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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to ______
Commission file number 0-23340
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ROCK-TENN COMPANY
(Exact name of registrant as specified in its charter)
GEORGIA 62-0342590
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
504 THRASHER STREET 30071
NORCROSS, GEORGIA (Zip code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (770) 448-2193
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: Class A Common
Stock, par value $.01 per share
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates
of the registrant as of December 17, 1997 (based on the last reported closing
price per share of Class A Common Stock as reported on the New York Stock
Exchange on such date) was $446,720,735.
As of December 17, 1997, the registrant had 23,401,864 and 11,749,947
shares of Class A Common Stock and Class B Common Stock outstanding,
respectively.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the fiscal year ended
September 30, 1997 are incorporated by reference in Part II. Portions of the
Proxy Statement for the Annual Meeting of Shareholders to be held on January 22,
1998 are incorporated by reference in Parts III and IV.
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INDEX TO FORM 10-K
ROCK-TENN COMPANY
PAGE REFERENCE
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PART I
Item 1. Business..................................................................................... 3
Item 2. Properties................................................................................... 8
Item 3. Legal Proceedings............................................................................ 8
Item 4. Submission of Matters to a Vote of Security Holders.......................................... 8
Item X. Executive Officers of the Registrant......................................................... 9
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters................................................................... 12
Item 6. Selected Financial Data...................................................................... 12
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations................................................... 12
Item 7A. Quantitative and Qualitative Disclosures about Market Risk................................... 12
Item 8. Financial Statements and Supplementary Data.................................................. 12
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure................................................ 12
PART III
Item 10. Directors and Executive Officers of the
Registrant............................................................................ 13
Item 11. Executive Compensation....................................................................... 13
Item 12. Security Ownership of Certain Beneficial
Owners and Management................................................................. 13
Item 13. Certain Relationships and Related Transactions............................................... 13
PART IV
Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K............................................................... 14
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PART I
ITEM 1. BUSINESS
Unless the context otherwise requires, references herein to the Company
are to the Company and its subsidiaries other than RTS Packaging, LLC.
GENERAL
Founded in 1936 as a folding carton manufacturer, the Company is a
leading converter of recycled and virgin paperboard, a leading manufacturer of
recycled clay-coated and uncoated paperboard and a producer of corrugating
medium. The Company believes that it is the second largest manufacturer of
folding cartons in North America and the largest U.S. producer of laminated
paperboard products for the book cover and furniture markets. The Company
operates 40 converting facilities, 10 paperboard mills, 14 paper recovery
facilities and one distribution facility located in 21 states and Canada.
In September 1997, the Company and Sonoco Products Company ("Sonoco")
formed RTS Packaging, LLC ("RTS"), and the Company contributed to RTS eight
fiber partition plants and one machine engineering facility in the U.S. and
Sonoco contributed to RTS five fiber partition plants in the U.S. (one of which
was subsequently closed) and one plant in Mexico. As a result, the Company
believes that RTS is the largest producer of solid fiber partitions in North
America. Under the terms of the agreement between the Company and Sonoco
relating to RTS, the Company and Sonoco own 65% and 35%, respectively, of the
outstanding interests in RTS. As a result of the consummation of this
transaction, all of the Company's partition products business is conducted
through RTS. RTS operates 13 solid fiber partition plants (one of which will be
closed prior to December 31, 1997) in eight states and Mexico.
PRODUCTS
The Company operates in two industry segments: converted products and
paperboard.
Converted Products
The Company primarily manufactures four lines of converted products:
folding cartons, laminated paperboard products, corrugated products and plastic
packaging products. RTS manufactures solid fiber partitions.
Folding Cartons. The Company believes that it is the second largest
producer of folding cartons in North America. The Company's folding cartons are
used by customers to package frozen, dry and perishable food items, paper goods,
hardware products, textile, automotive, apparel and other products. Folding
cartons are manufactured by the Company from recycled or virgin paperboard,
which is printed, coated, die-cut and glued in accordance with customer
specifications. Finished cartons are then shipped to customers' plants where
they are packed or sealed. The Company operates 22 folding carton plants and one
distribution facility, and sales of folding cartons to unaffiliated customers
accounted for 49.1%, 46.0% and 43.3% of the Company's net sales in fiscal 1997,
1996, and 1995, respectively.
Laminated Paperboard Products. The Company manufactures a number of
laminated paperboard products. The Company believes it is the largest U.S.
producer of laminated paperboard products for the book cover and furniture
markets and that it is recognized for its expertise in laminating recycled
paperboard. The Company converts uncoated paperboard into specialty laminated
paperboard products for use in book covers and binders, furniture, automotive
components and other industrial products. The Company operates nine laminated
paperboard products plants, and sales of laminated paperboard products to
unaffiliated customers accounted for 11.6%, 14.1% and 14.2% of the Company's net
sales in fiscal 1997, 1996 and 1995, respectively.
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Corrugated Products. The Company manufactures corrugated containers,
point-of-purchase displays and corrugated sheet stock, offering a range of flute
configurations and structural designs, which it markets primarily in the
Southeastern U.S. The Company purchases linerboard and corrugating medium, which
are fed simultaneously into a corrugator that flutes the medium to specified
sizes, glues the linerboard and fluted medium together and slits and cuts the
resulting corrugated paperboard into sheets in accordance with customer
specifications. The Company markets corrugated sheets to box manufacturers or
converts it into corrugated products ranging from one-color protective cartons
to graphically brilliant point-of-purchase containers and displays. The Company
operates seven corrugated products plants, and sales of corrugated products to
unaffiliated customers accounted for 10.4%, 12.8% and 10.5% of the Company's net
sales in fiscal 1997, 1996 and 1995, respectively.
