Exhibit 99.1
RockTenn Reports Earnings for the Fourth Quarter of Fiscal 2009 of $1.72 Per Share and Adjusted Earnings Per Share of $1.21, up 34% over Prior Year Quarter
NORCROSS, Ga.--(BUSINESS WIRE)--November 3, 2009--RockTenn (NYSE:RKT) today reported earnings for the quarter ended September 30, 2009 of $1.72 per diluted share. The Company’s adjusted earnings were $1.21 per diluted share, excluding specific items related to the alternative fuel tax credit and restructuring charges. Adjusted earnings per diluted share increased 34% over the prior year quarter adjusted earnings of $0.90 per diluted share.
| | | | | | | | |
| | Three Months | | Three Months | | Twelve Months | | Twelve Months |
| | Ended | | Ended | | Ended | | Ended |
| | September 30, | | September 30, | | September 30, | | September 30, |
| | | 2009 | | | 2008 | | 2009 | | | 2008 |
| | | | | | | | |
| Earnings per diluted share | | $ 1.72 | | | $ 0.74 | | $ 5.75 | | | $ 2.14 |
| | | | | | | | |
| Alternative fuel tax credit, net | | (0.55 | ) | | — | | (1.41 | ) | | — |
| Restructuring and other costs, net | | 0.04 | | | 0.14 | | 0.20 | | | 0.26 |
| Operating losses of previously closed facilities | | — | | | — | | 0.03 | | | 0.02 |
| Debt extinguishment costs and related items | | — | | | — | | 0.07 | | | 0.03 |
| Solvay mill expansion and upgrade | | — | | | — | | — | | | 0.06 |
| Acquisition inventory step-up | | — | | | 0.02 | | — | | | 0.21 |
| Acquisition bridge financing fee | | — | | | — | | — | | | 0.05 |
| | | | | | | | | |
| Adjusted earnings per diluted share | | $ 1.21 | | | $ 0.90 | | $ 4.64 | | | $ 2.77 |
Fourth Quarter Results
- Net sales of $729.0 million for the fourth quarter of fiscal 2009 decreased $56.7 million over the fourth quarter of fiscal 2008.
- Segment income increased to $128.9 million compared to $90.3 million in the prior year quarter, a 43% increase over the prior year quarter. Segment income includes the alternative fuel tax credit of $21.4 million, net of expenses. This tax credit is scheduled to expire on December 31, 2009.
- RockTenn’s pre-tax restructuring and other costs, net of related minority interest, were $2.1 million, or $0.04 per diluted share after-tax, for the fourth quarter of fiscal 2009 consisting primarily of plant closing related asset impairments.
Chairman and Chief Executive Officer’s Statement
RockTenn Chairman and Chief Executive Officer James A. Rubright stated, “RockTenn delivered another quarter of strong earnings growth over the prior year quarter as adjusted earnings increased 34%. Our free cash flow continued to be strong, and our net debt repayment and dividends totaled $7.81 per share in fiscal 2009 as we capitalized on the low cost positions we have developed in all of our businesses. We expect to continue to generate strong cash flow in fiscal 2010 as we expect input costs to remain relatively stable, and demand for containerboard and bleached paperboard to improve.”
Segment Results
Paperboard and Containerboard Tons Shipped and Average Price
Total tons shipped in the fourth quarter of fiscal 2009 decreased by 15,647 tons over the prior year quarter and increased on a sequential quarter basis by 48,398 tons. The average selling price for all paperboard and containerboard grades decreased $28 per ton from the prior year quarter and decreased $7 per ton on a sequential quarter basis.
Consumer Packaging Segment
Consumer Packaging segment net sales increased 0.3% in the fourth quarter of fiscal 2009 compared to the prior year quarter, due to higher folding carton volumes partially offset by lower paperboard volumes. Segment income increased $43.9 million over the prior year quarter to $74.6 million due primarily to $21.4 million of alternative fuel tax credit, lower recycled fiber and energy costs and greater income contributed from our folding carton business.
Corrugated Packaging Segment
Corrugated Packaging segment net sales decreased $38.5 million to $186.7 million in the fourth quarter of fiscal 2009 compared to the prior year quarter, due to lower volumes. Segment income was $37.1 million in the fourth quarter of fiscal 2009 and segment return on sales was 19.9%.
Merchandising Displays Segment
Merchandising Displays segment net sales decreased $5.2 million over the prior year fourth quarter. Segment income was $9.1 million in the fourth quarter of fiscal 2009 and $11.7 million in the prior year quarter.
Specialty Paperboard Products Segment
Specialty Paperboard Products segment net sales decreased $15.0 million in the fourth quarter of fiscal 2009 compared to the prior year quarter primarily due to decreased volumes and lower recycled fiber prices. Segment income was $8.1 million in the fourth quarter of fiscal 2009 and $8.5 million in the prior year quarter.
Cash Provided By Operating Activities
Net cash provided by operating activities in the fourth quarter of fiscal 2009 was $117.3 million compared to $83.9 million in the prior year quarter. Cash from operations was reduced by the voluntary contribution of $16 million to our pension plans in the quarter, bringing our total contributions in the fiscal year to $40 million.
Financing and Investing Activities
We reduced net debt by $78.3 million in the quarter and $286.5 million in the twelve months ended September 30, 2009. Our Credit Agreement Debt/EBITDA ratio was 2.36 times at September 30, 2009. On August 14, 2009 we amended our receivables-backed financing facility to increase the facility to $135 million. The amended facility continues to expire on July 13, 2012.
Conference Call
We will host a conference call to discuss our results of operations for the fourth quarter of fiscal 2009 and other topics that may be raised during the discussion at 9:00 a.m., Eastern Time, on November 4, 2009. The conference call will be webcast and can be accessed, along with a copy of this press release, at www.rocktenn.com.
About RockTenn
RockTenn (NYSE:RKT) is one of North America’s leading manufacturers of paperboard, containerboard and consumer and corrugated packaging, with annual net sales of approximately $2.8 billion. The Company operates locations in the United States, Canada, Mexico, Chile and Argentina. For more information, visit www.rocktenn.com.
