---




UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





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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 31,2002





OR





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




For the transition period
from
to .





Commission file number: 0-20704





LOGO





GRAPHIC PACKAGING INTERNATIONAL CORPORATION


(Exact name of registrant as specified in its charter)





Colorado

84-1208699(State or other jurisdiction of incorporation or
organization)

(I.R.S. Employer Identification No.)4455 Table Mountain Drive, Golden, Colorado

80403(Address of principal executive offices)

(Zip Code)





(303) 215-4600


(Registrants telephone number, including area code)





Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes  x  No  ̈





There were 32,517,495 shares of common stock outstanding as of May 1, 2002.





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---

PART I.    FINANCIAL INFORMATION








Item 1.Financial Statements








GRAPHIC PACKAGING INTERNATIONAL CORPORATION





CONSOLIDATED INCOME
STATEMENT


(In thousands, except per share data)





Three Months Ended March 31,2002


2001Net sales

$
263,724


$
288,444Cost of goods sold


229,432



248,210Gross profit


34,292



40,234Selling, general and administrative expense


14,887



14,489Goodwill amortization






5,169Asset impairment and restructuring charges






2,000Operating income


19,405



18,576Gain on sale of assets






3,650Interest expense


(11,296
)


(16,125
)Income before income taxes and extraordinary item


8,109



6,101Income tax expense


(3,163
)


(2,420
)Income before extraordinary item


4,946



3,681Extraordinary loss on early extinguishment of debt, net of tax of $6,149


(9,617
)


Net income (loss)


(4,671
)


3,681Preferred stock dividends declared


(2,500
)


(2,500
)Net income (loss) attributable to common shareholders

$
(7,171
)

$
1,181Net income (loss) attributable to common shareholders per basic and diluted share:Before extraordinary item

$
0.08


$
0.04Extraordinary loss


(0.30
)


$
(0.22
)

$
0.04Weighted average shares outstandingbasic


32,343



30,951Weighted average shares outstandingdiluted


32,343



31,476





See Notes to Consolidated Financial Statements.




2




---

GRAPHIC PACKAGING INTERNATIONAL CORPORATION





CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


(In thousands)





Three Months Ended March 31,2002


2001Net income (loss)

$
(4,671
)

$
3,681Other comprehensive income:Foreign currency translation adjustments


(14
)


(274
)Cumulative effect of change in accounting principle, net of tax of $2,012






(3,217
)Recognition of hedge results to interest expense during the period, net of tax of $937 and $208


1,507



333Change in fair value of cash flow hedges during the period, net of tax of $48 and $587


(76
)


(936
)Amortization of cancelled interest rate swap, net of tax of $46


73



Other comprehensive income (loss)


1,490



(4,094
)Comprehensive loss

$
(3,181
)

$
(413
)











See Notes
to Consolidated Financial Statements.




3




---

GRAPHIC PACKAGING INTERNATIONAL CORPORATION





CONSOLIDATED BALANCE SHEET


(In thousands, except share data)


March 31, 2002


December 31, 2001ASSETSCurrent assets:Cash and cash equivalents

$
5,272


$
6,766Accounts receivable


75,831



59,474Inventories:Finished


61,823



55,057In process


12,965



15,258Raw materials


24,360



22,093Total inventories


99,148



92,408Other assets


31,528



33,156Total current assets


211,779



191,804Properties, net


435,813



443,712Goodwill, net


559,696



559,696Other assets


31,572



34,123Total assets

$
1,238,860


$
1,229,335LIABILITIES AND SHAREHOLDERS' EQUITYCurrent maturities of long-term debt

$
3,948


$
37,373Accounts payable


56,388



59,002Other current liabilities


79,700



73,026Total current liabilities


140,036



169,401Long-term debt


530,251



488,386Other long-term liabilities


75,447



73,900Total liabilities


745,734



731,687Shareholders' equityPreferred 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



100,000Common stock, $0.01 par value, 100,000,000 shares authorized and 32,445,466 and 32,188,941 issued and outstanding at March 31, 2002,
and December 31, 2001, respectively


324



322Paid-in capital


416,406



417,749Retained deficit


(5,233
)


(562
)Accumulated other comprehensive loss


(18,371
)


(19,861
)Total shareholders equity


493,126



497,648Total liabilities and shareholders equity

$
1,238,860


$
1,229,335





See Notes to Consolidated Financial Statements.




4




---

GRAPHIC PACKAGING INTERNATIONAL CORPORATION





CONSOLIDATED STATEMENT OF CASH FLOWS


(In thousands)





Three Months Ended March 31,2002


2001Cash flows from operating activities:Net income (loss)

$
(4,671
)

$
3,681Adjustments to reconcile net income (loss) to net cash provided by operating activities:Gain on sale of assets






(3,650
)Extraordinary loss on early extinguishment of debt


15,766



Depreciation and amortization


15,229



20,154Amortization of debt issuance costs


1,368



1,950Change in current assets and current liabilities and other


(13,027
)


(8,700
)Net cash provided by operating activities


14,665



13,435Cash flows from investing activities:Capital expenditures


(7,200
)


(6,679
)Proceeds from sale of assets






3,650Net cash used in investing activities


(7,200
)


(3,029
)Cash flows from financing activities:Proceeds from borrowings


588,400



64,450Repayment of debt


(579,799
)


(72,000
)Payment of debt issuance costs


(15,133
)


Payment of preferred stock dividends


(2,500
)


(2,500
)Proceeds from issuance of stock and other


73



(130
)Net cash used in financing activities


(8,959
)


(10,180
)Cash and cash equivalents:Net increase (decrease) in cash and cash equivalents


(1,494
)


226Balance at beginning of period


6,766



4,012Balance at end of period

$
5,272


$
4,238








See Notes to Consolidated Financial Statements




5




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GRAPHIC PACKAGING INTERNATIONAL CORPORATION





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS








Note
1.    Nature of Operations and Basis of Presentation





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





The consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures included herein are adequate to
make the information presented not misleading. A description of the Companys accounting policies and other financial information is included in the audited financial statements filed with the Securities and Exchange Commission in the
Companys Form 10-K for the year ended December 31, 200l.





