##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549





FORM 10-K


|           |  |                                                                                              
|---------- |  | ---------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                              
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934    
|           |  | For the fiscal year ended September 30, 2005                                                 
|           |  | OR                                                                                           
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
     THE SECURITIES EXCHANGE ACT OF 1934
|           |  | For the transition period
    from                        to                                 

Commission file number 0-23340





ROCK-TENN COMPANY




|                                                                               |  |                                                   
|------------------------------------------------------------------------------ |  | --------------------------------------------------
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Georgia(State or Other Jurisdiction of
    Incorporation or Organization)      |  | 62-0342590(I.R.S. Employer
    Identification No.)
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|504 Thrasher Street, Norcross, Georgia(Address of Principal Executive Offices) |  | 30071(Zip Code)                                   

(770) 448-2193




|                                                |  |                                     
|----------------------------------------------- |  | ------------------------------------
|Title of Each Class                             |  | Name of Exchange on Which Registered
|                                               
|                                               
|                                               
|                                               
|Class A Common Stock, par value $0.01 per share |  | New York Stock Exchange             

None


o þ


o þ


þ o


þ


þ o


o þ






DOCUMENTS INCORPORATED BY REFERENCE












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##### 



ROCK-TENN COMPANY


INDEX TO FORM 10-K







|                                                                      |  |                                                                                                                          |  |           |    | 
|--------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------ |  | --------- | -- | 
|                                                                      |  |                                                                                                                          |  | Page      |   
|                                                                      |  |                                                                                                                          |  | Reference |   
|                                                                      |  |                                                                                                                          |  |           |   
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|PART I                                                               
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Item 1.                                                               |  | Business                                                                                                                 |  |           | 3  | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Item 1A.                                                              |  | Risk Factors                                                                                                             |  |           | 11 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Item 1B.                                                              |  | Unresolved Staff Comments                                                                                                |  |           | 13 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Item 2.                                                               |  | Properties                                                                                                               |  |           | 13 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Item 3.                                                               |  | Legal Proceedings                                                                                                        |  |           | 14 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Item 4.                                                               |  | Submission of Matters to a Vote of Security
    Holders                                                                  |  |           | 14 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|PART II                                                              
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Item 5.                                                               |  | Market for the Registrants Common
    Equity, Related Stockholder Matters and Issuer Purchases of
    Equity Securities |  |           | 15 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Item 6.                                                               |  | Selected Financial Data                                                                                                  |  |           | 16 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Item 7.                                                               |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                                |  |           | 18 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Item 7A.                                                              |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                           |  |           | 37 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Item 8.                                                               |  | Financial Statements and Supplementary
    Data                                                                          |  |           | 40 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Item 9.                                                               |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure                                 |  |           | 95 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Item 9A.                                                              |  | Controls and Procedures                                                                                                  |  |           | 95 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Item 9B.                                                              |  | Other Information                                                                                                        |  |           | 96 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|PART III                                                             
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Item 10.                                                              |  | Directors and Executive Officers of the
    Registrant                                                                   |  |           | 96 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Item 11.                                                              |  | Executive Compensation                                                                                                   |  |           | 96 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Item 12.                                                              |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters                       |  |           | 96 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Item 13.                                                              |  | Certain Relationships and Related
    Transactions                                                                       |  |           | 96 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Item 14.                                                              |  | Principal Accounting Fees and Services                                                                                   |  |           | 96 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|PART IV                                                              
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Item 15.                                                              |  | Exhibits and Financial Statement
    Schedules                                                                           |  |           | 97 | 
|EX-12 STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
|EX-21 SUBSIDIARIES OF THE REGISTRANT                                 
|EX-23 CONSENT OF ERNST & YOUNG LLP                                   
|EX-31.1 SECTION 302 CERTIFICATION OF THE CEO                         
|EX-31.2 SECTION 302 CERTIFICATION OF THE CFO                         
|EX-32.1 SECTION 906 CERTIFICATION OF THE CEO AND CFO                 



2



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PART I







|        |         
|------- | --------
|Item 1. | BUSINESS

Unless the context otherwise requires, we,
us, ouror
Rock-Tenn refers to the business of Rock-Tenn
Company and its consolidated subsidiaries, including RTS
Packaging, LLC, which we refer to as RTS GSD. We own 65% of RTS and conduct
our interior packaging business through RTS. We own 60% of GSD
and conduct some folding carton operations through GSD. These
terms do not include Seven Hills Paperboard, LLC, which we refer
to as Seven Hills.We own 49% of Seven Hills,
a manufacturer of gypsum paperboard liner, which we do not
consolidate for purposes of our financial statements. All
references in the accompanying financial statements and this
Annual Report on Form 10-K to aggregated data regarding
sales price per ton and fiber, energy, chemical and freight
costs with respect to our recycled paperboard mills excludes
that data with respect to our Aurora, Illinois, recycled
paperboard mill. We exclude that data because the Aurora
operation sells only converted products. All other references
herein to operating data with respect to our recycled paperboard
mills, including tons data and capacity utilization rates,
includes operating data from our Aurora recycled paperboard
mill.


General




Gulf States GSPP GSPP Acquisition bleached paperboard mill


Products


Financial Statements and Supplementary Data. Note 16. Segment
Information




| |                           
| | --------------------------
| | Packaging Products Segment



Folding Cartons.


3



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Interior Packaging.




| |                                                            
| | -----------------------------------------------------------
| | Merchandising Displays and Corrugated Packaging
    Segment



Merchandising Displays.


Corrugated Packaging.


4



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| |                   
| | ------------------
| | Paperboard Segment



Paperboard. (Lafarge)








Recycled Fiber.


Raw Materials




Business  Competition


5



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Energy




Business  Competition




Sales and Marketing








| |   |                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | packaging products to approximately 3,200 customers, the top 10
    of which represented approximately 18% of the external sales of
    our Packaging Products segment;

6



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| |   |                                                                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | merchandising display products and corrugated packaging products
    to approximately 1,300 customers, the top 10 of which
    represented approximately 52% of the external sales of our
    Merchandising Display and Corrugated Packaging segment; and
|
| |  | paperboard products to approximately 1,750 customers, the top 10
    of which represented approximately 42% of the external sales of
    our Paperboard segment.                                                                                         





Competition












7



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Governmental Regulation




| |                              
| | -----------------------------
| | Health and Safety Regulations

OSHA




| |                         
| | ------------------------
| | Environmental Regulation

CERCLA US EPA






(PRP) (Superfund legislation)




| |   |                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | With respect to each of two sites, while we have been identified
    as a PRP, our records reflect no evidence that we are associated
    with the site. Accordingly, if we are considered to be a PRP, we
    believe that we should be categorized as an unproven PRP.

8



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##### Table of Contents





| |   |                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | With respect to each of eight sites, we preliminarily determined
    that, while we may be associated with the site and while it is
    probable that we may have some liability with respect to the
    site, one of the following conclusions was applicable:



| |   |                                                                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | With respect to each of six sites, we determined that it was
    appropriate to conclude that, while it is not estimable, the
    potential liability is reasonably likely to be a de minimusamount and immaterial.                                                       
|
| |  | With respect to each of two sites, we have preliminarily
    determined that it is appropriate to conclude that the potential
    liability is best reflected by a range of reasonably possible
    liabilities all of which we expect to be de minimusand
    immaterial.



Patents and Other Intellectual Property


tm tm tm






Employees




9



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Available Information


www.rocktenn.com (SEC)


Forward-Looking Information




10



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Item 1A. 
Risk Factors.







|         |             
|-------- | ------------
|Item 1A. | RISK FACTORS



| |                                                                      
| | ---------------------------------------------------------------------
| |  We May Face Increased Costs and Reduced Supply
    of Raw Materials





| |                                        
| | ---------------------------------------
| |  We May Experience Pricing Variability



11



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##### Table of Contents





| |                                                   
| | --------------------------------------------------
| |  Our Earnings are Highly Dependent on
    Volumes





| |                              
| | -----------------------------
| |  We Face Intense Competition

Business  Competition.




| |                                                            
| | -----------------------------------------------------------
| |  We May be Unable to Complete and Finance
    Acquisitions





| |                                                                                  
| | ---------------------------------------------------------------------------------
| |  We are Subject to Extensive Environmental and
    Other Governmental Regulation



Business 
Governmental Regulation  Environmental
Regulation.


12



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| |                                                  
| | -------------------------------------------------
| |  We Have Been Dependent on Certain
    Customers





| |                                                  
| | -------------------------------------------------
| |  We May Incur Additional Restructuring
    Costs








|         |                          
|-------- | -------------------------
|Item 1B. | UNRESOLVED STAFF COMMENTS








|        |           
|------- | ----------
|Item 2. | PROPERTIES





|                                      |  |                        |         |     |                     |  |                                       | 
|------------------------------------- |  | ---------------------- | ------- | --- | ------------------- |  | ------------------------------------- | 
|                                      |  | Production             |         |     |                    
|                                      |  | Capacity               |         |     |                    
|Location of Mill                      |  | (in tons at 9/30/2005) |         |     | Paperboard Produced | 
|                                      |  |                        |         |     |                     | 
|Demopolis, AL                         |  |                        | 327,000 |     |                     |  | Bleached paperboard and               | 
|                                      |  |                        | 91,500  |     |                     |  | southern bleached softwood kraft pulp | 
|                                     
|                                     
|                                     
|                                     
|St. Paul, MN                          |  |                        | 180,000 |     |                     |  | Recycled corrugating medium           | 
|                                     
|                                     
|                                     
|                                     
|St. Paul, MN                          |  |                        | 160,000 |     |                     |  | Coated recycled paperboard            | 
|                                     
|                                     
|                                     
|                                     
|Battle Creek, MI                      |  |                        | 140,000 |     |                     |  | Coated recycled paperboard            | 
|                                     
|                                     
|                                     
|                                     
|Sheldon Springs, VT (Missisquoi Mill) |  |                        | 108,000 |     |                     |  | Coated recycled paperboard            | 
|                                     
|                                     
|                                     
|                                     
|Dallas, TX                            |  |                        | 96,000  |     |                     |  | Coated recycled paperboard            | 
|                                     
|                                     
|                                     
|                                     
|Stroudsburg, PA                       |  |                        | 60,000  |     |                     |  | Coated recycled paperboard            | 
|                                     
|                                     
|                                     
|                                     
|Chattanooga, TN                       |  |                        | 130,000 |     |                     |  | Specialty recycled paperboard         | 
|                                     
|                                     
|                                     
|                                     
|Lynchburg, VA                         |  |                        | 88,000  | (1) |                     |  | Specialty recycled paperboard         | 
|                                     
|                                     
|                                     
|                                     
|Eaton, IN                             |  |                        | 60,000  |     |                     |  | Specialty recycled paperboard         | 
|                                     
|                                     
|                                     
|                                     
|Cincinnati, OH                        |  |                        | 53,000  |     |                     |  | Specialty recycled paperboard         | 
|                                     
|                                     
|                                     
|                                     
|Aurora, IL                            |  |                        | 32,000  |     |                     |  | Specialty recycled paperboard         | 






|    |                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Reflects the production capacity of a paperboard machine that
    manufactures gypsum paperboard liner and is owned by our Seven
    Hills joint venture.

13



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|                                 |  |                                                                    |  |                 |       | 
|-------------------------------- |  | ------------------------------------------------------------------ |  | --------------- | ----- | 
|Type of Facility                 |  | Locations                                                          |  | Owned or Leased |      
|                                 |  |                                                                    |  |                 |      
|                                
|                                
|                                
|                                
|Merchandising Display Operations |  | Winston-Salem, NC
    (also contract packing and sales and design) |  |                 | Owned | 
|                                
|                                
|                                
|                                
|Headquarters                     |  | Norcross, GA                                                       |  |                 | Owned | 






|        |                  
|------- | -----------------
|Item 3. | LEGAL PROCEEDINGS



Business  Governmental
Regulation  Environmental Regulation Business  Patents and Other
Intellectual Property.







|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



14



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PART II







|        |                                                                                                                         
|------- | ------------------------------------------------------------------------------------------------------------------------
|Item 5. | MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED
    STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
    SECURITIES

Common Stock


Common Stock


Price Range of Common Stock


|               |  |             |       |  |             |   |       |      |  |   |       |  |  |   |       | 
|-------------- |  | ----------- | ----- |  | ----------- | - | ----- | ---- |  | - | ----- |  |  | - | ----- | 
|               |  | Fiscal 2005 |       |  | Fiscal 2004 |  
|               |  |             |       |  |             |  
|               |  | High        |       |  | Low         |   |       | High |  |   | Low   | 
|               |  |             |       |  |             |   |       |      |  |   |       | 
|First Quarter  |  | $           | 16.60 |  |             | $ | 14.68 |      |  | $ | 17.99 |  |  | $ | 14.50 | 
|              
|              
|              
|              
|Second Quarter |  | $           | 15.40 |  |             | $ | 13.05 |      |  | $ | 17.87 |  |  | $ | 13.35 | 
|              
|              
|              
|              
|Third Quarter  |  | $           | 13.60 |  |             | $ | 9.75  |      |  | $ | 17.00 |  |  | $ | 13.65 | 
|              
|              
|              
|              
|Fourth Quarter |  | $           | 16.00 |  |             | $ | 12.28 |      |  | $ | 16.98 |  |  | $ | 13.15 | 

Dividends




Item 6. Selected Financial Data.


Securities Authorized for Issuance Under Equity Compensation
Plans


Executive
Compensation Equity
Compensation Plan Information


Note 13. Shareholders Equity


15



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|        |                        
|------- | -----------------------
|Item 6. | SELECTED FINANCIAL DATA

Managements Discussion
and Analysis of Financial Condition and Results of
Operations,




|                                                                                                                                  |  |                                          |           |  |      |   |           |      |  |   |           |  |  |      |           |   |  |   |           | 
|--------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------- | --------- |  | ---- | - | --------- | ---- |  | - | --------- |  |  | ---- | --------- | - |  | - | --------- | 
|                                                                                                                                  |  | Year Ended September 30,                 |          
|                                                                                                                                  |  |                                          |          
|                                                                                                                                  |  | 2005                                     |           |  | 2004 |   |           | 2003 |  |   | 2002      |  |  | 2001 |          
|                                                                                                                                  |  |                                          |           |  |      |   |           |      |  |   |           |  |  |      |          
|                                                                                                                                  |  | (In thousands, except per share amounts) |          
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|Net sales                                                                                                                         |  | $                                        | 1,733,481 |  |      | $ | 1,581,261 |      |  | $ | 1,433,346 |  |  | $    | 1,369,050 |   |  | $ | 1,364,759 | 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|Restructuring and other costs                                                                                                     |  |                                          | 7,525     |  |      |   | 32,738    |      |  |   | 1,494     |  |  |      | 18,237    |   |  |   | 16,893    | 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|Goodwill amortization (a)                                                                                                         |  |                                          |          |  |      |   |          |      |  |   |          |  |  |      |          |   |  |   | 8,569     | 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|Income from continuing operations before the cumulative effect
    of a change in accounting principle                            |  |                                          | 17,614    |  |      |   | 9,651     |      |  |   | 29,541    |  |  |      | 29,853    |   |  |   | 24,623    | 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|Income from discontinued operations, net of tax                                                                                   |  |                                          |          |  |      |   | 7,997     |      |  |   | 35        |  |  |      | 2,617     |   |  |   | 5,614     | 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|Income before the cumulative effect of a change in accounting
    principle                                                       |  |                                          | 17,614    |  |      |   | 17,648    |      |  |   | 29,576    |  |  |      | 32,470    |   |  |   | 30,237    | 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|Cumulative effect of a change in accounting principle, net of tax                                                                 |  |                                          |          |  |      |   |          |      |  |   |          |  |  |      | (5,844    | ) |  |   | 286       | 
|                                                                                                                                  |  |                                         
|Net income (b)                                                                                                                    |  |                                          | 17,614    |  |      |   | 17,648    |      |  |   | 29,576    |  |  |      | 26,626    |   |  |   | 30,523    | 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|Diluted earnings per common share from continuing operations
    before the cumulative effect of a change in accounting principle |  |                                          | 0.49      |  |      |   | 0.27      |      |  |   | 0.85      |  |  |      | 0.87      |   |  |   | 0.74      | 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|Diluted earnings per common share before the cumulative effect
    of a change in accounting principle                            |  |                                          | 0.49      |  |      |   | 0.50      |      |  |   | 0.85      |  |  |      | 0.94      |   |  |   | 0.90      | 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|Diluted earnings (loss) per common share from cumulative effect
    of a change in accounting principle, net of tax               |  |                                          |          |  |      |   |          |      |  |   |          |  |  |      | (0.17     | ) |  |   | 0.01      | 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|Diluted earnings per common share                                                                                                 |  |                                          | 0.49      |  |      |   | 0.50      |      |  |   | 0.85      |  |  |      | 0.77      |   |  |   | 0.91      | 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|Dividends paid per common share                                                                                                   |  |                                          | 0.36      |  |      |   | 0.34      |      |  |   | 0.32      |  |  |      | 0.30      |   |  |   | 0.30      | 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|Book value per common share                                                                                                       |  |                                          | 12.57     |  |      |   | 12.28     |      |  |   | 12.07     |  |  |      | 11.80     |   |  |   | 12.00     | 
|                                                                                                                                  |  |                                         
|Total assets                                                                                                                      |  |                                          | 1,798,434 |  |      |   | 1,283,813 |      |  |   | 1,291,395 |  |  |      | 1,176,198 |   |  |   | 1,164,413 | 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|                                                                                                                                 
|Total current maturities of debt                                                                                                  |  |                                          | 62,079    |  |      |   | 85,760    |      |  |   | 12,927    |  |  |      | 62,917    |   |  |   | 97,152    | 

16



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|                                                           |  |                                          |         |  |      |  |         |      |  |  |         |  |  |      |         |  |  |  |         | 
|---------------------------------------------------------- |  | ---------------------------------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------- |  |  | ---- | ------- |  |  |  | ------- | 
|                                                           |  | Year Ended September 30,                 |        
|                                                           |  |                                          |        
|                                                           |  | 2005                                     |         |  | 2004 |  |         | 2003 |  |  | 2002    |  |  | 2001 |        
|                                                           |  |                                          |         |  |      |  |         |      |  |  |         |  |  |      |        
|                                                           |  | (In thousands, except per share amounts) |        
|                                                          
|                                                          
|                                                          
|                                                          
|Total long-term debt, less current maturities              |  |                                          | 853,002 |  |      |  | 398,301 |      |  |  | 512,967 |  |  |      | 410,074 |  |  |  | 397,090 | 
|                                                          
|                                                          
|                                                          
|                                                          
|Total debt (c)                                             |  |                                          | 915,081 |  |      |  | 484,061 |      |  |  | 525,894 |  |  |      | 472,991 |  |  |  | 494,242 | 
|                                                          
|                                                          
|                                                          
|                                                          
|Shareholders equity                                       |  |                                          | 456,222 |  |      |  | 437,601 |      |  |  | 422,036 |  |  |      | 405,147 |  |  |  | 402,760 | 
|                                                           |  |                                         
|Net cash provided by operating activities (d)              |  |                                          | 154,680 |  |      |  | 91,440  |      |  |  | 114,795 |  |  |      | 115,058 |  |  |  | 146,027 | 
|                                                          
|                                                          
|                                                          
|                                                          
|Capital expenditures                                       |  |                                          | 54,326  |  |      |  | 60,823  |      |  |  | 57,402  |  |  |      | 72,701  |  |  |  | 60,635  | 
|                                                          
|                                                          
|                                                          
|                                                          
|Cash paid for joint venture investment (e)                 |  |                                          | 120     |  |      |  | 158     |      |  |  | 332     |  |  |      | 1,720   |  |  |  | 9,627   | 
|                                                          
|                                                          
|                                                          
|                                                          
|Cash paid for purchase of businesses, net of cash received |  |                                          | 552,291 |  |      |  | 15,047  |      |  |  | 81,845  |  |  |      | 25,351  |  |  |  |        | 
|                                                           |  |                                         








|    |  |                                                                                                                                                                                                                                                                        
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Amount not deductible for income tax purposes was $6,189 in
    fiscal 2001.                                                                                                                                                                                           
|   
|(b) |  | Goodwill amortization, net of tax in fiscal 2001 was $7,802, or
    $0.23 per diluted share. Pro forma net income after adding
    back goodwill amortization, net of tax in fiscal 2001 was
    $38,325, or $1.14 per diluted share.                                  
|   
|(c) |  | Total debt includes fair value aggregate hedge adjustments
    resulting from terminated and/or existing interest rate
    derivatives or swaps of $12,255, $18,461, $23,930, $19,751, and
    $8,603 during fiscal 2005, 2004, 2003, 2002, and 2001,
    respectively.
|   
|(d) |  | Net cash provided by operating activities for the year ended
    September 30, 2004 was reduced by approximately $9,869 in
    cash taxes paid from the gain on the sale of discontinued
    operations.                                                               
|   
|(e) |  | Of the total cash paid for the joint venture investment,
    contributions for capital expenditures amounted to $120, $158,
    $332, $383, and $7,667 during fiscal 2005, 2004, 2003, 2002, and
    2001, respectively.                                               

17



---



##### Table of Contents








|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
    CONDITION AND RESULTS OF OPERATIONS

Critical Accounting Policies and Estimates


GAAP Note 1. Description of Business and Summary
of Significant Accounting Policies




| |                    
| | -------------------
| | Accounts Receivable





| |          
| | ---------
| | Inventory





| |                                             
| | --------------------------------------------
| | Impairment of Long-Lived Assets and Goodwill

Goodwill and Other Intangible
Assets (SFAS 142).


18



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##### Table of Contents







Accounting for the Impairment or Disposal
of Long-Lived Assets (SFAS 144


Note 7. Other Intangible Assets






| |               
| | --------------
| | Self-Insurance



19



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##### Table of Contents







| |                      
| | ---------------------
| | Workers Compensation





| |                            
| | ---------------------------
| | Accounting for Income Taxes





| |        
| | -------
| | Pension

Note 11. Retirement Plans


20



---



##### Table of Contents







|                                                 |  |                |      |   |                |   |      |  
|------------------------------------------------ |  | -------------- | ---- | - | -------------- | - | ---- | -
|                                                 |  | 25 Basis Point |      |   | 25 Basis Point |  
|                                                 |  | Increase       |      |   | Decrease       |  
|                                                 |  |                |      |   |                |  
|Discount rate                                    |  | $              | (1.2 | ) |                | $ | 1.4  |  
|                                                 |  |                |      |   |                |  
|Expected long-term rate of return on plan assets |  | $              | (0.5 | ) |                | $ | 0.5  |  
|                                                 |  |                |      |   |                |  
|Expected increase in compensation levels         |  | $              | 0.1  |   |                | $ | (0.1 | )
|                                                 |  |                |      |   |                |  





21



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Segment and Market Information






|                                                       |                                                 |                          |         |       |      |   |         |       |  |   |         |       | 
|------------------------------------------------------ | ----------------------------------------------- | ------------------------ | ------- | ----- | ---- | - | ------- | ----- |  | - | ------- | ----- | 
|                                                       |                                                 | Year Ended September 30, |        
|                                                       |                                                 |                          |        
|                                                       |                                                 | 2005                     |         |       | 2004 |   |         | 2003  | 
|                                                       |                                                 |                          |         |       |      |   |         |       | 
|                                                       |                                                 | (In millions)            |        
|                                                      
|                                                      
|                                                      
|                                                      
|Net sales (aggregate):                                 |                                                 |                          |         |       |      |   |         |       |  |   |         |      
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Packaging Products                              |                          | $       | 994.0 |      |   | $       | 908.1 |  |   | $       | 801.4 | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Merchandising Displays and Corrugated Packaging |                          |         | 333.8 |      |   |         | 318.3 |  |   |         | 291.2 | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Paperboard                                      |                          |         | 615.4 |      |   |         | 539.9 |  |   |         | 509.9 | 
|                                                       |                                                 |                          |         |       |      |   |         |       | 
|Total                                                  |                                                 | $                        | 1,943.2 |       |      | $ | 1,766.3 |       |  | $ | 1,602.5 |      
|                                                       |                                                 |                          |         |       |      |   |         |       | 
|Net sales (intersegment):                              |                                                 |                          |         |       |      |   |         |       |  |   |         |      
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Packaging Products                              |                          | $       | 3.4   |      |   | $       | 3.5   |  |   | $       | 4.6   | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Merchandising Displays and Corrugated Packaging |                          |         | 4.0   |      |   |         | 4.7   |  |   |         | 5.0   | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Paperboard                                      |                          |         | 202.3 |      |   |         | 176.8 |  |   |         | 159.6 | 
|                                                       |                                                 |                          |         |       |      |   |         |       | 
|Total                                                  |                                                 | $                        | 209.7   |       |      | $ | 185.0   |       |  | $ | 169.2   |      
|                                                       |                                                 |                          |         |       |      |   |         |       | 
|Net sales (unaffiliated customers):                    |                                                 |                          |         |       |      |   |         |       |  |   |         |      
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Packaging Products                              |                          | $       | 990.6 |      |   | $       | 904.6 |  |   | $       | 796.8 | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Merchandising Displays and Corrugated Packaging |                          |         | 329.8 |      |   |         | 313.6 |  |   |         | 286.2 | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Paperboard                                      |                          |         | 413.1 |      |   |         | 363.1 |  |   |         | 350.3 | 
|                                                       |                                                 |                          |         |       |      |   |         |       | 
|Total                                                  |                                                 | $                        | 1,733.5 |       |      | $ | 1,581.3 |       |  | $ | 1,433.3 |      
|                                                       |                                                 |                          |         |       |      |   |         |       | 
|Segment income:                                        |                                                 |                          |         |       |      |   |         |       |  |   |         |      
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Packaging Products                              |                          | $       | 33.4  |      |   | $       | 38.0  |  |   | $       | 38.5  | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Merchandising Displays and Corrugated Packaging |                          |         | 21.1  |      |   |         | 29.1  |  |   |         | 28.6  | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Paperboard                                      |                          |         | 31.6  |      |   |         | 15.7  |  |   |         | 21.8  | 
|                                                       |                                                 |                          |         |       |      |   |         |       | 
|                                                       |                                                 |                          | 86.1    |       |      |   | 82.8    |       |  |   | 88.9    |      
|                                                      
|                                                      
|                                                      
|                                                      
|Restructuring and other costs                          |                                                 |                          | (7.5    | )     |      |   | (32.7   | )     |  |   | (1.5    | )    
|                                                      
|                                                      
|                                                      
|                                                      
|Non-allocated expenses                                 |                                                 |                          | (17.7   | )     |      |   | (12.4   | )     |  |   | (9.7    | )    
|                                                      
|                                                      
|                                                      
|                                                      
|Interest expense                                       |                                                 |                          | (36.6   | )     |      |   | (23.6   | )     |  |   | (26.9   | )    
|                                                      
|                                                      
|                                                      
|                                                      
|Interest and other income (expense)                    |                                                 |                          | 0.4     |       |      |   | (0.2    | )     |  |   | 0.1     |      
|                                                      
|                                                      
|                                                      
|                                                      
|Minority interest in income of consolidated subsidiary |                                                 |                          | (4.8    | )     |      |   | (3.4    | )     |  |   | (3.2    | )    
|                                                       |                                                 |                          |         |       |      |   |         |       | 
|Income from continuing operations before income taxes  |                                                 | $                        | 19.9    |       |      | $ | 10.5    |       |  | $ | 47.7    |      
|                                                       |                                                 |                          |         |       |      |   |         |       | 

