##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

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

For the quarterly period ended March 31, 2003

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: 001-14060

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 [  ]

Indicate by check mark whether the
registrant is an accelerated filer (as defined in Rule 12b-2 of the
Exchange Act).

Yes [X]          
                    
                    
          
          No [  ]

There were 33,703,676 shares of common stock outstanding as of May 1, 2003.





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TABLE OF CONTENTS



|                                               |                                                                                               |  |  |  |  |  |  | 
|---------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                 
|                                               | Item 1. Financial Statements                                                                 
|NOTES TO CONSOLIDATED 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                           
|                                               | Item 4. Controls and Procedures                                                              
|PART II. OTHER INFORMATION                    
|                                               | Item 1. Legal Proceedings                                                                    
|                                               | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                    
|CERTIFICATIONS                                
|Exhibit Index                                 
|EX-10.2 Employment Agreement - J. Coors       
|EX-10.3 Employment Agreement - D. Scheible    
|EX-10.4 Employment Agreement - D. Sturdivant  
|Second Amend. to Employee Stock Purchase Plan 
|Second Amend. to Equity Incentive Plan        
|4th Amend. to Savings and Investment Plan     
|EX-10.9 Executive Incentive Plan              
|EX-99.1 Certifications Pursuant to Section 906



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##### Table of Contents






PART I. FINANCIAL INFORMATION




Item 1. Financial Statements

GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)

|                                                                                 |                                             |                                                            |         |                 |       |      |          |         |       |  
|-------------------------------------------------------------------------------- | ------------------------------------------- | ---------------------------------------------------------- | ------- | --------------- | ----- | ---- | -------- | ------- | ----- | -
|                                                                                 |                                             |                                                            |         | Three Months   
|                                                                                 |                                             |                                                            |         | Ended March 31,
|                                                                                 |                                             |                                                            |         | 2003            |       | 2002
|                                                                                 |                                             |                                                            |         |                 |       |     
|Net sales                                                                        |                                             | $                                                          | 260,883 |                 |       | $    | 263,724  |        
|                                                                                 | Cost of goods sold                          |                                                            |         | 232,174         |       |      |          | 229,432 |      
|                                                                                 |                                             |                                                            |         |                 |       |      |          |        
|Gross profit                                                                     |                                             |                                                            | 28,709  |                 |       |      | 34,292   |        
|                                                                                 | Selling, general and administrative expense |                                                            |         | 16,668          |       |      |          | 14,887  |      
|                                                                                 | Merger and acquisition transaction costs    |                                                            |         | 2,698           |       |      |          |        |      
|                                                                                 |                                             |                                                            |         |                 |       |      |          |        
|Operating income                                                                 |                                             |                                                            | 9,343   |                 |       |      | 19,405   |        
|Interest expense                                                                 |                                             |                                                            | (9,416  | )               |       |      | (11,296  | )      
|Loss on early extinguishment of debt                                             |                                             |                                                            |        |                 |       |      | (15,766  | )      
|                                                                                 |                                             |                                                            |         |                 |       |      |          |        
|Loss before income taxes and cumulative effect of change
in accounting principle |                                             |                                                            | (73     | )               |       |      | (7,657   | )      
|Income tax benefit                                                               |                                             |                                                            | 30      |                 |       |      | 2,986    |        
|                                                                                 |                                             |                                                            |         |                 |       |      |          |        
|Loss before cumulative effect of change in accounting
principle                  |                                             |                                                            | (43     | )               |       |      | (4,671   | )      
|Cumulative effect of change in goodwill accounting, net of
tax of $0             |                                             |                                                            |        |                 |       |      | (180,000 | )      
|                                                                                 |                                             |                                                            |         |                 |       |      |          |        
|Net loss                                                                         |                                             |                                                            | (43     | )               |       |      | (184,671 | )      
|                                                                                 |                                             |                                                            |         |                 |       |      |          |        
|Preferred stock dividends declared                                               |                                             |                                                            | (2,500  | )               |       |      | (2,500   | )      
|                                                                                 |                                             |                                                            |         |                 |       |      |          |        
|Net loss attributable to common shareholders                                     |                                             | $                                                          | (2,543  | )               |       | $    | (187,171 | )      
|                                                                                 |                                             |                                                            |         |                 |       |      |          |        
|Net loss attributable to common shareholders per basic and
diluted share:        |                                             |                                                            |         |                 |       |      |          |        
|                                                                                 |                                             | Before cumulative effect of change in accounting principle |         | $               | (0.08 | )    |          | $       | (0.22 | )
|                                                                                 |                                             | Cumulative effect of change in goodwill accounting         |         |                 |      |      |          |         | (5.57 | )
|                                                                                 |                                             |                                                            |         |                 |       |      |          |        
|                                                                                 |                                             | $                                                          | (0.08   | )               |       | $    | (5.79    | )      
|                                                                                 |                                             |                                                            |         |                 |       |      |          |        
|Weighted average shares outstanding  basic and diluted                          |                                             |                                                            | 33,574  |                 |       |      | 32,343   |        
|                                                                                 |                                             |                                                            |         |                 |       |      |          |        

See Notes to Consolidated Financial Statements.





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GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
(in thousands)

|                                   |                                                                                        |   |                 |      |      |   |          |       |  
|---------------------------------- | -------------------------------------------------------------------------------------- | - | --------------- | ---- | ---- | - | -------- | ----- | -
|                                   |                                                                                        |   | Three Months   
|                                   |                                                                                        |   | Ended March 31,
|                                   |                                                                                        |   | 2003            |      | 2002
|                                   |                                                                                        |   |                 |      |     
|Net loss                           |                                                                                        | $ | (43             | )    |      | $ | (184,671 | )    
|                                   |                                                                                        |   |                 |      |      |   |          |      
|Other comprehensive income (loss): |                                                                                        |   |                 |      |      |   |          |      
|                                   | Foreign currency translation adjustments                                               |   |                 | (217 | )    |   |          | (14   | )
|                                   | Recognition of hedge results to interest expense during the period,
net of tax of $937 |   |                 |     |      |   |          | 1,507 |  
|                                   | Change in fair value of cash flow hedges during the period, net of
tax of $48          |   |                 |     |      |   |          | (76   | )
|                                   | Amortization of cancelled interest rate swap, net of tax of $46                        |   |                 |     |      |   |          | 73    |  
|                                   |                                                                                        |   |                 |      |      |   |          |      
|Other comprehensive income (loss)  |                                                                                        |   | (217            | )    |      |   | 1,490    |      
|                                   |                                                                                        |   |                 |      |      |   |          |      
|Comprehensive loss                 |                                                                                        | $ | (260            | )    |      | $ | (183,181 | )    
|                                   |                                                                                        |   |                 |      |      |   |          |      

See Notes to Consolidated Financial Statements.





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

|                                                                                                                                                                         |                                                                                                      |   |           |           |  |              |           |         |  | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------- | - | --------- | --------- |  | ------------ | --------- | ------- |  | 
|                                                                                                                                                                         |                                                                                                      |   |           | March 31, |  | December 31,
|                                                                                                                                                                         |                                                                                                      |   |           | 2003      |  | 2002        
|                                                                                                                                                                         |                                                                                                      |   |           |           |  |             
|ASSETS                                                                                                                                                                   |                                                                                                      |   |           |           |  |              |           |        
|Current assets:                                                                                                                                                          |                                                                                                      |   |           |           |  |              |           |        
|Cash and cash equivalents                                                                                                                                                |                                                                                                      | $ | 5,028     |           |  | $            | 28,626    |        
|Accounts receivable, net                                                                                                                                                 |                                                                                                      |   | 74,068    |           |  |              | 63,546    |        
|Inventories:                                                                                                                                                             |                                                                                                      |   |           |           |  |              |           |        
|                                                                                                                                                                         | Finished                                                                                             |   |           | 60,516    |  |              |           | 50,771  | 
|                                                                                                                                                                         | In process                                                                                           |   |           | 10,615    |  |              |           | 11,298  | 
|                                                                                                                                                                         | Raw materials                                                                                        |   |           | 27,903    |  |              |           | 25,174  | 
|                                                                                                                                                                         |                                                                                                      |   |           |           |  |              |           |        
|Total inventories                                                                                                                                                        |                                                                                                      |   | 99,034    |           |  |              | 87,243    |        
|Other assets                                                                                                                                                             |                                                                                                      |   | 21,328    |           |  |              | 21,686    |        
|                                                                                                                                                                         |                                                                                                      |   |           |           |  |              |           |        
|                                                                                                                                                                         | Total current assets                                                                                 |   |           | 199,458   |  |              |           | 201,101 | 
|Properties, net                                                                                                                                                          |                                                                                                      |   | 405,703   |           |  |              | 410,592   |        
|Goodwill, net                                                                                                                                                            |                                                                                                      |   | 391,803   |           |  |              | 379,696   |        
|Other assets                                                                                                                                                             |                                                                                                      |   | 28,564    |           |  |              | 29,477    |        
|                                                                                                                                                                         |                                                                                                      |   |           |           |  |              |           |        
|Total assets                                                                                                                                                             |                                                                                                      | $ | 1,025,528 |           |  | $            | 1,020,866 |        
|                                                                                                                                                                         |                                                                                                      |   |           |           |  |              |           |        
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                     |                                                                                                      |   |           |           |  |              |           |        
|Current maturities of long-term debt                                                                                                                                     |                                                                                                      | $ | 3,593     |           |  | $            | 3,432     |        
|Accounts payable                                                                                                                                                         |                                                                                                      |   | 89,150    |           |  |              | 82,106    |        
|Interest payable                                                                                                                                                         |                                                                                                      |   | 4,626     |           |  |              | 11,117    |        
|Other current liabilities                                                                                                                                                |                                                                                                      |   | 52,500    |           |  |              | 58,334    |        
|                                                                                                                                                                         |                                                                                                      |   |           |           |  |              |           |        
|                                                                                                                                                                         | Total current liabilities                                                                            |   |           | 149,869   |  |              |           | 154,989 | 
|Long-term debt                                                                                                                                                           |                                                                                                      |   | 483,858   |           |  |              | 474,899   |        
|Pension liability                                                                                                                                                        |                                                                                                      |   | 44,055    |           |  |              | 42,310    |        
|Other long-term liabilities                                                                                                                                              |                                                                                                      |   | 42,159    |           |  |              | 41,630    |        
|                                                                                                                                                                         |                                                                                                      |   |           |           |  |              |           |        
|                                                                                                                                                                         | Total liabilities                                                                                    |   |           | 719,941   |  |              |           | 713,828 | 
|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 33,703,676 and 33,477,300 issued and outstanding at
March 31, 2003, and December 31, 2002, respectively |                                                                                                      |   | 337       |           |  |              | 335       |        
|Paid-in capital                                                                                                                                                          |                                                                                                      |   | 414,700   |           |  |              | 416,048   |        
|Unearned compensation                                                                                                                                                    |                                                                                                      |   | (2,266    | )         |  |              | (2,421    | )      
|Retained deficit                                                                                                                                                         |                                                                                                      |   | (179,255  | )         |  |              | (179,212  | )      
|Accumulated other comprehensive loss                                                                                                                                     |                                                                                                      |   | (27,929   | )         |  |              | (27,712   | )      
|                                                                                                                                                                         |                                                                                                      |   |           |           |  |              |           |        
|                                                                                                                                                                         | Total shareholders equity                                                                           |   |           | 305,587   |  |              |           | 307,038 | 
|                                                                                                                                                                         |                                                                                                      |   |           |           |  |              |           |        
|Total liabilities and shareholders equity                                                                                                                               |                                                                                                      | $ | 1,025,528 |           |  | $            | 1,020,866 |        
|                                                                                                                                                                         |                                                                                                      |   |           |           |  |              |           |        

See Notes to Consolidated Financial Statements.





