Graphic Packaging Reports Earnings, Record Sales, Lower Debt in First Quarter

Apr 24, 2001, 01:00 ET from Graphic Packaging International Corporation

    GOLDEN, Colo., April 24 /PRNewswire Interactive News Release/ -- Graphic
 Packaging International Corporation (NYSE:   GPK), a leading manufacturer of
 folding cartons primarily for food and beverage consumer products companies,
 today reported net income attributable to common shareholders for the first
 quarter 2001 of $1.2 million ($0.04 per diluted share), compared with a net
 loss of $3.5 million ($0.12 per diluted share) in the first quarter 2000.
 
     Record Sales in a Flat Market
     Net sales for the quarter were a record $288 million, an increase of 4.4%
 compared to the first quarter of 2000, and 7.0% compared to the fourth
 quarter.  The increase was driven by additional volume of value-added cartons.
 Sales were up 8.2% over the 2000 first quarter when adjusted for the sale of a
 plant in October 2000.
     CEO Jeffrey H. Coors, commenting on the results, said, "We are pleased
 with the strong sales this quarter, particularly in light of soft demand in
 the industry.  As you know, we have always placed emphasis on listening to
 customers and meeting their needs through technological solutions.  We are
 excited that part of the sales increase is due to the recent successful
 introduction of several new and innovative cartons."
 
     Debt Reduced by Nearly $8 Million
     Jeff Coors continued, "Our focus on cash flow, and the optimization and
 restructuring programs initiated last year are also bearing fruit, as
 demonstrated by a two point increase in the gross margin percentage.  These
 were major contributors to our continued success in debt reduction."  The
 Company reduced total debt by $7.6 million in the quarter, accomplished
 despite an increase in working capital to fund the increase in sales.  Reduced
 debt and a lower interest rate have resulted in a $3.6 million decrease in net
 interest expense in the quarter compared to the first quarter of 2000.
 
     Operating Margin Improved
     The first quarter's operating margin, before non-recurring items, improved
 to 7.1% compared to 4.3% in the first quarter of 2000.  The margin has shown a
 positive trend since the acquisition of the Fort James folding carton business
 in August 1999.  This quarter's increase results from strong sales volume,
 benefits from last year's system-wide optimization and restructuring
 activities, and improvements at the Golden, Colorado plant.  Margins are still
 under pressure from rising energy-related costs.
     The quarter's asset impairment and restructuring charges of $2.0 million
 are for severance for a reduction in the workforce, announced in December
 2000, and for the write-down in value of a closed facility.  The $3.6 million
 gain on the sale of assets relates to a former developmental business.
     Jeff Coors concluded, "This has been a reassuring quarter -- we are seeing
 some tangible results from 18 months of reorganization; our customers continue
 to show their confidence in our capabilities; and we have further reduced
 debt."
 
     Conference Call
     A conference call has been scheduled for today, April 24, at 4:00 pm ET,
 when management will discuss the first quarter's results.  All interested
 persons are invited to participate.  To connect, please call 800 874 9003
 (international calls: 706 634 2401) and ask for the Graphic Packaging
 conference.  A replay will be available from 8:00 pm ET, April 24, until
 7:00 pm ET on May 1.  Please call 800 642 1687 (international calls:
 706 645 9291) and give passcode 354055.
 
     Forward Looking Statements
     Some statements in this release are forward looking and so involve
 uncertainties that may cause actual results to be materially different from
 those stated or implied.  Specifically, a) revenue for 2001 might be reduced
 because customers experience lower demand, find alternative suppliers, or
 otherwise reduce their demand for our products, or because the Company, as a
 result of plant closures, is unable to efficiently move business or to qualify
 that business at other plants; b) the Golden, Colorado plant might continue to
 have technical and other challenges and therefore not be able to achieve
 planned throughput and efficiency; c) margins might be reduced due to market
 conditions for products sold and due to increases in operating and materials
 costs, including energy-related costs, recycled fiber and paperboard; d) the
 future benefits of restructuring, reorganization, integration, cost reduction
 and optimization to be realized are uncertain because of possible delays and
 increases in costs; e) the ability to further reduce working capital is
 dependent in part on customers' order and inventory levels, credit taken by
 them, and on suppliers' terms; f) capital expenditures might be higher than
 planned due to unexpected requirements or opportunities; g) debt may not be
 reduced due to lower than expected free cash flow; h) the Company may be
 exposed to higher than predicted interest rates on the unhedged portion of its
 debt and on any new debt it might incur; i) if the Company is unable to meet
 the financial terms of its senior debt, including the refinancing of a portion
 of its senior debt with subordinated debt, it could be subject to higher
 interest rates or possible default; and j) the Company might not meet its
 estimates for 2001 as a result of higher integration costs following the
 transfer of production within the system, market conditions for pricing
 products, higher production costs, higher than predicted interest rates, and
 other business factors.
 
