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RockTenn (RKT) today reported earnings for the quarter ended June
30, 2010 of $1.14 per diluted share. The Company’s adjusted earnings
were $1.14 per diluted share compared to the prior year quarter adjusted
earnings of $1.42 per diluted share.
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2010 2009 2010 2009
-------------- ----------- ---------- ----------
Earnings per diluted share $ 1.14 $ 2.23 $ 3.39 $ 3.99
Alternative fuel tax credit, net -- (0.86 ) (0.74 ) (0.86 )
Loss on extinguishment of debt -- 0.03 0.05 0.07
Restructuring and other costs, net -- 0.02 0.06 0.17
Operating losses of previously closed facilities -- -- 0.03 0.03
Adjusted earnings per diluted share $ 1.14 $ 1.42 $ 2.79 $ 3.40
------------------------------------------------ ------ ------ ---- ----- --- ----- --- -----
Third Quarter Results
--
Net sales of $771.9 million for the third quarter of fiscal 2010
increased $68.0 million compared to the third quarter of fiscal 2009.
--
Segment income was $101.4 million compared to $117.3 million in the
prior year quarter excluding $32.7 million of alternative fuel tax
credit, net of expenses in the prior year quarter.
Chairman and Chief Executive Officer’s
Statement
RockTenn Chairman and Chief Executive Officer James A. Rubright stated,
"RockTenn’s adjusted earnings of $1.14 per share increased 63% over
adjusted earnings of $0.70 per share in the March quarter on moderating
recycled fiber and wood costs, strengthening customer demand and
realization of previously announced price increases. Our mill backlogs
continue to be very strong and the overall demand environment continues
to improve, providing a basis for our optimism regarding earnings
improvement through fiscal 2011."
Segment Results
Paperboard and Containerboard Tons Shipped and Average Price
Total tons shipped in the third quarter of fiscal 2010 increased by
63,756 tons over the prior year quarter and increased on a sequential
quarter basis by 16,536 tons. The average selling price for all
paperboard and containerboard grades increased $38 per ton from the
prior year quarter and increased $32 per ton on a sequential quarter
basis.
Consumer Packaging Segment
Consumer Packaging segment net sales increased 5.6% in the third quarter
of fiscal 2010 compared to the prior year quarter, due to higher volumes
and increased paperboard selling prices. Segment income was $49.1
million in the third quarter of fiscal 2010 and $50.3 million in the
prior year quarter excluding $32.7 million of alternative fuel tax
credit, net of expenses in the prior year quarter.
Corrugated Packaging Segment
Corrugated Packaging segment net sales increased $24.0 million to $210.5
million in the third quarter of fiscal 2010 compared to the prior year
quarter, due to higher volumes and increased containerboard selling
prices. Segment income was $35.9 million in the third quarter of fiscal
2010 and segment return on sales was 17.1%.
Merchandising Displays Segment
Merchandising Displays segment net sales increased $8.2 million over the
prior year third quarter. Segment income increased to $8.4 million in
the third quarter of fiscal 2010 compared to $8.0 million in the prior
year quarter, and segment return on sales was 9.6%.
Specialty Paperboard Products Segment
Specialty Paperboard Products segment net sales increased $19.4 million
in the third quarter of fiscal 2010 compared to the prior year quarter
primarily due to higher recycled fiber prices and volumes and increased
paperboard volumes. Segment income was $8.0 million in the third quarter
of fiscal 2010 and $9.4 million in the prior year quarter. The decrease
was due primarily to higher recycled fiber costs.
Cash Provided By Operating Activities
Net cash provided by operating activities in the third quarter of fiscal
2010 was $100.3 million compared to $114.4 million in the prior year
quarter primarily due to lower earnings and a smaller net decrease in
operating assets and liabilities in the current year quarter compared to
the prior year period.
Financing and Investing Activities
We reduced net debt by $63.5 million in the third quarter and $311.5
million in the twelve months ended June 30, 2010. Our Credit Agreement
Debt/EBITDA ratio was 2.14 times at June 30, 2010, well below our
maximum permitted ratio of 4.25 times and the July 1, 2010 re-set of
3.75 times.
