Exhibit 99.1
Rock-Tenn Company Reports Second Quarter Fiscal Year 2004 Results:
Record Quarterly Sales of $400 Million
NORCROSS, Ga.--(BUSINESS WIRE)--April 27, 2004--Rock-Tenn Company
(NYSE:RKT) today reported financial results for the second quarter of fiscal
2004, which ended March 31, 2004. Net sales for the second quarter of
fiscal 2004 were $400.0 million, up 14.2% from $350.2 million in the
prior year quarter. Net income was $2.9 million, or $0.08 per diluted
share, for the second quarter ended March 31, 2004. Net income for the
quarter was reduced by pre-tax restructuring costs of $6.0 million
primarily related to the previously announced closure of a laminated
paperboard products facility. Net income in the second quarter of
fiscal 2003 was $7.3 million, or $0.21 per diluted share, which
included pre-tax restructuring charges of $0.9 million.
Chairman and Chief Executive Officer's Statement
Rock-Tenn Company Chairman and Chief Executive Officer James A.
Rubright stated, "Rock-Tenn achieved record sales of $400.0 million
during the second quarter, primarily due to strong sales increases in
our folding carton and merchandising display businesses. Folding
carton sales increased 22% over the prior year quarter on strong
demand and continued market penetration. Merchandising display sales
increased 21% over the prior year quarter also on strong demand and
sales to new customers as we expanded our presence in the North
American display business. Our recycled paperboard mills made the most
of their strong market positions and diverse range of high quality
products, operating at 98% of capacity. Rock-Tenn's segment income was
at the high end of the segment income that we used to establish our
earnings guidance for the quarter due to higher than expected
operating income in our Merchandising Displays and Corrugated
Packaging segment. Operating income for the segment was $7.2 million,
up 41% over the second quarter of fiscal 2003."
Segment Results
Packaging Products Segment
Packaging Products segment sales increased 18.1% to $231.8 million
in the second quarter of fiscal 2004 from $196.3 million in the second
quarter of fiscal 2003. Packaging Products segment operating income
increased to $9.9 million in the second quarter of fiscal 2004 from
$9.7 million in the prior year quarter.
Folding carton division sales were $199.8 million in the second
quarter of fiscal 2004, a 22.2% increase over the prior year quarter.
The $36.4 million sales increase was primarily due to an increase in
volume over the prior year quarter. Sales of Pacific Coast Packaging,
which Rock-Tenn Company acquired in August 2003, contributed $5.7
million to the increase from the prior year quarter.
Merchandising Displays and Corrugated Packaging Segment
Merchandising Displays and Corrugated Packaging segment sales were
$75.7 million in the second quarter of fiscal 2004 compared to $64.2
million in the second quarter of fiscal 2003. Operating income for the
segment was $7.2 million in the second quarter of fiscal 2004 compared
to $5.1 million in the prior year quarter.
Paperboard Segment
Paperboard segment sales increased 5.4% to $137.8 million in the
second quarter of fiscal 2004 compared to $130.7 million in the same
quarter of fiscal 2003. The sales increase was primarily due to an
8,300 ton increase in tons shipped compared to the prior year quarter
and an $18 per ton increase in average selling price. Recycled fiber
division sales also increased, while the laminated paperboard products
division's sales were lower due to decreased demand. Operating income
in the segment declined to $2.6 million in the second quarter of
fiscal 2004 from $6.4 million in the prior year quarter due primarily
to higher fiber and energy costs, which combined were $29 per ton
higher than the prior year quarter.
Selling, General & Administrative Expenses
During the second quarter of fiscal 2004, selling, general and
administrative (SG&A) expenses were up slightly over the prior year
quarter as a percentage of sales, 12.8% compared to 12.3%, in part due
to a $3.7 million increase in bad debt expense. The Company lowered
its allowance for doubtful accounts in the second quarter of fiscal
2003 and recorded additional expense during the second quarter of
fiscal 2004. The Company performs ongoing evaluations of its
customers' credit information, such as financial condition and payment
history, and adjusts its allowance for doubtful accounts as conditions
warrant.
