<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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
-----------------------------
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
----------------------------------------
(Address of principal executive offices)
(Zip Code)
(770) 948-3101
------------------
(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, May 7, 1996.
Common Stock, $.10 par value 24,749,553
---------------------------- -------------
(Class) (Outstanding)
<PAGE> 2
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996
CARAUSTAR INDUSTRIES, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
PAGE
<S> <C>
Item 1. Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets as of March 31, 1996 3
and December 31, 1995
Condensed Consolidated Statements of Income for the three-month 4
periods ended March 31, 1996 and March 31, 1995
Condensed Consolidated Statements of Cash Flows for the three-month 5
periods ended March 31, 1996 and March 31, 1995
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 7
Condition and Results of Operations for the three-month
periods ended March 31, 1996 and March 31, 1995
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 12
EXHIBIT INDEX 13
</TABLE>
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<PAGE> 3
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996
PART I, ITEM 1.
CARAUSTAR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995*
--------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 11,639 $ 8,785
Receivables, net 59,304 53,788
Inventories 45,589 47,146
Refundable income taxes 0 214
Other current assets 3,195 3,966
--------- ---------
Total current assets 119,727 113,899
--------- ---------
PROPERTY, PLANT AND EQUIPMENT
Land 9,552 9,031
Buildings and improvements 67,844 62,530
Machinery and equipment 251,377 243,913
Furniture and fixtures 7,904 7,477
--------- ---------
336,677 322,951
Less accumulated depreciation (145,966) (141,021)
--------- ---------
Property, plant and equipment, net 190,711 181,930
--------- ---------
GOODWILL 31,211 17,676
--------- ---------
OTHER ASSETS 9,302 8,571
--------- ---------
$ 350,951 $ 322,076
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Revolving credit loans $ 35,000 $ 10,000
Current maturities of long-term debt 26 36
Cash overdraft 7,053 5,113
Accounts payable 28,674 26,125
Accrued liabilities 24,432 22,763
Income taxes payable 6,988 0
Dividends payable 2,968 3,076
--------- ---------
Total current liabilities 105,141 67,113
--------- ---------
LONG-TERM DEBT, less current maturities 83,368 83,380
--------- ---------
DEFERRED INCOME TAXES 22,045 22,045
--------- ---------
DEFERRED COMPENSATION 6,188 6,227
--------- ---------
OTHER LIABILITIES 3,914 3,969
--------- ---------
MINORITY INTEREST 98 99
--------- ---------
COMMITMENTS AND CONTINGENCIES (Note 4)
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, 24,738,842 issued and outstanding
at March 31, 1996 and 25,682,371 issued
and outstanding at December 31, 1995 2,474 2,568
Additional paid-in capital 134,424 154,013
Accumulated deficit (6,701) (17,338)
--------- ---------
130,197 139,243
--------- ---------
$ 350,951 $ 322,076
========= =========
</TABLE>
*Condensed from audited financial statements.
The accompanying notes are an integral part of these condensed consolidated
balance sheets.
-3-
<PAGE> 4
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 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
March 31,
-----------------------
1996 1995
---- ----
(Unaudited)
<S> <C> <C>
SALES BEFORE FREIGHT $ 151,619 $136,502
FREIGHT (7,100) (6,075)
---------- --------
NET SALES 144,519 130,427
COST OF SALES (101,179) (98,199)
---------- --------
Gross profit 43,340 32,228
SELLING GENERAL AND ADMINISTRATIVE EXPENSES (19,054) (16,204)
---------- --------
Operating income 24,286 16,024
OTHER INCOME (EXPENSE) 5 174
INTEREST EXPENSE (2,154) (1,724)
INTEREST INCOME 132 174
---------- --------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 22,269 14,648
PROVISION FOR INCOME TAXES (8,718) (5,627)
MINORITY INTEREST 0 3
---------- --------
NET INCOME $ 13,551 $ 9,024
========= ========
PRIMARY
- -------
NET INCOME PER COMMON SHARE $ 0.53 $ 0.35
========= ========
Primary weighted average number of shares outstanding 25,538 25,826
========= ========
FULLY DILUTED
- -------------
NET INCOME PER COMMON SHARE $ 0.53 $ 0.35
========= ========
Fully diluted weighted average number of shares outstanding 25,611 25,826
========= ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements of income.