Plastic Packaging Products. The Company manufactures thermoformed
plastic converted products and extruded plastic roll stock for sale to the food
service, industrial products, consumer products, healthcare and food processors
markets. The Company uses contact heat and radiant heat thermoforming equipment
to manufacture thermoformed products from plastic roll stock in a wide range of
thicknesses, expanding the range of product applications. The Company also
operates extruders to manufacture plastic roll stock in a wide range of colors.
The Company uses virgin and recycled plastic resin purchased from third parties
in the extrusion process, including high impact polystyrene, high density
polyethylene, polypropylene, polyethylene terephthalate (PET) and K resin
blends.
Partition Products. The Company believes that RTS is the largest
manufacturer of solid fiber partitions in North America, which are marketed
principally to glass container manufacturers. Fiber partitions are manufactured
by RTS from 100% recycled uncoated paperboard. RTS manufactures solid fiber
partitions in varying thicknesses to meet different structural requirements that
are well-suited for high speed casing, uncasing and filling lines due to their
precision die-cut construction. RTS is focused on developing high quality,
value-added partition products for specific applications designed to meet
customers' packaging needs. RTS operates 13 solid fiber partition plants (one of
which will be closed prior to December 31, 1997), and the Company's sales of
fiber partition products (which, from September 5, 1997 to September 30, 1997
included all sales of RTS) to unaffiliated customers accounted for 9.3%, 11.1%
and 11.5% of the Company's net sales in fiscal 1997, 1996 and 1995,
respectively.
Paperboard
The Company produces 100% recycled clay-coated, and uncoated paperboard
and corrugating medium and operates ten paperboard mills, as well as 14
facilities that collect recovered paper.
Recycled Paperboard. The Company is the largest U.S. manufacturer of
100% recycled paperboard (excluding linerboard, medium and paperboard used in
the manufacture of gypsum wallboard), and it believes that it is the second
largest producer of clay-coated recycled paperboard in the U.S. The Company
markets its clay- coated and uncoated recycled paperboard to manufacturers of
folding cartons, fiber partitions, laminated paperboard products and other
paperboard products. The Company also manufactures recycled corrugating medium,
which is marketed to corrugated sheet manufacturers. The Company operates ten
paperboard mills, including one that produces clay-coated recycled paperboard
and corrugating medium, and sales of recycled paperboard (including corrugating
medium) to unaffiliated customers accounted for 13.4%, 9.6% and 13.2% of the
Company's net sales in fiscal 1997, 1996 and 1995, respectively.
Recycled Fiber. The Company operates 14 paper recovery facilities that
collect paper from a number of sources including factories, commercial printers,
office buildings, retail stores and paper converters as well as from other
wastepaper collectors. Certain of the Company's paper recovery facilities are
located near the Company's paperboard mills to minimize freight costs and
provide an additional source of supply of high quality recovered paper for the
Company's operations. Recovered paper is the principal raw material used by the
Company in the production of recycled paperboard. Collected paper is sorted and
baled and then either transferred to the Company's paperboard mills for
processing or sold principally to other U.S. manufacturers of recycled
paperboard.
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SALES AND MARKETING
The Company sold converted products and paperboard to over 5,000 and
1,000 customers, respectively, in fiscal 1997. None of the Company's customers
accounted for more than 10% of the Company's net sales in fiscal 1997. The
Company generally manufactures converted products and paperboard pursuant to
customers' orders. Certain of the Company's converted products and paperboard
are marketed to certain key customers, the loss of which could have an adverse
effect on net income attributable to such converted products or paperboard
segments and, depending on the significance of such product line to the
Company's operations, the Company's results of operations. The Company believes
that it has strong relationships with its customers.
Each of the Company's converted product and paperboard lines are
marketed through its own sales force that maintains direct sales relationships
with its customers. Several converted product lines, including folding cartons
and book covers, are also marketed through independent sales representatives and
independent distributors, respectively. Sales personnel are under the
supervision of regional sales managers, plant general managers or the general
manager for the particular product line, who support and coordinate the sales
activities within their designated area. The Company's paperboard and laminated
paperboard products sales personnel are generally paid a base salary, and its
packaging products sales personnel are generally paid a base salary plus
commissions. The Company's independent sales representatives are paid on a
commission basis.
COMPETITION
The converted products and paperboard industries are highly
competitive, and no single company is dominant. Management believes that the
Company is the second largest manufacturer of folding cartons in North America,
the largest U.S. manufacturer of 100% recycled paperboard (excluding linerboard,
medium and paperboard used in the manufacture of gypsum wallboard), the largest
U.S. producer of laminated paperboard products for the book cover and furniture
markets and the second largest producer of clay-coated recycled paperboard in
the U.S. In addition, the Company believes that RTS is the largest manufacturer
of solid fiber partitions in North America. The Company's and RTS' competitors
include large, vertically integrated converted products and paperboard companies
and numerous smaller companies. The primary competitive factors in the converted
products and paperboard industries are price, design, quality and service, with
varying emphasis on these factors depending on the product line. The Company
believes that it and RTS compete effectively with respect to each of these
factors, but, to the extent that one or more of their respective competitors
becomes more successful with respect to any key competitive factor, the
Company's and RTS' businesses could be materially adversely affected.
