FORM 10-Q

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


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

For the quarterly period ended June 30, 2001

OR

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

For the transition period from              to             .

Commission file number:  0-20704


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

           Colorado                          84-1208699
(State or other jurisdiction of           (I.R.S. Employer
incorporation or organization)           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 31,867,031 shares of common stock outstanding as of
August 2, 2001.



                 PART I.  FINANCIAL INFORMATION


Item 1.  Financial Statements


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

                             Three months ended     Six months ended
                                  June 30,              June 30,
                            -------------------    -------------------
                              2001       2000        2001       2000
                            --------   --------    --------   --------
Net sales                   $283,252   $273,189    $571,696   $549,509

  Cost of goods sold         240,976    237,378     489,186    480,802
                            --------   --------    --------   --------
Gross profit                  42,276     35,811      82,510     68,707

  Selling, general and
    administrative expense    16,428     16,076      30,917     31,853
  Goodwill amortization        5,143      5,088      10,312     10,272
  Asset impairment and
    restructuring charges      1,000        ---       3,000      3,420
                            --------   --------     -------   --------
Operating income              19,705     14,647      38,281     23,162

Gain on sale of assets-net       ---        ---       3,650      5,407
Interest expense - net       (13,530)   (21,650)    (29,655)   (41,330)
                            --------   --------     -------   --------
Income (loss) before income
  taxes                        6,175     (7,003)     12,276    (12,761)

Income tax (expense)
  benefit                     (2,446)     2,742      (4,866)     5,044
                            --------   --------     -------   --------

Net income (loss)              3,729     (4,261)      7,410     (7,717)

Preferred stock dividends
  declared                     2,500        ---       5,000        ---
                            --------   --------     -------   --------
Net income (loss)
  attributable to common
  shareholders                $1,229    ($4,261)     $2,410    ($7,717)
                            ========   ========     =======   ========
Net income (loss)
  attributable to common
  shareholders per basic
  share                        $0.04     ($0.15)      $0.08     ($0.27)
                            ========   ========     =======   ========
Net income (loss)
  attributable to common
  shareholders per diluted
  share                        $0.04     ($0.15)      $0.08     ($0.27)
                            ========   ========     =======   ========
Weighted average shares
  outstanding - basic         31,535     28,985      31,245     28,824
                            ========   ========     =======   ========
Weighted average shares
  outstanding - diluted       32,551     28,985      32,017     28,824
                            ========   ========     =======   ========

See Notes to Consolidated Financial Statements.



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

                             Three months ended      Six months ended
                                  June 30,               June 30,
                             -------------------    ------------------
                                2001      2000        2001       2000
                             --------   -------     -------    -------
Net income (loss)              $3,729   ($4,261)     $7,410    ($7,717)
Other comprehensive income:
  Foreign currency
    translation adjustments       (56)       (6)       (330)        (8)
  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
    $371 and $579                 593       ---         926        ---
  Change in fair value of
    cash flow hedges during
    the period, net of tax
    of $461 and $1,048           (737)      ---      (1,673)       ---
                             --------   -------      ------    -------
Other comprehensive income
    (loss)                       (200)       (6)     (4,294)        (8)
                             --------   -------      ------    -------
Comprehensive income (loss)    $3,529   ($4,267)     $3,116    ($7,725)
                             ========   =======      ======    =======

See Notes to Consolidated Financial Statements.



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

                                        June 30,      December 31,
                                          2001           2000
                                      ------------    ------------
ASSETS
Current assets:
Cash and cash equivalents                   $3,991          $4,012
Accounts receivable, net                    79,419          75,187
Inventories:
  Finished                                  61,576          61,038
  In process                                11,653          13,301
  Raw materials                             24,493          30,889
                                      ------------    ------------
Total inventories                           97,722         105,228
                                      ------------    ------------
Other assets                                33,586          31,634

  Total current assets                     214,718         216,061

Properties,net                             462,555         480,395
Goodwill, net                              569,998         580,299
Other assets                                41,185          54,695
                                      ------------    ------------
Total assets                            $1,288,456      $1,331,450
                                      ============    ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current maturities of long-term debt       $61,644         $58,500
Accounts payable                            40,985          38,903
Other current liabilities                   89,154          79,345
                                      ------------    ------------
  Total current liabilities                191,783         176,748

