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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
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998
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, NORCROSS, GEORGIA 30071
(Address of principal executive (Zip code)
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 4, 1998 (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 approximately $376 million.
As of December 14, 1998, the registrant had 23,017,199 and 11,636,683
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, 1998 are incorporated by reference in Part II. Portions of the
Proxy Statement for the Annual Meeting of Shareholders to be held on January 28,
1999 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.................................................. 7
Item 3. Legal Proceedings........................................... 8
Item 4. Submission of Matters to a Vote of Security Holders......... 8
Item X. Executive Officers of the Registrant........................ 8
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters....................................... 11
Item 6. Selected Financial Data..................................... 11
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 11
Item 7A. Quantitative and Qualitative Disclosures about Market
Risk...................................................... 11
Item 8. Financial Statements and Supplementary Data................. 13
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................... 13
PART III
Item 10. Directors and Executive Officers of the Registrant.......... 14
Item 11. Executive Compensation...................................... 14
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................ 14
Item 13. Certain Relationships and Related Transactions.............. 14
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K....................................................... 15
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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, including RTS Packaging, LLC ("RTS"). RTS
is a venture owned 65% by the Company. The Company conducts its partition
products business through RTS.
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 third 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 believes that it is the
largest producer of solid fiber partitions in North America. The Company
operates 55 converting facilities, 10 paperboard mills, 14 paper recovery
facilities, and one distribution facility located in 24 states, Canada and
Mexico.
The Company historically has expanded its business through the acquisition
of other related businesses. Recent acquisitions include the following:
- On January 21, 1997, the Company acquired all of the outstanding capital
stock of the parent of Waldorf Corporation, a manufacturer of folding
cartons and 100% recycled paperboard and a manufacturer of corrugating
medium
- On June 9, 1997, the Company acquired substantially all of the assets of
Rite Paper Products, Inc., a manufacturer of laminated paperboard
components primarily for the ready-to-assemble furniture industry
- On July 9, 1997, the Company acquired substantially all of the assets and
certain of the liabilities of The Davey Company, a manufacturer of
recycled paperboard book covers used by the book publishing industry
PRODUCTS
The Company operates in two industry segments: converted products and
paperboard.
CONVERTED PRODUCTS
The Company primarily manufactures five lines of converted products:
folding cartons, laminated paperboard products, solid fiber partitions,
corrugated products and plastic packaging products.
Folding Cartons. The Company believes that it is the third 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 45.3%, 49.1% and 46.0% of the Company's net sales in fiscal 1998,
1997, and 1996, respectively. The Company intends to close (as previously
announced) one folding carton plant by December 31, 1998.
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
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laminated paperboard products plants, and sales of laminated paperboard products
to unaffiliated customers accounted for 12.5%, 11.6% and 14.1% of the Company's
net sales in fiscal 1998, 1997 and 1996, respectively. The Company intends to
close (as previously announced) one laminated paperboard products plant by
January 31, 1999.
Partition Products. The Company believes that it is the largest
manufacturer of solid fiber partitions in North America, which are marketed
principally to glass container manufacturers. Fiber partitions are manufactured
by the Company from 100% recycled uncoated paperboard. The Company 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. The Company is focused on
developing high quality, value-added partition products for specific
applications designed to meet customers' packaging needs. The Company operates
11 solid fiber partition plants, and the Company's sales of fiber partition
products to unaffiliated customers accounted for 10.6%, 9.3% and 11.1% of the
Company's net sales in fiscal 1998, 1997 and 1996, respectively.
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 nine corrugated products plants, and sales of corrugated products to
unaffiliated customers accounted for 10.3%, 10.4% and 12.8% of the Company's net
sales in fiscal 1998, 1997 and 1996, 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.
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 believes that it is the second largest
producer of recycled clay-coated paperboard in the U.S. The Company markets its
recycled clay coated and uncoated 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 both recycled clay-coated paperboard and
corrugating medium, and sales of recycled paperboard (including corrugating
medium) to unaffiliated customers accounted for 15.8%, 13.4% and 9.6% of the
Company's net sales in fiscal 1998, 1997 and 1996, 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
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transferred to the Company's paperboard mills for processing or sold principally
to other U.S. manufacturers of recycled paperboard.
