Exhibit 99.1
Rock-Tenn Company Reported Record Earnings for Fiscal Year 2007 of $2.07 Per
Diluted Share on Strong Quarter over Quarter Sales and Segment Income Gains
NORCROSS, Ga.--(BUSINESS WIRE)--Nov. 7, 2007--Rock-Tenn Company
(NYSE:RKT) today reported earnings for the quarter ended September 30,
2007 of $0.50 per diluted share and for the fiscal year then ended of
$2.07 per diluted share. The Company reported net income of $21.5
million, or $0.57 per diluted share, and $28.7 million, or $0.77 per
diluted share, for the prior year quarter, and prior fiscal year,
respectively.
-- Adjusted net income of $0.57 per diluted share for the fourth
quarter of fiscal 2007 compared to $0.52 per diluted share in
the prior year quarter
-- Cash flow from operations of $97.3 million for the fourth
quarter of fiscal 2007; $238.3 million for the fiscal year
-- Stated total paperboard capacity increased 62,500 tons per
year from productivity initiatives
Adjusted net income reflects adjustments to net income, as
described below:
======================================================================
4Q 4Q Fiscal Year Fiscal Year
2007 2006 2007 2006
- ----------------------------------------------------------------------
Net income per diluted
share $ 0.50 $ 0.57 $ 2.07 $ 0.77
Restructuring and other
costs, net 0.04 0.01 0.07 0.14
Capacity increase related
outage at Battle Creek
Mill 0.03 n/a 0.03 n/a
State tax benefits
primarily due to a
change in effective rate n/a (0.06) n/a (0.06)
- ----------------------------------------------------------------------
Adjusted net income per
diluted share $ 0.57 $ 0.52 $ 2.17 $ 0.85
======================================================================
Fourth Quarter Results
-- Net sales of $604.8 million for the fourth quarter of fiscal
2007 increased $35.1 million, or 6.2%, over the fourth quarter
of fiscal 2006.
-- Segment income was $54.2 million compared to $50.5 million in
the prior year quarter.
-- The Company reported net income of $19.7 million, or $0.50 per
diluted share, for its fourth quarter of fiscal 2007. The
Company reported net income of $21.5 million, or $0.57 per
diluted share, in the prior year quarter.
-- Income for the fourth quarter of fiscal 2007 included pre-tax
restructuring and other costs of $2.4 million, or $0.04 per
diluted share, after-tax primarily related to the closure of
our Stone Mountain, Georgia folding carton plant and a pre-tax
expense of $1.7 million, or $0.03 per diluted share, after-tax
during the quarter related to the planned outage to increase
the capacity of our Battle Creek coated recycled paperboard
mill.
-- The Company recorded tax benefits of $2.4 million in the prior
year quarter, or $0.06 per diluted share, primarily due to a
change in its state effective tax rate. Income for the fourth
quarter of fiscal 2006 included pre-tax restructuring and
other costs of $0.6 million, or $0.01 per diluted share,
after-tax.
Segment Results
Packaging Products Segment
Packaging Products segment net sales were $326.0 million in the
fourth quarter of fiscal 2007 compared to $320.8 million in the prior
year quarter, with higher unit pricing in the fiscal 2007 quarter
representing pass through of higher paperboard costs offset by lower
sales volumes. Segment income of $12.1 million in the fourth quarter
of fiscal 2007 was $0.5 million higher than the fourth quarter of
fiscal 2006. Segment return on sales was 3.7% compared to 3.6% in the
prior year quarter.
Paperboard Segment
Paperboard segment net sales increased $27.3 million from the
prior year quarter to $249.5 million on higher selling prices and an
increase in paperboard tons shipped. Bleached paperboard tons shipped
increased 5.9% over the prior year quarter to 88,730 tons. The average
selling price for all paperboard grades increased $36 per ton over the
prior year quarter. Average fiber costs increased $27 per ton over the
prior year quarter. Segment income of $29.3 million increased $0.8
million over the prior year quarter.
Merchandising Displays Segment
Merchandising Displays segment net sales increased $16.1 million,
or 23.2%, over the prior year fourth quarter, to $85.5 million on
strong demand for promotional displays. Segment income increased 20.5%
to $10.6 million compared to $8.8 million in the prior year quarter.
Corrugated Segment
Corrugated segment net sales increased $1.9 million over the prior
year quarter to $40.7 million in the fourth quarter of fiscal 2007,
primarily due to increased production at the Company's corrugators.
Segment income was $2.2 million in the fourth quarter of fiscal 2007
and $1.6 million in the prior year quarter.