Long-term debt                             518,706         576,600
Other long-term liabilities                 61,651          62,951
                                      ------------    ------------
  Total liabilities                        772,140         816,299

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 31,742,441 and 30,544,449
  issued and outstanding at
  June 30, 2001, and December 31,
  2000, respectively                           317             305
Paid-in capital                            420,364         422,327
Retained earnings (deficit)                    412          (6,998)
Accumulated other comprehensive
  income (loss)                             (4,777)           (483)
                                      ------------    ------------
  Total shareholders' equity               516,316         515,151
                                      ------------    ------------
Total liabilities and shareholders'
  equity                                $1,288,456      $1,331,450
                                      ============    ============

See Notes to Consolidated Financial Statements.


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

                                          Six months ended
                                             June 30,
                                       ---------------------
                                         2001         2000
                                       --------    ---------
Cash flows from operating
activities:
  Net income (loss)                      $7,410      ($7,717)
  Adjustments to reconcile net
    income (loss)to net cash
    from operating activities:
    Asset impairment and
      restructuring charges               3,000        3,420
    Gain on sale of assets               (3,650)      (5,407)
    Depreciation and amortization        40,242       42,758
    Amortization of debt issuance
      costs                               3,970        4,585
    Change in current assets and
      current liabilities and other      17,936      (49,035)
                                       --------     --------
Net cash provided by (used in)
  operating activities                   68,908      (11,396)
                                       --------     --------
Cash flows from investing
  activities:
    Sale of assets                        7,050        5,596
    Capital expenditures                (16,374)     (17,102)
    Collection of note receivable           ---      200,000
                                       --------     --------
Net cash provided by (used in)
  investing activities                   (9,324)     188,494
                                       --------     --------
Cash flows from financing
  activities:
    Repayment of debt                  (141,450)    (219,000)
    Proceeds from borrowings             86,700       31,500
    Payment of debt issuance costs	    ---       (3,976)
    Payment of preferred dividends       (5,000)         ---
    Issuance of stock and other             145        2,432
                                       --------     --------
Net cash used in financing
  activities                            (59,605)    (189,044)
                                       --------     --------
Cash and cash equivalents:
  Net decrease in cash and cash
    equivalents                             (21)     (11,946)
  Balance at beginning of period          4,012       15,869
                                       --------     --------
  Balance at end of period               $3,991       $3,923
                                       ========     ========

See Notes to Consolidated Financial Statements.



 GRAPHIC PACKAGING INTERNATIONAL CORPORATION AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1.  Nature of Operations and Basis of Presentation

     Graphic Packaging International Corporation (the  Company or
GPC)  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, 2000.

     In  the  opinion of  management, the accompanying  unaudited
financial statements contain all adjustments necessary to present
fairly  the financial position of the Company at June  30,  2001,
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 and  six
months ended June 30, 2001 are not necessarily indicative of  the
results that may be achieved for the full fiscal year and  cannot
be used to indicate financial performance for the entire year.

     Certain  prior  period information has been reclassified  to
conform to the current presentation.


Note 2.  New Accounting Standard for Goodwill

     Statement  of  Financial   Accounting  Standards   No.  142,
Goodwill  and Other Intangible Assets, was issued in  July  2001.
This statement establishes new accounting and reporting standards
that   will,  among  other  things,  eliminate  amortization   of
goodwill.   Upon adoption of the new standard, goodwill  will  be
evaluated  for impairment using a fair-value based approach  and,
if  there is impairment, the carrying amount of the goodwill will
be  written  down to the implied fair value.  This  statement  is
effective  for the Company's financial statements  for  the  year
beginning   January  1,  2002.   Management  is   reviewing   the
implementation  guidance and evaluating the potential  impact  of
the  statement  and  the  change  in  accounting  method  on  the
Company's  financial position; therefore, a reliable estimate  of
the  impact  of this new accounting standard is not  possible  at
this time.


Note 3.  New Accounting Standard for Derivatives and Hedging
         Activities

     In   accordance  with  the  Company's  interest  rate  risk-
management  strategy, the Company has entered into  contracts  to
hedge  the  interest rates on approximately $575 million  of  its
borrowings.   Swap  agreements are in place on  $225  million  of
borrowings  and  cap agreements are in place on $350  million  of
borrowings.  The swap agreements lock in an average LIBOR rate of
6.5%,  $150 million of the caps provide upside protection to  the
Company  if LIBOR moves above 6.75% and $200 million of the  caps
provide  upside  protection to the Company if LIBOR  moves  above
8.13%.   The hedging instruments expire in 2002.  The fair  value
of  these  hedge agreements at June 30, 2001 was a  liability  of
$6.4 million, which has been recorded in the accompanying balance
sheet.