Overview




22



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Non-GAAP Measures Note 6. Acquisitions, Restructuring and Other
Matters








Sarbanes-Oxley Act


Results of Operations






| |                                   
| | ----------------------------------
| | Net Sales (Unaffiliated Customers)





23



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| |                                                       
| | ------------------------------------------------------
| | Net Sales (Aggregate)  Packaging Products
    Segment

|     |  |               |       |  |                |   |       |               |  |   |                |  |  |             |       |  |  |   |       | 
|---- |  | ------------- | ----- |  | -------------- | - | ----- | ------------- |  | - | -------------- |  |  | ----------- | ----- |  |  | - | ----- | 
|     |  | First Quarter |       |  | Second Quarter |   |       | Third Quarter |  |   | Fourth Quarter |  |  | Fiscal Year |      
|     |  |               |       |  |                |   |       |               |  |   |                |  |  |             |      
|     |  | (In millions) |      
|    
|    
|    
|    
|2003 |  | $             | 173.7 |  |                | $ | 196.3 |               |  | $ | 210.1          |  |  | $           | 221.3 |  |  | $ | 801.4 | 
|    
|    
|    
|    
|2004 |  |               | 208.9 |  |                |   | 231.7 |               |  |   | 231.6          |  |  |             | 235.9 |  |  |   | 908.1 | 
|    
|    
|    
|    
|2005 |  |               | 221.8 |  |                |   | 218.8 |               |  |   | 239.2          |  |  |             | 314.2 |  |  |   | 994.0 | 







| |                                                                                    
| | -----------------------------------------------------------------------------------
| | Net Sales (Aggregate)  Merchandising Displays
    and Corrugated Packaging Segment

|     |  |               |      |  |                |   |      |               |  |   |                |  |  |             |      |  |  |   |       | 
|---- |  | ------------- | ---- |  | -------------- | - | ---- | ------------- |  | - | -------------- |  |  | ----------- | ---- |  |  | - | ----- | 
|     |  | First Quarter |      |  | Second Quarter |   |      | Third Quarter |  |   | Fourth Quarter |  |  | Fiscal Year |     
|     |  |               |      |  |                |   |      |               |  |   |                |  |  |             |     
|     |  | (In millions) |     
|    
|    
|    
|    
|2003 |  | $             | 75.1 |  |                | $ | 66.1 |               |  | $ | 71.7           |  |  | $           | 78.3 |  |  | $ | 291.2 | 
|    
|    
|    
|    
|2004 |  |               | 73.5 |  |                |   | 77.5 |               |  |   | 75.8           |  |  |             | 91.5 |  |  |   | 318.3 | 
|    
|    
|    
|    
|2005 |  |               | 79.5 |  |                |   | 86.1 |               |  |   | 83.5           |  |  |             | 84.7 |  |  |   | 333.8 | 

Athens Acquisition tm






| |                                               
| | ----------------------------------------------
| | Net Sales (Aggregate)  Paperboard
    Segment

|     |  |               |       |  |                |   |       |               |  |   |                |  |  |             |       |  |  |   |       | 
|---- |  | ------------- | ----- |  | -------------- | - | ----- | ------------- |  | - | -------------- |  |  | ----------- | ----- |  |  | - | ----- | 
|     |  | First Quarter |       |  | Second Quarter |   |       | Third Quarter |  |   | Fourth Quarter |  |  | Fiscal Year |      
|     |  |               |       |  |                |   |       |               |  |   |                |  |  |             |      
|     |  | (In millions) |      
|    
|    
|    
|    
|2003 |  | $             | 121.8 |  |                | $ | 128.9 |               |  | $ | 128.8          |  |  | $           | 130.4 |  |  | $ | 509.9 | 
|    
|    
|    
|    
|2004 |  |               | 128.3 |  |                |   | 136.1 |               |  |   | 138.6          |  |  |             | 136.9 |  |  |   | 539.9 | 
|    
|    
|    
|    
|2005 |  |               | 128.7 |  |                |   | 131.8 |               |  |   | 155.0          |  |  |             | 199.9 |  |  |   | 615.4 | 

24



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| |                   
| | ------------------
| | Cost of Goods Sold

Quantitative
and Qualitative Disclosures About Market Risk 
Foreign Currency




25



---



##### Table of Contents



Quantitative and Qualitative
Disclosures About Market Risk  Foreign Currency






|                   |  |             |         |  |             |               |         |             |  |   |         |  |  |      |         |  |      |   |         |  |  |   |         | 
|------------------ |  | ----------- | ------- |  | ----------- | ------------- | ------- | ----------- |  | - | ------- |  |  | ---- | ------- |  | ---- | - | ------- |  |  | - | ------- | 
|                   |  | Fiscal 2005 |         |  | Fiscal 2004 |               |         | Fiscal 2003 | 
|                   |  |             |         |  |             |               |         |             | 
|                   |  | LIFO        |         |  | FIFO        |               |         | LIFO        |  |   | FIFO    |  |  | LIFO |         |  | FIFO |  
|                   |  |             |         |  |             |               |         |             |  |   |         |  |  |      |         |  |      |  
|                   |  |             |         |  |             | (In millions) |         |             |  |   |        
|                  
|                  
|                  
|                  
|Cost of goods sold |  | $           | 1,459.2 |  |             | $             | 1,463.6 |             |  | $ | 1,313.9 |  |  | $    | 1,311.8 |  |      | $ | 1,171.0 |  |  | $ | 1,170.5 | 
|                  
|                  
|                  
|                  
|Net income         |  |             | 17.6    |  |             |               | 14.9    |             |  |   | 17.6    |  |  |      | 19.0    |  |      |   | 29.6    |  |  |   | 29.9    | 





| |                                             
| | --------------------------------------------
| | Selling, General and Administrative Expenses

(SG&A)




Note 17. Financial
Results by Quarter (Unaudited)


26



---



##### Table of Contents





| |             
| | ------------
| | Acquisitions





Note 6.
Acquisitions, Restructuring and Other Matters




| |                              
| | -----------------------------
| | Restructuring and Other Costs







Note 6.
Acquisitions, Restructuring and Other Matters


27



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Segment Operating Income




| |                                                  
| | -------------------------------------------------
| | Operating Income  Packaging Products
    Segment

|               |  |                                   |       |  |           |   |      |          |  |  |     |  
|-------------- |  | --------------------------------- | ----- |  | --------- | - | ---- | -------- |  |  | --- | -
|               |  | Net Sales                         |       |  | Operating |   |      | Return   | 
|               |  | (Aggregate)                       |       |  | Income    |   |      | on Sales | 
|               |  |                                   |       |  |           |   |      |          | 
|               |  | (In millions, except percentages) |      
|              
|              
|              
|              
|First Quarter  |  | $                                 | 173.7 |  |           | $ | 4.9  |          |  |  | 2.8 | %
|              
|              
|              
|              
|Second Quarter |  |                                   | 196.3 |  |           |   | 10.0 |          |  |  | 5.1 |  
|              
|              
|              
|              
|Third Quarter  |  |                                   | 210.1 |  |           |   | 10.8 |          |  |  | 5.1 |  
|              
|              
|              
|              
|Fourth Quarter |  |                                   | 221.3 |  |           |   | 12.8 |          |  |  | 5.8 |  
|               |  |                                   |       |  |           |   |      |          | 
|Fiscal 2003    |  | $                                 | 801.4 |  |           | $ | 38.5 |          |  |  | 4.8 | %
|               |  |                                   |       |  |           |   |      |          | 
|First Quarter  |  | $                                 | 208.9 |  |           | $ | 7.0  |          |  |  | 3.4 | %
|              
|              
|              
|              
|Second Quarter |  |                                   | 231.7 |  |           |   | 10.2 |          |  |  | 4.4 |  
|              
|              
|              
|              
|Third Quarter  |  |                                   | 231.6 |  |           |   | 11.8 |          |  |  | 5.1 |  
|              
|              
|              
|              
|Fourth Quarter |  |                                   | 235.9 |  |           |   | 9.0  |          |  |  | 3.8 |  
|               |  |                                   |       |  |           |   |      |          | 
|Fiscal 2004    |  | $                                 | 908.1 |  |           | $ | 38.0 |          |  |  | 4.2 | %
|               |  |                                   |       |  |           |   |      |          | 
|First Quarter  |  | $                                 | 221.8 |  |           | $ | 5.3  |          |  |  | 2.4 | %
|              
|              
|              
|              
|Second Quarter |  |                                   | 218.8 |  |           |   | 5.7  |          |  |  | 2.6 |  
|              
|              
|              
|              
|Third Quarter  |  |                                   | 239.2 |  |           |   | 10.6 |          |  |  | 4.5 |  
|              
|              
|              
|              
|Fourth Quarter |  |                                   | 314.2 |  |           |   | 11.8 |          |  |  | 3.7 |  
|               |  |                                   |       |  |           |   |      |          | 
|Fiscal 2005    |  | $                                 | 994.0 |  |           | $ | 33.4 |          |  |  | 3.4 | %
|               |  |                                   |       |  |           |   |      |          | 





28



---



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| |                                                                               
| | ------------------------------------------------------------------------------
| | Operating Income  Merchandising Displays and
    Corrugated Packaging Segment

|               |  |                                   |       |  |           |   |      |           |  |  |      |  
|-------------- |  | --------------------------------- | ----- |  | --------- | - | ---- | --------- |  |  | ---- | -
|               |  | Net Sales                         |       |  | Operating |   |      | Return on | 
|               |  | (Aggregate)                       |       |  | Income    |   |      | Sales     | 
|               |  |                                   |       |  |           |   |      |           | 
|               |  | (In millions, except percentages) |      
|              
|              
|              
|              
|First Quarter  |  | $                                 | 75.1  |  |           | $ | 7.2  |           |  |  | 9.6  | %
|              
|              
|              
|              
|Second Quarter |  |                                   | 66.1  |  |           |   | 5.3  |           |  |  | 8.0  |  
|              
|              
|              
|              
|Third Quarter  |  |                                   | 71.7  |  |           |   | 6.8  |           |  |  | 9.6  |  
|              
|              
|              
|              
|Fourth Quarter |  |                                   | 78.3  |  |           |   | 9.3  |           |  |  | 11.8 |  
|               |  |                                   |       |  |           |   |      |           | 
|Fiscal 2003    |  | $                                 | 291.2 |  |           | $ | 28.6 |           |  |  | 9.8  | %
|               |  |                                   |       |  |           |   |      |           | 
|First Quarter  |  | $                                 | 73.5  |  |           | $ | 5.9  |           |  |  | 8.1  | %
|              
|              
|              
|              
|Second Quarter |  |                                   | 77.5  |  |           |   | 7.5  |           |  |  | 9.7  |  
|              
|              
|              
|              
|Third Quarter  |  |                                   | 75.8  |  |           |   | 6.1  |           |  |  | 8.0  |  
|              
|              
|              
|              
|Fourth Quarter |  |                                   | 91.5  |  |           |   | 9.6  |           |  |  | 10.4 |  
|               |  |                                   |       |  |           |   |      |           | 
|Fiscal 2004    |  | $                                 | 318.3 |  |           | $ | 29.1 |           |  |  | 9.1  | %
|               |  |                                   |       |  |           |   |      |           | 
|First Quarter  |  | $                                 | 79.5  |  |           | $ | 2.7  |           |  |  | 3.4  | %
|              
|              
|              
|              
|Second Quarter |  |                                   | 86.1  |  |           |   | 4.8  |           |  |  | 5.6  |  
|              
|              
|              
|              
|Third Quarter  |  |                                   | 83.5  |  |           |   | 6.4  |           |  |  | 7.7  |  
|              
|              
|              
|              
|Fourth Quarter |  |                                   | 84.7  |  |           |   | 7.2  |           |  |  | 8.5  |  
|               |  |                                   |       |  |           |   |      |           | 
|Fiscal 2005    |  | $                                 | 333.8 |  |           | $ | 21.1 |           |  |  | 6.3  | %
|               |  |                                   |       |  |           |   |      |           | 





29



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| |                                      
| | -------------------------------------
| | Operating Income  Paperboard Segment

|               |  |               |       |  |               |   |      |            |  |      |                |   |             |                |       |      |                |  |           |                |  |         |           |  |  |  |      |  |  |   |     | 
|-------------- |  | ------------- | ----- |  | ------------- | - | ---- | ---------- |  | ---- | -------------- | - | ----------- | -------------- | ----- | ---- | -------------- |  | --------- | -------------- |  | ------- | --------- |  |  |  | ---- |  |  | - | --- | 
|               |  |               |       |  |               |   |      | Coated and |  |      |                |   |             |                |       |      |               
|               |  |               |       |  |               |   |      | Specialty  |  |      |                |   |             |                |       |      |               
|               |  |               |       |  |               |   |      | Recycled   |  |      |                |   | Bleached    |                |       |      |                | 
|               |  |               |       |  |               |   |      | Paperboard |  |      | Corrugated     |   |             | Paperboard     |       |      | SBSK           |  |           |               
|               |  | Net Sales     |       |  | Operating     |   |      |            |  | Tons |                |   | Medium Tons |                |       | Tons |                |  | Pulp Tons |                |  | Average |          
|               |  | (Aggregate)   |       |  | Income        |   |      | Return     |  |      | Shipped(a)     |   |             | Shipped        |       |      | Shipped(b)     |  |           | Shipped(b)     |  |         | Price(c)  | 
|               |  | (In Millions) |       |  | (In Millions) |   |      | On Sales   |  |      | (In Thousands) |   |             | (In Thousands) |       |      | (In Thousands) |  |           | (In Thousands) |  |         | (Per Ton) | 
|               |  |               |       |  |               |   |      |            |  |      |                |   |             |                |       |      |                |  |           |                |  |         |           | 
|First Quarter  |  | $             | 121.8 |  |               | $ | 5.3  |            |  |      | 4.4            | % |             |                | 217.3 |      |                |  | 40.8      |                |  |         | n/a       |  |  |  | n/a  |  |  | $ | 419 | 
|              
|              
|              
|              
|Second Quarter |  |               | 128.9 |  |               |   | 6.4  |            |  |      | 5.0            |   |             |                | 241.9 |      |                |  | 41.5      |                |  |         | n/a       |  |  |  | n/a  |  |  |   | 406 | 
|              
|              
|              
|              
|Third Quarter  |  |               | 128.8 |  |               |   | 6.0  |            |  |      | 4.7            |   |             |                | 239.3 |      |                |  | 40.4      |                |  |         | n/a       |  |  |  | n/a  |  |  |   | 423 | 
|              
|              
|              
|              
|Fourth Quarter |  |               | 130.4 |  |               |   | 4.1  |            |  |      | 3.1            |   |             |                | 234.6 |      |                |  | 45.0      |                |  |         | n/a       |  |  |  | n/a  |  |  |   | 421 | 
|               |  |               |       |  |               |   |      |            |  |      |                |   |             |                |       |      |                |  |           |                |  |         |           | 
|Fiscal 2003    |  | $             | 509.9 |  |               | $ | 21.8 |            |  |      | 4.3            | % |             |                | 933.1 |      |                |  | 167.7     |                |  |         | n/a       |  |  |  | n/a  |  |  | $ | 417 | 
|               |  |               |       |  |               |   |      |            |  |      |                |   |             |                |       |      |                |  |           |                |  |         |           | 
|First Quarter  |  | $             | 128.3 |  |               | $ | 3.1  |            |  |      | 2.4            | % |             |                | 230.7 |      |                |  | 43.9      |                |  |         | n/a       |  |  |  | n/a  |  |  | $ | 422 | 
|              
|              
|              
|              
|Second Quarter |  |               | 136.1 |  |               |   | 2.4  |            |  |      | 1.7            |   |             |                | 248.8 |      |                |  | 42.9      |                |  |         | n/a       |  |  |  | n/a  |  |  |   | 424 | 
|              
|              
|              
|              
|Third Quarter  |  |               | 138.6 |  |               |   | 2.6  |            |  |      | 1.9            |   |             |                | 248.0 |      |                |  | 44.7      |                |  |         | n/a       |  |  |  | n/a  |  |  |   | 439 | 
|              
|              
|              
|              
|Fourth Quarter |  |               | 136.9 |  |               |   | 7.6  |            |  |      | 5.6            |   |             |                | 224.9 |      |                |  | 46.1      |                |  |         | n/a       |  |  |  | n/a  |  |  |   | 455 | 
|               |  |               |       |  |               |   |      |            |  |      |                |   |             |                |       |      |                |  |           |                |  |         |           | 
|Fiscal 2004    |  | $             | 539.9 |  |               | $ | 15.7 |            |  |      | 2.9            | % |             |                | 952.4 |      |                |  | 177.6     |                |  |         | n/a       |  |  |  | n/a  |  |  | $ | 435 | 
|               |  |               |       |  |               |   |      |            |  |      |                |   |             |                |       |      |                |  |           |                |  |         |           | 
|First Quarter  |  | $             | 128.7 |  |               | $ | 4.4  |            |  |      | 3.4            | % |             |                | 210.6 |      |                |  | 42.7      |                |  |         | n/a       |  |  |  | n/a  |  |  | $ | 467 | 
|              
|              
|              
|              
|Second Quarter |  |               | 131.8 |  |               |   | 3.6  |            |  |      | 2.8            |   |             |                | 209.7 |      |                |  | 45.2      |                |  |         | n/a       |  |  |  | n/a  |  |  |   | 472 | 
|              
|              
|              
|              
|Third Quarter  |  |               | 155.0 |  |               |   | 7.6  |            |  |      | 4.9            |   |             |                | 211.6 |      |                |  | 44.8      |                |  |         | 26.7      |  |  |  | 6.9  |  |  |   | 491 | 
|              
|              
|              
|              
|Fourth Quarter |  |               | 199.9 |  |               |   | 16.0 |            |  |      | 8.0            |   |             |                | 209.7 |      |                |  | 44.8      |                |  |         | 84.2      |  |  |  | 23.1 |  |  |   | 523 | 
|               |  |               |       |  |               |   |      |            |  |      |                |   |             |                |       |      |                |  |           |                |  |         |           | 
|Fiscal 2005    |  | $             | 615.4 |  |               | $ | 31.6 |            |  |      | 5.1            | % |             |                | 841.6 |      |                |  | 177.5     |                |  |         | 110.9     |  |  |  | 30.0 |  |  | $ | 492 | 
|               |  |               |       |  |               |   |      |            |  |      |                |   |             |                |       |      |                |  |           |                |  |         |           | 






|    |  |                                                                                                                                                                                                                      
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Recycled Paperboard Tons Shipped and Average Recycled Paperboard
    Price Per Ton include tons shipped by Seven Hills, our joint
    venture with Lafarge.                                                          
|   
|(b) |  | Bleached paperboard and southern bleached softwood kraft
    (SBSK) pulp tons shipped begin in June 2005 as a result of
    the GSPP Acquisition.                                                                    
|   
|(c) |  | Beginning in the third quarter of fiscal 2005, Average Price Per
    Ton includes coated and specialty recycled paperboard,
    corrugated medium, bleached paperboard and southern bleached
    softwood kraft pulp.





30



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##### Table of Contents







| |                 
| | ----------------
| | Interest Expense







| |                  
| | -----------------
| | Minority Interest







| |                           
| | --------------------------
| | Provision for Income Taxes



NOLs




31



---



##### Table of Contents







| |                        
| | -----------------------
| | Discontinued Operations



Cartem Wilco






| |           
| | ----------
| | Net Income



Liquidity and Capital Resources




| |                                         
| | ----------------------------------------
| | Working Capital and Capital Expenditures





32



---



##### Table of Contents



Senior Credit
Facility 2005
Notes Note 8. Debt








33



---



##### Table of Contents













34



---



##### Table of Contents





| |                        
| | -----------------------
| | Contractual Obligations



|                                                 |  |                        |         |        |      |   |        |             |  |        |             |  |  |            |       |  |  |   |       | 
|------------------------------------------------ |  | ---------------------- | ------- | ------ | ---- | - | ------ | ----------- |  | ------ | ----------- |  |  | ---------- | ----- |  |  | - | ----- | 
|                                                 |  | Payments Due by Period |        
|                                                 |  |                        |        
|                                                 |  |                        |         | Fiscal |      |   | Fiscal |             |  | Fiscal |             |  | 
|Contractual Obligations                          |  | Total                  |         |        | 2006 |   |        | 2007 & 2008 |  |        | 2009 & 2010 |  |  | Thereafter |      
|                                                 |  |                        |         |        |      |   |        |             |  |        |             |  |  |            |      
|                                                 |  | (In millions)          |        
|                                                
|                                                
|                                                
|                                                
|Long-term debt, including current portion (a)(e) |  | $                      | 903.4   |        |      | $ | 62.1   |             |  | $      | 63.6        |  |  | $          | 403.6 |  |  | $ | 374.1 | 
|                                                
|                                                
|                                                
|                                                
|Operating lease obligations (b)                  |  |                        | 38.1    |        |      |   | 10.2   |             |  |        | 15.4        |  |  |            | 7.5   |  |  |   | 5.0   | 
|                                                
|                                                
|                                                
|                                                
|Purchase obligations (c)(d)                      |  |                        | 276.0   |        |      |   | 137.0  |             |  |        | 120.9       |  |  |            | 17.9  |  |  |   | 0.2   | 
|                                                 |  |                        |         |        |      |   |        |             |  |        |             |  |  |            |      
|Total                                            |  | $                      | 1,217.5 |        |      | $ | 209.3  |             |  | $      | 199.9       |  |  | $          | 429.0 |  |  | $ | 379.3 | 
|                                                 |  |                        |         |        |      |   |        |             |  |        |             |  |  |            |      






|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | We have included in the long-term debt line item above amounts
    owed on our note agreements, industrial development revenue
    bonds, and credit agreements. For purposes of this table, we
    assume that all of our long- term debt will be held to maturity.
    We have not included in these amounts interest payable on our
    long-term debt. We have excluded aggregate hedge adjustments
    resulting from terminated interest rate derivatives or swaps of
    $12.3 million and excluded unamortized bond discounts of
    $0.6 million from the table to arrive at actual debt
    obligations. For information on the interest rates applicable to
    our various debt instruments see Note 8.
    Debt.of the Notes to Consolidated Financial
    Statements section of the Financial Statements included herein.                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(b) |  | For more information, see Note 9. Leases and
    Other Agreementsof the Notes to Consolidated
    Financial Statements section of the Financial Statements
    included herein.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(c) |  | Purchase obligations include agreements to purchase goods or
    services that are enforceable and legally binding and that
    specify all significant terms, including: fixed or minimum
    quantities to be purchased; fixed, minimum or variable price
    provision; and the approximate timing of the transaction.
    Purchase obligations exclude agreements that are cancelable
    without penalty.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(d) |  | Under the terms of the joint venture agreement, Lafarge has the
    option to terminate the joint venture and require us to purchase
    its interest in Seven Hills on March 29, 2008, and annually
    thereafter at a formula price that would result in a purchase
    price of less than 40% of Lafarges net equity investment.
    We have included an estimate of this contingent obligation in
    the table. We have included approximately $8.0 million in
    the table under the column Fiscal 2007 & 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(e) |  | We have not included in the table above an item labeled
    other long-term liabilities reflected on our consolidated
    balance sheet because none of our other long-term
    liabilities have a definite pay-out scheme. As discussed in
    Note 11. Retirement Plansof the
    Notes to Consolidated Financial Statements section of the
    Financial Statements included herein, we have long-term
    liabilities for deferred employee compensation, including
    pension, supplemental retirement plans, and deferred
    compensation. We have not included in the table the payments
    related to the supplemental retirement plans and deferred
    compensation because these amounts are dependent upon, among
    other things, when the employee retires or leaves our company,
    and whether the employee elects lump-sum or annuity payments. In
    addition, we have not included in the table minimum pension
    funding requirements because such amounts are not available for
    all periods presented. We estimate we will contribute
    approximately $35 million to our pension and supplemental
    retirement plans in the next two fiscal years. During fiscal
    2005, we contributed approximately $7.3 million to our five
    defined benefit pension plans.



35



---



##### Table of Contents



Note 14. Related Party
Transactions




| |                             
| | ----------------------------
| | Unconsolidated Joint Venture



Note 1.
Description of Business and Summary of Significant Accounting
Policies




| |                         
| | ------------------------
| | Stock Repurchase Program



Expenditures for Environmental Compliance


Business  Governmental
Regulation  Environmental Regulation.


