<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number 0-23340
ROCK-TENN COMPANY
(Exact name of registrant as specified in its charter)
Georgia 62-0342590
- ------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
504 Thrasher Street, Norcross, Georgia 30071
- ---------------------------------------- -----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 448-2193
N/A
-------------------------------------------------------------
(Former name or former address, if changed since last report.)
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
------- -------
Indicate the number of shares of each of the issuer's classes of common stock,
as of the latest practicable date:
Class Outstanding as of August 12, 1997
- ----------------------------------- ---------------------------------
Class A Common Stock, .01 par value 22,551,628
Class B Common Stock, .01 par value 11,819,948
<PAGE> 2
ROCK-TENN COMPANY
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Income for the three months and
nine months ended June 30, 1997 and 1996 1
Condensed Consolidated Balance Sheets at June 30, 1997 and
September 30, 1996 2
Condensed Consolidated Statements of Cash Flows for the nine months
ended June 30, 1997 and 1996 3
Notes to Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II.OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 15
Index to Exhibits 17
</TABLE>
<PAGE> 3
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ROCK-TENN COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 300,302 $ 216,211 $ 784,017 $ 652,050
Cost of goods sold 225,063 153,648 589,441 471,141
--------- --------- --------- ---------
Gross profit 75,239 62,563 194,576 180,909
Selling, general and administrative expenses 53,027 38,438 141,427 112,804
Plant closure and other costs 2,700 -- 15,484 --
--------- --------- --------- ---------
Income from operations 19,512 24,125 37,665 68,105
Interest income 82 360 689 832
Interest expense (8,596) (2,670) (17,842) (8,328)
--------- --------- --------- ---------
Income before income taxes 10,998 21,815 20,512 60,609
Provision for income taxes 4,786 8,290 14,092 23,032
--------- --------- --------- ---------
Net income $ 6,212 $ 13,525 $ 6,420 $ 37,577
========= ========= ========= =========
Weighted average number of common and
common equivalent shares outstanding 34,085 34,121 34,102 34,007
Earnings per common and common
equivalent share $ .18 $ .40 $ .19 $ 1.10
Cash dividends per common share $ .075 $ .068 $ .225 $ .205
========= ========= ========= =========
</TABLE>
See accompanying notes
1
<PAGE> 4
ROCK-TENN COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
June 30 September 30,
1997 1996
- -----------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,173 $ 50,876
Accounts receivable (net of allowance for
doubtful accounts of $3,935 and $3,094) 101,037 78,041
Inventories 90,266 58,505
Other current assets 28,251 1,908
----------- ---------
TOTAL CURRENT ASSETS 223,727 189,330
Property, plant and equipment at cost:
Land and buildings 144,350 113,059
Machinery and equipment 667,096 478,181
Leasehold improvements 4,104 4,049
Transportation equipment 13,912 12,106
----------- ---------
829,462 607,395
Less accumulated depreciation and amortization (303,528) (272,541)
----------- ---------
Net property, plant and equipment 525,934 334,854
Goodwill 323,453 48,632
Other assets 18,154 8,872
----------- ---------
$ 1,091,268 $ 581,688
=========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 40,866 $ 28,555
Income taxes payable 2,470 --
Accrued compensation and benefits 36,245 21,838
Current maturities of long-term debt 25,165 7,260
Other current liabilities 22,188 11,296
----------- ---------
TOTAL CURRENT LIABILITIES 126,934 68,949
Long-term debt due after one year 536,010 139,344
Deferred income taxes 73,000 23,136
Other liabilities 4,894 1,104
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.01 par value; 50,000,000 shares authorized; no
shares outstanding at June 30, 1997 and September 30, 1996 -- --
Class A common stock, $.01 par value; 175,000,000 shares authorized,
21,457,362 outstanding at June 30, 1997 and 21,178,313 outstanding at
September 30, 1996; Class B common stock, $.01 par value; 60,000,000
shares authorized; 11,931,744 outstanding at June 30, 1997 and 11,949,097
outstanding at September 30, 1996 334 331
Capital in excess of par value 112,950 109,879
Retained earnings 238,382 239,561
Other (1,236) (616)
----------- ---------
TOTAL SHAREHOLDERS' EQUITY 350,430 349,155
----------- ---------
$ 1,091,268 $ 581,688
=========== =========
</TABLE>
See accompanying notes
2
<PAGE> 5
ROCK-TENN COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months Ended
June 30, June 30,
1997 1996
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 6,420 $ 37,577
Items in income not affecting cash:
Depreciation and amortization 44,261 35,737
Plant closure and other costs 14,337 --
Deferred income taxes 5,017 2,823
Gain on sale of property, plant and equipment (404) (717)
Change in operating assets and liabilities (excluding acquisitions):
Accounts receivable 529 14,273
Inventories (278) 2,760
Other assets (6,276) 6,013
Accounts payable (6,495) (3,409)
Accrued liabilities (6,784) 345
Income taxes payable 2,470 228
Other (767) (270)
--------- --------
CASH PROVIDED BY OPERATING ACTIVITIES 52,030 95,360
FINANCING ACTIVITIES:
Net additions to revolving credit facilities 415,058 --
Additions to long-term debt 1,500 1,500
Repayments of long-term debt (145,482) (16,746)
Sales of common stock 2,969 1,818
Purchases of common stock -- (323)
Cash dividends paid (7,492) (6,795)
--------- --------
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 266,553 (20,546)
INVESTING ACTIVITIES:
Cash paid for purchases of businesses (299,114) --
Capital expenditures (67,049) (52,274)
Proceeds from sale of building, equipment and other 1,175 1,745
Cash paid for intangibles (290) (331)
Decrease in unexpended industrial revenue bond proceeds -- 1,363
--------- --------
CASH USED FOR INVESTING ACTIVITIES (365,278) (49,497)
Effect of exchange rate changes on cash (8) (29)
(Decrease) increase in cash and cash equivalents (46,703) 25,288
Cash and cash equivalents at beginning of period 50,876 21,532
--------- --------
Cash and cash equivalents at end of period $ 4,173 $ 46,820
========= ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes (net of refunds) $ 12,247 $ 16,306
Interest (net of amounts capitalized) 14,807 6,807
Supplemental disclosure of noncash investing and financing activities:
Indebtedness assumed in connection with acquisition 143,706 --
</TABLE>
See accompanying notes
3
<PAGE> 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. INTERIM FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements of Rock-Tenn
Company and its subsidiaries (the "Company") have not been audited by
independent auditors. The condensed consolidated balance sheet at September 30,
1996 has been derived from the audited consolidated financial statements. In
the opinion of the Company's management, the condensed consolidated financial
statements reflect all adjustments, which are of a normal recurring nature,
necessary for a fair presentation of the results of operations for the
three-month and nine-month periods ended June 30, 1997 and 1996, the Company's
financial position at June 30, 1997 and September 30, 1996, and the cash flows
for the nine-month periods ended June 30, 1997 and 1996.
