##### Table of Contents



FORM 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

|    |  |                                                                                        
|--- |  | ---------------------------------------------------------------------------------------
|[X] |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

OR

|      |  |                                                                                         
|----- |  | ----------------------------------------------------------------------------------------
|[   ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from  to .

Commission file number: 0-20704

GRAPHIC PACKAGING INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)

|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|Colorado
(State or other jurisdiction of
incorporation or organization) |  | 84-1208699
(I.R.S. Employer Identification No.)

|                                                                                     |  |                 
|------------------------------------------------------------------------------------ |  | ----------------
|4455 Table Mountain Drive, Golden, Colorado
(Address of principal executive offices) |  | 80403
(Zip Code)

(303) 215-4600
(Registrants telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

|        |  |         
|------- |  | --------
|Yes [X] |  | No [   ]

There were 32,837,085 shares of common stock outstanding as of August 1, 2002.





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TABLE OF CONTENTS



|                              |                                                                                               |  |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | Item 1. Financial Statements                                                                 
|                              | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                              | Item 3. Quantitative and Qualitative Disclosures about Market Risk                           
|PART II. OTHER INFORMATION   
|                              | Item 1. Legal Proceedings                                                                    
|                              | Item 4. Submission of Matters to a Vote of the Shareholders                                  
|                              | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES AND CERTIFICATIONS



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##### Table of Contents






PART I. FINANCIAL INFORMATION




Item 1. Financial Statements

GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONSOLIDATED INCOME STATEMENT
(In thousands, except per share data)

|                                                                                                       |                                             |   |                    |         |                  |   |         |         |      |   |          |         |  |   |         |         | 
|------------------------------------------------------------------------------------------------------ | ------------------------------------------- | - | ------------------ | ------- | ---------------- | - | ------- | ------- | ---- | - | -------- | ------- |  | - | ------- | ------- | 
|                                                                                                       |                                             |   | Three months ended |         | Six months ended
|                                                                                                       |                                             |   | June 30,           |         | June 30,        
|                                                                                                       |                                             |   | 2002               |         | 2001             |   | 2002    |         | 2001
|                                                                                                       |                                             |   |                    |         |                  |   |         |         |     
|Net sales                                                                                              |                                             | $ | 263,917            |         |                  | $ | 283,252 |         |      | $ | 527,641  |         |  | $ | 571,696 |        
|                                                                                                       |                                             |   |                    |         |                  |   |         |         |      |   |          |         |  |   |         |        
|                                                                                                       | Cost of goods sold                          |   |                    | 231,022 |                  |   |         | 240,976 |      |   |          | 460,454 |  |   |         | 489,186 | 
|                                                                                                       |                                             |   |                    |         |                  |   |         |         |      |   |          |         |  |   |         |        
|Gross profit                                                                                           |                                             |   | 32,895             |         |                  |   | 42,276  |         |      |   | 67,187   |         |  |   | 82,510  |        
|                                                                                                       |                                             |   |                    |         |                  |   |         |         |      |   |          |         |  |   |         |        
|                                                                                                       | Selling, general and administrative expense |   |                    | 15,808  |                  |   |         | 16,428  |      |   |          | 30,695  |  |   |         | 30,917  | 
|                                                                                                       | Goodwill amortization                       |   |                    |        |                  |   |         | 5,143   |      |   |          |        |  |   |         | 10,312  | 
|                                                                                                       | Asset impairment and restructuring charges  |   |                    |        |                  |   |         | 1,000   |      |   |          |        |  |   |         | 3,000   | 
|                                                                                                       |                                             |   |                    |         |                  |   |         |         |      |   |          |         |  |   |         |        
|Operating income                                                                                       |                                             |   | 17,087             |         |                  |   | 19,705  |         |      |   | 36,492   |         |  |   | 38,281  |        
|                                                                                                       |                                             |   |                    |         |                  |   |         |         |      |   |          |         |  |   |         |        
|Gain on sale of assets                                                                                 |                                             |   |                   |         |                  |   |        |         |      |   |         |         |  |   | 3,650   |        
|Interest expense                                                                                       |                                             |   | (12,453            | )       |                  |   | (13,530 | )       |      |   | (23,749  | )       |  |   | (29,655 | )      
|                                                                                                       |                                             |   |                    |         |                  |   |         |         |      |   |          |         |  |   |         |        
|Income before income taxes, extraordinary
item and cumulative effect of change in
accounting principle |                                             |   | 4,634              |         |                  |   | 6,175   |         |      |   | 12,743   |         |  |   | 12,276  |        
|                                                                                                       |                                             |   |                    |         |                  |   |         |         |      |   |          |         |  |   |         |        
|Income tax expense                                                                                     |                                             |   | (1,808             | )       |                  |   | (2,446  | )       |      |   | (4,971   | )       |  |   | (4,866  | )      
|                                                                                                       |                                             |   |                    |         |                  |   |         |         |      |   |          |         |  |   |         |        
|                                                                                                       |                                             |   |                    |         |                  |   |         |         |      |   |          |         |  |   |         |        
|Income before extraordinary item and
cumulative effect of change in accounting
principle               |                                             |   | 2,826              |         |                  |   | 3,729   |         |      |   | 7,772    |         |  |   | 7,410   |        
|                                                                                                       |                                             |   |                    |         |                  |   |         |         |      |   |          |         |  |   |         |        
|Extraordinary loss on early extinguishment
of debt, net of tax of $6,149                               |                                             |   |                   |         |                  |   |        |         |      |   | (9,617   | )       |  |   |        |        
|                                                                                                       |                                             |   |                    |         |                  |   |         |         |      |   |          |         |  |   |         |        
|                                                                                                       |                                             |   |                    |         |                  |   |         |         |      |   |          |         |  |   |         |        
|Income (loss) before cumulative effect of
change in accounting principle                               |                                             |   | 2,826              |         |                  |   | 3,729   |         |      |   | (1,845   | )       |  |   | 7,410   |        
|                                                                                                       |                                             |   |                    |         |                  |   |         |         |      |   |          |         |  |   |         |        
|Cumulative effect of change in goodwill
accounting, net of tax of $0                                   |                                             |   |                   |         |                  |   |        |         |      |   | (180,000 | )       |  |   |        |        
|                                                                                                       |                                             |   |                    |         |                  |   |         |         |      |   |          |         |  |   |         |        
|                                                                                                       |                                             |   |                    |         |                  |   |         |         |      |   |          |         |  |   |         |        
|Net income (loss)                                                                                      |                                             |   | 2,826              |         |                  |   | 3,729   |         |      |   | (181,845 | )       |  |   | 7,410   |        
|                                                                                                       |                                             |   |                    |         |                  |   |         |         |      |   |          |         |  |   |         |        
|Preferred stock dividends declared                                                                     |                                             |   | 2,500              |         |                  |   | 2,500   |         |      |   | 5,000    |         |  |   | 5,000   |        
|                                                                                                       |                                             |   |                    |         |                  |   |         |         |      |   |          |         |  |   |         |        
|Net income (loss) attributable to common
shareholders                                                  |                                             | $ | 326                |         |                  | $ | 1,229   |         |      | $ | (186,845 | )       |  | $ | 2,410   |        
|                                                                                                       |                                             |   |                    |         |                  |   |         |         |      |   |          |         |  |   |         |        

See Notes to Consolidated Financial Statements.

2



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GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONSOLIDATED INCOME STATEMENT
(In thousands, except per share data)

|                                                                                   |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        | 
|---------------------------------------------------------------------------------- |  | ------------------ | ------ | ---------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | 
|                                                                                   |  | Three months ended |        | Six months ended
|                                                                                   |  | June 30,           |        | June 30,        
|                                                                                   |  | 2002               |        | 2001             |  | 2002 |        | 2001
|                                                                                   |  |                    |        |                  |  |      |        |     
|Net income (loss) attributable to common
shareholders per basic and diluted share: |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        | 
|                                                                                   |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        | 
|Before extraordinary item and cumulative
effect of change in accounting principle  |  | $                  | 0.01   |                  |  | $    | 0.04   |      |  | $ | 0.09   |   |  | $ | 0.08   | 
|                                                                                   |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        | 
|Extraordinary loss                                                                 |  |                    |       |                  |  |      |       |      |  |   | (0.30  | ) |  |   |       | 
|                                                                                   |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        | 
|Cumulative effect of change in accounting
principle                                |  |                    |       |                  |  |      |       |      |  |   | (5.55  | ) |  |   |       | 
|                                                                                   |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        | 
|                                                                                   |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        | 
|                                                                                   |  | $                  | 0.01   |                  |  | $    | 0.04   |      |  | $ | (5.76  | ) |  | $ | 0.08   | 
|                                                                                   |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        | 
|                                                                                   |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        | 
|Weighted average shares outstanding  basic                                        |  |                    | 32,567 |                  |  |      | 31,535 |      |  |   | 32,456 |   |  |   | 31,245 | 
|                                                                                   |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        | 
|                                                                                   |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        | 
|Weighted average shares outstanding  diluted                                      |  |                    | 34,093 |                  |  |      | 32,551 |      |  |   | 33,830 |   |  |   | 32,017 | 
|                                                                                   |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        | 

See Notes to Consolidated Financial Statements.

3



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GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(In thousands)

|                                  |                                                                                                                              |   |                    |       |                  |   |       |      |      |   |          |       |   |   |        |        |  
|--------------------------------- | ---------------------------------------------------------------------------------------------------------------------------- | - | ------------------ | ----- | ---------------- | - | ----- | ---- | ---- | - | -------- | ----- | - | - | ------ | ------ | -
|                                  |                                                                                                                              |   | Three months ended |       | Six months ended
|                                  |                                                                                                                              |   | June 30,           |       | June 30,        
|                                  |                                                                                                                              |   | 2002               |       | 2001             |   | 2002  |      | 2001
|                                  |                                                                                                                              |   |                    |       |                  |   |       |      |     
|Net income (loss)                 |                                                                                                                              | $ | 2,826              |       |                  | $ | 3,729 |      |      | $ | (181,845 | )     |   | $ | 7,410  |       
|Other comprehensive income:       |                                                                                                                              |   |                    |       |                  |   |       |      |      |   |          |       |   |   |        |       
|                                  | Foreign currency translation adjustments                                                                                     |   |                    | 355   |                  |   |       | (56  | )    |   |          | 341   |   |   |        | (330   | )
|                                  | Cumulative effect of change in accounting principle,
net of tax of $2,012                                                    |   |                    |      |                  |   |       |     |      |   |          |      |   |   |        | (3,217 | )
|                                  | Recognition of hedge results to interest expense
during the period, net of tax of $882, $371,
$1,819, and $579, respectively |   |                    | 1,421 |                  |   |       | 593  |      |   |          | 2,928 |   |   |        | 926    |  
|                                  | Amortization of cancelled interest rate swap, net of
tax of $137 and $183, respectively                                      |   |                    | 220   |                  |   |       |     |      |   |          | 293   |   |   |        |       |  
|                                  | Change in fair value of cash flow hedges during the
period, net of tax of $82, $461, $130, and $1,048, respectively          |   |                    | (132  | )                |   |       | (737 | )    |   |          | (208  | ) |   |        | (1,673 | )
|                                  |                                                                                                                              |   |                    |       |                  |   |       |      |      |   |          |       |   |   |        |       
|Other comprehensive income (loss) |                                                                                                                              |   | 1,864              |       |                  |   | (200  | )    |      |   | 3,354    |       |   |   | (4,294 | )     
|                                  |                                                                                                                              |   |                    |       |                  |   |       |      |      |   |          |       |   |   |        |       
|Comprehensive income (loss)       |                                                                                                                              | $ | 4,690              |       |                  | $ | 3,529 |      |      | $ | (178,491 | )     |   | $ | 3,116  |       
|                                  |                                                                                                                              |   |                    |       |                  |   |       |      |      |   |          |       |   |   |        |       

See Notes to Consolidated Financial Statements.

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GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands, except share data)

