Exhibit 99.1
Rock-Tenn Company Reports First Quarter Fiscal 2005 Results
NORCROSS, Ga.--(BUSINESS WIRE)--Jan. 27, 2005--Rock-Tenn Company
(NYSE:RKT) today reported financial results for the quarter ended
December 31, 2004, its first quarter of fiscal 2005. Net sales for the
first quarter of fiscal 2005 were $385.8 million, up 5.4% from $366.1
million in the prior year quarter. The Company reported net income of
$0.5 million, or $0.01 per diluted share, for the first quarter of
fiscal 2005. Income from continuing operations in the first quarter of
fiscal 2004 was $4.2 million, or $0.12 per diluted share. Net income
for the first quarter of fiscal 2004 also included income from
discontinued operations of $7.7 million, or $0.22 per diluted share.
Net income for the first quarter of fiscal 2005 included pre-tax
restructuring and other costs of $0.5 million related to previously
announced facility closures. Foreign currency transactions reduced
pre-tax income by $0.4 million due to the change in the value of the
US dollar relative to the Canadian dollar. The Company recorded $0.8
million additional tax expense in excess of its normal provision
primarily due to an adjustment related to the acquisition of the
Athens, Alabama, corrugated facility acquired in August 2004.
Segment Results
Packaging Products Segment
Packaging Products segment sales increased 6.2% to $221.8 million
in the first quarter of fiscal 2005 from $208.9 million in the first
quarter of fiscal 2004. Packaging Products segment operating income
was $5.3 million in the first quarter of fiscal 2005 compared to $7.0
million in the prior year quarter.
Folding carton division sales increased 6.5% from the year ago
quarter primarily due to an increase in volume related to increased
sales to existing customers. Interior packaging division sales
increased 4.5% over the prior year quarter due to a combination of
higher prices and increased volume. Operating income during the first
quarter of fiscal 2005 was reduced by $1.3 million of pre-tax
operating losses, which are not properly classifiable as plant closing
costs, incurred in winding down operations of the St. Paul, Minnesota,
folding carton facility. This facility is now closed.
Merchandising Displays and Corrugated Packaging Segment
Merchandising Displays and Corrugated Packaging segment sales were
$79.5 million in the first quarter of fiscal 2005 compared to $73.5
million in the first quarter of fiscal 2004. Corrugated packaging
sales increased 50.1% compared to the prior year quarter primarily due
to a combination of sales of the Athens corrugator and higher selling
prices. Operating income for the segment was $2.7 million in the first
quarter of fiscal 2005 compared to $5.9 million in the prior year
quarter. The decline in operating income was primarily the result of
weaker than expected sales in the merchandising displays division and
a change in its customer and product mix.
Paperboard Segment
Paperboard segment sales increased to $128.7 million in the first
quarter of fiscal 2005 compared to $128.3 million in the first quarter
of fiscal 2004. Operating income in the segment increased 39.1% to
$4.4 million in the first quarter of fiscal 2005 compared to $3.1
million in the prior year quarter. During the first quarter of fiscal
2005 there was a $45 per ton increase in average paperboard selling
price compared to the prior year quarter. Fiber, energy, chemical and
freight costs increased by a total of $35 per ton compared to the
prior year quarter. Paperboard tons shipped in the first quarter of
fiscal 2005 were 253,257 tons compared to 274,590 tons in the year ago
quarter. The Company's mills operated at 92% of capacity during the
quarter.
Chairman and Chief Executive Officer's Statement
Rock-Tenn Company Chairman and Chief Executive Officer James A.
Rubright stated, "We are pleased with the results of our paperboard
mills in a seasonally weak quarter, as the price increases we
announced last year are allowing us to begin recovering the increased
material, freight and energy costs we have absorbed. Offsetting the
improved results of our Paperboard segment were lower results from our
Packaging Products and Merchandising Displays and Corrugated Packaging
segments."
"Our Packaging Products segment's sales continued to grow year
over year, reflecting the strong competitive position we have built
through investments in technology, although costs related to the
closure of our St. Paul facility reduced operating income for the
segment. In our Merchandising Displays and Corrugated Packaging
segment, better results in our corrugated packaging business were more
than offset by lower sales and earnings in our merchandising displays
business. Display demand has been strong in January and we expect
improved quarter over quarter results in this segment."
Selling, General & Administrative Expenses
Selling, general and administrative (SG&A) expenses were 12.0% of
net sales in the first quarter of fiscal 2005, compared to 13.1% of
net sales in the prior year quarter.
Financing
Rock-Tenn Company's current maturities of debt and long-term debt
due after one year combined was $459.6 million, at the end of the
first quarter of fiscal 2005. The Company's cash and cash equivalents
at quarter end were $63.2 million.