Certain notes and other information have been condensed or omitted from the
interim financial statements presented in this Quarterly Report on Form 10-Q.
Therefore, these financial statements should be read in conjunction with the
Company's Annual Report on Form 10-K for the fiscal year ended September 30,
1996.
The results for the nine months ended June 30, 1997 are not necessarily
indicative of results that may be expected for the full year.
Certain reclassifications have been made to prior year amounts to conform with
the current year presentation.
NOTE 2. USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results will differ from those estimates and the differences could be
material.
NOTE 3. INVENTORIES
Substantially all U.S. inventories are stated at the lower of cost or market,
with cost determined on the last-in, first-out (LIFO) basis. An actual
valuation of inventory under the LIFO method can only be made at the end of
each year based on the inventory levels and costs at that time. Accordingly,
interim LIFO estimates must necessarily be based on management's projection of
expected year-end inventory levels and costs. Because these are subject to many
factors beyond management's control, interim results are subject to the final
year-end LIFO inventory valuation.
Inventories at June 30, 1997 and September 30, 1996 were as follows (in
thousands):
<TABLE>
<CAPTION>
June 30, September 30,
1997 1996
---------- -----------
(Unaudited)
<S> <C> <C>
Finished goods and work in process $ 64,659 $ 46,796
Raw materials 34,869 26,583
Supplies 11,428 5,816
--------- --------
Inventories at first-in, first-out (FIFO) cost 110,956 79,195
LIFO reserve (20,690) (20,690)
--------- --------
Net inventories $ 90,266 $ 58,505
========= ========
</TABLE>
4
<PAGE> 7
NOTE 4. NEW DEPRECIATION METHOD
Effective October 1, 1996, the Company changed its method of depreciation for
machinery and equipment placed in service after September 30, 1996 to the
straight-line method. This change was applied on a prospective basis to such
assets acquired after that date. The Company's previous policy of depreciation
for additions of machinery and equipment was the 150% declining balance method.
Assets placed in service prior to the effective date of the change continue to
be depreciated using accelerated methods. The Company changed its method of
depreciation based upon 1) management's shift in operating style over the last
several years to focus on capital and technological improvements and related
changes in maintenance, 2) management's belief that straight-line provides a
better matching of costs and revenues, and 3) the fact that the straight-line
method is the predominant industry practice. Given the Company's circumstances,
management believes the straight-line method is preferable. There is no
cumulative effect of this change. The effect of this change on net income for
the three months and nine months ended June 30, 1997 was to increase net income
by approximately $690,000, or $.02 per share and $1,071,000, or $.03 per share,
respectively.
NOTE 5. STOCK DIVIDEND
On November 15, 1996, a 10% stock dividend was paid by the Company for
shareholders of record on November 4, 1996. All applicable per share and
weighted average common and common equivalent shares outstanding information in
the accompanying condensed consolidated financial statements reflects the stock
dividend for all periods presented herein. This dividend has been retroactively
reflected in the accompanying September 30, 1996 consolidated balance sheet and
has been valued using the price per share as of October 23, 1996, the most
recent closing price prior to the announcement of the dividend.
NOTE 6. NEW ACCOUNTING STANDARDS
Statement of Financial Accounting Standards No. 128 ("SFAS 128") establishes
accounting standards for computation, presentation and disclosure requirements
for earnings per share for entities with publicly held common stock. The
Company is required to adopt this statement in fiscal 1998. Earnings per common
and common equivalent shares for the three months and nine months ended June
30, 1997 and 1996 under this new standard would have been the following:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
----------------------------------------------------------
<S> <C> <C> <C> <C>
Basic earnings per common share $.19 $.41 $.19 $1.13
Diluted earnings per common and
common equivalent share $.18 $.40 $.19 $1.10
</TABLE>
Statement of Financial Accounting Standards No. 130 ("SFAS 130") establishes
standards for the reporting and display of comprehensive income and its
components in a full set of general purpose financial statements. Statement of
Financial Accounting Standards No. 131 ("SFAS 131") establishes standards for
disclosures of segment information about products and services, geographic
areas, major customers, and certain interim disclosures of segment information
which is not required by accounting standards currently used by the Company.
These statements are required to be adopted by October 1, 1998. Currently, the
Company is evaluating these new standards and is uncertain what impact SFAS 130
and SFAS 131 will have on the Company's consolidated financial statements.