|                                                                                                                                                                       |                                                                                                      |                            |                      |         |          |         |              |         |         |         | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------- | -------------------------- | -------------------- | ------- | -------- | ------- | ------------ | ------- | ------- | ------- | 
|                                                                                                                                                                       |                                                                                                      |                            |                      |         | June 30, |         | December 31,
|                                                                                                                                                                       |                                                                                                      |                            |                      |         | 2002     |         | 2001        
|                                                                                                                                                                       |                                                                                                      |                            |                      |         |          |         |             
|ASSETS                                                                                                                                                                 |                                                                                                      |                            |                      |         |          |         |              |        
|Current assets:                                                                                                                                                        |                                                                                                      |                            |                      |         |          |         |              |        
|Cash and cash equivalents                                                                                                                                              |                                                                                                      | $                          | 4,982                |         |          | $       | 6,766        |        
|Accounts receivable                                                                                                                                                    |                                                                                                      |                            | 74,409               |         |          |         | 59,474       |        
|Inventories:                                                                                                                                                           |                                                                                                      |                            |                      |         |          |         |              |        
|                                                                                                                                                                       |                                                                                                      | Finished                   |                      |         | 61,823   |         |              |         | 55,057  |        
|                                                                                                                                                                       |                                                                                                      | In process                 |                      |         | 10,900   |         |              |         | 15,258  |        
|                                                                                                                                                                       |                                                                                                      | Raw materials              |                      |         | 25,239   |         |              |         | 22,093  |        
|                                                                                                                                                                       |                                                                                                      |                            |                      |         |          |         |              |        
|Total inventories                                                                                                                                                      |                                                                                                      |                            | 97,962               |         |          |         | 92,408       |        
|Other assets                                                                                                                                                           |                                                                                                      |                            | 28,260               |         |          |         | 33,156       |        
|                                                                                                                                                                       |                                                                                                      |                            |                      |         |          |         |              |        
|                                                                                                                                                                       |                                                                                                      |                            | Total current assets |         |          | 205,613 |              |         |         | 191,804 | 
|                                                                                                                                                                       |                                                                                                      |                            |                      |         |          |         |              |        
|Properties, net                                                                                                                                                        |                                                                                                      |                            | 428,379              |         |          |         | 443,712      |        
|Goodwill, net                                                                                                                                                          |                                                                                                      |                            | 379,696              |         |          |         | 559,696      |        
|Other assets                                                                                                                                                           |                                                                                                      |                            | 31,195               |         |          |         | 34,123       |        
|                                                                                                                                                                       |                                                                                                      |                            |                      |         |          |         |              |        
|Total assets                                                                                                                                                           |                                                                                                      | $                          | 1,044,883            |         |          | $       | 1,229,335    |        
|                                                                                                                                                                       |                                                                                                      |                            |                      |         |          |         |              |        
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                   |                                                                                                      |                            |                      |         |          |         |              |        
|Current maturities of long-term debt                                                                                                                                   |                                                                                                      | $                          | 3,831                |         |          | $       | 37,373       |        
|Accounts payable                                                                                                                                                       |                                                                                                      |                            | 47,665               |         |          |         | 59,002       |        
|Interest payable                                                                                                                                                       |                                                                                                      |                            | 11,275               |         |          |         | 2,665        |        
|Other current liabilities                                                                                                                                              |                                                                                                      |                            | 74,951               |         |          |         | 70,361       |        
|                                                                                                                                                                       |                                                                                                      |                            |                      |         |          |         |              |        
|                                                                                                                                                                       |                                                                                                      | Total current liabilities  |                      |         | 137,722  |         |              |         | 169,401 |        
|Long-term debt                                                                                                                                                         |                                                                                                      |                            | 515,685              |         |          |         | 488,386      |        
|Other long-term liabilities                                                                                                                                            |                                                                                                      |                            | 74,665               |         |          |         | 73,900       |        
|                                                                                                                                                                       |                                                                                                      |                            |                      |         |          |         |              |        
|                                                                                                                                                                       |                                                                                                      | Total liabilities          |                      |         | 728,072  |         |              |         | 731,687 |        
|                                                                                                                                                                       |                                                                                                      |                            |                      |         |          |         |              |         |         |         | 
|Shareholders equity                                                                                                                                                   |                                                                                                      |                            |                      |         |          |         |              |        
|Preferred stock, nonvoting, 20,000,000 shares authorized:                                                                                                              |                                                                                                      |                            |                      |         |          |         |              |        
|                                                                                                                                                                       | Series A, $0.01 par value, no shares issued or outstanding                                           |                            |                      |         |          |         |              |         |        
|                                                                                                                                                                       | Series B, $0.01 par value, 1,000,000 shares issued and
outstanding at stated value of $100 per share |                            |                      | 100,000 |          |         |              | 100,000 |        
|Common stock, $0.01 par value 100,000,000 shares authorized
and 32,677,033 and 32,188,941 issued and outstanding at
June 30, 2002, and December 31, 2001, respectively |                                                                                                      |                            | 327                  |         |          |         | 322          |        
|Paid-in capital                                                                                                                                                        |                                                                                                      |                            | 415,398              |         |          |         | 417,749      |        
|Accumulated deficit                                                                                                                                                    |                                                                                                      |                            | (182,407             | )       |          |         | (562         | )      
|Accumulated other comprehensive loss                                                                                                                                   |                                                                                                      |                            | (16,507              | )       |          |         | (19,861      | )      
|                                                                                                                                                                       |                                                                                                      |                            |                      |         |          |         |              |        
|                                                                                                                                                                       |                                                                                                      | Total shareholders equity |                      |         | 316,811  |         |              |         | 497,648 |        
|                                                                                                                                                                       |                                                                                                      |                            |                      |         |          |         |              |        
|Total liabilities and shareholders equity                                                                                                                             |                                                                                                      | $                          | 1,044,883            |         |          | $       | 1,229,335    |        
|                                                                                                                                                                       |                                                                                                      |                            |                      |         |          |         |              |        

See Notes to Consolidated Financial Statements.

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GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)

|                                          |                                                                                          |                                                    |                           |          |                  |         |         |       |          |        |  
|----------------------------------------- | ---------------------------------------------------------------------------------------- | -------------------------------------------------- | ------------------------- | -------- | ---------------- | ------- | ------- | ----- | -------- | ------ | -
|                                          |                                                                                          |                                                    |                           |          | Six months ended
|                                          |                                                                                          |                                                    |                           |          | June 30,        
|                                          |                                                                                          |                                                    |                           |          | 2002             |         | 2001   
|                                          |                                                                                          |                                                    |                           |          |                  |         |        
|Cash flows from operating activities:     |                                                                                          |                                                    |                           |          |                  |         |         |      
|                                          | Net income (loss)                                                                        |                                                    | $                         | (181,845 | )                |         | $       | 7,410 |         
|                                          | Adjustments to reconcile net income (loss) to net cash
provided by operating activities: |                                                    |                           |          |                  |         |         |       |         
|                                          |                                                                                          | Goodwill impairment                                |                           |          | 180,000          |         |         |       |         |       
|                                          |                                                                                          | Asset impairment charges                           |                           |          |                 |         |         |       | 1,500    |       
|                                          |                                                                                          | Extraordinary loss on early extinguishment of debt |                           |          | 15,766           |         |         |       |         |       
|                                          |                                                                                          | Gain on sale of assets                             |                           |          |                 |         |         |       | (3,650   | )     
|                                          |                                                                                          | Depreciation                                       |                           |          | 30,716           |         |         |       | 29,930   |       
|                                          |                                                                                          | Amortization of goodwill                           |                           |          |                 |         |         |       | 10,312   |       
|                                          |                                                                                          | Amortization of debt issuance costs                |                           |          | 1,945            |         |         |       | 3,970    |       
|                                          |                                                                                          | Compensation expense settled in stock              |                           |          | 2,237            |         |         |       | 2,879    |       
|                                          |                                                                                          | Change in current assets and current liabilities:  |                           |          |                  |         |         |       |          |       
|                                          |                                                                                          |                                                    | Accounts receivable       |          |                  | (14,935 | )       |       |          | (4,232 | )
|                                          |                                                                                          |                                                    | Inventory                 |          |                  | (5,554  | )       |       |          | 7,506  |  
|                                          |                                                                                          |                                                    | Other current assets      |          |                  | 5,833   |         |       |          | (1,952 | )
|                                          |                                                                                          |                                                    | Accounts payable          |          |                  | (11,337 | )       |       |          | 2,082  |  
|                                          |                                                                                          |                                                    | Interest payable          |          |                  | 8,610   |         |       |          | 747    |  
|                                          |                                                                                          |                                                    | Other current liabilities |          |                  | 8,540   |         |       |          | 9,062  |  
|                                          |                                                                                          | Other                                              |                           |          | 423              |         |         |       | 3,344    |       
|                                          |                                                                                          |                                                    |                           |          |                  |         |         |      
|Net cash provided by operating activities |                                                                                          |                                                    | 40,399                    |          |                  |         | 68,908  |      
|                                          |                                                                                          |                                                    |                           |          |                  |         |         |      
|Cash flows from investing activities:     |                                                                                          |                                                    |                           |          |                  |         |         |      
|                                          |                                                                                          | Capital expenditures                               |                           |          | (15,454          | )       |         |       | (16,374  | )     
|                                          |                                                                                          | Proceeds from sale of assets                       |                           |          |                 |         |         |       | 7,050    |       
|                                          |                                                                                          |                                                    |                           |          |                  |         |         |      
|Net cash used in investing activities     |                                                                                          |                                                    | (15,454                   | )        |                  |         | (9,324  | )    
|                                          |                                                                                          |                                                    |                           |          |                  |         |         |      
|Cash flows from financing activities:     |                                                                                          |                                                    |                           |          |                  |         |         |      
|                                          |                                                                                          | Repayment of debt                                  |                           |          | (619,343         | )       |         |       | (141,450 | )     
|                                          |                                                                                          | Proceeds from borrowings                           |                           |          | 613,100          |         |         |       | 86,700   |       
|                                          |                                                                                          | Payment of debt issuance costs                     |                           |          | (15,922          | )       |         |       |         |       
|                                          |                                                                                          | Payment of preferred stock dividends               |                           |          | (5,000           | )       |         |       | (5,000   | )     
|                                          |                                                                                          | Issuance of common stock and other                 |                           |          | 436              |         |         |       | 145      |       
|                                          |                                                                                          |                                                    |                           |          |                  |         |         |      
|Net cash used in financing activities     |                                                                                          |                                                    | (26,729                   | )        |                  |         | (59,605 | )    
|                                          |                                                                                          |                                                    |                           |          |                  |         |         |      
|Cash and cash equivalents:                |                                                                                          |                                                    |                           |          |                  |         |         |      
|                                          | Net decrease in cash and cash equivalents                                                |                                                    |                           | (1,784   | )                |         |         | (21   | )       
|                                          | Balance at beginning of period                                                           |                                                    |                           | 6,766    |                  |         |         | 4,012 |         
|                                          |                                                                                          |                                                    |                           |          |                  |         |         |      
|                                          | Balance at end of period                                                                 |                                                    | $                         | 4,982    |                  |         | $       | 3,991 |         
|                                          |                                                                                          |                                                    |                           |          |                  |         |         |      

See Notes to Consolidated Financial Statements.

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##### Table of Contents



GRAPHIC PACKAGING INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Nature of Operations and Basis of Presentation

Graphic Packaging International Corporation (the Company or GPIC) is a
manufacturer of packaging products used by consumer product companies as
primary packaging for their end-use products.

The consolidated financial statements have been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures included herein
are adequate to make the information presented not misleading. A description
of the Companys accounting policies and other financial information is
included in the audited financial statements filed with the Securities and
Exchange Commission in the Companys Form 10-K/A for the year ended December 31,
2001.

In the opinion of management, the accompanying unaudited financial
statements contain all adjustments necessary to fairly state the financial
position of the Company at June 30, 2002, and the results of operations and
cash flows for the periods presented. All such adjustments are of a normal
recurring nature. The results of operations for the three months ended June
30, 2002 are not necessarily indicative of the results that may be achieved for
the full fiscal year and cannot be used to indicate financial performance for
the entire year.

Certain prior year
amounts have been reclassified to conform with the current
year presentation.

Note 2. Goodwill Accounting

SFAS No. 142, Goodwill and Other Intangible Assets,was issued in 2001 and
became effective on January 1, 2002 for the Company. This statement establishes new
accounting and reporting standards that, among other things, eliminate
amortization of goodwill and certain intangible assets with indefinite useful
lives. The Company does not have any intangible assets with indefinite useful
lives; however, as required by the new standard, the Companys goodwill will be
evaluated annually for impairment using a fair-value based approach and, if
there is impairment, the carrying amount of goodwill will be written down to
its implied fair value.

Effective January 1, 2002, the Company assigned the carrying value of its
goodwill, totaling $560 million, to one reporting unit. Management has
completed the transitional impairment testing of the Companys goodwill and has
determined that the Companys goodwill was impaired by $180 million at January
1, 2002. The fair value of the goodwill was derived using a discounted cash
flow method. The transitional impairment loss is reflected as a
cumulative effect of change in accounting principle in the
accompanying income statement. Future impairments of goodwill, if
any, will be charged to operating income in the period in which
impairment arises.

Of the
$560 million carrying value of goodwill at December 31,
2001, $418 million is deductible for Federal income tax purposes
and $142 million is not deductible. The $180 million
goodwill impairment charge consists of approximately
$131 million of deductible goodwill and approximately
$49 million of non-deductible goodwill. The $131 million
tax deductible portion of the impairment charge resulted in a
deferred tax benefit/asset of approximately $50 million. We
recorded a 100% valuation allowance against the approximately
$50 million deferred tax asset resulting from recognition of the
transitional goodwill impairment loss. Therefore, the cumulative effect of
change in accounting principle reflected in the accompanying income statement
is net of $0 tax benefit.

Effective January 1, 2002, the Company stopped amortizing its goodwill as
required by SFAS No. 142. The annual reduction in amortization expense is
approximately $20.6 million before taxes. Because some of the Companys
goodwill amortization is nondeductible for tax purposes, the Companys
effective tax rate is lower as a result of implementing SFAS No. 142. The
change in the carrying amount of the Companys goodwill consists entirely of
the impairment of $180 million for the six months ended June 30, 2002.

The Company recorded its transitional goodwill impairment charge in the
second quarter of 2002, as permitted by SFAS No. 142. The following table
presents the results of operations for the first quarter of 2002 after giving
effect to the goodwill impairment charge (in thousands):

|                                                                         |  |              |        |                     |  |   |          |  
|------------------------------------------------------------------------ |  | ------------ | ------ | ------------------- |  | - | -------- | -
|                                                                         |  | As Reported  |        | As Adjusted for    
|                                                                         |  | in Form 10-Q |        | Goodwill Impairment
|                                                                         |  |              |        |                    
|Operating income                                                         |  | $            | 19,405 |                     |  | $ | 19,405   |  
|                                                                         |  |              |        |                     |  |   |          |  
|Net loss attributable to common
shareholders                             |  | $            | (7,171 | )                   |  | $ | (187,171 | )
|                                                                         |  |              |        |                     |  |   |          |  
|Net loss attributable to common
shareholders per basic and diluted
share |  | $            | (0.22  | )                   |  | $ | (5.79    | )
|                                                                         |  |              |        |                     |  |   |          |  