 
                  Graphic Packaging International Corporation
                         Consolidated Income Statement
                     (in thousands, except per share data)
 
                                                        Three Months Ended
                                                     March 31       March 31
                                                       2001           2000
 
     Net sales                                       $288,444       $276,320
 
      Cost of goods sold                              248,210        243,424
 
     Gross profit                                      40,234         32,896
 
      Selling, general and administrative expense      14,489         15,777
      Goodwill amortization                             5,169          5,184
      Asset impairment and restructuring charges        2,000          3,420
 
     Operating income                                  18,576          8,515
 
      Gain on sale of assets - net                      3,650          5,407
      Interest expense - net                          (16,125)       (19,680)
 
     Income (loss) before income taxes                  6,101         (5,758)
 
      Income tax (expense) benefit                     (2,420)         2,302
 
     Net income (loss)                                  3,681         (3,456)
 
     Preferred stock dividend declared                 (2,500)            --
 
     Net income (loss) attributable to
      common shareholders                              $1,181        ($3,456)
 
     Net income (loss) attributable to
      common shareholders per basic share               $0.04         ($0.12)
 
     Net income (loss) attributable to
      common shareholders per diluted share             $0.04         ($0.12)
 
     Weighted average shares outstanding - basic       30,951         28,664
 
     Weighted average shares outstanding - diluted     31,476         28,664
 
 
                  Graphic Packaging International Corporation
                          Consolidated Balance Sheet
                                (in thousands)
 
                                                     March 31     December 31
                                                       2001          2000
 
     ASSETS
     Current assets:
       Cash and cash equivalents                       $4,238         $4,012
       Accounts receivable                             85,497         75,187
       Inventories                                    106,211        105,228
       Other assets                                    32,539         31,634
        Total current assets                          228,485        216,061
 
     Properties, net                                  472,973        480,395
     Goodwill, net                                    575,149        580,299
     Other assets                                      45,624         54,695
 
     Total assets                                  $1,322,231     $1,331,450
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
 
     Current maturities of long-term debt             $61,000        $58,500
     Other current liabilities                        117,753        118,248
        Total current liabilities                     178,753        176,748
 
     Long-term debt                                   566,550        576,600
     Other long-term liabilities                       62,790         62,951
        Total liabilities                             808,093        816,299
 
     Shareholders' equity                             514,138        515,151
 
     Total liabilities and shareholders' equity    $1,322,231     $1,331,450
 
 
                  Graphic Packaging International Corporation
                     Consolidated Statement of Cash Flows
                                (in thousands)
 
 
                                                        Three months ended
                                                     March 31       March 31
                                                       2001           2000
 
     Cash flows from operating activities:
      Net income (loss)                                $3,681        ($3,456)
      Adjustments to reconcile net income (loss)
       to net cash from operating activities:
       Asset impairment and restructuring charges       2,000          3,420
       Gain on sale of assets                          (3,650)        (5,407)
       Depreciation and goodwill amortization          20,154         21,437
       Amortization of debt issuance costs              1,950          2,135
       Change in current assets and current
        liabilities and other                         (10,700)       (36,500)
     Net cash provided by (used in) operating
      activities                                       13,435        (18,371)
 
     Cash flows from investing activities:
      Proceeds from sale of assets                      3,650          5,596
      Collection of note receivable                        --        200,000
      Capital expenditures                             (6,679)        (8,968)
     Net cash (used in) provided by investing
      activities                                       (3,029)       196,628
 