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, 2002, and the results of operations and cash flows for the periods presented. All such adjustments are of a normal recurring
nature. The results of operations for the three months ended March 31, 2002 are not necessarily indicative of the results that may be achieved for the full fiscal year and cannot be used to indicate financial performance for the entire year.








Note 2.    New Accounting Pronouncements





SFAS No. 142, Goodwill and Other Intangible Assets, was issued in 2001 and became effective on January 1, 2002 for GPIC. This statement
establishes new accounting and reporting standards that, among other things, eliminate amortization of goodwill and certain intangible assets with indefinite useful lives. The Company does not have any intangible assets with indefinite useful lives;
however, as required by the new standard, the Companys goodwill will be evaluated annually for impairment using a fair-value based approach and, if there is impairment, the carrying amount of goodwill will be written down to its implied fair
value. Any impairment loss as a result of the initial, or transitional, impairment testing of the Companys goodwill will be recognized as a cumulative effect of a change in accounting principle, net of tax, effective January 1, 2002. Any
subsequent impairment of the Companys goodwill will be charged to operating income in the period in which the impairment arises.





Effective January 1, 2002, the Company assigned the carrying value of its goodwill, totaling $560 million, to one reporting unit. Management expects to complete the transitional impairment testing of the Companys goodwill by June 30,
2002. Initial estimates using market data and discounted cash flow valuations at January 1, 2002 indicate significant goodwill impairment could exist, potentially up to $200 million.





Effective January 1, 2002, the Company stopped amortizing its goodwill as required by SFAS No. 142. The annual reduction in amortization expense is approximately $20.6 million before
taxes. Because some of the Companys goodwill amortization is nondeductible for tax purposes, the Companys effective tax rate is lower as a result of implementing SFAS No. 142.




6




---



GRAPHIC PACKAGING INTERNATIONAL CORPORATION





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)







The following table illustrates net income (loss) attributable to common
shareholders as if SFAS No. 142 had been implemented on January 1, 2001, and assumes no impairment of goodwill (in thousands):





Three Months Ended March 31,2002


2001Reported net income (loss) attributable to common shareholders

$
(7,171
)

$
1,181Goodwill amortization, net of tax






3,101Adjusted net income (loss) attributable to common shareholders

$
(7,171
)

$
4,282Earnings per sharebasic and dilutedReported net income (loss) attributable to common shareholders

$
(0.22
)

$
0.04Goodwill amortization, net of tax






0.10Adjusted net income (loss) attributable to common shareholders

$
(0.22
)

$
0.14


SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement no. 13, and Technical
Corrections, was issued on April 30, 2002. SFAS No. 145 includes, among other things, the 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 will be classified as extraordinary items when the losses are considered unusual in nature and infrequent in occurrence. SFAS No. 145 will be
effective for the Company on January 1, 2003, at which time the Company will reclassify its first quarter 2002 loss on early extinguishment of debt as a non-extraordinary item.








Note 3.    Refinancing Transactions





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





| |  |  | The Companys wholly owned subsidiary, Graphic Packaging Corporation(GPC), issued $300 million aggregate principal amount of 85/8% senior subordinated notes due in 2012 in a Rule 144a transaction. Net proceeds from the sale of the notes totaled approximately $294.1 million.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| |  |  | GPC entered into a new $450 million senior secured credit facility. The new facility includes a $175 million seven-year term note and a $275 million five-year revolving line of
credit. Initial borrowings under the revolving line of credit totaled $62.6 million.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




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







Senior Subordinated Notes





The Senior Subordinated Notes (the Notes) are unsecured senior
subordinated obligations of GPC. Interest accrues at 85/8%, payable semi-annually on August 15th and February 15th, beginning on
August 15, 2002. The Notes will mature on February 15, 2012. The Notes are unconditionally and jointly and severally guaranteed by GPIC and its domestic subsidiaries. GPC may redeem the Notes, but prior to 2010, must pay a premium to do so. Upon a
change in control, the holders of the Notes may require GPC to repurchase the Notes at a 1% premium.




7




---



GRAPHIC PACKAGING INTERNATIONAL CORPORATION





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)







GPC issued the Notes under an indenture among GPC, as issuer, GPIC, as a guarantor,
the Companys domestic subsidiaries, as the subsidiary guarantors, and Wells Fargo Bank Minnesota, National Association, as trustee. GPC and GPIC have entered into a registration rights agreement which provides for them to use commercially
reasonable efforts to consummate an exchange offer under the Securities Act of 1933, within 210 days of closing. Toward this end, GPC filed a Form S-4 with the U.S. Securities and Exchange Commission on April 9, 2002, which has not yet been declared
effective. GPC will pay additional interest on the Notes if it does not comply with certain of its obligations under the registration rights agreement.








