FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
For Quarter Ended December 31, 1996 Commission file number 1-9915
GAYLORD CONTAINER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-3472452
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 Lake Cook Road, Suite 400
Deerfield, Illinois 60015
Telephone: (847) 405-5500
(Address, including zip code, and telephone number, including
area code, of registrant's principal offices)
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 by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13, or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court. Yes X No
As of February 7, 1997, the registrant had outstanding 52,765,568
shares of its $0.0001 par value Class A Common Stock (including 2,807,940
shares held in trust for the benefit of the warrant holders) and 2,807,940
redeemable exchangeable warrants to obtain Class A Common Stock.
<PAGE>
PAGE
PART I. FINANCIAL INFORMATION NUMBERS
Item 1. Financial Statements 1 - 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 - 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
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<TABLE>
<CAPTION>
GAYLORD CONTAINER CORPORATION AND SUBSIDIARIES
----------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS,
DECEMBER 31, 1996 AND SEPTEMBER 30, 1996
---------------------------------------------------------------------------
DECEMBER 31, SEPTEMBER 30,
1996 1996
----------- ---------
ASSETS (In millions)
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents $ 3.5 $ 39.2
Trade receivables (less allowances of
$7.4 million and $6.9 million, respectively) 103.2 111.0
Inventories (Note 2) 84.8 70.4
Deferred income taxes 5.1 5.1
Other current assets 8.1 10.4
------- -------
Total current assets 204.7 236.1
------- -------
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost 1,041.3 1,033.3
Less accumulated depreciation 435.6 421.0
------- -------
Property - net 605.7 612.3
------- -------
DEFERRED INCOME TAXES 23.2 16.8
OTHER ASSETS 69.0 67.8
------- -------
TOTAL $ 902.6 $ 933.0
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Current maturities of long-term debt $ 11.3 $ 11.3
Trade payables 57.0 60.8
Accrued and other liabilities 66.6 94.2
------- -------
Total current liabilities 134.9 166.3
------- -------
LONG-TERM DEBT 633.8 623.1
OTHER LONG-TERM LIABILITIES 28.9 29.1
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY:
Class A common stock - par value, $.0001 per share;
authorized 125,000,000 shares; issued 54,312,812
shares and 54,270,011 shares, respectively, and
outstanding 52,741,913 shares and 52,688,233
shares, respectively - -
Capital in excess of par value 173.6 173.5
Retained deficit (55.8) (46.1)
Common stock in treasury - at cost; 1,570,899
shares and 1,581,778 shares, respectively (11.6) (11.7)
Recognition of minimum pension liability (1.2) (1.2)
------- -------
Total stockholders' equity 105.0 114.5
------- -------
TOTAL $ 902.6 $ 933.0
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
1
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<TABLE>
<CAPTION>
GAYLORD CONTAINER CORPORATION AND SUBSIDIARIES
----------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED
DECEMBER 31, 1996 AND 1995 (In millions, except per share data)
--------------------------------------------------------------------------
THREE MONTHS ENDED DECEMBER 31,
-------------------------------
1996 1995
------------ ------------
<S> <C> <C>
NET SALES $ 195.6 $ 253.8
COST OF GOODS SOLD 174.2 179.0
------ ------
GROSS MARGIN 21.4 74.8
SELLING AND ADMINISTRATIVE COSTS (20.5) (22.5)
------ ------
OPERATING EARNINGS 0.9 52.3
INTEREST EXPENSE - Net (19.4) (19.8)
OTHER INCOME - Net 0.8 0.1
------ ------
EARNINGS (LOSS) BEFORE TAXES AND
EXTRAORDINARY ITEM (17.7) 32.6
INCOME TAXES (8.0) 13.5
------ ------
EARNINGS (LOSS) BEFORE EXTRAORDINARY ITEM (9.7) 19.1
EXTRAORDINARY LOSS (Note 3) - (2.6)
------ ------
NET INCOME (LOSS) (9.7) $ 16.5
======
RETAINED DEFICIT:
BEGINNING OF PERIOD (46.1)
------
END OF PERIOD $ (55.8)
======
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE:
EARNINGS (LOSS) BEFORE
EXTRAORDINARY ITEM $ (0.18) $ 0.35
EXTRAORDINARY LOSS (Note 3) - (0.05)
------ ------
NET INCOME (LOSS) $ (0.18) $ 0.30