Cautionary Statements
Statements herein regarding, among others, expected relatively stable input costs, improvement in demand for containerboard and bleached paperboard and our ability to generate strong cash flows constitute forward-looking statements within the meaning of the federal securities laws. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contained in any forward-looking statement. With respect to these statements, we have made assumptions regarding, among other things, expected economic, competitive and market conditions generally; expected volumes and price levels of purchases by customers; recycled fiber and energy costs; costs associated with facility closures; competitive conditions in our businesses and possible adverse actions of our customers, our competitors and suppliers. Management believes its assumptions are reasonable; however, undue reliance should not be placed on these estimates, which are based on current expectations. There are many factors that impact these forward-looking statements that we cannot predict accurately. Further, our business is subject to a number of general risks that would affect any such forward-looking statements including, among others, decreases in demand for our products; increases in energy, raw materials, shipping and capital equipment costs; reduced supply of raw materials; fluctuations in selling prices and volumes; intense competition; the potential loss of certain key customers; and adverse changes in general market and industry conditions. These risks are more particularly described in our filings with the Securities and Exchange Commission, including under the caption “Business―Forward-Looking Information” and “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2008. The information contained in this release speaks as of the date hereof and we do not undertake any obligation to update this information as future events unfold.
| ROCK-TENN COMPANY |
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
| (UNAUDITED) |
| (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) |
| | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | |
| | FOR THE THREE MONTHS ENDED | FOR THE TWELVE MONTHS ENDED |
| | September 30, | | September 30, | | | | | September 30, | | September 30, |
| | | 2009 | | | | 2008 | | | | | | | 2009 | | | | 2008 | |
| | | | | | | | | | | | |
| | | | | | | | | | | |
| NET SALES | | $ | 729.0 | | | $ | 785.7 | | | | | | $ | 2,812.3 | | | $ | 2,838.9 | |
| | | | | | | | | | | |
| Cost of Goods Sold (net of alternative fuel tax | | | | | | | | | | | |
| credit of $21.4, $0, $54.1 and $0) | | | 525.7 | | | | 621.2 | | | | | | | 2,049.6 | | | | 2,296.8 | |
| | | | | | | | | | | | |
| | | | | | | | | | | |
| Gross Profit | | | 203.3 | | | | 164.5 | | | | | | | 762.7 | | | | 542.1 | |
| Selling, General and Administrative Expenses | | | 84.4 | | | | 84.6 | | | | | | | 330.8 | | | | 310.5 | |
| Restructuring and Other Costs, net | | | 2.6 | | | | 8.1 | | | | | | | 13.4 | | | | 15.6 | |
| | | | | | | | | | | | |
| | | | | | | | | | | |
| Operating Profit | | | 116.3 | | | | 71.8 | | | | | | | 418.5 | | | | 216.0 | |
| Interest Expense | | | (22.5 | ) | | | (27.6 | ) | | | | | | (96.7 | ) | | | (86.7 | ) |
| Loss on Extinguishment of Debt and Related Items | | | (0.1 | ) | | | - | | | | | | | (4.4 | ) | | | (1.9 | ) |
| Interest Income and Other Income (Expense), net | | | 0.1 | | | | 0.8 | | | | | | | - | | | | 1.6 | |
| Equity in Earnings of Unconsolidated Entities | | | 0.4 | | | | 1.5 | | | | | | | 0.1 | | | | 2.4 | |
| Minority Interest in Income of | | | | | | | | | | | |
| Consolidated Subsidiaries | | | (1.3 | ) | | | (1.5 | ) | | | | | | (3.6 | ) | | | (5.3 | ) |
| | | | | | | | | | | | |
| | | | | | | | | | | |
| INCOME BEFORE INCOME TAXES | | | 92.9 | | | | 45.0 | | | | | | | 313.9 | | | | 126.1 | |
| | | | | | | | | | | |
| Income Tax Expense | | | (25.6 | ) | | | (16.6 | ) | | | | | | (91.6 | ) | | | (44.3 | ) |
| | | | | | | | | | | | |
| | | | | | | | | | | |
| NET INCOME | | $ | 67.3 | | | $ | 28.4 | | | | | | $ | 222.3 | | | $ | 81.8 | |
| | | | | | | | | | | | |
| | | | | | | | | | | |
| Weighted Average Common Shares | | | | | | | | | | | |
| Outstanding-Diluted | | | 39.1 | | | | 38.5 | | | | | | | 38.7 | | | | 38.2 | |
| | | | | | | | | | | | |
| | | | | | | | | | | |
| Diluted Earnings Per Share | | $ | 1.72 | | | $ | 0.74 | | | | | | $ | 5.75 | | | $ | 2.14 | |
| ROCK-TENN COMPANY |
| SEGMENT INFORMATION |
| (UNAUDITED) |
| (IN MILLIONS, EXCEPT TONNAGE DATA) |
| | | | | | | | |
| | | | | | | | | |
| | | | | | | | |
| | FOR THE THREE MONTHS ENDED | | FOR THE TWELVE MONTHS ENDED |
| | September 30, | | September 30, | | September 30, | | September 30, |
| | | 2009 | | | | 2008 | | | | 2009 | | | | 2008 | |
| | | | | | | | | |
| | | | | | | | |
| NET SALES: | | | | | | | | |
| | | | | | | | |
