<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q
           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 2001

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

             For the transition period from               to
                                           --------------   -------------------
             Commission file number 1-11113

                             RIVERWOOD HOLDING, INC.
             (Exact name of registrant as specified in its charter)


        Delaware                                               58-2205241
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                             Identification No.)

                            1105 North Market Street
                                   Suite 1300
                           Wilmington, Delaware 19801
                    (Address of principal executive offices)
                                   (Zip Code)

                     c/o Riverwood International Corporation
                                 (770) 644-3000

              (Registrant's telephone number, including area code)


              (Former name, former address and former fiscal year,
                          if changed since last report)

         Indicate by check mark whether the registrant (1) has filed all reports
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes [X]        No [  ]

         At November 2, 2001 there were 7,067,180 shares and 500,000 shares of
the registrant's Class A and Class B common stock, respectively, outstanding.



<PAGE>




                          PART I. FINANCIAL INFORMATION


                          ITEM 1. FINANCIAL STATEMENTS










As used in this Form 10-Q, unless the context otherwise requires, "RIC" refers
to the corporation formerly named Riverwood International Corporation; the
"Predecessor" refers to RIC and its subsidiaries in respect of periods prior to
the acquisition on March 27, 1996 by Holding, through its wholly-owned
subsidiaries, of RIC (the "Merger"); the "Company" refers to the registrant,
Riverwood Holding, Inc., a Delaware corporation formerly named New River
Holding, Inc. ("Holding") and its subsidiaries; and "Riverwood" refers to
Riverwood International Corporation, a Delaware corporation formerly named
Riverwood International USA, Inc. and an indirect wholly-owned subsidiary of
Holding.


                                       2
<PAGE>

                          RIVERWOOD HOLDING, INC.
                   CONDENSED CONSOLIDATED BALANCE SHEETS
                         (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                                    SEPTEMBER 30,        DECEMBER 31,
                                                                       2001                  2000
                                                                    ------------         ------------
ASSETS                                                              (UNAUDITED)
<S>                                                                 <C>                  <C>
Current Assets:
    Cash and Equivalents                                            $     27,338         $     18,417
    Receivables, Net of Allowances                                       174,934              137,695
    Inventories                                                          187,567              175,972
    Prepaid Expenses                                                       6,943               13,594
                                                                    ------------         ------------
Total Current Assets                                                     396,782              345,678

Property, Plant and Equipment, Net of Accumulated
      Depreciation of $632,110 in 2001 and $562,235 in 2000            1,307,490            1,368,591
Goodwill, Net of Accumulated Amortization of $43,559 in 2001
      and $37,753 in 2000                                                276,383              273,436
Other Assets                                                             128,989              133,652
                                                                    ------------         ------------
Total Assets                                                        $  2,109,644         $  2,121,357
                                                                    ============         ============

LIABILITIES
Current Liabilities:
    Short-Term Debt                                                 $      9,962         $     15,908
    Accounts Payable and Other Accrued Liabilities                       277,234              194,059
                                                                    ------------         ------------
Total Current Liabilities                                                287,196              209,967

Long-Term Debt, Less Current Portion                                   1,499,516            1,516,881
Other Noncurrent Liabilities                                              66,158               82,486
                                                                    ------------         ------------
Total Liabilities                                                      1,852,870            1,809,334
                                                                    ------------         ------------

Contingencies and Commitments (Note 5)

Redeemable Common Stock, at Current Redemption Value                       8,061                8,061
                                                                    ------------         ------------

SHAREHOLDERS' EQUITY
Nonredeemable Common Stock                                                    75                   75
Capital in Excess of Par Value                                           748,753              748,813
Accumulated Deficit                                                     (461,263)            (415,875)
Accumulated Derivative Instruments Loss                                   (6,104)                  --
Cumulative Currency Translation Adjustment                               (32,748)             (29,051)
                                                                    ------------         ------------
Total Shareholders' Equity                                               248,713              303,962
                                                                    ------------         ------------
Total Liabilities and Shareholders' Equity                          $  2,109,644         $  2,121,357
                                                                    ============         ============
</TABLE>

See Notes to Condensed Consolidated Financial Statements.


                                       3


<PAGE>


                             RIVERWOOD HOLDING, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                             AND COMPREHENSIVE LOSS
                            (IN THOUSANDS OF DOLLARS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED          NINE MONTHS ENDED
                                                     ------------------------    ------------------------
                                                      SEPT. 30,     SEPT. 30,     SEPT. 30,     SEPT. 30,
                                                        2001          2000          2001          2000
                                                     ----------    ----------    ----------    ----------
<S>                                                  <C>           <C>           <C>           <C>
Net Sales                                            $  305,314    $  278,501    $  902,745    $  853,252
Cost of Sales                                           231,144       212,354       704,684       655,871
Selling, General and Administrative                      30,303        23,620        91,056        83,336
Research, Development and Engineering                     1,248         1,467         3,583         3,567
Other Expense, Net                                        2,503         3,517        15,571         5,490
                                                     ----------    ----------    ----------    ----------

Income from Operations                                   40,116        37,543        87,851       104,988
Interest Income                                             151           210           707           603
Interest Expense                                         39,378        47,045       119,581       139,550
                                                     ----------    ----------    ----------    ----------

Income (Loss) before Income Taxes and
   Equity in Net Earnings of Affiliates                     889        (9,292)      (31,023)      (33,959)
Income Tax Expense                                        2,717         1,419         5,142         3,856
                                                     ----------    ----------    ----------    ----------

(Loss) before Equity in Net Earnings of Affiliates       (1,828)      (10,711)      (36,165)      (37,815)
Equity in Net Earnings of Affiliates                         --         1,414            --         3,700
                                                     ----------    ----------    ----------    ----------
(Loss) before Extraordinary Item and Cumulative          (1,828)       (9,297)      (36,165)      (34,115)
   Effect of a Change in Accounting
Extraordinary Loss on Early Extinguishment
   of Debt, Net of Tax of $0                             (5,954)           --        (8,724)           --
                                                     ----------    ----------    ----------    ----------
(Loss) before Cumulative Effect of a Change in
   Accounting                                            (7,782)       (9,297)      (44,889)      (34,115)
Cumulative Effect of a Change in Accounting,
   Net of Tax of $0                                          --            --          (499)           --
                                                     ----------    ----------    ----------    ----------
Net (Loss)                                               (7,782)       (9,297)      (45,388)      (34,115)
                                                     ----------    ----------    ----------    ----------
Other Comprehensive Loss, Net of Tax:
   Derivative Instruments Loss                           (3,657)           --        (6,104)           --
   Foreign Currency Translation Adjustments               3,535        (5,279)       (3,697)      (16,247)
                                                     ----------    ----------    ----------    ----------
Comprehensive Loss                                   $   (7,904)   $  (14,576)   $  (55,189)   $  (50,362)
                                                     ==========    ==========    ==========    ==========
</TABLE>


See Notes to Condensed Consolidated Financial Statements.


                                       4


<PAGE>


                             RIVERWOOD HOLDING, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (IN THOUSANDS OF DOLLARS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                         NINE MONTHS ENDED
                                                                             -------------------------------------
                                                                             SEPT. 30, 2001         SEPT. 30, 2000
                                                                             --------------         --------------
<S>                                                                          <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss)                                                                   $      (45,388)        $      (34,115)
Noncash Items Included in Net (Loss):
     Depreciation and Amortization                                                  104,319                113,045
     Cumulative Effect of a Change in Accounting                                        499                     --
     Extraordinary Loss on Early Extinguishment of Debt, Net                          8,724                     --
     Deferred Income Taxes                                                           (1,574)                   179
     Pension, Postemployment and Postretirement Benefits
        Expense, Net of Contributions                                                 4,047                  3,140
     Net Gain on Disposal of Assets                                                      --                   (745)
     Equity in Net Earnings of Affiliates, Net of Dividends                             710                   (901)
     Amortization of Deferred Debt Issuance Costs                                     5,771                  8,226
     Other, Net                                                                       4,505                  1,495
(Increase) Decrease in Current Assets:
     Receivables                                                                    (10,732)                12,607
     Inventories                                                                    (11,590)                (1,130)
     Prepaid Expenses                                                                   501                 (4,429)
Increase (Decrease) in Accounts Payable and Other Accrued Liabilities                12,557                (19,249)
Decrease in Other Noncurrent Liabilities                                             (3,514)                  (193)
                                                                             --------------         --------------
Net Cash Provided by Operating Activities                                            68,835                 77,930
                                                                             --------------         --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of Property, Plant and Equipment                                          (38,574)               (41,428)
Proceeds from Sale of Assets                                                             --                  5,670
Cash Acquired of Subsidiary Consolidated                                             17,985                     --
Increase in Other Assets                                                             (2,391)                (1,450)
                                                                             --------------         --------------
Net Cash Used in Investing Activities                                               (22,980)               (37,208)
                                                                             --------------         --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net Decrease in Notes Payable                                                      (119,718)               (28,417)
Proceeds from Issuance of Debt                                                      592,500                     --
Payments on Debt                                                                   (488,294)                (5,126)
Increase in Debt Issuance Costs                                                     (18,399)                    --
Repurchases of Redeemable Common Stock, Net                                             (60)                   (49)
                                                                             --------------         --------------
Net Cash Used in Financing Activities                                               (33,971)               (33,592)
                                                                             --------------         --------------
Effect of Exchange Rate Changes on Cash                                              (2,963)                (1,355)
                                                                             --------------         --------------
Net Increase in Cash and Equivalents                                                  8,921                  5,775
Cash and Equivalents at Beginning of Period                                          18,417                 14,108
                                                                             --------------         --------------
Cash and Equivalents at End of Period                                        $       27,338         $       19,883
                                                                             ==============         ==============
</TABLE>

See Notes to Condensed Consolidated Financial Statements.


                                       5
<PAGE>


                             RIVERWOOD HOLDING, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

The accompanying Condensed Consolidated Financial Statements of the Company
included herein have been prepared by the Company without an audit, pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in the financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted pursuant to such
rules and regulations. In the opinion of management, all adjustments, consisting
of normal recurring adjustments necessary for a fair presentation of the
financial position, results of operations and cash flows for the interim periods
presented have been made. The Condensed Consolidated Balance Sheet as of
December 31, 2000 was derived from audited financial statements.

Holding and RIC Holding, Inc., a wholly-owned subsidiary, conducted no
significant business and have no independent assets or operations other than in
connection with the Merger and related transactions through March 27, 1996.
Holding and RIC Holding, Inc. fully and unconditionally guarantee substantially
all of the debt of Riverwood.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

For a summary of the Company's significant accounting policies, please refer to
the Company's report on Form 10-K filed with the Securities and Exchange
Commission for the year ended December 31, 2000.

The preparation of the Condensed Consolidated Financial Statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the Condensed Consolidated Financial Statements and
the reported amounts of revenues and expenses during the reporting period.
Actual amounts could differ from those estimates.

The Company's consolidated financial statements include all significant
subsidiaries in which the Company has the ability to exercise direct or indirect
control over operating and financial policies. Intercompany transactions and
balances are eliminated in consolidation.

