<PAGE> 1
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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 MARCH 31, 1997
--------------
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-23340
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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
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 448-2193
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N/A
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(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:
<TABLE>
<CAPTION>
Class Outstanding as of May 13, 1997
- ----------------------------------- ------------------------------
<S> <C>
Class A Common Stock, .01 par value 21,447,222
Class B Common Stock, .01 par value 11,941,884
</TABLE>
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<PAGE> 2
ROCK-TENN COMPANY
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Operations for the three months and
six months ended March 31, 1997 and 1996 1
Condensed Consolidated Balance Sheets at March 31, 1997 and
September 30, 1996 2
Condensed Consolidated Statements of Cash Flows for the six months
ended March 31, 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 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 15
Index to Exhibits 17
</TABLE>
<PAGE> 3
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ROCK-TENN COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31, March 31, March 31,
1997 1996 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 275,397 $ 216,477 $ 483,715 $ 435,839
Cost of goods sold 209,653 156,290 364,378 317,493
--------- --------- --------- ---------
Gross profit 65,744 60,187 119,337 118,346
Selling, general and administrative expenses 48,889 37,852 88,400 74,366
Plant closure and other costs 12,784 -- 12,784 --
--------- --------- --------- ---------
Income from operations 4,071 22,335 18,153 43,980
Interest income 111 224 607 472
Interest expense (6,804) (2,774) (9,246) (5,658)
--------- --------- --------- ---------
Income (loss) before income taxes (2,622) 19,785 9,514 38,794
Provision for income taxes 4,569 7,518 9,306 14,742
--------- --------- --------- ---------
Net income (loss) $ (7,191) $ 12,267 $ 208 $ 24,052
========= ========= ========= =========
Weighted average number of common and
common equivalent shares outstanding 33,266 33,978 34,114 33,954
========= ========= ========= =========
Earnings (loss) per common and common
equivalent share $ (.22) $ .36 $ .01 $ .71
========= ========= ========= =========
Cash dividends per common share $ .075 $ .068 $ .15 $ .136
========= ========= ========= =========
</TABLE>
See accompanying notes
1
<PAGE> 4
ROCK-TENN COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
- -------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,211 $ 50,876
Accounts receivable (net of allowance for
doubtful accounts of $4,098 and $3,094) 93,201 78,041
Inventories 91,050 58,505
Other current assets 29,780 1,908
----------- ---------
TOTAL CURRENT ASSETS 221,242 189,330
Property, plant and equipment at cost:
Land and buildings 138,459 113,059
Machinery and equipment 651,629 478,181
Leasehold improvements 4,103 4,049
Transportation equipment 13,435 12,106
----------- ---------
807,626 607,395
Less accumulated depreciation and amortization (291,655) (272,541)
----------- ---------
Net property, plant and equipment 515,971 334,854
Goodwill 299,651 48,632
Other assets 16,867 8,872
----------- ---------
$ 1,053,731 $ 581,688
=========== =========
- -------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 45,936 $ 28,555
Accrued compensation and benefits 35,366 21,838
Current maturities of long-term debt 25,038 7,260
Other current liabilities 13,749 11,296
----------- ---------
TOTAL CURRENT LIABILITIES 120,089 68,949
Long-term debt due after one year 510,667 139,344
Deferred income taxes 73,295 23,136
Other liabilities 3,869 1,104
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.01 par value; 50,000,000 shares authorized; no
shares outstanding at March 31, 1997 and September 30, 1996 -- --
Class A common stock, $.01 par value; 175,000,000 shares authorized,
21,361,558 outstanding at March 31, 1997 and 21,178,313 outstanding at
September 30, 1996; Class B common stock, $.01 par value; 60,000,000 shares
authorized; 11,931,984 outstanding
at March 31, 1997 and 11,949,097 outstanding at September 30, 1996 333 331
Capital in excess of par value 112,235 109,879
Retained earnings 234,673 239,561
Other (1,430) (616)
----------- ---------
TOTAL SHAREHOLDERS' EQUITY 345,811 349,155
----------- ---------
$ 1,053,731 $ 581,688
=========== =========
</TABLE>
See accompanying notes
2
<PAGE> 5
ROCK-TENN COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended
March 31, March 31,
1997 1996
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<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 208 $ 24,052