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

|                                                    |                                                                                           |                                                                                  |                           |         |                    |         |        |          |          |         |  
|--------------------------------------------------- | ----------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------- | ------------------------- | ------- | ------------------ | ------- | ------ | -------- | -------- | ------- | -
|                                                    |                                                                                           |                                                                                  |                           |         | Three Months Ended
|                                                    |                                                                                           |                                                                                  |                           |         | March 31,         
|                                                    |                                                                                           |                                                                                  |                           |         | 2003               |         | 2002  
|                                                    |                                                                                           |                                                                                  |                           |         |                    |         |       
|Cash flows from operating activities:               |                                                                                           |                                                                                  |                           |         |                    |         |        |         
|                                                    | Net loss                                                                                  |                                                                                  | $                         | (43     | )                  |         | $      | (184,671 | )       
|                                                    | Adjustments to reconcile net loss to net cash provided by (used
in) operating activities: |                                                                                  |                           |         |                    |         |        |          |         
|                                                    |                                                                                           | Depreciation                                                                     |                           |         | 15,425             |         |        |          | 15,229   |        
|                                                    |                                                                                           | Amortization of debt issuance costs                                              |                           |         | 570                |         |        |          | 1,368    |        
|                                                    |                                                                                           | Loss on early extinguishment of debt                                             |                           |         |                   |         |        |          | 15,766   |        
|                                                    |                                                                                           | Goodwill impairment charge                                                       |                           |         |                   |         |        |          | 180,000  |        
|                                                    |                                                                                           | Compensation expense settled in stock                                            |                           |         | 1,267              |         |        |          | 1,106    |        
|                                                    |                                                                                           | Change in current assets and current liabilities, net of effects
of acquisition: |                           |         |                    |         |        |          |          |        
|                                                    |                                                                                           |                                                                                  | Accounts receivable       |         |                    | (10,522 | )      |          |          | (16,357 | )
|                                                    |                                                                                           |                                                                                  | Inventory                 |         |                    | (10,174 | )      |          |          | (6,740  | )
|                                                    |                                                                                           |                                                                                  | Other current assets      |         |                    | 358     |        |          |          | 728     |  
|                                                    |                                                                                           |                                                                                  | Accounts payable          |         |                    | 5,444   |        |          |          | (2,614  | )
|                                                    |                                                                                           |                                                                                  | Other current liabilities |         |                    | (12,325 | )      |          |          | 9,112   |  
|                                                    |                                                                                           | Other                                                                            |                           |         | 2,347              |         |        |          | 1,738    |        
|                                                    |                                                                                           |                                                                                  |                           |         |                    |         |        |         
|Net cash provided by (used in) operating activities |                                                                                           |                                                                                  | (7,653                    | )       |                    |         | 14,665 |         
|                                                    |                                                                                           |                                                                                  |                           |         |                    |         |        |         
|Cash flows from investing activities:               |                                                                                           |                                                                                  |                           |         |                    |         |        |         
|                                                    |                                                                                           | Capital expenditures                                                             |                           |         | (4,540             | )       |        |          | (7,200   | )      
|                                                    |                                                                                           | Acquisition of J.D. Cahill Co.                                                   |                           |         | (18,088            | )       |        |          |         |        
|                                                    |                                                                                           |                                                                                  |                           |         |                    |         |        |         
|Net cash used in investing activities               |                                                                                           |                                                                                  | (22,628                   | )       |                    |         | (7,200 | )       
|                                                    |                                                                                           |                                                                                  |                           |         |                    |         |        |         
|Cash flows from financing activities:               |                                                                                           |                                                                                  |                           |         |                    |         |        |         
|                                                    |                                                                                           | Proceeds from borrowings                                                         |                           |         | 53,906             |         |        |          | 588,400  |        
|                                                    |                                                                                           | Repayment of debt                                                                |                           |         | (44,786            | )       |        |          | (579,799 | )      
|                                                    |                                                                                           | Preferred stock dividends paid                                                   |                           |         | (2,500             | )       |        |          | (2,500   | )      
|                                                    |                                                                                           | Debt issuance costs                                                              |                           |         |                   |         |        |          | (15,133  | )      
|                                                    |                                                                                           | Common stock issuance and other                                                  |                           |         | 63                 |         |        |          | 73       |        
|                                                    |                                                                                           |                                                                                  |                           |         |                    |         |        |         
|Net cash provided by (used in) financing activities |                                                                                           |                                                                                  | 6,683                     |         |                    |         | (8,959 | )       
|                                                    |                                                                                           |                                                                                  |                           |         |                    |         |        |         
|Cash and cash equivalents:                          |                                                                                           |                                                                                  |                           |         |                    |         |        |         
|                                                    | Net decrease in cash and cash equivalents                                                 |                                                                                  |                           | (23,598 | )                  |         |        | (1,494   | )       
|                                                    | Balance at beginning of period                                                            |                                                                                  |                           | 28,626  |                    |         |        | 6,766    |         
|                                                    |                                                                                           |                                                                                  |                           |         |                    |         |        |         
|                                                    | Balance at end of period                                                                  |                                                                                  | $                         | 5,028   |                    |         | $      | 5,272    |         
|                                                    |                                                                                           |                                                                                  |                           |         |                    |         |        |         

See Notes to Consolidated Financial Statements.





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GRAPHIC PACKAGING INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Significant Accounting Policies

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 for the year ended December 31,
2002.

In the opinion of management, the accompanying unaudited financial
statements contain all adjustments necessary to fairly state the financial
position of the Company at March 31, 2003, 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 March
31, 2003 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.

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.

Goodwill Accounting:SFAS No. 142, Goodwill and Other Intangible
Assets, 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, or whenever a triggering event
takes place, 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. Management re-evaluated the Companys goodwill for impairment upon
signing the merger agreement discussed in Note 5 below. Management
determined that the Companys goodwill is not impaired.

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

Of the $560 million carrying value of goodwill at December 31, 2001, $418
million was deductible for Federal income tax purposes and $142 million was 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. The Company 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 statement of
operations is net of $0 tax benefit.

Stock-Based Compensation:The Company applies Accounting Principles Board
Opinion No. 25 and related interpretations in accounting for its stock-based
compensation plans. Accordingly, no compensation expense has been recognized
for stock options or the employee stock purchase plan as all options were
granted at the market price. If the Company had elected to recognize
compensation cost based on the fair value of the stock options at grant date as
allowed by SFAS No. 123, Accounting for Stock-Based Compensation, pre-tax
compensation expense of $1.3 million and $0.4 million would have been recorded
for the quarterly periods ended March 31, 2003 and 2002, respectively. Net loss
attributable to common shareholders and loss per share would have been reduced
to the pro forma amounts indicated below:





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|                                                                                                                                            |             |   |                                       |       |      |   |          |       |  
|------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | - | ------------------------------------- | ----- | ---- | - | -------- | ----- | -
|                                                                                                                                            |             |   | Three Months Ended March 31,         
|                                                                                                                                            |             |   |                                      
|                                                                                                                                            |             |   | 2003                                  |       | 2002
|                                                                                                                                            |             |   |                                       |       |     
|                                                                                                                                            |             |   | (in thousands, except per share data)
|Net loss attributable to common shareholders, as
reported                                                                                   |             | $ | (2,543                                | )     |      | $ | (187,171 | )    
|Deduct: Total stock-based employee compensation expense
determined under fair value based method for all
awards, net of related tax effects |             |   | (767                                  | )     |      |   | (244     | )    
|                                                                                                                                            |             |   |                                       |       |      |   |          |      
|Pro forma net loss attributable to common shareholders                                                                                      |             | $ | (3,310                                | )     |      | $ | (187,415 | )    
|                                                                                                                                            |             |   |                                       |       |      |   |          |      
|Loss
per sharebasic and diluted:                                                                                                           |             |   |                                       |       |      |   |          |      
|                                                                                                                                            | As reported |   | $                                     | (0.08 | )    |   | $        | (5.79 | )
|                                                                                                                                            | Pro forma   |   | $                                     | (0.10 | )    |   | $        | (5.79 | )

Note 2. Loss on Early Extinguishment of Debt

It is the Companys policy to implement all new accounting pronouncements
as they are issued and become effective for the Company. During the first
quarter of 2003, one new accounting pronouncement was adopted.

In connection with its first quarter 2002 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 $15.8
million, pretax, which was reflected as an extraordinary loss in the 2002
statement of operations. The FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections, in April 2002. SFAS No. 145 includes, among other things, the
rescission of SFAS No. 4, which required that gains and losses from early
extinguishment of debt be classified as an extraordinary item, net of related
income tax effects. Under the new guidance of SFAS No. 145, losses from early
extinguishment of debt are classified as extraordinary items only when the
losses are considered unusual in nature and infrequent in occurrence. SFAS No.
145 was effective for the Company on January 1, 2003, at which time the Company
reclassified its first quarter 2002 loss on early extinguishment of debt ($.30
per share) as a non-extraordinary item.

Note 3. Acquisition of J.D. Cahill Co.

On
March 6, 2003, the Company acquired the business of J.D. Cahill
Co., Inc. in
an asset acquisition for approximately $20.0 million, consisting of
approximately $18.1 million in cash and assumption of approximately $1.9
million of liabilities. The assets acquired and liabilities assumed, which
consisted of inventories, fixed assets, intangible assets and accounts payable,
were valued at approximately $7.9 million, resulting in goodwill of $12.1
million. The change in the carrying amount of the Companys goodwill during
the first quarter of 2003 relates entirely to the Cahill acquisition.
Consolidated operating results for the first quarter of 2003 include
the results of Cahill beginning March 6, 2003. Among other expected benefits, the Company expects to avoid
approximately $10 million of future capital spending as a result of
this acquisition.

Note 4. New Accounting Pronouncement

Financial Accounting Standards Board Interpretation (FIN) No. 46,
Consolidation of Variable Interest Entities, was issued in January 2003. FIN
No. 46 defines a variable interest entity as a legal entity in which, among
other things, the equity investments at risk are not sufficient to finance the
operating and closing activities of the entity without additional subordinated
financial support from the entitys investors. The Company is a partner in the
Kalamazoo Valley Group (KVG) Partnership, which qualifies as a variable
interest entity, as defined by FIN No. 46. KVG is a partnership formed to
develop and operate a landfill for the partners disposal of paper residuals
from their respective paperboard mills. KVG borrowed $1.5 million for the
construction of the landfill, of which approximately $400 thousand remains
unpaid at March 31, 2003. The partners contribute capital annually to meet the
partnerships operating losses. The Companys annual contribution for the past
two years has been approximately $200 thousand. The landfill has been in
operation since December 1997; however, since 2000, two of the other partners
have closed their paperboard mills and one minority partner
was permitted to withdraw by the bankruptcy court. The Company is evaluating its alternatives
and liabilities under the partnership agreement and related note, while
continuing to use the landfill. However, if the partnership were to close the
landfill, the Companys share of estimated closing costs, perpetual care
obligations and debt repayment would approximate $2.5 million under the terms
of the partnership agreement. The Company accounts for its interest in KVG
using the equity method. The investment balance at March 31, 2003 was $14
thousand. Management is also evaluating its accounting method in light of the
new requirements under FIN No. 46, and may
conclude that its interest in KVG should be consolidated into the
Companys accounts. FIN No. 46 is effective for the Companys 2003 third
quarter.





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Note 5. Proposed Merger with Riverwood

On
March 25, 2003, GPIC entered into a merger agreement with Riverwood Holding,
Inc. to effect a stock-for-stock merger with Riverwood. Riverwood will be the
accounting acquiror of GPIC and will survive as the new public company listed
on the New York Stock Exchange. The new company will take the name
Graphic Packaging Corporation. Prior to the merger, Riverwood will
complete a 15.21 to 1 stock split of its common stock. GPIC shareholders are expected to receive
one share of Riverwood common stock for each share of GPIC common stock they
hold. As a condition to closing the merger, the Grover C. Coors Trust will
convert its preferred shares into 48,484,848 shares of common stock.
Assuming the conversion occurs on July 1, 2003,
Riverwood will pay the Grover C. Coors Trust an estimated
$19.7 million as consideration for early conversion of the
preferred stock. Immediately after the merger, GPIC shareholders will
own approximately 42.5% and Riverwood shareholders will own approximately 57.5%
of the combined company on a fully diluted basis.