Conference Call
We will host a conference call to discuss our results of operations for
the third quarter of fiscal 2010 and other topics that may be raised
during the discussion at 9:00 a.m., Eastern Time, on July 27, 2010. The
conference call will be webcast and can be accessed, along with a copy
of this press release, at www.rocktenn.com.
About RockTenn
RockTenn (RKT) is one of North America’s leading manufacturers of
paperboard, containerboard and consumer and corrugated packaging, with
annual net sales of approximately $3 billion. RockTenn’s 10,000
employees are committed to exceeding their customers’ expectations --
every time. The Company operates locations in the United States, Canada,
Mexico, Chile and Argentina. For more information, visit www.rocktenn.com.
Cautionary Statements
Statements herein regarding, among others, the strength of our mill
backlogs, continued improvement in the overall demand environment and
our optimism regarding earnings improvement through fiscal 2011
constitute forward-looking statements within the meaning of the federal
securities laws. These statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
those contained in any forward-looking statement. With respect to these
statements, we have made assumptions regarding, among other things,
expected economic, competitive and market conditions generally; expected
volumes and price levels of purchases by customers; recycled fiber and
energy costs; costs associated with facility closures; 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 these 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 our 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 key customers;
changes in environmental and other governmental regulation; and adverse
changes in general market and industry conditions. These risks are more
particularly described in our filings with the Securities and Exchange
Commission, including under the caption "Business--Forward-Looking
Information" and "Risk Factors" in our Annual Report on Form 10-K for
the fiscal year ended September 30, 2009. The information contained in
this release speaks as of the date hereof and we do not undertake any
obligation to update this information as future events unfold.
ROCK-TENN COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
June 30, June 30, June 30, June 30,
2010 2009 2010 2009
NET SALES $ 771.9 $ 703.9 $ 2,194.6 $ 2,083.3
Cost of Goods Sold (net of alternative fuel tax
credit of $0, $32.7, $28.8 and $32.7) 595.8 480.8 1,678.7 1,523.9
Gross Profit 176.1 223.1 515.9 559.4
Selling, General and Administrative Expenses 84.9 81.4 252.1 246.4
Restructuring and Other Costs, net (0.2 ) 1.1 4.1 10.8
Operating Profit 91.4 140.6 259.7 302.2
Interest Expense (17.8 ) (23.2 ) (58.5 ) (74.2 )
Loss on Extinguishment of Debt - (1.9 ) (2.8 ) (4.3 )
Interest Income and Other Income (Expense), net 0.1 - 0.4 (0.1 )
Equity in Income (Loss) of Unconsolidated Entities 0.3 0.3 0.2 (0.3 )
INCOME BEFORE INCOME TAXES 74.0 115.8 199.0 223.3
Income Tax Expense (27.0 ) (27.4 ) (60.7 ) (66.0 )
CONSOLIDATED NET INCOME 47.0 88.4 138.3 157.3
Less: Net Income Attributable to Noncontrolling
Interests (1.9 ) (1.4 ) (4.1 ) (2.3 )
NET INCOME ATTRIBUTABLE TO ROCK-TENN
