CARAUSTAR INDUSTRIES INC
424B3, 1998-09-16
PAPERBOARD MILLS
Previous: QCS CORP, PRE 14A, 1998-09-16
Next: ECHO SPRINGS WATER CO INC, 10QSB, 1998-09-16



<PAGE>   1
                                                Filed Pursuant to Rule 424(b)(3)
                                                      Registration No. 333-29937

                                 244,184 SHARES

                          CARAUSTAR INDUSTRIES, INC.

                                 COMMON STOCK

      This Prospectus covers the offer and sale of up to 244,184 shares of
Common Stock, par value $.10 per share (the "Common Stock"), of Caraustar
Industries, Inc. (together with its wholly owned subsidiaries, the "Company" or
"Caraustar"), which the Company may issue from time to time in connection with
the future direct and indirect acquisitions of other businesses, properties or
securities in business combination transactions in accordance with Rule
415(a)(1)(viii) of Regulation C under the Securities Act of 1933, as amended
(the "Securities Act") or as otherwise permitted under the Securities Act.

      The Company expects that the terms upon which it may issue the shares in
business combination transactions will be determined through negotiations with
the securityholders or principal owners of the businesses whose securities or
assets are to be acquired. It is expected that the shares that are issued will
be valued at prices reasonably related to market prices for the Common Stock
prevailing either at the time an acquisition agreement is executed or at the
time an acquisition is consummated.

      This Prospectus will be used only in connection with the acquisition of
businesses, properties or securities in business combination transactions that
would be exempt from registration but for the issuance of Common Stock and the
possibility of integration with other transactions. This Prospectus will be
furnished to security holders of the business, properties or securities to be
acquired.

      Persons receiving Common Stock in connection with the acquisition may be
required to agree to hold all or some portion of the Common Stock for a period
of up to two years after the date of such acquisition.  See "Plan of
Distribution."

      If an acquisition has a material financial effect upon the Company, a
current report on Form 8-K will be filed subsequent to the acquisition
containing financial and other information about the acquisition that would be
material to subsequent acquirors of Common Stock offered hereby, including pro
forma information for Caraustar and historical financial information about the
company being acquired. A current report on Form 8-K will also be filed when an
acquisition does not per se have a material effect upon the Company, but if
aggregated with other acquisitions since the date of the Company's most recent
audited financial statements, would have such a material effect.

      If an acquisition of a business, properties or securities in a business
combination transaction is not exempt from registration even if integration is
not taken into account, then the offerees of Common Stock in such acquisition
will be furnished with copies of this Prospectus as amended by a post-effective
amendment to the Registration Statement on Form S-4 of which this Prospectus is
a part.

      The Common Stock is quoted on the NASDAQ National Market System under the
symbol "CSAR." On September 15, 1998, the closing price per share of the Common
Stock, as reported by NASDAQ, was 22 13/16.

      All expenses of this offering (this "Offering") will be paid by the
Company. No underwriting discounts or commissions will be paid in connection
with the issuance of shares by the Company in business combination transactions,
although finder's fees may be paid with respect to specific acquisitions. Any
person receiving a finder's fee may be deemed to be an Underwriter within the
meaning of the Securities Act.

                                 ---------------

        AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES RISKS.
                    SEE "RISK FACTORS" COMMENCING ON PAGE 3.

          THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
           SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
            COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
         OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
                           ADEQUACY OF THE PROSPECTUS.
                       ANY REPRESENTATION TO THE CONTRARY
                             IS A CRIMINAL OFFENSE.

                                 ---------------

             The date of this Prospectus is September 16, 1998.



<PAGE>   2

                            AVAILABLE INFORMATION



      The Company is subject to the informational and reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission ("SEC"). The Registration Statement and
exhibits and schedules thereto, as well as such reports, proxy statements and
other information, may be inspected and copied at the Public Reference Section
of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the SEC located at 7 World Trade Center, Suite 1300, New
York, New York 10048 and at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of all or any part of such materials may be obtained from
any such office upon payment of the fees prescribed by the SEC. The SEC
maintains a World Wide Web site (http://www.sec.gov), which contains reports,
proxy and information statements and other information filed electronically
through the SEC's Electronic Data Gathering, Analysis and Retrieval System
("EDGAR"). The Common Stock is currently quoted on the NASDAQ National Market
System; such reports, statements and other information also can be inspected at
the offices of NASDAQ Operations, 1735 K Street, N.W., Washington, D.C. 20006.

