<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 March 29, 1997

                                      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.)

                               1013 Centre Road
                                   Suite 350
                          Wilmington, Delaware 19805
--------------------------------------------------------------------------------
                   (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 May 7, 1997 there were 7,111,900 shares and 500,000 shares of the
registrant's Class A and Class B common stock, respectively, outstanding.
<PAGE>
 
                        PART I. FINANCIAL INFORMATION*



*    As used in this Form 10-Q, unless the context otherwise requires, "RIC"
     refers to the corporation formerly named Riverwood International
     Corporation, the "Predecessor" or the "Predecessor Company" refers to RIC
     and its subsidiaries in respect of periods prior to the Merger (as defined
     herein), the "Company" refers to the registrant, Riverwood Holding, Inc., a
     Delaware corporation formerly named New River Holding, Inc. ("Holding") and
     its subsidiaries, "RIC Holding" refers to RIC Holding, Inc., a Delaware
     corporation, successor by merger to RIC and a wholly owned subsidiary of
     Holding, and "Riverwood" refers to Riverwood International Corporation, a
     Delaware corporation formerly named Riverwood International USA, Inc. and a
     wholly owned subsidiary of RIC Holding.

                                      I-1
<PAGE>
 
                            RIVERWOOD HOLDING, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                           (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                                           COMPANY 
-----------------------------------------------------------------------------------------------
                                                                 March 29,     December 31,
ASSETS                                                             1997           1996
-----------------------------------------------------------------------------------------------
                                                                (UNAUDITED)
<S>                                                             <C>            <C>
Current Assets
 Cash and equivalents                                           $    9,354     $   16,499
 Marketable securities, at cost (approximates market)                  838            858
 Receivables, net of allowances                                    150,339        153,864
 Inventories                                                       202,890        211,965
 Prepaid expenses                                                    8,603          8,113
 Deferred tax assets                                                 2,135          2,897
-----------------------------------------------------------------------------------------------
Total Current Assets                                               374,159        394,196
 
Property, Plant and Equipment, net of accumulated
     depreciation of $107,599 in 1997 and $85,768 in 1996        1,673,840      1,675,217
Investments in Net Assets of Equity Affiliates                     127,531        125,030
Goodwill, net of accumulated amortization of $8,117 in 1997
   and $5,900 in 1996                                              316,136        318,543
Other Assets                                                       169,381        158,501
-----------------------------------------------------------------------------------------------
Total Assets                                                    $2,661,047     $2,671,487
===============================================================================================
 
LIABILITIES
-----------------------------------------------------------------------------------------------
Current Liabilities
 Short-term debt                                                $   25,783     $   18,173
 Accounts payable                                                  116,590        125,014
 Compensation and employee benefits                                 38,702         38,017
 Income taxes                                                       38,697         42,031
 Other accrued liabilities                                         122,425        112,205
-----------------------------------------------------------------------------------------------
Total Current Liabilities                                          342,197        335,440
 
Long-Term Debt, less current portion                             1,600,721      1,567,259
Deferred Income Taxes                                               23,188         19,722
Other Noncurrent Liabilities                                        84,229         85,467
-----------------------------------------------------------------------------------------------
Total Liabilities                                                2,050,335      2,007,888
----------------------------------------------------------------------------------------------- 

Contingencies and Commitments (Note 5)
 
Redeemable Common Stock, at current redemption value                 9,390          9,390
 
SHAREHOLDERS' EQUITY
-----------------------------------------------------------------------------------------------
Nonredeemable Common Stock                                              75             75
Capital in Excess of Par Value                                     751,153        751,153
(Accumulated Deficit)                                             (142,980)      (105,136)
Cumulative Currency Translation Adjustment                          (6,926)         8,117
-----------------------------------------------------------------------------------------------
Total Shareholders' Equity                                         601,322        654,209
-----------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity                      $2,661,047     $2,671,487
===============================================================================================
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                      I-2
<PAGE>
 
                            RIVERWOOD HOLDING, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                           (IN THOUSANDS OF DOLLARS)
                                  (UNAUDITED)

ON MARCH 27, 1996, HOLDING, THROUGH ITS WHOLLY OWNED SUBSIDIARIES, ACQUIRED ALL
OF THE OUTSTANDING SHARES OF COMMON STOCK OF RIC.  THE PURCHASE METHOD OF
ACCOUNTING WAS USED TO RECORD ASSETS ACQUIRED AND LIABILITIES ASSUMED BY
HOLDING. AS A RESULT OF THE MERGER, PURCHASE ACCOUNTING AND THE EFFECT OF THE
DISPOSITION OF SUBSTANTIALLY ALL OF THE ASSETS OF THE U.S. TIMBERLANDS/WOOD
PRODUCTS BUSINESS SEGMENT (SEE NOTE 8), THE ACCOMPANYING FINANCIAL STATEMENTS OF
THE PREDECESSOR AND THE COMPANY ARE NOT COMPARABLE IN ALL MATERIAL RESPECTS
SINCE THE FINANCIAL STATEMENTS REPORT RESULTS OF OPERATIONS AND CASH FLOWS OF
THESE TWO SEPARATE ENTITIES.

<TABLE>
<CAPTION>
                                                                       COMPANY              PREDECESSOR
-------------------------------------------------------------------------------------------------------------
                                                                   Three Months            Three Months
                                                                      Ended                   Ended
                                                                  March 29, 1997          March 27, 1996
-------------------------------------------------------------------------------------------------------------
<S>                                                               <C>                     <C>
Net Sales                                                            $267,188                 $293,649
Cost of Sales                                                         235,209                  232,701
Selling, General and Administrative                                    29,207                   30,936
Research, Development and Engineering                                   1,689                    2,031
Other Costs                                                              -                      11,114
Other Expenses, net                                                     2,822                    1,217
-------------------------------------------------------------------------------------------------------------

(Loss) Income from Operations                                          (1,739)                  15,650
Interest Income                                                           142                      329
Interest Expense                                                       38,901                   26,392
-------------------------------------------------------------------------------------------------------------

(Loss) before Income Taxes and Equity in
     Net Earnings of Affiliates                                       (40,498)                 (10,413)
Income Tax Expense (Benefit)                                              901                   (3,436)
-------------------------------------------------------------------------------------------------------------

(Loss) before Equity in Net Earnings of Affiliates                    (41,399)                  (6,977)
Equity in Net Earnings of Affiliates                                    3,555                    4,927
-------------------------------------------------------------------------------------------------------------

Net (Loss)                                                           $(37,844)                $ (2,050)
=============================================================================================================
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                      I-3
<PAGE>
 
                            RIVERWOOD HOLDING, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (IN THOUSANDS OF DOLLARS)
                                  (UNAUDITED)

ON MARCH 27, 1996, HOLDING, THROUGH ITS WHOLLY OWNED SUBSIDIARIES, ACQUIRED ALL
OF THE OUTSTANDING SHARES OF COMMON STOCK OF RIC.  THE PURCHASE METHOD OF
ACCOUNTING WAS USED TO RECORD ASSETS ACQUIRED AND LIABILITIES ASSUMED BY
HOLDING. AS A RESULT OF THE MERGER, PURCHASE ACCOUNTING AND THE EFFECT OF THE
DISPOSITION OF SUBSTANTIALLY ALL OF THE ASSETS OF THE U.S. TIMBERLANDS/WOOD
PRODUCTS BUSINESS SEGMENT (SEE NOTE 8), THE ACCOMPANYING FINANCIAL STATEMENTS OF
THE PREDECESSOR AND THE COMPANY ARE NOT COMPARABLE IN ALL MATERIAL RESPECTS
SINCE THE FINANCIAL STATEMENTS REPORT RESULTS OF OPERATIONS AND CASH FLOWS OF
THESE TWO SEPARATE ENTITIES.

