::The Center for Paper Business and Industry Studies::

061110 Deutsche Bank Report - Dr. Paper's Weekly Wrap up

Deutsche Bank - Equity Research

O-I's CEO & Chairman Steve McCracken is stepping down and being
replaced by H.B. Fuller C.E.O. Al Stroucken. Corporate priorities
remain unchanged: (1) recover cost increases, (2) integrate BSN
acq'n, (3) deleverage.

We'll be meeting Plum Creek, O-I, and Caraustar at their investor
meetings next week in NYC. PCL @ 8:30 A.M. Tue.; OI @ 8:00 A.M
Wed.; and CSAR @ 12:00PM Wed.

Rock-Tenn reported F4Q EPS $0.52 net specials. DB was @ $0.47 &
First Call @ $0.42. Better-than-expected result impressive
considering $0.04 negative impact from LIFO charge. Big surprise
was rebound in volatile Displays segment (+$7.8MM q/q).

061109 Deutsche Bank Report - McCracken Stepping Down

Deutsche Bank - Equity Research

O-I {Ticker: OI.N, Target Price: USD 25, Recommendation: Buy}.

O-I has announced that CEO and Chairman of the Board Steve McCracken
will be stepping down at the end of this month. McCracken joined O-
I from DuPont in 2004. A press release suggests that McCracken is
stepping down for personal reasons. This is not a large surprise.
In July, we learned that Steve McCracken had stomach cancer and
would be undergoing surgery and post-operative treatment. Although
McCracken's tenure at O-I was relatively short, he did help to
instill a greater financial rigor as well as tighter operating
discipline and a more global "one O-I" strategy.

Succession plans have been announced. In early October, OI- named
Rich Crawford president of Global Glass operations, a new position
in the company. On Wednesday, O-I announced that H.B. Fuller's CEO,
Albert Stroucken, will fill McCracken's seat. By all reports,
Stroucken appears a strong replacement and the
reengineering/deleveraging program that McCracken initiated.
Stroucken has nearly a decade of experience as H.B. Fuller's CEO.
During his tenure, Stroucken implemented Six Sigma, (a program
McCracken put in place at O-I,) achieved substantial productivity
savings, and began a very successful acquisition & consolidation
strategy. Stroucken is also given high marks for repositioning
commodity products in higher margin markets. At O-I, we think the
two top near-term priorities must be: (1) recovery of margin lost to
higher input costs over the past 2yrs, (2) successful integration of
O-I's BSN acquisition in Europe. Two and a half years in, BSN has
taken longer to integrate & rationalize and costs have been somewhat
higher than expected.

Meaning for O-I's stock? This looks like a timely & constructive
resolution to the questions raised by Steve McCracken's health
issue. We do think that issue had created uncertainty around the
stock. That uncertainty has been removed. We expect that the
change in leadership will set some internal initiatives back by
roughly 6 months as Stroucken assesses the situation and the
players. O-I will hold their annual investor day in New York on
November 15. We expect to meet Stroucken, but don't expect to learn
any details of potential changes in the corporate gameplan.

061107 Deutsche Bank Report - Rock-Tenn's Fiscal 4Q in 100 words

Deutsche Bank - Equity Research

Rock-Tenn {Ticker: RKT.N, Closing Price: USD 21.45, Target Price: USD 20.00, Recommendation: Hold}.

Better-than-expected. GAAP F4Q05 EPS = $0.57. Suggesting $0.56,
net of specials. Without adjusting for LIFO charge ($2.3MM), number
looks like $0.52. DB @ $0.47 & FC @ $0.42. Comps: F3Q06 = $0.30;
F4Q05 = $0.26. Pos: good operating qtr, nice rebound in Displays,
strong paperboard markets. Neg: some margin pressure in Pkg.

Packaging. Slight squeeze from higher paperboard costs. EBIT @
$11.6MM = -$1.6MM q/q, -$0.2MM y/y.

Merchandising Displays & Corrugated. Nice rebound. EBIT @ $10.4MM
= +$7.8MM q/q and +$3.3MM y/y. Display business often volatile.

Paperboard. Strong vol's in recycled (+8.5% y/y), 100% operating
rate @ Demopolis. EBIT @ $28.5MM = +$9.6MM q/q and +$11.5MM y/y.

Other: (1) Net debt down $41MM in F4Q and $87MM in FY06. Targeting
another $80MM reduction in FY07. (2) F1Q will be seasonally weak
and maint. outage will cost $8-10MM, but there should be significant
y/y improvement.

View? More positive on surprising strength in Merchandising
Displays. Consolidation & closures have tightened recycled boxboard
markets. However, broader economic trends suggest caution, and
stock appears fully valued. Maintain Hold. Boosting estimates
slightly: FY07 goes from $1.35 to $1.70 (F1Q = $0.15), and FY07 goes
from $1.50 to $1.80.

061106 Deutsche Bank Report - Dr. Paper's Pulse on Pricing

Deutsche Bank - Equity Research

CONTAINERBOARD
IP has joined Weyerhaeuser in announcing a $40/ton price hike for
January. The move may simply "shore-up" the market as we approach a
seasonally-slow period. Supply management is one key. Norampac has
shut its 300K tpy linerboard machine, and all major players appear
set to take significant market downtime in 4Q. Containerboard is at
a sensitive point. With the industrial economy easing (the latest
ISM reading was down 1.7pts to 51.2), box demand is likely to
flatten out.

LUMBER
The Random Lengths composite fell $7/mbf to $273/mbf last week.
Prices are slightly above the 10-yr low for the composite of
$265/mbf back in November of 2002. However, that low was reached at
about the same time the CN$ was at its low - - - suggesting that
mill nets at many CN mills are significantly lower today. The pace
of CN mill closures has accelerated in recent weeks with moves by
Abitibi, Domtar, and others.

PANELS
The structural panel composite fell $2/mbf to $252/mbf last week.
The benchmark grade of OSB (7/16" in the North Central region) was
flat at $168/mbf. We believe OSB is below "delivered cash cost" for
some mills - - - so, further shuts seem inevitable. Earlier this
quarter, LPX announced the indefinite closure of a 500K msf Quebec
OSB mill (pointing to wood, transportation & energy as well as CN$)
as well as increased market downtime. Kruger and Tembec also have
announced closures.