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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-K/A




|  |  |                                                                                     
|- |  | ------------------------------------------------------------------------------------
|x |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|  |  |                                                                                     
|  |  | For the fiscal year ended December 31, 2002                                         

OR

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|o |  | 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 of incorporation)                    |  | (IRS 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)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:
$.01 par value Common Stock
Name of each exchange on which registered:
New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)

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   o

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. o

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes  x  No  o

As of March 7, 2003, there were 33,631,223 shares of common stock
outstanding. Aggregate market value of voting and non-voting common equity
held by non-affiliates at June 28, 2002, was $124,339,277.

DOCUMENTS INCORPORATED BY REFERENCE

Registrants definitive Proxy Statement filed under Regulation 14A
promulgated by the SEC under the Securities Exchange Act of 1934, which
definitive proxy statement is to be filed within 120 days of the registrants
fiscal year ended December 31, 2002, in connection with the 2003 Annual Meeting
of Shareholders, is incorporated by reference into Part III hereof.

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TABLE OF CONTENTS



|                                         |                                                                                               |  |  |  |  |  |  | 
|---------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|                                         | EXPLANATORY NOTE                                                                             
|PART I                                  
|                                         | ITEM 1. BUSINESS                                                                             
|                                         | ITEM 2. PROPERTIES                                                                           
|                                         | ITEM 3. LEGAL PROCEEDINGS                                                                    
|                                         | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|                                         | ITEM 10b. EXECUTIVE OFFICERS OF THE REGISTRANT                                               
|PART II                                 
|                                         | ITEM 5. MARKET FOR THE REGISTRANTS COMMON STOCK AND RELATED STOCKHOLDER MATTERS             
|                                         | ITEM 6. SELECTED FINANCIAL DATA                                                              
|                                         | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                         | ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                          
|                                         | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                          
|                                         | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 
|PART III                                
|                                         | ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                  
|                                         | ITEM 11. EXECUTIVE COMPENSATION                                                              
|                                         | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                      
|                                         | ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                      
|                                         | ITEM 14. CONTROLS AND PROCEDURES                                                             
|PART IV                                 
|                                         | ITEM 15. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
|SIGNATURES                              
|CERTIFICATIONS                          
|EXHIBIT INDEX                           
|EX-23 Consent of Independent Accountants



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GRAPHIC PACKAGING INTERNATIONAL CORPORATION




Annual Report on
Form 10-K/A




December 31, 2002


TABLE OF CONTENTS




|          |  |                                                                                       |  |                                                                                 |    |      |    | 
|--------- |  | ------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------- | -- | ---- | -- | 
|          |  |                                                                                       |  |                                                                                 |    | Page
|          |  |                                                                                       |  |                                                                                 |    | No. 
|          |  |                                                                                       |  |                                                                                 |    |     
|          |  |                                                                                       |  | PART I                                                                          |    |      |    | 
|Item 1.   |  | Business                                                                              |  |                                                                                 | 3  |     
|Item 2.   |  | Properties                                                                            |  |                                                                                 | 9  |     
|Item 3.   |  | Legal Proceedings                                                                     |  |                                                                                 | 10 |     
|Item 4.   |  | Submission of Matters to a Vote of Security Holders                                   |  |                                                                                 | 10 |     
|Item 10b. |  | Executive Officers of the Registrant                                                  |  |                                                                                 | 11 |     
|          |  |                                                                                       |  | PART II                                                                         |    |      |    | 
|Item 5.   |  | Market for the Registrants Common Stock and Related Stockholder Matters              |  |                                                                                 | 11 |     
|Item 6.   |  | Selected Financial Data                                                               |  |                                                                                 | 12 |     
|Item 7.   |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  |                                                                                 | 15 |     
|Item 7A.  |  | Quantitative and Qualitative Disclosures About Market Risk                            |  |                                                                                 | 26 |     
|Item 8.   |  | Financial Statements and Supplementary Data                                           |  |                                                                                 | 27 |     
|Item 9.   |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  |  |                                                                                 | 64 |     
|          |  |                                                                                       |  | PART III                                                                        |    |      |    | 
|Item 10.  |  | Directors and Executive Officers of the Registrant                                    |  |                                                                                 | 65 |     
|Item 11.  |  | Executive Compensation                                                                |  |                                                                                 | 65 |     
|Item 12.  |  | Security Ownership of Certain Beneficial Owners and Management                        |  |                                                                                 | 65 |     
|Item 13.  |  | Certain Relationships and Related Transactions                                        |  |                                                                                 | 65 |     
|Item 14.  |  | Controls and Procedures                                                               |  |                                                                                 | 65 |     
|          |  |                                                                                       |  | PART IV                                                                         |    |      |    | 
|Item 15.  |  | Exhibits, Financial Statements, Financial Statement Schedule and Reports on Form 8-K  |  |                                                                                 | 66 |     
|          |  |                                                                                       |  | CERTIFICATIONS                                                                  |    |      |    | 
|          |  |                                                                                       |  | Certifications in accordance with Section 906 of the Sarbanes-Oxley Act of 2002 |    |      | 70 | 
|          |  |                                                                                       |  | Certifications in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 |    |      | 71 | 




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GRAPHIC PACKAGING INTERNATIONAL CORPORATION

Where you can find more information

We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SECs website at http://www.sec.gov. Our SEC filings,
including our annual report on Form 10-K, quarterly reports on Form 10-Q
current reports on Form 8-K, and amendments to those reports, are also
available free of charge on our website at http://www.graphicpkg.comas soon as
reasonably practicable following the time that they are electronically filed
with or furnished to the SEC. You may also read and copy any document we file
with the SEC at its public reference rooms in Washington, DC, New York, NY and
Chicago, IL. Please call the SEC at (800) SEC-0330 for further information on
the public reference rooms. Our filings with the SEC are also available at the
New York Stock Exchange. You may also obtain a copy of our filings free of
charge by calling our Investor Relations Department at (303) 215-4600.










EXPLANATORY NOTE







The
Company is, by means of this filing, clarifying and adding certain
disclosure under Item 1  Business, Item 6 
Selected Five-Year Financial Data, Item 7 
Management's Discussion and
Analysis of Financial Condition and Results of Operations, and
Item 8  Financial Statements. In
addition, in connection with the filing of this amended
Form 10-K and pursuant to the rules of the Securities and
Exchange Commission, the Company is including with this amended
Form 10-K certain currently dated certifications.







This
amended Form 10-K does not purport to provide a general update
or discussion of developments with respect to the Company subsequent
to the original filing; such disclosures are contained in the
Company's subsequent filings with the Securities and Exchange
Commission.







The
filing of this amended Form 10-K shall not be deemed an
admission that the original filing, when made, included any untrue
statement of a material fact or omitted to state a material fact
necessary to make a statement not misleading.







PART I




ITEM 1. BUSINESS

We are a manufacturer of packaging products used by consumer product
companies as primary packaging for their end-use products. Our executive
offices are located at 4455 Table Mountain Drive, Golden, Colorado 80403. Our
telephone number is (303) 215-4600.

(a) General Development of Business

Graphic Packaging International Corporation (the Company or 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.

(b) Financial Information about Industry Segments, Foreign Operations and Foreign Sales

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

|          |  |                |           |        |  |              |        |                  |  |              |        |  |  |         |           |  |  |   |        | 
|--------- |  | -------------- | --------- | ------ |  | ------------ | ------ | ---------------- |  | ------------ | ------ |  |  | ------- | --------- |  |  | - | ------ | 
|          |  |                |           |        |  | Operating    |        | Depreciation and |  |              |        |  |  | Capital
|          |  | Net Sales      |           | Income |  | Amortization |        | Assets           |  | Expenditures
|          |  |                |           |        |  |              |        |                  |  |             
|          |  | (in thousands)
|2002      |  |                |           |        |  |              |        |                  |  |              |        |  |  |         |           |  |  |   |        | 
|Packaging |  | $              | 1,057,843 |        |  | $            | 62,642 |                  |  | $            | 61,165 |  |  | $       | 1,020,866 |  |  | $ | 27,706 | 
|          |  |                |           |        |  |              |        |                  |  |              |        |  |  |         |           |  |  |   |        | 
|2001      |  |                |           |        |  |              |        |                  |  |              |        |  |  |         |           |  |  |   |        | 
|Packaging |  | $              | 1,112,535 |        |  | $            | 59,854 |                  |  | $            | 79,406 |  |  | $       | 1,229,335 |  |  | $ | 31,884 | 
|          |  |                |           |        |  |              |        |                  |  |              |        |  |  |         |           |  |  |   |        | 
|2000      |  |                |           |        |  |              |        |                  |  |              |        |  |  |         |           |  |  |   |        | 
|Packaging |  | $              | 1,102,590 |        |  | $            | 51,223 |                  |  | $            | 83,094 |  |  | $       | 1,332,518 |  |  | $ | 30,931 | 
|          |  |                |           |        |  |              |        |                  |  |              |        |  |  |         |           |  |  |   |        | 

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Certain financial information regarding the Companys domestic and foreign
operations is included in the following summary. Long-lived assets include
plant, property and equipment, intangible assets, and certain other non-current
assets.

| |      |  |  |               |       |   |                |           |        |   |            |           | 
| | ---- |  |  | ------------- | ----- | - | -------------- | --------- | ------ | - | ---------- | --------- | 
| |      |  |  |               |       |   |                |           |        |   | Long-Lived
| |      |  |  |               |       |   | Net Sales      |           | Assets
| |      |  |  |               |       |   |                |           |       
| |      |  |  |               |       |   | (in thousands)
| | 2002 | 
| |      |  |  | United States |       | $ | 1,052,693      |           |        | $ | 815,854    |          
| |      |  |  | Canada        |       |   | 5,150          |           |        |   | 1,529      |          
| |      |  |  | Other         |       |   |               |           |        |   | 2,383      |          
| |      |  |  |               |       |   |                |           |        |   |            |          
| |      |  |  |               | Total |   | $              | 1,057,843 |        |   | $          | 819,766   | 
| |      |  |  |               |       |   |                |           |        |   |            |          
| | 2001 | 
| |      |  |  | United States |       | $ | 1,109,293      |           |        | $ | 1,032,748  |          
| |      |  |  | Canada        |       |   | 3,242          |           |        |   | 1,736      |          
| |      |  |  | Other         |       |   |               |           |        |   | 2,066      |          
| |      |  |  |               |       |   |                |           |        |   |            |          
| |      |  |  |               | Total |   | $              | 1,112,535 |        |   | $          | 1,036,550 | 
| |      |  |  |               |       |   |                |           |        |   |            |          
| | 2000 | 
| |      |  |  | United States |       | $ | 1,100,491      |           |        | $ | 1,103,411  |          
| |      |  |  | Canada        |       |   | 2,099          |           |        |   | 1,974      |          
| |      |  |  | Other         |       |   |               |           |        |   | 2,694      |          
| |      |  |  |               |       |   |                |           |        |   |            |          
| |      |  |  |               | Total |   | $              | 1,102,590 |        |   | $          | 1,108,079 | 
| |      |  |  |               |       |   |                |           |        |   |            |          




Sales
to Altria Group, Inc. were $215 million in 2002,
$216 million in 2001 and $189 million in 2000, representing
20%, 19% and 17% of the Companys consolidated gross sales.
Sales to Coors Brewing Company were $111 million in 2002,
$123 million in 2001 and $112 million in 2000, representing
10%, 11% and 10% of the Companys consolidated gross sales.
Sales to General Mills, Inc. were $122 million in 2002,
$127 million in 2001 and $113 million in 2000, representing
11%, 11% and 10% of the Companys consolidated gross sales. No
other customer generated greater than 10% of consolidated gross sales
for the periods presented.




(c) Narrative Description of Business

Overview




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




We sell our products primarily to major consumer product manufacturers in
non-cyclical industries such as food and beverage providers. In particular, 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.                                                                              




Our products enable our customers to include high-impact graphics,
abrasion and heat resistance, leakage protection, microwave management, and
moisture, gas and solvent barriers in their product packaging. As of March 7,
2003, we operate 19 folding carton converting facilities and three research and
development facilities in 14 states and Canada, and one recycled paperboard
mill in Michigan. Two of our facilities were acquired in March
2003, as discussed elsewhere in this document. Our facilities are
strategically located to best serve our largest customers.




Industry

We estimate that the folding carton industry had total sales of
approximately $8.6 billion in 2002, with the five largest producers accounting
for more than 50% of this amount. Folding carton packaging is used to package
various consumer products including pharmaceuticals, tobacco products,
hardware, confectioneries, food products and beverages. Folding cartons do not
include corrugated brown boxes, which are typically used for shipping and
transporting products in bulk. Folding cartons generally serve the dual purpose
of protecting non-durable goods during shipping and distribution, and
attracting consumer attention to the product. As printing technologies have
improved, the marketing function of folding cartons has become increasingly
important as consumer products companies rely more heavily on the retail
promotional value of product packaging.

Folding cartons are made from several grades of paperboard. The paperboard
used in folding cartons must meet specific quality and technical standards for:
bending, creasing, scoring and folding without breaking or cracking; stiffness
and resistance to bulging; ink absorption; and surface strength. The paperboard
used in folding cartons is typically die-cut, printed and shipped flat from
folding carton plants to manufacturer customers, where the cartons are then
assembled and filled on production lines.

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Product Research and Development

Our research and development activities consist of the development of
innovative technology, materials, products and processes using advanced and
cost-efficient manufacturing processes. Total research and development
expenditures were $4.0 million, $4.1 million and $4.7 million for 2002, 2001
and 2000, respectively.

Our development staff works directly with our sales and marketing
personnel in meeting with customers and pursuing new business. Our development
efforts include, but are not limited to, extending the shelf life of customers
products, reducing production costs, enhancing the heat-managing
characteristics of food packaging and refining packaging appearance through new
printing techniques and materials.

Sales and Distribution

Our products are sold primarily to well-recognized consumer product
manufacturers in North America. Sales are made primarily through direct sales
employees who work from offices located throughout the United States and, to a
lesser degree, through broker arrangements with third parties. Our selling
activities are supported by our technical and development staff.

Manufacturing and Raw Materials

We use a variety of raw materials such as recycled paper fiber, purchased
virgin paperboard, paper, inks, aluminum foil, plastic films, plastic resins,
adhesives and other materials which are available from domestic and foreign
suppliers. While many sources of each of these materials are available, we
prefer to develop strategic long-standing alliances with vendors, including the
use of multi-year supply agreements, in order to provide a guaranteed source of
materials that satisfies customer requirements, while obtaining the best
quality, service and price.

Our folding carton converting operations are supported by our
state-of-the-art coated recycled paperboard mill in Kalamazoo, Michigan. With
approximately 330,000 tons of annual production capacity, the mill is the
largest coated recycled paperboard facility in North America. The mills
paperboard is specifically designed to maximize throughput on high-speed
web-litho presses. We consume approximately 80% of the Kalamazoo mills output
in our folding carton converting operations, and the mill is an integral part
of our low cost converting strategy.

In addition to the coated recycled paperboard that is supplied to our
converting operations from our own mill, we convert a variety of other
paperboard grades such as solid bleached sulfate (SBS), solid unbleached
sulfate (SUS), chipboard, uncoated recycled board, and coated unbleached kraft
(CUK). We purchase a large amount of our paperboard requirements, including
additional coated recycled board, from outside vendors. Our folding carton
facilities convert in excess of 700,000 tons of paperboard annually.

Patents, Proprietary Rights and Licenses

We hold a substantial number of patents and pending patent applications in
the United States and in foreign countries. Our portfolio primarily consists of
microwave and barrier protection packaging and manufacturing methods. The
patents and processes are significant to our operations and are supported by
trademarks such as Composipac® and Micro-Rite®. In addition, we license certain
technology from third parties to enhance our technical capabilities. Our policy
generally is to pursue patent protection that we consider necessary or
advisable for the patentable inventions and technological improvements of our
business and to defend our patents against third party infringement. We also
have significant trade secrets, technical expertise and know-how, continuing
technological innovations and other means, such as confidentiality agreements
with our employees, consultants and customers, to protect and enhance our
competitive position within our industry.




Two
examples of our technology include:






| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Composipac®.  Our Composipac® internally developed and patented
technology provides finished products with high quality graphics, including
metallized high gloss effects and holographic imaging, that have enhanced
abrasion protection, added strength and moisture, air or other special
barrier properties. This technology enables us to create products that meet
the specialized packaging needs of beverage, powdered detergent, soap and
promotional products. This technology also provides us with the unique
ability to cost-effectively produce full web lamination holographic cartons.
|
| | Micro-Rite®.  Our Micro-Rite® microwave-active packaging provides
oven-heating, browning and crisping qualities for microwave foods, and
demonstrates our leadership in the development and marketing of microwave
technology. This technology allows us to offer controlled, predictable
heating when exposed to microwave power.                                                                                                                                                                                                                                                                    

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Major Customers

For the year ended December 31, 2002, sales to Altria Group, Inc.
accounted for approximately 20% of our gross sales. In 1999, we entered into a
five-year supply agreement with Altria. For the year ended December 31, 2002,
Coors Brewing Company accounted for approximately 10% of our gross sales. Our
current contract with Coors Brewing will expire on March 31, 2003. We have
negotiated a new packaging supply agreement with Coors Brewing Company, which
is being circulated for signature. General Mills, Inc. accounted for
approximately 11% of our 2002 gross sales. Gross sales to our top 10 customers
were approximately $716 million for 2002, or approximately 66% of our total
sales.

Competition

A relatively small number of large competitors comprise a significant
portion of the folding carton segment of the fiber-based packaging industry.
Our major U.S. competitors include Caraustar Industries, Inc., Field Container
Company, L.P., Gulf States Paper Corporation, MeadWestvaco Corporation,
Rock-Tenn Company and Smurfit-Stone Container Corporation.

The primary competitive factors in the folding carton industry are price,
design, product innovation, quality and service. In recent years, consolidation
among large consumer products companies has increased the geographic diversity
of their operations. These companies have a tendency to prefer suppliers with a
broad geographic presence and scale, who can more efficiently and economically
supply the majority of their folding carton needs.

Environmental Matters

We operate in a number of locations throughout the United States and one
in Canada. Our operations are subject to extensive regulation by various
federal, state, provincial and local agencies concerning compliance with
environmental control statutes and regulations. These regulations impose
limitations, including effluent and emission limitations, on the discharge of
materials into the environment and require us to obtain and operate in
compliance with the conditions of permits and other governmental
authorizations. As such, our operations must comply with regulations relating
to emissions of regulated air contaminants, discharges of wastewater and
stormwater, hazardous waste generation and associated emergency planning
requirements. Future regulations could materially increase our capital
requirements and operating expenses in future years.

In the ordinary course of business we are continually upgrading and
replacing equipment to comply with air quality and other environmental
standards. For example, under Section 126 of the Clean Air Act, non-electrical
generating units with heat input potentials exceeding certain limits are
required to meet certain nitrogen oxide emission limits and must contain
emission monitoring equipment. The Kalamazoo mill has one boiler that is
impacted by the requirement. Improvements to the plant necessary to ensure
compliance are expected to cost less than $1.0 million. The estimated capital
expenditures for 2003 for these and similar environmental projects total $2.4
million.

The Environmental Protection Agency (EPA) has issued an integrated
regulation referred to as the Cluster Rules to control the release of air and
water pollutants by the pulp and paper industry. The cluster rules contain
various technology-based process air and water standards depending on the type
of paper making process used (our Kalamazoo mill is a non de-inking secondary
fiber mill). Pursuant to the Cluster Rules air rules for secondary fiber
mills, no controls are warranted at this time. Regarding the water rules, the
best available technology requirements for wastewater emissions from the
secondary fiber non de-inking industry fall under Phase II of the rulemaking
process. On August 27, 2002, the EPA finalized the decision not to pursue
changes in the effluent limitations guidelines (under Phase II) for secondary
fiber non de-inking mills.




We
have been notified that we may be a potentially responsible party under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980 or similar laws with respect to the remediation of certain sites where
hazardous substances have been released into the environment. We cannot
predict with certainty the total costs of remediation, our share of the total
costs, the extent to which contributions will be available from other parties,
the amount of time necessary to complete the remediation or the availability of
insurance. However, based on the investigations to date, we believe that any
liability with respect to these sites would not be material to our financial
position or the results of our operations, without consideration for insurance
recoveries. There can be no certainty, however, that we will not be named as a
potentially responsible party at additional sites or be subject to other
environmental matters in the future or that the costs associated with those
additional sites or matters would not be material.







The
presence of soil and groundwater contamination has been investigated
at portions of our Portland, Oregon plant. The site is listed on
Oregons inventory of contaminated sites. We periodically
monitor groundwater conditions at the site. While we do not currently
have any remediation obligations at the site, such obligations could
arise in the future.







Our
Kalamazoo mill and carton plant have long histories of industrial
usage. Portions of the property on which the mill is located have
been found to contain some contamination. Remediation obligations
could arise in the future at these facilities.




In addition, we have received demands arising out of alleged contamination
of various properties currently or formerly owned by us. We believe that none
of these claims will result in liability that would materially affect our
financial position or results of operations.

Employees




At December 31, 2002, we had approximately 4,200 full-time employees, of
which approximately 33% are represented by labor unions. We consider our
employee relations to be satisfactory. Four different unions
represent our employees under eight labor contracts. The Paper,
Allied Chemical and Energy Workers Union, or PACE, represents
employees in five labor contracts covering our Charlotte, NC,
Gordonsville, TN, Garden Grove, CA and Wausau and Menasha, WI
converting plants and our Kalamazoo, MI converting plant and mill.
Graphic Communication International Union, or GCIU, represents
employees in our Wausau and Menasha, WI converting plants.
Association of Western Pulp & Paper Union, represents employees
at our North Portland converting plant. Finally, International
Brotherhood of Teamsters represents employees at our Kalamazoo, MI
transportation center.







In
2002, we reached a new four-year contract at our North Portland
converting plant which will expire in March 2006. Also in 2002, we
reached an agreement to extend the Garden Grove, CA contract, which
now will expire in April 2007. In 2003, we reached a new five year
contract with PACE for our Kalamazoo converting plant and mill, which
will expire in January 2008.







Two
of our contracts expire in 2004. The PACE contract covering
500 employees under the Wausau and Menasha, WI multisite
converting plants expires in April 2004. In June 2004, the GCIU
contract expires, which covers 160 employees under the Wausau
and Menasha, WI multisite converting plants.




6



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##### Table of Contents






ITEM 2. PROPERTIES

We believe that our facilities are well maintained and suitable for their
respective operations. Our operating facilities are not constrained by capacity
issues although, from time to time, we lease additional warehouse space and
sales offices throughout North America on an as needed basis. Our senior
secured credit facility, discussed in Note 5 to our accompanying consolidated
financial statements, is collateralized by first priority liens on all material
assets of our company, including all the domestic properties that we own. The
table below lists our plants and most other physical properties and their
locations and general character:

|                          |  |                                    |  |                                                                     
|------------------------- |  | ---------------------------------- |  | --------------------------------------------------------------------
|Location                  |  | Facility                           |  | Character                                                           
|                          |  |                                    |  |                                                                     
|Bow, New Hampshire        |  | Manufacturing                      |  | Converting Operations/Offices                                       
|Centralia, Illinois(2)(3) |  | Manufacturing                      |  | Converting Operations                                               
|Charlotte, North Carolina |  | Manufacturing                      |  | Converting Operations                                               
|Fort Smith, Arkansas      |  | Manufacturing                      |  | Converting Operations                                               
|Garden Grove, California  |  | Manufacturing                      |  | Converting Operations                                               
|Golden, Colorado          |  | Manufacturing/Company
Headquarters |  | Converting Operations/Research
and Development
Office/Administration
|Gordonsville, Tennessee   |  | Manufacturing                      |  | Converting Operations                                               
|Kalamazoo, Michigan       |  | Manufacturing                      |  | Converting Operations                                               
|Kalamazoo, Michigan       |  | Manufacturing                      |  | Paperboard Mill                                                     
|Kendallville, Indiana     |  | Manufacturing                      |  | Converting Operations                                               
|Lawrenceburg, Tennessee   |  | Manufacturing                      |  | Converting Operations                                               
|Lumberton, North Carolina |  | Manufacturing                      |  | Converting Operations                                               
|Menasha, Wisconsin        |  | Manufacturing                      |  | Converting Operations/Research and Development                      
|Mississauga, Ontario(1)   |  | Manufacturing                      |  | Converting Operations/Research and Development                      
|Mitchell, South Dakota    |  | Manufacturing                      |  | Converting Operations                                               
|Portland, Oregon          |  | Manufacturing                      |  | Converting Operations                                               
|Richmond, Virginia        |  | Manufacturing                      |  | Converting Operations                                               
|Tuscaloosa, Alabama(3)    |  | Manufacturing                      |  | Converting Operations                                               
|Wausau, Wisconsin         |  | Manufacturing                      |  | Converting Operations                                               



---

|(1) |  | Leased facility.                                                                                                             
|--- |  | -----------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Two facilities, one leased.                                                                                                  
|   
|(3) |  | One of our Centralia, Illinois facilities (which is leased) and our Tuscaloosa, Alabama facility were acquired in March 2003.

7



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##### Table of Contents






ITEM 3. LEGAL PROCEEDINGS

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

On February 19, 2002, Chinyun Kim filed a putative class action claim in
District Court, Jefferson County, Colorado against our Company and certain of
our shareholders and directors alleging breach of fiduciary duty in connection
with the issuance on August 15, 2000, of the Companys Series B Preferred Stock
to the Grover C. Coors Trust. The Court dismissed plaintiffs claim against
the Company for breach of fiduciary duty while allowing the plaintiff to
proceed against the named directors and shareholders, including certain Coors
Family Trusts. Currently, discovery is being conducted. We believe that the
transaction was in the best interest of the Company and its shareholders and
that we acted appropriately. We intend to continue to provide a vigorous
defense to this action.

In connection with the resale of our aluminum business in 1999, we
guaranteed accounts receivable owed by the former owner of the business. After
the resale, the former owner refused to pay the amounts owed, equal to $2.4
million. Pursuant to the terms of the resale agreement, we paid this amount and
sued the former owner in the United States District Court for the District of
Colorado on April 18, 2000. The former owner counterclaimed for an additional
$11 million for certain spare parts, and we claimed an additional $14.3 million
in overpayment for raw materials to run the business prior to resale. The
parties have filed motions for summary judgment. We do not believe that the
result of this litigation will have a material adverse effect on our
consolidated financial position, results of operations or cash flows.

On April 14, 2000, Lemelson Medical, Education & Research Foundation sued
our company and 75 other defendants in the United States District Court for the
District of Arizona for unspecified damages for alleged infringement of certain
patents relating to machine vision and automatic identification. This is
one of a series of cases brought against 430 defendants and has been stayed
pending a determination of a lawsuit for noninfringement brought by equipment
manufacturers which utilize the technology. We believe, based upon the advice
of counsel, that the Lemelson patents are invalid and therefore the litigation
against us will not have a material adverse effect on our financial position,
results of operations or cash flows.




ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth
quarter ended December 31, 2002.

8



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##### Table of Contents






ITEM 10b. EXECUTIVE OFFICERS OF THE REGISTRANT

The following executive officers of the Company serve at the pleasure of
the Board of Directors:

Jeffrey H. Coors, 58. Mr. Coors has served as Chairman of GPICs Board
of Directors since 2000 and as its Chief Executive Officer and President since
its formation in August 1992. He also has served as the President of Graphic
Packaging Corporation (GPC), a wholly-owned subsidiary of GPIC, since June 1997
and as the Chairman of its Board of Directors since 1985. Previously, he
worked at the Adolph Coors Company as its Executive Vice President from 1991 to
1992 and its President from 1985 to 1989, as well as at Coors Technology
Companies as its President from 1989 to 1992.

David W. Scheible, 46.Mr. Scheible has served as GPICs Chief
Operating Officer since December 1999 and has been Chief Operating Officer of
GPC since June 1999. He was President of GPCs Flexible Division from January
to June 1999. Prior to joining GPC, he was affiliated with the Avery Denison
Corporation, working most recently as its Vice President and General Manager of
the Specialty Tape Division from 1995 through 1998 and Vice President and
General Manager of the Automotive Division from 1993 to 1995.

Luis E. Leon, 50.Mr. Leon has served as GPICs Chief Financial Officer
since July 2001. From 1994 until joining GPIC, he worked with GS Industries, a
metals-products company, where he most recently served as Chief Financial
Officer and as a member of its Board of Directors. From 2000 until his
departure, he was also responsible for running its Mining Products Group.

Jill B.W. Sisson, 55.Ms. Sisson has served as GPICs General Counsel
and Secretary since joining GPIC in September 1992. Prior to joining GPIC, she
was Of Counsel to the Denver law firm of Bearman Talesnick & Clowdus
Professional Corporation from 1984 to 1992. She is Chairman of the Business Law
Section of the Colorado Bar Association.

Marsha Williams, 47. Ms. Williams has served as GPICs Vice President,
Human Resources since April 2000. Before joining GPIC, she was affiliated with
American Medical Response, most recently working as its Vice President, Human
Resources, Safety and Risk Management from June 1998 to April 2000 and Vice
President, Employee Relations from December 1997 to June 1998. Prior to joining
American Medical Response, she was affiliated with US West/Media One Cable as
its Vice President, Employee Relations from September 1994 to December 1997.




