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RockTenn Company Reports Operating Results (10-Q)

August 09, 2010 | About:
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10qk

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RockTenn Company (RKT) filed Quarterly Report for the period ended 2010-06-30.

Rocktenn Company has a market cap of $2.06 billion; its shares were traded at around $53.14 with a P/E ratio of 13.28 and P/S ratio of 0.73. The dividend yield of Rocktenn Company stocks is 1.13%. Rocktenn Company had an annual average earning growth of 11.5% over the past 10 years. GuruFocus rated Rocktenn Company the business predictability rank of 2.5-star.RKT is in the portfolios of RS Investment Management, George Soros of Soros Fund Management LLC, Steven Cohen of SAC Capital Advisors.
This is the annual revenues and earnings per share of RKT over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of RKT.


Highlight of Business Operations:

SG&A expenses increased $5.7 million and declined as a percentage of net sales in the nine months ended June 30, 2010 compared to the nine months ended June 30, 2009. We recorded increased compensation costs aggregating $4.7 million, increased professional fees and consulting expense for various initiatives of $3.0 million, increased pension costs of $2.4 million and increased interest rate swap expense of $1.5 million which were partially offset by reduced depreciation and amortization of $4.3 million and reduced bad debt expense of $2.3 million.

Interest expense for the third quarter of fiscal 2010 decreased to $17.8 million from $23.2 million for the same quarter last year and included non-cash deferred financing cost amortization of $1.5 million and $1.6 million, respectively. The decrease in our average outstanding borrowings decreased interest expense by approximately $4.4 million, and lower interest rates, net of swaps, decreased interest expense by approximately $0.8 million, and deferred financing cost amortization decreased $0.2 million.

Interest expense for the nine months ended June 30, 2010 decreased to $58.5 million from $74.2 million for the nine months ended June 30, 2009 and included non-cash deferred financing cost amortization of $4.6 million and $5.1 million, respectively. The decrease in our average outstanding borrowings decreased interest expense by approximately $14.6 million, and lower interest rates, net of swaps, decreased interest expense by approximately $0.6 million, and deferred financing cost amortization decreased $0.5 million.

Loss on extinguishment of debt for the nine months ended June 30, 2010 was $2.8 million and primarily includes $0.5 million of gain recognized in the first quarter of fiscal 2010 in connection with the repurchase of $19.5 million of our March 2013 Notes at an average price of approximately 98% of par and a $3.3 million charge in connection with the write off of unamortized deferred financing costs and original issuance discount in connection with the repayment of $120.0 million of the outstanding term loan B balance using proceeds from our revolving credit facility. Loss on extinguishment of debt for the nine months ended June 30, 2009 was $4.3 million, and included $2.4 million in the first quarter of fiscal 2009 to retire the Solvay IDBs we assumed as part of the Southern Container acquisition, at 102% of par. The $2.4 million was funded by the former Southern Container stockholders.

Excluding the $32.7 million included in the third quarter of fiscal 2009 related to the alternative fuel tax credit, net of related expenses, segment income of the Consumer Packaging segment for the quarter ended June 30, 2010 decreased $1.2 million. The decrease was primarily due to increased recycled fiber and virgin fiber costs, which were largely offset by higher paperboard volumes and selling prices and higher folding carton volumes, decreased chemical costs and continued operational improvements. At our mills, chemical costs decreased approximately $2.3 million, or $9 per ton. Recycled fiber and virgin fiber costs increased approximately $10.2 million, or $69 per ton, and $5.6 million, or $51 per ton, respectively, over the prior year quarter. Freight expense increased $3.4 million due in part to higher volumes and pension expense increased $2.2 million over the third quarter of fiscal 2009.

Segment income of the Consumer Packaging segment for the nine months ended June 30, 2010 increased primarily due to higher paperboard volumes and higher folding carton selling prices and volumes, decreased energy and chemical costs, continued operational improvements and the impact of the first quarter of fiscal 2009 Demopolis maintenance outage on the prior year period, which were partially offset by increased recycled fiber and virgin fiber costs, lower recycled paperboard selling prices and a $3.9 million decrease in alternative fuel tax credit in the current nine months compared to the prior year period. Chemical and energy costs decreased approximately $11.2 million, or $14 per ton, and $2.9 million, or $4 per ton, respectively, and bad debt expense decreased $1.6 million compared to the prior year period. Recycled fiber and virgin fiber costs increased approximately $21.0 million, or $48 per ton, and $9.7 million, or $30 per ton, respectively, over the prior year period. Pension expense increased $6.0 million, freight expense increased $5.2 million, in part due to higher paperboard volumes, group insurance expense increased $1.2 million and commissions expense increased $1.0 million compared to the nine months ended June 30, 2010.

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