On
May 12, 2003, the thirty-day waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR) expired.
Accordingly, the condition to the merger requiring the expiration or
termination of the HSR waiting period has been satisfied. In
addition to this and other conditions to the merger, the merger must be approved
by two-thirds of the combined voting power of GPIC common stock and
two thirds of the preferred stock voting as a separate class. The Coors family
shareholders, who collectively own approximately 65.1% of the combined voting
power of the Company, have signed a voting agreement with Riverwood in which
they have agreed to vote in favor of the merger. Another 0.6% of the combined
voting power of the Company is owned by directors and executive officers who
are also expected to vote in favor of the merger. Management is expecting the
merger to be approved at a special meeting of the shareholders in the
third quarter and that the merger will be consummated shortly thereafter.

The
combined company has commitment letters from a banking syndicate for
financing totaling $1.6 billion at the time of merger. Management estimates
that up to $1.3 billion will be drawn at the time of merger to repay existing
bank debt and to pay transaction costs. The combined company may also
refinance GPICs and Riverwoods senior and senior
subordinated notes in the principal amount of $850 million. Assuming the GPIC existing senior
bank credit facility and the senior subordinated notes are refinanced, a loss
on early extinguishment of debt will occur totaling approximately $17.5
million, consisting of $3.0 million of cash tender premium and $14.5 million of
non-cash unamortized debt issuance costs.

For the quarter ended March 31, 2003, the Company incurred approximately
$2.3 million of merger related costs. Management expects to incur an estimated
additional $10 million of transaction costs prior to closing for merger
related investment banking, legal and accounting fees. For the quarter ended
March 31, 2003, the Company also incurred approximately $400 thousand
evaluating acquisitions that were not consummated.

Relating
to the proposed merger, Riverwood has filed a registration statement
with the Securities and Exchange Commission which contains a proxy
statement/prospectus that will be sent to GPIC shareholders once the
registration statement is effective.

Note 6. Guarantees, Commitments and Contingencies

In the ordinary course of business, the Company is subject to various
pending claims, lawsuits and contingent liabilities, including claims by
current or former employees. In each of these cases, the Company is vigorously
defending against them. Although the eventual outcome cannot be predicted, it
is managements opinion that disposition of these matters will not have a
material adverse effect on the Companys consolidated financial position,
results of operations or cash flows.

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 alleging breach
of fiduciary duty in connection with the issuance on August 15,
2000, of the Companys Series B Preferred Stock to the Grover C.
Coors Trust. The court dismissed plaintiffs claims 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. Currently, discovery is being conducted.
The plaintiffs have moved to certify as a class action. Defendants have opposed the certification of a class.
The court has not yet ruled on (1) whether it will certify as a class
and (2) if it does, what group of shareholders would constitute the
class. The Company believes that the transaction was in the best
interest of the Company and its shareholders. The Company intends to
continue to provide a vigorous defense to this action.

On April 2, 2003, two putative class action lawsuits were filed in
District Court, Jefferson County, Colorado, against the Company, the Companys
directors and Riverwood Holding, Inc. relating to the proposed merger
transaction between the Company and Riverwood pursuant to the Merger Agreement
dated March 25, 2003 among the Company, Riverwood and Riverwood Acquisition Sub
LLC. The complaints were filed by Robert F. Smith and Harold Lightweis, on
behalf of themselves and all others similarly situated. Each of the two
complaints alleges breach of fiduciary duties by the defendants to the
Companys public shareholders in connection with the proposed merger. The
complaints seek an injunction against consummation of the merger, rescission of
the merger if it is consummated, unspecified damages, costs and other relief
permitted by law and equity. The Company believes that these lawsuits are
without merit and intends to vigorously defend both cases.

During
its normal course of business, the Company has entered into certain
indemnification agreements with directors and officers of the Company to the maximum extent
permitted under the laws of the State of Colorado, which are insured under
directors and officers liability policies.





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In connection with the sale of various businesses, the Company has
periodically agreed to guarantee the collectibility of accounts receivable and
indemnify purchasers for certain liabilities for a specified period of time.
Such liabilities include, but are not limited to, environmental matters and the
indemnification periods generally last for 2 to 15 years. At March 31, 2003,
the Company has accrued approximately $3.0 million related to these guarantees
and indemnifications.

In connection with the resale of the aluminum business in 1999, the
Company guaranteed accounts receivable owed by the former owner of these
assets. After the resale, the former owner refused to pay the amount owed of
$2.4 million. Pursuant to the terms of the resale agreement, the Company paid
this amount and sued the former owner. The $2.4 million is reflected as a
receivable on the Companys balance sheet. The former owner counterclaimed for
an additional $11.0 million for certain spare parts and the Company claimed an
additional $14.3 million in overpayment for raw materials to run the business
prior to resale. The parties have filed motions for summary judgment. The
Company does not believe that the result of this litigation will have a
material adverse effect on its consolidated financial position, results of
operations or cash flows.

Note 7. Related Party Supply Agreement

On December 28, 1992, the Company was spun off from Adolph Coors Company
(ACCo) and since that time ACCo has had no ownership interest in the Company.
However, certain Coors family trusts have significant interests in both GPIC
and ACCo. The Company has also entered into various business arrangements with
the Coors family trusts and related entities from time-to-time since the
spin-off. The Companys policy is to negotiate market prices and competitive
terms with all parties, including related parties.

The Company originated as the packaging division of Coors Brewing Company,
a subsidiary of ACCo. At the time of spin-off from ACCo the Company entered
into an agreement with Coors Brewing to continue to supply their packaging
needs. The initial agreement had a stated term of five years and has resulted
in substantial revenues for GPIC. The Company continues to sell packaging
products to Coors Brewing. Coors Brewing accounted for approximately
9% and 10% of
the Companys consolidated gross sales in the first quarter of
2003 and 2002, respectively. The loss
of Coors Brewing as a customer in the foreseeable future could have a material
effect on the Companys results of operations. In the first quarter of 2003,
the Company executed a new
supply agreement, effective April 1, 2003, with Coors Brewing that will not
expire until December 31, 2006.

Note 8. Shareholders Rights Plan

On June 1, 2000, the Company effected a dividend distribution of
shareholder rights (the Rights) that carry certain conversion rights in the
event of a significant change in beneficial ownership of the Company. One
right is attached to each share of the Companys common stock outstanding and
is not detachable until such time as beneficial ownership of 15% or more of the
Companys outstanding common stock has occurred (a Triggering Event) by a
person or group of affiliated or associated persons (an Acquiring Person).
Each Right entitles each registered holder (excluding the Acquiring Person) to
purchase from the Company one-thousandth of a share of Series A Junior
Participating Preferred Stock, par value $.01 per share, at a purchase price of
$42.00. Registered holders receive shares of the Companys common stock valued
at twice the exercise price of the Right upon exercise. Upon a Triggering
Event, the Company is entitled to exchange one share of the companys common
stock for each right outstanding or to redeem the Rights at the price of $.001
pre Right. The Rights will expire on June 1, 2010.

In connection with the proposed merger, the Company and the rights
agent amended the terms of the rights agreement so that the execution
and delivery of the merger agreement and voting agreement and the
consummation of the transactions contemplated by the merger
agreement will not constitute a triggering event. This means that
holders of the Companys common stock will not obtain the detachable
rights in connection with the proposed merger.

Note 9. Supplemental Information

Graphic Packaging Corporation (GPC), a wholly-owned subsidiary of GPIC,
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); (c) the
guarantor subsidiaries; (d) the nonguarantor subsidiaries; and (e) the Company
on a consolidated basis.

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 quarterly interest
expense in the three months ended March 31, 2003 and 2002, pursuant to a $100
million intercompany loan from GPIC.

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.





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##### Table of Contents



GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Three Months Ended March 31, 2003
(in thousands)

|                                             |  |        |         |        |  |              |        |              |  |              |     |              |  |   |       |   |  |              |        |   |  |   |         |  
|-------------------------------------------- |  | ------ | ------- | ------ |  | ------------ | ------ | ------------ |  | ------------ | --- | ------------ |  | - | ----- | - |  | ------------ | ------ | - |  | - | ------- | -
|                                             |  |        |         |        |  |              |        |              |  | Guarantor    |     | Nonguarantor |  |   |       |   |  | Consolidated
|                                             |  | Issuer |         | Parent |  | Subsidiaries |        | Subsidiaries |  | Eliminations |     | Total       
|                                             |  |        |         |        |  |              |        |              |  |              |     |             
|Net sales                                    |  | $      | 259,324 |        |  | $            |       |              |  | $            |    |              |  | $ | 1,559 |   |  | $            |       |   |  | $ | 260,883 |  
|Cost of goods sold                           |  |        | 230,589 |        |  |              |       |              |  |              |    |              |  |   | 1,585 |   |  |              |       |   |  |   | 232,174 |  
|                                             |  |        |         |        |  |              |        |              |  |              |     |              |  |   |       |   |  |              |        |   |  |   |         |  
|Gross profit                                 |  |        | 28,735  |        |  |              |       |              |  |              |    |              |  |   | (26   | ) |  |              |       |   |  |   | 28,709  |  
|Selling, general and
administrative expense  |  |        | 19,366  |        |  |              |       |              |  |              |    |              |  |   |      |   |  |              |       |   |  |   | 19,366  |  
|Equity in loss
of subsidiaries               |  |        | 52      |        |  |              | 1,545  |              |  |              | 27  |              |  |   |      |   |  |              | (1,624 | ) |  |   |        |  
|                                             |  |        |         |        |  |              |        |              |  |              |     |              |  |   |       |   |  |              |        |   |  |   |         |  
|Operating income (loss)                      |  |        | 9,317   |        |  |              | (1,545 | )            |  |              | (27 | )            |  |   | (26   | ) |  |              | 1,624  |   |  |   | 9,343   |  
|Interest (expense) income                    |  |        | (11,898 | )      |  |              | 2,500  |              |  |              | 6   |              |  |   | (24   | ) |  |              |       |   |  |   | (9,416  | )
|                                             |  |        |         |        |  |              |        |              |  |              |     |              |  |   |       |   |  |              |        |   |  |   |         |  
|Income (loss) before taxes                   |  |        | (2,581  | )      |  |              | 955    |              |  |              | (21 | )            |  |   | (50   | ) |  |              | 1,624  |   |  |   | (73     | )
|Income tax (expense)
benefit                 |  |        | 1,058   |        |  |              | (392   | )            |  |              | 9   |              |  |   | 21    |   |  |              | (666   | ) |  |   | 30      |  
|                                             |  |        |         |        |  |              |        |              |  |              |     |              |  |   |       |   |  |              |        |   |  |   |         |  
|Net income (loss)                            |  |        | (1,523  | )      |  |              | 563    |              |  |              | (12 | )            |  |   | (29   | ) |  |              | 958    |   |  |   | (43     | )
|Preferred stock dividends
declared           |  |        |        |        |  |              | (2,500 | )            |  |              |    |              |  |   |      |   |  |              |       |   |  |   | (2,500  | )
|                                             |  |        |         |        |  |              |        |              |  |              |     |              |  |   |       |   |  |              |        |   |  |   |         |  
|Net loss attributable to
common shareholders |  | $      | (1,523  | )      |  | $            | (1,937 | )            |  | $            | (12 | )            |  | $ | (29   | ) |  | $            | 958    |   |  | $ | (2,543  | )
|                                             |  |        |         |        |  |              |        |              |  |              |     |              |  |   |       |   |  |              |        |   |  |   |         |  