PART II




ITEM 5. MARKET FOR THE REGISTRANTS COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Our common stock is quoted on the New York Stock Exchange under the symbol
GPK. The historical range of the high and low sales price per share for each
quarter of 2002 and 2001 was as follows:

|               |  |      |      |      |  |      |      |     |  |   |      |  |  |   |      | 
|-------------- |  | ---- | ---- | ---- |  | ---- | ---- | --- |  | - | ---- |  |  | - | ---- | 
|               |  | 2002 |      | 2001
|               |  |      |      |     
|               |  | High |      | Low  |  | High |      | Low
|               |  |      |      |      |  |      |      |    
|First Quarter  |  | $    | 6.40 |      |  | $    | 3.55 |     |  | $ | 2.52 |  |  | $ | 1.25 | 
|Second Quarter |  | $    | 9.25 |      |  | $    | 6.26 |     |  | $ | 4.88 |  |  | $ | 1.80 | 
|Third Quarter  |  | $    | 8.79 |      |  | $    | 6.00 |     |  | $ | 7.05 |  |  | $ | 4.50 | 
|Fourth Quarter |  | $    | 8.15 |      |  | $    | 5.60 |     |  | $ | 6.50 |  |  | $ | 4.25 | 

No cash dividends have been paid during the last two years to our common
shareholders. Our intent is to not pay a common dividend at this timerather,
our intention is to deploy any earnings back into the Company. Additionally,
our credit facilities place substantial limitations on our ability to pay cash
dividends on common stock. During both 2002 and 2001, we declared dividends of
$10 million on our 10% Series B convertible preferred stock. At this time, we
anticipate that, except for the 10% Series B preferred stock dividends, we will
retain any earnings and we will not pay dividends to common shareholders in the
foreseeable future.

On March 7, 2003, there were 2,195 shareholders of record of our common
stock.

9



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##### Table of Contents






ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth certain of our historical consolidated
financial information. The selected consolidated financial information at
December 31, 2000, 1999 and 1998 and for the years ended December 31, 1999 and
1998 has been derived from our audited consolidated financial statements that
are not included in this Form 10-K. The selected consolidated financial
information at December 31, 2002 and 2001 and for the years ended December 31,
2002, 2001 and 2000 has been derived from our audited consolidated financial
statements and the related notes included elsewhere in this Form 10-K. You
should read the following selected consolidated financial information in
conjunction with Managements Discussion and Analysis of Financial Condition
and Results of Operations and our consolidated financial statements and
related notes included elsewhere in this Form 10-K.




|                                                                                                 |                                                                   |   |           |                                       |   |      |           |         |   |      |           |         |   |   |         |         |   |   |         |         |   | 
|------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------- | - | --------- | ------------------------------------- | - | ---- | --------- | ------- | - | ---- | --------- | ------- | - | - | ------- | ------- | - | - | ------- | ------- | - | 
|                                                                                                 |                                                                   |   |           | Years Ended December 31,             
|                                                                                                 |                                                                   |   |           |                                      
|                                                                                                 |                                                                   |   |           | 2002                                  |   | 2001 |           | 2000    |   | 1999 |           | 1998   
|                                                                                                 |                                                                   |   |           |                                       |   |      |           |         |   |      |           |        
|                                                                                                 |                                                                   |   |           | (in thousands, except per share data)
|Statement of Operations Data:                                                                    |                                                                   |   |           |                                       |   |      |           |         |   |      |           |         |   |   |         |         |   |   |         |        
|Net sales(1)                                                                                     |                                                                   | $ | 1,057,843 |                                       |   | $    | 1,112,535 |         |   | $    | 1,102,590 |         |   | $ | 850,155 |         |   | $ | 691,777 |        
|                                                                                                 | Cost of goods sold                                                |   |           | 930,581                               |   |      |           | 960,258 |   |      |           | 963,979 |   |   |         | 721,350 |   |   |         | 567,533 |  
|                                                                                                 |                                                                   |   |           |                                       |   |      |           |         |   |      |           |         |   |   |         |         |   |   |         |        
|Gross profit                                                                                     |                                                                   |   | 127,262   |                                       |   |      | 152,277   |         |   |      | 138,611   |         |   |   | 128,805 |         |   |   | 124,244 |        
|                                                                                                 | Selling, general and administrative expense                       |   |           | 64,620                                |   |      |           | 62,874  |   |      |           | 61,134  |   |   |         | 73,357  |   |   |         | 68,248  |  
|                                                                                                 | Goodwill amortization(7)                                          |   |           |                                      |   |      |           | 20,649  |   |      |           | 20,634  |   |   |         | 13,276  |   |   |         | 7,785   |  
|                                                                                                 | Asset impairment and restructuring charges                        |   |           |                                      |   |      |           | 8,900   |   |      |           | 5,620   |   |   |         | 7,813   |   |   |         | 21,391  |  
|                                                                                                 |                                                                   |   |           |                                       |   |      |           |         |   |      |           |         |   |   |         |         |   |   |         |        
|Operating income                                                                                 |                                                                   |   | 62,642    |                                       |   |      | 59,854    |         |   |      | 51,223    |         |   |   | 34,359  |         |   |   | 26,820  |        
|                                                                                                 | Gain from sale of businesses and other
assets(2)                  |   |           |                                      |   |      |           | 3,650   |   |      |           | 19,172  |   |   |         | 30,236  |   |   |         |        |  
|                                                                                                 | Interest expense                                                  |   |           | (44,640                               | ) |      |           | (52,811 | ) |      |           | (82,071 | ) |   |         | (34,240 | ) |   |         | (16,616 | )
|                                                                                                 |                                                                   |   |           |                                       |   |      |           |         |   |      |           |         |   |   |         |         |   |   |         |        
|Income (loss) from continuing operations before
income taxes                                     |                                                                   |   | 18,002    |                                       |   |      | 10,693    |         |   |      | (11,676   | )       |   |   | 30,355  |         |   |   | 10,204  |        
|                                                                                                 | Income tax (expense) benefit                                      |   |           | (7,035                                | ) |      |           | (4,257  | ) |      |           | 4,678   |   |   |         | (11,945 | ) |   |         | (4,751  | )
|                                                                                                 |                                                                   |   |           |                                       |   |      |           |         |   |      |           |         |   |   |         |         |   |   |         |        
|Income (loss) from continuing operations                                                         |                                                                   |   | 10,967    |                                       |   |      | 6,436     |         |   |      | (6,998    | )       |   |   | 18,410  |         |   |   | 5,453   |        
|                                                                                                 | Income from discontinued operations, net
of tax(3)                |   |           |                                      |   |      |           |        |   |      |           |        |   |   |         | 9,181   |   |   |         | 15,812  |  
|                                                                                                 |                                                                   |   |           |                                       |   |      |           |         |   |      |           |         |   |   |         |         |   |   |         |        
|Income (loss) before extraordinary items and
cumulative effect of change in accounting
principle |                                                                   |   | 10,967    |                                       |   |      | 6,436     |         |   |      | (6,998    | )       |   |   | 27,591  |         |   |   | 21,265  |        
|                                                                                                 | Extraordinary losses, net of tax(4)                               |   |           | (9,617                                | ) |      |           |        |   |      |           |        |   |   |         | (2,332  | ) |   |         |        |  
|                                                                                                 |                                                                   |   |           |                                       |   |      |           |         |   |      |           |         |   |   |         |         |   |   |         |        
|Income (loss) before cumulative effect of change in
accounting principle                         |                                                                   |   | 1,350     |                                       |   |      | 6,436     |         |   |      | (6,998    | )       |   |   | 25,259  |         |   |   | 21,265  |        
|                                                                                                 | Cumulative effect of change in goodwill
accounting, net of tax(7) |   |           | (180,000                              | ) |      |           |        |   |      |           |        |   |   |         |        |   |   |         |        |  
|                                                                                                 |                                                                   |   |           |                                       |   |      |           |         |   |      |           |         |   |   |         |         |   |   |         |        
|Net income (loss)                                                                                |                                                                   |   | (178,650  | )                                     |   |      | 6,436     |         |   |      | (6,998    | )       |   |   | 25,259  |         |   |   | 21,265  |        
|                                                                                                 | Preferred stock dividends declared                                |   |           | (10,000                               | ) |      |           | (10,000 | ) |      |           | (3,806  | ) |   |         |        |   |   |         |        |  
|                                                                                                 |                                                                   |   |           |                                       |   |      |           |         |   |      |           |         |   |   |         |         |   |   |         |        
|Net income (loss) attributable to common
shareholders                                            |                                                                   | $ | (188,650  | )                                     |   | $    | (3,564    | )       |   | $    | (10,804   | )       |   | $ | 25,259  |         |   | $ | 21,265  |        
|                                                                                                 |                                                                   |   |           |                                       |   |      |           |         |   |      |           |         |   |   |         |         |   |   |         |        
|Net income (loss) from continuing operations per
common share:                                   |                                                                   |   |           |                                       |   |      |           |         |   |      |           |         |   |   |         |         |   |   |         |        
|                                                                                                 | Basic                                                             |   | $         | 0.03                                  |   |      | $         | (0.11   | ) |      | $         | (0.37   | ) |   | $       | 0.65    |   |   | $       | 0.19    |  
|                                                                                                 | Diluted                                                           |   |           | 0.03                                  |   |      |           | (0.11   | ) |      |           | (0.37   | ) |   |         | 0.64    |   |   |         | 0.19    |  
|Weighted average shares outstanding:                                                             |                                                                   |   |           |                                       |   |      |           |         |   |      |           |         |   |   |         |         |   |   |         |        
|                                                                                                 | Basic                                                             |   |           | 32,715                                |   |      |           | 31,620  |   |      |           | 29,337  |   |   |         | 28,475  |   |   |         | 28,504  |  
|                                                                                                 | Diluted                                                           |   |           | 34,065                                |   |      |           | 31,620  |   |      |           | 29,337  |   |   |         | 28,767  |   |   |         | 29,030  |  




10



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##### Table of Contents



|                                                      |  |                 |           |      |  |      |           |      |  |      |           |  |  |   |           |   |  |   |         | 
|----------------------------------------------------- |  | --------------- | --------- | ---- |  | ---- | --------- | ---- |  | ---- | --------- |  |  | - | --------- | - |  | - | ------- | 
|                                                      |  | At December 31,
|                                                      |  |                
|                                                      |  | 2002            |           | 2001 |  | 2000 |           | 1999 |  | 1998
|                                                      |  |                 |           |      |  |      |           |      |  |     
|                                                      |  | (in thousands) 
|Balance Sheet Data:                                   |  |                 |           |      |  |      |           |      |  |      |           |  |  |   |           |   |  |   |         | 
|Cash and cash equivalents                             |  | $               | 28,626    |      |  | $    | 6,766     |      |  | $    | 4,012     |  |  | $ | 15,869    |   |  | $ | 26,196  | 
|Working capital                                       |  |                 | 46,112    |      |  |      | 22,403    |      |  |      | 36,640    |  |  |   | (107,224  | ) |  |   | 152,544 | 
|Working capital, excluding
current maturities of debt |  |                 | 49,544    |      |  |      | 59,776    |      |  |      | 95,282    |  |  |   | 292,776   |   |  |   | 238,844 | 
|Total assets                                          |  |                 | 1,020,866 |      |  |      | 1,229,335 |      |  |      | 1,332,518 |  |  |   | 1,643,171 |   |  |   | 846,022 | 
|Total debt                                            |  |                 | 478,331   |      |  |      | 525,759   |      |  |      | 640,672   |  |  |   | 1,021,097 |   |  |   | 275,881 | 
|Total shareholders equity(6)                         |  |                 | 307,038   |      |  |      | 497,648   |      |  |      | 515,151   |  |  |   | 423,310   |   |  |   | 447,955 | 




|                        |  |                          |        |      |  |      |        |      |  |      |        |  |  |   |        |  |  |   |        | 
|----------------------- |  | ------------------------ | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ------ |  |  | - | ------ | 
|                        |  | Years
Ended December 31,
|                        |  |                         
|                        |  | 2002                     |        | 2001 |  | 2000 |        | 1999 |  | 1998
|                        |  |                          |        |      |  |      |        |      |  |     
|                        |  | (in thousands)          
|Other Data:             |  |                          |        |      |  |      |        |      |  |      |        |  |  |   |        |  |  |   |        | 
|Depreciation(5)         |  | $                        | 61,165 |      |  | $    | 58,757 |      |  | $    | 62,460 |  |  | $ | 43,008 |  |  | $ | 29,746 | 
|Capital expenditures(5) |  |                          | 27,706 |      |  |      | 31,884 |      |  |      | 30,931 |  |  |   | 75,858 |  |  |   | 51,572 | 






---

|(1) |  | Net sales in 2002 and 2001 are from folding carton sales. Net sales from
folding cartons, as opposed to sales of flexible packaging and other
businesses disposed of in prior periods, totaled $1,071.9 million in 2000,
$691.3 million in 1999, and $468.3 million in 1998.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------






|(2) |  | We disposed of the following businesses and non-core assets during the
periods presented (in thousands):
|--- |  | --------------------------------------------------------------------------------------------------------







|               |                   |       |   |        |        | 
|-------------- | ----------------- | ----- | - | ------ | ------ | 
|Pre-tax Gains: |                   |       |   |       
|2001:          |                   |       |   |       
|               | Other Assets      |       | $ | 3,650  |       
|               |                   |       |   |       
|2000:          |                   |       |   |       
|               | Malvern
Business  |       | $ | 11,365 |       
|               | Other Assets      |       |   | 7,807  |       
|               |                   |       |   |       
|               |                   | Total |   | $      | 19,172 | 
|               |                   |       |   |       
|1999:          |                   |       |   |       
|               | Flexible
Business |       | $ | 22,700 |       
|               | Solar Business    |       |   | 7,536  |       
|               |                   |       |   |       
|               |                   | Total |   | $      | 30,236 | 
|               |                   |       |   |       






|(3) |  | Discontinued operations include the spin-off of CoorsTek and the sale of
the assets of Golden Aluminum Company.                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(4) |  | We refinanced our outstanding bank debt in February 2002 using funds
from a subordinated bond offering and new bank debt. As a result, we
wrote-off our existing debt issuance costs totaling $15.8 million before
tax and $9.6 million after tax. We also prepaid outstanding borrowings in
August 1999 using funds from a new credit facility in connection with our
acquisition of Fort James Corporations folding carton operations. The
cost incurred to prepay these borrowings was $3.6 million before tax and
$2.3 million after tax.
|   
|(5) |  | Excludes the discontinued operations of CoorsTek and Golden Aluminum for
the years ended December 31, 1999 and 1998.                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(6) |  | Includes $100 million of convertible, redeemable preferred stock issued
in 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                              

11



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##### Table of Contents





|(7) |  | We adopted SFAS No. 142, Goodwill and Other Intangible Assets, effective
January 1, 2002, and discontinued the amortization of our goodwill in
accordance with the new rules. If SFAS No. 142 had been in effect for all
periods presented, our net income (loss) attributable to common
shareholders and earnings per share would have changed as follows:
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                                 |  |                          |          |      |  |      |        |      |  |      |         |   |  |   |        |   |  |   |        | 
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------ | -------- | ---- |  | ---- | ------ | ---- |  | ---- | ------- | - |  | - | ------ | - |  | - | ------ | 
|                                                                                                                                                 |  | Years Ended December 31,
|                                                                                                                                                 |  |                         
|                                                                                                                                                 |  | 2002                     |          | 2001 |  | 2000 |        | 1999 |  | 1998
|                                                                                                                                                 |  |                          |          |      |  |      |        |      |  |     
|                                                                                                                                                 |  | (in thousands)          
|Reported net income (loss) attributable to common
shareholders before extraordinary item and
cumulative effect of change in accounting
principle |  | $                        | 967      |      |  | $    | (3,564 | )    |  | $    | (10,804 | ) |  | $ | 27,591 |   |  | $ | 21,265 | 
|Extraordinary item                                                                                                                               |  |                          | (9,617   | )    |  |      |       |      |  |      |        |   |  |   | (2,332 | ) |  |   |       | 
|Cumulative effect of change in goodwill accounting                                                                                               |  |                          | (180,000 | )    |  |      |       |      |  |      |        |   |  |   |       |   |  |   |       | 
|                                                                                                                                                 |  |                          |          |      |  |      |        |      |  |      |         |   |  |   |        |   |  |   |        | 
|Reported net income (loss) attributable to common
shareholders                                                                                   |  |                          | (188,650 | )    |  |      | (3,564 | )    |  |      | (10,804 | ) |  |   | 25,259 |   |  |   | 21,265 | 
|Goodwill amortization, net of tax                                                                                                                |  |                          |         |      |  |      | 12,389 |      |  |      | 12,380  |   |  |   | 8,098  |   |  |   | 4,126  | 
|                                                                                                                                                 |  |                          |          |      |  |      |        |      |  |      |         |   |  |   |        |   |  |   |        | 
|Adjusted net income (loss) attributable to common
shareholders                                                                                   |  | $                        | (188,650 | )    |  | $    | 8,825  |      |  | $    | 1,576   |   |  | $ | 33,357 |   |  | $ | 25,391 | 
|                                                                                                                                                 |  |                          |          |      |  |      |        |      |  |      |         |   |  |   |        |   |  |   |        | 
|Earnings per sharebasic:                                                                                                                        |  |                          |          |      |  |      |        |      |  |      |         |   |  |   |        |   |  |   |        | 
|Reported net income (loss) attributable to common
shareholders before extraordinary item and
cumulative effect of change in accounting
principle |  | $                        | 0.03     |      |  | $    | (0.11  | )    |  | $    | (0.37   | ) |  | $ | 0.97   |   |  | $ | 0.75   | 
|Extraordinary item                                                                                                                               |  |                          | (0.30    | )    |  |      |       |      |  |      |        |   |  |   | (0.08  | ) |  |   |       | 
|Cumulative effect of change in goodwill accounting                                                                                               |  |                          | (5.50    | )    |  |      |       |      |  |      |        |   |  |   |       |   |  |   |       | 
|                                                                                                                                                 |  |                          |          |      |  |      |        |      |  |      |         |   |  |   |        |   |  |   |        | 
|Reported net income (loss) attributable to common
shareholders                                                                                   |  |                          | (5.77    | )    |  |      | (0.11  | )    |  |      | (0.37   | ) |  |   | 0.89   |   |  |   | 0.75   | 
|Goodwill amortization, net of tax                                                                                                                |  |                          |         |      |  |      | 0.39   |      |  |      | 0.42    |   |  |   | 0.28   |   |  |   | 0.14   | 
|                                                                                                                                                 |  |                          |          |      |  |      |        |      |  |      |         |   |  |   |        |   |  |   |        | 
|Adjusted net income (loss) attributable to common
shareholders                                                                                   |  | $                        | (5.77    | )    |  | $    | 0.28   |      |  | $    | 0.05    |   |  | $ | 1.17   |   |  | $ | 0.89   | 
|                                                                                                                                                 |  |                          |          |      |  |      |        |      |  |      |         |   |  |   |        |   |  |   |        | 
|Earnings per sharediluted:                                                                                                                      |  |                          |          |      |  |      |        |      |  |      |         |   |  |   |        |   |  |   |        | 
|Reported net income (loss) attributable to common
shareholders before extraordinary item and
cumulative effect of change in accounting
principle |  | $                        | 0.03     |      |  | $    | (0.11  | )    |  | $    | (0.37   | ) |  | $ | 0.96   |   |  | $ | 0.73   | 
|Extraordinary item                                                                                                                               |  |                          | (0.28    | )    |  |      |       |      |  |      |        |   |  |   | (0.08  | ) |  |   |       | 
|Cumulative effect of change in goodwill accounting                                                                                               |  |                          | (5.28    | )    |  |      |       |      |  |      |        |   |  |   |       |   |  |   |       | 
|                                                                                                                                                 |  |                          |          |      |  |      |        |      |  |      |         |   |  |   |        |   |  |   |        | 
|Reported net income (loss) attributable to common
shareholders                                                                                   |  |                          | (5.53    | )    |  |      | (0.11  | )    |  |      | (0.37   | ) |  |   | 0.88   |   |  |   | 0.73   | 
|Goodwill amortization, net of tax                                                                                                                |  |                          |         |      |  |      | 0.39   |      |  |      | 0.42    |   |  |   | 0.28   |   |  |   | 0.14   | 
|                                                                                                                                                 |  |                          |          |      |  |      |        |      |  |      |         |   |  |   |        |   |  |   |        | 
|Adjusted net income (loss) attributable to common
shareholders                                                                                   |  | $                        | (5.53    | )    |  | $    | 0.28   |      |  | $    | 0.05    |   |  | $ | 1.16   |   |  | $ | 0.87   | 
|                                                                                                                                                 |  |                          |          |      |  |      |        |      |  |      |         |   |  |   |        |   |  |   |        | 

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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are the leading manufacturer of folding cartons in North America
according to Paperboard Packaging Magazine(January 2003). We have achieved
our leadership position by focusing our operations on the folding carton
segment of the fiber-based product packaging industry. Our business strategy
is to maintain and improve our customer relationships and market leadership,
while leveraging our low cost position.

GPIC was incorporated in Colorado in August 1992 as a holding company for
the packaging, ceramics, aluminum and developmental businesses formerly owned
by 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 1999, we have operated principally
in the United States and in one reportable segment.

Factors That Impact Our Business

Sales.We sell our products primarily to major consumer product
manufacturers in traditionally non-cyclical industries, such as food and
beverage providers. Sales are driven primarily by consumer buying habits in
the markets our customers serve. Recent economic conditions in the United
States have had a significant impact on consumer buying, even in non-cyclical
industries. New product introductions and promotional activity by our
customers, and our introduction of innovative packaging solutions, also impact
our sales.

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



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

We market our products directly to our customers through a relatively
small internal sales force. Our top 20 customers represent approximately 81% of
our gross sales in 2002. Our competition includes other large national folding
carton companies, as well as numerous smaller regional companies. Our primary
competitors include: Caraustar Industries, Inc., Field Container Company, L.P.,
Gulf States Paper Corporation, MeadWestvaco, Rock-Tenn Company and
Smurfit-Stone Container Corporation. We work to maintain our market share
through efficiency, innovation and strategic sourcing to our customers.

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

Cost of Goods Sold.Our costs of goods sold consist primarily of
recycled paper fiber, purchased paperboard, paper aluminum foil, ink, plastic
films and resins and labor, which are all variable cost components. Energy is
also a component of our costs, particularly for our Kalamazoo, Michigan
recycled paperboard mill, where energy represents approximately 12% of cost of
goods sold. Variable costs are estimated to be 78% and fixed costs to be 22%
of total cost of goods sold in 2002.

In light of increasing margin pressure throughout our industry, we have
aggressively reduced costs. We have controlled costs in our converting
facilities by coordinating and determining the optimal configuration of
equipment among our facilities. A substantial portion of our production is
centrally planned and can be allocated among different plants in the system in
order to take advantage of equipment optimization, capacity scheduling,
staffing and freight. Our ability to work as an integrated business, as opposed
to different units, has given us opportunities to reduce production overhead
costs and to take advantage of economies of scale in purchasing, customer
service, freight and other areas common to all of our facilities. We have
adopted a company-wide Six Sigma process to reduce our variable manufacturing
costs. The term Six Sigma refers to a measure of business capability. A
company that performs at a Six Sigma level has demonstrated one of the
following:

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

To achieve Six Sigma, we identify and address the cost of poor quality in
both the manufacturing and transactional processes through a disciplined
project methodology (Measure, Analyze, Improve, and Control) executed by
skilled project leaders called Black Belts and Green Belts. We currently have
25 dedicated and numerous shared resources focused on achieving our Six Sigma
objectives.




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




Results of Operations



| |  | Year Ended December 31, 2002 Compared to Year Ended December 31, 2001 and
Year Ended December 31, 2001 Compared to Year Ended December 31, 2000
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------

Net Sales

Net sales for 2002 totaled $1,057.8 million, a 5% decrease from 2001 net
sales of $1,112.5 million. Net sales for 2001 were nominally greater than sales
for 2000. However, if the sales from our Malvern plant that we sold in the
fourth quarter 2000 are subtracted from 2000 sales, our 2001 improvement
year-to-year is approximately 4%. Increased sales in 2001 were primarily the
result of increased sales of promotional packaging to existing customers in the
first three quarters of the year. The fourth quarter of 2001 began a general
decline in the nations economy, which had a negative impact on our customers
business well into 2002. This, in turn, reduced sales orders for packaging and
negatively impacted our sales in 2002.

Sales for the year ended December 31, 2002 to Coors Brewing totaled $111.0
million, a decrease of 10% over sales for 2001. Sales for the year ended
December 31, 2001 to Coors Brewing totaled $122.8 million, an increase of $10.6
million, or 9%, over sales for 2000. The brewerys orders from us depend upon
the brewerys sales results in products for which we provide packaging.

Our business is largely within the United States. We had sales to
customers outside the United States, primarily in Canada, which accounted for
0.5%, 0.3% and 0.2% of net sales during 2002, 2001 and 2000, respectively.

Gross Profit

Consolidated gross profit was 12.0%, 13.7% and 12.6% of net sales in 2002,
2001 and 2000, respectively. Our industry has experienced over capacity issues
which, when coupled with general downturns in the economy, create pressure to
reduce prices and lower sales volume. The improved profit margins in 2001 are
attributable to cost reduction through plant closings, reductions in work force
and Six Sigma projects company-wide that have reduced costs and increased
productivity. We continued our cost reduction efforts in 2002, but cost
savings were more than offset by lower absorption of fixed costs due to lower
sales and the following:



| |  |  | Gross profit was negatively impacted by a seven-month long
labor dispute at our Kalamazoo board mill. Direct, incremental
costs associated with the labor dispute were approximately $4.5
million in 2002.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------






| |  |  | Gross profit was further impacted by significant increases
in the price of recycled paper fiber, our Kalamazoo mills
primary raw material. Approximately 35% of the paperboard utilized
in our converting operations is supplied by the Kalamazoo Mill. The primary sources of recycled paper
fiber used by our board mill - old corrugated cardboard (OCC),
newsprint, and box cuttings  all increased in price during 2002,
with a total increase of approximately $4.0 million compared to
2001. OCC prices peaked in June 2002 at $120 per ton; however,
OCC prices had declined to $55 per ton in December 2002. Because
OCC prices have returned to lower per ton levels, we expect less
of an impact in 2003 from fiber prices at the board mill.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




Future improvements in gross profit will depend upon managements ability to
improve cost efficiencies and to maintain profitable, long-term customer
relationships.

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Selling, General and Administrative Expenses

Selling, general and administrative expenses, excluding goodwill
amortization and asset impairment and restructuring costs, were 6.1%, 5.7% and
5.5% of net sales in 2002, 2001 and 2000, respectively. The increasing trend
is attributable to increased information technology expense of $2.1 million in
2002, largely due to the increased spending for our new ERP manufacturing
system, of which $1.3 million related to depreciation of this system.

Asset Impairment and Restructuring Charges

We have recorded asset impairment and restructuring charges totaling $8.9
million and $5.6 million in 2001 and 2000, respectively. In addition, asset
impairment and restructuring reserves of $7.8 million related to the
Perrysburg, Ohio plant closure were recorded in 2000 as a cost of the
acquisition of Fort James Corporations folding carton operations. We review
the relative cost effectiveness of our assets, including plant facilities and
equipment, and the allocation 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 ultimate goal of maximizing our profits and optimizing our resources.

Asset Impairment Charges

2001: We recorded an asset impairment charge of $3.5 million in the fourth
quarter of 2001 in conjunction with the announcement of the planned closure of
the Newnan, Georgia plant, a plant that was more expensive to operate than
other plants in our system and produced margins below our expectations. We shut
down the plants operations during 2002 and plan to sell the plants building
and land. The net book value of the Newnan building and land was approximately
$1.7 million at December 31, 2002. The plants business has been transferred to
other plants in our system.

We recorded an asset impairment charge of $1.5 million in the first
quarter of 2001 related to our Saratoga Springs, New York building. Operations
of the Saratoga Springs plant were transferred to our other 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.

2000: We announced the planned closure of our Perrysburg, Ohio folding
carton plant in the second quarter of 2000. The Perrysburg plant was part of
Fort James Corporations folding carton operations and was eliminated due to
excess capacity. The shutdown and restructuring plan for the Perrysburg
facility included asset impairments totaling $6.5 million, which were recorded
in the second quarter of 2000 as a cost of the acquisition, with a resultant
adjustment to goodwill. We completed the closure of the plant and transition of
the plants business to our other facilities by the end of 2000. On July 11,
2001, the remaining real estate was sold for cash proceeds of approximately
$1.9 million. No gain or loss was recognized on the sale.

Restructuring Charges

2001: In connection with the announced closure of the Newnan, Georgia
plant discussed above, we recorded restructuring charges totaling $2.4 million
in the fourth quarter of 2001. The charges relate to severance packages for 105
plant personnel that were communicated to employees in December 2001. The
Newnan restructuring plan was essentially complete by the end of 2002, with
approximately $0.5 million of severance and other restructuring payments left
to be made in 2003.

2000: In December 2000 we announced a restructuring plan to reduce
fixed-cost personnel. The plan included the elimination of approximately 200
non-production positions, including the closure of our folding carton plant in
Portland, Oregon, and offered severance packages in accordance with our
policies. The total cost of the reduction in force was $5.0 million, of which
$3.0 million was recognized in the fourth quarter of 2000 results. The
remaining cost of approximately $2.0 million was recognized in the first half
of 2001 when severance packages were communicated to employees. The
restructuring plan is complete at December 31, 2002.

In connection with the announced closure of the Perrysburg, Ohio plant,
restructuring reserves were recorded totaling approximately $1.3 million in the
second quarter of 2000. The reserves related to the severance of approximately
100 production positions and other plant closing costs. Consistent with the
asset impairments related to the Perrysburg closure, the restructuring costs
were accounted for as a cost of the acquisition of Fort James Corporations
folding carton operations with a resultant adjustment to goodwill. At December
31, 2002, all the restructuring charges have been paid relating to the
Perrysburg closure.

We recorded a restructuring charge of $3.4 million in the first quarter of
2000 for anticipated severance costs for approximately 185 employees as a
result of the announced closure of the Saratoga Springs, New York plant. We
have completed the closure of the Saratoga Springs plant and the transition of
the plants business to other facilities. In the first quarter of 2001, we
reversed approximately $0.5 million of severance accruals which were not needed
related to the Saratoga Springs facility shutdown to complete the Saratoga
Springs restructuring plan. All of the remaining restructuring costs have been
paid as of December 31, 2002.