In addition, as demand for environmentally friendly packaging has
increased, producers of virgin paperboard have begun to manufacture paperboard
having some recycled paper content. Increasing acceptance of partially recycled
paperboard by consumers as an environmentally friendly alternative to paperboard
produced from 100% recovered paper could have an adverse effect on demand for
the Company's paperboard.
The converted products and recycled paperboard industries have
undergone significant consolidation in recent years, and the Company believes
that current trends within the converted products and paperboard industries will
result in further consolidation. Within the converted products industry, larger
corporate customers with expanded geographic presences have tended in recent
years to seek suppliers who can, because of their broad geographic presence,
efficiently and economically supply all of the customers' packaging needs. In
addition, during recent years, purchasers of recycled paperboard and converted
products have demanded higher quality products meeting stricter quality control
requirements. The Company's results of operations could be adversely affected by
these market trends.
ENVIRONMENTAL REGULATION
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The Company and RTS are subject to various Federal, state, local,
Canadian provincial, and Mexican environmental laws and regulations, including
those regulating the discharge, storage, handling and disposal of a variety of
substances. These laws and regulations include, among others, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), the Clean Air
Act (as amended in 1990), the Clean Water Act, the Resource Conservation and
Recovery Act (including amendments relating to underground tanks) and the Toxic
Substances Control Act. These environmental regulatory programs are administered
by the U.S. Environmental Protection Agency. In addition, states in which the
Company and RTS operate have adopted equivalent or more stringent environmental
laws and regulations, or have enacted their own parallel environmental programs,
which are enforced through various state administrative agencies. The Company's
and RTS' operations also are governed by other Federal, state, local, Canadian
provincial and Mexican laws and regulations relating to workplace safety and
worker health, principally the Occupational Safety and Health Act and
regulations promulgated thereunder which, among other things, establish asbestos
and noise standards and regulate the use of hazardous chemicals in the
workplace. Although neither the Company nor RTS use asbestos in the manufacture
of their products, some of their facilities contain asbestos. However,
management believes such asbestos is properly contained and comprehensive
operations and maintenance plans have been, or are in the process of being,
implemented for those facilities where asbestos is present.
The Company does not believe that future compliance with environmental
and health and safety laws and regulations by the Company and RTS will have any
material adverse effect on the Company's results of operations or financial
condition. However, environmental, health and safety laws and regulations are
becoming increasingly stringent. Consequently, unforeseen expenditures required
to comply with such laws and regulations, including remediation costs, or
unforeseen environmental liabilities could have a material adverse effect on the
Company's financial condition or results of operations. In addition, the Company
cannot with certainty assess at this time the impact upon its and RTS'
operations or capital expenditure requirements of the future emissions standards
and enforcement practices under the 1990 amendments to the Clean Air Act.
However, although there can be no assurance, the Company believes that any such
impact or capital expenditures will not have a material adverse effect on the
Company's financial condition or results of operations.
The Company may choose to modify or replace the coal fired boilers at
two of its facilities in order to operate cost effectively while complying with
emissions regulations under the Clean Air Act. The Company estimates these
improvements will cost approximately $3.0 million; however, the Company may
spend more on these improvements to reduce its energy costs at such facilities.
In addition, the Company estimates that it will spend an additional $0.5 million
for capital expenditures during fiscal 1998 in connection with other matters
relating to environmental compliance.
The Company has been identified as a potentially responsible party
("PRP") at ten Superfund sites pursuant to CERCLA or comparable state statutes.
Except with respect to the Muncie Racetrack site ("Muncie Site"), no remediation
costs or allocations have been determined with respect to such sites. With
respect to the Muncie Site, approximately $3.2 million has been spent to date by
certain PRPs other than the Company in connection with soil remediation
activities and studies. The Company was notified of its final allocation of
liability of approximately $9,300 on September 23, 1996 for the surface
contamination at the site. This amount represents 0.3% of the site remediation
costs. The Company believes that no further soil remediation activities will be
required. However, additional costs may be required in connection with the
investigation and remediation of groundwater contamination, and the Company does
not currently have sufficient information to estimate such costs.
In addition, a water treatment lagoon at one of the Company's
facilities is included with an adjacent former landfill owned by a third party
that is being investigated as a CERCLA site for potential addition to the
National Priority List ("NPL"). Based upon information currently available, the
Company believes that it has no material liability at this site. However, there
can be no assurance that such lagoon, together with the landfill, will not be
added to the NPL as a Superfund site or that the Company will not be required to
conduct some remediation in the future.
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Based upon currently available information and the opinions of the
Company's environmental compliance managers and General Counsel, although there
can be no assurance, the Company believes that any liability it may have at any
site will not have a material adverse effect on the Company's financial
condition or results of operations.
On December 1, 1995, a suit was filed by a private party against, among
others, the Company in the United States District Court for the Western District
of Michigan alleging that the Company is jointly and severally liable under
federal and state law for the release of certain hazardous materials at the
Allied Paper, Inc./Portage Creek/Kalamazoo River Superfund Site. No specific
amounts have been asserted by the plaintiff with respect to this matter,
however, the eventual amounts could be material. The Company has responded to
and denies any liability with respect to this matter and is vigorously defending
against these claims. The Company cannot currently predict whether the plaintiff
will prevail on its claims or the magnitude of any potential recovery, if any.
