##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWASHINGTON, D.C.
    20549
      FORM 10-K
 (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    September 30, 2006ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
    THE SECURITIES EXCHANGE ACT OF 1934For the transition period from
    
    to   Commission file number
    0-23340
      ROCK-TENN COMPANY (Exact Name of
    Registrant as Specified in Its Charter)
  Georgia

62-0342590(State or Other Jurisdiction of
    Incorporation or Organization)

(I.R.S. Employer
    Identification No.)504 Thrasher Street, Norcross,
    Georgia

30071(Address of Principal Executive
    Offices)

(Zip Code)   (770) 448-2193
    Title of Each Class

Name of Exchange on Which RegisteredClass A Common Stock, par
    value $0.01 per share


New York Stock Exchange   None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  rule 12b-2
  o þ o
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




---



##### 



ROCK-TENN
    COMPANY
  INDEX TO
    FORM 10-K
  PageReferencePART IItem 1.

Business


3Item 1A.

Risk
    Factors


9Item 1B.

Unresolved Staff
    Comments


11Item 2.

Properties


11Item 3.

Legal
    Proceedings


12Item 4.

Submission of
    Matters to a Vote of Security Holders


12PART IIItem 5.

Market for the
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


13Item 6.

Selected Financial
    Data


13Item 7.

Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


15Item 7A.

Quantitative and
    Qualitative Disclosures About Market Risk


34Item 8.

Financial
    Statements and Supplementary Data


37Item 9.

Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


88Item 9A.

Controls and
    Procedures


88Item 9B.

Other
    Information


89PART IIIItem 10.

Directors and
    Executive Officers of the Registrant


89Item 11.

Executive
    Compensation


89Item 12.

Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


89Item 13.

Certain
    Relationships and Related Transactions


89Item 14.

Principal
    Accounting Fees and Services


89PART IVItem 15.

Exhibits and
    Financial Statement Schedules


90EX-10.15 AMENDED CREDIT & SECURITY AGREEMENTEX-12 COMPUTATION OF RATIO OF EARNINGSEX-21 SUBSIDIARIES OF THE REGISTRANTEX-23 CONSENT OF ERNST & YOUNG LLPEX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEO & CFO   2




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##### Table of Contents



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 (RTS GSD. ) We own 65%
    of RTS and conduct our interior packaging business through RTS.
    We own 60% of GSD and conduct some of our folding carton
    operations through GSD. These terms do not include Seven Hills
    Paperboard, LLC (Seven Hills.). We own 49% of
    Seven Hills, a manufacturer of gypsum paperboard liner, which we
    do not consolidate. All references in the accompanying financial
    statements and this Annual Report to 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, which
    sells only converted products which would not be material. 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
    mill.
  General
    Products
  Financial Statements and Supplementary Data. Note 19. Segment Information
  Packaging
    Products Segment
    Folding Cartons.
  Interior Packaging.
 3




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##### Table of Contents



Paperboard
    Segment
    Paperboard.
  Recycled Fiber.
  Merchandising
    Displays Segment
  point-of-purchase point-of-purchase
  Corrugated
    Segment
  point-of-purchase
 4




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##### Table of Contents



Raw
    Materials
  Gulf States GSPP Acquisition
    Energy
    on-site on-site and/or
  Transportation
   5




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##### Table of Contents



Sales and
    Marketing
      
    packaging products to approximately 3,100 customers, the top 10
    of which represented approximately 32% of the external sales of
    our Packaging Products segment;
    paperboard products to approximately 1,400 customers, the top 10
    of which represented approximately 35% of the external sales of
    our Paperboard segment.
    merchandising display products to approximately 500 customers,
    the top 10 of which represented approximately 76% of the
    external sales of our Merchandising Display segment.
    corrugated packaging products to approximately 600 customers,
    the top 10 of which represented approximately 50% of the
    external sales of our Corrugated segment.      Competition
  point-of-purchase
       6




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##### Table of Contents



Governmental
    Regulation
  Health
    and Safety Regulations
  OSHA and/or
  Environmental
    Regulation
  CERCLA
      Note 18. Commitments and
    Contingencies
 7




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##### Table of Contents



Patents
    and Other Intellectual Property
  ® ® ® ® ® ® ® tm ® ® tm tm .
  Employees
    Available
    Information
  www.rocktenn.com. (SEC)
  Forward-Looking
    Information
   8




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##### Table of Contents



Item 1A.  Risk
    Factors.
  Item 1A.
    RISK
    FACTORS  
    We May Face Increased Costs and Reduced Supply of Raw
    Materials   9




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##### Table of Contents




    We May Experience Pricing Variability    
    Our Earnings are Highly Dependent on Volumes    
    We Face Intense Competition  Business 
    Competition.
  
    We Have Been Dependent on Certain Customers    
    We May Incur Business Disruptions    
    We May be Unable to Complete and Finance
    Acquisitions    
    We are Subject to Extensive Environmental and Other
    Governmental Regulation   10




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##### Table of Contents



Note 18. Commitments and Contingencies
  
    We May Incur Additional Restructuring Costs    
    We May Incur Increased Transportation Costs    
    We May Incur Increased Employee Benefit Costs    Item 1B.
    UNRESOLVED
    STAFF COMMENTS    Item 2.
    PROPERTIES   11




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##### Table of Contents



Annual ProductionCapacityLocation of Mill

(in tons at 9/30/2006)


Paperboard ProducedDemopolis, AL


327,000



Bleached paperboard and97,500



Market pulpSt. Paul, MN


180,000



Recycled corrugated mediumSt. Paul, MN


160,000



Coated recycled paperboardBattle Creek, MI


144,000



Coated recycled paperboardSheldon Springs, VT (Missisquoi
    Mill)


108,000



Coated recycled paperboardDallas, TX


96,000



Coated recycled paperboardStroudsburg, PA


67,000



Coated recycled paperboardChattanooga, TN


130,000



Specialty recycled paperboardLynchburg, VA


88,000
(1)


Specialty recycled paperboardEaton, IN


60,000



Specialty recycled paperboardCincinnati, OH


53,000



Specialty recycled paperboardAurora, 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.    Type of Facility

Locations

Owned or LeasedMerchandising Display Operations

Winston-Salem, NC
    (sales, design, manufacturing and contract packing)

OwnedHeadquarters

Norcross, GA

Owned   Item 3.
    LEGAL
    PROCEEDINGS  Note 18. Commitments and
    Contingencies
  Item 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   12




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##### Table of Contents



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 2006


Fiscal 2005High


Low


High


LowFirst Quarter

$
15.12


$
11.70


$
16.60


$
14.68Second Quarter

$
15.19


$
12.54


$
15.40


$
13.05Third Quarter

$
16.74


$
13.88


$
13.60


$
9.75Fourth Quarter

$
20.75


$
15.37


$
16.00


$
12.28   Dividends
    Selected Financial Data.
  Securities
    Authorized for Issuance Under Equity Compensation
    Plans
  Executive
    Compensation Equity
    Compensation Plan Information
  Note 15. Shareholders Equity
  Item 6.
    SELECTED
    FINANCIAL DATA  Managements Discussion
    and Analysis of Financial Condition and Results of
    Operations
 13




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##### Table of Contents



Year Ended September 30,2006


2005


2004


2003


2002(In millions, except per share amounts)Net sales

$
2,138.1


$
1,733.5


$
1,581.3


$
1,433.3


$
1,369.0Restructuring and other costs, net


7.8



7.5



32.7



1.5



18.2Income from continuing operations
    before the cumulative effect of a change in accounting principle


28.7



17.6



9.6



29.5



29.9Income from discontinued
    operations, net of tax










8.0



0.1



2.6Income before the cumulative effect
    of a change in accounting principle


28.7



17.6



17.6



29.6



32.5Cumulative effect of a change in
    accounting principle, net of tax


















(5.9
)Net income (a)


28.7



17.6



17.6



29.6



26.6Diluted earnings per common share
    from continuing operations before the cumulative effect of a
    change in accounting principle


0.77



0.49



0.27



0.85



0.87Diluted earnings per common share
    before the cumulative effect of a change in accounting principle


0.77



0.49



0.50



0.85



0.94Diluted earnings (loss) per common
    share from cumulative effect of a change in accounting
    principle, net of tax


















(0.17
)Diluted earnings per common share


0.77



0.49



0.50



0.85



0.77Dividends paid per common share


0.36



0.36



0.34



0.32



0.30Book value per common share


13.49



12.57



12.28



12.07



11.80Total assets


1,784.0



1,798.4



1,283.8



1,291.4



1,176.2Current portion of debt


40.8



7.1



85.8



12.9



62.9Total long-term debt


765.3



908.0



398.3



513.0



410.1Total debt (b)


806.1



915.1



484.1



525.9



473.0Shareholders equity


508.6



456.2



437.6



422.0



405.1Net cash provided by operating
    activities (c)


153.5



153.3



93.5



112.5



113.7Capital expenditures


64.6



54.3



60.8



57.4



72.7Cash paid for joint venture
    investment (d)


0.2



0.1



0.2



0.3



1.7Cash paid for purchase of
    businesses, net of cash received


7.8



552.3



15.0



81.8



25.4       (a)
    
    Net income includes expense of $5.9 million, net of tax, or
    $0.17 per diluted share, for the cumulative effect of a
    change in accounting principle from a goodwill write-off due to
    the adoption of Statement of Financial Accounting Standards
    No. 142, Goodwill and Other Intangible
    Assets(SFAS 142).(b)
    
    Total debt includes fair value aggregate hedge adjustments
    resulting from terminated
    and/or
    existing fair value interest rate derivatives or swaps of $10.4,
    $12.3, $18.5, $23.9, and $19.8 during fiscal 2006, 2005, 2004,
    2003, and 2002, respectively.(c)
    
    Net cash provided by operating activities for the year ended
    September 30, 2004 was reduced by approximately $9.9 in
    cash taxes paid from the gain on the sale of discontinued
    operations.(d)
    
    Of the total cash paid for the joint venture investment,
    contributions for capital expenditures amounted to $0.2, $0.1,
    $0.2, $0.3, and $0.4 during fiscal 2006, 2005, 2004, 2003, and
    2002, respectively. 14




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##### Table of Contents



Item 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Segment
    and Market Information
        Year Ended September 30,2006