The Company has reclassified the presentation of certain prior period
information to conform with the current presentation format.

NOTE 3 - INVENTORIES

The major classes of inventories were as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS)         SEPTEMBER 30, 2001        DECEMBER 31, 2000
-------------------------         ------------------        -----------------
<S>                               <C>                       <C>
Finished goods                       $     85,085              $     88,101
Work-in-process                            14,306                     9,967
Raw materials                              53,443                    40,374
Supplies                                   34,733                    37,530
                                     ------------              ------------
Total                                $    187,567              $    175,972
                                     ============              ============
</TABLE>


                                       6
<PAGE>


NOTE 4 - INVESTMENTS IN NET ASSETS OF EQUITY AFFILIATES

Investments are accounted for using the equity method of accounting. The most
significant of these investments was Igaras Papeis e Embalagens S. A.
("Igaras"), an integrated containerboard producer located in Brazil of which the
Company owned 50 percent. On July 1, 2000, Igaras spun off the multiple
packaging portion of its business into a newly formed company, of which the
Company owned 50 percent. On October 3, 2000, the Company, along with its joint
venture partner, Cia Suzano de Papel e Celulose, completed the sale of the
jointly-held subsidiary Igaras for approximately $510 million, including the
assumption of $112 million of debt. The Company recognized a gain of $70.9
million, in connection with the sale. On October 12, 2000, the Company purchased
the remaining 50 percent of the newly formed company for $12.5 million.

The following represents the summarized income statement information for Igaras,
of which the Company recognized 50 percent in its results of operations:

<TABLE>
<CAPTION>
                                                             NINE MONTHS ENDED
(IN THOUSANDS OF DOLLARS)                                   SEPTEMBER 30, 2000
-------------------------                                   ------------------
<S>                                                         <C>
Net Sales                                                       $  162,944
Cost of Sales                                                      121,215
                                                                ----------

Gross Profit                                                    $   41,729
                                                                ==========

Income from Operations                                          $   22,682
                                                                ==========

Net Income                                                      $    4,653
                                                                ==========
</TABLE>


NOTE 5 - CONTINGENCIES AND COMMITMENTS

The Company is committed to compliance with all applicable foreign, federal,
state and local environmental laws and regulations. Environmental law is,
however, dynamic rather than static. As a result, costs, which are unforeseeable
at this time, may be incurred when new laws are enacted, and when environmental
agencies adopt or revise rules and regulations.

In 1998, the U.S. Environmental Protection Agency adopted regulations (generally
referred to as the "cluster rules") that mandate more stringent controls on air
and water discharges from the United States pulp and paper mills. The Company
estimates that the capital spending that may be required to comply with the
cluster rules could reach $55 million to be spent at its two U.S. paper mills
over a seven-year period that began in 2000. The Company estimates that it has
spent one-quarter to one-third of that amount for such compliance.

In late 1995, the Louisiana Department of Environmental Quality ("DEQ") notified
the Predecessor of potential liability for the remediation of hazardous
substances at a wood treatment site in Shreveport, Louisiana that the
Predecessor or its predecessors previously operated, and at a former oil
refinery site in Caddo Parish, Louisiana which is on land that the Company
previously owned. In response to these notices, the Company has provided
additional information concerning these sites and has commenced its own
evaluation of any claims and remediation liabilities for which it may be
responsible. Subsequent to receipt in May 1996 of a Special Demand Letter from
DEQ to remediate the site in Shreveport, the Company performed a soil and
groundwater investigation at the site pursuant to an agreement with DEQ. In
August 2001, the Company entered into a Cooperative Agreement for Remedial
Action with DEQ and the landowners of the site, as well as a Mutual Release and
Settlement Agreement with the landowners. Under the Cooperative Agreement, the
Company will develop the remedial design and carry out the specified remediation
at the site. The Company has engaged a qualified contractor and expects


                                       7

<PAGE>


completion of the work by the end of 2002. In September 1996, the Company
received a Special Demand Letter from DEQ to remediate the site in Caddo Parish.
The Company performed a waste inventory and treatability study at the site and
subsequently met with DEQ in October 1999. On July 6, 2000, the Company and DEQ
entered into a Settlement Agreement that describes in detail the remedial
actions necessary for the Company to obtain full release of all future liability
at this site. The Company has contracted with a vendor to perform the remedial
actions as outlined in the Settlement Agreement and the work is currently
proceeding. The Company no longer owns the site since transferring the property
to another entity on October 22, 2000. The Company anticipates the remedial
actions outlined in the Settlement Agreement will be completed during the fourth
quarter of 2001 and, at that time, expects to be relieved of any future
liability.

The Company is involved in environmental remediation projects for certain
properties currently or formerly owned or operated by the Company, and at
certain waste disposal sites. Some of these projects are being addressed under
federal and state statutes, such as the Comprehensive Environmental Response,
Compensation and Liability Act and analogous state laws. The Company's costs in
certain instances cannot be reliably estimated until the remediation process is
substantially underway or liability has been addressed. To address these
contingent environmental costs, the Company has accrued reserves when such costs
are probable and can be reasonably estimated. The Company believes that, based
on current information and regulatory requirements, the accruals established by
the Company for environmental expenditures are adequate. Based on current
knowledge, to the extent that additional costs may be incurred that exceed the
accrued reserves, such amounts are not expected to have a material impact on the
results of operations, cash flows or financial condition of the Company,
although no assurance can be given that significant costs will not be incurred
in connection with clean-up activities at these properties, including the
Shreveport and Caddo Parish sites referred to above.

The Company is a party to a number of lawsuits arising out of the ordinary
conduct of its business. While there can be no assurance as to their ultimate
outcome, the Company does not believe that these lawsuits will have a material
impact on the results of operations, cash flows or financial condition of the
Company.

The Company is a plaintiff in a lawsuit against The Mead Corporation and in a
separate lawsuit against R.A. Jones Co. Inc., in each case claiming infringement
of the Company's patents for certain packaging technology. Each of the lawsuits
is pending in the U.S. District Court for the Northern District of Georgia. The
lawsuit against R.A. Jones recently went to trial. On August 10, 2001, the jury
returned a verdict that R.A. Jones had infringed the Company's patents at issue
in the lawsuit but that such patents were invalid. The Company has appealed such
verdict to the U.S. Court of Appeals for the Federal Circuit. If the Company is
not successful in challenging the verdict of invalidity, it is likely that there
will be an adverse outcome in the pending lawsuit against Mead because the same
patents are at issue in that lawsuit. The lawsuit against Mead has been placed
in suspension during the pending of this appeal. There can be no assurance
regarding the success of the appeal by the Company in the R.A. Jones lawsuit or
regarding the outcome of these lawsuits generally. The Company does not believe
that an adverse outcome in the R.A. Jones and/or Mead lawsuits would have a
material adverse effect on its business, financial condition or results of
operations.

NOTE 6 - RESTRUCTURING ACTIVITIES

In connection with the global restructuring program initiated in the fourth
quarter of 1998, the Company is reducing its European workforce by approximately
300 employees and is implementing other initiatives designed to improve
productivity and profitability across the global organization. The initial cost
of this program was approximately $25.6 million of which approximately $0.8
million was used in December 1998 and related to severance payments. The
following table provides information that details payments on this restructuring
plan since December 31, 1998:


                                       8

<PAGE>


<TABLE>
<CAPTION>
                                                                                                         Other
(In thousands of dollars)                                                              Severance        Exit Costs         Total
-------------------------                                                              ----------       ----------       ----------
<S>                                                                                    <C>              <C>              <C>
Balance at 12/31/98                                                                    $   21,205       $    3,537       $   24,742
Charges against accrual in 1999                                                           (11,527)            (791)         (12,318)
                                                                                       ----------       ----------       ----------
Balance at 12/31/99                                                                         9,678            2,746           12,424
Net charges against accrual in 2000                                                        (6,669)          (2,499)          (9,168)
                                                                                       ----------       ----------       ----------
Balance at 12/31/00                                                                         3,009              247            3,256
Charges against accrual in first nine months of 2001                                       (1,998)            (152)          (2,150)
                                                                                       ----------       ----------       ----------
Balance at 9/30/01                                                                     $    1,011       $       95       $    1,106
                                                                                       ==========       ==========       ==========
</TABLE>

During 2000, the Company substantially completed the restructuring plan and
reduced the reserve by $4.8 million. In addition, $2.2 million of new
restructuring activities aligned with the overall objectives of the initial plan
were completed in 2000. The Company anticipates completing this program during
2001.

As of September 30, 2001, the Company has reduced its European workforce related
to the 1998 restructuring by approximately 250 employees.

NOTE 7 - LONG-TERM DEBT

On June 21, 2001, the Company completed an offering of $250 million principal
amount of Senior Notes due 2007, bearing interest at 10 5/8 percent (the
"Initial 2001 Notes"). The Initial 2001 Notes were sold at a price of 103
percent of par. The proceeds from this offering of approximately $251.5 million,
net of approximately $6 million of transaction fees and expenses, were applied
to prepay a portion of the outstanding borrowings under the Term Loan Facility
(as defined below). During the second quarter of 2001, the Company recorded a
non-cash, extraordinary charge to earnings of approximately $2.8 million, net of
tax of nil, related to the write-off of the applicable portion of deferred debt
issuance costs on the term loans. A registration statement under the Securities
Act registering senior notes of the Company identical in all material respects
to the Initial 2001 Notes (the "Exchange 2001 Notes") offered in exchange for
the Initial 2001 Notes became effective on August 27, 2001. On October 5, 2001,
the Company completed its exchange offer of the Initial 2001 Notes for the
Exchange 2001 Notes. The Initial 2001 Notes and the Exchange 2001 Notes are
referred to herein as the 2001 Notes.

On August 10, 2001, the Company entered into an amendment and restatement of its
credit agreement (the "2001 Senior Secured Credit Agreement") with certain
lenders providing for senior secured credit facilities with aggregate
commitments not to exceed $635 million (the "2001 Facilities"), including a $335
million term loan facility (the "2001 Term Loan Facility") and a $300 million
revolving credit facility (the "2001 Revolving Facility"). The proceeds of the
initial borrowings under the 2001 Facilities of approximately $386.0 million,
including $51.0 million in revolving credit borrowings, were applied to repay in
full the outstanding borrowings under the Term Loan Facility and the Revolving
Facility (as defined below) and to pay approximately $12 million of the
estimated $14 million of fees and expenses incurred in connection with the
amendment and restatement of the credit agreement. During the third quarter of
2001, the Company recorded a non-cash, extraordinary charge to earnings of
approximately $6.0 million, net of tax of nil, related to the write-off of the
applicable remaining deferred debt issuance costs on the Term Loan Facility and
the Revolving Facility. The 2001 Term Loan Facility amortization requirements
are in semi-annual installments of $37.5 million beginning June 30, 2003 and
amounting to $75.0 million annually in each of 2003 and 2004, with $46.25
million due on June 30, 2005, and the remainder due at maturity on December 31,
2005. The 2001 Revolving Facility matures on December 31, 2005. The final
maturities of the 2001 Facilities are extendable from December 31, 2005 to
December 31, 2006 if the Company refinances the 1996 Senior Notes on specified
terms on or prior to December 31, 2005 (in such event, the 2001 Term Loan
Facility will continue to amortize in semi-annual installments of $46.25 million
through December 31, 2006). The 2001 Senior Secured Credit Agreement imposes
certain financial and other covenants. Such restrictions, together with the
highly leveraged nature of the Company, could limit


                                       9

<PAGE>

the Company's ability to respond to market conditions, to meet its capital
spending program, to provide for unanticipated capital investments or to take
advantage of business opportunities. The covenants contained in the 2001 Senior
Secured Credit Agreement also, among other things, restrict the ability of the
Company and its subsidiaries to dispose of assets, incur additional
indebtedness, incur guarantee obligations, prepay other indebtedness or amend
other debt instruments, pay dividends, create liens on assets, enter into sale
and leaseback transactions, make investments, loans or advances, make
acquisitions, engage in mergers or consolidations, change the business conducted
by Riverwood and its subsidiaries, make capital expenditures and engage in
certain transactions with affiliates. At September 30, 2001, the Company was in
compliance with the financial covenants in the credit agreement.

