RockTenn Reports First Quarter Fiscal 2014 Earnings Up 27% Over the Prior Year Quarter

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| Source: Rock-Tenn Company

NORCROSS, Ga., Jan. 28, 2014 (GLOBE NEWSWIRE) -- RockTenn (NYSE:RKT) today reported earnings for the quarter ended December 31, 2013 of $1.50 per diluted share and adjusted earnings of $1.66 per diluted share. Adjusted earnings per diluted share increased 23% over the prior year quarter.

 
  Three Months Three Months
  Ended  Ended
  December 31, December 31,
  2013 2012
     
Earnings per diluted share $1.50 $1.18
     
Restructuring and other costs and operating losses and transition costs due to plant closures 0.16 0.17
     
Adjusted earnings per diluted share $1.66 $1.35

First Quarter Results

  • Net sales of $2,363 million for the first quarter of fiscal 2014 increased $76 million compared to the first quarter of fiscal 2013. Segment income of $235 million increased $26 million or 13% over the prior year quarter.
  • RockTenn's restructuring and other costs and operating losses and transition costs due to plant closures for the first quarter of fiscal 2014 were $0.16 per diluted share after-tax. These costs primarily consisted of $10 million of pre-tax facility closure charges and $7 million of pre-tax acquisition and integration costs. The pre-tax facility closure charges primarily consisted of equipment impairments and carrying costs for facilities acquired in the Smurfit-Stone acquisition.

Chief Executive Officer's Statement

RockTenn Chief Executive Officer, Steve Voorhees, stated, "The success of our team in executing our strategy drove our 23% increase in adjusted earnings per share over the prior year quarter. We used our cash flow in the quarter to buy back $53 million of RockTenn stock, acquire NPG for $60 million, pay dividends of $26 million and reduce our leverage ratio from 1.95 to 1.84 times. We expect to continue to improve our business performance and generate strong free cash flow during the remainder of fiscal 2014."

Segment Results

In the first quarter of fiscal 2014, we announced a realignment of our operating responsibilities and a related change to our segments for financial reporting purposes. The changes primarily reflect the creation of a Merchandising Displays segment which was removed from the Consumer Packaging segment. We have reclassified prior results to the extent presented herein and we filed a Current Report on Form 8-K with the SEC on December 17, 2013, to present reclassified historical information in accordance with our new reportable segment structure.

Mill and Converting Tons Shipped

Corrugated Packaging segment shipments of approximately 1,814,000 tons decreased approximately 3.6% or approximately 67,000 tons compared to the prior year quarter due to lower customer demand for containerboard and corrugated containers. In the quarter, we took approximately 250,000 tons of downtime including approximately 157,000 tons of economic downtime and slowbacks. Consumer Packaging segment shipments of approximately 378,000 tons increased 2.6% or approximately 10,000 tons compared to the prior year quarter primarily due to higher converting shipments.

Corrugated Packaging Segment

Corrugated Packaging segment net sales increased $62 million to $1,652 million and segment income increased $20 million to $158 million in the first quarter of fiscal 2014 compared to the prior year quarter. The increased sales and earnings are primarily related to higher selling prices which were partially offset by lower volumes and higher commodity and other costs. Corrugated Packaging segment EBITDA margin was 16.3% for the first quarter of fiscal 2014 up 90 basis points over the prior year quarter.

Consumer Packaging Segment

Consumer Packaging segment net sales increased $19 million and segment income increased $3 million in the first quarter of fiscal 2014 compared to the prior year quarter. Segment income was impacted primarily by higher selling prices and converting volumes which were partially offset by higher commodity and other costs. Consumer Packaging segment EBITDA margin was 16.9% for the first quarter of fiscal 2014, essentially flat compared to the prior year quarter.

Merchandising Displays Segment

Merchandising Displays segment net sales increased $23 million over the prior year first quarter to $185 million primarily due to higher volumes. Segment income increased $8 million in the first quarter of fiscal 2014 compared to the prior year quarter primarily due to the impact of higher volumes. Merchandising Displays segment EBITDA margin was 11.9% for the first quarter of fiscal 2014 up 290 basis points over the prior year quarter.

Recycling Segment

Recycling segment net sales decreased $27 million over the prior year first quarter to $100 million primarily as the impact of lower volumes due primarily to soft export markets for recovered fiber and several collection facility closures which were partially offset by increased selling prices. Segment income decreased $4 million in the first quarter of fiscal 2014 compared to the prior year quarter primarily due to impact of lower volumes and market conditions which were partially offset by the impact of cost structure improvements.