COMPANY SHAREHOLDERS $ 45.1 $ 87.0 $ 134.2 $ 155.0
Computation of diluted earnings per share under the two-class method
(in millions, except per share data):
Net income attributable to Rock-Tenn Company
shareholders $ 45.1 $ 87.0 $ 134.2 $ 155.0
Less: Distributed and undistributed income
available to participating securities (0.6 ) (0.9 ) (1.7 ) (1.9 )
-------- - -------- - ------- --- ------- ---
Distributed and undistributed income available to
Rock-Tenn Company shareholders $ 44.5 $ 86.1 $ 132.5 $ 153.1
======== ======== ======== ======== === ======= === =======
Diluted weighted average shares outstanding 39.2 38.5 39.1 38.3
Diluted earnings per share $ 1.14 $ 2.23 $ 3.39 $ 3.99
======== ======== ======== ======== === ======= === =======
ROCK-TENN COMPANY
SEGMENT INFORMATION
(UNAUDITED)
(IN MILLIONS, EXCEPT TONNAGE DATA)
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
June 30, June 30, June 30, June 30,
2010 2009 2010 2009
NET SALES:
Consumer Packaging Segment $ 398.2 $ 377.2 $ 1,164.0 $ 1,108.9
Corrugated Packaging Segment 210.5 186.5 581.6 566.2
Merchandising Displays Segment 87.9 79.7 231.8 237.4
Specialty Paperboard Products Segment 96.6 77.2 272.8 222.7
Intersegment Eliminations (21.3 ) (16.7 ) (55.6 ) (51.9 )
TOTAL NET SALES $ 771.9 $ 703.9 $ 2,194.6 $ 2,083.3
SEGMENT INCOME:
Consumer Packaging Segment (1) $ 49.1 $ 83.0 $ 156.8 $ 153.7
Corrugated Packaging Segment 35.9 49.6 91.5 141.8
Merchandising Displays Segment 8.4 8.0 23.8 22.8
Specialty Paperboard Products Segment 8.0 9.4 18.5 18.4
TOTAL SEGMENT INCOME $ 101.4 $ 150.0 $ 290.6 $ 336.7
Restructuring and Other Costs, net 0.2 (1.1 ) (4.1 ) (10.8 )
Non-Allocated Expenses (9.9 ) (8.0 ) (26.6 ) (24.0 )
Interest Expense (17.8 ) (23.2 ) (58.5 ) (74.2 )
Loss on Extinguishment of Debt - (1.9 ) (2.8 ) (4.3 )
Interest Income and Other Income (Expense), net 0.1 - 0.4 (0.1 )
INCOME BEFORE INCOME TAXES $ 74.0 $ 115.8 $ 199.0 $ 223.3
Recycled Paperboard Shipped (in tons) 232,149 219,819 683,361 636,687
Containerboard Shipped (in tons) 244,997 203,019 710,867 613,494
Bleached Paperboard Shipped (in tons) 88,999 79,461 259,834 244,022
Market Pulp Shipped (in tons) 24,109 24,199 74,526 64,397
(1) Includes alternative fuel tax credits of $0, $32.7,
$28.8, and $32.7, respectively.
ROCK-TENN COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN MILLIONS)
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
June 30, June 30, June 30, June 30,
2010 2009 2010 2009
------ ------ ------ ------
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income $ 47.0 $ 88.4 $ 138.3 $ 157.3
Adjustments to reconcile consolidated net income to net cash
provided by operating activities:
Depreciation and amortization 36.4 37.5 110.7 112.7
Deferred income tax expense 2.9 4.9 16.2 24.4
Loss on extinguishment of debt - 1.9 2.8 4.3
Share-based compensation expense 3.9 3.3 11.9 8.2
Loss on disposal of plant and equipment and other, net 0.3 1.3 0.2 0.9
Equity in (income) loss of unconsolidated entities (0.3 ) (0.3 ) (0.2 ) 0.3
Pension funding (more) less than expense (9.3 ) (13.7 ) 3.1 (10.5 )
Alternative fuel tax credit benefit - (33.9 ) (29.0 ) (33.9 )
Impairment adjustments and other non-cash items (0.6 ) 0.8 2.6 -
Changes in operating assets and liabilities, net of acquisitions