NOTE 8 - BUSINESS SEGMENT INFORMATION

The Company reports its results in two business segments: Coated Board and
Containerboard. These segments are evaluated by the chief operating decision
maker based primarily on income from operations and EBITDA. The Coated Board
business segment includes the production and sale of coated board for beverage
carrierboard and folding cartons from its West Monroe, Louisiana and Macon,
Georgia mills and from its mill in Sweden; carton converting facilities in the
United States, the United Kingdom, Spain, France and Brazil; and the design,
manufacture and installation of packaging machinery related to the assembly of
beverage cartons. The Containerboard business segment includes the production
and sale of linerboard, corrugating medium and kraft paper from paperboard mills
in the United States.

Business segment information is as follows:


<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED          NINE MONTHS ENDED
                                                     ------------------------    ------------------------
                                                      SEPT. 30,     SEPT. 30,     SEPT. 30,     SEPT. 30,
(IN THOUSANDS OF DOLLARS)                               2001          2000          2001          2000
-------------------------                            ----------    ----------    ----------    ----------
<S>                                                  <C>           <C>           <C>           <C>
NET SALES:
Coated Board                                         $  286,270    $  250,607    $  836,998    $  767,935
Containerboard                                           19,044        27,894        65,747        85,317
                                                     ----------    ----------    ----------    ----------
                                                     $  305,314    $  278,501    $  902,745    $  853,252
                                                     ==========    ==========    ==========    ==========

INCOME (LOSS) FROM OPERATIONS:
Coated Board                                         $   49,218    $   41,584    $  118,545    $  118,923
Containerboard                                           (3,970)        1,495       (10,471)        3,374
Corporate And Eliminations                               (5,132)       (5,536)      (20,223)      (17,309)
                                                     ----------    ----------    ----------    ----------
                                                     $   40,116    $   37,543    $   87,851    $  104,988
                                                     ==========    ==========    ==========    ==========

EBITDA:
Coated Board                                         $   76,427    $   76,618    $  213,003    $  218,394
Containerboard                                           (1,147)        5,990           139        16,555
Corporate And Eliminations                               (2,181)       (2,032)       (8,737)       (5,412)
                                                     ----------    ----------    ----------    ----------
                                                     $   73,099    $   80,576    $  204,405    $  229,537
                                                     ==========    ==========    ==========    ==========
</TABLE>

The following represents a reconciliation of Income from Operations to EBITDA:

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED          NINE MONTHS ENDED
                                                     ------------------------    ------------------------
                                                      SEPT. 30,     SEPT. 30,     SEPT. 30,     SEPT. 30,
(IN THOUSANDS OF DOLLARS)                               2001          2000          2001          2000
-------------------------                            ----------    ----------    ----------    ----------
<S>                                                  <C>           <C>           <C>           <C>
Income from Operations                               $   40,116    $   37,543    $   87,851    $  104,988
Add: Depreciation and amortization                       31,978        37,918       104,319       113,045
     Dividends from equity investments                       --           696           710         2,798
     Other non-cash charges                               1,005         4,419        11,525         8,706
                                                      ---------    ----------    ----------    ----------
EBITDA                                                $  73,099    $   80,576    $  204,405    $  229,537
                                                      =========    ==========    ==========    ==========
</TABLE>



                                       10


<PAGE>


NOTE 9 - CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING FOR DERIVATIVE
         INSTRUMENTS AND HEDGING ACTIVITIES


The Company is exposed to fluctuations in interest rates on its variable rate
debt and fluctuations in foreign currency transaction cash flows. The Company
actively monitors these fluctuations and uses derivative instruments from time
to time to manage its exposure. In accordance with its risk management strategy,
the Company uses derivative instruments only for the purpose of managing risk
associated with fluctuations in the cash flow of the underlying exposures
identified by management. The Company does not trade or use derivative
instruments with the objective of earning financial gains on interest or
currency rates, nor does it use leveraged instruments or instruments where there
are no underlying exposures identified. The Company's use of derivative
instruments may result in short-term gains or losses and may increase volatility
in its earnings.

On January 1, 2001, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 133, Accounting for Derivative Instruments and Hedging
Activities, as amended by SFAS No. 137, Accounting for Derivative Instruments
and Hedging Activities - Deferral of the Effective Date of FASB Statement No.
133, and SFAS No. 138, Accounting for Certain Derivative Instruments and Certain
Hedging Activities ("SFAS No. 133"). SFAS No. 133 requires all derivative
instruments to be measured at fair value and recognized on the balance sheet as
either assets or liabilities. In addition, all derivative instruments used in
hedging relationships must be designated, reassessed and documented pursuant to
the provisions of SFAS No. 133. Upon adoption of SFAS No. 133, the Company
recognized a one-time after-tax transition adjustment to decrease earnings by
approximately $0.5 million and decrease other comprehensive income by
approximately $1.1 million. These amounts have been presented as a cumulative
effect of change in accounting principle in the accompanying Condensed
Consolidated Statement of Operations and Comprehensive Loss for the Nine Months
Ended September 30, 2001 and Condensed Consolidated Balance Sheet at September
30, 2001, respectively.

The following is a summary of the Company's derivative instruments as of
September 30, 2001 and the accounting policies it employs for each:

Hedges of Anticipated Cash Flows

The following is a reconciliation of current period changes in the fair value of
the interest rate swap agreements, foreign currency forward and option contracts
which have been recorded as Accumulated Derivative Instruments Loss in the
accompanying Condensed Consolidated Balance Sheet at September 30, 2001 and as
Derivative Instruments Loss in the accompanying Condensed Consolidated Statement
of Operations and Comprehensive Loss for the Nine Months Ended September 30,
2001.

<TABLE>
<CAPTION>
(in thousands of dollars)
-------------------------
<S>                                                            <C>
SFAS No. 133 transition adjustment                             $   (1,094)
Current period decrease in fair value                              (5,010)
                                                               ----------
Balance at September 30, 2001                                  $   (6,104)
                                                               ==========
</TABLE>

During the nine months ended September 30, 2001, there was no ineffective
portion related to the changes in fair value of the interest rate swap
agreements, foreign currency forward and option contracts and there were no
amounts excluded from the measure of effectiveness. The balance of $(6.1)
million recorded in Accumulated Derivative Instruments Loss at September 30,
2001 is expected to be reclassified into future earnings, contemporaneously with
and offsetting changes in the related hedged exposure. The estimated amount to
be reclassified into future earnings as interest expense over the next twelve
months through September 30, 2002 is approximately $3.9 million. The actual
amount that will be reclassified to future earnings over the next twelve months
will vary from this amount as a result of


                                       11

<PAGE>


changes in market conditions. No amounts were reclassified to earnings during
the third quarter of 2001 in connection with forecasted transactions that were
no longer considered probable of occurring.

Derivatives not Designated as Hedges

The Company has foreign currency forward contracts used to hedge the exposure
associated with foreign currency denominated receivables. These contracts are
presently being marked-to-market through the income statement and will continue
to be marked-to-market through the income statement.

NOTE 10 - NEW ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 141 ("SFAS No. 141"), "Business
Combinations." SFAS No. 141 requires the purchase method of accounting for
business combinations initiated after June 30, 2001 and eliminates the
pooling-of-interests method. The Company does not believe that the adoption of
SFAS No. 141 will have a significant impact on its financial statements.

In July 2001, the FASB issued Statement of Financial Accounting Standards No.
142 ("SFAS No. 142"), "Goodwill and Other Intangible Assets", which is effective
January 1, 2002. SFAS No. 142 requires, among other things, the discontinuance
of goodwill amortization. In addition, the standard includes provisions for the
reclassification of certain existing recognized intangibles as goodwill,
reassessment of the useful lives of existing recognized intangibles,
reclassification of certain intangibles out of previously reported goodwill and
the identification of reporting units for purposes of assessing potential future
impairments of goodwill. SFAS No. 142 also requires the Company to complete a
transitional goodwill impairment test six months from the date of adoption. The
Company is currently assessing, but has not yet determined, the impact of SFAS
No. 142 on its financial position and results of operations.

In October 2001, the FASB issued Statement of Financial Accounting Standards No.
144 ("SFAS No. 144"), "Accounting for the Impairment of Long-Lived Assets",
which is effective January 1, 2002. SFAS No. 144 addresses financial accounting
and reporting for the impairment or disposal of long-lived assets, as well as
eliminating the exception to consolidation for a subsidiary for which control is
likely to be temporary. The Company is currently assessing, but has not yet
determined, the impact of SFAS No. 144 on its financial position and results of
operations.

NOTE 11 - SUBSEQUENT EVENT

In connection with the Merger, the former majority owner of the Company agreed
to bear the cost of a Section 338(h)(10) election for U.S. federal tax purposes
and for purposes of state taxes for which the former majority owner and the
Company filed returns on a combined basis. The Company agreed to bear the cost
of this election for the purposes of other state taxes ("stand-alone taxes"),
including Louisiana income tax. During 1997, the Company paid $27.5 million in
estimated Louisiana stand-alone taxes relating to the election. The Company's
calculation of its Louisiana tax was based on state law in effect at the time of
the Merger, including a 1993 amendment. In May 1997, the Louisiana Supreme Court
declared the 1993 amendment to be void under the Louisiana Constitution,
retroactive to 1993. After consultation with Louisiana tax counsel, the Company
filed its Louisiana income tax return for the period ended March 27, 1996 in
reliance on the Louisiana tax law in effect at the time of the Merger, without
the payment of any additional tax due to the voiding of the 1993 amendment.