7



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The following table illustrates net income (loss) attributable to common
shareholders and earnings per share, exclusive of goodwill amortization expense
in the prior year periods (in thousands):

|                                                                                                                      |  |                    |      |                  |  |      |       |      |  |   |          |   |  |   |       | 
|--------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ---- | ---------------- |  | ---- | ----- | ---- |  | - | -------- | - |  | - | ----- | 
|                                                                                                                      |  | Three Months Ended |      | Six Months Ended
|                                                                                                                      |  | June 30,           |      | June 30,        
|                                                                                                                      |  |                    |      |                 
|                                                                                                                      |  | 2002               |      | 2001             |  | 2002 |       | 2001
|                                                                                                                      |  |                    |      |                  |  |      |       |     
|Reported net income (loss) before
extraordinary item
attributable to
common shareholders                              |  | $                  | 326  |                  |  | $    | 1,229 |      |  | $ | (177,228 | ) |  | $ | 2,410 | 
|Extraordinary item                                                                                                    |  |                    |     |                  |  |      |      |      |  |   | (9,617   | ) |  |   |      | 
|                                                                                                                      |  |                    |      |                  |  |      |       |      |  |   |          |   |  |   |       | 
|Reported net income (loss) attributable
to common shareholders                                                        |  |                    | 326  |                  |  |      | 1,229 |      |  |   | (186,845 | ) |  |   | 2,410 | 
|Goodwill amortization, net of tax                                                                                     |  |                    |     |                  |  |      | 3,086 |      |  |   |         |   |  |   | 6,187 | 
|                                                                                                                      |  |                    |      |                  |  |      |       |      |  |   |          |   |  |   |       | 
|Adjusted net income (loss) attributable
to common shareholders                                                        |  | $                  | 326  |                  |  | $    | 4,315 |      |  | $ | (186,845 | ) |  | $ | 8,597 | 
|                                                                                                                      |  |                    |      |                  |  |      |       |      |  |   |          |   |  |   |       | 
|Earnings per share  basic
Reported net income (loss)
before extraordinary item
attributable to common
shareholders   |  | $                  | 0.01 |                  |  | $    | 0.04  |      |  | $ | (5.46    | ) |  | $ | 0.08  | 
|Extraordinary item                                                                                                    |  |                    |     |                  |  |      |      |      |  |   | (0.30    | ) |  |   |      | 
|                                                                                                                      |  |                    |      |                  |  |      |       |      |  |   |          |   |  |   |       | 
|Reported net income (loss) attributable
to common shareholders                                                        |  |                    | 0.01 |                  |  |      | 0.04  |      |  |   | (5.76    | ) |  |   | 0.08  | 
|Goodwill amortization, net of tax                                                                                     |  |                    |     |                  |  |      | 0.10  |      |  |   |         |   |  |   | 0.20  | 
|                                                                                                                      |  |                    |      |                  |  |      |       |      |  |   |          |   |  |   |       | 
|Adjusted net income (loss) attributable
to common shareholders                                                        |  | $                  | 0.01 |                  |  | $    | 0.14  |      |  | $ | (5.76    | ) |  | $ | 0.28  | 
|                                                                                                                      |  |                    |      |                  |  |      |       |      |  |   |          |   |  |   |       | 
|Earnings per share  diluted
Reported net income (loss)
before extraordinary item
attributable to common
shareholders |  | $                  | 0.01 |                  |  | $    | 0.04  |      |  | $ | (5.46    | ) |  | $ | 0.08  | 
|Extraordinary item                                                                                                    |  |                    |     |                  |  |      |      |      |  |   | (0.30    | ) |  |   |      | 
|                                                                                                                      |  |                    |      |                  |  |      |       |      |  |   |          |   |  |   |       | 
|Reported net income (loss) attributable
to common shareholders                                                        |  |                    | 0.01 |                  |  |      | 0.04  |      |  |   | (5.76    | ) |  |   | 0.08  | 
|Goodwill amortization, net of tax                                                                                     |  |                    |     |                  |  |      | 0.09  |      |  |   |         |   |  |   | 0.19  | 
|                                                                                                                      |  |                    |      |                  |  |      |       |      |  |   |          |   |  |   |       | 
|Adjusted net income (loss) attributable
to common shareholders                                                        |  | $                  | 0.01 |                  |  | $    | 0.13  |      |  | $ | (5.76    | ) |  | $ | 0.27  | 
|                                                                                                                      |  |                    |      |                  |  |      |       |      |  |   |          |   |  |   |       | 

Note 3. New Accounting Pronouncements

In 2001, the FASB
issued SFAS No. 143. Accounting for Asset Retirement
Obligations. SFAS No. 143 requires the recognition of
a liability and offsetting asset for any legal obligation associated
with the retirement of long-lived assets. The asset retirement cost
is depreciated over the life of the related asset. This statement is
effective for financial statements issued for fiscal years beginning
after June 15, 2002. Management does not believe SFAS
No. 143 will have a significant effect on the Company.

SFAS No. 145, Recission of FASB Statements No. 4, 44, and 64, Amendment
of FASB Statement No. 13, and Technical Corrections, was issued on April 30,
2002. SFAS No. 145 includes, among other things, the recission of SFAS No. 4,
which required that gains and losses from early extinguishment of debt be
classified as an extraordinary item, net of related income tax effects. Under
the new guidance of SFAS No. 145, losses from early extinguishment of debt will
be classified as extraordinary items only when the losses are considered
unusual in nature and infrequent in occurrence. SFAS No. 145 will be effective
for the Company on January 1, 2003, at which time the Company will reclassify
its first quarter 2002 loss on early extinguishment of debt as a
non-extraordinary item.

SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities, was issued on July 30, 2002. SFAS No. 146 will require companies
to recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
SFAS No. 146 is effective for the Company on January 1, 2003 and will have no effect
on the Companys historical financial results.

Note 4. Refinancing Transactions

On February 28, 2002, the Company completed certain refinancing
transactions that replaced its then existing debt instruments with longer-term
facilities more conducive to the Companys long-range needs. The refinancing
consisted of the following concurrent transactions:



| |  |  | The Companys wholly owned subsidiary, Graphic
Packaging Corporation (GPC), issued $300 million aggregate
principal amount of 8 5/8% senior subordinated notes due in
2012 in a Rule 144A transaction. Net proceeds from the sale
of the notes totaled approximately $294.1 million.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  |  | GPC entered into a new $450 million senior secured
credit facility. The new facility includes a $175 million
seven-year term note and a $275 million five-year revolving
line of credit. Initial borrowings under the revolving line
of credit totaled $62.6 million. Initial interest rates for
the seven-year term note and the five-year revolving line of
credit were 6.5% and 5.75%, respectively.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Company used the proceeds from the refinancing
transactions to retire GPICs then existing senior credit
facilities, to repurchase $50 million of subordinated notes
due to Golden Heritage, LLC, a related party, at par, to pay interest and
expenses and for general corporate purposes.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Senior Subordinated Notes

The senior subordinated notes (the Notes) are unsecured senior
subordinated obligations of GPC. Interest accrues at 8 5/8%, payable
semi-annually on August 15th and February 15th, beginning on August 15, 2002.
The Notes will mature on February 15, 2012. The Notes are unconditionally and
jointly and severally guaranteed by GPIC and its domestic subsidiaries. GPC
may redeem the Notes, but prior to 2010, must pay a premium to do so. Upon a
change in control, the holders of the Notes may require GPC to repurchase the
Notes at a 1% premium.

GPC issued the Notes under an indenture among GPC, as issuer, GPIC, as a
guarantor, the Companys domestic subsidiaries, as the subsidiary guarantors,
and Wells Fargo Bank Minnesota, National Association, as trustee. GPC and GPIC
entered into a registration rights agreement which provided for them to use
commercially reasonable efforts to consummate an exchange offer under the
Securities Act of 1933, within 210 days of closing. Toward this end, GPC filed
a Form S-4 with the U.S. Securities and Exchange Commission, which was declared
effective on July 15, 2002. The exchange offer is expected to
close during the second half of August 2002.

Senior Secured Credit Facility

GPC is the borrower
under the new senior secured credit facility (the Credit
Facility). A syndicate of financial institutions serves as lenders, with
Morgan Stanley Senior Funding, Inc. and Credit Suisse First Boston as the joint
lead arrangers. The Credit Facility consists of a $275 million, five-year
revolving credit facility, or the Revolver, and a $175 million, seven-year term
loan, or the Term Loan. The Revolver bears interest at various pricing
options, including LIBOR plus a spread tied to GPCs leverage, with a single
principal payment due at maturity. The interest rate for the Revolver was
3.84% at June 30, 2002. The Term Loan bears interest at various pricing
options, including LIBOR plus 275 basis points, with principal amortization of
1% a year and the balance due at maturity. The interest rate for the Term Loan
was 4.59% at June 30, 2002. The Credit Facility must also be prepaid with a
cash flow recapture calculation, and with certain proceeds from asset sales,
and debt or equity offerings. The Credit Facility is collateralized by first
priority liens on all material assets of the Company and all of its domestic
subsidiaries. The Credit Facility limits the Companys ability to pay
dividends other than permitted dividends on the preferred stock, and imposes
limitations on the incurrence of additional debt, acquisitions, capital
expenditures and the sale of assets.

9



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##### Table of Contents



The Companys borrowings consist of
the following (in thousands):

|                                                                                   |  |          |         |              |  |   |         | 
|---------------------------------------------------------------------------------- |  | -------- | ------- | ------------ |  | - | ------- | 
|                                                                                   |  | June 30, |         | December 31,
|                                                                                   |  | 2002     |         | 2001        
|                                                                                   |  |          |         |             
|Seven-year
term facility due 2009, variable interest currently at 4.59%            |  | $        | 174,000 |              |  | $ |        | 
|Five-year
revolving credit facility due 2007, variable interest currently at 3.84% |  |          | 39,800  |              |  |   |        | 
|8-5/8% senior subordinated notes due 2012                                          |  |          | 300,000 |              |  |   |        | 
|Five-year term facility due 2004, variable interest at 4.18%                       |  |          |        |              |  |   | 247,035 | 
|Revolving credit facility due 2004, variable interest at 4.18%                     |  |          |        |              |  |   | 222,750 | 
|10% subordinated notes due 2008                                                    |  |          |        |              |  |   | 50,000  | 
|Other notes payable                                                                |  |          | 5,716   |              |  |   | 5,974   | 
|                                                                                   |  |          |         |              |  |   |         | 
|Total                                                                              |  |          | 519,516 |              |  |   | 525,759 | 
|Less current maturities                                                            |  |          | 3,831   |              |  |   | 37,373  | 
|                                                                                   |  |          |         |              |  |   |         | 
|Long-term maturities                                                               |  | $        | 515,685 |              |  | $ | 488,386 | 
|                                                                                   |  |          |         |              |  |   |         | 



In connection with the refinancing transactions, the Company incurred a
non-cash charge in 2002 to write off its remaining unamortized debt issuance
costs associated with the refinanced debt of $15.8 million, pretax, which has
been reflected as an extraordinary loss in the accompanying income statement.
If the Company continues to reduce LIBOR-based borrowings through increased
cash flows, it may also incur a charge related to its existing interest rate
swap agreements if they no longer qualify as a hedge of interest rate risk. On
February 28, 2002, the Company terminated a $35 million notional value interest
rate swap contract for $830,000, which is being amortized over the remaining
life of the contract (through September 2002). On July 28, 2002,
an interest rate
swap contract with a notional value of $125 million expired
leaving interest rate swap contracts with notional values totaling
$65 million. All the Companys
interest rate contracts will expire by the end of the third
quarter of 2002.

Note 5. Asset Impairment and Restructuring Charges

The Company recorded restructuring charges totaling $2.4 million in the
fourth quarter of 2001 in connection with the announced closure of the Newnan,
Georgia plant. The restructuring charges relate to severance packages for 105
plant personnel that were communicated to employees in December 2001. The
Company expects to shut down the plants operations during the third quarter of
2002 and subsequently sell the plants building and land which has a combined
net book value of $1.8 million. The Company expects to complete the Newnan
restructuring plan by the end of 2002. Restructuring payments made during the
first half of 2002 under this program totaled $0.2 million.

The Company recorded a restructuring charge of $1.0 million in the second
quarter of 2001, continuing the plan announced in the fourth quarter of 2000 to
eliminate approximately 200 non-production positions across the Company,
including the closure of the Companys folding carton plant in Portland,
Oregon. $3.0 million was recorded in the fourth quarter of 2000 and $1.0
million was recorded in the first quarter of 2001 related to this restructuring
plan. The 2001 charges relate to severance packages that were communicated to
employees in the first half of 2001. At June 30, 2002, this restructuring plan
is complete.

The Company recorded a restructuring charge of $3.4 million in the first
quarter of 2000 for anticipated severance costs as a result of the announced
closure of the Saratoga Springs, New York plant. The Company has completed the
closure of the Saratoga Springs plant and the transition of the plants
business to other Company facilities. Approximately $0.5 million of the
restructuring charges were not necessary to meet severance obligations for the
plants former employees and were reversed in the first quarter of 2001. The
Company recorded an asset impairment charge of $1.5 million in the quarter
ended March 31, 2001 related to its Saratoga Springs building. On June 29,
2001, the Saratoga Springs building and land were sold for cash proceeds of
approximately $3.4 million, with no gain or loss being
recognized. At June 30, 2002, this restructuring plan is
complete.

10



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##### Table of Contents



The following table summarizes accruals related to all of the Companys
restructuring activities during the first half of 2002 (in millions):

|                           |  |          |      |              |  |         |      |        |  |   |      |   |  |   |      |  
|-------------------------- |  | -------- | ---- | ------------ |  | ------- | ---- | ------ |  | - | ---- | - |  | - | ---- | -
|                           |  | 2000     |      |              |  |         |      | 2001   |  |   |      |  
|                           |  | Saratoga |      | 2000/2001    |  | Newnan  |      |        |  |  
|                           |  | Springs  |      | Reduction in |  | Plant   |      |        |  |  
|                           |  | Closure  |      | Force        |  | Closure |      | Totals
|                           |  |          |      |              |  |         |      |       
|Balance, December 31, 2001 |  | $        | 0.1  |              |  | $       | 0.2  |        |  | $ | 2.4  |   |  | $ | 2.7  |  
|                           |  |          |      |              |  |         |      |        |  |   |      |   |  |   |      |  
|Cash paid                  |  |          | (0.1 | )            |  |         | (0.2 | )      |  |   |     |   |  |   | (0.3 | )
|                           |  |          |      |              |  |         |      |        |  |   |      |   |  |   |      |  
|Balance, March 31, 2002    |  |          | 0.0  |              |  |         | 0.0  |        |  |   | 2.4  |   |  |   | 2.4  |  
|                           |  |          |      |              |  |         |      |        |  |   |      |   |  |   |      |  
|Cash paid                  |  |          |     |              |  |         |     |        |  |   | (0.2 | ) |  |   | (0.2 | )
|                           |  |          |      |              |  |         |      |        |  |   |      |   |  |   |      |  
|Balance, June 30, 2002     |  | $        | 0.0  |              |  | $       | 0.0  |        |  | $ | 2.2  |   |  | $ | 2.2  |  
|                           |  |          |      |              |  |         |      |        |  |   |      |   |  |   |      |  

Note 6. Asset Sales

The Company has closed several noncore or underperforming facilities over
the past two years. The Company sold its Saratoga Springs, New York building
and land in June 2001 and its Perrysburg, Ohio building and land in July 2001
for cash proceeds of $3.4 million and $1.9 million, respectively. No gain or
loss was recognized on the sales.

In the first quarter of 2001, a pre-tax gain of $3.6 million was
recognized upon receipt of additional consideration for assets of the Companys
former developmental businesses.

Note 7. Segment Information

The Companys reportable segments are based on its method of internal
reporting, which is based on product category. The Company has one reportable
segment  Packaging. In addition, the Companys holdings and operations
outside the United States are nominal. Therefore, no additional segment
information is provided herein.

Note 8. Kalamazoo Labor Dispute

The labor agreement between GPC and the Paper, Allied-Industrial, Chemical and
Energy Workers International (PACE) and PACE Local 1010, which represents approximately 400 workers at
our Kalamazoo, Michigan paperboard mill and folding carton plant, expired July
27, 2002, following a four-day extension of that agreement. On
July 22, 2002, the membership of the local voted against
ratification of our last, best, and final offer and voted to strike
pending approval of the international leadership of PACE. As a result
of the unions failure to ratify the contract or act on the
strike vote by the expiration of the extension, the Company staffed
the operations of the two facilities with salaried and non-union
employees of GPC to ensure an uninterrupted supply of product to our
customers. We locked out the union employees pending resolution of
the contract issues. GPCs last,
best, and final offer to the union remains unchanged. The primary unresolved
issue is overtime scheduling. It is
not possible at this time to estimate how long the lockout at these
plants will last or whether it will ultimately have a negative impact on the
Companys financial condition, results of operations or liquidity.