====== ======
AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 52.7 55.0
====== ======
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
GAYLORD CONTAINER CORPORATION AND SUBSIDIARIES
----------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED
DECEMBER 31, 1996 AND 1995
----------------------------------------------------------------------------
THREE MONTHS ENDED DECEMBER 31,
-------------------------------
1996 1995
--------------- ------------
(In millions)
<S> <C> <C>
CASH FLOWS FROM OPERATIONS:
Earnings (loss) before extraordinary item $ (9.7) $ 19.1
Adjustments to reconcile earnings (loss) before
extraordinary item to net cash from operating
activities:
Depreciation and amortization 16.3 16.3
Non-cash interest expense - 12.1
Deferred income taxes (6.4) 8.6
Change in current assets and liabilities,
excluding acquisitions and dispositions (36.3) (6.0)
Other - net (2.1) (1.3)
----- -----
Net cash provided by (used for) operations (38.2) 48.8
----- -----
CASH FLOWS FROM INVESTMENTS:
Capital expenditures (8.4) (16.0)
Capitalized interest (0.2) (0.1)
Other investments - net 0.5 1.9
----- -----
Net cash used for investments (8.1) (14.2)
----- -----
CASH FLOWS FROM FINANCING:
Senior debt - repayments (2.1) (1.7)
Early retirement of debt (Note 3) - (66.8)
Revolver borrowings - net 12.5 8.0
Other financing - net 0.2 0.1
----- -----
Net cash provided by (used for) financing 10.6 (60.4)
----- -----
Net decrease in cash and equivalents (35.7) (25.8)
Cash and equivalents, beginning of period 39.2 32.5
----- -----
Cash and equivalents, end of period $ 3.5 $ 6.7
===== =====
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for:
Interest $ 37.3 $ 13.3
===== =====
Income taxes $ - $ 0.4
===== =====
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Write-off of deferred financing fees $ - $ 1.4
===== =====
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
GAYLORD CONTAINER CORPORATION AND SUBSIDIARIES
----------------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
1. GENERAL
-------
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements include all normal and recurring adjustments
and accruals necessary to present fairly the financial position as of December
31, 1996 and the results of operations and cash flows for the three months
ended December 31, 1996 and 1995, including all the accounts of Gaylord
Container Corporation (including its subsidiaries, the Company), and
are in conformity with Securities and Exchange Commission Rule 10-01 of
Regulation S-X. The financial statements should be read in conjunction with
the audited consolidated financial statements and the notes thereto on Form
10-K for the fiscal year ended September 30, 1996.
2. INVENTORIES
-----------
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1996
------------ -------------
(In millions)
Inventories consist of:
<S> <C> <C>
Finished products $19.6 $16.3
In process 43.0 31.3
Raw materials 10.8 8.5
Supplies 14.4 14.3
---- ----
87.8 70.4
LIFO valuation adjustment (3.0) -
---- ----
Total $84.8 $70.4
==== ====
</TABLE>
3. CONTINGENCIES
-------------
The Company is not a party to any legal proceedings other than
litigation incidental to normal business activities, except as described
below:
The Company and certain of its officers and directors have been named in a
civil suit filed in Cook County (Illinois) Circuit Court alleging that they
omitted or misrepresented facts about the Company's operations in connection
with the Company's initial public offering of stock in 1988 and in certain
periodic reports. The complaint, a purported class action, originally
sought unspecified damages under the Illinois Consumer Fraud and Deceptive
Practices Act and for common law fraud. On January 10, 1996, the court
dismissed both counts with prejudice, and plaintiff has appealed. A similar
lawsuit, based on the same factual allegations, but alleging violations of
Federal securities laws and filed in the United States District Court for
the Northern District of Illinois, was voluntarily dismissed by the same
plaintiff in July 1993. The Company believes that, after investigation of
the facts, the allegations are without merit, and the Company is vigorously
defending itself.