     Cash flows used in financing activities          (10,180)      (190,037)
 
     Cash and cash equivalents:
      Net increase (decrease) in cash and
       cash equivalents                                   226        (11,780)
      Balance at beginning of period                    4,012         15,869
      Balance at end of period                         $4,238         $4,089
 
 
                  Graphic Packaging International Corporation
                          Supplemental Financial Data
                     (in thousands, except per share data)
 
                             2001                       2000
                            First      Fourth      Third     Second    First
                           Quarter     Quarter    Quarter   Quarter   Quarter
                           Mar. 31     Dec. 31    Sep. 30   June 30   Mar. 31
 
     Net Sales            $288,444    $269,627  $283,454   $273,189  $276,320
 
     Operating income      $18,576      $9,333   $18,728    $14,647    $8,515
      Asset impairment
       and restructuring
       charges               2,000       2,200        --         --     3,420
      Operating income
       excluding asset
       impairment and
       restructuring
       charges             $20,576     $11,533   $18,728    $14,647   $11,935
 
     Depreciation &
      goodwill
      amortization         $20,154     $19,634   $20,701    $21,321   $21,437
 
     EBITDA, excluding
      asset impairment
      and restructuring
      charges and gain
      on sale of assets    $40,730     $31,167   $39,429    $35,968   $33,372
 
      Net income (loss)     $3,681      $1,000     ($281)   ($4,261)  ($3,456)
      Asset impairment
       and restructuring
       charges, net of tax   1,200       1,320        --         --     2,052
      Gain on sale of
       assets, net of tax   (2,190)     (6,825)   (1,443)        --    (3,244)
      Net income (loss)
       before nonrecurring
       items                $2,691     ($4,505)  ($1,724)   ($4,261)  ($4,648)
 
      Net income (loss) per
       basic share before
       nonrecurring items    $0.09      ($0.15)   ($0.06)    ($0.15)   ($0.16)
 
                     MAKE YOUR OPINION COUNT -  Click Here
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SOURCE Graphic Packaging International Corporation
    GOLDEN, Colo., April 24 /PRNewswire Interactive News Release/ -- Graphic
 Packaging International Corporation (NYSE:   GPK), a leading manufacturer of
 folding cartons primarily for food and beverage consumer products companies,
 today reported net income attributable to common shareholders for the first
 quarter 2001 of $1.2 million ($0.04 per diluted share), compared with a net
 loss of $3.5 million ($0.12 per diluted share) in the first quarter 2000.
 
     Record Sales in a Flat Market
     Net sales for the quarter were a record $288 million, an increase of 4.4%
 compared to the first quarter of 2000, and 7.0% compared to the fourth
 quarter.  The increase was driven by additional volume of value-added cartons.
 Sales were up 8.2% over the 2000 first quarter when adjusted for the sale of a
 plant in October 2000.
     CEO Jeffrey H. Coors, commenting on the results, said, "We are pleased
 with the strong sales this quarter, particularly in light of soft demand in
 the industry.  As you know, we have always placed emphasis on listening to
 customers and meeting their needs through technological solutions.  We are
 excited that part of the sales increase is due to the recent successful
 introduction of several new and innovative cartons."
 
     Debt Reduced by Nearly $8 Million
     Jeff Coors continued, "Our focus on cash flow, and the optimization and
 restructuring programs initiated last year are also bearing fruit, as
 demonstrated by a two point increase in the gross margin percentage.  These
 were major contributors to our continued success in debt reduction."  The
 Company reduced total debt by $7.6 million in the quarter, accomplished
 despite an increase in working capital to fund the increase in sales.  Reduced
 debt and a lower interest rate have resulted in a $3.6 million decrease in net
 interest expense in the quarter compared to the first quarter of 2000.
 