The State of Louisiana completed its audit of the Company's tax return for the
period ended March 27, 1996 and on May 9, 2000, the Company received a Notice of
Proposed Tax Due for this period in the amount of $47.6 million in tax plus
statutory interest. On October 12, 2001, the Company entered into a settlement
agreement with the Louisiana Department of Revenue to pay $29.5 million to the
State of Louisiana to settle all Louisiana state income tax issues (tax and
interest) related to the period ended


                                       12

<PAGE>


March 27, 1996 and the nine month period ended December 31, 1996. The Company
made this payment on October 25, 2001 using funds borrowed under its revolving
credit facility. As required by accounting principles generally accepted in the
United States of America, the Company reported the settlement on the Condensed
Consolidated Balance Sheet as of September 30, 2001 as an increase to Goodwill,
Net of Accumulated Amortization and an increase to Accounts Payable and Other
Accrued Liabilities. The settlement had no impact on the Condensed Consolidated
Statements of Operations and Comprehensive Loss for the periods ended September
30, 2001. The settlement had no impact on the Condensed Consolidated Statement
of Cash Flows for the Nine Months Ended September 30, 2001.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW

In connection with the Merger, the Company entered into a credit agreement that
provided for senior secured credit facilities consisting of a term loan facility
and a $400 million revolving credit facility. Such credit agreement, term loan
facility and revolving facility, as in effect prior to the August 10, 2001
amendment and restatement discussed below, are referred to herein as the "Credit
Agreement", the "Term Loan Facility" and the "Revolving Facility", respectively.
In addition, Riverwood International Machinery, Inc., a wholly-owned subsidiary
of Riverwood, entered into a credit agreement providing for a $140 million
secured revolving credit facility (the "Machinery Facility") for the purpose of
financing or refinancing packaging machinery. In connection with the Merger, the
Company also completed an offering of $250 million aggregate principal amount of
10 1/4 percent Senior Notes due 2006 (the "1996 Senior Notes") and $400 million
aggregate principal amount of 10 7/8 percent Senior Subordinated Notes due 2008
(the "1996 Senior Subordinated Notes" and together with the 1996 Senior Notes,
the "1996 Notes").

On July 28, 1997, the Company completed an offering of $250 million principal
amount of 10 5/8 percent Senior Notes due 2007 (the "Initial Notes"). The net
proceeds of this offering were applied to prepay certain revolving credit
borrowings under the Revolving Facility (without any commitment reduction) and
to refinance certain Tranche A term loans and other borrowings under the Credit
Agreement. A registration statement under the Securities Act of 1933, as
amended, registering senior notes of the Company identical in all material
respects to the Initial Notes (the "Exchange Notes") offered in exchange for the
Initial Notes became effective October 1, 1997. On November 3, 1997, the Company
completed its exchange offer of the Initial Notes for the Exchange Notes. The
Initial Notes and the Exchange Notes are referred to herein as the 1997 Notes.

In connection with the sale of Igaras on October 3, 2000, the Company entered
into Amendment No. 5 dated September 12, 2000, effective October 3, 2000, to the
Credit Agreement. Pursuant to the amendment, the Company applied $120 million
and $25 million of the sale proceeds to its 2001 and 2002 term loan maturities
under the Term Loan Facility, respectively. The Company recognized a loss on the
early extinguishment of debt of approximately $2.1 million in the fourth quarter
of 2000. The Company applied the remaining portion of the proceeds
(approximately $48 million) to the Revolving Facility (without any commitment
reduction). In connection with Amendment No. 5, the Company canceled its
Machinery Facility. In addition, certain of the financial covenants included in
the Credit Agreement were amended.

On June 21, 2001, the Company completed an offering of $250 million principal
amount of 10 5/8 percent Senior Notes due 2007 (the "Initial 2001 Notes"). The
Initial 2001 Notes were sold at a price of 103 percent of par. The proceeds from
this offering of approximately $251.5 million, net of approximately $6 million
of transaction fees and expenses, were applied to prepay a portion of the
outstanding borrowings under the Term Loan Facility. During the second quarter
of 2001, the Company recorded a non-cash, extraordinary charge to earnings of
approximately $2.8 million, net of tax of nil, related to the write-off of


                                       13

<PAGE>


the applicable portion of deferred debt issuance costs on the term loans. In
connection with this offering, on June 6, 2001, the Company entered into
Amendment No. 6 to the Credit Agreement. The amendment modified certain
financial and other covenants, including minimum EBITDA requirements, in the
Credit Agreement to reflect recent financial results and market and operating
conditions. A registration statement under the Securities Act registering senior
notes of the Company identical in all material respects to the Initial 2001
Notes (the "Exchange 2001 Notes") offered in exchange for the Initial 2001 Notes
became effective on August 27, 2001. On October 5, 2001, the Company completed
its exchange offer of the Initial 2001 Notes for the Exchange 2001 Notes. The
Initial 2001 Notes and the Exchange 2001 Notes are referred to herein as the
2001 Notes.

On August 10, 2001, the Company entered into an amendment and restatement of the
Credit Agreement (the "2001 Senior Secured Credit Agreement") with certain
lenders providing for senior secured credit facilities with aggregate
commitments not to exceed $635 million (the "2001 Facilities"), including a $335
million term loan facility (the "2001 Term Loan Facility") and a $300 million
revolving credit facility (the "2001 Revolving Facility"). The proceeds of the
initial borrowings under the 2001 Facilities of approximately $386.0 million,
including $51.0 million in revolving credit borrowings, were applied to repay in
full the outstanding borrowings under the Term Loan Facility and the Revolving
Facility and to pay approximately $12 million of the estimated $14 million of
fees and expenses incurred in connection with the amendment and restatement of
the Credit Agreement. During the third quarter of 2001, the Company recorded a
non-cash, extraordinary charge to earnings of approximately $6.0 million, net of
tax of nil, related to the write-off of the applicable remaining deferred debt
issuance costs on the Term Loan Facility and the Revolving Facility.

GENERAL

The Company reports its results in two business segments: Coated Board and
Containerboard. The Coated Board business segment includes (i) the production
and sale of coated unbleached kraft paperboard ("CUK Board") for packaging
cartons from the paper mills in Macon, Georgia (the "Macon Mill") and in West
Monroe, Louisiana (the "West Monroe Mill") and white lined chip board ("WLC") at
its paper mill in Norrkoping, Sweden (the "Swedish Mill"); (ii) converting
operations facilities in the United States, the United Kingdom, Spain, France
and Brazil; and (iii) the design, manufacture and installation of packaging
machinery related to the assembly of beverage cartons. The Containerboard
business segment includes the production and sale of linerboard, corrugating
medium and kraft paper from paperboard mills in the United States.

EBITDA is defined as consolidated net income (exclusive of non-cash charges
resulting from purchase accounting during the periods subsequent to the Merger)
before consolidated interest expense, consolidated income taxes, consolidated
depreciation and amortization, and other non-cash charges deducted in
determining consolidated net income, extraordinary items and the cumulative
effect of accounting changes and earnings of, but including dividends from,
non-controlled affiliates. The Company believes that EBITDA provides useful
information regarding the Company's debt service ability, but should not be
considered in isolation or as a substitute for the Condensed Consolidated
Statements of Operations and Comprehensive Loss or cash flow data.

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED           NINE MONTHS ENDED
                                                     ------------------------    ------------------------
                                                      SEPT. 30,     SEPT. 30,     SEPT. 30,     SEPT. 30,
                                                        2001          2000          2001          2000
                                                     ----------    ----------    ----------    ----------
<S>                                                  <C>           <C>           <C>           <C>
(IN THOUSANDS OF DOLLARS)
 EBITDA (Segment Data):
      Coated Board                                   $   76,427    $   76,618    $  213,003    $  218,394
      Containerboard                                     (1,147)        5,990           139        16,555
      Corporate And Eliminations                         (2,181)       (2,032)       (8,737)       (5,412)
                                                     ----------    ----------    ----------    ----------
EBITDA                                               $   73,099    $   80,576    $  204,405    $  229,537
                                                     ==========    ==========    ==========    ==========
</TABLE>


                                       14
<PAGE>


BUSINESS TRENDS AND INITIATIVES

The Company's cash flow from operations and EBITDA are influenced by sales
volume and selling prices for its products and raw material costs, and are
affected by a number of significant business, economic and competitive factors.
Many of these factors are not within the Company's control. Historically, in the
Coated Board business segment, the Company has experienced stable pricing for
its integrated beverage carton products, and moderate cyclical pricing for its
folding cartonboard, which is principally sold in the open market. The Company's
folding cartonboard sales are affected by competition from competitors' CUK
Board and other substrates - solid bleached sulfate ("SBS"), recycled clay
coated news ("CCN") and, internationally, WLC -- as well as by general market
conditions.

In the Containerboard business segment, conditions in the cyclical worldwide
commodity paperboard markets have a substantial impact on the Company's
Containerboard sales. During the first nine months of 2001, the Company elected
to take 45 days, or approximately 17,700 tons, of medium market related downtime
at its U.S. mills that resulted in approximately $3.1 million of under-absorbed
fixed costs. The Company expects to take an additional 14 days, or approximately
5,500 tons, of medium market related downtime throughout the remaining three
months of 2001 on its medium machine, but the amount of downtime could change
depending upon market conditions. The downtime results from a number of factors,
but principally a weak containerboard market. As a result of the expected
downtime throughout the remainder of 2001, the Company estimates the impact on
earnings at its U.S. mills to be approximately $0.9 million related to the
under-absorption of fixed costs.

Energy, including natural gas, fuel oil and electricity, represents a
significant portion of the Company's manufacturing costs. During the first nine
months of 2001, the Company experienced a significant increase in its energy
costs compared to the first nine months of 2000, principally at its U.S. mills,
equal to approximately $17 million. Until recently, the Company's results had
not been significantly affected by energy costs. The Company entered into fixed
price contracts designed to mitigate the impact of future energy cost increases
through the remainder of 2001 and through a portion of 2002, and will continue
to evaluate its hedge position.

The Company is pursuing a number of long-term initiatives designed to improve
productivity and profitability while continuing to implement its Coated Board
business strategy. The Company has undertaken a profit center reorganization of
its operations, implemented a global restructuring program (see below),
implemented a number of cost saving measures and effected several management
changes. The Company is continuing to implement a global Total Quality Systems
("TQS") initiative which uses statistical process control to help design and
manage all types of activities including production and maintenance.

In addition, the Company is continuing to implement a strategy focused on the
expansion into the high-growth segments of the global consumer packaged goods
sector. The Company has identified a number of new end-use markets and strategic
alliance partners to position the Company to provide a broad portfolio of new
and enhanced products to generate additional growth in the global consumer
packaged goods sector.

Effective January 1, 2001, the Company consolidated into its financial
statements the accounts of Rengo Riverwood Packaging, Ltd. ("Rengo"), the
Company's Japanese joint venture, since the Company has the ability to exercise
direct or indirect control over Rengo's operating and financial policies. The
consolidation of Rengo contributed approximately $36 million in Net Sales and $4
million in EBITDA in the first nine months of 2001.

The Company expects capital expenditures will range from $50 million to $60
million in 2001 as the Company invests to improve its process capabilities, in
packaging machinery, and to comply with environmental cluster rules. The Company
continues to evaluate its current operations and assets with a


                                       15

<PAGE>


view to rationalizing its operations and improving profitability, in particular
with respect to its international converting assets and strategy. As part of
this effort, the Company initiated a $25.6 million global restructuring program
in the fourth quarter of 1998 aimed at achieving annualized savings and cost
avoidance of approximately $20 million when fully implemented. The global
restructuring program is focused in the Company's European operations. To date,
the Company has made significant progress in completing the restructuring
activities and anticipates completing this program during 2001 (see "--
Financial Condition, Liquidity and Capital Resources -- Restructuring
Activities"). Finally, the Company is continuing to focus on reducing working
capital and increasing liquidity.