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GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Three Months Ended March 31, 2002
(in thousands)

|                                                                                   |  |        |          |        |  |              |        |              |  |              |     |              |  |   |       |   |  |              |        |   |  |   |          |  
|---------------------------------------------------------------------------------- |  | ------ | -------- | ------ |  | ------------ | ------ | ------------ |  | ------------ | --- | ------------ |  | - | ----- | - |  | ------------ | ------ | - |  | - | -------- | -
|                                                                                   |  |        |          |        |  |              |        |              |  | Guarantor    |     | Nonguarantor |  |   |       |   |  | Consolidated
|                                                                                   |  | Issuer |          | Parent |  | Subsidiaries |        | Subsidiaries |  | Eliminations |     | Total       
|                                                                                   |  |        |          |        |  |              |        |              |  |              |     |             
|Net sales                                                                          |  | $      | 262,352  |        |  | $            |       |              |  | $            |    |              |  | $ | 1,372 |   |  | $            |       |   |  | $ | 263,724  |  
|Cost of goods sold                                                                 |  |        | 228,119  |        |  |              |       |              |  |              |    |              |  |   | 1,313 |   |  |              |       |   |  |   | 229,432  |  
|                                                                                   |  |        |          |        |  |              |        |              |  |              |     |              |  |   |       |   |  |              |        |   |  |   |          |  
|Gross profit                                                                       |  |        | 34,233   |        |  |              |       |              |  |              |    |              |  |   | 59    |   |  |              |       |   |  |   | 34,292   |  
|Selling, general and
administrative expense                                        |  |        | 14,864   |        |  |              |       |              |  |              |    |              |  |   | 23    |   |  |              |       |   |  |   | 14,887   |  
|Equity in (earnings) loss
of subsidiaries                                          |  |        | (19      | )      |  |              | 6,231  |              |  |              | (58 | )            |  |   |      |   |  |              | (6,154 | ) |  |   |         |  
|                                                                                   |  |        |          |        |  |              |        |              |  |              |     |              |  |   |       |   |  |              |        |   |  |   |          |  
|Operating income (loss)                                                            |  |        | 19,388   |        |  |              | (6,231 | )            |  |              | 58  |              |  |   | 36    |   |  |              | 6,154  |   |  |   | 19,405   |  
|Interest (expense) income                                                          |  |        | (13,777  | )      |  |              | 2,500  |              |  |              |    |              |  |   | (19   | ) |  |              |       |   |  |   | (11,296  | )
|Loss on early
extinguishment of debt                                               |  |        | (15,766  | )      |  |              |       |              |  |              |    |              |  |   |      |   |  |              |       |   |  |   | (15,766  | )
|                                                                                   |  |        |          |        |  |              |        |              |  |              |     |              |  |   |       |   |  |              |        |   |  |   |          |  
|Income (loss) before
taxes and cumulative
effect of change in
accounting principle |  |        | (10,155  | )      |  |              | (3,731 | )            |  |              | 58  |              |  |   | 17    |   |  |              | 6,154  |   |  |   | (7,657   | )
|Income tax (expense)
benefit                                                       |  |        | 3,970    |        |  |              | 1,446  |              |  |              | (50 | )            |  |   | 21    |   |  |              | (2,401 | ) |  |   | 2,986    |  
|                                                                                   |  |        |          |        |  |              |        |              |  |              |     |              |  |   |       |   |  |              |        |   |  |   |          |  
|Income (loss) before
cumulative effect of
change in accounting
principle           |  |        | (6,185   | )      |  |              | (2,285 | )            |  |              | 8   |              |  |   | 38    |   |  |              | 3,753  |   |  |   | (4,671   | )
|Cumulative effect of
change in goodwill
accounting, net of tax
of $0               |  |        | (180,000 | )      |  |              |       |              |  |              |    |              |  |   |      |   |  |              |       |   |  |   | (180,000 | )
|                                                                                   |  |        |          |        |  |              |        |              |  |              |     |              |  |   |       |   |  |              |        |   |  |   |          |  
|Net income (loss)                                                                  |  |        | (186,185 | )      |  |              | (2,285 | )            |  |              | 8   |              |  |   | 38    |   |  |              | 3,753  |   |  |   | (184,671 | )
|Preferred stock
dividends declared                                                 |  |        |         |        |  |              | (2,500 | )            |  |              |    |              |  |   |      |   |  |              |       |   |  |   | (2,500   | )
|                                                                                   |  |        |          |        |  |              |        |              |  |              |     |              |  |   |       |   |  |              |        |   |  |   |          |  
|Net income (loss)
attributable to common
shareholders                              |  | $      | (186,185 | )      |  | $            | (4,785 | )            |  | $            | 8   |              |  | $ | 38    |   |  | $            | 3,753  |   |  | $ | (187,171 | )
|                                                                                   |  |        |          |        |  |              |        |              |  |              |     |              |  |   |       |   |  |              |        |   |  |   |          |  





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GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
At March 31, 2003
(in thousands)

|                                           |                                               |                            |           |          |           |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |          |           | 
|------------------------------------------ | --------------------------------------------- | -------------------------- | --------- | -------- | --------- | ------ | ------- | ------------ | ------- | ------------ | ----- | ------------ | ----- | ------------ | ------- | -------- | -------- | - | -------- | ------------ | -------- | - | --------- | -------- | --------- | 
|                                           |                                               |                            |           |          |           |        |         |              |         |              |       | Guarantor    |       | Nonguarantor |         |          |          |   |          | Consolidated
|                                           |                                               |                            |           | Issuer   |           | Parent |         | Subsidiaries |         | Subsidiaries |       | Eliminations |       | Total       
|                                           |                                               |                            |           |          |           |        |         |              |         |              |       |              |       |             
|ASSETS                                     |                                               |                            |           |          |           |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|Current assets                             |                                               |                            |           |          |           |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|                                           | Cash and cash equivalents                     |                            | $         | 1,806    |           |        | $       |             |         |              | $     |             |       |              | $       | 3,222    |          |   | $        |             |          |   | $         | 5,028    |          
|                                           | Accounts receivable, net                      |                            |           | 71,034   |           |        |         | 2,437        |         |              |       |             |       |              |         | 597      |          |   |          |             |          |   |           | 74,068   |          
|                                           | Inventories                                   |                            |           | 98,551   |           |        |         |             |         |              |       |             |       |              |         | 483      |          |   |          |             |          |   |           | 99,034   |          
|                                           | Other assets                                  |                            |           | 21,234   |           |        |         |             |         |              |       |             |       |              |         | 24,064   |          |   |          | (23,970      | )        |   |           | 21,328   |          
|                                           |                                               |                            |           |          |           |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|                                           |                                               | Total current assets       |           |          | 192,625   |        |         |              | 2,437   |              |       |              |      |              |         |          | 28,366   |   |          |              | (23,970  | ) |           |          | 199,458   | 
|                                           | Properties, net                               |                            |           | 397,056  |           |        |         |             |         |              |       |             |       |              |         | 8,647    |          |   |          |             |          |   |           | 405,703  |          
|                                           | Goodwill, net                                 |                            |           | 391,803  |           |        |         |             |         |              |       |             |       |              |         |         |          |   |          |             |          |   |           | 391,803  |          
|                                           | Other assets                                  |                            |           | 28,504   |           |        |         | 555,020      |         |              |       | 6,501        |       |              |         | 18,393   |          |   |          | (579,854     | )        |   |           | 28,564   |          
|                                           |                                               |                            |           |          |           |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|                                           |                                               | Total assets               |           | $        | 1,009,988 |        |         | $            | 557,457 |              |       | $            | 6,501 |              |         | $        | 55,406   |   |          | $            | (603,824 | ) |           | $        | 1,025,528 | 
|                                           |                                               |                            |           |          |           |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|LIABILITIES AND
SHAREHOLDERS
EQUITY       |                                               |                            |           |          |           |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|Current liabilities                        |                                               |                            |           |          |           |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|Current maturities of
long-term debt       |                                               | $                          | 2,137     |          |           | $      |        |              |         | $            |      |              |       | $            | 1,456   |          |          | $ |         |              |          | $ | 3,593     |         
|Accounts payable                           |                                               |                            | 88,144    |          |           |        |        |              |         |              |      |              |       |              | 1,006   |          |          |   |         |              |          |   | 89,150    |         
|Interest payable                           |                                               |                            | 4,626     |          |           |        |        |              |         |              |      |              |       |              |        |          |          |   |         |              |          |   | 4,626     |         
|Other current liabilities                  |                                               |                            | 49,319    |          |           |        | 24,131  |              |         |              | 2,537 |              |       |              | 483     |          |          |   | (23,970  | )            |          |   | 52,500    |         
|                                           |                                               |                            |           |          |           |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|                                           |                                               | Total current
liabilities  |           |          | 144,226   |        |         |              | 24,131  |              |       |              | 2,537 |              |         |          | 2,945    |   |          |              | (23,970  | ) |           |          | 149,869   | 
|Long-term debt                             |                                               |                            | 481,554   |          |           |        |        |              |         |              |      |              |       |              | 235,585 |          |          |   | (233,281 | )            |          |   | 483,858   |         
|Other long-term liabilities                |                                               |                            | 188,222   |          |           |        | 1,845   |              |         |              |      |              |       |              |        |          |          |   | (103,853 | )            |          |   | 86,214    |         
|                                           |                                               |                            |           |          |           |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|                                           | Total liabilities                             |                            |           | 814,002  |           |        |         | 25,976       |         |              |       | 2,537        |       |              |         | 238,530  |          |   |          | (361,104     | )        |   |           | 719,941  |          
|Shareholders equity:                      |                                               |                            |           |          |           |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|                                           | Preferred stock                               |                            |           |         |           |        |         | 100,000      |         |              |       |             |       |              |         |         |          |   |          |             |          |   |           | 100,000  |          
|                                           | Common stock                                  |                            |           |         |           |        |         | 337          |         |              |       | 1,829        |       |              |         | 1,540    |          |   |          | (3,369       | )        |   |           | 337      |          
|                                           | Paid-in capital                               |                            |           | 419,101  |           |        |         | 185,594      |         |              |       | 241,405      |       |              |         | (182,486 | )        |   |          | (251,180     | )        |   |           | 412,434  |          
|                                           | Retained earnings
(deficit)                   |                            |           | (196,224 | )         |        |         | 245,550      |         |              |       | (239,270     | )     |              |         | (1,140   | )        |   |          | 11,829       |          |   |           | (179,255 | )        
|                                           | Accumulated other
comprehensive income
(loss) |                            |           | (26,891  | )         |        |         |             |         |              |       |             |       |              |         | (1,038   | )        |   |          |             |          |   |           | (27,929  | )        
|                                           |                                               |                            |           |          |           |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|                                           |                                               | Total shareholders
equity |           |          | 195,986   |        |         |              | 531,481 |              |       |              | 3,964 |              |         |          | (183,124 | ) |          |              | (242,720 | ) |           |          | 305,587   | 
|                                           |                                               |                            |           |          |           |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|Total liabilities and
shareholders equity |                                               | $                          | 1,009,988 |          |           | $      | 557,457 |              |         | $            | 6,501 |              |       | $            | 55,406  |          |          | $ | (603,824 | )            |          | $ | 1,025,528 |         
|                                           |                                               |                            |           |          |           |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         