     Operating Margin Improved
     The first quarter's operating margin, before non-recurring items, improved
 to 7.1% compared to 4.3% in the first quarter of 2000.  The margin has shown a
 positive trend since the acquisition of the Fort James folding carton business
 in August 1999.  This quarter's increase results from strong sales volume,
 benefits from last year's system-wide optimization and restructuring
 activities, and improvements at the Golden, Colorado plant.  Margins are still
 under pressure from rising energy-related costs.
     The quarter's asset impairment and restructuring charges of $2.0 million
 are for severance for a reduction in the workforce, announced in December
 2000, and for the write-down in value of a closed facility.  The $3.6 million
 gain on the sale of assets relates to a former developmental business.
     Jeff Coors concluded, "This has been a reassuring quarter -- we are seeing
 some tangible results from 18 months of reorganization; our customers continue
 to show their confidence in our capabilities; and we have further reduced
 debt."
 
     Conference Call
     A conference call has been scheduled for today, April 24, at 4:00 pm ET,
 when management will discuss the first quarter's results.  All interested
 persons are invited to participate.  To connect, please call 800 874 9003
 (international calls: 706 634 2401) and ask for the Graphic Packaging
 conference.  A replay will be available from 8:00 pm ET, April 24, until
 7:00 pm ET on May 1.  Please call 800 642 1687 (international calls:
 706 645 9291) and give passcode 354055.
 
     Forward Looking Statements
     Some statements in this release are forward looking and so involve
 uncertainties that may cause actual results to be materially different from
 those stated or implied.  Specifically, a) revenue for 2001 might be reduced
 because customers experience lower demand, find alternative suppliers, or
 otherwise reduce their demand for our products, or because the Company, as a
 result of plant closures, is unable to efficiently move business or to qualify
 that business at other plants; b) the Golden, Colorado plant might continue to
 have technical and other challenges and therefore not be able to achieve
 planned throughput and efficiency; c) margins might be reduced due to market
 conditions for products sold and due to increases in operating and materials
 costs, including energy-related costs, recycled fiber and paperboard; d) the
 future benefits of restructuring, reorganization, integration, cost reduction
 and optimization to be realized are uncertain because of possible delays and
 increases in costs; e) the ability to further reduce working capital is
 dependent in part on customers' order and inventory levels, credit taken by
 them, and on suppliers' terms; f) capital expenditures might be higher than
 planned due to unexpected requirements or opportunities; g) debt may not be
 reduced due to lower than expected free cash flow; h) the Company may be
 exposed to higher than predicted interest rates on the unhedged portion of its
 debt and on any new debt it might incur; i) if the Company is unable to meet
 the financial terms of its senior debt, including the refinancing of a portion
 of its senior debt with subordinated debt, it could be subject to higher
 interest rates or possible default; and j) the Company might not meet its
 estimates for 2001 as a result of higher integration costs following the
 transfer of production within the system, market conditions for pricing
 products, higher production costs, higher than predicted interest rates, and
 other business factors.
 
 
                  Graphic Packaging International Corporation
                         Consolidated Income Statement
                     (in thousands, except per share data)
 
                                                        Three Months Ended
                                                     March 31       March 31
                                                       2001           2000
 
     Net sales                                       $288,444       $276,320
 
      Cost of goods sold                              248,210        243,424
 
     Gross profit                                      40,234         32,896
 
      Selling, general and administrative expense      14,489         15,777
      Goodwill amortization                             5,169          5,184
      Asset impairment and restructuring charges        2,000          3,420
 
     Operating income                                  18,576          8,515
 
      Gain on sale of assets - net                      3,650          5,407
      Interest expense - net                          (16,125)       (19,680)
 
     Income (loss) before income taxes                  6,101         (5,758)
 
      Income tax (expense) benefit                     (2,420)         2,302
 
     Net income (loss)                                  3,681         (3,456)
 
     Preferred stock dividend declared                 (2,500)            --
 
     Net income (loss) attributable to
      common shareholders                              $1,181        ($3,456)
 
     Net income (loss) attributable to
      common shareholders per basic share               $0.04         ($0.12)
 
     Net income (loss) attributable to
      common shareholders per diluted share             $0.04         ($0.12)
 
     Weighted average shares outstanding - basic       30,951         28,664
 
     Weighted average shares outstanding - diluted     31,476         28,664
 
 
                  Graphic Packaging International Corporation
                          Consolidated Balance Sheet
                                (in thousands)
 