EMPLOYEES
At September 30, 1997, the Company had 8,415 employees (including
employees of the Company leased by the Company to RTS), of whom 6,514 were
hourly and 1,901 were salaried. Approximately 3,393 of the Company's hourly
employees are covered by union collective bargaining agreements, which generally
have three-year terms. The Company has not experienced any work stoppages in the
past 10 years, and management believes that the Company's relations with its
employees are good.
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ITEM 2. PROPERTIES
The following table sets forth certain information with respect to the
Company's paperboard mills:
Fiscal 1997
Production
Location of Mill Capacity (in tons) Paperboard Produced
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St. Paul, MN* ...............180,000 Recycled corrugating medium
Battle Creek, MI.............128,000 Clay-coated recycled paperboard
Dallas, TX...................160,000 Clay-coated and uncoated recycled
paperboard
Lynchburg, VA................140,000 Uncoated recycled paperboard
St. Paul, MN*................145,000 Clay-coated recycled paperboard
Chattanooga, TN..............122,000 Uncoated recycled paperboard
Otsego, MI....................92,000 Uncoated recycled paperboard
Sheldon Springs, VT
(Missisquoi Mill)..........84,000 Clay-coated recycled paperboard
Eaton, IN.....................60,000 Uncoated recycled paperboard
Cincinnati, OH................53,000 Uncoated recycled paperboard
Stroudsburg, PA...............51,000 Clay-coated recycled paperboard
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* Comprises one paperboard mill.
In addition to the paperboard mills set forth above, the Company also
operates 40 converting facilities, 14 paper recovery facilities and one
distribution facility in 18 states (mainly in the Southwestern, Southeastern,
Midwestern and Northeastern U.S.) and Canada. Of the Company's facilities, the
Company owns 57 and leases 8. The Company's principal executive offices are
located in Norcross, Georgia, in buildings owned by the Company. The Company
believes that its existing production capacity is adequate to service existing
demand for the Company's products. The Company considers its plants and
equipment to be in good condition.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to litigation incidental to its business from
time to time. The Company is not currently a party to any litigation that
management believes, if determined adversely to the Company, would have a
material adverse effect on the Company's results of operations or financial
condition. For additional information regarding litigation to which the Company
is a party, which information is incorporated into this item by reference, see
"Item 1 - Business - Environmental Regulation."
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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ITEM X. EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company are as follows:
Name Age Positions Held
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Bradley Currey, Jr............................ 67 Chairman of the Board, Chief Executive Officer
and Director
Jay Shuster................................... 43 President, Chief Operating Officer and Director
Edward E. Bowns............................... 54 Executive Vice President and General Manager
of Industrial Products Group*
David E. Dreibelbis........................... 45 Executive Vice President and General Manager
of the Mill Group*
David C. Nicholson............................ 43 Senior Vice President, Chief Financial Officer
and Secretary
Russell M. Currey............................. 36 Senior Vice President of Marketing and Planning
Paul England.................................. 42 Executive Vice President and General Manager
of the Uncoated Paperboard Division
Nicholas G. George............................ 47 Executive Vice President and General Manager
of the Folding Carton Division
James K. Hansen............................... 59 Executive Vice President and General Manager
of the Coated Paperboard Division
R. Evan Hardin................................ 35 Treasurer
John H. Morrison.............................. 54 Executive Vice President and General Manager
of the Corrugated Packaging and Display
Division
Paul G. Saari................................. 42 Vice President of Finance
John D. Skelton II............................ 43 Executive Vice President and General Manager
of the Plastic Packaging Division
Alford L. Smith............................... 56 Executive Vice President and General Manager
of Laminated Paperboard Products Division
Richard E. Steed.............................. 46 President and Chief Executive Officer of RTS
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* The Mill Group consists of the Recycled Fiber, Uncoated Paperboard and
Coated Paperboard Divisions and the Industrial Products Group consists
of the Laminated Paperboard Products, Plastic Packaging and Corrugated
Packaging and Display Divisions and RTS.
Bradley Currey, Jr. has served as Chief Executive Officer of the
Company since January 1989 and Chairman of the Board since July 1993. Mr. Currey
served as President of the Company from 1978 until October 1995. He has been a
director of the Company since 1967. Mr. Currey joined the Company in 1976 and
prior to that time was Executive Vice President and a director of Trust Company
Bank of Georgia (currently SunTrust Bank, Atlanta). Mr. Currey is also a
director of Genuine Parts Co., an auto parts wholesaler, and Poe & Brown, Inc.,
an insurance agency. Mr. Currey is the father of Russell M. Currey and brother
of Robert B. Currey, a director of the Company.
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Jay Shuster has served as President of the Company since October 1995
and Chief Operating Officer of the Company since June 1991. Mr. Shuster served
as an Executive Vice President of the Company from June 1991 until October 1995.
Mr. Shuster was elected a director of the Company in January 1992. From January
1989 until June 1991, Mr. Shuster was Executive Vice President and General
Manager of the Consumer Packaging Group. Mr. Shuster served as Executive Vice
President and General Manager of the Folding Carton Division from December 1986
until January 1989. Mr. Shuster joined the Company in May 1979.
