<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 AND
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
For the transition period from to
------------------- ------------------
Commission File Number: 0-20646
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CARAUSTAR INDUSTRIES, INC.
--------------------------
(Exact name of registrant as specified in its charter)
North Carolina 58-1388387
------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
3100 Washington Street
Austell, Georgia 30001
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(Address of principal executive offices)
(Zip Code)
(770) 948-3101
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(Registrant's telephone number, including area code)
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 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.
X Yes No
----- -----
Indicate the number of shares outstanding of each of issuer's classes of common
stock, as of the latest practicable date, August 5, 1996.
Common Stock, $.10 par value 24,766,170
---------------------------- ----------
(Class) (Outstanding)
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<PAGE> 2
Form 10-Q for the Quarter Ended June 30, 1996
CARAUSTAR INDUSTRIES, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets as of June 30, 1996 3
and December 31, 1995
Condensed Consolidated Statements of Income for the three-month and six-month
periods ended June 30, 1996 and June 30, 1995 4
Condensed Consolidated Statements of Cash Flows for the six-month 5
periods ended June 30, 1996 and June 30, 1995
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 8
Condition and Results of Operations for the three-month and six-month
periods ended June 30, 1996 and June 30, 1995
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 13
Exhibit Index 14
</TABLE>
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<PAGE> 3
Form 10-Q for the Quarter Ended June 30, 1996
Part I, Item 1.
CARAUSTAR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995*
-------- ------------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 6,431 $ 8,785
Receivables, net 55,639 53,788
Inventories 44,987 47,146
Refundable income taxes 0 214
Other current assets 2,282 3,966
--------- ---------
Total current assets 109,339 113,899
--------- ---------
PROPERTY, PLANT AND EQUIPMENT
Land 4,811 9,031
Buildings and improvements 61,993 62,530
Machinery and equipment 246,380 243,913
Furniture and fixtures 7,839 7,477
--------- ---------
321,023 322,951
Less accumulated depreciation (133,723) (141,021)
--------- ---------
Property, plant and equipment, net 187,300 181,930
--------- ---------
GOODWILL 30,947 17,676
--------- ---------
OTHER ASSETS 10,279 8,571
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$ 337,865 $ 322,076
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 19 $ 36
Cash overdraft 5,807 5,113
Accounts payable 26,998 26,125
Accrued liabilities 26,557 22,763
Income taxes payable 135 0
Dividends payable 2,971 3,076
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Total current liabilities 62,487 57,113
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REVOLVING CREDIT LOANS 17,000 10,000
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LONG-TERM DEBT, less current maturities 83,341 83,380
--------- ---------
DEFERRED INCOME TAXES 22,045 22,045
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DEFERRED COMPENSATION 6,154 6,227
--------- ---------
OTHER LIABILITIES 3,865 3,969
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MINORITY INTEREST 103 99
--------- ---------
COMMITMENTS AND CONTINGENCIES (Note 5)
SHAREHOLDERS' EQUITY
Preferred stock, $.10 par value; 5,000,000 shares
authorized; none issued 0 0
Common stock, $.10 par value; 60,000,000 shares
authorized, 24,764,169 issued and outstanding
at June 30, 1996 and 25,682,371 issued
and outstanding at December 31, 1995 2,476 2,568
Additional paid-in capital 134,781 154,013
Retained earnings (deficit) 5,613 (17,338)
--------- ---------
142,870 139,243
--------- ---------
$ 337,865 $ 322,076
========= =========
</TABLE>
* Condensed from audited financial statements.
The accompanying notes are an integral part of these condensed
consolidated balance sheets.
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<PAGE> 4
Form 10-Q for the Quarter Ended June 30, 1996
Part I, Item 1.