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##### Table of Contents



A 1999 plant rationalization plan included severance and related charges,
primarily at our Lawrenceburg, Tennessee manufacturing plant. However,
customer needs in Golden, Colorado and Lawrenceburg, coupled with the timing of
the transition of business to our new Golden, Colorado facility, impacted the
completion of the restructuring and resulted in the savings of approximately
$800 thousand of anticipated restructuring costs. The 2000 restructuring
expense is net of this $800 thousand benefit.

The following table summarizes accruals related to our restructurings (in
millions):

|                                                     |  |                 |      |            |  |            |      |           |  |         |      |        |  |   |      |   |  |   |      |   |  |   |      |  
|---------------------------------------------------- |  | --------------- | ---- | ---------- |  | ---------- | ---- | --------- |  | ------- | ---- | ------ |  | - | ---- | - |  | - | ---- | - |  | - | ---- | -
|                                                     |  | 1999            |      | 2000       |  | 2000       |      |           |  |         |      | 2001   |  |   |      |  
|                                                     |  | Plant           |      | S. Springs |  | Perrysburg |      | 2000/2001 |  | Newnan  |      |        |  |  
|                                                     |  | Rationalization |      | Plant      |  | Plant      |      | Reduction |  | Plant   |      |        |  |  
|                                                     |  | Plan            |      | Closure    |  | Closure    |      | In Force  |  | Closure |      | Totals
|                                                     |  |                 |      |            |  |            |      |           |  |         |      |       
|Balance, December 31, 1999                           |  | $               | 1.9  |            |  | $          |     |           |  | $       |     |        |  | $ |     |   |  | $ |     |   |  | $ | 1.9  |  
|2000 restructuring charges, net of reversals         |  |                 | (0.8 | )          |  |            | 3.4  |           |  |         |     |        |  |   | 3.0  |   |  |   |     |   |  |   | 5.6  |  
|2000 restructuringPerrysburg                        |  |                 |     |            |  |            |     |           |  |         | 1.3  |        |  |   |     |   |  |   |     |   |  |   | 1.3  |  
|Cash paid                                            |  |                 | (1.0 | )          |  |            | (2.0 | )         |  |         | (0.7 | )      |  |   | (0.1 | ) |  |   |     |   |  |   | (3.8 | )
|                                                     |  |                 |      |            |  |            |      |           |  |         |      |        |  |   |      |   |  |   |      |   |  |   |      |  
|Balance, December 31, 2000                           |  |                 | 0.1  |            |  |            | 1.4  |           |  |         | 0.6  |        |  |   | 2.9  |   |  |   |     |   |  |   | 5.0  |  
|2001 restructuring charges, net of reversals         |  |                 |     |            |  |            | (0.5 | )         |  |         |     |        |  |   | 2.0  |   |  |   | 2.4  |   |  |   | 3.9  |  
|Transfer of enhanced benefits to pension liabilities |  |                 |     |            |  |            |     |           |  |         |     |        |  |   | (2.2 | ) |  |   |     |   |  |   | (2.2 | )
|Cash paid                                            |  |                 | (0.1 | )          |  |            | (0.8 | )         |  |         | (0.6 | )      |  |   | (2.5 | ) |  |   |     |   |  |   | (4.0 | )
|                                                     |  |                 |      |            |  |            |      |           |  |         |      |        |  |   |      |   |  |   |      |   |  |   |      |  
|Balance, December 31, 2001                           |  |                 |     |            |  |            | 0.1  |           |  |         |     |        |  |   | 0.2  |   |  |   | 2.4  |   |  |   | 2.7  |  
|Cash paid                                            |  |                 |     |            |  |            | (0.1 | )         |  |         |     |        |  |   | (0.2 | ) |  |   | (1.9 | ) |  |   | (2.2 | )
|                                                     |  |                 |      |            |  |            |      |           |  |         |      |        |  |   |      |   |  |   |      |   |  |   |      |  
|Balance, December 31,
2002                           |  | $               |     |            |  | $          |     |           |  | $       |     |        |  | $ |     |   |  | $ | 0.5  |   |  | $ | 0.5  |  
|                                                     |  |                 |      |            |  |            |      |           |  |         |      |        |  |   |      |   |  |   |      |   |  |   |      |  

Operating Income

Consolidated operating income for 2002 was $62.6 million, an increase of
$2.8 million, or 5% over 2001. Consolidated operating income for 2001 was $59.9
million, an increase of $8.7 million, or 17%, over operating income for 2000.
If goodwill amortization and asset impairment and restructuring charges are
excluded from 2001 operating income, we experienced a 30% drop in operating
income in 2002. As discussed above, our lower sales, fiber prices and the
Kalamazoo labor dispute contributed to a decline in profitability.

Gain from Sale of Businesses and Other Assets




We
disposed of the following businesses and non-core assets during 2001 and 2000, for which the
following pre-tax gains were recognized:




|                |  |                |       | 
|--------------- |  | -------------- | ----- | 
|                |  | Intangible    
|                |  | Assets        
|                |  |               
|                |  | (in thousands)
|2001:           |  |                |       | 
|Cash proceeds   |  | $              | 3,650 | 
|Net book value  |  |                |      | 
|                |  |                |       | 
|Gain recognized |  | $              | 3,650 | 
|                |  |                |       | 




|                |  |                |         |            |  |            |       |       |  |       |       |   |  |   |         |  
|--------------- |  | -------------- | ------- | ---------- |  | ---------- | ----- | ----- |  | ----- | ----- | - |  | - | ------- | -
|                |  |                |         |            |  |            |       |       |  | Other |       |   |  |  
|                |  | Malvern        |         | Intangible |  | Long-lived |       |       |  |      
|                |  | Business       |         | Assets     |  | Assets     |       | Total
|                |  |                |         |            |  |            |       |      
|                |  | (in thousands)
|2000:           |  |                |         |            |  |            |       |       |  |       |       |   |  |   |         |  
|Cash proceeds   |  | $              | 35,000  |            |  | $          | 5,407 |       |  | $     | 2,600 |   |  | $ | 43,007  |  
|Net book value  |  |                | (23,635 | )          |  |            |      |       |  |       | (200  | ) |  |   | (23,835 | )
|                |  |                |         |            |  |            |       |       |  |       |       |   |  |   |         |  
|Gain recognized |  | $              | 11,365  |            |  | $          | 5,407 |       |  | $     | 2,400 |   |  | $ | 19,172  |  
|                |  |                |         |            |  |            |       |       |  |       |       |   |  |   |         |  




Interest Expense

Interest expense for 2002, 2001 and 2000 was $44.6 million, $52.8 million
and $82.1 million, respectively. The decrease reflects lower debt levels,
lower market interest rates, and improvements in our interest rate spreads due
to reductions in our leverage. We capitalized interest of $0.3 million, $1.8
million and $1.1 million in 2002, 2001 and 2000, respectively. Capitalized
interest primarily related to the construction of our Golden, Colorado facility
and our new enterprise resource planning system in 2001 and 2000. In
accordance with our credit agreement and our interest rate risk-management
policies, we had contracts in place at December 31, 2001 to hedge the interest
rates on our variable rate borrowings. In 2002 and 2001, we incurred interest
expense of $6.8 million and $4.8 million, respectively, related to these
contracts, and in 2000 we incurred $0.3 million less interest expense as a
result of these contracts. We had no interest rate contracts in place at
December 31, 2002. Interest expense also includes amortization of debt
issuance costs of $3.1 million, $7.8 million and $8.9 million in 2002, 2001 and
2000, respectively.

See Liquidity and Capital Resources.

16



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##### Table of Contents



Income Taxes

Our consolidated effective tax rate in 2001 and 2000 was 40%, compared to
39% in 2002. Increases in state income tax rates may slightly increase our
overall effective tax rate in 2003.

Related Party Transactions

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

Our company originated as the packaging division of the Coors Brewing
Company, a subsidiary of ACCo. We supplied the brewerys packaging needs at
the time. At the time of spin-off from ACCo, we entered into agreements with
Coors Brewing for the sale of packaging and other products in order to continue
to supply their packaging needs. The initial agreements had a stated term of
five years and have resulted in substantial revenues for us. We continue to
sell packaging products to Coors Brewing. Coors Brewing accounted for
approximately 10%, 11% and 10% of our consolidated gross sales for 2002, 2001
and 2000, respectively. The loss of Coors Brewing as a customer in the
foreseeable future could have a material effect on our results of operations.
Our current contract with Coors Brewing will expire on March 31, 2003. We have
negotiated a new packaging supply agreement with Coors Brewing, which is being
circulated for signature.




One of our subsidiaries, Golden Equities, Inc., is the general partner in
a limited partnership in which Coors Brewing is the limited partner. The
partnership owns, develops, operates and sells certain real estate previously
owned directly by Coors Brewing or ACCo. Distributions were allocated equally
between the partners until late 1999 when Coors Brewing recovered its
investment. Thereafter, distributions were made 80 percent to GPIC as the
general partner and 20 percent to Coors Brewing. Distributions in 2002 were
$2.0 million to GPIC and $0.5 million to Coors Brewing. No distributions were
made in 2001. Distributions in 2000 were approximately $0.8 million to Coors
Brewing and $3.2 million to GPIC. Coors Brewings share of the partnership net
assets at December 31, 2002 and 2001 was $3.9 million and $4.4 million,
respectively, and is reflected as minority interest on our consolidated balance
sheet. Coors Brewings allocated share of the partnerships profit was $0 in
2002, 2001 and 2000.




On December 31, 1999, we spun off our ceramics subsidiary, CoorsTek, Inc.,
which was in keeping with our goal to become solely a paperboard packaging
company. In connection with the spin-off, GPIC and CoorsTek entered into
contracts governing certain relationships between them following the spin-off,
including a tax-sharing agreement, a transitional services agreement and
certain other agreements. See further discussion of the tax-sharing agreement
in Note 8 to our Consolidated Financial Statements.

On March 31, 2000, we sold the net assets of our GTC Nutrition subsidiary
to an entity controlled by a member of the Coors family for approximately $0.7
million. GTC Nutrition was a non-core asset that was not strategically in line
with our packaging focus. No gain or loss was recognized as a result of the
sale.

In August 2000, we issued $100.0 million of preferred stock to the Grover
C. Coors Trust. Proceeds were used to fund principal amortization on our debt
due in August 2000. See further discussion of the preferred stock in Note 13
to our Consolidated Financial Statements.

In August 2001, we completed a $50.0 million private placement of 10%
subordinated unsecured notes. The purchaser of the notes was Golden Heritage,
LLC, a company owned by several Coors family trusts and a related party.
Proceeds were used to fund principal amortization on our debt due in August
2001. On February 28, 2002, we repaid the notes in connection with certain
refinancing transactions discussed in Note 5 to our Consolidated Financial
Statements.

In September 2002 we entered into a warehouse sublease with Rocky Mountain
Bottle Company, a partnership partially owned by Coors Brewing Company. Our
Golden, Colorado facility uses this warehouse space. Annual rent under the
sublease is approximately $100 thousand. The sublease term expires in July
2006.

Off Balance Sheet Arrangements

We enter into off balance sheet arrangements from time-to-time as business
needs arise for which permanent commitments of capital and obligations are not
desired. Following is a discussion of our off balance sheet arrangements.

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KVG Partnership

We are a partner in the Kalamazoo Valley Group (KVG), a Michigan
partnership formed to develop and operate a landfill for the partners disposal
of paper residuals from their respective paperboard mills. KVG borrowed $1.5
million for the construction of the landfill, of which approximately $500
thousand remains unpaid at December 31, 2002. The partners contribute capital
annually to meet the partnerships operating losses. Our annual contribution
for the past two years has been approximately $200 thousand. The landfill has
been in operation since December 1997; however, since 2000, two of the other
partners have closed their paperboard mills and one minority partner has left
the partnership via bankruptcy court. We are evaluating our alternatives and
liabilities under the partnership agreement and related note, while continuing
to use the landfill. However, if the partnership were to close the landfill,
our share of estimated closing costs, perpetual care obligations and debt
repayment would approximate $2.5 million under the terms of the partnership
agreement. We account for our interest in KVG using the equity method. Our
investment balance at December 31, 2002 was $0.3 million.

Operating Leases

We lease a variety of facilities, warehouses, offices, equipment and
vehicles under operating lease agreements that expire in various years.
Operating lease rentals for warehouse, production, office facilities and
equipment amounted to $4.0 million in 2002, $3.3 million in 2001, and $3.1
million in 2000.

Energy Contracts

We periodically purchase energy contracts for natural gas and/or fuel oil
at our Kalamazoo paperboard mill, in order to control the cost of power at the
plant. We had $6.3 million of natural gas purchase commitments open at
December 31, 2002.

Aggregate Contractual Obligations

The following are material contractual obligations as of December 31, 2002
(in thousands):

|                            |                           |  |                        |         |        |  |           |       |           |  |         |       |  |  |    |       |              |  |   |         | 
|--------------------------- | ------------------------- |  | ---------------------- | ------- | ------ |  | --------- | ----- | --------- |  | ------- | ----- |  |  | -- | ----- | ------------ |  | - | ------- | 
|                            |                           |  | Payments Due By Period
|                            |                           |  |                        |         |        |  | Less than |       |           |  |         |       |  |  |    |       | Greater than
|                            |                           |  | Total                  |         | 1 year |  | 1-3 years |       | 3-5 years |  | 5 years
|                            |                           |  |                        |         |        |  |           |       |           |  |        
|Long-term debt obligations: |                           |  |                        |         |        |  |           |       |           |  |         |       |  |  |    |       |              |  |   |        
|                            | Term loan                 |  | $                      | 173,250 |        |  | $         | 1,750 |           |  | $       | 5,250 |  |  | $  | 5,250 |              |  | $ | 161,000 | 
|                            | Senior subordinated notes |  |                        | 300,000 |        |  |           |      |           |  |         |      |  |  |    |      |              |  |   | 300,000 | 
|                            | Various notes payable     |  |                        | 5,081   |        |  |           | 1,682 |           |  |         | 2,481 |  |  |    |      |              |  |   | 918     | 
|Operating leases            |                           |  | 8,261                  |         |        |  | 3,612     |       |           |  | 4,607   |       |  |  | 42 |       |              |  |  |        
|Energy contracts            |                           |  | 6,287                  |         |        |  | 6,287     |       |           |  |        |       |  |  |   |       |              |  |  |        

Contingent Obligations

It is our policy generally to act as a self-insurer for certain insurable
risks consisting primarily of employee health insurance programs. With respect
to workers compensation, we use a variety of fully or partially self-funded
insurance vehicles. We maintain certain stop-loss and excess insurance policies
that reduce overall risk of financial loss.

In the ordinary course of business, we are subject to various pending
claims, lawsuits and contingent liabilities, including claims by current or
former employees. In each of these cases, we are vigorously defending against
them. Although the eventual outcome cannot be predicted, it is managements
opinion that disposition of these matters will not have a material adverse
effect on our consolidated financial position, results of operations or cash
flows. See further discussions in Item 3, Legal Proceedings.




Some
of our operations have been notified that they may be potentially
responsible parties under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 or similar state laws with respect to
the remediation of certain sites where hazardous substances have been released
into the environment. We cannot predict with certainty the total costs of
remediation, our share of the total costs, the extent to which contributions
will be available from other parties, the amount of time necessary to complete
the remediation or the availability of insurance. However, based on the
investigations to date, we believe that any liability with respect to these
sites would not be material to the financial condition, results of operations
or cash flow of the Company, without consideration for insurance recoveries.
There can be no certainty, however, that we will not be named as a potentially
responsible party at additional sites or be subject to other environmental
matters in the future or that the costs associated with those additional sites
or matters would not be material.




In connection with the sale of various businesses, we have periodically
agreed to guarantee the collectibility of accounts receivable and indemnify
purchasers for certain liabilities for a specified period of time. Such
liabilities include, but are not

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limited to, environmental matters and the indemnification periods
generally last for 2 to 15 years. We have recorded total indemnification
liabilities of approximately $3.0 million at December 31, 2002.

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

Critical Accounting Policies

Our discussion and analysis of financial condition and results of
operations are based upon our consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in
the United States. The preparation of these financial statements requires us to
make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosures of contingent
assets and liabilities. We base our estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.

On an on-going basis, we evaluate the continued appropriateness of our
accounting policies and resulting estimates, including those related to:



| |  |  | Collectibility of accounts receivable  We estimate losses for
uncollectible accounts based on the aging of our accounts
receivable and the evaluation of the likelihood of success in
collecting the receivables. Typically, allowances are needed for
disputed accounts, customers that are having financial problems or
bankruptcies. Because our customers are major consumer product
manufacturers with strong credit histories, our receivables average
over 80% current. At the end of December 2002, our top 20
customers, representing 81% of our sales, were 84% current on their
accounts.                                                                                                                                                                                                                                                                                                                                         
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Self-insurance reserves  We are self-insured for certain
losses relating to workers compensation claims and employee
medical and dental benefits. We have purchased stop-loss coverage
or insurance with deductibles in order to limit our exposure to
significant claims. We also have an extensive safety program in
place to minimize our exposure to workers compensation claims.
Self-insured losses are accrued based upon our estimates of the
aggregate uninsured claims incurred using certain actuarial
assumptions followed in the insurance industry and our Companys
historical experience. Our stop loss coverage for employee
medical benefits is $150 thousand per incident. Our workers
compensation stop loss coverages and deductibles range from $250
thousand to $500 thousand.                                                                                                                                     
|
| |  |  | Retirement-related benefits  We estimate our retiree
liabilities based upon actuarial reports prepared by our actuary,
which include estimates and assumptions related to interest rates,
future compensation and other factors. Our pension liabilities are
most sensitive to changes in the market values of our pension
assets from year-to-year, and the estimated future rate of return
of our pension assets, since the pension plan is invested in the
securities markets. Over the past two years, market values have
declined significantly and we have, as a result, recorded a
cumulative minimum pension liability of $42.3 million. We have
also reduced our expected long-term rate of return on our assets by .25%.
Our retiree medical liabilities are most sensitive to the
cost of health care. We are currently estimating an annual
increase in per capita health care costs of 10% - up from 6.5% in
the past two years.
|
| |  |  | Goodwill valuation  We estimate the value of our goodwill
using the discounted cash flow method of valuation on an annual
basis. Our cash flows are generated by our operations and are
used to fund working capital needs, debt service and capital
spending. We discount these cash flows using our companys
weighted average cost of capital. Changes in our borrowing rates,
which are impacted by market rate fluctuations, would impact our
discounted cash flow calculations. Other factors, such as
significant operating losses or acquisitions of new operations,
would also impact our discounted cash flow calculations.                                                                                                                                                                                                                                                                                                        
|
| |  |  | Recovery of long-lived assets  We periodically review our
long-lived assets for impairment whenever events or changes in
business circumstances, such as the closure of a plant, indicate
the carrying amount of the asset may not be fully recoverable by
undiscounted cash flows. Measurement of the impairment loss, if
any, is based on the fair value of the asset, which is generally
determined by the discounting of future estimated cash flows, or in
the case of real estate, determining market value. We evaluate the
recovery of our long-lived assets periodically by analyzing our
operating results and considering significant events or changes in
the business environment that may have triggered impairment.
Recently, we placed our Newnan, Georgia facility up for sale. At
this time, we                                                                                                                            

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| |   |  | believe that the facilitys market value is greater than its book
value; however, we will periodically evaluate the need to impair this
asset, if necessary.                                                                                                                                                                                                                                                          
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Deferred tax asset valuation allowance  We estimate the
realizability of deferred tax assets, by estimating the projected
reversal of offsetting deferred tax liability amounts and future
taxable income. As discussed above in goodwill valuation,
significant operating losses or acquisitions of operations would
impact our projected taxable income used to estimate the reversal
of our deferred tax balances.






| |  |  | Legal accruals  We estimate the amount of potential exposure
we may have with respect to litigation, claims and assessments,
based upon analyses prepared by in-house and outside counsel, and
we record reserves when our management believes it is probable that
a loss has occurred and the amount of loss is reasonably
estimatable. At this time, counsel has advised us that we have no
impending risk of material loss on our legal proceedings.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| |  |  | Environmental expenditures and remediation liabilities 
Environmental expenditures that relate to current operations are
expensed or capitalized as appropriate. Expenditures that relate
to an existing condition caused by past operations, and which do
not contribute to current or future revenue generation, are
expensed. Liabilities are recorded when environmental assessments
indicate that remedial efforts are probable and the costs can be
reasonably estimated. Typically, our environmental expenditures
are scheduled maintenance items and are not remedial, unless we are
closing a facility and must remediate that facility in the process.
However, we periodically need to remediate upon the issuance of
stricter or new environmental regulations that affect our
operations.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Stock-based employee compensation plans  We have various
stock-based employee compensation plans, including stock options,
restricted stock grants, and other forms of deferred compensation.
We do not recognize compensation expense related to our stock
option plans, as permitted by current generally accepted accounting
principles. If accounting guidance had changed to require
recognition of compensation expense related to employee stock
option grants, our pre-tax stock option expense for 2002 would have
been approximately $1.6 million.                                                                                                                                                                                                                                           

New Accounting Standards

Financial Accounting Standards Board Interpretation (FIN) No. 46,
Consolidation of Variable Interest Entities, was issued in January 2003. FIN
No. 46 defines a variable interest entity as a legal entity in which, among
other things, the equity investments at risk are not sufficient to finance the
operating and closing activities of the entity without additional subordinated
financial support from the entitys investors. We are a partner in the
Kalamazoo Valley Group (KVG) Partnership, which qualifies as a variable
interest entity, as defined by FIN No. 46. KVG is a partnership formed to
develop and operate a landfill for the partners disposal of paper residuals
from their respective paperboard mills. KVG borrowed $1.5 million for the
construction of the landfill, of which approximately $500 thousand remains
unpaid at December 31, 2002. The partners contribute capital annually to meet
the partnerships operating losses. Our annual contribution for the past two
years has been approximately $200 thousand. The landfill has been in operation
since December 1997; however, since 2000, two of the other partners have closed
their paperboard mills and one minority partner has left the partnership via
bankruptcy court. We are evaluating our alternatives and liabilities under the
partnership agreement and related note, while continuing to use the landfill.
However, if the partnership were to close the landfill, our share of estimated
closing costs, perpetual care obligations and debt repayment would approximate
$2.5 million under the terms of the partnership agreement. We account for our
interest in KVG using the equity method. The investment balance at December 31,
2002 was $0.3 million. Management is also evaluating its accounting method in
light of the new requirements under FIN No. 46, and may conclude that its
interest in KVG should be consolidated into its accounts. FIN No. 46 is
effective for our 2003 third quarter.

FIN No. 45, Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others, was
issued in November 2002. This interpretation elaborates on the disclosures to
be made by a guarantor in its financial statements about its obligations under
certain guarantees that it has issued. FIN No. 45 also clarifies that a
guarantor is required to recognize, at inception of a guarantee, a liability
for the fair value of the obligation undertaken in issuing the guarantee. The
initial recognition and initial measurement provisions of FIN 45 are applicable
on a prospective basis to guarantees issued or modified after December 31,
2002. The disclosure requirements in the interpretation are effective for our
company in 2002. We have included the disclosures required by this
interpretation in Note 15 to our Consolidated Financial Statements.

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

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.

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4, which required that gains and losses from early extinguishment of debt be
classified as extraordinary items, 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 us on
January 1, 2003, at which time we will reclassify our first quarter 2002 loss
on early extinguishment of debt as a non-extraordinary item.

SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities, was issued on July 30, 2002. SFAS No. 146 will require companies
to recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
SFAS No. 146 is effective for us on January 1, 2003. While SFAS No. 146 will
have no effect on our historical financial results, costs associated with any
future restructuring efforts will be accrued as those costs are incurred.

SFAS No. 148, Accounting for Stock-Based CompensationTransition and
Disclosure, was issued in December 2002. The statement amends SFAS No. 123 to
provide alternative methods of transition for voluntary change to the fair
value based method of accounting for stock-based employee compensation. In
addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to
require prominent disclosures in financial statements about the method of
accounting for stock-based employee compensation and the effect of the method
used on reported results. SFAS No. 148 improves the prominence and clarity of
the pro forma disclosures required by SFAS No. 123 by prescribing a specific
tabular format and by requiring disclosure in the Summary of Significant
Accounting Policies or its equivalent. In addition, SFAS No. 148 improves the
timeliness of those disclosures by requiring their inclusion in financial
reports for interim periods. SFAS No. 148 is effective for financial
statements for fiscal years ending after December 15, 2002. Adoption of this
statement resulted in moving footnote disclosures into the accounting policies
footnote, but had no impact on our consolidated financial statements.

Liquidity and Capital Resources

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

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

We used the net proceeds from the Refinancing Transactions to repay our
then existing bank debt, to repurchase our then existing $50.0 million of
subordinated notes at par, and to pay related interest, fees and expenses.

In connection with the Refinancing Transactions, we incurred a non-cash
charge to write off our remaining unamortized debt issuance costs. These costs
amounted to $15.8 million before taxes at February 28, 2002.

Pursuant to our then existing senior bank credit agreement, on August 15,
2001, we completed a $50.0 million private placement of subordinated unsecured
notes, which are included in long-term debt at December 31, 2001. These
subordinated notes accrued interest at 10% per annum and were to mature August
15, 2008. The proceeds of the subordinated notes were used to repay the
remaining balance on a one-year term note due August 15, 2001, and to pay down
indebtedness under our five-year senior bank credit facility. By issuing the
subordinated debt, we avoided an additional interest rate spread of 75 basis
points on our then existing senior bank credit facility and a fee of $750
thousand to those senior lenders. As discussed above, we repurchased the notes
at par concurrently with the closing of 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 senior bank credit facility. GPC is the
borrower under the senior bank credit facility and the senior subordinated
notes, and GPIC has guaranteed the loans. The senior bank credit facility
consists of a $275.0 million, five-year revolving credit facility, or the
Revolver, and a $175.0 million, seven-year term loan, or the Term Loan. The
Revolver bears interest at LIBOR plus a spread tied to our leverage, with a
single principal payment due at maturity. At March 7, 2003, the Revolvers
interest rate was 3.34%. The Term Loan bears interest at LIBOR plus 275 basis
points, with principal amortization of 1% a year and the balance due at
maturity. At March 7, 2003, the Term Loans interest rate was 4.09%. The
facilities must also be prepaid with an annual cash flow recapture calculation,
and with certain proceeds from asset sales, and debt or equity offerings. The
senior bank credit facility is secured by all of GPICs, GPCs and our domestic
subsidiaries material assets. The facility is collateralized by first
priority liens on all material assets of GPC and all of GPICs other domestic
subsidiaries. The facility limits our ability to pay dividends other than
permitted dividends on the preferred stock, and imposes limitations on the
incurrence of additional debt, acquisitions, capital expenditures, repurchase
of Company stock and the sale of assets.

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Our borrowings consist of the following (in thousands):

|                                                                                |  |              |         |              |  |   |         | 
|------------------------------------------------------------------------------- |  | ------------ | ------- | ------------ |  | - | ------- | 
|                                                                                |  | December 31, |         | December 31,
|                                                                                |  | 2002         |         | 2001        
|                                                                                |  |              |         |             
|Seven-year term loan due 2009 (variable interest rate at 4.17%)                 |  | $            | 173,250 |              |  | $ |        | 
|Five-year revolving credit facility due 2007 (variable interest rate at 3.42%)  |  |              |        |              |  |   |        | 
|8-5/8% Senior subordinated notes due 2012                                       |  |              | 300,000 |              |  |   |        | 
|Five-year term facility, refinanced in 2002 (variable interest rate at 4.18%)   |  |              |        |              |  |   | 247,035 | 
|Revolving credit facility, refinanced in 2002 (variable interest rate at 4.18%) |  |              |        |              |  |   | 222,750 | 
|10% Subordinated notes, refinanced in 2002                                      |  |              |        |              |  |   | 50,000  | 
|Various notes payable(1)                                                        |  |              | 5,081   |              |  |   | 5,974   | 
|                                                                                |  |              |         |              |  |   |         | 
|Total                                                                           |  |              | 478,331 |              |  |   | 525,759 | 
|Less current maturities                                                         |  |              | 3,432   |              |  |   | 37,373  | 
|                                                                                |  |              |         |              |  |   |         | 
|Long-term maturities                                                            |  | $            | 474,899 |              |  | $ | 488,386 | 
|                                                                                |  |              |         |              |  |   |         | 



---

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

At December 31, 2002, our maturities of long-term debt are as follows (in
thousands):

|           |  |   |         | 
|---------- |  | - | ------- | 
|2003       |  | $ | 3,432   | 
|2004       |  |   | 1,933   | 
|2005       |  |   | 1,941   | 
|2006       |  |   | 3,857   | 
|2007       |  |   | 1,750   | 
|Thereafter |  |   | 465,418 | 
|           |  |   |         | 
|           |  | $ | 478,331 | 
|           |  |   |         | 

We maintain an interest rate risk-management strategy that uses derivative
instruments to minimize significant, unanticipated earnings fluctuations that
may arise from volatility in interest rates. Our specific goals are to (1)
manage interest rate sensitivity by modifying the re-pricing or maturity
characteristics of some of our debt and (2) lower (where possible) the cost of
our borrowed funds. In accordance with the terms of our then existing credit
agreement and our interest rate risk-management strategy, we had contracts in
place at December 31, 2001 to hedge the interest rates on our variable rate
borrowings in the form of swap agreements on $225.0 million of borrowings and
cap agreements on $350.0 million of borrowings. The swap agreements locked in
an average LIBOR rate of 6.5%. $150.0 million of the caps provided upside
protection to us if LIBOR moved above 6.75%, and $200.0 million of the caps
provided upside protection to us if LIBOR moved above 8.13%. The hedging
instruments expired in 2002 and were not replaced, principally because market
interest rates are unusually low this year and because a significant portion of
our refinanced debt carries a fixed rate.