NOTE 7. ACQUISITION OF BUSINESSES
On January 21, 1997, the Company acquired all of the outstanding capital stock
of the parent of Waldorf Corporation ("Waldorf") for approximately $239,000,000
in cash (the "Waldorf Acquisition"). In addition, in connection with the Waldorf
Acquisition, the Company (i) made certain payments on the closing date
aggregating $32,600,000 relating to the settlement of a contingent interest
agreement with a former creditor of Waldorf and the termination of Waldorf's
Stock Appreciation Rights Plan and (ii) became indirectly liable for the net
long-term debt of Waldorf outstanding on such date. The Waldorf Acquisition did
5
<PAGE> 8
not include Waldorf's Canadian subsidiary, which was disposed of by Waldorf's
parent prior to the consummation of the Waldorf Acquisition. The Waldorf
Acquisition was financed with available cash and borrowings under a new
$400,000,000 revolving credit facility.
The consolidated statements of income for fiscal 1997 include the results of
operations of Waldorf from the date of acquisition. The Waldorf Acquisition has
been accounted for under the purchase method of accounting. The total estimated
purchase price for the Waldorf Acquisition has been allocated on a preliminary
basis to assets and liabilities based on management's estimates of their fair
values with the excess of cost over net assets acquired allocated to goodwill.
Each of such allocations is subject to revision when additional information
concerning asset and liability valuation is obtained. This allocation is
subject to change pending a final analysis of the value of the assets acquired
and liabilities assumed. The impact of such changes could be material. The
preliminary allocation of the purchase price to the assets acquired and
liabilities assumed is as follows (in thousands):
<TABLE>
<S> <C>
Net working capital $ 22,967
Property, plant, equipment and other 160,526
Goodwill 267,886
Other intangible assets 5,000
Deferred tax liabilities (44,862)
---------
Net assets 411,517
Less long-term debt assumed (143,706)
---------
Net purchase price $ 267,811
=========
</TABLE>
The following unaudited pro forma financial information gives effect to the
Waldorf Acquisition as if it had occurred at the beginning of the periods
presented. The pro forma financial information is provided for informational
purposes only. It is based on historical information and does not purport to
represent what the Company's results of operations would actually have been had
the Waldorf Acquisition actually occurred at the beginning of such periods nor
is it necessarily indicative of future results of operations of the combined
enterprise (in thousands, except per share data, unaudited):
<TABLE>
<CAPTION>
Nine months ended June 30,
1997 1996
----------------------------
(Unaudited)
<S> <C> <C>
Net sales $884,877 $922,755
Net income 3,782 43,247
Earnings per common and common
equivalent share .11 1.27
</TABLE>
On June 9, 1997, the Company acquired substantially all of the assets of Rite
Paper Products, Inc. ("Rite Paper"), a manufacturer of component pieces
primarily for the ready-to-assemble furniture industry. The acquisition was
accounted for under the purchase method. The consolidated statements of income
for fiscal 1997 include the results of operations of Rite Paper from the date
of acquisition. The Rite Paper Acquisition is considered to be immaterial for
pro forma presentation purposes and is not reflected in the aforementioned pro
forma financial information.
NOTE 8. REVOLVING CREDIT FACILITY
On January 21, 1997, the Company replaced its existing revolving credit
facilities, which provided for aggregate borrowing availability of
$100,000,000, with a revolving credit facility which increased the Company's
aggregate borrowing availability to $400,000,000. The term of the new facility
is five years and contains restrictive covenants that are not significantly
different from those contained in the previous facilities. On June 6, 1997, the
Company amended this facility to increase the aggregate borrowing availability
to $450,000,000 and adjusted coverages and limitations of certain restrictive
covenants. As of June 30, 1997, there was $415,000,000 of borrowings
outstanding under the new facility, all but $15,000,000 of which has been
classified as long-term debt since the Company has the ability to continue to
finance this amount pursuant to the terms of the revolving credit facility and
does not intend to repay this amount with cash from operations during the
ensuing year.
6
<PAGE> 9
NOTE 9. PLANT CLOSURES
In connection with the Waldorf Acquisition the Company began a review of the
combined operations of Rock-Tenn and Waldorf in order to most efficiently serve
its markets, eliminate geographic overlaps and coordinate production. In
connection with this ongoing review, in the second quarter of fiscal 1997,
management decided to close the Company's existing folding carton plant at
Mundelein, Illinois. The Mundelein facility was acquired in the acquisition of
Olympic Packaging in 1995. In connection with this planned closure (which was
announced to employees and customers in April 1997) and considering the impact
of the Waldorf Acquisition, the Company charged to earnings $12,800,000 during
the second quarter of fiscal 1997, which consisted primarily of the non-cash
write-off of goodwill associated with the Company's Olympic Packaging
subsidiary. The write-off of goodwill was required based upon the decision to
close the Mundelein facility and the determination that such goodwill would not
be recoverable. For the quarter ended June 30, 1997, the Company incurred
additional non-recurring expenses of approximately $1,400,000 principally for
employee termination and related charges associated with closing the Mundelein
facility.
During the third quarter of fiscal 1997, management decided to dispose the
manufacturing machinery and equipment of a plastics recycling facility located
in Indianapolis, Indiana. For the quarter ended June 30, 1997, the Company
incurred additional non-recurring expenses of approximately $1,250,000 related
to this closure, primarily relating to the estimated losses on disposal of the
equipment. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Forward-Looking Statements."
NOTE 10. OTHER EVENTS
On January 8, 1997, the Company announced that it had signed a letter of intent
with Sonoco Products Company ("Sonoco") to combine the Company's and Sonoco's
fiber partition businesses into a new entity. The Company will contribute eight
fiber partition plants and a machine engineering facility in the U.S. and
Sonoco will contribute six fiber partition plants in the U.S. and its fiber
partition plant in Mexico to the entity. Under the terms of the agreement, the
Company will own 65% of the entity and Sonoco will own 35%. Consummation of the
arrangement is subject to the satisfaction of a number of conditions including
negotiation and execution of definitive agreements, obtaining certain
regulatory approvals and the satisfactory completion of due diligence. The
closing of the agreement is expected to take place in the second half of
calendar 1997.
