Exhibit 99.1
Graphic Packaging Announces First Quarter 2003 Results
Golden, CO, April 29, 2003 - Graphic Packaging International
Corporation (NYSE:GPK) announced today its financial results
for the first quarter of 2003.
First Quarter Highlights:
. Resolution of the six-month labor dispute at the
Kalamazoo facilities
. Purchase of the assets of J.D. Cahill Co.
. Signing a new four-year supply contract with Coors
Brewing
. Receipt of vendor excellence awards from Hormel,
Philip Morris and Lorillard
. Announcement of the intent to merge with Riverwood
Holding
The net loss attributable to common shareholders was $2.5
million ($0.08 per diluted share). The net loss
attributable to common shareholders was $0.3 million ($0.01
per diluted share) and $187.2 million ($5.79 per diluted
share) for the previous quarter and the first quarter of
2002, respectively. These results include a $15.8 million
loss on the early extinguishment of debt and a $180 million
cumulative effect of a change in goodwill accounting during
the first quarter of 2002, and $2.7 million of merger and
acquisition transaction costs expensed during the first
quarter of 2003 primarily associated with the previously
announced agreement to merge with Riverwood Holding and
other acquisition activities.
Excluding these non-recurring items, the net loss
attributable to common shareholders for the first quarter of
2003 was $1.0 million ($0.03 per diluted share) compared to
net income attributable to common shareholders of $2.4
million ($0.08 per diluted share) during the first quarter
of 2002.
Net sales for the quarter were $260.9 million, compared to
$260.2 million for the previous quarter and $263.7 for the
first quarter of 2002. Demand from major customers
continued to be weak during the quarter, reflecting the
general economic conditions in the United States. Sales were
softer in the first half of the quarter, and strengthened
significantly as the quarter continued.
Gross margin of 11.0% was down from 11.9% during the
previous quarter. The decrease in margin is primarily
attributed to temporary changes in business mix, and waste
and inefficiencies associated with introducing new business.
Mill-related energy costs for the quarter were higher by
$0.2 million and $0.5 million for the previous quarter and
the first quarter of 2002, respectively. Lower fiber costs
contributed $0.6 million compared to fourth quarter of 2002,
but were $1.8 million higher than the first quarter of 2002.
SG&A expenses were $16.7 million (6.4% of net sales), an
improvement of $1.0 million from the previous quarter, but
up $1.8 million compared to the first quarter of 2002. The
year-on-year increase is attributed primarily to additional
depreciation and other expenses associated with the
information systems that have been placed in service.
Interest expense continued to decrease due to lower interest
rates and the absence of unfavorable interest swap
agreements that were in place for most of 2002.
Working capital increased $3.5 million during the quarter.
The percent of current accounts receivable reached a record
89% at the end of the quarter. Inventories were up
significantly due to promotional business that must be
completed in whole before it is shipped and new business
that has temporarily required additional product to be on
hand. This was partially offset by continued diligence in
the management of accounts payable.
Net debt, defined as total debt less cash, increased $32.7
million during the quarter from $449.7 million to $482.4
million. Uses of cash included the purchase of the assets
of J.D. Cahill Co. for approximately $18.1 million, the
payment of semi annual interest of $12.9 million, and the
increase of working capital of $3.5 million. Capital
expenditures for the quarter were $4.5 million.
Commenting on the results, the company's Chairman and CEO
Jeffrey H. Coors stated, "Consumer demand for our customers'
products was unusually soft. However, we witnessed
improvement toward the end of the quarter and expect further
improvements as the markets gain more confidence. In
addition, the acquisition of J.D. Cahill Co. adds
significant capabilities in the value-added laminated
structures growth markets. The big news, however, is the
previously announced plan to merge with Riverwood that will
create a new leader in paperboard packaging with enhanced
financial strength and growth opportunities."
More information is available in the Company's filings with
the Securities and Exchange Commission. Those filings can
be accessed at the Company's website
www.graphicpackaging.com in the Investor Relations section.
Graphic Packaging is the leading manufacturer of folding
cartons in North America, supplying packaging for the food,
beverage, and other consumable product markets. The Company
operates one large recycled paperboard mill located in
Kalamazoo, Michigan, and has 19 modern converting plants and
3 research and design centers across the nation. Its
customers make some of the most recognizable brand-name
products in their markets.