Accounts receivable (9.0 ) (11.6 ) 1.2 22.9
Inventories 3.5 1.7 15.6 (4.5 )
Other assets (1.7 ) (7.7 ) (5.6 ) (14.1 )
Accounts payable (10.7 ) 10.8 (3.7 ) (14.9 )
Income taxes payable 21.3 19.5 58.0 33.0
Accrued liabilities and other 16.6 11.5 (9.1 ) (13.8 )
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 100.3 $ 114.4 $ 313.0 $ 272.3
--------------------------------------------------------------------- ---- ------ ---- ------ ---- ------ ---- ------
INVESTING ACTIVITIES:
Capital expenditures (30.3 ) (18.1 ) (60.9 ) (49.3 )
Cash paid for purchase of businesses, including amounts received from
escrow, net of cash received - (4.5 ) - 4.0
Investment in unconsolidated entities (0.1 ) (0.5 ) (0.2 ) (1.0 )
Return of capital from unconsolidated entities 0.2 0.2 0.6 3.9
Proceeds from sale of property, plant and equipment 0.3 0.6 3.2 1.3
NET CASH USED FOR INVESTING ACTIVITIES $ (29.9 ) $ (22.3 ) $ (57.3 ) $ (41.1 )
--------------------------------------------------------------------- ---- ------ ---- ---- ------ ---- ---- ------ ---- ---- ------ ----
FINANCING ACTIVITIES:
Proceeds from issuance of notes - 100.0 - 100.0
Additions to revolving credit facilities 38.2 7.0 189.1 192.0
Repayments of revolving credit facilities (124.1 ) (37.3 ) (187.3 ) (195.6 )
Additions to debt 100.0 4.0 102.3 89.0
Repayments of debt (78.7 ) (150.4 ) (339.1 ) (446.4 )
Debt issuance costs - (2.8 ) (0.2 ) (3.7 )
Cash paid for debt extinguishment costs - (2.7 ) - (5.1 )
Restricted cash and investments - - - 19.2
Issuances of common stock, net of related minimum tax withholdings (0.6 ) (0.9 ) (1.9 ) (0.6 )
Excess tax benefits from share-based compensation 0.5 0.8 1.9 2.5
Capital contributed to consolidated subsidiary from noncontrolling - 1.7 - 1.7
interest
Advances from (repayments to) unconsolidated entity 1.4 (0.9 ) 0.7 (6.2 )
Cash dividends paid to shareholders (5.9 ) (3.8 ) (17.5 ) (11.5 )
Cash distributions to noncontrolling interests (2.3 ) - (4.4 ) (2.7 )
NET CASH USED FOR FINANCING ACTIVITIES $ (71.5 ) $ (85.3 ) $ (256.4 ) $ (267.4 )
--------------------------------------------------------------------- ---- ------ ---- ---- ------ ---- ---- ------ ---- ---- ------ ----
Effect of exchange rate changes on cash and cash equivalents 0.1 0.3 0.3 0.8
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS $ (1.0 ) $ 7.1 $ (0.4 ) $ (35.4 )
Cash and cash equivalents at beginning of period 12.4 10.3 11.8 52.8
Cash and cash equivalents at end of period $ 11.4 $ 17.4 $ 11.4 $ 17.4
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Income taxes, net of refunds $ 2.0 $ 2.2 $ (15.9 ) $ 5.5
Interest, net of amounts capitalized 6.7 14.8 48.2 70.1
ROCK-TENN COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN MILLIONS)
June 30, September 30,
2010 2009
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 11.4 $ 11.8
Accounts receivable (net of allowances of $8.3 and $8.8) 304.6 305.5
Inventories 259.9 275.1
Other current assets 37.8 65.9
TOTAL CURRENT ASSETS 613.7 658.3
Property, plant and equipment at cost:
Land and buildings 417.2 413.8
Machinery and equipment 1,898.0 1,857.1
Transportation equipment 13.4 13.5
Leasehold improvements 5.4 5.4
------------- --------
2,334.0 2,289.8