Cash Provided From Operating, Financing and Investing Activities

Cash provided by operations was $305 million in the first quarter of fiscal 2014 up $27 million compared to the prior year quarter, after pension funding in excess of expense of $35 million. We reduced net debt (as defined) by $80 million in the December quarter to $2.73 billion and at December 31, 2013, our Leverage Ratio (as defined) was 1.84 times. Total debt was $2.75 billion at December 31, 2013. We invested $101 million in capital expenditures, repurchased $53 million of shares, returned $26 million in dividends to our shareholders and acquired NPG Holding, Inc., a specialty display company, for $60 million. 

Conference Call

We will host a conference call to discuss our results of operations for the first quarter of fiscal 2014 and other topics that may be raised during the discussion at 9:00 a.m., Eastern Time, on January 29, 2014. The conference call will be webcast live with an accompanying slide presentation, along with a copy of this press release, at www.rocktenn.com.

Investors who wish to participate in the webcast via teleconference should dial 888-790-4710 (inside the U.S.) or 773-756-0961 (outside the U.S.) at least 15 minutes prior to the start of the call and enter the passcode ROCKTENN. Replays of the call will be available through February 12, 2014 and can be accessed at 866-351-2785 (U.S. callers) and 203-369-0055 (outside the U.S.).

About RockTenn

RockTenn (NYSE:RKT) is one of North America's leading integrated manufacturers of corrugated and consumer packaging. RockTenn's 26,000 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 in this release that do not relate strictly to historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on our current expectations, beliefs, plans or forecasts and use words such as will, estimate, anticipate, project, intend, or expect, or refer to future time periods, and include statements made in this report regarding, among other things our belief that we expect to continue to improve our business performance and generate strong free cash flow during the remainder of fiscal 2014. These statements are subject to certain risks and uncertainties including with respect to our expectations regarding economic, competitive and market conditions generally; expected volumes and price levels of purchases by customers; 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. These expectations are based on assumptions that management believes are reasonable; however, undue reliance should not be placed on these forward-looking statements because these risks and uncertainties could cause actual results to differ materially from those contained in any forward-looking statements. There are many other factors and uncertainties that impact these forward-looking statements that we cannot predict accurately, including our ability to achieve benefits from the Smurfit-Stone acquisition, including synergies, performance improvements and successful implementation of capital projects. 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, 2013. 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
  December 31, December 31,
  2013 2012
     
     
NET SALES  $ 2,362.6  $ 2,287.1
     
Cost of Goods Sold   1,914.8  1,877.6
     
     
Gross Profit  447.8  409.5
Selling, General and Administrative Expenses   234.8  223.0
Restructuring and Other Costs, net  17.6  16.1
     
     
Operating Profit  195.4  170.4
Interest Expense  (24.0)  (29.1)
Loss on Extinguishment of Debt   --   (0.2)
Interest Income and Other Income (Expense), net  (0.8)  -- 
Equity in Income of Unconsolidated Entities  1.7  0.6
     
     
INCOME BEFORE INCOME TAXES  172.3  141.7
     
Income Tax Expense  (61.7)  (54.8)
     
     
CONSOLIDATED NET INCOME  110.6  86.9
     
     
Less: Net Income Attributable to Noncontrolling Interests  (0.9)  (0.9)
     
     
NET INCOME ATTRIBUTABLE TO ROCK-TENN COMPANY SHAREHOLDERS  $ 109.7  $ 86.0
     
   
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  $ 109.7  $ 86.0
Less: Distributed and undistributed income available to participating securities  (0.1)  -- 
Distributed and undistributed income available to Rock-Tenn Company shareholders  $ 109.6  $ 86.0
     
Diluted weighted average shares outstanding  73.3  72.7
     
Diluted earnings per share  $ 1.50  $ 1.18
 
ROCK-TENN COMPANY
SEGMENT INFORMATION
(UNAUDITED)
(IN MILLIONS)
 
  FOR THE THREE MONTHS ENDED
  December 31, December 31,
  2013 2012
     
     
NET SALES:    
     
Corrugated Packaging  $ 1,651.9  $ 1,589.8
Consumer Packaging  472.1  452.8
Merchandising Displays  184.6  161.9
Recycling  99.6  126.8
Intersegment Eliminations  (45.6)  (44.2)
     
     
TOTAL NET SALES  $ 2,362.6  $ 2,287.1
     
     
SEGMENT INCOME:    
     