Packaging machinery placements during the first nine months of 2001 decreased
approximately 19 percent when compared to the first nine months of 2000. The
Company expects packaging machinery placements for 2001 to be lower when
compared to 2000. The Company expects packaging machinery orders for 2001 to be
higher when compared to 2000; as a result, the Company anticipates packaging
machinery placements for 2002 to exceed 2001 and be comparable to 2000. The
Company has been and will continue to be selective in future packaging machinery
placements to ensure appropriate returns.

OUTLOOK

The Company expects that its 2001 full year EBITDA will be approximately $20
million to $35 million lower than its 2000 EBITDA, although no assurance can be
given in this regard. The achievement of this expectation is dependent upon
(among other things) a number of profit improvement initiatives, including
increasing worldwide beverage and North American consumer product sales volumes
above 2000 levels, improving U.S. mill throughput, continued cost savings from
other actions taken to date and stable pricing for the Company's products. In
2001, the Company expects sales volume increases in its worldwide beverage
markets, and continued growth in its North American consumer product markets.
The Company expects containerboard sales and margins to be negatively affected
for the remainder of 2001 due to the recent negative market pressures on
containerboard pricing and sales volumes. The Company believes that increased
energy costs will continue to significantly impact its results for the remainder
of 2001.

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED                      NINE MONTHS ENDED
                                                  -------------------------------------   -------------------------------------
                                                              % INCREASE                              % INCREASE
                                                               (DECREASE)                              (DECREASE)
                                                   SEPT. 30,   FROM PRIOR     SEPT. 30,    SEPT. 30,   FROM PRIOR     SEPT. 30,
(IN THOUSANDS OF DOLLARS)                            2001        PERIOD         2000         2001        PERIOD         2000
                                                  ----------   ----------    ----------   ----------   ----------    ----------
<S>                                               <C>          <C>           <C>          <C>          <C>           <C>
Net Sales (Segment Data):
  Coated Board                                    $  286,270         14.2%   $  250,607   $  836,998          9.0%   $  767,935
  Containerboard                                      19,044        (31.7)       27,894       65,747        (22.9)       85,317
                                                  ----------                 ----------   ----------                 ----------
Net Sales                                            305,314          9.6       278,501      902,745          5.8       853,252
Cost of Sales                                        231,144          8.8       212,354      704,684          7.4       655,871
                                                  ----------                 ----------   ----------                 ----------
Gross Profit                                          74,170         12.1        66,147      198,061          0.3       197,381
Selling, General and Administrative                   30,303         28.3        23,620       91,056          9.3        83,336
Research, Development and
  Engineering                                          1,248        (14.9)        1,467        3,583          0.4         3,567
Other Expense, Net                                     2,503        (28.8)        3,517       15,571        183.6         5,490
                                                  ----------                 ----------   ----------                 ----------
Income from Operations                            $   40,116          6.9    $   37,543   $   87,851        (16.3)   $  104,988
                                                  ==========                 ==========   ==========                 ==========
Income (Loss) from Operations
 (Segment Data):
  Coated Board                                    $   49,218         18.4%   $   41,584   $  118,545         (0.3)%  $  118,923
  Containerboard                                      (3,970)      (100.0)        1,495      (10,471)      (100.0)        3,374
  Corporate And Eliminations                          (5,132)         7.3        (5,536)     (20,223)       (16.8)      (17,309)
                                                  ----------                 ----------   ----------                 ----------
Income from Operations                            $   40,116          6.9    $   37,543   $   87,851        (16.3)   $  104,988
                                                  ==========                 ==========   ==========                 ==========
</TABLE>


                                       16
<PAGE>


PAPERBOARD SHIPMENTS

The following represents shipments of Coated Board and Containerboard to outside
customers. Shipments of Coated Board represent sales to customers of beverage
carrierboard and folding cartonboard. Shipments from the Swedish Mill represent
sales to customers of WLC produced at this mill. Shipments of Containerboard
represent sales to customers of linerboard, corrugating medium, kraft paper and
various other items. Total shipments for the three and nine months ended
September 30, 2001 and 2000 were as follows:

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED           NINE MONTHS ENDED
                                                     ------------------------    ------------------------
                                                      SEPT. 30,     SEPT. 30,     SEPT. 30,      SEPT 30,
                                                        2001          2000          2001           2000
                                                     ----------    ----------    ----------    ----------
<S>                                                  <C>           <C>           <C>           <C>
(IN THOUSANDS OF TONS)
Coated Board                                              267.7         245.2         766.4         733.4
Swedish Mill                                               36.2          37.8         113.4         111.8
Containerboard                                             56.0          73.7         192.6         230.6
                                                     ----------    ----------    ----------    ----------
                                                          359.9         356.7       1,072.4       1,075.8
                                                     ==========    ==========    ==========    ==========
</TABLE>

THIRD QUARTER 2001 COMPARED WITH THIRD QUARTER 2000

NET SALES

As a result of the factors described below, the Company's Net Sales in the third
quarter of 2001 increased by $26.8 million, or 9.6 percent, compared with the
third quarter of 2000. Net Sales in the Coated Board business segment increased
by $35.7 million in the third quarter of 2001, or 14.2 percent, to $286.3
million from $250.6 million in the third quarter of 2000, due primarily to
higher sales volume in North American beverage carton and consumer product
markets, and the consolidation of Rengo. These increases were somewhat offset by
lower sales volume in international consumer product markets and the negative
impact of foreign currency exchange rates. Net Sales in the Containerboard
business segment decreased by $8.9 million, or 31.7 percent, to $19.0 million in
the third quarter of 2001 from $27.9 million in the third quarter of 2000, due
principally to lower volumes and pricing.

GROSS PROFIT

As a result of the factors discussed below, the Company's Gross Profit for the
third quarter of 2001 increased by $8.1 million, or 12.1 percent, to $74.2
million from $66.1 million in the third quarter of 2000. The Company's gross
profit margin increased to 24.3 percent in the third quarter of 2001 from 23.8
percent in the third quarter of 2000. Gross Profit in the Coated Board business
segment increased by $12.6 million, or 19.6 percent, to $76.9 million in the
third quarter of 2001 from $64.3 million in the third quarter of 2000, while its
gross profit margin increased to 26.9 percent in the third quarter of 2001 from
25.7 percent in the third quarter of 2000. The increase in Coated Board Gross
Profit was due primarily to worldwide cost reductions, higher Net Sales and
lower depreciation expense somewhat offset by increased energy costs. Gross
Profit in the Containerboard business segment decreased by $5.1 million to
$(3.2) million in the third quarter of 2001 from $1.9 million in the third
quarter of 2000, while its gross profit margin decreased to (16.7) percent in
the third quarter of 2001 from 6.8 percent in the third quarter of 2000. The
decrease in Containerboard Gross Profit resulted principally from lower volumes
and pricing.


                                       17
<PAGE>


SELLING, GENERAL AND ADMINISTRATIVE

Selling, General and Administrative expenses increased $6.7 million, or 28.3
percent, to $30.3 million in the third quarter of 2001 from $23.6 million in the
third quarter of 2000, due primarily to the consolidation of Rengo and certain
non-recurring operating credits recorded in the third quarter of 2000. As a
percentage of Net Sales, Selling, General and Administrative expenses increased
from 8.5 percent in the third quarter of 2000 to 9.9 percent in the third
quarter of 2001.

RESEARCH, DEVELOPMENT AND ENGINEERING

Research, Development and Engineering expenses decreased $0.3 million, or 14.9
percent, to $1.2 million in the third quarter of 2001 from $1.5 million in the
third quarter of 2000, due primarily to lower research and development investing
relating to packaging machinery.

OTHER EXPENSE, NET

Other Expense, Net, was $2.5 million in the third quarter of 2001 as compared to
$3.5 million in the third quarter of 2000. This change was principally due to
gains on foreign currency transactions recorded in the third quarter of 2001.

INCOME (LOSS) FROM OPERATIONS

Primarily as a result of the factors discussed above, the Company's Income from
Operations in the third quarter of 2001 increased by $2.6 million, or 6.9
percent, to $40.1 million from $37.5 million in the third quarter of 2000, while
the Company's operating margin decreased to 13.1 percent in the third quarter of
2001 from 13.5 percent in the third quarter of 2000. Income from Operations in
the Coated Board business segment increased by $7.6 million, or 18.4 percent, to
$49.2 million in the third quarter of 2001 from $41.6 million in the third
quarter of 2000, while the operating margin increased to 17.2 percent in the
third quarter of 2001 from 16.6 percent in the third quarter of 2000, primarily
as a result of the factors described above. Income (Loss) from Operations in the
Containerboard business segment decreased by $5.5 million to $(4.0) million in
the third quarter of 2001 from $1.5 million in the third quarter of 2000, while
the operating margin decreased to (20.8) percent in the third quarter of 2001
from 5.4 percent in the third quarter of 2000, primarily as a result of the
factors described above.

FLUCTUATIONS IN U.S. CURRENCY EXCHANGE RATES

The strengthening of the U.S. dollar currency exchange rates as compared to the
Euro and related currencies, and the Japanese Yen had a modest impact on Net
Sales, Gross Profit, Income from Operations, and operating expenses during the
third quarter of 2001.

FIRST NINE MONTHS 2001 COMPARED WITH FIRST NINE MONTHS 2000

NET SALES

As a result of the factors described below, the Company's Net Sales in the first
nine months of 2001 increased by $49.5 million, or 5.8 percent, compared with
the first nine months of 2000. Net Sales in the Coated Board business segment
increased by $69.1 million in the first nine months of 2001, or 9.0 percent, to
$837.0 million from $767.9 million in the first nine months of 2000, due
primarily to higher sales volume in North American consumer product markets,
North American beverage carton markets and international beverage markets, and
the consolidation of Rengo. These increases were somewhat offset by the lower
sales volume in international consumer product markets and the negative impact
of foreign currency exchange rates. Net Sales in the Containerboard business
segment decreased by $19.6


                                       18
<PAGE>

million, or 22.9 percent, to $65.7 million in the first nine months of 2001 from
$85.3 million in the first nine months of 2000, due principally to lower volumes
and pricing.


                                       19
<PAGE>


GROSS PROFIT

As a result of the factors discussed below, the Company's Gross Profit for the
first nine months of 2001 increased by $0.7 million, or 0.3 percent, to $198.1
million from $197.4 million in the first nine months of 2000. The Company's
gross profit margin decreased to 21.9 percent in the first nine months of 2001
from 23.1 percent in the first nine months of 2000. Gross Profit in the Coated
Board business segment increased by $13.0 million, or 6.8 percent, to $205.0
million in the first nine months of 2001 from $192.0 million in the first nine
months of 2000, while its gross profit margin decreased to 24.5 percent in the
first nine months of 2001 from 25.0 percent in the first nine months of 2000.
The increase in Coated Board Gross Profit was due primarily to worldwide cost
reductions, higher Net Sales and lower depreciation expense somewhat offset by
increased energy costs. Gross Profit in the Containerboard business segment
decreased by $13.4 million to $(8.0) million in the first nine months of 2001
from $5.4 million in the first nine months of 2000, while its gross profit
margin decreased to (12.2) percent in the first nine months of 2001 from 6.4
percent in the first nine months of 2000. The decrease in Containerboard Gross
Profit resulted principally from lower volumes and pricing.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, General and Administrative expenses increased $7.8 million, or 9.3
percent, to $91.1 million in the first nine months of 2001 from $83.3 million in
the first nine months of 2000, due primarily to the consolidation of Rengo and
certain non-recurring operating charges recorded in the first nine months of
2001. As a percentage of Net Sales, Selling, General and Administrative expenses
increased from 9.8 percent in the first nine months of 2000 to 10.1 percent in
2001.

