EXHIBIT 99.1
Rock-Tenn Company Reports Second Quarter Fiscal 2005 Results
NORCROSS, Ga.--(BUSINESS WIRE)--April 28, 2005--Rock-Tenn Company
(NYSE:RKT) today reported financial results for the quarter ended
March 31, 2005, its second quarter of fiscal 2005. Net sales for the
second quarter of fiscal 2005 were $394.3 million. The Company
reported net income of $0.2 million, or $0.01 per diluted share, for
the quarter, which included pre-tax restructuring and other costs of
$2.7 million. Net sales in the second quarter of fiscal 2004 were
$400.0 million. Income from continuing operations in the prior year
quarter was $3.0 million, or $0.09 per diluted share. Net income for
the second quarter of fiscal 2004 was $2.9 million, or $0.08 per
diluted share, reflecting a loss of $0.01 per diluted share from
discontinued operations. Net income for the quarter also reflected
pretax restructuring and other costs of $5.6 million.
Segment Results
Packaging Products Segment
Packaging Products segment sales were $218.8 million in the second
quarter of fiscal 2005 compared to $231.8 million in the second
quarter of fiscal 2004. Packaging Products segment operating income
was $5.7 million and $10.2 million in the second quarters of fiscal
2005 and 2004, respectively.
Folding carton sales were $183.6 million in the second quarter of
fiscal 2005, down 8.1% from the prior year quarter. Interior packaging
sales increased 10.2% over the prior year quarter due to a combination
of higher prices and increased volume. Operating income was adversely
affected by lower folding carton volume and increased board costs.
Merchandising Displays and Corrugated Packaging Segment
Merchandising Displays and Corrugated Packaging segment sales were
$86.1 million in the second quarter of fiscal 2005 compared to $77.4
million in the second quarter of fiscal 2004. The sales increase was
primarily due to a 41.5% increase in sales of corrugated packaging,
which was primarily driven by sales from the Athens, Alabama
corrugator, which Rock-Tenn acquired in August 2004, and higher
average selling prices. Operating income for the segment was $4.8
million in the second quarter of fiscal 2005 compared to $7.5 million
in the prior year quarter. Operating income for the segment was
primarily affected by changes in customer and product mix for
merchandising displays.
Paperboard Segment
Paperboard segment sales were $131.8 million in the second quarter
of fiscal 2005 compared to $136.1 million in the second quarter of
fiscal 2004. Operating income in the segment increased to $3.7 million
in the second quarter of fiscal 2005 compared to $2.4 million in the
prior year quarter. Paperboard tons shipped in the second quarter of
fiscal 2005 were 254,934 tons compared to 291,685 tons in the year ago
quarter. The Company's mills operated at 95% of capacity during the
quarter. The decline in tons shipped was due primarily to the closure
in July 2004, of the Otsego, Michigan mill and lower demand for clay
coated recycled paperboard compared to last year. The improvement in
operating income from the prior year quarter was a result of higher
paperboard selling prices and the closure of the Otsego mill, the
Wright City converting plant and the laminated product lines at the
Aurora facility.
Chairman and Chief Executive Officer's Statement
Rock-Tenn Company Chairman and Chief Executive Officer James A.
Rubright stated, "This quarter's results reflect the impact of higher
costs of recycled fiber, purchased paperboard, natural gas, chemicals
and freight. We had anticipated a decline in folding carton volume due
to the closing of our St. Paul facility in January. However, demand
for both folding cartons and clay coated recycled paperboard was much
weaker than we anticipated. These cost pressures and weak demand more
than offset improvements in operations and our intense cost reduction
efforts."
Selling, General & Administrative Expenses
Selling, general and administrative (SG&A) expenses were 12.3% of
net sales in the second quarter of fiscal 2005, compared to 12.8% of
net sales in the prior year quarter.
Financing
During the quarter Rock-Tenn Company purchased $3.5 million of its
2005 Notes at an average price of 101.75% of par value, or $0.06
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
101.05% of par value, or $0.04 million over par value.
