Exhibit 99.1
RockTenn Reports Earnings for the Second Quarter of Fiscal 2011 of $0.92 Per Share and Adjusted Earnings per Share of $1.04, up 49% over Prior Year Quarter
NORCROSS, Ga.--(BUSINESS WIRE)--April 26, 2011--RockTenn (NYSE:RKT) today reported earnings for the quarter ended March 31, 2011 of $0.92 per diluted share. The Company’s adjusted earnings were $1.04 per diluted share compared to the prior year quarter adjusted earnings of $0.70 per diluted share.
| Three Months | Three Months | Six Months | Six Months | ||||||||||||||
| Ended | Ended | Ended | Ended | ||||||||||||||
| March 31, | March 31, | March 31, | March 31, | ||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||||
| Earnings per diluted share | $ | 0.92 | $ | 0.83 | $ | 2.19 | $ | 2.26 | |||||||||
| Alternative fuel mixture credit, net | — | (0.21 | ) | — | (0.74 | ) | |||||||||||
| Restructuring and other costs, net | 0.10 | 0.02 | 0.11 | 0.06 | |||||||||||||
| Loss on extinguishment of debt | — | 0.05 | — | 0.04 | |||||||||||||
| Operating losses of previously closed facilities | 0.02 | 0.01 | 0.02 | 0.02 | |||||||||||||
| Adjusted earnings per diluted share | $ | 1.04 | $ | 0.70 | $ | 2.32 | $ | 1.64 | |||||||||
Second Quarter Results
Chairman and Chief Executive Officer’s Statement
RockTenn Chairman and Chief Executive Officer James A. Rubright stated, “Adjusted earnings per share increased 49% over the prior year quarter driven by higher sales volumes and pricing in our two largest businesses, consumer and corrugated packaging. Earnings again translated into strong free cash flow as we reduced net debt by $46 million in the quarter, after paying dividends of $8 million and investing $32 million in our businesses.”
Segment Results
Paperboard and Containerboard Tons Shipped and Average Price
Total tons shipped in the second quarter of fiscal 2011 increased by 18,531 tons over the prior year quarter. The average selling price for all paperboard and containerboard grades increased $59 per ton from the prior year quarter.
Consumer Packaging Segment
Consumer Packaging segment net sales increased 6.2% in the second quarter of fiscal 2011 compared to the prior year quarter, due to higher paperboard selling prices, increased recycled paperboard tons shipped and higher folding carton volumes. Segment income increased $6.6 million to $43.4 million in the second quarter of fiscal 2011, excluding $8.1 million of alternative fuel mixture credit in the prior year quarter.
Corrugated Packaging Segment
Corrugated Packaging segment net sales increased $18.4 million to $209.4 million in the second quarter of fiscal 2011 compared to the prior year quarter, due to higher selling prices and volumes. Segment income increased $8.2 million to $29.1 million in the second quarter of fiscal 2011 and segment return on sales was 13.9%.
Merchandising Displays Segment
Merchandising Displays segment net sales increased $14.3 million over the prior year second quarter to $91.4 million due to continued strong demand for merchandising displays. Segment income was $10.2 million in the second quarter of fiscal 2011 and segment return on sales was 11.2%.
Specialty Paperboard Products Segment
Specialty Paperboard Products segment net sales increased $7.1 million in the second quarter of fiscal 2011 compared to the prior year quarter primarily due to increased paperboard selling prices and volume and increased solid fiber interior packaging sales due to a fourth quarter of fiscal 2010 acquisition. Segment income was $5.2 million in the second quarter of fiscal 2011 and $6.0 million in the prior year quarter.
Cash Provided By Operating Activities
Excluding the $26.4 million tax refund we received in the second quarter of fiscal 2010 related primarily to the collection of fiscal 2009 alternative fuel mixture credits, net cash provided by operating activities in the second quarter of fiscal 2011 was $89.7 million compared to $90.7 million.
Financing and Investing Activities
We reduced net debt by $45.9 million in the second quarter of fiscal 2011 bringing our net debt at March 31, 2011 to below a billion dollars and increasing our cumulative net debt paid down since the Gulf States acquisition to more than a billion dollars as measured by net debt in the quarter preceding the transaction plus the aggregate purchase price including transaction costs of the Gulf States and Southern Container acquisitions. Our Leverage Ratio was 1.95 times at March 31, 2011, well below our maximum credit agreement covenant of 3.75 times.
