John Spiegel – Vice President and Treasurer James Rubright – Chairman and Chief Executive Officer Steven Voorhees – Executive Vice President and Chief Financial Officer

Claudia Hueston – JPMorgan Christopher Chun – Deutsche Bank Joshua Zaret – Longbow Research Bill Hoffman – UBS [Sam Madden] – Highland Capital

Thank you [Trey], welcome to Rock-Tenn's fiscal first quarter 2009 Earnings Call. I am John Spiegel, Vice President and Treasurer of Rock-Tenn.

Also joining me on this morning's call are Jim Rubright, CEO, and Steve Voorhees, CFO. During the course of the conference call, we may make statements that are not historical in nature and may involve forward-looking statements within the meaning of federal Securities Laws.

For example, statements regarding our planned expectations, estimates, and beliefs related to future events, or forward-looking statements, which involve a number of risks and uncertainties, many of which are beyond our control and that could cause actual results to differ materially from those discussed. Additional information regarding these risks and uncertainties is contained in the document that we file with the Securities and Exchange Commission.

These documents include the companies include the company's Form 10-K filed for the fiscal year ended September 30, 2008. During the call we will be referring to non-GAAP financial measures.

Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are contained in the first quarter press release, which is available on Rock-Tenn's Web site at rocktenn.com. Now I will turn the call over to Steve Voorhees, who will review our first quarter results.

Thank you, John. Rock-Tenn reported net income of $30.6 million or $0.79 per share, as compared to $17.5 million or $0.46 per share in the December quarter of last year.

Rock-Tenn incurred $6.5 million of pre-tax restructuring cost, including $2.4 million of integration expenses related to the Southern Container acquisition, acquisition related deferred compensation expenses of $2.1 million, and $2 million related to previously announced plant closures. These expenses add up to $0.11 per share after tax, Rock-Tenn expense $.2.4 million pre-tax or $0.04 per share after tax, and cost to retire the Salt Lake [inaudible].

This cost was funded by the Southern Container shareholders. We incurred $1.3 million pre-tax or $0.02 per share after tax in operating losses, primarily in connection with the previously announced closure of our folding carton plant in Baltimore.

After these adjustments of $0.17 a share, Rock-Tenn reported $0.96 in adjusted EPS, a $0.45 improvement over the $0.51 in adjusted EPS reported last year. For calendar year 2008, we earned $2.47 per share and $3.22 per share on an adjusted basis.

Southern Container added approximately $0.42 per share to earnings for the quarter and $0.94 per share to earnings for the ten months we've owned Southern Container since March of 2008. At the time of the acquisition, we anticipated $10 million in annual synergies.

We subsequently raised that number to $15 million during our April conference call. We have achieved an annual run rate of synergies in excess of $10 million and continue to expect to achieve $15 million during this fiscal year.

Turning to working capital, we added $9 million to inventory in the quarter. This is primarily board in our consumer packaging and corrugated packaging converting plants and is a normal seasonal pattern in our business.

Outstanding receivables declined by $34 million. Paid sales outstanding were between 35 and 36 days, the same as the September quarter.

Given current economic conditions, we increased our bad debt reserve by $2.5 million during the quarter. Capital expenditures for the quarter were $14 million, below depreciation and amortization of $38 million.

We have reduced our planned capital expenditures for fiscal year 2009 by $10 million. We expect to invest $80 million, possibly $85 million back into our business in capital expenditures in fiscal year 2009, below our full year depreciation and amortization expense of approximately $152 million.

For fiscal year 2009, we expect booked pension expense, including the expense associated with multi-employer plans to be approximately $18 million, as compared to our $9 million expense last year and an average expense of $15 million during the two fiscal years prior to last year. We expect to contribute $26 million to our pension plans in fiscal year 2009, this compares to our $16 million contribution last year and average contributions of $21 million during the two fiscal years before that.

We reduced net debt during the quarter by $33 million, making a total reduction of $184 million for the nine months since the March quarter when we acquired Southern Container. We have reduced our debt to EBITDA leverage ratio from 4.2 times at the time we closed the Southern Container acquisition, to 3.5 times at December 31, 2008.

