Exhibit 99.1
Rock-Tenn Company Announces Amendment to Senior Credit Facility
NORCROSS, Ga.--(BUSINESS WIRE)--Aug. 6, 2007--Rock-Tenn Company
(NYSE: RKT) announced today that its Senior Credit Facility, dated as
of June 6, 2005, has been amended to increase the limit on cash
repurchases of the Company's common stock to $100,000,000 during any
fiscal year, so long as such repurchases do not cause the Company's
Leverage Ratio to exceed 3.25:1.00. At June 30, 2007, the Company's
Leverage Ratio was 2.60:1.00. Prior to this amendment, the Senior
Credit Facility limited the Company to stock repurchases of 200,000
shares in any fiscal year.
The Company's board of directors previously approved a stock
repurchase plan that allows for the repurchase from time to time of
shares of common stock over an indefinite period of time. As of June
30, 2007, the Company had 2,033,000 shares of common stock available
for repurchase under this plan.
Rock-Tenn Company provides a wide range of marketing and packaging
solutions to consumer products companies at low costs, with annual net
sales of approximately $2.3 billion and operating locations in the
United States, Canada, Mexico, Argentina and Chile. The Company is one
of North America's leading manufacturers of packaging products,
merchandising displays and bleached and recycled paperboard.
Non-GAAP Measures
We have included in the discussion above the Company's Leverage
Ratio at June 30, 2007, which is 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 various non-GAAP financial measures that are used to
determine the Company's Leverage Ratio, provide a reconciliation of
each such 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.
Credit Agreement EBITDA and Total Funded Debt
"Credit Agreement EBITDA" is calculated in accordance with the
definition contained in the Company's 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 the Company's 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, plus additional outstanding letters of credit not already
reflected in debt.
Our management uses Credit Agreement EBITDA and Total Funded Debt
to evaluate compliance with Rock-Tenn's debt covenants and borrowing
capacity available under its Senior Credit Facility. Management
believes that investors also use these measures to evaluate the
Company's compliance with its 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 June 30, 2007 calculation, the Company's
Leverage Ratio was 2.60 times, which compares to a maximum Leverage
Ratio under the Senior Credit Facility of 4.25 times. Credit Agreement
EBITDA and Total Funded Debt are not intended to be substitutes for
GAAP financial measures and should not be used as such.
Set forth below is a reconciliation of Credit Agreement EBITDA to
the most directly comparable GAAP measure, net income:
(In Millions) 12 Months Ended
June 30, 2007
---------------
Net Income $ 83.5
Interest Expense and Other Income 51.3
Income Taxes 42.5
Depreciation and Amortization 102.8
Additional Permitted Charges 3.9
---------------
Credit Agreement EBITDA $284.0
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Set forth below is a reconciliation of Total Funded Debt to the
most directly comparable GAAP measures, Current Portion of Debt and
Total Long-Term Debt:
(In Millions) June 30,
2007
--------
Current Portion of Debt $135.4
Total Long-Term Debt 597.6
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Total Debt 733.0
Less: Hedge Adjustments Resulting From Terminated
Fair Value Interest Rate Derivatives or Swaps (9.1)
--------
Total Debt Less Hedge Adjustments 723.9
Plus: Letters of Credit 13.6
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Total Funded Debt $737.5
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CONTACT: Rock-Tenn Company
Investor Relations Department, 678-291-7900