<TABLE>
<CAPTION>
                                                                           COMPANY         PREDECESSOR
-------------------------------------------------------------------------------------------------------------
                                                                         Three Months     Three Months
                                                                             Ended           Ended
                                                                        March 29, 1997   March 27, 1996
-------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss)                                                                $ (37,844)        $ (2,050)
Noncash Items Included in Net (Loss):
  Depreciation, amortization and cost of timber harvested                    32,104           24,438
  Deferred income taxes                                                       1,040           (3,574)
  Pension, postemployment and
   postretirement expense, net of benefits paid                               1,430            1,861

  Equity in net earnings of affiliates, net of dividends                     (2,805)          (4,927)
  Amortization of debt issuance costs                                         2,891              619
  Other, net                                                                    197           (2,350)
Decrease (Increase) in Current Assets:
  Receivables                                                                 1,873           14,737
  Inventories                                                                 3,685          (14,659)
  Prepaid expenses                                                             (742)           8,298
(Decrease) Increase in Current Liabilities:
  Accounts payable                                                           (5,192)          18,182
  Compensation and employee benefits                                          1,513          (10,248)
  Income taxes                                                                 (260)          (3,343)
  Other accrued liabilities                                                   8,015           12,360
Decrease in Other Noncurrent Liabilities                                     (2,522)          (2,569)
-------------------------------------------------------------------------------------------------------------
Net Cash  Provided by Operating Activities                                    3,383           36,775
-------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of Property, Plant and Equipment                                  (44,738)         (44,074)
Payment of Merger costs                                                      (3,389)              -
Proceeds from Maturity of Marketable Securities                                  -               439
Proceeds from Sales of Assets                                                   388              623
Increase in Other Assets                                                     (4,031)          (8,004)
-------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities                                       (51,770)         (51,016)
-------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Debt                                                                 -            12,669
Net Increase (Decrease) in Revolving Credit Facilities                       43,280           (3,000)
Proceeds from Issuance of Common Stock                                           -               838
Payments on Debt                                                             (1,177)          (2,833)
Dividends                                                                        -            (2,630)
-------------------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities                                    42,103            5,044
-------------------------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes on Cash                                        (861)            (638)
-------------------------------------------------------------------------------------------------------------
Net Decrease in Cash and Equivalents                                         (7,145)          (9,835)
Cash and Equivalents at Beginning of Period                                  16,499           35,870
-------------------------------------------------------------------------------------------------------------
Cash and Equivalents at End of Period                                     $   9,354         $ 26,035
=============================================================================================================
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                      I-4
<PAGE>
 
                            RIVERWOOD HOLDING, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

Holding, its wholly owned subsidiaries RIC Holding and the corporation formerly
named CDRO Acquisition Corporation
("Acquisition Corp.") were incorporated in 1995 to acquire the stock of RIC.

On March 27, 1996, Holding, through its wholly owned subsidiaries, acquired all
of the outstanding shares of common stock of RIC.  On such date, Acquisition
Corp. was merged (the "Merger") into RIC.  RIC, as the surviving corporation in
the Merger, became a wholly owned subsidiary of RIC Holding.  On March 28, 1996,
RIC transferred substantially all of its properties and assets to Riverwood,
other than the capital stock of Riverwood, and RIC was merged (the "Subsequent
Merger") into RIC Holding.  Thereupon, Riverwood was renamed "Riverwood
International Corporation."  Upon consummation of the Subsequent Merger, RIC
Holding, as the surviving corporation in the Subsequent Merger, became the
parent company of Riverwood.

Holding and its subsidiaries conducted no significant business other than in
connection with the Merger and related transactions through March 27, 1996.

The condensed consolidated financial statements included herein have been
prepared by the Company without 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 generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations.  Although management believes that the
disclosures are adequate to make the information presented not misleading, it is
suggested that the interim condensed financial statements be read in conjunction
with the Company's and Predecessor's most recent audited financial statements
and notes thereto.  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,
1996 was derived from audited financial statements.

In connection with the Merger, the purchase method of accounting was used to
establish and record a new cost basis for the assets acquired and liabilities
assumed.  The difference between the purchase price and the fair market values
of the assets acquired and liabilities assumed was recorded as goodwill.

The condensed consolidated financial statements presented herein for the periods
prior to March 28, 1996, represent the Predecessor's results of operations and
cash flows prior to the Merger and, consequently, are stated on the
Predecessor's historical cost basis.  The condensed consolidated financial
statements as of March 29, 1997, and for the three months then ended, reflect
the adjustments which were made to record the Merger and represent the Company's
new cost basis.  On October 18, 1996, the Company sold substantially all of the
assets of the U.S. Timberlands/Wood Products business segment (see Note 8).  The
operating results for the U.S. Timberlands/Wood Products business segment were
classified as discontinued operations for periods beginning March 28, 1996 and
ending October 18, 1996 (the date of the sale).  The operating results for the
U.S. Timberlands/Wood Products business segment have not been reclassified as
discontinued operations in the Predecessor's Condensed Consolidated Statement of
Operations or Condensed Consolidated Statement of Cash Flows for the three
months ended March 27, 1996.  Accordingly, the financial statements of the
Predecessor for periods prior to March 28, 1996 are not comparable in all
material respects with the financial statements subsequent to the Merger date.
The most significant differences relate to amounts recorded for inventory,
property, plant and equipment, intangibles and debt which resulted in increased
cost of sales, amortization, depreciation and interest expense in the three
months ended March 29, 1997 and will continue to do so in future periods.

                                      I-5
<PAGE>
 
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 nine month period ended December 31, 1996.  For a summary of
RIC's significant accounting policies, please refer to the financial statements
incorporated by reference in RIC's annual report filed with the Securities and
Exchange Commission under Form 10-K for the year ended December 31, 1995.

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

The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles 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 consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period.  Actual amounts could differ from those estimates.


NOTE 3 - INVENTORIES

The major classes of inventories were as follows:

<TABLE>
<CAPTION>
          (In thousands of dollars)
                                        March 29, 1997     December 31, 1996
          -------------------------------------------------------------------
          <S>                           <C>                <C>
          Finished goods                   $ 90,257             $ 89,412
          Work-in-process                    17,473               12,496
          Raw materials                      61,776               71,075
          Supplies                           33,384               38,982
          -------------------------------------------------------------------
          Total                            $202,890             $211,965
          ===================================================================
</TABLE>

NOTE 4 -  INVESTMENTS IN NET ASSETS OF  EQUITY AFFILIATES

The Company has investments in affiliates that are accounted for using the
equity method of accounting.  The most significant investment is the Company's
50 percent investment in Igaras Papeis e Embalagens S.A. ("Igaras").