Note 9. Legal Proceedings

On February 19, 2002, Chinyun Kim filed a putative class action claim in
District Court, Jefferson County, Colorado against the Company and certain of
its shareholders and directors. The Complaint alleges that the defendants
breached their fiduciary duties in connection with the issuance on August 15,
2000, of the Companys Series B Preferred Stock to the Grover C. Coors Trust.
The Complaint seeks to rescind the sale of the Series B Preferred Stock,
unspecified damages and costs and attorneys fees. On July 29, 2002, the Court
dismissed Plaintiffs claim against the Company for breach of fiduciary duty
while allowing the Plaintiff to proceed against the named directors and
shareholders, including certain Coors Family Trusts. The Company
believes this claim is without merit and will continue
to provide a vigorous defense to this action.

Note 10. Supplemental Information

GPC issued $300 million of senior subordinated notes on February 28, 2002.
The senior subordinated notes are jointly and severally as well as fully and
unconditionally guaranteed by GPIC and its other domestic subsidiaries. The
Companys foreign subsidiaries and a real estate development partnership do not
guarantee the senior subordinated notes.

The accompanying supplemental financial information presents condensed
consolidating financial statements of (a) Graphic Packaging Corporation (the
Issuer); (b) Graphic Packaging International Corporation (the
Parent) and a guarantor; (c) the
guarantor subsidiaries; (d) the nonguarantor subsidiaries; and (e) the Company
on a consolidated basis.

11



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##### Table of Contents



GPC and GPIC were co-borrowers under the Companys senior bank debt and
subordinated debt agreements in effect prior to the refinancing transactions on
February 28, 2002. Interest expense under these borrowing agreements was
recorded by GPC. In addition, GPC incurred $2.5 million of interest expense in
the three months ended June 30, 2002, and $5.0 million of interest expense in
the six months ended June 30, 2002, pursuant to a $100 million intercompany
loan from GPIC. In the three month and six month periods ended June 30, 2001,
GPC incurred $2.2 million and $4.4 million, respectively, of interest pursuant
to the same intercompany note that totaled $92.7 million in 2001.

The following condensed consolidating financial statements are presented
on the equity method. Under this method, investments in subsidiaries are
recorded at cost and adjusted for the parent companys share of the
subsidiaries cumulative results of operations, capital contributions,
distributions and other equity changes. The elimination entries relate
primarily to investments in subsidiaries, intercompany loans and other
intercompany transactions.

12



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##### Table of Contents



GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATING INCOME STATEMENT

Three Months Ended June 30, 2002
(in thousands)

|                                               |  |        |         |        |  |              |         |              |  |              |      |              |  |   |       |   |  |              |         |   |  |   |         |  
|---------------------------------------------- |  | ------ | ------- | ------ |  | ------------ | ------- | ------------ |  | ------------ | ---- | ------------ |  | - | ----- | - |  | ------------ | ------- | - |  | - | ------- | -
|                                               |  |        |         |        |  |              |         |              |  | Guarantor    |      | Nonguarantor |  |   |       |   |  | Consolidated
|                                               |  | Issuer |         | Parent |  | Subsidiaries |         | Subsidiaries |  | Eliminations |      | Total       
|                                               |  |        |         |        |  |              |         |              |  |              |      |             
|Net Sales                                      |  | $      | 262,199 |        |  | $            |        |              |  | $            |     |              |  | $ | 1,718 |   |  | $            |        |   |  | $ | 263,917 |  
|Cost of goods sold                             |  |        | 229,779 |        |  |              |        |              |  |              |     |              |  |   | 1,243 |   |  |              |        |   |  |   | 231,022 |  
|                                               |  |        |         |        |  |              |         |              |  |              |      |              |  |   |       |   |  |              |         |   |  |   |         |  
|Gross profit                                   |  |        | 32,420  |        |  |              |        |              |  |              |     |              |  |   | 475   |   |  |              |        |   |  |   | 32,895  |  
|Selling, general and
administrative expense    |  |        | 15,787  |        |  |              |        |              |  |              |     |              |  |   | 21    |   |  |              |        |   |  |   | 15,808  |  
|Equity in (earnings) of
subsidiaries           |  |        | (250    | )      |  |              | (10,926 | )            |  |              | (402 | )            |  |   |      |   |  |              | 11,578  |   |  |   |        |  
|                                               |  |        |         |        |  |              |         |              |  |              |      |              |  |   |       |   |  |              |         |   |  |   |         |  
|Operating income                               |  |        | 16,883  |        |  |              | 10,926  |              |  |              | 402  |              |  |   | 454   |   |  |              | (11,578 | ) |  |   | 17,087  |  
|Interest (expense) income                      |  |        | (14,968 | )      |  |              | 2,500   |              |  |              |     |              |  |   | 15    |   |  |              |        |   |  |   | (12,453 | )
|                                               |  |        |         |        |  |              |         |              |  |              |      |              |  |   |       |   |  |              |         |   |  |   |         |  
|Income before taxes and
extraordinary item     |  |        | 1,915   |        |  |              | 13,426  |              |  |              | 402  |              |  |   | 469   |   |  |              | (11,578 | ) |  |   | 4,634   |  
|Income tax expense                             |  |        | (757    | )      |  |              | (5,227  | )            |  |              | (319 | )            |  |   | (21   | ) |  |              | 4,516   |   |  |   | (1,808  | )
|                                               |  |        |         |        |  |              |         |              |  |              |      |              |  |   |       |   |  |              |         |   |  |   |         |  
|Net income                                     |  |        | 1,158   |        |  |              | 8,199   |              |  |              | 83   |              |  |   | 448   |   |  |              | (7,062  | ) |  |   | 2,826   |  
|Preferred stock dividends
declared             |  |        |        |        |  |              | (2,500  | )            |  |              |     |              |  |   |      |   |  |              |        |   |  |   | (2,500  | )
|                                               |  |        |         |        |  |              |         |              |  |              |      |              |  |   |       |   |  |              |         |   |  |   |         |  
|Net income attributable to
common shareholders |  | $      | 1,158   |        |  | $            | 5,699   |              |  | $            | 83   |              |  | $ | 448   |   |  | $            | (7,062  | ) |  | $ | 326     |  
|                                               |  |        |         |        |  |              |         |              |  |              |      |              |  |   |       |   |  |              |         |   |  |   |         |  

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GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATING INCOME STATEMENT

Three Months Ended June 30, 2001
(in thousands)

|                                               |  |        |         |        |  |              |        |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |         |  
|---------------------------------------------- |  | ------ | ------- | ------ |  | ------------ | ------ | ------------ |  | ------------ | ---- | ------------ |  | - | ----- | - |  | ------------ | ------ | - |  | - | ------- | -
|                                               |  |        |         |        |  |              |        |              |  | Guarantor    |      | Nonguarantor |  |   |       |   |  | Consolidated
|                                               |  | Issuer |         | Parent |  | Subsidiaries |        | Subsidiaries |  | Eliminations |      | Total       
|                                               |  |        |         |        |  |              |        |              |  |              |      |             
|Net sales                                      |  | $      | 282,176 |        |  | $            |       |              |  | $            |     |              |  | $ | 1,076 |   |  | $            |       |   |  | $ | 283,252 |  
|Cost of goods sold                             |  |        | 239,935 |        |  |              |       |              |  |              |     |              |  |   | 1,041 |   |  |              |       |   |  |   | 240,976 |  
|                                               |  |        |         |        |  |              |        |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |         |  
|Gross profit                                   |  |        | 42,241  |        |  |              |       |              |  |              |     |              |  |   | 35    |   |  |              |       |   |  |   | 42,276  |  
|Selling, general and
administrative
expense    |  |        | 16,387  |        |  |              |       |              |  |              | 5    |              |  |   | 36    |   |  |              |       |   |  |   | 16,428  |  
|Goodwill amortization                          |  |        | 5,143   |        |  |              |       |              |  |              |     |              |  |   |      |   |  |              |       |   |  |   | 5,143   |  
|Asset impairment and
restructuring
charges     |  |        | 1,000   |        |  |              |       |              |  |              |     |              |  |   |      |   |  |              |       |   |  |   | 1,000   |  
|Equity in (earnings) of
subsidiaries           |  |        | (59     | )      |  |              | (2,445 | )            |  |              | (107 | )            |  |   |      |   |  |              | 2,611  |   |  |   |        |  
|                                               |  |        |         |        |  |              |        |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |         |  
|Operating income
(loss)                        |  |        | 19,770  |        |  |              | 2,445  |              |  |              | 102  |              |  |   | (1    | ) |  |              | (2,611 | ) |  |   | 19,705  |  
|Interest (expense)
income                      |  |        | (15,830 | )      |  |              | 2,154  |              |  |              | 4    |              |  |   | 142   |   |  |              |       |   |  |   | (13,530 | )
|                                               |  |        |         |        |  |              |        |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |         |  
|Income before taxes                            |  |        | 3,940   |        |  |              | 4,599  |              |  |              | 106  |              |  |   | 141   |   |  |              | (2,611 | ) |  |   | 6,175   |  
|Income tax expense                             |  |        | (1,567  | )      |  |              | (1,821 | )            |  |              | (91  | )            |  |   | (6    | ) |  |              | 1,039  |   |  |   | (2,446  | )
|                                               |  |        |         |        |  |              |        |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |         |  
|Net income                                     |  |        | 2,373   |        |  |              | 2,778  |              |  |              | 15   |              |  |   | 135   |   |  |              | (1,572 | ) |  |   | 3,729   |  
|Preferred stock
dividends declared             |  |        |        |        |  |              | (2,500 | )            |  |              |     |              |  |   |      |   |  |              |       |   |  |   | (2,500  | )
|                                               |  |        |         |        |  |              |        |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |         |  
|Net income attributable
to common
shareholders |  | $      | 2,373   |        |  | $            | 278    |              |  | $            | 15   |              |  | $ | 135   |   |  | $            | (1,572 | ) |  | $ | 1,229   |  
|                                               |  |        |         |        |  |              |        |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |         |  

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##### Table of Contents



GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATING INCOME STATEMENT
Six Months Ended June 30, 2002
(in thousands)

|                                                                                                |  |        |          |        |  |              |        |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |          |  
|----------------------------------------------------------------------------------------------- |  | ------ | -------- | ------ |  | ------------ | ------ | ------------ |  | ------------ | ---- | ------------ |  | - | ----- | - |  | ------------ | ------ | - |  | - | -------- | -
|                                                                                                |  |        |          |        |  |              |        |              |  | Guarantor    |      | Nonguarantor |  |   |       |   |  | Consolidated
|                                                                                                |  | Issuer |          | Parent |  | Subsidiaries |        | Subsidiaries |  | Eliminations |      | Total       
|                                                                                                |  |        |          |        |  |              |        |              |  |              |      |             
|Net sales                                                                                       |  | $      | 524,551  |        |  | $            |       |              |  | $            |     |              |  | $ | 3,090 |   |  | $            |       |   |  | $ | 527,641  |  
|Cost of goods sold                                                                              |  |        | 457,898  |        |  |              |       |              |  |              |     |              |  |   | 2,556 |   |  |              |       |   |  |   | 460,454  |  
|                                                                                                |  |        |          |        |  |              |        |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |          |  
|Gross profit                                                                                    |  |        | 66,653   |        |  |              |       |              |  |              |     |              |  |   | 534   |   |  |              |       |   |  |   | 67,187   |  
|Selling, general and
administrative
expense                                                     |  |        | 30,651   |        |  |              |       |              |  |              |     |              |  |   | 44    |   |  |              |       |   |  |   | 30,695   |  
|Equity in (earnings)
of subsidiaries                                                            |  |        | (269     | )      |  |              | (4,695 | )            |  |              | (460 | )            |  |   |      |   |  |              | 5,424  |   |  |   |         |  
|                                                                                                |  |        |          |        |  |              |        |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |          |  
|Operating income                                                                                |  |        | 36,271   |        |  |              | 4,695  |              |  |              | 460  |              |  |   | 490   |   |  |              | (5,424 | ) |  |   | 36,492   |  
|Interest (expense)
income                                                                       |  |        | (28,745  | )      |  |              | 5,000  |              |  |              |     |              |  |   | (4    | ) |  |              |       |   |  |   | (23,749  | )
|                                                                                                |  |        |          |        |  |              |        |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |          |  
|Income before taxes,
extraordinary item
and cumulative
effect of change in
accounting
principle |  |        | 7,526    |        |  |              | 9,695  |              |  |              | 460  |              |  |   | 486   |   |  |              | (5,424 | ) |  |   | 12,743   |  
|Income tax expense                                                                              |  |        | (2,936   | )      |  |              | (3,781 | )            |  |              | (369 | )            |  |   |      |   |  |              | 2,115  |   |  |   | (4,971   | )
|                                                                                                |  |        |          |        |  |              |        |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |          |  
|Income before
extraordinary item
and cumulative
effect of change in
accounting
principle        |  |        | 4,590    |        |  |              | 5,914  |              |  |              | 91   |              |  |   | 486   |   |  |              | (3,309 | ) |  |   | 7,772    |  
|Extraordinary loss on
early extinguishment
of debt, net of
tax                                  |  |        | (9,617   | )      |  |              |       |              |  |              |     |              |  |   |      |   |  |              |       |   |  |   | (9,617   | )
|                                                                                                |  |        |          |        |  |              |        |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |          |  
|Income (loss) before
cumulative effect of
change in accounting
principle                        |  |        | (5,027   | )      |  |              | 5,914  |              |  |              | 91   |              |  |   | 486   |   |  |              | (3,309 | ) |  |   | (1,845   | )
|Cumulative effect of
change in goodwill
accounting, net of tax                                  |  |        | (180,000 | )      |  |              |       |              |  |              |     |              |  |   |      |   |  |              |       |   |  |   | (180,000 | )
|                                                                                                |  |        |          |        |  |              |        |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |          |  
|Net income (loss)                                                                               |  |        | (185,027 | )      |  |              | 5,914  |              |  |              | 91   |              |  |   | 486   |   |  |              | (3,309 | ) |  |   | (181,845 | )
|Preferred stock
dividends
declared                                                              |  |        |         |        |  |              | (5,000 | )            |  |              |     |              |  |   |      |   |  |              |       |   |  |   | (5,000   | )
|                                                                                                |  |        |          |        |  |              |        |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |          |  
|Net income (loss)
attributable to
common
shareholders                                           |  | $      | (185,027 | )      |  | $            | 914    |              |  | $            | 91   |              |  | $ | 486   |   |  | $            | (3,309 | ) |  | $ | (186,845 | )
|                                                                                                |  |        |          |        |  |              |        |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |          |  