On October 18 and December 4, 1995, the Company, its directors and certain
of its officers were named in complaints which have been consolidated in the
Court of Chancery of the state of Delaware alleging breach of fiduciary
4
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GAYLORD CONTAINER CORPORATION AND SUBSIDIARIES
----------------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
----------------------------------------------------------------
duties on two counts. The first count is a putative class action and the
second is an alleged derivative claim brought on behalf of the Company
against the individual defendants. Both counts allege that the Company's
stockholder Rights Agreement, adopted on June 12, 1995, amendments to the
Company's charter and by-laws, adopted on July 21, 1995, and a redemption of
Warrants in June 1995 all were designed to entrench the individual
defendants in their capacities as directors and officers at the expense of
stockholders who otherwise would have been able to take advantage of a sale
of the Company. The complaint asks the court, among other things, to
rescind the amendments and prohibit the use of the stockholder Rights
Agreement to discourage any bona fide acquirer. In the alternative, the
plaintiffs seek compensatory damages. On December 19, 1996, the Delaware
Chancery Court denied the Company's motion to dismiss the complaint in its
entirety. The case is now in the preliminary discovery stage. The Company
believes the allegations are without merit and is defending itself
vigorously.
On October 23, 1995, a rail tank car exploded on the premises of the
Bogalusa, Louisiana plant of Gaylord Chemical Corporation, a wholly owned,
independently operated subsidiary of the Company. The accident resulted in
the venting of certain chemicals, including by-products of nitrogen
tetroxide, a raw material used by the plant to produce dimethyl sulfoxide, a
solvent used in the manufacture of pharmaceutical and agricultural
chemicals. More than 160 lawsuits have been filed in both federal and state
courts naming as defendants Gaylord Chemical Corporation and/or the Company,
certain of their respective officers and other unrelated corporations and
individuals. The lawsuits allege personal injury, property damage, economic
loss, related injuries and fear of injuries as a result of the accident. On
April 1, 1996, the federal judge dismissed all but one of the federal
actions for failing to state claims under federal law and remanded the
remaining tort cases to the district court in Washington Parish, Louisiana,
where they have been consolidated. Discovery in the remaining federal
action was ordered coordinated with the Louisiana State action.
On May 21, 1996 the Louisiana state court established a Plaintiff's Liaison
Committee (PLC) to coordinate and oversee the consolidated cases on behalf
of plaintiffs. On June 26, 1996 the PLC and defendants agreed to a Case
Management Order (CMO) that was subsequently entered by the Court. Pursuant
to this CMO, the plaintiffs filed a single Consolidated Master Petition
against Gaylord Chemical Corporation, the Company and twenty-one other
defendants. In this Consolidated Master Petition all claims against the
individuals (including the officers of Gaylord Chemical Corporation and the
Company) have been dropped. Also, pursuant to the terms of the CMO, all of
the individual actions filed before the Consolidated Master Petition have
been, or are scheduled to be, dismissed. The Consolidated Master Petition
includes substantially all of the claims and theories asserted in the prior
lawsuits, including negligence and strict liability, as well as several
claims of statutory liability. Compensatory and punitive damages are
sought. The Company and its subsidiaries are vigorously contesting all of
these claims.
On July 15, 1996 the Louisiana state court certified these consolidated
actions as a single class action. The class was tentatively defined to
5
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GAYLORD CONTAINER CORPORATION AND SUBSIDIARIES
----------------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
----------------------------------------------------------------
include all those persons or entities who claim to have been injured as a
result of the October 23, 1995 accident. This class definition may be
amended, or subclasses established, depending on the results of discovery.
The Court's July 15, 1996 Class Certification Order is currently on appeal
and all discovery in the underlying litigation has been stayed pending
resolution of that appeal, or until further order of the Court.