Edward E. Bowns has served as Executive Vice President and General
Manager of the Industrial Products Group since November 1990. From February 1986
until November 1990, Mr. Bowns served as Executive Vice President and General
Manager of the Partition Division. Mr. Bowns joined the Company in October 1980.
David E. Dreibelbis has served as Executive Vice President and General
Manager of the Mill Group since September 1992. From July 1985 until September
1992, Mr. Dreibelbis was Executive Vice President and General Manager of the
Recycled Fiber Division. Mr. Dreibelbis joined the Company in April 1979.
David C. Nicholson has served as Senior Vice President of the Company
since September 1994 and as Chief Financial Officer and Secretary of the Company
since December 1986. Mr. Nicholson served as Vice President of the Company from
December 1986 to September 1994. Mr. Nicholson joined the Company in November
1983 and has served in various other capacities, including Treasurer from
December 1986 until January 1988, Controller and Director of Mergers and
Acquisitions.
Russell M. Currey has served as Senior Vice President of Marketing and
Planning since December 1994. Mr. Currey served as Executive Vice President and
General Manager of the Recycled Fiber Division from September 1992 until
December 1994. From February 1990 until September 1992, Mr. Currey served as
Manager of Strategic Development for the Mill Group. From July 1986 until
February 1990, he was General Manager of one of the Company's recycled fiber
plants. Mr. Currey joined the Company in July 1983. Mr. Currey is the son of
Bradley Currey, Jr. and the nephew of Robert B. Currey, a director of the
Company.
Paul England has served as Executive Vice President and General Manager
of the Uncoated Paperboard Division since September 1997. Mr. England served as
Executive Vice President and General Manager of the Recycled Fiber Division from
September 1994 until September 1997. From September 1989 to September 1994, Mr.
England served in various capacities, including General Manager of one of the
Company's paperboard mills. Mr. England joined the Company in September 1989.
Nicholas G. George has served as Executive Vice President and General
Manager of the Folding Carton Division since June 1991. From January 1991 until
June 1991 he was Vice President and General Sales Manager of the Folding Carton
Division. From July 1986 until January 1991, he was Vice President of Folding
Sales, Western Area. Mr. George joined the Company in May 1980.
James K. Hansen has served as Executive Vice President and General
Manager of the Coated Paperboard Division since September 1997. Mr. Hansen
served as Executive Vice President and General Manager of the Mill Division from
May 1990 until September 1997. From 1984 until May 1990, he was General Manager
of one of the Company's paperboard mills. Mr. Hansen joined the Company in April
1979.
R. Evan Hardin has served as Treasurer of the Company since September
1994. Mr. Hardin joined the Company in March 1988 and has served in various
other capacities, including Assistant Treasurer and Financial Analyst.
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John H. Morrison has served as Executive Vice President and General
Manager of the Corrugated Packaging and Display Division since March 1986. From
1967 until March 1986, Mr. Morrison was employed by Union Camp Corporation,
serving in various capacities, including General Manager of a corrugated
manufacturing plant.
Paul G. Saari has served as Vice President Finance of the Company since
July 1994 and as Assistant Secretary of the Company since January 1988. From
February 1988 to July 1994 he served as Treasurer of the Company and from June
1987 until February 1988, Mr. Saari served as Controller of the Company. Mr.
Saari joined the Company in August 1984.
John D. Skelton II has served as Executive Vice President and General
Manager of the Plastic Packaging Division since December 1991. From January 1991
until December 1991, he served as Vice President of Folding Carton Sales,
Western Area. From 1981 until 1991, Mr. Skelton served as General Manager of
several of the Company's plants. Mr. Skelton joined the Company in July 1976.
Alford L. Smith has served as Executive Vice President and General
Manager of the Laminated Paperboard Products Division since December 1988. From
January 1988 until December 1988, he was Vice President of Sales of the
Laminated Paperboard Products Division. Mr. Smith joined the Company in March
1987.
Richard E. Steed has served as the President and Chief Executive
Officer of RTS since September 1997. From December 1991 until September 1997,
Mr. Steed served as Executive Vice President and General Manager of the
Partition Division. From December 1986 until December 1991, Mr. Steed served as
Executive Vice President and General Manager of the Plastic Packaging Division.
Mr. Steed joined the Company in December 1975.
All executive officers of the Company are elected annually by and serve
at the discretion of either the Board of Directors, or the Chairman of the Board
or the President, of the Company. Mr. Steed is elected annually and serves at
the discretion of the Managing Board of RTS.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The dividend and market price information under the heading "Financial
and Operating Highlights" on page 2, and the shareholder information under the
heading "Shareholder Information -- Common Stock" on page 50, of the Annual
Report to Shareholders for the year ended September 30, 1997 are incorporated
herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information under the heading "Five Year Selected Financial and
Operating Highlights" for the years ended September 30, 1993 through 1997 on
page 17 of the Annual Report to Shareholders for the year ended September 30,
1997 is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information under the heading "Management Discussion and Analysis
of Results of Operations and Financial Condition" on pages 18 through 27 of the
Annual Report to Shareholders for the year ended September 30, 1997 is
incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements of the Registrant and its
subsidiaries included in the Annual Report to Shareholders for the year ended
September 30, 1997 are incorporated herein by reference:
Consolidated Statements of Income for the years ended September 30,
1997, 1996 and 1995.