2005


2004(In millions)Net sales (aggregate):Packaging Products

$
1,267.8


$
994.0


$
908.1Paperboard


819.7



615.4



539.9Merchandising Displays


233.2



226.3



237.8Corrugated


135.7



118.5



89.9Total

$
2,456.4


$
1,954.2


$
1,775.7Net sales (intersegment):Packaging Products

$
2.9


$
3.4


$
3.5Paperboard


298.9



202.3



176.8Merchandising Displays


0.1



0.2



0.4Corrugated


16.4



14.8



13.7Total

$
318.3


$
220.7


$
194.4Net sales (unaffiliated customers):Packaging Products

$
1,264.9


$
990.6


$
904.6Paperboard


520.8



413.1



363.1Merchandising Displays


233.1



226.1



237.4Corrugated


119.3



103.7



76.2Total

$
2,138.1


$
1,733.5


$
1,581.3Segment income:Packaging Products

$
45.0


$
33.4


$
38.0Paperboard


62.2



31.6



15.7Merchandising Displays


16.4



17.6



24.0Corrugated


4.0



3.5



5.1Total Segment Income


127.6



86.1



82.8Restructuring and other costs, net


(7.8
)


(7.5
)


(32.7
)Non-allocated expenses


(20.8
)


(17.8
)


(12.5
)Interest expense


(55.6
)


(36.6
)


(23.6
) 15




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##### Table of Contents



Year Ended September 30,2006


2005


2004(In millions)Interest and other income (expense)


1.6



0.5



(0.1
)Minority interest in income of
    consolidated subsidiaries


(6.4
)


(4.8
)


(3.4
)Income from continuing operations
    before income taxes


38.6



19.9



10.5Income tax expense


(9.9
)


(2.3
)


(0.9
)Income from continuing operations


28.7



17.6



9.6Income from discontinued operations










8.0Net income

$
28.7


$
17.6


$
17.6   Overview
      Non-GAAP Measure
  Share-Based
    Payment SFAS 123(R) Note 15. Shareholders Equity
  Results
    of Operations
  Form 10-Q Note 20. Financial
    Results by Quarter (Unaudited)
  Net
    Sales (Unaffiliated Customers)
     16




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##### Table of Contents



Net
    Sales (Aggregate)  Packaging Products
    Segment
  First Quarter


Second Quarter


Third Quarter


Fourth Quarter


Fiscal Year(In millions)2004

$
208.9


$
231.7


$
231.6


$
235.9


$
908.12005


221.8



218.8



239.2



314.2



994.02006


301.1



319.7



326.2



320.8



1,267.8       Net
    Sales (Aggregate)  Paperboard Segment
  First Quarter


Second Quarter


Third Quarter


Fourth Quarter


Fiscal Year(In millions)2004

$
128.3


$
136.1


$
138.6


$
136.9


$
539.92005


128.7



131.8



155.0



199.9



615.42006


187.7



205.7



204.1



222.2



819.7       Net
    Sales (Aggregate)  Merchandising Displays
    Segment
  First Quarter


Second Quarter


Third Quarter


Fourth Quarter


Fiscal Year(In millions)2004

$
55.7


$
58.2


$
56.6


$
67.3


$
237.82005


52.7



59.0



57.0



57.6



226.32006


49.2



55.8



58.8



69.4



233.2    17




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##### Table of Contents



tm
    Net
    Sales (Aggregate)  Corrugated Segment
  First Quarter


Second Quarter


Third Quarter


Fourth Quarter


Fiscal Year(In millions)2004

$
19.7


$
21.5


$
21.5


$
27.2


$
89.92005


28.8



30.2



29.8



29.7



118.52006


28.4



31.9



36.6



38.8



135.7     (Athens
    Acquisition
  Cost
    of Goods Sold
  Quantitative
    and Qualitative Disclosures About Market Risk 
    Foreign Currency
    last-in LIFO first-in FIFO
    Fiscal 2006


Fiscal 2005


Fiscal 2004LIFO


FIFO


LIFO


FIFO


LIFO


FIFO(In millions)Cost of goods sold

$
1,789.0


$
1,784.7


$
1,459.2


$
1,463.6


$
1,314.0


$
1,311.8Net income


28.7



31.3



17.6



14.9



17.6



19.0  18




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##### Table of Contents



step-up
  Selling,
    General and Administrative Expenses
  (SG&A)
    Acquisitions
      Note 6.
    Acquisitions
 19




---



##### Table of Contents



Restructuring
    and Other Costs, Net
  Note 7. Restructuring and
    Other Costs, Net
  Segment
    Income
  Segment
    Income  Packaging Products Segment
  Net Sales


Segment


Return(Aggregate)


Income


on Sales(In millions, except percentages)First Quarter

$
208.9


$
7.0



3.4
%Second Quarter


231.7



10.2



4.4Third Quarter


231.6



11.8



5.1Fourth Quarter


235.9



9.0



3.8Fiscal 2004

$
908.1


$
38.0



4.2
%First Quarter

$
221.8


$
5.3



2.4
%Second Quarter


218.8



5.7



2.6Third Quarter


239.2



10.6



4.4Fourth Quarter


314.2



11.8



3.8Fiscal 2005

$
994.0


$
33.4



3.4
%First Quarter

$
301.1


$
6.8



2.3
%Second Quarter


319.7



13.4



4.2Third Quarter


326.2



13.2



4.0Fourth Quarter


320.8



11.6



3.6Fiscal 2006

$
1,267.8


$
45.0



3.5
%      20




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##### Table of Contents



Segment
    Income  Paperboard Segment
  Coated andSpecialtyRecycled





BleachedPaperboard


Corrugated


Paperboard


Market PulpNet Sales


Segment





Tons


Medium Tons


Tons


Tons


Average(Aggregate)


Income


Return


Shipped (a)


Shipped


Shipped (b)


Shipped (b)


Price (a) (c)(In Millions)


(In Millions)


On Sales


(In Thousands)


(In Thousands)


(In Thousands)


(In Thousands)


(Per Ton)First Quarter

$
128.3


$
3.1



2.4
%


230.7



43.9



n/a



n/a


$
422Second Quarter


136.1



2.4



1.8



248.8



42.9



n/a



n/a



424Third Quarter


138.6



2.6



1.9



248.0



44.7



n/a



n/a



439Fourth Quarter


136.9



7.6



5.6



224.9



46.1



n/a



n/a



455Fiscal 2004

$
539.9


$
15.7



2.9
%


952.4



177.6



n/a



n/a


$
435First Quarter

$
128.7


$
4.4



3.4
%


210.6



42.7



n/a



n/a


$
467Second Quarter


131.8



3.6



2.7



209.7



45.2



n/a



n/a



472Third Quarter


155.0



7.6



4.9



211.6



44.8



26.7



6.9



491Fourth Quarter


199.9



16.0



8.0



209.7



44.8



84.2



23.1



523Fiscal 2005

$
615.4


$
31.6



5.1
%


841.6



177.5



110.9



30.0


$
492First Quarter

$
187.7


$
(1.0
)


(0.5
)%


208.3



45.0



79.2



15.0


$
524Second Quarter


205.7



15.8



7.7



223.5



45.4



80.7



27.9



526Third Quarter


204.1



18.9



9.3



220.6



44.2



76.6



23.7



539Fourth Quarter


222.2



28.5



12.8



229.1



47.0



83.7



20.0



561Fiscal 2006

$
819.7


$
62.2



7.6
%


881.5



181.6



320.2



86.6


$
538     (a)
    
    Recycled Paperboard Tons Shipped and Average Price Per Ton
    include tons shipped by Seven Hills.(b)
    
    Bleached paperboard and market pulp tons shipped began 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 market pulp.       21




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##### Table of Contents



Segment
    Income  Merchandising Displays Segment
  Net Sales


Segment


Return on(Aggregate)


Income


Sales(In millions, except percentages)First Quarter

$
55.7


$
5.4



9.7
%Second Quarter


58.2



6.1



10.5Third Quarter


56.6



4.3



7.6Fourth Quarter


67.3



8.2



12.2Fiscal 2004

$
237.8


$
24.0



10.1
%First Quarter

$
52.7


$
2.4



4.6
%Second Quarter


59.0



3.7



6.3Third Quarter


57.0



5.4



9.5Fourth Quarter


57.6



6.1



10.6Fiscal 2005

$
226.3


$
17.6



7.8
%First Quarter

$
49.2


$
2.8



5.7
%Second Quarter


55.8



3.2



5.7Third Quarter


58.8



1.6



2.7Fourth Quarter


69.4



8.8



12.7Fiscal 2006

$
233.2


$
16.4



7.0
%      22




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##### Table of Contents



Segment
    Income  Corrugated Segment
  Net Sales


Segment


Return on(Aggregate)


Income


Sales(In millions, except percentages)First Quarter

$
19.7


$
0.5



2.5
%Second Quarter


21.5



1.4



6.5Third Quarter


21.5



1.8



8.4Fourth Quarter


27.2



1.4



5.1Fiscal 2004

$
89.9


$
5.1



5.7
%First Quarter

$
28.8


$
0.3



1.0
%Second Quarter


30.2



1.1



3.6Third Quarter


29.8



1.0



3.4Fourth Quarter


29.7



1.1



3.7Fiscal 2005

$
118.5


$
3.5



3.0
%First Quarter

$
28.4


$
0.4



1.4
%Second Quarter


31.9



1.0



3.1Third Quarter


36.6



1.0



2.7Fourth Quarter


38.8



1.6



4.1Fiscal 2006

$
135.7


$
4.0



2.9
%       Interest
    Expense
      Interest
    and Other Income
   23




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##### Table of Contents



Minority
    Interest
      Provision
    for Income Taxes
    (NOLs
    Discontinued
    Operations
  Cartem Wilco
 24




---



##### Table of Contents



Liquidity
    and Capital Resources
  Working
    Capital and Capital Expenditures
    floating-to-fixed Senior Credit Facility
    364-day (Receivables Facility Note 10. Debt
 25




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##### Table of Contents



26




---



##### Table of Contents



and/or Note 18. Commitments and
    Contingencies
        Contractual
    Obligations
    Payments Due by PeriodFiscal


Fiscal


FiscalContractual Obligations

Total


2007


2008 & 2009


2010 & 2011


Thereafter(In millions)Long-term debt, including current
    portion (a)(e)

$
796.2


$
40.8


$
215.9


$
418.1


$
121.4Operating lease obligations (b)


35.4



12.2



14.8



5.5



2.9Purchase obligations (c)(d)


223.8



168.2



55.2



0.2



0.2Total

$
1,055.4


$
221.2


$
285.9


$
423.8


$
124.5     (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
    $10.4 million and excluded unamortized bond discounts of
    $0.5 million from the table to arrive at 27




---



##### Table of Contents



actual debt obligations. For information on the interest rates
    applicable to our various debt instruments see
    Note 10. Debtof the Notes to
    Consolidated Financial Statements.(b)
    