Chairman and Chief Executive Officer's Statement
Rock-Tenn Company Chairman and Chief Executive Officer James A.
Rubright stated, "Our fourth quarter and full year earnings fulfilled
our expectations for a record year in many respects. We achieved
record earnings of $81.7 million, record Credit Agreement EBITDA of
$286.5 million, record tons produced in both recycled and bleached
categories and record sales and earnings in our display business. Our
businesses continued to perform well in the fourth quarter as
paperboard mill operating rates remained very high and strong demand
for corrugated packaging and displays continued into the start of our
first quarter of fiscal 2008."
Cash Provided By Operating Activities
Net cash provided by operating activities in the fourth quarter of
fiscal 2007 was $97.3 million, an increase of $42.0 million over the
prior year quarter.
Financing and Investing Activities
During the quarter Rock-Tenn Company decreased debt by $10.7
million and paid $58.7 million to repurchase 2,143,700 shares of
common stock of the Company. The Company's Credit Agreement
Debt/EBITDA ratio was 2.55 times as of September 30, 2007, based on
Credit Agreement EBITDA for the twelve months ended September 30, 2007
of $286.5 million. Upon the filing of our Form 10-K for the period
ended September 30, 2007, we will have the right to cause the lien on
certain assets required under our Senior Credit Facility to be
released due to our satisfying the requirement to be below a Credit
Agreement Debt/EBITDA ratio of 3.0 times for two sequential quarters.
Conference Call
The Company will host a conference call to discuss its results of
operations for the fourth quarter of fiscal 2007 and other topics that
may be raised during the discussion at 9:00 a.m., Eastern Time, on
November 8, 2007. 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 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, Chile and Argentina. The Company is one
of North America's leading manufacturers of packaging products,
merchandising displays and bleached and recycled paperboard.
ROCK-TENN COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
======================================================================
FOR THE THREE FOR THE TWELVE
MONTHS ENDED MONTHS ENDED
September 30,September 30,September 30,September 30,
2007 2006 2007 2006
- ----------------------------------------------------------------------
NET SALES $ 604.8 $ 569.7 $ 2,315.8 $ 2,138.1
Cost of Goods Sold 488.4 461.4 1,870.2 1,789.0
- ----------------------------------------------------------------------
Gross Profit 116.4 108.3 445.6 349.1
Selling, General
and
Administrative
Expenses 68.6 63.1 259.1 244.2
Restructuring and
Other Costs 2.4 0.6 4.7 7.8
- ----------------------------------------------------------------------
Operating Profit 45.4 44.6 181.8 97.1
Interest Expense (12.7) (13.5) (49.8) (55.6)
Interest and Other
Income (Expense),
net (0.2) 0.4 (1.3) 1.6
Equity in Income
(Loss) of
Unconsolidated
Entities (0.2) 0.5 1.1 1.9
Minority Interest
in Income of
Consolidated
Subsidiaries (1.0) (1.7) (4.8) (6.4)
- ----------------------------------------------------------------------
INCOME BEFORE
INCOME TAXES 31.3 30.3 127.0 38.6
Income Tax Expense (11.6) (8.8) (45.3) (9.9)
- ----------------------------------------------------------------------
NET INCOME $ 19.7 $ 21.5 $ 81.7 $ 28.7
Weighted Average
Common Shares
Outstanding-
Diluted 39.2 37.8 39.5 37.0
- ----------------------------------------------------------------------
Diluted Earnings
Per Share $ 0.50 $ 0.57 $ 2.07 $ 0.77
======================================================================
ROCK-TENN COMPANY
SEGMENT INFORMATION
(UNAUDITED)
(IN MILLIONS, EXCEPT TONNAGE DATA)
======================================================================
FOR THE THREE FOR THE TWELVE
MONTHS ENDED MONTHS ENDED