In addition, the Company, its subsidiary and numerous other third party
companies have been named as defendants in ten actions brought by plaintiffs
in Mississippi state court, who claim injury as a result of the October 23,
1995 accident at the Bogalusa facility. Included among these ten cases are
two actions which purport to be on behalf of over 9,000 individuals. These
ten cases are not filed as a class action but have been consolidated before
a single judge in Hinds County, Mississippi. All ten cases seek to allege
claims similar to those in the Louisiana state court. To date, discovery in
these ten consolidated cases has been coordinated with the ongoing discovery
in the Louisiana class action. In light of the stay of discovery in
Louisiana, on January 23, 1997, the Mississippi court stayed all discovery
in the ten consolidated Mississippi actions until March 31, 1997 or until
further order of the Court. Defendants have pending a motion to require the
thousands of individual plaintiffs in these ten Mississippi cases to file
separate complaints and filing fees for each individual plaintiff. The
Company and its subsidiary are vigorously contesting these claims.
The Company and its subsidiary maintain insurance and have filed separate
suits seeking a declaratory judgement of coverage for the October 23, 1995
accident against their general liability and directors and officers
liability insurance carriers. These cases are currently pending in
Louisiana state court with the liability cases. The carrier with the first
layer of coverage under the general liability policy has agreed to pay the
Company's and its subsidiary's defense costs under a reservation of rights.
Discovery in these declaratory judgement cases is proceeding.
The Company believes the outcome of such litigation will not have a material
adverse effect on the Company's financial position, results of operations or
cash flows.
4. EXTRAORDINARY ITEM
------------------
During the first quarter of fiscal 1996, the Company repurchased and retired
approximately $65.3 million principal amount of its publicly traded debt
securities. In conjunction with the repurchase, approximately $1.4 million
of deferred financing fees were written off. These transactions resulted in
an extraordinary loss of $2.6 million, net of an income tax benefit of $1.8
million.
5. ADOPTION OF NEW ACCOUNTING STANDARD
-----------------------------------
Effective October 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (FAS
123) by electing to continue to apply the intrinsic value-based method of
accounting for stock-based compensation. The Company will provide, if
material, the required pro forma disclosures pertaining to its stock-based
compensation in its year-end fiscal 1997 financial statement footnotes.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
---------------------
First Quarter of Fiscal 1997 Compared with First Quarter of Fiscal 1996.
Net sales for the first quarter of fiscal 1997 were $195.6 million, a
decrease of approximately 23 percent compared with net sales of $253.8
million for the first quarter of fiscal 1996. Operating earnings for the
current quarter were $0.9 million compared with $52.3 million for the
year-ago quarter. The net loss for the current quarter totaled $9.7
million, or $0.18 per share, compared with net income of $16.5 million, or
$0.30 per share (including a $2.6 million extraordinary loss ($0.05 per
share) on the early retirement of debt), for the year-ago quarter.
Sales and earnings in the first quarter of fiscal 1997 were adversely
affected by lower average selling prices for the Company's products, which
decreased operating earnings by approximately $55 million compared with the
first quarter of fiscal 1996. Average selling prices for the Company's
domestic linerboard, export linerboard and corrugated products decreased
approximately 34 percent, 35 percent and 26 percent, respectively, in the
first quarter of fiscal 1997 compared with the prior-year quarter. Average
selling prices for the Company's unbleached kraft paper and multiwall bags
decreased approximately 28 percent and 9 percent, respectively, in the
current quarter compared with the prior-year quarter.
Sales and earnings in the first quarter of fiscal 1997 were favorably
affected by higher mill production and corrugated shipments. Higher volume
increased operating earnings by approximately $6 million.
Quarter-over-quarter, total mill production increased to 3,997 tons per day
(TPD, calculated on the basis of the number of days in the period) from
3,903 TPD. This favorable volume variance is due to an estimated 17,000
tons of production "lost" due to non-maintenance downtime taken during the
first quarter of fiscal 1996. Containerboard production in the first
quarter of fiscal 1997 of 3,316 TPD increased approximately 5 percent from
3,146 TPD in the prior-year quarter. Unbleached kraft paper production in
the current quarter decreased approximately 10 percent to 681 TPD from 757
TPD in the prior-year quarter.
Corrugated shipments totaled 3.3 billion square feet in the first quarter of
fiscal 1997, an increase of approximately 6 percent compared with 3.1
billion square feet in the year-ago quarter. Multiwall bag shipments
increased to 14.1 thousand tons in the current quarter compared with
shipments of 12.6 thousand tons in the first quarter of fiscal 1996.