CARAUSTAR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
1996 1995 1996 1995
---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
SALES BEFORE FREIGHT $146,217 $ 145,850 $ 297,836 $ 282,352
FREIGHT (5,817) (6,185) (12,917) (12,260)
-------- --------- --------- ---------
NET SALES 140,400 139,665 284,919 270,092
COST OF SALES (96,634) (105,485) (197,813) (203,684)
-------- --------- --------- ---------
Gross profit 43,766 34,180 87,106 66,408
SELLING GENERAL AND ADMINISTRATIVE
EXPENSES (19,124) (16,100) (38,178) (32,304)
-------- --------- --------- ---------
Operating income 24,642 18,080 48,928 34,104
OTHER (EXPENSE) INCOME:
Interest expense (2,066) (1,698) (4,220) (3,422)
Interest income 166 206 298 380
Nonrecurring gain (Note 4) 2,357 0 2,357 0
Equity in income of
unconsolidated affiliate (Note 4) 277 0 277 0
Other, net (302) 136 (297) 310
-------- --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 25,074 16,724 47,343 31,372
PROVISION FOR INCOME TAXES (9,742) (6,314) (18,460) (11,941)
MINORITY INTEREST (5) 1 (5) 4
-------- --------- --------- ---------
NET INCOME $ 15,327 $ 10,411 $ 28,878 $ 19,435
======== ========= ========= =========
PRIMARY
NET INCOME PER COMMON SHARE $ 0.61 $ 0.40 $ 1.14 $ 0.75
======== ========= ========= =========
Primary weighted average number of shares
outstanding 25,228 25,870 25,383 25,848
======== ========= ========= =========
FULLY DILUTED
NET INCOME PER COMMON SHARE $ 0.61 $ 0.40 $ 1.14 $ 0.75
======== ========= ========= =========
Fully diluted weighted average number of shares
outstanding 25,237 25,870 25,437 25,848
======== ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements of income.
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<PAGE> 5
Form 10-Q for the Quarter Ended June 30, 1996
Part I, Item 1.
CARAUSTAR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------
1996 1995
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(Unaudited)
<S> <C> <C>
Cash provided by (used for)
Operations:
Net income $ 28,878 $ 19,435
Adjustments for non cash charges 8,746 8,249
Changes in assets and liabilities 2,431 (12,191)
-------- --------
Net cash provided by operations 40,055 15,493
-------- --------
Investments:
Capital expenditures (16,287) (12,830)
Acquisitions of businesses (22,365) 0
Proceeds from sale of interest in net assets of subsidiary 10,774 0
Other 4,263 (93)
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Cash used for investments (23,615) (12,923)
-------- --------
Financing:
Proceeds from revolving credit loans 35,000 0
Repayments of revolving credit loans (28,000) 0
Repayments of long and short-term debt (56) (2)
Dividends paid (6,046) (5,359)
Issuances of stock 988 1,031
Purchase of treasury stock (20,312) 0
Other (368) (323)
-------- --------
Cash used for financing (18,794) (4,653)
-------- --------
Net decrease in cash and cash equivalents (2,354) (2,083)
Cash and cash equivalents, beginning of period 8,785 12,465
-------- --------
Cash and cash equivalents, end of period $ 6,431 $ 10,382
======== ========
Cash payments for:
Interest $ 4,102 $ 3,346
======== ========
Income taxes $ 17,568 $ 6,402
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements of cash flows.
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<PAGE> 6
Form 10-Q for the Quarter Ended June 30, 1996
Part I, Item 1.
CARAUSTAR INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(Unaudited)
Note 1. Basis of Presentation
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting of normal recurring
adjustments) which are, in the opinion of management, necessary for a
fair statement of results for the interim periods. The results of
operations for the six months ended June 30, 1996 are not necessarily
indicative of the results to be expected for the full year. Certain
amounts in the 1995 financial statements have been reclassified to
conform with the 1996 presentation.
Note 2. Common Stock Repurchase Plan
During the first quarter of 1996, the Company repurchased and retired
1,000,000 shares of its common stock pursuant to a plan authorized
and approved by its board of directors. These repurchases were made
in a series of open market transactions at an aggregate cost of $20.3
million and at prices ranging from $18.81 to $20.50 per share. Upon
the completion of this series of transactions, the Company's board of
directors authorized repurchases of up to an additional 1,000,000
shares.