SALES AND MARKETING
The Company sold converted products and paperboard to over 5,000 and 1,000
customers, respectively, in fiscal 1998. None of the Company's customers
accounted for more than 10% of the Company's net sales in fiscal 1998. 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 supervised by
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. The Company's converted products include
folding cartons, fiber partitions, corrugated containers, corrugated displays,
thermoformed plastic products and laminated paperboard products. The Company's
paperboard products include 100% recycled clay-coated and uncoated paperboard
and corrugating medium. Management believes that the Company is the third
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 recycled clay-coated paperboard in
the U.S. In addition, the Company believes that it is the largest manufacturer
of solid fiber partitions in North America.
The Company's competitors include large, vertically integrated converted
products and paperboard companies and numerous smaller companies. In the folding
carton and corrugated container markets, the Company competes with a significant
number of national and regional packaging suppliers. In the fiber partitions,
corrugated displays, thermoformed plastic products and laminated paperboard
products markets, the Company competes with a smaller number of national,
regional and local companies offering highly specialized products. In the
paperboard segment, the Company competes with integrated and non-integrated
national, regional and local companies manufacturing various grades of
paperboard. 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 competes effectively with respect to each of these factors, but, to the
extent that one or more of its competitors becomes more successful with respect
to any key competitive factor, the Company's business 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
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customers with an expanded geographic presence 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. These market trends could adversely affect the Company's results
of operations.
ENVIRONMENTAL REGULATION
The Company is 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 primarily
administered by the U.S. Environmental Protection Agency. In addition, states in
which the Company operates 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 operations are also 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 that, among other things,
establish asbestos and noise standards and regulate the use of hazardous
chemicals in the workplace. Although the Company does not use asbestos in the
manufacture of its products, some of its 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 will have any material
adverse effect on the Company's financial condition or results of operations.
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 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 results of
operations or financial condition. The Company estimates that it will spend $1.5
million to $4.0 million for capital expenditures during fiscal 1999 in
connection with matters relating to environmental compliance.
In addition, 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.
The Company has been identified as a potentially responsible party ("PRP")
at nine Superfund sites pursuant to CERCLA or comparable state statutes. Except
with respect to the Muncie Racetrack site ("Muncie Site"), the Kalamazoo River
site ("Kalamazoo Site") and the Chemical Handling Corporation site ("Chemical
Handling 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 has paid
its final allocation of liability of approximately $9,300 for the surface
contamination at the site. This amount represented 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.
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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
Kalamazoo Site. The Company has entered into a settlement agreement pursuant to
which the Company paid $325,000 and received releases from certain past, present
and future environmental claims and actions involving the Kalamazoo Site. With
respect to the Chemical Handling Site, the Company was found to have only
minimal usage of the site. Therefore, on August 28, 1998, the Company signed a
consent decree pursuant to which the Company paid approximately $41,000. The
consent decree releases the Company from liability to the United States
government associated with past response costs at the Chemical Handling Site. It
is not anticipated that there will be any further clean-up costs at this site.
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.
EMPLOYEES
At September 30, 1998, the Company had 8,856 employees, of whom 6,923 were
hourly and 1,933 were salaried. Approximately 3,278 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.
ITEM 2. PROPERTIES
The following table sets forth certain information about the Company's
paperboard mills:
FISCAL 1998
PRODUCTION
CAPACITY
LOCATION OF MILL (IN TONS) PAPERBOARD PRODUCED
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St. Paul, MN*...................... 180,000 Recycled corrugating medium
Battle Creek, MI................... 130,000 Clay-coated recycled paperboard
Dallas, TX......................... 160,000 Clay-coated and uncoated recycled
paperboard
Lynchburg, VA...................... 140,000 Uncoated recycled paperboard
St. Paul, MN*...................... 165,000 Clay-coated recycled paperboard
Chattanooga, TN.................... 120,000 Uncoated recycled paperboard
Otsego, MI......................... 90,000 Uncoated recycled paperboard
Sheldon Springs, VT (Missisquoi 84,000 Clay-coated recycled paperboard
Mill)............................