     The  Company  adopted   Statement  of  Financial  Accounting
Standards  No.  133,  Accounting for Derivative  Instruments  and
Hedging  Activities (FAS 133) on January 1, 2001.  In  accordance
with  the transition provisions of FAS 133, as of January 1, 2001
the  Company recorded a net-of-tax cumulative loss adjustment  to
other comprehensive income totaling $3.2 million which relates to
the  fair  value  of  previously  designated  cash  flow  hedging
relationships.  Based upon current interest rates,  approximately
$6 million of the interest rate hedging pre-tax loss currently in
other  comprehensive income is expected to flow through  interest
expense during the next twelve months.

     All derivatives are recognized on the balance sheet at their
fair  value.   On  the  date  that  the  Company  enters  into  a
derivative contract, it designates the derivative as (1) a  hedge
of  (a) the fair value of a recognized asset or liability or  (b)
an unrecognized firm commitment (a fair value hedge); (2) a hedge
of  (a)  a forecasted transaction or (b) the variability of  cash
flows  that  are  to  be received or paid in  connection  with  a
recognized  asset  or liability (a cash flow  hedge);  or  (3)  a
foreign-currency  fair-value  or  cash  flow  hedge  (a   foreign
currency  hedge).    The Company does not enter  into  derivative
contracts for trading or non-hedging purposes.  Currently, all of
the  Company's derivatives are designated as cash flow hedges and
are recognized on the balance sheet at their fair value.  Changes
in  the  fair  value of the Company's cash flow  hedges,  to  the
extent  that  the  hedges are highly effective, are  recorded  in
other  comprehensive income, until earnings are affected  by  the
variability  of  cash  flows  of the hedged  transaction  through
interest  expense.   Any hedge ineffectiveness (which  represents
the  amount  by  which  the changes in  the  fair  value  of  the
derivative exceed the variability in the cash flows being hedged)
is  recorded  in  current period earnings.  Hedge ineffectiveness
during the six months ended June 30, 2001 was immaterial.

     The  Company  formally  documents all relationships  between
hedging  instruments  and hedged items,  as  well  as  its  risk-
management  objective and strategy for undertaking various  hedge
transactions.  This process includes linking all derivatives that
are  designated  as  fair value, cash flow, or  foreign  currency
hedges  to  (1)  specific assets and liabilities on  the  balance
sheet   or   (2)   specific   firm  commitments   or   forecasted
transactions.  The Company also formally assesses  (both  at  the
hedge's   inception  and  on  an  ongoing  basis)   whether   the
derivatives  that  are  used in hedging  transactions  have  been
highly  effective  in offsetting changes in  the  cash  flows  of
hedged  items  and whether those derivatives may be  expected  to
remain highly effective in future periods.  When it is determined
that  a  derivative is not (or has ceased to be) highly effective
as   a   hedge,   the   Company  discontinues  hedge   accounting
prospectively, as discussed below.

     The Company discontinues hedge accounting prospectively when
(1)  it determines that the derivative is no longer effective  in
offsetting  changes in the fair value or cash flows of  a  hedged
item  (including  hedged  items  such  as  firm  commitments   or
forecasted transactions); (2) the derivative expires or is  sold,
terminated, or exercised; (3) it is no longer probable  that  the
forecasted  transaction will occur; (4) a hedged firm  commitment
no  longer  meets  the definition of a firm  commitment;  or  (5)
management  determines  that  designating  the  derivative  as  a
hedging instrument is no longer appropriate.