Note 3. Acquisitions
On January 15, 1996, the Company acquired substantially all the
assets of Summer Paper Tube Company, a manufacturer of paper tubes
and industrial adhesives, for approximately $22.4 million in cash.
In conjunction with this acquisition, the Company recorded
approximately $13.8 million in goodwill which will be amortized over
40 years. The acquisition will be accounted for as a purchase and is
not anticipated to have a material impact on the operations of the
Company. The Summer acquisition was primarily funded with borrowings
under the Company's bank revolving credit facility.
Note 4. Sale of Interest in Subsidiary
On April 1, 1996, the Company transferred substantially all of
the operating assets and liabilities of its wholly-owned subsidiary,
Standard Gypsum Corporation, a producer of gypsum wallboard, to a
newly formed limited liability company, Standard Gypsum LLC ("LLC").
Simultaneous with the formation of LLC, the Company sold an undivided
50 percent interest in LLC to Temple-Inland Forest Products
Corporation ("Temple"), an unrelated third party, for $10.8 million
in cash. LLC will be operated as a joint venture managed by Temple.
The Company will account for its interest in LLC under the equity
method of accounting. In conjunction with this transaction, the
Company recognized a nonrecurring gain, before income taxes, of $2.4
million, or $0.06 per share (after tax) which is reflected in the
accompanying statements of income for the quarter and six months
ended June 30, 1996. Additionally, from the date of the transaction
through June 30, 1996, the Company recognized earnings of $277
thousand for the Company's equity interest in the earnings of LLC.
In management's opinion, this sale will not have a material effect on
the operations of the Company.
Note 5. Commitments and Contingencies
The Company is involved in certain litigation arising in the ordinary
course of business. In the opinion of management, the ultimate
resolution of these matters will not have a material adverse effect
on the Company's financial position or results of operations.
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<PAGE> 7
Form 10-Q for the Quarter Ended June 30, 1996
Part I, Item 1.
Note 6. Subsequent Events
On July 15, 1996, the Company entered into a partnership
("Partnership") with Tenneco Packaging Inc. ("TPI"), a wholly-owned
subsidiary of Tenneco, Inc. The Company contributed $114.5 million
in cash exchange for an 80 percent interest in the Partnership. TPI
contributed the assets and liabilities of its Rittman, Ohio and Tama,
Iowa clay-coated recycled paperboard mills and recovered fiber
recycling and brokerage operations located in Rittman and Cleveland,
Ohio in exchange for $114.5 million in cash and a 20 percent
partnership interest. The Company's investment in the Partnership
was funded with borrowings of $110.0 million from its revolving
credit facility and the remainder with internally generated cash.
The Company will account for the acquisition of its Partnership
interest using the purchase method of accounting. For financial
reporting purposes, the assets, liabilities, results of operations
and cash flows of the Partnership will be included in the Company's
consolidated financial statements from the date of formation, and
TPI's interest will be included as minority interest.
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<PAGE> 8
Form 10-Q for the Quarter Ended June 30, 1996
Part I, Item 2.
CARAUSTAR INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results during the periods included in the accompanying condensed consolidated
financial statements.
Quarters Ended June 30, 1996 and 1995
Net sales for the quarter ended June 30, 1996 increased 0.5 percent
from $139.7 million in the same period last year to $140.4 million.
Acquisitions made after the second quarter of 1995 accounted for $16.6 million
of sales in the second quarter of 1996. Excluding acquisitions, net sales
decreased $15.9 million, or 11.4 percent, due mainly to lower average selling
prices on paperboard and wastepaper. Tons sold from paperboard mill production
(including sales to outside customers and transfers to the Company's converting
operations) increased 1.1 percent to 181.1 thousand tons from 179.2 thousand
tons in the second quarter of 1995. Purchases of paperboard from outside
manufacturers (primarily gypsum facing paper for resale; tube, core and can
grades for internal conversion; and folding carton grades for internal
conversion) increased 17.2 percent to 30.0 thousand tons in the second quarter
of 1996 from 25.6 thousand tons in the same period of last year. Overall
paperboard tonnage thus increased 3.1 percent to 211.1 thousand tons versus
204.8 thousand tons in the same period last year. Tube, core and can volume
increased 6.2 percent on a quarter-to-quarter basis; folding carton volume
increased 14.0 percent; gypsum facing paper volume increased 6.5 percent; and
other specialty volume decreased 9.0 percent. Average paperboard mill net
selling price per ton was down 11.4 percent to $389 in the second quarter of
1996 from $439 in the same period last year. Average net selling price per ton
for tubes and cores was up 1.5 percent to $734 from $723 last year.