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

<TABLE>
<CAPTION>
          (In thousands of dollars)
                                     COMPANY            PREDECESSOR
          --------------------------------------------------------------
                                   Three Months        Three Months
                                       Ended             Ended
                                   March 29, 1997      March 27, 1996
          --------------------------------------------------------------
          <S>                      <C>                 <C>
          Net Sales                   $ 56,402            $ 59,582
          Cost of Sales                 40,286              38,962
          --------------------------------------------------------------

          Gross Profit                $ 16,116            $ 20,620
          ==============================================================

          Income from Operations      $  9,702            $ 14,521
          ==============================================================

          Net Income                  $  6,808            $ 10,113
          ==============================================================
</TABLE> 


During the first quarters of 1997 and 1996, the Company did not receive a
dividend from Igaras.  The Company received net dividends from its investments
in affiliates, other than Igaras, that are accounted for using the equity method
of accounting totaling $0.8 million and nil for the three months ended March 29,
1997 and March 27, 1996, respectively.

                                      I-6
<PAGE>
 
NOTE 5 - CONTINGENCIES AND COMMITMENTS

The Company is committed to compliance with all applicable 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 promulgate or revise rules and regulations.

In late 1993, the U.S. Environmental Protection Agency (the "EPA") proposed
regulations (generally referred to as the "cluster rules") that would mandate
more stringent controls on air and water discharges from the United States pulp
and paper mills.  In 1996, the EPA released additional clarification of the
proposed cluster rules.  Based on this information, the Company expects that the
cluster rules may be finally promulgated in 1997 and estimates 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 an eight-year period
beginning in 1997.  The Company anticipates that the majority of this spending
to comply with the cluster rules will occur later in the eight-year period. The
Company had no capital spending during the first quarter of 1997 related to
compliance with the cluster rules.

The Louisiana Department of Environmental Quality ("DEQ") notified the
Predecessor by letters, dated December 19, 1995, that the Predecessor may be
liable for the remediation of the release or threat of release of hazardous
substances at a wood treatment site in Shreveport, Louisiana, that the
Predecessor or its predecessor previously operated, and a former oil refinery
site in Caddo Parish, Louisiana that the Company currently owns.  Neither the
Company nor the Predecessor ever operated the oil  refinery.  In response to the
DEQ, the Company has provided additional information to the DEQ concerning these
sites and has commenced its own evaluation of any claims and remediation
liabilities for which it may be responsible.  The Company received a letter from
the DEQ dated May 20, 1996, requesting a plan for soil and groundwater sampling
of the wood treatment site.  The Company first met with the DEQ on July 18,
1996, and then submitted a soil sampling plan to the DEQ. The Company expects
approval of this sampling plan in the first half of 1997.  On September 6, 1996,
the Company received from the DEQ a letter requesting remediation of the former
oil refinery site in Caddo Parish, Louisiana.  The Company met with the DEQ on
February 17, 1997 to discuss these matters.  The DEQ has requested that the
Company enter into a cooperative agreement to perform a phased-in approach for
evaluating soil and groundwater conditions at the Shreveport site. The Company
is in discussions with the DEQ regarding the participation of other responsible
parties in any clean-up of hazardous substances at both of these sites.

The Company is engaged in environmental remediation projects for certain
properties currently owned or operated by the Company and certain properties
divested by the Company for which responsibility was retained for pre-existing
conditions. The Company's costs in some instances cannot be estimated until the
remediation process is substantially underway.  To address these contingent
environmental costs, the Company has accrued reserves where 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 material 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 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.

On December 6, 1995, Forrest Kelly Clay, a former shareholder of the
Predecessor, commenced a purported class action law suit in the United States
District Court for the Northern District of Georgia, against the Company and
certain officers of the Company (the "Individual Defendants," and together with
the Company, the "Defendants").  In his complaint, Clay alleges that the
Defendants violated the federal securities laws by disseminating misleading
statements and by omissions concerning the strategic alternatives that the
Predecessor was considering, including its potential sale to a third-party
investor.  The complaint also alleged that the Individual Defendants, through
their exercise of stock appreciation rights ("SARs"), violated the federal
securities laws by trading in the Predecessor's securities while in possession
of material, non-public information. The complaint generally seeks damages in an
unspecified amount, as well as other relief.  On January 29, 1996, Defendants
filed a motion to dismiss the complaint for failure to state a claim and failure
to plead fraud with particularity.  On March 29, 1996, the Court denied
Defendants' motion to dismiss and allowed limited discovery to proceed with
regard to statements attributable to the Company and the nature of the SARs.
That discovery is now complete, and plaintiff has twice amended his complaint
(each time putting forward the same claims made in the initial complaint but
amending certain of the factual allegations).  On November 1, 1996, the
Defendants moved to dismiss the amended complaint, noting (i) none of the
statements attributable to the Company concerning its review of strategic
alternatives was false and (ii) that there was no causal relationship between
plaintiff's purchase of Riverwood common stock and the Individual Defendants'
exercise of SARs.  That motion has been fully briefed and is currently before
the Court.

                                      I-7
<PAGE>
 
NOTE 6 - OTHER COSTS

Other Costs incurred by the Predecessor in 1996 included expenses associated
with stock based compensation plans, expenses related to RIC's review of
strategic alternatives and provision for environmental reserves.


NOTE 7 - INCOME TAXES

During the three months ended March 29, 1997, the Company recognized an income
tax expense of  $0.9 million on a (Loss) before Income Taxes and Equity in Net
Earnings of Affiliates of $40.5 million.  This expense differed from the
statutory federal income tax rate because of valuation allowances established on
net operating loss carryforward tax assets in the U.S. and certain international
locations where the realization of benefits is uncertain.

In the first quarter of 1996, the Predecessor recognized an income tax benefit
of $3.4 million on a (Loss) before Income Taxes and Equity in Net Earnings of
Affiliates of $10.4 million.


NOTE 8 - DISPOSITION OF BUSINESSES AND OPERATING ACTIVITIES

On October 18, 1996, the Company sold substantially all of the assets of the
U.S. Timberlands/Wood Products business segment for cash of approximately $550
million.  In addition, the buyer assumed certain specified preclosing
liabilities.  Under the terms of the agreement for such sale, the Company and
the buyer, Plum Creek Timber Company, L.P., entered into a twenty-year  supply
agreement with a ten-year renewal option for the purchase by the Company, at
market-based prices, of a majority of the Company's requirements for pine
pulpwood and residual chips at its paper mill in West Monroe, Louisiana (the
"West Monroe Mill"), as well as a portion of the Company's needs for hardwood
pulpwood at the West Monroe Mill.  The Company did not realize any gain or loss
on the sale.

The operating results for the U.S. Timberlands/Wood Products business segment
were classified as discontinued operations for periods beginning March 28, 1996
and ending October 18, 1996 (the date of the sale).  The operating results of
the U.S. Timberlands/Wood Products business segment have not been reclassified
as discontinued operations in the Predecessor's Condensed Consolidated
Statements of Operations or Condensed Consolidated Statements of Cash Flows.

In connection with and following the Merger, the Company decided in 1996 to exit
certain businesses and operating activities, including the sale or closure of
the Company's last dedicated folding carton converting plant in the United
States, located in Kankakee, Illinois, packaging machinery manufacturing plants
in Marietta, Georgia and Koln, Germany, a beverage multiple packaging converting
plant in Bakersfield, California and the trucking transportation operations in
West Monroe, Louisiana, as well as the consolidation and realignment of certain
other operations in the United States, Australia and Europe.  The cost of
exiting these businesses and operating activities was approximately $40.9
million which was accrued during 1996 as a purchase accounting adjustment.
These costs related principally to the severance of approximately 750 employees,
relocation and other plant closure costs.  At December 31, 1996, $32.6 million
of this total was unspent and accrued in Other accrued liabilities on the
Condensed Consolidated Balance Sheets.  During the first quarter of  1997, $7.0
million was paid out and charged against the accrual and related primarily to
severance costs.


