RockTenn Company Reports Operating Results (10-Q)

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Feb 03, 2011
RockTenn Company (RKT, Financial) filed Quarterly Report for the period ended 2010-12-31.

Rock-tenn Co has a market cap of $2.63 billion; its shares were traded at around $67.39 with a P/E ratio of 14.1 and P/S ratio of 0.9. The dividend yield of Rock-tenn Co stocks is 1.2%. Rock-tenn Co had an annual average earning growth of 17.8% over the past 10 years.Hedge Fund Gurus that owns RKT: George Soros of Soros Fund Management LLC, Bruce Kovner of Caxton Associates, Steven Cohen of SAC Capital Advisors. Mutual Fund and Other Gurus that owns RKT: John Keeley of Keeley Fund Management.

Highlight of Business Operations:

Excluding the $20.7 million included in the first quarter of fiscal 2010 in the Consumer Packaging segment related to the alternative fuel mixture credit, net of related expenses, segment income in the first quarter of fiscal 2011 increased $18.9 million to $104.4 million compared to the first quarter of fiscal 2010. The increase was primarily due to higher earnings in our Consumer Packaging and Merchandising Displays segments.

Net income attributable to Rock-Tenn Company shareholders, excluding the net income impact of the alternative fuel mixture credit of $20.8 million, increased $14.8 million to $50.3 million in the first quarter of fiscal 2011 as compared to the first quarter of fiscal 2010 primarily due to generally higher selling prices and volumes and continued strong execution by our businesses, which were partially offset by increased recycled fiber costs.

Interest expense for the first quarter of fiscal 2011 decreased to $16.7 million from $21.5 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 $3.0 million, and lower interest rates, net of swaps, decreased interest expense by approximately $1.7 million, and deferred financing cost amortization decreased $0.1 million.

Excluding the $20.7 million included in the first quarter of fiscal 2010 related to the alternative fuel mixture credit, net of related expenses, segment income of the Consumer Packaging segment for the quarter ended December 31, 2010 increased $10.2 million primarily due to higher paperboard selling prices and higher folding carton volumes and decreased virgin fiber and energy costs, partially offset by increased recycled fiber costs. At our mills, recycled fiber costs increased approximately $8.0 million, or $53 per ton, virgin fiber costs decreased approximately $2.7 million, or $24 per ton, and energy costs decreased approximately $1.2 million, or $5 per ton, over the prior year quarter. Freight expense in the segment increased $1.2 million.

Segment income attributable to the Corrugated Packaging segment for the first quarter of fiscal 2011 increased $1.7 million compared to the prior year first quarter due primarily to higher mill volumes and higher selling prices, which were partially offset by higher recycled fiber and energy costs. At our containerboard mills, recycled fiber costs increased approximately $19.8 million, or $80 per ton over the prior year quarter, energy costs increased approximately $1.0 million, or $4 per ton over the prior year quarter, and freight expense in the segment increased $1.6 million due in part to higher volumes.

On March 5, 2008, we entered into a Credit Facility with an original maximum principal amount of $1.2 billion and issued $200.0 million aggregate principal amount of 9.25% senior notes due March 2016; in fiscal 2009 we issued an additional $100 million of senior notes due March 2016. The Credit Facility originally included a $450 million revolving credit facility, a $550 million term loan A facility and a $200 million term loan B facility. The Credit Facility is pre-payable at any time. Scheduled term loan payments or other term loan payments reduce the facility size. The term loan B facility was repaid in fiscal 2010. Since entering into the Credit Facility, we have amended the facility to allow us additional flexibility to conduct our business including on November 1, 2010, when we amended our Credit Facility to allow us additional flexibility for capital expenditures, investments, dividend payments, securitization, note repurchases and future collateral, as discussed in Note 10. Debt of the Notes to Consolidated Financial Statements section of the Fiscal 2010 Form 10-K. The revolving credit facility and term loan

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