Items in income not affecting cash:
Depreciation and amortization 27,540 23,541
Plant closure and other costs 12,784 --
Deferred income taxes 5,017 1,736
Gain on sale of property, plant and equipment (229) (729)
Change in operating assets and liabilities (excluding acquisition):
Accounts receivable 6,718 12,974
Inventories (1,152) 2,241
Other assets (7,340) 5,093
Accounts payable (1,406) (5,220)
Accrued liabilities (14,683) (6,259)
Income taxes payable (17) --
Other (484) (203)
--------- --------
CASH PROVIDED BY OPERATING ACTIVITIES 26,956 57,226
FINANCING ACTIVITIES:
Net additions to revolving credit facilities 388,853 --
Additions to long-term debt 1,500 --
Repayment of long-term debt (144,954) (16,321)
Sales of common stock 2,254 1,099
Purchases of common stock -- (323)
Cash dividends paid (4,990) (4,526)
--------- --------
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 242,663 (20,071)
INVESTING ACTIVITIES:
Cash paid for purchase of business (267,152) --
Capital expenditures (45,590) (33,979)
Proceeds from sale of property, plant and equipment 851 1,546
Cash paid for intangibles (1,397) (191)
Decrease in unexpended industrial revenue bond proceeds -- 1,363
--------- --------
CASH USED FOR INVESTING ACTIVITIES (313,288) (31,261)
Effect of exchange rate changes on cash 4 (19)
(Decrease) increase in cash and cash equivalents (43,665) 5,875
Cash and cash equivalents at beginning of period 50,876 21,532
--------- --------
Cash and cash equivalents at end of period $ 7,211 $ 27,407
========= ========
Supplemental disclosure of cash flow information: Cash paid during the period
for:
Income taxes 12,328 $ 9,427
Interest (net of amounts capitalized) 9,059 5,677
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 six-month periods ended March 31, 1997 and 1996, the Company's
financial position at March 31, 1997 and September 30, 1996, and the cash flows
for the six-month periods ended March 31, 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 six months ended March 31, 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 March 31, 1997 and September 30, 1996 were as follows (in
thousands):
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
--------- --------
(Unaudited)
<S> <C> <C>
Finished goods and work in process $ 67,726 $ 46,796
Raw materials 32,239 26,583
Supplies 11,775 5,816
--------- --------
Inventories at first-in, first-out (FIFO) cost 111,740 79,195
LIFO reserve (20,690) (20,690)
--------- --------
Net inventories $ 91,050 $ 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 six months ended March 31, 1997 was to increase net income
by approximately $313,000, or $.01 per share and $381,000, or $.01 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 six months periods ended March
31, 1997 and 1996 under this new standard would have been the following:.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31 March 31 March 31,
1997 1996 1997 1996
--------------------------------------------
<S> <C> <C> <C> <C>
Basic earnings per common share $ (.22) $ .37 $ .01 $ .72
Diluted earnings per common and
common equivalent share $ (.22) $ .36 $ .01 $ .71
</TABLE>
NOTE 7. ACQUISITION OF BUSINESS
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
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.
5
<PAGE> 8
The consolidated statements of operations 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>
<CAPTION>
<S> <C>
Net working capital $ 24,283
Property, plant, equipment and other 160,526
Goodwill 266,209
Other intangible assets 5,000
Deferred tax liabilities (45,160)
---------
Net assets 410,858
Less long-term debt assumed (143,706)
---------
Net purchase price $ 267,152
=========
</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>
Six months ended March 31,
1997 1996
--------------------------
(Unaudited)
<S> <C> <C>
Net sales $584,575 $618,500
Net income (2,430) 27,526
Earnings per common and common
equivalent share (.07) .81
</TABLE>
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 increases 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. As of March 31, 1997, there was
$389,000,000 of borrowings outstanding under the new facility, all but
$15,000,000 of which has been classified as long-term since the Company has both
the ability to continue to finance this amount pursuant to the terms of the
revolving credit facility and the intent to not repay this amount with cash from
operations during the ensuing year.
NOTE 9. PLANT CLOSURE
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 $12,800,000 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 expects that it will incur additional non-recurring,
after-tax costs including employee termination and related charges associated
with the plant closing of $1,500,000 to $2,000,000 during the third
6
<PAGE> 9
quarter of fiscal 1997. 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 fiscal 1997.