NOTE 9 - PRO FORMA DATA

The following unaudited pro forma financial data has been prepared assuming that
the Merger and related financings were consummated on January 1, 1996 and
excluding the results of operations of the U.S. Timberlands/Wood Products
business segment from the period presented.  This pro forma financial data is
presented for informational purposes and is not necessarily indicative of the
operating results that would have occurred had the Merger been consummated on
January 1, 1996, nor is it necessarily indicative of future operations.


<TABLE> 
<CAPTION> 
                                    Three Months
                                        Ended
                                    March 27, 1996
                              (In thousands of dollars)
                     ---------------------------------------------
                     <S>                      <C>     
                     Net Sales                $    258,706

                     Net Loss                 $    (31,696)
</TABLE> 

                                      I-8
<PAGE>
 
                        INDEPENDENT ACCOUNTANTS' REPORT


To the Shareholders and Directors
of Riverwood Holding, Inc.

We have reviewed the accompanying condensed consolidated balance sheet of
Riverwood Holding, Inc. and its subsidiaries as of March 29, 1997, and the
related condensed consolidated statements of operations and cash flows for the
three-month period ended March 29, 1997. These financial statements are the
responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters.  It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole.  Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Riverwood Holding, Inc. and
subsidiaries as of December 31, 1996, and the related consolidated statements of
operations, shareholders' equity, and cash flows for the nine-month period ended
December 31, 1996 and the three-month period ended March 27, 1996 (Predecessor).
The consolidated statements of operations, shareholders' equity and cash flows
for the nine month period ended December 31, 1996 and the consolidated statement
of shareholders' equity for the three-month period ended March 27, 1996
(Predecessor) are not presented herein. In our report dated March 17, 1997, we
expressed an unqualified opinion on those consolidated financial statements,
based on our audit and the report of other auditors. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of December 31, 1996 and consolidated statements of operations and cash flows
for the three-month period ended March 27, 1996, are fairly stated, in all
material respects, in relation to the consolidated financial statements from
which they have been derived.



DELOITTE & TOUCHE LLP


Atlanta, Georgia
April 25, 1997

                                      I-9
<PAGE>
 
ITEM 2.

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

On March 27, 1996, Holding, through its wholly-owned subsidiaries, acquired all
of the outstanding shares of common stock of RIC.  On such date, Acquisition
Corp. was merged in the Merger into RIC.  RIC, as the surviving corporation of
the Merger, became a wholly owned subsidiary of RIC Holding.  On March 28, 1996,
RIC transferred substantially all of its properties and assets to Riverwood,
other than the capital stock of Riverwood, and RIC was merged in the Subsequent
Merger into RIC Holding.  Thereupon, Riverwood was renamed "Riverwood
International Corporation."  Upon consummation of the Subsequent Merger, RIC
Holding, as the surviving corporation in the Subsequent Merger, became the
parent company of Riverwood.

The Merger was accounted for as a purchase in accordance with APB Opinion No.
16, "Business Combinations" ("APB 16"). Purchase accounting results in increased
cost of sales, amortization and depreciation.  Additionally, the new capital
structure has resulted and will continue to result in higher reported interest
expense.  The condensed consolidated financial statements for periods prior to
March 28, 1996 have been prepared on the historical cost basis using accounting
principles that had been adopted by RIC.  As a result of the Merger, purchase
accounting and the effect of the disposition of substantially all of the U.S.
Timberlands/Wood Products business segment (see Note 8 to the Condensed
Consolidated Financial Statements), operating results subsequent to the Merger
are not comparable in all material respects to the operating results prior to
the Merger.

On October 18, 1996, the Company sold substantially all of the assets of the
U.S. Timberlands/Wood Products business segment for cash of approximately $550
million.  In addition, the buyer assumed certain specified preclosing
liabilities.  Under the terms of the agreement for such sale, the Company and
the buyer, Plum Creek Timber Company, L.P., entered into a twenty-year supply
agreement with a ten-year renewal option for the purchase by the Company, at
market-based prices, of a majority of the West Monroe Mill's requirements for
pine pulpwood and residual chips, as well as a portion of the Company's needs
for hardwood pulpwood at the West Monroe Mill. The Company did not realize any
gain or loss on the sale.  The operating results for the U.S. Timberlands/Wood
Products business segment were classified as discontinued operations for periods
beginning March 28, 1996 and ending October 18, 1996 (the date of the sale).
The operating results of the U.S. Timberlands/Wood Products business segment
have not been reclassified as discontinued operations in the Predecessor's
Condensed Consolidated Statements of Operations or Condensed Consolidated
Statements of Cash Flows.

Under the terms and definitions of the Company's senior secured credit agreement
(the "Senior Secured Credit Agreement") and the indentures (the "Indentures")
for the Company's $250 million aggregate principal amount of 10 1/4% Senior
Notes due 2006 (the "Senior Notes") and $400 million aggregate principal amount
of 10 7/8% Senior Subordinated Notes due 2008 (the "Senior Subordinated Notes"
and together with the Senior Notes, the "Notes"), certain expenses and costs are
excluded from the Company's Income (Loss) from Operations in determining EBITDA
(as defined below), including amortization, depreciation or expenses associated
with the write-up of inventory, fixed assets and intangible assets in accordance
with APB 16 and APB Opinion No. 17, "Intangible Assets", collectively referred
to as the "Purchased Asset Costs."  During the three months ended March 29,
1997, the Company's (Loss) from Operations included Purchased Asset Costs as
follows:

<TABLE>
<CAPTION>
                                                             Three months ended March 29, 1997
                                                                      (In thousands of dollars)
                                                                       ------------------------
                                                 COATED BOARD                      
DESCRIPTION                                         SYSTEM          CONTAINERBOARD         TOTAL
------------------------------------------------------------------------------------------------
<S>                                              <C>                <C>                   <C>
Cost of sales (excluding depreciation)               $  136             $       -         $  136
Depreciation expense                                  4,828                   911          5,739

Amortization of intangible assets                     1,255                     -          1,255
------------------------------------------------------------------------------------------------
Net impact on (Loss) Income from                                                   
 Operations                                          $6,219             $     911         $7,130
================================================================================================
</TABLE>

                                      I-10
<PAGE>
 
GENERAL

The Company reports its results in two business segments: Coated Board System
and Containerboard.  The Coated Board System business segment includes the
production and sale of coated board for packaging cartons from the paper mills
in West Monroe, Louisiana; Macon, Georgia (the "Macon Mill") and Norrkoping,
Sweden; converting operations at facilities in the United States, Australia and
Europe; 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. The former U.S.
Timberlands/Wood Products business segment included timberlands and operations
engaged in the supply of pulpwood to the West Monroe Mill from the Company's
former U.S. timberlands, as well as the manufacture and sale of lumber and
plywood.

The table below sets forth Net Sales, (Loss) Income from Operations and
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, cost of timber harvested and other non-cash charges deducted in
determining consolidated net income and extraordinary items and the cumulative
effect of accounting changes and earnings of, but including dividends from non-
controlled affiliates ("EBITDA"), calculated in accordance with definitions in
the Senior Secured Credit Agreement and the Indentures and on a pro forma basis
to exclude Other Costs of the Predecessor ("Pro Forma EBITDA").  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 or cash flow data.