Conference Call
We will host a conference call to discuss our results of operations for the second quarter of fiscal 2011 and other topics that may be raised during the discussion at 9:00 a.m., Eastern Time, on April 27, 2011. The conference call will be webcast live with an accompanying slide presentation, 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 $3 billion. RockTenn’s 10,000 employees are committed to exceeding their customers’ expectations – every time. The Company operates locations in the United States, Canada, Mexico, Chile and Argentina. For more information, visit www.rocktenn.com.
| ROCK-TENN COMPANY | |||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
| (UNAUDITED) | |||||||||||||||
| (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) | |||||||||||||||
| FOR THE THREE MONTHS ENDED | FOR THE SIX MONTHS ENDED | ||||||||||||||
| March 31, | March 31, | March 31, | March 31, | ||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||
| NET SALES | $ | 792.9 | $ | 731.9 | $ | 1,554.0 | $ | 1,422.7 | |||||||
| Cost of Goods Sold (net of alternative fuel mixture | |||||||||||||||
| credit of $0, $8.1, $0 and $28.8) | 626.6 | 570.6 | 1,208.9 | 1,082.9 | |||||||||||
| Gross Profit | 166.3 | 161.3 | 345.1 | 339.8 | |||||||||||
| Selling, General and Administrative Expenses | 88.3 | 87.2 | 171.5 | 167.2 | |||||||||||
| Restructuring and Other Costs, net | 6.3 | 1.3 | 6.9 | 4.3 | |||||||||||
| Operating Profit | 71.7 | 72.8 | 166.7 | 168.3 | |||||||||||
| Interest Expense | (16.2 | ) | (19.2 | ) | (32.9 | ) | (40.7 | ) | |||||||
| Loss on Extinguishment of Debt | - | (3.3 | ) | - | (2.8 | ) | |||||||||
| Interest Income and Other Income, net | - | 0.1 | - | 0.3 | |||||||||||
| Equity in Income of Unconsolidated Entities | 0.3 | (0.3 | ) | 0.6 | (0.1 | ) | |||||||||
| INCOME BEFORE INCOME TAXES | 55.8 | 50.1 | 134.4 | 125.0 | |||||||||||
| Income Tax Expense | (17.5 | ) | (16.4 | ) | (44.8 | ) | (33.7 | ) | |||||||
| CONSOLIDATED NET INCOME | 38.3 | 33.7 | 89.6 | 91.3 | |||||||||||
| Less: Net Income Attributable to Noncontrolling | |||||||||||||||
| Interests | (1.3 | ) | (0.9 | ) | (2.3 | ) | (2.2 | ) | |||||||
| NET INCOME ATTRIBUTABLE TO ROCK-TENN | |||||||||||||||
| COMPANY SHAREHOLDERS | $ | 37.0 | $ | 32.8 | $ | 87.3 | $ | 89.1 | |||||||
| Computation of diluted earnings per share under the two-class method (in millions, except per share data): | |||||||||||||||
| Net income attributable to Rock-Tenn Company | |||||||||||||||
| shareholders | $ | 37.0 | $ | 32.8 | $ | 87.3 | $ | 89.1 | |||||||
| Less: Distributed and undistributed income | |||||||||||||||
| available to participating securities | (0.7 | ) | (0.4 | ) | (1.2 | ) | (1.1 | ) | |||||||
| Distributed and undistributed income available to | |||||||||||||||
| Rock-Tenn Company shareholders | $ | 36.3 | $ | 32.4 | $ | 86.1 | $ | 88.0 | |||||||
| Diluted weighted average shares outstanding | 39.2 | 39.0 | 39.3 | 39.0 | |||||||||||
| Diluted earnings per share | $ | 0.92 | $ | 0.83 | $ | 2.19 | $ | 2.26 | |||||||
| ROCK-TENN COMPANY | |||||||||||||
| SEGMENT INFORMATION | |||||||||||||
| (UNAUDITED) | |||||||||||||
| (IN MILLIONS, EXCEPT TONNAGE DATA) | |||||||||||||
| FOR THE THREE MONTHS ENDED | FOR THE SIX MONTHS ENDED | ||||||||||||
| March 31, | March 31, | March 31, | March 31, | ||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||
| NET SALES: | |||||||||||||
| Consumer Packaging Segment | $ | 410.3 | $ | 386.2 | $ | 803.0 | $ | 765.8 | |||||