                                                     March 31     December 31
                                                       2001          2000
 
     ASSETS
     Current assets:
       Cash and cash equivalents                       $4,238         $4,012
       Accounts receivable                             85,497         75,187
       Inventories                                    106,211        105,228
       Other assets                                    32,539         31,634
        Total current assets                          228,485        216,061
 
     Properties, net                                  472,973        480,395
     Goodwill, net                                    575,149        580,299
     Other assets                                      45,624         54,695
 
     Total assets                                  $1,322,231     $1,331,450
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
 
     Current maturities of long-term debt             $61,000        $58,500
     Other current liabilities                        117,753        118,248
        Total current liabilities                     178,753        176,748
 
     Long-term debt                                   566,550        576,600
     Other long-term liabilities                       62,790         62,951
        Total liabilities                             808,093        816,299
 
     Shareholders' equity                             514,138        515,151
 
     Total liabilities and shareholders' equity    $1,322,231     $1,331,450
 
 
                  Graphic Packaging International Corporation
                     Consolidated Statement of Cash Flows
                                (in thousands)
 
 
                                                        Three months ended
                                                     March 31       March 31
                                                       2001           2000
 
     Cash flows from operating activities:
      Net income (loss)                                $3,681        ($3,456)
      Adjustments to reconcile net income (loss)
       to net cash from operating activities:
       Asset impairment and restructuring charges       2,000          3,420
       Gain on sale of assets                          (3,650)        (5,407)
       Depreciation and goodwill amortization          20,154         21,437
       Amortization of debt issuance costs              1,950          2,135
       Change in current assets and current
        liabilities and other                         (10,700)       (36,500)
     Net cash provided by (used in) operating
      activities                                       13,435        (18,371)
 
     Cash flows from investing activities:
      Proceeds from sale of assets                      3,650          5,596
      Collection of note receivable                        --        200,000
      Capital expenditures                             (6,679)        (8,968)
     Net cash (used in) provided by investing
      activities                                       (3,029)       196,628
 
     Cash flows used in financing activities          (10,180)      (190,037)
 
     Cash and cash equivalents:
      Net increase (decrease) in cash and
       cash equivalents                                   226        (11,780)
      Balance at beginning of period                    4,012         15,869
      Balance at end of period                         $4,238         $4,089
 
 
                  Graphic Packaging International Corporation
                          Supplemental Financial Data
                     (in thousands, except per share data)
 
                             2001                       2000
                            First      Fourth      Third     Second    First
                           Quarter     Quarter    Quarter   Quarter   Quarter
                           Mar. 31     Dec. 31    Sep. 30   June 30   Mar. 31
 
     Net Sales            $288,444    $269,627  $283,454   $273,189  $276,320
 
     Operating income      $18,576      $9,333   $18,728    $14,647    $8,515
      Asset impairment
       and restructuring
       charges               2,000       2,200        --         --     3,420
      Operating income
       excluding asset
       impairment and
       restructuring
       charges             $20,576     $11,533   $18,728    $14,647   $11,935
 
     Depreciation &
      goodwill
      amortization         $20,154     $19,634   $20,701    $21,321   $21,437
 
     EBITDA, excluding
      asset impairment
      and restructuring
      charges and gain
      on sale of assets    $40,730     $31,167   $39,429    $35,968   $33,372
 
      Net income (loss)     $3,681      $1,000     ($281)   ($4,261)  ($3,456)
      Asset impairment
       and restructuring
       charges, net of tax   1,200       1,320        --         --     2,052
      Gain on sale of
       assets, net of tax   (2,190)     (6,825)   (1,443)        --    (3,244)
      Net income (loss)
       before nonrecurring
       items                $2,691     ($4,505)  ($1,724)   ($4,261)  ($4,648)
 
      Net income (loss) per
       basic share before
       nonrecurring items    $0.09      ($0.15)   ($0.06)    ($0.15)   ($0.16)
 
                     MAKE YOUR OPINION COUNT -  Click Here
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 SOURCE  Graphic Packaging International Corporation