<TABLE>
<CAPTION>
(In thousand of dollars)                               
------------------------                               Company         Predecessor 
                                                    --------------------------------
                                                    Three Months     Three Months
                                                        Ended            Ended
                                                    March 29, 1997   March 27, 1996
                                                    ---------------------------------
<S>                                                 <C>              <C> 
Net Sales (Segment Data):
     Coated Board System                                 $240,110         $234,608
     Containerboard                                        27,078           25,496
     U.S. Timberlands/Wood Products                             -           37,336
     Intersegment Eliminations                                  -           (3,791)
                                                         --------         --------
Net Sales                                                $267,188         $293,649
                                                         ========         ========
                                                                                  
(Loss) Income from Operations (Segment Data):                                     
     Coated Board System                                 $ 15,779         $ 24,638
     Containerboard                                       (13,006)          (5,955)
     U.S. Timberlands/Wood Products                             -           13,868
     Corporate and Eliminations                            (4,512)         (16,901)
                                                         --------         --------
(Loss) Income from Operations                            $ (1,739)        $ 15,650
                                                         ========         ========
Pro Forma EBITDA (Segment Data):                                                  
     Coated Board System                                 $ 44,485         $ 47,174
     Containerboard                                        (8,038)          (1,242)
     U.S. Timberlands/Wood Products                             -           16,766
     Corporate and Eliminations                            (3,294)          (6,565)
                                                         --------         --------
Pro Forma EBITDA                                         $ 33,153         $ 56,133
                                                         ========         ======== 
</TABLE>

Prior to March 28, 1996, the Predecessor Company incurred expenses associated
with stock based compensation plans, expenses related to RIC's review of
strategic alternatives and provision for environmental reserves.  These expenses
were classified as Other Costs on the Condensed Consolidated Statements of
Operations.  Stock based compensation expense was allocated to each of the
business segments based upon the responsibility of the individuals holding or
exercising the stock incentive benefits.  During the three months ended March
27, 1996, $1.2 million, $0.1 million, $0.2 million and $0.8 million of stock-
based compensation expense were allocated to the Coated Board System,
Containerboard and U.S. Timberlands/Wood Products business segments and
Corporate and Eliminations, respectively.  Expenses related to RIC's review of
strategic alternatives and environmental reserves were included in Corporate and
Eliminations for business segment reporting purposes.

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 

                                      I-11
<PAGE>
 
within the Company's control. Historically, in the Coated Board System business
segment, the Company has experienced stable pricing for its integrated beverage
carton products, and cyclical pricing for its folding carton and open market
coated board products. The Company's open market coated board sales are affected
by competition from competitors' coated board and other substrates - solid
bleached sulfate (SBS), recycled clay coated news (CCN) and, internationally,
white lined chip (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.

The Company is pursuing a number of long-term initiatives designed to improve
productivity and profitability while continuing to implement its Coated Board
System business strategy.  First, the Company has taken actions to increase open
market coated board sales above 1996 levels.  The Company has established key
account relationships with a number of major independent converters, involving
multi-year commitments by the Company to supply a significant portion of these
customers' requirements for coated board. The Company is also undertaking a
comprehensive, long-term marketing initiative aimed at potential new folding
carton applications for coated board.  Second, the Company has undertaken a
profit-center oriented reorganization of its operations, designed to focus on
profitability and to reevaluate its commitment of assets to business sectors
with low profitability, and to provide greater control over costs and revenues,
as well as managerial autonomy and accountability.  A major initial project was
the reorganization of the Company's North American beverage operations into
three business units, each of which is a separate profit center serving a
different customer segment.  Third, the Company is implementing a number of cost
saving measures, including reorganizing operations to remove duplication and
excess overhead, and streamlining and consolidating international and other
operations.  These measures include the sale or closure of the Company's last
dedicated folding carton converting plant in the Unites States, located in
Kankakee, Illinois, packaging machinery manufacturing plants in Marietta,
Georgia, and Koln, Germany, a beverage multiple packaging converting plant in
Bakersfield, California, and the trucking transportation operations in West
Monroe, Louisiana, as well as the consolidation and realignment of certain
operations in the United States, Australia and Europe.  Finally, the Company has
reevaluated and reduced its planned capital expenditures, and is reducing its
inventory levels without impacting seasonal inventory requirements, as well as
considering the sale of surplus assets.  There can be no assurance, however,
that any of these business alternatives can be successfully implemented or will
result in improved cash flows from operations and EBITDA.

                                      I-12
<PAGE>
 
RESULTS OF OPERATIONS
FIRST QUARTER 1997 COMPARED WITH FIRST QUARTER 1996

The following is a discussion of the Company's results of operations on a pro
forma basis.  The discussion is based upon the three month period ended March
29, 1997, exclusive of the net effect of Purchased Asset Costs made in this
period, in comparison to the three month period ended March 27, 1996, exclusive
of Other Costs and the U.S. Timberlands/Wood Products business segment results
of operations, as follows:

<TABLE>
<CAPTION>
(In thousands of dollars) 
-------------------------                                                       Three Months Ended 
                                                            -------------------------------------------------------------
                                                                Pro forma         % Increase (Decrease)      Pro forma
                                                               March 29, 1997       From Prior Period     March 27, 1996
                                                            ---------------------------------------------------------------
<S>                                                            <C>                <C>                     <C>
Net Sales (Segment Data):

     Coated Board System                                           $240,110                     2.3         $234,608

     Containerboard                                                  27,078                     6.2           25,496
                                                                   --------                                 --------
Net Sales                                                           267,188                     2.7          260,104

Cost of Sales                                                       229,334                     7.4          213,588
                                                                   --------                                 --------
Gross Profit                                                         37,854                   (18.6)          46,516

Selling, General and Administrative                                  29,205                    (2.1)          29,830

Research, Development and Engineering                                 1,689                   (15.9)           2,009

Other Expenses, net                                                   1,569                   (21.5)           1,999
                                                                   --------                                 --------
Income from Operations                                             $  5,391                   (57.5)        $ 12,678
                                                                   ========                                 ========
Income (Loss) from Operations (Segment Data):                   

     Coated Board System                                           $ 21,998                   (15.0)        $ 25,881

     Containerboard                                                 (12,095)                 (107.3)          (5,835)

     Corporate                                                       (4,512)                   38.8           (7,368)
                                                                   --------                                 --------
Income from Operations                                             $  5,391                   (57.5)        $ 12,678
                                                                   ========                                 ========
</TABLE> 

 
PAPERBOARD PRODUCTION
 
Total tons of paperboard produced at the Company's paper mills for the first
quarters of 1997 and 1996 were as follows:
 
<TABLE> 
<CAPTION> 
                                              Three Months Ended
                                            (In thousands of tons)
                                  ----------------------------------------
                                    March 29, 1997          March 27, 1996
                                  ----------------------------------------
<S>                                 <C>                     <C>     
Carrierboard                              158.5                   170.7
Folding cartonboard                        65.7                    62.5
White Lined Chip board                     27.0                    29.1
                                         ------                   -----
Total Coated Board                        251.2                   262.3
Containerboard                             85.6                    95.3
                                         ------                   -----
                                          336.8                   357.6
                                         ======                   =====
</TABLE>