Less accumulated depreciation and amortization (1,096.1 ) (1,013.7 )
------------- - -------- ----
Net property, plant and equipment 1,237.9 1,276.1
Goodwill 736.4 736.4
Intangibles, net 142.5 151.3
Investment in unconsolidated entities 23.1 23.8
Other assets 30.5 38.5
TOTAL ASSETS $ 2,784.1 $ 2,884.4
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current portion of debt $ 72.3 $ 56.3
Accounts payable 230.4 233.9
Accrued compensation and benefits 79.8 88.0
Other current liabilities 67.3 71.1
TOTAL CURRENT LIABILITIES 449.8 449.3
Long-term debt due after one year 1,039.7 1,289.3
Hedge adjustments resulting from terminated fair value
interest rate derivatives or swaps 2.3 3.8
TOTAL LONG-TERM DEBT 1,042.0 1,293.1
Accrued pension and other long-term benefits 149.5 161.5
Deferred income taxes 178.9 149.2
Other long-term liabilities 30.5 36.7
Redeemable noncontrolling interests 7.3 11.5
Total Rock-Tenn Company shareholders’ equity 920.2 776.8
Noncontrolling interests 5.9 6.3
------------- --------
Total Equity 926.1 783.1
TOTAL LIABILITIES AND EQUITY $ 2,784.1 $ 2,884.4
Rock-Tenn Company Quarterly Statistics
Paperboard and Containerboard Operating Statistics
1st 2nd 3rd 4th Fiscal Year
Quarter Quarter Quarter Quarter
------------------ ----------- ----------- ----------- --------------
Average Net Selling Price Per
Ton (a) (b) (d)
---------------------------------------------
All Tons
2008 $ 596 $ 585 $ 564 $ 580 $ 579
2009 592 578 557 548 568
2010 544 563 595
Tons Shipped
---------------------------
Recycled Paperboard (a) (c)
2008 217,081 229,003 235,871 234,209 916,164
2009 204,927 211,941 219,819 224,269 860,956
2010 223,148 228,064 232,149
Containerboard (d)
2008 44,699 102,092 218,532 244,073 609,396
2009 221,907 188,568 203,019 235,250 848,744
2010 231,113 234,757 244,997
Bleached Paperboard
2008 79,623 84,916 86,268 90,724 341,531
2009 86,338 78,223 79,461 88,856 332,878
2010 84,993 85,842 88,999
Market Pulp
2008 21,193 27,837 24,469 21,537 95,036
2009 20,705 19,493 24,199 26,521 90,918
2010 25,362 25,055 24,109
Total (a) (d)
2008 362,596 443,848 565,140 590,543 1,962,127
2009 533,877 498,225 526,498 574,896 2,133,496
2010 564,616 573,718 590,254
(a) Average Net Selling Price Per Ton and Tons Shipped
include gypsum paperboard liner tons shipped by Seven Hills
Paperboard LLC, our unconsolidated joint venture with Lafarge North
America, Inc. Average Net Selling Price Per Ton is computed as net
sales of paperboard, containerboard and market pulp divided by tons
shipped.
(b) Beginning in the second quarter of fiscal 2008,
Average Price Per Ton includes coated and specialty recycled
paperboard, containerboard, bleached paperboard and market pulp.
(c) Recycled paperboard tons shipped include coated and
specialty paperboard.
(d) Containerboard tons shipped include corrugated medium
and linerboard, which include the Solvay Mill tons beginning in
March 2008.
Rock-Tenn Company Quarterly Statistics
Segment Sales and Segment Income
(In Millions, except Return On Sales data)
1st 2nd 3rd 4th Fiscal Year
Quarter Quarter Quarter Quarter
--------------------- --------- --------- --------- -------------
Consumer Packaging Segment Sales
2008 $ 374.7 $ 394.8 $ 388.9 $ 393.0 $ 1,551.4
2009 368.8 362.9 377.2 394.2 1,503.1