-4-
<PAGE> 5
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996
PART I, ITEM 1.
CARAUSTAR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1996 1995
-------- --------
(Unaudited)
<S> <C> <C>
Cash provided by (used for)
Operations:
Net income $ 13,551 $ 9,024
Adjustments for non cash charges 5,568 4,010
Changes in assets and liabilities 12,461 1,648
-------- --------
Net cash provided by operations 31,580 14,682
-------- --------
Investments:
Capital expenditures (7,835) (6,078)
Acquisitions of businesses (22,365) 0
Other (589) (85)
-------- --------
Cash used for investments (30,789) (6,163)
-------- --------
Financing:
Proceeds from revolving credit loans 35,000 0
Repayments of revolving credit loans (10,000) 0
(Repayments of) proceeds from long and short-term debt (22) 26
Dividends paid (3,076) (2,678)
Issuances of stock 629 720
Purchase of treasury stock (20,312) 0
Other (156) (174)
-------- --------
Cash provided by (used for) financing 2,063 (2,106)
-------- --------
Net increase in cash and cash equivalents 2,854 6,413
Cash and cash equivalents, beginning of period 8,785 12,465
-------- --------
Cash and cash equivalents, end of period $ 11,639 $ 18,878
======== ========
Cash payments for:
Interest $ 441 $ 88
======== ========
Income taxes $ 1,054 $ 859
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements of cash flows.
-5-
<PAGE> 6
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996
PART I, ITEM 1.
CARAUSTAR INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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 three months ended March 31, 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 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. 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.
Note 5. Subsequent Events
In April 1996, subsequent to the quarter ended March 31, 1996, the
Company transferred all the net assets (except cash) of its
wholly-owned subsidiary, Standard Gypsum, a producer of gypsum
wallboard, to a limited liability company ("LLC"). The Company then
sold an undivided 50 percent interest in the LLC to an unrelated
third party for $11.0 million in cash. The LLC will be operated as a
joint venture managed by the third party. The Company will account
for its interest in the LLC under the equity method of accounting.
This transaction is not anticipated to have a material impact on the
operations of the Company.
-6-
<PAGE> 7
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 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 MARCH 31, 1996 AND 1995
Net sales for the quarter ended March 31, 1996 increased 10.8 percent from
$130.4 million in the same period last year to $144.5 million. Acquisitions
made after the first quarter of 1995 accounted for $16.7 million of sales in
the first quarter of 1996. Excluding acquisitions, net sales decreased $2.6
million, or 2.0 percent. The decrease was due to volume decreases, which were
partially offset by higher average selling prices. Tons sold from paperboard
mill production (including sales to outside customers and transfers to the
Company's converting operations) declined 3.0 percent to 176.3 thousand tons in
the first quarter of 1996 from 181.7 thousand tons in the same period of last
year, primarily due to downtime taken at several of the Company's paperboard
mills to complete capital projects. 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 24.0 percent to 25.9 thousand
tons in the first quarter of 1996 from 34.1 thousand tons in the same period
last year. Overall paperboard tonnage thus decreased 6.3 percent to 202.2
thousand tons versus 215.8 thousand tons in the first quarter of 1995. Tube,
core and can volume decreased 4.9 percent on a quarter-to-quarter basis; gypsum
facing paper volume increased 0.8 percent; folding carton grade volume
decreased 11.7 percent; and other specialty grade volume decreased 12.8
percent. Average paperboard mill net selling price per ton was up 4.7 percent
to $402 in the first quarter of 1996 from $384 in the same period last year.
Average net selling price per ton for tubes and cores was up 12.6 percent to
$730 from $649 last year.
The Company's gross margin increased to 30.0 percent of net sales from 24.7
percent in the first quarter of 1995 as wastepaper costs per ton averaged $71
in the first quarter of 1996 versus $140 in the same period of last year.