      The Company has filed with the SEC a Registration Statement on Form S-4
under the Securities Act with respect to the Shares offered hereby (the
"Registration Statement"). As permitted by the rules of the SEC, this Prospectus
does not contain all of the information set forth in the Registration Statement
and the exhibits and schedules thereto. For further information with respect to
the Company and the Shares, reference is made to the Registration Statement,
including the exhibits and schedules filed as part thereof. Statements contained
in this Prospectus, and in any document incorporated herein by reference, as to
the contents of any contract or any other document are not necessarily complete,
and, in each instance, reference is hereby made to the copy of the contract or
document filed as an exhibit to the Registration Statement or such document,
each such statement being qualified in all respects by this reference thereto.
The Registration Statement has been filed through EDGAR and is also publicly
available through the SEC's Web site (http://www.sec.gov).


                                      -2-
<PAGE>   3

               INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

        The following documents filed by the Company with the SEC pursuant to
the Exchange Act are incorporated herein by reference: (i) Annual Report on Form
10-K for the year ended December 31, 1997; (ii) Quarterly Reports on
Form 10-Q for the quarters ended March 31, 1998 and June 30, 1998; (iii) Current
Report on Form 8-K filed July 29, 1996, as amended by Form 8-K/A filed September
25, 1996; (iv) Amendment No. 1 on Form 10-Q/A to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1995; (v) the description of the Common
Stock contained in the Company's Registration Statement on Form 8-A filed with
the SEC pursuant to Section 12 of the Exchange Act and any amendment or report
filed by the Company for the purpose of updating such description and (vi) all
documents filed by the Company with the Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the Offering of the Common Stock offered hereby.


        Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein (or in any subsequently filed document that also is or is
deemed to be incorporated by reference herein) modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
All information appearing in this Prospectus is qualified in its entirety by
information and financial statements (including notes thereto) appearing in the
documents incorporated by reference herein, except to the extent set forth in
the immediately preceding statement.

      The Company will provide, without charge, to each person to whom a copy of
this Prospectus is delivered, including any beneficial owner, upon written or
oral request of such person, a copy of any or all of the documents incorporated
by reference herein (other than exhibits to such documents, unless such exhibits
are specifically incorporated by reference into the information that the
Prospectus incorporates). Requests should be directed to Caraustar Industries,
Inc., 3100 Washington Street, Austell, Georgia 30001, Attention:
Corporate Secretary, telephone (770) 948-3101.


                                 THE COMPANY

      The Company is a major manufacturer of recycled paperboard and converted
paperboard products. The Company's executive offices are located at 3100
Washington Street, Austell, Georgia 30001, and its telephone number is (770)
948-3101.


                                      -3-
<PAGE>   4

                                 RISK FACTORS

         In addition to the other information contained in this Prospectus, the
following risk factors should be carefully considered in evaluating the Company
and its business before purchasing the Common Stock offered hereby. This
Prospectus, including information incorporated by reference herein, may contain
certain "forward-looking statements" within the meaning of the Securities Act
and the Exchange Act, which are based on the Company's expectations or beliefs,
as well as information currently available to management. When used in this
document, the words "anticipate," "estimate," "expect," and similar expressions
may identify such forward-looking statements. Although the Company believes that
the expectations reflected in any such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to be
correct. Any such statements are subject to certain risks, uncertainties and
assumptions. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results, performance or
financial condition may vary materially from those anticipated, estimated or
expected. Among the key factors that may have a direct bearing on the Company's
operating results, performance or financial condition are fluctuations in raw
material prices and the economy in general, the degree and nature of
competition, demand for the Company's products, changes in government
regulations, the Company's ability to complete acquisitions and integrate the
operations of acquired businesses and other matters described in this "Risk
Factors" section and elsewhere in this Prospectus.

POSSIBLE FUTURE INCREASES IN RECOVERED FIBER COSTS

      Historically, the cost of recovered fiber, which is derived from recycled
paperstock and is the Company's only significant raw material, has fluctuated
significantly due to market and industry conditions. Although the Company raises
its selling prices in response to increases in raw material costs, it is often
unable to maintain its operating margins during periods of dramatic price
increases, and it experiences short-term margin shrinkage during all periods of
price increases due to customary time lags in the implementation of price
increases. There can be no assurance that the Company will be able to recoup any
future increases in the cost of recovered fiber by raising the prices of its
products. There can also be no assurance that, even if the Company is able to
recoup such cost increases, its operating margins and results of operations will
not be materially and adversely affected by delays in implementing price
increases.