During the quarter Rock-Tenn Company purchased $6.0 million of its
2005 Notes at an average price of 103.1% of par value, or $0.18
million over par value, excluding the favorable impact of unamortized
realized interest rate swap gains. The average price including the
favorable impact of unamortized realized interest rate swap gains was
101.6% of par value, or $0.1 million over par value.
Rock-Tenn Company extended the term of its revolving credit
facility to June 30, 2006. The amendment made no other material
changes to the facility.
Cash Provided By Operating Activities
Net cash provided by operating activities in the first quarter of
fiscal 2005 was $22.4 million compared to $13.7 million in the first
quarter of fiscal 2004, which included $0.5 million of cash provided
by operating activities from discontinued operations.
Conference Call
The Company will host a conference call to discuss its results of
operations for the first quarter of fiscal 2005 and other topics that
may be raised during the discussion at 11:00 a.m., Eastern Time, on
Thursday, January 27, 2005. 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.
About Rock-Tenn Company
Rock-Tenn Company provides marketing and packaging solutions to
consumer products companies at low costs, with annual net sales of
$1.6 billion and over 80 operating locations in the United States,
Canada, Mexico and Chile.
Cautionary Statements
Statements herein regarding expected sales and earnings constitute
forward-looking statements within the meaning of the federal
securities laws and are subject to certain risks and uncertainties.
With respect to these statements, the Company has made assumptions
regarding, among other things, expected economic, competitive and
market conditions generally; expected volumes and price levels of
purchases by customers; 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 such 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 the Company's 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 customers; and
adverse changes in general market and industry conditions. Such risks
and other factors that may impact our assumptions 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. The
information contained herein speaks as of the date hereof and the
Company does not have or undertake any obligation to update such
information as future events unfold.
ROCK-TENN COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FOR THE THREE MONTHS ENDED
December 31, December 31,
2004 2003
- ----------------------------------------------------------------------
NET SALES $ 385,817 $ 366,110
Cost of Goods Sold 329,993 304,259
- ----------------------------------------------------------------------
Gross Profit 55,824 61,851
Selling, General and Administrative
Expenses 46,458 48,101
Restructuring and Other Costs 476 105
- ----------------------------------------------------------------------
Operating Profit 8,890 13,645
Interest Expense (6,448) (5,904)
Interest and Other Income 176 73
Income (Loss) from Unconsolidated Joint
Venture 143 (50)
Minority Interest in Income of
Consolidated Subsidiary (865) (886)
- ----------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 1,896 6,878
Provision for Income Taxes 1,414 2,712
- ----------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS 482 4,166
Income from Discontinued Operations, Net
of Taxes --- 7,713
NET INCOME $ 482 $ 11,879
- ----------------------------------------------------------------------
Weighted Average Common Shares
Outstanding-Diluted 35,881 35,281
- ----------------------------------------------------------------------
Diluted Earnings Per Share:
Income from Continuing Operations $ 0.01 $ 0.12
Income from Discontinued Operations 0.00 0.22
---- ----
Diluted Earnings Per Share $ 0.01 $ 0.34
- ----------------------------------------------------------------------
ROCK-TENN COMPANY
INDUSTRY SEGMENT INFORMATION
(UNAUDITED)
(IN THOUSANDS, EXCEPT TONNAGE DATA)
- ----------------------------------------------------------------------
FOR THE THREE MONTHS ENDED
December 31, December 31,
2004 2003
- ----------------------------------------------------------------------
NET SALES:
Packaging Products Segment $ 221,764 $ 208,875
Merchandising Displays and
Corrugated Packaging Segment 79,510 73,518
Paperboard Segment 128,703 128,262
Intersegment Eliminations (44,160) (44,545)
- ----------------------------------------------------------------------
TOTAL $ 385,817 $ 366,110
- ----------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS
BEFORE TAXES:
Packaging Products Segment $ 5,274 $ 7,037
Merchandising Displays and
Corrugated Packaging Segment 2,688 5,932
Paperboard Segment 4,354 3,130