New Accounting Standards


Note 1. Description of Business and Summary
of Significant Accounting Policies


Non-GAAP Measures


Managements Discussion and Analysis of
Financial Condition and Results of Operations 
Overview




| |                      
| | ---------------------
| | Net Debt (as defined)





36



---



##### Table of Contents





|                                                                                         |  |               |         |   |           |   |         |               |  |   |         |  
|---------------------------------------------------------------------------------------- |  | ------------- | ------- | - | --------- | - | ------- | ------------- |  | - | ------- | -
|                                                                                         |  | September 30, |         |   | March 31, |   |         | September 30, | 
|                                                                                         |  | 2005          |         |   | 2005      |   |         | 2004          | 
|                                                                                         |  |               |         |   |           |   |         |               | 
|Total Current Portion of Debt                                                            |  | $             | 62,079  |   |           | $ | 75,090  |               |  | $ | 85,760  |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Total Long-term Debt, Less Current Portion                                               |  |               | 853,002 |   |           |   | 390,691 |               |  |   | 398,301 |  
|                                                                                         |  |               |         |   |           |   |         |               | 
|                                                                                         |  |               | 915,081 |   |           |   | 465,781 |               |  |   | 484,061 |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Less: Hedge Adjustments Resulting From Terminated Interest Rate
    Derivatives or Swaps |  |               | (12,255 | ) |           |   | (18,702 | )             |  |   | (21,235 | )
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Less: Hedge Adjustments Resulting From Existing Interest Rate
    Derivatives or Swaps   |  |               |        |   |           |   | 8,937   |               |  |   | 2,774   |  
|                                                                                         |  |               |         |   |           |   |         |               | 
|                                                                                         |  |               | 902,826 |   |           |   | 456,016 |               |  |   | 465,600 |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Less: Cash and Cash Equivalents                                                          |  |               | (26,839 | ) |           |   | (28,505 | )             |  |   | (28,661 | )
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Less: Investment in Marketable Securities                                                |  |               |        |   |           |   | (31,230 | )             |  |   | (28,230 | )
|                                                                                         |  |               |         |   |           |   |         |               | 
|Net Debt                                                                                 |  | $             | 875,987 |   |           | $ | 396,281 |               |  | $ | 408,709 |  
|                                                                                         |  |               |         |   |           |   |         |               | 




Item 7A.     QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK




Derivative Instruments




Note 1. Description of Business and Summary of
Significant Accounting Policies




37



---



##### Table of Contents



Interest Rates




Market Risks Impacting Pension Plans




Foreign Currency








Commodities








| |                        
| | -----------------------
| | Coated Unbleached Kraft

CUK


38



---



##### Table of Contents







| |                               
| | ------------------------------
| | Linerboard/ Corrugating Medium





Energy










39



---



##### Table of Contents








|        |                                            
|------- | -------------------------------------------
|Item 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements


|                                                                                                                                                                 |  |  |          | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | -------- | 
|Description                                                                                                                                                      |  | 
|                                                                                                                                                                 |  | 
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|Consolidated Statements of Income                                                                                                                                |  |  | Page  41 | 
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|Consolidated Balance Sheets                                                                                                                                      |  |  | Page  42 | 
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|Consolidated Statements of
    Shareholders Equity                                                                                                              |  |  | Page  43 | 
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|Consolidated Statements of Cash Flows                                                                                                                            |  |  | Page  44 | 
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|Notes to Consolidated Financial
    Statements                                                                                                                   |  |  | Page  46 | 
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|Report of Independent Registered Public
    Accounting Firm                                                                                                      |  |  | Page  90 | 
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|Report of Independent Registered Public
    Accounting Firm On Internal Control Over Financial Reporting                                                         |  |  | Page  91 | 
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|                                                                                                                                                                
|Report of Management on Responsibility for
    Financial Information and for Establishing and Maintaining
    Adequate Internal Control over Financial Reporting |  |  | Page  93 | 

Note 17. Financial Results by Quarter
(Unaudited)


40



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##### Table of Contents



ROCK-TENN COMPANY





CONSOLIDATED STATEMENTS OF INCOME


|                                                                                 |                                   |                                       |           |      |      |   |           |      |  |   |           |      | 
|-------------------------------------------------------------------------------- | --------------------------------- | ------------------------------------- | --------- | ---- | ---- | - | --------- | ---- |  | - | --------- | ---- | 
|                                                                                 |                                   | Year Ended September 30,              |          
|                                                                                 |                                   |                                       |          
|                                                                                 |                                   | 2005                                  |           |      | 2004 |   |           | 2003 | 
|                                                                                 |                                   |                                       |           |      |      |   |           |      | 
|                                                                                 |                                   | (In thousands, except per share data) |          
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Net sales                                                                        |                                   | $                                     | 1,733,481 |      |      | $ | 1,581,261 |      |  | $ | 1,433,346 |     
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Cost of goods sold                                                               |                                   |                                       | 1,459,217 |      |      |   | 1,313,931 |      |  |   | 1,170,990 |     
|                                                                                 |                                   |                                       |           |      |      |   |           |      | 
|Gross profit                                                                     |                                   |                                       | 274,264   |      |      |   | 267,330   |      |  |   | 262,356   |     
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Selling, general and administrative expenses                                     |                                   |                                       | 204,918   |      |      |   | 197,078   |      |  |   | 182,729   |     
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Restructuring and other costs                                                    |                                   |                                       | 7,525     |      |      |   | 32,738    |      |  |   | 1,494     |     
|                                                                                 |                                   |                                       |           |      |      |   |           |      | 
|Operating profit                                                                 |                                   |                                       | 61,821    |      |      |   | 37,514    |      |  |   | 78,133    |     
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Interest expense                                                                 |                                   |                                       | (36,640   | )    |      |   | (23,566   | )    |  |   | (26,871   | )   
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Interest and other income (expense)                                              |                                   |                                       | 465       |      |      |   | (143      | )    |  |   | 73        |     
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Income (loss) from unconsolidated joint venture                                  |                                   |                                       | (958      | )    |      |   | 119       |      |  |   | (399      | )   
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Minority interest in income of consolidated subsidiary                           |                                   |                                       | (4,832    | )    |      |   | (3,419    | )    |  |   | (3,248    | )   
|                                                                                 |                                   |                                       |           |      |      |   |           |      | 
|Income from continuing operations before income taxes                            |                                   |                                       | 19,856    |      |      |   | 10,505    |      |  |   | 47,688    |     
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Provision for income taxes                                                       |                                   |                                       | 2,242     |      |      |   | 854       |      |  |   | 18,147    |     
|                                                                                 |                                   |                                       |           |      |      |   |           |      | 
|Income from continuing operations                                                |                                   |                                       | 17,614    |      |      |   | 9,651     |      |  |   | 29,541    |     
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Income from discontinued operations (net of $0, $4,844 and $22
    income taxes) |                                   |                                       |          |      |      |   | 7,997     |      |  |   | 35        |     
|                                                                                 |                                   |                                       |           |      |      |   |           |      | 
|Net income                                                                       |                                   | $                                     | 17,614    |      |      | $ | 17,648    |      |  | $ | 29,576    |     
|                                                                                 |                                   |                                       |           |      |      |   |           |      | 
|Basic earnings per share:                                                        |                                   |                                       |           |      |      |   |           |      |  |   |           |     
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Income from continuing operations |                                       | $         | 0.50 |      |   | $         | 0.28 |  |   | $         | 0.86 | 
|                                                                                 |                                   |                                       |           |      |      |   |           |      | 
|                                                                                 | Net income                        |                                       | $         | 0.50 |      |   | $         | 0.51 |  |   | $         | 0.86 | 
|                                                                                 |                                   |                                       |           |      |      |   |           |      | 
|Diluted earnings per share:                                                      |                                   |                                       |           |      |      |   |           |      |  |   |           |     
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Income from continuing operations |                                       | $         | 0.49 |      |   | $         | 0.27 |  |   | $         | 0.85 | 
|                                                                                 |                                   |                                       |           |      |      |   |           |      | 
|                                                                                 | Net income                        |                                       | $         | 0.49 |      |   | $         | 0.50 |  |   | $         | 0.85 | 
|                                                                                 |                                   |                                       |           |      |      |   |           |      | 



41



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##### Table of Contents



ROCK-TENN COMPANY





CONSOLIDATED BALANCE SHEETS


|                                                                                   |                                                                                                                                                                                           |                       |           |           |      |   |           |          |  
|---------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | --------- | --------- | ---- | - | --------- | -------- | -
|                                                                                   |                                                                                                                                                                                           | September 30,         |          
|                                                                                   |                                                                                                                                                                                           |                       |          
|                                                                                   |                                                                                                                                                                                           | 2005                  |           |           | 2004 |  
|                                                                                   |                                                                                                                                                                                           |                       |           |           |      |  
|                                                                                   |                                                                                                                                                                                           | (In thousands, except |          
|                                                                                   |                                                                                                                                                                                           | share                 |          
|                                                                                   |                                                                                                                                                                                           | and per share data)   |          
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|ASSETS                                                                            
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Current Assets:                                                                    |                                                                                                                                                                                           |                       |           |           |      |   |           |         
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Cash and cash equivalents                                                                                                                                                                 |                       | $         | 26,839    |      |   | $         | 28,661   |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Investment in marketable securities                                                                                                                                                       |                       |           |          |      |   |           | 28,230   |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Accounts receivable (net of allowances of $5,063 and $6,431)                                                                                                                              |                       |           | 199,493   |      |   |           | 177,378  |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Inventories                                                                                                                                                                               |                       |           | 201,965   |      |   |           | 127,359  |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Other current assets                                                                                                                                                                      |                       |           | 30,484    |      |   |           | 22,286   |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Assets held for sale                                                                                                                                                                      |                       |           | 3,435     |      |   |           | 1,526    |  
|                                                                                   |                                                                                                                                                                                           |                       |           |           |      |  
|Total current assets                                                               |                                                                                                                                                                                           |                       | 462,216   |           |      |   | 385,440   |         
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Property, plant and equipment at cost:                                             |                                                                                                                                                                                           |                       |           |           |      |   |           |         
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Land and buildings                                                                                                                                                                        |                       |           | 267,212   |      |   |           | 221,338  |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Machinery and equipment                                                                                                                                                                   |                       |           | 1,287,505 |      |   |           | 955,315  |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Transportation equipment                                                                                                                                                                  |                       |           | 10,473    |      |   |           | 9,034    |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Leasehold improvements                                                                                                                                                                    |                       |           | 5,623     |      |   |           | 6,043    |  
|                                                                                   |                                                                                                                                                                                           |                       |           |           |      |  
|                                                                                   |                                                                                                                                                                                           |                       | 1,570,813 |           |      |   | 1,191,730 |         
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Less accumulated depreciation and amortization                                                                                                                                            |                       |           | (685,808  | )    |   |           | (638,927 | )
|                                                                                   |                                                                                                                                                                                           |                       |           |           |      |  
|Net property, plant and equipment                                                  |                                                                                                                                                                                           |                       | 885,005   |           |      |   | 552,803   |         
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Goodwill                                                                           |                                                                                                                                                                                           |                       | 350,941   |           |      |   | 297,060   |         
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Intangibles, net                                                                   |                                                                                                                                                                                           |                       | 67,992    |           |      |   | 19,014    |         
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Other assets                                                                       |                                                                                                                                                                                           |                       | 32,280    |           |      |   | 29,496    |         
|                                                                                   |                                                                                                                                                                                           |                       |           |           |      |  
|                                                                                   |                                                                                                                                                                                           | $                     | 1,798,434 |           |      | $ | 1,283,813 |         
|                                                                                   |                                                                                                                                                                                           |                       |           |           |      |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|LIABILITIES AND SHAREHOLDERS EQUITY                                              
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Current liabilities:                                                               |                                                                                                                                                                                           |                       |           |           |      |   |           |         
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Current portion of debt                                                                                                                                                                   |                       | $         | 62,079    |      |   | $         | 83,906   |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Hedge adjustments resulting from terminated interest rate
    derivatives or swaps                                                                                                        |                       |           |          |      |   |           | 2,148    |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Hedge adjustments resulting from existing interest rate
    derivatives or swaps                                                                                                          |                       |           |          |      |   |           | (294     | )
|                                                                                   |                                                                                                                                                                                           |                       |           |           |      |  
|                                                                                   | Total current portion of debt                                                                                                                                                             |                       |           | 62,079    |      |   |           | 85,760   |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Accounts payable                                                                                                                                                                          |                       |           | 116,423   |      |   |           | 94,483   |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Accrued compensation and benefits                                                                                                                                                         |                       |           | 50,887    |      |   |           | 48,751   |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Other current liabilities                                                                                                                                                                 |                       |           | 49,821    |      |   |           | 40,522   |  
|                                                                                   |                                                                                                                                                                                           |                       |           |           |      |  
|Total current liabilities                                                          |                                                                                                                                                                                           |                       | 279,210   |           |      |   | 269,516   |         
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Long-term debt due after one year                                                  |                                                                                                                                                                                           |                       | 840,747   |           |      |   | 381,694   |         
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Hedge adjustments resulting from terminated interest rate
    derivatives or swaps |                                                                                                                                                                                           |                       | 12,255    |           |      |   | 19,087    |         
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Hedge adjustments resulting from existing interest rate
    derivatives or swaps   |                                                                                                                                                                                           |                       |          |           |      |   | (2,480    | )       
|                                                                                   |                                                                                                                                                                                           |                       |           |           |      |  
|Total long-term debt, less current maturities                                      |                                                                                                                                                                                           |                       | 853,002   |           |      |   | 398,301   |         
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Accrued pension                                                                    |                                                                                                                                                                                           |                       | 106,767   |           |      |   | 79,264    |         
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Deferred income taxes                                                              |                                                                                                                                                                                           |                       | 82,974    |           |      |   | 84,947    |         
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Other long-term liabilities                                                        |                                                                                                                                                                                           |                       | 3,655     |           |      |   | 6,732     |         
|Commitments and contingencies (Notes 9 and 15)                                     |                                                                                                                                                                                           |                       |           |           |      |   |           |         
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Minority interest                                                                  |                                                                                                                                                                                           |                       | 16,604    |           |      |   | 7,452     |         
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Shareholders equity:                                                              |                                                                                                                                                                                           |                       |           |           |      |   |           |         
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Preferred stock, $0.01 par value; 50,000,000 shares
    authorized; no shares outstanding                                                                                                 |                       |           |          |      |   |           |         |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Class A common stock, $0.01 par value;
    175,000,000 shares authorized; 36,280,164 and
    35,640,784 shares outstanding at September 30, 2005
    and September 30, 2004, respectively |                       |           | 363       |      |   |           | 356      |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Capital in excess of par value                                                                                                                                                            |                       |           | 166,423   |      |   |           | 159,012  |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Deferred compensation                                                                                                                                                                     |                       |           | (4,015    | )    |   |           | (3,795   | )
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Retained earnings                                                                                                                                                                         |                       |           | 326,041   |      |   |           | 321,557  |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Accumulated other comprehensive loss                                                                                                                                                      |                       |           | (32,590   | )    |   |           | (39,529  | )
|                                                                                   |                                                                                                                                                                                           |                       |           |           |      |  
|Total shareholders equity                                                         |                                                                                                                                                                                           |                       | 456,222   |           |      |   | 437,601   |         
|                                                                                   |                                                                                                                                                                                           |                       |           |           |      |  
|                                                                                   |                                                                                                                                                                                           | $                     | 1,798,434 |           |      | $ | 1,283,813 |         
|                                                                                   |                                                                                                                                                                                           |                       |           |           |      |  



42



---



##### Table of Contents



ROCK-TENN COMPANY





CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY


|                                                                                |                                                                         |                                                 |            |   |            |   |     |          |  |   |              |             |  |               |        |   |        |   |         |        |  |   |         |         |   |   |         |         |  
|------------------------------------------------------------------------------- | ----------------------------------------------------------------------- | ----------------------------------------------- | ---------- | - | ---------- | - | --- | -------- |  | - | ------------ | ----------- |  | ------------- | ------ | - | ------ | - | ------- | ------ |  | - | ------- | ------- | - | - | ------- | ------- | -
|                                                                                |                                                                         | Class A                                         |            |   | Capital in |   |     |          |  |   |              | Accumulated |  |               |       
|                                                                                |                                                                         | Common Stock                                    |            |   | Excess of  |   |     |          |  |   |              | Other       |  |               |       
|                                                                                |                                                                         |                                                 |            |   | Par        |   |     | Deferred |  |   | Retained     |             |  | Comprehensive |        |   |       
|                                                                                |                                                                         | Shares                                          |            |   | Amount     |   |     | Value    |  |   | Compensation |             |  | Earnings      |        |   | (Loss) |   |         | Total  | 
|                                                                                |                                                                         |                                                 |            |   |            |   |     |          |  |   |              |             |  |               |        |   |        |   |         |        | 
|                                                                                |                                                                         | (In thousands, except share and per share data) |           
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Balance at October 1, 2002                                                      |                                                                         |                                                 | 34,346,467 |   |            | $ | 343 |          |  | $ | 141,235      |             |  | $             | (2,267 | ) |        | $ | 298,279 |        |  | $ | (32,443 | )       |   | $ | 405,147 |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Comprehensive income:                                                           |                                                                         |                                                 |            |   |            |   |     |          |  |   |              |             |  |               |        |   |        |   |         |        |  |   |         |         |   |   |         |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Net income                                                              |                                                 |            |  |            |   |     |         |  |   |              |            |  |               |        |  |        |   |         | 29,576 |  |   |         |        |   |   |         | 29,576  |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Foreign currency translation adjustments                                |                                                 |            |  |            |   |     |         |  |   |              |            |  |               |        |  |        |   |         |       |  |   |         | 16,902  |   |   |         | 16,902  |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Net unrealized loss on derivative instruments (net of $171 tax)         |                                                 |            |  |            |   |     |         |  |   |              |            |  |               |        |  |        |   |         |       |  |   |         | (276    | ) |   |         | (276    | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Minimum pension liability (net of $15,806 tax)                          |                                                 |            |  |            |   |     |         |  |   |              |            |  |               |        |  |        |   |         |       |  |   |         | (25,019 | ) |   |         | (25,019 | )
|                                                                                |                                                                         |                                                 |            |   |            |   |     |          |  |   |              |             |  |               |        |   |        |   |         |        | 
|Comprehensive income                                                            |                                                                         |                                                 |           |   |            |   |    |          |  |   |             |             |  |               |       |   |        |   |        |        |  |   |        |         |   |   | 21,183  |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Income tax benefit from exercise of stock options                               |                                                                         |                                                 |           |   |            |   |    |          |  |   | 955          |             |  |               |       |   |        |   |        |        |  |   |        |         |   |   | 955     |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Shares granted under restricted stock plan                                      |                                                                         |                                                 | 120,500    |   |            |   | 2   |          |  |   | 1,687        |             |  |               | (1,689 | ) |        |   |        |        |  |   |        |         |   |   |        |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Compensation expense under restricted stock plan                                |                                                                         |                                                 |           |   |            |   |    |          |  |   |             |             |  |               | 851    |   |        |   |        |        |  |   |        |         |   |   | 851     |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Cash dividends  $0.32 per share                                                |                                                                         |                                                 |           |   |            |   |    |          |  |   |             |             |  |               |       |   |        |   | (11,064 | )      |  |   |        |         |   |   | (11,064 | )      
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Issuance of Class A common stock                                                |                                                                         |                                                 | 600,274    |   |            |   | 6   |          |  |   | 6,271        |             |  |               |       |   |        |   |        |        |  |   |        |         |   |   | 6,277   |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Purchases of Class A common stock                                               |                                                                         |                                                 | (105,200   | ) |            |   | (1  | )        |  |   | (426         | )           |  |               |       |   |        |   | (886    | )      |  |   |        |         |   |   | (1,313  | )      
|                                                                                |                                                                         |                                                 |            |   |            |   |     |          |  |   |              |             |  |               |        |   |        |   |         |        | 
|Balance at September 30, 2003                                                   |                                                                         |                                                 | 34,962,041 |   |            |   | 350 |          |  |   | 149,722      |             |  |               | (3,105 | ) |        |   | 315,905 |        |  |   | (40,836 | )       |   |   | 422,036 |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Comprehensive income:                                                           |                                                                         |                                                 |            |   |            |   |     |          |  |   |              |             |  |               |        |   |        |   |         |        |  |   |         |         |   |   |         |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Net income                                                              |                                                 |            |  |            |   |     |         |  |   |              |            |  |               |        |  |        |   |         | 17,648 |  |   |         |        |   |   |         | 17,648  |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Foreign currency translation adjustments                                |                                                 |            |  |            |   |     |         |  |   |              |            |  |               |        |  |        |   |         |       |  |   |         | 10,439  |   |   |         | 10,439  |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Net unrealized loss on derivative instruments (net of $128 tax)         |                                                 |            |  |            |   |     |         |  |   |              |            |  |               |        |  |        |   |         |       |  |   |         | (425    | ) |   |         | (425    | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Minimum pension liability (net of $5,018 tax)                           |                                                 |            |  |            |   |     |         |  |   |              |            |  |               |        |  |        |   |         |       |  |   |         | (8,707  | ) |   |         | (8,707  | )
|                                                                                |                                                                         |                                                 |            |   |            |   |     |          |  |   |              |             |  |               |        |   |        |   |         |        | 
|Comprehensive income                                                            |                                                                         |                                                 |           |   |            |   |    |          |  |   |             |             |  |               |       |   |        |   |        |        |  |   |        |         |   |   | 18,955  |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Income tax benefit from exercise of stock options                               |                                                                         |                                                 |           |   |            |   |    |          |  |   | 401          |             |  |               |       |   |        |   |        |        |  |   |        |         |   |   | 401     |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Shares granted under restricted stock plan                                      |                                                                         |                                                 | 144,000    |   |            |   | 1   |          |  |   | 2,220        |             |  |               | (2,221 | ) |        |   |        |        |  |   |        |         |   |   |        |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Compensation expense under restricted stock plan                                |                                                                         |                                                 |           |   |            |   |    |          |  |   |             |             |  |               | 1,531  |   |        |   |        |        |  |   |        |         |   |   | 1,531   |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Cash dividends  $0.34 per share                                                |                                                                         |                                                 |           |   |            |   |    |          |  |   |             |             |  |               |       |   |        |   | (11,996 | )      |  |   |        |         |   |   | (11,996 | )      
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Issuance of Class A common stock                                                |                                                                         |                                                 | 534,743    |   |            |   | 5   |          |  |   | 6,669        |             |  |               |       |   |        |   |        |        |  |   |        |         |   |   | 6,674   |        
|                                                                                |                                                                         |                                                 |            |   |            |   |     |          |  |   |              |             |  |               |        |   |        |   |         |        | 
|Balance at September 30, 2004                                                   |                                                                         |                                                 | 35,640,784 |   |            |   | 356 |          |  |   | 159,012      |             |  |               | (3,795 | ) |        |   | 321,557 |        |  |   | (39,529 | )       |   |   | 437,601 |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Comprehensive income:                                                           |                                                                         |                                                 |            |   |            |   |     |          |  |   |              |             |  |               |        |   |        |   |         |        |  |   |         |         |   |   |         |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Net income                                                              |                                                 |            |  |            |   |     |         |  |   |              |            |  |               |        |  |        |   |         | 17,614 |  |   |         |        |   |   |         | 17,614  |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Foreign currency translation adjustments                                |                                                 |            |  |            |   |     |         |  |   |              |            |  |               |        |  |        |   |         |       |  |   |         | 13,789  |   |   |         | 13,789  |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Net unrealized gain on derivative instruments (net of
    $(2,376) tax) |                                                 |            |  |            |   |     |         |  |   |              |            |  |               |        |  |        |   |         |       |  |   |         | 3,645   |   |   |         | 3,645   |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Minimum pension liability (net of $8,175 tax)                           |                                                 |            |  |            |   |     |         |  |   |              |            |  |               |        |  |        |   |         |       |  |   |         | (10,495 | ) |   |         | (10,495 | )
|                                                                                |                                                                         |                                                 |            |   |            |   |     |          |  |   |              |             |  |               |        |   |        |   |         |        | 
|Comprehensive income                                                            |                                                                         |                                                 |           |   |            |   |    |          |  |   |             |             |  |               |       |   |        |   |        |        |  |   |        |         |   |   | 24,553  |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Income tax benefit from exercise of stock options                               |                                                                         |                                                 |           |   |            |   |    |          |  |   | 212          |             |  |               |       |   |        |   |        |        |  |   |        |         |   |   | 212     |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Shares granted under restricted stock plan                                      |                                                                         |                                                 | 200,000    |   |            |   | 2   |          |  |   | 2,262        |             |  |               | (2,264 | ) |        |   |        |        |  |   |        |         |   |   |        |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Compensation expense under restricted stock plan                                |                                                                         |                                                 |           |   |            |   |    |          |  |   |             |             |  |               | 1,683  |   |        |   |        |        |  |   |        |         |   |   | 1,683   |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Restricted Stock grant cancelled                                                |                                                                         |                                                 | (24,333    | ) |            |   |    |          |  |   | (361         | )           |  |               | 361    |   |        |   |        |        |  |   |        |         |   |   |        |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Cash dividends  $0.36 per share                                                |                                                                         |                                                 |           |   |            |   |    |          |  |   |             |             |  |               |       |   |        |   | (12,949 | )      |  |   |        |         |   |   | (12,949 | )      
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Issuance of Class A common stock net of stock received
    for tax withholdings |                                                                         |                                                 | 463,713    |   |            |   | 5   |          |  |   | 5,298        |             |  |               |       |   |        |   | (181    | )      |  |   |        |         |   |   | 5,122   |        
|                                                                                |                                                                         |                                                 |            |   |            |   |     |          |  |   |              |             |  |               |        |   |        |   |         |        | 
|Balance at September 30, 2005                                                   |                                                                         |                                                 | 36,280,164 |   |            | $ | 363 |          |  | $ | 166,423      |             |  | $             | (4,015 | ) |        | $ | 326,041 |        |  | $ | (32,590 | )       |   | $ | 456,222 |        
|                                                                                |                                                                         |                                                 |            |   |            |   |     |          |  |   |              |             |  |               |        |   |        |   |         |        | 



