RockTenn Company (RKT, Financial) filed Quarterly Report for the period ended 2009-06-30.
Rock-Tenn Company provides a wide range of marketing and packaging solutions to consumer products companies at low costs with net sales 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. Rock-Tenn is uniquely equipped to provide solutions for our customers. The Company operates manufacturing facilities throughout the United States Canada Mexico and Chile. The Company hire the best people in the industry and our team\'s commitment to customer satisfaction is relentless. RockTenn Company has a market cap of $1.73 billion; its shares were traded at around $45.12 with a P/E ratio of 10.5 and P/S ratio of 0.6. The dividend yield of RockTenn Company stocks is 0.9%. RockTenn Company had an annual average earning growth of 3.3% over the past 10 years.
Cost of goods sold as a percentage of net sales decreased in the nine months ended June 30, 2009 compared to the nine months ended June 30, 2008 primarily related to a net alternative fuel tax credit of $32.7 million for the period from January 22, 2009 to June 30, 2009 and reduced recycled fiber and energy costs and the impact of higher margin Southern Container sales. Excluding the impact of Southern Container, recycled fiber and energy costs decreased $68 per ton and $22 per ton, respectively, and virgin fiber costs increased approximately $25 per ton, over the prior year period. Additionally, excluding the impact of the Southern Container acquisition, decreased freight expense due to cost reduction programs and lower volumes, decreased workers compensation expense and the impact of foreign currency transactions in the nine months ended June 30, 2009 compared to the nine months ended June 30, 2008 decreased costs of goods sold by $14.3 million, $1.0 million and $0.9 million, respectively. Partially offsetting these amounts, we experienced increased pension expense of $4.6 million, increased group insurance expense of $3.4 million, excluding the impact of the Southern Container acquisition, and $11.4 million of inventory related acquisition accounting charges in the nine months ended June 30, 2008.
Interest expense for the nine months ended June 30, 2009 increased to $74.2 million from $59.1 million for the impact of nine months of expense in fiscal 2009 associated with the additional debt required to fund the Southern Container acquisition, compared to approximately four months of related expense in the prior year period. Deferred financing cost amortization increased $2.8 million and the increase in our average outstanding borrowings increased interest expense by approximately $17.2 million and lower interest rates, net of swaps, decreased interest expense by approximately $1.9 million. Included in the nine months ended June 30, 2008 was a $3.0 million bridge financing fee.
Loss on extinguishment of debt and related items for the three months ended June 30, 2009 of $1.9 million represents amounts expensed in connection with the tender offer for up to $100 million of our August 2011 Notes. Loss on extinguishment of debt and related items 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. Loss on extinguishment of debt and related items for nine months ended June 30, 2008 was $1.9 million associated with the Southern Container acquisition which was previously included in interest expense.
Segment income of the Consumer Packaging segment for the quarter ended June 30, 2009 increased due to the recognition of the $32.7 million alternative fuel tax credit, net as discussed above, decreased recycled fiber, energy and freight costs and continued operational improvements, which were partially offset by lower volumes, increased chemical costs and the impact of the Demopolis maintenance outage. Recycled fiber and energy costs decreased approximately $10.5 million, or $74 per ton, and approximately $7.6 million, or $32 per ton, respectively, over the prior year quarter. Freight expense declined $5.3 million due to cost reduction programs and lower volumes. Chemical costs increased approximately $0.9 million and pension expense increased $1.1 million. Partially offsetting these increases in expense was reduced bad debt expense of $1.0 million and reduced salaries expense of $1.0 million.
Segment income of the Consumer Packaging segment for the nine months ended June 30, 2009 increased primarily due to the $32.7 million alternative fuel tax credit, net as discussed above, decreased recycled fiber, energy and freight costs, increased selling prices and continued operational improvements, which were partially offset by lower volumes, increased virgin fiber and chemical costs. Recycled fiber and energy costs decreased approximately $26.0 million, or $63 per ton, and approximately $10.1 million, or $14 per ton, respectively, over the prior year period. Freight expense declined $10.8 million due to cost reduction programs and lower volumes. Virgin fiber and chemical costs increased approximately $7.8 million and $7.3 million, respectively, and pension and group insurance expense increased $3.8 million and $1.8 million, respectively. Partially offsetting these increases in expense was reduced bonus expense of $1.7 million and reduced salaries expense of $1.7 million.