| Consumer Packaging Segment | | $ | 394.2 | | | $ | 393.0 | | | $ | 1,503.1 | | | $ | 1,551.4 | |
| Corrugated Packaging Segment | | | 186.7 | | | | 225.2 | | | | 752.9 | | | | 607.5 | |
| Merchandising Displays Segment | | | 83.2 | | | | 88.4 | | | | 320.6 | | | | 350.8 | |
| Specialty Paperboard Products Segment | | | 84.2 | | | | 99.2 | | | | 306.9 | | | | 392.9 | |
| Intersegment Eliminations | | | (19.3 | ) | | | (20.1 | ) | | | (71.2 | ) | | | (63.7 | ) |
| | | | | | | | | |
| | | | | | | | |
| TOTAL NET SALES | | $ | 729.0 | | | $ | 785.7 | | | $ | 2,812.3 | | | $ | 2,838.9 | |
| | | | | | | | | |
| | | | | | | | |
| SEGMENT INCOME: | | | | | | | | |
| | | | | | | | |
| Consumer Packaging Segment (1) | | $ | 74.6 | | | $ | 30.7 | | | $ | 228.3 | | | $ | 119.8 | |
| Corrugated Packaging Segment | | | 37.1 | | | | 39.4 | | | | 178.9 | | | | 71.3 | |
| Merchandising Displays Segment | | | 9.1 | | | | 11.7 | | | | 31.9 | | | | 41.9 | |
| Specialty Paperboard Products Segment | | | 8.1 | | | | 8.5 | | | | 26.5 | | | | 30.3 | |
| | | | | | | | | |
| | | | | | | | |
| TOTAL SEGMENT INCOME | | $ | 128.9 | | | $ | 90.3 | | | $ | 465.6 | | | $ | 263.3 | |
| | | | | | | | | |
| | | | | | | | |
| Restructuring and Other Costs, net | | | (2.6 | ) | | | (8.1 | ) | | | (13.4 | ) | | | (15.6 | ) |
| Non-Allocated Expenses | | | (9.6 | ) | | | (8.9 | ) | | | (33.6 | ) | | | (29.3 | ) |
| Interest Expense | | | (22.5 | ) | | | (27.6 | ) | | | (96.7 | ) | | | (86.7 | ) |
| Loss on Extinguishment of Debt and Related Items | | | (0.1 | ) | | | - | | | | (4.4 | ) | | | (1.9 | ) |
| Interest Income and Other Income (Expense), net | | | 0.1 | | | | 0.8 | | | | - | | | | 1.6 | |
| Minority Interest in Income of | | | | | | | | |
| Consolidated Subsidiaries | | | (1.3 | ) | | | (1.5 | ) | | | (3.6 | ) | | | (5.3 | ) |
| | | | | | | | | |
| | | | | | | | |
| INCOME BEFORE INCOME TAXES | | $ | 92.9 | | | $ | 45.0 | | | $ | 313.9 | | | $ | 126.1 | |
| | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Recycled Paperboard Shipped (in tons) | | | 224,269 | | | | 234,209 | | | | 860,956 | | | | 916,164 | |
| Containerboard Shipped (in tons) | | | 235,250 | | | | 244,073 | | | | 848,744 | | | | 609,396 | |
| Bleached Paperboard Shipped (in tons) | | | 88,856 | | | | 90,724 | | | | 332,878 | | | | 341,531 | |
| Pulp Shipped (in tons) | | | 26,521 | | | | 21,537 | | | | 90,918 | | | | 95,036 | |
| | | | | | | | | |
| | | | | | | | |
| (1) Includes alternative fuel tax credits of $21.4 and $54.1 in the three months and twelve months ended September 30, 2009, respectively. |
| ROCK-TENN COMPANY |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (UNAUDITED) |
| (IN MILLIONS) |
| | | | | | | | | |
| | | | | | | | |
| | FOR THE THREE MONTHS ENDED | | FOR THE TWELVE MONTHS ENDED |
| | September 30, | | September 30, | | September 30, | | September 30, |
| | | | 2009 | | | | 2008 | | | | 2009 | | | | 2008 | |
| | | | | | | | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | |
| Net income | | $ | 67.3 | | | $ | 28.4 | | | $ | 222.3 | | | $ | 81.8 | |
| | | | | | | | |
| Items in income not affecting cash: | | | | | | | | |
| Depreciation and amortization | | | 37.3 | | | | 38.7 | | | | 150.0 | | | | 135.3 | |
| Deferred income tax expense | | | 21.6 | | | | 23.2 | | | | 46.0 | | | | 22.8 | |
| Share-based compensation expense | | | 3.7 | | | | 2.0 | | | | 11.9 | | | | 9.2 | |
| Loss (gain) on disposal of plant and equipment and other, net | | | 1.9 | | | | 0.3 | | | | 2.8 | | | | (0.4 | ) |
| Minority interest in income of consolidated subsidiaries | | | 1.3 | | | | 1.5 | | | | 3.6 | | | | 5.3 | |
| Equity in earnings of unconsolidated entities | | | (0.4 | ) | | | (1.5 | ) | | | (0.1 | ) | | | (2.4 | ) |
| Proceeds from termination of cash flow interest | | | | | | | | |
| rate hedges | | | - | | | | - | | | | - | | | | 6.9 | |
| Pension funding (more) less than expense | | | (12.6 | ) | | | 2.2 | | | | (23.1 | ) | | | (7.1 | ) |
| Alternative fuel tax credit benefit | | | (21.5 | ) | | | - | | | | (55.4 | ) | | | - | |
| Impairment adjustments and other non-cash items | | | 3.1 | | | | 2.5 | | | | 3.1 | | | | 2.8 | |
| Changes in operating assets and liabilities, net of acquisitions | | | | | | | | |
| Accounts receivable | | | (23.2 | ) | | | (9.5 | ) | | | (0.3 | ) | | | (25.3 | ) |
| Inventories | | | 12.5 | | | | (2.9 | ) | | | 8.0 | | | | 2.2 | |
| Other assets | | | 2.0 | | | | 3.5 | | | | (12.9 | ) | | | 1.1 | |
| Accounts payable | | | 8.5 | | | | 13.8 | | | | (6.4 | ) | | | 32.8 | |
| Income taxes payable | | | 12.4 | | | | (14.2 | ) | | | 45.4 | | | | (12.5 | ) |
| Accrued liabilities and other | | | 3.4 | | | | (4.1 | ) | | | (10.4 | ) | | | (11.6 | ) |
| | | | | | | | | |
| NET CASH PROVIDED BY OPERATING ACTIVITIES | | $ | 117.3 | | | $ | 83.9 | | | $ | 384.5 | | | $ | 240.9 | |