September 30,September 30,September 30,September 30,
2007 2006 2007 2006
- ----------------------------------------------------------------------
NET SALES:
Packaging Products
Segment $ 326.0 $ 320.8 $ 1,260.9 $ 1,267.8
Paperboard Segment 249.5 222.2 939.6 819.7
Merchandising
Displays Segment 85.5 69.4 305.8 233.2
Corrugated Segment 40.7 38.8 158.3 135.7
Intersegment
Eliminations (96.9) (81.5) (348.8) (318.3)
- ----------------------------------------------------------------------
TOTAL NET SALES $ 604.8 $ 569.7 $ 2,315.8 $ 2,138.1
- ----------------------------------------------------------------------
SEGMENT INCOME:
Packaging Products
Segment $ 12.1 $ 11.6 $ 49.3 $ 45.0
Paperboard Segment 29.3 28.5 114.2 62.2
Merchandising
Displays Segment 10.6 8.8 38.7 16.4
Corrugated Segment 2.2 1.6 8.4 4.0
- ----------------------------------------------------------------------
TOTAL SEGMENT
INCOME $ 54.2 $ 50.5 $ 210.6 $ 127.6
Restructuring and
Other Costs (2.4) (0.6) (4.7) (7.8)
Non-Allocated
Expense (6.6) (4.8) (23.0) (20.8)
Interest Expense (12.7) (13.5) (49.8) (55.6)
Interest and Other
Income (Expense),
net (0.2) 0.4 (1.3) 1.6
Minority Interest
in Income of
Consolidated
Subsidiaries (1.0) (1.7) (4.8) (6.4)
- ----------------------------------------------------------------------
INCOME BEFORE
INCOME TAXES $ 31.3 $ 30.3 $ 127.0 $ 38.6
======================================================================
Recycled
Paperboard
Shipped (in tons) 270,320 276,131 1,076,069 1,063,115
Bleached
Paperboard
Shipped (in tons) 88,730 83,799 335,005 320,249
Pulp Shipped (in
tons) 24,787 20,019 95,882 86,569
======================================================================
ROCK-TENN COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN MILLIONS)
======================================================================
FOR THE THREE FOR THE TWELVE
MONTHS ENDED MONTH ENDED
September 30, September 30,September 30,September 30,
2007 2006 2007 2006
- ----------------------------------------------------------------------
CASH FLOWS FROM
OPERATING
ACTIVITIES:
Net income $ 19.7 $ 21.5 $ 81.7 $ 28.7
Items in income
not affecting
cash:
Depreciation
and
amortization 26.2 26.5 103.7 104.3
Deferred income
tax expense 10.4 7.3 22.2 5.5
Share-based
compensation
expense 2.0 1.1 7.3 3.6
(Gain) loss on
disposal of
plant,
equipment and
other, net 0.4 0.8 0.9 (0.4)
Minority
interest in
income of
consolidated
subsidiaries 1.0 1.7 4.8 6.4
Equity in
income of
unconsolidated
entities 0.2 (0.5) (1.1) (1.9)
Proceeds from
(payment on)
termination of
cash flow
interest rate
hedges (0.5) --- (0.7) 14.5
Pension funding
(more) less
than expense 3.7 4.1 (7.5) (4.1)
Impairment
adjustments
and other non-
cash items 1.0 0.7 2.0 3.5
Changes in
operating assets
and liabilities,
net of
acquisitions
Accounts
receivable 6.1 (7.4) 3.4 (30.9)
Inventories (3.9) (0.6) (2.6) (14.1)
Other assets 20.8 1.7 18.8 (7.6)
Accounts
payable 28.3 (17.2) 18.7 25.1
Income taxes
payable (3.9) 10.9 (4.3) 8.6
Accrued
liabilities (14.2) 4.7 (9.0) 12.3
- ----------------------------------------------------------------------
NET CASH PROVIDED
BY OPERATING
ACTIVITIES $ 97.3 $ 55.3 $ 238.3 $ 153.5
- ----------------------------------------------------------------------
INVESTING
ACTIVITIES:
Capital
expenditures (19.3) (18.4) (78.0) (64.6)
Cash paid for
purchase of
businesses, net
of cash received --- --- (32.1) (7.8)
Investment in
unconsolidated
entities (0.1) (0.2) (9.6) (0.2)
Return of capital
from
unconsolidated
entities 0.2 --- 6.5 ---
Proceeds from
sale of
property, plant
and equipment 0.2 0.3 2.8 4.7
Proceeds from
property, plant
and equipment
insurance
settlement --- 0.9 1.3 0.9
- ----------------------------------------------------------------------
NET CASH USED FOR
INVESTING
ACTIVITIES $ (19.0)$(17.4) $(109.1) $ (67.0)
- ----------------------------------------------------------------------