Senior Secured Credit Facility





GPC is the borrower
of the new senior secured credit facility (the Credit Facility). A syndicate of financial institutions serves as lenders, with Morgan Stanley Senior Funding, Inc. and Credit Suisse First Boston as the joint lead arrangers. The Credit Facility
consists of a $275 million, five-year revolving credit facility, or the Revolver, and a $175 million, seven-year term loan, or the Term Loan. The Revolver will bear interest at various pricing options, including LIBOR plus a spread tied to
GPCs leverage, with a single principal payment due at maturity. The interest rate for the Revolver was 3.9% at March 31, 2002. The Term Loan will bear interest at various pricing options, including LIBOR plus 275 basis points, with principal
amortization of 1% a year and the balance due at maturity. The interest rate for the Term Loan was 4.6% at March 31, 2002. The Credit Facility must also be prepaid with a cash flow recapture calculation, and with certain proceeds from asset sales,
and debt or equity offerings. The Credit Facility is collateralized by first priority liens on all material assets of the Company and all of its domestic subsidiaries. The Credit Facility limits the Companys ability to pay dividends other than
permitted dividends on the preferred stock, and imposes limitations on the incurrence of additional debt, acquisitions, capital expenditures and the sale of assets.





The Companys borrowings at March 31, 2002 and December 31, 2001 consist of the following (in thousands):





March 31,

December 31,2002

2001Seven-year term facility due 2009

$
175,000

$
Five-year revolving credit facility due 2007


53,600


85/8%
senior subordinated notes due 2012


300,000


Five-year term facility due 2004





247,035Revolving credit facility due 2004





222,75010% subordinated notes due 2008





50,000Other notes payable


5,599


5,974Total


534,199


525,759Less current maturities


3,948


37,373Long-term maturities

$
530,251

$
488,386





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








Note 4.    Asset Impairment and Restructuring Charges





Asset
Impairment Charges





The Company recorded an asset impairment charge of $1.5 million in the quarter ended March 31, 2001
related to its Saratoga Springs, New York building. Operations of the Saratoga Springs plant were transferred to other GPC manufacturing locations and the building and real property were sold in June 2001 for cash proceeds of $3.4 million. No gain
or loss was recognized on the June 2001 sale.




8




---



GRAPHIC PACKAGING INTERNATIONAL CORPORATION





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)







Restructuring Charges





The Company recorded restructuring charges totaling $2.4 million in the fourth quarter of 2001 in connection with the announced closure of the Newnan, Georgia plant. The
restructuring charges relate to severance packages for 105 plant personnel that were communicated to employees in December 2001. The Company expects to shut down the plants operations during the third quarter of 2002 and sell the plants
building and land. The Company expects to complete the Newnan restructuring plan by the end of 2002. No restructuring payments were made during the first quarter of 2002.





The Company recorded restructuring charges of $1.0 million in the first quarter of 2001 in continuance of the plan announced in the fourth quarter of 2000 that eliminated approximately
200 non-production positions across the Company. The total cost of the plan was approximately $5.0 million. The 2001 charge relates to severance packages that were communicated to employees in the first quarter of 2001. At March 31, 2002, this
restructuring plan is complete.





The Company completed the closure of the Saratoga Springs plant and the transition of the
plants business to other Company facilities by the end of 2000. Approximately $0.5 million of the restructuring charges recognized in 2000 relating to this plant closure were not necessary to meet severance obligations for the plants
former employees and were reversed in the first quarter of 2001.





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





2000 Saratoga Springs Closure


2000/2001 Reduction in Force


2001 Newnan Plant Closure

TotalsBalance, December 31, 2001

$
0.1


$
0.2


$
2.4

$
2.7Cash paid


(0.1
)


(0.2
)





(0.3
)Balance, March 31, 2002

$
0.0


$
0.0


$
2.4

$
2.4








Note 5.    Gain on Sale of Assets





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








Note 6.    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 since 1999Packaging. In addition, the Companys holdings and operations outside the United States are nominal. Therefore, no additional segment information is provided herein.




9




---



GRAPHIC PACKAGING INTERNATIONAL CORPORATION





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)







Note 7.    Supplemental Information





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





The accompanying supplemental financial information presents condensed consolidating financial statements of (a) Graphic Packaging Corporation (the
Issuer); (b) Graphic Packaging International Corporation (the Parent); (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, 2002, pursuant to a $100 million intercompany loan from GPIC. In the three months
ended March 31, 2001, GPC incurred $2.2 million of quarterly interest pursuant to the same intercompany note that totaled $92.7 million in 2001.