Operating income increased $8.3 million, or 51.6 percent, from $16.0 million to
$24.3 million in the first quarter of 1996. Acquisitions completed after the
first quarter of 1995 accounted for $760 thousand 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. Selling, general and
administrative expenses increased to 13.2 percent of net sales from 12.4
percent in the first quarter of last year, due primarily to relatively higher
selling, general and administrative expenses at operations acquired since last
year and slightly lower sales volume at existing facilities. Interest expense
increased to $2.2 million from $1.7 million in the first quarter of 1995,
primarily due to interest on borrowings from the Company's bank revolving
credit facility.
LIQUIDITY AND CAPITAL RESOURCES
On March 31, 1996, the Company had borrowings of $35.0 million outstanding on
its revolving line of credit versus none on March 31, 1995. These borrowings
were used to partially finance the Company's acquisition of Summer Paper Tube
as well as the Company's stock repurchase program. Total long-term debt less
current maturities was down slightly to $83.4 million at the end of the first
quarter of 1996 from $83.5 million a year ago. Capital expenditures for the
first quarter of 1996 were $7.8 million versus $6.1 million for the first
quarter of 1995. The Company anticipates that capital expenditures will be
approximately $32.5 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
cash and borrowings under its bank revolving credit facility.
-7-
<PAGE> 8
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996
PART I, ITEM 2.
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.
On January 15, 1996, the Company acquired 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. The acquisition will be accounted for as a purchase.
In April 1996, the Company sold a one-half interest in the business of its
wholly-owned subsidiary, Standard Gypsum, a producer of gypsum wallboard, to an
unrelated third party for $11.0 million in cash. The business will be operated
as a joint venture under a limited liability company managed by the third
party.
The Company paid cash dividends of approximately $3.1 million in the first
quarter of 1996, compared to $2.7 million in the first quarter of 1995.
-8-
<PAGE> 9
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996
PART I, ITEM 4.
Item 4. Submission of Matters to a Vote of Security Holders
The Company's annual shareholders' meeting was held on April 17,
1996. The matters voted upon at the meeting were proposals (1) to
elect three Class I directors (Thomas V. Brown, Maxine Francis
Forrest and Ralph M. Holt, Jr.) and one Class III director (James H.
Hance, Jr.), (2) to approve the Company's 1996 Director Equity Plan
and (3) to ratify the selection of Arthur Andersen LLP as the
Company's independent public accountants for fiscal 1996. Each of
these proposals was approved by the following margins:
<TABLE>
<CAPTION>
Votes Votes Against Broker
Proposal For or Withheld Abstentions Nonvotes
-------- --- ----------- ----------- --------
<S> <C> <C> <C> <C>
Election of Directors
Thomas V. Brown 20,182,992 115,956 -- --
Maxine Francis Forrest 20,092,569 206,379 -- --
Ralph M. Holt, Jr. 20,140,751 158,197 -- --
James H. Hance, Jr. 20,140,751 158,197 -- --
<CAPTION>
Votes Votes Against Broker
Proposal For or Withheld Abstentions Nonvotes
-------- --- ----------- ----------- --------
Approval of the 1996 Director
Equity Plan 18,720,779 334,055 145,713 4,311,644
Ratification of Selection
of Independent Public
Accountants 20,148,795 55,701 94,452 --
</TABLE>
-9-
<PAGE> 10
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 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
----------- -----------
<S> <C>
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])
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])
</TABLE>
-10-
<PAGE> 11
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996
PART II, ITEM 6.
CARAUSTAR INDUSTRIES, INC.
<TABLE>
<S> <C>
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
11.00 Computation of Earnings per Share
27.00 Financial Data Schedule (For SEC purposes only)
(b) Reports on Form 8-K
There were no Current Reports on Form 8-K for the quarter
ended March 31, 1996.
</TABLE>
-11-
<PAGE> 12
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 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: May 13, 1996 /s/ H. Lee Thrash, III
-------------------------------------------------
By: H. Lee Thrash, III
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
-12-
<PAGE> 13
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Document Filed Herewith (*)
----------- -------- or Incorporated by
Reference (**)
------------------
<S> <C> <C>
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>
-13-
<PAGE> 1
EXHIBIT 10.12
CARAUSTAR INDUSTRIES, INC.