Conference Call & Webcast
A conference call will be held today at 2:00 pm ET. All
interested persons are invited to listen. To connect, please
access the webcast through the Investor Relations section of
the Company's website www.graphicpackaging.com. If you are
unable to listen to the live conference, the webcast will be
archived on the website.
The conference call is also accessible by dialing 877-812-
1325 (international calls: 706-634-2401). Ask for the
Graphic Packaging Conference.
A replay will be available two hours after the call and
through May 6th. Please call 800-642-1687 (international
calls: 706-645-9291) and give the passcode 9290747.
Forward Looking Statements
Some of the statements in this release are forward looking
and involve uncertainties that may cause actual results to
be materially different from those stated or implied.
Specifically, a) plant closures, purchasing savings
initiatives, and cost reduction and efficiency programs,
such as Six Sigma, might not realize significant future
benefits, b) sales might be lower than expected due to the
economy, lower prices, customer inventory adjustments, and
losing customers or market share, c) margins and earnings
may be impacted due to competitive pressures, d) capital
expenditures may be more or less than projected and may not
be adequate to cover all possible business requirements, e)
the company's ability to generate cash flow may differ from
past performance and the cash that is generated may not be
used to reduce debt, f) future raw material pricing may
fluctuate and may not be as projected by management, g)
general economic conditions are unpredictable. Company
financial results may not improve as markets improve for
reasons given above, h) the merger with Riverwood Holding
may not result in a new leader in the paperboard industry or
improved financial strengths or growth opportunities due to
market conditions, customer response to the merger,
integration issues, and similar issues, i) the merger with
Riverwood Holding may not be completed if stockholders of
Graphic Packaging fail to approve the transaction, the
merger fails to meet regulatory requirements, or failure to
meet other conditions detailed in the merger agreement.
Investors are encouraged to read the proxy statement when it
becomes available.
Financial Statements and a Supplemental Financial Data
Schedule follow.
GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)
Three months ended
------------------------------------
March 31, December 31, March 31,
2003 2002 2002
--------- ------------ ---------
Net sales $260,883 $260,200 $263,724
Cost of goods sold 232,174 229,178 229,432
-------- -------- ---------
Gross profit 28,709 31,022 34,292
Selling, general and
administrative expense 16,668 17,733 14,887
Merger and acquisition
transaction costs 2,698 --- ---
-------- -------- ---------
Operating income 9,343 13,289 19,405
Interest expense (9,416) (9,581) (11,296)
Loss on early extinguishment
of debt --- --- (15,766)
-------- -------- ---------
Income (loss) before income
taxes and cumulative effect
of change in accounting
principle (73) 3,708 (7,657)
Income tax (expense) benefit 30 (1,460) 2,986
-------- -------- ---------
Income (loss) before
cumulative effect of change
in accounting principle (43) 2,248 (4,671)
Cumulative effect of change
in goodwill accounting,
net of tax of $0 --- --- (180,000)
-------- -------- ---------
Net income (loss) (43) 2,248 (184,671)
Preferred stock dividends
declared (2,500) (2,500) (2,500)
-------- -------- ---------
Net loss attributable to
common shareholders ($2,543) ($252) ($187,171)
======== ======== =========
Net loss attributable to
common shareholders per
basic and diluted share:
Before cumulative change
in accounting principle ($0.08) ($0.01) ($0.22)
Cumulative effect of
change in goodwill
accounting --- --- (5.57)
-------- -------- --------
($0.08) ($0.01) ($5.79)
======== ======== =========
Weighted average shares
outstanding - basic and
diluted 33,574 33,099 32,343
======== ======== =========
GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONSOLIDATED BALANCE SHEET
(in thousands)
March 31, December 31,
2003 2002
----------- ------------
ASSETS
Cash and cash equivalents $5,028 $28,626
Accounts receivable 74,068 63,546
Inventories 99,034 87,243
Other assets 21,328 21,686
---------- ----------
Total current assets 199,458 201,101