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




10




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GRAPHIC PACKAGING INTERNATIONAL CORPORATION





CONDENSED CONSOLIDATING INCOME STATEMENT


Three Months Ended March 31, 2002


(in thousands)





Issuer


Parent


Guarantor Subsidiaries


Nonguarantor Subsidiaries


Eliminations


Consolidated TotalNet sales

$
262,352


$



$



$
1,372


$



$
263,724Cost of goods sold


228,119











1,313







229,432Gross profit


34,233











59







34,292Selling, general and administrative expense


14,864











23







14,887Equity in (earnings) loss of subsidiaries


(19
)


6,231



(58
)






(6,154
)


Operating income (loss)


19,388



(6,231
)


58



36



6,154



19,405Interest (expense) income


(13,777
)


2,500







(19
)






(11,296
)Income (loss) before taxes and extraordinary item


5,611



(3,731
)


58



17



6,154



8,109Income tax (expense) benefit


(2,179
)


1,446



(50
)


21



(2,401
)


(3,163
)Income (loss) before extraordinary item


3,432



(2,285
)


8



38



3,753



4,946Extraordinary loss on early extinguishment of debt, net of tax


(9,617
)


















(9,617
)Net income (loss)


(6,185
)


(2,285
)


8



38



3,753



(4,671
)Preferred stock dividends declared






(2,500
)














(2,500
)Net income (loss) attributable to common shareholders

$
(6,185
)

$
(4,785
)

$
8


$
38


$
3,753


$
(7,171
)




11




---

GRAPHIC PACKAGING INTERNATIONAL CORPORATION





CONDENSED CONSOLIDATING INCOME STATEMENT


Three Months Ended March 31, 2001


(in thousands)





Issuer


Parent


Guarantor Subsidiaries


Nonguarantor Subsidiaries


Eliminations


Consolidated TotalNet sales

$
287,602


$



$



$
842


$



$
288,444Cost of goods sold


247,402











808







248,210Gross profit


40,200











34







40,234Selling, general and administrative expense


14,460







20



9







14,489Goodwill amortization


5,169



















5,169Asset impairment and restructuring charges


2,000



















2,000Equity in (earnings) of subsidiaries


(2,399
)


(2,351
)


(17
)






4,767



Operating income (loss)


20,970



2,351



(3
)


25



(4,767
)


18,576Gain from sale of businesses and other assets










3,650











3,650Interest (expense) income


(18,568
)


2,155



274



14







(16,125
)Income before taxes


2,402



4,506



3,921



39



(4,767
)


6,101Income tax expense


(936
)


(1,804
)


(1,561
)


(16
)


1,897



(2,420
)Net income


1,466



2,702



2,360



23



(2,870
)


3,681Preferred stock dividends declared






(2,500
)














(2,500
)Net income attributable to common shareholders

$
1,466


$
202


$
2,360


$
23


$
(2,870
)

$
1,181




12




---

GRAPHIC PACKAGING INTERNATIONAL CORPORATION





CONDENSED CONSOLIDATING BALANCE SHEET


At March 31, 2002


(in thousands)





Issuer


Parent

Guarantor Subsidiaries


Nonguarantor Subsidiaries


Eliminations


Consolidated TotalASSETSCurrent assetsCash and cash equivalents

$
573


$


$



$
4,699


$



$
5,272Accounts receivable, net


72,677



2,437


18



699







75,831Inventories


98,759










389







99,148Other assets


31,466










24,032



(23,970
)


31,528Total current assets


203,475



2,437


18



29,819



(23,970
)


211,779Properties, net


426,968










8,845







435,813Goodwill, net


559,696


















559,696Other assets


31,531



549,050


3,564



18,076



(570,649
)


31,572Total assets

$
1,221,670


$
551,487

$
3,582


$
56,740


$
(594,619
)

$
1,238,860LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesCurrent maturities of long-term debt

$
2,732


$


$



$
1,216


$



$
3,948Accounts payable


55,752



319






317







56,388Other current liabilities


70,677



28,991


2,654



1,348



(23,970
)


79,700Total current liabilities


129,161



29,310


2,654



2,881



(23,970
)


140,036Long-term debt


628,265










235,268



(333,282
)


530,251Other long-term liabilities


68,655



1,772


4,355



78



587



75,447Total liabilities


826,081



31,082


7,009



238,227



(356,665
)


745,734Shareholders equity:Preferred stock






100,000














100,000Common stock






324


1,829



1,540



(3,369
)


324Paid-in capital


428,467



186,990


234,067



(180,728
)


(252,390
)


416,406Retained earnings (deficit)


(15,201
)


233,091


(239,323
)


(1,605
)


17,805



(5,233
)Accumulated other comprehensive income (loss)


(17,677
)









(694
)






(18,371
)Total shareholders equity


395,589



520,405


(3,427
)


(181,487
)


(237,954
)


493,126Total liabilities and shareholders equity

$
1,221,670


$
551,487

$
3,582


$
56,740


$
(594,619
)

$
1,238,860




13




---

GRAPHIC PACKAGING INTERNATIONAL CORPORATION





CONDENSED CONSOLIDATING BALANCE SHEET


At December 31, 2001


(in thousands)





Issuer


Parent

Guarantor Subsidiaries


Nonguarantor Subsidiaries


Eliminations


Consolidated TotalASSETSCurrent assetsCash and cash equivalents

$
1,145


$
976

$



$
4,645


$



$
6,766Accounts receivable, net


56,560



1,987


93



834







59,474Inventories


92,154










254







92,408Other assets


33,101










24,024



(23,969
)


33,156Total current assets


182,960



2,963


93



29,757



(23,969
)


191,804Properties, net


434,549










9,163







443,712Goodwill, net


559,696


















559,696Other assets


18,626



605,228


3,566



18,075



(611,372
)


34,123Total assets

$
1,195,831


$
608,191

$
3,659


$
56,995


$
(635,341
)

$
1,229,335LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesCurrent maturities of long-term debt

$
36,156


$


$



$
1,217


$



$
37,373Accounts payable


58,110



534






358







59,002Other current liabilities


59,929



33,286


2,730



1,500



(24,419
)