43



---



##### Table of Contents



ROCK-TENN COMPANY





CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                 |                                                                  |                                                        |                                                                                 |          |        |          |        |          |         |         |        |          |         |          |  
|------------------------------------------------ | ---------------------------------------------------------------- | ------------------------------------------------------ | ------------------------------------------------------------------------------- | -------- | ------ | -------- | ------ | -------- | ------- | ------- | ------ | -------- | ------- | -------- | -
|                                                 |                                                                  | Year Ended September 30,                               |                                                                                
|                                                 |                                                                  |                                                        |                                                                                
|                                                 |                                                                  | 2005                                                   |                                                                                 |          | 2004   |          |        | 2003     |        
|                                                 |                                                                  |                                                        |                                                                                 |          |        |          |        |          |        
|                                                 |                                                                  | (In thousands)                                         |                                                                                
|                                                
|                                                
|                                                
|                                                
|Operating activities:                            |                                                                  |                                                        |                                                                                 |          |        |          |        |          |         |         |        |         
|                                                
|                                                
|                                                
|                                                
|                                                 | Income from continuing operations                                |                                                        | $                                                                               | 17,614   |        |          | $      | 9,651    |         |         | $      | 29,541   |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Items in income not affecting cash:                              |                                                        |                                                                                 |          |        |          |        |          |         |         |        |          |        
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                  | Depreciation and amortization                          |                                                                                 |          | 84,040 |          |        |          | 74,189  |         |        |          | 72,683  |         
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                  | Deferred income taxes                                  |                                                                                 |          | 3,963  |          |        |          | (4,678  | )       |        |          | 11,689  |         
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                  | Income tax benefit of employee stock options           |                                                                                 |          | 212    |          |        |          | 401     |         |        |          | 955     |         
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                  | Loss on bond purchase                                  |                                                                                 |          |       |          |        |          | 948     |         |        |          |        |         
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                  | Deferred compensation expense                          |                                                                                 |          | 1,683  |          |        |          | 1,531   |         |        |          | 851     |         
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                  | Gain on disposal of plant and equipment and other, net |                                                                                 |          | (1,820 | )        |        |          | (2,121  | )       |        |          | (766    | )       
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                  | Minority interest in income of consolidated subsidiary |                                                                                 |          | 4,832  |          |        |          | 3,419   |         |        |          | 3,248   |         
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                  | (Income) loss from unconsolidated joint venture        |                                                                                 |          | 958    |          |        |          | (119    | )       |        |          | 399     |         
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                  | Pension funding (more) less than expense               |                                                                                 |          | 8,717  |          |        |          | (2,996  | )       |        |          | (11,554 | )       
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                  | Impairment loss and other non-cash charges             |                                                                                 |          | 2,893  |          |        |          | 28,598  |         |        |          | 1,635   |         
|                                                
|                                                
|                                                
|                                                
|                                                 | Change in operating assets and liabilities, net of acquisitions: |                                                        |                                                                                 |          |        |          |        |          |         |         |        |          |        
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                  | Accounts receivable                                    |                                                                                 |          | 23,393 |          |        |          | (11,417 | )       |        |          | (710    | )       
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                  | Inventories                                            |                                                                                 |          | 9,506  |          |        |          | (7,287  | )       |        |          | 2,096   |         
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                  | Other assets                                           |                                                                                 |          | (5,182 | )        |        |          | (6,360  | )       |        |          | (4,667  | )       
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                  | Accounts payable                                       |                                                                                 |          | 3,143  |          |        |          | 6,922   |         |        |          | 2,946   |         
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                  | Accrued liabilities                                    |                                                                                 |          | 728    |          |        |          | 386     |         |        |          | 1,865   |         
|                                                 |                                                                  |                                                        |                                                                                 |          |        |          |        |          |        
|                                                 |                                                                  |                                                        | Cash provided by operating activities from continuing operations                |          |        | 154,680  |        |          |         | 91,067  |        |          |         | 110,211  |  
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                  |                                                        | Cash provided by operating activities from discontinued
    operations          |          |        |         |        |          |         | 373     |        |          |         | 4,584    |  
|                                                 |                                                                  |                                                        |                                                                                 |          |        |          |        |          |        
|                                                 |                                                                  |                                                        | Net cash provided by operating activities                                       |          |        | 154,680  |        |          |         | 91,440  |        |          |         | 114,795  |  
|                                                
|                                                
|                                                
|                                                
|Investing activities:                            |                                                                  |                                                        |                                                                                 |          |        |          |        |          |         |         |        |         
|                                                
|                                                
|                                                
|                                                
|                                                 | Capital expenditures                                             |                                                        |                                                                                 | (54,326  | )      |          |        | (60,823  | )       |         |        | (57,402  | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | Purchases of marketable securities                               |                                                        |                                                                                 | (195,250 | )      |          |        | (318,900 | )       |         |        |         |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Maturities and sales of marketable securities                    |                                                        |                                                                                 | 223,480  |        |          |        | 290,670  |         |         |        |         |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Cash paid for purchase of assets under synthetic lease           |                                                        |                                                                                 |         |        |          |        |         |         |         |        | (21,885  | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | Cash paid for purchase of businesses, net of cash received       |                                                        |                                                                                 | (552,291 | )      |          |        | (15,047  | )       |         |        | (81,845  | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | Cash contributed to joint venture                                |                                                        |                                                                                 | (120     | )      |          |        | (158     | )       |         |        | (332     | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from sale of property, plant and equipment              |                                                        |                                                                                 | 6,071    |        |          |        | 6,061    |         |         |        | 8,316    |        
|                                                 |                                                                  |                                                        |                                                                                 |          |        |          |        |          |        
|                                                 |                                                                  |                                                        | Cash used for investing activities from continuing operations                   |          |        | (572,436 | )      |          |         | (98,197 | )      |          |         | (153,148 | )
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                  |                                                        | Cash provided by (used for) investing activities by discontinued
    operations |          |        |         |        |          |         | 61,916  |        |          |         | (3,598   | )
|                                                 |                                                                  |                                                        |                                                                                 |          |        |          |        |          |        
|                                                 |                                                                  |                                                        | Net cash used for investing activities                                          |          |        | (572,436 | )      |          |         | (36,281 | )      |          |         | (156,746 | )
|                                                
|                                                
|                                                
|                                                
|Financing activities:                            |                                                                  |                                                        |                                                                                 |          |        |          |        |          |         |         |        |         
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from issuance of public debt                            |                                                        |                                                                                 |         |        |          |        |         |         |         |        | 99,748   |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Net additions (repayments) to revolving credit facilities        |                                                        |                                                                                 | 216,000  |        |          |        | (3,500   | )       |         |        | 1,103    |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Additions to debt                                                |                                                        |                                                                                 | 320,800  |        |          |        | 146      |         |         |        | 53,645   |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Repayments of debt                                               |                                                        |                                                                                 | (100,545 | )      |          |        | (34,177  | )       |         |        | (106,226 | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from monetizing swap contracts                          |                                                        |                                                                                 |         |        |          |        | 4,385    |         |         |        | 9,390    |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Payment on termination of swap contracts                         |                                                        |                                                                                 | (4,245   | )      |          |        |         |         |         |        |         |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Industrial revenue bond proceeds                                 |                                                        |                                                                                 |         |        |          |        |         |         |         |        | 3,649    |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Debt issuance costs                                              |                                                        |                                                                                 | (4,047   | )      |          |        | (29      | )       |         |        | (1,016   | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | Issuances of common stock                                        |                                                        |                                                                                 | 5,122    |        |          |        | 6,674    |         |         |        | 6,277    |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Purchases of common stock                                        |                                                        |                                                                                 |         |        |          |        |         |         |         |        | (1,313   | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | Cash dividends paid to shareholders                              |                                                        |                                                                                 | (12,949  | )      |          |        | (11,996  | )       |         |        | (11,064  | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | Distribution to minority interest                                |                                                        |                                                                                 | (5,075   | )      |          |        | (2,625   | )       |         |        | (3,780   | )      
|                                                 |                                                                  |                                                        |                                                                                 |          |        |          |        |          |        
|                                                 |                                                                  |                                                        | Cash provided by (used for) financing activities                                |          |        | 415,061  |        |          |         | (41,122 | )      |          |         | 50,413   |  
|                                                
|                                                
|                                                
|                                                
|Effect of exchange rate changes on cash          |                                                                  |                                                        | 873                                                                             |          |        |          | 451    |          |         |         | (849   | )       
|                                                 |                                                                  |                                                        |                                                                                 |          |        |          |        |          |        
|Increase (decrease) in cash and cash equivalents |                                                                  |                                                        | (1,822                                                                          | )        |        |          | 14,488 |          |         |         | 7,613  |         
|                                                
|                                                
|                                                
|                                                
|Cash and cash equivalents at beginning of year   |                                                                  |                                                        | 28,661                                                                          |          |        |          | 14,173 |          |         |         | 6,560  |         
|                                                 |                                                                  |                                                        |                                                                                 |          |        |          |        |          |        
|Cash and cash equivalents at end of year         |                                                                  | $                                                      | 26,839                                                                          |          |        | $        | 28,661 |          |         | $       | 14,173 |         
|                                                 |                                                                  |                                                        |                                                                                 |          |        |          |        |          |        

44



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##### Table of Contents



ROCK-TENN COMPANY


CONSOLIDATED STATEMENTS OF CASH
FLOWS  (Continued)




|                                 |                                      |                          |   |        |      |  |   |        |  |  |   |        | 
|-------------------------------- | ------------------------------------ | ------------------------ | - | ------ | ---- |  | - | ------ |  |  | - | ------ | 
|                                 |                                      | Year Ended September 30, |  
|                                 |                                      |                          |  
|                                 |                                      | 2005                     |   |        | 2004 |  |   | 2003   | 
|                                 |                                      |                          |   |        |      |  |   |        | 
|                                 |                                      | (In thousands)           |  
|                                
|                                
|                                
|                                
|Cash paid during the period for: |                                      |                          |   |        |      |  |   |        |  |  |   |       
|                                
|                                
|                                
|                                
|                                 | Income taxes, net of refunds         |                          | $ | 4,219  |      |  | $ | 15,032 |  |  | $ | 11,168 | 
|                                
|                                
|                                
|                                
|                                 | Interest, net of amounts capitalized |                          |   | 38,445 |      |  |   | 27,379 |  |  |   | 29,516 | 







|                                                 |  |                |         |  |      |   |        | 
|------------------------------------------------ |  | -------------- | ------- |  | ---- | - | ------ | 
|                                                 |  | September 30,  |        
|                                                 |  |                |        
|                                                 |  | 2005           |         |  | 2004 |  
|                                                 |  |                |         |  |      |  
|                                                 |  | (In thousands) |        
|                                                
|                                                
|                                                
|                                                
|Fair value of assets acquired including goodwill |  | $              | 586,589 |  |      | $ | 16,729 | 
|                                                
|                                                
|                                                
|                                                
|Cash paid                                        |  |                | 552,291 |  |      |   | 15,047 | 
|                                                 |  |                |         |  |      |  
|Liabilities assumed                              |  | $              | 34,298  |  |      | $ | 1,682  | 
|                                                 |  |                |         |  |      |  



45



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##### Table of Contents



ROCK-TENN COMPANY





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|        |                                                                           
|------- | --------------------------------------------------------------------------
|Note 1. | Description of Business and Summary of Significant Accounting
    Policies



| |                        
| | -----------------------
| | Description of Business

Unless the context otherwise requires, we,
us, our and the
Company refer to the business of Rock-Tenn Company and
its consolidated subsidiaries, including RTS Packaging, LLC,
which we refer to as RTS and GSD Packaging,
LLC , which we refer to as GSD. We own 65% of
RTS and conduct our interior packaging business through RTS. We
own 60% of GSD and conduct some folding carton operations
through GSD. These terms do not include Seven Hills Paperboard,
LLC, which we refer to as Seven Hills. We own
49% of Seven Hills, a manufacturer of gypsum paperboard liner,
which we do not consolidate for purposes of our financial
statements.






| |              
| | -------------
| | Consolidation





| |                             
| | ----------------------------
| | Unconsolidated Joint Venture







| |                 
| | ----------------
| | Use of Estimates



46



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##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                    
| | -------------------
| | Revenue Recognition







| |                            
| | ---------------------------
| | Shipping and Handling Costs





| |            
| | -----------
| | Derivatives





47



---



##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                 
| | ----------------
| | Cash Equivalents





| |                      
| | ---------------------
| | Marketable Securities









| |                    
| | -------------------
| | Accounts Receivable





48



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##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |            
| | -----------
| | Inventories







| |                              
| | -----------------------------
| | Property, Plant and Equipment



|                                    |  |            
|----------------------------------- |  | -----------
|                                   
|                                   
|                                   
|                                   
|Buildings and building improvements |  | 15-40 years
|                                   
|                                   
|                                   
|                                   
|Machinery and equipment             |  | 3-20 years 
|                                   
|                                   
|                                   
|                                   
|Transportation equipment            |  | 3-8 years  





| |                                             
| | --------------------------------------------
| | Impairment of Long-Lived Assets and Goodwill







49



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##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








Note 7. Other Intangible Assets.






| |               
| | --------------
| | Self-Insurance



50



---



##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                      
| | ---------------------
| | Workers Compensation





| |                            
| | ---------------------------
| | Accounting for Income Taxes





| |                                           
| | ------------------------------------------
| | Pension and Other Post-Retirement Benefits

Note 11. Retirement Plans,




| |              
| | -------------
| | Stock Options

Note 13. Shareholders
Equity.




| |                             
| | ----------------------------
| | Repair and Maintenance Costs



51



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##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                 
| | ----------------
| | Foreign Currency





| |                    
| | -------------------
| | Environmental Costs





| |   |                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We accrue for losses associated with our environmental
    remediation obligations when both of the following are true: it
    is probable that we have incurred a liability and the amount of
    the loss can be reasonably estimated.
|
| |  | We generally recognize accruals for estimated losses from our
    environmental remediation obligations no later than completion
    of the remedial feasibility study.                                                                 
|
| |  | We adjust such accruals as further information develops or
    circumstances change.                                                                                                                                                    
|
| |  | We recognize recoveries of our environmental remediation costs
    from other parties as assets when we deem their receipt probable.                                                                                                    



| |                         
| | ------------------------
| | New Accounting Standards

Accounting for Purchases and
Sales of Inventory with the Same Counterparty Accounting for Nonmonetary Transactions


Accounting Changes and Error Corrections Accounting Changes,


52



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##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Share-Based Payment SFAS 123(R)








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A modified prospective method in which the entity
    would recognize compensation cost beginning with the effective
    date: (a) based on the requirements of SFAS 123(R) for
    all share-based payments to be granted or modified after the
    effective date and (b) based on the requirements of
    SFAS 123 for all awards granted to employees prior to the
    effective date that remain unvested on the effective date.
|
| |  | A modified retrospective method which includes the
    requirements of the modified prospective method described above,
    but also permits entities to restate based on the amounts
    previously recognized under SFAS 123 for purposes of pro
    forma disclosures either for (a) all prior periods
    presented or (b) the prior interim periods of the year of
    adoption.                                                



Note 13. Shareholders
Equity


Inventory Costs  an amendment of ARB
No. 43, Chapter 4 SFAS 151




| |                  
| | -----------------
| | Reclassifications



53



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##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|        |                                     
|------- | ------------------------------------
|Note 2. | Basic and Diluted Earnings Per Share



|                            |                                                                                                  |                          |   |        |      |  |   |        |  |  |   |        | 
|--------------------------- | ------------------------------------------------------------------------------------------------ | ------------------------ | - | ------ | ---- |  | - | ------ |  |  | - | ------ | 
|                            |                                                                                                  | Year Ended September 30, |  
|                            |                                                                                                  |                          |  
|                            |                                                                                                  | 2005                     |   |        | 2004 |  |   | 2003   | 
|                            |                                                                                                  |                          |   |        |      |  |   |        | 
|Numerator:                  |                                                                                                  |                          |   |        |      |  |   |        |  |  |   |       
|                           
|                           
|                           
|                           
|                            | Income from continuing operations                                                                |                          | $ | 17,614 |      |  | $ | 9,651  |  |  | $ | 29,541 | 
|                           
|                           
|                           
|                           
|                            | Income from discontinued operations, net of tax                                                  |                          |   |       |      |  |   | 7,997  |  |  |   | 35     | 
|                            |                                                                                                  |                          |   |        |      |  |   |        | 
|                            | Net income                                                                                       |                          | $ | 17,614 |      |  | $ | 17,648 |  |  | $ | 29,576 | 
|                            |                                                                                                  |                          |   |        |      |  |   |        | 
|Denominator:                |                                                                                                  |                          |   |        |      |  |   |        |  |  |   |       
|                           
|                           
|                           
|                           
|                            | Denominator for basic earnings per share  weighted
    average shares                           |                          |   | 35,492 |      |  |   | 34,922 |  |  |   | 34,320 | 
|                           
|                           
|                           
|                           
|                            | Effect of dilutive stock options and restricted stock awards                                     |                          |   | 605    |      |  |   | 556    |  |  |   | 423    | 
|                            |                                                                                                  |                          |   |        |      |  |   |        | 
|                            | Denominator for diluted earnings per share  weighted
    average shares and assumed conversions |                          |   | 36,097 |      |  |   | 35,478 |  |  |   | 34,743 | 
|                            |                                                                                                  |                          |   |        |      |  |   |        | 
|Basic earnings per share:   |                                                                                                  |                          |   |        |      |  |   |        |  |  |   |       
|                           
|                           
|                           
|                           
|                            | Income from continuing operations                                                                |                          | $ | 0.50   |      |  | $ | 0.28   |  |  | $ | 0.86   | 
|                           
|                           
|                           
|                           
|                            | Income from discontinued operations, net of tax                                                  |                          |   |       |      |  |   | 0.23   |  |  |   |       | 
|                            |                                                                                                  |                          |   |        |      |  |   |        | 
|                            | Net income per share  basic                                                                     |                          | $ | 0.50   |      |  | $ | 0.51   |  |  | $ | 0.86   | 
|                            |                                                                                                  |                          |   |        |      |  |   |        | 
|Diluted earnings per share: |                                                                                                  |                          |   |        |      |  |   |        |  |  |   |       
|                           
|                           
|                           
|                           
|                            | Income from continuing operations                                                                |                          | $ | 0.49   |      |  | $ | 0.27   |  |  | $ | 0.85   | 
|                           
|                           
|                           
|                           
|                            | Income from discontinued operations, net of tax                                                  |                          |   |       |      |  |   | 0.23   |  |  |   |       | 
|                            |                                                                                                  |                          |   |        |      |  |   |        | 
|                            | Net income per share  diluted                                                                   |                          | $ | 0.49   |      |  | $ | 0.50   |  |  | $ | 0.85   | 
|                            |                                                                                                  |                          |   |        |      |  |   |        | 



|        |                                     
|------- | ------------------------------------
|Note 3. | Accumulated Other Comprehensive Loss



|                                                                 |  |               |         |   |      |   |         |  
|---------------------------------------------------------------- |  | ------------- | ------- | - | ---- | - | ------- | -
|                                                                 |  | September 30, |        
|                                                                 |  |               |        
|                                                                 |  | 2005          |         |   | 2004 |  
|                                                                 |  |               |         |   |      |  
|Foreign currency translation                                     |  | $             | 32,209  |   |      | $ | 18,420  |  
|                                                                
|                                                                
|                                                                
|                                                                
|Net unrealized gain (loss) on derivative instruments, net of tax |  |               | 3,095   |   |      |   | (550    | )
|                                                                
|                                                                
|                                                                
|                                                                
|Minimum pension liability, net of tax                            |  |               | (67,894 | ) |      |   | (57,399 | )
|                                                                 |  |               |         |   |      |  
|Total accumulated other comprehensive loss                       |  | $             | (32,590 | ) |      | $ | (39,529 | )
|                                                                 |  |               |         |   |      |  

54



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##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|        |            
|------- | -----------
|Note 4. | Inventories



|                                   |  |               |         |   |      |   |         |  
|---------------------------------- |  | ------------- | ------- | - | ---- | - | ------- | -
|                                   |  | September 30, |        
|                                   |  |               |        
|                                   |  | 2005          |         |   | 2004 |  
|                                   |  |               |         |   |      |  
|Finished goods and work in process |  | $             | 134,144 |   |      | $ | 97,139  |  
|                                  
|                                  
|                                  
|                                  
|Raw materials                      |  |               | 59,905  |   |      |   | 42,953  |  
|                                  
|                                  
|                                  
|                                  
|Supplies and spare parts           |  |               | 30,735  |   |      |   | 14,460  |  
|                                   |  |               |         |   |      |  
|Inventories at FIFO cost           |  |               | 224,784 |   |      |   | 154,552 |  
|                                  
|                                  
|                                  
|                                  
|LIFO reserve                       |  |               | (22,819 | ) |      |   | (27,193 | )
|                                   |  |               |         |   |      |  
|Net inventories                    |  | $             | 201,965 |   |      | $ | 127,359 |  
|                                   |  |               |         |   |      |  





|        |                                                                     
|------- | --------------------------------------------------------------------
|Note 5. | Discontinued Operations and Assets and Liabilities Held for
    Sale



| |                        
| | -----------------------
| | Discontinued Operations







| |                                     
| | ------------------------------------
| | Assets and Liabilities Held for Sale



|                              |  |               |       |  |      |   |       | 
|----------------------------- |  | ------------- | ----- |  | ---- | - | ----- | 
|                              |  | September 30, |      
|                              |  |               |      
|                              |  | 2005          |       |  | 2004 |  
|                              |  |               |       |  |      |  
|                             
|                             
|                             
|                             
|Property, plant and equipment |  | $             | 3,435 |  |      | $ | 1,526 | 



|        |                                              
|------- | ---------------------------------------------
|Note 6. | Acquisitions, Restructuring and Other Matters



| |             
| | ------------
| | Acquisitions

Gulf States


55



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ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


GSPP GSPP Acquisition.




Consolidation of Variable
Interest Entities.






|                                                                                        |  |   |         | 
|--------------------------------------------------------------------------------------- |  | - | ------- | 
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Current assets, net of cash received                                                    |  | $ | 127,626 | 
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Property, plant, and equipment                                                          |  |   | 357,093 | 
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Goodwill                                                                                |  |   | 50,990  | 
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Intangible assets  customer relationships
    (22.3 year weighted-average useful life) |  |   | 50,679  | 
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Other long-term assets                                                                  |  |   | 340     | 
|                                                                                        |  |   |        
|Total assets acquired                                                                   |  |   | 586,728 | 
|                                                                                        |  |   |        
|Current liabilities                                                                     |  |   | 24,628  | 
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Minority interest                                                                       |  |   | 9,395   | 
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Other long-term liabilities                                                             |  |   | 489     | 
|                                                                                        |  |   |        
|Total liabilities assumed                                                               |  |   | 34,512  | 
|                                                                                        |  |   |        
|Net assets acquired                                                                     |  | $ | 552,216 | 
|                                                                                        |  |   |        





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ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                  |  |                           |           |  |      |   |           | 
|--------------------------------- |  | ------------------------- | --------- |  | ---- | - | --------- | 
|                                  |  | Year Ended September 30,  |          
|                                  |  |                           |          
|                                  |  | 2005                      |           |  | 2004 |  
|                                  |  |                           |           |  |      |  
|                                  |  | (In thousands, except per |          
|                                  |  | share data)               |          
|                                 
|                                 
|                                 
|                                 
|Net sales                         |  | $                         | 2,075,188 |  |      | $ | 2,041,366 | 
|                                  |  |                           |           |  |      |  
|Net income                        |  | $                         | 30,074    |  |      | $ | 21,917    | 
|                                  |  |                           |           |  |      |  
|Diluted earnings per common share |  | $                         | 0.83      |  |      | $ | 0.61      | 
|                                  |  |                           |           |  |      |  





| |                              
| | -----------------------------
| | Restructuring and Other Costs





| |                                               
| | ----------------------------------------------
| | Summary of Restructuring and Other Initiatives





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ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


















58



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ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                           
| | ------------------------------------------
| | Summary of Restructuring and Other Charges

