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Filed Pursuant to Rule 424(b)(2)
Registration No. 333-66945
Prospectus
CARAUSTAR INDUSTRIES, INC.
[LOGO]
1,775,000 Shares
Common Stock
- -- We may use this prospectus from time to time to offer and sell our
common stock to the owners of businesses we may acquire in the future.
- -- The specific terms upon which we will issue these shares will be
determined by negotiation with the owners of the businesses we acquire.
- -- We expect the price of the shares we issue in an acquisition to be
reasonably related to the prevailing market prices of our common stock
at or near the time we enter an acquisition agreement or consummate the
acquisition.
- -- In addition to certain resale limitations imposed by federal securities
laws, we may require persons receiving our common stock in connection
with an acquisition to agree to hold such stock for a certain period
from the date of acquisition.
- -- We will pay all expenses of this offering. We will not pay underwriting
discounts or commissions in connection with issuing our stock in
acquisitions, although we may pay finder's fees in specific
acquisitions. Any person receiving a finder's fee may be deemed an
"underwriter" within the meaning of the Securities Act of 1933.
- -- All of the common stock offered by this prospectus may, subject to
certain conditions, also be offered and resold from time to time
pursuant to this prospectus by the persons who receive this common
stock in acquisitions.
- -- We are based in Austell, Georgia and primarily manufacture packaging
products from recycled paper.
- -- Our common stock is quoted on the NASDAQ Stock Market under the trading
symbol "CSAR."
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Before making any investment in our company, you should
consider carefully the risk factors beginning on page 3.
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Neither the SEC nor any state securities commission has approved any of the
securities offered by this prospectus or determined that this prospectus is
accurate or complete. Any representation to the contrary is a criminal offense.
June 23, 1999
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WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION BY REFERENCE
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission (the "SEC"). You
may read and copy (upon the payment of fees prescribed by the SEC) any document
that we file with the SEC at its public reference rooms in Washington, D.C. (450
Fifth Street, N.W. 20549), New York, New York (7 World Trade Center, Suite 1300
10048) and Chicago, Illinois (500 West Madison Street, Suite 1400 60661). You
may call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our filings are also available to the public on the internet,
through the SEC's EDGAR database. You may access the EDGAR database at the SEC's
web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with them. This means that we can disclose important
business, financial and other information in our SEC filings by referring you to
the documents containing this information. All information incorporated by
reference is part of this prospectus, unless and until that information is
updated and superseded by the information contained in this prospectus or any
information incorporated later. Any information that we subsequently file with
the SEC that is incorporated by reference will automatically update and
supersede any previous information that is part of this prospectus. We
incorporate by reference the documents listed below and any future filings we
make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until we sell all the securities we offer with this
prospectus:
-- Annual Report on Form 10-K for the year ended December 31,
1997;
-- Quarterly Reports on Form 10-Q for the quarters ended March
31, 1998 and June 30, 1998; and
-- The description of our common stock contained in our
registration statement on Form 8-A that we filed with the SEC
on September 17, 1992 to register our common stock under the
Securities Exchange Act of 1934, along with any future update
of this description that we file.
This prospectus is part of a registration statement (on Form S-4) we
have filed with the SEC relating to the shares offered by this prospectus. As
permitted by SEC rules, this prospectus does not contain all the information
contained in the registration statement and accompanying exhibits and schedules
we file with the SEC. You may refer to the registration statement, the exhibits
and schedules for more information about us and our common stock. The
registration statement, exhibits and schedules are available at the SEC's public
reference rooms or through its EDGAR database on the internet.
You may obtain a copy of these filings, at no cost, by writing or telephoning us
at the following address:
Caraustar Industries, Inc.
3100 Washington Street
Austell, Georgia 30106
Attn: Corporate Secretary
Telephone: (770) 948-3101
To ensure timely delivery of these materials, you should make any
request no later than five business days prior to the date on which you intend
to vote on or otherwise consent to or approve our acquisition of your business.
Materials will be sent via first class mail within one business day after we
receive a request.
You should rely only on the information provided in this prospectus or
incorporated by reference. We have not authorized anyone else to provide you
with different
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information. We are not making an offer of these securities in any state where
the offer is not permitted. Information is accurate only as of the date of the
documents containing the information, unless the information specifically
indicates that another date applies.
RISK FACTORS
In addition to the other information contained in this prospectus, you
should consider carefully the following risk factors before investing in any of
our common stock.