Our capital structure also includes $100.0 million of Series B preferred
stock issued on August 15, 2000. The Series B preferred stock is convertible
into shares of our common stock at $2.0625 per share and is entitled to receive
a dividend payable quarterly at an annual rate of 10%. We may redeem the
Series B preferred stock beginning on August 15, 2005 at 105% of par. This
premium decreases by 1% per year until August 15, 2010, at which time we can
elect to redeem the shares at par. The Series B preferred stock has a
liquidation preference over our common stock and is entitled to one vote for
every two shares held on an as-converted basis.




Cash
Flows.  Cash and cash equivalents increased by
$21.9 million during 2002, which was the net effect of positive
cash flows from operations totaling $122.1 million, capital
expenditures of $27.7 million, and cash used in financing
activities totaling $72.5 million. Cash generated by operations
allowed for debt reduction of $47.4 million during 2002, and
funded the purchase of capital assets, preferred stock dividend
payments, and payment of debt issuance costs related to
Graphics February 2002 refinancing. Cash provided by operations
decreased $29.6 million in 2002 compared to 2001, due primarily
to reduced operating income before non-cash charges of depreciation,
amortization and asset impairment charges. Reductions in working
capital again provided positive cash flow from operations, but not to
the same extent as in 2001, due primarily to an increase in accounts
receivable during 2002. The continued reduction of inventory levels
in 2002 again provided cash from operations, but not to the same
extent as in 2001.




Working Capital

Our working capital levels are dependent upon our ability to manage our
inventories, collect our receivables on a timely basis, and maintain favorable
terms with our vendors. Low working capital levels are desirable to us, as we
strive to maximize cash flow and reduce our debt. We believe that our working
capital position is very favorable when compared to our industry. Our working
capital can be negatively impacted if our operations run less efficiently,
particularly at times when business is moved among plants or new plants are
acquired, or if inventories build up due to lower than planned sales during a
period.

We currently expect that cash flows from operations and borrowings under
our new credit facility will be adequate to meet our needs for working capital,
post-retirement obligations, temporary financing for capital expenditures and
debt repayments for the foreseeable future. Our working capital position
(including current maturities of long term debt) at December 31, 2002 was $46.1
million. Although we had no borrowings against our revolver at December 31,
2002, $267.1 million was available under our $275.0 million revolving credit
facility, due to $7.9 million of letters of credit outstanding. Our letters of
credit are used as security against our self-insurance obligations and an
outstanding note payable.

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

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Subsequent Event

On March 6, 2003, we acquired substantially all of the assets of JD Cahill
Co., Inc. for approximately $18 million in cash. JD Cahill has annual revenues
of approximately $20 million and produces laminated and coated paperboard with
manufacturing facilities in Tuscaloosa, Alabama and Centralia, Illinois. The
purchase was financed using our existing revolving credit facility.

Defined Benefit Retirement Plan

We contributed $6.5 million, $2.3 million and $1.4 million to our defined
benefit retirement plan in 2002, 2001 and 2000, respectively. We expect to
contribute $10.0 million to the plan in 2003. (See Note 10 to the consolidated
financial statements for information on the funded status of this plan.)

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

Inflation

The impact of inflation on our financial position and results of
operations has been minimal during 2002, 2001 and 2000 and is not expected to
adversely affect future results.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

As of March 7, 2003, our capital structure includes $204.9 million of debt
that bears interest based upon an underlying rate that fluctuates with
short-term interest rates, specifically LIBOR. As of February 28, 2002, the
date of our refinancing, the Companys capital structure included $237.6
million of debt that also bore interest based upon an underlying rate that
fluctuated with short-term interest rates, specifically LIBOR. During 2002 and
2001, one-month LIBOR rates have fluctuated from a high of 5.6% in January of
2001 to a low of 1.4% in December 2002. In 2001, we had interest rate swap
agreements that locked in LIBOR at 5.94% on $65.0 million of borrowings ($100
million in 2000) and 6.98% on $125.0 million of borrowings. In addition, we
entered into interest rate contracts that capped the LIBOR interest rate at
8.13% for $200.0 million of borrowings and 6.75% for $150.0 million of
borrowings. All of these interest rate contracts expired in 2002 and were not
replaced. With our interest rate protection contracts in place last year, a 1%
change in interest rates would have impacted annual pre-tax results by
approximately $0.5 million. Since these interest rate protection contracts have
expired, a 1% change in interest rates would impact annual pre-tax results by
approximately $2.0 million.

Factors That May Affect Future Results

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

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements and Supplementary Data




|                                   |                                                                                                            |  |         |       | 
|---------------------------------- | ---------------------------------------------------------------------------------------------------------- |  | ------- | ----- | 
|                                   |                                                                                                            |  | Page(s)
|                                   |                                                                                                            |  |        
|Consolidated Financial Statements: |                                                                                                            |  |         |      
|                                   | Managements Report to Shareholders                                                                        |  |         | 28    | 
|                                   | Report of Independent Accountants                                                                          |  |         | 28    | 
|                                   | Consolidated Statement of Operations for the years ended December 31, 2002, 2001 and 2000                  |  |         | 29    | 
|                                   | Consolidated Statement of Comprehensive Income (Loss) for the years ended December 31, 2002, 2001
and 2000 |  |         | 31    | 
|                                   | Consolidated Balance Sheet at December 31, 2002 and 2001                                                   |  |         | 32    | 
|                                   | Consolidated Statement of Cash Flows for the years ended December 31, 2002, 2001 and 2000                  |  |         | 33    | 
|                                   | Consolidated Statement of Shareholders Equity for the years ended December 31, 2002, 2001 and 2000        |  |         | 34    | 
|                                   | Notes to Consolidated Financial Statements                                                                 |  |         | 35-63 | 
|                                   | Schedule IIValuation and Qualifying Accounts for the years ended December 31, 2002, 2001 and 2000         |  |         | 64    | 




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MANAGEMENTS REPORT TO SHAREHOLDERS

The preparation, integrity and objectivity of the financial statements and
all other financial information included in this annual report are the
responsibility of the management of Graphic Packaging International
Corporation. The financial statements have been prepared in accordance with
generally accepted accounting principles, applying estimates based on
managements best judgment where necessary. Management believes that all
material uncertainties have been appropriately accounted for and disclosed.

The established system of accounting procedures and related internal
controls provide reasonable assurance that the assets are safeguarded against
loss and that the policies and procedures are implemented by qualified
personnel.

PricewaterhouseCoopers LLP, the Companys independent accountants, provide
an objective, independent audit of the consolidated financial statements. Their
accompanying report is based upon an examination conducted in accordance with
generally accepted auditing standards, including tests of accounting procedures
and records.

The Board of Directors, operating through its Audit Committee composed of
outside directors, monitors the Companys accounting control systems and
reviews the results of the Companys auditing activities. The Audit Committee
meets at least quarterly, either separately or jointly, with representatives of
management, PricewaterhouseCoopers LLP, and internal auditors. To ensure
complete independence, PricewaterhouseCoopers LLP and the Companys internal
auditors have full and free access to the Audit Committee and may meet with or
without the presence of management.

|                        |  |                              
|----------------------- |  | -----------------------------
|LUIS E. LEON            |  | JOHN S. NORMAN               
|Chief Financial Officer |  | Vice President and Controller

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of Graphic Packaging International
Corporation:

In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Graphic Packaging International Corporation (the Company) at
December 31, 2002 and 2001, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 2002 in
conformity with accounting principles generally accepted in the United States
of America. In addition, in our opinion, the financial statement schedule
listed in the accompanying index presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements. These financial statements and the
financial statement schedule are the responsibility of the Companys
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

As discussed in Note 1 to the consolidated financial statements, effective
January 1, 2002 the Company changed its method of accounting for goodwill and
other intangible assets.

PricewaterhouseCoopers LLP

Denver, Colorado
February 11, 2003

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GRAPHIC PACKAGING INTERNATIONAL CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)

|                                                                                                              |                                                                          |   |                         |          |      |   |           |         |   |   |           |         |  
|------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | - | ----------------------- | -------- | ---- | - | --------- | ------- | - | - | --------- | ------- | -
|                                                                                                              |                                                                          |   | Year Ended December 31,
|                                                                                                              |                                                                          |   |                        
|                                                                                                              |                                                                          |   | 2002                    |          | 2001 |   | 2000     
|                                                                                                              |                                                                          |   |                         |          |      |   |          
|Sales to unrelated parties                                                                                    |                                                                          | $ | 946,833                 |          |      | $ | 989,716   |         |   | $ | 990,390   |        
|Sales to Coors Brewing Company                                                                                |                                                                          |   | 111,010                 |          |      |   | 122,819   |         |   |   | 112,200   |        
|                                                                                                              |                                                                          |   |                         |          |      |   |           |         |   |   |           |        
|Total net sales                                                                                               |                                                                          |   | 1,057,843               |          |      |   | 1,112,535 |         |   |   | 1,102,590 |        
|                                                                                                              | Cost of goods sold                                                       |   |                         | 930,581  |      |   |           | 960,258 |   |   |           | 963,979 |  
|                                                                                                              |                                                                          |   |                         |          |      |   |           |         |   |   |           |        
|Gross profit                                                                                                  |                                                                          |   | 127,262                 |          |      |   | 152,277   |         |   |   | 138,611   |        
|                                                                                                              | Selling, general and administrative expense                              |   |                         | 64,620   |      |   |           | 62,874  |   |   |           | 61,134  |  
|                                                                                                              | Goodwill amortization                                                    |   |                         |         |      |   |           | 20,649  |   |   |           | 20,634  |  
|                                                                                                              | Asset impairment and restructuring charges                               |   |                         |         |      |   |           | 8,900   |   |   |           | 5,620   |  
|                                                                                                              |                                                                          |   |                         |          |      |   |           |         |   |   |           |        
|Operating income                                                                                              |                                                                          |   | 62,642                  |          |      |   | 59,854    |         |   |   | 51,223    |        
|                                                                                                              | Gain from sale of businesses and other assets                            |   |                         |         |      |   |           | 3,650   |   |   |           | 19,172  |  
|                                                                                                              | Interest expense                                                         |   |                         | (44,640  | )    |   |           | (52,811 | ) |   |           | (82,071 | )
|                                                                                                              |                                                                          |   |                         |          |      |   |           |         |   |   |           |        
|Income (loss) before income taxes, extraordinary item and cumulative effect of
change in accounting principle |                                                                          |   | 18,002                  |          |      |   | 10,693    |         |   |   | (11,676   | )      
|                                                                                                              | Income tax (expense) benefit                                             |   |                         | (7,035   | )    |   |           | (4,257  | ) |   |           | 4,678   |  
|                                                                                                              |                                                                          |   |                         |          |      |   |           |         |   |   |           |        
|Income (loss) before extraordinary item and cumulative effect of change in
accounting principle               |                                                                          |   | 10,967                  |          |      |   | 6,436     |         |   |   | (6,998    | )      
|                                                                                                              | Extraordinary loss on early extinguishment of debt, net of tax of $6,149 |   |                         | (9,617   | )    |   |           |        |   |   |           |        |  
|                                                                                                              |                                                                          |   |                         |          |      |   |           |         |   |   |           |        
|Income (loss) before cumulative effect of change in accounting principle                                      |                                                                          |   | 1,350                   |          |      |   | 6,436     |         |   |   | (6,998    | )      
|                                                                                                              | Cumulative effect of change in goodwill accounting, net of tax of $0     |   |                         | (180,000 | )    |   |           |        |   |   |           |        |  
|                                                                                                              |                                                                          |   |                         |          |      |   |           |         |   |   |           |        
|Net income (loss)                                                                                             |                                                                          |   | (178,650                | )        |      |   | 6,436     |         |   |   | (6,998    | )      
|Preferred stock dividends declared                                                                            |                                                                          |   | (10,000                 | )        |      |   | (10,000   | )       |   |   | (3,806    | )      
|                                                                                                              |                                                                          |   |                         |          |      |   |           |         |   |   |           |        
|Net loss attributable to common shareholders                                                                  |                                                                          | $ | (188,650                | )        |      | $ | (3,564    | )       |   | $ | (10,804   | )      
|                                                                                                              |                                                                          |   |                         |          |      |   |           |         |   |   |           |        

(Continued)
See Notes to Consolidated Financial Statements.

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GRAPHIC PACKAGING INTERNATIONAL CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)

|                                                                                         |                                                                                   |   |                         |       |      |   |        |       |   |   |        |       |  
|---------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | - | ----------------------- | ----- | ---- | - | ------ | ----- | - | - | ------ | ----- | -
|                                                                                         |                                                                                   |   | Year Ended December 31,
|                                                                                         |                                                                                   |   |                        
|                                                                                         |                                                                                   |   | 2002                    |       | 2001 |   | 2000  
|                                                                                         |                                                                                   |   |                         |       |      |   |       
|Net income (loss) attributable to common shareholders per basic share
of common stock:   |                                                                                   |   |                         |       |      |   |        |       |   |   |        |      
|                                                                                         | Before extraordinary item and cumulative effect of change in
accounting principle |   | $                       | 0.03  |      |   | $      | (0.11 | ) |   | $      | (0.37 | )
|                                                                                         | Extraordinary loss                                                                |   |                         | (0.30 | )    |   |        |      |   |   |        |      |  
|                                                                                         | Cumulative effect of change in accounting principle                               |   |                         | (5.50 | )    |   |        |      |   |   |        |      |  
|                                                                                         |                                                                                   |   |                         |       |      |   |        |       |   |   |        |      
|Net income (loss) attributable to common shareholders per basic share                    |                                                                                   | $ | (5.77                   | )     |      | $ | (0.11  | )     |   | $ | (0.37  | )    
|                                                                                         |                                                                                   |   |                         |       |      |   |        |       |   |   |        |      
|Weighted average shares outstandingbasic                                                |                                                                                   |   | 32,715                  |       |      |   | 31,620 |       |   |   | 29,337 |      
|                                                                                         |                                                                                   |   |                         |       |      |   |        |       |   |   |        |      
|Net income (loss) attributable to common shareholders per diluted
share of common stock: |                                                                                   |   |                         |       |      |   |        |       |   |   |        |      
|                                                                                         | Before extraordinary item and cumulative effect of change in
accounting principle |   | $                       | 0.03  |      |   | $      | (0.11 | ) |   | $      | (0.37 | )
|                                                                                         | Extraordinary loss                                                                |   |                         | (0.28 | )    |   |        |      |   |   |        |      |  
|                                                                                         | Cumulative effect of change in accounting principle                               |   |                         | (5.28 | )    |   |        |      |   |   |        |      |  
|                                                                                         |                                                                                   |   |                         |       |      |   |        |       |   |   |        |      
|Net income (loss) attributable to common shareholders per diluted share                  |                                                                                   | $ | (5.53                   | )     |      | $ | (0.11  | )     |   | $ | (0.37  | )    
|                                                                                         |                                                                                   |   |                         |       |      |   |        |       |   |   |        |      
|Weighted average shares outstandingdiluted                                              |                                                                                   |   | 34,065                  |       |      |   | 31,620 |       |   |   | 29,337 |      
|                                                                                         |                                                                                   |   |                         |       |      |   |        |       |   |   |        |      

See Notes to Consolidated Financial Statements.

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GRAPHIC PACKAGING INTERNATIONAL CORPORATION

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
(in thousands)

|                                   |                                                                            |                                                                                                     |          |                         |       |      |         |         |        |   |        |      |   | 
|---------------------------------- | -------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------- | -------- | ----------------------- | ----- | ---- | ------- | ------- | ------ | - | ------ | ---- | - | 
|                                   |                                                                            |                                                                                                     |          | Year Ended December 31,
|                                   |                                                                            |                                                                                                     |          |                        
|                                   |                                                                            |                                                                                                     |          | 2002                    |       | 2001 |         | 2000   
|                                   |                                                                            |                                                                                                     |          |                         |       |      |         |        
|Net income (loss)                  |                                                                            | $                                                                                                   | (178,650 | )                       |       | $    | 6,436   |         |        | $ | (6,998 | )   
|                                   |                                                                            |                                                                                                     |          |                         |       |      |         |         |        |   |        |     
|Other comprehensive income (loss): |                                                                            |                                                                                                     |          |                         |       |      |         |         |        |   |        |     
|                                   | Foreign currency translation adjustments                                   |                                                                                                     |          | 279                     |       |      |         | (905    | )      |   |        | (355 | )
|                                   | Interest rate swap agreements:                                             |                                                                                                     |          |                         |       |      |         |         |        |   |        |      |  
|                                   |                                                                            | 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 $2,595 and $1,861 |          |                         | 4,177 |      |         |         | 2,973  |   |        |      |  | 
|                                   |                                                                            | Change in fair value of cash flow hedges during the period, net of tax
of $275 and $2,753           |          |                         | 498   |      |         |         | (4,397 | ) |        |      |  | 
|                                   | Change in minimum pension liability, net of tax of $7,572, $9,103 and $178 |                                                                                                     |          | (12,805                 | )     |      |         | (13,832 | )      |   |        | (267 | )
|                                   |                                                                            |                                                                                                     |          |                         |       |      |         |         |        |   |        |     
|Other comprehensive loss           |                                                                            |                                                                                                     | (7,851   | )                       |       |      | (19,378 | )       |        |   | (622   | )   
|                                   |                                                                            |                                                                                                     |          |                         |       |      |         |         |        |   |        |     
|Comprehensive loss                 |                                                                            | $                                                                                                   | (186,501 | )                       |       | $    | (12,942 | )       |        | $ | (7,620 | )   
|                                   |                                                                            |                                                                                                     |          |                         |       |      |         |         |        |   |        |     

See Notes to Consolidated Financial Statements.

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GRAPHIC PACKAGING INTERNATIONAL CORPORATION

CONSOLIDATED BALANCE SHEET
(in thousands)

|                                                                                                                                            |                                                                                                                                 |                                      |                            |         |  |                 |           |         |  |         |  | 
|------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | -------------------------- | ------- |  | --------------- | --------- | ------- |  | ------- |  | 
|                                                                                                                                            |                                                                                                                                 |                                      |                            |         |  | At December 31,
|                                                                                                                                            |                                                                                                                                 |                                      |                            |         |  |                
|                                                                                                                                            |                                                                                                                                 |                                      |                            |         |  | 2002            |           | 2001   
|                                                                                                                                            |                                                                                                                                 |                                      |                            |         |  |                 |           |        
|                                                                                                                                            |                                                                                                                                 |                                      |                            | ASSETS  |  |                 |           |         |  |         |  | 
|Current assets                                                                                                                              |                                                                                                                                 |                                      |                            |         |  |                 |           |        
|                                                                                                                                            | Cash and cash equivalents                                                                                                       |                                      | $                          | 28,626  |  |                 | $         | 6,766   | 
|                                                                                                                                            | Accounts receivable, less allowance for doubtful accounts
of $2,395 in 2002 and $1,769 in 2001                                  |                                      |                            | 61,886  |  |                 |           | 57,679  | 
|                                                                                                                                            | Accounts receivable from Coors Brewing Company                                                                                  |                                      |                            | 1,660   |  |                 |           | 1,795   | 
|                                                                                                                                            | Inventories                                                                                                                     |                                      |                            | 87,243  |  |                 |           | 92,408  | 
|                                                                                                                                            | Deferred income taxes                                                                                                           |                                      |                            | 8,999   |  |                 |           | 17,378  | 
|                                                                                                                                            | Other assets                                                                                                                    |                                      |                            | 12,687  |  |                 |           | 15,778  | 
|                                                                                                                                            |                                                                                                                                 |                                      |                            |         |  |                 |           |        
|                                                                                                                                            |                                                                                                                                 |                                      | Total current assets       |         |  | 201,101         |           |         |  | 191,804 | 
|Properties, net                                                                                                                             |                                                                                                                                 |                                      | 410,592                    |         |  |                 | 443,712   |        
|Goodwill, net                                                                                                                               |                                                                                                                                 |                                      | 379,696                    |         |  |                 | 559,696   |        
|Other assets                                                                                                                                |                                                                                                                                 |                                      | 29,477                     |         |  |                 | 34,123    |        
|                                                                                                                                            |                                                                                                                                 |                                      |                            |         |  |                 |           |        
|Total assets                                                                                                                                |                                                                                                                                 | $                                    | 1,020,866                  |         |  | $               | 1,229,335 |        
|                                                                                                                                            |                                                                                                                                 |                                      |                            |         |  |                 |           |        
|                                                                                                                                            |                                                                                                                                 | LIABILITIES AND SHAREHOLDERS EQUITY |                            |         |  |                 |           |         |  |        
|Current liabilities                                                                                                                         |                                                                                                                                 |                                      |                            |         |  |                 |           |        
|                                                                                                                                            | Current maturities of long-term debt                                                                                            |                                      | $                          | 3,432   |  |                 | $         | 37,373  | 
|                                                                                                                                            | Accounts payable                                                                                                                |                                      |                            | 82,106  |  |                 |           | 59,002  | 
|                                                                                                                                            | Interest payable                                                                                                                |                                      |                            | 11,117  |  |                 |           | 2,665   | 
|                                                                                                                                            | Accrued compensation                                                                                                            |                                      |                            | 20,013  |  |                 |           | 20,431  | 
|                                                                                                                                            | Other accrued expenses and liabilities                                                                                          |                                      |                            | 38,321  |  |                 |           | 49,930  | 
|                                                                                                                                            |                                                                                                                                 |                                      |                            |         |  |                 |           |        
|                                                                                                                                            |                                                                                                                                 |                                      | Total current liabilities  |         |  | 154,989         |           |         |  | 169,401 | 
|Long-term debt                                                                                                                              |                                                                                                                                 |                                      | 474,899                    |         |  |                 | 488,386   |        
|Pension liability                                                                                                                           |                                                                                                                                 |                                      | 42,310                     |         |  |                 | 24,860    |        
|Other long-term liabilities                                                                                                                 |                                                                                                                                 |                                      | 37,774                     |         |  |                 | 44,684    |        
|                                                                                                                                            |                                                                                                                                 |                                      |                            |         |  |                 |           |        
|                                                                                                                                            |                                                                                                                                 |                                      | Total liabilities          |         |  | 709,972         |           |         |  | 727,331 | 
|Minority interest                                                                                                                           |                                                                                                                                 |                                      | 3,856                      |         |  |                 | 4,356     |        
|Commitments and contingencies (Note 15)                                                                                                     |                                                                                                                                 |                                      |                           |         |  |                 |          |        
|Shareholders equity                                                                                                                        |                                                                                                                                 |                                      |                            |         |  |                 |           |        
|Preferred stock, 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 and liquidation preference of
$100 per share |                                      |                            | 100,000 |  |                 |           | 100,000 | 
|Common stock, $0.01 par value 100,000,000 shares authorized;
33,477,300 and 32,188,941 issued and outstanding at December 31,
2002 and 2001 |                                                                                                                                 |                                      | 335                        |         |  |                 | 322       |        
|Paid-in capital                                                                                                                             |                                                                                                                                 |                                      | 416,048                    |         |  |                 | 417,749   |        
|Unearned compensation                                                                                                                       |                                                                                                                                 |                                      | (2,421                     | )       |  |                 |          |        
|Retained deficit                                                                                                                            |                                                                                                                                 |                                      | (179,212                   | )       |  |                 | (562      | )      
|Accumulated other comprehensive loss                                                                                                        |                                                                                                                                 |                                      | (27,712                    | )       |  |                 | (19,861   | )      
|                                                                                                                                            |                                                                                                                                 |                                      |                            |         |  |                 |           |        
|                                                                                                                                            |                                                                                                                                 |                                      | Total shareholders equity |         |  | 307,038         |           |         |  | 497,648 | 
|                                                                                                                                            |                                                                                                                                 |                                      |                            |         |  |                 |           |        
|Total liabilities and shareholders equity                                                                                                  |                                                                                                                                 | $                                    | 1,020,866                  |         |  | $               | 1,229,335 |        
|                                                                                                                                            |                                                                                                                                 |                                      |                            |         |  |                 |           |        

See Notes to Consolidated Financial Statements.

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GRAPHIC PACKAGING INTERNATIONAL CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)

|                                                    |                                                                                          |                                                    |                                        |          |                         |        |          |          |        |        |          |          |         |         |  
|--------------------------------------------------- | ---------------------------------------------------------------------------------------- | -------------------------------------------------- | -------------------------------------- | -------- | ----------------------- | ------ | -------- | -------- | ------ | ------ | -------- | -------- | ------- | ------- | -
|                                                    |                                                                                          |                                                    |                                        |          | Year Ended December 31,
|                                                    |                                                                                          |                                                    |                                        |          |                        
|                                                    |                                                                                          |                                                    |                                        |          | 2002                    |        | 2001     |          | 2000  
|                                                    |                                                                                          |                                                    |                                        |          |                         |        |          |          |       
|Cash flows from operating activities:               |                                                                                          |                                                    |                                        |          |                         |        |          |          |        |        |          |         
|                                                    | Net income (loss)                                                                        |                                                    | $                                      | (178,650 | )                       |        | $        | 6,436    |        |        | $        | (6,998   | )      
|                                                    | Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |                                                    |                                        |          |                         |        |          |          |        |        |          |          |        
|                                                    |                                                                                          | Extraordinary loss on early extinguishment of debt |                                        |          | 15,766                  |        |          |          |       |        |          |          |        |        
|                                                    |                                                                                          | Cumulative effect of change in goodwill accounting |                                        |          | 180,000                 |        |          |          |       |        |          |          |        |        
|                                                    |                                                                                          | Asset impairment charges                           |                                        |          |                        |        |          |          | 5,000  |        |          |          |        |        
|                                                    |                                                                                          | Gain from sale of businesses and other assets      |                                        |          |                        |        |          |          | (3,650 | )      |          |          | (19,172 | )      
|                                                    |                                                                                          | Depreciation                                       |                                        |          | 61,165                  |        |          |          | 58,757 |        |          |          | 62,460  |        
|                                                    |                                                                                          | Amortization of goodwill                           |                                        |          |                        |        |          |          | 20,649 |        |          |          | 20,634  |        
|                                                    |                                                                                          | Amortization of debt issuance costs                |                                        |          | 3,109                   |        |          |          | 7,795  |        |          |          | 8,865   |        
|                                                    |                                                                                          | Deferred income tax expense                        |                                        |          | 4,990                   |        |          |          | 8,417  |        |          |          | 10,012  |        
|                                                    |                                                                                          | Compensation expense settled in stock              |                                        |          | 4,298                   |        |          |          | 5,152  |        |          |          | 4,122   |        
|                                                    |                                                                                          | Change in current assets and current liabilities:  |                                        |          |                         |        |          |          |        |        |          |          |         |        
|                                                    |                                                                                          |                                                    | Accounts receivable                    |          |                         | (4,072 | )        |          |        | 15,713 |          |          |         | (3,271  | )
|                                                    |                                                                                          |                                                    | Inventories                            |          |                         | 5,165  |          |          |        | 12,820 |          |          |         | 23,137  |  
|                                                    |                                                                                          |                                                    | Other assets                           |          |                         | 3,091  |          |          |        | (1,122 | )        |          |         | (3,592  | )
|                                                    |                                                                                          |                                                    | Accounts payable                       |          |                         | 23,104 |          |          |        | 20,100 |          |          |         | (4,935  | )
|                                                    |                                                                                          |                                                    | Accrued expenses and other liabilities |          |                         | 3,970  |          |          |        | (4,595 | )        |          |         | (27,954 | )
|                                                    |                                                                                          | Other                                              |                                        |          | 159                     |        |          |          | 227    |        |          |          | (429    | )      
|                                                    |                                                                                          |                                                    |                                        |          |                         |        |          |          |        |        |          |         
|Net cash provided by operating activities           |                                                                                          |                                                    | 122,095                                |          |                         |        | 151,699  |          |        |        | 62,879   |         
|Cash flows from investing activities:               |                                                                                          |                                                    |                                        |          |                         |        |          |          |        |        |          |         
|                                                    | Capital expenditures                                                                     |                                                    |                                        | (27,706  | )                       |        |          | (31,884  | )      |        |          | (30,931  | )      
|                                                    | Proceeds from sale of assets                                                             |                                                    |                                        |         |                         |        |          | 8,950    |        |        |          | 43,580   |        
|                                                    | Collection of note receivable                                                            |                                                    |                                        |         |                         |        |          |         |        |        |          | 200,000  |        
|                                                    |                                                                                          |                                                    |                                        |          |                         |        |          |          |        |        |          |         
|Net cash provided by (used in) investing activities |                                                                                          |                                                    | (27,706                                | )        |                         |        | (22,934  | )        |        |        | 212,649  |         
|Cash flows from financing activities:               |                                                                                          |                                                    |                                        |          |                         |        |          |          |        |        |          |         
|                                                    | Proceeds from borrowings                                                                 |                                                    |                                        | 759,677  |                         |        |          | 206,750  |        |        |          | 52,015   |        
|                                                    | Repayment of debt                                                                        |                                                    |                                        | (807,105 | )                       |        |          | (320,965 | )      |        |          | (431,996 | )      
|                                                    | Debt issuance costs                                                                      |                                                    |                                        | (16,390  | )                       |        |          |         |        |        |          | (6,312   | )      
|                                                    | Proceeds from issuance of preferred stock, net of stock issuance costs                   |                                                    |                                        |         |                         |        |          |         |        |        |          | 98,558   |        
|                                                    | Preferred stock dividends paid                                                           |                                                    |                                        | (10,000  | )                       |        |          | (12,083  | )      |        |          | (1,306   | )      
|                                                    | Common stock issuance and other                                                          |                                                    |                                        | 1,289    |                         |        |          | 287      |        |        |          | 1,656    |        
|                                                    |                                                                                          |                                                    |                                        |          |                         |        |          |          |        |        |          |         
|Net cash used in financing activities               |                                                                                          |                                                    | (72,529                                | )        |                         |        | (126,011 | )        |        |        | (287,385 | )       
|Cash and cash equivalents:                          |                                                                                          |                                                    |                                        |          |                         |        |          |          |        |        |          |         
|                                                    | Net increase (decrease) in cash and cash equivalents                                     |                                                    |                                        | 21,860   |                         |        |          | 2,754    |        |        |          | (11,857  | )      
|                                                    | Balance at beginning of year                                                             |                                                    |                                        | 6,766    |                         |        |          | 4,012    |        |        |          | 15,869   |        
|                                                    |                                                                                          |                                                    |                                        |          |                         |        |          |          |        |        |          |         
|                                                    | Balance at end of year                                                                   |                                                    | $                                      | 28,626   |                         |        | $        | 6,766    |        |        | $        | 4,012    |        
|                                                    |                                                                                          |                                                    |                                        |          |                         |        |          |          |        |        |          |         

See Notes to Consolidated Financial Statements.