                                      -4-
<PAGE>   5

ABILITY TO CONTROL GROWTH; EXPANSION AND ACQUISITION RISKS

      The Company intends to continue increasing its production capacity in the
next several years. Such expansion entails operating, marketing and financial
risks, and its success is largely dependent upon the availability of working
capital to permit the Company to complete its capital expenditures program and
identify and consummate selected acquisitions. The Company has consummated
numerous acquisitions in recent years and actively seeks acquisition
opportunities. Once integrated, acquisitions may not achieve levels of revenue,
profitability or productivity comparable to those of the Company's existing
locations or may not otherwise perform as expected. The consummation of
acquisitions could result in the incurrence of additional indebtedness, the
issuance of additional capital stock having a dilutive effect on the Company's
shareholders, or both. Acquisitions also involve special risks, including risks
associated with unanticipated liabilities and contingencies, diversion of
management attention and possible adverse effects on earnings resulting from
increased goodwill amortization, increased interest costs, the issuance of
additional securities and difficulties related to the integration of the
acquired business. There can be no assurance that the Company will be able to
utilize increased production capacity at its existing facilities, to
successfully identify additional suitable acquisition candidates, complete
additional acquisitions or integrate acquired businesses into its operations.

UNFORESEEN ENVIRONMENTAL LIABILITIES OR COSTS

      Compliance with federal, state and local governmental requirements,
particularly relating to wastewater discharge and air quality, is a significant
factor in the Company's business. Among other things, these laws and regulations
regulate the discharge of materials into the water, air and land and govern the
use and disposal of hazardous substances. The most significant federal laws are
the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), the Clean Air Act, the Clean Water Act, the Toxic Substances Control
Act and the Resource Conservation and Recovery Act ("RCRA"). These laws are
administered by the United States Environmental Protection Agency, and in some
cases by state and local agencies. In addition, states in which the Company
operates have adopted supplemental environmental laws and regulations, or have
enacted their own parallel environmental programs, which are enforced through
various state and local administrative agencies. Under CERCLA and other laws and
regulations, the Company can be held strictly liable if hazardous substances are
found on real property owned or operated by the Company or used by the Company
as a disposal site. In recent years, the Company has adopted a policy of
assessing real property for environmental risks prior to purchase. The Company
is aware of issues regarding hazardous substances at some of its facilities and
one of its disposal sites, but in each case a remedial plan is in place where
necessary in the Company's opinion, and the Company has reason to believe that
any possible liabilities will not be material, although there can be no
assurance that such liabilities will not be material. The Company regularly
makes capital and operating expenditures to stay in compliance with applicable
environmental laws. Despite these compliance efforts, risk of environmental
liability is inherent in the operation of the Company's businesses, as it is
with other companies engaged in similar businesses, and there can be no
assurance that environmental liabilities, including compliance and remediation
costs, will not have a material adverse effect on the Company in the future. In
addition, future events, such as changes in or modified interpretations of
existing laws or regulations or enforcement policies, or further investigation
or evaluation of the potential health hazards of certain products or business
activities, may give rise to additional compliance and other costs that could
have a material adverse effect on the Company.



                                      -5-
<PAGE>   6

HIGHLY COMPETITIVE MARKETS

      The manufacture and sale of recycled paperboard and converted paperboard
products are highly competitive. The Company competes with a variety of
companies, some of which are larger and have greater resources than the Company.
In most of its markets the Company's competitors are capable of supplying
products that would meet customer needs. There can be no assurance that the
Company will be able to continue competing successfully.

POTENTIAL ANTI-TAKEOVER EFFECT OF CERTAIN ARTICLES OF INCORPORATION AND BYLAW
PROVISIONS; POSSIBLE ISSUANCES OF PREFERRED STOCK; SHAREHOLDER RIGHTS PLAN

      Certain provisions of the Company's articles of incorporation and bylaws,
as well as a shareholder rights plan, could have the effect of making it more
difficult for a third party to acquire, or of discouraging a third party from
acquiring, a majority of the outstanding voting stock of the Company and, as a
result, have the effect of discouraging bids for the Company's Common Stock at a
premium and adversely affecting the market price of the Common Stock. The
Company's articles of incorporation authorize 5,000,000 shares of preferred
stock (the "Preferred Stock"), which may be issued in the future without further
shareholder approval upon such terms and conditions, and having such rights,
privileges and preferences, as the Board of Directors may determine. The rights
of the holders of Common Stock will be subject to, and may be adversely affected
by, the rights of the holders of any Preferred Stock that may be issued in the
future. The Company's Board of Directors is divided into three classes with
staggered terms, and the Company's articles of incorporation provide that
directors may be removed only for cause. The shareholder rights plan generally
provides a mechanism by which the Board of Directors and shareholders may act to
substantially dilute the share position of any takeover bidder who acquires 20%
or more of the Common Stock.

