RockTenn Company (RKT, Financial) filed Quarterly Report for the period ended 2009-12-31.
Rocktenn Company has a market cap of $1.54 billion; its shares were traded at around $39.73 with a P/E ratio of 8.5 and P/S ratio of 0.6. The dividend yield of Rocktenn Company stocks is 1.5%. Rocktenn Company had an annual average earning growth of 3.3% over the past 10 years. GuruFocus rated Rocktenn Company the business predictability rank of 2.5-star.RKT is in the portfolios of Paul Tudor Jones of The Tudor Group.
We recorded income tax expense of $17.3 million in the three months ended December 31, 2009, compared to $16.7 million in the three months ended December 31, 2008. The 23.1% effective tax rate for the three months ended December 31, 2009 was primarily impacted by the exclusion of the alternative fuel tax credit from taxable income, a $0.8 million tax benefit related to changes in state deferred rates and a $0.4 million tax benefit due to the reduction in the Ontario tax rate. The 34.8% effective rate for the three months ended December 31, 2008 was primarily impacted by a tax benefit of $0.7 million related to the extension of the United States federal research credit, which was partially offset by a $0.4 million deferred tax expense related to changes in state effective rates. In fiscal 2010, we expect our marginal effective income tax rate to be approximately 36.5% and our effective tax rate, excluding the impact of alternative fuel tax credit, to be approximately 35%. We discuss the alternative fuel tax
Segment income of the Consumer Packaging segment for the quarter ended December 31, 2009 increased due to the recognition of the $20.7 million alternative fuel tax credit, net as discussed above, higher paperboard volumes and folding carton selling prices, 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 quarter. Energy costs decreased approximately $3.3 million, or $13 per ton, over the prior year quarter. Chemical costs decreased approximately $5.9 million, or $23 per ton, and bad debt expense decreased $1.0 million. Partially offsetting these decreases in expense was an increase in pension expense of $1.7 million and increased expense of $1.1 million related to foreign currency transactions.
Cash and cash equivalents was $14.1 million at December 31, 2009, and $11.8 million at September 30, 2009. During the three months ended December 31, 2009, Net Debt (as hereinafter defined) decreased $81.4 million. We expect our strong cash flows to enable us to decrease net debt by approximately $245 million in the full fiscal year. Included in our estimate are the expectations that we will collect the remaining approximately $25 million of alternative fuel tax credits from fiscal 2009 in the second quarter of fiscal 2010 and reduce fiscal 2010 cash tax payments by approximately $21 million utilizing our fiscal 2010 alternative fuel tax credits by the end of the third quarter of fiscal 2010. Additionally, we expect operating cash flows to benefit from deferred income tax expense in fiscal 2010 of approximately $27 million. However, it is possible that our expected decrease in net debt or deferred income tax expense may vary due to changes in income or other factors.
On March 5, 2008, we entered into the 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. The Credit Facility includes revolving credit, swing, term loan, and letters of credit consisting of 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 revolving credit facility and term loan A facility are scheduled to mature on the earlier to occur of (a) March 5, 2013 or (b) if our $100 million March 2013 Notes have not been paid in full or refinanced by September 15, 2012, then September 15, 2012; the term loan B facility is scheduled to mature on the earlier to occur of (a) March 5, 2014 or (b) if the March 2013 Notes have not been paid in full or refinanced by September 15, 2012, then September 15, 2012. Certain restrictive covenants govern our maximum availability under this facility, including Minimum Consolidated Interest Ratio Coverage; Maximum Leverage Ratio; and Minimum Consolidated Net Worth (as those terms are defined by the Credit Facility). We test and report our compliance with these covenants each quarter. We are in compliance with all of our covenants. Our available borrowings under the revolving credit portion of the Credit Facility, reduced by outstanding letters of credit not drawn upon of approximately $31.6 million, were $390.6 million at December 31, 2009. Concurrent with our earnings release, we filed our quarterly compliance report with our bank group and, based on the most recent Leverage Ratio, received a 25 basis point decrease prospectively to the applicable credit margin in the Credit Facility. The March 2016 Notes are guaranteed by the guarantors listed therein (comprising most of our subsidiaries which are guarantors under the Credit Facility). The senior note indenture contains financial and restrictive covenants, including limitations on restricted payments, dividend and other payments affecting restricted subsidiaries (as defined therein), incurrence of debt, asset sales, transactions with affiliates, liens, sale and leaseback transactions and the creation of unrestricted subsidiaries.