| Corrugated Packaging Segment | 209.4 | 191.0 | 407.7 | 371.1 | |||||||||
| Merchandising Displays Segment | 91.4 | 77.1 | 183.2 | 143.9 | |||||||||
| Specialty Paperboard Products Segment | 103.5 | 96.4 | 201.9 | 176.2 | |||||||||
| Intersegment Eliminations | (21.7 | ) | (18.8 | ) | (41.8 | ) | (34.3 | ) | |||||
| TOTAL NET SALES | $ | 792.9 | $ | 731.9 | $ | 1,554.0 | $ | 1,422.7 | |||||
| SEGMENT INCOME: | |||||||||||||
| Consumer Packaging Segment (1) | $ | 43.4 | $ | 44.9 | $ | 95.7 | $ | 107.7 | |||||
| Corrugated Packaging Segment | 29.1 | 20.9 | 65.5 | 55.6 | |||||||||
| Merchandising Displays Segment | 10.2 | 11.2 | 21.6 | 15.4 | |||||||||
| Specialty Paperboard Products Segment | 5.2 | 6.0 | 9.5 | 10.5 | |||||||||
| TOTAL SEGMENT INCOME | $ | 87.9 | $ | 83.0 | $ | 192.3 | $ | 189.2 | |||||
| Restructuring and Other Costs, net | (6.3 | ) | (1.3 | ) | (6.9 | ) | (4.3 | ) | |||||
| Non-Allocated Expenses | (9.6 | ) | (9.2 | ) | (18.1 | ) | (16.7 | ) | |||||
| Interest Expense | (16.2 | ) | (19.2 | ) | (32.9 | ) | (40.7 | ) | |||||
Loss on Extinguishment of Debt | - | (3.3 | ) | - | (2.8 | ) | |||||||
| Interest Income and Other Income, net | - | 0.1 | - | 0.3 | |||||||||
| INCOME BEFORE INCOME TAXES | $ | 55.8 | $ | 50.1 | $ | 134.4 | $ | 125.0 | |||||
| Recycled Paperboard Shipped (in tons) | 239,270 | 228,064 | 463,787 | 451,212 | |||||||||
| Containerboard Shipped (in tons) | 243,838 | 234,757 | 491,284 | 465,870 | |||||||||
| Bleached Paperboard Shipped (in tons) | 85,095 | 85,842 | 169,505 | 170,835 | |||||||||
| Market Pulp Shipped (in tons) | 24,046 | 25,055 | 46,122 | 50,417 | |||||||||
| (1) Includes alternative fuel mixture credits of $8.1 and $28.8 in the three and six months ended March 31, 2010, respectively. | |||||||||||||
| ROCK-TENN COMPANY | |||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||
| (UNAUDITED) | |||||||||||||
| (IN MILLIONS) | |||||||||||||
| FOR THE THREE MONTHS ENDED | FOR THE SIX MONTHS ENDED | ||||||||||||
| March 31, | March 31, | March 31, | March 31, | ||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||
| Consolidated net income | $ | 38.3 | $ | 33.7 | $ | 89.6 | $ | 91.3 | |||||
| Adjustments to reconcile consolidated net income to net cash provided by operating activities: | |||||||||||||
| Depreciation and amortization | 37.2 | 36.8 | 73.9 | 74.3 | |||||||||
| Deferred income tax expense | 6.7 | 10.3 | 26.5 | 13.3 | |||||||||
| Loss on extinguishment of debt | - | 3.3 | - | 2.8 | |||||||||
| Share-based compensation expense | 5.4 | 4.5 | 9.4 | 8.0 | |||||||||
| Gain on disposal of plant and equipment and other, net | (0.3 | ) | - | (0.1 | ) | (0.1 | ) | ||||||
| Equity in (income) loss of unconsolidated entities | (0.3 | ) | 0.3 | (0.6 | ) | 0.1 | |||||||
| Pension funding less than expense | 3.1 | 4.9 | 8.5 | 12.4 | |||||||||
| Alternative fuel mixture credit benefit | - | (8.1 | ) | - | (29.0 | ) | |||||||
| Impairment adjustments and other non-cash items | 0.5 | 1.0 | 0.7 | 3.2 | |||||||||
| Changes in operating assets and liabilities, net of acquisitions: | |||||||||||||
| Accounts receivable | (44.7 | ) | (31.3 | ) | 5.5 | 10.2 | |||||||
| Inventories | 7.9 | 2.9 | (8.7 | ) | 12.1 | ||||||||
| Other assets | (2.2 | ) | (3.5 | ) | (1.9 | ) | (3.9 | ) | |||||
| Accounts payable | 36.3 | 37.9 | 10.7 | 7.0 | |||||||||
| Income taxes | (1.1 | ) | 27.6 | 1.2 | 36.7 | ||||||||
| Accrued liabilities and other | 2.9 | (3.2 | ) | (20.7 | ) | (25.7 | ) | ||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | $ | 89.7 | $ | 117.1 | $ | 194.0 | $ | 212.7 | |||||
