RockTenn RockTenn provides superior paperboard and packaging solutions for consumer product companies at very low costs. We attract capable, highly motivated people who want to apply their talents to build a great company. We are committed to relentless performance and to: 2010 • Exceeding our customers’ expectations every time 2010 • Encouraging and rewarding employee excellence Annual Annual • Creating long-term shareholder value Report Report 2010 ANNUAL REPORT 504 Thrasher Street Norcross, Georgia 30071 770-448-2193 www.rocktenn.com NYSE: RKT RTC012_Cover_wp.indd A 12/10/10 4:39 PM Shareholder Information Home Office Auditors Annual Meeting Inc. 504 Thrasher Street Ernst & Young LLP Grand Hyatt Atlanta Norcross, Georgia 30071 55 Ivan Allen Jr. Boulevard 3300 Peachtree Road, NE 770-448-2193 Suite 1000 Atlanta, Georgia 30305 Initiative, Transfer Agent Atlanta, Georgia 30308 Friday, January 28, 2011 at 9:00 a.m. and Registrar Direct Deposit of Dividends Common Stock Forestry First Class/Registered/Certifi ed Mail: RockTenn shareholders may have RockTenn common stock trades on reserved. Computershare Investor Services their quarterly cash dividends the New York Stock Exchange under P.O. Box 43078 automatically deposited to checking, the symbol RKT. Sustainable rights of Providence, Rhode Island 02940 savings or money market accounts As of October 30, 2010, there were All Courier Services: through the automatic clearinghouse approximately 254 shareholders of system. If you wish to participate in Computershare Investor Services record of our Common Stock.* trademarks the program, please contact: Company. 250 Royall Street Computershare Trust Company, N.A. * The number of shareholders of record Canton, Massachusetts 02021 only includes a single shareholder, Cede 800-568-3476 & Co., for all of the shares held by our registered Investor Relations www.computershare.com shareholders in individual brokerage Rock-Tenn are Investor Relations Department accounts maintained at banks, brokers SFI and institutions. 2010 RockTenn © and 504 Thrasher Street Price Range of Common Stock LLC. Norcross, Georgia 30071 678-291-7900 Fiscal 2010 Fiscal 2009 High Low High Low Services Fax: 678-291-7903 INITIATIVE subsidiaries. First Quarter $53.20 $42.18 $40.44 $23.87 its Second Quarter $52.59 $37.25 $36.89 $22.84 Financial and Third Quarter $55.90 $45.33 $42.08 $25.95 FORESTRY Poor’s Fourth Quarter $55.22 $46.61 $52.58 $36.22 & Company Stock Performance Graph Standard SUSTAINABLE of Rock-Tenn The graph below refl ects cumulative shareholder return (assuming the reinvestment of dividends) on our Common Stock of compared to the return on the S&P 500 Index and our Industry Peer Group. The graph refl ects the investment of $100.00 on September 30, 2005 in our Common Stock, the S&P 500 Index and our Industry Peer Group and the reinvestment of trademarks Corporation. dividends. Our Industry Peer Group consists of public companies that compete directly in one or more of our product lines trademarks or produce other types of food or consumer nondurable packaging.1 Henkel 2 registered of Comparison of 5-Year Cumulative Total Return registered are are 500 $400 trademark S&P $350 and $300 registered POP-N-SHOP 400 a is and $250 $200 MIDCAP S&P $150 MIRAFOIL CHECKOUT Inc. A.C. $100 TO $50 9/30/05 9/30/06 9/30/07 9/30/08 9/30/09 9/30/10 Council, Industries, CONCEPT Atlanta / Cork Fiscal Year 9/05 9/06 9/07 9/08 9/09 9/10 of eye Stewardship Rock-Tenn Company $ 100.00 $ 134.26 $ 198.56 $ 278.28 $ 331.60 $ 355.09 see 1 Selected Financial Information BIO-PAK, see S&P 500 100.00 110.79 129.01 100.66 93.70 103.22 3 Letter to Shareholders Forest trademark “R,” 18 Board of Directors and Leadership Team of Peer Group 100.00 113.79 136.45 109.35 113.64 122.47 19 Form 10-K VWA| by 1. Industry Peer Group includes Ball Corp., Bemis Company, Cascades, Inc., Crown Holdings Inc., Graphic Packaging Holding Company, Greif, Inc., A-1 Appendix – Non-GAAP Measures stylized and Reconciliations registered International Paper Company, MeadWestvaco Corporation, Owens-Illinois Inc., Packaging Corporation of America, Sealed Air Corp., Silgan Holdings the a trademark is Inc., Sonoco Products Company and Temple-Inland Inc. Chesapeake Corporation and Smurfi t-Stone Container Corporation were included in our IBC Shareholder Information and This annual report contains non-GAAP information. produced Industry Peer Group in the prior year; however, we have excluded both of them this year because they fi led for bankruptcy and no longer represent a A reconciliation to comparable GAAP numbers can fair comparison to our company. and CURE registered be found in the appendix of this annual