73,026Total current liabilities


154,195



33,820


2,730



3,075



(24,419
)


169,401Long-term debt


579,006










235,336



(325,956
)


488,386Other long-term liabilities


208,823



1,959


4,356



76



(141,314
)


73,900Total liabilities


942,024



35,779


7,086



238,487



(491,689
)


731,687Shareholders equity:Preferred stock






100,000














100,000Common stock






322


1,829



1,540



(3,369
)


322Paid-in capital


283,787



234,975


234,075



(180,753
)


(154,335
)


417,749Retained earnings (deficit)


(8,993
)


235,353


(239,331
)


(1,643
)


14,052



(562
)Accumulated other comprehensive income (loss)


(20,987
)


1,762






(636
)






(19,861
)Total shareholders equity


253,807



572,412


(3,427
)


(181,492
)


(143,652
)


497,648Total liabilities and shareholders equity

$
1,195,831


$
608,191

$
3,659


$
56,995


($
635,341
)

$
1,229,335




14




---

GRAPHIC PACKAGING INTERNATIONAL CORPORATION





CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS


Three Months Ended March 31, 2002


(in thousands)





Issuer


Parent


Guarantor Subsidiaries

Nonguarantor Subsidiaries

Eliminations

Consolidated TotalNet cash provided by (used in) operating activities

$
13,160


$
1,451


$


$
54

$


$
14,665Cash flows from investing activities:Capital expenditures


(7,200
)















(7,200
)Cash flows from financing activities:Proceeds from borrowings


588,400
















588,400Repayment 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












73Net 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





6,766Balance at end of period

$
573


$



$


$
4,699

$


$
5,272




15




---

GRAPHIC PACKAGING INTERNATIONAL CORPORATION





CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS


Three Months Ended March 31, 2001


(in thousands)





Issuer


Parent


Guarantor Subsidiaries


Nonguarantor Subsidiaries

Eliminations

Consolidated TotalNet cash provided by (used in) operating activities

$
14,229


$
2,630


$
(3,650
)

$
226

$


$
13,435Cash flows from investing activities:Capital expenditures


(6,679
)
















(6,679
)Proceeds from sales of assets










3,650









3,650Net cash provided by (used in) investing activities


(6,679
)






3,650









(3,029
)Cash flows from financing activities:Proceeds from borrowings


64,450

















64,450Repayment of debt


(72,000
)
















(72,000
)Preferred stock dividends paid






(2,500
)












(2,500
)Common stock issuance and other






(130
)












(130
)Net cash used in financing activities


(7,550
)


(2,630
)












(10,180
)Cash and cash equivalents:Net increase














226





226Balance at beginning of period














4,012





4,012Balance at end of period

$



$



$



$
4,238

$


$
4,238




16




---

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 with an estimated 13% market share. Our business strategy is to maintain and improve our customer relationships and market leadership, while leveraging our low cost position.





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








Segment Information





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








Factors That Impact Our Business





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





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





| |  |  | foodcereal; desserts; frozen and microwave foods; pet foods; prepared foods; snacks; and food service products;
| | - |  | ----------------------------------------------------------------------------------------------------------------




| |  |  | household productsdishwasher and laundry detergent; sporting goods; healthcare; and tissues and papers;
| | - |  | --------------------------------------------------------------------------------------------------------




| |  |  | beveragebottle and can carriers and cases; and
| | - |  | -----------------------------------------------




| |  |  | tobaccofliptop boxes and cartons.
| | - |  | ----------------------------------




We market our products directly to our customers through a relatively small internal sales force. Our top 20 customers, with whom we have long-term relationships, represent approximately 80% of our gross sales in the first quarter of 2002.
Our competition includes other large national folding carton companies, as well as numerous smaller regional companies. We work to maintain our market share through quality, service, efficiency, innovation, competitive pricing and strategic sourcing
to our customers.





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





Cost of Goods Sold.    Our costs of goods sold consist primarily of recycled paper fiber, purchased paperboard, ink, plastic films, resins and labor, which are
all variable cost components. Energy is also a component of our costs, particularly for our Kalamazoo, Michigan recycled paperboard mill. Variable costs are estimated to be 80% and fixed costs to be 20% of total costs.





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




17




---

freight. Our ability to work as an integrated business, as opposed to different units, has given us opportunities to reduce production overhead costs and to
take advantage of economies of scale in purchasing, customer service, freight and other areas common to all of our facilities. Our newest initiative to reduce our variable manufacturing costs is our recent introduction of a company-wide Six Sigma
process. This implementation includes extensive training for our employees in the Six Sigma process.





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








Results of Operations





Net sales for the three months ended March 31, 2002 were $263.7
million, a decrease of $24.7 million, or 8.6%, compared to the first quarter of 2001. In contrast, sales for the three months ended March 31, 2001 were $288.4 million, an increase of $12.1 million, or 4.4%, compared to the same period in 2000. The
2001 increase would have been 8.2% after excluding $9.8 million of sales generated by the Malvern, Pennsylvania plant in the first quarter of 2000, which was sold in October 2000. In the first quarter of 2001 we enjoyed exceptionally strong sales to
customers for one-time product promotions and new, value-added business. In the first quarter of 2002 our customers generally focused on managing their inventories as they faced an uncertain economy. This resulted in significantly lower orders from
customers and, in some cases, temporary plant shutdowns by our customers and us in the first three months of 2002. Although this impacted us by reducing our sales volume, it did not impact our pricing, nor do we believe our market share with our
customers changed.