On May 12, 1997, the Company announced that it had entered into a definitive
agreement to acquire substantially all of the assets and assume certain of the
liabilities of The Davey Company, a manufacturer of recycled paperboard used by
the book manufacturing industry for bookcovers. The purchase price for the
acquisition will consist of approximately 1,200,000 shares of Rock-Tenn Class A
Common Stock, which will be registered under the Securities Act of 1933, as
amended, subject to certain adjustments. The acquisition is expected to close
during the third quarter of fiscal 1997, subject to certain customary conditions
including obtaining regulatory approvals.
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 SIX MONTHS ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES:
Converted Products $ 231,520 $ 193,347 $ 415,957 $ 386,436
Paperboard 100,396 71,896 166,942 144,859
Intersegment Eliminations (56,519) (48,766) (99,184) (95,456)
- ----------------------------------------------------------------------------------------------------------
TOTAL $ 275,397 $ 216,477 $ 483,715 $ 435,839
- ----------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES:
Converted Products $ (4,580) $ 7,627 $ 359 $ 14,268
Paperboard 12,187 16,496 23,191 33,336
Corporate Expense (2,706) (1,788) (4,567) (3,624)
Intersegment Eliminations (830) -- (830) --
Interest Expense (6,804) (2,774) (9,246) (5,658)
Interest Income 111 224 607 472
- ----------------------------------------------------------------------------------------------------------
TOTAL $ (2,622) $ 19,785 $ 9,514 $ 38,794
==========================================================================================================
Paperboard Shipped (in tons) 246,387 155,095 406,692 303,131
==========================================================================================================
</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 is currently experiencing a period of weak
conditions and selling prices within the industry have been negatively affected.
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 six months ended March 31, 1997. In addition, in
connection with the acquisition of the Waldorf Corporation (the "Waldorf
Acquisition") the Company acquired a plant that manufactures corrugating
medium, a product that was not previously manufactured by the Company. Due
primarily to these negative industry conditions, the Company's corrugating
medium business has incurred significant losses since January 21, 1997, the
date of the Waldorf Acquisition. 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 March 31,
1997 increased 27.2% to $275.4 million from $216.5 million for the quarter ended
March 31, 1996. Net sales for the six months ended March 31, 1997 increased
11.0% to $483.7 million from $435.8 million for the six months ended March 31,
1996. Net sales increased for the quarter and for the six months ended March 31,
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 March 31, 1997
increased 19.8% to $231.5 million from $193.3 million for the quarter ended
March 31, 1996. Net sales of converted products before intersegment eliminations
for the six months ended March 31, 1997 increased 7.7% to $416.0 from $386.4 for
the six months ended March 31, 1996. The increase for the quarter ended and for
the six months ended March 31, 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 March 31, 1997 increased 39.6%
to $100.4 million from $71.9 million for the quarter ended March 31, 1996. Net
sales of paperboard before intersegment eliminations for the six months ended
March 31, 1997 increased 15.2% to $166.9 million from $144.9 million for the six
months ended March 31, 1996. The increase for the quarter ended and the six
months ended March 31, 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 March 31, 1997
increased 34.2% to $209.7 million from $156.3 million for the quarter ended
March 31, 1996. Cost of goods sold as a percentage of net sales for the quarter
ended March 31, 1997 increased to 76.1% from 72.2% for the quarter ended March
31, 1996. Cost of goods sold for the six months ended March 31, 1997 increased
14.8% to $364.4 million from $317.5 million for the six months ended March 31,
1996. Cost of goods sold as a percentage of net sales for the six months ended
March 31, 1997 increased to 75.3% from 72.9% for the six months ended March 31,
1996. The average cost of recovered paper, the Company's primary raw material,
increased to $57 per ton for the quarter ended March 31, 1997 compared to $53
per ton for the quarter ended March 31, 1996. This cost increase and lower
average selling prices which were partially offset by higher volumes of
paperboard shipped resulted in an increase in cost of goods sold as a percentage
of net sales for the quarter ended March 31, 1997. The average cost of recovered
paper for the six months ended March 31, 1997 decreased to approximately $55 per