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GRAPHIC PACKAGING INTERNATIONAL CORPORATION

CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
(in thousands)

|                                                                               |  |        |        |           |  |        |         |         |  |              |     |           |  |               |         |       |  |   |        |   |  |          |          |       |  |             |         |   |  |   |          |  
|------------------------------------------------------------------------------ |  | ------ | ------ | --------- |  | ------ | ------- | ------- |  | ------------ | --- | --------- |  | ------------- | ------- | ----- |  | - | ------ | - |  | -------- | -------- | ----- |  | ----------- | ------- | - |  | - | -------- | -
|                                                                               |  |        |        |           |  |        |         |         |  |              |     |           |  |               |         |       |  |   |        |   |  |          |          |       |  | Accumulated |         |   |  |  
|                                                                               |  |        |        |           |  |        |         |         |  |              |     |           |  |               |         |       |  |   |        |   |  | Retained |          | Other |  |             |         |  
|                                                                               |  | Common |        | Preferred |  | Common |         | Paid-in |  | Unearned     |     | Earnings  |  | Comprehensive |         |       |  |  
|                                                                               |  | Shares |        | Stock     |  | Stock  |         | Capital |  | Compensation |     | (Deficit) |  | Income (Loss) |         | Total
|                                                                               |  |        |        |           |  |        |         |         |  |              |     |           |  |               |         |      
|Balance at December 31, 1999                                                   |  |        | 28,577 |           |  | $      |        |         |  | $            | 286 |           |  | $             | 422,885 |       |  | $ |       |   |  | $        |         |       |  | $           | 139     |   |  | $ | 423,310  |  
|Issuance of common stock                                                       |  |        | 1,967  |           |  |        |        |         |  |              | 19  |           |  |               | 4,690   |       |  |   |       |   |  |          |         |       |  |             |        |   |  |   | 4,709    |  
|Issuance of 1,000,000 shares
of preferred stock, net of
issuance costs         |  |        |       |           |  |        | 100,000 |         |  |              |    |           |  |               | (1,442  | )     |  |   |       |   |  |          |         |       |  |             |        |   |  |   | 98,558   |  
|Net loss                                                                       |  |        |       |           |  |        |        |         |  |              |    |           |  |               |        |       |  |   |       |   |  |          | (6,998   | )     |  |             |        |   |  |   | (6,998   | )
|Preferred stock dividends
declared                                             |  |        |       |           |  |        |        |         |  |              |    |           |  |               | (3,806  | )     |  |   |       |   |  |          |         |       |  |             |        |   |  |   | (3,806   | )
|Change in minimum pension
liability, net of tax                                |  |        |       |           |  |        |        |         |  |              |    |           |  |               |        |       |  |   |       |   |  |          |         |       |  |             | (267    | ) |  |   | (267     | )
|Cumulative translation
adjustment                                              |  |        |       |           |  |        |        |         |  |              |    |           |  |               |        |       |  |   |       |   |  |          |         |       |  |             | (355    | ) |  |   | (355     | )
|                                                                               |  |        |        |           |  |        |         |         |  |              |     |           |  |               |         |       |  |   |        |   |  |          |          |       |  |             |         |   |  |   |          |  
|Balance at December 31, 2000                                                   |  |        | 30,544 |           |  |        | 100,000 |         |  |              | 305 |           |  |               | 422,327 |       |  |   |       |   |  |          | (6,998   | )     |  |             | (483    | ) |  |   | 515,151  |  
|Issuance of common stock                                                       |  |        | 1,645  |           |  |        |        |         |  |              | 17  |           |  |               | 5,422   |       |  |   |       |   |  |          |         |       |  |             |        |   |  |   | 5,439    |  
|Net income                                                                     |  |        |       |           |  |        |        |         |  |              |    |           |  |               |        |       |  |   |       |   |  |          | 6,436    |       |  |             |        |   |  |   | 6,436    |  
|Preferred stock dividends
declared                                             |  |        |       |           |  |        |        |         |  |              |    |           |  |               | (10,000 | )     |  |   |       |   |  |          |         |       |  |             |        |   |  |   | (10,000  | )
|Change in minimum pension
liability, net of tax                                |  |        |       |           |  |        |        |         |  |              |    |           |  |               |        |       |  |   |       |   |  |          |         |       |  |             | (13,832 | ) |  |   | (13,832  | )
|Cumulative effect of a change
in accounting principle,
net of tax              |  |        |       |           |  |        |        |         |  |              |    |           |  |               |        |       |  |   |       |   |  |          |         |       |  |             | (3,217  | ) |  |   | (3,217   | )
|Recognition of hedge results
to interest expense during
the period, net of tax |  |        |       |           |  |        |        |         |  |              |    |           |  |               |        |       |  |   |       |   |  |          |         |       |  |             | 2,973   |   |  |   | 2,973    |  
|Change in fair value of cash
flow hedges during the
period, net of tax         |  |        |       |           |  |        |        |         |  |              |    |           |  |               |        |       |  |   |       |   |  |          |         |       |  |             | (4,397  | ) |  |   | (4,397   | )
|Cumulative translation
adjustment                                              |  |        |       |           |  |        |        |         |  |              |    |           |  |               |        |       |  |   |       |   |  |          |         |       |  |             | (905    | ) |  |   | (905     | )
|                                                                               |  |        |        |           |  |        |         |         |  |              |     |           |  |               |         |       |  |   |        |   |  |          |          |       |  |             |         |   |  |   |          |  
|Balance at December 31, 2001                                                   |  |        | 32,189 |           |  |        | 100,000 |         |  |              | 322 |           |  |               | 417,749 |       |  |   |       |   |  |          | (562     | )     |  |             | (19,861 | ) |  |   | 497,648  |  
|Issuance of common stock                                                       |  |        | 883    |           |  |        |        |         |  |              | 9   |           |  |               | 5,831   |       |  |   |       |   |  |          |         |       |  |             |        |   |  |   | 5,840    |  
|Issuance of restricted stock                                                   |  |        | 405    |           |  |        |        |         |  |              | 4   |           |  |               | 2,468   |       |  |   | (2,472 | ) |  |          |         |       |  |             |        |   |  |   |         |  
|Restricted stock amortized to
expense                                          |  |        |       |           |  |        |        |         |  |              |    |           |  |               |        |       |  |   | 51     |   |  |          |         |       |  |             |        |   |  |   | 51       |  
|Net loss                                                                       |  |        |       |           |  |        |        |         |  |              |    |           |  |               |        |       |  |   |       |   |  |          | (178,650 | )     |  |             |        |   |  |   | (178,650 | )
|Preferred stock dividends
declared                                             |  |        |       |           |  |        |        |         |  |              |    |           |  |               | (10,000 | )     |  |   |       |   |  |          |         |       |  |             |        |   |  |   | (10,000  | )
|Change in minimum pension
liability, net of tax                                |  |        |       |           |  |        |        |         |  |              |    |           |  |               |        |       |  |   |       |   |  |          |         |       |  |             | (12,805 | ) |  |   | (12,805  | )
|Recognition of hedge results
to interest expense during
the period, net of tax |  |        |       |           |  |        |        |         |  |              |    |           |  |               |        |       |  |   |       |   |  |          |         |       |  |             | 4,177   |   |  |   | 4,177    |  
|Change in fair value of cash
flow hedges during the
period, net of tax         |  |        |       |           |  |        |        |         |  |              |    |           |  |               |        |       |  |   |       |   |  |          |         |       |  |             | 498     |   |  |   | 498      |  
|Cumulative translation
adjustment                                              |  |        |       |           |  |        |        |         |  |              |    |           |  |               |        |       |  |   |       |   |  |          |         |       |  |             | 279     |   |  |   | 279      |  
|                                                                               |  |        |        |           |  |        |         |         |  |              |     |           |  |               |         |       |  |   |        |   |  |          |          |       |  |             |         |   |  |   |          |  
|Balance at December 31, 2002                                                   |  |        | 33,477 |           |  | $      | 100,000 |         |  | $            | 335 |           |  | $             | 416,048 |       |  | $ | (2,421 | ) |  | $        | (179,212 | )     |  | $           | (27,712 | ) |  | $ | 307,038  |  
|                                                                               |  |        |        |           |  |        |         |         |  |              |     |           |  |               |         |       |  |   |        |   |  |          |          |       |  |             |         |   |  |   |          |  

See Notes to Consolidated Financial Statements.

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##### Table of Contents



GRAPHIC PACKAGING INTERNATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies

Nature of Operations: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
Companys strategy is to maximize its competitive position and growth
opportunities in its core business, folding cartons.

Use of Estimates:The consolidated financial statements have been
prepared in conformity with generally accepted accounting principles, using
managements best estimates and judgments where appropriate. These estimates
and judgments affect the reported amounts of assets and liabilities and
disclosure of the contingent assets and liabilities at the date of the
financial statements. The estimates and judgments will also affect the
reported amounts for certain revenues and expenses during the reporting period.
Management has made significant estimates with respect to the following:



| |  |  | Collectibility of accounts receivable  The Company estimates
losses from uncollectible accounts based on the aging of the
accounts receivable and an evaluation of the likelihood of success
in collecting the receivable.                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Self-insurance reserves  The Company is self-insured for
certain losses relating to workers compensation claims and
employee medical and dental benefits. The Company has purchased
stop-loss coverage in order to limit its exposure to significant
claims. Self-insured losses are accrued based upon the Companys
estimates of the aggregate uninsured claims incurred using certain
actuarial assumptions followed in the insurance industry and the
Companys historical experience.                                                                                                                                                                                              
|
| |  |  | Retirement-related benefits  The Company estimates its
retiree liabilities based upon actuarial reports prepared by the
Companys actuary, which include estimates and assumptions related
to interest rates, future compensation and other factors. See
further discussion of retirement related estimates and assumptions
in Note 10.                                                                                                                                                                                                                                                                                                                                                 
|
| |  |  | Goodwill valuation  The Company estimates the value of its
goodwill using the discounted cash flow method of valuation on an
annual basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  |  | Recovery of long-lived assets  The Company periodically
reviews long-lived assets for impairment whenever events or changes
in business circumstances, such as the closure of a plant, indicate
the carrying amount of the asset may not be fully recoverable by
undiscounted cash flows. Measurement of the impairment loss, if
any, is based on the fair value of the asset, which is generally
determined by the discounting of future estimated cash flows. The
Company evaluates the recovery of its long-lived assets
periodically by analyzing its operating results and considering
significant events or changes in the business environment that may
have triggered impairment.
|
| |  |  | Deferred tax asset valuation allowance  The Company estimates
the realizability of deferred tax assets by estimating the
projected reversal of offsetting deferred tax liability amounts and
future taxable income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  |  | Legal accruals  The Company estimates the amount of potential
exposure it may have with respect to litigation, claims and
assessments, based upon analyses prepared by in-house and outside
counsel, and records legal reserves when management believes it is
probable that a loss has occurred and the amount of loss is
reasonably estimatable.                                                                                                                                                                                                                                                                                                                                       
|
| |  |  | Environmental expenditures and remediation liabilities 
Environmental expenditures that relate to current operations are
expensed or capitalized as appropriate. Expenditures that relate to
an existing condition caused by past operations, and which do not
contribute to current or future revenue generation, are expensed.
Liabilities are recorded when environmental assessments indicate
that remedial efforts are probable and the costs can be reasonably
estimated.                                                                                                                                                                                                          
|
| |  |  | Stock-based employee compensation plans  The Company has
various stock-based employee compensation plans, which are
described more fully in Note 9. The plans are accounted for under
the recognition and measurement principles of APB No. 25, and
related interpretations. Supplemental disclosures regarding
stock-based compensation include estimates regarding volatility of
the Companys stock, interest rates and expected life.                                                                                                                                                                                                                                                

Actual results could differ from these estimates and judgments, making it
reasonably possible that a change in these estimates could occur in the near
term.

Reclassifications: Certain prior period amounts have been reclassified
to conform to the current year presentation.

Consolidation:The consolidated financial statements include the
accounts of the Company and its wholly owned and majority owned subsidiaries.
All material intercompany transactions have been eliminated. See discussion of
the minority interest shown on the consolidated balance sheet in Note 14.

33



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Revenue
Recognition:The Companys revenues are generated by the
sale of packaging products. Revenue for all of the Companys
products is recognized when goods are shipped and risks of ownership
have passed to the customer. Risks of ownership pass at the time of
shipment from the Companys warehouse or at the time of delivery
to the customer, dependent on shipping terms with the customer.
Shipping and handling costs invoiced to customers are included in
revenue and associated costs are recognized as cost of goods sold.
Customer returns, rebates and allowances are provided for at the time
of sale based on estimates.




Concentration of Credit Risk:The Companys largest 20 customers make up
approximately 81% of its gross sales. A significant portion of the Companys
sales are to Altria Group, Inc., Coors Brewing Company and General Mills, Inc.
For the year ended December 31, 2002, Altria Group accounted for approximately
20% of the Companys gross sales, Coors Brewing accounted for approximately 10%
of gross sales and General Mills accounted for approximately 11% of gross
sales. For the year ended December 31, 2001, Altria Group accounted for
approximately 19% of the Companys gross sales, Coors Brewing accounted for
approximately 11% of gross sales and General Mills accounted for approximately
11% of gross sales. The Company controls credit risk related to accounts
receivable through credit approvals, credit limits and monitoring procedures.
Credit risk with respect to accounts receivable is concentrated primarily in
the food and beverage industries. Altria Group represents 15% and 15% of
accounts receivable at December 31, 2002 and 2001.




Inventories:Inventories are stated at the lower of cost or market.
Cost is determined by the first-in, first-out (FIFO) method.
Manufacturing costs are capitalized into inventory as incurred and
include such items as recycled paper fiber, purchased paperboard,
paper, aluminum foil, ink, plastic films and resins, freight on
purchased raw materials, labor, energy, depreciation and other
manufacturing overhead costs.




The classification of inventories, in thousands, was as follows:

|               |                   |   |                 |        |      |   |        |        | 
|-------------- | ----------------- | - | --------------- | ------ | ---- | - | ------ | ------ | 
|               |                   |   | At December 31,
|               |                   |   |                
|               |                   |   | 2002            |        | 2001
|               |                   |   |                 |        |     
|Finished goods |                   | $ | 50,771          |        |      | $ | 55,057 |       
|In process     |                   |   | 11,298          |        |      |   | 15,258 |       
|Raw materials  |                   |   | 25,174          |        |      |   | 22,093 |       
|               |                   |   |                 |        |      |   |        |       
|               | Total inventories |   | $               | 87,243 |      |   | $      | 92,408 | 
|               |                   |   |                 |        |      |   |        |       

Properties:Land, buildings, equipment and purchased software are
stated at cost. The costs of developing an enterprise resource planning
software system are capitalized and amortized when placed in service over the
expected useful life of the software. Real estate properties are non-operating
properties held for sale. For financial reporting purposes, depreciation is
recorded principally on the straight-line method over the estimated useful
lives of the assets as follows:

|                                    |  |                                             
|----------------------------------- |  | --------------------------------------------
|Buildings                           |  | 30 years                                    
|Machinery and equipment             |  | 3 to 15 years                               
|Building and leasehold improvements |  | The shorter of the useful life or lease term
|Internal-use software               |  | 8 years                                     

The cost of properties and related accumulated depreciation, in thousands,
was as follows:

|                              |                |   |                 |         |      |   |         |         | 
|----------------------------- | -------------- | - | --------------- | ------- | ---- | - | ------- | ------- | 
|                              |                |   | At December 31,
|                              |                |   |                
|                              |                |   | 2002            |         | 2001
|                              |                |   |                 |         |     
|Land and improvements         |                | $ | 17,381          |         |      | $ | 16,687  |        
|Buildings and improvements    |                |   | 118,309         |         |      |   | 119,439 |        
|Machinery and equipment       |                |   | 522,559         |         |      |   | 508,814 |        
|Internal-use software         |                |   | 35,769          |         |      |   | 1,781   |        
|Real estate properties        |                |   | 4,485           |         |      |   | 5,359   |        
|Construction in progress      |                |   | 9,304           |         |      |   | 42,101  |        
|                              |                |   |                 |         |      |   |         |        
|                              |                |   | 707,807         |         |      |   | 694,181 |        
|Less accumulated depreciation |                |   | 297,215         |         |      |   | 250,469 |        
|                              |                |   |                 |         |      |   |         |        
|                              | Net properties |   | $               | 410,592 |      |   | $       | 443,712 | 
|                              |                |   |                 |         |      |   |         |        

Expenditures for new facilities and improvements that substantially extend
the capacity or useful life of an asset are capitalized. Ordinary repairs and
maintenance are expensed as incurred. Upon sale or retirement of assets, the
cost and related accumulated depreciation are eliminated from the respective
accounts and any resulting gains or losses are reflected in operations.

Goodwill Accounting

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

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

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

Effective January 1, 2002, the Company stopped amortizing its goodwill as
required by SFAS No. 142. The annual reduction in amortization expense was
approximately $20.6 million before taxes. Because some of the Companys
goodwill amortization is nondeductible for tax purposes, the Companys
effective tax rate is lower as a result of implementing SFAS No. 142. The
change in the carrying amount of the Companys goodwill consists entirely of
the impairment of $180 million for the year ended December 31, 2002.

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

|                                                               |  |              |        |            |  |             |          |  
|-------------------------------------------------------------- |  | ------------ | ------ | ---------- |  | ----------- | -------- | -
|                                                               |  |              |        |            |  | As Adjusted
|                                                               |  |              |        |            |  | for        
|                                                               |  | As Reported  |        | Goodwill  
|                                                               |  | in Form 10-Q |        | Impairment
|                                                               |  |              |        |           
|Operating income                                               |  | $            | 19,405 |            |  | $           | 19,405   |  
|                                                               |  |              |        |            |  |             |          |  
|Net loss attributable to common shareholders                   |  | $            | (7,171 | )          |  | $           | (187,171 | )
|                                                               |  |              |        |            |  |             |          |  
|Net loss attributable to common shareholders per basic share   |  | $            | (0.22  | )          |  | $           | (5.79    | )
|                                                               |  |              |        |            |  |             |          |  
|Net loss attributable to common shareholders per diluted share |  | $            | (0.22  | )          |  | $           | (2.28    | )
|                                                               |  |              |        |            |  |             |          |  

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

|                                                                                                                                                 |  |                         |          |      |  |      |        |   |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------- | -------- | ---- |  | ---- | ------ | - |  | - | ------- | -
|                                                                                                                                                 |  | Year Ended December 31,
|                                                                                                                                                 |  | 2002                    |          | 2001 |  | 2000
|                                                                                                                                                 |  |                         |          |      |  |     
|Reported net income (loss) before extraordinary item and
cumulative effect of change in accounting principle
attributable to common shareholders |  | $                       | 967      |      |  | $    | (3,564 | ) |  | $ | (10,804 | )
|Cumulative effect of change in goodwill accounting                                                                                               |  |                         | (180,000 | )    |  |      |       |   |  |   |        |  
|Extraordinary item                                                                                                                               |  |                         | (9,617   | )    |  |      |       |   |  |   |        |  
|                                                                                                                                                 |  |                         |          |      |  |      |        |   |  |   |         |  
|Reported net income (loss) attributable to common
shareholders                                                                                   |  |                         | (188,650 | )    |  |      | (3,564 | ) |  |   | (10,804 | )
|Goodwill amortization, net of tax                                                                                                                |  |                         |         |      |  |      | 12,389 |   |  |   | 12,380  |  
|                                                                                                                                                 |  |                         |          |      |  |      |        |   |  |   |         |  
|Adjusted net income (loss) attributable to common
shareholders                                                                                   |  | $                       | (188,650 | )    |  | $    | 8,825  |   |  | $ | 1,576   |  
|                                                                                                                                                 |  |                         |          |      |  |      |        |   |  |   |         |  
|Earnings per share  basic:                                                                                                                      |  |                         |          |      |  |      |        |   |  |   |         |  
|Reported net income (loss) before extraordinary item and
cumulative effect of change in accounting principle
attributable to common shareholders |  | $                       | 0.03     |      |  | $    | (0.11  | ) |  | $ | (0.37   | )
|Cumulative effect of change in goodwill accounting                                                                                               |  |                         | (5.50    | )    |  |      |       |   |  |   |        |  
|Extraordinary item                                                                                                                               |  |                         | (0.30    | )    |  |      |       |   |  |   |        |  
|                                                                                                                                                 |  |                         |          |      |  |      |        |   |  |   |         |  
|Reported net income (loss) attributable to common
shareholders                                                                                   |  |                         | (5.77    | )    |  |      | (0.11  | ) |  |   | (0.37   | )
|Goodwill amortization, net of tax                                                                                                                |  |                         |         |      |  |      | 0.39   |   |  |   | 0.42    |  
|                                                                                                                                                 |  |                         |          |      |  |      |        |   |  |   |         |  
|Adjusted net income (loss) attributable to common
shareholders                                                                                   |  | $                       | (5.77    | )    |  | $    | 0.28   |   |  | $ | 0.05    |  
|                                                                                                                                                 |  |                         |          |      |  |      |        |   |  |   |         |  
|Earnings per share  diluted:                                                                                                                    |  |                         |          |      |  |      |        |   |  |   |         |  
|Reported net income (loss) before extraordinary item and
cumulative effect of change in accounting principle
attributable to common shareholders |  | $                       | 0.03     |      |  | $    | (0.11  | ) |  | $ | (0.37   | )
|Cumulative effect of change in goodwill accounting                                                                                               |  |                         | (5.28    | )    |  |      |       |   |  |   |        |  
|Extraordinary item                                                                                                                               |  |                         | (0.28    | )    |  |      |       |   |  |   |        |  
|                                                                                                                                                 |  |                         |          |      |  |      |        |   |  |   |         |  
|Reported net income (loss) attributable to common
shareholders                                                                                   |  |                         | (5.53    | )    |  |      | (0.11  | ) |  |   | (0.37   | )
|Goodwill amortization, net of tax                                                                                                                |  |                         |         |      |  |      | 0.39   |   |  |   | 0.42    |  
|                                                                                                                                                 |  |                         |          |      |  |      |        |   |  |   |         |  
|Adjusted net income (loss) attributable to common
shareholders                                                                                   |  | $                       | (5.53    | )    |  | $    | 0.28   |   |  | $ | 0.05    |  
|                                                                                                                                                 |  |                         |          |      |  |      |        |   |  |   |         |  

Derivatives and Hedging Activities:In accordance with the Companys
interest rate risk-management policies, the Company periodically enters into
contracts to hedge the interest rates on its variable rate borrowings. During
the period January 2000  September 2002, the Company had in place various
interest rate contracts. At December 31, 2002, the Company had no interest
rate contracts in place. The Company adopted Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities, on January 1, 2001.

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. The Companys interest rate derivatives
that were outstanding until the third quarter of 2002 were designated as cash
flow hedges and are recognized on the December 31, 2001 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.

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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.

Foreign Currency Translation:The functional currencies for the Companys
United Kingdom and Canadian subsidiaries are the British pound and the Canadian
dollar, respectively. Translation into U.S. dollars is performed for assets and
liabilities at the exchange rates as of the balance sheet date. Income and
expense accounts are translated at average exchange rates for the year.
Adjustments resulting from the translation are reflected as a separate
component of other comprehensive income.

Debt Issuance Costs:Costs related to the issuance of debt are
capitalized and amortized to interest expense using the effective interest
method over the period the debt is outstanding.

Earnings per Share:Following is a reconciliation between basic and
diluted earnings per common share from continuing operations attributable to
common shareholders (in thousands, except per share information):

|                                                                  |  |        |          |        |  |        |        |           |  |        |       |        |  |                         |        |           |  |        |        |  |  |   |       |           |  |      |         |   |  |  |        |  |  |   |       |  
|----------------------------------------------------------------- |  | ------ | -------- | ------ |  | ------ | ------ | --------- |  | ------ | ----- | ------ |  | ----------------------- | ------ | --------- |  | ------ | ------ |  |  | - | ----- | --------- |  | ---- | ------- | - |  |  | ------ |  |  | - | ----- | -
|                                                                  |  |        |          |        |  |        |        |           |  |        |       |        |  | Year Ended December 31, |        |           |  |        |        |  |  |   |       |           |  |     
|                                                                  |  |        |          |        |  |        |        |           |  |        |       |        |  |                         |        |           |  |        |        |  |  |   |       |           |  |     
|                                                                  |  |        |          |        |  | 2002   |        |           |  |        |       |        |  |                         |        | 2001      |  |        |        |  |  |   |       |           |  | 2000 |         |   |  | 
|                                                                  |  |        |          |        |  |        |        |           |  |        |       |        |  |                         |        |           |  |        |        |  |  |   |       |           |  |      |         |   |  | 
|                                                                  |  | Income |          |        |  |        |        | Per Share |  | Income |       |        |  |                         |        | Per Share |  | Income |        |  |  |   |       | Per Share
|                                                                  |  | (Loss) |          | Shares |  | Amount |        | (Loss)    |  | Shares |       | Amount |  | (Loss)                  |        | Shares    |  | Amount
|                                                                  |  |        |          |        |  |        |        |           |  |        |       |        |  |                         |        |           |  |       
|Net income (loss)
attributable to common shareholdersbasic EPS   |  | $      | (188,650 | )      |  |        | 32,715 |           |  | $      | (5.77 | )      |  | $                       | (3,564 | )         |  |        | 31,620 |  |  | $ | (0.11 | )         |  | $    | (10,804 | ) |  |  | 29,337 |  |  | $ | (0.37 | )
|Other dilutive
equity instruments                                 |  |        |         |        |  |        | 1,350  |           |  |        |       |        |  |                         |       |           |  |        |       |  |  |   |       |           |  |      |        |   |  |  |       |  |  |   |       |  
|                                                                  |  |        |          |        |  |        |        |           |  |        |       |        |  |                         |        |           |  |        |        |  |  |   |       |           |  |      |         |   |  |  |        |  |  |   |       |  
|Net income (loss)
attributable to common shareholdersdiluted EPS |  | $      | (188,650 | )      |  |        | 34,065 |           |  | $      | (5.53 | )      |  | $                       | (3,564 | )         |  |        | 31,620 |  |  | $ | (0.11 | )         |  | $    | (10,804 | ) |  |  | 29,337 |  |  | $ | (0.37 | )
|                                                                  |  |        |          |        |  |        |        |           |  |        |       |        |  |                         |        |           |  |        |        |  |  |   |       |           |  |      |         |   |  |  |        |  |  |   |       |  

The Companys outstanding preferred stock of $100.0 million is convertible
into 48,484,848 shares of common stock. The conversion of the preferred stock
into common stock is not reflected in the diluted earnings per share
calculations above as conversion would be anti-dilutive for 2002, 2001 and
2000. Additional potentially dilutive securities, in thousands, totaling
4,703, 6,338 and 6,627, were excluded from the historical diluted income or
loss per common share calculations above because of their anti-dilutive effect
for 2002, 2001 and 2000, respectively. The additional potentially dilutive
securities are primarily stock options.

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Stock-Based Compensation:SFAS No. 148, Accounting for Stock-Based
CompensationTransition and Disclosure, was issued in December 2002. The
statement amends SFAS No. 123 to provide alternative methods of transition for
voluntary change to the fair value based method of accounting for stock-based
employee compensation. In addition, SFAS No. 148 amends the disclosure
requirements of SFAS No. 123 to require prominent disclosures in financial
statements about the method of accounting for stock-based employee compensation
and the effect of the method used on reported results. SFAS No. 148 improves
the prominence and clarity of the pro forma disclosures required by SFAS No.
123 by prescribing a specific tabular format and by requiring disclosure in the
Summary of Significant Accounting Policies or its equivalent. In addition,
SFAS No. 148 improves the timeliness of those disclosures by requiring their
inclusion in financial reports for interim periods. SFAS No. 148 is effective
for financial statements for fiscal years ending after December 15, 2002.
Adoption of this statement resulted in moving the following disclosure to the
accounting policies footnote, but had no impact on the Companys consolidated
financial statements.