| | | | | | | | |
| INVESTING ACTIVITIES: | | | | | | | | |
| | | | | | | | |
| Capital expenditures | | | (26.6 | ) | | | (24.5 | ) | | | (75.9 | ) | | | (84.2 | ) |
| Cash paid for the purchase of a leased facility | | | (8.1 | ) | | | - | | | | (8.1 | ) | | | - | |
| Cash paid for purchase of business, including amounts (paid into) | | | | | | | | |
| received from escrow, net of cash received | | | - | | | | - | | | | 4.0 | | | | (817.9 | ) |
| Investment in unconsolidated entities | | | - | | | | (0.1 | ) | | | (1.0 | ) | | | (0.3 | ) |
| Return of capital from unconsolidated entities | | | 0.2 | | | | 0.2 | | | | 4.1 | | | | 0.8 | |
| Proceeds from sale of property, plant and equipment | | | 0.1 | | | | 0.1 | | | | 1.4 | | | | 6.4 | |
| Proceeds from property, plant and equipment insurance settlement | | | 0.1 | | | | - | | | | 0.1 | | | | - | |
| | | | | | | | | |
| NET CASH USED FOR INVESTING ACTIVITIES | | $ | (34.3 | ) | | $ | (24.3 | ) | | $ | (75.4 | ) | | $ | (895.2 | ) |
| | | | | | | | |
| FINANCING ACTIVITIES: | | | | | | | | |
| | | | | | | | |
| Proceeds from issuance of notes | | | - | | | | - | | | | 100.0 | | | | 198.6 | |
| Additions to revolving credit facilities | | | 38.8 | | | | 3.7 | | | | 230.8 | | | | 206.0 | |
| Repayments of revolving credit facilities | | | (49.0 | ) | | | (43.4 | ) | | | (244.6 | ) | | | (238.7 | ) |
| Additions to debt | | | 30.6 | | | | - | | | | 119.6 | | | | 764.0 | |
| Repayments of debt | | | (105.7 | ) | | | (22.3 | ) | | | (552.1 | ) | | | (192.2 | ) |
| Debt issuance costs | | | (0.7 | ) | | | (0.6 | ) | | | (4.4 | ) | | | (27.1 | ) |
| Restricted cash and investments | | | - | | | | - | | | | 19.2 | | | | (0.4 | ) |
| Issuances of common stock, net of related minimum tax withholdings | | | 0.5 | | | | 1.9 | | | | (0.1 | ) | | | 4.3 | |
| Excess tax benefits from share-based compensation | | | 3.0 | | | | 0.8 | | | | 5.5 | | | | 1.8 | |
| Capital contributed to consolidated subsidiary from minority interest | | | - | | | | - | | | | 1.7 | | | | - | |
| (Repayments to) advances from unconsolidated entity | | | (0.8 | ) | | | 0.2 | | | | (7.0 | ) | | | 0.7 | |
| Cash dividends paid to shareholders | | | (3.8 | ) | | | (3.8 | ) | | | (15.3 | ) | | | (15.2 | ) |
| Cash distributions to minority interest | | | (2.1 | ) | | | - | | | | (4.8 | ) | | | (5.3 | ) |
| | | | | | | | | |
| NET CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES | | $ | (89.2 | ) | | $ | (63.5 | ) | | $ | (351.5 | ) | | $ | 696.5 | |
| | | | | | | | |
| Effect of exchange rate changes on cash and cash equivalents | | | 0.6 | | | | (0.2 | ) | | | 1.4 | | | | (0.3 | ) |
| | | | | | | | |
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | $ | (5.6 | ) | | $ | (4.1 | ) | | $ | (41.0 | ) | | $ | 41.9 | |
| | | | | | | | |
| Cash and cash equivalents at beginning of period | | | 17.4 | | | | 56.9 | | | | 52.8 | | | | 10.9 | |
| | | | | | | | | |
| | | | | | | | |
| Cash and cash equivalents at end of period | | $ | 11.8 | | | $ | 52.8 | | | $ | 11.8 | | | $ | 52.8 | |
| | | | | | | | | |
| | | | | | | | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | | | | | |
| Cash paid during the period for: | | | | | | | | |
| Income taxes, net of refunds | | $ | (9.4 | ) | | $ | 7.7 | | | $ | (3.9 | ) | | $ | 31.4 | |
| Interest, net of amounts capitalized | | | 34.8 | | | | 41.0 | | | | 104.9 | | | | 82.5 | |
| ROCK-TENN COMPANY |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| (UNAUDITED) |
| (IN MILLIONS) |
| | | | | |
| | | | |
| | September 30, | | September 30, |
| | | 2009 | | | | 2008 | |
| | | | | |
| | | | |
| ASSETS | | | | |
| CURRENT ASSETS: | | | | |
| Cash and cash equivalents | | $ | 11.8 | | | $ | 52.8 | |
| Restricted cash and marketable debt securities | | | - | | | | 19.2 | |
| Accounts receivable (net of allowances of $8.8 and $9.0) | | | 305.5 | | | | 304.3 | |
| Inventories | | | 275.1 | | | | 283.0 | |
| Other current assets | | | 65.0 | | | | 49.2 | |
| Assets held for sale | | | 0.9 | | | | 0.7 | |
| | | | | |
| | | | |
| TOTAL CURRENT ASSETS | | | 658.3 | | | | 709.2 | |
| | | | | |
| | | | |
| Property, plant and equipment at cost: | | | | |
| Land and buildings | | | 413.8 | | | | 398.3 | |
| Machinery and equipment | | | 1,857.1 | | | | 1,826.2 | |
| Transportation equipment | | | 13.5 | | | | 15.2 | |
| Leasehold improvements | | | 5.4 | | | | 7.6 | |
| | | 2,289.8 | | | | 2,247.3 | |
| Less accumulated depreciation and amortization | | | (1,013.7 | ) | | | (914.2 | ) |
| Net property, plant and equipment | | | 1,276.1 | | | | 1,333.1 | |
| Goodwill | | | 736.4 | | | | 727.0 | |
| Intangibles, net | | | 151.3 | | | | 176.9 | |
| Investment in unconsolidated entities | | | 23.8 | | | | 29.4 | |
| Other assets | | | 38.5 | | | | 37.5 | |
| | | | | |
| | | | |
| TOTAL ASSETS | | $ | 2,884.4 | | | $ | 3,013.1 | |
| | | | | |
| | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | |
CURRENT LIABILITIES: | | | | |
| Current portion of debt | | $ | 56.3 | | | $ | 245.1 | |
| Accounts payable | | | 233.9 | | | | 241.5 | |
| Accrued compensation and benefits | | | 88.0 | | | | 95.2 | |
| Other current liabilities | | | 71.1 | | | | 65.9 | |
| | | | | |
| | | | |
| TOTAL CURRENT LIABILITIES | | | 449.3 | | | | 647.7 | |
| | | | | |
| | | | |
| Long-term debt due after one year | | | 1,289.3 | | | | 1,447.2 | |
Hedge adjustments resulting from terminated fair value
interest rate derivatives or swaps | | | | |
| | 3.8 | | | | 6.6 | |
| | | | | |
| | | | |
| TOTAL LONG-TERM DEBT | | | 1,293.1 | | | | 1,453.8 | |
| | | | | |
| | | | |
| Accrued pension and other long-term benefits | | | 161.5 | | | | 70.8 | |
| Deferred income taxes | | | 149.2 | | | | 153.3 | |
| Other long-term liabilities | | | 36.7 | | | | 29.4 | |
| Minority interest | | | 17.8 | | | | 17.6 | |
| | | | |
| Shareholders' equity | | | 776.8 | | | | 640.5 | |
| | | | | |
| | | | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | | $ | 2,884.4 | | | $ | 3,013.1 | |
| Rock-Tenn Company Quarterly Statistics |
| | | | | | | | | | |
| Paperboard and Containerboard Operating Statistics |
| | | | | | | | | | |
| | 1st Quarter | | 2nd Quarter | | 3rd Quarter | | 4th Quarter | | Fiscal Year |
| | | | | | | | | | |
| Average Price Per Ton (a) (b) | | | | | | | | | | |
| | | | | | | | | | |
| All Tons | | | | | | | | | | |
2007 | | $ | 558 | | $ | 571 | | $ | 588 | | $ | 596 | | $ | 578 |
2008 | | | 599 | | | 587 | | | 566 | | | 585 | | | 583 |
2009 | | | 596 | | | 586 | | | 564 | | | 557 | | | 575 |
| | | | | | | | | | |
| Tons Shipped | | | | | | | | | | |
| Recycled Paperboard (a) (c) | | | | | | | | | | |
2007 | | | 221,506 | | | 222,970 | | | 225,135 | | | 223,527 | | | 893,138 |
2008 | | | 217,081 | | | 229,003 | | | 235,871 | | | 234,209 | | | 916,164 |
2009 | | | 204,927 | | | 211,941 | | | 219,819 | | | 224,269 | | | 860,956 |
| | | | | | | | | | |
| Containerboard (d) | | | | | | | | | | |
2007 | | | 44,615 | | | 46,219 | | | 45,304 | | | 46,793 | | | 182,931 |
2008 | | | 44,699 | | | 102,092 | | | 218,532 | | | 244,073 | | | 609,396 |
2009 | | | 221,907 | | | 188,568 | | | 203,019 | | | 235,250 | | | 848,744 |
| | | | | | | | | | |
| Bleached Paperboard | | | | | | | | | | |
2007 | | | 73,968 | | | 82,205 | | | 90,102 | | | 88,730 | | | 335,005 |
2008 | | | 79,623 | | | 84,916 | | | 86,268 | | | 90,724 | | | 341,531 |
2009 | | | 86,338 | | | 78,223 | | | 79,461 | | | 88,856 | | | 332,878 |
| | | | | | | | | | |
| Market Pulp | | | | | | | | | | |
2007 | | | 20,883 | | | 24,661 | | | 25,551 | | | 24,787 | | | 95,882 |
2008 | | | 21,193 | | | 27,837 | | | 24,469 | | | 21,537 | | | 95,036 |
2009 | | | 20,705 | | | 19,493 | | | 24,199 | | | 26,521 | | | 90,918 |
| | | | | | | | | | |
| Total (a) (d) | | | | | | | | | | |
2007 | | | 360,972 | | | 376,055 | | | 386,092 | | | 383,837 | | | 1,506,956 |
2008 | | | 362,596 | | | 443,848 | | | 565,140 | | | 590,543 | | | 1,962,127 |
2009 | | | 533,877 | | | 498,225 | | | 526,498 | | | 574,896 | | | 2,133,496 |
| | | | | | | | | | |
| | | | | | | | | | |
| (a) Average Price Per Ton and Tons Shipped include tons shipped by Seven Hills Paperboard LLC, our unconsolidated joint venture with Lafarge North America, Inc. |
| | | | | | | | | | |
| (b) Beginning in the second quarter of fiscal 2008, Average Price Per Ton includes coated and specialty recycled paperboard, containerboard, bleached paperboard and market pulp. |
| | | | | | | | | | |
| (c) Recycled paperboard tons shipped include coated and specialty paperboard. |
| | | | | | | | | | |
| (d) Containerboard tons shipped include corrugated medium and linerboard, which include the Solvay Mill tons beginning in March 2008. |
| Rock-Tenn Company Quarterly Statistics |
| | | | | | | | | | | | |
| Segment Sales and Segment Income |
| (In Millions, except Return On Sales data) |
| | | | | | | | | | | | |
| | 1st Quarter | | 2nd Quarter | | 3rd Quarter | | | 4th Quarter | | | Fiscal Year |
| Consumer Packaging Segment Sales | | | | | | | | | | | | |
2007 | | $ | 346.8 | | $ | 363.7 | | $ | 373.0 | | | $ | 376.1 | | | $ | 1,459.6 |
2008 | | | 374.7 | | | 394.8 | | | 388.9 | | | | 393.0 | | | | 1,551.4 |
2009 | | | 368.8 | | | 362.9 | | | 377.2 | | | | 394.2 | | | | 1,503.1 |
| Consumer Packaging Intersegment Sales | | | | | | | | | | | | |
2007 | | $ | 2.8 | | $ | 3.8 | | $ | 3.9 | | | $ | 4.5 | | | $ | 15.0 |
2008 | | | 4.2 | | | 4.3 | | | 3.9 | | | | 5.7 | | | | 18.1 |
2009 | | | 6.6 | | | 4.7 | | | 6.0 | | | | 7.8 | | | | 25.1 |
| Consumer Packaging Segment Income | | | | | | | | | | | | |
2007 | | $ | 24.3 | | $ | 29.7 | | $ | 36.9 | | | $ | 34.3 | | | $ | 125.2 |
2008 | | | 28.7 | | | 32.5 | | | 27.9 | | | | 30.7 | | | | 119.8 |