- ----------------------------------------------------------------------
Segment Income $ 12,316 $ 16,099
Restructuring and Other Costs (476) (105)
Non-Allocated Expense (2,807) (2,399)
Interest Expense (6,448) (5,904)
Interest and Other Income 176 73
Minority Interest in Income of
Consolidated Subsidiary (865) (886)
- ----------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS
BEFORE TAXES $ 1,896 $ 6,878
- ----------------------------------------------------------------------
Paperboard Shipped (in tons) 253,257 274,590
- ----------------------------------------------------------------------
ROCK-TENN COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
- ----------------------------------------------------------------------
FOR THE THREE MONTHS ENDED
December 31, December 31,
2004 2003
- ----------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income from continuing operations $ 482 $ 4,166
Items in income not affecting cash:
Depreciation and amortization 18,451 18,602
Deferred income taxes 1,177 (3,354)
Deferred compensation expense 400 281
Income tax benefit of employee stock options 125 188
(Gain) loss on disposal of property, plant
and equipment and other, net 65 (448)
Loss on currency translation 383 34
(Income) loss from unconsolidated joint
venture (143) 50
Minority interest in income of consolidated
subsidiary 865 886
Impairment loss and other non-cash items (857) ---
Pension funding less than expense 3,349 4,416
Net changes in operating assets and
liabilities (1,908) (11,655)
- ----------------------------------------------------------------------
CASH PROVIDED BY OPERATING ACTIVITIES
FROM CONTINUING OPERATIONS 22,389 13,166
Cash provided by operating activities from
discontinued operations --- 531
------ ------
NET CASH PROVIDED BY OPERATING ACTIVITIES 22,389 13,697
- ----------------------------------------------------------------------
INVESTING ACTIVITIES:
Capital expenditures (10,174) (15,421)
Cash paid for purchase of businesses, net of
cash received (75) (1,060)
Cash contributed to joint venture --- (100)
Proceeds from sale of property, plant and
equipment 2,043 693
- ----------------------------------------------------------------------
CASH USED FOR INVESTING ACTIVITIES
FROM CONTINUING OPERATIONS (8,206) (15,888)
Cash provided by investing activities from
discontinued operations --- 61,943
------- ------
NET CASH PROVIDED BY (USED FOR) INVESTING
ACTIVITIES (8,206) 46,055
- ----------------------------------------------------------------------
FINANCING ACTIVITIES:
Net repayments to revolving credit
facilities --- (3,500)
Repayments of debt (6,104) (9,107)
Debt issuance costs (64) ---
Issuance of common stock 1,824 1,411
Cash dividends paid to shareholders (3,222) (2,978)
Distribution to minority interest (525) ---
- ----------------------------------------------------------------------
CASH USED FOR FINANCING ACTIVITIES (8,091) (14,174)
- ----------------------------------------------------------------------
Effect of exchange rate changes on cash 205 207
INCREASE IN CASH AND CASH EQUIVALENTS 6,297 45,785
Cash and cash equivalents:
Beginning of period 56,891 14,173
- ----------------------------------------------------------------------
End of period $ 63,188 $ 59,958
- ----------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Income taxes, net of refunds $ 2,001 $ 2,341
Interest, net of amounts capitalized 313 320
- ----------------------------------------------------------------------
ROCK-TENN COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(IN THOUSANDS)
- ----------------------------------------------------------------------
DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
2004 2004 2003
- ----------------------------------------------------------------------
ASSETS:
Cash and cash equivalents $ 63,188 $ 56,891 $ 59,958
Receivables - net 154,970 177,378 153,991
Inventories - at LIFO cost 134,057 127,359 120,560
Other current assets 25,399 22,286 17,221
Current assets held for sale 804 1,526 ---
- ----------------------------------------------------------------------
TOTAL CURRENT ASSETS 378,418 385,440 351,730
- ----------------------------------------------------------------------
Land, building and equipment - net 549,868 552,803 580,575
Intangible and other assets 345,808 345,570 346,443
- ----------------------------------------------------------------------
TOTAL ASSETS $1,274,094 $1,283,813 $1,278,748
- ----------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current maturities of debt $ 78,116 $ 83,906 $ 429
Current realized interest rate
swap gains 1,401 2,148 ---
Current mark-to-market value of
interest rate swaps (417) (294) ---
------ ------ ---