|                       |  |             |  |               |        |           |          |   |       |               |  |   |          |  |  |        |       |  |       |   |       |       |  |   |        |   |  |   |        |  
|---------------------- |  | ----------- |  | ------------- | ------ | --------- | -------- | - | ----- | ------------- |  | - | -------- |  |  | ------ | ----- |  | ----- | - | ----- | ----- |  | - | ------ | - |  | - | ------ | -
|                       |  |             |  |               |        | Severance |          |   |       |               |  |   |          |  |  |        |      
|                       |  |             |  |               |        | and Other |          |   |       |               |  |   |          |  |  |        |      
|                       |  |             |  | Net Property, |        |           | Employee |   |       | Equipment and |  |   | Facility |  |  |        |       |  |       |  
|                       |  |             |  | Plant and     |        |           | Related  |   |       | Inventory     |  |   | Carrying |  |  | Corp.  |       |  |       |   |      
|Initiative and Segment |  | Period      |  | Equipment(a)  |        |           | Costs    |   |       | Relocation    |  |   | Costs    |  |  | Reorg. |       |  | Other |   |       | Total | 
|                       |  |             |  |               |        |           |          |   |       |               |  |   |          |  |  |        |       |  |       |   |       |       | 
|Dallas,                |  | Fiscal 2005 |  | $             | (73    | )         |          | $ | (3    | )             |  | $ |         |  |  | $      | 134   |  |       | $ |      |       |  | $ | 2      |   |  | $ | 60     |  
|Paperboard             |  | Cumulative  |  |               | 105    |           |          |   | 165   |               |  |   | 59       |  |  |        | 196   |  |       |   |      |       |  |   | 10     |   |  |   | 535    |  
|                       |  | Expected    |  |               | 105    |           |          |   | 165   |               |  |   | 59       |  |  |        | 246   |  |       |   |      |       |  |   | 10     |   |  |   | 585    |  
|                      
|                      
|                      
|                      
|Wright City,           |  | Fiscal 2005 |  |               | (677   | )         |          |   | (29   | )             |  |   |         |  |  |        | 31    |  |       |   |      |       |  |   | (92    | ) |  |   | (767   | )
|Paperboard             |  | Cumulative  |  |               | 5,875  |           |          |   | 607   |               |  |   | 181      |  |  |        | 187   |  |       |   |      |       |  |   | 273    |   |  |   | 7,123  |  
|                       |  | Expected    |  |               | 5,875  |           |          |   | 607   |               |  |   | 181      |  |  |        | 187   |  |       |   |      |       |  |   | 273    |   |  |   | 7,123  |  
|                      
|                      
|                      
|                      
|Aurora,                |  | Fiscal 2005 |  |               | (319   | )         |          |   | 33    |               |  |   |         |  |  |        |      |  |       |   |      |       |  |   | 5      |   |  |   | (281   | )
|Paperboard             |  | Cumulative  |  |               | 3,142  |           |          |   | 730   |               |  |   | 1        |  |  |        |      |  |       |   |      |       |  |   | 12     |   |  |   | 3,885  |  
|                       |  | Expected    |  |               | 3,142  |           |          |   | 730   |               |  |   | 1        |  |  |        |      |  |       |   |      |       |  |   | 12     |   |  |   | 3,885  |  
|                      
|                      
|                      
|                      
|Otsego,                |  | Fiscal 2005 |  |               | 28     |           |          |   | 264   |               |  |   | 595      |  |  |        | 610   |  |       |   |      |       |  |   | 82     |   |  |   | 1,579  |  
|Paperboard             |  | Cumulative  |  |               | 14,549 |           |          |   | 1,948 |               |  |   | 735      |  |  |        | 768   |  |       |   |      |       |  |   | 136    |   |  |   | 18,136 |  
|                       |  | Expected    |  |               | 14,549 |           |          |   | 1,948 |               |  |   | 835      |  |  |        | 1,068 |  |       |   |      |       |  |   | 136    |   |  |   | 18,536 |  
|                      
|                      
|                      
|                      
|St. Paul,              |  | Fiscal 2005 |  |               | 30     |           |          |   | 2,409 |               |  |   | 206      |  |  |        |      |  |       |   |      |       |  |   | 104    |   |  |   | 2,749  |  
|Packaging              |  | Cumulative  |  |               | 2,333  |           |          |   | 3,038 |               |  |   | 236      |  |  |        |      |  |       |   |      |       |  |   | 104    |   |  |   | 5,711  |  
|Products               |  | Expected    |  |               | 2,333  |           |          |   | 3,063 |               |  |   | 236      |  |  |        |      |  |       |   |      |       |  |   | 104    |   |  |   | 5,736  |  
|                      
|                      
|                      
|                      
|Restructuring,         |  | Fiscal 2005 |  |               |       |           |          |   | 1,610 |               |  |   |         |  |  |        |      |  |       |   |      |       |  |   |       |   |  |   | 1,610  |  
|Folding                |  | Cumulative  |  |               |       |           |          |   | 1,610 |               |  |   |         |  |  |        |      |  |       |   |      |       |  |   |       |   |  |   | 1,610  |  
|                       |  | Expected    |  |               |       |           |          |   | 1,610 |               |  |   |         |  |  |        |      |  |       |   |      |       |  |   |       |   |  |   | 1,610  |  
|                      
|                      
|                      
|                      
|Corporate              |  | Fiscal 2005 |  |               |       |           |          |   |      |               |  |   |         |  |  |        |      |  |       |   | 192   |       |  |   |       |   |  |   | 192    |  
|Reorganization,        |  | Cumulative  |  |               |       |           |          |   |      |               |  |   |         |  |  |        |      |  |       |   | 1,330 |       |  |   |       |   |  |   | 1,330  |  
|Corporate              |  | Expected    |  |               |       |           |          |   |      |               |  |   |         |  |  |        |      |  |       |   | 1,330 |       |  |   |       |   |  |   | 1,330  |  
|                      
|                      
|                      
|                      
|Norcross Real          |  | Fiscal 2005 |  |               |       |           |          |   |      |               |  |   |         |  |  |        |      |  |       |   |      |       |  |   | (1,873 | ) |  |   | (1,873 | )
|                      
|                      
|                      
|                      
|Estate Sale,           |  | Cumulative  |  |               |       |           |          |   |      |               |  |   |         |  |  |        |      |  |       |   |      |       |  |   | (1,873 | ) |  |   | (1,873 | )
|Corporate              |  | Expected    |  |               |       |           |          |   |      |               |  |   |         |  |  |        |      |  |       |   |      |       |  |   | (1,873 | ) |  |   | (1,873 | )
|                      
|                      
|                      
|                      
|Waco,                  |  | Fiscal 2005 |  |               |       |           |          |   | 229   |               |  |   | 291      |  |  |        |      |  |       |   |      |       |  |   |       |   |  |   | 520    |  
|Folding                |  | Cumulative  |  |               |       |           |          |   | 229   |               |  |   | 291      |  |  |        |      |  |       |   |      |       |  |   |       |   |  |   | 520    |  
|                       |  | Expected    |  |               |       |           |          |   | 229   |               |  |   | 441      |  |  |        | 150   |  |       |   |      |       |  |   | 100    |   |  |   | 920    |  
|                      
|                      
|                      
|                      
|Marshville,            |  | Fiscal 2005 |  |               | 2,488  |           |          |   |      |               |  |   |         |  |  |        |      |  |       |   |      |       |  |   |       |   |  |   | 2,488  |  
|Folding                |  | Cumulative  |  |               | 2,488  |           |          |   |      |               |  |   |         |  |  |        |      |  |       |   |      |       |  |   |       |   |  |   | 2,488  |  
|                       |  | Expected    |  |               | 2,488  |           |          |   | 625   |               |  |   | 75       |  |  |        | 200   |  |       |   |      |       |  |   | 225    |   |  |   | 3,613  |  
|                      
|                      
|                      
|                      
|Other                  |  | Fiscal 2005 |  |               | (112   | )         |          |   | (43   | )             |  |   | 8        |  |  |        | 15    |  |       |   |      |       |  |   | 1,380  |   |  |   | 1,248  |  
|                       |  |             |  |               |        |           |          |   |       |               |  |   |          |  |  |        |       |  |       |   |       |       | 
|Totals                 |  | Fiscal Year |  | $             | 1,365  |           |          | $ | 4,470 |               |  | $ | 1,100    |  |  | $      | 790   |  |       | $ | 192   |       |  | $ | (392   | ) |  | $ | 7,525  |  
|                       |  |             |  |               |        |           |          |   |       |               |  |   |          |  |  |        |       |  |       |   |       |       | 
|                       |  | Cumulative  |  | $             | 28,492 |           |          | $ | 8,327 |               |  | $ | 1,503    |  |  | $      | 1,151 |  |       | $ | 1,330 |       |  | $ | (1,338 | ) |  | $ | 39,465 |  
|                       |  |             |  |               |        |           |          |   |       |               |  |   |          |  |  |        |       |  |       |   |       |       | 
|                       |  | Expected    |  | $             | 28,492 |           |          | $ | 8,977 |               |  | $ | 1,828    |  |  | $      | 1,851 |  |       | $ | 1,330 |       |  | $ | (1,013 | ) |  | $ | 41,465 |  
|                       |  |             |  |               |        |           |          |   |       |               |  |   |          |  |  |        |       |  |       |   |       |       | 






|    |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | For purposes of the tables in this Note 6, we have
    definedNet property, plant and
    equipmentas: property, plant and equipment
    impairment losses, and subsequent adjustments to fair value for
    assets classified as held for sale, subsequent (gains) or
    losses on sales of property, plant and equipment, and property,
    plant and equipment related parts and supplies.

59



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ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |            
| | -----------
| | Fiscal 2005

Summary of Restructuring and Other
Charges.




Restructuring and other costs


|                                        |  |               |       |   |               |   |       |          |  |            |            |   |               |      |     |   |  |   |       | 
|--------------------------------------- |  | ------------- | ----- | - | ------------- | - | ----- | -------- |  | ---------- | ---------- | - | ------------- | ---- | --- | - |  | - | ----- | 
|                                        |  | Reserve at    |       |   |               |   |       |          |  |            | Reserve at |  
|                                        |  | September 30, |       |   | Restructuring |   |       |          |  | Adjustment |            |   | September 30, |     
|                                        |  | 2004          |       |   | Charges       |   |       | Payments |  |            | to Accrual |   |               | 2005 |    
|                                        |  |               |       |   |               |   |       |          |  |            |            |   |               |      |    
|Severance and other employee costs      |  | $             | 1,029 |   |               | $ | 2,720 |          |  | $          | (2,179     | ) |               | $    | (4  | ) |  | $ | 1,566 | 
|                                       
|                                       
|                                       
|                                       
|Other                                   |  |               | 123   |   |               |   |      |          |  |            | (15        | ) |               |      | (31 | ) |  |   | 77    | 
|                                        |  |               |       |   |               |   |       |          |  |            |            |   |               |      |    
|Total restructuring                     |  | $             | 1,152 |   |               | $ | 2,720 |          |  | $          | (2,194     | ) |               | $    | (35 | ) |  | $ | 1,643 | 
|                                        |  |               |       |   |               |   |       |          |  |            |            |   |               |      |    
|                                       
|                                       
|                                       
|                                       
|Adjustment to accrual (see table above) |  |               | (35   | ) |               |   |       |          |  |            |            |   |               |      |     |  
|                                       
|                                       
|                                       
|                                       
|Severance and other employee costs      |  |               | 1,754 |   |               |   |       |          |  |            |            |   |               |      |     |  
|                                       
|                                       
|                                       
|                                       
|Net property, plant and equipment       |  |               | 1,365 |   |               |   |       |          |  |            |            |   |               |      |     |  
|                                       
|                                       
|                                       
|                                       
|Equipment relocation                    |  |               | 1,100 |   |               |   |       |          |  |            |            |   |               |      |     |  
|                                       
|                                       
|                                       
|                                       
|Facility carrying costs                 |  |               | 790   |   |               |   |       |          |  |            |            |   |               |      |     |  
|                                       
|                                       
|                                       
|                                       
|Corporate reorganization project        |  |               | 192   |   |               |   |       |          |  |            |            |   |               |      |     |  
|                                       
|                                       
|                                       
|                                       
|Other                                   |  |               | (361  | ) |               |   |       |          |  |            |            |   |               |      |     |  
|                                        |  |               |       |   |               |   |       |          |  |            |            |  
|                                       
|                                       
|                                       
|                                       
|Total restructuring and other costs     |  | $             | 7,525 |   |               |   |       |          |  |            |            |   |               |      |     |  
|                                        |  |               |       |   |               |   |       |          |  |            |            |  

60



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ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |            
| | -----------
| | Fiscal 2004

















61



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ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Restructuring and other costs


|                                                         |  |               |        |   |               |   |       |          |  |            |            |   |               |      |     |   |  |   |       | 
|-------------------------------------------------------- |  | ------------- | ------ | - | ------------- | - | ----- | -------- |  | ---------- | ---------- | - | ------------- | ---- | --- | - |  | - | ----- | 
|                                                         |  | Reserve at    |        |   |               |   |       |          |  |            | Reserve at |  
|                                                         |  | September 30, |        |   | Restructuring |   |       |          |  | Adjustment |            |   | September 30, |     
|                                                         |  | 2003          |        |   | Charges       |   |       | Payments |  |            | to Accrual |   |               | 2004 |    
|                                                         |  |               |        |   |               |   |       |          |  |            |            |   |               |      |    
|Severance and other employee costs                       |  | $             | 160    |   |               | $ | 3,033 |          |  | $          | (2,403     | ) |               | $    | 239 |   |  | $ | 1,029 | 
|                                                        
|                                                        
|                                                        
|                                                        
|Other                                                    |  |               | 10     |   |               |   | 125   |          |  |            | (7         | ) |               |      | (5  | ) |  |   | 123   | 
|                                                         |  |               |        |   |               |   |       |          |  |            |            |   |               |      |    
|Total restructuring                                      |  | $             | 170    |   |               | $ | 3,158 |          |  | $          | (2,410     | ) |               | $    | 234 |   |  | $ | 1,152 | 
|                                                         |  |               |        |   |               |   |       |          |  |            |            |   |               |      |    
|                                                        
|                                                        
|                                                        
|                                                        
|Adjustment to accrual (see table above)                  |  |               | 234    |   |               |   |       |          |  |            |            |   |               |      |     |  
|                                                        
|                                                        
|                                                        
|                                                        
|Property, plant and equipment impairment loss            |  |               | 26,518 |   |               |   |       |          |  |            |            |   |               |      |     |  
|                                                        
|                                                        
|                                                        
|                                                        
|Gain on sale of property, plant and equipment            |  |               | (2,046 | ) |               |   |       |          |  |            |            |   |               |      |     |  
|                                                        
|                                                        
|                                                        
|                                                        
|Property, plant and equipment related parts and supplies |  |               | 1,447  |   |               |   |       |          |  |            |            |   |               |      |     |  
|                                                        
|                                                        
|                                                        
|                                                        
|Corporate reorganization project                         |  |               | 1,138  |   |               |   |       |          |  |            |            |   |               |      |     |  
|                                                        
|                                                        
|                                                        
|                                                        
|Pension curtailment                                      |  |               | 850    |   |               |   |       |          |  |            |            |   |               |      |     |  
|                                                        
|                                                        
|                                                        
|                                                        
|Equipment relocation                                     |  |               | 476    |   |               |   |       |          |  |            |            |   |               |      |     |  
|                                                        
|                                                        
|                                                        
|                                                        
|Facility carrying costs                                  |  |               | 456    |   |               |   |       |          |  |            |            |   |               |      |     |  
|                                                        
|                                                        
|                                                        
|                                                        
|Goodwill impairment                                      |  |               | 244    |   |               |   |       |          |  |            |            |   |               |      |     |  
|                                                        
|                                                        
|                                                        
|                                                        
|Other                                                    |  |               | 263    |   |               |   |       |          |  |            |            |   |               |      |     |  
|                                                         |  |               |        |   |               |   |       |          |  |            |            |  
|                                                        
|                                                        
|                                                        
|                                                        
|Total restructuring and other costs                      |  | $             | 32,738 |   |               |   |       |          |  |            |            |   |               |      |     |  
|                                                         |  |               |        |   |               |   |       |          |  |            |            |  



| |            
| | -----------
| | Fiscal 2003







62



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ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|        |                        
|------- | -----------------------
|Note 7. | Other Intangible Assets



|                       |  |           |      |               |                |   |        |              |  |   |                |   |  |              |        |  |  |   |         |  
|---------------------- |  | --------- | ---- | ------------- | -------------- | - | ------ | ------------ |  | - | -------------- | - |  | ------------ | ------ |  |  | - | ------- | -
|                       |  |           |      | September 30, |               
|                       |  |           |      |               |               
|                       |  |           |      | 2005          |                |   | 2004   |             
|                       |  |           |      |               |                |   |        |             
|                       |  | Weighted  |      |               | Gross Carrying |   |        | Accumulated  |  |   | Gross Carrying |   |  | Accumulated  |       
|                       |  | Avg. Life |      |               | Amount         |   |        | Amortization |  |   | Amount         |   |  | Amortization |       
|                       |  |           |      |               |                |   |        |              |  |   |                |   |  |              |       
|Customer relationships |  |           | 20.0 |               |                | $ | 65,618 |              |  | $ | (6,099         | ) |  | $            | 14,680 |  |  | $ | (2,783  | )
|                      
|                      
|                      
|                      
|Non-compete agreements |  |           | 8.8  |               |                |   | 6,474  |              |  |   | (5,337         | ) |  |              | 8,327  |  |  |   | (6,182  | )
|                      
|                      
|                      
|                      
|Financing costs        |  |           | 8.2  |               |                |   | 7,955  |              |  |   | (1,845         | ) |  |              | 5,850  |  |  |   | (2,854  | )
|                      
|                      
|                      
|                      
|Patents                |  |           | 5.5  |               |                |   | 1,038  |              |  |   | (210           | ) |  |              | 2,120  |  |  |   | (617    | )
|                      
|                      
|                      
|                      
|Trademark              |  |           | 20.0 |               |                |   | 800    |              |  |   | (577           | ) |  |              | 759    |  |  |   | (523    | )
|                      
|                      
|                      
|                      
|License Costs          |  |           | 5.0  |               |                |   | 309    |              |  |   | (134           | ) |  |              | 309    |  |  |   | (72     | )
|                       |  |           |      |               |                |   |        |              |  |   |                |   |  |              |       
|Total                  |  |           | 18.5 |               |                | $ | 82,194 |              |  | $ | (14,202        | ) |  | $            | 32,045 |  |  | $ | (13,031 | )
|                       |  |           |      |               |                |   |        |              |  |   |                |   |  |              |       





|     |  |   |       | 
|---- |  | - | ----- | 
|    
|    
|    
|    
|2006 |  | $ | 7,546 | 
|    
|    
|    
|    
|2007 |  |   | 7,103 | 
|    
|    
|    
|    
|2008 |  |   | 6,848 | 
|    
|    
|    
|    
|2009 |  |   | 6,349 | 
|    
|    
|    
|    
|2010 |  |   | 4,396 | 

63



---



##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|        |     
|------- | ----
|Note 8. | Debt



|                                                                                                                                                                              |  |               |         |  |      |   |         |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- |  | ---- | - | ------- | -
|                                                                                                                                                                              |  | September 30, |        
|                                                                                                                                                                              |  |               |        
|                                                                                                                                                                              |  | 2005          |         |  | 2004 |  
|                                                                                                                                                                              |  |               |         |  |      |  
|Face value of 5.625% notes due March 2013, net of
    unamortized discount of $188 and $213                                                                                   |  | $             | 99,812  |  |      | $ | 99,787  |  
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|Hedge adjustments resulting from terminated interest rate
    derivatives or swaps                                                                                            |  |               | 2,374   |  |      |   | 4,263   |  
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|Hedge adjustments resulting from existing interest rate
    derivatives or swaps                                                                                              |  |               |        |  |      |   | (1,357  | )
|                                                                                                                                                                              |  |               |         |  |      |  
|                                                                                                                                                                              |  |               | 102,186 |  |      |   | 102,693 |  
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|Face value of 8.20% notes due August 2011, net of
    unamortized discount of $399 and $467                                                                                   |  |               | 249,601 |  |      |   | 249,533 |  
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|Hedge adjustments resulting from terminated interest rate
    derivatives or swaps                                                                                            |  |               | 9,881   |  |      |   | 14,824  |  
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|Hedge adjustments resulting from existing interest rate
    derivatives or swaps                                                                                              |  |               |        |  |      |   | (1,123  | )
|                                                                                                                                                                              |  |               |         |  |      |  
|                                                                                                                                                                              |  |               | 259,482 |  |      |   | 263,234 |  
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|Face value of 7.25% notes due August 2005, net of
    unamortized discount of $0 and $9 (a)                                                                                   |  |               |        |  |      |   | 83,491  |  
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|Hedge adjustments resulting from terminated interest rate
    derivatives or swaps                                                                                            |  |               |        |  |      |   | 2,148   |  
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|Hedge adjustments resulting from existing interest rate
    derivatives or swaps                                                                                              |  |               |        |  |      |   | (294    | )
|                                                                                                                                                                              |  |               |         |  |      |  
|                                                                                                                                                                              |  |               |        |  |      |   | 85,345  |  
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|Term debt (b)                                                                                                                                                                 |  |               | 250,000 |  |      |   |        |  
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|Revolving credit facility (b)(c)                                                                                                                                              |  |               | 216,000 |  |      |   |        |  
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|Receivables-backed financing facility (d)                                                                                                                                     |  |               | 55,000  |  |      |   |        |  
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|Industrial development revenue bonds, bearing interest at
    variable rates (4.30% at September 30, 2005, and 2.90% at
    September 30, 2004), due through October 2036 (e) |  |               | 30,120  |  |      |   | 30,120  |  
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|Other notes                                                                                                                                                                   |  |               | 2,293   |  |      |   | 2,669   |  
|                                                                                                                                                                              |  |               |         |  |      |  
|                                                                                                                                                                              |  |               | 915,081 |  |      |   | 484,061 |  
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|Less total current portion of debt                                                                                                                                            |  |               | 62,079  |  |      |   | 85,760  |  
|                                                                                                                                                                              |  |               |         |  |      |  
|Long-term debt due after one year                                                                                                                                             |  | $             | 853,002 |  |      | $ | 398,301 |  
|                                                                                                                                                                              |  |               |         |  |      |  
|The following were the aggregate components of debt (in
    thousands):                                                                                                       |  |               |         |  |      |   |         |  
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|Face value of debt instruments, net of unamortized discounts                                                                                                                  |  | $             | 902,826 |  |      | $ | 465,600 |  
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|Hedge adjustments resulting from terminated interest rate
    derivatives or swaps                                                                                            |  |               | 12,255  |  |      |   | 21,235  |  
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|                                                                                                                                                                             
|Hedge adjustments resulting from existing interest rate
    derivatives or swaps                                                                                              |  |               |        |  |      |   | (2,774  | )
|                                                                                                                                                                              |  |               |         |  |      |  
|                                                                                                                                                                              |  | $             | 915,081 |  |      | $ | 484,061 |  
|                                                                                                                                                                              |  |               |         |  |      |  

64



---



##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)







|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | During the first quarter of fiscal 2005, we purchased
    $6.0 million of our Notes due August 2005 at an average
    price of 103.1% of par value, or $0.18 million over par
    value, excluding the favorable impact of unamortized realized
    interest rate swap gains. The average price including the
    favorable impact of unamortized realized interest rate swap
    gains was 101.6% of par value, or $0.1 million over par
    value. During the second quarter of fiscal 2005, we purchased
    $3.5 million of our Notes due August 2005 at an average
    price of 101.75% of par value, or $0.06 million over par
    value, excluding the favorable impact of unamortized realized
    interest rate swap gains. The average price including the
    favorable impact of unamortized realized interest rate swap
    gains was 101.05% of par value, or $0.04 million over par
    value. On August 1, 2005, we retired the remaining
    $74.0 million of our Notes due August 2005 with
    $14.0 million of cash and $60.0 million of borrowings
    under our Senior Credit Facility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(b) |  | On June 6, 2005, we entered into the Senior Credit
    Facility. The Senior Credit Facility includes revolving credit,
    swing, and term loan facilities in the aggregate principal
    amount of $700 million. The Senior Credit Facility is
    pre-payable at any time and is scheduled to expire on
    June 6, 2010. We have aggregate outstanding letters of
    credit under this facility of approximately $41 million. At
    September 30, 2005, due to the restrictive covenants on the
    revolving credit facility, maximum additional available
    borrowings under this facility were approximately
    $126 million. Borrowings in the United States under the
    Senior Credit Facility bear interest based either upon
    (1) LIBOR plus an applicable margin (which we refer to as
    LIBOR Loans) or (2) the alternative base
    rate plus an applicable margin (which we refer to as
    Base Rate Loans). The applicable margin for
    determining the interest rate applicable to LIBOR Loans ranges
    from 0.875% to 1.750% of the aggregate borrowing availability
    based on the ratio of our consolidated funded debt to an EBITDA
    measure calculated based on earnings before interest, taxes,
    depreciation and amortization less special items (which we refer
    to as Credit Agreement EBITDA). The
    applicable margin for determining the interest rate applicable
    to Base Rate Loans ranges from 0.000% to 0.750% of the aggregate
    borrowing availability based on the ratio of our consolidated
    funded debt to Credit Agreement EBITDA. The applicable
    percentage for determining the facility commitment fee ranges
    from 0.175% to 0.400% of the aggregate borrowing availability
    based on the ratio of our consolidated funded debt to Credit
    Agreement EBITDA. At September 30, 2005, the applicable
    margin for determining the interest rate applicable to LIBOR
    Loans and the applicable margin for determining the interest
    rate applicable to Base Rate Loans were 1.50% and 0.50%,
    respectively. The facility commitment fee at September 30,
    2005 was 0.325% of the unused amount. Interest on the revolving
    credit facility and term loan facility are payable in arrears on
    each applicable payment date. At our election, we can choose
    Base Rate Loans, LIBOR Loans, or a combination thereof. If we
    chose LIBOR Loans, the interest rate reset options are 30,
    60, 90 or 180 days. The Senior Credit Facility is secured
    by the real and personal property of the GSPP business that we
    acquired in the GSPP Acquisition and the following property of
    the Company and its wholly-owned subsidiaries: inventory and
    general intangibles, including, without limitation, specified
    patents, patent licenses, trademarks, trademark licenses,
    copyrights and copyright licenses. The agreement documenting the
    Senior Credit Facility includes restrictive covenants regarding
    the maintenance of financial ratios, the creation of additional
    long-term and short-term debt, the creation or existence of
    certain liens, the occurrence of certain mergers, acquisitions
    or disposals of assets and certain leasing arrangements, the
    occurrence of certain fundamental changes in the primary nature
    of our consolidated business, the nature of certain investments,
    and other matters. We are in compliance with these restrictions.
|   
|(c) |  | Until June 6, 2005, we maintained a $75 million
    revolving credit facility. As of June 6, 2005 and
    September 30, 2004, there were no amounts outstanding under
    this facility. On June 6, 2005, contemporaneously with the
    execution and delivery of the Senior Credit Facility (as defined
    below), we terminated this facility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(d) |  | We maintained a $75.0 million receivables-backed financing
    facility (which we refer to as the Receivables
    Facility). A bank provided a back-up liquidity
    facility. The borrowing rate, which                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

65



---



##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  | consisted of a daily commercial paper rate plus a fee for the
    used portion of the facility, was 4.10% as of September 30,
    2005. The borrowing rate at September 30, 2004 was 2.17%.
    Both the Receivables Facility and the back-up liquidity facility
    have 364-day terms. At September 30, 2005, this facility
    was fully drawn. On October 26, 2005, we increased the
    facility to $100 million. The new facility is scheduled to
    expire on October 25, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(e) |  | The industrial development revenue bonds are issued by various
    municipalities in which we maintain operations or other
    facilities. The bonds are fully secured by a pledge of payments
    to the municipality by us under a financing agreement. Each
    series of bonds are also secured by and payable through a letter
    of credit issued in favor of the Trustee to the bonds. We are
    required to maintain these letters of credit under the terms of
    the bond indenture. The letters of credit are renewable at our
    request so long as no default or event of default has occurred
    under the Senior Credit Facility. A remarketing agent offers the
    bonds for initial sale and uses its best efforts to remarket the
    bonds until they mature or are otherwise fully redeemed. The
    remarketing agent also periodically determines the interest
    rates on the bonds based on prevailing market conditions. The
    remarketing agent is paid a fee for this service. Our industrial
    development revenue bonds are remarketed on a periodic basis
    upon demand of the bondholders. If the remarketing agent is
    unable to successfully remarket the bonds, the remarketing agent
    will repurchase the bonds by drawing on the letters of credit.
    If this were to occur, we would immediately reimburse the
    issuing lender with the proceeds of a revolving loan obtained
    under the Senior Credit Facility. Accordingly, we have
    classified the industrial development revenue bonds as
    non-current.





| |                    
| | -------------------
| | Interest Rate Swaps



66



---



##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                                     |  |   |         |  
|------------------------------------------------------------------------------------ |  | - | ------- | -
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|2006                                                                                 |  | $ | 62,079  |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|2007                                                                                 |  |   | 25,590  |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|2008                                                                                 |  |   | 38,019  |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|2009                                                                                 |  |   | 91,355  |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|2010                                                                                 |  |   | 312,250 |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Thereafter                                                                           |  |   | 374,120 |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Unamortized fair value adjustments from terminated interest rate
    swap agreements |  |   | 12,255  |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Unamortized bond discount                                                            |  |   | (587    | )
|                                                                                     |  |   |        
|Total long-term debt                                                                 |  | $ | 915,081 |  
|                                                                                     |  |   |        



|        |                            
|------- | ---------------------------
|Note 9. | Leases and Other Agreements





|                                    |  |   |        | 
|----------------------------------- |  | - | ------ | 
|                                   
|                                   
|                                   
|                                   
|2006                                |  | $ | 10,186 | 
|                                   
|                                   
|                                   
|                                   
|2007                                |  |   | 8,610  | 
|                                   
|                                   
|                                   
|                                   
|2008                                |  |   | 6,813  | 
|                                   
|                                   
|                                   
|                                   
|2009                                |  |   | 4,612  | 
|                                   
|                                   
|                                   
|                                   
|2010                                |  |   | 2,874  | 
|                                   
|                                   
|                                   
|                                   
|Thereafter                          |  |   | 5,029  | 
|                                    |  |   |       
|Total future minimum lease payments |  | $ | 38,124 | 
|                                    |  |   |       