ton from $59 per ton for the six months ended March 31, 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 six months ended March 31, 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 $0.4 million higher and $2.0
million lower than it would have been under the FIFO method in the quarter
ended March 31, 1997 and 1996, respectively. Cost of goods sold determined
under the LIFO method was the same as it would have been and $2.5 million lower
than it would have been under the FIFO method for the six months ended March
31, 1997 and 1996, respectively. Net income was $0.2 million lower and $1.2
million higher than it would have been under the FIFO method in the quarter
ended March 31, 1997 and 1996, respectively. Net income was the same as it
would have been and $1.6 million higher than it would have been under the FIFO
method for the six months ended March 31, 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 March 31, 1997 increased 9.1%
to $65.7 million from $60.2 million for the quarter ended March 31, 1996. Gross
profit for the six months ended March 31, 1997 increased .8% to $119.3 million
from $118.3 for the six months ended March 31, 1996. Gross profit as a
percentage of net sales decreased to 23.9% for the quarter ended March 31, 1997
from 27.8% for the quarter ended March 31, 1996. Gross profit as a percentage of
net sales decreased to 24.7% for the six months ended March 31, 1997 from 27.1%
for the six months ended March 31, 1996. The decrease in gross profit as a
percentage of net sales for the quarter ended March 31, 1997 was primarily the
result of reductions in average selling prices 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. The decrease in gross
profit as a percentage of net sales for the six months ended March 31, 1997 was
primarily the result of reductions in average selling prices, 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 March 31, 1997 increased 29.0% to
$48.9 million from $37.9 million for the quarter ended March 31, 1996. Selling,
general and administrative expenses for the six months ended March 31, 1997
increased 18.8% to $88.4 million from $74.4 million for the six months ended
March 31, 1996. Selling, general and administrative expenses as a percentage of
net sales for the quarter ended March 31, 1997 increased to 17.8% from 17.5% for
the quarter ended March 31, 1996. Selling, general and administrative expenses
as a percentage of net sales for the six months ended March 31, 1997 increased
to 18.3% from 17.1% for the six months ended March 31, 1996. The increase in
selling, general and administrative expenses as a percentage of net sales for
the quarter ended and the six months ended March 31, 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 expects that it will incur
additional, after-tax costs including employee termination and related charges
associated with the plant closing of $1.5 million to $2 million during the third
quarter of fiscal 1997. See "Forward-Looking Statements."
Segment Operating Income (Loss).
Operating Income (Loss) - Converted Products Segment. Excluding the $12.8
million non-cash write-off of goodwill associated with the Company's Olympic
Packaging subsidiary, operating income attributable to the converted products
segment for the quarter ended March 31, 1997 increased 7.9% to $8.2 million
from $7.6 million for the quarter ended March 31, 1996. Excluding the $12.8
million non-cash write-off of goodwill associated with the Company's Olympic
Packaging subsidiary, operating income attributable to the converted products
segment for the six months ended March 31, 1997 decreased 8.4% to $13.1 million
from $14.3 million for the six months ended March 31, 1996. Excluding the
$12.8 million non-cash write-off of goodwill associated with the Company's
Olympic Packaging subsidiary, operating margin for the quarter ended March 31,
1997 was 3.5% compared to 3.9% for the quarter ended March 31, 1996. Excluding
the $12.8 million non-cash write-off of goodwill associated with
10
<PAGE> 13
the Company's Olympic Packaging subsidiary, operating margin for the six months
ended March 31, 1997 was 3.1% compared to 3.7% for the six months ended March
31, 1997. The increase in operating income for the three months ended March 31,
1997, excluding the effect of the $12.8 million non-cash write-off of goodwill,
was primarily a result of the Waldorf Acquisition on January 21, 1997. The
decrease in operating income for the six months ended March 31, 1997, excluding
the effect of the $12.8 million non-cash write-off of goodwill, was primarily
the result of decreased customer demand for converted products, particularly
for folding cartons and laminated paperboard products, and reduced average
selling prices for certain converted products, partially offset by the impact
of the Waldorf Acquisition. Inefficiencies at the recently reconfigured
Vineland laminated paperboard products facility and other laminated paperboard
products facilities contributed to the decline in operating margin, excluding
the effect of the $12.8 million non-cash write-off of goodwill.