The Company's gross margin increased to 31.2 percent of net sales from 24.5
percent in the second quarter of 1995. This margin increase was due primarily
to lower average wastepaper costs, offset in part by the acquisition of
additional converting facilities after the second quarter of 1995 and their
inherent lower margins as a percent of sales. Market prices for wastepaper
continued the decline from their peak which occurred during the second quarter
of 1995. Average wastepaper cost per ton of paperboard produced was down 70.1
percent to $58 from $194 in the second quarter of 1995. This decrease was
partially offset by a 13.0 percent increase in all other paperboard mill
converting costs.
Operating income increased $6.6 million, or 36.3 percent, from $18.1 million to
$24.6 million in the second quarter of 1996. Acquisitions completed after the
second quarter of 1995 accounted for $1.2 million of the increase. The balance
of the increase was due primarily to higher margins at the Company's paperboard
mills and tube and core converting operations offset in part by lower margins
at the Company's paperstock recycling facilities. Selling, general and
administrative expenses increased by $3.0 million in the second quarter of 1996
versus the same period last year. Of this increase, $2.1 million was due to
acquisitions made after the second quarter of 1995. Interest expense increased
to $2.1 million from $1.7 million in the second quarter of 1995, due to
interest on loans from the revolving credit facility.
Six Months Ended June 30, 1996 and 1995
Net sales for six months ended June 30, 1996 increased 5.5 percent from $270.1
million in the same period last year to $284.9 million. Acquisitions made
after the second quarter of 1995 accounted for $33.3 million of sales in the
first half of 1996. Excluding acquisitions completed after June 30, 1995, net
sales decreased $18.5 million, or 6.9 percent, due to lower average selling
prices combined with slightly lower volume. Tons sold from paperboard mill
production (including sales to outside customers and transfers to the Company's
converting operations) decreased 1.0 percent to 357.4
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<PAGE> 9
Form 10-Q for the Quarter Ended June 30, 1996
Part I, Item 2.
thousand tons from 360.9 thousand tons for the first six months of 1995.
Purchases of paperboard from outside manufacturers (primarily gypsum facing
paper for resale and internal conversion; tube, core and can grades for
internal conversion; and folding carton grades for internal conversion)
decreased 6.5 percent to 55.9 thousand tons from 59.7 thousand tons in the
first half of 1995. Overall paperboard tonnage thus decreased 1.8 percent to
413.3 thousand tons in the first six months of 1996 versus 420.7 thousand tons
in the same period last year. Both tube, core and can volume and folding
carton volume were essentially unchanged for the first half of 1996 from 1995;
gypsum facing paper volume increased 3.6 percent; and other specialty
paperboard volume declined 10.9 percent from 1995. Average paperboard mill net
selling price per ton was down 3.9 percent from $411 to $395 for the first six
months of 1996. Average net selling price per ton for tubes and cores
increased 6.9 percent from $685 to $732 for the first half of 1996.
The Company's gross margin increased to 30.6 percent of net sales from 24.6
percent in the first half of 1995. This increase was due primarily to lower
average wastepaper costs, offset in part by the acquisition of additional
converting facilities after the first half of 1995 and their inherent lower
margins as a percent of net sales. Wastepaper costs averaged $65 per ton of
paperboard produced versus $167 for the first six months of 1995, a decrease of
61.1 percent. This decrease was partially offset by a 13.0 percent increase in
all other paperboard mill converting costs.