| INVESTING ACTIVITIES: | |||||||||||||
| Capital expenditures | (30.3 | ) | (18.3 | ) | (58.8 | ) | (30.6 | ) | |||||
| Investment in unconsolidated entities | (1.5 | ) | - | (1.2 | ) | (0.1 | ) | ||||||
| Return of capital from unconsolidated entities | 0.2 | 0.2 | 0.4 | 0.4 | |||||||||
| Proceeds from sale of property, plant and equipment | 0.2 | 0.6 | 0.6 | 2.9 | |||||||||
| Proceeds from property, plant and equipment insurance settlement | 0.3 | - | 0.3 | - | |||||||||
| NET CASH USED FOR INVESTING ACTIVITIES | $ | (31.1 | ) | $ | (17.5 | ) | $ | (58.7 | ) | $ | (27.4 | ) | |
| FINANCING ACTIVITIES: | |||||||||||||
| Additions to revolving credit facilities | 3.1 | 134.8 | 23.1 | 150.9 | |||||||||
| Repayments of revolving credit facilities | (20.0 | ) | (55.7 | ) | (29.3 | ) | (63.2 | ) | |||||
| Additions to debt | 35.0 | - | 35.0 | 2.3 | |||||||||
| Repayments of debt | (62.3 | ) | (170.5 | ) | (144.5 | ) | (260.4 | ) | |||||
| Debt issuance costs | - | (0.1 | ) | (0.5 | ) | (0.2 | ) | ||||||
| Issuances of common stock, net of related minimum tax withholdings | (4.5 | ) | (2.2 | ) | (3.7 | ) | (1.3 | ) | |||||
| Excess tax benefits from share-based compensation | 0.5 | 0.2 | 0.6 | 1.4 | |||||||||
| Advances from (repayments to) unconsolidated entity | 0.7 | (0.9 | ) | (0.3 | ) | (0.7 | ) | ||||||
| Cash dividends paid to shareholders | (7.9 | ) | (5.8 | ) | (15.7 | ) | (11.6 | ) | |||||
| Cash distributions to noncontrolling interests | (1.2 | ) | (1.2 | ) | (3.2 | ) | (2.1 | ) | |||||
| NET CASH USED FOR FINANCING ACTIVITIES | $ | (56.6 | ) | $ | (101.4 | ) | $ | (138.5 | ) | $ | (184.9 | ) | |
| Effect of exchange rate changes on cash and cash equivalents | (0.1 | ) | 0.1 | (0.8 | ) | 0.2 | |||||||
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | $ | 1.9 | $ | (1.7 | ) | $ | (4.0 | ) | $ | 0.6 | |||
| Cash and cash equivalents at beginning of period | 10.0 | 14.1 | 15.9 | 11.8 | |||||||||
| Cash and cash equivalents at end of period | $ | 11.9 | $ | 12.4 | $ | 11.9 | $ | 12.4 | |||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||||||||
| Cash paid during the period for: | |||||||||||||
| Income taxes, net of refunds | $ | 11.3 | $ | (20.3 | ) | $ | 16.2 | $ | (17.9 | ) | |||
| Interest, net of amounts capitalized | 27.3 | 30.7 | 32.0 | 41.5 | |||||||||
| ROCK-TENN COMPANY | |||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| (UNAUDITED) | |||||||
| (IN MILLIONS) | |||||||
| March 31, | September 30, | ||||||
| 2011 | 2010 | ||||||
| ASSETS | |||||||
| CURRENT ASSETS: | |||||||
| Cash and cash equivalents | $ | 11.9 | $ | 15.9 | |||
| Accounts receivable (net of allowances of $8.7 and $7.8) | 330.1 | 333.5 | |||||
| Inventories | 280.4 | 269.5 | |||||
| Other current assets | 88.2 | 90.1 | |||||
| TOTAL CURRENT ASSETS | 710.6 | 709.0 | |||||
| Property, plant and equipment at cost: | |||||||
| Land and buildings | 428.1 | 420.6 | |||||
| Machinery and equipment | 1,972.3 | 1,915.7 | |||||
| Transportation equipment | 13.3 | 13.1 | |||||
| Leasehold improvements | 5.2 | 5.1 | |||||
| 2,418.9 | 2,354.5 | ||||||
| Less accumulated depreciation and amortization | (1,166.5 | ) | (1,104.5 | ) | |||
| Net property, plant and equipment | 1,252.4 | 1,250.0 | |||||
| Goodwill | 751.8 | 748.8 | |||||
| Intangibles, net | 145.6 | 151.5 | |||||
| Investment in unconsolidated entities | 24.4 | 23.3 | |||||
| Other assets | 28.6 | 32.3 | |||||
| TOTAL ASSETS | $ | 2,913.4 | $ | 2,914.9 | |||
LIABILITIES AND EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
| Current portion of debt | $ | 237.8 | $ | 231.6 | |||
| Accounts payable | 264.0 | 252.3 | |||||
| Accrued compensation and benefits | 76.8 | 90.7 | |||||
| Other current liabilities | 50.7 | 56.6 | |||||
| TOTAL CURRENT LIABILITIES | 629.3 | 631.2 | |||||
| Long-term debt due after one year | 774.8 | 897.3 | |||||
| Accrued pension and other long-term benefits | 164.1 | 165.3 | |||||
| Deferred income taxes | 194.9 | 166.4 | |||||
| Other long-term liabilities | 28.8 | 30.0 | |||||
| Redeemable noncontrolling interests | 7.5 | 7.3 | |||||
| Total Rock-Tenn Company shareholders' equity | 1,108.3 | 1,011.3 | |||||
| Noncontrolling interests | 5.7 | 6.1 | |||||
| Total Equity | 1,114.0 | 1,017.4 | |||||
| TOTAL LIABILITIES AND EQUITY | $ | 2,913.4 | $ | 2,914.9 | |||
| Rock-Tenn Company Quarterly Statistics | |||||||||||||
| Paperboard and Containerboard Operating Statistics | |||||||||||||
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | Fiscal Year | |||||||||
Average Net Selling Price Per Ton (a) | |||||||||||||
| All Tons | |||||||||||||
2009 | 592 | 578 | 557 | 548 | 568 | ||||||||
2010 | 544 | 563 | 595 | 610 | 578 | ||||||||
2011 | 617 | 622 | |||||||||||
�� | |||||||||||||
Tons Shipped | |||||||||||||
| Recycled Paperboard (a) (b) | |||||||||||||
2009 | 204,927 | 211,941 | 219,819 | 224,269 | 860,956 | ||||||||
2010 | 223,148 | 228,064 | 232,149 | 235,648 | 919,009 | ||||||||
2011 | 224,517 | 239,270 | |||||||||||
| Containerboard | |||||||||||||
2009 | 221,907 | 188,568 | 203,019 | 235,250 | 848,744 | ||||||||
2010 | 231,113 | 234,757 | 244,997 | 244,698 | 955,565 | ||||||||
2011 | 247,446 | 243,838 | |||||||||||
| Bleached Paperboard | |||||||||||||
2009 | 86,338 | 78,223 | 79,461 | 88,856 | 332,878 | ||||||||
2010 | 84,993 | 85,842 | 88,999 | 86,051 | 345,885 | ||||||||
2011 | 84,410 | 85,095 | |||||||||||
| Market Pulp | |||||||||||||
2009 | 20,705 | 19,493 | 24,199 | 26,521 | 90,918 | ||||||||
2010 | 25,362 | 25,055 | 24,109 | 25,851 | 100,377 | ||||||||
2011 | 22,076 | 24,046 | |||||||||||
| Total (a) | |||||||||||||
2009 | 533,877 | 498,225 | 526,498 | 574,896 | 2,133,496 | ||||||||
2010 | 564,616 | 573,718 | 590,254 | 592,248 | 2,320,836 | ||||||||
2011 | 578,449 | 592,249 | |||||||||||
| (a) Average Net Selling Price Per Ton and Tons Shipped include gypsum paperboard liner tons shipped by Seven Hills Paperboard LLC, our unconsolidated joint venture with Lafarge North America, Inc. Average Net Selling Price Per Ton is computed as net sales of paperboard, containerboard and market pulp divided by tons shipped. | |||||||||||||
| (b) Recycled paperboard tons shipped include coated and specialty paperboard. | |||||||||||||
| 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 | ||||||||||||||||||||||||
2009 | $ | 368.8 | $ | 362.9 | $ | 377.2 | $ | 394.2 | $ | 1,503.1 | ||||||||||||||
2010 | 379.6 | 386.2 | 398.2 | 414.1 | 1,578.1 | |||||||||||||||||||
2011 | 392.7 | 410.3 | ||||||||||||||||||||||
| Consumer Packaging Intersegment Sales | ||||||||||||||||||||||||
2009 | $ | 6.6 | $ | 4.7 | $ | 6.0 | $ | 7.8 | $ | 25.1 | ||||||||||||||
2010 | 6.0 | 7.2 | 8.5 | 8.9 | 30.6 | |||||||||||||||||||
2011 | 6.5 | 6.3 | ||||||||||||||||||||||
| Consumer Packaging Segment Income | ||||||||||||||||||||||||
2009 | $ | 31.5 | $ | 39.2 | $ | 50.3 | (1) | $ | 53.2 | (2) | $ | 174.2 | ||||||||||||
2010 | 42.1 | (3) | 36.8 | (4) | 49.1 | 57.7 | 185.7 | |||||||||||||||||
2011 | 52.3 | 43.4 | ||||||||||||||||||||||
| Return On Sales | ||||||||||||||||||||||||
2009 | 8.5 | % | 10.8 | % | 13.3 | % | (1) | 13.5 | % | (2) | 11.6 | % | ||||||||||||
2010 | 11.1 | % | (3) | 9.5 | % | (4) | 12.3 | % | 13.9 | % | 11.8 | % | ||||||||||||
2011 | 13.3 | % | 10.6 | % | ||||||||||||||||||||
| Corrugated Packaging Segment Sales | ||||||||||||||||||||||||
2009 | $ | 203.2 | $ | 176.5 | $ | 186.5 | $ | 186.7 | $ | 752.9 | ||||||||||||||
2010 | 180.1 | 191.0 | 210.5 | 219.0 | 800.6 | |||||||||||||||||||
2011 | 198.3 | 209.4 | ||||||||||||||||||||||
| Corrugated Packaging Intersegment Sales | ||||||||||||||||||||||||
2009 | $ | 10.1 | $ | 9.7 | $ | 8.8 | $ | 8.7 | $ | 37.3 | ||||||||||||||
2010 | 7.3 | 8.6 | 9.6 | 11.8 | 37.3 | |||||||||||||||||||
2011 | 9.4 | 11.1 | ||||||||||||||||||||||
| Corrugated Packaging Segment Income | ||||||||||||||||||||||||
2009 | $ | 50.6 | $ | 41.6 | $ | 49.6 | $ | 37.1 | $ | 178.9 | ||||||||||||||
2010 | 34.7 | 20.9 | 35.9 | 48.2 | 139.7 | |||||||||||||||||||
2011 | 36.4 | 29.1 | ||||||||||||||||||||||
| Return on Sales | ||||||||||||||||||||||||
2009 | 24.9 | % | 23.6 | % | 26.6 | % | 19.9 | % | 23.8 | % | ||||||||||||||
2010 | 19.3 | % | 10.9 | % | 17.1 | % | 22.0 | % | 17.4 | % | ||||||||||||||
2011 | 18.4 | % | 13.9 | % | ||||||||||||||||||||
| Merchandising Displays Segment Sales | ||||||||||||||||||||||||
2009 | $ | 74.8 | $ | 82.9 | $ | 79.7 | $ | 83.2 | $ | 320.6 | ||||||||||||||
2010 | 66.8 | 77.1 | 87.9 | 101.4 | 333.2 | |||||||||||||||||||
2011 | 91.8 | 91.4 | ||||||||||||||||||||||
| Merchandising Displays Intersegment Sales | ||||||||||||||||||||||||
2009 | $ | - | $ | 0.2 | $ | 0.1 | $ | 0.1 | $ | 0.4 | ||||||||||||||
2010 | 0.1 | 0.1 | 0.1 | 0.3 | 0.6 | |||||||||||||||||||
2011 | 0.3 | 0.3 | ||||||||||||||||||||||
| Merchandising Displays Segment Income | ||||||||||||||||||||||||
2009 | $ | 5.1 | $ | 9.7 | $ | 8.0 | $ | 9.1 | $ | 31.9 | ||||||||||||||
2010 | 4.2 | 11.2 | 8.4 | 12.5 | 36.3 | |||||||||||||||||||
2011 | 11.4 | 10.2 | ||||||||||||||||||||||
| Return on Sales | ||||||||||||||||||||||||
2009 | 6.8 | % | 11.7 | % | 10.0 | % | 10.9 | % | 10.0 | % | ||||||||||||||
2010 | 6.3 | % | 14.5 | % | 9.6 | % | 12.3 | % | 10.9 | % | ||||||||||||||
2011 | 12.4 | % | 11.2 | % | ||||||||||||||||||||
| (1) Excludes $32.7 of alternative fuel mixture credit, net of expenses. | ||||||||||||||||||||||||
| (2) Excludes $21.4 of alternative fuel mixture credit, net of expenses. | ||||||||||||||||||||||||
| (3) Excludes $20.7 of alternative fuel mixture credit, net of expenses. | ||||||||||||||||||||||||
| (4) Excludes $8.1 of alternative fuel mixture 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 | ||||||||||||||||||||||||
2009 | $ | 75.3 | $ | 70.2 | $ | 77.2 | $ | 84.2 | $ | 306.9 | ||||||||||||||
2010 | 79.8 | 96.4 | 96.6 | 95.9 | 368.7 | |||||||||||||||||||
2011 | 98.4 | 103.5 | ||||||||||||||||||||||
| Specialty Paperboard Products Intersegment Sales | ||||||||||||||||||||||||
2009 | $ | 2.3 | $ | 1.6 | $ | 1.8 | $ | 2.7 | $ | 8.4 | ||||||||||||||
2010 | 2.1 | 2.9 | 3.1 | 2.6 | 10.7 | |||||||||||||||||||
2011 | 3.9 | 4.0 | ||||||||||||||||||||||
| Specialty Paperboard Products Segment Income | ||||||||||||||||||||||||
2009 | $ | 2.8 | $ | 6.2 | $ | 9.4 | $ | 8.1 | $ | 26.5 | ||||||||||||||
2010 | 4.5 | 6.0 | 8.0 | 7.5 | 26.0 | |||||||||||||||||||
2011 | 4.3 | 5.2 | ||||||||||||||||||||||
| Return on Sales | ||||||||||||||||||||||||
2009 | 3.7 | % | 8.8 | % | 12.2 | % | 9.6 | % | 8.6 | % | ||||||||||||||