NOTE 11. SUBSEQUENT EVENTS
On July 9, 1997, the Company acquired substantially all of the assets and
certain of the liabilities of The Davey Company ("Davey"), a manufacturer of
recycled paperboard used by the book manufacturing industry for bookcovers. The
acquisition was financed through the issuance of 863,500 shares of the
Company's Class A common stock subject to certain final adjustments. The
acquisition included Davey's manufacturing facilities in Jersey City, New
Jersey and Aurora, Illinois, and certain manufacturing equipment located at
Davey's other manufacturing facility in Downingtown, Pennsylvania. Davey
announced the closure of the Downingtown facility prior to the acquisition.
7
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the condensed
consolidated financial statements and notes thereto, included herein, and the
Company's audited consolidated financial statements and notes thereto for the
fiscal year ended September 30, 1996 which have been filed with the Securities
and Exchange Commission as part of the Company's Annual Report on Form 10-K.
SEGMENT INFORMATION
The Company operates principally in two industry segments: converted products
and paperboard. The converted products segment is comprised of facilities that
produce folding cartons, fiber partitions, corrugated containers, corrugated
displays, thermoformed plastic products and laminated paperboard products. The
paperboard segment consists of facilities that manufacture 100% recycled
clay-coated and uncoated paperboard and corrugating medium and that collect
recovered paper.
ROCK-TENN COMPANY
INDUSTRY SEGMENT INFORMATION
(UNAUDITED)
(IN THOUSANDS EXCEPT FOR TONNAGE DATA)
<TABLE>
<CAPTION>
===========================================================================================================================
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES:
Converted Products $251,657 $193,667 $667,614 $580,103
Paperboard 109,262 69,858 276,204 214,717
Intersegment Eliminations (60,617) (47,314) (159,801) (142,770)
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL $300,302 $216,211 $784,017 $652,050
- ---------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES:
Converted Products $ 9,064 $ 9,620 $ 9,423 $ 23,888
Paperboard 12,415 16,328 35,606 49,664
Corporate Expense (1,967) (1,823) (6,534) (5,447)
Intersegment Eliminations --- --- (830) ---
Interest Expense (8,596) (2,670) (17,842) (8,328)
Interest Income 82 360 689 832
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL $ 10,998 $ 21,815 $ 20,512 $ 60,609
===========================================================================================================================
Paperboard Shipped (in tons) 271,155 161,540 677,847 464,671
===========================================================================================================================
</TABLE>
Note: All per share amounts in the following discussion have been
retroactively restated to reflect a 10% stock dividend paid on November 15,
1996.
8
<PAGE> 11
Results of Operations
General. The paperboard industry experienced a period of lower selling prices
during the last eight quarters. These lower selling prices have had a
significant negative effect on the results of operations of the Company's
paperboard segment as well as the Company's overall results during the nine
months ended June 30, 1997. In particular, these lower selling prices have
severely impacted the Company's corrugating medium business, a business acquired
in the acquisition of the Waldorf Corporation (the "Waldorf Acquisition"). Since
January 21, 1997, the date of the Waldorf Acquisition, the Company's corrugating
medium business has incurred significant operating losses. The Company
anticipates that results of operations attributable to the Company's paperboard
operations, including its medium business, will continue to be negatively
affected until industry conditions improve.
Net Sales (Unaffiliated Customers). Net sales for the quarter ended June 30,
1997 increased 38.9% to $300.3 million from $216.2 million for the quarter
ended June 30, 1996. Net sales for the nine months ended June 30, 1997
increased 20.2% to $784.0 million from $652.1 million for the nine months ended
June 30, 1996. Net sales increased for the quarter and for the nine months
ended June 30, 1997 as a result of the Waldorf Acquisition on January 21, 1997.
Net Sales (Aggregate) - Converted Products Segment. Net sales of converted
products before intersegment eliminations for the quarter ended June 30, 1997
increased 29.9% to $251.7 million from $193.7 million for the quarter ended
June 30, 1996. Net sales of converted products before intersegment eliminations
for the nine months ended June 30, 1997 increased 15.1% to $667.6 from $580.1
for the nine months ended June 30, 1996. The increase for the quarter ended and
for the nine months ended June 30, 1997 was primarily the result of the Waldorf
Acquisition on January 21, 1997.
Net Sales (Aggregate) - Paperboard Segment. Net sales of paperboard before
intersegment eliminations for the quarter ended June 30, 1997 increased 56.4%
to $109.3 million from $69.9 million for the quarter ended June 30, 1996. Net
sales of paperboard before intersegment eliminations for the nine months ended
June 30, 1997 increased 28.6% to $276.2 million from $214.7 million for the
nine months ended June 30, 1996. The increase for the quarter ended and the
nine months ended June 30, 1997 was primarily the result of the Waldorf
Acquisition on January 21, 1997.
Cost of Goods Sold. Cost of goods sold for the quarter ended June 30, 1997
increased 46.5% to $225.1 million from $153.6 million for the quarter ended
June 30, 1996. Cost of goods sold as a percentage of net sales for the quarter
ended June 30, 1997 increased to 75.0% from 71.0% for the quarter ended June
30, 1996. Cost of goods sold for the nine months ended June 30, 1997 increased
25.1% to $589.4 million from $471.1 million for the nine months ended June 30,
1996. Cost of goods sold as a percentage of net sales for the nine months ended
June 30, 1997 increased to 75.2% from 72.2% for the nine months ended June 30,
1996. The average cost of recovered paper, the Company's primary raw material,
increased to $50 per ton for the quarter ended June 30, 1997 compared to $43
per ton for the quarter ended June 30, 1996. This cost increase and lower
average selling prices which were partially offset by higher volumes of
paperboard shipped and converted products sold resulted in an increase in cost
of goods sold as a percentage of net sales for the quarter ended June 30, 1997.
