The merger of Rock City Packaging and Tennessee Paper Mills in 1973 gave Morris, Brown, and others who held stock in the former companies a controlling interest in the new corporation, RockTenn Company. Most Tennessee Paper common stockholders received preferred stock in the new company that earned them triple the dividends they had been receiving. Some shareholders, however, opted for cash instead. The president of Tennessee Paper, W. Max Finley, and his immediate family, received common stock in the new company. Finley was elected chairman of the board and Brown became president and chief executive officer.
Reorganization did nothing to slow down expansion. The Crescent Box & Printing Co. of Tullahoma, Tennessee, was acquired in 1973 and Clevepak Corporation's Conway, Arkansas, folding carton plant in 1974. By 1976 the company had 29 divisions. Sales in 1974, the first fiscal year after the merger, reached $47.7 million. In 1978 Bradley Currey, Jr., a veteran officer of the Trust Company of Georgia who had helped effect the merger, became president and chief operating officer of RockTenn. Brown became chairman of the board while remaining chief executive officer. Finley moved to senior chairman of the board. Morris remained chairman of the executive committee until his death in January 1985. Currey later became RockTenn's chairman (in 1993) and CEO (in 1989) as well as its president.
Acquisition-fueled growth in the 1980s and 1990s
In 1982 RockTenn's sales volume reached $133 million and its production of recycled paperboard peaked at 180,000 tons, most of which it used itself in the manufacture of folding cartons and containers and corrugated boxes. Its many customers included Coca-Cola, DuPont and Kentucky Fried Chicken, which it serviced from facilities in Alabama, Arkansas, Georgia, Maryland, Massachusetts, North Carolina, Ohio, Tennessee, and Texas with a workforce of 1,700 people. In a 1983 Atlanta Constitution interview, Currey attributed the decade-old company's growth to "luck, chance, and circumstance ... but the success of any company depends on its people." He added that the company had gone to great lengths "to make sure the workers know that we care" – a group of senior executives took a month each year to travel to each of the company's facilities in order to talk to employees and present service awards.
RockTenn made its biggest acquisition yet in 1983, when it paid $40 million to buy 11 Clevepak Corporation plants, seven of which were making partitions to protect glass and plastic containers. Currey said the acquisition would allow RockTenn to capture about one-fourth of the partition market, raise annual revenue to more than $200 million, and increase production of recycled paperboard to 235,000 tons. In 1989, net sales had reached $515.9 million, and net income was $31.1 million. The following year the company dedicated to Chairman of the Board Finley a 33,000-square-foot office building behind its headquarters in Norcross.
In 1990, RockTenn acquired Allforms Packaging Corp. of Long Island, New York, and Box Innards Inc. of Orange, California. The next year it purchased the former Specialty Paperboard Inc. mill in Sheldon Springs, Vermont, and Ellis Paperboard Products Inc. of Scarborough, Maine, a manufacturer of folding cartons and solid-fiber partitions. The Ellis purchase included its Canadian subsidiary, Dominion Paperboard Products Ltd. With these additions RockTenn controlled 60 manufacturing and distribution operations, including eight mills with a total annual production capacity of 607,000 tons of recycled paperboard products. RockTenn now ranked sixth among U.S. producers of recycled paperboard, with market share of 5.7 percent.
Net sales rose from $564.1 million in 1991, ending September 30, 1991, to $655.5 million in 1992, but dipped to $650.7 million in 1993. Net income rose from $25 million in 1991 to $33.2 million in 1992 before dipping to $25.5 million in 1993. The 1993 figure included unusual after-tax expenses of $5.8 million. Production in 1994 was 700,000 tons of recycled paperboard, of which 182,000 tons was clay-coated recycled paperboard.
The first public offering of RockTenn stock, amounting to about 14 percent of the shares outstanding, was made in March 1994. A handful of shareholders offered about 3.6 million shares of Class A common stock, while the company itself offered about 900,000 shares. An analysis in Barron's described RockTenn's balance sheet as "attractive" and said the company was "more soundly financed than many in its field," noting that long-term debt of $51.6 million was only one year's cash flow. Although calling the offering somewhat pricey at $16.50 a share, it noted that "RockTenn's emphasis on recycling makes it well-suited to customers wishing to appear environmentally responsible, and could also prove profitable if use of woodlands is restricted." Officers and directors of RockTenn still controlled about 71 percent of the combined voting power of Class A and B common stock after the offering.