    For more information, see Note 11. Leasesof the Notes to Consolidated Financial Statements.(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 Seven Hills joint venture agreement, our
    joint venture partner 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 current purchase price of less than
    40% of our joint venture partners then current book net
    equity investment. At September 30, 2006 we have estimated
    the purchase price to be approximately $8.1 million. We
    have not included the $8.1 million in the table above.(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 13. Retirement Plansof the
    Notes to Consolidated Financial Statements, 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 installment
    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 that we will
    contribute approximately $13 million to our five qualified
    defined benefit pension plans in fiscal 2007 and based on
    current facts and assumptions expect to contribute
    $45 million to the plans by the end of fiscal 2008. During
    fiscal 2006, we contributed approximately $20.6 million to
    our five qualified defined benefit pension plans.    Note 17. Related Party Transactions
  Unconsolidated
    Joint Venture
    Note 9.
    Unconsolidated Joint Venture
 28




---



##### Table of Contents



Stock
    Repurchase Program
    Expenditures
    for Environmental Compliance
  Business 
    Governmental Regulation  Environmental
    Regulation.
  Critical
    Accounting Policies and Estimates
  Note 1. Description of Business and Summary
    of Significant Accounting Policies Quantitative and Qualitative Disclosures About
    Market Risk.
  Accounts
    Receivable and Allowances
    Inventory
   29




---



##### Table of Contents



Impairment
    of Goodwill and Long-Lived Assets
  Goodwill and Other
    Intangible Assets.
    Accounting for the Impairment or Disposal
    of Long-Lived Assets (SFAS 144
  Note 8. Other Intangible Assets
   30




---



##### Table of Contents



Health
    Insurance
  12-month
  Workers
    Compensation
    Accounting
    for Income Taxes
    Pension
    Plans
  U.S. Qualified Plans
 31




---



##### Table of Contents



Note 13. Retirement Plans
        25 Basis Point


25 Basis PointIncrease


DecreaseDiscount rate

$
(1.4
)

$
1.4Compensation level

$
0.2


$
(0.2
)Expected long-term rate of return
    on plan assets

$
(0.6
)

$
0.6    32




---



##### Table of Contents



ERISA
    FASB Employers
    Accounting for Defined Benefit Pension and Other Postretirement
    Plans  an Amendment of FASB Statements No. 87,
    88, 106 and 132(R) SFAS 158
  New
    Accounting Standards
  Note 1. Description of Business and Summary
    of Significant Accounting Policies
  Non-GAAP Measure
  Managements Discussion and Analysis of
    Financial Condition and Results of Operations 
    Overview
  Net
    Debt (as defined)
     33




---



##### Table of Contents



Current
    Portion of Debt and Total Long-Term Debt
  September 30,


September 30,


March 31,2006


2005


2005Current Portion of Debt

$
40.8


$
7.1


$
75.1Total Long-Term Debt


765.3



908.0



390.7806.1



915.1



465.8Less: Hedge Adjustments Resulting
    From Terminated Fair Value Interest Rate Derivatives or Swaps


(10.4
)


(12.3
)


(18.7
)Less: Hedge Adjustments Resulting
    From Existing Fair Value Interest Rate Derivatives or Swaps










8.9795.7



902.8



456.0Less: Cash and Cash Equivalents


(6.9
)


(26.8
)


(28.5
)Less: Investment in Marketable
    Securities










(31.2
)Net Debt

$
788.8


$
876.0


$
396.3   Item 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK    Derivative
    Instruments
    Interest
    Rates
    Market
    Risks Impacting Pension Plans
   34




---



##### Table of Contents



Foreign
    Currency
          Commodities
  Fiber
  OCC
    Coated
    Unbleached Kraft
  (CUK
  Linerboard/Corrugated
    Medium
     35




---



##### Table of Contents



Energy
         36




---



##### Table of Contents



Item 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  Index to
    Financial Statements
  DescriptionConsolidated
    Statements of Income


Page 38Consolidated
    Balance Sheets


Page 39Consolidated
    Statements of Shareholders Equity


Page 40Consolidated
    Statements of Cash Flows


Page 41Notes to
    Consolidated Financial Statements


Page 43Report of
    Independent Registered Public Accounting Firm


Page 84Report of
    Independent Registered Public Accounting Firm On Internal
    Control Over Financial Reporting


Page 85Report of
    Management on Responsibility for Financial Information and for
    Establishing and Maintaining Adequate Internal Control over
    Financial Reporting


Page 86   Note 20. Financial Results by Quarter
    (Unaudited)
 37




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##### Table of Contents



ROCK-TENN
    COMPANY
  CONSOLIDATED
    STATEMENTS OF INCOME
  Year Ended September 30,2006


2005


2004(In millions, except per share data)Net sales

$
2,138.1


$
1,733.5


$
1,581.3Cost of goods sold


1,789.0



1,459.2



1,314.0Gross profit


349.1



274.3



267.3Selling, general and
    administrative expenses


244.2



205.0



197.1Restructuring and other costs, net


7.8



7.5



32.7Operating profit


97.1



61.8



37.5Interest expense


(55.6
)


(36.6
)


(23.6
)Interest and other income (expense)


1.6



0.5



(0.1
)Income (loss) from unconsolidated
    joint venture


1.9



(1.0
)


0.1Minority interest in income of
    consolidated subsidiaries


(6.4
)


(4.8
)


(3.4
)Income from continuing operations
    before income taxes


38.6



19.9



10.5Income tax expense


(9.9
)


(2.3
)


(0.9
)Income from continuing operations


28.7



17.6



9.6Income from discontinued
    operations (net of $4.8 income taxes)










8.0Net income

$
28.7


$
17.6


$
17.6Basic earnings per share:Income from continuing operations

$
0.79


$
0.50


$
0.28Net income

$
0.79


$
0.50


$
0.51Diluted earnings per share:Income from continuing operations

$
0.77


$
0.49


$
0.27Net income

$
0.77


$
0.49


$
0.50    38




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##### Table of Contents



ROCK-TENN
    COMPANY
  CONSOLIDATED
    BALANCE SHEETS
  September 30,2006


2005(In millions, except share and per share data)ASSETSCurrent Assets:Cash and cash equivalents

$
6.9


$
26.8Accounts receivable (net of
    allowances of $5.2 and $5.1)


230.8



199.5Inventories


218.9



202.0Other current assets


25.0



30.5Assets held for sale


4.0



3.4Total current assets


485.6



462.2Property, plant and equipment at
    cost:Land and buildings


266.0



267.2Machinery and equipment


1,299.7



1,287.5Transportation equipment


10.8



10.5Leasehold improvements


6.2



5.61,582.7



1,570.8Less accumulated depreciation and
    amortization


(732.1
)


(685.8
)Net property, plant and equipment


850.6



885.0Goodwill


356.6



350.9Intangibles, net


55.1



61.9Investment in joint venture


21.6



19.5Other assets


14.5



18.9$
1,784.0


$
1,798.4LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent liabilities:Current portion of debt

$
40.8


$
7.1Accounts payable


141.8



116.4Accrued compensation and benefits


65.7



50.9Other current liabilities


57.7



49.8Total current liabilities


306.0



224.2Long-term debt due after one year


754.9



895.7Hedge adjustments resulting from
    terminated fair value interest rate derivatives or swaps


10.4



12.3Total long-term debt


765.3



908.0Accrued pension and other long-term
    benefits


75.9



106.8Deferred income taxes


99.8



83.0Other long-term liabilities


9.6



3.6Commitments and contingencies
    (Notes 11 and 18)Minority interest


18.8



16.6Shareholders 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;
    37,688,522 and 36,280,164 shares outstanding at
    September 30, 2006 and September 30, 2005, respectively


0.4



0.4Capital in excess of par value


179.6



162.4Retained earnings


341.2



326.0Accumulated other comprehensive loss


(12.6
)


(32.6
)Total shareholders equity


508.6



456.2$
1,784.0


$
1,798.4    39




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##### Table of Contents



ROCK-TENN
    COMPANY
  CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY
  AccumulatedClass A


Capital in





OtherCommon Stock


Excess of


Retained


ComprehensiveShares


Amount


Par Value


Earnings


(Loss)


Total(In millions, except share and per share data)Balance at October 1,
    2003


34,962,041


$
0.4


$
146.6


$
315.9


$
(40.9
)

$
422.0Comprehensive income:Net income














17.6







17.6Foreign currency translation
    adjustments


















10.4



10.4Net unrealized loss on derivative
    instruments (net of $0.1 tax)


















(0.4
)


(0.4
)Minimum pension liability (net of
    $5.0 tax)


















(8.6
)


(8.6
)Comprehensive income






















19.0Income tax benefit from exercise of
    stock options










0.4











0.4Shares granted under restricted
    stock plan


144,000



















Compensation expense under
    restricted stock plan










1.5











1.5Cash dividends 
    $0.34 per share














(12.0
)






(12.0
)Issuance of Class A common
    stock


534,743







6.7











6.7Balance at September 30,
    2004


35,640,784



0.4



155.2



321.5



(39.5
)


437.6Comprehensive income:Net income














17.6







17.6Foreign currency translation
    adjustments


















13.8



13.8Net unrealized gain on derivative
    instruments (net of $(2.4) tax)


















3.6



3.6Minimum pension liability (net of
    $8.2 tax)


















(10.5
)


(10.5
)Comprehensive income






















24.5Income tax benefit from exercise of
    stock options










0.2











0.2Shares granted under restricted
    stock plan


200,000



















Compensation expense under
    restricted stock plan










1.7











1.7Restricted Stock grant cancelled


(24,333
)


















Cash dividends 
    $0.36 per share














(12.9
)






(12.9
)Issuance of Class A common
    stock net of stock received for tax withholdings


463,713







5.3



(0.2
)






5.1Balance at September 30,
    2005


36,280,164



0.4



162.4



326.0



(32.6
)


456.2Comprehensive income:Net income














28.7







28.7Foreign currency translation
    adjustments


















3.3



3.3Net unrealized gain on
    derivative instruments (net of $(0.6) tax)


















1.0



1.0Minimum pension liability (net
    of $(10.6) tax)


















15.7



15.7Comprehensive income






















48.7Income tax benefit from exercise
    of stock options










1.0











1.0Shares granted under restricted
    stock plan


469,503



















Compensation expense under share
    based plans










3.5











3.5Cash dividends 
    $0.36 per share














(13.2
)






(13.2
)Issuance of Class A common
    stock net of stock received for tax withholdings


938,855







12.7



(0.3
)






12.4Balance at September 30,
    2006


37,688,522


$
0.4


$
179.6


$
341.2


$
(12.6
)

$
508.6    40




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##### Table of Contents



ROCK-TENN
    COMPANY
 CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Year Ended September 30,2006


2005


2004(In millions)Operating activities:Income from continuing operations

$
28.7


$
17.6


$
9.6Items in income not affecting cash:Depreciation and amortization


104.3



84.0



74.2Deferred income tax (benefit)
    expense


5.5



4.0



(4.7
)Income tax benefit of employee
    stock options






0.2



0.4Loss on bond purchase










0.9Share-based compensation expense


3.6



1.7



1.5Gain on disposal of plant and
    equipment and other, net


(0.4
)