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 55 converting facilities, 14 paper recovery facilities and one
distribution facility in 24 states (mainly in the Southwestern, Southeastern,
Midwestern and Northeastern U.S.), Canada and Mexico. Of the Company's
facilities, the Company owns 70 and leases nine. The Company's principal
executive offices, which it owns, are located in Norcross, Georgia. 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.
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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 financial condition or results of operations. For
additional information regarding litigation to which the Company is a party,
which is incorporated by reference into this item, see "Item
1 -- Business -- Environmental Regulation."
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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...... 68 Chairman of the Board, Chief Executive Officer and Director
Jay Shuster............. 44 President, Chief Operating Officer and Director
Edward E. Bowns......... 55 Executive Vice President and General Manager of Industrial
Products Group*
David E. Dreibelbis..... 46 Executive Vice President and General Manager of the Mill
Group*
David C. Nicholson...... 44 Senior Vice President, Chief Financial Officer and Secretary
Russell M. Currey....... 37 Senior Vice President of Marketing and Planning
Vincent D'Amelio........ 47 Executive Vice President and General Manager of the Plastic
Packaging Division
Paul England............ 43 Executive Vice President and General Manager of the Uncoated
Paperboard Division
Steve Flanagan.......... 44 Executive Vice President and General Manager of the Recycled
Fiber Division
Nicholas G. George...... 48 Executive Vice President and General Manager of the Folding
Carton Division
James K. Hansen......... 60 Executive Vice President and General Manager of the Coated
Paperboard Division
R. Evan Hardin.......... 36 Treasurer
John H. Morrison........ 55 Executive Vice President and General Manager of the
Corrugated Packaging and Display Division
Paul G. Saari........... 43 Vice President of Finance
John D. Skelton II...... 44 Executive Vice President and General Manager of Laminated
Paperboard Products Division
Richard E. Steed........ 47 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
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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.
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.
Vincent D'Amelio has served as Executive Vice President and General Manager
of the Plastic Packaging Division since July 1998. From 1994 until July 1998, he
was Vice-President for Manufacturing for the Plastic Packaging Division. Mr.
D'Amelio joined the Company in 1994.
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.
Steve Flanagan has served as Executive Vice President and General Manager
of the Recycled Fiber Division since July 1998. From 1983 until 1995, he was
General Manager of one of the Company's recycled fiber plants. From 1995 until
July 1998, Mr. Flanagan served as Regional Manager, Southwest Region for the
Recycled Fiber Division. Mr. Flanagan joined the Company in 1983.
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.
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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.
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 Laminated Paperboard Products Division since July 1998. From
December 1991 until July 1998, he served as Executive Vice President and General
Manager of the Plastic Packaging Division. 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.
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, 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 the inside front cover, and the shareholder information
under the heading "Shareholder Information -- Common Stock" on page 49, of the
Annual Report to Shareholders for the year ended September 30, 1998 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, 1994 through 1998 on
page 16 of the Annual Report to Shareholders for the year ended September 30,
1998 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 17 through 27 of the
Annual Report to Shareholders for the year ended September 30, 1998 is
incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk from changes in interest rates and
commodity prices. To modify the risk from these interest rate and commodity
price fluctuations, the Company enters into various hedging transactions.
INTEREST RATES
The Company is exposed to changes in interest rates, primarily as a result
of its short-term and long-term debt with both fixed and floating interest
rates. The Company uses interest rate agreements effectively to cap the LIBOR
rate on portions of the amount outstanding under the revolving credit facility.
In addition, the Company has used an interest rate swap agreement effectively to
fix the LIBOR rate on $100,000,000 of variable rate borrowings.
11
12
The following table summarizes information on instruments and transactions
that are sensitive to interest rate fluctuations. The table presents principal
cash flows and related weighted average interest rates by expected maturity
dates. The carrying value of the Company's variable rate debt approximates its
fair value. The fair value of the fixed rate financial instruments is estimated
based on quoted market prices. The interest rate swap agreement is settled
quarterly.