Cash Provided By Operating Activities
Net cash provided by operating activities in the second quarter of
fiscal 2005 was $14.2 million compared to cash provided by operating
activities from continuing operations of $21.6 million in the prior
year quarter.
Conference Call
The Company will host a conference call to discuss its results of
operations for the second quarter of fiscal 2005 and other topics that
may be raised during the discussion at 11:00 a.m., Eastern Time, on
Thursday, April 28, 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.
ROCK-TENN COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
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FOR THE THREE FOR THE SIX
MONTHS ENDED MONTHS ENDED
March 31, March 31,
2005 2004 2005 2004
- ----------------------------------------------------------------------
NET SALES
$394,338 $400,000 $780,155 $766,110
Cost of Goods Sold 335,159 331,791 665,152 636,050
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Gross Profit 59,179 68,209 115,003 130,060
Selling, General and
Administrative Expenses 48,509 51,296 94,967 99,397
Restructuring and Other Costs 2,724 5,643 3,200 5,748
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Operating Profit 7,946 11,270 16,836 24,915
Interest Expense (6,771) (5,871) (13,219) (11,775)
Interest and Other Income (Loss) (76) 131 100 204
Income (Loss) from Unconsolidated
Joint Venture 200 (83) 343 (133)
Minority Interest in Income of
Consolidated Subsidiary (703) (590) (1,568) (1,476)
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INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 596 4,857 2,492 11,735
Provision for Income Taxes 356 1,848 1,770 4,560
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INCOME FROM CONTINUING OPERATIONS 240 3,009 722 7,175
Income from Discontinued
Operations, Net of Taxes - (99) --- 7,614
NET INCOME $ 240 $ 2,910 $ 722 $ 14,789
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Weighted Average Common Shares
Outstanding-Diluted 35,879 35,312 35,887 35,305
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Diluted Earnings Per Share:
Income from Continuing
Operations $ 0.01 $ 0.09 $ 0.02 $ 0.20
Income from Discontinued
Operations 0.00 (0.01) 0.00 0.22
-------- -------- -------- --------
Diluted Earnings Per Share $ 0.01 $ 0.08 $ 0.02 $ 0.42
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ROCK-TENN COMPANY
INDUSTRY SEGMENT INFORMATION
(UNAUDITED)
(IN THOUSANDS, EXCEPT TONNAGE DATA)
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FOR THE THREE FOR THE SIX
MONTHS ENDED MONTHS ENDED
March 31, March 31,
2005 2004 2005 2004
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NET SALES:
Packaging Products Segment $218,792 $231,772 $440,556 $440,647
Merchandising Displays and
Corrugated Packaging Segment 86,090 77,440 165,600 150,958
Paperboard Segment 131,831 136,142 260,534 264,404
Intersegment Eliminations (42,375) (45,354) (86,535) (89,899)
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TOTAL $394,338 $400,000 $780,155 $766,110
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INCOME FROM CONTINUING OPERATIONS
BEFORE TAXES:
Packaging Products Segment $ 5,722 $ 10,208 $ 10,996 $ 17,245
Merchandising Displays and
Corrugated Packaging Segment 4,835 7,507 7,523 13,439
Paperboard Segment 3,650 2,361 8,004 5,491
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Segment Income $ 14,207 $ 20,076 $ 26,523 $ 36,175
Restructuring and Other Costs (2,724) (5,643) (3,200) (5,748)
Non-Allocated Expense (3,337) (3,246) (6,144) (5,645)
Interest Expense (6,771) (5,871) (13,219) (11,775)
Interest and Other Income (Loss) (76) 131 100 204
Minority Interest in Income of
Consolidated Subsidiary (703) (590) (1,568) (1,476)
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INCOME FROM CONTINUING OPERATIONS
BEFORE TAXES $ 596 $ 4,857 $ 2,492 $ 11,735
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Paperboard Shipped (in tons) 254,934 291,685 508,191 566,275
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ROCK-TENN COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
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FOR THE THREE FOR THE SIX
MONTHS ENDED MONTHS ENDED
March 31, March 31,
2005 2004 2005 2004
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CASH FLOWS FROM OPERATING
ACTIVITIES:
Income from continuing
operations $ 240 $ 3,009 $ 722 $ 7,175
Items in income not affecting
cash:
Depreciation and amortization 18,579 18,557 37,030 37,159