Corrugated Packaging  $ 157.7  $ 137.6
Consumer Packaging   57.6  54.9
Merchandising Displays  19.3  11.8
Recycling  0.1  4.3
     
     
TOTAL SEGMENT INCOME  $ 234.7  $ 208.6
     
     
Restructuring and Other Costs, net  (17.6)  (16.1)
Non-Allocated Expenses  (20.0)  (21.5)
Interest Expense  (24.0)  (29.1)
Loss on Extinguishment of Debt   --   (0.2)
Interest Income and Other Income (Expense), net  (0.8)  -- 
     
     
INCOME BEFORE INCOME TAXES  $ 172.3  $ 141.7
 
ROCK-TENN COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN MILLIONS)
 
  FOR THE THREE MONTHS ENDED
  December 31, December 31,
  2013 2012
     
CASH FLOWS FROM OPERATING ACTIVITIES:    
Consolidated net income  $ 110.6  $ 86.9
     
Adjustments to reconcile consolidated net income to net cash provided by operating activities:    
Depreciation and amortization  143.2  138.1
Deferred income tax expense  51.5  50.2
Loss on extinguishment of debt   --   0.2
Share-based compensation expense  9.5  6.8
(Gain) loss on disposal of plant and equipment and other, net  (2.0)  0.7
Equity in income of unconsolidated entities  (1.7)  (0.6)
Pension and other postretirement funding more than expense  (35.2)  (12.8)
Impairment adjustments and other non-cash items  4.1  2.7
Changes in operating assets and liabilities, net of acquisitions:    
Accounts receivable  171.0  74.7
Inventories  4.2  (49.2)
Other assets  (12.6)  11.0
Accounts payable  (76.6)  (31.8)
Income taxes  (7.6)  (8.3)
Accrued liabilities and other  (53.9)  8.9
     
NET CASH PROVIDED BY OPERATING ACTIVITIES  304.5  277.5
     
INVESTING ACTIVITIES:    
     
Capital expenditures  (100.6)  (92.0)
Cash paid for purchase of businesses, net of cash acquired  (60.0)  -- 
Return of capital from unconsolidated entities  0.2  0.4
Proceeds from sale of property, plant and equipment   3.3  2.6
Proceeds from property, plant and equipment insurance settlement  2.7  -- 
     
NET CASH USED FOR INVESTING ACTIVITIES   (154.4)  (89.0)
     
FINANCING ACTIVITIES:    
     
Additions to revolving credit facilities  20.0  31.8
Repayments of revolving credit facilities  (21.9)  (14.5)
Additions to debt  46.6  150.1
Repayments of debt  (131.6)  (326.9)
Debt issuance costs  --   (1.3)
Issuances of common stock, net of related minimum tax withholdings  (5.9)  (4.8)
Purchases of common stock  (53.0)  -- 
Excess tax benefits from share-based compensation  10.2  4.4
Repayments to unconsolidated entity  (0.2)  -- 
Cash dividends paid to shareholders  (25.8)  (32.1)
Cash distributions to noncontrolling interests  (0.1)  (1.3)
     
NET CASH USED FOR BY FINANCING ACTIVITIES  (161.7)  (194.6)
     
Effect of exchange rate changes on cash and cash equivalents  (0.2)  (0.1)
     
DECREASE IN CASH AND CASH EQUIVALENTS  (11.8)  (6.2)
     
Cash and cash equivalents at beginning of period  36.4  37.2
     
     
Cash and cash equivalents at end of period  $ 24.6  $ 31.0
     
     
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:    
Cash paid during the period for:    
Income taxes, net of refunds  $ 7.4  $ 8.4
Interest, net of amounts capitalized  6.4  9.3
 
ROCK-TENN COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN MILLIONS)
 
  December 31, September 30,
  2013 2013
ASSETS
CURRENT ASSETS:    
Cash and cash equivalents  $ 24.6  $ 36.4
Restricted cash  9.2  9.3
Accounts receivable (net of allowances of $22.8 and $26.8)  981.2  1,134.9
Inventories  925.3  937.9
Other current assets  326.5  297.9
     
TOTAL CURRENT ASSETS  2,266.8  2,416.4
     
Property, plant and equipment at cost:    
Land and buildings  1,195.5  1,203.1
Machinery and equipment  6,565.1  6,467.8
Transportation equipment  14.5  13.8
Leasehold improvements  24.7  24.7
   7,799.8  7,709.4
Less accumulated depreciation and amortization  (2,256.8)  (2,154.7)
Net property, plant and equipment  5,543.0  5,554.7
Goodwill  1,887.2  1,862.1
Intangibles, net  691.2  699.4
Other assets  203.2  200.8
     
