Question-and-Answer Session
Operator
Thank you. (Operator instructions) The first question does come from Claudia Hueston of JP Morgan. You may ask your question.
Claudia Hueston - JPMorgan
Thanks very much, good morning.
James Rubright
Good morning Claudia.
Claudia Hueston - JPMorgan
Did I hear you right that Southern was $0.21 to earnings in the quarter and then I just wondered if you could talk about how we should think about the accretion on an annualized basis, so are you comfortable with that as sort of a run rate?
James Rubright
Yes, I am. The mill does not take a prolonged annual outage as the Demopolis virgin mill does. It does take outages during the year, so you multiply 21 by 4. You might shave a couple cents of it for maintenance outages, but I think it is a run rate. When we announce that we were doing the shutdown to increase the capacity of the mill, we predicted about $0.05 of operating losses which is really lost production and expenses that you would otherwise have devoted to productive offer activities. And I think that if you're trying to go to the underlining earnings of the mill, you have to essentially treat that as a capital expense associated with the project and that's why we adjusted it out.
So, yes, I think that's right, but it does not reflect the synergies because the business integration with respect to the reduction and staffing and associated business improvements from aligning our business with the Southern Container business model we just began in basically in July and August. And then as we've also discussed, the administrative synergies are awaiting a major system integration which we are in the process of designing. As Steve mentioned, we upgraded Rock-Tenn's financial systems materially in the last quarter and we had to do ours first before we could do theirs. So I don't think you are seeing significant synergies. We have integrated some purchases, but the substantial majority of the synergies are ahead and we have them identified and I feel very confident that we will be able to recognize them.
In modeling our business, Claudia, they probably will not all show up in the containerboard segment because there will be an administrative component to those savings that will show up across Rock-Tenn. And we very likely will reallocate the home office in administrative costs. For purposes of this year, particularly because of the way the Southern Container employee compensation programs were established, we didn't change the allocation of cost to Southern Container. We held them steady from the administrative cost they would have incurred. And in fact that made sense because of the transition of the administrative assistance I referred to.
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