     When  hedge accounting  is discontinued due to the Company's
determination  that  the  derivative no longer  qualifies  as  an
effective  fair value hedge, the Company will continue  to  carry
the  derivative on the balance sheet at its fair value but  cease
to  adjust  the  hedged asset or liability for  changes  in  fair
value.   When hedge accounting is discontinued because the hedged
item  no  longer  meets the definition of a firm commitment,  the
Company  will  continue to carry the derivative  on  the  balance
sheet  at  its  fair value, removing from the balance  sheet  any
asset  or  liability  that was recorded  to  recognize  the  firm
commitment  and recording it as a gain or loss in current  period
earnings.  When the Company discontinues hedge accounting because
it  is  no  longer probable that the forecasted transaction  will
occur in the originally expected period, the gain or loss on  the
derivative remains in accumulated other comprehensive income  and
is  reclassified  into  earnings when the forecasted  transaction
affects  earnings.  However, if it is probable that a  forecasted
transaction will not occur by the end of the originally specified
time  period  or  within an additional two-month period  of  time
thereafter, the gains and losses that were accumulated  in  other
comprehensive income will be recognized immediately in  earnings.
In  all situations in which hedge accounting is discontinued  and
the  derivative  remains outstanding the Company will  carry  the
derivative  at  its fair value on the balance sheet,  recognizing
changes in the fair value in current period earnings.


Note 4.  Asset Impairment and Restructuring Charges

     The  Company recorded a restructuring charge of $1.0 million
in  the  second  quarter  of  2001 in  continuance  of  the  plan
announced  in  the  fourth quarter of 2000  that  will  eliminate
approximately  200 non-production positions across  the  Company,
including  the closure of the Company's folding carton  plant  in
Portland,  Oregon.   $3.0  million was  recorded  in  the  fourth
quarter  of  2000  and  $1.0 million was recorded  in  the  first
quarter  of  2001 related to this restructuring plan.   The  2001
charges  relate  to severance packages that were communicated  to
employees  in  the  first half of 2001.   No  additional  charges
related to this restructuring plan are expected.

     On  May 12, 2000, the  Company announced the planned closure
of  the Perrysburg, Ohio folding carton plant.  The shutdown  and
related  restructuring plan for the Perrysburg facility  included
asset   impairments  totaling  $6.5  million  and   restructuring
reserves  of  $1.35 million, which were recorded  in  the  second
quarter  2000.   The costs to shut down the Perrysburg  facility,
which  was  part  of the acquisition of the Fort James  packaging
business, were accounted for as a cost of the acquisition, with a
resultant  adjustment  to goodwill.  The  Company  completed  the
closure  of the plant and the transition of the plant's  business
to  other  Company facilities by the end of 2000.   On  July  11,
2001,  the Perrysburg plant building and land were sold for  cash
proceeds of approximately $1.9 million.

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

     The following  table summarizes accruals  related  to all of
the Company's restructuring  activities during the first  half of
2001:

     (in millions)
     Balance, December 31, 2000                          $5.0

     Transfer of enhanced benefit to pension liability   (1.5)
     Additional restructuring charges                     1.0
     Reversal of Saratoga Springs severance accrual      (0.5)
     Cash paid                                           (1.6)
                                                         ----
     Balance, March 31, 2001                              2.4

     Transfer of enhanced benefit to pension liability   (0.5)
     Additional restructuring charges                     1.0
     Cash paid                                           (1.0)
                                                        -----
     Balance, June 30, 2001                              $1.9
                                                        =====


Note 5.   Asset Sales

2001
     As  discussed  in  Note 4, the Company  has  closed  several
noncore  or  underperforming facilities over the past two  years.
The Company sold its Saratoga Springs, New York building and land
in  June 2001 and its Perrysburg, Ohio building and land in  July
2001  for  cash  proceeds  of  $3.4  million  and  $1.9  million,
respectively.  No gain or loss was recognized on the sales.   The
Company  has  recently announced that it has engaged advisors  to
assess  the strategic options with respect to its extruded coated
paper business in Portland, Oregon.

2000
     The  Company sold patents and various long-lived  assets  of
its former developmental businesses during the first half of 2000
for  consideration of approximately $6.2 million.  A pre-tax gain
of $5.4 million was recognized related to these asset sales.   In
the  first  half  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 in 2001 and 2000 - Packaging.
In  addition, the Company's holdings and operations  outside  the
United  States  are  nominal in 2001 and  2000.    Therefore,  no
additional segment information is provided herein.