TOTAL ASSETS  $ 10,591.4  $ 10,733.4
LIABILITIES AND EQUITY
CURRENT LIABILITES:    
Current portion of debt  $ 3.2  $ 2.9
Accounts payable  738.3  802.1
Accrued compensation and benefits  183.2  249.0
Other current liabilities  203.5  189.4
     
TOTAL CURRENT LIABILITIES  1,128.2  1,243.4
     
Long-term debt due after one year  2,750.3  2,841.9
Pension liabilities  932.5  975.2
Postretirement medical liabilities  115.9  118.3
Deferred income taxes  1,132.3  1,063.1
Other long-term liabilities  166.9  165.4
Redeemable noncontrolling interests  14.0  13.3
     
Total Rock-Tenn Company shareholders' equity  4,350.8  4,312.3
Noncontrolling interests  0.5  0.5
Total Equity  4,351.3  4,312.8
     
TOTAL LIABILITIES AND EQUITY  $ 10,591.4  $ 10,733.4
           
Rock-Tenn Company Quarterly Statistics          
           
Key Financial Statistics          
(In Millions, Unless Otherwise Specified)          
           
  1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Fiscal Year
           
Net Income Attributable to Rock-Tenn Company Shareholders          
2012  $ 76.7  $ 31.9  $ 58.2  $ 82.3  $ 249.1
2013  86.0  324.7  140.1  176.5  727.3
2014  109.7        
           
Diluted Earnings per Share          
2012  $ 1.06  $ 0.44  $ 0.81  $ 1.14  $ 3.45
2013  1.18  4.45  1.91  2.40  9.95
2014  1.50        
           
Depreciation & Amortization          
2012  $ 132.7  $ 132.6  $ 131.4  $ 137.6  $ 534.3
2013  138.1  139.2  132.4  142.5  552.2
2014  143.2        
           
Capital Expenditures          
2012  $ 81.6  $ 120.6  $ 146.1  $ 104.1  $ 452.4
2013  92.0  102.0  113.1  133.3  440.4
2014  100.6        
           
Mill System Operating Rates          
2012 96.4% 90.6% 92.4% 97.7% 94.3%
2013 97.6% 96.1% 98.2% 97.1% 97.2%
2014 90.4%        
 
Rock-Tenn Company Quarterly Statistics
                   
Segment Operating Statistics
(Sales and Income In Millions, Shipments in Thousands of Tons Unless Otherwise Specified)
                   
  1st Quarter   2nd Quarter   3rd Quarter   4th Quarter   Fiscal Year
Corrugated Packaging Segment Net Sales                  
2012  $ 1,522.2    $ 1,504.7    $ 1,545.3    $ 1,597.2    $ 6,169.4
2013  1,589.8    1,608.2    1,719.3    1,744.4    6,661.7
2014  1,651.9                
                   
Corrugated Packaging Intersegment Net Sales                  
2012  $ 32.3    $ 30.4    $ 29.4    $ 30.2    $ 122.3
2013  28.6    28.9    27.2    30.9    115.6
2014  29.7                
                   
Corrugated Packaging Segment Income                  
2012  $ 109.7  (1)  $ 75.3  (2)  $ 73.5  (3)  $ 112.7  (4)  $ 371.2
2013  137.6    107.6    196.1    237.5    678.8
2014  157.7                
                   
Return On Sales                  
2012 7.2%  (1) 5.0%  (2) 4.8%  (3) 7.1%  (4) 6.0%
2013 8.7%   6.7%   11.4%   13.6%   10.2%
2014 9.5%                
                   
Corrugated Packaging Segment Shipments (5)                  
2012 1,858.8   1,839.2   1,901.3   1,982.0    7,581.3
2013 1,880.7   1,869.5   1,935.2   1,934.3    7,619.7
2014 1,813.9                
                   
Corrugated Container Shipments - BSF (6)                  
2012  19.0    19.1    19.5    19.7    77.3
2013  19.2    18.9    19.7    19.3    77.1
2014  18.6                
                   
Corrugated Container Per Shipping Day - MMSF (6)                  
2012  317.0    298.1    309.1    312.9    309.1
2013  313.9    305.2    308.5    306.0    308.4
2014  304.3                
(1) Excludes $0.4 million of inventory step-up expense.
(2) Excludes $6.7 million of operating losses at the recently closed Matane, Quebec containerboard mill.
(3) Excludes $0.2 million of inventory step-up expense.
(4) Excludes $0.2 million of inventory step-up expense.
(5) Corrugated Packaging Segment Shipments is a tons equivalent which includes external and intersegment shipments from our Corrugated mills and of Corrugated Container Shipments converted from BSF to tons.
(6) MMSF - millions of square feet and BSF - billons of square feet and is included in the Corrugated Packaging Segment Shipments on a converted basis.
           