This moves us closer to our goal of 3 times by September 2010. The current portion of long-term debt at the end of December was $192 million.

The $192 million includes $140 million from the receivables securitization facility that extends through September 1 of this year, and $52 million that is mostly amortization of the term loans under our senior credit facility. Rock-Tenn's next significant security is $250 million of public notes due in August 2011.

For the month of December, we incurred interest expense of $8.2 million; this is an annual run rate slightly less than $100 million in interest expense. Of Rock-Tenn's $1.6 billion in debt as of September 31, fixed interest rates apply to $1.1 billion or 69% of the total.

Floating interest rates apply to approximately $500 million or 31% of the total. Of the $500 million in floating rate debt, about $200 million a [live] lower floor of 3%.

During the quarter, we funded the redemption of $129 million in debt at Solvay Paperboard and paid $69 million to the stockholders of Southern Container to reimburse them for the taxes they will incur as a result of the Section 338 (h)(10) election we agreed to make as part of the acquisition. At the end of the quarter, Rock-Tenn had borrowed $132 million under our $450 million revolving credit facility.

Rock-Tenn had approximately $282 million in availability under our senior credit facility as of the end of December. This provides us with very good liquidity for our business.

Jim will now discuss our operating results and outlook, Jim.

Thank you, Steve and good morning. Our employees again delivered excellent results; the most remarkable aspect was the strong margin improvement for Rock-Tenn.

Overall, EBITDA margins increased to 17% and that's up to the 14, 15% range that we disclosed pro former to the acquisition of Southern Container in March, and 12% pre-acquisition. These excellent margin gains and improvements are a function of the cost structure improvements that we've achieved across our businesses and the positioning of our company, primarily as a result of the two major acquisitions in the last three years of the Gulf State's Assets and Southern Container.

As we outlined in our press release, Southern Container contributed $0.42 per share to adjusted earnings in the quarter and $0.94 since we acquired this great business. The business has outperformed our expectations really in every way.

For example, for the calendar year 2008, and recall they were a calendar year company, we looked at them on that basis in connection with the acquisition, Southern Container's Box Plant volumes increased 6% in a declining market. Their graphics corrugated plant sales increased 21% and that's very significant because of the high value associated with graphics corrugated sales and our view that that's an area that we can develop within their business, and the result of all of that was that the converting plant profits doubled over the prior year.

Our Solvay Container Board Mill volumes also increased 2% year-over-year. Even in the difficult December quarter we outperformed the industry based on all the data we've seen so far.

In the December quarter, our box plant volumes were off 5% compared to the prior year quarter and our container board tons shipped were down a little less than 2% over the prior year quarter. We did see the steepest declines in the quarter during the month of December and we curtailed significant container board volume in December as we matched our out output to customer demand.

But our record results are also attributable to the outperformance of our folding carton business. Although physical volumes were down 5% in folding cartons over the prior year quarter, our consumer product segment earnings were up, as were the operating earnings of our folding carton plants.

In fact, those plants, in a quarter in which volumes were down 1% over the prior year quarter, we actually exceeded our targeted rate of return on sales of folding cartons of 5%. Again remarkable, as this is our worst quarter for seasonal sales.

In this business, we continue to make strides in improving the folding carton plant operations and their performance and to capitalize on the significant operating synergies that we've achieved from the 2005 Gulf States acquisition. During the quarter, our display sales were weaker as demand for promotional displays declined and our specialty paperboard volumes were down due to lower demand, particularly in the month of December, and I'll discuss both of those in somewhat more detail in a moment.

The margins in our businesses also benefited from higher pricing and lower cost, primarily for recycled fiber and energy. Our prices in the quarter were up for all our paperboard grades, except for pulp, and of course, actual physical sales of recycled fiber in our trading business.

This was a result of 2008 price increases and our prices were up in the first quarter over the September 2008 quarter again, with almost all of our lines except again, for a decline in pulp and recycled fiber pricing and a very slight decline in the pricing for folding cartons that I can't attribute to anything except for perhaps mix. The December gains over the 2008 fourth quarter mainly reflect deferred accretion of price increases as contracts roll over or adjust under their terms.

