Pro Forma Senior Secured Credit Facility Reconciliations April 29, - - PowerPoint PPT Presentation

Pro Forma Senior Secured Credit Facility Reconciliations April 29, 2008

Use Of Non-GAAP Financial Measures We have included certain financial measures of Rock-Tenn and Southern Container Corp. (Southern Container), which we acquired effective March 2, 2008, that are not prepared in accordance with accounting principles generally accepted in the United States (GAAP). We discuss in connection with the presentation of the non-GAAP financial measures the reasons we believe this information is useful to management and why it may be useful to investors. We define each non-GAAP financial measure and provide a reconciliation of the non-GAAP measure to the most directly comparable financial measure calculated in accordance with GAAP. Any analysis of non-GAAP financial measures should be used only in conjunction with results presented in accordance with GAAP. Reconciliations of non-GAAP measures can be found on slides 5 and 6. These slides can be accessed on our website at www.rocktenn.com.

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Non-GAAP Measures: Pro Forma Credit Agreement EBITDA and Adjusted Total Funded Debt (as defined) Non-GAAP Measures: Pro Forma Credit Agreement EBITDA and Adjusted Total Funded Debt (as defined)

“Pro Forma Credit Agreement EBITDA” is calculated in accordance with the definition of “EBITDA”

contained in the Company’s Senior Secured Credit Facility. Pro Forma Credit Agreement EBITDA is generally defined as Consolidated Net Income plus: consolidated interest expense (interest expense, interest and other income (expense)), taxes of the consolidated companies, depreciation and amortization expense of the consolidated companies determined in accordance with GAAP, non-cash charges related to the expensing of stock options, certain cash and non-cash restructuring charges, and certain additional adjustments related to the Southern Container acquisition to add back the minority interest’s share of earnings of the Solvay mill, because such interests had been acquired by Southern Container prior to our acquisition, eliminate a portion of compensation and other expense to the former officers and employees of Southern Container, add back the impact of acquisition inventory step-up and eliminate expense related primarily to fair value adjustments on contracts assumed. For additional information on the calculation see our Amended and Restated Credit Agreement, dated as of March 5, 2008 on Form 8-K filed on March 11, 2008.

• “Total Funded Debt” is calculated in accordance with the definition contained in the Company’s

Senior Secured Credit Facility. Total Funded Debt is generally defined as aggregate debt

• bligations reflected in our balance sheet, less the hedge adjustments resulting from terminated

and existing fair value interest rate derivatives or swaps, plus additional outstanding letters of credit not already reflected in debt, plus debt guarantees. Total Funded Debt less deferred cash is referred herein as “Adjusted Total Funded Debt.”

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Non-GAAP Measures: Pro Forma Credit Agreement EBITDA and Adjusted Total Funded Debt (as defined) Non-GAAP Measures: Pro Forma Credit Agreement EBITDA and Adjusted Total Funded Debt (as defined)

Our management uses Pro Forma Credit Agreement EBITDA and Adjusted Total

Funded Debt to evaluate compliance with Rock-Tenn’s debt covenants and borrowing capacity available under its Senior Secured Credit Facility. Management also uses Pro Forma Credit Agreement EBITDA as a measure of our company’s core operating

• performance. Management believes that investors also use these measures to

evaluate the Company’s compliance with its debt covenants and available borrowing

• capacity. Management also believes that investors use Pro Forma Credit Agreement

EBITDA as a measure of our company’s core operating performance. Borrowing capacity is dependent upon, in addition to other measures, the “Credit Agreement Debt/EBITDA ratio” or the “Leverage Ratio,” which is defined as Adjusted Total Funded Debt divided by Pro Forma Credit Agreement EBITDA.

Pro Forma Credit Agreement EBITDA and Adjusted Total Funded Debt are not

intended to be substitutes for GAAP financial measures and should not be used as such.

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Pro Forma Credit Agreement EBITDA Reconciliation Pro Forma Credit Agreement EBITDA Reconciliation

Twelve Months Ended March 31, 2008 ($ millions) Southern Rock-Tenn* Container* Total Net income 79.5 $ 53.9 $ 133.4 $ Interest expense and other income (expense) 59.4 7.9 67.3 Tax expense 44.4 4.1 48.5 Depreciation and amortization 109.6 41.1 150.7 Additional permitted charges 13.0 35.6 48.6 Pro Forma Credit Agreement EBITDA 305.9 $ 142.6 $ 448.5 $ *Southern Container's results since March 2, 2008 are included in Rock-Tenn

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Credit Agreement Adjusted Total Funded Debt Credit Agreement Adjusted Total Funded Debt

($ millions) March 31, 2008 Total current portion of debt 247.7 $ Total long-term debt, less current maturities 1,606.8 1,854.5 Less: Hedge adjustments resulting from terminated fair falue interest rate derivatives or swaps (7.6) Plus: Stand-by letters of credit 13.1 Plus: Debt guarantees 2.3 Total funded debt 1,862.3 Less: Deferred cash (52.1) Adjusted Total Funded Debt 1,810.2 $ Leverage Ratio* 4.04x * Adjusted Total Funded Debt divided by Pro Forma Credit Agreement EBITDA

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