The average cost of recovered paper for the nine months ended June 30, 1997
decreased to approximately $53 per ton from $54 per ton for the nine months
ended June 30, 1996. This cost decrease and higher volume of paperboard shipped
were not enough to offset the impact of lower average selling prices. As a
result, cost of goods sold as a percentage of sales increased for the nine
months ended June 30, 1997. (See discussion in General section)
Substantially all U.S. inventories of the Company are valued at the lower of
cost or market with cost determined on the last-in, first-out (LIFO) inventory
valuation method, which management believes generally results in a better
matching of current costs and revenues than under the first-in, first-out
(FIFO) inventory valuation method. In periods of decreasing costs, the LIFO
method generally results in lower cost of goods sold than under the FIFO
method. In periods of increasing costs, the results are generally the opposite.
The Company's quarterly results of operations reflect LIFO estimates based on
management's projection of expected year-end inventory levels and costs.
Because these estimates are subject to many factors beyond management's
control, interim results are subject to the final year-end LIFO inventory
valuation.
9
<PAGE> 12
Since some of the Company's competitors principally use the FIFO method, the
following supplemental data is presented to illustrate the comparative effect
of LIFO and FIFO accounting on the Company's results of operations. Cost of
goods sold determined under the LIFO method was the same as it would have been
and $1.6 million lower than it would have been under the FIFO method in the
quarter ended June 30, 1997 and 1996, respectively. Cost of goods sold
determined under the LIFO method was the same as it would have been and $4.1
million lower than it would have been under the FIFO method for the nine months
ended June 30, 1997 and 1996, respectively. Net income was the same as it would
have been and $1.0 million higher than it would have been under the FIFO method
in the quarter ended June 30, 1997 and 1996, respectively. Net income was the
same as it would have been and $2.5 million higher than it would have been
under the FIFO method for the nine months ended June 30, 1997 and 1996,
respectively. These supplemental FIFO earnings reflect the after tax effect of
LIFO each year.
Gross Profit. Gross profit for the quarter ended June 30, 1997 increased 20.1%
to $75.2 million from $62.6 million for the quarter ended June 30, 1996. Gross
profit for the nine months ended June 30, 1997 increased 7.6% to $194.6 million
from $180.9 million for the nine months ended June 30, 1996. Gross profit as a
percentage of net sales decreased to 25.0% for the quarter ended June 30, 1997
from 29.0% for the quarter ended June 30, 1996. Gross profit as a percentage of
net sales decreased to 24.8% for the nine months ended June 30, 1997 from 27.7%
for the nine months ended June 30, 1996. The decrease in gross profit as a
percentage of net sales for the quarter ended June 30, 1997 was primarily the
result of reductions in average selling prices, significant losses incurred by
the Company's corrugating medium business and increases in the cost of
recovered paper, the Company's primary raw material, which were partially
offset by increases in tons shipped in the paperboard segment and sales volume
in the converted products segment. The decrease in gross profit as a percentage
of net sales for the nine months ended June 30, 1997 was primarily the result
of reductions in average selling prices and significant losses incurred by the
Company's corrugating medium business, which were partially offset by decreases
in the cost of recovered paper and increases in tons shipped in the paperboard
segment.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the quarter ended June 30, 1997 increased 38.0% to
$53.0 million from $38.4 million for the quarter ended June 30, 1996. Selling,
general and administrative expenses for the nine months ended June 30, 1997
increased 25.4% to $141.4 million from $112.8 million for the nine months ended
June 30, 1996. Selling, general and administrative expenses as a percentage of
net sales for the quarter ended June 30, 1997 decreased to 17.6% from 17.8% for
the quarter ended June 30, 1996. Selling, general and administrative expenses
as a percentage of net sales for the nine months ended June 30, 1997 increased
to 18.0% from 17.3% for the nine months ended June 30, 1996. The increase in
selling, general and administrative expenses as a percentage of net sales for
the quarter ended and the nine months ended June 30, 1997 resulted from
increased freight costs, increased salary and benefit costs and an increase in
goodwill amortization expense resulting from the Waldorf Acquisition.
Plant Closure and Other Costs. In connection with the Waldorf Acquisition the
Company began a review of the combined operations of Rock-Tenn and Waldorf in
order to most efficiently serve its markets, eliminate geographic overlaps and
coordinate production. In connection with this ongoing review, in the second
quarter of fiscal 1997, management decided to close the Company's existing
folding carton plant at Mundelein, Illinois. The Mundelein facility was
acquired in the acquisition of Olympic Packaging in 1995. In connection with
this planned closure (which was announced to employees and customers in April
1997) and considering the impact of the Waldorf Acquisition, the Company
charged to earnings in the quarter ended March 31, 1997 $12.8 million
consisting primarily of the non-cash write-off of goodwill associated with the
Company's Olympic Packaging subsidiary. The write-off of goodwill was required
based upon the decision to close the Mundelein facility and the determination
that such goodwill would not be recoverable. The Company incurred additional,
after-tax costs including employee termination and related charges associated
with the plant closing of approximately $.8 million during the third quarter of
fiscal 1997 and expects to incur an additional $.6 million of after-tax costs
in the fourth quarter of 1997. See "Forward-Looking Statements."
In June of 1997, the decision was made to dispose the manufacturing machinery
and equipment of a plastics recycling facility located in Indianapolis,
Indiana. The Company recorded in the quarter ended June 30, 1997 after-tax
costs of approximately $.8 million related to this closure, primarily relating
to the estimated losses on disposal of the equipment.