Prices for recycled fiber declined sharply, as you know, with Chicago OBM averaging for us $48 a ton over the quarter, versus $112 a ton for the prior year quarter and $105.50 for the full fiscal year. Today, Chicago OBM is $20 per ton and Buffalo is $25 per ton, so we expect to see lower fiber costs this quarter as well.

Natural gas currently trades at $4.50 an Mcf versus an average of $6.94 for the December quarter and $9.04 for the September '08 fiscal quarter as we've disclosed. We consume approximately 9 Bcf of natural gas equivalent per year and as a matter of considered policy, we don't hedge away material portions of our natural gas exposure.

So $1 per MCF reduction in natural gas costs is a $9 million annual change for us. My expectation is that our investors and analysts would like as much detail on volume patterns during and after the quarter and for the current months as we can provide, so I'll address that in some detail now.

The overall picture for the December quarter was down of course; however, the pattern over the course of the quarter was not uniform. For example, folding carton volumes, off 5% for the quarter, were actually higher in the month of December, whereas coded recycled paperboard volumes, particularly sales to independent converters were off significantly in December beyond our normal seasonal expectations.

Bleached paperboard volumes on the other hand were up 6% quarter-over-quarter. First, unlike coated recycled paperboard, we took no economic downtime in bleached paperboard, although we did take a three day mini-outage in the quarter as we moved to an 18-month major outage schedule as we discussed in our last call, whereas if you compare the shipping rates to the prior year September quarter we took the major annual outage in that quarter.

So it somewhat affects the quarterly comparison and I'll actually come back to that point. Container board demand and box volumes were off really pretty sharply for us in the month of December, making the full quarter decline about 5% over the 2007 quarter.

On the other hand, like folding cartons, display volumes were weaker in October and November, but they strengthened during the month of December. Turning to the month of January, the month got off to a clearly weak start as January typically does.

As we come off our weak December quarter and the holiday shutdowns of so many of our customers. However, the later part of the month had some tightening that we've seen in some of our markets.

In folding cartons, our January volumes are a little lower than the prior year and currently we'd project sales to be about 2% lower than last January for the month, and while shipments for coated recycled paperboard for January will be lower as we continue to take economic downtime early in the month, the backlogs today for coated recycled paperboard are basically back to where they were before September when volumes started to decline significantly. Our bleached paperboard backlogs are down from historical levels, but that's partly a result of not taking the major outage in the December quarter as I mentioned, which effectively increased our production in our seasonally weakest quarter.

And in any case, with the very large shore position in bleached paperboard that we have in our folding carton business, keeping our Demopolis Mill should not be a problem. Keeping it full won't be a problem.

Container board and box plant shipments will be down from last January, but again we've seen some strengthening in the last week or so. Here, the cost structure of our container board mills, which are 100% recycled, matches up very well with the current environment where lower costs to recycle fiber allow us to remain very profitable, while curtailing production to meet customer demand.

Demand in our display business appears within normal levels for this season, continuing the trend established during the month of December. Our specialty paperboard mills present a mixed picture.

The part of this business that has industrial end markets such as tubes and cores are still quite weak. On the other hand, the largest end market for that specialty mill business is solid fiber partitions for food and beverage glass packaging.

Demand for partitions was very low last quarter and at the beginning of the December as we anticipated as our customers took several planned major plant outages, but in late January, we're seeing normal seasonal patterns and then of course in the segment our gypsum liner board mill that contractually sold out to our joint venture partner and continues to perform quite well. The area where we have the least visibility is on pricing in the marketplace.

Transaction pricing is most recently down on the January publications, $10 per ton on container board and recycled paperboard and its flat on bleached paperboard. In the marketplace, we're seeing some inconsistent behavior and some discounting.

But again, given our large exposure to recycled fiber and natural gas and the low-cost position of our mill system, we have a good bit of cushion and we believe that cushion will allow us to continue to generate strong earnings and cash flow in the current economic climate. We don't think that the economic climate that we've seen, including possible developments in the marketplace, should impair our ability to meet our view that we will be able to reduce debt by approximately $200 million this year.