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##### Table of Contents



GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATING INCOME STATEMENT
Six Months Ended June 30, 2001
(in thousands)

|                                               |  |        |         |        |  |              |        |              |  |              |        |              |  |   |       |   |  |              |        |   |  |   |         |  
|---------------------------------------------- |  | ------ | ------- | ------ |  | ------------ | ------ | ------------ |  | ------------ | ------ | ------------ |  | - | ----- | - |  | ------------ | ------ | - |  | - | ------- | -
|                                               |  |        |         |        |  |              |        |              |  | Guarantor    |        | Nonguarantor |  |   |       |   |  | Consolidated
|                                               |  | Issuer |         | Parent |  | Subsidiaries |        | Subsidiaries |  | Eliminations |        | Total       
|                                               |  |        |         |        |  |              |        |              |  |              |        |             
|Net sales                                      |  | $      | 569,778 |        |  | $            |       |              |  | $            |       |              |  | $ | 1,918 |   |  | $            |       |   |  | $ | 571,696 |  
|Cost of goods sold                             |  |        | 487,337 |        |  |              |       |              |  |              |       |              |  |   | 1,849 |   |  |              |       |   |  |   | 489,186 |  
|                                               |  |        |         |        |  |              |        |              |  |              |        |              |  |   |       |   |  |              |        |   |  |   |         |  
|Gross profit                                   |  |        | 82,441  |        |  |              |       |              |  |              |       |              |  |   | 69    |   |  |              |       |   |  |   | 82,510  |  
|Selling, general and
administrative expense    |  |        | 30,847  |        |  |              |       |              |  |              | 25     |              |  |   | 45    |   |  |              |       |   |  |   | 30,917  |  
|Goodwill amortization                          |  |        | 10,312  |        |  |              |       |              |  |              |       |              |  |   |      |   |  |              |       |   |  |   | 10,312  |  
|Asset impairment and
restructuring charges     |  |        | 3,000   |        |  |              |       |              |  |              |       |              |  |   |      |   |  |              |       |   |  |   | 3,000   |  
|Equity in (earnings) of
subsidiaries           |  |        | (2,458  | )      |  |              | (4,796 | )            |  |              | (124   | )            |  |   |      |   |  |              | 7,378  |   |  |   |        |  
|                                               |  |        |         |        |  |              |        |              |  |              |        |              |  |   |       |   |  |              |        |   |  |   |         |  
|Operating income                               |  |        | 40,740  |        |  |              | 4,796  |              |  |              | 99     |              |  |   | 24    |   |  |              | (7,378 | ) |  |   | 38,281  |  
|Gain from sale of
businesses and other
assets  |  |        |        |        |  |              |       |              |  |              | 3,650  |              |  |   |      |   |  |              |       |   |  |   | 3,650   |  
|Interest (expense)
income                      |  |        | (34,398 | )      |  |              | 4,309  |              |  |              | 278    |              |  |   | 156   |   |  |              |       |   |  |   | (29,655 | )
|                                               |  |        |         |        |  |              |        |              |  |              |        |              |  |   |       |   |  |              |        |   |  |   |         |  
|Income before taxes                            |  |        | 6,342   |        |  |              | 9,105  |              |  |              | 4,027  |              |  |   | 180   |   |  |              | (7,378 | ) |  |   | 12,276  |  
|Income tax expense                             |  |        | (2,503  | )      |  |              | (3,625 | )            |  |              | (1,652 | )            |  |   | (22   | ) |  |              | 2,936  |   |  |   | (4,866  | )
|                                               |  |        |         |        |  |              |        |              |  |              |        |              |  |   |       |   |  |              |        |   |  |   |         |  
|Net income                                     |  |        | 3,839   |        |  |              | 5,480  |              |  |              | 2,375  |              |  |   | 158   |   |  |              | (4,442 | ) |  |   | 7,410   |  
|Preferred stock dividends
declared             |  |        |        |        |  |              | (5,000 | )            |  |              |       |              |  |   |      |   |  |              |       |   |  |   | (5,000  | )
|                                               |  |        |         |        |  |              |        |              |  |              |        |              |  |   |       |   |  |              |        |   |  |   |         |  
|Net income attributable to
common shareholders |  | $      | 3,839   |        |  | $            | 480    |              |  | $            | 2,375  |              |  | $ | 158   |   |  | $            | (4,442 | ) |  | $ | 2,410   |  
|                                               |  |        |         |        |  |              |        |              |  |              |        |              |  |   |       |   |  |              |        |   |  |   |         |  

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##### Table of Contents



GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET

At June 30, 2002
(in thousands)

|                                     |                                               |                            |         |           |           |        |       |              |         |              |   |              |       |              |         |          |          |   |          |              |          |   |         |           |           | 
|------------------------------------ | --------------------------------------------- | -------------------------- | ------- | --------- | --------- | ------ | ----- | ------------ | ------- | ------------ | - | ------------ | ----- | ------------ | ------- | -------- | -------- | - | -------- | ------------ | -------- | - | ------- | --------- | --------- | 
|                                     |                                               |                            |         |           |           |        |       |              |         |              |   | Guarantor    |       | Nonguarantor |         |          |          |   |          | Consolidated
|                                     |                                               |                            |         | Issuer    |           | Parent |       | Subsidiaries |         | Subsidiaries |   | Eliminations |       | Total       
|                                     |                                               |                            |         |           |           |        |       |              |         |              |   |              |       |             
|ASSETS                               |                                               |                            |         |           |           |        |       |              |         |              |   |              |       |              |         |          |          |   |          |              |          |   |         |          
|Current assets                       |                                               |                            |         |           |           |        |       |              |         |              |   |              |       |              |         |          |          |   |          |              |          |   |         |          
|                                     | Cash and cash
equivalents                     |                            | $       | 1,293     |           |        | $     |             |         |              | $ |             |       |              | $       | 3,689    |          |   | $        |             |          |   | $       | 4,982     |          
|                                     | Accounts receivable                           |                            |         | 71,262    |           |        |       | 2,437        |         |              |   |             |       |              |         | 710      |          |   |          |             |          |   |         | 74,409    |          
|                                     | Inventories                                   |                            |         | 97,524    |           |        |       |             |         |              |   |             |       |              |         | 438      |          |   |          |             |          |   |         | 97,962    |          
|                                     | Other assets                                  |                            |         | 28,573    |           |        |       |             |         |              |   |             |       |              |         | 42       |          |   |          | (355         | )        |   |         | 28,260    |          
|                                     |                                               |                            |         |           |           |        |       |              |         |              |   |              |       |              |         |          |          |   |          |              |          |   |         |          
|                                     |                                               | Total
current
assets       |         |           | 198,652   |        |       |              | 2,437   |              |   |              |      |              |         |          | 4,879    |   |          |              | (355     | ) |         |           | 205,613   | 
|                                     | Properties, net                               |                            |         | 419,510   |           |        |       |             |         |              |   |             |       |              |         | 8,869    |          |   |          |             |          |   |         | 428,379   |          
|                                     | Goodwill, net                                 |                            |         | 379,696   |           |        |       |             |         |              |   |             |       |              |         |         |          |   |          |             |          |   |         | 379,696   |          
|                                     | Other assets                                  |                            |         | 31,430    |           |        |       | 560,924      |         |              |   | 7,368        |       |              |         | 42,044   |          |   |          | (610,571     | )        |   |         | 31,195    |          
|                                     |                                               |                            |         |           |           |        |       |              |         |              |   |              |       |              |         |          |          |   |          |              |          |   |         |          
|                                     |                                               | Total
assets               |         | $         | 1,029,288 |        |       | $            | 563,361 |              |   | $            | 7,368 |              |         | $        | 55,792   |   |          | $            | (610,926 | ) |         | $         | 1,044,883 | 
|                                     |                                               |                            |         |           |           |        |       |              |         |              |   |              |       |              |         |          |          |   |          |              |          |   |         |          
|LIABILITIES AND
SHAREHOLDERS EQUITY |                                               |                            |         |           |           |        |       |              |         |              |   |              |       |              |         |          |          |   |          |              |          |   |         |          
|Current liabilities                  |                                               |                            |         |           |           |        |       |              |         |              |   |              |       |              |         |          |          |   |          |              |          |   |         |          
|                                     | Current maturities
of long-term
debt          |                            | $       | 2,473     |           |        | $     |             |         |              | $ |             |       |              | $       | 1,358    |          |   | $        |             |          |   | $       | 3,831     |          
|                                     | Accounts payable                              |                            |         | 46,992    |           |        |       | 201          |         |              |   |             |       |              |         | 472      |          |   |          |             |          |   |         | 47,665    |          
|                                     | Interest payable                              |                            |         | 11,275    |           |        |       |             |         |              |   |             |       |              |         |         |          |   |          |             |          |   |         | 11,275    |          
|                                     | Other current
liabilities                     |                            |         | 71,418    |           |        |       | 24,009       |         |              |   | 2,555        |       |              |         | 1,295    |          |   |          | (24,326      | )        |   |         | 74,951    |          
|                                     |                                               |                            |         |           |           |        |       |              |         |              |   |              |       |              |         |          |          |   |          |              |          |   |         |          
|                                     |                                               | Total
current
liabilities  |         |           | 132,158   |        |       |              | 24,210  |              |   |              | 2,555 |              |         |          | 3,125    |   |          |              | (24,326  | ) |         |           | 137,722   | 
|Long-term debt                       |                                               |                            | 613,550 |           |           |        |      |              |         |              |  |              |       |              | 235,416 |          |          |   | (333,281 | )            |          |   | 515,685 |          
|Other long-term
liabilities          |                                               |                            | 68,997  |           |           |        | 1,791 |              |         |              |  |              |       |              |        |          |          |   | 3,877    |              |          |   | 74,665  |          
|                                     |                                               |                            |         |           |           |        |       |              |         |              |   |              |       |              |         |          |          |   |          |              |          |   |         |          
|                                     |                                               | Total
liabilities          |         |           | 814,705   |        |       |              | 26,001  |              |   |              | 2,555 |              |         |          | 238,541  |   |          |              | (353,730 | ) |         |           | 728,072   | 
|                                     |                                               |                            |         |           |           |        |       |              |         |              |   |              |       |              |         |          |          |   |          |              |          |   |         |           |           | 
|Shareholders equity:                |                                               |                            |         |           |           |        |       |              |         |              |   |              |       |              |         |          |          |   |          |              |          |   |         |          
|                                     | Preferred stock                               |                            |         |          |           |        |       | 100,000      |         |              |   |             |       |              |         |         |          |   |          |             |          |   |         | 100,000   |          
|                                     | Common stock                                  |                            |         |          |           |        |       | 326          |         |              |   | 1,829        |       |              |         | 1,540    |          |   |          | (3,369       | )        |   |         | 326       |          
|                                     | Paid-in capital                               |                            |         | 424,329   |           |        |       | 195,767      |         |              |   | 242,224      |       |              |         | (182,352 | )        |   |          | (264,571     | )        |   |         | 415,397   |          
|                                     | Retained earnings
(deficit)                   |                            |         | (194,020  | )         |        |       | 241,267      |         |              |   | (239,240     | )     |              |         | (1,157   | )        |   |          | 10,744       |          |   |         | (182,406  | )        
|                                     | Accumulated other
comprehensive
income (loss) |                            |         | (15,726   | )         |        |       |             |         |              |   |             |       |              |         | (780     | )        |   |          |             |          |   |         | (16,506   | )        
|                                     |                                               |                            |         |           |           |        |       |              |         |              |   |              |       |              |         |          |          |   |          |              |          |   |         |          
|                                     |                                               | Total
shareholders
equity |         |           | 214,583   |        |       |              | 537,360 |              |   |              | 4,813 |              |         |          | (182,749 | ) |          |              | (257,196 | ) |         |           | 316,811   | 
|                                     |                                               |                            |         |           |           |        |       |              |         |              |   |              |       |              |         |          |          |   |          |              |          |   |         |          
|                                     | Total liabilities
and shareholders
equity    |                            | $       | 1,029,288 |           |        | $     | 563,361      |         |              | $ | 7,368        |       |              | $       | 55,792   |          |   | $        | (610,926     | )        |   | $       | 1,044,883 |          
|                                     |                                               |                            |         |           |           |        |       |              |         |              |   |              |       |              |         |          |          |   |          |              |          |   |         |          

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GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
At December 31, 2001
(in thousands)