The Company applies Accounting Principles Board Opinion No. 25 and related
interpretations in accounting for its stock-based compensation plans.
Accordingly, no compensation expense has been recognized for stock options or
the employee stock purchase plan. If the Company had elected to recognize
compensation cost based on the fair value of the stock options at grant date as
allowed by SFAS No. 123, Accounting for Stock-Based Compensation, pre-tax
compensation expense of $1.6 million, $1.7 million and $1.2 million would have
been recorded for 2002, 2001 and 2000, respectively. Net income (loss)
attributable to common shareholders and earnings per share would have been
reduced to the pro forma amounts indicated below:

|                                                                                                                                            |             |   |                                       |          |      |   |        |        |   |   |         |         |  
|------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | - | ------------------------------------- | -------- | ---- | - | ------ | ------ | - | - | ------- | ------- | -
|                                                                                                                                            |             |   | Years Ended December 31,             
|                                                                                                                                            |             |   |                                      
|                                                                                                                                            |             |   | 2002                                  |          | 2001 |   | 2000  
|                                                                                                                                            |             |   |                                       |          |      |   |       
|                                                                                                                                            |             |   | (in thousands, except per share data)
|Net income (loss) attributable to common shareholders, as
reported                                                                          |             | $ | (188,650                              | )        |      | $ | (3,564 | )      |   | $ | (10,804 | )      
|Deduct: Total stock-based employee compensation expense
determined under fair value based method for all
awards, net of related tax effects |             |   | (976                                  | )        |      |   | (1,020 | )      |   |   | (720    | )      
|                                                                                                                                            |             |   |                                       |          |      |   |        |        |   |   |         |        
|                                                                                                                                            | Pro forma   |   | $                                     | (189,626 | )    |   | $      | (4,584 | ) |   | $       | (11,524 | )
|Earnings per sharebasic:                                                                                                                   |             |   |                                       |          |      |   |        |        |   |   |         |        
|                                                                                                                                            | As reported |   | $                                     | (5.77    | )    |   | $      | (0.11  | ) |   | $       | (0.37   | )
|                                                                                                                                            | Pro forma   |   | $                                     | (5.80    | )    |   | $      | (0.15  | ) |   | $       | (0.39   | )
|Earnings per sharediluted:                                                                                                                 |             |   |                                       |          |      |   |        |        |   |   |         |        
|                                                                                                                                            | As reported |   | $                                     | (5.53    | )    |   | $      | (0.11  | ) |   | $       | (0.37   | )
|                                                                                                                                            | Pro forma   |   | $                                     | (5.57    | )    |   | $      | (0.15  | ) |   | $       | (0.39   | )

Statement of Cash Flows:The Company defines cash equivalents as highly
liquid investments with original maturities of 90 days or less. Book overdrafts
totaling $3.5 million and $1.3 million at December 31, 2002 and 2001,
respectively, have been included as a liability in other accrued expenses and
liabilities on the accompanying balance sheet. The Company received income tax
refunds of $2.6 million, $7.5 million and $7.1 million in 2002, 2001 and 2000,
respectively.

Total interest paid was $33.3 million, $53.9 million and $80.9 million in
2002, 2001 and 2000, respectively. Capitalized interest was $0.3 million, $1.8
million and $1.1 million in 2002, 2001 and 2000, respectively.

Non-cash investing and financing activities in 2002, 2001 and 2000 include
the issuance of shares of common stock valued at $4.3 million, $5.2 million and
$4.1 million, respectively, relating to the 401(k) employer match.

Note 2. New Accounting Standards

Financial Accounting Standards Board Interpretation (FIN) No. 46,
Consolidation of Variable Interest Entities, was issued in January 2003. FIN
No. 46 defines a variable interest entity as a legal entity in which, among
other things, the equity investments at risk are not sufficient to finance the
operating and closing activities of the entity without additional subordinated
financial support from the entitys investors. The Company is a partner in the
Kalamazoo Valley Group (KVG) partnership, which qualifies as a variable
interest entity, as defined by FIN No. 46. KVG is a partnership formed to
develop and operate a landfill for the partners disposal of paper residuals
from their respective paperboard mills. KVG borrowed $1.5 million for the
construction of the landfill, of which approximately $500 thousand remains
unpaid at December 31, 2002. The partners contribute capital annually to fund
the partnerships operating losses. The Companys annual capital contribution
for the past two years has been approximately $200 thousand. The landfill has
been in operation since December 1997; however, since 2000, the other partners
have closed their paperboard mills and one minority partner has left the
partnership via bankruptcy court. The Company is evaluating its alternatives
and liabilities under the partnership agreement and related note, while
continuing to use the landfill. However, if the partnership were to close the
landfill, the Companys share of estimated closing costs, perpetual care
obligations and debt repayment would approximate $2.5 million under the terms
of the partnership agreement. The Company

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accounts for its interest in KVG using the equity method. The investment
balance at December 31, 2002 was $0.3 million. Management is also evaluating
its accounting method in light of the new requirements under FIN No. 46, and
may conclude that its interest in KVG should be consolidated into its accounts.
FIN No. 46 is effective for the Companys 2003 third quarter.

FIN No. 45, Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others, was
issued in November 2002. This interpretation elaborates on the disclosures to
be made by a guarantor in its financial statements about its obligations under
certain guarantees that it has issued. FIN No. 45 also clarifies that a
guarantor is required to recognize, at inception of a guarantee, a liability
for the fair value of the obligation undertaken in issuing the guarantee. The
initial recognition and initial measurement provisions of FIN No. 45 are
applicable on a prospective basis to guarantees issued or modified after
December 31, 2002. The disclosure requirements in the interpretation are
effective for financial statements ending after December 15, 2002. The Company
has included the disclosures required by this interpretation in Note 15.

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

SFAS No. 145, 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 extraordinary items, 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.

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

Note 3. Dispositions




Malvern
Packaging Business







On October 31, 2000, the Company sold the net assets of its Malvern,
Pennsylvania packaging business to Huhtamaki Van Leer for approximately $35
million in cash. The proceeds from the sale were used to reduce debt. The
Company recorded a pre-tax gain of $11.4 million on the sale. The after-tax
gain on sale was $6.8 million, or $0.23 per basic and diluted share.




Other Assets

The Company sold patents and various other assets of its former
developmental businesses and an airplane for cash consideration of
approximately $8.2 million in 2000. A pre-tax gain of $7.8 million was
recognized relating to these asset sales. The after-tax gain on sale was $4.7
million, or $0.16 per basic and diluted share. In 2001, a pre-tax gain of
approximately $3.6 million was recognized upon receipt of additional
consideration for assets of the Companys former developmental businesses.

Note 4. Asset Impairment and Restructuring Charges

The Company recorded asset impairment and restructuring charges totaling
$8.9 million and $5.6 million in 2001 and 2000, respectively. In addition,
asset impairment and restructuring reserves of $7.8 million related to the
Perrysburg, Ohio plant closure were recorded in 2000 as a cost of the
acquisition of Fort James Corporations folding carton operations, which the
Company acquired in August 1999. The Company reviews the relative cost
effectiveness of its assets, including plant facilities and equipment, and the
allocation of human resources across all functions while integrating
acquisitions and responding to pressures on margins from industry conditions.
As a result, the Company has closed plants and downsized its workforce with the
goal of maximizing its profits and optimizing its resources.

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Asset Impairment Charges

2001: The Company recorded an asset impairment charge of $3.5 million in
the fourth quarter of 2001 in conjunction with the announcement of the planned
closure of the Newnan, Georgia plant, a plant that was more expensive to
operate than other plants in its system and produced margins below its
expectations. The Company shut down the plants operations during 2002 and
plans to sell the plants building and land. The net book value of the Newnan
building and land was approximately $1.7 million at December 31, 2002. The
plants business has been transferred to other plants in the Companys system.

The Company recorded an asset impairment charge of $1.5 million in the
first quarter of 2001 related to its Saratoga Springs, New York building.
Operations of the Saratoga Springs plant were transferred to other
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.

2000: The Company announced the planned closure of its Perrysburg, Ohio
folding carton plant in the second quarter of 2000. The Perrysburg plant was
acquired as part of Fort James Corporations folding carton operations and was
eliminated due to excess capacity. The shutdown and restructuring plan for the
Perrysburg facility included asset impairments totaling $6.5 million, which
were recorded in the second quarter of 2000 as a cost of the acquisition, with
a resultant adjustment to goodwill. The Company completed the closure of the
plant and transition of the plants business to our other facilities by the end
of 2000. On July 11, 2001, the remaining real estate was sold for cash
proceeds of approximately $1.9 million. No gain or loss was recognized on the
sale.

Restructuring Charges

2001: In connection with the announced closure of the Newnan, Georgia
plant discussed above, the Company recorded restructuring charges totaling $2.4
million in the fourth quarter of 2001. The charges relate to severance
packages for 105 plant personnel that were communicated to employees in
December 2001. The Newnan restructuring plan was essentially complete by the
end of 2002, with approximately $0.5 million of severance and other
restructuring payments left to be made in 2003.

2000: In December 2000 the Company announced a restructuring plan to
reduce fixed-cost personnel. The plan included the elimination of approximately
200 non-production positions, including the closure of its folding carton plant
in Portland, Oregon, and offered severance packages in accordance with Company
policies. The total cost of the reduction in force was $5.0 million, of which
$3.0 million was recognized in the fourth quarter of 2000 results. The
remaining cost of approximately $2.0 million was recognized in the first half
of 2001 when severance packages were communicated to employees. The
restructuring plan is complete at December 31, 2002.

In connection with the announced closure of the Perrysburg, Ohio plant,
restructuring reserves were recorded totaling approximately $1.3 million in the
second quarter of 2000. The reserves relate to the severance of approximately
100 production positions and other plant closing costs. Consistent with the
asset impairments related to the Perrysburg closure, the restructuring costs
have been accounted for as a cost of the acquisition of Fort James
Corporations folding carton operations with a resultant adjustment to
goodwill. At December 31, 2002, all restructuring costs have been paid relating
to the Perrysburg closure.

The Company recorded a restructuring charge of $3.4 million in the first
quarter of 2000 for anticipated severance costs for approximately 185
employees 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 facilities. In the
first quarter of 2001, the Company reversed approximately $0.5 million of
severance accruals which were not needed to complete the Saratoga Springs
restructuring plan. All remaining restructuring costs have been paid as of
December 31, 2002.

A 1999 plant rationalization plan included severance and related charges,
primarily at the Companys Lawrenceburg, Tennessee manufacturing plant.
However, customer needs in Golden, Colorado and Lawrenceburg, coupled with the
timing of the transition of business to the Companys new Golden, Colorado
facility, impacted the completion of the restructuring and resulted in the
savings of approximately $800 thousand of anticipated restructuring costs. The
2000 restructuring expense is net of this $800 thousand benefit.

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The following table summarizes accruals related to the Companys
restructurings (in millions):

|                                                     |  |                 |      |            |  |            |      |           |  |         |      |        |  |   |      |   |  |   |      |   |  |   |      |  
|---------------------------------------------------- |  | --------------- | ---- | ---------- |  | ---------- | ---- | --------- |  | ------- | ---- | ------ |  | - | ---- | - |  | - | ---- | - |  | - | ---- | -
|                                                     |  | 1999            |      | 2000       |  | 2000       |      |           |  |         |      | 2001   |  |   |      |  
|                                                     |  | Plant           |      | S. Springs |  | Perrysburg |      | 2000/2001 |  | Newnan  |      |        |  |  
|                                                     |  | Rationalization |      | Plant      |  | Plant      |      | Reduction |  | Plant   |      |        |  |  
|                                                     |  | Plan            |      | Closure    |  | Closure    |      | In Force  |  | Closure |      | Totals
|                                                     |  |                 |      |            |  |            |      |           |  |         |      |       
|Balance, December 31, 1999                           |  | $               | 1.9  |            |  | $          |     |           |  | $       |     |        |  | $ |     |   |  | $ |     |   |  | $ | 1.9  |  
|2000 restructuring charges, net of reversals         |  |                 | (0.8 | )          |  |            | 3.4  |           |  |         |     |        |  |   | 3.0  |   |  |   |     |   |  |   | 5.6  |  
|2000 restructuringPerrysburg                        |  |                 |     |            |  |            |     |           |  |         | 1.3  |        |  |   |     |   |  |   |     |   |  |   | 1.3  |  
|Cash paid                                            |  |                 | (1.0 | )          |  |            | (2.0 | )         |  |         | (0.7 | )      |  |   | (0.1 | ) |  |   |     |   |  |   | (3.8 | )
|                                                     |  |                 |      |            |  |            |      |           |  |         |      |        |  |   |      |   |  |   |      |   |  |   |      |  
|Balance, December 31, 2000                           |  |                 | 0.1  |            |  |            | 1.4  |           |  |         | 0.6  |        |  |   | 2.9  |   |  |   |     |   |  |   | 5.0  |  
|2001 restructuring charges, net of reversals         |  |                 |     |            |  |            | (0.5 | )         |  |         |     |        |  |   | 2.0  |   |  |   | 2.4  |   |  |   | 3.9  |  
|Transfer of enhanced benefits to pension liabilities |  |                 |     |            |  |            |     |           |  |         |     |        |  |   | (2.2 | ) |  |   |     |   |  |   | (2.2 | )
|Cash paid                                            |  |                 | (0.1 | )          |  |            | (0.8 | )         |  |         | (0.6 | )      |  |   | (2.5 | ) |  |   |     |   |  |   | (4.0 | )
|                                                     |  |                 |      |            |  |            |      |           |  |         |      |        |  |   |      |   |  |   |      |   |  |   |      |  
|Balance, December 31, 2001                           |  |                 |     |            |  |            | 0.1  |           |  |         |     |        |  |   | 0.2  |   |  |   | 2.4  |   |  |   | 2.7  |  
|Cash paid                                            |  |                 |     |            |  |            | (0.1 | )         |  |         |     |        |  |   | (0.2 | ) |  |   | (1.9 | ) |  |   | (2.2 | )
|                                                     |  |                 |      |            |  |            |      |           |  |         |      |        |  |   |      |   |  |   |      |   |  |   |      |  
|Balance, December 31, 2002                           |  | $               |     |            |  | $          |     |           |  | $       |     |        |  | $ |     |   |  | $ | 0.5  |   |  | $ | 0.5  |  
|                                                     |  |                 |      |            |  |            |      |           |  |         |      |        |  |   |      |   |  |   |      |   |  |   |      |  

Note 5. Indebtedness

The following table summarizes the Companys outstanding debt, in
thousands.

|                                                                                |                         |   |                 |       |      |   |         |        | 
|------------------------------------------------------------------------------- | ----------------------- | - | --------------- | ----- | ---- | - | ------- | ------ | 
|                                                                                |                         |   | At December 31,
|                                                                                |                         |   |                
|                                                                                |                         |   | 2002            |       | 2001
|                                                                                |                         |   |                 |       |     
|Seven-year term loan due 2009 (variable interest rate at 4.17%)                 |                         | $ | 173,250         |       |      | $ |        |       
|Five-year revolving credit facility due 2007 (variable interest rate at 3.42%)  |                         |   |                |       |      |   |        |       
|8-5/8% Senior subordinated notes due 2012                                       |                         |   | 300,000         |       |      |   |        |       
|Five-year term loan, refinanced in 2002 (variable interest rate at 4.18%)       |                         |   |                |       |      |   | 247,035 |       
|Revolving credit facility, refinanced in 2002 (variable interest rate at 4.18%) |                         |   |                |       |      |   | 222,750 |       
|10% Subordinated notes, refinanced in 2002                                      |                         |   |                |       |      |   | 50,000  |       
|Various notes payable (interest rates ranging from 4.00% to 13.06%)             |                         |   | 5,081           |       |      |   | 5,974   |       
|                                                                                |                         |   |                 |       |      |   |         |       
|Total debt                                                                      |                         |   | 478,331         |       |      |   | 525,759 |       
|                                                                                | Less current maturities |   |                 | 3,432 |      |   |         | 37,373 | 
|                                                                                |                         |   |                 |       |      |   |         |       
|Total long-term debt                                                            |                         | $ | 474,899         |       |      | $ | 488,386 |       
|                                                                                |                         |   |                 |       |      |   |         |       

The maturities of long-term debt are as follows (in thousands):

|           |  |   |         | 
|---------- |  | - | ------- | 
|2003       |  | $ | 3,432   | 
|2004       |  |   | 1,933   | 
|2005       |  |   | 1,941   | 
|2006       |  |   | 3,857   | 
|2007       |  |   | 1,750   | 
|Thereafter |  |   | 465,418 | 
|           |  |   |         | 
|           |  | $ | 478,331 | 
|           |  |   |         | 

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



| |  |  | The Companys wholly owned subsidiary, Graphic
Packaging Corporation (GPC), issued $300 million aggregate
principal amount of 8 5/8% senior subordinated notes due in
2012. 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.

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| |  |  | In connection with the refinancing transactions, the
Company incurred a pre-tax non-cash charge to write off its
remaining unamortized debt issuance costs of $15.8 million.
Issuance costs associated with the new debt totaled $16.4
million.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Senior Subordinated Notes

The Senior Subordinated Notes (the Notes) are unsecured senior
subordinated obligations of GPC. Interest accrues at 8-5/8%, payable
semi-annually on February 15th and August 15th. The Notes will mature on
February 15, 2012. The Notes are unconditionally and jointly and severally
guaranteed by GPIC and its domestic subsidiaries. The Notes are non-callable
for five years. Thereafter, they are callable at a declining premium. Upon a
change in control, the holders of the Notes may require GPC to repurchase the
Notes at a 1% premium.

GPC issued the Notes under an indenture among GPC, as issuer, GPIC, as a
guarantor, the Companys domestic subsidiaries, as the subsidiary guarantors,
and Wells Fargo Bank Minnesota, National Association, as trustee.

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 bears interest at various pricing
options, including LIBOR plus a spread tied to GPCs leverage, with a single
principal payment due at maturity. The 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 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, repurchase of Company stock and the sale of assets.

Other Notes Payable

Other notes payable consist of miscellaneous secured notes. The notes
bear interest at rates ranging from 4.0% to 13.06% and mature in 2003 through
2008. The notes are generally collateralized by assets purchased with the
proceeds from the notes or by letters of credit.

Note 6. Fair Value of Financial Instruments

The Companys financial instruments consist of cash and debt at December
31, 2002.

The fair value of cash and cash equivalents and current maturities of
long-term debt approximates carrying value because of the short maturity of
these instruments. For 2002 and 2001, the fair value of the Companys long-term
bank debt is estimated based on the current rates offered to the Company for
debt of the same remaining maturity and credit quality. Because the interest
rates on the long-term bank debt are reset monthly, the carrying value
approximates the fair value of the long-term bank debt.

The fair value of the Companys $300 million of senior subordinated notes
is based upon market quotes. As of December 31, 2002 and February 25, 2003,
our bonds were trading at $105.5.

Until September 2002, the Company had interest rate swap agreements to
hedge the underlying interest rates on $100 million of borrowings at an average
fixed interest rate of 5.94% and an average risk-free rate of 6.98% on $125
million of its borrowings. In addition, the Company had interest rate contracts
that provided interest rate cap protection on $350 million of floating rate
debt. The fair value of the interest rate swaps at December 31, 2001 was $(7.5
million). The interest rate caps had no value at December 31, 2001. These
contracts were not replaced as they expired during 2002.

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Note 7. Operating Leases

The Company leases a variety of facilities, warehouses, offices, equipment
and vehicles under operating lease agreements that expire in various years.
Future minimum lease payments, in thousands, required as of December 31, 2002,
under non-cancelable operating leases with terms exceeding one year, are as
follows:

|                    |       |   |       |       | 
|------------------- | ----- | - | ----- | ----- | 
|2003                |       | $ | 3,612 |      
|2004                |       |   | 2,450 |      
|2005                |       |   | 1,301 |      
|2006                |       |   | 856   |      
|2007 and thereafter |       |   | 42    |      
|                    |       |   |       |      
|                    | Total |   | $     | 8,261 | 
|                    |       |   |       |      

Operating lease rentals for warehouse, production, office facilities and
equipment amounted to $4.0 million in 2002, $3.3 million in 2001, and $3.1
million in 2000.

Note 8. Income Taxes

The sources of income (loss), in thousands, before income taxes,
extraordinary item and cumulative effect of change in accounting principle
were:

|                                                                                                              |  |                         |        |      |  |      |        |  |  |   |         |  
|------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ------ | ---- |  | ---- | ------ |  |  | - | ------- | -
|                                                                                                              |  | Year Ended December 31,
|                                                                                                              |  |                        
|                                                                                                              |  | 2002                    |        | 2001 |  | 2000
|                                                                                                              |  |                         |        |      |  |     
|Domestic                                                                                                      |  | $                       | 18,002 |      |  | $    | 10,689 |  |  | $ | (11,228 | )
|Foreign                                                                                                       |  |                         |       |      |  |      | 4      |  |  |   | (448    | )
|                                                                                                              |  |                         |        |      |  |      |        |  |  |   |         |  
|Income (loss) before income taxes, extraordinary item and cumulative
effect of change in accounting principle |  | $                       | 18,002 |      |  | $    | 10,693 |  |  | $ | (11,676 | )
|                                                                                                              |  |                         |        |      |  |      |        |  |  |   |         |  

Income tax expense (benefit) attributable to continuing operations, in
thousands, included the following:

|                                   |                                      |   |                         |        |      |   |       |        |   |   |        |         |  
|---------------------------------- | ------------------------------------ | - | ----------------------- | ------ | ---- | - | ----- | ------ | - | - | ------ | ------- | -
|                                   |                                      |   | Year Ended December 31,
|                                   |                                      |   |                        
|                                   |                                      |   | 2002                    |        | 2001 |   | 2000 
|                                   |                                      |   |                         |        |      |   |      
|Current provision:                 |                                      |   |                         |        |      |   |       |        |   |   |        |        
|                                   | Federal                              |   | $                       | (4,141 | )    |   | $     | (4,345 | ) |   | $      | (15,011 | )
|                                   | State                                |   |                         | 37     |      |   |       | 185    |   |   |        | 321     |  
|                                   |                                      |   |                         |        |      |   |       |        |   |   |        |        
|                                   | Total current tax expense (benefit)  |   | $                       | (4,104 | )    |   | $     | (4,160 | ) |   | $      | (14,690 | )
|                                   |                                      |   |                         |        |      |   |       |        |   |   |        |        
|Deferred provision:                |                                      |   |                         |        |      |   |       |        |   |   |        |        
|                                   | Federal                              |   | $                       | 9,315  |      |   | $     | 9,250  |   |   | $      | 11,229  |  
|                                   | State                                |   |                         | 1,824  |      |   |       | (833   | ) |   |        | (1,217  | )
|                                   |                                      |   |                         |        |      |   |       |        |   |   |        |        
|                                   | Total deferred tax expense (benefit) |   |                         | 11,139 |      |   |       | 8,417  |   |   |        | 10,012  |  
|                                   |                                      |   |                         |        |      |   |       |        |   |   |        |        
|Total income tax expense (benefit) |                                      | $ | 7,035                   |        |      | $ | 4,257 |        |   | $ | (4,678 | )      
|                                   |                                      |   |                         |        |      |   |       |        |   |   |        |        

The total provision for income taxes, in thousands, is included in the
consolidated statement of operations as follows:

|                   |                                            |   |                         |     |      |   |       |       |  |   |        |        |  
|------------------ | ------------------------------------------ | - | ----------------------- | --- | ---- | - | ----- | ----- |  | - | ------ | ------ | -
|                   |                                            |   | Year Ended December 31,
|                   |                                            |   |                        
|                   |                                            |   | 2002                    |     | 2001 |   | 2000 
|                   |                                            |   |                         |     |      |   |      
|Operations         |                                            | $ | 7,035                   |     |      | $ | 4,257 |       |  | $ | (4,678 | )     
|Extraordinary item |                                            |   | (6,149                  | )   |      |   |      |       |  |   |       |       
|                   |                                            |   |                         |     |      |   |       |       |  |   |        |       
|                   | Total provision (benefit) for income taxes |   | $                       | 886 |      |   | $     | 4,257 |  |   | $      | (4,678 | )
|                   |                                            |   |                         |     |      |   |       |       |  |   |        |       

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Temporary differences that gave rise to a significant portion of deferred
tax assets (liabilities), in thousands, were as follows:

|                                               |                                                                            |   |                 |         |      |   |         |         |  
|---------------------------------------------- | -------------------------------------------------------------------------- | - | --------------- | ------- | ---- | - | ------- | ------- | -
|                                               |                                                                            |   | At December 31,
|                                               |                                                                            |   |                
|                                               |                                                                            |   | 2002            |         | 2001
|                                               |                                                                            |   |                 |         |     
|Depreciation and other property related        |                                                                            | $ | (44,406         | )       |      | $ | (43,570 | )      
|Amortization of intangibles                    |                                                                            |   |                |         |      |   | (12,306 | )      
|All other                                      |                                                                            |   | (82             | )       |      |   |        |        
|                                               |                                                                            |   |                 |         |      |   |         |        
|                                               | Gross deferred tax liability                                               |   |                 | (44,488 | )    |   |         | (55,876 | )
|                                               |                                                                            |   |                 |         |      |   |         |        
|Amortization of intangibles                    |                                                                            |   | 18,306          |         |      |   |        |        
|Pension and employee benefits                  |                                                                            |   | 26,646          |         |      |   | 20,551  |        
|Tax credit carryforwards                       |                                                                            |   | 21,632          |         |      |   | 13,719  |        
|Interest                                       |                                                                            |   | 493             |         |      |   | 3,414   |        
|Inventory                                      |                                                                            |   | 1,769           |         |      |   | 2,195   |        
|Accruals                                       |                                                                            |   | 4,273           |         |      |   | 7,557   |        
|Net operating loss and contribution carryovers |                                                                            |   | 19,898          |         |      |   | 6,814   |        
|All other                                      |                                                                            |   | 637             |         |      |   | 279     |        
|                                               |                                                                            |   |                 |         |      |   |         |        
|                                               | Gross deferred tax asset                                                   |   |                 | 93,654  |      |   |         | 54,529  |  
|                                               | Less valuation allowance                                                   |   |                 | (51,299 | )    |   |         | (256    | )
|                                               |                                                                            |   |                 |         |      |   |         |        
|Net deferred tax asset (liability)             |                                                                            | $ | (2,133          | )       |      | $ | (1,603  | )      
|                                               |                                                                            |   |                 |         |      |   |         |        
|Financial statement classification:            |                                                                            |   |                 |         |      |   |         |        
|                                               | Current deferred tax asset                                                 |   | $               | 8,999   |      |   | $       | 17,378  |  
|                                               | Long-term deferred tax liability (included in other long-term liabilities) |   |                 | (11,132 | )    |   |         | (18,981 | )
|                                               |                                                                            |   |                 |         |      |   |         |        
|Net deferred tax liability                     |                                                                            | $ | (2,133          | )       |      | $ | (1,603  | )      
|                                               |                                                                            |   |                 |         |      |   |         |        

The valuation allowance for deferred tax assets was increased by $51.0
million in 2002 and decreased by $82 thousand in 2001. The increase in 2002
relates to uncertainty surrounding the ultimate deductibility of the deferred
tax asset created as a result of the change in accounting method as described
in Note 1 - Goodwill Accounting. The 2001 decrease and $66 thousand of the
2002 increase relates to uncertainty surrounding the ultimate deductibility of
foreign net operating loss and research and development credit carryforwards.

At December 31, 2002 the Company had federal net operating loss
carryforwards of approximately $40.6 million which will begin to expire in
years after 2022. The Company also has approximately $10.2 million of
alternative minimum tax credits which have an indefinite carryforward period,
approximately $6.5 million of foreign tax credits which will expire in years
after 2004, and $4.8 million in research and development credits which will
begin to expire in years after 2017.

The principal differences between the effective income tax rate and the
U.S. statutory federal income tax rate, were as follows:

|                                                 |                    |  |                         |      |      |  |       |      |   |  |       |       |   
|------------------------------------------------ | ------------------ |  | ----------------------- | ---- | ---- |  | ----- | ---- | - |  | ----- | ----- | --
|                                                 |                    |  | Year Ended December 31,
|                                                 |                    |  |                        
|                                                 |                    |  | 2002                    |      | 2001 |  | 2000 
|                                                 |                    |  |                         |      |      |  |      
|Expected tax rate                                |                    |  | 35.0                    | %    |      |  | 35.0  | %    |   |  | (35.0 | )%   
|State income taxes (net of federal benefit)      |                    |  | 4.1                     |      |      |  | 3.4   |      |   |  | (3.2  | )    
|Nondeductible expenses and losses                |                    |  | 1.5                     |      |      |  | 21.3  |      |   |  | 28.7  |      
|Nontaxable income                                |                    |  | (1.9                    | )    |      |  | (1.5  | )    |   |  | (2.0  | )    
|Effect of foreign investments                    |                    |  |                        |      |      |  |      |      |   |  | (0.1  | )    
|Change in deferred tax asset valuation allowance |                    |  | 0.4                     |      |      |  | (0.8  | )    |   |  | 1.8   |      
|Research and development and other tax credits   |                    |  | (2.6                    | )    |      |  | (14.4 | )    |   |  | (28.3 | )    
|Othernet                                        |                    |  | 2.6                     |      |      |  | (3.2  | )    |   |  | (2.0  | )    
|                                                 |                    |  |                         |      |      |  |       |      |   |  |       |      
|                                                 | Effective tax rate |  |                         | 39.1 | %    |  |       | 39.8 | % |  |       | (40.1 | )%
|                                                 |                    |  |                         |      |      |  |       |      |   |  |       |      

The Internal Revenue Service (IRS) is examining the Companys Federal
income tax returns for the years 1999 through 2001. In the opinion of
management, adequate accruals have been provided for all income tax matters and
related interest.

As a result of certain restructuring actions, the undistributed earnings
of foreign subsidiaries previously considered as being permanently reinvested
have been distributed to the U.S. as a dividend. Foreign tax credits eliminated
the resulting U.S. income tax liability on the dividend. The Company no longer
provides for U.S. or additional foreign taxes on undistributed earnings of
foreign subsidiaries, since all foreign subsidiaries income is included in the
U.S. return.

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The Company and CoorsTek (a former subsidiary spun off in 1999) have
executed a tax sharing agreement that defines the parties rights and
obligations with respect to deficiencies and refunds of Federal, state and
other taxes relating to the CoorsTek business for tax years prior to the
spin-off and with respect to certain tax attributes of CoorsTek after the
spin-off. In general, the Company is responsible for filing consolidated
Federal and combined or consolidated state tax returns and paying the
associated taxes for periods through December 31, 1999. CoorsTek will reimburse
the Company for the portion of such taxes relating to the CoorsTek business.
CoorsTek is responsible for filing returns and paying taxes related to the
CoorsTek business for periods after December 31, 1999.

The tax sharing agreement is designed to preserve the status of the
spin-off as a tax-free distribution. CoorsTek has agreed that it will refrain
from engaging in certain transactions during the two-year period following the
spin-off unless it first provides the Company with a ruling from the IRS or an
opinion of tax counsel acceptable to the Company that the transaction will not
adversely affect the tax-free nature of the spin-off. In addition, CoorsTek has
indemnified the Company against any tax liability or other expense it may incur
if the spin-off is determined to be taxable as a result of CoorsTeks breach of
any covenant or representation contained in the tax sharing agreement or
CoorsTeks action in effecting such transactions. By its terms, the tax sharing
agreement will terminate when the statutes of limitations under applicable tax
laws expire.