That concludes our prepared remarks and Steve and I will welcome questions.

Just a couple of questions. One, just looking at the Southern Container acquisition, which is nicely accretive in the quarter, as I look at the $0.42 in the December quarter and compare it to the $0.29 of accretion items that you had in the prior quarter, now was most of that due to lower OCC or are there other things going on as we think about that business?

Primarily OCC pricing.

Okay, and do you have much of an outlook for OCC as we think about it through 2009?

It’s very weak now but we’re seeing some strengthening on the ports, but I think it’s primarily going to be a function of demand in China and that in turn may be a function of the US demand for imported products. So I don’t see it strengthening terrifically in the short term, but as you move out beyond three to six months it gets very hard to see.

Okay, and then if you could just maybe talk a little bit about the bleached board business as well? I was curious there where things are from a price cost perspective.

You didn’t really comment much on wood costs and if you could provide just any color on what you’re seeing on the cost side there and then also on the pricing side as well.

Yes, I think costs for virgin manufactures of all grades are not seeing what we’re seeing on the recycled side. Our fiber costs into our bleached board mill were up significantly in our fourth quarter over the third quarter.

I’m not confident that there aren’t some just sort of inventory accounting issues moving through there and part of the reason is that in this season the wood comes in wetter and there for your yield is less, so its very hard to compare the actual price per ton based on what you’re paying at the gate. We haven’t seen gate wood prices increase in the December quarter over the September quarter, and in fact we think we’re going to see them come down, although, as I mentioned yields are down.

So you’re seeing no significant price relief in hardwood, and in our markets, in softwoods although they may soften a little bit. The other thing is your significant user of caustic soda in the pulping process and unlike all other commodity charts that I’ve seen, which look like Mt.

Everest on both sides, this one just looks like the upside, it has not come down. So those costs are significant and that’s also true with coating chemicals and so forth.

Transportation fuels, on the other hand, and fuel for energy are coming down. So I think that the bleached board business is not going to perform as well as it would have performed last year because of our low cost structure and our integration it’s going to run full and it’ll be profitable but that business is not benefiting us as the recycling businesses are.

Okay thanks, and then just two more. One, I wondered if you just had a volume number for the specialty paperboard business in the quarter and then if you could just give some tax rate guidance for 2009 that would be helpful.

Yes, I don’t have reliable data across specialty paperboards because you’ve got four different product segments there so the number is not that meaningful but it was down significantly, as I say, in the industrial markets and for special reasons in the partition business. And Steve, regarding the effective tax rate?

Our marginal rate is 37% overall, we do earn R&D tax credits but I’d use between 35% and 36% overall effective rate.

Just wanted to follow-up on the cost difference between production by the craft process as opposed to recycle process. I think you’re saying that under current conditions the recycled mills have a significant advantage, and if that’s true, I’m wondering if you see any price difference developing or if there’s any customers asking for discounts on recycled container board as opposed to craft.

Really in the course in the building carton business in all of our mills rather than container board, the answer to that question is they just price differently. There may be some relationship to the price but you couldn’t correlate them based on what might be happening in the marketplace today.

In container board I’ve read some of the things that you’ve read about price differentials but we have not seen it. The quality of our paperboard is such that it simply trades one for one with virgin and the vast majority of it we sell under either through our box plan or trade with outside customers and I can’t contribute to the discounting in the marketplace that we’re seeing for independence that’s necessarily for one reason or another.

It seemed like; you as well as other industry players, exercised good discipline in recent months in terms of matching production to demand, but given the fact that margins are very healthy in recycled container board, to what extent do you have any temptation, Jim, to run full and try to take market share in an environment like this?

Well we’ve been pretty consistent, I think, in our approach to our business and focusing on margin, which may answer your question, but beyond that comment and with respect to our price strategy, as you know, I am unable to do that.

Okay, that’s fair, but from a [big kicker’s fence], it seems like the behavior of the industry overall is a little bit different from what many of us would have expected given the sharp decline in demand. It seems like the industry overall is taking a lot more downtime, and I’m wondering if you see any structural factors that would explain that.