67



---



##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |             
|-------- | ------------
|Note 10. | Income Taxes



|                           |         |                          |        |        |      |   |        |        |   |   |        |        | 
|-------------------------- | ------- | ------------------------ | ------ | ------ | ---- | - | ------ | ------ | - | - | ------ | ------ | 
|                           |         | Year Ended September 30, |       
|                           |         |                          |       
|                           |         | 2005                     |        |        | 2004 |   |        | 2003   |  
|                           |         |                          |        |        |      |   |        |        |  
|Current income taxes:      |         |                          |        |        |      |   |        |        |   |   |        |       
|                          
|                          
|                          
|                          
|                           | Federal |                          | $      | (3,483 | )    |   | $      | 9,073  |   |   | $      | 2,048  | 
|                          
|                          
|                          
|                          
|                           | State   |                          |        | 538    |      |   |        | (1,186 | ) |   |        | 1,271  | 
|                          
|                          
|                          
|                          
|                           | Foreign |                          |        | 1,224  |      |   |        | 3,290  |   |   |        | 2,765  | 
|                           |         |                          |        |        |      |   |        |        |  
|Total current              |         |                          | (1,721 | )      |      |   | 11,177 |        |   |   | 6,084  |       
|                           |         |                          |        |        |      |   |        |        |  
|Deferred income taxes:     |         |                          |        |        |      |   |        |        |   |   |        |       
|                          
|                          
|                          
|                          
|                           | Federal |                          |        | 2,908  |      |   |        | (596   | ) |   |        | 10,908 | 
|                          
|                          
|                          
|                          
|                           | State   |                          |        | (178   | )    |   |        | (4,581 | ) |   |        | 885    | 
|                          
|                          
|                          
|                          
|                           | Foreign |                          |        | 1,233  |      |   |        | (302   | ) |   |        | 292    | 
|                           |         |                          |        |        |      |   |        |        |  
|Total deferred             |         |                          | 3,963  |        |      |   | (5,479 | )      |   |   | 12,085 |       
|                           |         |                          |        |        |      |   |        |        |  
|Provision for income taxes |         | $                        | 2,242  |        |      | $ | 5,698  |        |   | $ | 18,169 |       
|                           |         |                          |        |        |      |   |        |        |  



|                                                                                        |                         |                          |        |       |      |   |         |       |  |   |        |        | 
|--------------------------------------------------------------------------------------- | ----------------------- | ------------------------ | ------ | ----- | ---- | - | ------- | ----- |  | - | ------ | ------ | 
|                                                                                        |                         | Year Ended September 30, |       
|                                                                                        |                         |                          |       
|                                                                                        |                         | 2005                     |        |       | 2004 |   |         | 2003  | 
|                                                                                        |                         |                          |        |       |      |   |         |       | 
|Other accruals and allowances                                                           |                         | $                        | (177   | )     |      | $ | (622    | )     |  | $ | 2,498  |       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Employee related accruals and allowances                                                |                         |                          | (827   | )     |      |   | (1,533  | )     |  |   | 179    |       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Federal net operating loss carryforward                                                 |                         |                          |       |       |      |   |        |       |  |   | 7,270  |       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|State net operating loss carryforwards                                                  |                         |                          | (2,652 | )     |      |   | (1,816  | )     |  |   |       |       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|State credit carryforwards, net of federal benefit                                      |                         |                          | 271    |       |      |   | (970    | )     |  |   |       |       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Valuation allowance                                                                     |                         |                          | 160    |       |      |   | 1,333   |       |  |   |       |       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Property, plant and equipment                                                           |                         |                          | 15,864 |       |      |   | (12,541 | )     |  |   | 5,675  |       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Deductible intangibles                                                                  |                         |                          | 1,353  |       |      |   | 2,398   |       |  |   | 1,052  |       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Pension                                                                                 |                         |                          | (3,949 | )     |      |   | 7,447   |       |  |   | (4,070 | )     
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Inventory                                                                               |                         |                          | (2,256 | )     |      |   | 1,443   |       |  |   | (626   | )     
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Other deferred tax assets                                                               |                         |                          | 287    |       |      |   | (894    | )     |  |   | (159   | )     
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Other deferred tax liabilities                                                          |                         |                          | (4,111 | )     |      |   | 276     |       |  |   | 266    |       
|                                                                                        |                         |                          |        |       |      |   |         |       | 
|Deferred income tax expense                                                             |                         | $                        | 3,963  |       |      | $ | (5,479  | )     |  | $ | 12,085 |       
|                                                                                        |                         |                          |        |       |      |   |         |       | 
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Income tax expense is included in our consolidated statements of
    income as follows: |                         |                          |        |       |      |   |         |       |  |   |        |       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        | Continuing operations   |                          | $      | 2,242 |      |   | $       | 854   |  |   | $      | 18,147 | 
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        | Discontinued operations |                          |        |      |      |   |         | 4,844 |  |   |        | 22     | 
|                                                                                        |                         |                          |        |       |      |   |         |       | 
|Provisions for income taxes                                                             |                         | $                        | 2,242  |       |      | $ | 5,698   |       |  | $ | 18,169 |       
|                                                                                        |                         |                          |        |       |      |   |         |       | 

68



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##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                            |  |                          |       |   |      |  |      |      |  |  |      |  
|--------------------------------------------------------------------------- |  | ------------------------ | ----- | - | ---- |  | ---- | ---- |  |  | ---- | -
|                                                                            |  | Year Ended September 30, |      
|                                                                            |  |                          |      
|                                                                            |  | 2005                     |       |   | 2004 |  |      | 2003 | 
|                                                                            |  |                          |       |   |      |  |      |      | 
|Statutory federal tax rate                                                  |  |                          | 35.0  | % |      |  | 35.0 | %    |  |  | 35.0 | %
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Meals and entertainment expense                                             |  |                          | 2.5   |   |      |  | 2.0  |      |  |  | 1.2  |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Permanent provision to return adjustments                                   |  |                          | (1.8  | ) |      |  | (1.1 | )    |  |  | (0.3 | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Adjustment of deferred taxes for changes in state and foreign
    tax rates |  |                          | 6.9   |   |      |  | (1.8 | )    |  |  | 0.7  |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Other adjustments to deferred taxes                                         |  |                          | (8.4  | ) |      |  | 3.6  |      |  |  | (0.1 | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Reduction in tax contingency reserve                                        |  |                          | (20.8 | ) |      |  | (2.2 | )    |  |  | (2.1 | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|U.S. residual tax on foreign earnings                                       |  |                          | (0.4  | ) |      |  | 1.8  |      |  |  | 0.6  |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|State taxes, net of federal benefit                                         |  |                          | (3.5  | ) |      |  | 1.2  |      |  |  | 4.3  |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Adjustment of prior years taxes, net of federal
    benefit  restructuring |  |                          | 1.4   |   |      |  | (9.0 | )    |  |  |     |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Valuation allowance decrease  restructuring                                |  |                          |      |   |      |  | (5.3 | )    |  |  |     |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Other, net                                                                  |  |                          | 0.4   |   |      |  | 0.2  |      |  |  | (1.2 | )
|                                                                            |  |                          |       |   |      |  |      |      | 
|Effective tax rate                                                          |  |                          | 11.3  | % |      |  | 24.4 | %    |  |  | 38.1 | %
|                                                                            |  |                          |       |   |      |  |      |      | 







69



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##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                   |  |               |         |   |      |   |         |  
|-------------------------------------------------- |  | ------------- | ------- | - | ---- | - | ------- | -
|                                                   |  | September 30, |        
|                                                   |  |               |        
|                                                   |  | 2005          |         |   | 2004 |  
|                                                   |  |               |         |   |      |  
|Deferred income tax assets:                        |  |               |         |   |      |   |         |  
|                                                  
|                                                  
|                                                  
|                                                  
|Accruals and allowances                            |  | $             | 3,125   |   |      | $ | 2,944   |  
|                                                  
|                                                  
|                                                  
|                                                  
|Employee related accruals and allowances           |  |               | 6,561   |   |      |   | 5,734   |  
|                                                  
|                                                  
|                                                  
|                                                  
|Minimum pension liability                          |  |               | 43,411  |   |      |   | 35,031  |  
|                                                  
|                                                  
|                                                  
|                                                  
|State net operating loss carryforwards             |  |               | 4,468   |   |      |   | 1,816   |  
|                                                  
|                                                  
|                                                  
|                                                  
|State credit carryforwards, net of federal benefit |  |               | 856     |   |      |   | 1,127   |  
|                                                  
|                                                  
|                                                  
|                                                  
|Other                                              |  |               | 4,581   |   |      |   | 5,218   |  
|                                                  
|                                                  
|                                                  
|                                                  
|Valuation allowance                                |  |               | (1,651  | ) |      |   | (1,491  | )
|                                                   |  |               |         |   |      |  
|Total                                              |  |               | 61,351  |   |      |   | 50,379  |  
|                                                   |  |               |         |   |      |  
|Deferred income tax liabilities:                   |  |               |         |   |      |   |         |  
|                                                  
|                                                  
|                                                  
|                                                  
|Property, plant and equipment                      |  |               | 108,180 |   |      |   | 90,820  |  
|                                                  
|                                                  
|                                                  
|                                                  
|Deductible intangibles                             |  |               | 11,394  |   |      |   | 9,679   |  
|                                                  
|                                                  
|                                                  
|                                                  
|Pension                                            |  |               | 10,174  |   |      |   | 14,123  |  
|                                                  
|                                                  
|                                                  
|                                                  
|Inventory                                          |  |               | 1,983   |   |      |   | 4,240   |  
|                                                  
|                                                  
|                                                  
|                                                  
|Other                                              |  |               | 7,515   |   |      |   | 11,960  |  
|                                                   |  |               |         |   |      |  
|Total                                              |  |               | 139,246 |   |      |   | 130,822 |  
|                                                   |  |               |         |   |      |  
|Net deferred income tax liability                  |  | $             | 77,895  |   |      | $ | 80,443  |  
|                                                   |  |               |         |   |      |  



|                                  |  |               |        |  |      |   |        | 
|--------------------------------- |  | ------------- | ------ |  | ---- | - | ------ | 
|                                  |  | September 30, |       
|                                  |  |               |       
|                                  |  | 2005          |        |  | 2004 |  
|                                  |  |               |        |  |      |  
|Current deferred tax asset        |  | $             | 5,079  |  |      | $ | 4,504  | 
|                                 
|                                 
|                                 
|                                 
|Long-term deferred tax liability  |  |               | 82,974 |  |      |   | 84,947 | 
|                                  |  |               |        |  |      |  
|Net deferred income tax liability |  | $             | 77,895 |  |      | $ | 80,443 | 
|                                  |  |               |        |  |      |  



70



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##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                    |  |                          |        |  |      |   |        |      |  |   |        | 
|----------------------------------- |  | ------------------------ | ------ |  | ---- | - | ------ | ---- |  | - | ------ | 
|                                    |  | Year Ended September 30, |       
|                                    |  |                          |       
|                                    |  | 2005                     |        |  | 2004 |   |        | 2003 | 
|                                    |  |                          |        |  |      |   |        |      | 
|United States continuing operations |  | $                        | 12,973 |  |      | $ | (156   | )    |  | $ | 37,014 | 
|                                   
|                                   
|                                   
|                                   
|Discontinued operations             |  |                          |       |  |      |   | 12,541 |      |  |   | 57     | 
|                                    |  |                          |        |  |      |   |        |      | 
|                                    |  |                          | 12,973 |  |      |   | 12,385 |      |  |   | 37,071 | 
|                                   
|                                   
|                                   
|                                   
|Foreign continuing operations       |  |                          | 6,883  |  |      |   | 10,661 |      |  |   | 10,674 | 
|                                   
|                                   
|                                   
|                                   
|Foreign discontinued operations     |  |                          |       |  |      |   | 300    |      |  |   |       | 
|                                    |  |                          |        |  |      |   |        |      | 
|                                    |  |                          | 6,883  |  |      |   | 10,961 |      |  |   | 10,674 | 
|                                    |  |                          |        |  |      |   |        |      | 
|Income before income taxes          |  | $                        | 19,856 |  |      | $ | 23,346 |      |  | $ | 47,745 | 
|                                    |  |                          |        |  |      |   |        |      | 







|         |                 
|-------- | ----------------
|Note 11. | Retirement Plans





| |                              
| | -----------------------------
| | Defined Benefit Pension Plans



71



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##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                |  |      |     |   |      |  |     |  
|------------------------------- |  | ---- | --- | - | ---- |  | --- | -
|                                |  | 2005 |     |   | 2004 | 
|                                |  |      |     |   |      | 
|Equity managers                 |  |      | 66  | % |      |  | 71  | %
|                               
|                               
|                               
|                               
|Fixed income managers           |  |      | 29  | % |      |  | 17  | %
|                               
|                               
|                               
|                               
|Cash and cash equivalents       |  |      | 2   | % |      |  | 8   | %
|                               
|                               
|                               
|                               
|Alternative investment managers |  |      | 3   | % |      |  | 4   | %
|                                |  |      |     |   |      | 
|Total                           |  |      | 100 | % |      |  | 100 | %
|                                |  |      |     |   |      | 







| |                   
| | ------------------
| | Target Allocations

|                                                   |  |      |        |   |      |  |        |  
|-------------------------------------------------- |  | ---- | ------ | - | ---- |  | ------ | -
|                                                   |  | 2005 |        |   | 2004 | 
|                                                   |  |      |        |   |      | 
|Equity managers                                    |  |      | 50- 80 | % |      |  | 58- 91 | %
|                                                  
|                                                  
|                                                  
|                                                  
|Fixed Income Managers                              |  |      | 15- 45 | % |      |  | 15- 25 | %
|                                                  
|                                                  
|                                                  
|                                                  
|Alternative investments, cash and cash equivalents |  |      | 0- 35  | % |      |  | 0- 09  | %

RFP


72



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##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                  |  |                          |          |   |      |   |         |  
|----------------------------------------------------------------- |  | ------------------------ | -------- | - | ---- | - | ------- | -
|                                                                  |  | Year Ended September 30, |         
|                                                                  |  |                          |         
|                                                                  |  | 2005                     |          |   | 2004 |  
|                                                                  |  |                          |          |   |      |  
|Projected benefit obligation at beginning of year                 |  | $                        | 300,081  |   |      | $ | 260,303 |  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Service cost                                                      |  |                          | 9,411    |   |      |   | 9,013   |  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Interest cost on projected benefit obligations                    |  |                          | 17,728   |   |      |   | 17,335  |  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Amendments                                                        |  |                          |         |   |      |   | 326     |  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Curtailment (gain) loss                                           |  |                          | (7,355   | ) |      |   | 180     |  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Actuarial loss                                                    |  |                          | 29,082   |   |      |   | 23,468  |  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Benefits paid                                                     |  |                          | (10,885  | ) |      |   | (10,544 | )
|                                                                  |  |                          |          |   |      |  
|Projected benefit obligation at end of year                       |  |                          | 338,062  |   |      |   | 300,081 |  
|                                                                  |  |                          |          |   |      |  
|Fair value of assets at beginning of year                         |  |                          | 208,847  |   |      |   | 181,244 |  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Actual gain on plan assets                                        |  |                          | 21,416   |   |      |   | 18,514  |  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Employer contribution                                             |  |                          | 7,384    |   |      |   | 19,633  |  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Benefits paid                                                     |  |                          | (10,885  | ) |      |   | (10,544 | )
|                                                                  |  |                          |          |   |      |  
|Fair value of assets at end of year                               |  |                          | 226,762  |   |      |   | 208,847 |  
|                                                                  |  |                          |          |   |      |  
|Funded status                                                     |  |                          | (111,300 | ) |      |   | (91,234 | )
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Net unrecognized loss                                             |  |                          | 121,081  |   |      |   | 108,809 |  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Unrecognized prior service cost                                   |  |                          | 2,035    |   |      |   | 1,713   |  
|                                                                  |  |                          |          |   |      |  
|Net amount recognized                                             |  | $                        | 11,816   |   |      | $ | 19,288  |  
|                                                                  |  |                          |          |   |      |  
|Amounts recognized in the consolidated balance sheets consist of: |  |                          |          |   |      |   |         |  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Prepaid benefit cost                                              |  | $                        | 11,816   |   |      | $ | 19,288  |  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Additional minimum liability                                      |  |                          | (114,393 | ) |      |   | (96,271 | )
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Intangible asset                                                  |  |                          | 3,144    |   |      |   | 3,692   |  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Accumulated other comprehensive loss                              |  |                          | 111,249  |   |      |   | 92,579  |  
|                                                                  |  |                          |          |   |      |  
|Net amount recognized                                             |  | $                        | 11,816   |   |      | $ | 19,288  |  
|                                                                  |  |                          |          |   |      |  

73



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##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                         |  |                          |         |   |      |   |         |      |  |   |         |  
|-------------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                         |  | Year Ended September 30, |        
|                                                         |  |                          |        
|                                                         |  | 2005                     |         |   | 2004 |   |         | 2003 | 
|                                                         |  |                          |         |   |      |   |         |      | 
|Service cost                                             |  | $                        | 9,411   |   |      | $ | 9,013   |      |  | $ | 7,258   |  
|                                                        
|                                                        
|                                                        
|                                                        
|Interest cost on projected benefit obligations           |  |                          | 17,728  |   |      |   | 17,335  |      |  |   | 16,123  |  
|                                                        
|                                                        
|                                                        
|                                                        
|Expected return on plan assets                           |  |                          | (19,046 | ) |      |   | (16,320 | )    |  |   | (15,507 | )
|                                                        
|                                                        
|                                                        
|                                                        
|Net amortization of actuarial loss                       |  |                          | 7,084   |   |      |   | 6,563   |      |  |   | 2,813   |  
|                                                        
|                                                        
|                                                        
|                                                        
|Net amortization of prior service cost                   |  |                          | 108     |   |      |   | 49      |      |  |   | 50      |  
|                                                        
|                                                        
|                                                        
|                                                        
|Curtailment loss (gain)                                  |  |                          | (429    | ) |      |   | 679     |      |  |   |        |  
|                                                         |  |                          |         |   |      |   |         |      | 
|Total company defined benefit plan expense               |  |                          | 14,856  |   |      |   | 17,319  |      |  |   | 10,737  |  
|                                                        
|                                                        
|                                                        
|                                                        
|Multi-employer plans for collective bargaining employees |  |                          | 512     |   |      |   | 450     |      |  |   | 340     |  
|                                                         |  |                          |         |   |      |   |         |      | 
|Net periodic pension cost                                |  | $                        | 15,368  |   |      | $ | 17,769  |      |  | $ | 11,077  |  
|                                                         |  |                          |         |   |      |   |         |      | 

|                                                 |  |      |      |   |      |  |      |      |  |  |      |  
|------------------------------------------------ |  | ---- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | -
|                                                 |  | 2005 |      |   | 2004 |  |      | 2003 | 
|                                                 |  |      |      |   |      |  |      |      | 
|Weighted-average assumptions as of September 30: |  |      |      |   |      |  |      |      |  |  |      |  
|                                                
|                                                
|                                                
|                                                
|Discount rate                                    |  |      | 5.50 | % |      |  | 6.00 | %    |  |  | 6.50 | %
|                                                
|                                                
|                                                
|                                                
|Expected long-term rate of return on plan assets |  |      | 9.00 | % |      |  | 9.00 | %    |  |  | 9.00 | %





|                  |  |   |        | 
|----------------- |  | - | ------ | 
|                 
|                 
|                 
|                 
|2006              |  | $ | 12,123 | 
|                 
|                 
|                 
|                 
|2007              |  |   | 12,981 | 
|                 
|                 
|                 
|                 
|2008              |  |   | 13,930 | 
|                 
|                 
|                 
|                 
|2009              |  |   | 14,883 | 
|                 
|                 
|                 
|                 
|2010              |  |   | 15,808 | 
|                 
|                 
|                 
|                 
|Years 2011  2015 |  |   | 96,450 | 

pension plan


74



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##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Effective January 1, 2005, employees hired on or after
    January 1, 2005, are not eligible to participate in our
    pension plan. We provide the following enhanced 401(k) plan
    match for such employees (the enhanced 401(k) plan
    match): 100% match on the first 3% of eligible pay
    contributed by the employee and 50% match on the next 2% of
    eligible pay contributed by the employee.                                                                                                                                                            
|
| |  | Effective January 1, 2005, then current employees who were
    less than 35 years old and who had less than
    5 years of vesting service on December 31, 2004, were
    no longer eligible to participate in our pension plan after
    December 31, 2004. We will pay pension benefits earned
    through December 31, 2004, upon retirement in accordance
    with applicable plan rules. We began providing the enhanced
    401(k) plan match for such employees effective January 1,
    2005.                                                                       
|
| |  | Effective March 1, 2005, then current employees who were
    35 years old or older or who had 5 years or
    more of vesting service on December 31, 2004, were required
    to elect one of two options: (1) a reduced future pension
    accrual based on a revised benefit formula and the current
    401(k) plans match or (2) no future pension accrual
    and the enhanced 401(k) Plan match. In either event, we will pay
    these employees pension benefits earned through
    February 28, 2005, upon retirement in accordance with
    applicable plan rules.



| |             
| | ------------
| | 401(k) Plans

Code




| |                              
| | -----------------------------
| | Supplemental Retirement Plans

Supplemental Plans Obligations


75



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##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




(SERP)




|         |                      
|-------- | ---------------------
|Note 12. | Financial Instruments



| |                
| | ---------------
| | Long-Term Notes





| |            
| | -----------
| | Derivatives



|                                        |  |      |       |  |      |   |        |  
|--------------------------------------- |  | ---- | ----- |  | ---- | - | ------ | -
|                                        |  | 2005 |       |  | 2004 |  
|                                        |  |      |       |  |      |  
|Interest rate swaps (fair value hedges) |  | $    |      |  |      | $ | (2,773 | )
|                                       
|                                       
|                                       
|                                       
|Interest rate swaps (cash flow hedges)  |  |      | 5,404 |  |      |   |       |  
|                                       
|                                       
|                                       
|                                       
|Commodity swaps                         |  |      | 8     |  |      |   | (844   | )
|                                        |  |      |       |  |      |  
|Net fair value of derivative contracts  |  | $    | 5,412 |  |      | $ | (3,617 | )
|                                        |  |      |       |  |      |  





|         |                     
|-------- | --------------------
|Note 13. | Shareholders Equity



| |               
| | --------------
| | Capitalization



76



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##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                      
| | ---------------------
| | Stock Repurchase Plan





| |                   
| | ------------------
| | Stock Option Plans





|                        |  |      |      |   |      |  |      |      |  |  |      |  
|----------------------- |  | ---- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | -
|                        |  | 2005 |      |   | 2004 |  |      | 2003 | 
|                        |  |      |      |   |      |  |      |      | 
|Expected Term in Years  |  |      | 7    |   |      |  | 7    |      |  |  | 8    |  
|                       
|                       
|                       
|                       
|Expected Volatility     |  |      | 44.1 | % |      |  | 43.8 | %    |  |  | 45.8 | %
|                       
|                       
|                       
|                       
|Risk-Free Interest Rate |  |      | 4.1  | % |      |  | 4.1  | %    |  |  | 3.1  | %
|                       
|                       
|                       
|                       
|Dividend Yield          |  |      | 2.6  | % |      |  | 2.2  | %    |  |  | 2.3  | %