Operating Income - Paperboard Segment. Operating income attributable to the
paperboard segment for the quarter ended March 31, 1997 decreased 26.1% to $12.2
million from $16.5 million for the quarter ended March 31, 1996. Operating
margin for the quarter ended March 31, 1997 was 12.2% compared to 22.9% for the
quarter ended March 31, 1996. Operating income attributable to the paperboard
segment for the six months ended March 31, 1997 decreased 30.3% to $23.2 million
from $33.3 million for the six months ended March 31, 1996. The decrease in
operating income and margin for the quarter ended March 31, 1997 was primarily
the result of 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 $401 per ton for the quarter ended
March 31, 1997 from $438 per ton for the quarter ended March 31, 1996. The
Company's weighted average cost per ton of paper recovered during the quarter
ended March 31, 1997 increased to $57 per ton compared to $53 per ton during the
quarter ended March 31, 1996. Tons of paperboard shipped (excluding corrugating
medium) increased to 221,584 for the quarter ended March 31, 1997 from 155,095
for the quarter ended March 31, 1996.
The decrease in operating income and margin for the six months ended March 31,
1997 was primarily the result of 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 six months ended March 31, 1997 from
$452 per ton for the six months ended March 31, 1996. The Company's weighted
average cost per ton of paper recovered during the six months ended March 31,
1997 decreased to $55 per ton compared to $59 per ton for the six months ended
March 31, 1996. Tons of paperboard (excluding corrugating medium) shipped
increased to 381,889 for the six months ended March 31, 1997 from 303,131 for
the six months ended March 31, 1996. (See "General")
Interest Expense. Interest expense for the quarter ended March 31, 1997
increased to $6.8 million from $2.8 million for the quarter ended March 31,
1996. Interest expense for the six months ended March 31, 1997 increased to $9.2
million from $5.7 million for the six months ended March 31, 1996. The increase
in interest expense for the quarter and the six months ended March 31, 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 $4.6 million
for the quarter ended March 31, 1997 from $7.5 million for the quarter ended
March 31, 1996. Provision for income taxes for the six months ended March 31,
1997 decreased to $9.3 million from $14.7 million for the six months ended March
31, 1996. Excluding the effect of the non-cash write-off of goodwill, which is
not deductible for income tax purposes, associated with the Olympic Packaging
acquisition, the Company's effective tax rate increased to 41.7% for the six
months ended March 31, 1997 compared to 38.0% for the six months ended March 31,
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 (Loss) and Earnings (Loss) Per Common and Common Equivalent Share.
Net income (loss) for the quarter ended March 31, 1997 decreased 158.5% to a
$7.2 million loss from net income of $12.3 million for the quarter ended March
31, 1996. Net income for the six months ended March 31, 1997 decreased 99.2% to
$0.2 million from $24.1 million for the six months ended March 31, 1996. Net
income (loss) as a percentage of net sales decreased to (2.6)% for the quarter
ended March 31, 1997 from 5.7% for the quarter ended March 31, 1996. Net income
(loss) as a percentage of net sales decreased to less than 1% for the six months
ended March 31, 1997 from 5.5% for the six months ended March 31, 1996. Earnings
(loss) per common and common equivalent share for the quarter ended March 31,
1997 decreased 161.1% to $(.22) from $.36 for the quarter ended March 31, 1996.
Earnings (loss) per common and common equivalent share for the six months ended
March 31, 1997 decreased to $.01 from $.71 for the six months ended March 31,
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
11
<PAGE> 14
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. At March 31, 1997, the Company had $389.0 million outstanding
under its new revolving credit facility. Cash and cash equivalents, $7.2 million
at March 31, 1997, decreased from $50.9 million at September 30, 1996.
Net cash provided by operating activities for the six months ended March 31,
1997 was $27.0 million compared to $57.2 million for the six months ended March
31, 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 $242.7
million for the six months ended March 31, 1997 and consisted primarily of
borrowings under the Company's $400.0 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 $20.1 million for the six months ended March 31, 1996 and
consisted primarily of repayments of long-term debt and dividend payments. Net
cash used for investing activities was $313.3 million for the six months ended
March 31, 1997 compared to $31.3 million for the quarter ended March 31, 1996
and consisted primarily of cash paid for the Waldorf Acquisition and capital
expenditures for the six months ended March 31, 1997 and capital expenditures
for the six months ended March 31, 1996.