Well container board is far more consolidated than it would have been in 2000 or in 1994. CRB is much more consolidated, so you do have consolidation but we’ve talked about this factor before, the companies are basically run by different people today, and the arithmetic of taking down time versus cutting the prices across all of your production is so compelling that it may be the people who have actually done the math and the conclusion from that is really pretty obvious.

Okay, in the marketplace right now there seems to be quite a bit of speculation that in container board, inventories might have dropped pretty sharply in December, given how low production was and we’re getting a lot of data points that at least on a month-over-month basis, shipments in December were okay. First of all, I’m wondering whether based on Rock-Tenn’s experience, if that would seem likely, and also I’m wondering if that a similar thing might be happening in CRB, because CRB production was very low in December as well and I think you said that folding carton volumes were okay in December.

Yes, our folding carton volumes had been okay in December and January. In CRB there’s so little inventory, that I don’t think that you can really look at it and you don’t’ have the data the way that you have data regarding container board inventories, but I have seen the data that you’re seeing, but given our relatively small size relative to the market, I don’t know that our experience would confirm or really deny what you’re seeing in a much larger marketplace.

That’s fair. All right, thanks for your help.

A couple of questions, you're bringing your CapEx down, is that now where you’re at, is 80 to 85, is that a normal level and it was just elevated last year because of the Solvay expansion project?

Our capital expenditure process Josh, is really a dynamic process where we’re evaluating market opportunities and we’re evaluating customer needs, and then we’re looking at opportunities to reduce cost. Our long term trend was very heavy investment in the first half of the decade in our businesses which was very necessary and then after that a trend of reducing CapEx.

I think the current environment has made us cautious about growth projects, which is the primary driver in the reduction of CapEx, but I think as we discussed, if we really went to a maintenance CapEx level, it would be significantly lower than the $85 million that we anticipate spending next year.

What is that maintenance level?

Well it’s very hard to come up with a maintenance level, but I think we could run the business on $40 million. People would be very unhappy, but we could run it for a long time on $40 to $45 million.

Okay, that’s a good answer. Then going back to the box side of the equation, how much of the box price increased increase from the August initiative have you realized to date, and how much did you realize in the fourth quarter?

The price increase that went through which was the July, August price increase, we realized what we’re going to get substantially. There may be a tail and some contracts, but that one's substantially through.

Would it be more, would the box side be more then $55?

If we passed it through fully there’s probably some noise. I don’t know that we significantly increased the recovery in the box plant over the underlying board.

Could you give us a sense of how much of that came in the fourth quarter?

I believe we had it in the fourth quarter. Sorry my answer wasn’t clear, but I believe it was – what we had you saw in the fourth quarter, for the full quarter.

Meaning you had it fully implemented by October 31st and it just rolled over, or how should I interpret what you just said?

What I’m saying is when it went through in July and August, it went through. So when you run the quarter from September 30 on, we had substantially all of what we were going to get.

On the box side?

Yes.

Oh wow.

We have some contracts which will have a tail, but I don’t expect further significant price increase beyond what you saw in the quarter.

Okay and that was sort of part of my next question. What percentage of your business in the boxes is tied to a January 1 or beginning of the year time frame for rolling over?

It’s not significant, relative to other periods. The contracts are simply based on when they’re entered into; they’re not keyed typically into a calendar year.

Okay and just so I’m clear on the question you gave, I think Chris a second ago, on the recycled side of the business, you did not experience discounting like pulp and paper we talked about, because you’re a higher quality board. Would that be correct?

Yes. Chris’ question basically said, “Are we seeing price pressure to reduce our medium, or liner that’s recycled relative to virgin pricing?”

And my answer was that we were not, we may have been seeing pressure but we were not. Our liner and medium meet specifications of virgin liner and we simply sell it at price equality.

Okay, and so then my last question, how are you tied in –are your contracts tied into pulp and paper weak or official board markets those indexes? And how would we expect that to roll through?

The majority of our contracts outside of our box plans are with other independent producers under trade agreements, and those simply follow the published indexes, so you’d expect to see it roll through at the mill level, and then the question is how do you recover it in the box plant? And our contracts they contain a range of provisions which either provide for either relative immediately full recovery, in some cases will move up or down by a percentage of the increase and in other cases there is some delay.