2010 379.6 386.2 398.2
Consumer Packaging Intersegment Sales
2008 $ 4.2 $ 4.3 $ 3.9 $ 5.7 $ 18.1
2009 6.6 4.7 6.0 7.8 25.1
2010 6.0 7.2 8.5
Consumer Packaging Segment Income
2008 $ 28.7 $ 32.5 $ 27.9 $ 30.7 $ 119.8
2009 31.5 39.2 50.3 (1) 53.2 (2) 174.2
2010 42.1 (3) 36.8 (4) 49.1
Return On Sales
2008 7.7 % 8.2 % 7.2 % 7.8 % 7.7 %
2009 8.5 % 10.8 % 13.3 % (1) 13.5 % (2) 11.6 %
2010 11.1 % (3) 9.5 % (4) 12.3 %
Corrugated Packaging Segment Sales
2008 $ 61.4 $ 112.0 $ 208.9 $ 225.2 $ 607.5
2009 203.2 176.5 186.5 186.7 752.9
2010 180.1 191.0 210.5
Corrugated Packaging Intersegment Sales
2008 $ 6.3 $ 7.2 $ 7.6 $ 10.0 $ 31.1
2009 10.1 9.7 8.8 8.7 37.3
2010 7.3 8.6 9.6
Corrugated Packaging Segment Income
2008 $ 4.3 $ 4.4 $ 23.2 $ 39.4 $ 71.3
2009 50.6 41.6 49.6 37.1 178.9
2010 34.7 20.9 35.9
Return on Sales
2008 7.0 % 3.9 % 11.1 % 17.5 % 11.7 %
2009 24.9 % 23.6 % 26.6 % 19.9 % 23.8 %
2010 19.3 % 10.9 % 17.1 %
Merchandising Displays Segment Sales
2008 $ 82.0 $ 94.3 $ 86.1 $ 88.4 $ 350.8
2009 74.8 82.9 79.7 83.2 320.6
2010 66.8 77.1 87.9
Merchandising Displays Intersegment Sales
2008 $ - $ 0.2 $ 0.1 $ 0.1 $ 0.4
2009 - 0.2 0.1 0.1 0.4
2010 0.1 0.1 0.1
Merchandising Displays Segment Income
2008 $ 8.0 $ 13.8 $ 8.4 $ 11.7 $ 41.9
2009 5.1 9.7 8.0 9.1 31.9
2010 4.2 11.2 8.4
Return on Sales
2008 9.8 % 14.6 % 9.8 % 13.2 % 11.9 %
2009 6.8 % 11.7 % 10.0 % 10.9 % 10.0 %
2010 6.3 % 14.5 % 9.6 %
(1) Excludes $32.7 of alternative fuel tax credit, net
of expenses.
(2) Excludes $21.4 of alternative fuel tax credit, net of
expenses.
(3) Excludes $20.7 of alternative fuel tax credit, net of
expenses.
(4) Excludes $8.1 of alternative fuel tax credit.
Rock-Tenn Company Quarterly Statistics
Segment Sales and Segment Income (Continued)
(In Millions, except Return On Sales data)
1st 2nd 3rd 4th Fiscal Year
Quarter Quarter Quarter Quarter
------------------------- --------------- ----------- ---------- -----------
Specialty Paperboard Products Segment Sales
2008 $ 91.8 $ 99.8 $ 102.1 $ 99.2 $ 392.9
2009 75.3 70.2 77.2 84.2 306.9
2010 79.8 96.4 96.6
Specialty Paperboard Products Intersegment Sales
2008 $ 3.1 $ 3.3 $ 3.4 $ 4.3 $ 14.1
2009 2.3 1.6 1.8 2.7 8.4
2010 2.1 2.9 3.1
Specialty Paperboard Products Segment Income
2008 $ 7.4 $ 6.6 $ 7.8 $ 8.5 $ 30.3
2009 2.8 6.2 9.4 8.1 26.5
2010 4.5 6.0 8.0
Return on Sales
2008 8.1 % 6.6 % 7.6 % 8.6 % 7.7 %
2009 3.7 % 8.8 % 12.2 % 9.6 % 8.6 %
2010 5.6 % 6.2 % 8.3 %
Key Financial Statistics
(In Millions, except EPS Data)
1st 2nd 3rd 4th Fiscal Year
Quarter Quarter Quarter Quarter
------------------------- --------------- ----------- ---------- -----------
Net Income Attributable to Rock-Tenn Company Shareholders
2008 $ 17.5 $ 17.1 $ 18.8 $ 28.4 $ 81.8
2009 30.6 37.4 87.0 67.3 222.3
2010 56.3 32.8 45.1
Diluted EPS (1)
2008 $ 0.46 $ 0.45 $ 0.49 $ 0.74 $ 2.12
2009 0.79 0.97 2.23 1.71 5.71
2010 1.43 0.83 1.14
Depreciation & Amortization
2008 $ 25.8 $ 29.7 $ 39.2 $ 38.7 $ 133.4
2009 37.9 37.3 37.5 37.3 150.0
2010 37.5 36.8 36.4
Capital Expenditures
2008 $ 17.9 $ 19.3 $ 22.5 $ 24.5 $ 84.2
2009 14.2 17.0 18.1 26.6 75.9
2010 12.3 18.3 30.3
(1) Fiscal 2008 and 2009 Diluted EPS are adjusted
to reflect the October 1, 2009 adoption of accounting guidance
related to the computation of earnings per share.