Possible Future Increases In Raw Material Costs
Our primary raw material is recycled paper, which is known in our industry as
"recovered fiber." The cost of recovered fiber has at times fluctuated greatly
because of factors such as shortages or surpluses created by market or industry
conditions. Although in the past we have raised the selling prices of our
products in response to raw material price increases, sometimes raw material
prices have increased so quickly or to such levels that we have been unable to
maintain our operating margins or pass the price increases through to our
customers on a timely basis. We cannot assure you that we will be able to
maintain our margins in the face of raw material price fluctuations or that we
will be able to pass such price changes through to our customers on a timely
basis.
Ability To Control Growth; Expansion and Acquisition Risks
We intend to increase our production capacity in the next several years. This
strategy involves risks and depends on the availability of funds to permit us to
make capital expenditures and acquisitions. We have made numerous acquisitions
in recent years and actively seek new acquisitions that meet our criteria.
Acquired businesses may not achieve the same levels of revenue, profit or
productivity as our existing locations and may not otherwise perform as we
expect. To make acquisitions, we might incur additional debt, issue additional
stock (which would dilute the relative stock holdings of our existing
shareholders), or both.
Acquisitions also involve special risks. Some of these risks include:
-- assumption of unanticipated liabilities and contingencies
-- diversion of management's attention
-- possible reduction of our reported earnings because of:
> increased goodwill write-offs
> increased interest costs
> issuances of additional securities
> difficulties of integrating acquired business
As we grow, we can give no assurance that we will be able to:
-- use increased production capacity at our facilities
-- identify suitable acquisition candidates
-- complete additional acquisitions
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-- integrate acquired businesses into our operations
Environmental Liabilities or Costs
Compliance with the environmental requirements of federal, state and
local governments significantly affects our business. Among other things, these
requirements regulate the discharge of materials into the water, air and land
and govern the use and disposal of hazardous substances. Under environmental
laws, we can be held strictly liable if hazardous substances are found on real
property we have ever owned or operated or used as a disposal site. In recent
years, we have adopted a policy of assessing real property for environmental
risks prior to purchase. We are aware of issues regarding hazardous substances
at some of our facilities and one of our disposal sites, and we have put into
place a remedial plan at each site where we believe such a plan is necessary. We
regularly make capital and operating expenditures to stay in compliance with
environmental laws. Despite these compliance efforts, risk of environmental
liability is part of the nature of our business. We cannot assure you that
environmental liabilities, including compliance and remediation costs, will not
have a material adverse effect on us in the future. In addition, future events
may lead to additional compliance or other costs that could have a material
adverse effect on us. Such future events could include changes in, or new
interpretations of, existing laws or enforcement policies or further
investigation of the potential health hazards of certain products or business
activities.
Highly Competitive Markets
The manufacture and sale of our products are highly competitive. We
compete with a variety of companies, some of which are larger and have greater
resources than we do. In most of our markets, our competitors are capable of
supplying products that would meet the needs of our customers. We cannot assure
you that we will be able to compete successfully in the future.
Potential Deterrents to Takeovers
Certain provisions of our articles of incorporation and bylaws, as well
as a shareholder rights plan, could make it more difficult for a third party to
acquire, or discourage a third party from acquiring, a controlling interest in
our outstanding voting stock. As a result, these provisions could discourage
bids for our common stock at a premium and might adversely affect the market
price of our common stock.
Our articles of incorporation authorize 5,000,000 shares of preferred
stock, which may be issued in the future without further shareholder approval
with such terms and rights as our board of directors may determine. The rights
of the holders of our common stock may be adversely affected by the rights of
the holders of any preferred stock that may be issued in the future.
Our board of directors is divided into three classes with staggered
terms. This means that, as a general matter, only one-third of our board of
directors must stand for re-election at any annual meeting of shareholders. Our
articles of incorporation provide that directors may be removed only for cause.
These provisions make it more difficult and time consuming for a potential
acquiror of our company to replace our board of directors.
Our shareholder rights plan generally authorize our board of directors
and shareholders to substantially dilute the share ownership position of any
person who acquires 20% or more of our common stock.
Dependence on Key Personnel
We depend on the continued efforts of our executive officers and senior
management. In addition, we depend on the performance and productivity of our
local managers. The loss of executive officers, members of senior management or
key local
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managers could have a material adverse effect on our operations, including our
ability to establish and maintain customer relationships. We maintain no key
person insurance policies on any of our executive officers or other senior
managers. If we are unable to attract or retain key employees to perform these
services, our business could be materially and adversely affected.