But substantially all of our business is going to move with the market, regardless of whether it’s under contract or not.

Okay and so we’ve seen as you said $20 off of liner board, $30 off of medium. Is that – that’s enough to trigger the contracts to change?

Yes, typically you’re going to see that pass through relatively rapidly and fully with respect to our business.

Great, well thank you very much for your answers.

I wonder if you’d just talk a little about the March quarter here and maybe a little bit from a volume expectation standpoint. I guess we’re generally thinking that with some of the weakness we saw in the fourth quarter, we kind of mirror those trends in the first quarter, although you indicated some differences like in the display business being Okay in December, o maybe just some general context on an overall basis.

Bill, January was a weak month relative to typical January’s. The end of January was showing some strengthening so I don’t think the large quarter overall can be a terrific quarter because I’m not expecting any rebound.

Ultimately, I cannot see our businesses diverging greatly from GDP. I mean our consumer products business, our folding carton business, and the bleached board and the recycled mills except for the small piece of business we got in uncoated, primarily are in food, beverage, consumer non-durables, personal care and the like.

And I just don’t understand how that can vary significantly from GDP over the long term. Similarly, our containerboard business in the universe of containerboard and corrugated packaging producers has a heavy orientation again to food, beverage, personal care items, home items, other consumer non-durables and consumer products.

And as I mentioned, the business grew 6% last year. I’m very familiar with where that grew and it is primarily in personal care, home care items, and again that large percentage of that business which is more then 2/3 of the business, I just don’t see how that can diverge that materially from either GDP where our businesses have typically been GDP minus because of the effect of imports, and there’s lots of data out there, or on their very tight correlation to food and consumer non-durables.

So my view is I don’t know whether it’s going to be February, March, April or whenever, but ultimately whatever is happening to the inventory chain and to household stocking is going to start looking like GDP, and you can have your own view on what GDP is going to do. I personally don’t consider myself an expert, but most of the stuff that I see suggest that you’re going to see 1 to 2% negative GDP for the year, for the full year.

And that seems reasonable to us so you’d not expect the consumer packaging business to look like that and the corrugating package business to look a little worse then that, so when it occurs is difficult. The other thing you’re going to see particularly with consumer packaging business is that as consumers are under pressure, yes they conserve, but as much as conserving they actually tier down their purchases.

So a purchase of a premium personal care item becomes tiered down to the next, or maybe two levels lower product and while that is not good in terms of dollar GDP growth and it is difficult on a consumer products company who faces that customer shift, I think our paper board mills are pretty indifferent with respect to the product category in terms of tearing that we sell to. So again I think again that drives us to correlate closer to GDP then perhaps a lot of other businesses.

But again, I don’t think the March quarter is going to be a great quarter by any means, but our cost structure is going to mediate that, but a great quarter. I mean if December was a good quarter I guess it’s not a bad quarter, but I think that you won’t see significant growth in that quarter, it might look very much the same and then as you go through the balance of the year economic factors are really going to predominate.

Sure, and that was very helpful. And a question for Steven, I wonder if you could just help us a little bit with some of the cash movements in the quarter where you paid the cash to the sellers, note was reduced, some of the Solvay bonds were refinanced, and it looks like you rolled enough into the revolver, but I can’t quite tie all the pieces together.

I think there was another additional source of cash or capital from borrowings.

We financed, we paid off the $69 million in the 338(h)(10) election and we paid off the Solvay bonds, and between the cash flow from the business and borrowings under the revolver and our receivable securitization, we were able to fund that. I’m not sure if that answers your question.

There’s also cash on the balance sheet that we returned to the shareholders.

I guess that where I was just targeting was the revolver balance and the A/R facility balance, just so we get a sense of where they are at this point.

Now the revolver balance is $132 and the securitization balance is $140.

In cash?

In cash was a [fault nine].

What effects will the [Smertzer] filing have on you guys since it's a small loan, whether it’s pricing or market share or whatnot, if any?

Yes, I don’t have a view that I can express on that. I appreciate your question.

Thank you very much for joining our call.