Operating income increased $14.8 million, or 43.5 percent, from $34.1 million
to $48.9 million for the first six months of 1996. Acquisitions completed
after June 30, 1995 accounted for $2.0 million of the increase. The balance of
the increase was due to higher margins at the Company's paperboard mills and
tube and core converting operations offset in part by lower margins at the
Company's paperstock recycling facilities. Selling, general, and
administrative expenses increased by $5.9 million in the first half of 1996
versus the same period last year. Of this increase, $4.1 million was due to
acquisitions made after the first half of 1995. Interest expense increased to
$4.2 million from $3.4 million in the first half of 1995, due to interest on
loans from the revolving credit facility.
Liquidity and Capital Resources
On June 30, 1996, the Company had loans of $17.0 million outstanding from its
revolving credit facility versus none on June 30, 1995. During the first half
of 1996, the Company borrowed $35.0 million from the facility and repaid $28.0
million by June 30, 1996. These borrowings were used to help finance the
acquisition of Summer Paper Tube and the purchase of shares under the Company's
stock repurchase program. Other long-term debt less current maturities was
down slightly to $83.3 million on June 30, 1996 from $83.4 million a year ago.
Capital expenditures for the first half of 1996 were $16.3 million versus $12.8
million for the same period last year. The Company anticipates that capital
expenditures will be approximately $31.6 million in 1996. The Company also
anticipates increased working capital needs and the possible acquisition of
additional facilities. The Company expects to meet these funding needs through
internally generated funds and borrowings under its revolving credit facility.
During the first quarter of 1996, the Company repurchased and retired 1,000,000
shares of its common stock pursuant to a plan authorized and approved by its
board of directors. These repurchases were made in a series of open market
transactions at an aggregate cost of $20.3 million and at prices ranging from
$18.81 to $20.50 per share. Upon the completion of this series of
transactions, the Company's board of directors authorized repurchases of up to
an additional 1,000,000 shares. As of June 30, 1996, no additional shares had
been repurchased.
On January 15, 1996, the Company acquired substantially all the assets of Summer
Paper Tube Company ("Summer") for approximately $22.4 million in cash. Summer
manufactures spiral-wound tubes and cores and produces adhesives for industrial
uses. Summer has two operating facilities in Kernersville, North Carolina, and
one in Altavista, Virginia. In conjunction with this acquisition, the Company
recorded approximately $13.8 million in goodwill which will be amortized over
40 years.
On April 1, 1996, the Company transferred substantially all the operating
assets of its wholly-owned subsidiary, Standard Gypsum Corporation, to a newly
formed limited liability company, Standard Gypsum LLC ("LLC"). Simultaneous
with
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<PAGE> 10
Form 10-Q for the Quarter Ended June 30, 1996
Part I, Item 2.
this transaction, Temple-Inland Forest Products Corporation, an unrelated third
party, paid the Company $10.8 million in cash for a 50 percent interest in the
LLC. The business, which includes a gypsum wallboard manufacturing facility in
McQueeney, Texas, and a gypsum quarry in Fredricksburg, Texas, will be managed
by Temple-Inland. Caraustar will continue to supply all of the gypsum
paperboard requirements. In conjunction with this transaction, the Company
recognized a pretax, nonrecurring gain of $2.4 million, or $0.06 per share
(after tax), during the second quarter of 1996. The Company also recognized
income of $277 thousand in the second quarter of 1996, which represents its 50
percent interest in the earnings of the LLC.
On July 15, 1996, the Company entered into a partnership ("Partnership") with
Tenneco Packaging Inc. ("TPI"), a wholly-owned subsidiary of Tenneco, Inc.
The Company contributed $114.5 million in cash in exchange for an 80 percent
interest in the Partnership. TPI contributed its Rittman, Ohio and Tama, Iowa
clay-coated recycled paperboard mills and its recovered fiber recycling and
brokerage operations in Rittman and Cleveland, Ohio in exchange for $114.5
million in cash and a 20 percent partnership interest. The Partnership will be
managed by the Company and will continue to operate in the clay-coated recycled
paperboard and recovered fiber businesses. The Company funded its investment
in the Partnership with borrowings of $110.0 million from its revolving credit
facility and the remainder with internally generated cash.