INTEREST RATE SENSITIVITY
PRINCIPAL (NOTIONAL) AMOUNT BY EXPECTED MATURITY
AVERAGE INTEREST (SWAP) RATE/CAP STRIKE PRICE
(IN THOUSANDS)
- --------------------------------------------------------------------------------
FAIR
VALUE
1999 2000 2001 2002 2003 THEREAFTER TOTAL 9/30/98
---------- ---------- ---------- ---------- ---------- ---------- -------- ----------
LIABILITIES:
Long-term debt,
including current
portion:
Fixed rate............ $ 5,462 $ 324 $ 197 $ 218 $ 241 $ 100,746 $107,188 $107,438
Average interest
rate................ 7.3% 7.3% 7.3% 7.3% 7.3% 7.3%
Variable rate,
revolving credit
facility............ $ 38,000 -- -- $ 331,000 -- -- $369,000 $369,000
Average interest
rate................ LIBOR LIBOR LIBOR LIBOR LIBOR LIBOR
+ + + + + +
spread spread spread spread spread spread
Variable rate,
industrial
development bonds... -- -- -- -- -- $ 32,150 $ 32,150 $ 32,150
Average interest
rate................ open open open open open open
market market market market market market
(tax-free) (tax-free) (tax-free) (tax-free) (tax-free) (tax-free)
INTEREST RATE DERIVATIVE
FINANCIAL INSTRUMENTS
RELATED TO DEBT:
Interest rate swap:
Pay fixed/receive
variable............ -- -- -- -- -- $ 100,000 $100,000 $ 4,451
Average pay rate...... 5.8% 5.8% 5.8% 5.8% 5.8% 5.8%
Average receive
rate................ 90-day 90-day 90-day 90-day 90-day 90-day
LIBOR LIBOR LIBOR LIBOR LIBOR LIBOR
Interest rate caps:
Notional amount....... -- $ 75,000 $ 75,000 -- -- -- $150,000 $ 3
Strike rate........... -- 7.5% 8.0% -- -- --
Forward rate
(beginning of
period)............. 5.4% 4.6% 4.8% -- -- --
Spread range is 0.25% -- 0.875%, currently .750%
COMMODITIES
The Company sells recycled corrugating medium ("Medium") to various
customers. The principal raw material used in the production of Medium is old
corrugated containers ("OCC"). Medium and OCC prices and costs fluctuate widely
due to changing market forces. The impact of these price and cost fluctuations
has not been material to the overall consolidated financial statements; however,
the Company does make use of swap agreements to synthetically manage the selling
prices and raw material costs of a portion of its recycled medium business and
to limit the Company's exposure to falling prices and rising costs.
12
13
The following table outlines the terms of the three commodity swaps that
were outstanding at September 30, 1998. These swaps are settled quarterly.
Board Swap #1
Contract Volume............................................. 24,000 short tons per year
Average sales price (per ton)............................... Medium price(1)
Contract sales price (per ton).............................. $380
Expiration Date............................................. December 31, 2002
Board Swap #2
Contract Volume............................................. 12,000 short tons per year
Weighted average price (per ton)............................ Spread(2)
Contract sales price (per ton).............................. $268
Expiration Date............................................. March 31, 2003
Board Swap #3
Contract Volume............................................. 12,000 short tons per year
Weighted average price (per ton)............................ Spread(2)
Contract sales price (per ton).............................. $270
Expiration Date............................................. March 31, 2003
- ---------------
(1) Containerboard: 26 Lb. Semichemical Medium: Price (Eastern U.S.) as reported
in the Paper Packaging Monitor.
(2) Spread represents the difference between the Medium price (Containerboard:
26 Lb. Semichemical Medium: Price (Eastern U.S.) as reported in the Pulp
Packaging Monitor) and the OCC price (Recovered Paper: Corrugated: OCC (11)
Price as reported in the Recycled Materials Monitor).