Note 7.  Subsequent Event

     Pursuant  to  terms  in  its  senior credit  agreement,  the
Company  expects to complete a $50 million private  placement  of
subordinated   unsecured   debt   in  August  2001  substantially
according to the following terms:  the notes will accrue interest
at  10%  per  annum,  payable  quarterly, beginning September 15,
2001; and the notes mature August 15, 2008, but  are  redeemable,
subject to the terms of the senior credit agreement, at a premium
of 3%  in  the  first  year, 1.5%  in  the second year and at par
thereafter.  Proceeds will  be used  to repay the remaining $27.9
million balance (as of July 31, 2001) on  the one-year term  note
due August 15, 2001 and the balance applied against the five-year
senior  credit  facilities.  If  the  Company  does not issue the
subordinated  debt, it will utilize available borrowing  capacity
under  its revolving credit facility to repay the remaining $27.9
million  of the  one-year note and would pay an additional spread
of 75 basis  points  in  interest  and  a fee  of $750,000 to the
senior lenders.


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

General Business Overview

     Graphic Packaging International Corporation (the  Company or
GPC)  is  a  manufacturer of packaging products used by  consumer
product   companies  as  primary  packaging  for  their   end-use
products.   The Company's strategy is to maximize its competitive
position  and growth opportunities in its sole business,  folding
cartons.

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 in 2001 and 2000 - Packaging,
and  the  Company's  holdings and operations outside  the  United
States are nominal in 2001 and 2000.

Results from Operations

     Net  sales  increased  3.7% to $283 million  for  the  three
months  ended  June  30, 2001, compared to $273  million  in  the
second quarter of 2000.  For the six months ended June 30,  2001,
net  sales increased 4% to $572 million, compared to $550 million
in  the  first  half  of  2000.  If net sales  generated  by  the
Malvern, Pennsylvania plant, which was sold in October 2000,  are
subtracted from the 2000 comparable sales numbers, the  quarterly
increase  would  be 7.3% and the year-to-date increase  would  be
7.8%.   GPC's  sales  increases,  although  strengthened  by  new
customers,  are directly related to the success of its customers'
products.  The Company's sales to established customers have been
enhanced  by  special  product promotions and  other  value-added
products during 2001.

     Gross  profit  margins for the second quarter  and  the  six
months  ended  June 30, 2001 were 14.9% and 14.4%,  respectively,
increasing  from  13.1%  and 12.5% in the comparable  periods  in
2000.   The Company's goal has been to optimize its capacity  and
personnel in order to meet increased customer demand in the  most
cost-effective manner.  Improvements in profit margin reflect the
Company's  increased  sales and success  at  decreasing  variable
production  costs,  such as overtime, rework  and  scrap.   Also,
margins have improved due to decreased fixed manufacturing  costs
that  were  achieved  through  plant closures,  specifically  the
Saratoga Springs and Perrysburg facilities, and consolidation  of
administrative functions company-wide.

     Selling, general  and administrative expense as a percentage
of net sales continues to be just under 6% when comparing quarter-
to-quarter and year-to-year.  This has been the Company's  target
rate as it works to keep overhead costs at an optimal level.

     The  Company's  improvements in managing its production  and
overhead costs have resulted in improved operating income margin.
Operating income margin in the three months ended June  30,  2001
was  7%,  compared  to  5.4%  in  the  second  quarter  of  2000.
Operating  income margin for the six months ended June  30,  2001
was 6.7%, compared to 4.2% in the first half of 2000.

     Net interest  expense for the second quarter of 2001 totaled
$13.5 million, an $8.2 million decrease from the $21.7 million of
interest  expense  recorded  in  the  second  quarter  of   2000.
Likewise,  net  interest  expense for  the  first  half  of  2001
decreased $11.7 million when compared to the $41.3 million of net
interest  expense recorded in the comparable 2000 period.   Lower
amounts  of  outstanding  debt,  lower  LIBOR  rates,  and  lower
interest  rate  spreads over LIBOR as a result of  the  Company's
improved financial condition have contributed to these decreases.

     The  consolidated  effective tax rate for the second quarter
and  the  first half of 2001 was approximately 40%.  The  Company
expects  to  maintain an effective tax rate of approximately  40%
for the remainder of 2001.

Asset Impairment and Restructuring Charges

     The  Company recorded a restructuring charge of $1.0 million
in  the  second  quarter  of  2001 in  continuance  of  the  plan
announced  in  the  fourth quarter of 2000  that  will  eliminate
approximately  200 non-production positions across  the  Company,
including  the closure of the Company's folding carton  plant  in
Portland,  Oregon.   $3.0  million was  recorded  in  the  fourth
quarter  of  2000  and  $1.0 million was recorded  in  the  first
quarter  of  2001 related to this restructuring plan.   The  2001
charges  relate  to severance packages that were communicated  to
employees  in  the  first half of 2001.   No  additional  charges
related to this restructuring plan are expected.