                                      I-13
<PAGE>
 
This tonnage represents production at the Company's paper mills and does not
represent shipments or sales of paperboard to customers.  Containerboard
production included 5,600 tons and 8,200 tons of saleable off-specification
coated board for the first quarter of 1997 and 1996, respectively, produced on
dedicated coated board paper machines and sold in the Containerboard business
segment.  The Company's U.S. mill production of containerboard decreased by
approximately 9,700 tons in the first quarter of 1997 compared to the same
period of 1996, while its production of coated board decreased by approximately
11,100 tons in the first quarter of 1997 as compared to the first quarter of
1996. The decrease in production is due principally to lower daily production
rates for both containerboard and coated board to produce quality paperboard,
and to higher maintenance-related down time on one of four U.S. coated board
paper machines.  During the first three months of 1997 and 1996, the Company
took 30 machine days and 49 machine days, respectively, of unscheduled
corrugating medium paper machine outages to balance inventory levels.  The
Company's coated board capacity can also be used for linerboard production when
market conditions warrant.  During the first quarters of 1997 and 1996, the
Company produced approximately 2,900 and 1,000 tons, respectively, of linerboard
on U.S. coated board paper machines. The Company anticipates an insignificant
amount of linerboard production on its dedicated coated board paper machines
during the second quarter of 1997 and will review the need for producing
linerboard on coated board paper machines in the second half of 1997 based on
existing market conditions and the start-up of the second coated board paper
machine at the Macon Mill.  The second paper machine at the Macon Mill is
expected to produce approximately 110,000 tons of linerboard in 1997, and,
during the start-up of the conversion to coated board production in the second
half of 1997, is expected to produce approximately 50,000 tons of coated board.

NET SALES

As a result of the factors described below, the Company's Net Sales in the first
quarter of 1997 increased by $7.1 million, or 2.7 percent, compared with the
first quarter of 1996.  Net Sales in the Coated Board System business segment
increased $5.5 million, or 2.3 percent, in the first quarter of 1997 to $240.1
million from $234.6 million in the first quarter of 1996, due primarily to
increased sales volume of approximately 26,000 tons, substantially offset by
lower average selling prices, in worldwide coated board open markets.  In
addition, the Company's domestic integrated beverage business benefited from
increased sales volumes, slight selling price improvement, lower distribution
costs and favorable product mix.  Net Sales in the Containerboard business
segment increased $1.6 million, or 6.2 percent, to $27.1 million in the first
quarter of 1997 from $25.5 million in the first quarter of 1996, due to an
increase in containerboard sales volume, offset  somewhat by a decrease in
selling prices as a result of the significant decline in containerboard markets
worldwide that began in the latter part of 1995 and has continued into the first
quarter of 1997.

GROSS PROFIT

As a result of the factors discussed below, the Company's Gross Profit for the
first quarter of 1997 decreased $8.6 million, or 18.6 percent, to $37.9 million
from $46.5 million in the first quarter of 1996.  The Company's gross profit
margin decreased to 14.2 percent for the first quarter of 1997 from 17.9 percent
in the first quarter of 1996.  In the Containerboard business segment, Gross
Profit decreased $6.1 million to a loss of $10.5 million in the first quarter of
1997 as compared to a loss of $4.4 million in the first quarter of 1996. This
decrease was due principally to sales volume increases combined with declining
selling prices of containerboard which were below related production costs.
Gross Profit in the Coated Board System business segment decreased by $2.2
million, or 4.3 percent, to $48.9 million in the first quarter of 1997 as
compared to $51.2 million in the first quarter of 1996, while that segment's
gross profit margin decreased to 20.4 percent in the first quarter of 1997 from
21.8 percent in the first quarter of 1996.  This decrease in the gross profit
margin resulted principally from lower selling prices in worldwide coated board
open markets.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, General and Administrative expenses decreased $0.6 million, or 2.1
percent, to $29.2 million in the first quarter of 1997 as compared to $29.8
million in the first quarter of 1996 and as a percentage of Net Sales, Selling,
General and Administrative expenses decreased to 10.9 percent in the first
quarter of 1997 from 11.5 percent in the same period of 1996. This decrease was
primarily a result of lower operating expenses in international operations,
particularly in Europe, resulting from efforts to reduce inefficiencies and
streamline operations.

RESEARCH, DEVELOPMENT AND ENGINEERING

Research, Development and Engineering expenses decreased by $0.3 million to $1.7
million.

OTHER EXPENSES, NET

Other Expenses, net, decreased by approximately $0.4 million to $1.6 million.

                                      I-14
<PAGE>
 
INCOME FROM OPERATIONS

As a result of the above factors, the Company's Income from Operations in the
first quarter of 1997 decreased by $7.3 million, or 57.5 percent, to $5.4
million from $12.7 million in the first quarter of 1996, while the operating
margin as a percent of Net Sales decreased to 2.0 percent from 4.9 percent.
(Loss) from Operations in the Containerboard business segment increased $6.3
million to a loss of $12.1 million in the first quarter of 1997 from a (Loss)
from Operations of $5.8 million in the first quarter of 1996, primarily as a
result of the factors described above.  Income from Operations in the Coated
Board System business segment decreased $3.9 million, or 15.0 percent, to $22.0
million in the first quarter of 1997 from $25.9 million in the first quarter of
1996, while the operating margin as a percent of Net Sales decreased to 9.2
percent from 11.0 percent for the same periods, primarily as a result of the
factors described above.

U.S. DOLLAR CURRENCY EXCHANGE RATES

Fluctuations in U.S. dollar currency exchange rates did not have a significant
impact on Net Sales, Gross Profit, operating expenses or Income from Operations
of the Company during the first quarter of 1997 as compared to the same period
of 1996.


INTEREST INCOME, INTEREST EXPENSE, INCOME TAXES AND EQUITY IN NET EARNINGS OF
AFFILIATES

INTEREST INCOME

Interest Income decreased $0.2 million to $0.1 million in the first quarter of
1997 from $0.3 million in the first quarter of 1996 primarily as a result of
lower average balances of cash and equivalents and marketable securities in 1997
as compared to 1996.

INTEREST EXPENSE

Interest Expense increased $12.5 million to $38.9 million in the first quarter
1997 from the first quarter of 1996 primarily as a result of the incremental
indebtedness incurred in connection with the Merger, offset somewhat by an
increase of $1.3 million in 1997 of capitalized interest related to the pulp
mill modification at the Macon Mill and conversion of the linerboard paper
machine at the Macon Mill to coated board production.

INCOME TAX EXPENSE (BENEFIT)

During the first quarter of 1997, the Company recognized an income tax expense
of $0.9 million on a (Loss) before Income Taxes and Equity in Net Earnings of
Affiliates of $40.5 million.  This expense differed from the statutory federal
income tax rate because of valuation allowances established on net operating
loss carryforward tax assets in the U.S. and certain international locations
where the realization of benefits is uncertain.  Cash paid for income taxes
during the first quarter of 1997 was $4.3 million.

In the first quarter of 1996, the Predecessor Company recognized an income tax
benefit of $3.4 million on a (Loss) from Operations before Income Taxes and
Equity in Net Earnings of Affiliates of $10.4 million.

EQUITY IN NET EARNINGS OF AFFILIATES

Equity in Net Earnings of Affiliates is comprised primarily of the Company's
equity in net earnings of Igaras, an integrated containerboard producer located
in Brazil, which produces linerboard, corrugating medium and corrugated boxes,
which is accounted for under the equity method of accounting.  Equity in Net
Earnings of Affiliates decreased $1.3 million to $3.6 million in the first
quarter 1997 from $4.9 million in the first quarter of 1996, primarily as a
result of the significant decline in containerboard markets worldwide.  During
the first quarters of 1997 and 1996, the Company did not receive a dividend from
Igaras.  The Company received net dividends from its investments in affiliates,
other than Igaras, that are accounted for using the equity method of accounting
totaling $0.8 million and nil for the three months ended March 29, 1997 and
March 27, 1996, respectively


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.