|                                           |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         |         | 
|------------------------------------------ | --------------------------------------------- | -------------------------- | --------- | ------- | ------- | ------ | ------- | ------------ | ------- | ------------ | ----- | ------------ | ----- | ------------ | ------- | -------- | -------- | - | -------- | ------------ | -------- | - | --------- | ------- | ------- | 
|                                           |                                               |                            |           |         |         |        |         |              |         |              |       | Guarantor    |       | Nonguarantor |         |          |          |   |          | Consolidated
|                                           |                                               |                            |           | Issuer  |         | Parent |         | Subsidiaries |         | Subsidiaries |       | Eliminations |       | Total       
|                                           |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |             
|ASSETS                                     |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |        
|Current assets                             |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |        
|                                           | Cash and cash
equivalents                     |                            | $         | 1,145   |         |        | $       | 976          |         |              | $     |             |       |              | $       | 4,645    |          |   | $        |             |          |   | $         | 6,766   |        
|                                           | Accounts receivable                           |                            |           | 56,560  |         |        |         | 135,301      |         |              |       | 93           |       |              |         | 834      |          |   |          | (133,314     | )        |   |           | 59,474  |        
|                                           | Inventories                                   |                            |           | 92,154  |         |        |         |             |         |              |       |             |       |              |         | 254      |          |   |          |             |          |   |           | 92,408  |        
|                                           | Other assets                                  |                            |           | 33,101  |         |        |         |             |         |              |       |             |       |              |         | 24,024   |          |   |          | (23,969      | )        |   |           | 33,156  |        
|                                           |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |        
|                                           |                                               | Total current
assets       |           |         | 182,960 |        |         |              | 136,277 |              |       |              | 93    |              |         |          | 29,757   |   |          |              | (157,283 | ) |           |         | 191,804 | 
|                                           | Properties, net                               |                            |           | 434,549 |         |        |         |             |         |              |       |             |       |              |         | 9,163    |          |   |          |             |          |   |           | 443,712 |        
|                                           | Goodwill, net                                 |                            |           | 559,696 |         |        |         |             |         |              |       |             |       |              |         |         |          |   |          |             |          |   |           | 559,696 |        
|                                           | Other assets                                  |                            |           | 18,626  |         |        |         | 471,914      |         |              |       | 8,147        |       |              |         | 18,075   |          |   |          | (482,639     | )        |   |           | 34,123  |        
|                                           |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |        
|Total assets                               |                                               | $                          | 1,195,831 |         |         | $      | 608,191 |              |         | $            | 8,240 |              |       | $            | 56,995  |          |          | $ | (639,922 | )            |          | $ | 1,229,335 |        
|                                           |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |        
|LIABILITIES AND
SHAREHOLDERS EQUITY       |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |        
|Current liabilities                        |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |        
|                                           | Current
maturities of
long-term debt          |                            | $         | 36,156  |         |        | $       |             |         |              | $     |             |       |              | $       | 1,217    |          |   | $        |             |          |   | $         | 37,373  |        
|                                           | Accounts payable                              |                            |           | 58,110  |         |        |         | 534          |         |              |       |             |       |              |         | 358      |          |   |          |             |          |   |           | 59,002  |        
|                                           | Interest payable                              |                            |           | 9,975   |         |        |         | 1,309        |         |              |       |             |       |              |         |         |          |   |          | (8,619       | )        |   |           | 2,665   |        
|                                           | Other current
liabilities                     |                            |           | 49,954  |         |        |         | 31,977       |         |              |       | 2,730        |       |              |         | 1,500    |          |   |          | (15,800      | )        |   |           | 70,361  |        
|                                           |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |        
|                                           |                                               | Total current
liabilities  |           |         | 154,195 |        |         |              | 33,820  |              |       |              | 2,730 |              |         |          | 3,075    |   |          |              | (24,419  | ) |           |         | 169,401 | 
|Long-term debt                             |                                               |                            | 579,006   |         |         |        |        |              |         |              |      |              |       |              | 2,055   |          |          |   | (92,675  | )            |          |   | 488,386   |        
|Other long-term
liabilities                |                                               |                            | 208,823   |         |         |        | 1,959   |              |         |              |      |              |       |              | 233,357 |          |          |   | (370,239 | )            |          |   | 73,900    |        
|                                           |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |        
|                                           | Total liabilities                             |                            |           | 942,024 |         |        |         | 35,779       |         |              |       | 2,730        |       |              |         | 238,487  |          |   |          | (487,333     | )        |   |           | 731,687 |        
|                                           |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         |         | 
|Shareholders equity:                      |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |        
|                                           | Preferred stock                               |                            |           |        |         |        |         | 100,000      |         |              |       |             |       |              |         |         |          |   |          |             |          |   |           | 100,000 |        
|                                           | Common stock                                  |                            |           |        |         |        |         | 322          |         |              |       | 1,829        |       |              |         | 1,540    |          |   |          | (3,369       | )        |   |           | 322     |        
|                                           | Paid-in capital                               |                            |           | 283,787 |         |        |         | 234,975      |         |              |       | 243,012      |       |              |         | (180,753 | )        |   |          | (163,272     | )        |   |           | 417,749 |        
|                                           | Retained earnings
(deficit)                   |                            |           | (8,993  | )       |        |         | 235,353      |         |              |       | (239,331     | )     |              |         | (1,643   | )        |   |          | 14,052       |          |   |           | (562    | )      
|                                           | Accumulated other
comprehensive income
(loss) |                            |           | (20,987 | )       |        |         | 1,762        |         |              |       |             |       |              |         | (636     | )        |   |          |             |          |   |           | (19,861 | )      
|                                           |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |        
|                                           |                                               | Total shareholders
equity |           |         | 253,807 |        |         |              | 572,412 |              |       |              | 5,510 |              |         |          | (181,492 | ) |          |              | (152,589 | ) |           |         | 497,648 | 
|                                           |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |        
|Total liabilities and
shareholders
equity |                                               | $                          | 1,195,831 |         |         | $      | 608,191 |              |         | $            | 8,240 |              |       | $            | 56,995  |          |          | $ | (639,922 | )            |          | $ | 1,229,335 |        
|                                           |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |        

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GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Six Months Ended June 30, 2002
(in thousands)

|                                                    |                                                     |   |         |          |        |   |              |        |              |   |              |       |              |   |        |        |   |   |              |        |   |   |         |          |  
|--------------------------------------------------- | --------------------------------------------------- | - | ------- | -------- | ------ | - | ------------ | ------ | ------------ | - | ------------ | ----- | ------------ | - | ------ | ------ | - | - | ------------ | ------ | - | - | ------- | -------- | -
|                                                    |                                                     |   |         |          |        |   |              |        |              |   | Guarantor    |       | Nonguarantor |   |        |        |   |   | Consolidated
|                                                    |                                                     |   | Issuer  |          | Parent |   | Subsidiaries |        | Subsidiaries |   | Eliminations |       | Total       
|                                                    |                                                     |   |         |          |        |   |              |        |              |   |              |       |             
|Net cash provided by (used in) operating
activities |                                                     | $ | 37,767  |          |        | $ | 3,588        |        |              | $ | (1,200       | )     |              | $ | 244    |        |   | $ |             |        |   | $ | 40,399  |         
|                                                    |                                                     |   |         |          |        |   |              |        |              |   |              |       |              |   |        |        |   |   |              |        |   |   |         |         
|Cash flows from investing activities:               |                                                     |   |         |          |        |   |              |        |              |   |              |       |              |   |        |        |   |   |              |        |   |   |         |         
|                                                    | Capital expenditures                                |   |         | (15,454  | )      |   |              |       |              |   |              |      |              |   |        |       |   |   |              |       |   |   |         | (15,454  | )
|                                                    | Other
investing activities                          |   |         |         |        |   |              |       |              |   |              | 1,200 |              |   |        |       |   |   |              | (1,200 | ) |   |         |         |  
|                                                    |                                                     |   |         |          |        |   |              |        |              |   |              |       |              |   |        |        |   |   |              |        |   |   |         |         
|                                                    | Net
cash provided by (used in) investing activities |   |         | (15,454  | )      |   |              |       |              |   |              | 1,200 |              |   |        |       |   |   |              | (1,200 | ) |   |         | (15,454  | )
|                                                    |                                                     |   |         |          |        |   |              |        |              |   |              |       |              |   |        |        |   |   |              |        |   |   |         |         
|Cash flows from financing activities:               |                                                     |   |         |          |        |   |              |        |              |   |              |       |              |   |        |        |   |   |              |        |   |   |         |         
|                                                    | Repayment of debt                                   |   |         | (619,343 | )      |   |              |       |              |   |              |      |              |   |        |       |   |   |              |       |   |   |         | (619,343 | )
|                                                    | Proceeds from borrowings                            |   |         | 613,100  |        |   |              |       |              |   |              |      |              |   |        |       |   |   |              |       |   |   |         | 613,100  |  
|                                                    | Payment of debt issuance costs                      |   |         | (15,922  | )      |   |              |       |              |   |              |      |              |   |        |       |   |   |              |       |   |   |         | (15,922  | )
|                                                    | Preferred stock dividends paid                      |   |         |         |        |   |              | (5,000 | )            |   |              |      |              |   |        |       |   |   |              |       |   |   |         | (5,000   | )
|                                                    | Common stock issuance and other                     |   |         |         |        |   |              | 436    |              |   |              |      |              |   |        | (1,200 | ) |   |              | 1,200  |   |   |         | 436      |  
|                                                    |                                                     |   |         |          |        |   |              |        |              |   |              |       |              |   |        |        |   |   |              |        |   |   |         |         
|Net cash used in financing activities               |                                                     |   | (22,165 | )        |        |   | (4,564       | )      |              |   |             |       |              |   | (1,200 | )      |   |   | 1,200        |        |   |   | (26,729 | )       
|                                                    |                                                     |   |         |          |        |   |              |        |              |   |              |       |              |   |        |        |   |   |              |        |   |   |         |          |  
|Cash and cash equivalents:                          |                                                     |   |         |          |        |   |              |        |              |   |              |       |              |   |        |        |   |   |              |        |   |   |         |         
|                                                    | Net increase (decrease)                             |   |         | 148      |        |   |              | (976   | )            |   |              |      |              |   |        | (956   | ) |   |              |       |   |   |         | (1,784   | )
|                                                    | Balance at beginning of period                      |   |         | 1,145    |        |   |              | 976    |              |   |              |      |              |   |        | 4,645  |   |   |              |       |   |   |         | 6,766    |  
|                                                    |                                                     |   |         |          |        |   |              |        |              |   |              |       |              |   |        |        |   |   |              |        |   |   |         |          |  
|                                                    | Balance at end of period                            |   | $       | 1,293    |        |   | $            |       |              |   | $            |      |              |   | $      | 3,689  |   |   | $            |       |   |   | $       | 4,982    |  
|                                                    |                                                     |   |         |          |        |   |              |        |              |   |              |       |              |   |        |        |   |   |              |        |   |   |         |         

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##### Table of Contents



GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Six Months Ended June 30, 2001
(in thousands)

|                                                    |                                 |   |         |          |        |   |              |        |              |   |              |       |              |   |     |       |   |   |              |   |  |   |         |          |  
|--------------------------------------------------- | ------------------------------- | - | ------- | -------- | ------ | - | ------------ | ------ | ------------ | - | ------------ | ----- | ------------ | - | --- | ----- | - | - | ------------ | - |  | - | ------- | -------- | -
|                                                    |                                 |   |         |          |        |   |              |        |              |   | Guarantor    |       | Nonguarantor |   |     |       |   |   | Consolidated
|                                                    |                                 |   | Issuer  |          | Parent |   | Subsidiaries |        | Subsidiaries |   | Eliminations |       | Total       
|                                                    |                                 |   |         |          |        |   |              |        |              |   |              |       |             
|Net cash provided by (used
in) operating
activities |                                 | $ | 67,724  |          |        | $ | 4,855        |        |              | $ | (3,650       | )     |              | $ | (21 | )     |   | $ |             |   |  | $ | 68,908  |         
|                                                    |                                 |   |         |          |        |   |              |        |              |   |              |       |              |   |     |       |   |   |              |   |  |   |         |         
|Cash flows from investing
activities:               |                                 |   |         |          |        |   |              |        |              |   |              |       |              |   |     |       |   |   |              |   |  |   |         |         
|                                                    | Capital expenditures            |   |         | (16,374  | )      |   |              |       |              |   |              |      |              |   |     |      |   |   |              |  |  |   |         | (16,374  | )
|                                                    | Proceeds from sale of
assets    |   |         | 3,400    |        |   |              |       |              |   |              | 3,650 |              |   |     |      |   |   |              |  |  |   |         | 7,050    |  
|                                                    |                                 |   |         |          |        |   |              |        |              |   |              |       |              |   |     |       |   |   |              |   |  |   |         |         
|Net cash provided by (used
in) investing
activities |                                 |   | (12,974 | )        |        |   |             |        |              |   | 3,650        |       |              |   |    |       |   |   |             |   |  |   | (9,324  | )       
|                                                    |                                 |   |         |          |        |   |              |        |              |   |              |       |              |   |     |       |   |   |              |   |  |   |         |          |  
|Cash flows from financing
activities:               |                                 |   |         |          |        |   |              |        |              |   |              |       |              |   |     |       |   |   |              |   |  |   |         |         
|                                                    | Repayment of debt               |   |         | (141,450 | )      |   |              |       |              |   |              |      |              |   |     |      |   |   |              |  |  |   |         | (141,450 | )
|                                                    | Proceeds from
borrowings        |   |         | 86,700   |        |   |              |       |              |   |              |      |              |   |     |      |   |   |              |  |  |   |         | 86,700   |  
|                                                    | Preferred stock dividends
paid  |   |         |         |        |   |              | (5,000 | )            |   |              |      |              |   |     |      |   |   |              |  |  |   |         | (5,000   | )
|                                                    | Common stock issuance and
other |   |         |         |        |   |              | 145    |              |   |              |      |              |   |     |      |   |   |              |  |  |   |         | 145      |  
|                                                    |                                 |   |         |          |        |   |              |        |              |   |              |       |              |   |     |       |   |   |              |   |  |   |         |         
|Net cash used in financing
activities               |                                 |   | (54,750 | )        |        |   | (4,855       | )      |              |   |             |       |              |   |    |       |   |   |             |   |  |   | (59,605 | )       
|                                                    |                                 |   |         |          |        |   |              |        |              |   |              |       |              |   |     |       |   |   |              |   |  |   |         |          |  
|Cash and cash equivalents:                          |                                 |   |         |          |        |   |              |        |              |   |              |       |              |   |     |       |   |   |              |   |  |   |         |         
|                                                    | Net decrease                    |   |         |         |        |   |              |       |              |   |              |      |              |   |     | (21   | ) |   |              |  |  |   |         | (21      | )
|                                                    | Balance at beginning of
period  |   |         |         |        |   |              |       |              |   |              |      |              |   |     | 4,012 |   |   |              |  |  |   |         | 4,012    |  
|                                                    |                                 |   |         |          |        |   |              |        |              |   |              |       |              |   |     |       |   |   |              |   |  |   |         |         
|                                                    | Balance at end of period        |   | $       |         |        |   | $            |       |              |   | $            |      |              |   | $   | 3,991 |   |   | $            |  |  |   | $       | 3,991    |  
|                                                    |                                 |   |         |          |        |   |              |        |              |   |              |       |              |   |     |       |   |   |              |   |  |   |         |         

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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

Overview

According to a Corrugated and Paperboard Boxes
study, dated February 2002, prepared by the Freedonia Group, Inc., we
are the leading manufacturer of folding cartons in North America. We
have an estimated 13% market share. Our business
strategy is to maintain and improve our customer relationships and market
leadership, while leveraging our low cost position.

GPIC was incorporated in Colorado in August 1992 as a holding company for
the packaging, ceramics, aluminum and developmental businesses formerly owned
by Adolph Coors Company, or ACCo. In December 1992, ACCo distributed to its
shareholders all outstanding shares of GPICs stock. During our initial years,
we operated packaging, ceramics, aluminum and various developmental businesses.
Through various acquisitions and divestitures, a spin-off and other
transactions, we are now strategically focused on the folding carton segment of
the fiber-based product packaging industry.

Segment Information

Our reportable segments are based on our method of internal reporting,
which is based on product category. Since January 1, 2000, we have operated
principally in the United States and in only one reportable segmentPackaging.

Factors That Impact Our Business

Sales. We sell our products primarily to major consumer product
manufacturers in non-cyclical industries, such as food and beverage providers.
Sales are driven primarily by consumer buying habits in the markets our
customers serve. New product introductions and promotional activity by our
customers, and our introduction of innovative packaging solutions, also impact
our sales.