Deferred income taxes (1,626) (1,034) (449) (4,388)
Deferred compensation expense 348 281 748 562
Income tax benefit of employee
stock options 2 --- 127 188
(Gain) loss on disposal of
property, plant and equipment
and other, net 16 (1,722) 81 (2,170)
(Gain) loss on currency
translation (42) (275) 341 (241)
(Income) loss from
unconsolidated joint venture (200) 83 (343) 133
Minority interest in income of
consolidated subsidiary 703 590 1,568 1,476
Impairment loss (income) and
other non-cash items 783 6,619 (74) 6,619
Pension funding less than
expense 4,291 4,181 7,640 8,597
Net changes in operating assets
and liabilities (8,867) (8,727) (10,775) (20,382)
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CASH PROVIDED BY OPERATING
ACTIVITIES FROM CONTINUING
OPERATIONS 14,227 21,562 36,616 34,728
Cash provided by (used for)
operating activities from
discontinued operations --- (80) --- 451
-------- -------- --------- ---------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 14,227 21,482 36,616 35,179
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INVESTING ACTIVITIES:
Capital expenditures (12,278) (14,923) (22,452) (30,344)
Purchases of available-for-sale-
investments (85,690) (82,760) (175,250) (135,520)
Maturities and sales of
available-for-sale investments 87,690 92,760 172,250 107,890
Cash paid for purchase of
businesses, net of cash
received --- (34) (75) (1,094)
Cash contributed to joint
venture (17) (3) (17) (103)
Proceeds from sale of property,
plant and equipment 465 4,485 2,508 5,178
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CASH USED FOR INVESTING
ACTIVITIES FROM CONTINUING
OPERATIONS (9,830) (475) (23,036) (53,993)
Cash provided by (used for)
investing activities from
discontinued Operations --- (22) --- 61,921
-------- -------- --------- ---------
NET CASH PROVIDED BY (USED FOR)
INVESTING ACTIVITIES (9,830) (497) (23,036) 7,928
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FINANCING ACTIVITIES:
Net repayments to revolving
credit facilities --- --- --- (3,500)
Repayments of debt (3,607) (139) (9,711) (9,246)
Proceeds from monetizing swap
contracts --- 4,169 --- 4,169
Debt issuance costs --- --- (64) ---
Issuance of common stock 935 1,374 2,759 2,785
Cash dividends paid to
shareholders (3,228) (2,991) (6,450) (5,969)
Distribution to minority
interest --- (350) (525) (350)
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CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES (5,900) 2,063 (13,991) (12,111)
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Effect of exchange rate changes
on cash 50 210 255 417
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (1,453) 23,258 (156) 31,413
Cash and cash equivalents:
Beginning of period 29,958 22,328 28,661 14,173
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End of period $ 28,505 $ 45,586 $ 28,505 $ 45,586
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SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid during the period for:
Income taxes, net of
refunds $ 2,704 $ 8,213 $ 4,705 $ 10,554
Interest, net of amounts
capitalized 14,535 16,955 14,848 17,275
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ROCK-TENN COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(IN THOUSANDS)
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MARCH 31, DECEMBER 31, SEPTEMBER 30,
2005 2004 2004
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ASSETS:
Cash and cash equivalents $ 28,505 $ 29,958 $ 28,661
Investment in available-for-sale
securities 31,230 33,230 28,230
Receivables - net 161,299 154,970 177,378
Inventories - at LIFO cost 128,896 134,057 127,359
Other current assets 26,520 25,399 22,286
Current assets held for sale 427 804 1,526
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TOTAL CURRENT ASSETS 376,877 378,418 385,440
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Land, building and equipment - net 543,441 549,868 552,803
Intangible and other assets 343,114 345,808 345,570
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TOTAL ASSETS $1,263,432 $1,274,094 $1,283,813
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LIABILITIES AND SHAREHOLDERS'
EQUITY:
Current maturities of debt $ 74,716 $ 78,116 $ 83,906
Current net fair value hedge
adjustments resulting from
terminated interest rate
derivatives or swaps 767 1,401 2,148
Current net fair value hedge
adjustments resulting from
existing interest rate