Rock-Tenn Company Quarterly Statistics          
           
Segment Operating Statistics          
(Sales and Income In Millions, Shipments in Thousands of Tons Unless Otherwise Specified)
           
  1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Fiscal Year
Consumer Packaging Segment Net Sales          
2012  $ 464.9  $ 484.1  $ 473.9  $ 496.4  $ 1,919.3
2013  452.8  468.3  482.1  495.5  1,898.7
2014  472.1        
           
Consumer Packaging Intersegment Net Sales          
2012  $ 6.9  $ 6.1  $ 5.3  $ 7.6  $ 25.9
2013  5.1  5.4  5.2  9.4  25.1
2014  5.7        
           
Consumer Packaging Segment Income          
2012  $ 62.0  $ 64.5  $ 69.7  $ 81.0  $ 277.2
2013  54.9  50.5  59.1  66.8  231.3
2014  57.6        
           
Return on Sales          
2012 13.3% 13.3% 14.7% 16.3% 14.4%
2013 12.1% 10.8% 12.3% 13.5% 12.2%
2014 12.2%        
           
Consumer Packaging Segment Shipments (1)          
2012 370.3 377.6 384.0 382.2  1,514.1
2013 368.5 380.1 396.2 403.0  1,547.8
2014 378.1        
           
Consumer Packaging Converting Shipments - BSF (2)        
2012  5.0  5.2  5.1  5.2  20.5
2013  4.9  5.2  5.3  5.3  20.7
2014  5.0        
           
Consumer Packaging Converting Per Shipping Day - MMSF (2)        
2012  83.5  81.0  80.6  83.1  82.0
2013  81.0  83.9  82.3  84.3  82.9
2014  82.0        
(1) Consumer Packaging Segment Shipments is a tons equivalent which includes external and intersegment shipments from our Consumer mills and Consumer Packaging Converting Shipments converted from BSF to tons. Includes gypsum paperboard liner tons by Seven Hills Paperboard LLC, our unconsolidated joint venture with Lafarge North America, Inc.
(2) MMSF - millions of square feet and BSF - billons of square feet and is included in the Consumer Packaging Segment Shipments on a converted basis.
 
Rock-Tenn Company Quarterly Statistics
           
Segment Operating Statistics
(Sales and Income In Millions, Shipments in Thousands of Tons Unless Otherwise Specified)
           
  1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Fiscal Year
Merchandising Displays Segment Net Sales          
2012  $ 159.1  $ 168.0  $ 158.5  $ 170.4  $ 656.0
2013  161.9  162.1  166.4  184.2  674.6
2014  184.6        
           
Merchandising Displays Intersegment Net Sales          
2012  $ 3.7  $ 3.8  $ 3.7  $ 3.4  $ 14.6
2013  4.2  3.9  4.2  4.8  17.1
2014  4.4        
           
Merchandising Displays Segment Income          
2012  $ 18.3  $ 20.0  $ 14.1  $ 17.9  $ 70.3
2013  11.8  12.7  17.2  22.7  64.4
2014  19.3        
           
Return on Sales          
2012 11.5% 11.9% 8.9% 10.5% 10.7%
2013 7.3% 7.8% 10.3% 12.3% 9.5%
2014 10.5%        
           
Recycling Segment Net Sales          
2012  $ 171.0  $ 172.3  $ 170.0  $ 137.2  $ 650.5
2013  126.8  130.7  123.6  113.0  494.1
2014  99.6        
           
Recycling Intersegment Net Sales          
2012  $ 6.6  $ 5.9  $ 6.1  $ 6.2  $ 24.8
2013  6.3  6.2  6.5  6.9  25.9
2014  5.8        
           
Recycling Segment Income          
2012  $ 3.5  $ 4.2  $ 2.2  $ (2.8)  $ 7.1
2013  4.3  3.5  2.0  4.6  14.4
2014  0.1        
           
Return on Sales          
2012 2.0% 2.4% 1.3% (2.0)% 1.1%
2013 3.4% 2.7% 1.6% 4.1% 2.9%
2014 0.1%        
           
Fiber Reclaimed and Brokered          
2012 2,064.5 1,996.9 2,039.7 2,014.5 8,115.6
2013 1,945.0 1,802.5 1,819.2 1,826.6 7,393.3
2014 1,562.5        

Non-GAAP Financial 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 fair value interest rate derivatives or swaps, if any, and the balance of our cash and cash equivalents. 