1996 DIRECTOR EQUITY PLAN
1. Purpose of Plan. This 1996 Director Equity Plan (the "Plan")
provides for payment of a portion of the directors' annual retainer in shares
of the common stock of Caraustar Industries, Inc. ( "Caraustar" ) and for an
annual grant of options to acquire Caraustar shares to Caraustar directors.
The purpose of the Plan is to tie directors' compensation to the price of
Caraustar's shares.
2. Shares Subject to Plan. The maximum number of shares that may
be issued pursuant to this Plan is 100,000.
3. Administration of Plan. The Compensation and Employee
Benefits Committee (the "Committee") of Caraustar's Board of Directors will
administer the Plan.
The Committee, in addition to any other powers granted to it
hereunder, shall have the powers, subject to the expressed provisions of the
Plan:
(a) to prescribe, amend and repeal rules and regulations
of general application relating to the Plan;
(b) to construe and interpret the Plan;
(c) to require of any person exercising an option granted
under the Plan, at the time of such exercise, the execution of any
paper, the making of any representation or the giving of any
commitment that the Committee shall, in its discretion, deem necessary
or advisable by reason of the securities laws of the United States or
any State, or the execution of any paper or the payment of any sum of
money in respect of taxes or the undertaking to pay or have paid any
such sum that the Committee shall, in its discretion, deem necessary
by reason of the Internal Revenue Code or any rule or regulation
thereunder, or by reason of the tax laws of any State;
(d) to amend stock options previously granted and
outstanding, but no amendment to any such agreement shall be made
without the consent of the optionee if such amendment would adversely
affect the rights of the optionee under his stock option agreement;
and no amendment shall be made to any stock option agreement that
would cause the inclusion therein of any term or provision
inconsistent with the Plan; and
(e) to make all other determinations necessary or
advisable for the administration of the Plan.
The Committee may designate selected Committee members or employees of
Caraustar to assist the Committee in the administration of the Plan and may
grant authority to such persons to
<PAGE> 2
execute documents, including options, on behalf of the Committee, subject in
each such case to the requirements of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended.
Decisions and determinations of the Committee on all matters relating
to the Plan shall be in its sole discretion and shall be conclusive and
binding. No member of the Committee, nor any person authorized to act on
behalf of the Committee, shall be liable for any action taken or decision made
in good faith relating to the Plan or any award thereunder.
4. Annual Retainer. Caraustar pays to those of its directors who
are not employees of Caraustar or any subsidiary (such directors are referred
to herein as "Eligible Directors") an annual retainer. The amount of this
annual retainer is paid to the Eligible Directors in four quarterly
installments, on the first business day of each calendar quarter. From and
after the effective date of this Plan, Caraustar will pay the July and January
quarterly installments of the annual retainer by delivery of shares of
Caraustar common stock, valued for such purpose at the closing trading price of
the Caraustar shares on the last business day immediately preceding the date of
payment, or if such shares did not trade publicly on this date, the most recent
date on which they did so trade. No fractional shares will be issued; and any
balance of the quarterly installment shall be paid in cash.
No shares issued pursuant to this Section 4 of the Plan may be sold or
otherwise transferred until six months shall have elapsed from the date such
shares were issued.
5. Options for Outside Directors. The grant of options under
this Section 5 shall be limited to those directors of Caraustar who, on the
date of grant, are Eligible Directors.
On the first business day of May of each calendar year during the
term of the Plan (the "Grant Date"), each Eligible Director shall automatically
receive from Caraustar an option to acquire 1,000 shares of its common stock at
an exercise price equal to the closing trading price of such shares on the last
business day immediately preceding the Grant Date, or if such shares did not
trade publicly on this date, the most recent date on which they did so trade.
Each such option shall be exercisable immediately and at any time and from time
to time thereafter (subject to Section 6 hereof) until and including the date
which is the business day immediately preceding the tenth anniversary of the
Grant Date. Notice of each such option granted on a Grant Date shall be given
to each Eligible Director within a reasonable time after the Grant Date.
6. Exercise. An option granted hereunder may be exercised as to
part or all of the shares covered thereby at any time before the expiration
date of such option.