On July 21, 2009, we amended our Credit Facility to, among other things, allow us to refinance the March 2016 Notes and to redeem, repurchase, defease, purchase prior to maturity or prepay the August 2011 Notes and/or the March 2013 Notes in an aggregate amount not to exceed (i) an annual limit of $85 million in any fiscal year plus, at the beginning of the fiscal year ended September 30, 2011, $85 million plus the unused amount available under the annual limit for the immediately preceding fiscal year and (ii) $170 million for all such redemptions, repurchases, defeasances, purchases or prepayments (collectively, the repurchases), subject in each case to certain conditions. Such repurchases are available to us as long as no default or event of default has occurred or would be directly or indirectly caused as a result thereof, subject to availability under the Aggregate Revolving Committed Amount of at least $300 million. In addition, when the Leverage Ratio does not exceed 3.00 to 1.00 after giving effect to all such repurchases on a Pro Forma Basis, as such terms are defined in the Credit Facility, as amended, we may repurchase an additional $100 million of the August 2011 Notes and/or March 2013 Notes. On February 3, 2010, we amended our Credit Facility to among other things adjust our ability to borrow unsecured debt subject to certain conditions outlined in the amendment, including a maximum Leverage Ratio, calculated on a pro forma basis, not to exceed 3.50 to 1.00, if such indebtedness is incurred through and including June 30, 2011, and 3.25 to 1.00 if such indebtedness is incurred at any time thereafter. In conjunction with this amendment, we will repay the $120.0 million outstanding term loan B balance on or before February 12, 2010 with proceeds from our revolving credit facility. We expect to r
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Rocktenn Company has a market cap of $1.54 billion; its shares were traded at around $39.73 with a P/E ratio of 8.5 and P/S ratio of 0.6. The dividend yield of Rocktenn Company stocks is 1.5%. Rocktenn Company had an annual average earning growth of 3.3% over the past 10 years. GuruFocus rated Rocktenn Company the business predictability rank of 2.5-star.RKT is in the portfolios of Paul Tudor Jones of The Tudor Group.
Highlight of Business Operations:
Interest expense for the first quarter of fiscal 2010 decreased to $21.5 million from $26.4 million for the same quarter last year and included non-cash deferred financing cost amortization of $1.6 million and $1.7 million, respectively. The decrease in our average outstanding borrowings decreased interest expense by approximately $5.4 million, and higher interest rates, net of swaps, increased interest expense by approximately $0.6 million, and deferred financing cost amortization decreased $0.1 million.We recorded income tax expense of $17.3 million in the three months ended December 31, 2009, compared to $16.7 million in the three months ended December 31, 2008. The 23.1% effective tax rate for the three months ended December 31, 2009 was primarily impacted by the exclusion of the alternative fuel tax credit from taxable income, a $0.8 million tax benefit related to changes in state deferred rates and a $0.4 million tax benefit due to the reduction in the Ontario tax rate. The 34.8% effective rate for the three months ended December 31, 2008 was primarily impacted by a tax benefit of $0.7 million related to the extension of the United States federal research credit, which was partially offset by a $0.4 million deferred tax expense related to changes in state effective rates. In fiscal 2010, we expect our marginal effective income tax rate to be approximately 36.5% and our effective tax rate, excluding the impact of alternative fuel tax credit, to be approximately 35%. We discuss the alternative fuel tax
Segment income of the Consumer Packaging segment for the quarter ended December 31, 2009 increased due to the recognition of the $20.7 million alternative fuel tax credit, net as discussed above, higher paperboard volumes and folding carton selling prices, 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 quarter. Energy costs decreased approximately $3.3 million, or $13 per ton, over the prior year quarter. Chemical costs decreased approximately $5.9 million, or $23 per ton, and bad debt expense decreased $1.0 million. Partially offsetting these decreases in expense was an increase in pension expense of $1.7 million and increased expense of $1.1 million related to foreign currency transactions.