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Rock-Tenn Company provides a wide range of marketing and packaging solutions to consumer products companies at low costs with net sales 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. Rock-Tenn is uniquely equipped to provide solutions for our customers. The Company operates manufacturing facilities throughout the United States Canada Mexico and Chile. The Company hire the best people in the industry and our team\'s commitment to customer satisfaction is relentless. RockTenn Company has a market cap of $1.73 billion; its shares were traded at around $45.12 with a P/E ratio of 10.5 and P/S ratio of 0.6. The dividend yield of RockTenn Company stocks is 0.9%. RockTenn Company had an annual average earning growth of 3.3% over the past 10 years.
Highlight of Business Operations:
Net income increased $68.2 million to $87.0 million in the third quarter of fiscal 2009 as compared to the third quarter of fiscal 2008 primarily due to the alternative fuel tax credit discussed above, comparatively lower recycled fiber, energy and chemical costs in 2009 which were partially offset by generally lower volumes, and 2008 earnings being impacted by certain pretax charges related to the Southern Container acquisition. Specific pre-tax charges in the third quarter of fiscal 2008 related to the Southern Container acquisition aggregated $8.1 million, which consisted of $4.3 million of acquisition inventory step up expense, $1.7 million of integration costs and $2.1 million of deferred compensation expense funded into escrow through a purchase price reduction from Southern Containers stockholders.Cost of goods sold as a percentage of net sales decreased in the nine months ended June 30, 2009 compared to the nine months ended June 30, 2008 primarily related to a net alternative fuel tax credit of $32.7 million for the period from January 22, 2009 to June 30, 2009 and reduced recycled fiber and energy costs and the impact of higher margin Southern Container sales. Excluding the impact of Southern Container, recycled fiber and energy costs decreased $68 per ton and $22 per ton, respectively, and virgin fiber costs increased approximately $25 per ton, over the prior year period. Additionally, excluding the impact of the Southern Container acquisition, decreased freight expense due to cost reduction programs and lower volumes, decreased workers compensation expense and the impact of foreign currency transactions in the nine months ended June 30, 2009 compared to the nine months ended June 30, 2008 decreased costs of goods sold by $14.3 million, $1.0 million and $0.9 million, respectively. Partially offsetting these amounts, we experienced increased pension expense of $4.6 million, increased group insurance expense of $3.4 million, excluding the impact of the Southern Container acquisition, and $11.4 million of inventory related acquisition accounting charges in the nine months ended June 30, 2008.
Interest expense for the nine months ended June 30, 2009 increased to $74.2 million from $59.1 million for the impact of nine months of expense in fiscal 2009 associated with the additional debt required to fund the Southern Container acquisition, compared to approximately four months of related expense in the prior year period. Deferred financing cost amortization increased $2.8 million and the increase in our average outstanding borrowings increased interest expense by approximately $17.2 million and lower interest rates, net of swaps, decreased interest expense by approximately $1.9 million. Included in the nine months ended June 30, 2008 was a $3.0 million bridge financing fee.
Loss on extinguishment of debt and related items for the three months ended June 30, 2009 of $1.9 million represents amounts expensed in connection with the tender offer for up to $100 million of our August 2011 Notes. Loss on extinguishment of debt and related items 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. Loss on extinguishment of debt and related items for nine months ended June 30, 2008 was $1.9 million associated with the Southern Container acquisition which was previously included in interest expense.
Segment income of the Consumer Packaging segment for the quarter ended June 30, 2009 increased due to the recognition of the $32.7 million alternative fuel tax credit, net as discussed above, decreased recycled fiber, energy and freight costs and continued operational improvements, which were partially offset by lower volumes, increased chemical costs and the impact of the Demopolis maintenance outage. Recycled fiber and energy costs decreased approximately $10.5 million, or $74 per ton, and approximately $7.6 million, or $32 per ton, respectively, over the prior year quarter. Freight expense declined $5.3 million due to cost reduction programs and lower volumes. Chemical costs increased approximately $0.9 million and pension expense increased $1.1 million. Partially offsetting these increases in expense was reduced bad debt expense of $1.0 million and reduced salaries expense of $1.0 million.
Segment income of the Consumer Packaging segment for the nine months ended June 30, 2009 increased primarily due to the $32.7 million alternative fuel tax credit, net as discussed above, decreased recycled fiber, energy and freight costs, increased selling prices and continued operational improvements, which were partially offset by lower volumes, increased virgin fiber and chemical costs. Recycled fiber and energy costs decreased approximately $26.0 million, or $63 per ton, and approximately $10.1 million, or $14 per ton, respectively, over the prior year period. Freight expense declined $10.8 million due to cost reduction programs and lower volumes. Virgin fiber and chemical costs increased approximately $7.8 million and $7.3 million, respectively, and pension and group insurance expense increased $3.8 million and $1.8 million, respectively. Partially offsetting these increases in expense was reduced bonus expense of $1.7 million and reduced salaries expense of $1.7 million.
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