DEPENDENCE ON KEY PERSONNEL

      The Company's operations are dependent on the continued efforts of its
executive officers and senior management. In addition, the Company is dependent
on the performance and productivity of its local managers. The loss of some of
the Company's key managers could have an adverse effect on the Company's
operations, including the Company's ability to establish and maintain customer
relationships. The Company maintains no key person insurance policies on any of
its executive officers or other senior managers. If the Company is unable to
attract and retain key employees to perform these services, the Company's
business could be adversely affected.

STOCK PRICE VOLATILITY

      From time to time, there may be significant volatility in the market price
of the Common Stock. Factors such as announcements of fluctuations in the
Company's or its competitors' operating results, recovered fiber costs, market
conditions for paper industry stocks or manufacturing stocks in general, changes
in general conditions in the economy or financial markets, natural disasters or
other developments could cause the market price of the Common Stock to fluctuate
substantially. In addition, the stock market in recent years has experienced
extreme price and volume fluctuations that often have been unrelated or
disproportionate to the operating performance of affected companies. These broad
fluctuations may adversely affect the market price of the Common Stock.


                                      -6-
<PAGE>   7


                             PLAN OF DISTRIBUTION

      This Prospectus covers the offer and sale of up to 244,184 shares which
the Company may issue from time to time in connection with the future direct and
indirect acquisitions of other businesses, properties or securities in business
combination transactions in accordance with Rule 415(a)(1)(viii) of Regulation C
under the Securities Act.

      The Company expects that the terms upon which it may issue the shares will
be determined through negotiations with the securityholders or principal owners
of the businesses whose securities or assets are acquired. It is expected that
the shares that are issued will be valued at prices reasonably related to market
prices for the Common Stock prevailing either at the time an acquisition
agreement is executed or at the time an acquisition is consummated.

      All expenses of this Offering will be paid by the Company. No underwriting
discounts or commissions will be paid in connection with the issuance of shares
by the Company in business combination transactions, although finder's fees may
be paid with respect to specific acquisitions. Any person receiving a finder's
fee may be deemed to be an Underwriter within the meaning of the Securities Act.

      The Company's Common Stock will be quoted on the NASDAQ national market
system, but the shares offered hereunder may be subject to certain contractual
holding period requirements.

                          REGISTRAR AND TRANSFER AGENT

      The registrar and transfer agent for the Common Stock is The Bank of New
York, New York, New York.



                                      -7-
<PAGE>   8

                                LEGAL MATTERS

      Certain legal matters in connection with the shares of Common Stock
offered hereby will be passed on for the Company by Robinson, Bradshaw & Hinson,
P.A., Charlotte, North Carolina. Russell M. Robinson, II, a shareholder in the
firm of Robinson, Bradshaw & Hinson, P.A., is Chairman of the Board of Directors
of the Company. Robinson, Bradshaw & Hinson, P.A. is the Company's principal
outside legal counsel. Certain members of such firm beneficially owned
approximately 113,680 shares of the Company's Common Stock as of the date of
this Prospectus.


                                   EXPERTS

      The consolidated financial statements and schedule incorporated by
reference in this Prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are incorporated by
reference in reliance upon the authority of said firm as experts.



                                      -8-
<PAGE>   9


================================================================================

      No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company. This Prospectus does
not constitute an offer to sell, or a solicitation of an offer to buy, to any
person in any jurisdiction in which such offer or solicitation is not
authorized, or in which the person making such offer or solicitation is not
qualified to do so, or to any person to whom it is unlawful to make such offer
or solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that the
information contained herein is correct as of any date subsequent to the date
hereof.

                                   ----------

                              TABLE OF CONTENTS

                                                                            Page
                                                                            ----


AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . . . . . . . . 3

THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

RISK FACTORS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

PLAN OF DISTRIBUTION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

REGISTRAR AND TRANSFER AGENT  . . . . . . . . . . . . . . . . . . . . . . . . 7

LEGAL MATTERS  . . . . . . .  . . . . . . . . . . . . . . . . . . . . . . . . 8

EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

================================================================================

================================================================================

                                244,184 SHARES

                          CARAUSTAR INDUSTRIES, INC.

                                 COMMON STOCK

                                 -----------

                                  PROSPECTUS

                                 -----------

                               September 16, 1998

================================================================================


© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission