Exhibit 99.1
Rock-Tenn Company Reports First Quarter
Fiscal Year 2004 Results Continued Folding Carton Growth
Business Editors
NORCROSS, Ga.--(BUSINESS WIRE)--January 21, 2004--Rock-Tenn Company
(NYSE:RKT) today reported financial results for the first quarter of fiscal
2004, which ended December 31, 2003. Net sales for the first quarter of fiscal
2004 were $366.1 million up 11.0% from $329.8 million in the prior year quarter.
Net income was $11.9 million, or $0.34 per diluted share, for the first quarter
ended December 31, 2003, compared to $5.1 million, or $0.15 per diluted share,
in the comparable quarter of the prior fiscal year. Rock-Tenn Company's net
income in the first quarter of fiscal 2004 included income of $7.7 million, or
$0.22 per diluted share, from discontinued operations, relating primarily to the
completion of the sale of the Plastic Packaging division in October 2003.
Chairman and Chief Executive Officer's Statement
Rock-Tenn Company Chairman and Chief Executive Officer James A.
Rubright stated, "This quarter was marked by strong sales growth --
11% higher than the first quarter of fiscal 2003. We continue to
increase our penetration in key folding carton market segments where
our strategy of aggressively investing in technology and modern
printing and cutting capacity to reduce our cost structure continues
to gain traction. We also gained share in our paperboard mills where
tons produced were up 6% over the first quarter of fiscal 2003
primarily from higher sales of coated recycled board for folding
cartons. Earnings from continuing operations for the quarter were down
somewhat from the prior year quarter due primarily to higher energy
costs, as natural gas costs averaged $10 per ton higher than in the
first quarter of fiscal 2003, and due to a $1.1 million receivables
and inventory write-off occasioned by a customer bankruptcy that
occurred after the quarter ended.
"For the second quarter of fiscal 2004, we expect a small increase
in sales over the first quarter due to seasonal factors and earnings
in the range of $0.15 to $0.20 per share. While these earnings are
somewhat higher than the first quarter due to expected better asset
utilization and operating performance, they are somewhat lower than
the second quarter of fiscal 2003 as we will continue to be adversely
affected by the current high natural gas prices."
Segment Results
Packaging Products Segment
Packaging Products segment sales increased 20.3% in the first
quarter of fiscal 2004 to $208.9 million from $173.7 million in the
first quarter of fiscal 2003. Packaging Products segment operating
income increased to $6.7 million in the first quarter of fiscal 2004
compared to $4.7 million in the prior year quarter.
Folding carton division sales were $177.1 million in the first
quarter of fiscal 2004, a $35.3 million increase over the prior year
quarter. The sales increase was partially due to the Company's
acquisitions of Cartem Wilco and Pacific Coast Packaging and strong
internal growth, which contributed 10.3% of the 24.8% increase. The
folding carton division's operating income increased $1.6 million from
the prior year quarter. Interior packaging sales were relatively flat
compared to the year ago quarter, while operating income increased
over the first quarter of fiscal 2003 in part due to reduced selling,
general and administrative (SG&A) expenses.
Merchandising Displays and Corrugated Packaging Segment
In the first quarter of fiscal 2004, Merchandising Displays and
Corrugated Packaging segment sales were $72.3 million compared to
$73.7 million in the first quarter of fiscal 2003. Operating income
for the segment was $5.7 million in the first quarter of fiscal 2004
versus $6.9 million in the prior year quarter. The decrease in sales
and operating income compared to the prior year quarter was primarily
due to changes in customer and product mix, resulting in somewhat
lower margins.
Paperboard Segment
Paperboard segment sales increased 5.2% to $129.5 million in the
first quarter of fiscal 2004 versus $123.1 million in the same quarter
of fiscal 2003. The sales increase was primarily due to a 6.4%
increase in tons shipped compared to the prior year quarter and a $3
per ton increase in average selling price, which was offset in part by
lower sales of recycled fiber and laminated paperboard products. Total
tons shipped in the quarter for the Paperboard segment were 274,590
tons compared to 258,133 tons shipped in the same quarter last year.
The Company's recycled paperboard mills operated at 92% of capacity
during the first quarter of fiscal 2004. Operating income in the
segment declined $2.2 million from the prior year quarter to $2.8
million in the first quarter of fiscal 2004. Higher fiber and energy
costs, adjusted for the increased average selling price, negatively
impacted the paperboard segment by $3.0 million compared to the prior
year quarter.
Selling, General & Administrative Expenses
During the first quarter of fiscal 2004, SG&A expenses were $48.0
million, or 13.1% of net sales, compared to $47.0 million, or 14.3% of
net sales, in the same quarter of last year. SG&A expense as a
percentage of net sales decreased versus the previous year quarter due
to continued focus on cost reductions and productivity improvements.
Financing
Rock-Tenn Company's debt balance, excluding the fair value hedge
adjustment of $18.1 million, at the end of the first quarter of fiscal
2004 was $489.5 million compared to $502.0 million, excluding the fair
value hedge adjustment of $23.9 million, on September 30, 2003. The
Company's cash on hand was $50.9 million at the end of the first
quarter of fiscal 2004 compared to $14.2 million on September 30,
2003.
Cautionary Statements
Statements herein regarding the expected impact of energy and raw
material costs, expectations regarding seasonal factors, expected
earnings of the Company and expected performance of the Company's
businesses, including expectations regarding factors such as sales,
asset utilization, and operating performance, constitute
forward-looking statements within the meaning of the Securities Act of
1933 and the Securities Exchange Act of 1934. Such statements are
based on our current expectations and beliefs and 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, the Company has made
assumptions regarding expected economic conditions, expected volumes
and price levels of purchases by customers, raw material and energy
costs, labor costs, the amount and timing of expected capital
expenditures, including installation costs, project development and
implementation costs, severance and other shutdown costs,
restructuring costs, expected credit availability, expected inventory
levels and costs, competitive conditions in our businesses, and
possible adverse actions of our customers, our competitors and
suppliers. The forward-looking statements are subject to certain risks
including, among others, that the foregoing assumptions are
inaccurate. There are many factors that impact these forward-looking
statements that cannot be predicted accurately. Actual results may
vary materially from current expectations, in part because the Company
manufactures most of its products against customer orders with short
lead times and small backlogs, while earnings are currently dependent
on volume due to price levels and fixed operating costs. Further,
these forward-looking statements are subject to a number of general
risks including, among others, decreases in demand for the Company's
products, increases in energy and raw material costs, reduced supply
of raw materials, increases in capital equipment costs, fluctuations
in selling prices, increased competition, and adverse changes in
general market and industry conditions. Such risks are more
particularly described in the Company's filings with the Securities
and Exchange Commission, including under the caption "Business --
Forward-Looking Information and Risk Factors" in the Company's Annual
Report on Form 10-K for the most recently ended fiscal year.
Management believes its estimates are reasonable; however, undue
reliance should not be placed on such estimates, which are based on
current expectations. The information contained herein speaks as of
the date hereof and the Company does not undertake any obligation to
update such information, including, without limitation, expected
earnings of the Company, as future events unfold.
Conference Call
The Company will host a conference call to discuss its first
quarter of fiscal 2004 and other topics that may be raised during the
discussion at 2:00 p.m., Eastern Time, on Wednesday, January 21, 2004.
The conference call will be webcast and can be accessed, along with a
copy of this press release and any other statistical information
related to the conference call, at www.rocktenn.com.
Rock-Tenn Company provides superior marketing and packaging
solutions to consumer products companies at very low costs, with
annual net sales of over $1.4 billion and over 70 operating locations
in the United States, Canada, Mexico and Chile.
ROCK-TENN COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
======================================================================
FOR THE THREE MONTHS ENDED
December 31, December 31,
2003 2002
- ----------------------------------------------------------------------
NET SALES $ 366,110 $ 329,849
Cost of Goods Sold 304,344 267,921
- ----------------------------------------------------------------------
Gross Profit 61,766 61,928
Selling, General and
Administrative Expenses 47,989 47,021
Restructuring and Other Costs 132 (519)
- ----------------------------------------------------------------------
Operating Profit 13,645 15,426
Interest Expense (5,911) (6,463)
Interest and Other Income 80 52
Loss from Unconsolidated Joint Venture (50) ---
Minority Interest in Income of
Consolidated Subsidiary (886) (738)
- ----------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 6,878 8,277
Provision For Income Taxes 2,712 3,332
- ----------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS 4,166 4,945
Income from Discontinued Operations 7,713 125
NET INCOME $ 11,879 $ 5,070
- ----------------------------------------------------------------------
Weighted Average Common Shares
Outstanding-Diluted 35,281 34,502
- ----------------------------------------------------------------------
Diluted Earnings Per Share:
Income from Continuing Operations $ 0.12 $ 0.14
Income from Discontinued Operations 0.22 0.01
---------- ----------
Diluted Earnings Per Share $ 0.34 $ 0.15
======================================================================
ROCK-TENN COMPANY
INDUSTRY SEGMENT INFORMATION
(UNAUDITED)
(IN THOUSANDS, EXCEPT TONNAGE DATA)
======================================================================
FOR THE THREE MONTHS ENDED
December 31, December 31,
2003 2002
- ----------------------------------------------------------------------
NET SALES:
Packaging Products Segment $ 208,875 $ 173,677
Merchandising Displays and
Corrugated Packaging Segment 72,270 73,710
Paperboard Segment 129,529 123,136
Intersegment Eliminations (44,564) (40,674)
- ----------------------------------------------------------------------
TOTAL $ 366,110 $ 329,849
- ----------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS
BEFORE TAXES:
Packaging Products Segment $ 6,731 $ 4,654
Merchandising Displays and
Corrugated Packaging Segment 5,698 6,907
Paperboard Segment 2,816 5,061
- ----------------------------------------------------------------------
Segment Income $ 15,245 $ 16,622
Restructuring and Other Costs (132) 519
Non-Allocated Expense (1,518) (1,715)
Interest Expense (5,911) (6,463)
Interest and Other Income 80 52
Minority Interest in Income of
Consolidated Subsidiary (886) (738)
- ----------------------------------------------------------------------
TOTAL $ 6,878 $ 8,277
======================================================================
Paperboard Shipped (in tons) 274,590 258,133
======================================================================
ROCK-TENN COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
======================================================================
FOR THE THREE MONTHS ENDED
December 31, December 31,
2003 2002
- ----------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income from continuing operations $ 4,166 $ 4,945
Items in income not affecting cash:
Depreciation and amortization 18,602 17,953
Deferred income taxes (3,354) 2,482
Deferred compensation expense 281 171
Income tax benefit of employee stock options 188 ---
Gain on disposal of property,
plant and equipment (441) (674)
Equity in loss from joint venture 50 ---
Minority interest in income of
consolidated subsidiary 886 738
Impairment loss and other non-cash items 34 366
Pension funding less than expense 4,416 3,144
Net changes in operating assets and
liabilities (20,765) (4,659)
- ----------------------------------------------------------------------
CASH PROVIDED BY OPERATING ACTIVITIES
FROM CONTINUING OPERATIONS 4,063 24,466
Cash provided by operating activities from
discontinued operations 531 1,870
-------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,594 26,336
- ----------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (15,428) (16,393)
Cash paid for purchase of businesses, net
of cash received (1,060) ---
Cash contributed to joint venture (100) (82)
Proceeds from sale of property,
plant and equipment 693 6,126
- ----------------------------------------------------------------------
CASH USED FOR INVESTING ACTIVITIES
FROM CONTINUING OPERATIONS (15,895) (10,349)
Cash provided by (used for) investing
activities from discontinued operations 61,943 (328)
-------- --------
NET CASH PROVIDED BY (USED FOR) INVESTING
ACTIVITIES 46,048 (10,677)
- ----------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments to revolving credit
facilities (3,500) (1,700)
Additions to long-term debt 27 7
Repayments of long-term debt (9,107) (10,134)
Issuance of common stock 1,411 1,015
Purchases of common stock --- (1,313)
Cash dividends paid to shareholders (2,978) (2,755)
Distribution to minority interest --- (1,100)
- ----------------------------------------------------------------------
CASH USED FOR FINANCING ACTIVITIES (14,147) (15,980)
- ----------------------------------------------------------------------
Effect of exchange rate changes on cash 207 565
INCREASE IN CASH AND CASH EQUIVALENTS 36,702 244
Cash and cash equivalents:
Beginning of period 14,173 6,560
- ----------------------------------------------------------------------
End of period $ 50,875 $ 6,804
- ----------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes (net of refunds) $ 2,341 $ 3,863
Interest (net of amounts capitalized) $ 320 $ 90
======================================================================
ROCK-TENN COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(IN THOUSANDS)
======================================================================
DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
2003 2003 2002
- ----------------------------------------------------------------------
ASSETS:
Cash and cash equivalents $50,875 $14,173 $ 6,804
Receivables - net 153,991 163,096 131,930
Inventories - at LIFO cost 120,560 118,414 104,023
Other current assets 17,221 17,717 18,396
Current assets held for sale --- 52,703 46,005
- ----------------------------------------------------------------------
TOTAL CURRENT ASSETS 342,647 366,103 307,158
- ----------------------------------------------------------------------
Building and equipment-net 580,575 579,514 531,654
Intangible and other assets 346,443 345,778 310,956
- ----------------------------------------------------------------------
TOTAL ASSETS $1,269,665 $1,291,395 $1,149,768
======================================================================
LIABILITIES AND
SHAREHOLDERS' EQUITY:
Current maturities of
long-term debt $ 429 $12,927 $51,156
Other current liabilities 148,896 167,069 138,016
Current liabilities held
for sale --- 7,487 3,368
- ----------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 149,325 187,483 192,540
- ----------------------------------------------------------------------
Long-term maturities of
debt 489,022 489,037 390,256
Adjustment for fair value
hedge 18,074 23,930 20,010
------- ------- -------
Total long-term debt 507,096 512,967 410,266
Deferred income taxes 90,447 93,801 86,827
Other long-term items 83,629 75,108 52,092
Shareholders' equity 439,168 422,036 408,043
- ----------------------------------------------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,269,665 $1,291,395 $1,149,768
======================================================================
Total debt excluding
adjustment for fair
value hedge $489,451 $501,964 $441,412
Rock-Tenn Company Quarterly Statistics
Paperboard Group Operating Statistics
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Fiscal Year
-------- -------- ------- ------- -----------
Average Price Per Ton
- ---------------------
Coated & Specialty
Paperboard (a)
2002 $ 424 $ 410 $ 410 $ 425 $417
2003 434 418 437 438 432
2004 440
Corrugated Medium
2002 $ 342 $ 337 $ 331 $ 346 $339
2003 343 335 340 333 338
2004 331
All Tons
2002 $ 410 $ 398 $ 397 $ 413 $405
2003 419 406 423 421 417
2004 422
Average Recovered
Paper Cost
2002 $ 67 $ 65 $ 78 $ 108 $ 80
2003 82 78 88 86 83
2004 86
Tons Shipped
- ------------
Coated
2002 125,382 117,813 117,724 126,625 487,544
2003 117,566 128,606 126,292 125,363 497,827
2004 130,383
Specialty (a)
2002 98,538 112,408 117,652 114,367 442,965
2003 99,752 113,299 113,001 109,243 435,295
2004 100,327
Corrugated Medium
2002 43,556 42,541 43,960 44,797 174,854
2003 40,815 41,459 40,413 45,023 167,710
2004 43,880
Total
2002 267,476 272,762 279,336 285,789 1,105,363
2003 258,133 283,364 279,706 279,629 1,100,832
2004 274,590
(a) Specialty Paperboard Average Price Per Ton and Tons Shipped
include tons shipped by Seven Hills Paperboard LLC, our joint
venture with LaFarge Corporation.
Rock-Tenn Company Quarterly Statistics
Segment Sales and Operating Income
(In Thousands)
1st 2nd 3rd 4th Fiscal
Quarter Quarter Quarter Quarter Year
-------- -------- -------- ------- --------
Packaging Segment
Sales
2002 $177,684 $177,606 $182,841 $184,554 $722,685
2003 173,677 196,277 210,180 221,268 801,402
2004 208,875
Packaging Income
2002 $ 9,995 $ 11,904 $ 13,695 $ 10,553 $ 46,147
2003 4,654 9,742 10,503 12,659 37,558
2004 6,731
Return On Sales
2002 5.6% 6.7% 7.5% 5.7% 6.4%
2003 2.7% 5.0% 5.0% 5.7% 4.7%
2004 3.2%
Merchandising Displays
and Corrugated Packaging
Segment
Sales
2002 $ 72,271 $ 69,965 $ 67,856 $ 79,459 $289,551
2003 73,710 64,214 70,350 76,832 285,106
2004 72,270
Merchandising Displays
and Corrugated
Packaging Income
2002 $ 11,389 $ 7,849 $ 4,569 $ 9,006 $ 32,813
2003 6,907 5,073 6,672 9,093 27,745
2004 5,698
Return on Sales
2002 15.8% 11.2% 6.7% 11.3% 11.3%
2003 9.4% 7.9% 9.5% 11.8% 9.7%
2004 7.9%
Paperboard Segment
Sales
2002 $125,078 $123,740 $129,094 $138,261 $516,173
2003 123,136 130,742 130,307 131,889 516,074
2004 129,529
Paperboard Income
2002 $ 6,287 $ 6,348 $ 9,033 $ 2,426 $ 24,094
2003 5,061 6,351 5,626 3,700 20,738
2004 2,816
Return on Sales
2002 5.0% 5.1% 7.0% 1.8% 4.7%
2003 4.1% 4.9% 4.3% 2.8% 4.0%
2004 2.2%
Rock-Tenn Company Quarterly Statistics
Key Financial Statistics
(In Thousands except EPS Data)
1st 2nd 3rd 4th Fiscal
Quarter Quarter Quarter Quarter Year
------- ------- ------- ------- -------
Income From Continuing
Operations Before
Cumulative Effect of a
Change in Accounting
Principle
2002 $11,259 $11,026 $4,922 $2,646 $29,853
2003 4,945 7,131 7,853 9,612 29,541
2004 4,166
Diluted EPS From Continuing
Operations Before
Cumulative Effect of a
Change in Accounting
Principle
2002 $0.33 $0.32 $0.14 $0.08 $0.87
2003 0.14 0.21 0.23 0.27 0.85
2004 0.12
Income Before Cumulative
Effect of a Change in
Accounting Principle
2002 $12,199 $11,584 $5,471 $3,216 $32,470
2003 5,070 7,330 7,212 9,964 29,576
2004 11,879
Diluted EPS Before
Cumulative Effect of a
Change in Accounting
Principle
2002 $0.36 $0.34 $0.16 $0.09 $0.94
2003 0.15 0.21 0.21 0.28 0.85
2004 0.34
Net Income
2002 $6,355 $11,584 $5,471 $3,216 $26,626
2003 5,070 7,330 7,212 9,964 29,576
2004 11,879
Diluted EPS
2002 $0.19 0.34 $0.16 $0.09 $0.77
2003 0.15 0.21 0.21 0.28 0.85
2004 0.34
Depreciation & Amortization
2002 $16,749 $17,217 $16,945 $17,180 $68,091
2003 17,953 17,502 17,791 19,437 72,683
2004 18,602
Capital Expenditures
2002 $9,038 $16,656 $23,887 $23,120 $72,701
2003 16,393 15,002 12,114 13,893 57,402
2004 15,428
CONTACT: Rock-Tenn Company
Steven C. Voorhees, 770-448-2193
(Executive Vice President & Chief Financial Officer)
David Rees, 770-448-2193 (Investor Relations)