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RockTenn Reports Fourth Quarter Fiscal 2012 Results

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, 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 September 30, 2012 calculation, our Leverage Ratio was 2.96 times. Our maximum permitted Leverage Ratio under the Credit Facility at September 30, 2012 was 3.75 times.

Set forth below is a reconciliation of Credit Agreement EBITDA for the twelve months ended September 30, 2012, to the most directly comparable GAAP measure, Consolidated Net Income:

(In Millions)

Twelve MonthsEnded September 30, 2012

 

 
Consolidated Net Income $ 252.2
Interest Expense, net 108.0
Income Taxes 136.9
Depreciation and Amortization 534.3
Additional Permitted Charges   147.5
Credit Agreement EBITDA $ 1,178.9
 
 

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)   September 30,
2012
 
Current Portion of Debt $ 261.3
Long-Term Debt Due After One Year   3,151.2  
Total Debt 3,412.5
Less: Hedge Adjustments Resulting From Terminated
Fair Value Interest Rate Derivatives or Swaps   (0.1 )
Total Debt Less Hedge Adjustments 3,412.4
Plus: Letters of Credit, Guarantees and Other Adjustments   73.2  
Total Funded Debt $ 3,485.6  
 
Credit Agreement EBITDA for the Twelve Months Ended

September 30, 2012

$

1,178.9

 
 
Leverage Ratio   2.96  
 




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