RESEARCH, DEVELOPMENT AND ENGINEERING

Research, Development and Engineering expenses were $3.6 million in the first
nine months of 2001 and 2000.

OTHER EXPENSE, NET

Other Expense, Net, was $15.6 million in the first nine months of 2001 as
compared to $5.5 million in the first nine months of 2000. This change was
principally due to non-recurring operating charges recorded in the first nine
months of 2001 primarily relating to a litigation reserve and non-cash asset
retirements, and certain non-recurring operating credits recorded in the first
nine months of 2000.

INCOME (LOSS) FROM OPERATIONS

Primarily as a result of the factors discussed above, the Company's Income from
Operations in the first nine months of 2001 decreased by $17.1 million, or 16.3
percent, to $87.9 million from $105.0 million in the first nine months of 2000,
while the Company's operating margin decreased to 9.7 percent in the first nine
months of 2001 from 12.3 percent in the first nine months of 2000. Income from
Operations in the Coated Board business segment decreased by $0.4 million, or
0.3 percent, to $118.5 million in the first nine months of 2001 from $118.9
million in the first nine months of 2000, while the operating margin decreased
to 14.2 percent in the first nine months of 2001 from 15.5 percent in the first
nine months of 2000, primarily as a result of the factors described above.
Income (Loss) from Operations in the Containerboard business segment decreased
by $13.9 million to $(10.5) million in the first nine months of 2001 from $3.4
million in the first nine months of 2000, while the operating margin decreased
to (15.9) percent in the first nine months of 2001 from 4.0 percent in the first
nine months of 2000, primarily as a result of the factors described above.


                                       20
<PAGE>


FLUCTUATIONS IN U.S. CURRENCY EXCHANGE RATES

The strengthening of the U.S. dollar currency exchange rates as compared to the
Euro and related currencies, and the Japanese Yen had a modest impact on Net
Sales, Gross Profit, Income from Operations, and operating expenses during the
first nine months of 2001.

INTEREST INCOME, INTEREST EXPENSE, INCOME TAX EXPENSE, EQUITY IN NET EARNINGS OF
AFFILIATES, EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT OF DEBT, AND CUMULATIVE
EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE.

INTEREST INCOME

Interest Income increased by $0.1 million to $0.7 million in the first nine
months of 2001 from $0.6 million in the first nine months of 2000.

INTEREST EXPENSE

Interest Expense decreased by $20.0 million to $119.6 million in the first nine
months of 2001 from $139.6 million in the first nine months of 2000 due
primarily to lower average debt balances and, to a lesser extent, lower average
interest rates.

INCOME TAX EXPENSE

During the first nine months of 2001, the Company recognized an income tax
expense of $5.1 million on a (Loss) before Income Taxes and Equity in Net
Earnings of Affiliates of $(31.0) million. During the first nine months of 2000,
the Company recognized an income tax expense of $3.9 million on a (Loss) before
Income Taxes and Equity in Net Earnings of Affiliates of $(34.0) million. These
expenses differed from the statutory federal income tax rate primarily because
of valuation allowances established on net operating loss carryforward tax
assets in the U.S. and certain international locations where the realization of
such benefits is not more likely than not.

EQUITY IN NET EARNINGS OF AFFILIATES

Equity in Net Earnings of Affiliates was comprised primarily of the Company's
equity in net earnings of Igaras, which was accounted for under the equity
method of accounting. On October 3, 2000, the Company, along with its joint
venture partner, Cia Suzano de Papel e Celulose, completed the sale of the
jointly-held subsidiary Igaras. Equity in Net Earnings of Affiliates decreased
$3.7 million to nil in the first nine months of 2001 from $3.7 million in the
first nine months of 2000 as a result of the sale of Igaras and the
consolidation of Rengo.

EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT OF DEBT

On June 21, 2001, the Company completed an offering of $250 million principal
amount of the Initial 2001 Notes, bearing interest at 10 5/8 percent. The net
proceeds of this offering were applied to prepay a portion of the outstanding
borrowings under the Term Loan Facility resulting in a non-cash, extraordinary
charge to earnings of approximately $2.8 million, net of tax of nil, related to
the write-off of the applicable portion of deferred debt issuance costs on the
term loans.

On August 10, 2001, the Company entered into the 2001 Senior Secured Credit
Agreement. The proceeds of the initial borrowings under the 2001 Facilities of
approximately $386.0 million, including $51.0 million in revolving credit
borrowings, were applied to repay in full the outstanding borrowings under the
Term Loan Facility and the Revolving Facility and to pay approximately $12
million of the estimated $14 million of fees and expenses incurred in connection
with the amendment and restatement of the


                                       21
<PAGE>


Credit Agreement. During the third quarter of 2001, the Company recorded a
non-cash, extraordinary charge to earnings of approximately $6.0 million, net of
tax of nil, related to the write-off of the applicable remaining deferred debt
issuance costs on the Term Loan Facility and the Revolving Facility.

CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE

The Company is exposed to fluctuations in interest rates on its variable rate
debt and fluctuations in foreign currency transaction cash flows. The Company
actively monitors these fluctuations and uses derivative instruments from time
to time to manage its exposure. In accordance with its risk management strategy,
the Company uses derivative instruments only for the purpose of managing risk
associated with fluctuations in the cash flow of the underlying exposures
identified by management. The Company does not trade or use derivative
instruments with the objective of earning financial gains on interest or
currency rates, nor does it use leveraged instruments or instruments where there
are no underlying exposures identified. The Company's use of derivative
instruments may result in short-term gains or losses and may increase volatility
in its earnings.

On January 1, 2001, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 133, Accounting for Derivative Instruments and Hedging
Activities, as amended by SFAS No. 137, Accounting for Derivative Instruments
and Hedging Activities - Deferral of the Effective Date of FASB Statement No.
133, and SFAS No. 138, Accounting for Certain Derivative Instruments and Certain
Hedging Activities ("SFAS No. 133"). SFAS No. 133 requires all derivative
instruments to be measured at fair value and recognized on the balance sheet as
either assets or liabilities. In addition, all derivative instruments used in
hedging relationships must be designated, reassessed and documented pursuant to
the provisions of SFAS No. 133. Upon adoption of SFAS No. 133, the Company
recognized a one-time after-tax transition adjustment to decrease earnings by
approximately $0.5 million and decrease other comprehensive income by
approximately $1.1 million. These amounts have been presented as a cumulative
effect of change in accounting principle in the accompanying Condensed
Consolidated Statement of Operations and Comprehensive Loss for the Nine Months
Ended September 30, 2001 and Condensed Consolidated Balance Sheet at September
30, 2001, respectively.

The following is a summary of the Company's derivative instruments as of
September 30, 2001 and the accounting policies it employs for each:

Hedges of Anticipated Cash Flows

The following is a reconciliation of current period changes in the fair value of
the interest rate swap agreements, foreign currency forward and option contracts
which have been recorded as Accumulated Derivative Instruments Loss in the
accompanying Condensed Consolidated Balance Sheet at September 30, 2001 and as
Derivative Instruments Loss in the accompanying Condensed Consolidated Statement
of Operations and Comprehensive Loss for the Nine Months Ended September 30,
2001.

<TABLE>
<CAPTION>
(in thousands of dollars)
-------------------------
<S>                                                             <C>
SFAS No. 133 transition adjustment                              $  (1,094)
Current period decrease in fair value                              (5,010)
                                                                ---------
Balance at September 30, 2001                                   $  (6,104)
                                                                =========
</TABLE>

During the nine months ended September 30, 2001, there was no ineffective
portion related to the changes in fair value of the interest rate swap
agreements, foreign currency forward and option contracts and there were no
amounts excluded from the measure of effectiveness. The balance of $(6.1)
million recorded in Accumulated Derivative Instruments Loss at September 30,
2001 is expected to be reclassified into future earnings, contemporaneously with
and offsetting changes in the related hedged exposure. The estimated amount to
be reclassified into future earnings as interest expense over the next


                                       22

<PAGE>


twelve months through September 30, 2002 is approximately $3.9 million. The
actual amount that will be reclassified to future earnings over the next twelve
months will vary from this amount as a result of changes in market conditions.
No amounts were reclassified to earnings during the third quarter of 2001 in
connection with forecasted transactions that were no longer considered probable
of occurring.

Derivatives not Designated as Hedges

The Company has foreign currency forward contracts used to hedge the exposure
associated with foreign currency denominated receivables. These contracts are
presently being marked-to-market through the income statement and will continue
to be marked-to-market through the income statement.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

The Company broadly defines liquidity as its ability to generate sufficient cash
flow from operating activities to meet its obligations and commitments. In
addition, liquidity includes the ability to obtain appropriate debt and equity
financing and to convert into cash those assets that are no longer required to
meet existing strategic and financial objectives. Therefore, liquidity cannot be
considered separately from capital resources that consist of current or
potentially available funds for use in achieving long-range business objectives
and meeting debt service commitments.

CASH FLOWS

Cash and Equivalents increased by approximately $8.9 million in the first nine
months of 2001 primarily as a result of the net cash provided by operating
activities ($68.8 million) and the consolidation of Rengo ($18.0 million),
somewhat offset by the net cash used in financing activities ($34.0 million) and
purchases of property, plant and equipment ($38.6 million). Depreciation and
amortization during the first nine months of 2001 totaled approximately $104
million, and is expected to be approximately $140 million to $150 million for
2001.

The Company's cash flows from its operations and EBITDA are subject to moderate
seasonality with demand usually increasing in the spring and summer due to the
seasonality of the worldwide multiple packaging beverage segment.

LIQUIDITY AND CAPITAL RESOURCES

The Company's liquidity needs arise primarily from debt service on the
substantial indebtedness incurred in connection with the Merger, and from the
funding of its capital expenditures, ongoing operating costs, and working
capital.

On June 21, 2001, the Company completed the offering of the Initial 2001 Notes.
The Company applied the net proceeds of the offering of approximately $251.5
million to prepay a portion of the outstanding borrowings under the Term Loan
Facility.

On August 10, 2001, the Company entered into the 2001 Senior Secured Credit
Agreement with certain lenders providing for senior secured credit facilities
with aggregate commitments not to exceed $635 million, including the $335
million 2001 Term Loan Facility and the $300 million 2001 Revolving Facility.
The proceeds of the initial borrowings under the 2001 Facilities of
approximately $386.0 million, including $51.0 million in revolving credit
borrowings, were applied to repay in full the outstanding borrowings under the
Term Loan Facility and the Revolving Facility and to pay approximately $12
million of the estimated $14 million of fees and expenses incurred in connection
with the amendment and restatement of the Credit Agreement.