Our management uses net debt, along with other factors, 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. Set forth below is a reconciliation of net debt to the most directly comparable GAAP measures, Current Portion of Debt and Long-term Debt Due After One Year for the current quarter and the prior quarter.

(In Millions)   December 31, September 30,
    2013 2013
       
Current Portion of Debt    $3.2 $2.9
Long-Term Debt Due After One Year    2,750.3 2,841.9
Total Debt    2,753.5 2,844.8
Less: Cash and Cash Equivalents    (24.6) (36.4)
Net Debt    $2,728.9 $2,808.4

Segment EBITDA Margins

Our management uses "Segment EBITDA Margins", along with other factors, to evaluate our segment performance against our peers. Management believes that investors also use this measure to evaluate our performance relative to our peers.

Set forth below is a reconciliation of Segment EBITDA margins to the most directly comparable GAAP measures, Segment Income and Segment Net Sales for the quarter ending December 31, 2013:

(In Millions, except percentages)            
             
  Corrugated
Packaging
Consumer
Packaging
Merchandising
Displays

Recycling 
Corporate
/ Other

Consolidated
             
Segment Net Sales  $1,651.9 $472.1 $184.6 $99.6 $(45.6) $2,362.6
             
Segment Income  $157.7 $57.6 $19.3 $0.1   $234.7
Depreciation and Amortization  111.7 22.1 2.7 2.8 3.9 143.2
EBITDA  $269.4 $79.7 $22.0 $2.9    
             
Segment EBITDA Margins  16.3% 16.9% 11.9% 2.9%    

Credit Agreement EBITDA and Total Funded Debt

"Credit Agreement EBITDA" is calculated in accordance with the definition contained in our 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, loss on extinguishment of debt and financing fees, certain non-cash and cash charges incurred, including certain restructuring and other costs, acquisition and integration costs, charges and expenses associated with the write-up of inventory acquired and other items.

"Total Funded Debt" is calculated in accordance with the definition contained in our 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, if any, less certain 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 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 December 31, 2013 calculation, our Leverage Ratio was 1.84 times. Our maximum permitted Leverage Ratio under the Credit Facility at December 31, 2013 was 3.50 times.

Set forth below is a reconciliation of Credit Agreement EBITDA for the twelve months ended December 31, 2013, to the most directly comparable GAAP measure, Consolidated Net Income: 

(In Millions) Twelve Months
  Ended
  December 31, 2013
   
Consolidated Net Income  $756.2
Interest Expense, net  91.3
Income Taxes  (14.9)
Depreciation and Amortization  557.3
Additional Permitted Charges  134.8
Credit Agreement EBITDA  $1,524.7

Set forth below is a reconciliation of Total Funded Debt to the most directly comparable GAAP measures, Current portion of debt and Long-term debt due after one year:

(In Millions, except ratio) December 31,
  2013
   
Current Portion of Debt  $3.2
Long-Term Debt Due After One Year  2,750.3
Total Debt  2,753.5
Plus: Letters of Credit, Guarantees and Other Adjustments  55.9
Total Funded Debt  $2,809.4
   
Credit Agreement EBITDA for the Twelve Months Ended December 31, 2013 $1,524.7
   
Leverage Ratio  1.84

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 at the beginning of this press release is a reconciliation of adjusted earnings per diluted share to Earnings per diluted share. Set forth below is a reconciliation of adjusted net income to Net income attributable to Rock-Tenn Company shareholders:

 
  Three Months Three Months
  Ended  Ended
  December 31, December 31,
(In Millions) 2013 2012
     
Net income attributable to Rock-Tenn Company shareholders $109.7 $86.0
     
Restructuring and other costs and operating losses and transition costs due to plant closures 12.2 12.0
Loss on extinguishment of debt 0.1
     
Adjusted net income $121.9 $98.1
RockTenn
John Stakel, SVP-Treasurer, 678-291-7901