     On  May 12, 2000, the  Company announced the planned closure
of  the Perrysburg, Ohio folding carton plant.  The shutdown  and
related  restructuring plan for the Perrysburg facility  included
asset   impairments  totaling  $6.5  million  and   restructuring
reserves  of  $1.35 million, which were recorded  in  the  second
quarter  2000.   The costs to shut down the Perrysburg  facility,
which  was  part  of the acquisition of the Fort James  packaging
business, were accounted for as a cost of the acquisition, with a
resultant  adjustment  to goodwill.  The  Company  completed  the
closure  of the plant and the transition of the plant's  business
to  other  Company facilities by the end of 2000.   On  July  11,
2001,  the Perrysburg plant building and land were sold for  cash
proceeds of approximately $1.9 million.

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

     The following table summarizes accruals related  to  all the
Company's restructuring activities during the first half of 2001:

     (in millions)
     Balance, December 31, 2000                          $5.0

     Transfer of enhanced benefit to pension liability   (1.5)
     Additional restructuring charges                     1.0
     Reversal of Saratoga Springs severance accrual      (0.5)
     Cash paid                                           (1.6)
                                                         ----
     Balance, March 31, 2001                              2.4

     Transfer of enhanced benefit to pension liability   (0.5)
     Additional restructuring charges                     1.0
     Cash paid                                           (1.0)
                                                        -----
     Balance, June 30, 2001                              $1.9
                                                        =====

Asset Sales

2001
     As  discussed  in  Note 4, the Company  has  closed  several
noncore  or  underperforming facilities over the past two  years.
The Company sold its Saratoga Springs, New York building and land
in  June 2001 and its Perrysburg, Ohio building and land in  July
2001  for  cash  proceeds  of  $3.4  million  and  $1.9  million,
respectively.  No gain or loss was recognized on the sales.   The
Company  has  recently announced that it has engaged advisors  to
assess  the strategic options with respect to its extruded coated
paper business in Portland, Oregon.

2000
     The  Company sold patents and various long-lived  assets  of
its former developmental businesses during the first half of 2000
for  consideration of approximately $6.2 million.  A pre-tax gain
of $5.4 million was recognized related to these asset sales.   In
the  first  half  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.

Financial Resources and Liquidity

     The Company's 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

     The  Company has  a revolving credit and term loan agreement
(the  Credit  Agreement) with a group of lenders,  with  Bank  of
America,  N.A.  as  agent.   Currently, the Credit  Agreement  is
comprised  of  three senior credit facilities  including  a  $400
million  one-year  facility, a $325 million five-year  term  loan
facility  and a $400 million five-year revolving credit  facility
(collectively,  the  Senior  Credit  Facilities).   The   Company
reduced amounts outstanding under its Senior Credit Facilities in
the  first  half  of  2001 by $54.8 million, with  $47.2  million
repaid  in the second quarter, largely through cash generated  by
operations.   Borrowings under the revolving credit  facility  on
August  1,  2001  were approximately $268 million,  leaving  $132
million  available for future borrowing needs.  As  of  June  30,
2001  the Company's borrowings under the Senior Credit Facilities
were as follows (in thousands):

     One-year term facility due
       August 15, 2001                $ 31,644
     Five-year term facility due
       August 2, 2004                  283,106
     Five-year revolving credit
       facility due August 2, 2004     265,600
                                      --------
     Total                             580,350
     Less:    Current maturities        61,644
                                      --------
     Long-term maturities             $518,706
                                      ========

     Amounts  borrowed  under the Senior Credit  Facilities  bear
interest  under  various  pricing  alternatives  plus  a   spread
depending  on the Company's leverage ratio.  The various  pricing
alternatives include (i) LIBOR, or (ii) the higher of the Federal
Funds  Rate  plus  0.5%,  or the prime rate.   In  addition,  the
Company  pays  a  commitment  fee  that  varies  based  upon  the
Company's  leverage ratio and the unused portion of the revolving
credit  facility.  Mandatory prepayments under the Senior  Credit
Facilities  are  required from the proceeds  of  any  significant
asset sale or from the issuance of any debt or equity securities.
In  addition,  the  five-year  term  loan  is  due  in  quarterly
installments.  Total annual principal payments for  2001  through
2003, respectively, are $25 million, $35 million and $40 million,
with the balance of the borrowings due in 2004.