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,
1998 are incorporated herein by reference:
Consolidated Statements of Income for the years ended September 30, 1998,
1997 and 1996.
Consolidated Balance Sheets as of September 30, 1998 and 1997.
Consolidated Statements of Shareholders' Equity for the years ended
September 30, 1998, 1997 and 1996.
Consolidated Statements of Cash Flows for the years ended September 30,
1998, 1997 and 1996.
Notes to Consolidated Financial Statements.
The information in Note 12, "Financial Results by Quarter (Unaudited)" on
page 45 of the Annual Report to Shareholders for the years ended September 30,
1998 and 1997 is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not applicable.
13
14
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 2002," "Incumbent Directors -- Term Expiring 2001"
and "Incumbent Directors -- Term Expiring 2000" in the Proxy Statement for the
Annual Meeting of Shareholders to be held January 28, 1999 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 "Section
16(a) Beneficial Ownership Reporting Compliance" in the Proxy Statement for the
Annual Meeting of Shareholders to be held on January 28, 1999 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 28, 1999 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 28, 1999 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 28, 1999 is
incorporated herein by reference.
14
15
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, 1998 are incorporated by reference in Part II, Item 8:
Consolidated Statements of Income for the years ended September 30,
1998, 1997 and 1996.
Consolidated Balance Sheets as of September 30, 1998 and 1997.
Consolidated Statements of Shareholders' Equity for the years ended
September 30, 1998, 1997 and 1996.
Consolidated Statements of Cash Flows for the years ended September 30,
1998, 1997 and 1996.
Notes to Consolidated Financial Statements.
Report of Independent Auditors.
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).
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.
15
16
EXHIBIT
NUMBER
- -------
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. (incorporated
by reference to Exhibit 10.8 to the Registrant's Annual
Report on Form 10-K for the year ended September 30, 1997).
10.9 -- Contribution Agreement dated as of September 5, 1997 by and
among Rock-Tenn Company, Rock-Tenn Partition Company and RTS
Packaging, LLC (incorporated by reference to Exhibit 10.9 to
the Registrant's Annual Report on Form 10-K for the year
ended September 30, 1997).
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. (incorporated
by reference to Exhibit 10.10 to the Registrant's Annual
Report on Form 10-K for the year ended September 30, 1997).
10.11 -- Consulting Agreement dated January 21, 1997 between Eugene
U. Frey and the Company (incorporated by reference to
Exhibit 10.11 to the Registrant's Annual Report on Form 10-K
for the year ended September 30, 1997).
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 (for SEC use only).
99 -- Audited Financial Statements for the Rock-Tenn Company 1993
Employee Stock Purchase Plan for the years ended September
30, 1998, 1997 and 1996.
16
17
(B) REPORTS ON FORM 8-K.
Not applicable.
(C) SEE ITEM 14(A)(3) AND SEPARATE EXHIBIT INDEX ATTACHED HERETO.
(D) NOT APPLICABLE.
17
18
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
Date: December 18, 1998 By: /s/ BRADLEY CURREY, JR.
------------------------------------
Bradley Currey, Jr.