The Company paid cash dividends of approximately $6.0 million in the first half
of 1996, compared to $5.4 million in the first half of 1995.
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<PAGE> 11
Form 10-Q for the Quarter Ended June 30, 1996
Part II, Item 6.
CARAUSTAR INDUSTRIES, INC.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
2.01 Contribution Agreement between Tenneco Packaging Inc. and Caraustar Industries,
Inc. regarding the formation of a Partnership, dated as of June 21, 1996
(including Annex A, Form of Partnership Agreement), as amended by Amendment to
Contribution Agreement dated July 15, 1996 (Incorporated by reference - Exhibit
2 to Current Report on Form 8-K dated July 15, 1996 [SEC File No. 0-20646])
3.01 Amended and Restated Articles of Incorporation of the Company (Incorporated by
reference - Exhibit 3.01 to Annual Report for 1992 on Form 10-K [SEC File No. 0-
20646])
3.02 Second Amended and Restated Bylaws of the Company (Incorporated by reference -
Exhibit 3.02 to Annual Report for 1992 on Form 10-K [SEC File No. 0-20646])
4.01 Specimen Common Stock Certificate (Incorporated by reference - Exhibit 4.01 to
Registration Statement on form S-1 [SEC File No. 33-50582])
4.02 Articles 3 and 4 of the Company's Amended and Restated Articles of Incorporation
(included in Exhibit 3.01)
4.03 Article II of the Company's Second Amended and Restated Bylaws (included in
Exhibit 3.02)
4.04 Rights Agreement, dated as of April 19, 1995, between Caraustar Industries, Inc.
and First Union National Bank of North Carolina, as Rights Agent (Incorporated
by reference - Exhibit 1 to Current Report on Form 8-K dated April 19, 1995 [SEC
File No. 0-20646])
10.01 Credit Agreement, dated as of June 2, 1995, by and among the Company, the Banks
signatory thereto from time to time, NationsBank, N.A. (Carolinas) as
Administrative and Managing Agent, Bankers Trust Company, as Managing Agent and
CIBC, Inc., as Co-Agent, as amended by First Amendment to Credit Agreement,
dated as of July 31, 1995 (Incorporated by reference - Exhibit 10.01 to Report
on Form 10-Q for the quarter ended September 30, 1995 [SEC File No. 0-20646])
10.02 Note Agreement, dated as of October 1, 1992, between the Company and the
Prudential Insurance Company of America, regarding the Company's 7.89% Senior
Subordinated Notes (Incorporated by reference - Exhibit 10.02 to Annual Report
for 1992 on Form 10-K [SEC File No. 0-20646])
10.03 Amendment Agreement, dated as of June 2, 1995, between the Company and the
Prudential Insurance Company of America regarding the Company's 7.89% Senior
Subordinated Notes (Incorporated by reference - Exhibit 10.03 to Report on Form
10-Q for the quarter ended September 30, 1995 [SEC File No. 0-20646])
</TABLE>
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<PAGE> 12
Form 10-Q for the Quarter Ended June 30, 1996
Part II, Item 6.
CARAUSTAR INDUSTRIES, INC.
<TABLE>
<S> <C>
10.04 Employment Agreement, dated December 31, 1990, between the Company and Thomas V.
Brown (Incorporated by reference - Exhibit 10.06 to Registration Statement on
Form S-1 [SEC File No. 33-50582])
10.05 Asset Purchase Agreement, dated August 7, 1992, between the Company and Domtar
Gypsum Inc. (Incorporated by reference - Exhibit 10.07 to Registration Statement
on Form S-1 [SEC File No. 33-50582])
10.06 Deferred Compensation Plan, together with copies of existing individual deferred
compensation agreements (Incorporated by reference - Exhibit 10.08 to
Registration Statement on Form S-1 [SEC File No. 33-50582])
10.07 1987 Executive Stock Option Plan (Incorporated by reference - Exhibit 10.09 to
Registration Statement on Form S-1 [SEC File No. 33-50582])
10.08 1993 Key Employees' Share Ownership Plan (Incorporated by reference - Exhibit
10.10 to Registration Statement on Form S-1 [SEC File No. 33-50582])
10.09 Energy Purchase Agreement, dated December 18, 1989, between Camden Paperboard
Corporation and Camden Cogen, L.P. (Incorporated by reference -Exhibit 10.11 to
Registration Statement on Form S-1 [SEC File No. 33-50582])
10.10 Incentive Bonus Plan of the Company (Incorporated by reference - Exhibit 10.10
to Annual Report for 1993 on Form 10-K [SEC File No. 0-20646])
10.11 Agreement and Plan of Merger, dated as of September 13, 1995, among the Company,
CSAR Acquisition, Inc., GAR Holding Company and each of the stockholders,
warrantholders and optionees of GAR Holding Company, as amended by Amendment No.