77



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##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                                                                                                    |                       |      |        |      |      |   |        |      |  |   |        |      | 
|--------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | ---- | ------ | ---- | ---- | - | ------ | ---- |  | - | ------ | ---- | 
|                                                                                                                                                    |                       | 2005 |        |      | 2004 |   |        | 2003 | 
|                                                                                                                                                    |                       |      |        |      |      |   |        |      | 
|Net income, as reported                                                                                                                             |                       | $    | 17,614 |      |      | $ | 17,648 |      |  | $ | 29,576 |     
|                                                                                                                                                   
|                                                                                                                                                   
|                                                                                                                                                   
|                                                                                                                                                   
|Add: Stock-based employee compensation expense included in
    reported net income, net of related tax effects                                      |                       |      | 1,027  |      |      |   | 949    |      |  |   | 525    |     
|                                                                                                                                                   
|                                                                                                                                                   
|                                                                                                                                                   
|                                                                                                                                                   
|Deduct: Total stock-based employee compensation expense
    determined under fair value based method for all awards, net of
    related tax effects |                       |      | (4,932 | )    |      |   | (3,776 | )    |  |   | (3,282 | )   
|                                                                                                                                                    |                       |      |        |      |      |   |        |      | 
|Pro forma net income                                                                                                                                |                       | $    | 13,709 |      |      | $ | 14,821 |      |  | $ | 26,819 |     
|                                                                                                                                                    |                       |      |        |      |      |   |        |      | 
|Earnings per share: Basic  as reported                                                                                                             |                       | $    | 0.50   |      |      | $ | 0.51   |      |  | $ | 0.86   |     
|                                                                                                                                                    |                       |      |        |      |      |   |        |      | 
|                                                                                                                                                    | Basic  pro forma     |      | $      | 0.39 |      |   | $      | 0.42 |  |   | $      | 0.78 | 
|                                                                                                                                                    |                       |      |        |      |      |   |        |      | 
|                                                                                                                                                    | Diluted  as reported |      | $      | 0.49 |      |   | $      | 0.50 |  |   | $      | 0.85 | 
|                                                                                                                                                    |                       |      |        |      |      |   |        |      | 
|                                                                                                                                                    | Diluted  pro forma   |      | $      | 0.38 |      |   | $      | 0.42 |  |   | $      | 0.77 | 
|                                                                                                                                                    |                       |      |        |      |      |   |        |      | 

de minimus


78



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ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                             |  |                |           |          |             |   |             |       |  |   |       | 
|------------------------------------------------------------ |  | -------------- | --------- | -------- | ----------- | - | ----------- | ----- |  | - | ----- | 
|                                                             |  | Class A Common |          
|                                                             |  |                |          
|                                                             |  |                |           | Weighted |            
|                                                             |  |                |           | Average  |            
|                                                             |  |                |           | Exercise |            
|                                                             |  | Shares         |           |          | Price Range |   |             | Price | 
|                                                             |  |                |           |          |             |   |             |       | 
|Options outstanding at October 1, 2002                       |  |                | 3,399,328 |          |             | $ | 7.42-20.31  |       |  | $ | 13.90 | 
|                                                            
|                                                            
|                                                            
|                                                            
|Exercised                                                    |  |                | (276,098  | )        |             | $ | 7.42-15.45  |       |  | $ | 9.99  | 
|                                                            
|                                                            
|                                                            
|                                                            
|Expired                                                      |  |                | (69,474   | )        |             | $ | 8.94-20.31  |       |  | $ | 17.73 | 
|                                                            
|                                                            
|                                                            
|                                                            
|Forfeited                                                    |  |                | (46,415   | )        |             | $ | 8.94-18.19  |       |  | $ | 13.91 | 
|                                                            
|                                                            
|                                                            
|                                                            
|Granted                                                      |  |                | 693,500   |          |             | $ | 14.01-14.60 |       |  | $ | 14.02 | 
|                                                             |  |                |           |          |             |   |             |       | 
|Options outstanding at September 30, 2003                    |  |                | 3,700,841 |          |             | $ | 8.00-20.31  |       |  | $ | 14.17 | 
|                                                            
|                                                            
|                                                            
|                                                            
|Exercised                                                    |  |                | (248,540  | )        |             | $ | 8.00-16.51  |       |  | $ | 12.00 | 
|                                                            
|                                                            
|                                                            
|                                                            
|Expired                                                      |  |                | (158,535  | )        |             | $ | 11.13-20.31 |       |  | $ | 15.94 | 
|                                                            
|                                                            
|                                                            
|                                                            
|Forfeited                                                    |  |                | (36,232   | )        |             | $ | 11.25-18.19 |       |  | $ | 15.40 | 
|                                                            
|                                                            
|                                                            
|                                                            
|Granted                                                      |  |                | 451,000   |          |             | $ | 15.40-16.15 |       |  | $ | 15.46 | 
|                                                             |  |                |           |          |             |   |             |       | 
|Options outstanding at September 30, 2004                    |  |                | 3,708,534 |          |             | $ | 8.00-20.31  |       |  | $ | 14.39 | 
|                                                            
|                                                            
|                                                            
|                                                            
|Exercised                                                    |  |                | (141,331  | )        |             | $ | 8.94-15.45  |       |  | $ | 11.30 | 
|                                                            
|                                                            
|                                                            
|                                                            
|Expired                                                      |  |                | (221,099  | )        |             | $ | 8.94-20.31  |       |  | $ | 16.21 | 
|                                                            
|                                                            
|                                                            
|                                                            
|Forfeited                                                    |  |                | (22,001   | )        |             | $ | 14.01-15.40 |       |  | $ | 14.22 | 
|                                                            
|                                                            
|                                                            
|                                                            
|Granted                                                      |  |                | 662,000   |          |             | $ | 11.23-13.70 |       |  | $ | 11.38 | 
|                                                             |  |                |           |          |             |   |             |       | 
|Options outstanding at September 30, 2005                    |  |                | 3,986,103 |          |             | $ | 8.00-20.31  |       |  | $ | 13.90 | 
|                                                             |  |                |           |          |             |   |             |       | 
|Options exercisable at September 30, 2005                    |  |                | 3,739,104 |          |             | $ | 8.00-20.31  |       |  | $ | 13.88 | 
|                                                             |  |                |           |          |             |   |             |       | 
|Options available for future grant at September 30,
    2005 |  |                | 1,580,499 |          |             |   |            |       |  |   |      | 
|                                                             |  |                |           |          |             |   |             |       | 



|                |  |             |           |  |          |   |          |             |  |          |           |  |  |                  |       |  |  |  |     | 
|--------------- |  | ----------- | --------- |  | -------- | - | -------- | ----------- |  | -------- | --------- |  |  | ---------------- | ----- |  |  |  | --- | 
|Class A Common  | 
|                | 
|                |  | Weighted    |           |  |          |   | Weighted |             |  | Weighted |          
|                |  | Average     |           |  |          |   | Average  |             |  | Average  |          
|Range of        |  | Number      |           |  | Exercise |   |          | Number      |  |          | Exercise  |  |  | Remaining        |      
|Exercise Prices |  | Outstanding |           |  | Price    |   |          | Exercisable |  |          | Price     |  |  | Contractual Life |      
|                |  |             |           |  |          |   |          |             |  |          |           |  |  |                  |      
|$8.00-8.94      |  |             | 319,635   |  |          | $ | 8.89     |             |  |          | 319,635   |  |  | $                | 8.89  |  |  |  | 4.7 | 
|               
|               
|               
|               
|$10.25-11.81    |  |             | 1,261,601 |  |          |   | 11.20    |             |  |          | 1,261,601 |  |  |                  | 11.20 |  |  |  | 7.0 | 
|               
|               
|               
|               
|$12.98-14.60    |  |             | 952,734   |  |          |   | 14.11    |             |  |          | 729,729   |  |  |                  | 14.15 |  |  |  | 6.2 | 
|               
|               
|               
|               
|$15.19-16.59    |  |             | 648,500   |  |          |   | 15.41    |             |  |          | 624,506   |  |  |                  | 15.38 |  |  |  | 6.6 | 
|               
|               
|               
|               
|$18.19-20.31    |  |             | 803,633   |  |          |   | 18.65    |             |  |          | 803,633   |  |  |                  | 18.65 |  |  |  | 4.3 | 
|                |  |             |           |  |          |   |          |             |  |          |           |  |  |                  |      
|                |  |             | 3,986,103 |  |          | $ | 13.90    |             |  |          | 3,739,104 |  |  | $                | 13.88 |  |  |  | 6.0 | 
|                |  |             |           |  |          |   |          |             |  |          |           |  |  |                  |      



79



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##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                             
| | ----------------------------
| | Employee Stock Purchase Plan

ESPP


80



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##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |                           
|-------- | --------------------------
|Note 14. | Related Party Transactions







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | During fiscal 2004, we maintained a revolving credit facility
    (in which SunTrust Banks, Inc. has a 22.92% share) under which
    SunTrust Bank, Atlanta, a wholly owned subsidiary of SunTrust
    Banks, Inc., served as agent. We had aggregate borrowing
    availability thereunder of $75.0 million through June 2006.
    As of September 30, 2004, we had no borrowings outstanding
    thereunder.                                                                                             
|
| |  | During fiscal 2003 and 2004, we entered into derivative
    transactions with SunTrust Capital Markets. At the end of fiscal
    2004, we had no derivative transactions in place with SunTrust
    Capital Markets. At the end of fiscal 2003, we had notional
    amounts outstanding on interest rate swaps of $50.0 million
    and foreign exchange forward contracts of approximately
    $2.5 million.                                                                                              
|
| |  | At September 30, 2004, we were a party with SunTrust Banks,
    Inc. to a letter of credit agreement relating to industrial
    development revenue bonds issued on our behalf and relating to
    aspects of our business.                                                                                                                                                                                                                                                                                
|
| |  | SunTrust Banks, Inc., through one of its subsidiaries, Trusco
    Capital Management, Inc., managed some of the assets in our
    defined benefit plan, which totaled approximately
    $65.0 million as of September 30, 2004.                                                                                                                                                                                                                                                                            
|
| |  | Until May 2003, we maintained a $24.8 million synthetic
    lease facility with an entity affiliated with SunTrust Bank,
    Atlanta. On May 30, 2003, we exercised our option to
    purchase the land, buildings and improvements under this
    facility for approximately $24.5 million, which represented
    the lessors original costs for such assets, plus related
    costs and expenses.                                                                                                       
|
| |  | SunTrust Banks, Inc. and its subsidiaries have performed other
    banking and financial consulting services for us in fiscal 2004
    and 2003. Our aggregate payments to SunTrust Banks, Inc. and its
    subsidiaries for these services, together with all of the other
    services described above in this section, did not exceed 1% of
    our gross revenues during fiscal 2004 and 2003,or 1% of SunTrust
    Banks gross revenues during its fiscal years ended
    December 31, 2003 and 2002.

81



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##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |                              
|-------- | -----------------------------
|Note 15. | Commitments and Contingencies



| |                  
| | -----------------
| | Capital Additions

Managements
Discussion and Analysis of Financial Condition and Results of
Operations  Contractual Obligations.




| |                                
| | -------------------------------
| | Environmental and Other Matters



Business 
Forward-Looking Information and Risk Factors.








| |   |                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | With respect to each of two sites, while we have been identified
    as a PRP, our records reflect no evidence that we are associated
    with the site. Accordingly, if we are considered to be a PRP, we
    believe that we should be categorized as an unproven PRP.
|
| |  | With respect to each of eight sites, we preliminarily determined
    that, while we may be associated with the site and while it is
    probable that we have incurred a liability with respect to the
    site, one of the following conclusions was applicable:       



| |   |                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | With respect to each of six sites, we determined that it was
    appropriate to conclude that, while it was not estimable, the
    potential liability was reasonably likely to be a de minimusamount and immaterial.                                                   
|
| |  | With respect to each of two sites, we have preliminarily
    determined that it was appropriate to conclude that the
    potential liability was best reflected by a range of reasonably
    possible liabilities all of which we expect to be de minimusand immaterial.

82



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ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |           
| | ----------
| | Guarantees





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We have a 49% ownership interest in Seven Hills, a joint
    venture. The partners of the joint venture guarantee funding of
    net losses in proportion to their share of ownership.                                                                                                                                                                                                                                       
|
| |  | We lease certain manufacturing and warehousing facilities and
    equipment under various operating leases. A substantial number
    of these leases require us to indemnify the lessor in the event
    that additional taxes are assessed due to a change in the tax
    law. We are unable to estimate our maximum exposure under these
    leases because our exposure is dependent on future changes in
    the tax law.





| |                             
| | ----------------------------
| | Insurance Placed with Kemper



83



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ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|         |                    
|-------- | -------------------
|Note 16. | Segment Information









|                               |                                                 |                           |           |         |      |   |           |         |  |   |           |         | 
|------------------------------ | ----------------------------------------------- | ------------------------- | --------- | ------- | ---- | - | --------- | ------- |  | - | --------- | ------- | 
|                               |                                                 | Years Ended September 30, |          
|                               |                                                 |                           |          
|                               |                                                 | 2005                      |           |         | 2004 |   |           | 2003    | 
|                               |                                                 |                           |           |         |      |   |           |         | 
|Net sales (aggregate):         |                                                 |                           |           |         |      |   |           |         |  |   |           |        
|                              
|                              
|                              
|                              
|                               | Packaging Products                              |                           | $         | 993,977 |      |   | $         | 908,085 |  |   | $         | 801,402 | 
|                              
|                              
|                              
|                              
|                               | Merchandising Displays and Corrugated Packaging |                           |           | 333,812 |      |   |           | 318,274 |  |   |           | 291,238 | 
|                              
|                              
|                              
|                              
|                               | Paperboard                                      |                           |           | 615,443 |      |   |           | 539,882 |  |   |           | 509,941 | 
|                               |                                                 |                           |           |         |      |   |           |         | 
|Total                          |                                                 | $                         | 1,943,232 |         |      | $ | 1,766,241 |         |  | $ | 1,602,581 |        
|                               |                                                 |                           |           |         |      |   |           |         | 
|Less net sales (intersegment): |                                                 |                           |           |         |      |   |           |         |  |   |           |        
|                              
|                              
|                              
|                              
|                               | Packaging Products                              |                           | $         | 3,444   |      |   | $         | 3,485   |  |   | $         | 4,576   | 
|                              
|                              
|                              
|                              
|                               | Merchandising Displays and Corrugated Packaging |                           |           | 4,033   |      |   |           | 4,678   |  |   |           | 5,070   | 
|                              
|                              
|                              
|                              
|                               | Paperboard                                      |                           |           | 202,274 |      |   |           | 176,817 |  |   |           | 159,589 | 
|                               |                                                 |                           |           |         |      |   |           |         | 
|Total                          |                                                 | $                         | 209,751   |         |      | $ | 184,980   |         |  | $ | 169,235   |        
|                               |                                                 |                           |           |         |      |   |           |         | 

84



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##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                      |                                                 |                           |           |         |      |   |           |         |  |   |           |         | 
|----------------------------------------------------- | ----------------------------------------------- | ------------------------- | --------- | ------- | ---- | - | --------- | ------- |  | - | --------- | ------- | 
|                                                      |                                                 | Years Ended September 30, |          
|                                                      |                                                 |                           |          
|                                                      |                                                 | 2005                      |           |         | 2004 |   |           | 2003    | 
|                                                      |                                                 |                           |           |         |      |   |           |         | 
|Net sales (unaffiliated customers):                   |                                                 |                           |           |         |      |   |           |         |  |   |           |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Packaging Products                              |                           | $         | 990,533 |      |   | $         | 904,600 |  |   | $         | 796,826 | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Merchandising Displays and Corrugated Packaging |                           |           | 329,779 |      |   |           | 313,596 |  |   |           | 286,168 | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Paperboard                                      |                           |           | 413,169 |      |   |           | 363,065 |  |   |           | 350,352 | 
|                                                      |                                                 |                           |           |         |      |   |           |         | 
|Total                                                 |                                                 | $                         | 1,733,481 |         |      | $ | 1,581,261 |         |  | $ | 1,433,346 |        
|                                                      |                                                 |                           |           |         |      |   |           |         | 
|Segment income:                                       |                                                 |                           |           |         |      |   |           |         |  |   |           |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Packaging Products                              |                           | $         | 33,417  |      |   | $         | 37,997  |  |   | $         | 38,560  | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Merchandising Displays and Corrugated Packaging |                           |           | 21,096  |      |   |           | 29,075  |  |   |           | 28,569  | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Paperboard                                      |                           |           | 31,597  |      |   |           | 15,751  |  |   |           | 21,764  | 
|                                                      |                                                 |                           |           |         |      |   |           |         | 
|                                                      |                                                 |                           | 86,110    |         |      |   | 82,823    |         |  |   | 88,893    |        
|                                                     
|                                                     
|                                                     
|                                                     
|Restructuring and other costs                         |                                                 |                           | (7,525    | )       |      |   | (32,738   | )       |  |   | (1,494    | )      
|                                                     
|                                                     
|                                                     
|                                                     
|Other non-allocated expenses                          |                                                 |                           | (17,722   | )       |      |   | (12,452   | )       |  |   | (9,665    | )      
|                                                     
|                                                     
|                                                     
|                                                     
|Interest expense                                      |                                                 |                           | (36,640   | )       |      |   | (23,566   | )       |  |   | (26,871   | )      
|                                                     
|                                                     
|                                                     
|                                                     
|Interest and other income (expense)                   |                                                 |                           | 465       |         |      |   | (143      | )       |  |   | 73        |        
|                                                     
|                                                     
|                                                     
|                                                     
|Minority interest in consolidated subsidiary          |                                                 |                           | (4,832    | )       |      |   | (3,419    | )       |  |   | (3,248    | )      
|                                                      |                                                 |                           |           |         |      |   |           |         | 
|Income from continuing operations before income taxes |                                                 | $                         | 19,856    |         |      | $ | 10,505    |         |  | $ | 47,688    |        
|                                                      |                                                 |                           |           |         |      |   |           |         | 
|Identifiable assets:                                  |                                                 |                           |           |         |      |   |           |         |  |   |           |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Packaging Products                              |                           | $         | 674,536 |      |   | $         | 518,648 |  |   | $         | 488,898 | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Merchandising Displays and Corrugated Packaging |                           |           | 175,324 |      |   |           | 194,365 |  |   |           | 176,734 | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Paperboard                                      |                           |           | 901,031 |      |   |           | 498,917 |  |   |           | 539,557 | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Assets held for sale                            |                           |           | 3,435   |      |   |           | 1,526   |  |   |           | 52,703  | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Corporate                                       |                           |           | 44,108  |      |   |           | 70,357  |  |   |           | 33,503  | 
|                                                      |                                                 |                           |           |         |      |   |           |         | 
|Total                                                 |                                                 | $                         | 1,798,434 |         |      | $ | 1,283,813 |         |  | $ | 1,291,395 |        
|                                                      |                                                 |                           |           |         |      |   |           |         | 
|Goodwill                                              |                                                 |                           |           |         |      |   |           |         |  |   |           |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Packaging Products                              |                           | $         | 81,187  |      |   | $         | 64,554  |  |   | $         | 59,178  | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Merchandising Displays and Corrugated Packaging |                           |           | 28,800  |      |   |           | 28,792  |  |   |           | 28,663  | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Paperboard                                      |                           |           | 240,954 |      |   |           | 203,714 |  |   |           | 203,958 | 
|                                                      |                                                 |                           |           |         |      |   |           |         | 
|Total                                                 |                                                 | $                         | 350,941   |         |      | $ | 297,060   |         |  | $ | 291,799   |        
|                                                      |                                                 |                           |           |         |      |   |           |         | 
|Depreciation and amortization:                        |                                                 |                           |           |         |      |   |           |         |  |   |           |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Packaging Products                              |                           | $         | 37,580  |      |   | $         | 33,120  |  |   | $         | 29,263  | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Merchandising Displays and Corrugated Packaging |                           |           | 10,987  |      |   |           | 9,662   |  |   |           | 10,665  | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Paperboard                                      |                           |           | 32,273  |      |   |           | 28,079  |  |   |           | 28,849  | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Corporate                                       |                           |           | 3,200   |      |   |           | 3,328   |  |   |           | 3,906   | 
|                                                      |                                                 |                           |           |         |      |   |           |         | 
|Total                                                 |                                                 | $                         | 84,040    |         |      | $ | 74,189    |         |  | $ | 72,683    |        
|                                                      |                                                 |                           |           |         |      |   |           |         | 

85



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##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                      |                                                 |                           |        |        |      |   |        |        |  |   |        |        | 
|--------------------- | ----------------------------------------------- | ------------------------- | ------ | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|                      |                                                 | Years Ended September 30, |       
|                      |                                                 |                           |       
|                      |                                                 | 2005                      |        |        | 2004 |   |        | 2003   | 
|                      |                                                 |                           |        |        |      |   |        |        | 
|Capital expenditures: |                                                 |                           |        |        |      |   |        |        |  |   |        |       
|                     
|                     
|                     
|                     
|                      | Packaging Products                              |                           | $      | 26,264 |      |   | $      | 36,760 |  |   | $      | 25,148 | 
|                     
|                     
|                     
|                     
|                      | Merchandising Displays and Corrugated Packaging |                           |        | 6,739  |      |   |        | 6,492  |  |   |        | 14,524 | 
|                     
|                     
|                     
|                     
|                      | Paperboard                                      |                           |        | 19,362 |      |   |        | 16,647 |  |   |        | 16,093 | 
|                     
|                     
|                     
|                     
|                      | Corporate                                       |                           |        | 1,961  |      |   |        | 924    |  |   |        | 1,637  | 
|                      |                                                 |                           |        |        |      |   |        |        | 
|Total                 |                                                 | $                         | 54,326 |        |      | $ | 60,823 |        |  | $ | 57,402 |       
|                      |                                                 |                           |        |        |      |   |        |        | 



|                                 |  |           |        |                 |               |   |        |            |  |   |         |  |  |   |         | 
|-------------------------------- |  | --------- | ------ | --------------- | ------------- | - | ------ | ---------- |  | - | ------- |  |  | - | ------- | 
|                                 |  |           |        | Merch. Displays |               |   |        |            | 
|                                 |  | Packaging |        |                 | and Corr. Pkg |   |        | Paperboard |  |   | Total   | 
|                                 |  |           |        |                 |               |   |        |            |  |   |         | 
|Balance as of October 1, 2004    |  | $         | 64,554 |                 |               | $ | 28,792 |            |  | $ | 203,714 |  |  | $ | 297,060 | 
|                                
|                                
|                                
|                                
|Goodwill acquired                |  |           | 13,750 |                 |               |   |       |            |  |   | 37,240  |  |  |   | 50,990  | 
|                                
|                                
|                                
|                                
|Translation adjustment           |  |           | 2,883  |                 |               |   | 8      |            |  |   |        |  |  |   | 2,891   | 
|                                 |  |           |        |                 |               |   |        |            |  |   |         | 
|Balance as of September 30, 2005 |  | $         | 81,187 |                 |               | $ | 28,800 |            |  | $ | 240,954 |  |  | $ | 350,941 | 
|                                 |  |           |        |                 |               |   |        |            |  |   |         | 





|         |                                         
|-------- | ----------------------------------------
|Note 17. | Financial Results by Quarter (Unaudited)

|                                                      |  |                                       |         |  |         |   |         |         |  |   |         |  |  |   |         | 
|----------------------------------------------------- |  | ------------------------------------- | ------- |  | ------- | - | ------- | ------- |  | - | ------- |  |  | - | ------- | 
|                                                      |  | First                                 |         |  | Second  |   |         | Third   |  |   | Fourth  | 
|2005                                                  |  | Quarter                               |         |  | Quarter |   |         | Quarter |  |   | Quarter | 
|                                                      |  |                                       |         |  |         |   |         |         |  |   |         | 
|                                                      |  | (In thousands, except per share data) |        
|                                                     
|                                                     
|                                                     
|                                                     
|Net sales                                             |  | $                                     | 385,817 |  |         | $ | 394,338 |         |  | $ | 424,679 |  |  | $ | 528,647 | 
|                                                     
|                                                     
|                                                     
|                                                     
|Gross profit                                          |  |                                       | 55,001  |  |         |   | 58,372  |         |  |   | 71,895  |  |  |   | 88,996  | 
|                                                     
|                                                     
|                                                     
|                                                     
|Restructuring and other costs                         |  |                                       | 476     |  |         |   | 2,724   |         |  |   | 777     |  |  |   | 3,548   | 
|                                                     
|                                                     
|                                                     
|                                                     
|Income from continuing operations before income taxes |  |                                       | 1,730   |  |         |   | 430     |         |  |   | 9,592   |  |  |   | 8,104   | 
|                                                     
|                                                     
|                                                     
|                                                     
|Net income (a)                                        |  |                                       | 482     |  |         |   | 240     |         |  |   | 11,982  |  |  |   | 4,910   | 
|                                                     
|                                                     
|                                                     
|                                                     
|Basic earnings per share from continuing operations   |  |                                       | 0.01    |  |         |   | 0.01    |         |  |   | 0.34    |  |  |   | 0.14    | 
|                                                     
|                                                     
|                                                     
|                                                     
|Diluted earnings per share from continuing operations |  |                                       | 0.01    |  |         |   | 0.01    |         |  |   | 0.33    |  |  |   | 0.14    | 
|                                                     
|                                                     
|                                                     
|                                                     
|Basic earnings per share                              |  |                                       | 0.01    |  |         |   | 0.01    |         |  |   | 0.34    |  |  |   | 0.14    | 
|                                                     
|                                                     
|                                                     
|                                                     
|Diluted earnings per share                            |  |                                       | 0.01    |  |         |   | 0.01    |         |  |   | 0.33    |  |  |   | 0.14    | 

86



---



##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                             |  |                                       |         |  |         |   |         |         |  |   |         |   |  |   |         | 
|------------------------------------------------------------ |  | ------------------------------------- | ------- |  | ------- | - | ------- | ------- |  | - | ------- | - |  | - | ------- | 
|                                                             |  | First                                 |         |  | Second  |   |         | Third   |  |   | Fourth  |  
|2004                                                         |  | Quarter                               |         |  | Quarter |   |         | Quarter |  |   | Quarter |  
|                                                             |  |                                       |         |  |         |   |         |         |  |   |         |  
|                                                             |  | (In thousands, except per share data) |        
|                                                            
|                                                            
|                                                            
|                                                            
|Net sales                                                    |  | $                                     | 366,110 |  |         | $ | 400,000 |         |  | $ | 397,281 |   |  | $ | 417,870 | 
|                                                            
|                                                            
|                                                            
|                                                            
|Gross profit                                                 |  |                                       | 61,095  |  |         |   | 67,695  |         |  |   | 64,969  |   |  |   | 73,571  | 
|                                                            
|                                                            
|                                                            
|                                                            
|Restructuring and other costs                                |  |                                       | 105     |  |         |   | 5,643   |         |  |   | 21,317  |   |  |   | 5,673   | 
|                                                            
|                                                            
|                                                            
|                                                            
|Income (loss) from continuing operations before income taxes |  |                                       | 6,695   |  |         |   | 4,675   |         |  |   | (11,337 | ) |  |   | 10,472  | 
|                                                            
|                                                            
|                                                            
|                                                            
|Net income (loss) (b)                                        |  |                                       | 11,879  |  |         |   | 2,910   |         |  |   | (3,726  | ) |  |   | 6,585   | 
|                                                            
|                                                            
|                                                            
|                                                            
|Basic earnings (loss) per share from continuing operations   |  |                                       | 0.12    |  |         |   | 0.09    |         |  |   | (0.12   | ) |  |   | 0.19    | 
|                                                            
|                                                            
|                                                            
|                                                            
|Diluted earnings (loss) per share from continuing operations |  |                                       | 0.12    |  |         |   | 0.09    |         |  |   | (0.12   | ) |  |   | 0.18    | 
|                                                            
|                                                            
|                                                            
|                                                            
|Basic earnings (loss) per share                              |  |                                       | 0.34    |  |         |   | 0.08    |         |  |   | (0.11   | ) |  |   | 0.19    | 
|                                                            
|                                                            
|                                                            
|                                                            
|Diluted earnings (loss) per share                            |  |                                       | 0.34    |  |         |   | 0.08    |         |  |   | (0.11   | ) |  |   | 0.18    | 

|                                                      |  |                                       |         |   |         |   |         |         |  |   |         |  |  |   |         | 
|----------------------------------------------------- |  | ------------------------------------- | ------- | - | ------- | - | ------- | ------- |  | - | ------- |  |  | - | ------- | 
|                                                      |  | First                                 |         |   | Second  |   |         | Third   |  |   | Fourth  | 
|2003                                                  |  | Quarter                               |         |   | Quarter |   |         | Quarter |  |   | Quarter | 
|                                                      |  |                                       |         |   |         |   |         |         |  |   |         | 
|                                                      |  | (In thousands, except per share data) |        
|                                                     
|                                                     
|                                                     
|                                                     
|Net sales                                             |  | $                                     | 329,849 |   |         | $ | 350,234 |         |  | $ | 368,232 |  |  | $ | 385,031 | 
|                                                     
|                                                     
|                                                     
|                                                     
|Gross profit                                          |  |                                       | 61,209  |   |         |   | 62,344  |         |  |   | 67,958  |  |  |   | 70,845  | 
|                                                     
|                                                     
|                                                     
|                                                     
|Restructuring and other costs                         |  |                                       | (519    | ) |         |   | 782     |         |  |   | 648     |  |  |   | 583     | 
|                                                     
|                                                     
|                                                     
|                                                     
|Income from continuing operations before income taxes |  |                                       | 8,128   |   |         |   | 11,509  |         |  |   | 12,738  |  |  |   | 15,313  | 
|                                                     
|                                                     
|                                                     
|                                                     
|Net income                                            |  |                                       | 5,070   |   |         |   | 7,330   |         |  |   | 7,212   |  |  |   | 9,964   | 
|                                                     
|                                                     
|                                                     
|                                                     
|Basic earnings per share from continuing operations   |  |                                       | 0.14    |   |         |   | 0.21    |         |  |   | 0.23    |  |  |   | 0.28    | 
|                                                     
|                                                     
|                                                     
|                                                     
|Diluted earnings per share from continuing operations |  |                                       | 0.14    |   |         |   | 0.21    |         |  |   | 0.23    |  |  |   | 0.27    | 
|                                                     
|                                                     
|                                                     
|                                                     
|Basic earnings per share                              |  |                                       | 0.15    |   |         |   | 0.21    |         |  |   | 0.21    |  |  |   | 0.29    | 
|                                                     
|                                                     
|                                                     
|                                                     
|Diluted earnings per share                            |  |                                       | 0.15    |   |         |   | 0.21    |         |  |   | 0.21    |  |  |   | 0.28    | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | In the first quarter of fiscal 2005, we recorded additional tax
    expense of $0.6 million related to our acquisition of the
    Athens corrugated sheet stock manufacturing facility. We
    originally recorded this adjustment as a reduction of tax
    expense in the year ended September 30, 2004. In the third
    quarter of fiscal 2005 we recorded a $4.6 million benefit
    resulting from the resolution of historical federal and state
    tax deductions that we had previously reserved. In the fourth
    quarter of fiscal 2005, we recorded a $1.4 million tax
    benefit that resulted from adjustments to temporary differences
    that will not reverse in future periods.                                                                                                                                                                                                     
|   
|(b) | In the third quarter of fiscal 2004 we reviewed our corporate
    structure and reorganized our corporate subsidiaries, reducing
    the number of corporate entities and the complexity of our
    organizational structure. The changes we implemented as a result
    of this review resulted in a one-time income tax benefit.
    Approximately $1.2 million of the benefit related to the
    filing of amended tax returns for fiscal years 2001 and 2002 and
    comparable adjustments made to the fiscal 2003 tax returns. The
    changes related to certain income apportionment factors and a
    correction of an allocation of intercompany charges. The impact
    of these changes was not material to our net income for any of
    the fiscal years in question; therefore, we recorded the
    cumulative impact in the current period. The $1.2 million
    benefit was $0.3 million,