                                      I-15
<PAGE>
 
CASH FLOWS

Cash and equivalents decreased by approximately $7.1 million in the first
quarter of 1997 primarily as a result of  $51.8 million of net cash used in
investing activities, offset in part by $42.1 million and $3.4 million of net
cash provided by financing and operating activities, respectively.  Cash used in
investing activities related principally to the purchases of property, plant and
equipment (see "-Liquidity and Capital Resources - Capital Expenditures").
Depreciation, amortization and cost of timber harvested during the first quarter
of 1997 totaled approximately $32.1 million, and is expected to be approximately
$125 million to $130 million for fiscal 1997.

The Company's cash flows from its operations and EBITDA are subject to moderate
seasonality with demand usually increasing in the spring and summer.  The
Company's Coated Board System business segment experiences seasonality
principally due to the seasonality of the worldwide multiple packaging beverage
segment.  Historically, the Company's Coated Board System business segment
reports its strongest sales in the second and third quarters of the fiscal year
driven by the seasonality of the Company's integrated beverage business.

LIQUIDITY AND CAPITAL RESOURCES

GENERALLY

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.  In connection with the Merger, the Company
entered into the Senior Secured Credit Agreement with certain lenders providing
for senior secured credit facilities with aggregate commitments not to exceed
$1,550 million (the "Senior Secured Credit Facilities"), including a $1,150
million term loan facility (the "Term Loan Facility") and a $400 million
revolving credit facility (the "Revolving Facility").  In addition, Riverwood
International Machinery, Inc., a wholly owned subsidiary of Riverwood, entered
into a credit agreement (the "Machinery Credit Agreement," and together with the
Senior Secured Credit Agreement, the "Credit Agreements") providing for a $140
million secured revolving credit facility (the "Machinery Facility," and
together with the Senior Secured Credit Facilities, the "Facilities") with
certain lenders for the purpose of financing or refinancing packaging machinery.
Also in connection with the Merger, the Company completed an offering of the
Notes.

As of March 29, 1997, the Company had outstanding approximately $1,627 million
of indebtedness, consisting primarily of $650 million aggregate principal amount
of the Notes payable, $750 million in term loan borrowings under the Term Loan
Facility and additional amounts under the Revolving Facility, the Machinery
Facility and other debt issues and facilities.  During the first quarter of
1997, the Company had a net increase in revolving credit facilities of
approximately $43.3 million and repaid approximately $1.2 million of debt.

DEBT SERVICE

Principal and interest payments under the Facilities and interest payments on
the Notes represent significant liquidity requirements for the Company.  Annual
term loan amortization requirements under the Term Loan Facility will be
approximately $1.0 million, $3.0 million, $28.0 million, $80.2 million, $124.7
million, $173.0 million, $184.1 million and $156.0 million for each of the years
1997 through 2004, respectively.  The Revolving Facility will mature in March
2003 and the $140 million Machinery Facility will mature in March 2001, with all
amounts then outstanding becoming due.  The loans under the Facilities bear
interest at floating rates based upon the interest rate option elected by the
Company.  The Senior Notes and the Senior Subordinated Notes bear interest at
rates of 10 1/4 percent and 10 7/8 percent, respectively.  Interest expense in
1997 is expected to be approximately $170 million to $175 million, including
approximately $10 million of non-cash amortization of deferred debt issuance
costs.  During the first quarter of 1997, cash paid for interest was
approximately $19.7 million, and during April 1997, the Company paid an
additional $36.2 million of interest.

CAPITAL EXPENDITURES

Capital spending for the first quarter of 1997 was approximately $45 million.
During the first quarter of 1997, the Company completed a project to modify the
pulp mill at the Macon Mill and is in the process of converting the second
linerboard paper machine at the Macon Mill to coated board production.  The cost
of the pulp mill modification was approximately $32 million and was completed in
early 1997 while the paper machine conversion is expected to cost approximately
$85 million and is expected to be completed in mid-1997.  For the first quarter
of 1997, capital spending on these two projects totaled approximately $26
million while cumulative capital spending through March 29, 1997 on these two
projects totaled approximately $72 million.  The pulp mill modification project
was completed on budget and on schedule, and to date, the conversion of the
second linerboard paper machine is on budget and on schedule.  Other capital
spending during this period related primarily to increasing paper production
efficiencies, increasing converting capacity, and manufacturing packaging
machinery.  Total capital spending for fiscal 1997 is expected to be
approximately $155 million and is expected to relate principally to the pulp
mill modification, the conversion of the second paper machine at the Macon Mill
and the production of packaging machinery.

                                      I-16
<PAGE>
 
FINANCING SOURCES AND CASH FLOWS

At March 29, 1997, the Company and its U.S. and international subsidiaries had
the following amounts undrawn under revolving credit facilities:

<TABLE>
<CAPTION>
                                              Total Amount     Total Amount
                             Total Amount of  Outstanding at   Available at
(In thousands of dollars)    Commitments      March 29, 1997   March 29, 1997
-------------------------    ---------------  --------------   --------------
<S>                          <C>              <C>              <C>
Revolving Facility                  $400,000         $132,000        $268,000
Machinery Facility                   140,000           35,000          19,000
International facilities              54,933           38,438          16,495
                                    --------         --------        --------
                                    $594,933         $205,438        $303,495
                                    ========         ========        ========
</TABLE>

The Machinery Facility is limited by a borrowing base.  During December 1996,
the commitment for the Australian revolving facility was reduced from
approximately $37 million to approximately $32 million.  Undrawn Revolving
Facility availability is expected to be used to pay taxes and other remaining
costs of the Merger of approximately $43 million and to meet future working
capital and other business needs of the Company.  The Company anticipates
pursuing additional working capital financing for its foreign operations as
necessary, and possibly implementing a receivables securitization program.
During the first quarter of 1997, the Company paid approximately $3 million of
accrued costs related to the Merger.  During April 1997, the Company made
payments of $29 million for taxes relating to the Merger.

As described above, the Company has substantial liquidity, but anticipates
material incremental borrowings throughout 1997.  The Company believes that cash
generated from operations, together with amounts available under its Revolving
Facility, the Machinery 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, although no assurance can be given in this regard.  The Company's future
financial and operating performance, ability to service or refinance the senior
and senior subordinated notes payable and to repay, extend or refinance the
revolving credit facilities 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 its ability to successfully implement its overall
business and profitability strategies.  See "-Business Trends and Initiatives."

In connection with and following the Merger, the Company decided in 1996 to exit
certain businesses and operating activities, including the sale or closure of
the Company's last dedicated folding carton converting plant in the United
States, located in Kankakee, Illinois,  packaging machinery manufacturing plants
in Marietta, Georgia and Koln, Germany, a beverage multiple packaging converting
plant in Bakersfield, California and the trucking transportation operations in
West Monroe, Louisiana, as well as the consolidation and realignment of certain
operations in the United States, Australia and Europe.  The cost of exiting
these businesses and operating activities was approximately $40.9 million which
was accrued during 1996 as a purchase accounting adjustment.  The costs relate
principally to the severance of approximately 750 employees, relocation and
other plant closure costs.  At December 31, 1996, $32.6 million of this total
was accrued in Other accrued liabilities on the Condensed Consolidated Balance
Sheets.  During the first quarter of 1997, $7.0 million was paid out and charged
against the accrual and related primarily to severance costs.

