,808 290 301 6,797 Construction in progress 30,228 12,037 1,492 40,773 Investment property 153,202 26,216 817 178,601 $1,319,839 $100,286 $18,592 $1,401,533 Accumulated depreciation(1)$ 434,192 $ 55,241 $15,080 $ 474,353
(1) The annual provisions for depreciation have been computed using both the straight-line and accelerated methods principally in accordance with the following estimated useful lives: Estimated Useful life Land and timber ---- Land improvements 20 Buildings 45 Machinery and equipment 10 - 30 Office equipment 6 - 10 Autos and trucks 3 - 6 Construction in progress ---- Investment property various
It is not practical to show accumulated depreciation to correspond with the above classification as our accounting records do not provide such information. S-2
ST. JOE PAPER COMPANY SCHEDULE VIII (CONSOLIDATED) VALUATION AND QUALIFYING ACCOUNTS Years ended December 31, 1993, 1992 and 1991 (Dollars in thousands)
Balance at Additions Reserves included Beginning Charged to Balance at in Liabilities of Year Expense Payments End of Year Accrued casualty reserves 22,916 2,443 2,448 22,911(a) Accrued casualty reserves 23,043 3,774 3,901 22,916(a) Accrued casualty reserves 18,382 10,282 5,621 23,043(a)
(a) Includes $11,601, $11,213 and $8,084 in current liabilities at December 31, 1993, 1992 and 1991, respectively. The remainder is included in "Accrued casualty reserves and other liabilities."
S-3
ST. JOE PAPER COMPANY SCHEDULE X (CONSOLIDATED) SUPPLEMENTARY INCOME STATEMENT INFORMATION Years ended December 31, 1993, 1992 and 1991 (Dollars in thousands)
Charged to Costs and Expenses Item Description 1993 1992 1991 Maintenance and repairs $93,803 $83,781 $84,118 Real estate taxes $16,632 $18,847 $21,128
All other expenses categories have been omitted since individually they represent less than 1% of total consolidated revenue.
S-4
ST. JOE PAPER COMPANY SCHEDULE XI (CONSOLIDATED) REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1993, 1992 and 1991 (Dollars in thousands)
Initial Cost to Company Costs Buildings & Capitalized Encum- Tenant Subsequent to Description brances Land Improvements Acquisition Duval County Office Buildings (5) 0 1,153 6,200 25,374 Office/Showroom/Warehouses (8) 0 1,502 18,700 Land w/ Infrastructure 0 1,773 968 City & Residential Lots 0 371 5 77 Unimproved land & Misc Assets 0 5,735 4,325 St. Johns County Land w/ Infrastructure 0 10 1,044 Unimproved land 0 2,631 411 Flagler County Unimproved land 0 3,218 1,008 Volusia County Unimproved land 0 3,651 499 Brevard County Office/Showroom/Warehouse 0 73 1,890 Land w/ Infrastructure 0 3,797 0 Unimproved land 0 4,846 191 Indian River County Unimproved land 0 218 156 St. Lucie County Unimproved land 0 639 8 Martin County Unimproved land 0 4,671 2,344 Palm Beach County Office/Showroom/Warehouse 0 113 2,641 Rail Warehouses 0 449 4,097 Cross Docks 0 117 3,763 Land w/ Infrastructure 0 1,269 87 Unimproved land 0 1,605 0 Broward County Rail Warehouse 0 85 1,584 Unimproved land 0 733 701 Dade County Office/Showroom/Warehouses (4) 0 1,003 11,774 Office/Warehouses (4) 0 1,462 12,468 Rail Warehouses (4) 0 808 13,998 Cross Dock 0 137 1,018 Double Front Load Warehouse 0 768 5,376 Front Load Warehouses (5) 0 1,943 11,269 Land w/ Infrastructure 0 2,577 8,993 Unimproved land & Misc Assets 0 16,010 11,894 Putnam County Unimproved land 0 7 0 Manatee County Unimproved land 0 14 3 Gulf County Unimproved land 0 559 795
S-5
ST. JOE PAPER COMPANY SCHEDULE XI (CONSOLIDATED) REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1993, 1992 and 1991 (Dollars in thousands)
Initial Cost to Company Costs Buildings & Capitalized Encum- Tenant Subsequent to Description brances Land Improvements Acquisition Bay County Land w/ Infrastructure 0 1 55 Office Building 0 1 763 Unimproved land 0 517 133 Leon County Land w/ Infrastructure 0 605 39 Walton County Land w/ Infrastructure 0 127 506 Other Counties Unimproved land 0 849 1,294 Grand Total 0 66,047 6,205 150,246
S-6
ST. JOE PAPER COMPANY SCHEDULE XI (CONSOLIDATED) REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1993, 1992 and 1991 (Dollars in thousands) Gross Amount at Which Carried as of December 31, 1993