2010 | 5.6 | % | 6.2 | % | 8.3 | % | 7.8 | % | 7.1 | % | ||||||||||||||
2011 | 4.4 | % | 5.0 | % | ||||||||||||||||||||
| Key Financial Statistics | ||||||||||||||||||||||||
| (In Millions, except EPS Data) | ||||||||||||||||||||||||
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | Fiscal Year | ||||||||||||||||||||
| Net Income Attributable to Rock-Tenn Company Shareholders | ||||||||||||||||||||||||
2009 | $ | 30.6 | $ | 37.4 | $ | 87.0 | $ | 67.3 | $ | 222.3 | ||||||||||||||
2010 | 56.3 | 32.8 | 45.1 | 91.4 | 225.6 | |||||||||||||||||||
2011 | 50.3 | 37.0 | ||||||||||||||||||||||
| Diluted EPS (1) | ||||||||||||||||||||||||
2009 | $ | 0.79 | $ | 0.97 | $ | 2.23 | $ | 1.71 | $ | 5.71 | ||||||||||||||
2010 | 1.43 | 0.83 | 1.14 | 2.31 | 5.70 | |||||||||||||||||||
2011 | 1.27 | 0.92 | ||||||||||||||||||||||
| Depreciation & Amortization | ||||||||||||||||||||||||
2009 | $ | 37.9 | $ | 37.3 | $ | 37.5 | $ | 37.3 | $ | 150.0 | ||||||||||||||
2010 | 37.5 | 36.8 | 36.4 | 36.7 | 147.4 | |||||||||||||||||||
2011 | 36.7 | 37.2 | ||||||||||||||||||||||
| Capital Expenditures | ||||||||||||||||||||||||
2009 | $ | 14.2 | $ | 17.0 | $ | 18.1 | $ | 26.6 | $ | 75.9 | ||||||||||||||
2010 | 12.3 | 18.3 | 30.3 | 45.3 | 106.2 | |||||||||||||||||||
2011 | 28.5 | 30.3 | ||||||||||||||||||||||
| (1) Fiscal 2009 Diluted EPS has been adjusted to reflect the October 1, 2009 adoption of accounting guidance related to the computation of earnings per share. | ||||||||||||||||||||||||
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 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 other variations of net debt repayment per diluted share provide measures 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 Long-term debt due after one year for the current quarter, the prior quarter, the quarter following the Southern Container acquisition and the quarter before the Gulf States acquisition which was used to measure pro forma net debt for the Gulf States acquisition:
| (In Millions) | March 31, | December 31, | March 31, | March 31, | |||||||||||||||
| 2011 | 2010 | 2008 | 2005 | ||||||||||||||||
| Current Portion of Debt | $ | 237.8 | $ | 234.7 | $ | 247.7 | $ | 75.1 | |||||||||||
| Long-Term Debt Due After One Year | 774.8 | 822.3 | 1,606.8 | 390.7 | |||||||||||||||
| Total Debt | 1,012.6 | 1,057.0 | 1,854.5 | 465.8 | |||||||||||||||
| Less: Hedge Adjustments Resulting From | |||||||||||||||||||
Fair Value Interest Rate Derivatives or Swaps | (1.1 | ) | (1.5 | ) | (7.6 | ) | (9.8 | ) | |||||||||||
| 1,011.5 | 1,055.5 | 1,846.9 | 456.0 | ||||||||||||||||
| Less: Cash and Cash Equivalents | (11.9 | ) | (10.0 | ) | (56.6 | ) | (28.5 | ) | |||||||||||
| Less: Investment in Marketable Securities | — | — | — | (31.2 | ) | ||||||||||||||
| Less: Restricted Cash | — | — | (19.5 | ) | — | ||||||||||||||
| Net Debt | $ | 999.6 | $ | 1,045.5 | $ | 1,770.8 | $ | 396.3 | |||||||||||
| Plus: Gulf States estimated purchase price | 552.4 | ||||||||||||||||||
| Plus: Southern Container purchase price | 1,059.9 | ||||||||||||||||||
| $ | 2,008.6 | ||||||||||||||||||
| Net Debt | |||||||||||||||||||
| Repayment | |||||||||||||||||||
| Current Quarter | $ | 45.9 | |||||||||||||||||
| Since March 31, 2008 | $ | 771.2 | |||||||||||||||||
| Since March 31, 2005 | $ | 1,009.0 | |||||||||||||||||
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 March 31, 2011 calculation, our Leverage Ratio was 1.95 times. Our maximum permitted Leverage Ratio under the Senior Credit Facility at March 31, 2011 was 3.75 times.