Gross margin as a percentage of net sales for the first quarter of fiscal
1997 decreased to 10.9 percent from 29.5 percent in the prior-year quarter
primarily due to lower selling prices for the Company's products, partially
offset by improved volume. The Company's average delivered cost of OCC
decreased approximately 4 percent in the first quarter of fiscal 1997
compared with the year-ago quarter.
Selling and administrative costs of $20.5 million for the current quarter
decreased from $22.5 million in the prior-year quarter. The favorable
comparison in selling and administrative costs is primarily due to the
7
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exchange of the Company's grocery bag and sack manufacturing assets for a 35
percent equity interest in S&G Packaging Company, L.L.C., a joint venture
with Stone Container Corporation, in the fourth quarter of fiscal 1996. Net
interest expense declined from the prior-year quarter by $0.4 million to
$19.4 million in the first quarter of fiscal 1997.
In the first quarter of fiscal 1997, the Company recorded a tax benefit of
$8.0 million which corresponds to an effective tax rate of approximately 45
percent. In the first quarter of fiscal 1996, the Company recorded a tax
provision of $13.5 million which corresponds to an effective rate of
approximately 41 percent.
During the first quarter of fiscal 1996, the Company repurchased and retired
approximately $65.3 million principal amount of its publicly traded debt
securities. In conjunction with the repurchase, approximately $1.4 million
of deferred financing fees were written off. These transactions resulted in
an extraordinary loss of $2.6 million, net of an income tax benefit of $1.8
million.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
General
The Company has historically financed its operations through cash provided
by operations, borrowings under its credit agreements and the issuance of
debt and equity securities. The Company's principal uses of cash are to pay
operating expenses, fund capital expenditures and service debt.
Net cash used for operations for the first quarter of fiscal 1997 was $38.2
million, compared with net cash provided by operations of $48.8 million a
year ago. The unfavorable comparison to the prior-year period was primarily
due to reduced earnings and the first quarter fiscal 1997 semi-annual
interest payment on the Company's Senior Subordinated Discount Debentures
due 2005, on which interest had previously been accreting.
Capital expenditures of $8.4 million in the first quarter of fiscal 1997
decreased by $7.6 million from $16.0 million in the first quarter of fiscal
1996.
In fiscal 1992, the Company determined it would be unlikely that its
Antioch, California virgin fiber mill (the East Mill), which was closed in
fiscal 1991, could be sold as a mill site or that the East Mill, or some
portion thereof, could be operated economically by the Company. For the
first quarter of fiscal 1997, East Mill related costs exceeded proceeds from
asset disposals by approximately $0.5 million. At December 31, 1996,
balance sheet valuation allowances for demolition and asbestos removal were
approximately $2.1 million and $15.3 million, respectively, reducing the
carrying value of the East Mill to $1.2 million.
In the fourth quarter of fiscal 1996, the Company recognized a $8.1 million
pre-tax charge primarily for enhanced retirement benefits and
post-retirement medical costs, and severance payments associated with a
staff reduction program. In fiscal 1997, the Company charged approximately
$0.9 million of severance costs to balance sheet accruals. At December 31,
1996, the Company had remaining balance sheet accruals for severance
payments of approximately $0.9 million and anticipates making substantially
8
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all of such payments by September 1997. In addition, the Company has
remaining balance sheet accruals of approximately $2.0 million for
non-recurring operating charges (primarily lease termination costs)
recognized prior to fiscal 1995. The Company anticipates incurring such
costs ratably over the next twelve months.
Liquidity
At December 31, 1996, the Company had cash and equivalents of $3.5 million,
a decrease of $35.7 million from September 30, 1996, as cash used for
operations and investments exceeded cash provided by financing. Total debt
increased by $10.7 million to $645.1 million at December 31, 1996 from
$634.4 million at September 30, 1996 as a result of revolver borrowings. At
December 31, 1996, the Company had $12.5 million of borrowings outstanding
and approximately $210 million of credit available under the revolving
portions of its credit agreements.