Consolidated Balance Sheets as of September 30, 1997 and 1996.
Consolidated Statements of Shareholders' Equity for the years ended
September 30, 1997, 1996 and 1995.
Consolidated Statements of Cash Flows for the years ended September 30,
1997, 1996 and 1995.
Notes to Consolidated Financial Statements.
The information in Note 11, "Financial Results by Quarter (Unaudited)"
on page 46 of the Annual Report to Shareholders for the year ended September 30,
1997 is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The sections under the heading "Election of Directors" entitled
"Nominees for Election - Term Expiring 2001," "Nominee for Election -- Term
Expiring 1999," "Incumbent Directors - Term Expiring 2000" and "Incumbent
Directors - Term Expiring 1999" in the Proxy Statement for the Annual Meeting of
Shareholders to be held January 22, 1998 are incorporated herein by reference
for information on the directors of the Registrant. See Item X in Part I hereof
for information regarding the executive officers of the Registrant. The section
under the heading "Other Matters" entitled "Compliance with Section 16(a) of the
Securities Exchange Act of 1934" in the Proxy Statement for the Annual Meeting
of Shareholders to be held on January 22, 1998 is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION
The section under the heading "Election of Directors" entitled
"Compensation of Directors" and the sections under the heading "Executive
Compensation" entitled "Summary Compensation Table," "Option Grants Table,"
Aggregated Options Table" and "Pension Plan Table" and the section entitled
"Compensation Committee Interlocks and Insider Participation" in the Proxy
Statement for the Annual Meeting of Shareholders to be held January 22, 1998 are
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the heading "Common Stock Ownership by Management
and Principal Shareholders" in the Proxy Statement for the Annual Meeting of
Shareholders to be held on January 22, 1998 is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the heading "Certain Transactions" in the Proxy
Statement for the Annual Meeting of Shareholders to be held January 22, 1998 is
incorporated herein by reference.
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14
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(A) 1. FINANCIAL STATEMENTS.
The following Consolidated Financial Statements of Rock-Tenn Company
and its consolidated subsidiaries and the Report of the Independent Auditors,
included in the Registrant's Annual Report to Shareholders for the year ended
September 30, 1997 are incorporated by reference in Part II, Item 8:
Report of Independent Auditors.
Consolidated Statements of Income for the years ended September
30, 1997, 1996 and 1995.
Consolidated Balance Sheets as of September 30, 1997 and 1996.
Consolidated Statements of Shareholders' Equity for the years
ended September 30, 1997, 1996 and 1995.
Consolidated Statements of Cash Flows for the years ended
September 30, 1997, 1996 and 1995.
Notes to Consolidated Financial Statements.
2. FINANCIAL STATEMENT SCHEDULE OF ROCK-TENN COMPANY.
The following financial statement schedule is included in Part IV of
this report:
Schedule II - Valuation and Qualifying Accounts.
All other schedules are omitted because they are not applicable
or not required.
3. EXHIBITS.
Exhibit
Number
-------
2.1 -- Asset Acquisition Agreement by and between Rock-Tenn Converting Company, a
wholly owned subsidiary of the Registrant, and Alliance Display and Packaging
Company dated January 31, 1995 (incorporated by reference to Exhibit 2.1 to the
Registrant's Current Report on Form 8-K executed as of February 6, 1995).
2.2 -- Stock Purchase Agreement, dated January 21, 1997 between Rock-Tenn Company and
the Shareholders of Wabash Corporation (incorporated by reference to the Registrant's
Current Report on Form 8-K/A dated January 21, 1997).
3.1 -- Restated and Amended Articles of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.1 to the Registrant's Registration Statement on Form S-1, File
No. 33-73312).
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15
3.2 -- Articles of Amendment to the Registrant's Restated and Amended Articles of
Incorporation (incorporated by reference to Exhibit 2 of the Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1995, Commission File No. 0-
23340).
3.3 -- Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant's
Registration Statement on Form S-1, File No. 33-73312).
4.1 -- Credit Agreement dated January 21, 1997, by and among Rock-Tenn Company,
SunTrust Bank, Atlanta and the other banks and lending institutions party to such Credit
Agreement from time to time.
4.2 -- First Amendment to Credit Agreement dated February 20, 1997, by and among Rock-
Tenn Company, SunTrust Bank, Atlanta, in its capacity as a Lender, and SunTrust
Bank, Atlanta, in its capacity as agent for the Lenders.
4.3 -- Second Amendment to Credit Agreement dated June 6, 1997, by and among Rock-Tenn
Company, the Lenders under the Credit Agreement and SunTrust Bank, Atlanta.
4.4 -- Agreement to Provide Other Debt Instruments.
10.1 -- ISO Stock Option Plan (incorporated by reference to Exhibit 10.10 to the Registrant's
Registration Statement on Form S-1, File No. 33-73312).
10.2 -- Rock-Tenn Company 1987 Stock Option Plan (incorporated by reference to Exhibit
10.11 to the Registrant's Registration Statement on Form S-1, File No. 33-73312).
10.3 -- Rock-Tenn Company 1989 Stock Option Plan (incorporated by reference to Exhibit
10.12 to the Registrant's Registration Statement on Form S-1, File No. 33-73312).