Gross profit, as a percentage of net sales, was 13.0% for the first quarter of 2002. Gross profit, as a
percentage of net sales, was 13.9% for the three months ended March 31, 2001, and 11.9% for the same period in 2000. Although the first quarter of 2002 was negatively impacted by lower sales, the Companys system-wide optimization and
restructuring activities and emphasis on cost control programs, like Six Sigma, have contributed to gross margin improvement since 2000.





Selling, general and administrative expenses were 5.6% of net sales for the three months ended March 31, 2002. In the first quarter of 2001, these expenses as a percentage of net sales were 5%. The increase is principally due to employee
incentive programs and reduced sales. Our goal is to keep selling, general and administrative expense at or under 6% of net sales.





Interest expense decreased $4.8 million or 30% in the first quarter of 2002, compared to the first quarter of 2001. Contributing factors include lower debt balances and lower market interest rates.





The effective tax rate for the first quarter of 2002 was approximately 39%, compared to 40% in the first quarter of 2001. Because some of our goodwill
amortization is nondeductible for tax purposes, our effective tax rate is lower as a result of implementing SFAS No. 142, which eliminated goodwill amortization expense for financial reporting purposes effective January 1, 2002. See Note 2 to the
accompanying financial statements. The Company expects to maintain an effective tax rate of approximately 39% for the remainder of 2002.








Asset Impairment and Restructuring Charges





We review the relative cost effectiveness of
our Companys assets, including plant facilities and equipment, and the deployment of human resources across all functions while integrating acquisitions and responding to pressures on margins from industry conditions. As a result, we have
closed plants and downsized our workforce with the goal of maximizing our profits and optimizing our resources.








Asset Impairment Charges





We recorded an asset impairment charge of $1.5 million in the
quarter ended March 31, 2001 related to our Saratoga Springs, New York building. Operations of the Saratoga Springs plant were transferred to other GPC manufacturing locations and the building and real property were sold in June 2001 for cash
proceeds of $3.4 million. No gain or loss was recognized on the June 2001 sale.




18




---

Restructuring Charges





We
recorded restructuring charges totaling $2.4 million in the fourth quarter of 2001 in connection with the announced closure of the Newnan, Georgia plant. The Newnan plant is more expensive to operate than other plants in our system and produces
margins below our expectations. The plants business will be transferred to other plants in our system. The restructuring charges relate to severance packages for 105 plant personnel that were communicated to employees in December 2001. We
expect to shut down the plants operations during the third quarter of 2002 and sell the plants building and land. We expect to complete the Newnan restructuring plan by the end of 2002. No restructuring payments were made during the
first quarter of 2002.





We recorded restructuring charges of $1.0 million in the first quarter of 2001 in continuance of the
plan announced in the fourth quarter of 2000 that eliminated approximately 200 non-production positions across the Company. The total cost of the plan was approximately $5.0 million. The 2001 charge relates to severance packages that were
communicated to employees in the first quarter of 2001. At March 31, 2002, this restructuring plan is complete.





We completed
the closure of the Saratoga Springs plant and the transition of the plants business to other Company facilities by the end of 2000. Approximately $0.5 million of the restructuring charges recognized in 2000 relating to this plant closure were
not necessary to meet severance obligations for the plants former employees and were reversed in the first quarter of 2001.





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





2000 Saratoga Springs Closure


2000/2001 Reduction in Force


2001 Newnan Plant Closure

TotalsBalance, December 31, 2001

$
0.1


$
0.2


$
2.4

$
2.7Cash paid


(0.1
)


(0.2
)





(0.3
)Balance, March 31, 2002

$
0.0


$
0.0


$
2.4

$
2.4








Gain on Sale of Assets





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








Financial Resources and Liquidity





Our liquidity is generated from both internal and external sources and is used to fund short-term working capital needs, capital expenditures, preferred
stock dividends and acquisitions.








Capital Structure





On February 28, 2002, we refinanced our existing senior bank credit facility with a private placement of $300 million of senior subordinated notes, carrying interest at 85/8%, payable semi-annually and due in 2012, and a new $450 million senior bank credit facility. We collectively refer to these
transactions as the Refinancing Transactions.





We intend to fund future working capital needs, capital
expenditures, preferred stock dividends and acquisitions through cash flow generated from operations and borrowings under our new senior bank credit facility. GPC is the borrower under the new senior bank credit facility and the senior subordinated
notes, and GPIC has




19




---

guaranteed the loans. The new senior bank credit facility consists of a $275 million, five-year revolving credit facility, or the Revolver, and a $175 million,
seven-year term loan, or the Term Loan. The Revolver bears interest at various pricing options, including LIBOR plus a spread tied to our leverage, with a single principal payment due at maturity. The interest rate for the Revolver was 3.9% at March
31, 2002. The Term Loan bears interest at various pricing options, including LIBOR plus 275 basis points, with principal amortization of 1% a year and the balance due at maturity. The interest rate for the Term Loan was 4.6% at March 31, 2002. The
facilities must also be prepaid with a cash flow recapture calculation, and with certain proceeds from asset sales, and debt or equity offerings. The facility is collateralized by first priority liens on all material assets of the Company and all of
its domestic subsidiaries. The facility limits the Companys ability to pay dividends other than permitted dividends on the preferred stock, and imposes limitations on the incurrence of additional debt, acquisitions, capital expenditures and
the sale of assets.