Note 9. Stock Compensation

The Company has an equity incentive plan that provides for the granting of
nonqualified stock options and incentive stock options to certain key
employees. The equity incentive plan also provides for the granting of
restricted stock, bonus shares, stock units and offers to officers of the
Company to purchase stock. The number of shares made available for award under
the plan was 2.8 million shares as of December 31, 2002 and is increased
annually by 2% of the Companys outstanding shares on each December 31.
Generally, options outstanding under the Companys equity incentive plan are
subject to the following terms: (1) grant price equal to 100% of the fair value
of the stock on the date of grant; (2) ratable vesting over either a three-year
or four-year service period; and (3) maximum term of ten years from the date of
grant. Certain options, granted primarily in 2001 pursuant to a long-term
incentive plan, provide for accelerated vesting upon attainment of certain
stock prices or debt to EBITDA ratios, as defined by the equity incentive plan,
but vest completely after six years.

Stock option activity was as follows (shares in thousands):

|                                   |  |                         |       |       |  |          |      |       |  |        |       |          |  |   |      |  |  |          |       |   |  |   |      | 
|---------------------------------- |  | ----------------------- | ----- | ----- |  | -------- | ---- | ----- |  | ------ | ----- | -------- |  | - | ---- |  |  | -------- | ----- | - |  | - | ---- | 
|                                   |  | Year Ended December 31,
|                                   |  |                        
|                                   |  | 2002                    |       | 2001  |  | 2000    
|                                   |  |                         |       |       |  |         
|                                   |  |                         |       |       |  | Weighted |      |       |  |        |       | Weighted |  |   |      |  |  | Weighted
|                                   |  |                         |       |       |  | Average  |      |       |  |        |       | Average  |  |   |      |  |  | Average 
|                                   |  |                         |       |       |  | Exercise |      |       |  |        |       | Exercise |  |   |      |  |  | Exercise
|                                   |  | Shares                  |       | Price |  | Shares   |      | Price |  | Shares |       | Price   
|                                   |  |                         |       |       |  |          |      |       |  |        |       |         
|Options outstanding at January 1   |  |                         | 6,023 |       |  | $        | 5.96 |       |  |        | 6,262 |          |  | $ | 6.04 |  |  |          | 4,281 |   |  | $ | 8.86 | 
|Granted                            |  |                         | 25    |       |  | $        | 7.20 |       |  |        | 251   |          |  | $ | 4.62 |  |  |          | 2,523 |   |  | $ | 1.66 | 
|Exercised                          |  |                         | (147  | )     |  | $        | 6.84 |       |  |        |      |          |  |   |     |  |  |          |      |   |  |   |     | 
|Expired or forfeited               |  |                         | (134  | )     |  | $        | 4.57 |       |  |        | (490  | )        |  | $ | 6.27 |  |  |          | (542  | ) |  | $ | 7.88 | 
|                                   |  |                         |       |       |  |          |      |       |  |        |       |          |  |   |      |  |  |          |       |   |  |   |      | 
|Options outstanding at December 31 |  |                         | 5,767 |       |  | $        | 5.98 |       |  |        | 6,023 |          |  | $ | 5.96 |  |  |          | 6,262 |   |  | $ | 6.04 | 
|                                   |  |                         |       |       |  |          |      |       |  |        |       |          |  |   |      |  |  |          |       |   |  |   |      | 
|Exercisable                        |  |                         | 2,216 |       |  | $        | 9.72 |       |  |        | 2,336 |          |  | $ | 9.64 |  |  |          | 2,302 |   |  | $ | 9.73 | 
|                                   |  |                         |       |       |  |          |      |       |  |        |       |          |  |   |      |  |  |          |       |   |  |   |      | 
|Available for future grant         |  |                         | 2,782 |       |  |          |      |       |  |        | 2,315 |          |  |   |      |  |  |          | 1,458 |   |  |   |      | 
|                                   |  |                         |       |       |  |          |      |       |  |        |       |          |  |   |      |  |  |          |       |   |  |   |      | 

The following table summarizes information about stock options outstanding
at December 31, 2002 (shares in thousands):

|                         |  |                     |       |                     |  |                  |      |             |  |                  |       |  |  |  |       |  |  |   |       | 
|------------------------ |  | ------------------- | ----- | ------------------- |  | ---------------- | ---- | ----------- |  | ---------------- | ----- |  |  |  | ----- |  |  | - | ----- | 
|                         |  | Options Outstanding |       | Options Exercisable
|                         |  |                     |       |                    
|                         |  |                     |       |                     |  | Weighted Average |      |             |  |                  |       |  |  |  |       |  |  |  
|                         |  | Options             |       | Remaining           |  | Weighted Average |      | Options     |  | Weighted Average
|Range of Exercise Prices |  | Outstanding         |       | Contractual Life    |  | Exercise Price   |      | Exercisable |  | Exercise Price  
|                         |  |                     |       |                     |  |                  |      |             |  |                 
|$1.56 to $6.92           |  |                     | 2,678 |                     |  |                  | 7.87 | years       |  | $                | 2.20  |  |  |  | 102   |  |  | $ | 3.24  | 
|$7.06 to $10.17          |  |                     | 2,592 |                     |  |                  | 3.31 | years       |  | $                | 8.66  |  |  |  | 1,616 |  |  | $ | 9.32  | 
|$10.48 to $13.74         |  |                     | 497   |                     |  |                  | 4.43 | years       |  | $                | 12.36 |  |  |  | 497   |  |  | $ | 12.36 | 
|                         |  |                     |       |                     |  |                  |      |             |  |                  |       |  |  |  |       |  |  |   |       | 
|$1.56 to $13.74          |  |                     | 5,767 |                     |  |                  | 5.52 | years       |  | $                | 5.98  |  |  |  | 2,215 |  |  | $ | 9.72  | 
|                         |  |                     |       |                     |  |                  |      |             |  |                  |       |  |  |  |       |  |  |   |       | 

Subsequent to December 31, 2002, the accelerated vesting requirements were
met on 1,240,000 options with a weighted average exercise price of $1.62.

The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following assumptions:
(1) dividend yield of 0%; (2) expected volatility of 74% in 2002, 70% in 2001
and 56% in 2000; (3) risk-free interest rate ranging from 1.2% to 4.5% in 2002,
3.7% to 5.5% in 2001 and 4.2% to 6.4% in 2000; and (4) expected life of

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1.1 to 7.9 years in 2002, 4.5 to 9.0 years in 2001 and 3.0 to 9.91 years
in 2000. The weighted average per-share fair value of options granted during
2002, 2001 and 2000 was $3.62, $3.52 and $1.09, respectively.

In December 2002, 405,246 shares of restricted common stock were issued to
executive management pursuant to the Companys equity incentive plan. The
restrictions on the stock lapse ratably over four years. The total value of
the restricted stock grant amounted to approximately $2.5 million, based upon
the $6.10 market price of the Companys common stock on the date of grant. The
$2.5 million restricted stock issuance has been recorded as unearned
compensation and is being amortized to compensation expense over the four year
vesting period. Approximately $51 thousand was amortized to compensation
expense for the month of December 2002. Remaining unearned compensation of
approximately $2.4 million at December 31, 2002 is reflected in the
accompanying financial statements as a reduction of shareholders equity.

On January 1, 2003, 2,600,000 shares of restricted stock were granted to
management pursuant to a long-term incentive program. The fair market value of
shares on the date of grant was $14.7 million, based upon the $5.64 market
price of the Companys common stock on the date of grant. The restrictions on
the stock lapse only if the Company meets its shareholder value growth target
during the four-year life of the long-term incentive program. The long-term
incentive plan restricted stock grant will be expensed over the estimated
vesting period, beginning January 1, 2003. The amount of expense to be
recorded is dependent upon meeting the shareholder value growth vesting
requirement and the market price of the Companys common stock upon completion
of the vesting requirements.

Note 10. Defined Benefit Plans

The Company maintains a defined benefit pension plan for the majority of
employees. Benefits are based on years of service and average base compensation
levels over a period of years. Plan assets consist primarily of equity and
interest-bearing investments. The Companys funding policy is to contribute
annually not less than the minimum funding required by the internal revenue
code nor more than the maximum amount that can be deducted for federal income
tax purposes.

The Company also has a non qualified Supplemental Executive Retirement
Plan (SERP). The SERP, which is unfunded, provides defined pension benefits
outside of the Companys defined benefit plan to eligible executives. The
total expense and benefit obligations for the SERP are included with other
pension benefits below. Expense under the SERP was $0.4 million, $0.5 million
and $0.4 million for 2002, 2001 and 2000, respectively. The projected benefit
obligation for the SERP was $4.3 million at December 31, 2002.

Non-union retirement health care and life insurance benefits are provided
to certain employees hired prior to June 1999 and eligible dependents. Eligible
employees may receive these benefits after reaching age 55 with 10 years of
service. Prior to reaching age 65, eligible retirees may receive certain health
care benefits identical to those available to active employees. The amount the
retiree pays is based on age and service at the time of retirement. These plans
are not funded.

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The following assets (liabilities), in thousands, were recognized for the
combined defined benefit plans of the Company at December 31:

|                                                                                             |  |                  |         |                |  |      |         |      |  |   |         |   |  |   |         |  
|-------------------------------------------------------------------------------------------- |  | ---------------- | ------- | -------------- |  | ---- | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                                             |  | Pension Benefits |         | Other Benefits
|                                                                                             |  |                  |         |               
|                                                                                             |  | 2002             |         | 2001           |  | 2002 |         | 2001
|                                                                                             |  |                  |         |                |  |      |         |     
|Change in benefit obligation                                                                 |  |                  |         |                |  |      |         |      |  |   |         |   |  |   |         |  
|Benefit obligation at beginning of year                                                      |  | $                | 143,203 |                |  | $    | 121,486 |      |  | $ | 17,632  |   |  | $ | 18,241  |  
|Service cost                                                                                 |  |                  | 5,339   |                |  |      | 4,447   |      |  |   | 493     |   |  |   | 431     |  
|Interest cost                                                                                |  |                  | 9,428   |                |  |      | 9,400   |      |  |   | 1,472   |   |  |   | 1,286   |  
|Plan amendments                                                                              |  |                  |        |                |  |      | 4,517   |      |  |   |        |   |  |   | (1,832  | )
|Actuarial loss (gain)                                                                        |  |                  | (11,246 | )              |  |      | (2,475  | )    |  |   | 4,107   |   |  |   |        |  
|Change in actuarial assumptions                                                              |  |                  | 9,898   |                |  |      | 8,906   |      |  |   |        |   |  |   | 678     |  
|Benefits paid                                                                                |  |                  | (3,932  | )              |  |      | (3,078  | )    |  |   | (610    | ) |  |   | (1,172  | )
|                                                                                             |  |                  |         |                |  |      |         |      |  |   |         |   |  |   |         |  
|Benefit obligation at end of year                                                            |  |                  | 152,690 |                |  |      | 143,203 |      |  |   | 23,094  |   |  |   | 17,632  |  
|                                                                                             |  |                  |         |                |  |      |         |      |  |   |         |   |  |   |         |  
|Change in plan assets                                                                        |  |                  |         |                |  |      |         |      |  |   |         |   |  |   |         |  
|Fair value of plan assets at beginning of year                                               |  |                  | 111,778 |                |  |      | 118,344 |      |  |   |        |   |  |   |        |  
|Actual return on plan assets                                                                 |  |                  | (9,805  | )              |  |      | (5,794  | )    |  |   |        |   |  |   |        |  
|Company contributions                                                                        |  |                  | 6,507   |                |  |      | 2,306   |      |  |   |        |   |  |   |        |  
|Benefits paid                                                                                |  |                  | (3,931  | )              |  |      | (3,078  | )    |  |   |        |   |  |   |        |  
|                                                                                             |  |                  |         |                |  |      |         |      |  |   |         |   |  |   |         |  
|Fair value of plan assets at end of year                                                     |  |                  | 104,549 |                |  |      | 111,778 |      |  |   |        |   |  |   |        |  
|                                                                                             |  |                  |         |                |  |      |         |      |  |   |         |   |  |   |         |  
|Funded status                                                                                |  |                  | (48,141 | )              |  |      | (31,425 | )    |  |   | (23,094 | ) |  |   | (17,632 | )
|Unrecognized actuarial loss (gain)                                                           |  |                  | 49,874  |                |  |      | 30,208  |      |  |   | 1,950   |   |  |   | (2,156  | )
|Unrecognized prior service cost/intangible pension asset                                     |  |                  | 7,390   |                |  |      | 7,640   |      |  |   | (2,853  | ) |  |   | (3,187  | )
|                                                                                             |  |                  |         |                |  |      |         |      |  |   |         |   |  |   |         |  
|Net amount recognized                                                                        |  | $                | 9,123   |                |  | $    | 6,423   |      |  | $ | (23,997 | ) |  | $ | (22,975 | )
|                                                                                             |  |                  |         |                |  |      |         |      |  |   |         |   |  |   |         |  
|Net prepaid (accrued) benefit cost is included in the
consolidated balance sheet as follows: |  |                  |         |                |  |      |         |      |  |   |         |   |  |   |         |  
|Other assets, long-term                                                                      |  | $                | 7,390   |                |  | $    | 7,640   |      |  | $ |        |   |  | $ |        |  
|Pension liability                                                                            |  |                  | (42,310 | )              |  |      | (24,860 | )    |  |   |        |   |  |   |        |  
|Other long-term liabilities                                                                  |  |                  |        |                |  |      |        |      |  |   | (23,997 | ) |  |   | (22,975 | )
|Accumulated other comprehensive loss                                                         |  |                  | 44,043  |                |  |      | 23,643  |      |  |   |        |   |  |   |        |  
|                                                                                             |  |                  |         |                |  |      |         |      |  |   |         |   |  |   |         |  
|Total                                                                                        |  | $                | 9,123   |                |  | $    | 6,423   |      |  | $ | (23,997 | ) |  | $ | (22,975 | )
|                                                                                             |  |                  |         |                |  |      |         |      |  |   |         |   |  |   |         |  
|Weighted average assumptions at year end                                                     |  |                  |         |                |  |      |         |      |  |   |         |   |  |   |         |  
|Discount rate                                                                                |  |                  | 6.75    | %              |  |      | 7.25    | %    |  |   | 6.75    | % |  |   | 7.25    | %
|Expected long-term return on plan assets                                                     |  |                  | 9.50    | %              |  |      | 9.75    | %    |  |   |        |   |  |   |        |  
|Rate of compensation increase                                                                |  |                  | 4.25    | %              |  |      | 4.75    | %    |  |   |        |   |  |   |        |  

The Company had accumulated benefit obligations in excess of the fair
value of its plan assets totaling $42.3 million and $24.9 million at December
31, 2002 and 2001, respectively, which are reflected as a minimum pension
liability in long term liabilities in the accompanying balance sheet. The
Companys intangible pension asset was $7.4 million and $7.6 million at
December 31, 2002 and 2001, respectively. The after-tax amounts included in
other comprehensive income from changes arising in the minimum pension
liability in 2002, 2001 and 2000 are $12.8 million, $13.8 million and $0.3
million, respectively.

It is the Companys policy to amortize unrecognized gains and losses in
excess of 10% of the larger of plan assets and the projected benefit obligation
(PBO) over the expected service of active employees (12-15 years). However, in
cases where the accrued benefit liability exceeds the actual unfunded liability
by more than 20% of the PBO, the amortization period is reduced to 5 years.

For measurement purposes, a 10% annual rate of increase in the per capita
cost of covered health care benefits was assumed for 2002. The assumed rate
was 6.5% in 2001 and 2000; however, rising health care costs prompted an
increase in this assumption in 2002. The rate is assumed to decrease by 0.5%
per annum to 5.0% and remain at that level thereafter.

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The following, in thousands, represents the Companys net periodic benefit
cost.

|                                        |  |                  |         |                |  |      |         |      |  |      |        |      |  |   |       |   |  |   |       |   |  |   |       |  
|--------------------------------------- |  | ---------------- | ------- | -------------- |  | ---- | ------- | ---- |  | ---- | ------ | ---- |  | - | ----- | - |  | - | ----- | - |  | - | ----- | -
|                                        |  | Pension Benefits |         | Other Benefits
|                                        |  |                  |         |               
|                                        |  | 2002             |         | 2001           |  | 2000 |         | 2002 |  | 2001 |        | 2000
|                                        |  |                  |         |                |  |      |         |      |  |      |        |     
|Components of net periodic benefit cost |  |                  |         |                |  |      |         |      |  |      |        |      |  |   |       |   |  |   |       |   |  |   |       |  
|Service cost                            |  | $                | 5,339   |                |  | $    | 4,447   |      |  | $    | 5,094  |      |  | $ | 493   |   |  | $ | 431   |   |  | $ | 633   |  
|Interest cost                           |  |                  | 9,428   |                |  |      | 9,400   |      |  |      | 8,434  |      |  |   | 1,472 |   |  |   | 1,286 |   |  |   | 1,257 |  
|Actual return on plan assets            |  |                  | 9,805   |                |  |      | 5,794   |      |  |      | (6,534 | )    |  |   |      |   |  |   |      |   |  |   |      |  
|Deferred investment loss                |  |                  | (21,604 | )              |  |      | (17,662 | )    |  |      | (4,939 | )    |  |   |      |   |  |   |      |   |  |   |      |  
|Amortization of prior service cost      |  |                  | 794     |                |  |      | 755     |      |  |      | 552    |      |  |   | (334  | ) |  |   | (334  | ) |  |   | (422  | )
|Recognized actuarial loss (gain)        |  |                  | 46      |                |  |      | 67      |      |  |      | 136    |      |  |   |      |   |  |   | (125  | ) |  |   | (448  | )
|Transition asset amortization           |  |                  | (1      | )              |  |      | (72     | )    |  |      | (69    | )    |  |   |      |   |  |   |      |   |  |   |      |  
|                                        |  |                  |         |                |  |      |         |      |  |      |        |      |  |   |       |   |  |   |       |   |  |   |       |  
|Net periodic benefit cost               |  | $                | 3,807   |                |  | $    | 2,729   |      |  | $    | 2,674  |      |  | $ | 1,631 |   |  | $ | 1,258 |   |  | $ | 1,020 |  
|                                        |  |                  |         |                |  |      |         |      |  |      |        |      |  |   |       |   |  |   |       |   |  |   |       |  

Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. A one-percentage-point change in
assumed health care cost trend rates would have the following effects, in
thousands:

|                                                        |  |          |       |          |  |   |       | 
|------------------------------------------------------- |  | -------- | ----- | -------- |  | - | ----- | 
|                                                        |  | 1%Point  |       | 1%Point 
|                                                        |  | Increase |       | Decrease
|                                                        |  |          |       |         
|Effect on total of service and interest cost components |  | $        | 140   |          |  | $ | 123   | 
|Effect on postretirement benefit obligation             |  | $        | 2,294 |          |  | $ | 2,005 | 

Note 11. Defined Contribution Plan

The Company provides a defined contribution profit sharing plan for the
benefit of its employees (the Plan). The Plan and its associated trust are
intended to comply with the provisions of the Internal Revenue Code and ERISA,
to qualify as a profit sharing plan for all purposes of the tax code, and to
provide a cash or deferred arrangement that is qualified under tax code section
401(k). Generally, employees expected to complete at least 1,000 hours of
service per year are immediately eligible to participate in the Plan upon
employment. Company matching contributions are 60% of participant
contributions, up to 3.6% of participant annual compensation, and are
denominated in the Companys common stock. Company expenses related to the
matching provisions of the Plan totaled approximately $4.3 million, $4.3
million and $4.1 million in 2002, 2001 and 2000, respectively. The Plan also
provides for discretionary matching. The Company did not elect to provide
discretionary matching under this provision in 2002, 2001 or 2000.

Note 12. Shareholders Rights Plan

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

Note 13. Preferred Stock

On August 15, 2000 the Company issued one million shares of 10% Series B
Convertible Preferred Stock (the Preferred Stock) at $100 per share to the
Grover C. Coors Trust (the Trust). At the time of the issuance of the
Preferred Stock, the Trust owned 9% of the Companys then outstanding common
stock. The Trusts beneficiaries are members of the Coors family. Individual
members of the Coors family and other Coors family trusts held a controlling
interest in the Company at the time of issuance of the Preferred Stock. As a
condition to the issuance of the Preferred Stock, a fairness opinion was
obtained as to the consideration received and the value of the Preferred Stock
at issuance was consistent with open market conditions and values for similar
securities.

The Trust, as holder of the Preferred Stock, has the following rights and
preferences:

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Conversion Feature

Each share of Preferred Stock is convertible into shares of the Companys
common stock at $2.0625 per share of common stock. The conversion price of
$2.0625 was 125% of the average NYSE closing price per share of the Companys
common stock for the five trading days prior to August 15, 2000which was
$1.65. The Preferred Stock was issued at $100 per share; therefore, a complete
conversion would result in the issuance of 48,484,848 additional shares of the
Companys common stock.

The Trust held 2,727,016 shares of the Companys common stock on December
31, 2002 which represents approximately 8% of all common shares currently
outstanding (33,477,300). On an as-converted basis, the Trust would hold
51,211,864 shares of the Companys common stock on December 31, 2002, which
would be approximately 62.5% of all shares outstanding (81,962,148).

Redemption Feature

The Company can redeem the Preferred Stock at $105 per share beginning on
August 15, 2005, reduced by $1 per share each year until August 15, 2010.

Dividends

Dividends are payable quarterly at an annual rate of 10%. Dividends are
cumulative and hold a preference to any dividends paid to other shareholders.
The Preferred Stock participates in any common stock dividends on an
as-converted basis. If dividends are not paid for two consecutive quarters, the
Trust may elect one director to the Companys Board. If dividends are not paid
for four consecutive quarters, the Trust may elect a majority of the directors
to the Companys Board and effectively control the Company.

Liquidation Preference

The Preferred Stock has a liquidation preference over the Companys common
stock at $100 per share, plus unpaid dividends. The Preferred Stock also
participates in any liquidation distributions to the common shareholders on an
as-converted basis.

Voting and Registration Rights

Every two shares of common stock underlying the Preferred Stock on an
as-converted basis receive one vote. Therefore, the Trust currently votes
24,242,424 shares, in addition to the 2,727,016 shares of common stock held.
The Trust may require the Company, with certain limitations, to register under
the Securities Act of 1933 the common shares into which the Preferred Stock may
be converted.

Note 14. Related Party Transactions

On December 28, 1992, the Company was spun off from Adolph Coors Company
(ACCo) and since that time ACCo has had no ownership interest in GPIC.
However, certain Coors family trusts have significant interests in both GPIC
and ACCo. At the time of spin-off from ACCo, GPIC entered into agreements with
Coors Brewing Company, a subsidiary of ACCo, for the sale of packaging and
other products. The initial agreements had a stated term of five years and
have resulted in substantial revenues to the Company. The Company continues to
sell packaging products to Coors Brewing Company. The current contract with
Coors Brewing Company will expire on March 31, 2003. The Company is
renegotiating a new packaging supply agreement with Coors Brewing Company,
which is expected to be executed in the first quarter of 2003.

Sales to Coors Brewing Company accounted for approximately 10%, 11% and
10% of our consolidated gross sales for 2002, 2001 and 2000, respectively. The
loss of Coors Brewing as a customer in the foreseeable future could have a
material effect on our results of operations.

One of our subsidiaries, Golden Equities, Inc., is the general partner in
a limited partnership in which Coors Brewing Company is the limited partner.
The partnership owns, develops, operates and sells certain real estate
previously owned directly by Coors Brewing or ACCo. Distributions were
allocated equally between the partners until late 1999 when Coors Brewing
recovered its investment. Thereafter, distributions were made 80 percent to
GPIC as the general partner and 20 percent to Coors Brewing. Distributions in
2002 were $2.0 million to GPIC and $0.5 million to Coors Brewing. No
distributions were made in 2001. Distributions in 2000 were approximately $0.8
million to Coors Brewing and $3.2 million to GPIC. Coors Brewings share of
the partnership net assets at December 31, 2002 was $3.9 million and $4.4
million, respectively, and is reflected as minority interest on the Companys
consolidated balance sheet. Coors Brewings allocated share of the
partnerships profit was $0 in 2002, 2001 and 2000.

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On December 31, 1999, GPIC spun off its ceramics subsidiary, CoorsTek,
Inc. In connection with the spin-off, GPIC and CoorsTek entered into contracts
governing certain relationships between them following the spin-off, including
a tax-sharing agreement, a transitional services agreement and certain other
agreements. See further discussion of the tax-sharing agreement in Note 8.

On March 31, 2000 the Company sold the net assets of its GTC Nutrition
subsidiary to an entity controlled by a member of the Coors family for
approximately $0.7 million. No gain or loss was recognized as a result of the
sale.

In August 2000 the Company issued $100.0 million of preferred stock to the
Grover C. Coors Trust. See further discussion of the preferred stock in Note
13.

In August 2001, the Company completed a $50.0 million private placement of
10% subordinated unsecured notes. The purchaser of the notes was Golden
Heritage, LLC, a company owned by several Coors family trusts and a related
party. On February 28, 2002, the notes were repaid in connection with certain
refinancing transactions discussed in Note 5.

In September 2002 the Company entered into a warehouse sublease with Rocky
Mountain Bottle Company, a partnership partially owned by Coors Brewing
Company. Annual rent under the sublease is approximately $100 thousand. The
sublease term expires in July 2006.

Note 15. Commitments and Contingencies

It is the policy of the Company generally to act as a self-insurer for
certain insurable risks consisting primarily of employee health insurance
programs. With respect to workers compensation, the Company uses a variety of
fully or partially self-funded insurance vehicles. The Company maintains
certain stop-loss and excess insurance policies that reduce overall risk of
financial loss.

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

The Company is a partner in the Kalamazoo Valley Group (KVG), a
partnership formed to develop and operate a landfill for the partners disposal
of paper residuals from their respective paperboard mills. KVG borrowed $1.5
million for the construction of the landfill, of which $500 thousand remains
unpaid at December 31, 2002. Recently, the other parties have closed their
paperboard mills and one minority partner has left the partnership via
bankruptcy. The Company is evaluating its alternatives and liabilities under
the partnership agreement and related note. The landfill remains in operation
at December 31, 2002. However, if the partnership were to close the landfill,
the Companys share of estimated closing costs, perpetual care obligations and
debt repayment would approximate $2.5 million under the terms of the
partnership agreement. The Companys investment of $0.3 million at December 31,
2002 is included in other long-term assets on the accompanying balance sheet.




From
time to time the Company has been notified that it may be a
potentially responsible party (PRP) under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 or similar state laws with
respect to the remediation of certain sites where hazardous substances have
been released into the environment. The Company cannot predict with certainty
the total costs of remediation, its share of the total costs, the extent to
which contributions will be available from other parties, the amount of time
necessary to complete the remediation or the availability of insurance.
However, based on the investigations to date, the Company believes that any
liability with respect to these sites (either currently active or
settled) would not be material to the financial
condition, results of operations or cash flow of the Company, without
consideration for insurance recoveries. There can be no certainty, however,
that the Company will not be named as a PRP at additional sites or be subject
to other environmental matters in the future or that the costs associated with
those additional sites or matters would not be material.




In connection with the sale of various businesses, the Company has
periodically agreed to guarantee the collectibility of accounts receivable and
indemnify purchasers for certain liabilities for a specified period of time.
Such liabilities include, but are not limited to, environmental matters and the
indemnification periods generally last for 2 to 15 years. At December 31, 2002
and 2001, the Company has accrued approximately $3.0 million related to these
guarantees and indemnifications.

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

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On February 19, 2002, Chinyun Kim filed a putative class action claim in
District Court, Jefferson County, Colorado against the Company and certain of
its shareholders and directors alleging breach of fiduciary duty in connection
with the issuance on August 15, 2000, of the Companys Series B Preferred Stock
to the Grover C. Coors Trust. The Court dismissed plaintiffs claim against
the Company for breach of fiduciary duty while allowing the plaintiff to
proceed against the named directors and shareholders, including certain Coors
Family Trusts. Currently, discovery is being conducted. The Company believes
that the transaction was in the best interest of the Company and its
shareholders and that it acted appropriately. It intends to continue to
provide a vigorous defense to this action.