Set forth below is a reconciliation of Credit Agreement EBITDA for the three and twelve months ended March 31, 2011, to the most directly comparable GAAP measure, Consolidated Net Income:
| (In Millions, except percentages) | Three Months | Twelve Months | |||||||
| Ended | Ended | ||||||||
| March 31, 2011 | March 31, 2011 | ||||||||
| Consolidated Net Income | $ | 38.3 | $ | 229.0 | |||||
| Interest Expense, net | 14.6 | 61.5 | |||||||
| Income Taxes | 17.5 | 75.8 | |||||||
| Depreciation and Amortization | 37.2 | 147.0 | |||||||
| Additional Permitted Charges and pro forma | |||||||||
| Acquisition EBITDA | 6.3 | 14.1 | |||||||
| Credit Agreement EBITDA | $ | 113.9 | $ | 527.4 | |||||
| Less: Capital Expenditures | (30.3 | ) | (134.4 | ) | |||||
| Credit Agreement EBITDA, Excluding Capital Expenditures | $ | $ 83.6 | $ | 393.0 | |||||
| Net Sales | $ | 792.9 | $ | 3,132.7 | |||||
| Credit Agreement EBITDA Margin | 14.4 | % | 16.8 | % | |||||
| Credit Agreement EBITDA Margin, Excluding | |||||||||
| Capital Expenditures | 10.5 | % | 12.5 | % | |||||
Set forth below is a reconciliation of Total Funded Debt to the most directly comparable GAAP measures, Current portion of debt and Long-term debt due after one year:
| (In Millions, except ratio) | March 31, | |||
| 2011 | ||||
| Current Portion of Debt | $ | 237.8 | ||
| Long-Term Debt Due After One Year | 774.8 | |||
| Total Debt | 1,012.6 | |||
| Less: Hedge Adjustments Resulting From Terminated | ||||
| Fair Value Interest Rate Derivatives or Swaps | (1.1 | ) | ||
| Total Debt Less Hedge Adjustments | 1,011.5 | |||
| Plus: Letters of Credit, Guarantees and Other Adjustments | 14.9 | |||
| Total Funded Debt | $ | 1,026.4 | ||
| Credit Agreement EBITDA for the Twelve Months Ended | ||||
| March 31, 2011 | $ | 527.4 | ||
| Leverage Ratio | 1.95 | |||
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 our 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 attributable to Rock-Tenn Company shareholders and Earnings per Diluted Share, respectively. Set forth below is a reconciliation of adjusted net income to Net income attributable to Rock-Tenn Company shareholders:
| Three Months | Three Months | Six Months | Six Months | |||||||||||||||
| Ended | Ended | Ended | Ended | |||||||||||||||
| March 31, | March 31, | March 31, | March 31, | |||||||||||||||
| (In Millions) | 2011 | 2010 | 2011 | 2010 | ||||||||||||||
| Net income attributable to Rock-Tenn Company shareholders | $ | 37.0 | $ | 32.8 | $ | 87.3 | $ | 89.1 | ||||||||||
| Alternative fuel mixture credit, net | — | (8.1 | ) | — | (28.9 | ) | ||||||||||||
| Restructuring and other costs, net | 4.0 | 0.6 | 4.4 | 2.6 | ||||||||||||||
| Loss on extinguishment of debt | — | 2.1 | — | 1.8 | ||||||||||||||
| Operating losses of previously closed facilities | 0.4 | 0.4 | 0.5 | 0.6 | ||||||||||||||
| Adjusted net income | $ | 41.4 | $ | 27.8 | $ | 92.2 | $ | 65.2 | ||||||||||
CONTACT:
RockTenn
John Stakel, VP-Treasurer, 678-291-7900