     Pursuant  to  terms  in  its  senior credit  agreement,  the
Company  expects to complete a $50 million private  placement  of
subordinated   unsecured   debt   in  August  2001  substantially
according to the following terms:  the notes will accrue interest
at  10%  per  annum,  payable  quarterly, beginning September 15,
2001; and the notes mature August 15, 2008, but  are  redeemable,
subject to the terms of the senior credit agreement, at a premium
of 3%  in  the  first  year, 1.5%  in  the second year and at par
thereafter.  Proceeds will  be used  to repay the remaining $27.9
million balance (as of July 31, 2001) on  the one-year term  note
due August 15, 2001 and the balance applied against the five-year
senior  credit  facilities.  If  the  Company  does not issue the
subordinated  debt, it will utilize available borrowing  capacity
under  its revolving credit facility to repay the remaining $27.9
million  of the  one-year note and would pay an additional spread
of 75 basis  points  in  interest  and  a fee  of $750,000 to the
senior lenders.

     The  Senior Credit  Facilities are collateralized  by  first
priority liens on all material assets of the Company and  all  of
its domestic subsidiaries.  The Credit Agreement currently limits
the  Company's  ability  to pay dividends  other  than  permitted
dividends   on  its  Series  B  preferred  stock,   and   imposes
limitations  on  the  incurrence  of  additional  debt,   capital
expenditures, acquisitions and the sale of assets.   The  Company
is  in  compliance with all covenants.  Although there can be  no
assurance  that all of these covenants will continue to  be  met,
management  believes that the Company will remain  in  compliance
with  the covenants based upon the Company's expected performance
and  debt  repayment forecasts.  In the event of a default  under
the  Credit Agreement, the lenders would have the right  to  call
the  Senior  Credit Facilities immediately due and  refrain  from
making further advances to the Company.  If the Company is unable
to  pay  the  accelerated payments, the lenders  could  elect  to
proceed  against the collateral in order to satisfy the Company's
obligations.

     The  Company  maintains  an  interest  rate  risk-management
strategy   that   uses   derivative   instruments   to   minimize
significant, unanticipated earnings fluctuations that  may  arise
from  volatility in interest rates.  The Company's specific goals
are  to (1) manage interest rate sensitivity by modifying the re-
pricing  or maturity characteristics of some of its debt and  (2)
lower  (where  possible)  the cost of  its  borrowed  funds.   In
accordance  with  the  Company's  interest  rate  risk-management
strategy,  the Company has entered into contracts  to  hedge  the
interest  rates on approximately $575 million of its  borrowings.
Swap  agreements are in place on $225 million of  borrowings  and
cap  agreements are in place on $350 million of borrowings.   The
swap  agreements  lock in an average LIBOR  rate  of  6.5%,  $150
million  of the caps provide upside protection to the Company  if
LIBOR  moves  above 6.75% and $200 million of  the  caps  provide
upside  protection  to the Company if LIBOR  moves  above  8.13%.
The hedging instruments expire in 2002.

     The  Company's  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  the
Company's  common stock at $2.0625 per share and is  entitled  to
receive  a dividend payable quarterly at an annual rate  of  10%.
The Company may redeem the Series B preferred stock beginning  on
August  15,  2005 at 105% of par reducing by 1%  per  year  until
August 15, 2010 at which time the Company can elect to redeem the
shares  at  par.  The Series B preferred stock has a  liquidation
preference over the Company's common stock and is entitled to one
vote for every two shares held on an as-converted basis.

Working Capital

     The   Company   currently   expects  that  cash  flows  from
operations, the possible sale of certain assets, borrowings under
its current credit facilities, and the proposed subordinated debt
issuance will be adequate to meet the Company's needs for working
capital,  temporary financing for capital expenditures  and  debt
repayments.  The Company's working capital position  as  of  June
30, 2001 was $22.9 million.

     During the  first half of 2001, net cash from operations was
used  to  fund  capital requirements.  During the first  half  of
2000,  capital  requirements were met largely  through  investing
activities.    The  Company expects its capital expenditures  for
2001 to be approximately $35 million, primarily related to a  new
enterprise resource planning system and upgrades to equipment.