87



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ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | $0.3 million, and $0.6 million for fiscal 2001, fiscal
    2002, and fiscal 2003, respectively. We recorded the benefit in
    the third quarter of fiscal 2004.



|                                             |             |         |   |         |         |  |   |         |  |  |   |         |   |  |  |  | 
|-------------------------------------------- | ----------- | ------- | - | ------- | ------- |  | - | ------- |  |  | - | ------- | - |  |  |  | 
|                                             |             | First   |   |         | Second  |  |   | Third   |  |  |  
|2005                                         |             | Quarter |   |         | Quarter |  |   | Quarter |  |  |  
|                                             |             |         |   |         |         |  |   |         |  |  |  
|Cost of goods sold                           |             |         |   |         |         |  |   |         |  |  |   |         |   |  |  | 
|                                            
|                                            
|                                            
|                                            
|                                             | as reported |         | $ | 329,993 |         |  | $ | 335,159 |  |  | $ | 351,927 |   |  |  |  | 
|                                            
|                                            
|                                            
|                                            
|                                             | as revised  |         |   | 330,816 |         |  |   | 335,966 |  |  |   | 352,784 |   |  |  |  | 
|                                            
|                                            
|                                            
|                                            
|Selling, general and administrative expenses |             |         |   |         |         |  |   |         |  |  |   |         |   |  |  | 
|                                            
|                                            
|                                            
|                                            
|                                             | as reported |         |   | 46,458  |         |  |   | 48,509  |  |  |   | 50,605  |   |  |  |  | 
|                                            
|                                            
|                                            
|                                            
|                                             | as revised  |         |   | 45,801  |         |  |   | 47,868  |  |  |   | 49,914  |   |  |  |  | 
|                                            
|                                            
|                                            
|                                            
|Provision for income taxes                   |             |         |   |         |         |  |   |         |  |  |   |         |   |  |  | 
|                                            
|                                            
|                                            
|                                            
|                                             | as reported |         |   | 1,414   |         |  |   | 356     |  |  |   | (2,224  | ) |  |  |  | 
|                                            
|                                            
|                                            
|                                            
|                                             | as revised  |         |   | 1,248   |         |  |   | 190     |  |  |   | (2,390  | ) |  |  |  | 

|                                             |             |         |   |         |         |  |   |         |  |  |         |         |   |  |   |         | 
|-------------------------------------------- | ----------- | ------- | - | ------- | ------- |  | - | ------- |  |  | ------- | ------- | - |  | - | ------- | 
|                                             |             | First   |   |         | Second  |  |   | Third   |  |  | Fourth  |        
|2004                                         |             | Quarter |   |         | Quarter |  |   | Quarter |  |  | Quarter |        
|                                             |             |         |   |         |         |  |   |         |  |  |         |        
|Cost of goods sold                           |             |         |   |         |         |  |   |         |  |  |         |         |   |  |   |        
|                                            
|                                            
|                                            
|                                            
|                                             | as reported |         | $ | 304,259 |         |  | $ | 331,791 |  |  | $       | 331,403 |   |  | $ | 343,471 | 
|                                            
|                                            
|                                            
|                                            
|                                             | as revised  |         |   | 305,015 |         |  |   | 332,305 |  |  |         | 332,312 |   |  |   | 344,299 | 
|Selling, general and administrative expenses |             |         |   |         |         |  |   |         |  |  |         |         |   |  |   |        
|                                            
|                                            
|                                            
|                                            
|                                             | as reported |         |   | 48,101  |         |  |   | 51,296  |  |  |         | 48,583  |   |  |   | 51,375  | 
|                                            
|                                            
|                                            
|                                            
|                                             | as revised  |         |   | 47,528  |         |  |   | 50,964  |  |  |         | 47,856  |   |  |   | 50,730  | 
|Provision for income taxes                   |             |         |   |         |         |  |   |         |  |  |         |         |   |  |   |        
|                                            
|                                            
|                                            
|                                            
|                                             | as reported |         |   | 2,712   |         |  |   | 1,848   |  |  |         | (7,079  | ) |  |   | 4,103   | 
|                                            
|                                            
|                                            
|                                            
|                                             | as revised  |         |   | 2,529   |         |  |   | 1,666   |  |  |         | (7,261  | ) |  |   | 3,920   | 

|                                             |             |         |   |         |         |  |   |         |  |  |         |         |  |  |   |         | 
|-------------------------------------------- | ----------- | ------- | - | ------- | ------- |  | - | ------- |  |  | ------- | ------- |  |  | - | ------- | 
|                                             |             | First   |   |         | Second  |  |   | Third   |  |  | Fourth  |        
|2003                                         |             | Quarter |   |         | Quarter |  |   | Quarter |  |  | Quarter |        
|                                             |             |         |   |         |         |  |   |         |  |  |         |        
|Cost of goods sold                           |             |         |   |         |         |  |   |         |  |  |         |         |  |  |   |        
|                                            
|                                            
|                                            
|                                            
|                                             | as reported |         | $ | 267,830 |         |  | $ | 287,126 |  |  | $       | 299,771 |  |  | $ | 313,453 | 
|                                            
|                                            
|                                            
|                                            
|                                             | as revised  |         |   | 268,640 |         |  |   | 287,890 |  |  |         | 300,274 |  |  |   | 314,186 | 
|Selling, general and administrative expenses |             |         |   |         |         |  |   |         |  |  |         |         |  |  |   |        
|                                            
|                                            
|                                            
|                                            
|                                             | as reported |         |   | 47,112  |         |  |   | 43,089  |  |  |         | 46,558  |  |  |   | 48,183  | 
|                                            
|                                            
|                                            
|                                            
|                                             | as revised  |         |   | 46,451  |         |  |   | 42,475  |  |  |         | 46,203  |  |  |   | 47,600  | 
|Provision for income taxes                   |             |         |   |         |         |  |   |         |  |  |         |         |  |  |   |        
|                                            
|                                            
|                                            
|                                            
|                                             | as reported |         |   | 3,332   |         |  |   | 4,528   |  |  |         | 5,033   |  |  |   | 5,851   | 
|                                            
|                                            
|                                            
|                                            
|                                             | as revised  |         |   | 3,183   |         |  |   | 4,378   |  |  |         | 4,885   |  |  |   | 5,701   | 



88



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##### Table of Contents



ROCK-TENN COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|         |                              
|-------- | -----------------------------
|Note 18. | Subsequent Events (unaudited)



| |                        
| | -----------------------
| | Announced Plant Closure





| |                                 
| | --------------------------------
| | Increase in Receivables Facility



89



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##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM












Internal Control 
Integrated Framework




| |                  
| | -----------------
| | ERNST & YOUNG LLP





90



---



##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


ON INTERNAL CONTROL OVER FINANCIAL REPORTING






Internal Control  Integrated Framework










91



---



##### Table of Contents









| |                  
| | -----------------
| | ERNST & YOUNG LLP





92



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##### Table of Contents



ROCK-TENN COMPANY





REPORT OF MANAGEMENT ON RESPONSIBILITY FOR FINANCIAL
STATEMENTS AND


MAINTAINING ADEQUATE INTERNAL CONTROL OVER FINANCIAL
REPORTING


Managements Responsibility for the Financial
Statements




Internal Control Over Financial Reporting


(Exchange
Act)




Internal Control  Integrated Framework. GSPP Acquisition




93



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##### Table of Contents



Audit Committee Responsibility






| |                                     
| | ------------------------------------
| | james a. rubright,                  
| | Chairman and Chief Executive Officer
|
| | steven c. voorhees,                 
| | Executive Vice President and        
| | Chief Financial Officer             

94



---



##### Table of Contents








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
    ACCOUNTING AND FINANCIAL DISCLOSURE








|         |                        
|-------- | -----------------------
|Item 9A. | CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures






| |   |                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | that information required to be disclosed by us in the reports
    that we file or submit under the Securities Exchange Act of 1934
    (the Exchange Act) is recorded, processed,
    summarized and reported, within the time periods specified in
    the SECs rules and forms; and                                                                                                         
|
| |  | that information required to be disclosed by us in the reports
    that we file under the Exchange Act is accumulated and
    communicated to our management, including our Chairman of the
    Board and Chief Executive Officer (CEO)and
    our Executive Vice President and Chief Financial Officer
    (CFO), as appropriate to allow timely
    decisions regarding required disclosure.





Internal Control Over Financial Reporting










95



---



##### Table of Contents



CEO and CFO Certifications









|         |                  
|-------- | -----------------
|Item 9B. | OTHER INFORMATION






PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Election of
Directors Nominees for
Election  Term Expiring 2009, Incumbent
Directors  Term Expiring 2007, Incumbent
Directors  Term Expiring 2008, Committees
of the Board of Directors  Audit Committee, Codes of Business Conduct and
Ethics  Code of Ethical Conduct for CEO and Senior
Financial Officers, Executive Officers Identification of Executive Officers Additional
Information Section 16(a) Beneficial Ownership Reporting
Compliance







|         |                       
|-------- | ----------------------
|Item 11. | EXECUTIVE COMPENSATION

Election of
Directors Compensation of
Directors Executive Compensation Summary Compensation Table, Option
Grants Table, Aggregated Options Table, Retirement Benefit Plans Report on Executive Compensation Stock Price Performance Graph







|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
    MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Common Stock
Ownership by Management and Principal Shareholders Executive
Compensation Equity
Compensation Plan Information







|         |                                               
|-------- | ----------------------------------------------
|Item 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Certain
Transactions







|         |                                       
|-------- | --------------------------------------
|Item 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES

Independent
Registered Public Accounting Firm Fees Audit Committee
Pre-Approval of Services by the Independent Registered Public
Accounting Firm


96



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##### Table of Contents






PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES



|    |                             
|--- | ----------------------------
|(a) | 1.     Financial Statements.



|                                                                                                          |  |      |    | 
|--------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                          |  | Page |   
|                                                                                                          |  |      |   
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|Consolidated Statements of Income for the years ended
    September 30, 2005, 2004 and 2003               |  |      | 41 | 
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|Consolidated Balance Sheets as of September 30, 2005 and
    2004                                         |  |      | 42 | 
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|Consolidated Statements of Shareholders Equity for the
    years ended September 30, 2005, 2004 and 2003 |  |      | 43 | 
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|Consolidated Statements of Cash Flows for the years ended
    September 30, 2005, 2004 and 2003           |  |      | 44 | 
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|Notes to Consolidated Financial Statements                                                                |  |      | 46 | 
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|Report of Independent Registered Public Accounting Firm                                                   |  |      | 90 | 
|                                                                                                         
|                                                                                                         
|                                                                                                         
|                                                                                                         
|Report of Independent Registered Public Accounting Firm On
    Internal Control Over Financial Reporting  |  |      | 91 | 



|   |                                                   
|-- | --------------------------------------------------
|2. | Financial Statement Schedule of Rock-Tenn Company.





| |                                                                                     
| | ------------------------------------------------------------------------------------
| | Schedule II  Valuation and Qualifying Accounts.                                    
|
| | All other schedules are omitted because they are not applicable
    or not required.



|   |          
|-- | ---------
|3. | Exhibits.

See separate Exhibit Index attached hereto and
incorporated herein.




|    |                                                                                          
|--- | -----------------------------------------------------------------------------------------
|(c) | See Item 15(a)(3) and separate Exhibit Index
    attached hereto and incorporated herein.



|    |                
|--- | ---------------
|(d) | Not applicable.

97



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##### Table of Contents



SIGNATURES






| |                  
| | -----------------
| | ROCK-TENN COMPANY



|                         | 
|------------------------ | 
|Dated: December 14, 2005 | 

| |     |                      
| | --- | ---------------------
| | By: | /s/ JAMES A. RUBRIGHT

| |                          
| | -------------------------
| |                          
| | James A. Rubright        
| | Chairman of the Board and
| | Chief Executive Officer  



|                                                                     |  |                                                                                                           |  |                   |  | 
|-------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------- |  | ----------------- |  | 
|Signature                                                            |  | Title                                                                                                     |  | Date             
|                                                                     |  |                                                                                                           |  |                  
|                                                                    
|/s/ JAMES A. RUBRIGHTJames
    A. Rubright                           |  | Director, Chairman of the Board and
    Chief Executive Officer (Principal
    Executive Officer)         |  | December 14, 2005
|                                                                    
|/s/ STEVEN C. VOORHEESSteven
    C. Voorhees                         |  | Executive Vice President and Chief
    Financial Officer (Principal Financial and
    Accounting Officer) |  | December 14, 2005
|                                                                    
|/s/ STEPHEN G. ANDERSONStephen
    G. Anderson                       |  | Director                                                                                                  |  | December 14, 2005
|                                                                    
|/s/ J. HYATT BROWNJ.
    Hyatt Brown                                 |  | Director                                                                                                  |  | December 14, 2005
|                                                                    
|/s/ ROBERT B. CURREYRobert
    B. Currey                             |  | Director                                                                                                  |  | December 14, 2005
|                                                                    
|/s/ RUSSELL M. CURREYRussell
    M. Currey                           |  | Director                                                                                                  |  | December 14, 2005
|                                                                    
|/s/ G. STEPHEN FELKERG.
    Stephen Felker                           |  | Director                                                                                                  |  | December 14, 2005
|                                                                    
|/s/ LAWRENCE L.
    GELLERSTEDT, IIILawrence
    L. Gellerstedt, III |  | Director                                                                                                  |  | December 14, 2005
|                                                                    
|/s/ JOHN D. HOPKINSJohn
    D. Hopkins                               |  | Director                                                                                                  |  | December 14, 2005
|                                                                    
|/s/ JAMES W. JOHNSONJames
    W. Johnson                             |  | Director                                                                                                  |  | December 14, 2005
|                                                                    
|/s/ JOHN W. SPIEGELJohn
    W. Spiegel                               |  | Director                                                                                                  |  | December 14, 2005
|                                                                    
|/s/ JAMES E. YOUNGJames
    E. Young                                 |  | Director                                                                                                  |  | December 14, 2005

98



---



##### Table of Contents



INDEX TO EXHIBITS


|        |       |  |  |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|------- | ----- |  |  | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |  |                        
|Number  |       |  |  | Description of Exhibits
|        |       |  |  |                        
|        | 3.1   |  |  |                        |  | Restated and Amended Articles of Incorporation of the Registrant
    (incorporated by reference to Exhibit 3.1 to the
    Registrants Registration Statement on Form S-1, File
    No. 33-73312).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       
|        | 3.2   |  |  |                        |  | Articles of Amendment to the Registrants Restated and
    Amended Articles of Incorporation (incorporated by reference to
    Exhibit 3.2 of the Registrants Annual Report on
    Form 10-K for the year ended September 30, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       
|        | 3.3   |  |  |                        |  | Bylaws of the Registrant (incorporated by reference to
    Exhibit 3.3 of the Registrants Annual Report on
    Form 10-K for the year ended September 30, 2003).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       
|        | 4.1   |  |  |                        |  | Credit Agreement dated as of June 6, 2005, among the
    Registrant; Rock-Tenn Company of Canada; Wachovia Bank, National
    Association and Bank of America, N.A., acting through its Canada
    branch, as the lenders; Wachovia Capital Markets, LLC, SunTrust
    Robinson Humphrey, a division of SunTrust Capital Markets, Inc.,
    and Banc of America Securities, as the joint book runners;
    Wachovia Capital Markets, LLC and SunTrust Robinson Humphrey, a
    division of SunTrust Capital Markets, Inc., as the joint lead
    arrangers; SunTrust Bank, as syndication agent; Bank of America,
    N.A., as documentation agent; and the following subsidiaries of
    Rock-Tenn Company, as guarantors: Rock-Tenn Converting Company,
    Waldorf Corporation, PCPC, Inc., Rock-Tenn Company, Mill
    Division, LLC, Rock-Tenn Packaging and Paperboard, LLC,
    Rock-Tenn Mill Company, LLC, Rock-Tenn Shared Services, LLC,
    Rock-Tenn Services Inc., Alliance Display, LLC, Rock-Tenn
    Packaging Company, Rock-Tenn Company of Texas, Rock-Tenn
    Partition Company, Rock-Tenn Real Estate, LLC, Ling Industries
    Inc., 9124-1232 Quebec Inc., Groupe Cartem Wilco Inc., Wilco
    Inc., and Ling Quebec Inc. (incorporated by reference to
    Exhibit 4.2 of the Registrants Quarterly Report on
    Form 10-Q for the quarter ended June 30, 2005).
|       
|        | 4.2   |  |  |                        |  | The Registrant agrees to furnish to the Securities and Exchange
    Commission, upon request, a copy of any instrument defining the
    rights of holders of long-term debt of the Registrant and all of
    its consolidated subsidiaries and unconsolidated subsidiaries
    for which financial statements are required to be filed with the
    Securities and Exchange Commission.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       
|        | 4.3   |  |  |                        |  | Indenture between Rock-Tenn Company and SunTrust Bank, as
    successor trustee to Trust Company Bank (incorporated by
    reference to Exhibit 4.1 of the Registrants
    Registration Statement on Form S-3, File No. 33-93934).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       
|        | *10.1 |  |  |                        |  | Rock-Tenn Company 1993 Employee Stock Option Plan and Amendment
    Number One to the Rock-Tenn Company 1993 Employee Stock Option
    Plan (incorporated by reference to Exhibits 99.1 and 99.2,
    respectively, to the Registrants Registration Statement on
    Form S-8, File No. 333-77237).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       
|        | *10.2 |  |  |                        |  | Rock-Tenn Company Supplemental Executive Retirement Plan
    Effective as of October 1, 1994 (incorporated by reference
    to Exhibit 10.5 of the Registrants Annual Report on
    Form 10-K for the year ended September 30, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       
|        | *10.3 |  |  |                        |  | 2000 Incentive Stock Plan (incorporated by reference to the
    Registrants definitive Proxy Statement for the 2001 Annual
    Meeting of Shareholders filed with the SEC on December 18,
    2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       
|        | *10.4 |  |  |                        |  | 1993 Employee Stock Purchase Plan as Amended and Restated
    (incorporated by reference to Exhibit 99.3 to the
    Registrants Registration Statement on Form S-8, File
    No. 333-77237), as amended by Amendment No. One to 1993
    Employee Stock Purchase Plan (incorporated by reference to
    Exhibit 10.4 of the Registrants Annual Report on
    Form 10-K for the year ended September 30, 2003), and
    as further amended by Amendment No. Two to 1993 Employee Stock
    Purchase Plan (incorporated by reference to Exhibit 10.1 of
    the Registrants Quarterly Report on Form 10-Q for the
    quarter ended December 31, 2003), and as further amended by
    Amendment No. Three to 1993 Employee Stock Purchase Plan
    (incorporated by reference to Exhibit 10.4 of the
    Registrants Annual Report on Form 10-K for the year
    ended September 30, 2004).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              



---



##### Table of Contents



|        |       |  |  |                         |  |                                                                                                                                                                                                                                                                                      
|------- | ----- |  |  | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |  |                        
|Number  |       |  |  | Description of Exhibits
|        |       |  |  |                        
|       
|        | *10.5 |  |  |                        |  | Rock-Tenn Company Annual Executive Bonus Program (incorporated
    by reference to the Registrants definitive Proxy Statement
    for the 2002 Annual Meeting of Shareholders filed with the SEC
    on December 19, 2001).                                                         
|       
|        | *10.6 |  |  |                        |  | Rock-Tenn Company Supplemental Retirement Savings Plan as
    Effective as of May 15, 2003 (incorporated by reference to
    Exhibit 4.1 to the Registrants Registration Statement
    on Form S-8, File No. 333-104870).                                                           
|       
|        | *10.7 |  |  |                        |  | Amended and Restated Employment Agreement between Rock-Tenn
    Converting Company and James L. Einstein, dated as of
    February 21, 2003 (incorporated by reference to
    Exhibit 10.7 of the Registrants Annual Report on
    Form 10-K for the year ended September 30, 2003).
|       
|        | *10.8 |  |  |                        |  | 2004 Incentive Stock Plan (incorporated by reference to
    Exhibit 10.1 to the Registrants Current Report on
    Form 10-K filed with the SEC on February 3, 2005).                                                                                                                
|       
|        | *10.9 |  |  |                        |  | 2005 Shareholder Value Creation Incentive Plan
    (incorporated by reference to Exhibit 4.2 of the
    Registrants Quarterly Report on Form 10-Q for the
    quarter ended June 30, 2005).                                                                                         
|       
|        | 12    |  |  |                        |  | Statement re: Computation of Ratio of Earnings to Fixed Charges.                                                                                                                                                                                                                     
|       
|        | 21    |  |  |                        |  | Subsidiaries of the Registrant.                                                                                                                                                                                                                                                      
|       
|        | 23    |  |  |                        |  | Consent of Ernst & Young LLP, Independent Registered
    Public Accounting Firm.                                                                                                                                                                                                     
|       
|        | 31.1  |  |  |                        |  | Certification Accompanying Periodic Report Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002, executed by
    James A. Rubright, Chairman of the Board and Chief Executive
    Officer of Rock-Tenn Company.                                                             
|       
|        | 31.2  |  |  |                        |  | Certification Accompanying Periodic Report Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002, executed by
    Steven C. Voorhees, Executive Vice President and Chief Financial
    Officer of Rock-Tenn Company.                                                         





| |      |  |  |   |  |                                                                                                                                                                                                                                                                                                                                                         
| | ---- |  |  | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 32.1 |  |  |  |  | Certification Pursuant to 18 U.S.C. Section 1350, as
    Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002, executed by James A. Rubright, Chairman of the Board
    and Chief Executive Officer of Rock-Tenn Company, and by Steven
    C. Voorhees, Executive Vice President and Chief Financial
    Officer of Rock-Tenn Company.






|  |                                                         
|- | --------------------------------------------------------
|* | Management contract or compensatory plan or arrangement.



---



##### Table of Contents



SCHEDULE II


ROCK-TENN COMPANY


September 30, 2005


|                               |                                                 |                |   |       |             |  |   |        |   |  |            |            |  |        |   |         |   |  |   |       | 
|------------------------------ | ----------------------------------------------- | -------------- | - | ----- | ----------- |  | - | ------ | - |  | ---------- | ---------- |  | ------ | - | ------- | - |  | - | ----- | 
|                               |                                                 | Balance at     |   |       | Charged to  |  |   |        |   |  |            | Balance at | 
|                               |                                                 | Beginning      |   |       | Costs and   |  |   |        |   |  |            | End of     | 
|Description                    |                                                 | of Period      |   |       | Expenses(1) |  |   | Other  |   |  | Deductions |            |  | Period |  
|                               |                                                 |                |   |       |             |  |   |        |   |  |            |            |  |        |  
|                               |                                                 | (In thousands) |  
|                              
|                              
|                              
|                              
|Year ended September 30, 2005: |                                                 |                |   |       |             |  |   |        |   |  |            |            |  |        |   |         |   |  |   |      
|                              
|                              
|                              
|                              
|                               | Allowance for Doubtful Accounts, Returns        |                | $ | 6,431 |             |  | $ | 18,610 |   |  | $          | 867        |  |        | $ | (20,845 | ) |  | $ | 5,063 | 
|                              
|                              
|                              
|                              
|                               | Reserve for Facility Closures and Consolidation |                |   | 1,152 |             |  |   | 2,685  |   |  |            |           |  |        |   | (2,194  | ) |  |   | 1,643 | 
|                              
|                              
|                              
|                              
|Year ended September 30, 2004: |                                                 |                |   |       |             |  |   |        |   |  |            |            |  |        |   |         |   |  |   |      
|                              
|                              
|                              
|                              
|                               | Allowance for Doubtful Accounts, Returns        |                |   | 5,475 |             |  |   | 19,460 |   |  |            |           |  |        |   | (18,504 | ) |  |   | 6,431 | 
|                              
|                              
|                              
|                              
|                               | Reserve for Facility Closures and Consolidation |                |   | 170   |             |  |   | 3,392  |   |  |            |           |  |        |   | (2,410  | ) |  |   | 1,152 | 
|                              
|                              
|                              
|                              
|Year ended September 30, 2003: |                                                 |                |   |       |             |  |   |        |   |  |            |            |  |        |   |         |   |  |   |      
|                              
|                              
|                              
|                              
|                               | Allowance for Doubtful Accounts, Returns        |                |   | 6,847 |             |  |   | 12,674 |   |  |            | 432        |  |        |   | (14,478 | ) |  |   | 5,475 | 
|                              
|                              
|                              
|                              
|                               | Reserve for Facility Closures and Consolidation |                |   | 3,935 |             |  |   | (853   | ) |  |            |           |  |        |   | (2,912  | ) |  |   | 170   | 






|    |                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | We recorded the reserves in this column in connection with plant
    closings and employee terminations, net of reversals of $35, $0,
    and $1,109 in fiscal 2005, 2004, and 2003, respectively.