Restructuring and Other Costs
Restructuring costs for the quarter included a $7.7 million
pre-tax charge associated with the previously announced closure of the
Wright City laminated paperboard products facility, including the
impairment of $0.2 million of the $5.0 million goodwill allocated to
the laminated paperboard products division. The Wright City charge
included $7.2 million of non-cash charges primarily for facility and
equipment impairments. During the first six months of fiscal 2004, the
Wright City facility incurred a pre-tax loss of $1.6 million. The
costs related to the Wright City closure were partially offset by a
$1.8 million gain from the sale of a previously closed facility site.
Financing
Rock-Tenn Company's debt balance was $489.3 million, excluding
$25.1 million attributable to interest rate swaps, at the end of the
second quarter of fiscal 2004 compared to $502.0 million, excluding
the $23.9 million attributable to interest rate swaps, on September
30, 2003. The Company's cash on hand was $73.2 million at the end of
the second quarter of fiscal 2004 compared to $14.2 million on
September 30, 2003.
Conference Call
The Company will host a conference call to discuss results for the
second quarter of fiscal 2004 and other topics that may be raised
during the discussion at 11:00 a.m., Eastern Time, on Tuesday, April
27, 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 marketing and packaging solutions to
consumer products companies at 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 FOR THE SIX
MONTHS ENDED MONTHS ENDED
March 31, March 31, March 31, March 31,
2004 2003 2004 2003
- ----------------------------------------------------------------------
NET SALES $400,000 $ 350,234 $ 766,110 $680,083
Cost of Goods Sold 331,594 287,071 635,938 554,992
- ----------------------------------------------------------------------
Gross Profit 68,406 63,163 130,172 125,091
Selling, General and
Administrative Expenses 51,094 42,991 99,083 90,012
Restructuring and Other
Costs 6,043 935 6,175 416
- ----------------------------------------------------------------------
Operating Profit 11,269 19,237 24,914 34,663
Interest Expense (5,871) (6,566) (11,782) (13,029)
Interest and Other Income 132 56 212 108
Loss from Unconsolidated
Joint Venture (83) (284) (133) (284)
Minority Interest in Income
of Consolidated Subsidiary (590) (784) (1,476) (1,522)
- ----------------------------------------------------------------------
INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES 4,857 11,659 11,735 19,936
Provision For Income Taxes 1,848 4,528 4,560 7,860
- ----------------------------------------------------------------------
INCOME FROM CONTINUING
OPERATIONS 3,009 7,131 7,175 12,076
Income (Loss) from
Discontinued Operations (99) 199 7,614 324
NET INCOME $2,910 $7,330 $14,789 $12,400
- ----------------------------------------------------------------------
Weighted Average Common
Shares Outstanding-Diluted 35,312 34,515 35,305 34,513
- ----------------------------------------------------------------------
Diluted Earnings Per Share:
Income from Continuing
Operations $0.09 $0. 21 $0.20 $0. 35
Income (Loss) from
Discontinued
Operations (0.01) 0. 00 0.22 0.01
------- ------- ------- -------
Diluted Earnings Per Share $0.08 $0. 21 $0.42 $0.36
- ----------------------------------------------------------------------
ROCK-TENN COMPANY
INDUSTRY SEGMENT INFORMATION
(UNAUDITED)
(IN THOUSANDS, EXCEPT TONNAGE DATA)
FOR THE THREE FOR THE SIX
MONTHS ENDED MONTHS ENDED
March 31, March 31, March 31, March 31,
2004 2003 2004 2003
- ----------------------------------------------------------------------
NET SALES:
Packaging Products Segment $231,772 $196,277 $440,647 $369,954
Merchandising Displays and
Corrugated Packaging Segment 75,725 64,214 147,995 137,924
Paperboard Segment 137,843 130,742 267,372 253,878
Intersegment Eliminations (45,340) (40,999) (89,904) (81,673)
- ----------------------------------------------------------------------
TOTAL $400,000 $350,234 $766,110 $680,083
- ----------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS
BEFORE TAXES:
Packaging Products Segment $ 9,894 $ 9,742 $ 16,625 $ 14,396
Merchandising Displays and
Corrugated Packaging Segment 7,161 5,073 12,859 11,980
Paperboard Segment 2,582 6,351 5,398 11,412
- ----------------------------------------------------------------------