(1.8
)


(2.1
)Minority interest in income of
    consolidated subsidiaries


6.4



4.8



3.4(Income) loss from unconsolidated
    joint venture


(1.9
)


1.0



(0.1
)Proceeds from termination of cash
    flow interest rate hedges


14.5







Pension funding (more) less than
    expense


(4.1
)


8.7



(3.0
)Impairment adjustments and other
    non-cash items


3.5



2.9



28.6Change in operating assets and
    liabilities, net of acquisitions:Accounts receivable


(30.9
)


23.4



(11.4
)Inventories


(14.1
)


9.5



(7.3
)Other assets


(7.6
)


(5.2
)


(6.3
)Accounts payable


25.1



3.2



6.9Income taxes payable


8.6



(3.2
)


(8.4
)Accrued liabilities


12.3



2.5



10.9Cash provided by operating
    activities from continuing operations


153.5



153.3



93.1Cash provided by operating
    activities from discontinued operations










0.4Net cash provided by operating
    activities


153.5



153.3



93.5Investing activities:Capital expenditures


(64.6
)


(54.3
)


(60.8
)Purchases of marketable securities






(195.3
)


(318.9
)Maturities and sales of marketable
    securities






223.5



290.7Cash paid for purchase of
    businesses, net of cash received


(7.8
)


(552.3
)


(15.0
)Cash contributed to joint venture


(0.2
)


(0.1
)


(0.2
)Proceeds from sale of property,
    plant and equipment


4.7



6.0



6.0Proceeds from property, plant and
    equipment insurance settlement


0.9







Cash used for investing activities
    from continuing operations


(67.0
)


(572.5
)


(98.2
)Cash provided by investing
    activities from discontinued operations










61.9Net cash used for investing
    activities


(67.0
)


(572.5
)


(36.3
)Financing activities:Additions to revolving credit
    facilities


79.5



226.0



Repayments of revolving credit
    facilities


(210.7
)


(10.0
)


(3.5
)Additions to debt


51.8



320.8



0.1Repayments of debt


(29.7
)


(100.5
)


(34.2
)Proceeds from monetizing swap
    contracts










4.4Payment on termination of fair
    value interest rate hedges






(4.3
)


Debt issuance costs


(0.3
)


(4.0
)


Issuances of common stock


11.5



5.1



6.7Excess tax benefits from
    share-based compensation


1.0







Capital contributed to consolidated
    subsidiary from minority interest


2.1







Advances from (to) joint venture


8.6



1.4



(2.1
)Cash dividends paid to shareholders


(13.2
)


(12.9
)


(12.0
)Cash distribution to minority
    interest


(6.4
)


(5.1
)


(2.6
)Net cash provided by (used for)
    financing activities


(105.8
)


416.5



(43.2
)Effect of exchange rate changes on
    cash and cash equivalents


(0.6
)


0.8



0.5Increase (decrease) in cash and
    cash equivalents


(19.9
)


(1.9
)


14.5Cash and cash equivalents at
    beginning of year


26.8



28.7



14.2Cash and cash equivalents at end of
    year

$
6.9


$
26.8


$
28.7  41




---



##### Table of Contents



ROCK-TENN
    COMPANY
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS  (Continued)
    Year Ended September 30,2006


2005


2004(In millions)Cash paid (received) during the
    period for:Income taxes, net of refunds

$
(4.4
)

$
4.2


$
15.0Interest, net of amounts
    capitalized


60.1



38.4



27.4         (Gulf
    States (GSPP GSPP Acquisition.
  Year EndedSeptember 30,2006


2005(In millions)Fair value of assets acquired
    including goodwill

$
8.5


$
586.6Cash paid


7.8



552.3Liabilities assumed

$
0.7


$
34.3    42




---



##### 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
    (RTS) and GSD Packaging, LLC
    (GSD.) We own 65% of RTS and conduct our
    interior packaging business through RTS. We own 60% of GSD and
    conduct some of our folding carton operations through GSD. These
    terms do not include Seven Hills Paperboard, LLC (Seven
    Hills.) We own 49% of Seven Hills, a manufacturer of
    gypsum paperboard liner, which we do not consolidate.
    Consolidation
    Consolidation of Variable Interest Entities.
  Use of
    Estimates
  GAAP
    Revenue
    Recognition
   43




---



##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Shipping
    and Handling Costs
    Derivatives
    Accounting for Derivative Instruments and
    Hedging Activities (SFAS 133). and/or
  Cash
    Equivalents
   44




---



##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Accounts
    Receivable and Allowances
      Inventories
  last-in, LIFO first-in, FIFO
    Property,
    Plant and Equipment
    Buildings and building improvements


15-40 yearsMachinery and equipment


3-20 yearsTransportation equipment


3-8 years     Impairment
    of Goodwill and Long-Lived Assets
   45




---



##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Goodwill and Other Intangible
    Assets SFAS 142
        Note 8. Other
    Intangible Assets.
   46




---



##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Health
    Insurance
  12-month
  Workers
    Compensation
    Accounting
    for Income Taxes
    Pension
    and Other Post-Retirement Benefits
  Employers
    Accounting for Pensions (SFAS 87). Note 13. Retirement Plans,
  Stock
    Based Compensation
  Note 15.
 47




---



##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Shareholders Equity. Share-Based
    Payment SFAS 123(R)
  Note 15. Shareholders
    Equity
  Asset
    Retirement Obligations
  Accounting for
    Asset Retirement Obligations SFAS 143 Accounting for Conditional Asset
    Retirement Obligations FIN 47
  Repair
    and Maintenance Costs
    Foreign
    Currency
    Environmental
    Remediation Costs
   48




---



##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  New
    Accounting Standards  Recently Adopted
  Inventory Costs  an amendment of ARB
    No. 43, Chapter 4 SFAS 151
  SFAS 123(R) Note 15. Shareholders
    Equity 
  New
    Accounting Standards  Recently Issued
  FASB Accounting for Uncertainty in Income
    Taxes  an Interpretation of FASB
    Statement 109 FIN 48
  SFAS 157
  Employers Accounting for Defined Benefit Pension
    and Other Postretirement Plans, an amendment of FASB Statements
    No. 87, 88, 106, and 132(R) SFAS 158
  
    Recognize the funded status of a benefit plan in its statement
    of financial position.
    Recognize as a component of other comprehensive income, net of
    tax, the gains or losses and prior service costs or credits that
    arise during the period but are not recognized as components of
    net periodic benefit cost.
    Measure defined benefit plan assets and obligations as of the
    date of the employers fiscal year-end statement of
    financial position (with limited exceptions).
    Provide additional disclosure in the Consolidated Financial
    Statements.   49




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Considering the Effects of
    Prior Year Misstatements when Quantifying Misstatements in
    Current Year Financial Statements SAB 108 dual approach
  
    The roll-over method:  This
    method focuses primarily on the impact of a misstatement on the
    income statement  including the reversing effect of
    prior year misstatements  but can lead to the
    accumulation of misstatements in the balance sheet.
    The iron curtain
    method:  This method focuses primarily on the
    effect of correcting the period-end balance sheet with less
    emphasis on the reversing effects of prior year errors on the
    income statement in the period of correction.    Reclassifications
    Note 2.
    Basic and
    Diluted Earnings Per Share    Year Ended September 30,2006


2005


2004Numerator:Income from continuing operations

$
28.7


$
17.6


$
9.6Income from discontinued
    operations, net of tax










8.0Net income

$
28.7


$
17.6


$
17.6Denominator:Denominator for basic earnings per
    share  weighted average shares


36.1



35.5



34.9Effect of dilutive stock options
    and restricted stock awards


0.9



0.6



0.6Denominator for diluted earnings
    per share  weighted average shares and assumed
    conversions


37.0



36.1



35.5Basic earnings per share:Income from continuing operations

$
0.79


$
0.50


$
0.28Income from discontinued
    operations, net of tax










0.23Net income per share 
    basic

$
0.79


$
0.50


$
0.51Diluted earnings per share:Income from continuing operations

$
0.77


$
0.49


$
0.27Income from discontinued
    operations, net of tax










0.23Net income per share 
    diluted

$
0.77


$
0.49


$
0.50  50




---



##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 3.
    Accumulated
    Other Comprehensive Loss    September 30,2006


2005Foreign currency translation gain

$
35.5


$
32.2Net unrealized gain on derivative
    instruments, net of tax


4.1



3.1Minimum pension liability, net of
    tax


(52.2
)


(67.9
)Total accumulated other
    comprehensive loss

$
(12.6
)

$
(32.6
)   Note 4.
    Inventories    September 30,2006


2005Finished goods and work in process

$
140.0


$
134.2Raw materials


70.6



59.9Supplies and spare parts


35.4



30.7Inventories at FIFO cost


246.0



224.8LIFO reserve


(27.1
)


(22.8
)Net inventories

$
218.9


$
202.0     Note 5.
    Discontinued
    Operations and Assets Held for Sale  Discontinued
    Operations
   51




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Assets
    Held for Sale
    September 30,2006


2005Property, plant and equipment

$
4.0


$
3.4   Note 6.
    Acquisitions  Interior
    Packaging
    GSPP
     52




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Current assets, net of cash
    received

$
127.6Property, plant, and equipment


357.1Goodwill


51.0Intangible assets 
    customer relationships (22.3 year weighted-average useful
    life)


50.7Other long-term assets


0.3Total assets acquired


586.7Current liabilities


24.6Minority interest


9.4Other long-term liabilities


0.5Total liabilities assumed


34.5Net assets acquired

$
552.2       Year Ended September 30,2005


2004Net sales

$
2,075.2


$
2,041.4Net income

$
30.1


$
21.9Diluted earnings per common share

$
0.83


$
0.61   Note 7.
    Restructuring
    and Other Costs, Net      Summary
    of Restructuring and Other Costs (Income), Net
  Severanceand OtherInitiative



Net Property,


Employee


Equipment and


Facilityand



Plant and


Related


Inventory


Carrying


Corp.Segment

Period(1)

Equipment(2)


Costs


Relocation


Costs


Reorg.


Other


TotalKerman,

Fiscal 2006


1.8



1.1



0.2



0.1







2.6



5.8Packaging

Cumulative


1.8



1.1



0.2



0.1







2.6



5.8Products(a)

Expected Total


1.8



1.3



0.4



0.5







2.6



6.6 53




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Severanceand OtherInitiative



Net Property,


Employee


Equipment and


Facilityand



Plant and


Related


Inventory


Carrying


Corp.Segment

Period(1)

Equipment(2)


Costs


Relocation


Costs


Reorg.