                                       23

<PAGE>


As of September 30, 2001, the Company had outstanding approximately $1,501
million of long-term debt, consisting primarily of $650 million aggregate
principal amount of the 1996 Notes, $250 million of the 1997 Notes, $250 million
of the 2001 Notes, $335 million outstanding under the 2001 Term Loan Facility
and $12 million under the 2001 Revolving Facility (which does not reflect
amounts borrowed to make the Settlement Payment (as defined below) on October
25, 2001), and other debt issues and facilities.


                                       24
<PAGE>


DEBT SERVICE

Principal and interest payments under the 2001 Term Loan Facility and the 2001
Revolving Facility, together with interest payments on the 2001 Notes, 1997
Notes and 1996 Notes, represent significant liquidity requirements for the
Company. The 2001 Term Loan Facility amortization requirements are in
semi-annual installments of $37.5 million beginning June 30, 2003 and amounting
to $75 million annually in each of 2003 and 2004, with $46.25 million due on
June 30, 2005, and the remainder due at maturity on December 31, 2005. The 2001
Revolving Facility matures on December 31, 2005. The final maturities of the
2001 Facilities are extendable from December 31, 2005 to December 31, 2006 if
the Company refinances the 1996 Senior Notes on specified terms on or prior to
December 31, 2005 (in such event, the 2001 Term Loan Facility will continue to
amortize in semi-annual installments of $46.25 million through December 31,
2006).

The loans under the 2001 Facilities bear interest at floating rates based upon
the interest rate option elected by the Company. The term loans under the 2001
Term Loan Facility bore interest as of September 30, 2001 at an average rate per
annum of 6.3 percent. The 1996 Senior Notes, the 1997 Notes, the 2001 Notes and
the 1996 Senior Subordinated Notes bear interest at rates of 10 1/4 percent, 10
5/8 percent, 10 5/8 percent and 10 7/8 percent, respectively.

Interest expense in 2001 is expected to be approximately $160 million, including
approximately $8 million of non-cash amortization of deferred debt issuance
costs. During the first nine months of 2001, cash paid for interest was
approximately $103 million.

The Company expects that its working capital and business needs will require it
to continue to have access to the 2001 Revolving Facility or a similar revolving
credit facility after the maturity date, and that the Company accordingly will
have to extend, renew, replace or otherwise refinance such facility at or prior
to such date. No assurance can be given that it will be able to do so.

The Company uses interest rate swap agreements to fix a portion of its variable
rate term loans to a fixed rate in order to reduce the impact of interest rate
changes on future income. The difference to be paid or received under these
agreements is recognized as an adjustment to interest expense related to that
debt. At September 30, 2001, the Company had interest rate swap agreements with
a notional amount of $225 million, under which the Company will pay fixed rates
of 4.75 percent to 6.53 percent and receive three-month LIBOR.

COVENANT RESTRICTIONS

The 2001 Senior Secured Credit Agreement imposes restrictions on the Company's
ability to make capital expenditures and both the 2001 Senior Secured Credit
Agreement and the indentures governing the 1996 Notes, the 1997 Notes and the
2001 Notes limit the Company's ability to incur additional indebtedness. Such
restrictions, together with the highly leveraged nature of the Company, could
limit the Company's ability to respond to market conditions, meet its capital
spending program, provide for unanticipated capital investments or take
advantage of business opportunities. The covenants contained in the 2001 Senior
Secured Credit Agreement, among other things, restrict the ability of the
Company and its subsidiaries to dispose of assets, incur additional
indebtedness, incur guarantee obligations, prepay other indebtedness or amend
other debt instruments, pay dividends, create liens on assets, enter into sale
and leaseback transactions, make investments, loans or advances, make
acquisitions, engage in mergers or consolidations, change the business conducted
by Riverwood and its subsidiaries, make capital expenditures and engage in
certain transactions with affiliates. The covenants contained in the indentures
governing the 1996 Notes, the 1997 Notes and the 2001 Notes also impose
restrictions on the operation of the Company's business.


                                       25


<PAGE>


The financial covenants in the 2001 Senior Secured Credit Agreement specify,
among other things, the following requirements for each four quarter period
ended during the following test periods:


<TABLE>
<CAPTION>
                                                           Consolidated         Consolidated
                                                          Debt to EBITDA      Interest Expense
Test Period                                               Leverage Ratio           Ratio
--------------------------------------                    --------------      ----------------
<S>                                                       <C>                 <C>
September 30, 2001 - December 30, 2002                     5.85 to 1.00          1.75 to 1.00
December 31, 2002 - December 30, 2003                      5.50 to 1.00          2.00 to 1.00
December 31, 2003 - December 30, 2004                      5.00 to 1.00          2.10 to 1.00
December 31, 2004 - December 30, 2005                      4.70 to 1.00          2.25 to 1.00
December 31, 2005 - December 30, 2006                      4.40 to 1.00          2.25 to 1.00
</TABLE>

At September 30, 2001, the Company was in compliance with the financial
covenants in the 2001 Senior Secured Credit Agreement. The Company's ability to
comply in future periods with the financial covenants in the 2001 Senior Secured
Credit Agreement will depend on its ongoing financial and operating performance,
which in turn will be subject to economic conditions and to financial, business
and other factors, many of which are beyond the Company's control and will be
substantially dependent on the selling prices for the Company's products, raw
material and energy costs, and the Company's ability to successfully implement
its overall business and profitability strategies (see "--Outlook").

CAPITAL EXPENDITURES

Capital spending for the first nine months of 2001 was approximately $38.6
million, down 6.9 percent from $41.4 million in the first nine months of 2000.
Capital spending during the first nine months of 2001 related primarily to
improving the Company's process capabilities, manufacturing packaging machinery
and environmental cluster rules compliance. Total capital spending for 2001 is
expected to be between $50 million and $60 million, and is expected to relate
principally to improving the Company's process capabilities, the production of
packaging machinery and environmental cluster rules compliance. The Company
estimates that the capital spending that may be required to comply with the
cluster rules could reach $55 million to be spent at its two U.S. paper mills
over a seven-year period that began in 2000 (see "Environmental and Legal
Matters"). The Company estimates that it has spent one-quarter to one-third of
that amount for such compliance.

RESTRUCTURING ACTIVITIES

In connection with the global restructuring program initiated in the fourth
quarter of 1998, the Company is reducing its European workforce by approximately
300 employees and is implementing other initiatives designed to improve
productivity and profitability across the global organization. The initial cost
of this program was approximately $25.6 million of which approximately $0.8
million was used in December 1998 and related to severance payments. The
following table provides information that details payments on this restructuring
plan since December 31, 1998:


<TABLE>
<CAPTION>
                                                                                                          Other
(In thousands of dollars)                                                              Severance        Exit Costs         Total
-------------------------                                                              ----------       ----------       ----------
<S>                                                                                    <C>              <C>              <C>
Balance at 12/31/98                                                                    $   21,205       $    3,537       $   24,742
Charges against accrual in 1999                                                           (11,527)            (791)         (12,318)
                                                                                       ----------       ----------       ----------
Balance at 12/31/99                                                                         9,678            2,746           12,424
Net charges against accrual in 2000                                                        (6,669)          (2,499)          (9,168)
                                                                                       ----------       ----------       ----------
Balance at 12/31/00                                                                         3,009              247            3,256
Charges against accrual in first nine months of 2001                                       (1,998)            (152)          (2,150)
                                                                                       ----------       ----------       ----------
Balance at 9/30/01                                                                     $    1,011       $       95       $    1,106
                                                                                       ==========       ==========       ==========
</TABLE>


                                       26


<PAGE>


During 2000, the Company substantially completed the restructuring plan and
reduced the reserve by $4.8 million. In addition, $2.2 million of new
restructuring activities aligned with the overall objectives of the initial plan
were completed in 2000. The Company anticipates completing this program during
2001.

As of September 30, 2001, the Company has reduced its European workforce related
to the 1998 restructuring by approximately 250 employees.

FINANCING SOURCES AND CASH FLOWS

The 2001 Revolving Facility matures on December 31, 2005, extendable to December
31, 2006 if the Company refinances the 1996 Senior Notes on specified terms on
or prior to December 31, 2005. At September 30, 2001, the Company and its U.S.
and international subsidiaries had the following amounts of commitments, amounts
outstanding and amounts available under revolving credit facilities (which
amounts do not reflect borrowings under the 2001 Revolving Facility to make the
Settlement Payment on October 25, 2001):

<TABLE>
<CAPTION>
                                                        TOTAL AMOUNT
                                                            OF             TOTAL AMOUNT       TOTAL AMOUNT
(IN THOUSANDS OF DOLLARS)                               COMMITMENTS        OUTSTANDING         AVAILABLE
-------------------------                               ------------       ------------       ------------
<S>                                                     <C>                <C>                <C>
2001 Revolving Facility                                 $    300,000       $     11,500       $    288,500
International Facilities                                      15,052              7,469              7,583
                                                        ------------       ------------       ------------
                                                        $    315,052       $     18,969       $    296,083
                                                        ============       ============       ============
</TABLE>

The Company anticipates pursuing additional working capital financing for its
foreign operations as necessary. The Company believes that cash generated from
operations, together with amounts available under its 2001 Revolving Facility
and other available financing sources, will be adequate to permit the Company to
meet its debt service obligations, capital expenditure program requirements,
ongoing operating costs and working capital needs until the maturity of the 2001
Revolving Facility, although no assurance can be given in this regard. The
Company's future financial and operating performance, ability to service or
refinance its debt and ability to comply with the covenants and restrictions
contained in its debt agreements (see "--Covenant Restrictions"), will be
subject to future economic conditions and to financial, business and other
factors, many of which are beyond the Company's control and will be
substantially dependent on the selling prices for the Company's products, raw
material and energy costs, and the Company's ability to successfully implement
its overall business and profitability strategies.

ENVIRONMENTAL AND LEGAL MATTERS

The Company is committed to compliance with all applicable foreign, federal,
state and local environmental laws and regulations. Environmental law is,
however, dynamic rather than static. As a result, costs, which are unforeseeable
at this time, may be incurred when new laws are enacted, and when environmental
agencies adopt or revise rules and regulations.

In 1998, the U.S. Environmental Protection Agency adopted regulations (generally
referred to as the "cluster rules") that mandate more stringent controls on air
and water discharges from the United States pulp and paper mills. The Company
estimates that the capital spending that may be required to comply with the
cluster rules could reach $55 million to be spent at its two U.S. paper mills
over a seven-year period that began in 2000. The Company estimates that it has
spent one-quarter to one-third of that amount for such compliance.