FINANCING
ACTIVITIES:
Additions to
revolving credit
facilities 21.5 15.0 68.1 79.5
Repayments of
revolving credit
facilities (19.4) (49.2) (91.9) (210.7)
Additions to debt --- 4.6 22.1 51.8
Repayments of
debt (15.3) (12.6) (85.1) (29.7)
Debt issuance
costs --- --- --- (0.3)
Issuances of
common stock 1.8 5.9 31.5 11.5
Purchases of
common stock (58.7) --- (58.7) ---
Excess tax
benefits from
share-based
compensation (0.3) 0.8 14.1 1.0
Capital
contributed to
consolidated
subsidiary from
minority
interest --- --- --- 2.1
Advances from
(repayments to)
unconsolidated
entity 0.5 1.4 (5.4) 8.6
Cash dividends
paid to
shareholders (4.0) (3.3) (15.4) (13.2)
Cash
distributions
paid to minority
interest (1.5) (1.6) (4.2) (6.4)
- ----------------------------------------------------------------------
NET CASH USED FOR
FINANCING
ACTIVITIES $ (75.4)$(39.0) $(124.9) $(105.8)
- ----------------------------------------------------------------------
Effect of
exchange rate
changes on cash
and cash
equivalents (0.1) --- (0.3) (0.6)
INCREASE
(DECREASE) IN
CASH AND CASH
EQUIVALENTS 2.8 (1.1) 4.0 (19.9)
Cash and cash
equivalents at
beginning of
period 8.1 8.0 6.9 26.8
- ----------------------------------------------------------------------
Cash and cash
equivalents at
end of period $ 10.9 $ 6.9 $ 10.9 $ 6.9
- ----------------------------------------------------------------------
SUPPLEMENTAL
DISCLOSURE OF
CASH FLOW
INFORMATION:
Cash paid during
the period for:
Income
taxes, net
of refunds $ 5.3 $ (9.8) $ 13.1 $ (4.4)
Interest,
net of
amounts
capitalized 19.4 21.8 54.4 60.1
======================================================================
ROCK-TENN COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN MILLIONS)
======================================================================
September 30,June 30, September 30,
2007 2007 2006
- ----------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 10.9 $ 8.1 $ 6.9
Accounts receivable, net 230.6 234.9 230.8
Inventories 224.4 218.3 218.9
Other current assets 26.8 26.6 25.0
Assets held for sale 1.8 1.9 4.0
- ----------------------------------------------------------------------
TOTAL CURRENT ASSETS 494.5 489.8 485.6
- ----------------------------------------------------------------------
Property, plant and equipment at
cost:
Land and buildings 274.8 270.9 266.0
Machinery and equipment 1,368.6 1,343.6 1,299.7
Transportation equipment 10.8 10.8 10.8
Leasehold improvements 5.9 5.9 6.2
-------- -------- --------
1,660.1 1,631.2 1,582.7
Less accumulated depreciation and
amortization (822.6) (795.1) (732.1)
-------- -------- --------
Net property, plant and equipment 837.5 836.1 850.6
Goodwill 364.5 362.8 356.6
Intangibles, net 67.6 68.1 55.1
Investment in unconsolidated
entities 28.9 29.4 21.6
Other assets 7.7 13.7 14.5
- ----------------------------------------------------------------------
TOTAL ASSETS $1,800.7 $1,799.9 $1,784.0
======================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITES:
Current portion of debt $ 46.0 $ 135.4 $ 40.8
Accounts payable 161.6 132.7 141.8
Accrued compensation and benefits 73.8 66.8 65.7
Other current liabilities 63.5 60.4 57.7
- ----------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 344.9 395.3 306.0
- ----------------------------------------------------------------------
Long-term debt due after one year 667.8 588.5 754.9
Hedge adjustments resulting from
terminated fair value interest
rate derivatives or swaps 8.5 9.1 10.4
- ----------------------------------------------------------------------
TOTAL LONG-TERM DEBT 676.3 597.6 765.3
- ----------------------------------------------------------------------
Accrued pension and other long-term
benefits 47.3 64.1 75.9
Deferred income taxes 125.7 113.6 99.8
Other long-term liabilities 7.6 7.1 9.6
Minority interest 9.9 10.4 18.8
SHAREHOLDERS' EQUITY:
Preferred stock, $0.01 par value --- --- ---