Other


TotalMarshville,

Fiscal 2006






0.5



0.2



0.1











0.8Packaging

Fiscal 2005


2.5























2.5Products(b)

Cumulative


2.5



0.5



0.2



0.1











3.3Expected Total


2.5



0.5



0.3



0.1







0.1



3.5Waco,

Fiscal 2006


(0.1
)






0.3



0.1







0.1



0.4Packaging

Fiscal 2005






0.2



0.3















0.5Products(c)

Cumulative


(0.1
)


0.2



0.6



0.1







0.1



0.9Expected Total


(0.1
)


0.2



0.6



0.2







0.2



1.1Restructuring,

Fiscal 2005






1.6



















1.6Packaging

Cumulative






1.6



















1.6Products(d)

Expected Total






1.6



















1.6Norcross Real

Fiscal 2005






















(1.9
)


(1.9
)Estate Sale,

Cumulative






















(1.9
)


(1.9
)Corporate(e)

Expected Total






















(1.9
)


(1.9
)Otsego,

Fiscal 2006


(0.1
)






0.1











(0.1
)


(0.1
)Paperboard(f)

Fiscal 2005






0.3



0.6



0.6







0.1



1.6Fiscal 2004


14.5



1.7



0.1



0.2







0.1



16.6Cumulative


14.4



2.0



0.8



0.8







0.1



18.1Expected Total


14.4



2.0



0.8



0.8







0.1



18.1St. Paul,

Fiscal 2005






2.4



0.2











0.1



2.7Packaging

Fiscal 2004


2.3



0.7



















3.0Products(g)

Cumulative


2.3



3.1



0.2











0.1



5.7Expected Total


2.3



3.1



0.2











0.1



5.7Aurora,

Fiscal 2005


(0.3
)






















(0.3
)Paperboard(h)

Fiscal 2004


3.5



0.7



















4.2Cumulative


3.2



0.7



















3.9Expected Total


3.2



0.7



















3.9Division Consolidation,

Fiscal 2004






0.5



















0.5Paperboard(i)

Cumulative






0.5



















0.5Expected Total






0.5



















0.5Wright City,

Fiscal 2005


(0.7
)


















(0.1
)


(0.8
)Paperboard(j)

Fiscal 2004


6.6



0.6



0.2



0.1







0.4



7.9Cumulative


5.9



0.6



0.2



0.1







0.3



7.1Expected Total


5.9



0.6



0.2



0.1







0.3



7.1Mundelein Facility Sale,

Fiscal 2004


(1.8
)






0.1



0.1











(1.6
)Merchandising

Cumulative


(1.8
)






0.1



0.1











(1.6
)Displays(k)

Expected Total


(1.8
)






0.1



0.1











(1.6
)Corporate

Fiscal 2005


















0.2







0.2Reorganization,

Fiscal 2004


















1.1







1.1Corporate(l)

Cumulative


















1.3







1.3Expected Total


















1.3







1.3Other(m)

Fiscal 2006






0.1







0.1







0.7



0.9Fiscal 2005


(0.1
)










0.1







1.4



1.4Fiscal 2004


0.8







0.2



0.1







(0.1
)


1.0Cumulative


0.7



0.1



0.2



0.3







2.0



3.3Expected Total


0.7



0.1



0.2



0.4







2.0



3.4 54




---



##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Severanceand OtherInitiative



Net Property,


Employee


Equipment and


Facilityand



Plant and


Related


Inventory


Carrying


Corp.Segment

Period(1)

Equipment(2)


Costs


Relocation


Costs


Reorg.


Other


TotalTotal

Fiscal 2006

$
1.6


$
1.7


$
0.8


$
0.4


$



$
3.3


$
7.8Fiscal 2005

$
1.4


$
4.5


$
1.1


$
0.7


$
0.2


$
(0.4
)

$
7.5Fiscal 2004

$
25.9


$
4.2


$
0.6


$
0.5


$
1.1


$
0.4


$
32.7Cumulative

$
28.9


$
10.4


$
2.5


$
1.6


$
1.3


$
3.3


$
48.0Expected Total

$
28.9


$
10.6


$
2.8


$
2.2


$
1.3


$
3.5


$
49.3     (1)
    
    Fiscal years are omitted for initiatives where no charges were
    incurred during the fiscal year.(2)
    
    For this Note 7, 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.(a)
    
    In fiscal 2006 we announced the closure and ceased operations at
    our Kerman, California folding carton plant. We transferred a
    substantial portion of the facilitys assets and production
    to our other folding carton facilities. We recognized an
    impairment charge to reduce the carrying value of certain
    equipment to its estimated fair value, recorded a charge for
    severance and other employee related costs, recorded a liability
    for future lease payments when we ceased operations at the
    facility of $1.0 million, and recorded charges aggregating
    $1.3 million for the impairment of the customer
    relationship intangible asset.(b)
    
    On October 4, 2005, we announced the closure of our
    Marshville, North Carolina folding carton plant. We transferred
    the majority of the facilitys production to our other
    folding carton facilities. We recognized an impairment charge in
    fiscal 2005 to reduce the carrying value of the impaired
    equipment. In fiscal 2006, we closed the facility and certain
    equipment and the facility was classified as held for sale. We
    sold the facility in October 2006.(c)
    
    In fiscal 2005, we announced the closure of our Waco, Texas
    folding carton plant that we acquired as part of the GSPP
    Acquisition. We transferred the majority of the facilitys
    production to other plants. We classified the land and building
    as held for sale and we recorded a liability of
    $1.5 million primarily for severance and other employee
    related costs as part of the purchase.(d)
    
    We incurred $1.6 million in fiscal 2005 for severance and
    other employee costs related to our folding carton division
    restructuring. The GSPP Acquisition included 11 folding carton
    facilities and we believe the restructuring of the division
    allowed us to more effectively manage the collective folding
    assets.(e)
    
    In fiscal 2005, we sold 9.4 acres of real estate adjacent
    to our Norcross, Georgia headquarters and received proceeds of
    $2.8 million and recognized a gain of $1.9 million.(f)
    
    In fiscal 2004, we announced the closure of our Otsego, Michigan
    paperboard mill. We transferred approximately one third of the
    production of this facility to our remaining mills and
    recognized an impairment charge to reduce the carrying value of
    the facility and certain equipment to its estimated fair value.
    We sold the facility in the fourth quarter of fiscal 2006.(g)
    
    In fiscal 2004, we announced the closure of our St. Paul,
    Minnesota folding carton facility. We closed the facility in
    fiscal 2005. We shifted a majority of the production to our
    other folding carton facilities. We recognized an impairment
    charge to reduce the carrying value of certain equipment to its
    estimated fair value less cost to sell. We have other operations
    at this complex. We will retain the land and building; and they
    will remain available for use by those operations. The St. Paul
    union contract allows more senior folding carton employees from
    this facility to replace other union employees at our St. Paul
    mill. The replacement process 55




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  requires
    one-on-one
    training for a specific period of time per position. As a
    result, we have included in the severance and other employee
    costs $1.2 million of duplicate mill labor in fiscal 2005.(h)
    
    In fiscal 2004, we announced the closure of the laminated
    paperboard products converting lines at our Aurora, Illinois
    facility. We recognized an impairment charge to reduce the
    carrying value of the equipment to its estimated fair value less
    cost to sell and classified the equipment as held for sale until
    it was sold.(i)
    
    In fiscal 2004, we consolidated our laminated paperboard
    products division and mill division under common management and
    reduced the size of the combined divisional staffs. We renamed
    the combined division as the paperboard division.(j)
    
    In fiscal 2004, we announced the closure of our Wright City,
    Missouri laminated paperboard products facility. We recognized
    an impairment charge to reduce the carrying value of certain
    equipment and the facility to its estimated fair value less cost
    to sell and we classified the property, plant and equipment as
    held for sale. We sold the facility in fiscal 2005.(k)
    
    In fiscal 2004, we sold our previously closed Mundelein,
    Illinois merchandising displays facility site.(l)
    
    In fiscal 2004, we reviewed our corporate structure and
    reorganized our subsidiaries, reducing the number of corporate
    entities and the complexity of the organizational structure. We
    substantially completed the reorganization process in the fiscal
    2005.(m)
    
    In fiscal 2005, we acquired certain GSPP assets and assumed
    certain of Gulf States related liabilities. We have
    expensed as incurred various incremental transition costs to
    integrate the operations into our mill and folding carton
    operations of $0.5 million in fiscal 2006 and
    $0.7 million in fiscal 2005. In fiscal 2005, we recorded a
    charge of $0.6 million to expense previously capitalized
    patent defense costs.  Restructuring and other costs,
    net
  2006


2005


2004Accrual at beginning of fiscal year

$
1.6


$
1.2


$
0.2Additional accruals


2.5



2.6



3.2Payments


(1.9
)


(2.2
)


(2.4
)Adjustment to accruals


(0.1
)






0.2Accrual at September 30,

$
2.1


$
1.6


$
1.2   Reconciliation of accruals and charges to restructuring
    and other costs, net:
  Additional accruals and adjustment
    to accruals (see table above)

$
2.4


$
2.6


$
3.4Severance and other employee costs


0.5



1.9



Net property, plant and equipment


1.6



1.4



25.9Equipment relocation


0.8



1.1



0.6Facility carrying costs


0.4



0.7



0.5Pension curtailment










0.9Goodwill impairment










0.2Corporate reorganization project






0.2



1.1Other


2.1



(0.4
)


0.1Total restructuring and other
    costs, net

$
7.8


$
7.5


$
32.7  56




---



##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2006


2005Accrual at beginning of fiscal year

$
1.5


$
Additional accruals






1.5Payments


(1.4
)


Adjustment to accruals


(0.1
)


Accrual at September 30,

$



$
1.5     Note 8.
    Other
    Intangible Assets    September 30,2006


2005Weighted


Gross Carrying


Accumulated


Gross Carrying


AccumulatedAvg. Life


Amount


Amortization


Amount


AmortizationCustomer relationships


21.0


$
65.2


$
(11.7
)

$
65.6


$
(6.1
)Non-compete agreements


8.4



6.5



(6.1
)


6.5



(5.3
)Patents


5.0



1.2



(0.3
)


1.0



(0.2
)Trademark


5.0



0.8



(0.6
)


0.8



(0.6
)License Costs


5.4



0.3



(0.2
)


0.3



(0.1
)Total


20.5


$
74.0


$
(18.9
)

$
74.2


$
(12.3
)        57




---



##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      2007

$
6.82008

$
6.62009

$
6.22010

$
4.62011

$
3.7   Note 9.
    Unconsolidated
    Joint Venture       58




---



##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 10.
    Debt    September 30,2006


2005Face value of 5.625% notes
    due March 2013, net of unamortized discount of $0.2 and $0.2

$
99.8


$
99.8Hedge adjustments resulting from
    terminated interest rate derivatives or swaps


2.1



2.4101.9



102.2Face value of 8.20% notes due
    August 2011, net of unamortized discount of $0.3 and $0.4