2009 | | | 31.5 | | | 39.2 | | | 50.3 | (1) | | | 53.2 | (2) | | | 174.2 |
| Return On Sales | | | | | | | | | | | | |
2007 | | | 7.0% | | | 8.2% | | | 9.9% | | | | 9.1% | | | | 8.6% |
2008 | | | 7.7% | | | 8.2% | | | 7.2% | | | | 7.8% | | | | 7.7% |
2009 | | | 8.5% | | | 10.8% | | | 13.3% | (1) | | | 13.5% | (2) | | | 11.6% |
| | | | | | | | | | | | |
| Corrugated Packaging Segment Sales | | | | | | | | | | | | |
2007 | | $ | 56.2 | | $ | 59.3 | | $ | 60.2 | | | $ | 61.0 | | | $ | 236.7 |
2008 | | | 61.4 | | | 112.0 | | | 208.9 | | | | 225.2 | | | | 607.5 |
2009 | | | 203.2 | | | 176.5 | | | 186.5 | | | | 186.7 | | | | 752.9 |
| Corrugated Packaging Intersegment Sales | | | | | | | | | | | | |
2007 | | $ | 4.5 | | $ | 5.7 | | $ | 5.8 | | | $ | 6.7 | | | $ | 22.7 |
2008 | | | 6.3 | | | 7.2 | | | 7.6 | | | | 10.0 | | | | 31.1 |
2009 | | | 10.1 | | | 9.7 | | | 8.8 | | | | 8.7 | | | | 37.3 |
| Corrugated Packaging Segment Income | | | | | | | | | | | | |
2007 | | $ | 6.0 | | $ | 5.8 | | $ | 4.0 | | | $ | 3.1 | | | $ | 18.9 |
2008 | | | 4.3 | | | 4.4 | | | 23.2 | | | | 39.4 | | | | 71.3 |
2009 | | | 50.6 | | | 41.6 | | | 49.6 | | | | 37.1 | | | | 178.9 |
| Return on Sales | | | | | | | | | | | | |
2007 | | | 10.7% | | | 9.8% | | | 6.6% | | | | 5.1% | | | | 8.0% |
2008 | | | 7.0% | | | 3.9% | | | 11.1% | | | | 17.5% | | | | 11.7% |
2009 | | | 24.9% | | | 23.6% | | | 26.6% | | | | 19.9% | | | | 23.8% |
| | | | | | | | | | | | |
| Merchandising Displays Segment Sales | | | | | | | | | | | | |
2007 | | $ | 60.9 | | $ | 82.6 | | $ | 76.8 | | | $ | 85.5 | | | $ | 305.8 |
2008 | | | 82.0 | | | 94.3 | | | 86.1 | | | | 88.4 | | | | 350.8 |
2009 | | | 74.8 | | | 82.9 | | | 79.7 | | | | 83.2 | | | | 320.6 |
| Merchandising Displays Intersegment Sales | | | | | | | | | | | | |
2007 | | $ | - | | $ | - | | $ | - | | | $ | - | | | $ | - |
2008 | | | - | | | 0.2 | | | 0.1 | | | | 0.1 | | | | 0.4 |
2009 | | | - | | | 0.2 | | | 0.1 | | | | 0.1 | | | | 0.4 |
| Merchandising Displays Segment Income | | | | | | | | | | | | |
2007 | | $ | 5.2 | | $ | 12.1 | | $ | 10.9 | | | $ | 10.6 | | | $ | 38.8 |
2008 | | | 8.0 | | | 13.8 | | | 8.4 | | | | 11.7 | | | | 41.9 |
2009 | | | 5.1 | | | 9.7 | | | 8.0 | | | | 9.1 | | | | 31.9 |
| Return on Sales | | | | | | | | | | | | |
2007 | | | 8.5% | | | 14.6% | | | 14.2% | | | | 12.4% | | | | 12.7% |
2008 | | | 9.8% | | | 14.6% | | | 9.8% | | | | 13.2% | | | | 11.9% |
2009 | | | 6.8% | | | 11.7% | | | 10.0% | | | | 10.9% | | | | 10.0% |
| | | | | | | | | | | | |
(1) Excludes $32.7 of alternative fuel tax credit. |
| (2) Excludes $21.4 of alternative fuel tax credit. |
| Rock-Tenn Company Quarterly Statistics |
| | | | | | | | | | |
| Segment Sales and Segment Income (Continued) |
| (In Millions, except Return On Sales data) |
| | | | | | | | | | |
| | 1st Quarter | | 2nd Quarter | | 3rd Quarter | | 4th Quarter | | Fiscal Year |
| Specialty Paperboard Products Segment Sales | | | | | | | | | | |
2007 | | $ | 79.5 | | $ | 91.9 | | $ | 94.0 | | $ | 96.3 | | $ | 361.7 |
2008 | | | 91.8 | | | 99.8 | | | 102.1 | | | 99.2 | | | 392.9 |
2009 | | | 75.3 | | | 70.2 | | | 77.2 | | | 84.2 | | | 306.9 |
| Specialty Paperboard Products Intersegment Sales | | | | | | | | | | |
2007 | | $ | 2.2 | | $ | 2.3 | | $ | 2.9 | | $ | 2.9 | | $ | 10.3 |
2008 | | | 3.1 | | | 3.3 | | | 3.4 | | | 4.3 | | | 14.1 |
2009 | | | 2.3 | | | 1.6 | | | 1.8 | | | 2.7 | | | 8.4 |
| Specialty Paperboard Products Segment Income | | | | | | | | | | |
2007 | | $ | 7.3 | | $ | 7.2 | | $ | 7.8 | | $ | 6.5 | | $ | 28.8 |
2008 | | | 7.4 | | | 6.6 | | | 7.8 | | | 8.5 | | | 30.3 |
2009 | | | 2.8 | | | 6.2 | | | 9.4 | | | 8.1 | | | 26.5 |
| Return on Sales | | | | | | | | | | |
2007 | | | 9.2% | | | 7.8% | | | 8.3% | | | 6.7% | | | 8.0% |
2008 | | | 8.1% | | | 6.6% | | | 7.6% | | | 8.6% | | | 7.7% |
2009 | | | 3.7% | | | 8.8% | | | 12.2% | | | 9.6% | | | 8.6% |
| | | | | | | | | | |
| | | | | | | | | | |
| Key Financial Statistics | | | | | | | | | | |
| (In Millions, except EPS Data) | | | | | | | | | | |
| | | | | | | | | | |
| | 1st Quarter | | 2nd Quarter | | 3rd Quarter | | 4th Quarter | | Fiscal Year |
| | | | | | | | | | |
| Net Income | | | | | | | | | | |
2007 | | $ | 15.1 | | $ | 21.7 | | $ | 25.2 | | $ | 19.7 | | $ | 81.7 |
2008 | | | 17.5 | | | 17.1 | | | 18.8 | | | 28.4 | | | 81.8 |
2009 | | | 30.6 | | | 37.4 | | | 87.0 | | | 67.3 | | | 222.3 |
| | | | | | | | | | |
| Diluted EPS | | | | | | | | | | |
2007 | | $ | 0.39 | | $ | 0.55 | | $ | 0.63 | | $ | 0.50 | | $ | 2.07 |
2008 | | | 0.46 | | | 0.45 | | | 0.49 | | | 0.74 | | | 2.14 |
2009 | | | 0.79 | | | 0.97 | | | 2.24 | | | 1.72 | | | 5.75 |
| | | | | | | | | | |
| Depreciation & Amortization | | | | | | | | | | |
2007 | | $ | 26.0 | | $ | 25.5 | | $ | 26.0 | | $ | 26.2 | | $ | 103.7 |
2008 | | | 25.8 | | | 31.6 | | | 39.2 | | | 38.7 | | | 135.3 |
2009 | | | 37.9 | | | 37.3 | | | 37.5 | | | 37.3 | | | 150.0 |