1 to Agreement and Plan of Merger dated as of October 31, 1995 (Incorporated by
reference - Exhibit 10.11 to Report on Form 10-Q for the quarter ended September
30, 1995 [SEC File No. 0-20646])
10.12 1996 Director Equity Plan of the Company (Incorporated by reference - Exhibit
10.12 to Report on Form 10-Q for the quarter ended March 31, 1996 [SEC File No.
0-20646])
11.00 Computation of Earnings per Share
27.00 Financial Data Schedule (For SEC purposes only)
</TABLE>
(b) Reports on Form 8-K
There were no Current Reports on Form 8-K for the
quarter ended June 30, 1996.
On July 29, 1996, the Company filed a Current Report on Form
8-K dated July 15, 1996 (the "Report") to report its entry
into a partnership (the "Partnership") with Tenneco Packaging
Inc. ("TPI"), a wholly-owned subsidiary of Tenneco, Inc. The
Partnership, in which the Company has an 80 percent interest
and TPI has a 20 percent interest, assumed the assets and
liabilities of businesses formerly owned and operated by TPI,
consisting of clay-coated recycling paperboard mills in
Rittman, Ohio and Tama, Iowa and a recovered fiber recycling
and brokerage business with operations in Rittman and
Cleveland, Ohio. The terms of the transaction are more fully
described in the Report. The financial statements and pro
forma information relating to the transaction are expected to
be filed on or about September 13, 1996.
-12-
<PAGE> 13
Form 10-Q for the Quarter Ended June 30, 1996
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.
CARAUSTAR INDUSTRIES, INC.
Dated: August 9, 1996 /s/ H. Lee Thrash, III
---------------------------------------
By: H. Lee Thrash, III
Vice President and Chief Financial
Officer (Principal Financial
and Accounting Officer)
-13-
<PAGE> 14
Form 10-Q for the Quarter Ended June 30, 1996
CARAUSTAR INDUSTRIES, INC.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Filed Herewith (*)
or Incorporated by
Exhibit No. Document Reference (**)
- ----------- -------- ------------------
<S> <C> <C>
2.01 Contribution Agreement between Tenneco Packaging Inc. and Caraustar **
Industries, Inc. regarding the formation of a Partnership, dated as of June
21, 1996 (including Annex A, Form of Partnership Agreement), as amended by
Amendment to Contribution Agreement dated July 15, 1996
3.01 Amended and Restated Articles of Incorporation of the Company **
3.02 Second Amended and Restated Bylaws of the Company **
4.01 Specimen Common Stock Certificate **
4.02 Articles 3 and 4 of the Company's Amended and Restated Articles of
Incorporation (included in Exhibit 3.01) **
4.03 Article II of the Company's Second Amended and Restated Bylaws (included in
Exhibit 3.02) **
4.04 Rights Agreement, dated as of April 19, 1995, between Caraustar Industries,
Inc. and First Union National Bank of North Carolina, as Rights Agent **
10.01 Credit Agreement, dated as of June 2, 1995, by and among the Company, the
Banks signatory thereto from time to time, NationsBank, N.A. (Carolinas) as
Administrative and Managing Agent, Bankers Trust Company, as Managing Agent
and CIBC, Inc., as Co-Agent, as amended by First Amendment to Credit
Agreement, dated as of July 31, 1995 **
10.02 Note Agreement, dated as of October 1, 1992, between the Company and the
Prudential Insurance Company of America, regarding the Company's 7.89% Senior
Subordinated Notes **