249.7



249.6Hedge adjustments resulting from
    terminated interest rate derivatives or swaps


8.3



9.9258.0



259.5Term loan facility(a)


243.7



250.0Revolving credit and swing
    facilities(a)


86.9



216.0Receivables-backed financing
    facility(b)


90.0



55.0Industrial development revenue
    bonds, bearing interest at variable rates (5.55% at
    September 30, 2006, and 4.30% at September 30, 2005),
    due through October 2036(c)


23.9



30.1Other notes


1.7



2.3806.1



915.1Less current portion of debt


40.8



7.1Long-term debt due after one year

$
765.3


$
908.0The following were the aggregate
    components of debt (in millions):Face value of debt instruments,
    net of unamortized discounts

$
795.7


$
902.8Hedge adjustments resulting from
    terminated interest rate derivatives or swaps


10.4



12.3$
806.1


$
915.1       (a)
    
    The Senior Credit Facility includes revolving credit, swing,
    term loan, and letters of credit facilities with an aggregate
    original maximum principal amount of $700 million. The
    Senior Credit Facility provides for up to $100.0 million in
    loans to a Canadian subsidiary. At September 30, 2006,
    there were $49.8 million in borrowings to the Canadian
    subsidiary. As scheduled term loan payments are made, the
    facility size is reduced by those notional amounts. At
    September 30, 2006 the Senior Credit Facility had a maximum
    principal amount of $693.7 million. The Senior Credit
    Facility is pre-payable at any time and is scheduled to expire
    on June 6, 2010. At September 30, 2006, we had issued
    aggregate outstanding letters of credit under this facility of
    approximately $37 million, none of which had been drawn
    upon. At September 30, 2006, due to the restrictive
    covenants on the revolving credit facility, maximum additional
    available borrowings under this facility were approximately
    $115.5 million. Borrowings in the United States under the
    Senior Credit Facility bear interest based either upon
    (1) LIBOR plus an applicable margin (U.S.
    LIBOR Loans) or (2) the alternative base rate
    plus an applicable margin (U.S. Base Rate
    Loans). Borrowings in Canada under the Senior Credit
    Facility 59




---



##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  bear interest based either upon: (1) Canadian Deposit
    Offering Rate plus an applicable margin for Canadian dollar
    loans (Bankers Acceptance Loans);
    (2) LIBOR plus an applicable margin for U.S. Dollar
    loans (Canadian LIBOR Loans); or (3) the
    Canadian or U.S. Dollar base rate plus an applicable margin
    (Canadian Base Rate Loans.) The applicable
    margin for determining the interest rate applicable to U.S. and
    Canadian Base Rate Loans ranges from 0.000% to 0.750% and
    Bankers Acceptance and U.S. and Canadian LIBOR Loans from
    .875% to 1.75% based on the ratio of our total funded debt to
    EBITDA as defined in the credit agreement (Leverage
    Ratio). The applicable percentage for determining the
    facility commitment fee ranges from 0.175% to 0.400% of the
    aggregate borrowing availability based on the Leverage Ratio. At
    September 30, 2006, the applicable margin for determining
    the interest rate applicable to U.S. and Canadian LIBOR Loans
    and Bankers Acceptance Loans and the applicable margin for
    determining the interest rate applicable to U.S. and Canadian
    Base Rate Loans were 1.75% and 0.75%, respectively. At
    September 30, 2005, the applicable margin for determining
    the interest rate applicable to U.S. and Canadian LIBOR Loans
    and the applicable margin for determining the interest rate
    applicable to U.S. and Canadian Base Rate Loans were 1.50% and
    0.50%, respectively. The facility commitment fee at
    September 30, 2006 and September 30, 2005 was 0.40%
    and 0.325% of the unused amount, respectively. Interest on the
    U.S. revolving credit facility and term loan facility are
    payable in arrears on each applicable payment date. At our
    election, we can choose U.S. and Canadian Base Rate Loans, U.S.
    and Canadian LIBOR Loans, Bankers Acceptance Loans or a
    combination thereof. If we chose U.S. and Canadian LIBOR Loans
    or Bankers Acceptance 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.
    Under the most restrictive of these covenants as of
    September 30, 2006 we could pay up to approximately
    $90 million of dividends without violating our Minimum
    Consolidated Net Worth covenant.(b)
    
    On October 26, 2005, we amended the
    364-day
    receivables-backed financing facility (Receivables
    Facility) and increased the maximum borrowing
    availability from $75.0 to $100.0 million. The facility
    expired on October 25, 2006. We amended the facility, and
    the facility is scheduled to expire on November 16, 2007.
    Accordingly, such borrowings are classified as non-current at
    September 30, 2006. At September 30, 2005, we had the
    intent to maintain at least $55.0 million outstanding under
    this facility on a long-term basis. We also had the ability to
    re-finance this borrowing on a long-term basis, as evidenced by
    the fact that it was renewed in October 2005, expiring October
    2006. Accordingly, we have reclassified the $55.0 million
    drawn upon this facility at September 30, 2005 previously
    classified as short-term to long-term. Borrowing availability
    under this facility is based on the eligible underlying
    receivables. At September 30, 2006, maximum available
    borrowings under this facility were approximately
    $100.0 million. The borrowing rate, which consists of the
    market rate for asset-backed commercial paper plus a utilization
    fee, was 5.61% as of September 30, 2006. The borrowing rate
    at September 30, 2005 was 4.10%.(c)
    
    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 60




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  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.  August 2011 notes March 2013 notes
    2007

$
40.82008


128.02009


87.92010


168.12011


250.0Thereafter


121.4Unamortized hedge adjustments from
    terminated interest rate derivatives or swaps


10.4Unamortized bond discount


(0.5
)Total long-term debt

$
806.1   Note 11.
    Leases      2007

$
12.22008


9.22009


5.62010


3.32011


2.2Thereafter


2.9Total future minimum lease payments

$
35.4    61




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 12.
    Income
    Taxes    Year Ended September 30,2006


2005


2004Current income taxes:Federal

$
1.1


$
(3.4
)

$
9.1State


(0.8
)


0.5



(1.2
)Foreign


4.1



1.2



3.3Total current


4.4



(1.7
)


11.2Deferred income taxes:Federal


8.1



2.9



(0.6
)State


(2.1
)


(0.1
)


(4.6
)Foreign


(0.5
)


1.2



(0.3
)Total deferred


5.5



4.0



(5.5
)Provision for income taxes

$
9.9


$
2.3


$
5.7     Year Ended September 30,2006


2005


2004Employee related accruals and
    allowances

$
(2.7
)

$
(0.8
)

$
(1.5
)Research and development and other
    federal credit carryforwards


(1.2
)






State net operating loss
    carryforwards, net of valuation allowance


(2.1
)


(2.6
)


(0.5
)State credit carryforwards, net of
    federal benefit and valuation allowance






0.3



(1.0
)Property, plant and equipment


9.7



15.9



(12.5
)Deductible intangibles


2.4



1.4



2.4Pension


1.5



(4.0
)


7.4Inventory reserves


(0.3
)


(2.3
)


1.4Other deferred tax assets


(0.7
)


0.4



(0.9
)Other deferred tax liabilities


(1.1
)


(4.3
)


(0.3
)Deferred income tax expense

$
5.5


$
4.0


$
(5.5
)Income tax expense is included in
    our consolidated statements of income as follows:Continuing operations

$
9.9


$
2.3


$
0.9Discontinued operations










4.8Provision for income taxes

$
9.9


$
2.3


$
5.7  62




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended September 30,2006


2005


2004Statutory federal tax rate


35.0
%


35.0
%


35.0
%Meals and entertainment expense


0.9



2.5



2.0Adjustment of deferred taxes for
    changes in state and foreign tax rates


(5.2
)


6.9



(1.8
)Fixed assets and inventory
    adjustments


0.2



(6.6
)


3.6Adjustment and resolution of
    federal and state tax deductions


(1.7
)


(20.8
)


(2.2
)State taxes, net of federal benefit


(1.6
)


(3.5
)


1.2Research and development and other
    tax credits, net of valuation allowances


(2.1
)


(0.1
)


(0.8
)Adjustment to deferred
    taxes  restructuring


(1.0
)


(1.7
)


(9.0
)Other valuation allowances


0.6



0.8



(5.3
)Other, net


0.7



(1.2
)


1.7Effective tax rate


25.8
%


11.3
%


24.4
%    63




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    September 30,2006


2005Deferred income tax assets:Accruals and allowances

$
3.2


$
3.1Employee related accruals and
    allowances


9.2



6.6Minimum pension liability


32.7



43.4Research and development and other
    federal credit carryforwards


1.3



State net operating loss
    carryforwards


6.8



4.5State credit carryforwards, net of
    federal benefit


0.9



0.9Foreign tax credit carryforwards


1.6



Valuation allowances


(3.5
)


(1.7
)Other


6.0



4.6Total


58.2



61.4Deferred income tax liabilities:Property, plant and equipment


118.4



108.2Deductible intangibles


13.9



11.4Pension


11.7



10.2Inventory reserves


1.7



2.0Other


6.4



7.5Total


152.1



139.3Net deferred income tax liability

$
93.9


$
77.9     September 30,2006


2005Current deferred tax asset

$
5.9


$
5.1Long-term deferred tax liability


99.8



83.0Net deferred income tax liability

$
93.9


$
77.9      64




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Year Ended September 30,2006


2005


2004United States continuing operations

$
28.4


$
13.0


$
(0.2
)United States discontinued
    operations










12.528.4



13.0



12.3Foreign continuing operations


10.2



6.9



10.7Foreign discontinued operations










0.310.2



6.9



11.0Income before income taxes

$
38.6


$
19.9


$
23.3       Note 13.  Retirement
    Plans
  Defined
    Benefit Pension Plans
     65




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2006


2005Equity investment managers


70
%


66
%Fixed income investment managers


29
%


29
%Cash and cash equivalents


1
%


2
%Alternative investment managers


0
%


3
%Total


100
%


100
%         Target
    Allocations
  2006


2005Equity managers


50-80
%


50-80
%Fixed income managers


15-45
%


15-45
%Alternative investments, cash and
    cash equivalents


0-45
%


0-45
%    66




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended September 30,2006


2005Projected benefit obligation at
    beginning of year

$
338.1


$
300.1Service cost


9.5



9.4Interest cost on projected benefit
    obligations


18.1



17.7Amendments


0.3



Curtailment gain






(7.3
)Actuarial (gain) loss


(18.2
)


29.1Benefits paid


(12.6
)


(10.9
)Projected benefit obligation at
    end of year


335.2



338.1Fair value of assets at beginning
    of year


226.8



208.9Actual gain on plan assets


20.8



21.4Employer contribution


20.6



7.4Benefits paid


(12.6
)