During the participant's lifetime, only the participant may exercise
an option granted to him. If a participant dies prior to the expiration date
of an option granted to him, without having
-2-
<PAGE> 3
exercised his option as to all of the shares covered thereby, the option may be
exercised, to the extent of the shares with respect to which the option could
have been exercised on the date of the participant's death, by the estate or a
person who acquired the right to exercise the option by bequest or inheritance
or by reason of the death of the Employee.
No shares acquired upon exercise of an option granted pursuant to this
Plan may be sold or otherwise transferred until six months shall have elapsed
from the date the option was granted.
7. Payment of Exercise Price. The exercise price will be payable
upon exercise of the option to purchase shares. Payment of the exercise price
shall be made in cash.
8. Transferability. No option granted hereunder may be
transferred by the participant except by will or by the laws of descent and
distribution, upon the death of the participant.
9. Memorandum of Option. The Committee will deliver to each
participant to whom an option is granted a Memorandum of Option, stating the
terms of the option.
10. Capital Adjustments. The number of shares of common stock
covered by each outstanding option granted under the Plan, and the exercise
price thereof, will be subject to an appropriate and equitable adjustment, as
determined by the Committee, to reflect any stock dividend, stock split, share
combination, exchange of shares, recapitalization, merger, consolidation,
separation, reorganization, liquidation or the like, of or by Caraustar.
11. Amendment or Discontinuance. The Plan may be amended,
altered or discontinued by the Board of Directors of Caraustar. This Plan may
not be amended more frequently than once every six months, other than to
comport with changes in the Internal Revenue Code of 1986, as amended, the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder. No termination or amendment of the Plan shall materially and
adversely affect any rights or obligations of the holder of an option
theretofore granted under the Plan without his consent.
12. Effect of the Plan. Neither the adoption of this Plan nor any
action of the Board or the Committee shall be deemed to give any person any
right to be granted an option to purchase common stock of Caraustar or any
other rights hereunder except as may be expressly granted hereunder and
evidenced by a Memorandum of Option described in Section 9.
13. Effectiveness of the Plan; Duration. The Plan shall be
subject to approval by the vote of the holders of a majority of the shares of
stock of Caraustar entitled to vote. The Plan shall be effective at once upon
such approval. No option may be granted prior to the approval of the Plan by
shareholders. No options or shares may be granted under this Plan after
December 31, 2005.
-3-
<PAGE> 1
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996 EXHIBIT 11
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
March 31,
----------------------
1996 1995
------- -------
<S> <C> <C>
Earnings:
Net income available to common stock $13,551 $ 9,024
------- -------
Shares:
Primary weighted average common shares outstanding 25,152 25,359
Stock options 386 467
------- -------
Average primary shares outstanding and equivalents 25,538 25,826
------- -------
Fully diluted weighted average common shares outstanding 25,152 25,359
Stock options 459 467
------- -------
Average common shares outstanding and equivalents 25,611 25,826
------- -------
Primary earnings per common share:
Net income $ 0.53 $ 0.35
======= =======
Fully diluted earnings per common share:
Net income $ 0.53 $ 0.35
======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT MARCH 31, 1996 (UNAUDITED) AND THE
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31,
1996 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 11,639
<SECURITIES> 0
<RECEIVABLES> 59,304<F1>
<ALLOWANCES> 0
<INVENTORY> 45,589
<CURRENT-ASSETS> 119,727
<PP&E> 336,677
<DEPRECIATION> 145,966
<TOTAL-ASSETS> 350,951
<CURRENT-LIABILITIES> 105,141
<BONDS> 83,368<F2>
0
0
<COMMON> 2,474
<OTHER-SE> 127,723
<TOTAL-LIABILITY-AND-EQUITY> 350,951
<SALES> 144,519
<TOTAL-REVENUES> 144,519
<CGS> 101,179
<TOTAL-COSTS> 101,179
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,154
<INCOME-PRETAX> 22,269
<INCOME-TAX> 8,718
<INCOME-CONTINUING> 13,551
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,551
<EPS-PRIMARY> .53
<EPS-DILUTED> .53
<FN>
<F1> "RECEIVABLES" ARE PRESENTED NET OF THE ALLOWANCE FOR DOUBTFUL ACCOUNTS.
<F2> "BONDS" REPRESENT LONG-TERM DEBT, LESS CURRENT MATURITIES.
</FN>
</TABLE>