Our products are used in the following end-use markets:



| |  |  | food  cereal; desserts; frozen and microwave foods; pet foods;
prepared foods; snacks; and food service products;
| | - |  | ------------------------------------------------------------------------------------------------------------------
|
| |  |  | household products  dishwasher and laundry detergent; sporting goods;
healthcare; and tissues and papers;        
|
| |  |  | beverage  bottle and can carriers and cases; and                                                                 
|
| |  |  | tobacco   fliptop boxes and cartons.                                                                             

We market our
products directly to our customers through an internal sales force. Our top 20 customers, with whom we have long-term
relationships, represent approximately 80% of our gross sales in the first six
months of 2002. Our competition includes other large national folding carton
companies, as well as numerous smaller regional companies. Our primary
competitors include: Caraustar Industries, Inc., Field Container Company,
L.P., Gulf States Paper Corporation, Rock-Tenn Company and Smurfit-Stone
Container Corporation. We work to maintain our market share through quality,
service, efficiency, innovation, competitive pricing and strategic sourcing to
our customers.

In addition, we believe that we have the opportunity to expand the folding
carton market by developing new products that can replace other types of
packaging. Our research and development organization is closely involved with
our customers in the development of new packaging alternatives.

Cost of Goods
Sold. Our costs of goods sold consist primarily of
recycled paper fiber, purchased paperboard, ink, plastic films, resins and
labor, which are all variable cost components. Variable costs are estimated to be 80% and fixed costs to be 20% of total
costs.

In light of rising margin pressure throughout our industry, we have
aggressively reduced costs. We have controlled costs in our converting
facilities by coordinating and determining the optimal configuration of
equipment

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among our facilities. A substantial portion of our production is
centrally planned and can be allocated among different plants in the system in
order to take advantage of equipment optimization, capacity scheduling,
staffing and freight. Our ability to work as an integrated business, as
opposed to different units, has given us opportunities to reduce production
overhead costs and to take advantage of economies of scale in purchasing,
customer service, freight and other areas common to all of our facilities. Our
newest initiative to reduce our variable manufacturing costs is our recent
introduction of a company-wide Six Sigma process. The term Six Sigma refers
to a measure of business capability. A company that performs at a Six Sigma
level has demonstrated one of the following:



| | 1. |  | the amount of variation in its process is so tightly controlled
that there are six standard deviations
between the mean and the nearest customer specification (upper and
lower control limit); or
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | the company produces products with a defect rate of not more than
3.4 defects for every
1 million opportunities.                                                                                  

To achieve Six Sigma, we identify and address the Cost of Poor Quality in both
manufacturing and transactional processes through a disciplined project
methodology (Measure, Analyze, Improve, and Control) executed by skilled
project leaders called Black Belts and Green Belts.

We have also taken steps to reduce our fixed manufacturing and corporate
overhead (selling, general and administrative) costs. In addition to closing
plants and moving equipment and business to other facilities, we have
eliminated positions to reduce fixed personnel costs and have begun to use the
Six Sigma program to make our non-production business processes more cost
effective.

Results of Operations

Net sales for the three months ended June 30, 2002 were $263.9 million, a
decrease of $19.4 million, or 6.8%, compared to the second quarter of 2001.
Sales for the six months ended June 30, 2002 were $527.6 million, a decrease of
$44.1 million, or 7.7%, compared to the same period in 2001. In the first half
of 2001, we enjoyed exceptionally strong sales to customers for one-time product
promotions and new, value-added business. By the end of the third quarter of
2001, we started to experience lower sales that have continued through June
2002, as, we believe, our customers focused on managing their inventories as they
faced an uncertain economy. This trend resulted in lower orders
from customers and, in some cases, temporary plant shutdowns by our
customers. The impact on our company has been primarily reduced
volume.

Gross profit, as a percentage of net sales, was 12.5% for the second
quarter of 2002 and 12.7% for the six months ended June 30, 2002. Gross
profit, as a percentage of net sales, was 14.9% and 14.4% for the comparable
periods in 2001. Although gross profit as a percentage of sales in the first
half of 2002 was negatively impacted by lower sales and the resulting lower
absorption of fixed costs, our system-wide optimization and
restructuring activities and emphasis on cost control programs, like Six Sigma,
have contributed to gross margin improvement since 2000.

Selling, general and
administrative expenses were $15.8 million, or 6.0% of
net sales, for the three months ended June 30, 2002, and
$30.7 million, or 5.8% of net sales, for the six months ended June 30, 2002. In the comparable periods of 2001,
these expenses were $16.4 million and $30.9 million, or 5.8% and 5.4% as a
percentage of sales, respectively. Decreases against prior year expenses are
principally due to reduced management incentives, partially offset by
costs related to the installation of an ERP information system in 2002. Percentage increases are
principally due to reduced sales. Our goal is to keep selling, general and
administrative expense at or under 6% of net sales.

Interest expense
decreased $1.1 million, or 8%, in the second quarter of
2002, compared to the second quarter of 2001. Year-to-date 2002 interest
expense is lower than year-to-date 2001 by $5.9 million, or 20%, primarily as a
result of lower debt balances and lower market interest rates. Partially
offsetting the favorable impact of lower market interest rates and lower debt
balances is the interest rate impact from our February 28, 2002 senior
subordinated notes issuance. The senior subordinated notes have a higher fixed
interest rate of 8 5/8% as long term financing versus the shorter term variable
rate bank financing they replaced.

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The effective tax rate for the first half of 2002 was approximately 39%,
compared to 40% in the first half of 2001. Because some of our goodwill
amortization is nondeductible for tax purposes, our effective tax rate is lower
as a result of implementing SFAS No. 142, which eliminated goodwill
amortization expense for financial reporting purposes effective January 1,
2002. See discussion of our new goodwill accounting below. We
expect to maintain an effective tax rate of approximately 39% for the
remainder of 2002.

Kalamazoo Labor Dispute

The labor agreement between GPC and the Paper, Allied-Industrial, Chemical and
Energy Workers International (PACE) and PACE Local 1010, which represents approximately 400 workers at
our Kalamazoo, Michigan paperboard mill and folding carton plant, expired July
27, 2002, following a four-day extension of that agreement. On
July 22, 2002, the membership of the local voted against
ratification of our last, best, and final offer and voted to strike
pending approval of the international leadership of PACE. As a result
of the unions failure to ratify the contract or act on the
strike vote by the expiration of the extension, we staffed
the operations of the two facilities with salaried and non-union
employees of GPC to ensure an uninterrupted supply of product to our
customers. We locked out the union employees pending resolution of
the contract issues. Our last,
best, and final offer to the union remains unchanged. The primary unresolved
issue is overtime scheduling. It is
not possible at this time to estimate how long the lockout at these
plants will last or whether it will ultimately have a negative impact on the
Companys financial condition, results of operations or liquidity.

Asset Impairment and Restructuring Charges

We recorded restructuring charges totaling $2.4 million in the
fourth quarter of 2001 in connection with the announced closure of the Newnan,
Georgia plant. The restructuring charges relate to severance packages for 105
plant personnel that were communicated to employees in December 2001.
We expect to shut down the plants operations during the third quarter of
2002 and subsequently sell the plants building and land which has a combined
net book value of $1.8 million. We expect to complete the Newnan
restructuring plan by the end of 2002. Restructuring payments made during the
first half of 2002 under this program totaled $0.2 million.

We recorded a restructuring charge of $1.0 million in the second
quarter of 2001, continuing the plan announced in the fourth quarter of 2000 to
eliminate approximately 200 non-production positions across the company,
including the closure of our folding carton plant in Portland,
Oregon. $3.0 million was recorded in the fourth quarter of 2000 and $1.0
million was recorded in the first quarter of 2001 related to this restructuring
plan. The 2001 charges relate to severance packages that were communicated to
employees in the first half of 2001. At June 30, 2002, this restructuring plan
is complete.

We recorded a restructuring charge of $3.4 million in the first
quarter of 2000 for anticipated severance costs as a result of the announced
closure of the Saratoga Springs, New York plant. We have completed the
closure of the Saratoga Springs plant and the transition of the plants
business to other company facilities. Approximately $0.5 million of the
restructuring charges were not necessary to meet severance obligations for the
plants former employees and were reversed in the first quarter
of 2001. We recorded an asset impairment charge of $1.5 million in the quarter
ended March 31, 2001 related to our Saratoga Springs building. On June 29,
2001, the Saratoga Springs building and land were sold for cash proceeds of
approximately $3.4 million, with no gain or loss being
recognized. At June 30, 2002, this restructuring plan is
complete.

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The following table
summarizes accruals related to all of our restructuring activities during the first half of 2002 (in millions):

|                           |  |          |      |           |  |         |      |        |  |   |      |   |  |   |      |  
|-------------------------- |  | -------- | ---- | --------- |  | ------- | ---- | ------ |  | - | ---- | - |  | - | ---- | -
|                           |  | 2000     |      |           |  |         |      | 2001   |  |   |      |  
|                           |  | Saratoga |      | 2000/2001 |  | Newnan  |      |        |  |  
|                           |  | Springs  |      | Reduction |  | Plant   |      |        |  |  
|                           |  | Closure  |      | in Force  |  | Closure |      | Totals
|                           |  |          |      |           |  |         |      |       
|Balance, December 31, 2001 |  | $        | 0.1  |           |  | $       | 0.2  |        |  | $ | 2.4  |   |  | $ | 2.7  |  
|                           |  |          |      |           |  |         |      |        |  |   |      |   |  |   |      |  
|Cash paid                  |  |          | (0.1 | )         |  |         | (0.2 | )      |  |   |     |   |  |   | (0.3 | )
|                           |  |          |      |           |  |         |      |        |  |   |      |   |  |   |      |  
|Balance, March 31, 2002    |  |          | 0.0  |           |  |         | 0.0  |        |  |   | 2.4  |   |  |   | 2.4  |  
|                           |  |          |      |           |  |         |      |        |  |   |      |   |  |   |      |  
|Cash paid                  |  |          |     |           |  |         |     |        |  |   | (0.2 | ) |  |   | (0.2 | )
|                           |  |          |      |           |  |         |      |        |  |   |      |   |  |   |      |  
|                           |  |          |      |           |  |         |      |        |  |   |      |   |  |   |      |  
|Balance, June 30, 2002     |  | $        | 0.0  |           |  | $       | 0.0  |        |  | $ | 2.2  |   |  | $ | 2.2  |  
|                           |  |          |      |           |  |         |      |        |  |   |      |   |  |   |      |  

Asset Sales

We have closed several noncore or underperforming facilities over
the past two years. We sold our Saratoga Springs, New York building
and land in June 2001 and our Perrysburg, Ohio building and land in July 2001
for cash proceeds of $3.4 million and $1.9 million, respectively. No gain or
loss was recognized on the sales.

In the first quarter of 2001, a pre-tax gain of $3.6 million was
recognized upon receipt of additional consideration for assets of our former developmental businesses.

Goodwill Accounting

SFAS No. 142, Goodwill and Other Intangible Assets,was issued in 2001 and
became effective for us on January 1, 2002. This statement establishes new
accounting and reporting standards that, among other things, eliminate
amortization of goodwill and certain intangible assets with indefinite useful
lives. We do not have any intangible assets with indefinite useful
lives; however, as required by the new standard, our goodwill will be
evaluated annually for impairment using a fair-value based approach and, if
there is impairment, the carrying amount of goodwill will be written down to
its implied fair value.

Effective
January 1, 2002, we assigned the carrying value of our goodwill, totaling $560 million, to one reporting unit. Management has
completed the transitional impairment testing of our goodwill and has
determined that our goodwill was impaired by $180 million at January
1, 2002. The fair value of the goodwill was derived using a discounted cash
flow method. The transitional impairment loss is reflected as a
cumulative effect of
change in accounting principle in the accompanying income statement. Future impairments of goodwill, if any, will be charged to
operating income in the period in which impairment arises.

Of the
$560 million carrying value of goodwill at December 31,
2001, $418 million is deductible for Federal income tax purposes
and $142 million is not deductible. The $180 million
goodwill impairment charge consists of approximately
$131 million of deductible goodwill and approximately
$49 million of non-deductible goodwill. The $131 million
tax deductible portion of the impairment charge resulted in a
deferred tax benefit/asset of approximately $50 million. We
recorded a 100% valuation allowance against the approximately
$50 million deferred tax asset resulting from recognition of the
transitional goodwill impairment loss. Therefore, the cumulative
effect of change in accounting principle reflected in the
accompanying income statement is net of $0 tax benefit.

Effective
January 1, 2002, we stopped amortizing our goodwill as
required by SFAS No. 142. The annual reduction in amortization expense is
approximately $20.6 million before taxes. Because some of our
goodwill amortization is nondeductible for tax purposes, our effective tax rate is lower as a result of implementing SFAS No. 142. The
change in the carrying amount of our goodwill consists entirely of
the impairment of $180 million for the six months ended June 30, 2002.

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New Accounting Pronouncements

In 2001, the FASB
issued SFAS No. 143. Accounting for Asset Retirement
Obligations. SFAS No. 143 requires the recognition of
a liability and offsetting asset for any legal obligation associated
with the retirement of long-lived assets. The asset retirement cost
is depreciated over the life of the related asset. This statement is
effective for financial statements issued for fiscal years beginning
after June 15, 2002. We do not believe SFAS
No. 143 will have a significant effect on our company.

SFAS No. 145, Recission of FASB Statements No. 4, 44, and 64, Amendment
of FASB Statement No. 13, and Technical Corrections, was issued on April 30,
2002. SFAS No. 145 includes, among other things, the recission of SFAS No. 4,
which required that gains and losses from early extinguishment of debt be
classified as an extraordinary item, net of related income tax effects. Under
the new guidance of SFAS No. 145, losses from early extinguishment of debt will
be classified as extraordinary items only when the losses are considered
unusual in nature and infrequent in occurrence. SFAS No. 145 will be effective
for us on January 1, 2003, at which time we will reclassify
its first quarter 2002 loss on early extinguishment of debt as a
non-extraordinary item.

SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities, was issued on July 30, 2002. SFAS No. 146 will require companies
to recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
SFAS No. 146 is effective for us on January 1, 2003 and will have no effect
on our companys historical financial results.

Liquidity and Capital Resources

Our liquidity is generated from both internal and external sources and is
used to fund short-term working capital needs, capital expenditures (estimated
to be $40 million in 2002), preferred stock dividends and other
general corporate purposes.

Capital Structure

On February 28, 2002, we refinanced our existing senior bank credit
facility with $300 million of senior subordinated notes, carrying interest at 8
5/8%, payable semi-annually and due in 2012, and a new $450 million senior bank
credit facility. We collectively refer to these transactions as the
Refinancing Transactions.