Land & Buildings & Land Tenant Description Improvements Improvements Total Duval County Office Buildings (5) 3,525 29,202 32,727 Office/Showroom/ Office/Showroom/Warehouses (8) 3,930 16,272 20,202 Land w/ Infrastructure 2,741 2,741 City & Residential Lots 371 82 453 Unimproved land & misc assets 9,863 197 10,060 St. Johns County Land w/ Infrastructure 1,054 1,054 Unimproved land 3,042 3,042 Flagler County Unimproved land 4,226 4,226 Volusia County Unimproved land 4,150 4,150 Brevard County Office/Showroom/Warehouse 438 1,525 1,963 Land w/ Infrastructure 3,797 3,797 Unimproved land 5,037 5,037 Indian River County Unimproved land 374 374 St. Lucie County Unimproved land 647 647 Martin County Unimproved land 7,015 7,015 Palm Beach County Office/Showroom/Warehouse 599 2,155 2,754 Rail Warehouses 544 4,002 4,546 Cross Docks 1,262 2,618 3,880 Land w/ Infrastructure 1,356 1,356 Unimproved land 1,605 1,605 Broward County Rail Warehouse 405 1,264 1,669 Unimproved land 1,434 1,434 Dade County Office/Showroom/Warehouses (4) 2,419 10,358 12,777 Office/Warehouses (4) 2,838 11,092 13,930 Rail Warehouses (4) 2,398 12,408 14,806 Cross Dock 137 1,018 1,155 Double Front Load Warehouse 1,409 4,735 6,144 Front Load Warehouses (5) 2,476 10,736 13,212 Land w/ Infrastructure 11,570 11,570 Unimproved land & misc assets 27,571 333 27,904 Putnam County Unimproved land 7 7 Manatee County Unimproved land 17 17 Gulf County Unimproved land 1,354 1,354
S-7
ST. JOE PAPER COMPANY SCHEDULE XI (CONSOLIDATED) REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1993, 1992 and 1991 (Dollars in thousands) Gross Amounts at Which Carried as of December 31, 1993 Buildings & Land & Buildings Land Tenant Description Improvements Improvements Total Bay County Land w/ Infrastructure 1 55 56 Office Building 1 763 764 Unimproved land 523 127 650 Leon County Land w/ Infrastructure 605 39 644 Walton County Land w/ Infrastructure 633 633 Other Counties Unimproved land 2,102 41 2,143 Grand Total 113,476 109,022 222,498
S-8
ST. JOE PAPER COMPANY SCHEDULE XI (CONSOLIDATED) REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1993, 1992 and 1991 (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) 4,074 1982 3 to 40 years Office/Showroom/ Office/Showroom/Warehouses (8) 2,707 1987 3 to 40 years Land w/ Infrastructure Various 3 to 40 years City & Residential Lots 5 Various 3 to 40 years Unimproved land & misc assets 123 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 237 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 549 1986 3 to 40 years Rail Warehouses 927 1987 3 to 40 years Cross Docks 604 1987 3 to 40 years Land w/ Infrastructure Various Unimproved land Various Broward County Rail Warehouse 428 1986 3 to 40 years Unimproved land Various Dade County Office/Showroom/Warehouses (4) 1,395 1988 3 to 40 years Office/Warehouses (4) 913 1990 3 to 40 years Rail Warehouses (4) 885 1987 3 to 40 years Cross Dock 182 1987 3 to 40 years Double Front Load Warehouse 182 1993 3 to 40 years Front Load Warehouses (5) 460 1991 4 to 40 years Land w/ Infrastructure 1,560 Various 3 to 40 years Unimproved land & misc assets 65 Various 3 to 40 years Putnam County Unimproved land Various Manatee County Unimproved land Various Gulf County Unimproved land 20
S-9
ST. JOE PAPER COMPANY SCHEDULE XI (CONSOLIDATED) REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 1993, 1992 and 1991 (Dollars in thousands) Life on Which Accum- Depreciation in ulated Date Latest Income Depre- Started or Statement is Description ciation Acquired Computed Bay County Land w/ Infrastructure 21 3 to 40 years Office Building 116 3 to 40 years Unimproved land 13 Various Leon County Land w/ Infrastructure 9 Various Walton County Land w/ Infrastructure 1993 3 to 40 years Other Counties Unimproved land Various Grand Total 15,475
Notes (a) The aggregate cost of real estate owned at December 31, 1993 for federal income tax purposes is $113,271.
1993 1992 1991 (b) Reconciliation of real estate owned: Balance at beginning of year 192,466 162,083 139,962 Amounts capitalized 31,691 30,690 22,938 Amounts retired or adjusted (1,659) (307) (817) Balanced at close of period 222,498 192,466 162,083
(c) Reconciliation of accumulated depreciation: Balance at beginning of year 11,306 8,127 5,793 Depreciation expense 4,169 3,272 2,427 Amounts retired or adjusted (93) (93) Balanced at close of period 15,475 11,306 8,127
(d) Table excludes $27,515 of real estate costs in progress.
S-10