10.03 Amendment Agreement, dated as of June 2, 1995, between the Company and the
Prudential Insurance Company of America regarding the Company's 7.89% Senior
Subordinated Notes **
10.04 Employment Agreement, dated December 31, 1990, between the Company and
Thomas V. Brown **
10.05 Asset Purchase Agreement, dated August 7, 1992, between the Company and Domtar
Gypsum Inc. **
10.06 Deferred Compensation Plan, together with copies of existing individual
deferred compensation agreements **
10.07 1987 Executive Stock Option Plan **
10.08 1993 Key Employees' Share Ownership Plan **
10.09 Energy Purchase Agreement, dated December 18, 1989, between Camden Paperboard
Corporation and Camden Cogen, L.P. **
10.10 Incentive Bonus Plan of the Company **
10.11 Agreement and Plan of Merger, dated as of September 13, 1995, among the
Company, CSAR Acquisition, Inc., GAR Holding Company and each of the
stockholders, warrantholders and optionees of GAR Holding Company, as amended
by Amendment No. 1 to Agreement and Plan of Merger dated as of October 31, **
1995
10.12 1996 Director Equity Plan of the Company **
11.00 Computation of Earnings per Share *
27.00 Financial Data Schedule (For SEC purposes only) *
</TABLE>
-14-
<PAGE> 1
Form 10-Q for the Quarter Ended June 30, 1996
EXHIBIT 11
CARAUSTAR INDUSTRIES, INC.
CARAUSTAR INDUSTRIES, INC.
Computation of Earnings per Share
(In thousands, except per share data)
(Unaudited)
Computation of Primary and Fully Diluted Earnings Per Common Share
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------- ------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Earnings:
Net income available to common stock $15,327 $10,411 $28,878 $19,435
------- ------- ------- -------
Shares:
Primary weighted average common shares outstanding 24,752 25,515 24,952 25,437
Stock options 476 355 431 411
------- ------- ------- -------
Average primary shares outstanding and equivalents 25,228 25,870 25,383 25,848
------- ------- ------- -------
Fully diluted weighted average common shares outstanding 24,752 25,515 24,952 25,437
Stock options 485 355 485 411
------- ------- ------- -------
Average fully diluted shares outstanding and equivalents 25,237 25,870 25,437 25,848
------- ------- ------- -------
Primary earnings per common share:
Net income $ 0.61 $ 0.40 $ 1.14 $ 0.75
======= ======= ======= =======
Fully diluted earnings per common share:
Net income $ 0.61 $ 0.40 $ 1.14 $ 0.75
======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT JUNE 30, 1996 (UNAUDITED) AND THE
CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30,
1996 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 6,431
<SECURITIES> 0
<RECEIVABLES> 55,639<F1>
<ALLOWANCES> 0
<INVENTORY> 44,987
<CURRENT-ASSETS> 109,339
<PP&E> 321,023
<DEPRECIATION> 133,723
<TOTAL-ASSETS> 337,865
<CURRENT-LIABILITIES> 62,487
<BONDS> 100,341<F2>
0
0
<COMMON> 2,476
<OTHER-SE> 140,394
<TOTAL-LIABILITY-AND-EQUITY> 337,865
<SALES> 284,919
<TOTAL-REVENUES> 284,919
<CGS> 197,813
<TOTAL-COSTS> 197,813
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,220
<INCOME-PRETAX> 47,343
<INCOME-TAX> 18,460
<INCOME-CONTINUING> 28,878
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,878
<EPS-PRIMARY> 1.14
<EPS-DILUTED> 1.14
<FN>
<F1>RECEIVABLES - ARE PRESENTED NET OF THE ALLOWANCE FOR DOUBTFUL ACCOUNTS.
<F2>BONDS - REPRESENT REVOLVING CREDIT LOANS AND LONG-TERM DEBT, LESS CURRENT
MATURITIES.
</FN>
</TABLE>