Class A common stock, $0.01 par
value 0.4 0.4 0.4
Capital in excess of par value 222.6 232.0 179.6
Retained earnings 357.8 388.8 341.2
Accumulated other comprehensive
income (loss) 8.2 (9.4) (12.6)
- ----------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 589.0 611.8 508.6
- ----------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $1,800.7 $1,799.9 $1,784.0
======================================================================
Rock-Tenn Company Quarterly Statistics
Paperboard Group Operating Statistics
1st 2nd 3rd 4th Fiscal
Quarter Quarter Quarter Quarter Year
--------------------------------------------
Average Price Per Ton
(a)(c)
- --------------------------
All Tons
2005 $467 $472 $491 $523 $492
2006 524 526 539 561 538
2007 558 571 588 597 579
Tons Shipped
- --------------------------
Coated and Specialty (a)
2005 210,566 209,706 211,628 209,721 841,621
2006 208,325 223,469 220,596 229,086 881,476
2007 221,506 222,970 225,135 223,527 893,138
Corrugated Medium
2005 42,691 45,228 44,758 44,841 177,518
2006 44,985 45,444 44,165 47,045 181,639
2007 44,615 46,219 45,304 46,793 182,931
Bleached Paperboard (b)
2005 -- -- 26,713 84,169 110,882
2006 79,152 80,719 76,579 83,799 320,249
2007 73,968 82,205 90,102 88,730 335,005
Market Pulp (b)
2005 -- -- 6,933 23,104 30,037
2006 14,994 27,911 23,645 20,019 86,569
2007 20,883 24,661 25,551 24,787 95,882
Total (b)
2005 253,257 254,934 290,032 361,8351,160,058
2006 347,456 377,543 364,985 379,9491,469,933
2007 360,972 376,055 386,092 383,8371,506,956
(a) Average Price Per Ton and Tons Shipped include tons shipped by
Seven Hills Paperboard LLC, our unconsolidated joint venture with
LaFarge North America, Inc.
(b) Bleached paperboard and market pulp tons shipped began in June
2005 as a result of the Gulf States acquisition.
(c) Beginning in the third quarter of fiscal 2005, Average Price Per
Ton includes coated and specialty recycled paperboard, corrugated
medium, bleached paperboard and market pulp.
Rock-Tenn Company Quarterly Statistics
Segment Sales and Segment Income
(In Millions)
1st 2nd 3rd 4th Fiscal
Quarter Quarter Quarter Quarter Year
-----------------------------------------
Packaging Products Segment
Sales
2005 $221.8 $218.8 $239.2 $314.2 $ 994.0
2006 301.1 319.7 326.2 320.8 1,267.8
2007 303.1 312.8 319.0 326.0 1,260.9
Packaging Products Segment
Income
2005 $ 5.3 $ 5.7 $ 10.6 $ 11.8 $ 33.4
2006 6.8 13.4 13.2 11.6 45.0
2007 11.7 13.1 12.4 12.1 49.3
Return On Sales
2005 2.4% 2.6% 4.4% 3.8% 3.4%
2006 2.3% 4.2% 4.0% 3.6% 3.5%
2007 3.9% 4.2% 3.9% 3.7% 3.9%
Paperboard Segment Sales
2005 $128.7 $131.8 $155.0 $199.9 $ 615.4
2006 187.7 205.7 204.1 222.2 819.7
2007 210.8 231.6 247.7 249.5 939.6
Paperboard Segment Income
(Loss)
2005 $ 4.4 $ 3.6 $ 7.6 $ 16.0 $ 31.6
2006 (1.0) 15.8 18.9 28.5 62.2
2007 23.9 26.9 34.1 29.3 114.2
Return on Sales
2005 3.4% 2.7% 4.9% 8.0% 5.1%
2006 (0.5)% 7.7% 9.3% 12.8% 7.6%
2007 11.3% 11.6% 13.8% 11.7% 12.2%
Merchandising Displays
Segment Sales
2005 $ 52.7 $ 59.0 $ 57.0 $ 57.6 $ 226.3
2006 49.2 55.8 58.8 69.4 233.2
2007 60.9 82.6 76.8 85.5 305.8
Merchandising Displays
Segment Income
2005 $ 2.4 $ 3.7 $ 5.4 $ 6.1 $ 17.6
2006 2.8 3.2 1.6 8.8 16.4
2007 5.1 12.2 10.8 10.6 38.7
Return on Sales
2005 4.6% 6.3% 9.5% 10.6% 7.8%
2006 5.7% 5.7% 2.7% 12.7% 7.0%
2007 8.4% 14.8% 14.1% 12.4% 12.7%
Corrugated Segment Sales
2005 $ 28.8 $ 30.2 $ 29.8 $ 29.7 $ 118.5
2006 28.4 31.9 36.6 38.8 135.7
2007 36.6 40.4 40.6 40.7 158.3
Corrugated Segment Income
2005 $ 0.3 $ 1.1 $ 1.0 $ 1.1 $ 3.5
2006 0.4 1.0 1.0 1.6 4.0
2007 1.8 2.4 2.0 2.2 8.4
Return on Sales
2005 1.0% 3.6% 3.4% 3.7% 3.0%
2006 1.4% 3.1% 2.7% 4.1% 2.9%
2007 4.9% 5.9% 4.9% 5.4% 5.3%
Rock-Tenn Company Quarterly Statistics
Key Financial Statistics
(In Millions, except EPS Data)
1st Quarter 2nd Quarter 3rd Quarter4th QuarterFiscal Year
---------------------------------------------------------