We intend to fund future working capital needs, capital expenditures,
preferred stock dividends and acquisitions through cash flow generated from
operations and borrowings under our new senior bank credit facility. GPC is
the borrower under the new senior bank credit facility and the senior
subordinated notes, and GPIC has guaranteed the loans. The new senior bank
credit facility consists of a $275 million, five-year revolving credit
facility, or the Revolver, and a $175 million, seven-year term loan, or the
Term Loan. The Revolver bears interest at various pricing options, including
LIBOR plus a spread tied to our leverage, with a single principal payment due
at maturity. The interest rate for the Revolver was 3.84% at June 30, 2002.
The Term Loan bears interest at various pricing options, including LIBOR plus
275 basis points, with principal amortization of 1% a year and the balance due
at maturity. The interest rate for the Term Loan was 4.59% at June 30, 2002.
The facilities must also be prepaid with a cash flow recapture calculation, and
with certain proceeds from asset sales, and debt or equity offerings. The
facility is collateralized by first priority liens on all material assets of
the Company and all of its domestic subsidiaries. The facility limits the
Companys ability to pay dividends other than permitted dividends on the
preferred stock, and imposes limitations on the incurrence of additional debt,
acquisitions, capital expenditures and the sale of assets.

We used the net
proceeds from the Refinancing Transactions to repay the existing bank
debt, to repurchase the existing $50 million of subordinated
notes at par from Golden Heritage, LLC, a related party, and to pay related
interest, fees and expenses.

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In connection with the Refinancing Transactions, we incurred a non-cash
charge in 2002 to write off our remaining unamortized debt issuance costs
associated with the refinanced debt. These costs amounted to $15.8 million,
pretax, at February 28, 2002. If we continue to reduce LIBOR-based borrowings
through increased cash flows, we may also incur an immediate charge related to our
existing interest rate swap agreements if they no longer qualify as a hedge of
interest rate risk. On February 28, 2002, we terminated a $35 million notional
value interest rate swap contract for $830,000 that we are amortizing over the
remaining life of the swap contract (through September 2002). At June 30, 2002, we had
$190 million notional value of interest rate swap agreements, which had a
negative fair value of $2.3 million.

Our borrowings at June 30, 2002 and December 31, 2001 consist of the
following (in thousands):

|                                                                                   |  |          |         |              |  |   |         | 
|---------------------------------------------------------------------------------- |  | -------- | ------- | ------------ |  | - | ------- | 
|                                                                                   |  | June 30, |         | December 31,
|                                                                                   |  | 2002     |         | 2001        
|                                                                                   |  |          |         |             
|Seven-year
term facility due 2009, variable interest currently at 4.59%            |  | $        | 174,000 |              |  | $ |        | 
|Five-year
revolving credit facility due 2007, variable interest currently at 3.84% |  |          | 39,800  |              |  |   |        | 
|8-5/8% senior subordinated notes due 2012                                          |  |          | 300,000 |              |  |   |        | 
|Five-year term facility due 2004, variable interest at 4.18%                       |  |          |        |              |  |   | 247,035 | 
|Revolving credit facility due 2004, variable interest at 4.18%                     |  |          |        |              |  |   | 222,750 | 
|10% subordinated notes due 2008                                                    |  |          |        |              |  |   | 50,000  | 
|Other notes payable                                                                |  |          | 5,716   |              |  |   | 5,974   | 
|                                                                                   |  |          |         |              |  |   |         | 
|                                                                                   |  |          |         |              |  |   |         | 
|Total                                                                              |  |          | 519,516 |              |  |   | 525,759 | 
|Less current maturities                                                            |  |          | 3,831   |              |  |   | 37,373  | 
|                                                                                   |  |          |         |              |  |   |         | 
|Long-term maturities                                                               |  | $        | 515,685 |              |  | $ | 488,386 | 
|                                                                                   |  |          |         |              |  |   |         | 

Our maturities of long-term debt as of June 30, 2002 are as follows (in
thousands):

|                            |  |   |         | 
|--------------------------- |  | - | ------- | 
|2002 (remaining six months) |  | $ | 2,872   | 
|2003                        |  |   | 1,927   | 
|2004                        |  |   | 1,923   | 
|2005                        |  |   | 1,941   | 
|Thereafter                  |  |   | 510,853 | 
|                            |  |   |         | 
|                            |  | $ | 519,516 | 
|                            |  |   |         | 

We maintain an interest rate risk-management strategy that uses derivative
instruments to minimize significant, unanticipated earnings fluctuations that
may arise from volatility in interest rates. Our specific goals are to (1)
manage interest rate sensitivity by modifying the re-pricing or maturity
characteristics of some of our debt and (2) lower (where possible) the cost of
our borrowed funds. In accordance with our interest rate risk-management
strategy, we had contracts in place at June 30, 2002 to hedge the interest
rates on our variable rate borrowings in the form of swap agreements on $190
million of borrowings. The
swap agreements lock in an average LIBOR rate of 6.6%. LIBOR was
1.8% at June 30, 2002. A $125 million notional value swap agreement expired in July 2002. The remaining swap agreements will
expire in September 2002. Although these contracts were not replaced with new
contracts upon expiration, our policy allows management to enter into new
contracts in the future.

Our capital structure also includes $100 million of Series B preferred
stock, issued on August 15, 2000 to the Grover C. Coors Trust, a related party.
The Series B preferred stock is convertible into shares of our common stock at
$2.0625 per share and is entitled to receive a dividend payable quarterly at an
annual rate of 10%. We may redeem the Series B preferred stock beginning on
August 15, 2005 at 105% of par. This premium decreases by 1% per year until
August 15, 2010, at which time we can elect to redeem the shares at par. The
Series B preferred stock has a liquidation preference over our common stock and
is entitled to one vote for every two shares held on an as-converted basis.

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Working Capital

Our working capital
before current maturities of long-term debt, increased
$12 million during the six months ended June 30, 2002. Our working capital is dependent upon our ability to manage our
inventories, collect our receivables on a timely basis, and maintain favorable
terms with our vendors. Our working capital can be negatively impacted if our
operations run less efficiently, particularly at times when business is moved
among plants or new plants are acquired, or if inventories build up due to
lower than planned sales during a period. The increase in working
capital reflects increased receivables after having unusually low
sales volume during December 2001, and changes in inventory and
accounts payable. Our cash flow from operations for
the first half of 2002 was positively impacted by the change in our interest
payment schedule when we refinanced our debt; however, on August 15, 2002, we
will make a semi-annual interest payment on our senior subordinated notes
totaling $11.9 million. This will negatively impact our cash flows from
operations in the third quarter of 2002.

We currently expect that cash flows from operations and borrowings under
our new credit facility will be adequate to meet our needs for
working capital, financing for capital expenditures and debt repayments for the
foreseeable future. Our working capital position (including current maturities
of long term debt) at June 30, 2002 was $67.9 million, and $229.1 million was
available under our revolving credit facility.

We expect our capital expenditures for 2002 to be approximately $40
million, and expect to fund our capital requirements with net cash from
operations.

Inflation

The impact of inflation on our financial position and results of
operations has been minimal and is not expected to adversely affect future
results.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

As of August 1, 2002, the Companys capital structure includes $202.8
million of debt that bears interest based upon an underlying rate that
fluctuates with short-term interest rates, specifically LIBOR. As of August 1,
2001, the Companys capital structure included $580.0 million of debt that bore
interest based upon an underlying rate that fluctuated with short-term interest
rates, specifically LIBOR. Since January 1, 2001, one-month LIBOR rates have
fluctuated from a high of 5.6% to a low of 1.8%. At August 1, 2002, the
Company has interest rate swap agreements that lock LIBOR at 5.94% on $65
million of its borrowings. At August 1, 2001, the Company had interest rate swap agreements that locked LIBOR at 5.94% on $100 million of its
borrowings and 6.98%. Until May 2002, the
Company had interest rate contracts that capped the LIBOR interest rate at
8.13% on $200 million of borrowings and 6.75% for $150 million of borrowings.
With the Companys interest rate protection contracts still in place at August
1, 2002, a 1% rise in interest rates would impact annual pre-tax results by
approximately $1.4 million. One year ago, a 1% rise in interest rates would
have impacted annual pre-tax results by approximately $3.6 million.

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Factors That May Affect Future Results

Certain statements in this document constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements may include words such as anticipate, estimate,
expect, project, intend,
plan, believe and other words and terms of
similar meaning in connection with any discussion of the timing or nature of
future operating or financial performance or other events. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
that may cause our actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking statements. Specifically, a) we are dependent
on key customers and strategic relationships, and the loss of key customers or
these relationships could adversely affect our business, financial condition
and results of operations; b) we face intense competition and, if we are unable
to compete successfully against other manufacturers of folding cartons, we
could lose customers and our revenues may decline; c) we have made
acquisitions, which entail certain risks, and may do so again in the future,
and we cannot guarantee that we will realize the expected benefits from future
acquisitions or that our existing operations will not be harmed as a result of
any such acquisitions; d) price fluctuations in raw materials and energy costs
could adversely affect our manufacturing costs and ability to obtain the
materials we need to manufacture our products; e) we may not be able to
adequately protect our intellectual property and proprietary rights, which
could harm our future success and competitive position; f) we are subject to
environmental laws and other governmental regulations, and costs related to
compliance with, or any liability for failure to comply with, existing or
future laws and regulations which could adversely affect our business,
financial condition and results of operations; g) our business may be adversely
impacted by the Kalamazoo work stoppage and other labor relations matters; h)
we may encounter difficulties in our restructuring and reorganization efforts,
which could prevent us from accommodating our existing business and capturing
new business; i) capital expenditures might be higher than planned due to
unexpected requirements or opportunities; j) various Coors family trusts own a
significant interest in us and may exercise their control in a manner
beneficial or detrimental to our other investors interests; k) terrorist
attacks, such as those that occurred on September 11, 2001, and acts of
bioterrorism have contributed to economic instability in the United States and
further acts of terrorism, bioterrorism, violence or war could affect the
markets in which we operate, our business operations, our expectations and
other forward-looking statements contained in this document; l) we may be
subject to losses that might not be covered in whole or in part by existing
insurance coverage, and these uninsured losses could adversely affect our
business, financial condition and results of operations; m) selling, general
and administrative costs might increase based on adding more staff and programs
(including costs to meet increasing corporate compliance requirements), and
general cost increases; n) we may be exposed to higher than predicted interest
rates on the unhedged portion of our debt and on any new debt we might incur;
o) if we are unable to meet the financial covenants on our debt, we could be
subject to higher interest rates or possible default (which could
lead to our insolvency); and p) we may not be able
to maintain our effective tax rate due to the current and future tax laws, our
ability to identify and use our tax credits and other factors.

These statements should be read in conjunction with the financial
statements and notes thereto included in the Companys
Form 10-K/A for the year
ended December 31, 2001. The accompanying financial statements have not been
examined by independent accountants in accordance with generally accepted
auditing standards, but in the opinion of management, such financial statements
include all adjustments necessary to summarize fairly the Companys financial
position and results of operations. Except for certain reclassifications made
to consistently report the information contained in the financial statements,
all adjustments made to the interim financial statements presented are of a
normal recurring nature. The results of operations for the second quarter
ended June 30, 2002, may not be indicative of results that may be expected for
the year ending December 31, 2002.

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##### Table of Contents






PART II. OTHER INFORMATION




Item 1. Legal Proceedings

On February 19, 2002, Chinyun Kim filed a putative class action claim in
District Court, Jefferson County, Colorado against the Company and certain of
its shareholders and directors. The Complaint alleges that the defendants
breached their fiduciary duties in connection with the issuance on August 15,
2000, of the Companys Series B Preferred Stock to the Grover C. Coors Trust.
The Complaint seeks to rescind the sale of the Series B Preferred Stock,
unspecified damages and costs and attorneys fees. On July 29, 2002, the Court
dismissed Plaintiffs claim against the Company for breach of fiduciary duty
while allowing the Plaintiff to proceed against the named directors and
shareholders, including certain Coors Family Trusts. The Company
believes this claim is without merit and will continue
to provide a vigorous defense to this action.




Item 4. Submission of Matters to a Vote of the Shareholders

At the May 14, 2002 annual meeting of the Companys shareholders, the
following matters were submitted for a vote of the shareholders. The report of
the Inspectors of Election is below.

There were 56,608,703 shares of common stock (including voting rights of
preferred stock) entitled to vote at the meeting and a total of 49,621,515
shares (87.66%) were represented at the meeting.

(1)  Election of two directors for a three-year term.

|                  |  |     |            |          |  |  |         | 
|----------------- |  | --- | ---------- | -------- |  |  | ------- | 
|                  |  | FOR |            | WITHHOLD
|Jeffrey H. Coors  |  |     | 49,067,532 |          |  |  | 553,983 | 
|John Hoyt Stookey |  |     | 49,377,292 |          |  |  | 244,223 | 



| |                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------
| | The other directors whose term of office
continued after the meeting are John D. Beckett, William K. Coors,
Harold R. Logan, Jr., and James K. Peterson.

(2)  Approval of an amendment to the Companys Executive Incentive Plan to,
among other things, increase the target performance bonus for the Chief
Executive Officer/President from 55% to 60%.

|           |  |         |         |         |  |                 |        |  |  |  |           | 
|---------- |  | ------- | ------- | ------- |  | --------------- | ------ |  |  |  | --------- | 
|FOR        |  | AGAINST |         | ABSTAIN |  | BROKER NON-VOTE
|45,266,555 |  |         | 814,175 |         |  |                 | 99,284 |  |  |  | 3,441,501 | 




Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits:

|        |  |                      |  |  |  | 
|------- |  | -------------------- |  |  |  | 
|Exhibit
|Number  |  | Document Description

(b)  Reports on Form 8-K



| |                                                                     
| | --------------------------------------------------------------------
| | No reports were filed on Form 8-K during the second quarter of 2002.

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##### Table of Contents






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|      |  |                 |  |                                                                                
|----- |  | --------------- |  | -------------------------------------------------------------------------------
|Date: |  | August 14, 2002 |  | By /s/ Luis E. LeonLuis E. Leon
           (Chief Financial Officer)           
|     
|Date: |  | August 14, 2002 |  | By /s/ John S. NormanJohn S. Norman
           (Vice President and  Controller)

CERTIFICATIONS PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Graphic Packaging International
Corporation (the Company) on Form 10-Q for the period ended June 30, 2002 as
filed with the Securities and Exchange Commission on the date hereof (the
Report), we, Jeffrey H. Coors, Chief Executive Officer and President of the
Company, and Luis E. Leon, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:



| | (1) |  | The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange
Act of 1934, as amended; and                   
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (2) |  | The information contained in the Report fairly presents, in all
material respects, the financial condition
and results of operations of the Company.

|      |  |                 |  |                                                                                          
|----- |  | --------------- |  | -----------------------------------------------------------------------------------------
|Date: |  | August 14, 2002 |  | By /s/ Jeffrey H. CoorsJeffrey H. Coors
            Chief Executive Officer and President



|      |  |                 |  |                                                                    
|----- |  | --------------- |  | -------------------------------------------------------------------
|Date: |  | August 14, 2002 |  | By /s/ Luis E. LeonLuis E. Leon
            Chief Financial Officer

31