Stock Price Fluctuation
From time to time, there may be significant fluctuations in the market price of
our common stock, which could be caused by the occurrence of, or announcements
or rumors related to:
-- changes in our or our competitors' operating results
-- changes in cost of recovered fiber
-- changes in market conditions for paper industry stocks or
manufacturing stocks in general
-- changes in general conditions in the U.S. or foreign economies
or financial markets
-- natural disasters or other newsworthy events, including
developments of a political or social nature
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 types of fluctuations
may adversely affect the market price of our common stock or other securities.
Economic Conditions
Demand for our products generally is dependent upon production levels
and consumer demand, which fluctuate with U.S. and global economic conditions
and cycles. Demand is generally higher during periods of economic strength and
lower during periods of economic weakness or uncertainty. Adverse economic
conditions could have a material adverse effect on us.
SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this prospectus under the caption "Risk Factors"
and the documents incorporated by reference into this prospectus may constitute
"forward-looking statements" within the meaning of federal securities laws.
Forward-looking statements are based on our management's beliefs, assumptions,
and expectations of our future economic performance, taking into account the
information currently available to them. These statements are not statements of
historical fact. Forward-looking statements involve risks and uncertainties that
may cause our actual results, performance or financial condition to be
materially different from the expectations of future results, performance or
financial condition we express or imply in any forward-looking statements. Some
of the important factors that could cause our actual results, performance or
financial condition to differ materially from our expectations are:
-- Fluctuations in our raw material prices
-- Our ability to identify and complete acquisitions and
successfully integrate the businesses we acquire
-- Changes in government regulations, particularly environmental
regulations
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-- Changes in demand for our products
-- Changes in the industrial sector or the general domestic or
global economy
-- Degree and nature of our competition
-- Other factors described in this prospectus or the documents we
file with the SEC and incorporate by reference into this
prospectus
When used in our documents or oral presentations, the words
"anticipate," "estimate," "expect," "objective," "projection," "forecast,"
"goal" or similar words are intended to identify forward-looking statements. We
qualify any such forward-looking statements entirely by these cautionary
factors.
THE COMPANY
Caraustar Industries, Inc. is a major manufacturer of recycled
paperboard and converted paperboard products. Our executive offices are located
at 3100 Washington Street, Austell, Georgia 30106. Our phone number is (770)
948-3101.
ACQUISITION TERMS
This prospectus covers the offer and sale of up to 1,775,000 shares of
our common stock that we 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. We will furnish this prospectus
to the securityholders or owners of the businesses we acquire in exchange for
the shares we offer by this prospectus.
We expect that the terms upon which we issue the shares will be
determined through negotiations with the securityholders or principal owners of
the businesses whose securities or assets we acquire. We expect that the shares
we issue in an acquisition will be valued at prices reasonably related to the
market prices for our common stock prevailing at or near the time we enter into
an acquisition agreement or consummate the acquisition.
We will pay all expenses of the offering of these shares. We will pay
no underwriting discounts or commissions in connection with the issuance of
these shares, although we may pay finder's fees 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 of 1933.
We will use this prospectus in connection with the issuance of our
shares only in those acquisitions that would be exempt from registration except
for the possibility of integration with other transactions. If an acquisition
would not be so exempt, we will furnish those offerees this prospectus, as
amended by a post-effective amendment to the Registration Statement (on Form
S-4) of which this prospectus is a part.
If we consummate an acquisition (or series of acquisitions since the
date of our most recently audited financial statements) that would have a
material financial effect on us, we will file a Current Report on Form 8-K
containing the financial and other information about the acquisition(s) that
would be material to subsequent purchasers of the shares we offer through this
prospectus.
Our common stock is quoted on the NASDAQ Stock Market. The shares we
issue in acquisitions may be subject to restrictions on resale imposed by Rules
144 and 145
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under the Securities Act of 1933. In addition, we may impose certain contractual
holding period requirements upon persons acquiring our shares in acquisitions.
SELLING SHAREHOLDERS
This prospectus may also be used for reoffers and resales by persons
who receive our common stock in acquisition transactions and who may be entitled
to reoffer and resale such common stock under circumstances requiring the use of
a prospectus. However, no person will be authorized to use this prospectus for
an offer of such common stock without first obtaining our consent. We may
consent to the use of this prospectus by such selling shareholders for a limited
period of time and subject to limitations and conditions, which may be varied by
agreement between us and such selling shareholders. A supplement to this
prospectus will set forth information identifying any such selling shareholders
and disclosing the information about such selling shareholders and the
securities to be sold as may then be required by the Securities Act of 1933 and
the rules of the Securities and Exchange Commission.