Non-GAAP Measures and Reconciliations
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.
The following non-GAAP measures are not intended to be substitutes for
GAAP financial measures and should not be used as such.
Net Debt
We have defined the non-GAAP measure "net debt" to include the aggregate
debt obligations reflected in our consolidated balance sheet, less the
hedge adjustments resulting from terminated fair value interest rate
derivatives or swaps, the balance of our cash and cash equivalents,
restricted cash (which includes restricted cash and marketable debt
securities) and certain other investments that we consider to be readily
available to satisfy these debt obligations.
Our management uses net debt, along with other factors, including net
debt repayment per diluted share, 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 and net debt repayment
per diluted share provides a measure to investors of how successful we
are at achieving our debt reduction. Set forth below is a reconciliation
of net debt to the most directly comparable GAAP measures, Current
Portion of Debt and Total Long-Term Debt for the current quarter, prior
quarter, one year ago quarter and the quarter following the Southern
Container acquisition:
(In Millions, except per share data) June 30, March 31, June 30, March 31,
2010 2010 2009 2008
------- ------- ------- -------
Current Portion of Debt $ 72.3 $ 70.4 $ 50.0 $ 247.7
Total Long-Term Debt 1,042.0 1,108.8 1,383.7 1,606.8
------- ------- ------- -------
Total Debt 1,114.3 1,179.2 1,433.7 1,854.5
Less: Hedge Adjustments Resulting From Terminated Fair Value
Interest Rate
Derivatives or Swaps (2.3 ) (2.7 ) (4.2 ) (7.6 )
------- --- ------- --- ------- --- ------- ---
1,112.0 1,176.5 1,429.5 1,846.9
Less: Cash and Cash Equivalents (11.4 ) (12.4 ) (17.4 ) (56.6 )
Less: Restricted Cash -- -- -- (19.5 )
------- ------- ------- ------- ---
Net Debt $ 1,100.6 $ 1,164.1 $ 1,412.1 $ 1,770.8
=== ======= === ======= === ======= === =======
Net Debt
Average Repayment
Net Debt Diluted Per Diluted
Repayment Shares Share
---------------- ---------------- ----------------
Current Quarter $ 63.5 39.2 $ 1.62
Twelve Months Ended June 30, 2010 $ 311.5 39.0 $ 7.99
Since March 31, 2008 $ 670.2 38.6 $ 17.37
Credit Agreement EBITDA and Total Funded Debt
"Credit Agreement EBITDA" is calculated in accordance with the
definition contained in our 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 our 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, less certain deferred cash,
plus additional outstanding letters of credit not already reflected in
debt and certain guarantees.
Our management uses Credit Agreement EBITDA and Total Funded Debt to
evaluate compliance with our debt covenants and borrowing capacity
available under our Senior Credit Facility. Management believes that
investors also use these measures to evaluate our compliance with our
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, 2010
calculation, our Leverage Ratio was 2.14 times, which includes a
reduction of .23 times for the alternative fuel tax credit. Our maximum
permitted Leverage Ratio under the Senior Credit Facility at June 30,
2010 was 4.25 times and re-set to 3.75 times on July 1, 2010.