The Company announced price increases for containerboard and kraft paper to
take effect in the fall of 1996. Although the Company realized higher
prices for these products during the first fiscal quarter, containerboard
prices declined to the pre-increase levels in early January and resulted in
retroactive pricing adjustments which were recorded in the first quarter of
fiscal 1997. Based upon January 1997 product prices and fiber costs, the
Company believes that cash provided by operations and amounts available
under its credit agreements will provide adequate liquidity to meet its debt
service obligations and other liquidity requirements over the next 12 to 24
months. However, unless there is significant price improvement in fiscal
1998, modifications would be required to certain financial covenants in the
Company's bank credit agreement.
Forward-looking statements in this filing, including those in the footnotes
to the financial statements, are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are subject to risks and uncertainties and actual
results could differ materially. Such risks and uncertainties include, but
are not limited to, general economic and business conditions, competitive
market pricing, increases in raw material, energy and other manufacturing
costs, fluctuations in demand for the Company's products, potential
equipment malfunctions and pending litigation. For additional information
see the Company's annual report on Form 10-K for the most recent fiscal
year.
9
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is not a party to any legal proceedings other than
litigation incidental to normal business activities, except as
described in "Note 3 of Notes to Condensed Consolidated Financial
Statements." The Company believes the outcome of such litigation
will not have a material adverse effect on the Company's financial
position, results of operations or cash flows.
Item 2. Changes in Securities.
Not Applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
On February 5, 1997, the Company held its annual meeting of
stockholders at which the following issues were voted upon by
holders of the Company's common stock:
The Company's ten directors were re-elected by the following vote:
For Withheld
Mary Sue Coleman 48,905,552 2,051,948
Harve A. Ferrill 48,912,652 2,044,848
John E. Goodenow 48,914,652 2,042,848
David B. Hawkins 48,913,652 2,043,848
John Hawkinson 48,907,652 2,049,848
Warren J. Hayford 48,909,652 2,047,848
Richard S. Levitt 48,913,652 2,043,848
Ralph L. MacDonald Jr. 48,915,652 2,041,848
Marvin A. Pomerantz 48,906,352 2,051,148
Thomas H. Stoner 48,912,902 2,044,598
Stockholders approved the Gaylord Container Corporation 1997 Long-Term
Equity Incentive Plan by a vote of 37,792,627 for; 10,008,791 against;
1,542,750 withheld.
The appointment of Deloitte & Touche LLP to continue to serve as the
Company's independent auditors in fiscal 1997 was ratified by a vote of
49,298,284 for; 273,248 against; 1,385,968 withheld.
Item 5. Other Information.
Not applicable.
10
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PART II - OTHER INFORMATION - CONCLUDED
Item 6. Exhibits and Reports on Form 8-K.
Number and Description of Exhibit
---------------------------------
a) 27.1(a) Financial Data Schedule
b) Not applicable.
------------------------------------------------------------------
(a) Filed with this Quarterly Report.
11
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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.
GAYLORD CONTAINER CORPORATION
Date: February 7, 1997 /s/ Marvin A. Pomerantz
------------------------------------
Marvin A. Pomerantz
Chairman and Chief Executive Officer
Date: February 7, 1997 /s/ Jeffrey B. Park
------------------------------------
Jeffrey B. Park
Vice President-Controller
(Principal Accounting Officer)
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 3,500
<SECURITIES> 0
<RECEIVABLES> 103,200
<ALLOWANCES> 7,400
<INVENTORY> 84,800
<CURRENT-ASSETS> 204,700
<PP&E> 1,041,300
<DEPRECIATION> 435,600
<TOTAL-ASSETS> 902,600
<CURRENT-LIABILITIES> 134,900
<BONDS> 633,800
0
0
<COMMON> 173,600
<OTHER-SE> (68,600)
<TOTAL-LIABILITY-AND-EQUITY> 902,600
<SALES> 195,600
<TOTAL-REVENUES> 195,600
<CGS> 174,200
<TOTAL-COSTS> 194,700
<OTHER-EXPENSES> (800)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,400
<INCOME-PRETAX> (17,700)
<INCOME-TAX> (8,000)
<INCOME-CONTINUING> (9,700)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,700)
<EPS-PRIMARY> (0.18)
<EPS-DILUTED> (0.18)
</TABLE>