10
<PAGE> 13
Segment Operating Income
Operating Income - Converted Products Segment. Excluding $2.7 million of plant
closure and other related costs, operating income attributable to the converted
products segment for the quarter ended June 30, 1997 increased 22.9% to $11.8
million from $9.6 million for the quarter ended June 30, 1996. Excluding $15.5
million of plant closure and other related costs, operating income attributable
to the converted products segment for the nine months ended June 30, 1997
increased 4.2% to $24.9 million from $23.9 million for the nine months ended
June 30, 1996. Excluding the effect of $2.7 million of plant closure and other
related costs, operating margin for the quarter ended June 30, 1997 was 4.7%
compared to 5.0% for the quarter ended June 30, 1996. Excluding the effect of
$15.5 million of plant closure and other related costs, operating margin for
the nine months ended June 30, 1997 was 3.7% compared to 4.1% for the nine
months ended June 30, 1996. The increase in operating income for the three
months and nine months ended June 30, 1997, excluding the effect of $2.7
million and $15.5 million of plant closure and other related costs for the
three months and nine months ended June 30, 1997, respectively, was primarily
the result of increased sales volume partially offset by lower selling prices.
The decrease in operating margin for the three months and nine months ended
June 30, 1997, excluding the effect of $2.7 million and $15.5 million of plant
closure and other related costs for the three months and nine months ending
June 30, 1997, respectively, primarily was the result of lower selling prices.
Inefficiencies at the recently reconfigured Lynchburg laminated paperboard
products facility contributed to the decline in operating margin.
Historically, the Company's Lynchburg converting facility has incurred
significant operating losses. During the fourth quarter of fiscal 1996, the
laminated recycled paperboard book cover panels operation at this facility was
closed and relocated to other manufacturing facilities. A second converting
operation which manufactures laminated recycled paperboard furniture panels
continues to operate in Lynchburg. This remaining operation continues to incur
significant operating losses. The Company is currently evaluating alternatives
to reduce these losses, including relocation of this operation to other
manufacturing facilities. While the Company has not yet determined which
alternative to pursue, the cost of some alternatives may have a significant
one-time negative effect on the results of operations of the converted products
segment.
Operating Income - Paperboard Segment. Operating income attributable to the
paperboard segment for the quarter ended June 30, 1997 decreased 23.9% to $12.4
million from $16.3 million for the quarter ended June 30, 1996. Operating
margin for the quarter ended June 30, 1997 was 11.3% compared to 23.3% for the
quarter ended June 30, 1996. Operating income attributable to the paperboard
segment for the nine months ended June 30, 1997 decreased 28.4% to $35.6
million from $49.7 million for the nine months ended June 30, 1996. The
decrease in operating income and margin for the quarter ended June 30, 1997 was
primarily the result of significant losses incurred by the Company's
corrugating medium business, an increase in the weighted average cost of
recovered paper, the segment's primary raw material, and lower average selling
prices, which were partially offset by higher volumes shipped. Average
paperboard selling prices (excluding corrugating medium) decreased to $397 per
ton for the quarter ended June 30, 1997 from $407 per ton for the quarter ended
June 30, 1996. The Company's weighted average cost per ton of paper recovered
during the quarter ended June 30, 1997 increased to $50 per ton compared to $43
per ton during the quarter ended June 30, 1996. Tons of paperboard shipped
(excluding corrugating medium) increased to 241,348 for the quarter ended June
30, 1997 from 161,540 for the quarter ended June 30, 1996, primarily as a
result of the Waldorf Acquisition on January 21, 1997.
The decrease in operating income and margin for the nine months ended June 30,
1997 was primarily the result of significant losses incurred by the Company's
corrugating medium business, lower average selling prices, which were partially
offset by a decrease in the average cost of recovered paper and higher volumes
shipped. Average paperboard selling prices (excluding corrugating medium)
decreased to $396 per ton for the nine months ended June 30, 1997 from $436 per
ton for the nine months ended June 30, 1996. The Company's weighted average
cost per ton of paper recovered during the nine months ended June 30, 1997
decreased to $53 per ton compared to $54 per ton for the nine months ended June
30, 1996. Tons of paperboard (excluding corrugating medium) shipped increased
to 623,237 for the nine months ended June 30, 1997 from 464,671 for the nine
months ended June 30, 1996. (See discussion in General section)
11
<PAGE> 14
Interest Expense. Interest expense for the quarter ended June 30, 1997
increased to $8.6 million from $2.7 million for the quarter ended June 30,
1996. Interest expense for the nine months ended June 30, 1997 increased to
$17.8 million from $8.3 million for the nine months ended June 30, 1996. The
increase in interest expense for the quarter and the nine months ended June 30,
1997 was primarily due to an increase in the average outstanding borrowings
during such periods resulting from the Waldorf Acquisition.
Provision for Income Taxes. Provision for income taxes decreased to $4.8
million for the quarter ended June 30, 1997 from $8.3 million for the quarter
ended June 30, 1996. Provision for income taxes for the nine months ended June
30, 1997 decreased to $14.1 million from $23.0 million for the nine months
ended June 30, 1996. Excluding the effect of the non-cash write-off of the
goodwill associated with the Olympic Packaging acquisition which is not
deductible for income tax purposes, the Company's effective tax rate increased
to 42.3% for the nine months ended June 30, 1997 compared to 38.0% for the nine
months ended June 30, 1996. This increase in the effective tax rate was
primarily due to the effect of amortization of goodwill associated with the
Waldorf Acquisition that is not deductible for income tax purposes.
Net Income and Earnings Per Common and Common Equivalent Share. Net income for
the quarter ended June 30, 1997 decreased 54.1% to $6.2 million from $13.5
million for the quarter ended June 30, 1996. Net income for the nine months
ended June 30, 1997 decreased 83.0% to $6.4 million from $37.6 million for the
nine months ended June 30, 1996. Net income as a percentage of net sales
decreased to 2.1% for the quarter ended June 30, 1997 from 6.2% for the quarter
ended June 30, 1996. Net income as a percentage of net sales decreased to 0.8%
for the nine months ended June 30, 1997 from 5.8% for the nine months ended
June 30, 1996. Earnings per common and common equivalent share for the quarter
ended June 30, 1997 decreased 55.0% to $0.18 from $0.40 for the quarter ended
June 30, 1996. Earnings per common and common equivalent share for the nine
months ended June 30, 1997 decreased to $0.19 from $1.10 for the nine months
ended June 30, 1996.