Segment Income $ 19,637 $ 21,166 $ 34,882 $ 37,788
Restructuring and Other Costs (6,043) (935) (6,175) (416)
Non-Allocated Expense (2,408) (1,278) (3,926) (2,993)
Interest Expense (5,871) (6,566) (11,782) (13,029)
Interest and Other Income 132 56 212 108
Minority Interest in Income of
Consolidated Subsidiary (590) (784) (1,476) (1,522)
- ----------------------------------------------------------------------
TOTAL $ 4,857 $ 11,659 $ 11,735 $ 19,936
- ----------------------------------------------------------------------
Paperboard Shipped (in tons) 291,685 283,364 566,275 541,497
- ----------------------------------------------------------------------
ROCK-TENN COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
- ----------------------------------------------------------------------
FOR THE THREE FOR THE SIX
MONTHS ENDED MONTHS ENDED
March 31, March 31, March 31, March 31,
2004 2003 2004 2003
- ----------------------------------------------------------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income from continuing
operations $ 3,009 $ 7,131 $ 7,175 $ 12,076
Items in income not affecting
cash:
Depreciation and amortization 18,557 17,502 37,159 35,455
Deferred income taxes (1,034) (1,830) (4,388) 652
Deferred compensation expense 281 171 562 342
Income tax benefit of employee
stock options --- --- 188 ---
Gain on disposal of property,
plant and equipment (1,729) (67) (2,170) (741)
(Gain) loss on currency
translation (275) 120 (241) 15
Equity in loss from joint
venture 83 284 133 284
Minority interest in income of
consolidated subsidiary 590 784 1,476 1,522
Impairment loss and other non-
cash items 6,945 410 6,945 881
Pension funding less than
expense 4,281 2,723 8,697 5,867
Net changes in operating
assets and liabilities (97) (3,000) (20,862) (7,659)
- ----------------------------------------------------------------------
CASH PROVIDED BY OPERATING
ACTIVITIES FROM CONTINUING
OPERATIONS 30,611 24,228 34,674 48,694
Cash provided by (used for)
operating activities from
discontinued operations (80) 1,044 451 2,914
------- ------- ------- -------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 30,531 25,272 35,125 51,608
- ----------------------------------------------------------------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures (14,916) (15,002) (30,344) (31,395)
Cash paid for purchase of
businesses, net of cash
received (34) (65,220) (1,094) (65,220)
Cash contributed to joint
venture (3) (155) (103) (237)
Proceeds from sale of
property, plant and equipment 4,485 567 5,178 6,693
Decrease in unexpected
industrial revenue bond
proceeds --- 827 --- 827
- ----------------------------------------------------------------------
CASH USED FOR INVESTING
ACTIVITIES FROM CONTINUING
OPERATIONS (10,468) (78,983) (26,363) (89,332)
Cash provided by (used for)
investing activities from
discontinued operations (22) (263) 61,921 (591)
------- ------- ------- -------
NET CASH PROVIDED BY (USED
FOR) INVESTING ACTIVITIES (10,490) (79,246) 35,558 (89,923)
- ----------------------------------------------------------------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance of
public notes --- 99,748 --- 99,748
Net additions (repayments) to
revolving credit facilities --- 3,300 (3,500) 1,600
Additions to long-term debt 27 23,871 54 23,878
Repayments of long-term debt (139) (72,842) (9,246) (82,976)
Proceeds from monetizing swap
contracts 4,169 2,482 4,169 2,482
Debt issuance costs --- (990) --- (990)
Issuance of common stock 1,374 966 2,785 1,981
Purchases of common stock --- --- --- (1,313)
Cash dividends paid to
shareholders (2,991) (2,753) (5,969) (5,508)
Distribution to minority
interest (350) (160) (350) (1,260)
- ----------------------------------------------------------------------
CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES 2,090 53,622 (12,057) 37,642
- ----------------------------------------------------------------------
Effect of exchange rate
changes on cash 210 (932) 417 (368)
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 22,341 (1,284) 59,043 (1,041)
Cash and cash equivalents:
Beginning of period 50,875 6,803 14,173 6,560
- ----------------------------------------------------------------------
End of period $ 73,216 $ 5,519 $ 73,216 $ 5,519
- ----------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the period