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##### Table of Contents



GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
At December 31, 2002
(in thousands)

|                                           |                                               |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |          |         | 
|------------------------------------------ | --------------------------------------------- | -------------------------- | --------- | -------- | ------- | ------ | ------- | ------------ | ------- | ------------ | ----- | ------------ | ----- | ------------ | ------- | -------- | -------- | - | -------- | ------------ | -------- | - | --------- | -------- | ------- | 
|                                           |                                               |                            |           |          |         |        |         |              |         |              |       | Guarantor    |       | Nonguarantor |         |          |          |   |          | Consolidated
|                                           |                                               |                            |           | Issuer   |         | Parent |         | Subsidiaries |         | Subsidiaries |       | Eliminations |       | Total       
|                                           |                                               |                            |           |          |         |        |         |              |         |              |       |              |       |             
|ASSETS                                     |                                               |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|Current assets                             |                                               |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|                                           | Cash and cash equivalents                     |                            | $         | 25,565   |         |        | $       |             |         |              | $     |             |       |              | $       | 3,061    |          |   | $        |             |          |   | $         | 28,626   |        
|                                           | Accounts receivable, net                      |                            |           | 60,231   |         |        |         | 2,437        |         |              |       |             |       |              |         | 878      |          |   |          |             |          |   |           | 63,546   |        
|                                           | Inventories                                   |                            |           | 86,740   |         |        |         |             |         |              |       |             |       |              |         | 503      |          |   |          |             |          |   |           | 87,243   |        
|                                           | Other assets                                  |                            |           | 21,609   |         |        |         |             |         |              |       | 1            |       |              |         | 24,046   |          |   |          | (23,970      | )        |   |           | 21,686   |        
|                                           |                                               |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|                                           |                                               | Total current assets       |           |          | 194,145 |        |         |              | 2,437   |              |       |              | 1     |              |         |          | 28,488   |   |          |              | (23,970  | ) |           |          | 201,101 | 
|                                           | Properties, net                               |                            |           | 401,889  |         |        |         |             |         |              |       |             |       |              |         | 8,703    |          |   |          |             |          |   |           | 410,592  |        
|                                           | Goodwill, net                                 |                            |           | 379,696  |         |        |         |             |         |              |       |             |       |              |         |         |          |   |          |             |          |   |           | 379,696  |        
|                                           | Other assets                                  |                            |           | 29,781   |         |        |         | 561,410      |         |              |       | 6,880        |       |              |         | 18,393   |          |   |          | (586,987     | )        |   |           | 29,477   |        
|                                           |                                               |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|Total assets                               |                                               | $                          | 1,005,511 |          |         | $      | 563,847 |              |         | $            | 6,881 |              |       | $            | 55,584  |          |          | $ | (610,957 | )            |          | $ | 1,020,866 |         
|                                           |                                               |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|LIABILITIES AND
SHAREHOLDERS EQUITY       |                                               |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|Current liabilities                        |                                               |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|Current maturities of
long-term debt       |                                               | $                          | 1,976     |          |         | $      |        |              |         | $            |      |              |       | $            | 1,456   |          |          | $ |         |              |          | $ | 3,432     |         
|                                           | Accounts payable                              |                            |           | 81,519   |         |        |         | 24           |         |              |       |             |       |              |         | 563      |          |   |          |             |          |   |           | 82,106   |        
|                                           | Interest payable                              |                            |           | 11,117   |         |        |         |             |         |              |       |             |       |              |         |         |          |   |          |             |          |   |           | 11,117   |        
|                                           | Other current liabilities                     |                            |           | 55,426   |         |        |         | 23,691       |         |              |       | 2,536        |       |              |         | 651      |          |   |          | (23,970      | )        |   |           | 58,334   |        
|                                           |                                               |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|                                           |                                               | Total current
liabilities  |           |          | 150,038 |        |         |              | 23,715  |              |       |              | 2,536 |              |         |          | 2,670    |   |          |              | (23,970  | ) |           |          | 154,989 | 
|Long-term debt                             |                                               |                            | 472,798   |          |         |        |        |              |         |              |      |              |       |              | 235,383 |          |          |   | (233,282 | )            |          |   | 474,899   |         
|Other long-term liabilities                |                                               |                            | 185,968   |          |         |        | 1,826   |              |         |              |      |              |       |              |        |          |          |   | (103,854 | )            |          |   | 83,940    |         
|                                           |                                               |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|                                           | Total liabilities                             |                            |           | 808,804  |         |        |         | 25,541       |         |              |       | 2,536        |       |              |         | 238,053  |          |   |          | (361,106     | )        |   |           | 713,828  |        
|Shareholders equity:                      |                                               |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|                                           | Preferred stock                               |                            |           |         |         |        |         | 100,000      |         |              |       |             |       |              |         |         |          |   |          |             |          |   |           | 100,000  |        
|                                           | Common stock                                  |                            |           |         |         |        |         | 335          |         |              |       | 1,829        |       |              |         | 1,540    |          |   |          | (3,369       | )        |   |           | 335      |        
|                                           | Paid-in capital                               |                            |           | 418,299  |         |        |         | 192,984      |         |              |       | 241,774      |       |              |         | (182,077 | )        |   |          | (257,353     | )        |   |           | 413,627  |        
|                                           | Retained earnings
(deficit)                   |                            |           | (194,701 | )       |        |         | 244,987      |         |              |       | (239,258     | )     |              |         | (1,111   | )        |   |          | 10,871       |          |   |           | (179,212 | )      
|                                           | Accumulated other
comprehensive income
(loss) |                            |           | (26,891  | )       |        |         |             |         |              |       |             |       |              |         | (821     | )        |   |          |             |          |   |           | (27,712  | )      
|                                           |                                               |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|                                           |                                               | Total shareholders
equity |           |          | 196,707 |        |         |              | 538,306 |              |       |              | 4,345 |              |         |          | (182,469 | ) |          |              | (249,851 | ) |           |          | 307,038 | 
|                                           |                                               |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|Total liabilities and
shareholders equity |                                               | $                          | 1,005,511 |          |         | $      | 563,847 |              |         | $            | 6,881 |              |       | $            | 55,584  |          |          | $ | (610,957 | )            |          | $ | 1,020,866 |         
|                                           |                                               |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         





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##### Table of Contents



GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Three Months Ended March 31, 2003
(in thousands)

|                                                    |                                       |   |         |         |        |   |              |        |              |   |              |   |              |   |     |       |  |   |              |   |  |   |         |         |  
|--------------------------------------------------- | ------------------------------------- | - | ------- | ------- | ------ | - | ------------ | ------ | ------------ | - | ------------ | - | ------------ | - | --- | ----- |  | - | ------------ | - |  | - | ------- | ------- | -
|                                                    |                                       |   |         |         |        |   |              |        |              |   | Guarantor    |   | Nonguarantor |   |     |       |  |   | Consolidated
|                                                    |                                       |   | Issuer  |         | Parent |   | Subsidiaries |        | Subsidiaries |   | Eliminations |   | Total       
|                                                    |                                       |   |         |         |        |   |              |        |              |   |              |   |             
|Net cash provided by (used
in) operating activities |                                       | $ | (10,247 | )       |        | $ | 2,433        |        |              | $ |             |   |              | $ | 161 |       |  | $ |             |   |  | $ | (7,653  | )      
|                                                    |                                       |   |         |         |        |   |              |        |              |   |              |   |              |   |     |       |  |   |              |   |  |   |         |        
|Cash flows from investing
activities:               |                                       |   |         |         |        |   |              |        |              |   |              |   |              |   |     |       |  |   |              |   |  |   |         |        
|                                                    | Capital expenditures                  |   |         | (4,540  | )      |   |              |       |              |   |              |  |              |   |     |      |  |   |              |  |  |   |         | (4,540  | )
|                                                    | Acquisition of J.D.
Cahill Co. assets |   |         | (18,088 | )      |   |              |       |              |   |              |  |              |   |     |      |  |   |              |  |  |   |         | (18,088 | )
|                                                    |                                       |   |         |         |        |   |              |        |              |   |              |   |              |   |     |       |  |   |              |   |  |   |         |        
|Net cash used in investing
activities               |                                       |   | (22,628 | )       |        |   |             |        |              |   |             |   |              |   |    |       |  |   |             |   |  |   | (22,628 | )      
|                                                    |                                       |   |         |         |        |   |              |        |              |   |              |   |              |   |     |       |  |   |              |   |  |   |         |        
|Cash flows from financing
activities:               |                                       |   |         |         |        |   |              |        |              |   |              |   |              |   |     |       |  |   |              |   |  |   |         |        
|                                                    | Proceeds from borrowings              |   |         | 53,906  |        |   |              |       |              |   |              |  |              |   |     |      |  |   |              |  |  |   |         | 53,906  |  
|                                                    | Repayment of debt                     |   |         | (44,786 | )      |   |              |       |              |   |              |  |              |   |     |      |  |   |              |  |  |   |         | (44,786 | )
|                                                    | Preferred stock
dividends
paid        |   |         |        |        |   |              | (2,500 | )            |   |              |  |              |   |     |      |  |   |              |  |  |   |         | (2,500  | )
|                                                    | Common stock issuance
and other       |   |         | 63      |        |   |              | 67     |              |   |              |  |              |   |     |      |  |   |              |  |  |   |         | 63      |  
|                                                    |                                       |   |         |         |        |   |              |        |              |   |              |   |              |   |     |       |  |   |              |   |  |   |         |        
|Net cash used in financing
activities               |                                       |   | 9,116   |         |        |   | (2,433       | )      |              |   |             |   |              |   |    |       |  |   |             |   |  |   | 6,683   |        
|Cash and cash equivalents:                          |                                       |   |         |         |        |   |              |        |              |   |              |   |              |   |     |       |  |   |              |   |  |   |         |        
|                                                    | Net increase (decrease)               |   |         | (23,759 | )      |   |              |       |              |   |              |  |              |   |     | 161   |  |   |              |  |  |   |         | (23,598 | )
|                                                    | Balance at beginning of
period        |   |         | 25,565  |        |   |              |       |              |   |              |  |              |   |     | 3,061 |  |   |              |  |  |   |         | 28,626  |  
|                                                    |                                       |   |         |         |        |   |              |        |              |   |              |   |              |   |     |       |  |   |              |   |  |   |         |        
|                                                    | Balance at end of period              |   | $       | 1,806   |        |   | $            |       |              |   | $            |  |              |   | $   | 3,222 |  |   | $            |  |  |   | $       | 5,028   |  
|                                                    |                                       |   |         |         |        |   |              |        |              |   |              |   |              |   |     |       |  |   |              |   |  |   |         |        





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##### Table of Contents



GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Three Months Ended March 31, 2002
(in thousands)