Liquidity and Capital Resources
The Company has funded its working capital requirements and capital
expenditures (including acquisitions) from net cash provided by operating
activities, borrowings under term notes and bank credit facilities and proceeds
received in connection with the issuance of industrial revenue bonds and debt
and equity securities. In January 1997, the Company entered into a new credit
facility under which it has aggregate borrowing availability of $400.0 million,
which replaced the existing revolving credit facilities, under which it had
aggregate borrowing availability of $100.0 million. On June 6, 1997, the
Company amended the new credit facility to increase the aggregate borrowing
availability to $450.0 million. At June 30, 1997, the Company had $415.0
million outstanding under its new revolving credit facility. Cash and cash
equivalents, $4.2 million at June 30, 1997, decreased from $50.9 million at
September 30, 1996.
Net cash provided by operating activities for the nine months ended June 30,
1997 was $52.0 million compared to $95.4 million for the nine months ended June
30, 1996. This decrease was primarily the result of decreased earnings before
depreciation and amortization and an increase in net operating asset
requirements. Net cash provided by financing activities aggregated $266.6
million for the nine months ended June 30, 1997 and consisted primarily of
borrowings under the Company's $450.0 million revolving credit facility, net of
scheduled repayments of long-term debt, repayments of certain acquired
indebtedness of Waldorf and dividend payments. Net cash used for financing
activities aggregated $20.5 million for the nine months ended June 30, 1996 and
consisted primarily of repayments of long-term debt and dividend payments. Net
cash used for investing activities was $365.3 million for the nine months ended
June 30, 1997 compared to $49.5 million for the quarter ended June 30, 1996 and
consisted primarily of cash paid for the Waldorf Acquisition and capital
expenditures for the nine months ended June 30, 1997 and capital expenditures
for the nine months ended June 30, 1996.
The Company estimates that its capital expenditures will aggregate approximately
$10 million for the remainder of fiscal 1997, excluding any expenditures which
may be made relating to facilities acquired in fiscal 1997. These expenditures
will be used for (i) the remaining payments for two printers, the remaining
payments for two die cutters and four gluer upgrades in several folding carton
facilities, (ii) a die cutter in a corrugated packaging and displays operation,
(iii) a laminator upgrade in a coverboard operation, (iv) a cut-to-size machine
in a laminated paperboard facility, (v) the upgrading of the paperforming,
coating and drying equipment at the Company's paperboard mills and (vi) the
upgrading of computer hardware in several of the Company's manufacturing
facilities. The Company is still evaluating the capital requirements of the
12
<PAGE> 15
facilities acquired in the Waldorf Acquisition.
The Company historically has expanded its business through the acquisition of
other related businesses. The recycled paperboard and converted paperboard
products industries have undergone significant consolidation in recent years,
and the Company believes it may be able to capitalize on this trend in the
future.
On January 8, 1997, the Company announced it had signed a letter of intent to
enter into an agreement to form a new entity with Sonoco Products Company which
would consist of both companies' respective solid fiber partition businesses.
Pursuant to the agreement, the Company will own 65% of the entity and will
supply 65% of the joint venture's paperboard needs. Rock-Tenn and Sonoco
continue to seek regulatory approval and, provided such approval can be
obtained, expect that the closing of this joint venture will occur during the
second half of calendar 1997.
On January 21, 1997, the Company acquired all of the outstanding capital stock
of the parent of Waldorf Corporation ("Waldorf') for approximately $239.0
million in cash (the Waldorf Acquisition). In addition, in connection with the
Waldorf Acquisition, the Company (i) made certain payments on the closing date
aggregating $32.6 million relating to the settlement of a contingent interest
agreement with a former creditor of Waldorf and the termination of Waldorf's
Stock Appreciation Rights Plan and (ii) became indirectly liable for
approximately $141.7 million of net long-term debt of Waldorf outstanding on
such date. The Waldorf Acquisition was financed with available cash and
borrowings aggregating $240.0 million under the Company's $450.0 million
revolving credit facility.
On June 9, 1997, the Company acquired substantially all of the assets of Rite
Paper Products, Inc., a manufacturer of component pieces primarily for the
ready-to-assemble furniture industry. This acquisition was financed with
borrowings under the Company's $450.0 million revolving credit facility.
On July 9, 1997, the Company acquired substantially all of the assets and
assumed certain liabilities of The Davey Company, a manufacturer of recycled
paperboard used by the book manufacturing industry for bookcovers. The
acquisition was financed through the issuance of 863,500 shares of the
Company's Class A common stock subject to certain final adjustments.
The Board of Directors has authorized the Company to repurchase from time to
time prior to July 31, 1998 up to 1.5 million shares of Class A Common Stock in
open market transactions on the New York Stock Exchange. In addition, the Board
has authorized the Company to repurchase from time to time shares of Class B
Common Stock pursuant to certain first offer rights contained in the Company's
Restated and Amended Articles of Incorporation, provided that the aggregate
number of shares of Class A and Class B Common Stock purchased under these
programs may not exceed 1.5 million shares. During the nine months ended June
30, 1997, the Company did not repurchase any shares of Class A or Class B
Common Stock. As of June 30, 1997, an aggregate of 716,500 shares had been
repurchased under these programs. The Company anticipates that it will make
additional purchases through July 1998.
The Company anticipates that it will be able to fund its capital expenditures,
acquisitions, debt service, stock repurchases, dividends and working capital
needs for the foreseeable future from cash generated from operations,
borrowings under its bank credit facilities, proceeds from the issuance of debt
or equity securities or other additional long-term debt financing.