| | | | | | | | | | |
| Capital Expenditures | | | | | | | | | | |
2007 | | $ | 17.3 | | $ | 23.5 | | $ | 17.9 | | $ | 19.3 | | $ | 78.0 |
2008 | | | 17.9 | | | 19.3 | | | 22.5 | | | 24.5 | | | 84.2 |
2009 | | | 14.2 | | | 17.0 | | | 18.1 | | | 26.6 | | | 75.9 |
Non-GAAP Measures and Reconciliations
We have included financial measures that are not prepared in accordance with GAAP. Any analysis of non-GAAP financial measures should be used only in conjunction with results presented in accordance with GAAP. Below, we define the non-GAAP financial measures, provide a reconciliation of each non-GAAP financial measure to the most directly comparable financial measure calculated in accordance with GAAP, and discuss the reasons that we believe this information is useful to management and may be useful to investors. These measures may differ from similarly captioned measures of other companies in our industry. The following non-GAAP measures are not intended to be substitutes for GAAP financial measures and should not be used as such.
Net Debt
We have defined the non-GAAP measure “net debt” to include the aggregate debt obligations reflected in our consolidated balance sheet, less the hedge adjustments resulting from terminated fair value interest rate derivatives or swaps, the balance of our cash and cash equivalents, restricted cash (which includes restricted cash and marketable debt securities) and certain other investments that we consider to be readily available to satisfy these debt obligations.
Our management uses net debt, along with other factors, including net debt repayment per diluted share, to evaluate our financial condition. We believe that net debt is an appropriate supplemental measure of financial condition because it provides a more complete understanding of our financial condition before the impact of our decisions regarding the appropriate use of cash and liquid investments and net debt repayment per diluted share provides a measure to investors of how successful we are at achieving our debt reduction. Set forth below is a reconciliation of net debt to the most directly comparable GAAP measures, Current Portion of Debt and Total Long-Term Debt for the current quarter, prior quarter, one year ago quarter and the quarter following the Southern Container Acquisition:
| (In Millions, except per share data) | | September 30, | | June 30, | | September 30, | | March 31, |
| | | 2009 | | | | 2009 | | | | 2008 | | | | 2008 | |
| | | | | | | | |
| Current Portion of Debt | | $ | 56.3 | | | $ | 50.0 | | | $ | 245.1 | | | $ | 247.7 | |
| Total Long-Term Debt | | | 1,293.1 | | | | 1,383.7 | | | | 1,453.8 | | | | 1,606.8 | |
| | | 1,349.4 | | | | 1,433.7 | | | | 1,698.9 | | | | 1,854.5 | |
| Less: Hedge Adjustments Resulting From Terminated Fair Value Interest Rate | | | | | | | | |
| Derivatives or Swaps | | | (3.8 | ) | | | (4.2 | ) | | | (6.6 | ) | | | (7.6 | ) |
| | | 1,345.6 | | | | 1,429.5 | | | | 1,692.3 | | | | 1,846.9 | |
| Less: Cash and Cash Equivalents | | | (11.8 | ) | | | (17.4 | ) | | | (52.8 | ) | | | (56.6 | ) |
| Less: Restricted Cash | | | — | | | | — | | | | (19.2 | ) | | | (19.5 | ) |
| Net Debt | | $ | 1,333.8 | | | $ | 1,412.1 | | | $ | 1,620.3 | | | $ | 1,770.8 | |
| | | | | | | | |
| | | | | | Net Debt | | |
| | | | Average | | Repayment | | |
| | | | Diluted | | Per Diluted | | |
| | | | Shares | | Share | | |
| Net Debt Repayment for the Quarter | | $ | 78.3 | | | | 39.1 | | | $ | 2.00 | | | |
| Net Debt Repayment for the Twelve Months Ended September 30, 2009 | | $ | 286.5 | | | | 38.7 | | | $ | 7.41 | | | |
| Net Debt Repayment since March 31, 2008 | | $ | 437.0 | | | | 38.7 | | | $ | 11.30 | | | |
Set forth below is a reconciliation of Net Debt Repayment and Dividends. Net Debt Repayment is derived from the table above, as described above and dividends are from the cash flow line item Cash dividends paid to shareholders:
| Net Debt Repayment for the Twelve Months Ended September 30, 2009 | | $ | 286.5 |
| Cash dividends paid to shareholders for the Twelve Months Ended September 30, 2009 | | | 15.3 |
| | $ | 301.8 |
| Average Diluted Shares | | | 38.7 |
| Net Debt Repayment and Dividends per diluted share | | $ | 7.81 |
Credit Agreement EBITDA and Total Funded Debt
“Credit Agreement EBITDA” is calculated in accordance with the definition contained in our Senior Credit Facility. Credit Agreement EBITDA is generally defined as Consolidated Net Income plus: consolidated interest expense, income taxes of the consolidated companies determined in accordance with GAAP, depreciation and amortization expense of the consolidated companies determined in accordance with GAAP, certain non-cash and cash charges incurred, and charges taken resulting from the impact of changes to accounting rules related to the expensing of stock options.