Properties, net 405,703 410,592
Goodwill, net 391,803 379,696
Other assets 28,564 29,477
---------- ----------
Total assets $1,025,528 $1,020,866
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current maturities of long-term debt $3,593 $3,432
Accounts payable 89,150 82,106
Other current liabilities 57,126 69,451
---------- ----------
Total current liabilities 149,869 154,989
Long-term debt 483,858 474,899
Other long-term liabilities 86,214 83,940
---------- ----------
Total liabilities 719,941 713,828
Shareholders' equity 305,587 307,038
---------- ----------
Total liabilities and shareholders'
equity $1,025,528 $1,020,866
========== ==========
GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
Three months ended
-----------------------------------
March 31, December 31, March 31,
2003 2002 2002
--------- ------------ ---------
Cash flows from operating
activities:
Net income (loss) ($43) $2,248 ($184,671)
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Depreciation 15,425 15,215 15,229
Amortization of debt
issuance costs 570 570 1,368
Loss on early
extinguishment of debt --- --- 15,766
Goodwill impairment charge --- --- 180,000
Change in current assets
and current liabilities
and other (23,605) 9,981 (13,027)
------- ------- -------
Net cash provided by (used in)
operating activities (7,653) 28,014 14,665
------- ------- -------
Cash flows from investing
activities:
Capital expenditures (4,540) (6,657) (7,200)
Acquisition of J.D. Cahill
Co. assets (18,088) --- ---
------- ------- -------
Net cash used in investing
activities (22,628) (6,657) (7,200)
------- ------- -------
Cash flows provided by (used in)
financing activities 6,683 (3,377) (8,959)
------- ------- -------
Cash and cash equivalents:
Net increase (decrease) in
cash and cash equivalents (23,598) 17,980 (1,494)
Balance at beginning of period 28,626 10,646 6,766
------- ------- -------
Balance at end of period $5,028 $28,626 $5,272
======= ======= =======
GRAPHIC PACKAGING INTERNATIONAL CORPORATION
SUPPLEMENTAL FINANCIAL DATA
(in thousands, except per share data)
Three months ended
----------------------------------
March 31, December 31, March 31,
2003 2002 2002
--------- ------------ ---------
Net Sales $260,883 $260,200 $263,724
======== ======== ========
Operating income in accordance
with GAAP (1) $9,343 $13,289 $19,405
Loss on early extinguishment of
debt --- --- (15,766)
Depreciation 15,425 15,215 15,229
-------- -------- --------
EBITDA (2) 24,768 28,504 18,868
Merger and acquisition
transaction costs 2,698 --- ---
Loss on early extinguishment of
debt --- --- 15,766
-------- -------- --------
EBITDA excluding merger and
acquisition transaction
costs and loss on early
extinguishment of debt $27,466 $28,504 $34,634
======== ======== ========
Leverage: (3)
Leverage, based upon operating
income 9.27x 7.63x 8.80x
Leverage, based upon EBITDA 4.28x 4.42x 4.47x
Leverage, based upon EBITDA
excluding merger and
acquisition transaction
costs and loss on early
extinguishment of debt 4.02x 3.73x 3.76x
(1) Generally Accepted Accounting Principles
(2) Earnings before Interest, Taxes, Depreciation and Amortization
(3) Debt at period-end divided by trailing twelve-month
operating income, EBITDA, and EBITDA excluding merger and
acquisition transaction costs and loss on early extinguishment
of debt
GRAPHIC PACKAGING INTERNATIONAL CORPORATION
SUPPLEMENTAL FINANCIAL DATA
(in thousands, except per share data)
Three months ended
----------------------------------
March 31, December 31, March 31,
2003 2002 2002
--------- ------------ ---------
Net loss attributable to common
shareholders ($2,543) ($252) ($187,171)
Merger and acquisition
transaction costs, net of tax 1,592 --- ---
Goodwill impairment charge, net
of tax --- --- 180,000
Loss on early extinguishment of
debt, net of tax --- --- 9,617
-------- -------- --------
Net income (loss) attributable
to common shareholders
before nonrecurring items ($951) ($252) $2,446
======== ======== ========
Net loss attributable to common
shareholders per diluted share ($0.08) ($0.01) ($5.79)
Merger and acquisition
transaction costs, net of tax 0.05 --- ---
Goodwill impairment charge, net
of tax --- --- 5.57
Loss on early extinguishment of
debt, net of tax --- --- 0.30
-------- -------- --------
Net income (loss) attributable
to common shareholders
per diluted share before
nonrecurring items ($0.03) ($0.01) $0.08
======== ======== ========