Depreciation Change
Effective October 1, 1996, the Company changed its method of depreciation for
machinery and equipment placed in service after September 30, 1996 to the
straight-line method. This change was applied on a prospective basis to such
assets acquired after that date. The Company's previous policy of depreciation
for additions of machinery and equipment was the 150% declining balance method.
Assets placed in service prior to the effective date of the change continue to
be depreciated using accelerated methods. The Company changed its method of
depreciation based upon 1) management's shift in operating style over the last
several years to focus on capital and technological improvements and related
changes in maintenance, 2) management's belief that straight-line provides a
better matching of costs and revenues, and 3) the fact that the straight-line
method is the predominant industry practice. Given these circumstances,
13
<PAGE> 16
management believes the straight-line method is preferable. There is no
cumulative effect of this change. The effect of this change on net income for
the three months and nine months ended June 30, 1997 was to increase net income
by approximately $.7 million, or $.02 per share and $1.1 million, or $.03 per
share, respectively.
New Accounting Standards
Statement of Financial Accounting Standards No. 128 ("SFAS 128") establishes
accounting standards for computation, presentation and disclosure requirements
for earnings per share for entities with publicly held common stock. The
Company is required to adopt this statement in fiscal 1998. See Note 6 of Notes
to Condensed Consolidated Financial Statements for the disclosure of the effect
of SFAS 128 on the periods presented.
Statement of Financial Accounting Standards No. 130 ("SFAS 130") establishes
standards for the reporting and display of comprehensive income and its
components in a full set of general purpose financial statements. Statement of
Financial Accounting Standards No. 131 ("SFAS 131") establishes standards for
disclosures of segment information about products and services, geographic
areas, major customers, and certain interim disclosures of segment information
which is not required by accounting standards currently applied by the Company.
These statements are required to be adopted as of October 1, 1998. Currently,
the Company is evaluating these new standards and is uncertain what impact SFAS
130 and SFAS 131 will have on the Company's consolidated financial statements.
Forward-Looking Statements
Statements herein regarding employee termination and related charges expected
to be incurred in the fourth quarter of fiscal 1997 constitute forward-looking
statements within the meaning of the Securities Act of 1933 and the Securities
Exchange Act of 1934. Such statements are subject to certain risks and
uncertainties that could cause actual amounts to differ materially from those
projected. With respect to such estimated employee termination and related
charges, management has made assumptions regarding, among other things, the
timing of the plant closing and the realizable value of any property or
equipment disposed of. The amount of employee termination and related charges
are subject to certain risks including, among others, that plant closure costs
have been underestimated, the realizable value of any property and equipment
have been overestimated and the unforeseen costs will be incurred. Management
believes these estimates are reasonable; however undue reliance should not be
placed on such estimates which are based on current expectations.
14
<PAGE> 17
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11 - Statement Regarding Computation of Per Share Earnings
27 - Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
None
15
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<CAPTION>
ROCK-TENN COMPANY
(Registrant)
<S> <C>
Date August 13, 1997 By:/s/ DAVID C. NICHOLSON
------------------------ -------------------------------------------
David C. Nicholson, Senior Vice-President,
Chief Financial Officer, Secretary
(Principal Financial Officer, Principal
Accounting Officer and duly
authorized officer)
</TABLE>
16
<PAGE> 19
ROCK-TENN COMPANY
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Page No.
<S> <C> <C>
Exhibit 11 Statement Regarding Computation of Per Share Earnings 18
Exhibit 27 Financial Data Schedule (For SEC use only)
</TABLE>
17
<PAGE> 1
Exhibit 11
ROCK-TENN COMPANY
COMPUTATION OF PER SHARE EARNINGS
(Unaudited)
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE
Net income $ 6,212 $13,525 $ 6,420 $37,577
======= ======= ======= =======
Average common shares outstanding 33,357 33,257 33,265 33,204
Average common shares outstanding including
common equivalent shares 34,085 34,121 34,102 34,007
Primary earnings per common share $ 0.19 $ 0.41 $ 0.19 $ 1.13
Primary earnings per common and
common equivalent share $ 0.18 $ 0.40 $ 0.19 $ 1.10
======= ======= ======= =======
FULLY DILUTED EARNINGS PER SHARE
Net income $ 6,212 $13,525 $ 6,420 $37,577
======= ======= ======= =======
Average common shares outstanding 33,357 33,257 33,265 33,204
Average common shares outstanding including
common equivalent shares 34,152 34,159 34,102 34,116
Fully diluted earnings per common share $ 0.19 $ 0.41 $ 0.19 $ 1.13
Fully diluted earnings per common and
common equivalent share $ 0.18 $ 0.40 $ 0.19 $ 1.10
======= ======= ======= =======
</TABLE>
18
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AND THE CONDENSED CONSOLIDATED STATEMENT OF
INCOME FILED AS PART OF THE QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 4,173
<SECURITIES> 0
<RECEIVABLES> 104,972
<ALLOWANCES> 3,935
<INVENTORY> 90,266
<CURRENT-ASSETS> 223,727
<PP&E> 829,462
<DEPRECIATION> 303,528
<TOTAL-ASSETS> 1,091,268
<CURRENT-LIABILITIES> 126,934
<BONDS> 536,010
0
0
<COMMON> 334
<OTHER-SE> 350,096
<TOTAL-LIABILITY-AND-EQUITY> 1,091,268
<SALES> 784,017
<TOTAL-REVENUES> 784,017
<CGS> 589,441
<TOTAL-COSTS> 589,441
<OTHER-EXPENSES> 15,484
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,842
<INCOME-PRETAX> 20,512
<INCOME-TAX> 14,092
<INCOME-CONTINUING> 6,420
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,420
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
</TABLE>