|                                          |                                 |   |        |          |        |   |              |        |              |   |              |   |              |   |    |       |  |   |              |   |  |   |        |          |  
|----------------------------------------- | ------------------------------- | - | ------ | -------- | ------ | - | ------------ | ------ | ------------ | - | ------------ | - | ------------ | - | -- | ----- |  | - | ------------ | - |  | - | ------ | -------- | -
|                                          |                                 |   |        |          |        |   |              |        |              |   | Guarantor    |   | Nonguarantor |   |    |       |  |   | Consolidated
|                                          |                                 |   | Issuer |          | Parent |   | Subsidiaries |        | Subsidiaries |   | Eliminations |   | Total       
|                                          |                                 |   |        |          |        |   |              |        |              |   |              |   |             
|Net cash provided by
operating activities |                                 | $ | 13,160 |          |        | $ | 1,451        |        |              | $ |             |   |              | $ | 54 |       |  | $ |             |   |  | $ | 14,665 |         
|                                          |                                 |   |        |          |        |   |              |        |              |   |              |   |              |   |    |       |  |   |              |   |  |   |        |         
|Cash flows from investing
activities:     |                                 |   |        |          |        |   |              |        |              |   |              |   |              |   |    |       |  |   |              |   |  |   |        |         
|                                          | Capital expenditures            |   |        | (7,200   | )      |   |              |       |              |   |              |  |              |   |    |      |  |   |              |  |  |   |        | (7,200   | )
|                                          |                                 |   |        |          |        |   |              |        |              |   |              |   |              |   |    |       |  |   |              |   |  |   |        |         
|Cash flows from financing
activities:     |                                 |   |        |          |        |   |              |        |              |   |              |   |              |   |    |       |  |   |              |   |  |   |        |         
|                                          | Proceeds from borrowings        |   |        | 588,400  |        |   |              |       |              |   |              |  |              |   |    |      |  |   |              |  |  |   |        | 588,400  |  
|                                          | Repayment of debt               |   |        | (579,799 | )      |   |              |       |              |   |              |  |              |   |    |      |  |   |              |  |  |   |        | (579,799 | )
|                                          | Payment of debt
issuance costs  |   |        | (15,133  | )      |   |              |       |              |   |              |  |              |   |    |      |  |   |              |  |  |   |        | (15,133  | )
|                                          | Preferred stock
dividends
paid  |   |        |         |        |   |              | (2,500 | )            |   |              |  |              |   |    |      |  |   |              |  |  |   |        | (2,500   | )
|                                          | Common stock issuance
and other |   |        |         |        |   |              | 73     |              |   |              |  |              |   |    |      |  |   |              |  |  |   |        | 73       |  
|                                          |                                 |   |        |          |        |   |              |        |              |   |              |   |              |   |    |       |  |   |              |   |  |   |        |         
|Net cash used in financing
activities     |                                 |   | (6,532 | )        |        |   | (2,427       | )      |              |   |             |   |              |   |   |       |  |   |             |   |  |   | (8,959 | )       
|Cash and cash equivalents:                |                                 |   |        |          |        |   |              |        |              |   |              |   |              |   |    |       |  |   |              |   |  |   |        |         
|                                          | Net increase (decrease)         |   |        | (572     | )      |   |              | (976   | )            |   |              |  |              |   |    | 54    |  |   |              |  |  |   |        | (1,494   | )
|                                          | Balance at beginning of
period  |   |        | 1,145    |        |   |              | 976    |              |   |              |  |              |   |    | 4,645 |  |   |              |  |  |   |        | 6,766    |  
|                                          |                                 |   |        |          |        |   |              |        |              |   |              |   |              |   |    |       |  |   |              |   |  |   |        |         
|                                          | Balance at end of period        |   | $      | 573      |        |   | $            |       |              |   | $            |  |              |   | $  | 4,699 |  |   | $            |  |  |   | $      | 5,272    |  
|                                          |                                 |   |        |          |        |   |              |        |              |   |              |   |              |   |    |       |  |   |              |   |  |   |        |         





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

Overview

We are the leading manufacturer of folding cartons in North America
according to Paperboard Packaging Magazine(January 2003). We have achieved
our leadership position by focusing our operations on the folding carton
segment of the fiber-based product packaging industry. 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.

As discussed below, we recently announced our intention to merge with
Riverwood Holding, Inc. (Riverwood) later in 2003. Riverwood is an
integrated provider of paperboard packaging solutions to
multinational beverage and consumer products companies.

Segment Information

Our reportable segments are based on our method of internal reporting,
which is based on product category. Since 1999, we have operated principally in
the United States and in only one reportable segment.

Factors That Impact Our Business

Sales.We sell our products primarily to major consumer product
manufacturers in traditionally non-cyclical industries, such as food and
beverage providers. Sales are driven primarily by consumer buying habits in
the markets our customers serve. Recent economic conditions in the United
States have had a significant impact on consumer buying even in non-cyclical
industries. 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 a relatively
small internal sales force. Our top 20 customers represent approximately 80%
of our gross sales in the first quarter of 2003. 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,
MeadWestvaco, Rock-Tenn Company and Smurfit-Stone Container Corporation. We
work to maintain our market share through efficiency, innovation 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, paper, aluminum foil, ink, plastic
films, resins and labor, which are all variable cost components. Energy is
also a component of our costs, particularly for our Kalamazoo, Michigan
recycled paperboard mill, where energy represents approximately 13% of cost of
goods sold. Consolidated variable costs are estimated to be 78% and fixed
costs to be 22% of total cost of goods sold.

In light of increasing 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 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. We have adopted a
company-wide





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Six Sigma process to reduce our variable manufacturing costs. 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 the 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 currently have
25 dedicated and numerous shared resources focused on achieving our Six Sigma
objectives.

We have also taken steps to reduce our fixed manufacturing and corporate
overhead costs, consisting of selling, general and administrative costs. In
addition to closing plants and moving equipment and business to other
facilities, we have also undertaken downsizing initiatives to reduce fixed
personnel costs and are using the Six Sigma program to make our non-production
business processes more cost effective.

Results of Operations

Net sales for the three months ended March 31, 2003 were $260.9 million, a
decrease of $2.8 million or 1%, compared to the first quarter of 2002. Net
sales for the three months ended March 31, 2002 were $263.7 million, a decrease
of $24.7 million, or 8.6%, compared to the first quarter of 2001. Although
sales were stronger toward the end of March 2003, we do see a continued weakness in our sales, reflecting the general economic
conditions in the United States since the third quarter of 2001. In addition,
we continue to experience price pressure and lower promotional business from
our customers as they face similar economic pressures. Net sales relating to
the J.D. Cahill Co. acquisition from the March 6, 2003 date of acquisition
through March 31, 2003 were approximately $1.5 million.

Gross profit, as a percentage of net sales, declined to 11% for the first
quarter of 2003, compared to 13% in the first quarter of 2002. Lower sales
volumes, price pressure, and product mix contributed to the lower margins in
2003. Product mix issues in the first quarter of 2003 included costs such as
scrap and learning curve inefficiencies associated with the introduction of new
business.

Selling, general and administrative expenses were 6.4% of net sales in the
first quarter of 2003, compared to 5.6% for the three months ended March 31,
2002. The year-on-year increase is primarily attributed to additional
depreciation and other expenses associated with the information systems that
have been placed in service.

Our merger and acquisition activities in the first quarter of 2003
resulted in related expenses totaling $2.7 million, which are non-recurring to
our business and separately presented in our statement of operations. We
anticipate that our total merger and acquisition expenses, including costs
related to the Riverwood merger will total approximately $13 million in 2003.

Interest expense decreased $1.9 million or 17% in the first quarter of
2003, compared to the first quarter of 2002. The decrease is due to lower
interest rates and the absence of unfavorable interest swap agreements that
were in place during the first quarter of 2002.

The effective tax rate for the first quarter of 2003 was approximately
41%. The effective tax rate throughout 2002 was 39%. The increase was due
primarily to higher state income taxes. The effective tax rate could increase
in the future due to merger-related costs that we expect will be nondeductible
upon consummation of the Riverwood merger.

New Accounting Pronouncements

Financial Accounting Standards Board Interpretation (FIN) No. 46,
Consolidation of Variable Interest Entities, was issued in January 2003. FIN
No. 46 defines a variable interest entity as a legal entity in which, among
other things, the equity investments at risk are not sufficient to finance the
operating and closing activities of the entity without additional subordinated
financial support from the entitys investors. We are a partner in the
Kalamazoo Valley Group (KVG) Partnership, which qualifies as a variable
interest entity, as defined by FIN No. 46. KVG is a partnership formed to
develop and operate a landfill for





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the partners disposal of paper residuals
from their respective paperboard mills. KVG borrowed $1.5 million for the
construction of the landfill, of which approximately $400 thousand remains
unpaid at March 31, 2003. The partners contribute capital annually to meet the
partnerships operating losses. Our annual contribution for the past two years
has been approximately $200 thousand. The landfill has been in operation since
December 1997; however, since 2000, two of the other partners have closed their
paperboard mills and one minority partner was permitted to withdraw
by the bankruptcy court. We are evaluating our alternatives and liabilities under the
partnership agreement and related note, while continuing to use the landfill.
However, if the partnership were to close the landfill, our share of estimated
closing costs, perpetual care obligations and debt repayment would approximate
$2.5 million under the terms of the partnership agreement. We account for our
interest in KVG using the equity method. The investment balance at March 31,
2003 was $14 thousand. Management is also evaluating its accounting method in
light of the new requirements under FIN No. 46, and may conclude that its
interest in KVG should be consolidated into our accounts. FIN No. 46 is
effective for our 2003 third quarter.

Related Party Transaction

On December 28, 1992, our company was spun off from ACCo and since that
time ACCo has had no ownership interest in our company. However, certain Coors
family trusts have significant interests in both GPIC and ACCo. We have also
entered into various business arrangements with the Coors family trusts and
related entities from time-to-time since our spin-off. Our policy is to
negotiate market prices and competitive terms with all third parties, including
related parties.

Our company originated as the packaging division of the Coors Brewing
Company, a subsidiary of ACCo. At the time of spin-off from ACCo, we entered
into an agreement with Coors Brewing to continue to supply their packaging
needs. The initial agreements had a stated term of five years and have
resulted in substantial revenues for us. We continue to sell packaging
products to Coors Brewing. Coors Brewing accounted for approximately
9% and 10% of
our consolidated gross sales in the first quarter of 2003 and 2002,
respectively. The loss of Coors
Brewing as a customer in the foreseeable future could have a material effect on
our results of operations. In the first quarter of 2003, we executed
a new supply agreement, effective April 1, 2003, with Coors Brewing that will not expire until December 31, 2006.

Liquidity and Capital Resources

We generate our liquidity from both internal and external sources and use
it to fund our short-term working capital needs, capital expenditures
(estimated to be $42 million in 2003), preferred stock dividends and
acquisitions.

Capital Structure

On February 28, 2002, we refinanced our then existing senior bank credit
facility with a private placement of $300.0 million senior subordinated notes,
carrying interest at 8 5/8%, payable semi-annually and due in 2012, and a new
$450.0 million senior bank credit facility. This refinancing provided the
financial flexibility to consider acquisitions and converted a significant
amount of our borrowings into long-term borrowings. We collectively refer to
these transactions as the Refinancing Transactions.

We used the net proceeds from the Refinancing Transactions to repay our
then existing bank debt, to repurchase our then existing $50.0 million of
subordinated notes at par, and to pay related interest, fees and expenses. In
connection with the Refinancing Transactions, we incurred a non-cash charge to
write off our then remaining unamortized debt issuance costs from the
refinanced debt. These costs were $15.8 million before taxes at February 28,
2002.

In connection with the Riverwood merger, a change of control will occur as
defined in the $300.0 million senior subordinated bond indenture. Under the
terms of the indenture, the change of control requires us to commence an offer
to purchase all of the senior subordinated notes at 101% of the principal
amount outstanding. As discussed below, we currently expect our bondholders to
accept this offer and therefore, to refinance our $300.0 million of senior
subordinated notes as part of the merger. Assuming this occurs, we will be
required to pay the 1% redemption premium on all senior subordinated notes
outstanding at the time.

In the event the Riverwood merger is not consummated, 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 senior bank credit facility. GPC is the borrower under the senior
bank credit facility and the senior subordinated notes, and GPIC has guaranteed
the loans. The senior bank credit facility consists of a $275.0 million,
five-year revolving credit facility, or the Revolver, and a $175.0 million,
seven-year term loan, or the Term Loan. The Revolver bears interest at LIBOR
plus a spread tied to our leverage, with a single principal payment due at
maturity. At May 1, 2003, the Revolvers interest rate was 3.32%. The Term
Loan bears interest at LIBOR plus 275 basis points, with principal amortization
of 1% a year and the balance due at maturity. At May 1, 2003, the Term Loans
interest rate was 4.07%. The facilities must also be prepaid with an annual
cash flow





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recapture calculation, and with certain proceeds from asset sales,
and debt or equity offerings. The senior bank credit facility is secured with
first priority liens on all of GPICs, GPCs and our domestic subsidiaries
material assets. The facility limits our ability to pay dividends other than
permitted dividends on the preferred stock, and imposes limitations on the
incurrence of additional debt, acquisitions, capital expenditures, repurchase
of Company stock and the sale of assets.