     The impact of inflation on the Company's 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   August  1,  2001, the Company's  capital  structure
includes  approximately $580 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
$100  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 $3.6 million.

Factors That May Affect Future Results

     Some  statements in this release are forward looking and  so
involve  uncertainties  that  may  cause  actual  results  to  be
materially different from those stated or implied.  Specifically,
a) revenue for 2001 might be reduced because customers experience
lower  demand,  find alternative suppliers, or  otherwise  reduce
their  demand  for  our products, or because the  Company,  as  a
result  of plant closures, is unable to efficiently move business
or  to qualify that business at other plants; b) margins might be
reduced  due to market conditions for products sold  and  due  to
increases  in  operating and materials costs,  including  energy-
related  costs,  recycled  fiber and paperboard;  c)  the  future
benefits  of restructuring,  cost reduction and optimization  are
uncertain  because of possible delays and increases in costs;  d)
capital  expenditures  might  be  higher  than  planned  due   to
unexpected  requirements or opportunities; e)  debt  may  not  be
reduced due to lower than expected free cash flow; f) the Company
may  be  exposed to higher than predicted interest rates  on  the
unhedged portion of its debt and on any new debt it might  incur;
g)  if  the  Company  is unable to meet the  financial  terms  or
covenants  of  its  senior debt, including the refinancing  of  a
portion  of its senior debt with subordinated debt, it  could  be
subject  to higher interest rates, one time fees and/or  default;
and  h)  the Company might not meet its estimates for 2001  as  a
result  of  the transfer of production within the system,  market
conditions for pricing products, higher production costs,  higher
than predicted interest rates, and other business 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 31, 2000.  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 half of  2001 may not be indicative of results that may
be expected for the year ending December 31, 2001.


                   PART II.  OTHER INFORMATION


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

     At  the  May  15,  2001  annual  meeting  of  the  Company's
shareholders, the following matters were submitted for a vote  of
the  shareholders.  The report of the Inspectors of  Election  is
below.

     There  were  55,495,592 shares  of common  stock  (including
voting rights of preferred stock) entitled to vote at the meeting
and  a total of 49,123,608 shares (88.5%) were represented at the
meeting.

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

                                    FOR             WITHHOLD
                                 ----------        ---------
       Jeffrey H. Coors          46,169,299        2,954,309
       Harold R. Logan, Jr.      46,525,720        2,597,888
       James K. Peterson         46,445,386        2,678,222

     (2)  Approval  of  amendments  to  the  Company's  Executive
Incentive Plan to modify the financial goals to include the ratio
of  debt  to  EBITDA (earnings before interest  and  taxes,  plus
depreciation  and  amortization).  In addition, the  Compensation
Committee  of  the Board of Directors is authorized to  establish
long term goals and payouts.

        FOR        AGAINST         ABSTAIN     BROKER NON-VOTE
     ----------   ---------       ---------    ---------------
     43,444,976    621,470        1,488,784       3,568,378

     (3)  Approval  of  an  amendment  to  the  Company's  Equity
Compensation  Plan  for Non-Employee Directors  to  increase  the
number  of  shares  of common stock authorized  for  issuance  to
500,000 shares.

        FOR        AGAINST         ABSTAIN     BROKER NON-VOTE
     ----------   ---------       ---------    ---------------
     43,329,144    754,384        1,471,702       3,568,378

     (4)  Approval  of  an  amendment  to  the  Company's  Equity
Incentive  Plan to make shares available for award each  calendar
year  beginning with 2002 equal to two percent of the  number  of
shares outstanding on the preceding December 31.

        FOR        AGAINST         ABSTAIN     BROKER NON-VOTE
     ----------   ---------       ---------    ---------------
     39,817,800   4,255,256       1,482,174       3,568,378



Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits:

Exhibit
Number    Document Description

10.0      Description of Arrangement with Luis E. Leon dated
          May, 2001.


(b)  Reports on Form 8-K

     No reports were filed on Form 8-K during the second quarter
     of 2001.




                           SIGNATURES


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


Date:  August 10, 2001            By /s/ Luis E. Leon
                                  --------------------------------
                                         Luis E. Leon
                                         (Chief Financial Officer)

Date:  August 10, 2001            By /s/ John S. Norman
                                  --------------------------------
                                         John S. Norman
                                         (Corporate Controller)