10.4 -- Rock-Tenn Company 1993 Employee Stock Option Plan (incorporated by reference to
Exhibit 10.13 to the Registrant's Registration Statement on Form S-1, File No. 33-
73312).
10.5 -- Rock-Tenn Company Key Employee Incentive Bonus Plan as amended on October 27,
1994 (incorporated by reference to Exhibit 10.16 to the Registrant's Annual Report on
Form 10-K for the year ended September 30, 1994, Commission File No. 0-23340).
10.6 -- Rock-Tenn Company Supplemental Executive Retirement Plan Effective as of
October 1, 1994 (incorporated by reference to Exhibit 10.17 to the Registrant's Annual
Report on Form 10-K for the year ended September 30, 1994, Commission File No. 0-
23340).
10.7 -- Demand Promissory Note for $18,500,000, dated January 31, 1995, between the
Registrant and Alliance Display and Packaging Company (incorporated by reference
to Exhibit 10 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995, Commission File No. 0-23340).
10.8 -- Joint Venture Agreement, dated September 5, 1997 between Rock-Tenn Company,
Rock-Tenn Partition Company, Sonoco Products Company and Sonoco Partitions, Inc.
10.9 -- Contribution Agreement, dated as of September 5, 1997 by and among Rock-Tenn
Company, Rock-Tenn Partition Company and RTS Packaging, LLC.
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16
10.10 -- Amended and Restated Operating Agreement of RTS Packaging, LLC, dated as of
September 5, 1997 between Rock-Tenn Partition Company and Sonoco Partitions, Inc.
10.11 -- Consulting Agreement, dated January 21, 1997, between Eugene U. Frey and the
Company.
11 -- Statement re: Computation of Earnings Per Share.
12 -- Statement re: Computation of Ratio of Earnings to Fixed Changes.
13 -- Annual Report to Shareholders submitted herewith but not "filed," except for those
portions expressly incorporated by reference herein.
21 -- Subsidiaries of the Registrant.
23 -- Report and Consent of Ernst & Young LLP.
27 -- Financial Data Schedule.
99 -- Audited Financial Statements for the Rock-Tenn Company 1993 Employee Stock
Purchase Plan for the years ended September 30, 1997, 1996 and 1995.
(B) REPORTS ON FORM 8-K
Not applicable.
(C) SEE ITEM 14(A)(3) AND SEPARATE EXHIBIT INDEX ATTACHED HERETO.
(D) NOT APPLICABLE.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
ROCK-TENN COMPANY
By: /s/ BRADLEY CURREY, JR.
--------------------------
Bradley Currey, Jr.
Chairman of the Board and
Chief Executive Officer
Date: December 17, 1997
Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
--------- ----- -----
/s/ BRADLEY CURREY, JR. Principal Executive Officer and December 19, 1997
- ------------------------------ Director, Chairman of the
Bradley Currey, Jr. Board and Chief Executive
Officer
/s/ DAVID C. NICHOLSON Principal Financial and December 19, 1997
- ------------------------------ Accounting Officer, Senior
David C. Nicholson Vice President, Chief
Financial Officer and
Secretary
/s/ STEPHEN G. ANDERSON Director December 19, 1997
- ------------------------------
Stephen G. Anderson
/s/ J. HYATT BROWN Director December 19, 1997
- ------------------------------
J. Hyatt Brown
/s/ MARY LOUISE MORRIS BROWN Director December 19, 1997
- ------------------------------
Mary Louise Morris Brown
/s/ ROBERT B. CURREY Director December 19, 1997
- ------------------------------
Robert B. Currey
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/s/ EUGENE U. FREY Director December 19, 1997
- --------------------------------
Eugene U. Frey
/s/ JOHN D. HOPKINS Director December 19, 1997
- --------------------------------
John D. Hopkins
/s/ JAMES W. JOHNSON Director December 19, 1997
- --------------------------------
James W. Johnson
/s/ RANDOLPH SEXTON Director December 19, 1997
- --------------------------------
Randolph Sexton
/s/ JAY SHUSTER Director December 19, 1997
- --------------------------------
Jay Shuster
/s/ JOHN W. SPIEGEL Director December 19, 1997
- --------------------------------
John W. Spiegel
/s/ LAWRENCE L. GELLERSTEDT, JR. Director December 19, 1997
- --------------------------------
Lawrence L. Gellerstedt, Jr.
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INDEX TO EXHIBITS
Exhibit Sequentially
Number Description of Exhibits Numbered Page
- ------ ----------------------- -------------
2.1 -- Asset Acquisition Agreement by and between Rock-Tenn
Converting Company, a wholly owned subsidiary of the
Registrant, and Alliance Display and Packaging Company dated
January 31, 1995 (incorporated by reference to Exhibit 2.1 to the
Registrant's Current Report on Form 8-K executed as of
February 6, 1995).
2.2 -- Stock Purchase Agreement, dated January 21, 1997 between
Rock-Tenn Company and the Shareholders of Wabash
Corporation (incorporated by reference to the Registrant's
Current Report on Form 8-K/A dated January 21, 1997).
3.1 -- Restated and Amended Articles of Incorporation of the
Registrant (incorporated by reference to Exhibit 3.1 to the
Registrant's Registration Statement on Form S-1, File
No. 33-73312).
3.2 -- Articles of Amendment to the Registrant's Restated and
Amended Articles of Incorporation (incorporated by reference
to Exhibit 2 of the Registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1995, Commission File
No. 0-23340).