“Total Funded Debt” is calculated in accordance with the definition contained in our Senior Credit Facility. Total Funded Debt is generally defined as aggregate debt obligations reflected in our balance sheet, less the hedge adjustments resulting from terminated and existing fair value interest rate derivatives or swaps, less certain deferred cash, plus additional outstanding letters of credit not already reflected in debt and certain guarantees.
Our management uses Credit Agreement EBITDA and Total Funded Debt to evaluate compliance with our debt covenants and borrowing capacity available under our Senior Credit Facility. Management believes that investors also use these measures to evaluate our compliance with our debt covenants and available borrowing capacity. Borrowing capacity is dependent upon, in addition to other measures, the “Credit Agreement Debt/EBITDA ratio” or the “Leverage Ratio,” which is defined as Total Funded Debt divided by Credit Agreement EBITDA. As of the September 30, 2009 calculation, our Leverage Ratio was 2.36 times, which includes a reduction of .24 times for the alternative fuel tax credit. Our maximum permitted Leverage Ratio under the Senior Credit Facility at September 30, 2009 was 4.25 times and will remain at this level until July 1, 2010 when it will re-set to 3.75 times.
Set forth below is a reconciliation of Credit Agreement EBITDA for the three and twelve months ended September 30, 2009, to the most directly comparable GAAP measure, Net Income:
| (In Millions) | | Three Months Ended September 30, 2009 | | Twelve Months Ended September 30, 2009 |
| | | | |
| Net Income | | $ | 67.3 | | | $ | 222.3 | |
| Interest Expense, net | | | 20.7 | | | | 89.2 | |
| Income Taxes | | | 25.6 | | | | 91.6 | |
| Depreciation and Amortization | | | 37.3 | | | | 150.0 | |
| Additional Permitted Charges | | | 3.8 | | | | 26.2 | |
| Credit Agreement EBITDA | | $ | 154.7 | | | $ | 579.3 | |
| | | | |
| Less: Alternative Fuel Tax Credit, net | | $ | (21.4 | ) | | $ | (54.1 | ) |
| Credit Agreement EBITDA, Excluding Alternative Fuel Tax Credit, net | | $ | 133.3 | | | $ | 525.2 | |
| | | | |
| Net Sales | | $ | 729.0 | | | $ | 2,812.3 | |
| | | | |
| Credit Agreement EBITDA Margin, Excluding Alternative Fuel Tax Credit, net | | | 18.3 | % | | | 18.7 | % |
Set forth below is a reconciliation of Total Funded Debt to the most directly comparable GAAP measures, Current Portion of Debt and Total Long-Term Debt:
| (In Millions) | | September 30, |
| | | 2009 | |
| | |
| Current Portion of Debt | | $ | 56.3 | |
| Total Long-Term Debt | | | 1,293.1 | |
| Total Debt | | | 1,349.4 | |
| Less: Hedge Adjustments Resulting From Terminated | | |
| Fair Value Interest Rate Derivatives or Swaps | | | (3.8 | ) |
| Total Debt Less Hedge Adjustments | | | 1,345.6 | |
| Plus: Letters of Credit and Guarantees | | | 19.4 | |
| Total Funded Debt | | $ | 1,365.0 | |
| | |
| Credit Agreement EBITDA for the Twelve Months Ended September 30, 2009 | | $ | 579.3 | |
| | |
| Leverage Ratio | | | 2.36 | |
Adjusted Net Income and Adjusted Earnings per Diluted Share
We also use the non-GAAP measures “adjusted net income” and “adjusted earnings per diluted share”. Management believes these non-GAAP financial measures provide our board of directors, investors, potential investors, securities analysts and others with useful information to evaluate the performance of the Company because it excludes restructuring and other costs, net, and other specific items that management believes are not indicative of the ongoing operating results of the business. The Company and the board of directors use this information to evaluate the Company’s performance relative to other periods. We believe that the most directly comparable GAAP measures to adjusted net income and adjusted earnings per diluted share are Net Income and Earnings per Diluted Share, respectively. Set forth is a reconciliation of adjusted net income to Net Income:
| | | | | | | | |
| | Three Months | | Three Months | | Twelve Months | | Twelve Months |
| | Ended | | Ended | | Ended | | Ended |
| | September 30, | | September 30, | | September 30, | | September 30, |
| (In Millions) | | | 2009 | | | | 2008 | | | 2009 | | | | 2008 |
| | | | | | | | |
| Net income | | $ | 67.3 | | | $ | 28.4 | | $ | 222.3 | | | $ | 81.8 |
| | | | | | | | |
| Alternative fuel tax credit, net | | | (21.5 | ) | | | — | | | (54.6 | ) | | | — |
| Restructuring and other costs, net | | | 1.3 | | | | 5.2 | | | 7.8 | | | | 10.0 |
| Operating losses of previously closed facilities | | | 0.1 | | | | — | | | 1.1 | | | | 0.7 |
| Debt extinguishment costs and related items | | | 0.1 | | | | — | | | 2.8 | | | | 1.2 |
| Solvay mill expansion and upgrade | | | — | | | | — | | | — | | | | 2.4 |
| Acquisition inventory step-up | | | — | | | | 0.9 | | | — | | | | 7.8 |
| Acquisition bridge financing fee | | | — | | | | — | | | — | | | | 1.9 |
| | | | | | | | | |
| Adjusted net income | | $ | 47.3 | | | $ | 34.5 | | $ | 179.4 | | | $ | 105.8 |
CONTACT:
RockTenn
John Stakel, VP-Treasurer, 678-291-7900