(10.9
)Fair value of assets at end of year


255.6



226.8Funded status


(79.6
)


(111.3
)Net unrecognized loss


95.0



121.1Unrecognized prior service cost


2.2



2.0Net amount recognized

$
17.6


$
11.8Amounts recognized in the
    consolidated balance sheets consist of:Prepaid benefit cost

$
17.6


$
11.8Additional minimum liability


(87.9
)


(114.4
)Intangible asset


3.0



3.1Accumulated other comprehensive
    loss


84.9



111.3Net amount recognized

$
17.6


$
11.8  67




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended September 30,2006


2005


2004Service cost

$
9.5


$
9.4


$
9.0Interest cost on projected benefit
    obligations


18.1



17.7



17.3Expected return on plan assets


(20.6
)


(19.0
)


(16.3
)Net amortization of actuarial loss


7.7



7.1



6.6Net amortization of prior service
    cost


0.1



0.1



Curtailment loss (gain)






(0.4
)


0.7Total company defined benefit plan
    expense


14.8



14.9



17.3Multi-employer plans for
    collective bargaining employees


0.5



0.5



0.5Net periodic pension cost

$
15.3


$
15.4


$
17.8     2006


2005


2004Discount rate


5.50
%


6.00
%


6.50
%Expected long-term rate of return
    on plan assets


9.00
%


9.00
%


9.00
%     2006


2005


2004Weighted-average assumptions as
    of September 30:Discount rate


5.875
%


5.50
%


6.00
%Expected long-term rate of return
    on plan assets


9.00
%


9.00
%


9.00
%    68




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    RP-2000
    table GAM-83 table 
    2007

$
12.92008


13.72009


14.62010


15.62011


16.5Years 2012  2016


102.0   pension plan
    
    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. 69




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     
    Effective January 1, 2006, current employees who were
    35 years old or older or who had 5 years or
    more of vesting service on December 31, 2004, were allowed
    to opt for no future pension accrual and the enhanced 401(k)
    plan match. In the event they chose this option, we will pay
    these employees pension benefits earned through
    December 31, 2005, upon retirement in accordance with
    applicable plan rules.  401(k)
    Plans
  Code
  Supplemental
    Retirement Plans
  Supplemental Plans Obligations and/or
  (SERP
 70




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 14.  Derivatives
    2006


2005Interest rate financial swaps

$
(4.4
)

$
5.4Commodity financial swaps


(0.1
)


Commodity physical contracts


0.1



Net fair value of derivative
    contracts

$
(4.4
)

$
5.4     fixed-to-floating floating-to-fixed
     71




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 15.  Shareholders
    Equity
  Capitalization
    Stock
    Repurchase Plan
    Adoption
    of SFAS 123(R)
  Accounting for Stock Issued to
    Employees (APB 25
  Accounting for
    Stock-Based Compensation
    de minimis.
 72




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      2005


2004Net income, as reported

$
17.6


$
17.6Add: Stock-based employee
    compensation expense included in reported net income, net of
    related tax effects


1.0



1.0Deduct: Total stock-based employee
    compensation expense determined under fair value based method
    for all awards, net of related tax effects


(4.9
)


(3.8
)Pro forma net income

$
13.7


$
14.8Earnings per share:Basic  as reported

$
0.50


$
0.51Basic  pro forma

$
0.39


$
0.42Diluted  as reported

$
0.49


$
0.50Diluted  pro forma

$
0.38


$
0.42   Stock
    Options
        2006


2005


2004Expected Term in Years


7



7



7Expected Volatility


42.9
%


44.1
%


43.8
%Risk-Free Interest Rate


5.1
%


4.1
%


4.1
%Dividend Yield


2.6
%


2.6
%


2.2
%  73




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    WeightedWeighted


Average


AggregateAverage


Remaining


IntrinsicExercise


Contractual


ValueShares


Price


Term


(In Millions)Outstanding at September 30,
    2005


3,986,103


$
13.90Granted


50,000



16.46Exercised


(653,867
)


13.41Expired


(168,867
)


17.85Forfeited


(2,000
)


14.01Outstanding at
    September 30, 2006


3,211,369


$
13.83



5.5 years


$
19.2Exercisable at
    September 30, 2006


3,125,378


$
13.78



5.4 years


$
18.9Options available for future
    grant at September 30, 2006


1,006,666       WeightedAverageGrant Date FairShares


ValueNonvested at September 30,
    2005


246,999


$
5.75Granted


50,000



6.50Vested


(209,008
)


5.75Forfeited


(2,000
)


5.71Nonvested at September 30,
    2006


85,991


$
6.19      74




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Restricted
    Stock
    WeightedAverageGrant Date FairShares


ValueUnvested at September 30, 2005


508,831


$
13.55Granted


598,500



13.56Vested


(92,501
)


14.24Forfeited






Unvested at September 30,
    2006


1,014,830


$
13.49       
    Achievement of Credit Agreement Debt to EBITDA (as defined in
    the Companys Senior Credit Facility) ratio of 4.4 or lower
    for any trailing 12 months during the service period.
    Reduction of net debt as of March 31, 2005 pro forma for
    the Gulf States acquisition by $180 million by
    September 30, 2007 as adjusted for any subsequent
    acquisitions or dispositions of businesses.
    An increase in diluted earnings per share, adjusted to exclude
    restructuring costs, by 15% or more in fiscal 2006 or 2007 over
    fiscal 2005.    
    The condition will be met with respect to one third of the award
    if the Company achieves a stock price of $18 per share
    within the vesting period.
    The condition will be met with respect to one third of the award
    if the Company achieves a stock price of $20 per share
    within the vesting period.
    The condition will be met with respect to one third of the award
    if the Company achieves a stock price of $22 per share
    within the vesting period.   75




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Earnings per
    Share (SFAS 128)
    Employee
    Stock Purchase Plan
  (the Plan)
  Note 16.
    Business
    Interruption and Other Insurance Recoveries    Note 17.
    Related
    Party Transactions   76




---



##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      
    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 2005.
    As of September 30, 2004, we had no borrowings outstanding
    thereunder.
    During fiscal 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 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. We discontinued this arrangement in
    June 2005 when we entered into our new credit facility.
    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.
    SunTrust Banks, Inc. and its subsidiaries have performed other
    banking and financial consulting services for us in fiscal 2004.
    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, or 1% of SunTrust
    Banks gross revenues during its fiscal year ended
    December 31, 2003.  Note 18.
    Commitments
    and Contingencies  Capital
    Additions
    Environmental
    and Other Matters
     77




---



##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (PRP)
  
    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 while it was
    not estimable, the potential liability was reasonably likely to
    be a de minimisamount and immaterial.
    With respect to one site, we have preliminarily determined the
    potential liability was best reflected by a range of reasonably
    possible liabilities, all of which we expect to be de minimisand immaterial.
    With respect to one site, we have preliminarily determined that
    it is probable that we have incurred a liability with respect to
    this site. The status of the site is unknown, pending further
    investigation.    
    Contamination was discovered at the time of the GSPP Acquisition
    at two sites we acquired. We did not assume any environmental
    liabilities as part of the acquisition and we believe that we
    have strong defenses under applicable laws with respect to any
    pre-closing environmental contamination.
    One of these sites is one of our former locations that is
    involved in a
    clean-up
    under the state hazardous waste sites program. Investigations of
    a few areas of concern are continuing.
    It is believed that the contamination discovered at one of the
    sites was due to an oil release by a previous owner. The
    previous owner is obligated to indemnify us for any
    contamination caused by the oil release.    Guarantees
    
    We have a 49% ownership interest in Seven Hills. The partners
    guarantee funding of net losses in proportion to their share of
    ownership. 78




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    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 it is dependent on changes in the tax law.  and/or
  Insurance
    Placed with Kemper
    Note Receivable
    Joint
    Venture Option
   79




---



##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 19.
    Segment
    Information        Note 1. Description of Business and Summary of
    Significant Accounting Policies.
    Years Ended September 30,2006


2005


2004Net sales (aggregate):Packaging Products

$
1,267.8


$
994.0


$
908.1Paperboard


819.7



615.4



539.9Merchandising Displays


233.2



226.3



237.8Corrugated


135.7



118.5



89.9Total

$
2,456.4


$
1,954.2


$
1,775.7 80




---



##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Years Ended September 30,2006


2005


2004Less net sales (intersegment):Packaging Products

$
2.9


$
3.4


$
3.5Paperboard


298.9



202.3



176.8Merchandising Displays


0.1



0.2



0.4Corrugated


16.4



14.8



13.7Total

$
318.3


$
220.7


$
194.4Net sales (unaffiliated customers):Packaging Products

$
1,264.9


$
990.6


$
904.6Paperboard


520.8



413.1



363.1Merchandising Displays


233.1



226.1



237.4Corrugated


119.3



103.7



76.2Total

$
2,138.1


$
1,733.5


$
1,581.3Segment income:Packaging Products

$
45.0


$
33.4


$
38.0Paperboard


62.2



31.6



15.7Merchandising Displays


16.4



17.6



24.0Corrugated


4.0



3.5



5.1127.6



86.1



82.8Restructuring and other costs, net


(7.8
)


(7.5
)


(32.7
)Non-allocated expenses


(20.8
)


(17.8
)


(12.5
)Interest expense


(55.6
)


(36.6
)


(23.6
)Interest and other income (expense)


1.6



0.5



(0.1
)Minority interest in consolidated
    subsidiaries


(6.4
)


(4.8
)


(3.4
)Income from continuing operations
    before income taxes

$
38.6


$
19.9


$
10.5Identifiable assets:Packaging Products

$
662.1


$
674.6


$
518.6Paperboard


886.3



901.0



498.9Merchandising Displays


158.0



133.0



145.5Corrugated


42.7



42.3



48.9Assets held for sale


4.0



3.4



1.5Corporate


30.9



44.1



70.4Total

$
1,784.0


$
1,798.4


$
1,283.8 81




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Years Ended September 30,2006


2005


2004GoodwillPackaging Products

$
84.5


$
81.2


$
64.6Paperboard


243.4



240.9



203.7Merchandising Displays


28.7



28.8



28.8Corrugated










Total

$
356.6


$
350.9


$
297.1Depreciation and amortization:Packaging Products

$
42.7


$
37.5


$
33.1Paperboard


47.6



32.3



28.1Merchandising Displays


6.9



7.0



6.3Corrugated


3.9



4.0



3.4Corporate


3.2



3.2



3.3Total

$
104.3


$
84.0


$
74.2Capital expenditures:Packaging Products

$
27.5


$
26.3


$
36.8Paperboard


29.3



19.4



16.6Merchandising Displays


5.0



5.6



5.1Corrugated


1.8



1.1



1.4Corporate


1.0



1.9



0.9Total

$
64.6


$
54.3


$
60.8     Merch.Packaging


Paperboard


Displays


Corrugated


TotalBalance as of October 1, 2004

$
64.6


$
203.7


$
28.8


$



$
297.1Goodwill acquired


13.8



37.2











51.0Translation adjustment


2.8















2.8Balance as of September 30,
    2005

$
81.2


$
240.9


$
28.8


$



$
350.9Goodwill acquired


1.8



2.5











4.3Impairment loss










(0.1
)