3.3 -- Bylaws of the Registrant (incorporated by reference to Exhibit
3.2 to the Registrant's Registration Statement on Form S-1, File
No. 33-73312).
4.1 -- Credit Agreement dated January 21, 1997, by and among Rock-
Tenn Company, SunTrust Bank, Atlanta and the other banks and
lending institutions party to such Credit Agreement from time to
time.
4.2 -- First Amendment to Credit Agreement dated February 20, 1997,
by and among Rock-Tenn Company, SunTrust Bank, Atlanta, in
its capacity as a Lender, and SunTrust Bank, Atlanta, in its
capacity as agent for the Lenders.
4.3 -- Second Amendment to Credit Agreement dated June 6, 1997, by
and among Rock-Tenn Company, the Lenders under the Credit
Agreement and SunTrust Bank, Atlanta.
4.4 -- Agreement to Provide Other Debt Instruments.
10.1 -- ISO Stock Option Plan (incorporated by reference to Exhibit
10.10 to the Registrant's Registration Statement on Form S-1,
File No. 33-73312).
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Exhibit Sequentially
Number Description of Exhibits Numbered Page
- ------ ----------------------- -------------
10.2 -- Rock-Tenn Company 1987 Stock Option Plan (incorporated by
reference to Exhibit 10.11 to the Registrant's Registration
Statement on Form S-1, File No. 33-73312).
10.3 -- Rock-Tenn Company 1989 Stock Option Plan (incorporated by
reference to Exhibit 10.12 to the Registrant's Registration
Statement on Form S-1, File No. 33-73312).
10.4 -- Rock-Tenn Company 1993 Employee Stock Option Plan
(incorporated by reference to Exhibit 10.13 to the Registrant's
Registration Statement on Form S-1, File No. 33-73312).
10.5 -- Rock-Tenn Company Key Employee Incentive Bonus Plan as
amended on October 27, 1994 (incorporated by reference to
Exhibit 10.16 to the Registrant's Annual Report on Form 10-K
for the year ended September 30, 1994, Commission File
No. 0-23340).
10.6 -- Rock-Tenn Company Supplemental Executive Retirement Plan
Effective as of October 1, 1994 (incorporated by reference to
Exhibit 10.17 to the Registrant's Annual Report on Form 10-K
for the year ended September 30, 1994, Commission File
No. 0-23340).
10.7 -- Demand Promissory Note for $18,500,000, dated January 31,
1995, between the Registrant and Alliance Display and
Packaging Company (incorporated by reference to Exhibit 10 to
the Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995, Commission File No. 0-23340).
10.8 -- Joint Venture Agreement, dated September 5, 1997 between
Rock-Tenn Company, Rock-Tenn Partition Company, Sonoco
Products Company and Sonoco Partitions, Inc.
10.9 -- Contribution Agreement, dated as of September 5, 1997 by and
among Rock-Tenn Company, Rock-Tenn Partition Company
and RTS Packaging, LLC.
10.10 -- Amended and Restated Operating Agreement of RTS
Packaging, LLC, dated as of September 5, 1997 between Rock-
Tenn Partition Company and Sonoco Partitions, Inc.
10.11 -- Consulting Agreement, dated January 21, 1997, between Eugene
U. Frey and the Company.
11 -- Statement re: Computation of Earnings Per Share.
12 -- Statements re: Computation of Ratio of Earnings to Fixed
Charges
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Exhibit Sequentially
Number Description of Exhibits Numbered Page
- ------ ----------------------- -------------
13 -- Annual Report to Shareholders submitted herewith but not
"filed," except for those portions expressly incorporated by
reference herein.
21 -- Subsidiaries of the Registrant.
23 -- Report and Consent of Ernst & Young LLP.
27 -- Financial Data Schedule, (for SEC use only).
99 -- Financial Statements for the Rock-Tenn Company 1993
Employee Stock Purchase Plan for the
years ended September 30, 1997, 1996 and 1995.
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ROCK-TENN COMPANY SCHEDULE II
SEPTEMBER 30, 1997
(IN THOUSANDS)
Balance At Charged To Balance At
Beginning of Costs and End of
Description Period Expenses Other Deductions Period
----------- ------------ ---------- ----- ---------- -----------
YEAR ENDED SEPTEMBER 30, 1997:
Allowance for Doubtful Accounts $3,094 $ 188 $ 589(1) $ 239(2) $3,632
Reserve for Facility Closures and
Consolidation 640 3,009 7,536(3) 3,531(4) 7,654
YEAR ENDED SEPTEMBER 30, 1996:
Allowance for Doubtful Accounts $2,144 $1,522 --- $ 572(2) $3,094
Reserve for Facility Closures and
Consolidation --- 1,312 --- 672(4) 640
YEAR ENDED SEPTEMBER 30, 1995:
Allowance for Doubtful Accounts $1,361 $1,790 $2,209(5) $3,216(2) $2,144
- -----------------------------
(1) Reserve recorded in connection with Waldorf acquisition
(2) Uncollectible accounts written off, net of recoveries
(3) Reserve recorded in connection with Waldorf and Davey acquisitions and the
formation of RTS Packaging, LLC
(4) Amounts paid relating to facility closures and consolidation
(5) Reserves recorded in connection with Olympic and Alliance acquisitions
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