In December 1993, RockTenn paid $35 million for Les Industries Ling, a Canadian company that used recycled paperboard to make folding cartons. The newly acquired plant, which was to serve as the principal supplier of recycled clay-coated paperboard for RockTenn's Vermont mill, became the company's second largest folding carton facility. A year later, RockTenn agreed to acquire Olympic Packaging, an Illinois-based manufacturer of folding cartons, and Alliance Display and Packaging Co. of Winston-Salem, North Carolina, maker of corrugated displays. The purchases, which boosted RockTenn's acquisitions of manufacturing operations to 17 in a decade, cost about $75 million.
By the middle of the 1990s, RockTenn had 59 facilities in 19 states and Canada. Net sales reached $705.8 million during 1994, constituting an 11.8 percent compounded annual growth rate for the past decade. Net income came to a record $37.5 million. Late in 1995 COO Jay Shuster was named president of RockTenn, with Currey retaining the posts of chairman and CEO.
In January 1997, RockTenn consummated the largest acquisition in its history, purchasing Waldorf Corporation for $239 million in cash and the assumption of $170 million in debt. Based in St. Paul, Minnesota, Waldorf operated six folding carton plants and three paperboard mills in Illinois, Massachusetts, Michigan, Minnesota, North Carolina and Wisconsin; the firm had revenues of $377 million during 1996. The acquisition propelled RockTenn into the number two position among producers of folding cartons in North America and also made the company the leading manufacturer of recycled paperboard in the United States. RockTenn followed up with two smaller deals in mid-1997, adding Wright City, Missouri-based Rite Paper Products, Inc., a producer of laminated recycled paperboard products primarily for the furniture industry, and the Davey Company, a manufacturer of high-density recycled paperboard mainly used in book covers and binders that operated mills in Aurora, Illinois; and Jersey City, New Jersey. Also in 1997, RockTenn and Sonoco Products Company created a fiber partition joint venture called RTS Packaging, LLC, with RockTenn holding a 65 percent stake and Sonoco the remaining 35 percent. The venture combined RockTenn's eight partition plants with the seven that had been owned by Sonoco.
Although the purchase of Waldorf pushed RockTenn's revenues past the $1 billion mark for the first time in 1997, difficulties in the integration process resulted in a depressed profit figure of $16.1 million. Some of the profit shortfall was attributable to costs stemming from plant closings, and the company closed additional plants in the next two fiscal years as profit levels recovered somewhat.
Increasing focus on packaging and merchandising displays: early 2000s
In October 1999, RockTenn went outside its ranks for a new CEO, hiring James A. Rubright, who had previously been the head of the pipeline group and energy services business of Sonat, Inc. Currey handed over the chairmanship to Rubright as well in January 2000. Later in 2000, Shuster, having been passed over for the CEO position, left the company. Rubright accelerated the pace of restructuring at RockTenn through the closure of a number of under-performing plants. He also shifted the company's emphasis away from the slow-growing recycled paperboard side and toward the areas with higher growth potential: the folding carton and plastics packaging businesses, as well as the burgeoning merchandising display operation, which by the early 2000s was the U.S. leader in point-of-purchase displays.
During 2000, RockTenn closed one laminated-paperboard products plant and three folding carton plants, resulting in 550 employee terminations and charges of $61.1 million – and a net loss for the year of $15.9 million. Seven more plants were closed over the next three years, resulting in the loss of 450 more jobs and an additional $19 million in charges.
Meantime, in February 2000 the company formed a joint venture with Lafarge Corporation called Seven Hills Paperboard, LLC, which was charged with producing gypsum paperboard liner for the U.S. drywall manufacturing plants of Lafarge. RockTenn owned 49 percent of the venture. RockTenn also beefed up its merchandising display business, its fastest-growing segment, through two acquisitions costing a total of $25.4 million.
In November 2001, Advertising Display Company, a producer of both temporary and permanent point-of-purchase displays, was acquired. In March of the following year RockTenn bought Athena Industries, Inc., a Burr Ridge, Illinois, manufacturer of permanent point-of-purchase displays, with an emphasis on wire displays.
On December 20, 2001, RockTenn Company announced revised historical segment operating income results, because it had changed its presentation of certain segment operating income data for fiscal 2002.