Cash and cash equivalents was $14.1 million at December 31, 2009, and $11.8 million at September 30, 2009. During the three months ended December 31, 2009, Net Debt (as hereinafter defined) decreased $81.4 million. We expect our strong cash flows to enable us to decrease net debt by approximately $245 million in the full fiscal year. Included in our estimate are the expectations that we will collect the remaining approximately $25 million of alternative fuel tax credits from fiscal 2009 in the second quarter of fiscal 2010 and reduce fiscal 2010 cash tax payments by approximately $21 million utilizing our fiscal 2010 alternative fuel tax credits by the end of the third quarter of fiscal 2010. Additionally, we expect operating cash flows to benefit from deferred income tax expense in fiscal 2010 of approximately $27 million. However, it is possible that our expected decrease in net debt or deferred income tax expense may vary due to changes in income or other factors.
On March 5, 2008, we entered into the 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. The Credit Facility includes revolving credit, swing, term loan, and letters of credit consisting of 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 revolving credit facility and term loan A facility are scheduled to mature on the earlier to occur of (a) March 5, 2013 or (b) if our $100 million March 2013 Notes have not been paid in full or refinanced by September 15, 2012, then September 15, 2012; the term loan B facility is scheduled to mature on the earlier to occur of (a) March 5, 2014 or (b) if the March 2013 Notes have not been paid in full or refinanced by September 15, 2012, then September 15, 2012. Certain restrictive covenants govern our maximum availability under this facility, including Minimum Consolidated Interest Ratio Coverage; Maximum Leverage Ratio; and Minimum Consolidated Net Worth (as those terms are defined by the Credit Facility). We test and report our compliance with these covenants each quarter. We are in compliance with all of our covenants. Our available borrowings under the revolving credit portion of the Credit Facility, reduced by outstanding letters of credit not drawn upon of approximately $31.6 million, were $390.6 million at December 31, 2009. Concurrent with our earnings release, we filed our quarterly compliance report with our bank group and, based on the most recent Leverage Ratio, received a 25 basis point decrease prospectively to the applicable credit margin in the Credit Facility. The March 2016 Notes are guaranteed by the guarantors listed therein (comprising most of our subsidiaries which are guarantors under the Credit Facility). The senior note indenture contains financial and restrictive covenants, including limitations on restricted payments, dividend and other payments affecting restricted subsidiaries (as defined therein), incurrence of debt, asset sales, transactions with affiliates, liens, sale and leaseback transactions and the creation of unrestricted subsidiaries.
On July 21, 2009, we amended our Credit Facility to, among other things, allow us to refinance the March 2016 Notes and to redeem, repurchase, defease, purchase prior to maturity or prepay the August 2011 Notes and/or the March 2013 Notes in an aggregate amount not to exceed (i) an annual limit of $85 million in any fiscal year plus, at the beginning of the fiscal year ended September 30, 2011, $85 million plus the unused amount available under the annual limit for the immediately preceding fiscal year and (ii) $170 million for all such redemptions, repurchases, defeasances, purchases or prepayments (collectively, the repurchases), subject in each case to certain conditions. Such repurchases are available to us as long as no default or event of default has occurred or would be directly or indirectly caused as a result thereof, subject to availability under the Aggregate Revolving Committed Amount of at least $300 million. In addition, when the Leverage Ratio does not exceed 3.00 to 1.00 after giving effect to all such repurchases on a Pro Forma Basis, as such terms are defined in the Credit Facility, as amended, we may repurchase an additional $100 million of the August 2011 Notes and/or March 2013 Notes. On February 3, 2010, we amended our Credit Facility to among other things adjust our ability to borrow unsecured debt subject to certain conditions outlined in the amendment, including a maximum Leverage Ratio, calculated on a pro forma basis, not to exceed 3.50 to 1.00, if such indebtedness is incurred through and including June 30, 2011, and 3.25 to 1.00 if such indebtedness is incurred at any time thereafter. In conjunction with this amendment, we will repay the $120.0 million outstanding term loan B balance on or before February 12, 2010 with proceeds from our revolving credit facility. We expect to r
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