Chairman of the Board and Chief
Executive Officer
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 December 18, 1998
- ----------------------------------------------------- and Director, Chairman of
Bradley Currey, Jr. the Board and Chief
Executive Officer
/s/ DAVID C. NICHOLSON Principal Financial and December 18, 1998
- ----------------------------------------------------- Accounting Officer, Senior
David C. Nicholson Vice President, Chief
Financial Officer and
Secretary
/s/ STEPHEN G. ANDERSON Director December 18, 1998
- -----------------------------------------------------
Stephen G. Anderson
/s/ J. HYATT BROWN Director December 18, 1998
- -----------------------------------------------------
J. Hyatt Brown
/s/ MARY LOUISE MORRIS BROWN Director December 18, 1998
- -----------------------------------------------------
Mary Louise Morris Brown
/s/ ROBERT B. CURREY Director December 18, 1998
- -----------------------------------------------------
Robert B. Currey
/s/ A.D. FRAZIER Director December 18, 1998
- -----------------------------------------------------
A.D. Frazier
/s/ EUGENE U. FREY Director December 18, 1998
- -----------------------------------------------------
Eugene U. Frey
/s/ LAWRENCE L. GELLERSTEDT, III Director December 18, 1998
- -----------------------------------------------------
Lawrence L. Gellerstedt, III
/s/ JOHN D. HOPKINS Director December 18, 1998
- -----------------------------------------------------
John D. Hopkins
18
19
SIGNATURE TITLE DATE
- ----------------------------------------------------- ---------------------------- -----------------
/s/ JAMES W. JOHNSON Director December 18, 1998
- -----------------------------------------------------
James W. Johnson
/s/ RANDOLPH SEXTON Director December 18, 1998
- -----------------------------------------------------
Randolph Sexton
/s/ JAY SHUSTER Director December 18, 1998
- -----------------------------------------------------
Jay Shuster
/s/ JOHN W. SPIEGEL Director December 18, 1998
- -----------------------------------------------------
John W. Spiegel
19
20
INDEX TO EXHIBITS
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION OF EXHIBITS PAGE NO.
- ------- ----------------------- ----------
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 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................. 23
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)
20
21
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION OF EXHIBITS PAGE NO.
- ------- ----------------------- ----------
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. (incorporated
by reference to Exhibit 10.8 to the Registrant's Annual
Report on Form 10-K for the year ended September 30, 1997)
10.9 -- Contribution Agreement dated as of September 5, 1997 by and
among Rock-Tenn Company, Rock-Tenn Partition Company and RTS
Packaging, LLC (incorporated by reference to Exhibit 10.9 to
the Registrant's Annual Report on Form 10-K for the year
ended September 30, 1997)
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. (incorporated
by reference to Exhibit 10.10 to the Registrant's Annual
Report on Form 10-K for the year ended September 30, 1997)
10.11 -- Consulting Agreement dated January 21, 1997 between Eugene
U. Frey and the Company (incorporated by reference to
Exhibit 10.11 to the Registrant's Annual Report on Form 10-K
for the year ended September 30, 1997)
12 -- Statements re: Computation of Ratio of Earnings to Fixed
Charges..................................................... 24
13 -- Annual Report to Shareholders submitted herewith but not
"filed," except for those portions expressly incorporated by
reference herein
21 -- Subsidiaries of the Registrant.............................. 25
23 -- Report and Consent of Ernst & Young LLP..................... 26
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............................................... 27
21
22
SCHEDULE II
ROCK-TENN COMPANY
SEPTEMBER 30, 1998
(IN THOUSANDS)
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
DESCRIPTION OF PERIOD EXPENSES OTHER DEDUCTIONS PERIOD
- ------------------------------------------ ---------- ---------- ------ ---------- ----------
Year ended September 30, 1998:
Allowance for Doubtful Accounts, Returns
and Discounts........................ $3,632 $10,088 -- $9,903 $3,817
Reserve for Facility Closures and
Consolidation........................ 4,640 1,903(3) -- 3,597 2,946
Year Ended September 30, 1997(4):
Allowance for Doubtful Accounts, Returns
and Discounts........................ $3,094 $12,454 $589(1) $12,505 $3,632
Reserve for Facility Closures and
Consolidation........................ 1,176 1,090(3) 6,736(2) 4,362 4,640
Year Ended September 30, 1996(4):
Allowance for Doubtful Accounts, Returns
and Discounts........................ $2,144 $6,028 -- $5,078 $3,094
Reserve for Facility Closures and
Consolidation........................ -- 1,926(3) -- 750 1,176
- ---------------
(1) Reserve recorded in connection with Waldorf acquisition.
(2) Reserve recorded in connection with Waldorf and Davey acquisitions and the
formation of RTS Packaging, LLC.
(3) Reserve recorded in connection with plant closings and employee
terminations, net of reversals of $377 and $247 in fiscal 1997 and fiscal
1998, respectively.
(4) Prior year amounts have been changed to conform to current year
presentation.
22