Profile: Rock-Tenn Company (RKT)

Rock-Tenn Company (RockTenn) is a manufacturer of packaging products, recycled paperboard, containerboard, bleached paperboard and merchandising displays. The Company operates in four segments: Consumer Packaging, Corrugated Packaging, Merchandising Displays and Specialty Paperboard Products. The Consumer Packaging segment consists of facilities that manufacture coated paperboard products and convert paperboard into folding cartons. The Corrugated Packaging segment consists of facilities that manufacture containerboard and produce corrugated packaging and sheet stock. The Merchandising Displays segment consists of facilities that produce displays. The Specialty Paperboard Products segment consists of facilities that manufacture specialty paperboard and convert paperboard into interior packaging, convert specialty paperboard into laminated paperboard products, and facilities that collect recovered paper.

RockTenn operates a total of 100 facilities located in 27 states, Canada, Mexico, Chile and Argentina. The Company’s subsidiaries include RTS Packaging, LLC (RTS), GraphCorr LLC, Schiffenhaus Canada, Inc. and Schiffenhaus California, LLC.

Consumer Packaging Segment

The Company operates an integrated system of five coated recycled mills and a bleached paperboard mill that produce paperboard for its folding carton operations and third parties. Customers use its folding cartons to package dry, frozen and perishable foods for the retail sale and quick-serve markets, beverages, paper goods, automotive products, hardware, health care and nutritional food supplement products, household goods, health and beauty aids, recreational products, apparel, take out food products, and other products. RockTenn also manufactures express mail envelopes for the overnight courier industry.

The Company manufactures folding cartons from recycled and virgin paperboard, laminated paperboard and various substrates with features, such as grease masking and microwaveability. It prints, coats, die-cuts and glues the paperboard to customer specifications. RockTenn ships finished cartons to customers for assembling, filling and sealing. It employs a range of offset, flexographic, gravure, backside printing and double coating technologies. The Company supports its customers with product development, graphic design and packaging systems services.

RockTenn manufactures bleached paperboard and market pulp. It sells coated recycled and bleached paperboard to manufacturers of folding cartons and other paperboard products. During the fiscal year ended September 30, 2009 (fiscal 2009), sales of consumer packaging products to external customers accounted for 52.6% of its net sales.

Corrugated Packaging Segment

The Company operates an integrated system that manufactures linerboard and corrugated medium (containerboard), corrugated sheets, corrugated packaging and preprinted linerboard for sale to industrial and consumer products manufacturers and corrugated box manufacturers. To make corrugated sheet stock, RockTenn feeds linerboard and corrugated medium into a corrugator that flutes the medium to specified sizes, glues the linerboard and fluted medium together, and slits and cuts the resulting corrugated paperboard into sheets to customer specifications. The Company also converts corrugated sheets into corrugated products ranging from one-color protective cartons to point-of-purchase containers and displays. It provides structural design and engineering services. During fiscal 2009, sales of corrugated packaging products to external customers accounted for 25.4% of its net sales.

Merchandising Displays Segment

The Company manufactures temporary and permanent point-of-purchase displays. RockTenn designs, manufactures and packs temporary displays for sale to consumer products companies. These displays are used as marketing tools to support new product introductions and specific product promotions in mass merchandising stores, supermarkets, convenience stores, home improvement stores and other retail locations. The Company also designs, manufactures and, in some cases, pre-assembles permanent displays for the same categories of customers. It makes temporary displays primarily from corrugated paperboard.

The Company provides contract packing services, such as multi-product promotional packing and product manipulation, such as multipacks and onpacks. It also manufactures lithographic laminated packaging. During fiscal 2009, sales of its merchandising display products to external customers accounted for 11.4% of its net sales.

Specialty Paperboard Products Segment

The Company operates an integrated system of five specialty recycled paperboard mills (including its Seven Hills LLC), which produce paperboard for its converting operations (including its solid fiber interior packaging locations) and third parties, and it also buys and sells recycled fiber. The Company sells its specialty recycled paperboard to manufacturers of solid fiber interior packaging, tubes and cores, and other paperboard products. Through its Seven Hills joint venture, RockTenn manufactures gypsum paperboard liner for sale to its joint venture partner. The Company also converts specialty paperboard into book cover and laminated paperboard products for use in furniture, automotive components, storage and other industrial products. The Company’s subsidiary, RTS, designs and manufactures fiber partitions and die-cut paperboard components. RTS operates in the United States, Canada, Mexico, Chile and Argentina.

RockTenn sells its solid fiber partitions principally to glass container manufacturers and producers of beer, food, wine, spirits, cosmetics and pharmaceuticals. It also manufactures specialty agricultural packaging for specific fruit and vegetable markets and sheeted separation products. The Company manufactures solid fiber interior packaging primarily from recycled paperboard. Its solid fiber interior packaging is made from varying thicknesses of single ply and laminated paperboard to meet different structural requirements, including those required for high speed-casing, de-casing and filling lines.

The Company’s paper recovery facilities collect primarily waste paper from factories, warehouses, commercial printers, office complexes, retail stores, document storage facilities and paper converters, and from other wastepaper collectors. The Company handles a range of grades of recovered paper, including old corrugated containers, office paper, box clippings, newspaper and print shop scraps. It also operates a fiber marketing and brokerage group that serves large regional and national accounts, as well as its coated and specialty recycled paperboard mills and sells scrap materials for its converting businesses and paperboard mills. During fiscal 2009, sales of specialty paperboard products to external customers accounted for 10.6% of its net sales.