derivatives or swaps (393) (417) (294)
---------- ---------- ----------
Total current maturities of debt 75,090 79,100 85,760
Other current liabilities 165,137 171,913 183,756
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TOTAL CURRENT LIABILITIES 240,227 251,013 269,516
- ----------------------------------------------------------------------
Long-term maturities of debt 381,300 381,496 381,694
Net fair value hedge adjustments
resulting from terminated
interest rate derivatives or
swaps 17,935 18,514 19,087
Net fair value hedge adjustments
resulting from existing interest
rate derivatives or swaps (8,544) (3,509) (2,480)
---------- ---------- ----------
Total long-term debt 390,691 396,501 398,301
Deferred income taxes 85,163 86,529 84,947
Other long-term items 104,952 94,473 93,448
Shareholders' equity 442,399 445,578 437,601
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TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,263,432 $1,274,094 $1,283,813
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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 482 487 --- --- ---
Corrugated Medium
2003 343 335 340 333 338
2004 331 341 350 383 352
2005 394 405 --- --- ---
All Tons
2003 419 406 423 421 417
2004 422 424 439 455 435
2005 467 472 --- --- ---
Average Recovered
Paper Cost
2003 82 78 88 86 83
2004 86 94 107 105 98
2005 102 103 --- --- ---
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 210,566 209,706 --- --- ---
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 45,228 --- --- ---
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 253,257 254,934 --- --- ---
(a) Specialty Paperboard Average Price Per Ton and Tons Shipped
include tons shipped by Seven Hills Paperboard LLC, our joint
venture with LaFarge North America, Inc.
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 221,764 218,792 --- --- ---
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 5,722 --- --- ---
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% 2.6% --- --- ---
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 86,090 --- --- ---
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 4,835 --- --- ---
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% 5.6% --- --- ---
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 128,703 131,831 --- --- ---
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 3,650 --- --- ---
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% 2.8% --- --- ---
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 482 240 --- --- ---
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 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 482 240 --- --- ---
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 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 18,579 --- --- ---
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 12,278 --- --- ---
Non-GAAP Measures
Net Debt
We have defined the non-GAAP measure Net Debt to include the
aggregate debt obligations reflected in our balance sheet less the net
fair value of hedge adjustments resulting from terminated and existing
interest rate derivatives or swaps, the balance of our cash and cash
equivalents and certain other investments that we consider to be
readily available to satisfy such debt obligations.
Rock-Tenn management uses Net Debt, along with other factors, 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. Set forth below is a reconciliation of
Net Debt to the most directly comparable GAAP measures, Total Current
Maturities of Debt and Total Long-term Debt, Less Current Maturities:
Debt Reconciliation
- -------------------
March 31, Dec. 31, Sept. 30,
2005 2004 2004
-------- -------- --------
Total Current Maturities of Debt $ 75,090 $ 79,100 $ 85,760
Total Long-term Debt, Less Current
Maturities 390,691 396,501 398,301
-------- -------- --------
465,781 475,601 484,061
Less: Net Fair Value Hedge Adjustments
Resulting From Terminated Interest
Rate Derivatives or Swaps (18,702) (19,915) (21,235)
Less: Net Fair Value Hedge Adjustments
Resulting From Existing Interest
Rate Derivatives or Swaps 8,937 3,926 2,774
-------- -------- --------
456,016 459,612 465,600
Less: Cash and Cash Equivalents (28,505) (29,958) (28,661)
Less: Investment in Available for Sale
Securities (31,230) (33,230) (28,230)
-------- -------- --------
Net Debt $396,281 $396,424 $408,709
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CONTACT: Rock-Tenn Company, Atlanta
David Rees, 678-291-7552