The Company estimates that its capital expenditures will aggregate approximately
$45 million for the remainder of fiscal 1997, excluding any expenditures which
may be made relating to facilities acquired in fiscal 1997. The Company is still
evaluating the capital requirements of the facilities acquired in the Waldorf
Acquisition. These expenditures will be used for (i) the remaining payments for
three printers, the remaining payments for three die cutters and four gluer
upgrades in the Folding Carton Division, (ii) a die cutter and conveyors in the
Corrugated Division, (iii), a laminator upgrade and a cut-to-size machine in the
Paperboard Products Division, (iv) the remaining capital costs associated with
the construction and relocation for one facility in the Recycled Fiber Division,
(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 historically has expanded its business through the acquisition of
other related businesses and the Company plans to continue to focus on making
acquisitions. The recycled paperboard and converted paperboard products
industries have undergone significant consolidation in recent years, and the
Company believes it will 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 expect that the closing of this joint
venture will occur during the second half of fiscal 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. Waldorf is a leading manufacturer of folding cartons and recycled
clay-coated paperboard, as well as a manufacturer of recycled corrugating
medium. The Waldorf Acquisition was financed with available cash and borrowings
aggregating $240.0 million under the Company's $400.0 million revolving credit
facility.
The Company will delay until market conditions improve a previously announced
proposed public offering of equity securities originally planned for the first
half of 1997. The proceeds from the proposed public offering were to be used to
repay a portion of the borrowings incurred by the Company in connection with the
Waldorf Acquisition.
12
<PAGE> 15
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 six months ended March
31, 1997, the Company did not repurchase any shares of Class A or Class B Common
Stock. As of March 31, 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, 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,
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 six months ended March 31, 1997 was to increase net income
by approximately $313,000, or $.01 per share and $381,000, or $.01 per share,
respectively.
NEW ACCOUNTING STANDARD
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.
FORWARD-LOOKING STATEMENTS
Statements herein regarding employee termination and related charges and the
Company's anticipated performance in subsequent quarters 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 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.
Further, any statements herein regarding the Company's performance in future
periods are subject to risks relating to, among other things, decreases in
demand for the Company's products, increases in raw material costs, fluctuations
in selling prices and adverse changes in general market and industry conditions.
Management believes these estimates are reasonable; however undue reliance
should not be placed on such estimates which are based on current expectations.
13
<PAGE> 16
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders was held on Thursday, February 20, 1997 at
which several matters were submitted to a vote of the shareholders:
(a) Votes cast for or withheld regarding the four individuals elected as
directors of the Company for a term expiring in 2000 were as follows
(there were no abstentions or broker non-votes):
<TABLE>
<CAPTION>
For Withheld
--- --------
<S> <C> <C>
Bradley Currey, Jr 113,642,970 76,156
Mary Louise Morris Brown 113,640,016 76,110
John D. Hopkins 113,650,551 68,575
James W. Johnson 113,646,451 72,675
</TABLE>
Additional directors, whose terms of office as directors continued
after the meeting, are as follows:
<TABLE>
<CAPTION>
Term expiring in 1998 Term expiring in 1999
--------------------- ---------------------
<C> <C>
Stephen G. Anderson J. Hyatt Brown
Robert B. Currey C. Randolph Sexton
Lawrence L. Gellerstedt Jay Shuster
John W. Spiegel
</TABLE>
(b) Votes cast for or against and the number of abstentions regarding each
other matter voted upon at the meeting were as follows:
<TABLE>
<CAPTION>
Broker
Description of Matter For Against Abstain Non-Votes
--------------------- --- ------- ------- ---------
<S> <C> <C> <C> <C>
Ratification of the
appointment of Ernst &
Young LLP as independent
auditors of the Company
to serve for the 1997 fiscal year 113,643,862 4,591 70,673 ---
</TABLE>
14
<PAGE> 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
2.1- Stock Purchase Agreement by and among Rock-Tenn Company and the
Shareholders of Wabash Corporation dated January 21, 1997
(incorporated by reference to Exhibit 2.1 to the Registrant's
Current Report on Form 8-K dated as of January 21, 1997 and as
amended in the Registrant's Current Report on Form 8-K/A dated
as of January 21, 1997).
4.1- Credit Agreement dated as of January 21, 1997 among Rock-Tenn
Company, the Lenders named therein and SunTrust Bank, Atlanta, as
Agent (incorporated by reference to Exhibit 2.1 to the
Registrant's Current Report on Form 8-K dated as of January 21,
1997 and as amended in the Registrant's Current Report on Form
8-K/A dated as of January 21, 1997).