report. a & 2. $100.00 invested on September 30, 2005 in stock and index – including reinvestment of dividends. Fiscal year ending September 30. Cumulative total is return is weighted according to the respective issuer’s stock market capitalization at the beginning of each period for which the return is indicated. Designed ROCKTENN CAST FSC © 2010 Standard & Poor’s, a division of The McGraw-Hill Companies Inc. All rights reserved. (www.researchdatagroup.com/S&P.htm) RTC012_Cover_wp.indd B 112/9/102/9/10 6:53 PM RockTenn | 2010 Annual Report RockTenn (NYSE:RKT) is one of North America’s leading manufacturers of paperboard, containerboard and consumer and corrugated packaging. In 2010, RockTenn again achieved industry leading margins and reinforced its low-cost position with a focus on creating and delivering shareholder value, a long-standing commitment to environmental sustainability and an innovative, 1 performance-based workforce driven to continuously improve quality and customer satisfaction. Earnings Per Share Adjusted Earnings Per Share in dollars in dollars $5.71 $5.70 $4.59 $4.43 $2.75 $2.05 $2.12 $2.15 $0.77 $0.84 06 07 08 09 10 06 07 08 09 10 Free Cash Flow Free Cash Flow Yield in millions of dollars $284 21.5% $266 18.6% 16.2% 14.3% 14.6% $160 $157 $89 06 07 08 09 10 06 07 08 09 10 RTC012_AR_wp.indd 1 112/9/102/9/10 7:04 PM RockTenn earns industry leading margins. RockTenn has earned an 11-year total return to shareholders of 332%. In 2009 and 2010, RockTenn has earned industry leading EBITDA margins. RockTenn’s 10,400 co-workers have achieved these results through a culture based on respect and commitment to low cost and unmatched customer satisfaction. Total Shareholder Return 1999-2010 Year Ended September 30 RockTenn S&P Midcap 400 Index 2 BUSPACK* Index S&P 500 Index 0% 50% 100% 150% 200% 250% 300% 350% 400% EBITDA Margin 2004 Year Ended September 30 2010 Year Ended September 30 Peer A RockTenn Peer B Peer B Peer C Peer D Peer D Peer E Peer E Peer A Peer F Peer C Peer G Peer F RockTenn Peer I Peer H Peer G Peer I Peer H 0% 4% 8% 12% 16% 20% 0% 4% 8% 12% 16% 20% For companies other than RockTenn, we used the reported trailing 12 months for the period ended closest to September 30. *Bloomberg Americas Packaging & Containers Index RTC012_AR_wp.indd 2 112/9/102/9/10 7:04 PM RockTenn | 2010 Annual Report Letter to Shareholders Letter to Shareholders RockTenn’s 10,400 co-workers produced another year of industry leading margins as we continued to gain share in our markets and advance operational excellence across our businesses. 3 Our strong margins and the low We have announced maintenance capital expenditure require- price increases on all ments of our largely recycled mill system paperboard grades again generated strong free cash flow that would lead to returns to our shareholders – a 14.6% higher realized pricing return to shareholders who bought our over the course of shares on the last day of the preceding fiscal 2011. All of fiscal year. We ended the fiscal year with which gives us confi- our mill backlogs at historic highs and dence that our earnings the expectation that we will not take any per share will continue economic downtime in our paperboard to grow in fiscal 2011. mills and containerboard mills for the foreseeable future. James A. Rubright Chairman and Chief Executive Officer Letter to Shareholders 4 In last year’s letter I noted that whenever recycled fi ber. In fact, our $610 per ton the economy regained its footing we average net selling price for all grades would see a steep escalation in recycled in the fourth quarter of fi scal 2010 was fi ber costs, our largest single input cost. $62 higher than the average selling price The combination of the beginning of the in the fourth quarter of fi scal 2009. The recovery, the expiration of black liquor net effect was that the fi ber price spike tax credits (causing virgin manufacturers passed through, and while earnings for to shift back to a normal furnish mix of several quarters suffered by comparison virgin and recycled fi ber) and seasonally to 2009, the full year earnings did not. low fi ber generation, all occurring at the As our shareholders who have followed same time, resulted in a very steep recy- RockTenn for some time know – we cled fi ber price spike, peaking at $165 per measure our success by our ability to ton Chicago OCC in March 2010. Even generate strong cash fl ows, specifi cally so, RockTenn’s adjusted earnings per our free cash fl ow return on market share stayed roughly on pace with fi scal equity. Our belief is that we can – and 2009 when recycled fi ber prices averaged our commitment to our shareholders $57 per ton less.