PLAN OF DISTRIBUTION BY SELLING SHAREHOLDERS
Resales of our common stock may be made on NASDAQ or such national
securities exchange or other quotation service on which our common stock may be
listed or quoted at the time of sale, in the over-the-counter market, in private
transactions or pursuant to underwriting agreements. Such resales may be
effected in one or more of the following methods:
-- ordinary brokers' transactions, which may include long or
short sales
-- transactions involving cross or block trades or otherwise on
NASDAQ
-- purchases by brokers, dealers or underwriters as principal and
resale for their own accounts pursuant to this prospectus
-- "at the market" to or through market makers or into an
existing market for the common stock
-- in other ways not involving market makers or established
trading markets, including direct sales to purchasers or sales
effected through agents
-- through transactions in options, swaps or other derivatives
-- any combination of the methods listed above, or by any other
legally available means
Agreements with selling shareholders permitting use of this prospectus
may provide that any such offering be effected in an orderly manner through
securities dealers, acting as broker or dealer, selected by us; that selling
shareholders enter into custody agreements with one or more banks with respect
to the common stock offered; and that sales be made only by one or more of the
methods described in this prospectus, as appropriately supplemented or amended
when required. The selling shareholders may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933.
Brokers, dealers, underwriters or agents participating in the sale of
our common stock as principals or agents may receive compensation in the form of
commissions, discounts or concessions from the selling shareholders and/or
purchasers of the common stock for whom such broker-dealers may act as agent, or
to whom they may sell as principal, or both (which compensation as to a
particular broker-dealer may be
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less than or in excess of customary commissions). Sales of common stock by such
broker, dealer, underwriter or agent may be made on the NASDAQ Stock Market or
any securities exchange from time to time at prices related to prices then
prevailing, at negotiated prices or at fixed prices, which may be changed. Any
such sales may be by block trade. Any such broker/dealer or agent may be deemed
to be an "underwriter" within the meaning of the Securities Act of 1933, and any
commissions earned by such member firm may be deemed to be underwriting
discounts and commissions under the Securities Act of 1933.
Upon our being notified by a selling shareholder that it proposes to
make a block trade, a prospectus supplement, if required, will be filed pursuant
to Rule 424 under the Securities Act of 1933 (or successor rule), disclosing the
name of the broker or dealer, the number of shares of common stock involved, the
price at which such shares of common stock are being sold by such selling
shareholder, and the commissions to be paid by such selling shareholder to such
broker or dealer.
To comply with the securities laws of certain jurisdictions, if
applicable, the common stock will be offered or sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions, such securities may not be offered or sold unless they have been
registered or qualified for sale in such jurisdictions or any exemption from
registration or qualification is available and is complied with.
REGISTRAR AND TRANSFER AGENT
The registrar and transfer agent for our common stock is The Bank of
New York, located in New York, New York.
LEGAL MATTERS
Robinson, Bradshaw & Hinson, P.A., Charlotte, North Carolina, will
issue an opinion for us regarding the validity of the common stock offered by
this prospectus and certain other legal matters. Russell M. Robinson, II, a
shareholder in the firm of Robinson, Bradshaw & Hinson, P.A., is Chairman of our
Board of Directors. Robinson, Bradshaw & Hinson, P.A. is our principal outside
legal counsel. Certain members of such firm beneficially owned approximately
113,680 shares of our common stock as of the date of this prospectus.
EXPERTS
The financial statements and schedules 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 to such financial statements and schedules, and are
incorporated by reference in reliance upon the authority of such firm as experts
in giving such reports.
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TABLE OF CONTENTS
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WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION BY REFERENCE...................................................2
RISK FACTORS......................................................................................................3
SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS......................................................5
THE COMPANY.......................................................................................................6
ACQUISITION TERMS.................................................................................................6
SELLING SHAREHOLDERS..............................................................................................7
PLAN OF DISTRIBUTION BY SELLING SHAREHOLDERS......................................................................7
REGISTRAR AND TRANSFER AGENT......................................................................................8
LEGAL MATTERS.....................................................................................................8
EXPERTS ..........................................................................................................8
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CARAUSTAR INDUSTRIES, INC.
1,775,000 Shares
COMMON STOCK
[CARAUSTAR LOGO]
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PROSPECTUS
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June 23, 1999
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