Net Income
(Loss)
2005 $ 0.5 $ 0.2 $12.0 $ 4.9 $ 17.6
2006 (9.0) 5.2 11.0 21.5 28.7
2007 15.1 21.7 25.2 19.7 81.7
Diluted EPS
2005 $ 0.01 $0.01 $0.33 $0.14 $ 0.49
2006 (0.25) 0.14 0.30 0.57 0.77
2007 0.39 0.55 0.63 0.50 2.07
Depreciation
&
Amortization
2005 $ 18.5 $18.5 $20.5 $26.5 $ 84.0
2006 25.8 25.9 26.1 26.5 104.3
2007 26.0 25.5 26.0 26.2 103.7
Capital
Expenditures
2005 $ 10.2 $12.2 $11.8 $20.1 $ 54.3
2006 13.5 13.6 19.1 18.4 64.6
2007 17.3 23.5 17.9 19.3 78.0
Non-GAAP Measures
We have included financial measures that are 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 non-GAAP financial
measures, provide a reconciliation of each 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.
These measures may differ from similarly captioned measures of other
companies in our industry.
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 September 30, 2007 calculation, the
Company's Leverage Ratio was 2.55 times, which compares to a maximum
Leverage Ratio under the Senior Credit Facility of 4.00 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
September 30, 2007
-----------------------
Net Income $ 81.7
Interest Expense and Other Income 51.1
Income Taxes 45.3
Depreciation and Amortization 102.5
Additional Permitted Charges 5.9
-----------------------
Credit Agreement EBITDA $286.5
=======================
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) September 30,
2007
-------------
Current Portion of Debt $ 46.0
Total Long-Term Debt 676.3
-------------
Total Debt 722.3
Less: Hedge Adjustments Resulting From Terminated
Fair Value Interest Rate Derivatives or Swaps (8.5)
-------------
Total Debt Less Hedge Adjustments 713.8
Plus: Letters of Credit 15.6
-------------
Total Funded Debt $ 729.4
=============
Adjusted Net Income and Adjusted Net Income per Diluted Share
We also use the non-GAAP measure "Adjusted Net Income" and
"Adjusted Net Income per Diluted Share". Management believes these
non-GAAP financial measures provide our board of directors, investors,
potential investors, security analysts and others with useful
information to evaluate the performance of the Company because it
excludes gains and losses and charges that management believes are not
indicative of the ongoing operating results of the business. The
Company and the board of directors use this information to evaluate
the Company's performance relative to other periods.
Set forth below are reconciliations of "Adjusted Net Income" and
"Adjusted Net Income per Diluted Share" to the most directly
comparable GAAP measures, "Net Income" and "Net Income per Diluted
Share", respectively:
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4Q 4Q Fiscal Year Fiscal Year
2007 2006 2007 2006
- ----------------------------------------------------------------------
Net income $ 19.7 $ 21.5 $81.7 $ 28.7
Restructuring and other
costs, net - net of tax 1.5 0.4 3.0 5.0
Capacity increase related
outage at Battle Creek
Mill - net of tax 1.1 n/a 1.1 n/a
State tax benefits
primarily due to a change
in effective rate n/a (2.4) n/a (2.4)
- ----------------------------------------------------------------------
Adjusted net income $ 22.3 $ 19.5 $85.8 $ 31.3
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4Q 4Q Fiscal Year Fiscal Year
2007 2006 2007 2006
- ----------------------------------------------------------------------
Net income per diluted
share $ 0.50 $ 0.57 $2.07 $ 0.77
Restructuring and other
costs, net 0.04 0.01 0.07 0.14
Capacity increase related
outage at Battle Creek
Mill 0.03 n/a 0.03 n/a
State tax benefits
primarily due to a change
in effective rate n/a (0.06) n/a (0.06)
- ----------------------------------------------------------------------
Adjusted net income per
diluted share $ 0.57 $ 0.52 $2.17 $ 0.85
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CONTACT: Rock-Tenn Company
Investor Relations Department, 678-291-7900