Our borrowings consist of the following (in thousands):

|                                                                               |  |           |         |              |  |   |         | 
|------------------------------------------------------------------------------ |  | --------- | ------- | ------------ |  | - | ------- | 
|                                                                               |  | March 31, |         | December 31,
|                                                                               |  | 2003      |         | 2002        
|                                                                               |  |           |         |             
|Seven-year term loan due 2009 (variable interest rate at 4.06%)                |  | $         | 172,813 |              |  | $ | 173,250 | 
|Five-year revolving credit facility due 2007 (variable interest rate at 4.69%) |  |           | 9,400   |              |  |   |        | 
|8-5/8% Senior subordinated notes due 2012                                      |  |           | 300,000 |              |  |   | 300,000 | 
|Various notes payable(1)                                                       |  |           | 5,238   |              |  |   | 5,081   | 
|                                                                               |  |           |         |              |  |   |         | 
|Total                                                                          |  |           | 487,451 |              |  |   | 478,331 | 
|Less current maturities                                                        |  |           | 3,593   |              |  |   | 3,432   | 
|                                                                               |  |           |         |              |  |   |         | 
|Long-term maturities                                                           |  | $         | 483,858 |              |  | $ | 478,899 | 
|                                                                               |  |           |         |              |  |   |         | 



---

|(1) |  | The notes bear interest at rates ranging from 4.00% to 13.06% and mature
from 2003 through 2008.
|--- |  | ------------------------------------------------------------------------------------------------

At March 31, 2003, our maturities of long-term debt are as follows (in
thousands):

|           |  |   |         | 
|---------- |  | - | ------- | 
|2003       |  | $ | 3,593   | 
|2004       |  |   | 2,099   | 
|2005       |  |   | 2,065   | 
|2006       |  |   | 4,224   | 
|2007       |  |   | 1,920   | 
|Thereafter |  |   | 473,550 | 
|           |  |   |         | 
|           |  | $ | 487,451 | 
|           |  |   |         | 

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 the terms of our then existing credit
agreement and our interest rate risk-management strategy, we had contracts in
place at December 31, 2001 to hedge the interest rates on our variable rate
borrowings in the form of swap agreements on $225.0 million of borrowings and
cap agreements on $350.0 million of borrowings. The swap agreements locked in
an average LIBOR rate of 6.5%. $150.0 million of the caps provided upside
protection to us if LIBOR moved above 6.75%, and $200.0 million of the caps
provided upside protection to us if LIBOR moved above 8.13%. The hedging
instruments expired in 2002 and were not replaced, principally because a
significant portion of our refinanced debt carries a fixed rate.

Our capital structure also includes $100.0 million of Series B preferred
stock issued on August 15, 2000. 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.

Working Capital

Our working capital levels are dependent upon our ability to manage our
inventories, collect our receivables on a timely basis, and maintain favorable
terms with our vendors. Low working capital levels are desirable to us, as we
strive to maximize cash flow and reduce our debt. We believe that our working
capital position is very favorable when compared to our industry.
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.

We currently expect that cash flows from operations and borrowings under
our credit facility will be adequate to meet our needs for working capital,
post-retirement obligations, temporary financing for capital expenditures and
debt repayments for the foreseeable future. Our working capital position
(including current maturities of long term debt) at March 31, 2003 was $49.6
million. We had $9.4 million borrowed against our revolver at March 31, 2003,
with $256.3 million of availability under our $275.0 million facility, due to
$9.3 million of letters of credit outstanding. Our letters of credit are used
as security against our self-insurance obligations and an outstanding note
payable.





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During 2002 and 2003, we funded our capital requirements with net cash
from operations and borrowings under our revolving credit facility. We expect
our capital expenditures for 2003 to be approximately $42 million for planned
capital expenditures for upgrades and replacements of equipment and systems as
a result of ordinary business operations. We also plan to expand certain
existing equipment and facilities in order to meet expected capacity needs.

Pension Plan Assumptions

We contributed $6.5 million, $2.3 million and $1.4 million to our defined
benefit retirement plan in 2002, 2001 and 2000, respectively. Although no
contributions were made to the pension plan in the first quarter of 2003, we
expect to contribute $10.0 million to the plan in 2003.

Our retirement plan assets and liabilities are measured at December 31
each year for financial reporting purposes. Market returns on assets invested
in by the defined benefit retirement plan trust were negative during the past
year. Additionally, because of the declines in interest rates and a
corresponding decrease in the discount rates used to estimate our pension
liability, we recorded after-tax charges to other comprehensive income of $12.8
million and $13.8 million to reflect minimum pension liabilities in 2002 and
2001, respectively. If asset returns do not improve or interest rates remain
low, additional funding may be required to the defined benefit retirement plan.

Proposed Merger with Riverwood

On
March 25, 2003, we entered into a merger agreement with Riverwood Holding,
Inc. to effect a stock-for-stock merger with Riverwood. Riverwood will be the
accounting acquiror of GPIC and will survive as the new public company listed
on the New York Stock Exchange. The new company will take the name
Graphic Packaging Corporation. Prior to the merger, Riverwood will
complete a 15.21 to 1 stock split of its common stock. GPIC shareholders are expected to receive
one share of Riverwood common stock for each share of GPIC common stock they
hold. As a condition to closing the merger, the Grover C. Coors Trust will
convert its preferred shares into 48,484,848 shares of common stock.
Assuming the conversion occurs on July 1, 2003,
Riverwood will pay the Grover C. Coors Trust an estimated
$19.7 million as consideration for early conversion of the
preferred stock. Immediately after the merger, GPIC shareholders will
own approximately 42.5% and Riverwood shareholders will own approximately 57.5%
of the combined company on a fully diluted basis.

On
May 12, 2003, the thirty-day waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR) expired.
Accordingly, the condition to the merger requiring the expiration or
termination of the HSR waiting period has been satisfied. In addition
to this and other conditions to the merger, the merger must be approved
by two-thirds of the combined voting power of GPIC common stock and
two-thirds of the preferred stock voting as a separate class. The Coors family
shareholders, who collectively own approximately 65.1% of the combined voting
power of the Company, have signed a voting agreement with Riverwood in which
they have agreed to vote in favor of the merger. Another 0.6% of the combined
voting power of the Company is owned by directors and executive officers who
are also expected to vote in favor of the merger. We are expecting the merger
to be approved at a special meeting of the shareholders in the third quarter and that the merger will be consummated shortly
thereafter.

The
combined company has commitment letters from a banking syndicate for
financing totaling $1.6 billion at the time of merger. We estimate that up to
$1.3 billion will be drawn at the time of merger to repay existing bank debt
and to pay transaction costs. We may also refinance GPICs and
Riverwoods senior and senior
subordinated notes in the principal amount of $850 million. Assuming the GPIC existing senior bank credit facility and
the senior subordinated notes are refinanced, a loss on early extinguishment of
debt will occur totaling approximately $17.5 million, consisting
of $3.0 million
of cash tender premiums and $14.5 million of non-cash unamortized debt issuance costs.

For the quarter ended March 31, 2003, we incurred approximately $2.3
million of merger related costs. We expect to incur an estimated additional
$10 million of transaction costs prior to closing for merger related
investment, banking and legal and accounting costs. For the quarter
ended March 31, 2003, we also incurred approximately $400
thousand evaluating acquisitions that were not consummated.

Relating
to the proposed merger, Riverwood has filed a registration statement
with the Securities and Exchange Commission which contains a proxy
statement/prospectus that will be sent to GPIC shareholders once the
registration statement is effective.




Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

As of May 1, 2003, the Companys capital structure includes $208.8 million
that bears interest based upon an underlying rate that fluctuates with
short-term interest rates, specifically LIBOR. As of May 1, 2002, the
Companys capital structure included $214.6 million of debt bearing variable
interest under the same terms. During the first quarter of 2002, the Company
had interest rate swap agreements that locked LIBOR at 5.94% on $65 million of
borrowings and 6.98% on $125 million of its borrowings in the first quarter of
2002. In addition, 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 in the first quarter of 2002. These contracts all
expired during 2002 and none were outstanding during the first quarter of 2003.
With the Companys interest rate protection contracts in place last year, a 1%
rise in interest rates would have impacted annual pre-tax results by
approximately $0.3 million. Currently, a 1% rise in interest rates would
impact the Companys annual pre-tax results by approximately $2.1 million.





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Item 4. Controls and Procedures

We maintain a system of controls and procedures designed to provide
reasonable assurance as to the reliability of the financial statements and
other disclosures included in this report, as well as to safeguard assets from
unauthorized use or disposition. We evaluated the effectiveness of the design
and operation of our disclosure controls and procedures as defined in Exchange
Act Rule 13a-14 under supervision and with the participation of management,
including our Chief Executive Officer and Chief Financial Officer, within 90
days prior to the filing date of this report. Based upon that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures are effective in timely alerting them to
material information required to be included in our periodic Securities and
Exchange Commission filings. No significant changes were made to our internal
controls or in other factors that could significantly affect these controls
subsequent to the date of their evaluation. The design of any system of
controls and procedures is based in part upon certain assumptions about the
likelihood of future events. There can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions,
regardless of how remote.





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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/or market share and our revenues may decline; c) sales
might be lower than expected due to the economy, lower prices, loss of business
and customer inventory adjustments; d) market share estimations are based on
third-party information that may be or become obsolete or inaccurate; e) we
have made acquisitions, which entails 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; f) 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; g) we may not be able
to adequately protect our intellectual property and proprietary rights, which
could harm our future success and competitive position; h) new products in
development may not become commercially viable and anticipated new orders may
not materialize; i) 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 could adversely affect
our business, financial condition and results of operations; j) we may
encounter difficulties in our restructuring and reorganization efforts, which
could prevent us from accommodating our existing business and capturing new
business; k) capital expenditures might be higher than planned due to
unexpected requirements or opportunities; l) various Coors family trusts own a
significant interest in us and may exercise their control in a manner
detrimental to our other investors interests; m) 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; n) 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; o) 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; p)
we may be exposed to higher than predicted interest rates on our debt and on
any new debt we might incur; q) 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); r) 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; s) purchase savings
initiatives, and cost reduction and efficiency programs, such as Six Sigma,
might not realize significant future benefits; t) we might not be able to
maintain our position as one of the lowest cost producers due to competitors
more effectively reducing their costs and improving efficiencies; u) capital
expenditures may be more or less than projected and may not be adequate to
cover all possible business requirements; v) the companys ability to generate
cash flow may differ from past performance and the cash that is generated may
not be used to reduce debt; w) the merger with Riverwood Holding may not result
in a new leader in the paperboard industry or improved financial strengths or
growth opportunities due to market conditions, customer response to the merger,
integration issues, and similar issues; and x) the merger with Riverwood
Holding may not be completed if shareholders of GPIC fail to approve the
transaction, the merger fails to meet regulatory requirements, or failure to
meet other conditions detailed in the merger agreement. Investors are
encouraged to read the proxy statement when it becomes available.

These statements should be read in conjunction with the financial
statements and notes thereto included in the Companys Form 10-K for the year
ended December 31, 2002. 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 first quarter ended
March 31, 2003, may not be indicative of results that may be expected for the
year ending December 31, 2003.





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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 in
District Court, Jefferson County, Colorado against the Company and
certain of its shareholders and directors alleging breach of
fiduciary duty in connection with the issuance on August 15, 2000, of
the Company's Series B Preferred Stock to the Grover C. Coors Trust.
The court dismissed plaintiff's claims against the Company for breach
of fiduciary duty while allowing the plaintiff to proceed against the
named directors and shareholder's, including certain Coors Family
Trusts. Currently, discovery is being conducted. The plaintiffs have
moved to certify as a class action. Defendants have opposed the
certifications of a class. The court has not yet ruled on (1) whether
it will certify a class and (2) if it does, what group of
shareholders would constitute the class. The Company believes that
the transaction was in the best interest of the Company and its
shareholders. The Company intends to continue to provide a vigorous
defense to this action.