Total current maturities of debt 79,100 85,760 429
Other current liabilities 171,913 183,756 157,979
- ----------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 251,013 269,516 158,408
- ----------------------------------------------------------------------
Long-term debt due after one year 381,496 381,694 489,022
Realized interest rate swap gains 18,514 19,087 21,032
Mark-to-market value of interest
rate swaps (3,509) (2,480) (2,958)
------- ------- -------
Total long-term debt 396,501 398,301 507,096
Deferred income taxes 86,529 84,947 90,447
Other long-term items 94,473 93,448 83,629
Shareholders' equity 445,578 437,601 439,168
- ----------------------------------------------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,274,094 $1,283,813 $1,278,748
- ----------------------------------------------------------------------
Current maturities of debt &
long-term debt due after one
year $ 459,612 $ 465,600 $ 489,451
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)
2003 $434 $418 $437 $438 $432
2004 440 439 456 470 451
2005 482 --- --- --- ---
Corrugated Medium
2003 343 335 340 333 338
2004 331 341 350 383 352
2005 394 --- --- --- ---
All Tons
2003 419 406 423 421 417
2004 422 424 439 455 435
2005 467 --- --- --- ---
Average Recovered
Paper Cost
2003 82 78 88 86 83
2004 86 94 107 105 98
2005 102 --- --- --- ---
Tons Shipped
- ------------
Coated and Specialty (a)
2003 217,318 241,905 239,293 234,606 933,122
2004 230,710 248,743 248,078 224,881 952,412
2005 210,566 --- --- --- ---
Corrugated Medium
2003 40,815 41,459 40,413 45,023 167,710
2004 43,880 42,942 44,667 46,103 177,592
2005 42,691 --- --- --- ---
Total
2003 258,133 283,364 279,706 279,629 1,100,832
2004 274,590 291,685 292,745 270,984 1,130,004
2005 253,257 --- --- --- ---
(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
Quarter Quarter Quarter Quarter Fiscal Year
---------------------------------------------------
Packaging Segment
Sales
2003 $173,677 $196,277 $210,180 $221,268 $801,402
2004 208,875 231,772 231,526 235,912 908,085
2005 221,764 --- --- --- ---
Packaging Income
2003 $4,924 $9,951 $10,792 $12,893 $38,560
2004 7,037 10,208 11,714 9,038 37,997
2005 5,274 --- --- --- ---
Return On Sales
2003 2.8% 5.1% 5.1% 5.8% 4.8%
2004 3.4% 4.4% 5.1% 3.8% 4.2%
2005 2.4% --- --- --- ---
Merchandising Displays
and Corrugated
Packaging Segment
Sales
2003 $75,067 $66,130 $71,738 $78,303 $291,238
2004 73,518 77,440 75,841 91,475 318,274
2005 79,510 --- --- --- ---
Merchandising Displays
and Corrugated
Packaging Income
2003 $7,221 $5,266 $6,858 $9,224 $28,569
2004 5,932 7,507 6,096 9,540 29,075
2005 2,688 --- --- --- ---
Return on Sales
2003 9.6% 8.0% 9.6% 11.8% 9.8%
2004 8.1% 9.7% 8.0% 10.4% 9.1%
2005 3.4% --- --- --- ---
Paperboard Segment
Sales
2003 $121,797 $128,863 $128,855 $130,426 $509,941
2004 128,262 136,142 138,560 136,918 539,882
2005 128,703 --- --- --- ---
Paperboard Income
2003 $5,308 $6,408 $6,017 $4,031 $ 21,764
2004 3,130 2,361 2,639 7,621 15,751
2005 4,354 --- --- --- ---
Return on Sales
2003 4.4% 5.0% 4.7% 3.1% 4.3%
2004 2.4% 1.7% 1.9% 5.6% 2.9%
2005 3.4% --- --- --- ---
Rock-Tenn Company Quarterly Statistics
Key Financial Statistics
(In Thousands except EPS Data)
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Fiscal Year
-------------------------------------------------
Income (Loss) From
Continuing Operations
2003 $4,945 $7,131 $7,853 $9,612 $29,541
2004 4,166 3,009 (4,076) 6,552 9,651
2005 482 --- --- --- ---
Diluted EPS From
Continuing Operations
2003 $0.14 $0.21 $0.23 $0.27 $0.85
2004 0.12 0.09 (0.12) 0.18 0.27
2005 0.01 --- --- --- ---
Net Income (Loss)
2003 $5,070 $7,330 $7,212 $9,964 $29,576
2004 11,879 2,910 (3,726) 6,585 17,648
2005 482 --- --- --- ---
Diluted EPS
2003 $0.15 $0.21 $0.21 $0.28 $0.85
2004 0.34 0.08 (0.11) 0.18 0.50
2005 0.01 --- --- --- ---
Depreciation
& Amortization
2003 $17,953 $17,502 $17,791 $19,437 $72,683
2004 18,602 18,557 18,387 18,643 74,189
2005 18,451 --- --- --- ---
Capital Expenditures
2003 $16,393 $15,002 $12,114 $13,893 $57,402
2004 15,421 14,923 18,269 12,210 60,823
2005 10,174 --- --- --- ---
Reconciliation of Debt Measures
(In Thousands)
December 31, September 30, December 31,
2004 2004 2003
-------------- ------------- -------------
Current maturities of debt $ 78,116 $ 83,906 $ 429
Long-term debt due after one
year 381,496 381,694 489,022
-------------- ------------- -------------
Current maturities of debt
and long-term debt due after
one year 459,612 465,600 489,451
Less: cash and cash
equivalents (63,188) (56,891) (59,958)
-------------- ------------- -------------
Net debt, excluding interest
rate swaps $ 396,424 $ 408,709 $ 429,493
CONTACT: Rock-Tenn Company, Norcross
David Rees, 770-438-2193