We used the net proceeds from the Refinancing Transactions to repay our existing bank debt, to repurchase
our existing $50 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 in 2002 to write off our remaining unamortized debt issuance costs associated with the refinanced debt. These costs amounted to $15.8, pretax, at February 28, 2002. If we continue to reduce
LIBOR-based borrowings through increased cash flows, we may also incur a charge related to our existing interest rate swap agreements if they no longer qualify as a hedge of interest rate risk. On February 28, 2002, we terminated a $35 million
notional value interest rate swap contract for $830,000 that we are amortizing over the remaining life of the swap contract. At March 31, 2002, we had $190 million notional value of interest rate swap agreements, which had a negative fair value of
$4.4 million.





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





March 31, 2002

December 31, 2001Seven-year term facility due 2009

$
175,000

$
Five-year revolving credit facility due 2007


53,600


85/8%
senior subordinated notes due 2012


300,000


Five-year term facility due 2004





247,035Revolving credit facility due 2004





222,75010% subordinated notes due 2008





50,000Other notes payable


5,599


5,974Total


534,199


525,759Less current maturities


3,948


37,373Long-term maturities

$
530,251

$
488,386





Our maturities of long-term debt as of March 31, 2002 are as follows (in
thousands):





2002

$
3,9482003


1,9312004


1,9282005


1,900Thereafter


524,492$
534,199





We maintain an interest rate risk-management strategy that uses derivative
instruments to minimize significant, unanticipated earnings fluctuations that may arise from volatility in interest rates. Our specific goals are to (1) manage interest rate sensitivity by modifying the re-pricing or maturity characteristics of some
of our debt and (2) lower (where possible) the cost of our borrowed funds. In accordance with our interest rate risk-management strategy, we had contracts in place at March 31, 2002 to hedge the interest rates on all of our variable rate borrowings
in the form of swap agreements on $190 million of borrowings and cap agreements on $350 million of borrowings. The swap agreements lock in an average LIBOR rate of 6.6%, $150 million of the caps provide upside protection to us if LIBOR moves
above 6.75% and $200 million of the caps provide upside protection to us if LIBOR moves above 8.13%. The hedging instruments expire in 2002.





Our capital structure also includes $100 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




20




---

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 is dependent upon our ability to manage our inventories, collect our receivables on a timely basis, and maintain favorable terms with our vendors. Our working capital
can be negatively impacted if our operations run less efficiently, particularly at times when business is moved among plants or new plants are acquired, or if inventories build up due to lower than planned sales during a period.





We currently expect that cash flows from operations and borrowings under our new credit facility will be adequate to meet our needs for
working capital, 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, 2002 was $71.7 million, and $216.3 million was
available under our revolving credit facility.





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








Inflation





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








Item 3.Quantitative and Qualitative Disclosures about Market
Risk





Interest Rate Risk





As of May 1, 2002, the Companys capital structure includes $214.6 million of debt that bears interest based upon an underlying rate that fluctuates with short-term interest rates, specifically LIBOR. The Company
has entered into interest rate swap agreements that lock LIBOR at 5.94% on $65 million of borrowings and 6.98% on $125 million of its borrowings. In addition, the Company has interest rate contracts that cap the LIBOR interest rate at 8.13% on $200
million of borrowings and 6.75% for $150 million of borrowings. With the Companys interest rate protection contracts, a 1% rise in interest rates would impact annual pre-tax results by approximately $0.3 million.




21




---

Factors That Mav Affect Future Results





Certain statements in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may include words such as anticipate,
estimate, expect, project, intend, plan, believe and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or
financial performance or other events. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future
results, performance or achievements expressed or implied by the forward-looking statements. Specifically, a) we are dependent on key customers and strategic relationships, and the loss of key customers or these relationships could adversely affect
our business, financial condition and results of operations; b) we face intense competition and, if we are unable to compete successfully against other manufacturers of folding cartons, we could lose customers and our revenues may decline; c) we
have made acquisitions, which entail certain risks, and may do so again in the future, and we cannot guarantee that we will realize the expected benefits from future acquisitions or that our existing operations will not be harmed as a result of any
such acquisitions; d) price fluctuations in raw materials and energy costs could adversely affect our manufacturing costs and ability to obtain the materials we need to manufacture our products; e) we may not be able to adequately protect our
intellectual property and proprietary rights, which could harm our future success and competitive position; f) we are subject to environmental laws and other governmental regulations, and costs related to compliance with, or any liability for
failure to comply with, existing or future laws and regulations which could adversely affect our business, financial condition and results of operations; g) our business may be adversely impacted by work stoppages and other labor relations matters;
h) we may encounter difficulties in our restructuring and reorganization efforts, which could prevent us from accommodating our existing business and capturing new business; i) capital expenditures might be higher than planned due to unexpected
requirements or opportunities; j) various Coors family trusts own a significant interest in us and may exercise their control in a manner detrimental to our other investors interests; k) terrorist attacks, such as those that occurred on
September 11, 2001, and acts of bioterrorism have contributed to economic instability in the United States and further acts of terrorism, bioterrorism, violence or war could affect the markets in which we operate, our business operations, our
expectations and other forward-looking statements contained in this document; 1) we may be subject to losses that might not be covered in whole or in part by existing insurance coverage, and these uninsured losses could adversely affect our
business, financial condition and results of operations; m) selling, general and administrative costs might increase based on adding more staff and programs, and general cost increases; n) we may be exposed to higher than predicted interest rates on
the unhedged portion of our debt and on any new debt we might incur; o) if we are unable to meet the financial covenants on our debt, we could be subject to higher interest rates or possible default; and p) we may not be able to maintain our
effective tax rate due to the current and future tax laws, our ability to identify and use our tax credits and other factors.