(0.1
)Translation adjustment


1.5















1.5Balance as of
    September 30, 2006

$
84.5


$
243.4


$
28.7


$



$
356.6  82




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##### Table of Contents



ROCK-TENN
    COMPANY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 20.
    Financial
    Results by Quarter (Unaudited)  First


Second


Third


Fourth2006

Quarter


Quarter


Quarter


Quarter(In millions, except per share data)Net sales

$
490.4


$
529.7


$
548.3


$
569.7Gross profit


59.6



89.2



92.0



108.3Restructuring and other costs,
    net


1.0



3.5



2.7



0.6Income (loss) before income
    taxes


(12.1
)


8.4



12.0



30.3Net income
    (loss) (a)


(9.0
)


5.2



11.0



21.5Basic earnings (loss) per
    share


(0.25
)


0.15



0.30



0.59Diluted earnings (loss) per
    share


(0.25
)


0.14



0.30



0.57   First


Second


Third


Fourth2005

Quarter


Quarter


Quarter


Quarter(In millions, except per share data)Net sales

$
385.8


$
394.4


$
424.6


$
528.7Gross profit


55.0



58.4



71.9



89.0Restructuring and other costs, net


0.5



2.7



0.8



3.5Income before income taxes


1.7



0.4



9.7



8.1Net income (b)


0.5



0.2



12.0



4.9Basic earnings per share


0.01



0.01



0.34



0.14Diluted earnings per share


0.01



0.01



0.33



0.14     (a)
    
    In the third quarter of fiscal 2006 we recorded a
    $3.5 million benefit primarily due to $1.2 million of
    research and development tax credits related to prior years, and
    a $1.1 million tax benefit for a reduction in deferred tax
    liabilities due primarily to recently enacted lower income tax
    rates in Canada. In the fourth quarter of fiscal 2006, we
    recorded a state tax benefit of $2.4 million which related
    primarily to a change in our state effective tax rate from
    approximately 4% to 3%.(b)
    
    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.   83




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           Note 15. Shareholders
    Equity Share-Based
    Payment
  Internal Control 
    Integrated Framework
  
    84




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    ON INTERNAL CONTROL OVER FINANCIAL REPORTING     Internal Control 
    Integrated Framework
            
    85




---



##### Table of Contents



ROCK-TENN
    COMPANYREPORT OF MANAGEMENT ON RESPONSIBILITY FOR
    FINANCIAL INFORMATION AND
    FOR ESTABLISHING AND MAINTAINING ADEQUATE INTERNAL CONTROL
    OVER
     FINANCIAL REPORTING
  Managements
    Responsibility for the Financial Statements
  Form 10-K. Form 10-K
  Internal
    Control Over Financial Reporting
  Rule 13a-15(f) Exchange
    Act
    Internal
    Control  Integrated Framework.
   86




---



##### Table of Contents



Audit
    Committee Responsibility
    james a. rubright, Chairman and Chief Executive Officer
   steven c. voorhees, Executive Vice President and
    Chief Financial Officer
 87




---



##### 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 Exchange Act 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
  Regulation S-K
  Regulation S-K
  Rule 13a-15(f)
   88




---



##### Table of Contents



CEO and
    CFO Certifications
  Form 10-K.
 Item 9B.OTHER
    INFORMATION   PART III  Item 10.
    DIRECTORS
    AND EXECUTIVE OFFICERS OF THE REGISTRANT  Election of
    Directors Nominees for
    Election  Term Expiring 2010, Incumbent
    Directors  Term Expiring 2008, Incumbent
    Directors  Term Expiring 2009, Committees
    of the Board of Directors  Audit Committee, Codes of Business Conduct and
    Ethics  Code of Ethical Conduct for Chief Executive
    Officer 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 Employment Agreement with James A. Rubright 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
 89




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##### Table of Contents



PART IV  Item 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  (a) 1.  Financial
    Statements.
    PageConsolidated Statements of Income
    for the years ended September 30, 2006, 2005 and 2004


38Consolidated Balance Sheets as of
    September 30, 2006 and 2005


39Consolidated Statements of
    Shareholders Equity for the years ended September 30,
    2006, 2005 and 2004


40Consolidated Statements of Cash
    Flows for the years ended September 30, 2006, 2005 and 2004


41Notes to Consolidated Financial
    Statements


43Report of Independent Registered
    Public Accounting Firm


84Report of Independent Registered
    Public Accounting Firm On Internal Control Over Financial
    Reporting


85Report of Management on
    Responsibility for Financial Information and for Establishing
    and Maintaining Adequate Internal Control over Financial
    Reporting


86   2.
    Financial
    Statement Schedule of Rock-Tenn Company.        3.
    Exhibits.  See separate Exhibit Index attached hereto and
    incorporated herein.
  (b) 
    See Item 15(a)(3) and separate Exhibit Index attached
    hereto and incorporated herein.
  (c) 
    Not applicable.
 90




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##### Table of Contents



SIGNATURES
      Dated: November 22, 2006

By: /s/  JAMES
    A. RUBRIGHTJames A. RubrightChairman 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)

November 22, 2006/s/  STEVEN
    C. VOORHEESSteven
    C. Voorhees

Executive Vice President and Chief
    Financial Officer (Principal  Financial Officer)

November 22, 2006/s/  A.
    STEPHEN
    MEADOWSA.
    Stephen Meadows

Chief Accounting Officer
    (Principal Accounting Officer)

November 22, 2006/s/  STEPHEN
    G. ANDERSONStephen
    G. Anderson

Director

November 22, 2006/s/  J.
    HYATT BROWNJ.
    Hyatt Brown

Director

November 22, 2006/s/  ROBERT
    B. CURREYRobert
    B. Currey

Director

November 22, 2006/s/  RUSSELL
    M. CURREYRussell
    M. Currey

Director

November 22, 2006/s/  G.
    STEPHEN
    FELKERG.
    Stephen Felker

Director

November 22, 2006/s/  LAWRENCE
    L.
    GELLERSTEDT, IIILawrence
    L. Gellerstedt, III

Director

November 22, 2006/s/  JOHN
    D. HOPKINSJohn
    D. Hopkins

Director

November 22, 2006/s/  JAMES
    W. JOHNSONJames
    W. Johnson

Director

November 22, 2006/s/  JOHN
    W. SPIEGELJohn
    W. Spiegel

Director

November 22, 2006/s/  JAMES
    E. YOUNGJames
    E. Young

Director

November 22, 2006  91




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##### Table of Contents



INDEX TO
    EXHIBITS
  ExhibitNumber



Description of Exhibits3
.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).*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).




---



##### Table of Contents



ExhibitNumber



Description of Exhibits*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).10
.10



Amended and Restated Credit and
    Security Agreement dated as of October 26, 2005 among
    Rock-Tenn Financial, Inc., as Borrower, Rock-Tenn Converting
    Company, as Servicer, the Liquidity Banks from time to time
    party hereto, SunTrust Capital Markets, Inc., as TPF Agent and a
    Co-Agent and Wachovia Bank, National Association, as Blue Ridge
    Agent, a Co-Agent and Administrative Agent (incorporated by
    reference to Exhibit 10.1 of the Registrants
    Quarterly Report on
    Form 10-Q
    for the quarter ended December 31, 2005).10
.11



Amended and Restated Receivables
    Sale Agreement dated as of October 26, 2005 among Rock-Tenn
    Company, as Parent, Rock-Tenn Company of Texas, Rock-Tenn
    Converting Company, Rock-Tenn Mill Company, LLC, Rock-Tenn
    Packaging and Paperboard, LLC, PCPC, Inc. and Waldorf
    Corporation, as Originators, and Rock-Tenn Financial, Inc., as
    Buyer (incorporated by reference to Exhibit 10.2 of the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended December 31, 2005).*10
.12



Amendment to Rock-Tenn Company
    Supplemental Executive Retirement Plan Effective as of
    November 11, 2005 (incorporated by reference to
    Exhibit 10.3 of the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended December 31, 2005).*10
.13



Amended and Restated Rock-Tenn
    Company Supplemental Retirement Savings Plan Effective as of
    January 1, 2006 (incorporated by reference to
    Exhibit 10.4 of the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended December 31, 2005).*10
.14



Employment Agreement between
    Rock-Tenn Company and James A. Rubright, dated as of
    February 6, 2006 (incorporated by reference to
    Exhibit 10.1 of the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2006).10
.15



Amendment to Amended and Restated
    Credit and Security Agreement dated as of October 25, 2006
    among Rock-Tenn Financial, Inc., as Borrower, Rock-Tenn
    Converting Company, as Servicer, Variable Funding Capital
    Company LLC, as assignee of Blue Ridge Asset Funding
    Corporation, Three Pillars Funding LLC and SunTrust Bank as
    liquidity provider to TPF, SunTrust Capital Markets, Inc., as
    agent for the TPF Group, and Wachovia Bank, National
    Association, as liquidity provider to VFCC, agent for the VFCC
    Group and Administrative Agent.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.     No. 33-8238,
  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.




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##### Table of Contents



SCHEDULE II
  ROCK-TENN COMPANY
  September 30, 2006
 (In millions)
  Balance at


Charged to








Balance atBeginning


Costs and








End ofDescription

of Period


Expenses


Other


Deductions


PeriodYear ended September 30,
    2006:Allowance for Doubtful
    Accounts, Returns and Allowances, and Discounts

$
5.1


$
24.7


$



$
(24.6
)

$
5.2Restructuring and Other Reserve
    for Facility Closures and Consolidation


1.6



2.4







(1.9
)


2.1Deferred Tax
    Assets  Valuation Allowance


1.7



1.8











3.5Year ended September 30, 2005:Allowance for Doubtful Accounts,
    Returns and Allowances, and Discounts

$
6.4


$
18.6


$
0.9


$
(20.8
)

$
5.1Restructuring and Other Reserve
    for Facility Closures and Consolidation


1.2



2.6







(2.2
)


1.6Deferred Tax
    Assets  Valuation Allowance


1.5



0.2











1.7Year ended September 30, 2004:Allowance for Doubtful Accounts,
    Returns and Allowances, and Discounts

$
5.5


$
19.4


$



$
(18.5
)

$
6.4Restructuring and Other Reserve
    for Facility Closures and Consolidation


0.2



3.4







(2.4
)


1.2Deferred Tax
    Assets  Valuation Allowance


3.5



(2.0
)










1.5