Set forth below is a reconciliation of Credit Agreement EBITDA for the
three and twelve months ended June 30, 2010, to the most directly
comparable GAAP measure, Consolidated Net Income:
(In Millions) Three Months Twelve Months
Ended Ended
June 30, 2010 June 30, 2010
------------- ---------------
Consolidated Net Income $ 47.0 $ 206.9
Interest Expense, net 16.3 74.1
Income Taxes 27.0 86.3
Depreciation and Amortization 36.4 148.0
Additional Permitted Charges 1.1 11.5
----- -------
Credit Agreement EBITDA $ 127.8 $ 526.8
Less: Alternative Fuel Tax Credit, net -- (50.2 )
----- ------- ----
Credit Agreement EBITDA, Excluding
Alternative Fuel Tax Credit, net $ 127.8 $ 476.6
Less: Capital Expenditures (30.3 ) (87.5 )
----- ---- ------- ----
Credit Agreement EBITDA, Excluding
Alternative Fuel Tax Credit, net and Capital
Expenditures $ 97.5 $ 389.1
==== ===== ==== ==== ======= ====
Net Sales $ 771.9 $ 2,923.6
==== ===== ==== =======
Credit Agreement EBITDA Margin, Excluding
Alternative Fuel Tax Credit, net 16.6 % 16.3 %
===== ==== ======= ====
Credit Agreement EBITDA Margin, Excluding
Alternative Fuel Tax Credit, net and Capital
Expenditures 12.6 % 13.3 %
===== ==== ======= ====
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,
2010
-------
Current Portion of Debt $ 72.3
Total Long-Term Debt 1,042.0
-------
Total Debt 1,114.3
Less: Hedge Adjustments Resulting From Terminated
Fair Value Interest Rate Derivatives or Swaps (2.3 )
------- --
Total Debt Less Hedge Adjustments 1,112.0
Plus: Letters of Credit and Guarantees 17.3
-------
Total Funded Debt $ 1,129.3
== =======
Credit Agreement EBITDA for the Twelve Months
Ended June 30, 2010 $ 526.8
== =======
Leverage Ratio 2.14
=======
Adjusted Net Income and Adjusted Earnings per Diluted Share
We also use the non-GAAP measures "adjusted net income" and "adjusted
earnings per diluted share". Management believes these non-GAAP
financial measures provide our board of directors, investors, potential
investors, securities analysts and others with useful information to
evaluate the performance of the Company because it excludes
restructuring and other costs, net, and other specific items that
management believes are not indicative of the ongoing operating results
of the business. The Company and our board of directors use this
information to evaluate the Company’s performance relative to other
periods. We believe that the most directly comparable GAAP measures to
adjusted net income and adjusted earnings per diluted share are Net
income attributable to Rock-Tenn Company shareholders and Earnings per
Diluted Share, respectively. Set forth below is a reconciliation of
adjusted net income to Net income attributable to Rock-Tenn Company
shareholders:
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
(In Millions) 2010 2009 2010 2009
--------------------------------------------------------- ---- ----- ----- -----
Net income attributable to Rock-Tenn Company shareholders $ 45.1 $ 87.0 $ 134.2 $ 155.0
Alternative fuel tax credit, net -- (33.1 ) (28.9 ) (33.1 )
Loss on extinguishment of debt -- 1.2 1.8 2.7
Restructuring and other costs, net (0.1 ) 0.6 2.5 6.5
Operating losses of previously closed facilities 0.3 -- 0.9 1.0
Adjusted net income $ 45.3 $ 55.7 $ 110.5 $ 132.1
--------------------------------------------------------- ---- ---- ---- ----- --- ----- --- -----
Set forth below is a reconciliation of adjusted earnings per diluted
share to Earnings per diluted share and adjusted net income to Net
income attributable to Rock-Tenn Company shareholders for the second
quarter of fiscal 2010:
Three Months
Ended
March 31,
2010
-----
Earnings per diluted share $ 0.83
Alternative fuel tax credit, net (0.21 )
Loss on extinguishment of debt 0.05
Restructuring and other costs, net 0.02
Operating losses of previously closed facilities 0.01
Adjusted earnings per diluted share $ 0.70
--------------------------------------------------------- ---- -----
Three Months
Ended
March 31,
(In Millions) 2010
--------------------------------------------------------- -----
Net income attributable to Rock-Tenn Company shareholders $ 32.8
Alternative fuel tax credit, net (8.1 )
Loss on extinguishment of debt 2.1
Restructuring and other costs, net 0.6
Operating losses of previously closed facilities 0.4
Adjusted net income $ 27.8
--------------------------------------------------------- ---- -----
SOURCE: RockTenn
RockTenn
John Stakel, 678-291-7900
VP-Treasurer
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