On April 2, 2003, two putative class action lawsuits were filed in
District Court, Jefferson County, Colorado, against Graphic Packaging
International Inc., the Companys directors and Riverwood Holding, Inc.
relating to the proposed merger transaction between the Company and Riverwood
pursuant to the Merger Agreement dated March 25, 2003 among the Company,
Riverwood and Riverwood Acquisition Sub LLC. The complaints were filed by
Robert F. Smith and Harold Lightweis, on behalf of themselves and all others
similarly situated. Each of the two Complaints alleges breach of fiduciary
duties by the defendants to the Companys public shareholders in connection
with the proposed Merger. The Complaints seek an injunction against
consummation of the Merger, rescission of the Merger if it is consummated,
unspecified damages, costs and other relief permitted by law and equity. The
Company believes that these lawsuits are without merit and intends to
vigorously defend both cases.




Item 6. Exhibits and Reports on Form 8-K



| | (a) |  | Exhibits:
| | --- |  | ---------

|        |  |                                                                                                                                                                                                                                                                                          
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                          
|Number  |  | Document Description                                                                                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                          
|2.1     |  | Agreement and Plan of Merger dated as of March 25, 2003, by and among
Graphic Packaging International Corporation,
Riverwood Holding, Inc. and Riverwood Acquisition Sub LLC. (Incorporated
by reference to Form 8-K filed on March 28, 2003)                                            
|        |  |                                                                                                                                                                                                                                                                                          
|10.0    |  | First Amendment to Rights Agreement dated as of March 24, 2003 between
the Company and Wells Fargo Bank
Minnesota, N.A. (successor in interest to Norwest Bank Minnesota, N.A.),
as Rights Agent. (Incorporated by reference
to Form 8-K filed on March 28, 2003)                        
|        |  |                                                                                                                                                                                                                                                                                          
|10.1    |  | Form of Voting Agreement dated as of March 25, 2003 between
Riverwood Holding, Inc. and the Family Stockholders.
(Incorporated by reference to Form 8-K filed on March 28, 2003)                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                          
|10.2    |  | Third Amendment to Form of Employment Agreement Entered Into By and
Between the Company and Jeffrey H. Coors dated as of March 25, 2003.                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                          
|10.3    |  | Third Amendment to Form of Employment Agreement Entered Into By and
Between the Company and David Scheible dated as of March 25, 2003.                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                          
|10.4    |  | Third Amendment to Form of Employment Agreement Entered Into By and
Between the Company and Don Sturdivant dated as of March 25, 2003.                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                          
|10.5    |  | Form of Affiliate Agreement for Affiliates of Graphic Packaging
International Corporation. (Incorporated
by reference to Form 8-K filed on March 28, 2003)                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                          
|10.6    |  | Graphic Packaging
Employee Stock Purchase Plan. (Incorporated by reference to Exhibit
4.1 to Form S-8 filed on September 17, 1993, file No. 33-68898)                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                          
|10.6A   |  | Second Amendment to
the Graphic Packaging Employee Stock Purchase Plan as Amended and Restated
November 14, 1995.                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                                          
|10.7    |  | Graphic Packaging
Equity Incentive Plan, as amended. (Incorporated by reference to Form
10-K filed on March 23, 2001)                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                          
|10.7A   |  | Second Amendment to
the Graphic Packaging Equity Incentive Plan as Amended and Restated
May 15, 2001.                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                          
|10.8    |  | Graphic Packaging
Savings and Investment Plan A, as amended, and Graphic Packaging
Savings and Investment Plan B, as amended. (Incorporated by reference
to the Annual Report on Form 11-K, File No. 0-20704)                                                                            
|        |  |                                                                                                                                                                                                                                                                                          
|10.8A   |  | Fourth Amendment to
the Graphic Packaging Savings and Investment Plan as Amended and
Restated January 1, 1997.                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                          
|10.9    |  | Graphic Packaging Executive Incentive
Plan as Amended and Restated December 10, 2002.                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                          
|10.10   |  | Stockholders Agreement, dated as of March 25, 2003, by and among
Riverwood Holding, Inc., the Family Stockholders named therein,
Clayton Dubilier & Rice Fund V Limited Partnership and EXOR Group
S.A. (Incorporated by reference to Form S-4 filed on May 2, 2003.)                    
|        |  |                                                                                                                                                                                                                                                                                          
|10.11   |  | Amendment No. 1 to Stockholders Agreement, dated as of April 29, 2003,
by and among Riverwood Holding, Inc., the Family Stockholders named
therein, Clayton Dubilier & Rice Fund V Limited Partnership and EXOR
Group, S.A. (Incorporated by reference to Form S-4 filed on May 2, 2003.)
|        |  |                                                                                                                                                                                                                                                                                          
|99.1    |  | Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                          
|99.2    |  | Purchase and Sale Agreement by and between Graphic Packaging Corporation
and Coors Brewing Company. (Incorporated by reference to Form 8-K/A filed
on March 31, 2003) (Confidential treatment has been requested for portions
of the Exhibit)                                            
|        |  |                                                                                                                                                                                                                                                                                          
|99.3    |  | Joint press release issued by Graphic Packaging International Corporation
and Riverwood Holding, Inc. on March 26, 2003 announcing execution of
Merger Agreement. (Incorporated by reference to Form 8-K filed on March
28, 2003)                                                        





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##### Table of Contents





|(b) |  | Reports on Form 8-K                                                                                                                                                                                                                                                               
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | On February 19, 2003, the Company filed a Current Report on Form 8-K
disclosing its earnings for the fourth quarter of 2002 and the full year
ended December 31, 2002. Conference call disclosures were also reported.                                                            
|   
|    |  | On March 25, 2003, the Company filed a Current Report on Form 8-K
disclosing its agreement with Coors Brewing Company signed on March 21,
2003. A request for confidential treatment of certain sections of the
agreement was submitted to the Securities and Exchange Commission.
|   
|    |  | On March 28, 2003, the Company filed a Current Report on Form 8-K
disclosing an agreement signed March 25, 2003 announcing a proposed merger
transaction with Riverwood Holding, Inc.                                                                                             
|   
|    |  | On March 31, 2003, the Company filed a Current Report on Form 8-K/A,
revising the redactment of the agreement with Coors Brewing Company filed
on March 25, 2003.                                                                                                                 
|   
|    |  | On April 16, 2003, the Company filed a Current Report on Form 8-K
disclosing two putative class action lawsuits filed against the Company,
its directors and Riverwood Holding, Inc. relating to the proposed merger
transaction.                                                 
|   
|    |  | On May 5, 2003, the Company filed a Current Report on Form 8-K disclosing
its earnings for the first quarter of 2003. Conference call disclosures
were also reported.                                                                                                             





---



##### 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: | May 15, 2003 | By | /s/ Luis E. Leon                              
|      |              |   
|      |              |    | Luis E. Leon
(Chief Financial Officer)        
|      |              |   
|Date: | May 15, 2003 | By | /s/ John S. Norman                            
|      |              |   
|      |              |    | John S. Norman
(Vice President and Controller)





---



##### Table of Contents






CERTIFICATIONS

I, Jeffrey H. Coors, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Graphic Packaging
International Corporation;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;                                                                                                                        

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data
and have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.

May 15, 2003

| |                                          
| | -----------------------------------------
| | By /s/ Jeffrey H. Coors

Jeffrey H. Coors
| | Chief Executive Officer and President    





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##### Table of Contents



CERTIFICATIONS

I, Luis E. Leon, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Graphic Packaging
International Corporation;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;                                                                                                                        

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data
and have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.

May 15, 2003

| |                                                          
| | ---------------------------------------------------------
| | By /s/ Luis E. Leon

Luis E. Leon
Chief Financial Officer





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##### Table of Contents






Exhibit Index

|        |  |                                                                                                                                                                                                                                                                                          
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                          
|Number  |  | Document Description                                                                                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                          
|2.1     |  | Agreement and Plan of Merger dated as of March 25, 2003, by and among
Graphic Packaging International Corporation,
Riverwood Holding, Inc. and Riverwood Acquisition Sub LLC. (Incorporated
by reference to Form 8-K filed on March 28, 2003)                                            
|        |  |                                                                                                                                                                                                                                                                                          
|10.0    |  | First Amendment to Rights Agreement dated as of March 24, 2003 between
the Company and Wells Fargo Bank
Minnesota, N.A. (successor in interest to Norwest Bank Minnesota, N.A.),
as Rights Agent. (Incorporated by reference
to Form 8-K filed on March 28, 2003)                        
|        |  |                                                                                                                                                                                                                                                                                          
|10.1    |  | Form of Voting Agreement dated as of March 25, 2003 between
Riverwood Holding, Inc. and the Family Stockholders.
(Incorporated by reference to Form 8-K filed on March 28, 2003)                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                          
|10.2    |  | Third Amendment to Form of Employment Agreement Entered Into By and
Between the Company and Jeffrey H. Coors dated as of March 25, 2003.                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                          
|10.3    |  | Third Amendment to Form of Employment Agreement Entered Into By and
Between the Company and David Scheible dated as of March 25, 2003.                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                          
|10.4    |  | Third Amendment to Form of Employment Agreement Entered Into By and
Between the Company and Don Sturdivant dated as of March 25, 2003.                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                          
|10.5    |  | Form of Affiliate Agreement for Affiliates of Graphic Packaging
International Corporation. (Incorporated
by reference to Form 8-K filed on March 28, 2003)                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                          
|10.6    |  | Graphic Packaging
Employee Stock Purchase Plan. (Incorporated by reference to Exhibit
4.1 to Form S-8 filed on September 17, 1993, file No. 33-68898)                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                          
|10.6A   |  | Second Amendment to
the Graphic Packaging Employee Stock Purchase Plan as Amended and Restated
November 14, 1995.                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                                          
|10.7    |  | Graphic Packaging
Equity Incentive Plan, as amended. (Incorporated by reference to Form
10-K filed on March 23, 2001)                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                          
|10.7A   |  | Second Amendment to
the Graphic Packaging Equity Incentive Plan as Amended and Restated
May 15, 2001.                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                          
|10.8    |  | Graphic Packaging
Savings and Investment Plan A, as amended, and Graphic Packaging
Savings and Investment Plan B, as amended. (Incorporated by reference
to the Annual Report on Form 11-K, File No. 0-20704)                                                                            
|        |  |                                                                                                                                                                                                                                                                                          
|10.8A   |  | Fourth Amendment to
the Graphic Packaging Savings and Investment Plan as Amended and
Restated January 1, 1997.                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                          
|10.9    |  | Graphic Packaging Executive Incentive
Plan as Amended and Restated December 10, 2002.                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                          
|10.10   |  | Stockholders Agreement, dated as of March 25, 2003, by and among
Riverwood Holding, Inc., the Family Stockholders named therein,
Clayton Dubilier & Rice Fund V Limited Partnership and EXOR Group
S.A. (Incorporated by reference to Form S-4 filed on May 2, 2003.)                    
|        |  |                                                                                                                                                                                                                                                                                          
|10.11   |  | Amendment No. 1 to Stockholders Agreement, dated as of April 29, 2003,
by and among Riverwood Holding, Inc., the Family Stockholders named
therein, Clayton Dubilier & Rice Fund V Limited Partnership and EXOR
Group, S.A. (Incorporated by reference to Form S-4 filed on May 2, 2003.)
|        |  |                                                                                                                                                                                                                                                                                          
|99.1    |  | Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                          
|99.2    |  | Purchase and Sale Agreement by and between Graphic Packaging Corporation
and Coors Brewing Company. (Incorporated by reference to Form 8-K/A filed
on March 31, 2003) (Confidential treatment has been granted for portions
of the Exhibit)                                              
|        |  |                                                                                                                                                                                                                                                                                          
|99.3    |  | Joint press release issued by Graphic Packaging International Corporation
and Riverwood Holding, Inc. on March 26, 2003 announcing execution of
Merger Agreement. (Incorporated by reference to Form 8-K filed on March
28, 2003)