While the Company believes that Igaras has adequate liquidity, the Company
shares control of Igaras with its joint venture partner and future dividend
payments from Igaras, if any, would be subject to restrictions in the joint
venture agreement and would reflect only the Company's remaining interest of
50%.  Under the Igaras joint venture agreement, Igaras is required to pay
dividends equal to at least 25% of its net profits.  Due to currency
fluctuations, inflation and changes in political and economic conditions,
earnings from Brazilian operations have been subject to significant volatility.
There can be no assurance that such volatility will not recur in the future.

COVENANT RESTRICTIONS

The Credit Agreements impose restrictions on the Company's ability to make
capital expenditures and both the Credit Agreements and the Indentures governing
the 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, to meet its capital
spending program, to provide for unanticipated capital investments or to take
advantage of business opportunities.  The covenants contained in the Credit
Agreements also, among other things, restrict the ability of the Company and its
subsidiaries to dispose of assets, incur guarantee obligations, repay the Notes,
pay dividends, create liens on assets, enter into sale and leaseback
transactions, 

                                      I-17
<PAGE>
 
make investments, loans or advances, make acquisitions, engage in mergers or
consolidations, make capital expenditures or engage in certain transactions with
affiliates, and otherwise restrict corporate activities. The covenants contained
in the Indentures governing the Notes also impose restrictions on the operation
of the Company's businesses. At March 29, 1997, the Company was in compliance
with the covenants in its debt agreements.

ENVIRONMENTAL AND LEGAL MATTERS

The Company is committed to compliance with all applicable environmental laws
and regulations throughout the world. 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
promulgate or revise rules and regulations.

In late 1993, the EPA proposed regulations (generally referred to as the
"cluster rules") that would mandate more stringent controls on air and water
discharges from United States pulp and paper mills.  In 1996, the EPA released
additional clarification of the proposed cluster rules.  Based on this
information, the Company expects that the cluster rules may be finally
promulgated in 1997 and estimates 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 an eight-year period beginning in 1997.  The Company
anticipates that the majority of this spending for compliance with the cluster
rules will occur later in the eight-year period.  The Company had no capital
spending during the first quarter of 1997 related to compliance with the cluster
rules.

The DEQ has notified the Company by letters, dated December 19, 1995, that the
Predecessor may be liable for the remediation of the release or threat of
release of hazardous substances at a wood treatment site in Shreveport,
Louisiana, that the Predecessor or its predecessor previously operated, and at a
former oil refinery site in Caddo Parish, Louisiana that the Company currently
owns. Neither the Company nor the Predecessor ever operated the oil refinery.
In response to the DEQ, the Company has provided additional information to the
DEQ concerning these sites and has commenced its own evaluation of any claims
and remediation liabilities for which it may be responsible.   The Company
received a letter from the DEQ dated May 20, 1996, requesting a plan for soil
and groundwater sampling of the wood treatment site.  The Company first met with
the DEQ on July 18, 1996, and then submitted a soil sampling plan to the DEQ.
The Company expects approval of this sampling plan in the first half of 1997.
On September 6, 1996, the Company received from the DEQ a letter requesting
remediation of the former oil refinery site in Caddo Parish, Louisiana.  The
Company met with the DEQ on February 17, 1997 to discuss these matters.  The DEQ
requested that the Company enter into a cooperative agreement to perform a
phased-in approach for evaluating soil and groundwater conditions at the
Shreveport site.  The Company is in discussions with the DEQ regarding the
participation of other responsible parties in any clean up of hazardous
substances at both of these sites.

The Company is engaged in environmental remediation projects for certain
properties currently owned or operated by the Company and certain properties
divested by the Company for which responsibility was retained for pre-existing
conditions.  The Company's costs in some instances cannot be reliably estimated
until the remediation process is substantially underway.  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 material costs will not be incurred in
connection with clean-up activities at these properties, including the
Shreveport and Caddo Parish sites referred to above.

On December 6, 1995, Forrest Kelly Clay, a former shareholder of the
Predecessor, commenced a purported class action lawsuit in the United States
District Court for the Northern District of Georgia, against the Company and
certain officials of the Company (the "Individual Defendants," and together with
the Company, the "Defendants").  In his complaint, Clay alleges that the
Defendants violated the federal securities laws by disseminating misleading
statements and by omission concerning the strategic alternatives that the
Predecessor was considering, including its potential sale to a third-party
investor.  The complaint also alleged that the Individual Defendants, through
their exercise of stock appreciation rights ("SARs"), violated the federal
securities laws by trading in the Predecessor's securities while in possession
of material, non-public information.  The complaint generally seeks damages in
an unspecified amount, as well as other relief.  On January 29, 1996, Defendants
filed a motion to dismiss the complaint for failure to state a claim and failure
to plead fraud with particularity.  On March 29, 1996, the Court denied
Defendants' motion to dismiss and allowed limited discovery to proceed with
regard to statements attributable to the Company and the nature of the SARs.
That discovery is now complete, and plaintiff has twice amended his complaint
(each time putting forward the same claims made in the initial complaint but
amending certain of the factual allegations).  On November 1, 1996, the
Defendants moved to dismiss the amended complaint, noting (i) none of the
statements attributable to the Company concerning its review of strategic
alternatives was false and (ii) that there is no causal relationship between
plaintiff's purchase of Riverwood common stock and the Individual Defendants'
exercise of SARs.  That motion has been fully briefed and is currently before
the Court.

                                      I-18
<PAGE>
 
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

Certain of the statements contained in this report (other than the financial
statements and other statements of historical fact), including, without
limitation, statements as to management's expectations and belief presented in
this "Management's Discussion and Analysis of Financial Condition and Results of
Operations," are forward-looking statements.  Forward-looking statements are
made based upon management's expectations and belief concerning future
developments and their potential effect 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.  There are certain important factors that could
cause actual results to differ materially from estimates reflected in such
forward-looking statements, including changes in the level of sales volume of
coated board for beverage cartons and folding cartons, as well as for
containerboard, in the United States and abroad, changes in selling prices of
the products of the Company or its competitors, the Company's ability to realize
cost savings from productivity improvements and changes in the market for raw
materials which could impact the Company's production costs.

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 herein in light of future events.

                                      I-19
<PAGE>
 
                          PART II - OTHER INFORMATION


ITEM 1.    LEGAL PROCEEDINGS.

Not applicable

ITEM 2.    CHANGES IN SECURITIES.

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.

Effective March 31, 1997, Stephen M. Humphrey was appointed as President and
Chief Executive Officer of the Company.  He is also a member of the Company's
board of directors.

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

(a)  Exhibits.

     10.1 Employment Agreement between Riverwood Holding, Inc., Riverwood
          International Corporation and Stephen Humphrey. Filed as an exhibit
          hereto.

     10.2 Management Stock Option Agreement between Riverwood Holding Inc. and
          Stephen Humphrey. Filed as an exhibit hereto.

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

(b)  Reports on Form 8-K.

     Not applicable.

                                      II-1
<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:  May 9, 1997             By:   /s/  B. H. Chastain
                                        ---------------------------------------
                                          B. H. Chastain
                                          Secretary


Date:  May 9, 1997             By:   /s/  J. O. Egan
                                        ---------------------------------------
                                          J. O. Egan
                                          Senior Vice President and
                                          Chief Financial Officer

                                      II-2