In late 1995, the Louisiana Department of Environmental Quality ("DEQ") notified
the Predecessor of potential liability for the remediation of hazardous
substances at a wood treatment site in Shreveport, Louisiana that the
Predecessor or its predecessors previously operated, and at a former oil
refinery site in


                                       27

<PAGE>



Caddo Parish, Louisiana which is on land that the Company previously owned. In
response to these notices, the Company has provided additional information
concerning these sites and has commenced its own evaluation of any claims and
remediation liabilities for which it may be responsible. Subsequent to receipt
in May 1996 of a Special Demand Letter from DEQ to remediate the site in
Shreveport, the Company performed a soil and groundwater investigation at the
site pursuant to an agreement with DEQ. In August 2001, the Company entered into
a Cooperative Agreement for Remedial Action with DEQ and the landowners of the
site, as well as a Mutual Release and Settlement Agreement with the landowners.
Under the Cooperative Agreement, the Company will develop the remedial design
and carry out the specified remediation at the site. The Company has engaged a
qualified contractor and expects completion of the work by the end of 2002. In
September 1996, the Company received a Special Demand Letter from DEQ to
remediate the site in Caddo Parish. The Company performed a waste inventory and
treatability study at the site and subsequently met with DEQ in October 1999. On
July 6, 2000, the Company and DEQ entered into a Settlement Agreement that
describes in detail the remedial actions necessary for the Company to obtain
full release of all future liability at this site. The Company has contracted
with a vendor to perform the remedial actions as outlined in the Settlement
Agreement and the work is currently proceeding. The Company no longer owns the
site since transferring the property to another entity on October 22, 2000. The
Company anticipates the remedial actions outlined in the Settlement Agreement
will be completed during the fourth quarter of 2001 and, at that time, expects
to be relieved of any future liability.

The Company is involved in environmental remediation projects for certain
properties currently or formerly owned or operated by the Company, and at
certain waste disposal sites. Some of these projects are being addressed under
federal and state statutes, such as the Comprehensive Environmental Response,
Compensation and Liability Act and analogous state laws. The Company's costs in
certain instances cannot be reliably estimated until the remediation process is
substantially underway or liability has been addressed. To address these
contingent environmental costs, the Company has accrued reserves when such costs
are probable and can be reasonably estimated. The Company believes that, based
on current information and regulatory requirements, the accruals established by
the Company for environmental expenditures are adequate. Based on current
knowledge, to the extent that additional costs may be incurred that exceed the
accrued reserves, such amounts are not expected to have a material impact on the
results of operations, cash flows or financial condition of the Company,
although no assurance can be given that significant costs will not be incurred
in connection with clean-up activities at these properties, including the
Shreveport and Caddo Parish sites referred to above.

The Company is a party to a number of lawsuits arising out of the ordinary
conduct of its business. While there can be no assurance as to their ultimate
outcome, the Company does not believe that these lawsuits will have a material
impact on the results of operations, cash flows or financial condition of the
Company.

The Company is a plaintiff in a lawsuit against The Mead Corporation and in a
separate lawsuit against R.A. Jones Co. Inc., in each case claiming infringement
of the Company's patents for certain packaging technology. Each of the lawsuits
is pending in the U.S. District Court for the Northern District of Georgia. The
lawsuit against R.A. Jones recently went to trial. On August 10, 2001, the jury
returned a verdict that R.A. Jones had infringed the Company's patents at issue
in the lawsuit but that such patents were invalid. The Company has appealed such
verdict to the U.S. Court of Appeals for the Federal Circuit. If the Company is
not successful in challenging the verdict of invalidity, it is likely that there
will be an adverse outcome in the pending lawsuit against Mead because the same
patents are at issue in that lawsuit. The lawsuit against Mead has been placed
in suspension during the pending of this appeal. There can be no assurance
regarding the success of the appeal by the Company in the R.A. Jones lawsuit or
regarding the outcome of these lawsuits generally. The Company does not believe
that an adverse outcome in the R.A. Jones and/or Mead lawsuits would have a
material adverse effect on its business, financial condition or results of
operations.


                                       28


<PAGE>


TAX MATTERS RELATING TO THE MERGER

In connection with the Merger, the former majority owner of the Company agreed
to bear the cost of a Section 338(h)(10) election for U.S. federal tax purposes
and for purposes of state taxes for which the former majority owner and the
Company filed returns on a combined basis. The Company agreed to bear the cost
of this election for the purposes of other state taxes ("stand-alone taxes"),
including Louisiana income tax. During 1997, the Company paid $27.5 million in
estimated Louisiana stand-alone taxes relating to the election. The Company's
calculation of its Louisiana tax was based on state law in effect at the time of
the Merger, including a 1993 amendment. In May 1997, the Louisiana Supreme Court
declared the 1993 amendment to be void under the Louisiana Constitution,
retroactive to 1993. After consultation with Louisiana tax counsel, the Company
filed its Louisiana income tax return for the period ended March 27, 1996 in
reliance on the Louisiana tax law in effect at the time of the Merger, without
the payment of any additional tax due to the voiding of the 1993 amendment.

The State of Louisiana completed its audit of the Company's tax return for the
period ended March 27, 1996 and on May 9, 2000, the Company received a Notice of
Proposed Tax Due for this period in the amount of $47.6 million in tax plus
statutory interest. On October 12, 2001, the Company entered into a settlement
agreement with the Louisiana Department of Revenue to pay $29.5 million to the
State of Louisiana to settle all Louisiana state income tax issues (tax and
interest) related to the period ended March 27, 1996 and the nine month period
ended December 31, 1996. The Company made this payment (the "Settlement
Payment") on October 25, 2001 using funds borrowed under the 2001 Revolving
Facility. See Note 11 to the Condensed Consolidated Financial Statements.

INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

Certain of the statements contained in this report (other than the financial
statements and other statements of historical fact) are forward-looking
statements, including, without limitation, (i) the statements in "-Business
Trends and Initiatives" concerning (a) the Company's expectation regarding
downtime during the remainder of 2001, (b) the improvements which the Company's
long-term initiatives, including, without limitation, its profit center
reorganization and global restructuring program, are designed to achieve, (c)
the Company's expectation that capital expenditures will range from $50 million
to $60 million in 2001, (d) the Company's expectation that its global
restructuring program will be completed during 2001, and (e) the Company's
expectation regarding packaging machinery placements and orders; (ii) the
statements in "-Outlook" concerning (a) the Company's expectation that its 2001
EBITDA will be approximately $20 million to $35 million lower than its 2000
EBITDA as well as each of the factors which the Company believes support such
expectation, (b) the Company's expectations regarding sales volumes in its
worldwide beverage markets and continued growth in its North American consumer
product markets, (c) the Company's expectation regarding containerboard sales
and margins, and (d) the Company's expectation regarding increased energy costs;
(iii) the statements in "Financial Condition, Liquidity and Capital Resources"
concerning (a) the Company's expectation that depreciation and amortization for
2001 will be approximately $140 million to $150 million, (b) the Company's
expectation that 2001 interest expense will be approximately $160 million,
including approximately $8 million of non-cash amortization of deferred debt
issuance costs, (c) the Company's expectation that total capital spending for
2001 will range from $50 million to $60 million, (d) the Company's belief that
cash generated from operations, together with amounts available under available
financing sources, will be adequate to permit the Company to meet its debt
service obligations, capital expenditure program requirements, ongoing operating
costs and working capital needs until the maturity of the 2001 Revolving
Facility and (e) the Company's expectations with respect to capital spending
that may be required to comply with the cluster rules and that, based on current
knowledge, environmental costs are not expected to have a material impact on the
results of operations, cash flows or financial condition of the Company; (iv)
other statements as to management's or the Company's expectations and beliefs
presented in this "Management's Discussion and Analysis of Financial Condition
and Results of Operations."


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<PAGE>


Forward-looking statements are made based upon management's current expectations
and beliefs concerning future developments and their potential effects upon the
Company. There can be no assurance that future developments will be in
accordance with management's expectations or that the effect of future
developments on the Company will be those anticipated by management. The
important factors described elsewhere in this report (including, without
limitation, those discussed in "- Financial Condition, Liquidity and Capital
Resources - Liquidity and Capital Resources - Environmental and Legal Matters"),
the Company's Report on Form 10-K for the year ended December 31, 2000, or in
other Securities and Exchange Commission filings, could affect (and in some
cases have affected) the Company's actual results and could cause such results
to differ materially from estimates or expectations reflected in such
forward-looking statements.

While the Company periodically reassesses material trends and uncertainties
affecting the Company's results of operations and financial condition in
connection with its preparation of management's discussion and analysis of
results of operations and financial condition contained in its quarterly and
annual reports, the Company does not intend to review or revise any particular
forward-looking statement referenced in this report in light of future events.

RECENT ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 141 ("SFAS No. 141"), "Business
Combinations." SFAS No. 141 requires the purchase method of accounting for
business combinations initiated after June 30, 2001 and eliminates the
pooling-of-interests method. The Company does not believe that the adoption of
SFAS No. 141 will have a significant impact on its financial statements.

In July 2001, the FASB issued Statement of Financial Accounting Standards No.
142 ("SFAS No. 142"), "Goodwill and Other Intangible Assets", which is effective
January 1, 2002. SFAS No. 142 requires, among other things, the discontinuance
of goodwill amortization. In addition, the standard includes provisions for the
reclassification of certain existing recognized intangibles as goodwill,
reassessment of the useful lives of existing recognized intangibles,
reclassification of certain intangibles out of previously reported goodwill and
the identification of reporting units for purposes of assessing potential future
impairments of goodwill. SFAS No. 142 also requires the Company to complete a
transitional goodwill impairment test six months from the date of adoption. The
Company is currently assessing, but has not yet determined, the impact of SFAS
No. 142 on its financial position and results of operations.

In October 2001, the FASB issued Statement of Financial Accounting Standards No.
144 ("SFAS No. 144"), "Accounting for the Impairment of Long-Lived Assets",
which is effective January 1, 2002. SFAS No. 144 addresses financial accounting
and reporting for the impairment or disposal of long-lived assets, as well as
eliminating the exception to consolidation for a subsidiary for which control is
likely to be temporary. The Company is currently assessing, but has not yet
determined, the impact of SFAS No. 144 on its financial position and results of
operations.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

For a discussion of certain market risks related to the Company, see Part II,
Item 7A, "Quantitative and Qualitative Disclosure about Market Risk", in the
Company's Annual Report on Form 10-K for the fiscal period ended December 31,
2000. There have been no significant developments with respect to derivatives or
exposure to market risk during the first nine months of 2001.


                                       30
<PAGE>


PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

Not applicable

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

Not applicable

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

Not applicable

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable

ITEM 5.  OTHER INFORMATION.

Not applicable

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)  Exhibits.

99   Reconciliation of Income (Loss) from Operations to EBITDA. Filed as an
     exhibit hereto.

(b)  Reports on Form 8-K.

Not applicable


                                       31


<PAGE>


                                    SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                        RIVERWOOD HOLDING, INC.
                                        ---------------------------------------
                                        (Registrant)


Date:    November 8, 2001                By:
                                             /s/  Edward W. Stroetz Jr.
                                            -----------------------------------
                                                  Edward W. Stroetz Jr.
                                                  Secretary


Date:    November 8, 2001                By:
                                             /s/  Daniel J. Blount
                                            -----------------------------------
                                                  Daniel J. Blount
                                                  Senior Vice President and
                                                  Chief Financial Officer


                                       32