11 - Statement Regarding Computation of Per Share Earnings
27 - Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
1. On January 8, 1997, the Company filed a Current Report on Form
8-K, dated January 8, 1997, under which the Company filed a press
release announcing the proposed formation of a joint venture
between the Company and Sonoco Products Company through the
combination of their fiber partition businesses.
2. On January 10, 1997, the Company filed a Current Report on Form
8-K, dated January 10, 1997, under which the Company filed a copy
of a press release announcing the Company's results for the first
fiscal quarter ending December 31, 1996.
3. On February 5, 1997, the Company filed a Current Report on Form
8-K, dated January 21, 1997, which contained the financial
statements of Waldorf Corporation, pro forma financial information
and exhibits required in connection with the acquisition of all of
the outstanding capital stock of Wabash Corporation, the parent of
Waldorf Corporation.
4. On February 13, 1997, the Company filed a Current Report on Form
8-K/A, dated January 21, 1997, which contained the financial
statements of Waldorf Corporation and exhibits required in
connection with the acquisition of all of the outstanding capital
stock of Wabash Corporation, the parent of Waldorf Corporation.
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.
ROCK-TENN COMPANY
(Registrant)
Date May 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)
16
<PAGE> 19
ROCK-TENN COMPANY
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Page No.
<S> <C> <C>
Exhibit 2.1 Stock Purchase Agreement by and among Rock-Tenn Company and
the Shareholders of Wabash Corporation dated January 21, 1997
(incorporated by reference to Exhibit 2.1 to the Registrant's
Current Report on Form 8-K dated as of January 21, 1997 and as
amended in the Registrant's Current Report on Form 8-K/A dated
as of January 21, 1997).
Exhibit 4.1 Credit Agreement dated as of January 21, 1997 among Rock-Tenn
Company, the Lenders named therein and SunTrust Bank,
Atlanta, as Agent (incorporated by reference to Exhibit 2.1
to the Registrant's Current Report on Form 8-K dated as of
January 21, 1997 and as amended in the Registrant's Current
Report on Form 8-K/A dated as of January 21, 1997).
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 (LOSS)
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31, March 31, March 31,
1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------------
PRIMARY EARNINGS (LOSS) PER SHARE
<S> <C> <C> <C> <C>
Net income (loss) $ (7,191) $12,267 $ 208 $24,052
======== ======= ======= =======
Average common shares outstanding 33,266 33,194 33,218 33,178
Average common shares outstanding including
common equivalent shares 33,266 33,978 34,114 33,954
Primary earnings (loss) per common share $ (0.22) $ 0.37 $ 0.01 $ 0.72
Primary earnings (loss) per common and
common equivalent share $ (0.22) $ 0.36 $ 0.01 $ 0.71
======== ======= ======= =======
FULLY DILUTED EARNINGS (LOSS) PER SHARE
Net income (loss) $ (7,191) $12,267 $ 208 $24,052
======== ======= ======= =======
Average common shares outstanding 33,266 33,194 33,218 33,178
Average common shares outstanding including
common equivalent shares 33,266 33,994 34,114 33,979
Fully diluted earnings (loss) per common share $ (0.22) $ 0.37 $ 0.01 $ 0.72
Fully diluted earnings (loss) per common and
common equivalent share $ (0.22) $ 0.36 $ 0.01 $ 0.71
======== ======= ======= =======
</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> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 7,211
<SECURITIES> 0
<RECEIVABLES> 97,299
<ALLOWANCES> 4,098
<INVENTORY> 91,050
<CURRENT-ASSETS> 221,242
<PP&E> 807,626
<DEPRECIATION> 291,655
<TOTAL-ASSETS> 1,053,731
<CURRENT-LIABILITIES> 120,089
<BONDS> 510,667
0
0
<COMMON> 333
<OTHER-SE> 345,478
<TOTAL-LIABILITY-AND-EQUITY> 1,053,731
<SALES> 483,715
<TOTAL-REVENUES> 483,715
<CGS> 364,378
<TOTAL-COSTS> 364,378
<OTHER-EXPENSES> 12,784
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,246
<INCOME-PRETAX> 9,514
<INCOME-TAX> 9,306
<INCOME-CONTINUING> 208
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 208
<EPS-PRIMARY> .01
<EPS-DILUTED> 0
</TABLE>