These statements should be read in conjunction with the financial statements and notes thereto included in the Companys Form 10-K for the year ended December 3 1, 2001. The accompanying financial statements have not been examined by
independent accountants in accordance with generally accepted auditing standards, but in the opinion of management, such financial statements include all adjustments necessary to summarize fairly the Companys financial position and results of
operations. Except for certain reclassifications made to consistently report the information contained in the financial statements, all adjustments made to the interim financial statements presented are of a normal recurring nature. The results of
operations for the first quarter ended March 31, 2002, may not be indicative of results that may be expected for the year ending December 31, 2002.




22




---

PART II.    OTHER INFORMATION








Item 1.Legal Proceedings





On February 19, 2002, Chinyun Kim filed a putative class action claim in District Court, Jefferson County, Colorado against the Company and certain of its shareholders and directors. The Complaint alleges that the
defendants breached their fiduciary duties in connection with the issuance on August 15, 2000, of the Companys Series B Preferred Stock to the Grover C. Coors Trust. The Complaint seeks to rescind the sale of the Series B Preferred Stock,
unspecified damages and costs and attorneys fees. The Company intends to vigorously defend against these claims and, on April 30, 2002, filed a motion to dismiss.








Item 6.Exhibits and Reports on Form S-K





(a)Exhibits:





Exhibit Number

Document Description4.7

Indenture, dated as of February 28, 2002, as amended by the First Supplemental Indenture, dated as of April 9, 2002, by and among
Graphic Packaging Corporation, as issuer, the Guarantors Named Therein, and Wells Fargo Bank Minnesota, National Association, as Trustee. (Incorporated by reference to Graphic Packaging Corporation Form S-4 tiled April 9, 2002.)4.8

The form of Senior Subordinated Guarantee is included as Exhibit A to the form of New Note included as Exhibit A to the Indenture
included as Exhibit 4.7 hereto.4.9

Registration Rights Agreement, dated February 28, 2002, by and among Credit Suisse First Boston Corporation, Morgan Stanley &
Co. Incorporated, Graphic Packaging International Corporation and Graphic Packaging Corporation. (Incorporated by reference to Graphic Packaging Corporation Form S-4 filed April 9, 2002.)4.10

The Form of New Note is included as Exhibit A to the Indenture included as Exhibit 4.7 hereto.4.11

Purchase Agreement, dated February 14, 2002, by and among Graphic Packaging International Corporation, Graphic Packaging
Corporation, Credit Suisse First Boston Corporation and Morgan Stanley & Co. Incorporated. (Incorporated by reference to Graphic Packaging Corporation Form S-4 filed April 9, 2002.)4.12

Amendment No. 1 to Purchase Agreement, dated February 21, 2002, by and among Graphic Packaging International Corporation, Graphic
Packaging Corporation, Credit Suisse First Boston Corporation, Morgan Stanley & Co. Incorporated, ABN Ambro Incorporated, U.S. Bancorp Piper Jaffray Inc., and Wells Fargo Brokerage Services, LLC. (Incorporated by reference to Graphic Packaging
Corporation Form S-4 filed April 9, 2002.)10.0

Credit Agreement, dated as of February 28, 2002, among Graphic Packaging International Corporation, Graphic Packaging
Corporation, as the Borrower, Various Financial Institutions from Time to Time Parties Hereto, as the Lenders, Morgan Stanley Senior Funding, Inc., as the Administrative Agent for the Lenders, Credit Suisse First Boston, as the Syndication Agent for
the Lenders, and LaSalle Bank National Association, US Bank National Association, and Wells Fargo Bank, N.A., as Co-Documentation Agents, and Morgan Stanley Senior Funding, Inc., and Credit Suisse First Boston as Lead Arrangers and Book Runners.
(Incorporated by reference to Graphic Packaging Corporation Form S-4 filed April 9, 2002.)10.15

Form of Employment Agreement entered into by and between the Following Individuals: Jeffrey H. Coors, David W. Scheible, Jill
B.W. Sisson, Marsha C. Williams and Luis E. Leon. (Incorporated by reference to Graphic Packaging Corporation Form S-4 filed April 9, 2002.)




23




---

(b)Reports on Form 8-K





On February 1, 2002, the Company filed a Current Report on Form 8-K disclosing its plans to privately place subordinated debt and to announce its February 22, 2002 conference call to discuss 2001 results.





On February 22, 2002, the Company filed a Current Report on Form 8-K disclosing its 2001 results and to announce the completion
of pricing of its $300 million subordinated notes.





On March 28, 2002, the Company filed a Current Report on Form 8-K disclosing
a shareholder lawsuit filed against the Company and certain of its shareholders and directors.




24




---

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, 2002



By:

/s/    LUIS E. LEONLuis E. Leon (Chief Financial Officer)








Date:

May 15, 2002



By:

/s/    JOHN S. NORMANJohn S. Norman (Vice President and Controller)




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