for:
Income taxes (net of
refunds) $ 8,213 $ 3,327 $ 10,554 $ 7,190
Interest (net of amounts
capitalized) $ 16,955 $ 12,203 $ 17,275 $ 12,293
- ----------------------------------------------------------------------
ROCK-TENN COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(IN THOUSANDS)
- ----------------------------------------------------------------------
MARCH 31, DECEMBER 31, SEPTEMBER 30,
2004 2003 2003
- ----------------------------------------------------------------------
ASSETS:
Cash and cash equivalents $ 73,216 $ 50,875 $ 14,173
Receivables - net 168,539 153,991 163,096
Inventories - at LIFO cost 120,568 120,560 118,414
Other current assets 13,163 17,221 17,717
Current assets held for sale --- --- 52,703
- ----------------------------------------------------------------------
TOTAL CURRENT ASSETS 375,486 342,647 366,103
- ----------------------------------------------------------------------
Building and equipment - net 567,800 580,575 579,514
Intangible and other assets 346,373 346,443 345,778
- ----------------------------------------------------------------------
TOTAL ASSETS $1,289,659 $1,269,665 $1,291,395
- ----------------------------------------------------------------------
LIABILITIES AND
SHAREHOLDERS' EQUITY:
Current maturities of long-term
debt $ 414 $ 429 $ 12,927
Other current liabilities 161,191 148,896 167,069
Current liabilities held for
sale --- --- 7,487
- ----------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 161,605 149,325 187,483
- ----------------------------------------------------------------------
Long-term maturities of debt 488,907 489,022 489,037
Realized interest rate swap
gains 23,979 20,707 24,024
Marked to market value of
interest rate swaps 1,094 (2,633) (94)
------- ------- --------
Total long-term debt 513,980 507,096 512,967
Deferred income taxes 89,413 90,447 93,801
Other long-term items 86,050 83,629 75,108
Shareholders' equity 438,611 439,168 422,036
- ----------------------------------------------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,289,659 $1,269,665 $1,291,395
- ----------------------------------------------------------------------
Total debt excluding interest
rate swaps $ 489,321 $ 489,451 $ 501,964
- ----------------------------------------------------------------------
Rock-Tenn Company Quarterly Statistics
Paperboard Group Operating Statistics
1st 2nd 3rd 4th Fiscal
Quarter Quarter Quarter Quarter Year
---------------------------------------------
Average Price Per Ton
- ---------------------
Coated & Specialty
Paperboard (a)
2002 $ 424 $ 410 $ 410 $ 425 $417
2003 434 418 437 438 432
2004 440 439
Corrugated Medium
2002 342 337 331 346 339
2003 343 335 340 333 338
2004 331 341
All Tons
2002 410 398 397 413 405
2003 419 406 423 421 417
2004 422 424
Average Recovered
Paper Cost
2002 67 65 78 108 80
2003 82 78 88 86 83
2004 86 94
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 130,383 138,830
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 100,327 109,913
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 42,942
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 274,590 291,685
(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 208,875 231,772
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 9,894
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% 4.3%
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 75,725
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 7,161
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% 9.5%
Paperboard Segment
Sales $125,078 $123,740 $129,094 $138,261 $516,173
2002 123,136 130,742 130,307 131,889 516,074
2003 129,529 137,843
2004
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 2,582
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% 1.9%
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 3,009
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 0.09
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 2,910
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 0.08
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 2,910
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 0.08
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 18,557
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 14,916
CONTACT: Rock-Tenn Company, Norcross
Steven C. Voorhees or David Rees, 770-448-2193