Note 16. Segment Information

The Companys reportable segments are based on its method of internal
reporting, which is based on product category. Thus, the Companys one
reportable segment in 2002, 2001 and 2000 is Packaging.

|          |  |                |           |        |  |              |        |        |  |              |        |  |  |         |           |  |  |   |        | 
|--------- |  | -------------- | --------- | ------ |  | ------------ | ------ | ------ |  | ------------ | ------ |  |  | ------- | --------- |  |  | - | ------ | 
|          |  |                |           |        |  |              |        |        |  | Depreciation |        |  |  |         |           |  |  |  
|          |  |                |           |        |  | Operating    |        | and    |  |              |        |  |  | Capital
|          |  | Net Sales      |           | Income |  | Amortization |        | Assets |  | Expenditures
|          |  |                |           |        |  |              |        |        |  |             
|          |  | (in thousands)
|2002      |  |                |           |        |  |              |        |        |  |              |        |  |  |         |           |  |  |   |        | 
|Packaging |  | $              | 1,057,843 |        |  | $            | 62,642 |        |  | $            | 61,165 |  |  | $       | 1,020,866 |  |  | $ | 27,706 | 
|          |  |                |           |        |  |              |        |        |  |              |        |  |  |         |           |  |  |   |        | 
|2001      |  |                |           |        |  |              |        |        |  |              |        |  |  |         |           |  |  |   |        | 
|Packaging |  | $              | 1,112,535 |        |  | $            | 59,854 |        |  | $            | 79,406 |  |  | $       | 1,229,335 |  |  | $ | 31,884 | 
|          |  |                |           |        |  |              |        |        |  |              |        |  |  |         |           |  |  |   |        | 
|2000      |  |                |           |        |  |              |        |        |  |              |        |  |  |         |           |  |  |   |        | 
|Packaging |  | $              | 1,102,590 |        |  | $            | 51,223 |        |  | $            | 83,094 |  |  | $       | 1,332,518 |  |  | $ | 30,931 | 
|          |  |                |           |        |  |              |        |        |  |              |        |  |  |         |           |  |  |   |        | 

Certain financial information regarding the Companys domestic and foreign
operations is included in the following summary. Long-lived assets include
plant, property and equipment, intangible assets, and certain other non-current
assets.

|     |               |       |   |                |           |        |   |            |           | 
|---- | ------------- | ----- | - | -------------- | --------- | ------ | - | ---------- | --------- | 
|     |               |       |   |                |           |        |   | Long-Lived
|     |               |       |   | Net Sales      |           | Assets
|     |               |       |   |                |           |       
|     |               |       |   | (in thousands)
|2002 |               |       |   |                |           |        |   |           
|     | United States |       | $ | 1,052,693      |           |        | $ | 815,854    |          
|     | Canada        |       |   | 5,150          |           |        |   | 1,529      |          
|     | Other         |       |   |               |           |        |   | 2,383      |          
|     |               |       |   |                |           |        |   |           
|     |               | Total |   | $              | 1,057,843 |        |   | $          | 819,766   | 
|     |               |       |   |                |           |        |   |           
|2001 |               |       |   |                |           |        |   |           
|     | United States |       | $ | 1,109,293      |           |        | $ | 1,032,748  |          
|     | Canada        |       |   | 3,242          |           |        |   | 1,736      |          
|     | Other         |       |   |               |           |        |   | 2,066      |          
|     |               |       |   |                |           |        |   |           
|     |               | Total |   | $              | 1,112,535 |        |   | $          | 1,036,550 | 
|     |               |       |   |                |           |        |   |           
|2000 |               |       |   |                |           |        |   |           
|     | United States |       | $ | 1,100,491      |           |        | $ | 1,103,411  |          
|     | Canada        |       |   | 2,099          |           |        |   | 1,974      |          
|     | Other         |       |   |               |           |        |   | 2,694      |          
|     |               |       |   |                |           |        |   |           
|     |               | Total |   | $              | 1,102,590 |        |   | $          | 1,108,079 | 
|     |               |       |   |                |           |        |   |           




Sales
to Altria Group, Inc. were $215 million in 2002,
$216 million in 2001 and $189 million in 2000, representing
20%, 19% and 17% of the Companys consolidated gross sales.
Sales to Coors Brewing Company were $111 million in 2002,
$123 million in 2001 and $112 million in 2000, representing
10%, 11% and 10% of the Companys consolidated gross sales.
Sales to General Mills, Inc. were $122 million in 2002,
$127 million in 2001 and $113 million in 2000, representing
11%, 11% and 10% of the Companys consolidated gross sales. No
other customer generated greater than 10% of consolidated gross sales
for the periods presented.




Note 17. Subsequent Event

On March 6, 2003, the Company acquired substantially all of the assets of
JD Cahill Co., Inc. for approximately $18 million in cash. JD Cahill has
annual revenues of approximately $20 million and produces laminated and coated
paperboard with manufacturing facilities in Tuscaloosa, Alabama and Centralia,
Illinois.

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Note 18. Quarterly Financial Information (Unaudited)

The following information summarizes selected quarterly financial
information, in thousands except per share data, for each of the two years in
the period ended December 31, 2002.

|                                                                                                       |  |       |          |        |  |       |         |        |  |      |         |   |  |   |         |   |  |   |           |  
|------------------------------------------------------------------------------------------------------ |  | ----- | -------- | ------ |  | ----- | ------- | ------ |  | ---- | ------- | - |  | - | ------- | - |  | - | --------- | -
|2002                                                                                                   |  | First |          | Second |  | Third |         | Fourth |  | Year
|                                                                                                       |  |       |          |        |  |       |         |        |  |     
|Net sales                                                                                              |  | $     | 263,724  |        |  | $     | 263,917 |        |  | $    | 270,002 |   |  | $ | 260,200 |   |  | $ | 1,057,843 |  
|Cost of goods sold                                                                                     |  |       | 229,432  |        |  |       | 231,022 |        |  |      | 240,949 |   |  |   | 229,178 |   |  |   | 930,581   |  
|                                                                                                       |  |       |          |        |  |       |         |        |  |      |         |   |  |   |         |   |  |   |           |  
|Gross profit                                                                                           |  |       | 34,292   |        |  |       | 32,895  |        |  |      | 29,053  |   |  |   | 31,022  |   |  |   | 127,262   |  
|Selling, general and administrative expense                                                            |  |       | 14,887   |        |  |       | 15,808  |        |  |      | 16,192  |   |  |   | 17,733  |   |  |   | 64,620    |  
|                                                                                                       |  |       |          |        |  |       |         |        |  |      |         |   |  |   |         |   |  |   |           |  
|Operating income                                                                                       |  |       | 19,405   |        |  |       | 17,087  |        |  |      | 12,861  |   |  |   | 13,289  |   |  |   | 62,642    |  
|Interest expense                                                                                       |  |       | (11,296  | )      |  |       | (12,453 | )      |  |      | (11,310 | ) |  |   | (9,581  | ) |  |   | (44,640   | )
|                                                                                                       |  |       |          |        |  |       |         |        |  |      |         |   |  |   |         |   |  |   |           |  
|Income before income taxes, extraordinary item and
cumulative effect of change in accounting principle |  |       | 8,109    |        |  |       | 4,634   |        |  |      | 1,551   |   |  |   | 3,708   |   |  |   | 18,002    |  
|Income tax expense                                                                                     |  |       | (3,163   | )      |  |       | (1,808  | )      |  |      | (604    | ) |  |   | (1,460  | ) |  |   | (7,035    | )
|                                                                                                       |  |       |          |        |  |       |         |        |  |      |         |   |  |   |         |   |  |   |           |  
|Income before extraordinary item and cumulative
effect of change in accounting principle               |  |       | 4,946    |        |  |       | 2,826   |        |  |      | 947     |   |  |   | 2,248   |   |  |   | 10,967    |  
|Extraordinary loss on early extinguishment of debt,
net of tax                                         |  |       | (9,617   | )      |  |       |        |        |  |      |        |   |  |   |        |   |  |   | (9,617    | )
|                                                                                                       |  |       |          |        |  |       |         |        |  |      |         |   |  |   |         |   |  |   |           |  
|Income (loss) before cumulative effect of change in
accounting principle                               |  |       | (4,671   | )      |  |       | 2,826   |        |  |      | 947     |   |  |   | 2,248   |   |  |   | 1,350     |  
|Cumulative effect of change in goodwill accounting,
net of tax                                         |  |       | (180,000 | )      |  |       |        |        |  |      |        |   |  |   |        |   |  |   | (180,000  | )
|                                                                                                       |  |       |          |        |  |       |         |        |  |      |         |   |  |   |         |   |  |   |           |  
|Net income (loss)                                                                                      |  |       | (184,671 | )      |  |       | 2,826   |        |  |      | 947     |   |  |   | 2,248   |   |  |   | (178,650  | )
|Preferred stock dividends declared                                                                     |  |       | (2,500   | )      |  |       | (2,500  | )      |  |      | (2,500  | ) |  |   | (2,500  | ) |  |   | (10,000   | )
|                                                                                                       |  |       |          |        |  |       |         |        |  |      |         |   |  |   |         |   |  |   |           |  
|Net income (loss) attributable to common shareholders                                                  |  | $     | (187,171 | )      |  | $     | 326     |        |  | $    | (1,553  | ) |  | $ | (252    | ) |  | $ | (188,650  | )
|                                                                                                       |  |       |          |        |  |       |         |        |  |      |         |   |  |   |         |   |  |   |           |  
|Net income (loss) attributable to common
shareholders per basic share(1)                               |  | $     | (5.79    | )      |  | $     | 0.01    |        |  | $    | (0.05   | ) |  | $ | (0.01   | ) |  | $ | (5.77     | )
|                                                                                                       |  |       |          |        |  |       |         |        |  |      |         |   |  |   |         |   |  |   |           |  
|Net income (loss) attributable to common
shareholders per diluted share(1)                             |  | $     | (2.28    | )      |  | $     | 0.01    |        |  | $    | (0.05   | ) |  | $ | (0.01   | ) |  | $ | (5.53     | )
|                                                                                                       |  |       |          |        |  |       |         |        |  |      |         |   |  |   |         |   |  |   |           |  

|                                                                        |  |       |         |        |  |       |         |        |  |      |         |   |  |   |         |   |  |   |           |  
|----------------------------------------------------------------------- |  | ----- | ------- | ------ |  | ----- | ------- | ------ |  | ---- | ------- | - |  | - | ------- | - |  | - | --------- | -
|2001                                                                    |  | First |         | Second |  | Third |         | Fourth |  | Year
|                                                                        |  |       |         |        |  |       |         |        |  |     
|Net sales                                                               |  | $     | 288,444 |        |  | $     | 283,252 |        |  | $    | 270,818 |   |  | $ | 270,021 |   |  | $ | 1,112,535 |  
|Cost of goods sold                                                      |  |       | 248,210 |        |  |       | 240,976 |        |  |      | 234,363 |   |  |   | 236,709 |   |  |   | 960,258   |  
|                                                                        |  |       |         |        |  |       |         |        |  |      |         |   |  |   |         |   |  |   |           |  
|Gross profit                                                            |  |       | 40,234  |        |  |       | 42,276  |        |  |      | 36,455  |   |  |   | 33,312  |   |  |   | 152,277   |  
|Selling, general and administrative expense                             |  |       | 14,489  |        |  |       | 16,428  |        |  |      | 16,061  |   |  |   | 15,896  |   |  |   | 62,874    |  
|Goodwill amortization                                                   |  |       | 5,169   |        |  |       | 5,143   |        |  |      | 5,175   |   |  |   | 5,162   |   |  |   | 20,649    |  
|Asset impairment and restructuring charges                              |  |       | 2,000   |        |  |       | 1,000   |        |  |      |        |   |  |   | 5,900   |   |  |   | 8,900     |  
|                                                                        |  |       |         |        |  |       |         |        |  |      |         |   |  |   |         |   |  |   |           |  
|Operating income                                                        |  |       | 18,576  |        |  |       | 19,705  |        |  |      | 15,219  |   |  |   | 6,354   |   |  |   | 59,854    |  
|Gain from sale of businesses and other assets                           |  |       | 3,650   |        |  |       |        |        |  |      |        |   |  |   |        |   |  |   | 3,650     |  
|Interest expense                                                        |  |       | (16,125 | )      |  |       | (13,530 | )      |  |      | (12,429 | ) |  |   | (10,727 | ) |  |   | (52,811   | )
|                                                                        |  |       |         |        |  |       |         |        |  |      |         |   |  |   |         |   |  |   |           |  
|Income (loss) before income taxes                                       |  |       | 6,101   |        |  |       | 6,175   |        |  |      | 2,790   |   |  |   | (4,373  | ) |  |   | 10,693    |  
|Income tax (expense) benefit                                            |  |       | (2,420  | )      |  |       | (2,446  | )      |  |      | (1,160  | ) |  |   | 1,769   |   |  |   | (4,257    | )
|                                                                        |  |       |         |        |  |       |         |        |  |      |         |   |  |   |         |   |  |   |           |  
|Net income (loss)                                                       |  |       | 3,681   |        |  |       | 3,729   |        |  |      | 1,630   |   |  |   | (2,604  | ) |  |   | 6,436     |  
|Preferred stock dividends declared                                      |  |       | (2,500  | )      |  |       | (2,500  | )      |  |      | (2,500  | ) |  |   | (2,500  | ) |  |   | (10,000   | )
|                                                                        |  |       |         |        |  |       |         |        |  |      |         |   |  |   |         |   |  |   |           |  
|Net income (loss) attributable to common shareholders                   |  | $     | 1,181   |        |  | $     | 1,229   |        |  | $    | (870    | ) |  | $ | (5,104  | ) |  | $ | (3,564    | )
|                                                                        |  |       |         |        |  |       |         |        |  |      |         |   |  |   |         |   |  |   |           |  
|Net income (loss) attributable to common
shareholders per basic share   |  | $     | 0.04    |        |  | $     | 0.04    |        |  | $    | (0.03   | ) |  | $ | (0.16   | ) |  | $ | (0.11     | )
|                                                                        |  |       |         |        |  |       |         |        |  |      |         |   |  |   |         |   |  |   |           |  
|Net income (loss) attributable to common
shareholders per diluted share |  | $     | 0.04    |        |  | $     | 0.04    |        |  | $    | (0.03   | ) |  | $ | (0.16   | ) |  | $ | (0.11     | )
|                                                                        |  |       |         |        |  |       |         |        |  |      |         |   |  |   |         |   |  |   |           |  



|(1) |  | Quarterly earnings per share do not accumulate to total year earnings per
share as a results of the anti-dilutive effect of the
preferred stock for the year, compared to the dilutive effect of the
preferred stock in the first quarter, plus the increase in
common stock equivalents during the year.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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Note 19. Supplemental Information

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

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

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 $10.0 million of interest expense
in the year ended December 31, 2002, pursuant to a $100 million intercompany
loan from GPIC. In 2001 and 2000, GPC incurred $8.8 million of interest
pursuant to the same intercompany note that totaled $92.7 million.

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GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONSYear Ended December 31, 2002
(in thousands)

|                                                                                                 |  |        |           |        |  |              |         |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |           |  
|------------------------------------------------------------------------------------------------ |  | ------ | --------- | ------ |  | ------------ | ------- | ------------ |  | ------------ | ---- | ------------ |  | - | ----- | - |  | ------------ | ------ | - |  | - | --------- | -
|                                                                                                 |  |        |           |        |  |              |         |              |  | Guarantor    |      | Nonguarantor |  |   |       |   |  | Consolidated
|                                                                                                 |  | Issuer |           | Parent |  | Subsidiaries |         | Subsidiaries |  | Eliminations |      | Total       
|                                                                                                 |  |        |           |        |  |              |         |              |  |              |      |             
|Net sales                                                                                        |  | $      | 1,051,347 |        |  | $            |        |              |  | $            |     |              |  | $ | 6,496 |   |  | $            |       |   |  | $ | 1,057,843 |  
|Cost of goods sold                                                                               |  |        | 925,095   |        |  |              |        |              |  |              |     |              |  |   | 5,486 |   |  |              |       |   |  |   | 930,581   |  
|                                                                                                 |  |        |           |        |  |              |         |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |           |  
|Gross profit                                                                                     |  |        | 126,252   |        |  |              |        |              |  |              |     |              |  |   | 1,010 |   |  |              |       |   |  |   | 127,262   |  
|Selling, general and
administrative expense                                                      |  |        | 64,301    |        |  |              |        |              |  |              |     |              |  |   | 319   |   |  |              |       |   |  |   | 64,620    |  
|Equity in earnings of subsidiaries                                                               |  |        | (311      | )      |  |              | (4,845  | )            |  |              | (352 | )            |  |   |      |   |  |              | 5,508  |   |  |   |          |  
|                                                                                                 |  |        |           |        |  |              |         |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |           |  
|Operating income                                                                                 |  |        | 62,262    |        |  |              | 4,845   |              |  |              | 352  |              |  |   | 691   |   |  |              | (5,508 | ) |  |   | 62,642    |  
|Interest (expense) income                                                                        |  |        | (54,589   | )      |  |              | 10,000  |              |  |              |     |              |  |   | (51   | ) |  |              |       |   |  |   | (44,640   | )
|                                                                                                 |  |        |           |        |  |              |         |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |           |  
|Income before taxes,
extraordinary item and
cumulative effect of change
in accounting priniciple |  |        | 7,673     |        |  |              | 14,845  |              |  |              | 352  |              |  |   | 640   |   |  |              | (5,508 | ) |  |   | 18,002    |  
|Income tax expense                                                                               |  |        | (3,007    | )      |  |              | (5,790  | )            |  |              | (322 | )            |  |   | (65   | ) |  |              | 2,149  |   |  |   | (7,035    | )
|                                                                                                 |  |        |           |        |  |              |         |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |           |  
|Income before extraordinary
item and cumulative effect of
change in accounting principle         |  |        | 4,666     |        |  |              | 9,055   |              |  |              | 30   |              |  |   | 575   |   |  |              | (3,359 | ) |  |   | 10,967    |  
|Extraordinary loss on early
extinguishment of debt,
net of tax of $6,149                         |  |        | (9,617    | )      |  |              |        |              |  |              |     |              |  |   |      |   |  |              |       |   |  |   | (9,617    | )
|                                                                                                 |  |        |           |        |  |              |         |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |           |  
|Income (loss) before cumulative
effect of change in
accounting principle                         |  |        | (4,951    | )      |  |              | 9,055   |              |  |              | 30   |              |  |   | 575   |   |  |              | (3,359 | ) |  |   | 1,350     |  
|Cumulative effect of change in
goodwill accounting, net
of tax of $0                             |  |        | (180,000  | )      |  |              |        |              |  |              |     |              |  |   |      |   |  |              |       |   |  |   | (180,000  | )
|                                                                                                 |  |        |           |        |  |              |         |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |           |  
|Net income (loss)                                                                                |  |        | (184,951  | )      |  |              | 9,055   |              |  |              | 30   |              |  |   | 575   |   |  |              | (3,359 | ) |  |   | (178,650  | )
|Preferred stock dividends declared                                                               |  |        |          |        |  |              | (10,000 | )            |  |              |     |              |  |   |      |   |  |              |       |   |  |   | (10,000   | )
|                                                                                                 |  |        |           |        |  |              |         |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |           |  
|Net income (loss) attributable to
common shareholders                                            |  | $      | (184,951  | )      |  | $            | (945    | )            |  | $            | 30   |              |  | $ | 575   |   |  | $            | (3,359 | ) |  | $ | (188,650  | )
|                                                                                                 |  |        |           |        |  |              |         |              |  |              |      |              |  |   |       |   |  |              |        |   |  |   |           |  

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GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONSYear Ended December 31, 2001
(in thousands)

|                                                      |  |        |           |        |  |              |         |              |  |              |        |              |  |   |       |   |  |              |        |   |  |   |           |  
|----------------------------------------------------- |  | ------ | --------- | ------ |  | ------------ | ------- | ------------ |  | ------------ | ------ | ------------ |  | - | ----- | - |  | ------------ | ------ | - |  | - | --------- | -
|                                                      |  |        |           |        |  |              |         |              |  | Guarantor    |        | Nonguarantor |  |   |       |   |  | Consolidated
|                                                      |  | Issuer |           | Parent |  | Subsidiaries |         | Subsidiaries |  | Eliminations |        | Total       
|                                                      |  |        |           |        |  |              |         |              |  |              |        |             
|Net sales                                             |  | $      | 1,108,878 |        |  | $            |        |              |  | $            |       |              |  | $ | 3,657 |   |  | $            |       |   |  | $ | 1,112,535 |  
|Cost of goods sold                                    |  |        | 956,631   |        |  |              |        |              |  |              |       |              |  |   | 3,627 |   |  |              |       |   |  |   | 960,258   |  
|                                                      |  |        |           |        |  |              |         |              |  |              |        |              |  |   |       |   |  |              |        |   |  |   |           |  
|Gross profit                                          |  |        | 152,247   |        |  |              |        |              |  |              |       |              |  |   | 30    |   |  |              |       |   |  |   | 152,277   |  
|Selling, general and
administrative expense           |  |        | 62,789    |        |  |              |        |              |  |              | 33     |              |  |   | 52    |   |  |              |       |   |  |   | 62,874    |  
|Goodwill amortization                                 |  |        | 20,649    |        |  |              |        |              |  |              |       |              |  |   |      |   |  |              |       |   |  |   | 20,649    |  
|Asset impairment and
restructuring charges            |  |        | 8,900     |        |  |              |        |              |  |              |       |              |  |   |      |   |  |              |       |   |  |   | 8,900     |  
|Equity in earnings of subsidiaries                    |  |        | (2,471    | )      |  |              | (1,248  | )            |  |              | (101   | )            |  |   |      |   |  |              | 3,820  |   |  |   |          |  
|                                                      |  |        |           |        |  |              |         |              |  |              |        |              |  |   |       |   |  |              |        |   |  |   |           |  
|Operating income (loss)                               |  |        | 62,380    |        |  |              | 1,248   |              |  |              | 68     |              |  |   | (22   | ) |  |              | (3,820 | ) |  |   | 59,854    |  
|Gain from sale of businesses
and other assets         |  |        |          |        |  |              |        |              |  |              | 3,650  |              |  |   |      |   |  |              |       |   |  |   | 3,650     |  
|Interest (expense) income                             |  |        | (61,941   | )      |  |              | 8,619   |              |  |              | 288    |              |  |   | 223   |   |  |              |       |   |  |   | (52,811   | )
|                                                      |  |        |           |        |  |              |         |              |  |              |        |              |  |   |       |   |  |              |        |   |  |   |           |  
|Income (loss) before taxes                            |  |        | 439       |        |  |              | 9,867   |              |  |              | 4,006  |              |  |   | 201   |   |  |              | (3,820 | ) |  |   | 10,693    |  
|Income tax (expense) benefit                          |  |        | (174      | )      |  |              | (3,928  | )            |  |              | (1,595 | )            |  |   | (80   | ) |  |              | 1,520  |   |  |   | (4,257    | )
|                                                      |  |        |           |        |  |              |         |              |  |              |        |              |  |   |       |   |  |              |        |   |  |   |           |  
|Net income (loss)                                     |  |        | 265       |        |  |              | 5,939   |              |  |              | 2,411  |              |  |   | 121   |   |  |              | (2,300 | ) |  |   | 6,436     |  
|Preferred stock dividends declared                    |  |        |          |        |  |              | (10,000 | )            |  |              |       |              |  |   |      |   |  |              |       |   |  |   | (10,000   | )
|                                                      |  |        |           |        |  |              |         |              |  |              |        |              |  |   |       |   |  |              |        |   |  |   |           |  
|Net income (loss) attributable to
common shareholders |  | $      | 265       |        |  | $            | (4,061  | )            |  | $            | 2,411  |              |  | $ | 121   |   |  | $            | (2,300 | ) |  | $ | (3,564    | )
|                                                      |  |        |           |        |  |              |         |              |  |              |        |              |  |   |       |   |  |              |        |   |  |   |           |  

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GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONSYear Ended December 31, 2000
(in thousands)

|                                                      |  |        |           |        |  |              |         |              |  |              |        |              |  |   |       |   |  |              |        |   |  |   |           |  
|----------------------------------------------------- |  | ------ | --------- | ------ |  | ------------ | ------- | ------------ |  | ------------ | ------ | ------------ |  | - | ----- | - |  | ------------ | ------ | - |  | - | --------- | -
|                                                      |  |        |           |        |  |              |         |              |  | Guarantor    |        | Nonguarantor |  |   |       |   |  | Consolidated
|                                                      |  | Issuer |           | Parent |  | Subsidiaries |         | Subsidiaries |  | Eliminations |        | Total       
|                                                      |  |        |           |        |  |              |         |              |  |              |        |             
|Net sales                                             |  | $      | 1,098,498 |        |  | $            |        |              |  | $            | 1,083  |              |  | $ | 3,009 |   |  | $            |       |   |  | $ | 1,102,590 |  
|Cost of goods sold                                    |  |        | 960,750   |        |  |              |        |              |  |              |       |              |  |   | 3,229 |   |  |              |       |   |  |   | 963,979   |  
|                                                      |  |        |           |        |  |              |         |              |  |              |        |              |  |   |       |   |  |              |        |   |  |   |           |  
|Gross profit                                          |  |        | 137,748   |        |  |              |        |              |  |              | 1,083  |              |  |   | (220  | ) |  |              |       |   |  |   | 138,611   |  
|Selling, general and
administrative expense           |  |        | 60,074    |        |  |              |        |              |  |              | 977    |              |  |   | 83    |   |  |              |       |   |  |   | 61,134    |  
|Goodwill amortization                                 |  |        | 20,634    |        |  |              |        |              |  |              |       |              |  |   |      |   |  |              |       |   |  |   | 20,634    |  
|Asset impairment and
restructuring charges            |  |        | 5,620     |        |  |              |        |              |  |              |       |              |  |   |      |   |  |              |       |   |  |   | 5,620     |  
|Equity in (earnings) of
subsidiaries                  |  |        | (3,121    | )      |  |              | 12,158  |              |  |              | (407   | )            |  |   |      |   |  |              | (8,630 | ) |  |   |          |  
|                                                      |  |        |           |        |  |              |         |              |  |              |        |              |  |   |       |   |  |              |        |   |  |   |           |  
|Operating income (loss)                               |  |        | 54,541    |        |  |              | (12,158 | )            |  |              | 513    |              |  |   | (303  | ) |  |              | 8,630  |   |  |   | 51,223    |  
|Gain from sale of businesses
and other assets         |  |        | 13,765    |        |  |              |        |              |  |              | 5,407  |              |  |   |      |   |  |              |       |   |  |   | 19,172    |  
|Interest (expense) income                             |  |        | (90,681   | )      |  |              | 8,611   |              |  |              | 10     |              |  |   | (11   | ) |  |              |       |   |  |   | (82,071   | )
|                                                      |  |        |           |        |  |              |         |              |  |              |        |              |  |   |       |   |  |              |        |   |  |   |           |  
|Income (loss) before taxes                            |  |        | (22,375   | )      |  |              | (3,547  | )            |  |              | 5,930  |              |  |   | (314  | ) |  |              | 8,630  |   |  |   | (11,676   | )
|Income tax (expense) benefit                          |  |        | 8,966     |        |  |              | 1,421   |              |  |              | (2,539 | )            |  |   | 289   |   |  |              | (3,459 | ) |  |   | 4,678     |  
|                                                      |  |        |           |        |  |              |         |              |  |              |        |              |  |   |       |   |  |              |        |   |  |   |           |  
|Net income (loss)                                     |  |        | (13,409   | )      |  |              | (2,126  | )            |  |              | 3,391  |              |  |   | (25   | ) |  |              | 5,171  |   |  |   | (6,998    | )
|Preferred stock dividends
declared                    |  |        |          |        |  |              | (3,806  | )            |  |              |       |              |  |   |      |   |  |              |       |   |  |   | (3,806    | )
|                                                      |  |        |           |        |  |              |         |              |  |              |        |              |  |   |       |   |  |              |        |   |  |   |           |  
|Net income (loss) attributable
to common shareholders |  | $      | (13,409   | )      |  | $            | (5,932  | )            |  | $            | 3,391  |              |  | $ | (25   | ) |  | $            | 5,171  |   |  | $ | (10,804   | )
|                                                      |  |        |           |        |  |              |         |              |  |              |        |              |  |   |       |   |  |              |        |   |  |   |           |  

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GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET

At December 31, 2002
(in thousands)

|                                           |                                      |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |          |         | 
|------------------------------------------ | ------------------------------------ | -------------------------- | --------- | -------- | ------- | ------ | ------- | ------------ | ------- | ------------ | ----- | ------------ | ----- | ------------ | ------- | -------- | -------- | - | -------- | ------------ | -------- | - | --------- | -------- | ------- | 
|                                           |                                      |                            |           |          |         |        |         |              |         |              |       | Guarantor    |       | Nonguarantor |         |          |          |   |          | Consolidated
|                                           |                                      |                            |           | Issuer   |         | Parent |         | Subsidiaries |         | Subsidiaries |       | Eliminations |       | Total       
|                                           |                                      |                            |           |          |         |        |         |              |         |              |       |              |       |             
|ASSETS                                     |                                      |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|Current assets                             |                                      |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|                                           | Cash and cash equivalents            |                            | $         | 25,565   |         |        | $       |             |         |              | $     |             |       |              | $       | 3,061    |          |   | $        |             |          |   | $         | 28,626   |        
|                                           | Accounts receivable, net             |                            |           | 60,231   |         |        |         | 2,437        |         |              |       |             |       |              |         | 878      |          |   |          |             |          |   |           | 63,546   |        
|                                           | Inventories                          |                            |           | 86,740   |         |        |         |             |         |              |       |             |       |              |         | 503      |          |   |          |             |          |   |           | 87,243   |        
|                                           | Other assets                         |                            |           | 21,609   |         |        |         |             |         |              |       | 1            |       |              |         | 24,046   |          |   |          | (23,970      | )        |   |           | 21,686   |        
|                                           |                                      |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |          |        
|                                           |                                      | Total current assets       |           |          | 194,145 |        |         |              | 2,437   |              |       |              | 1     |              |         |          | 28,488   |   |          |              | (23,970  | ) |           |          | 201,101 | 
|                                           | Properties, net                      |                            |           | 401,889  |         |        |         |             |         |              |       |             |       |              |         | 8,703    |          |   |          |             |          |   |           | 410,592  |        
|                                           | Goodwill, net                        |                            |           | 379,696  |         |        |         |             |         |              |       |             |       |              |         |         |          |   |          |             |          |   |           | 379,696  |        
|                                           | Other assets                         |                            |           | 29,781   |         |        |         | 561,410      |         |              |       | 6,880        |       |              |         | 18,393   |          |   |          | (586,987     | )        |   |           | 29,477   |        
|                                           |                                      |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |          |        
|Total assets                               |                                      | $                          | 1,005,511 |          |         | $      | 563,847 |              |         | $            | 6,881 |              |       | $            | 55,584  |          |          | $ | (610,957 | )            |          | $ | 1,020,866 |         
|                                           |                                      |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |          |        
|LIABILITIES AND
SHAREHOLDERS EQUITY       |                                      |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|Current liabilities                        |                                      |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|                                           | Current maturities of
long-term debt |                            | $         | 1,976    |         |        | $       |             |         |              | $     |             |       |              | $       | 1,456    |          |   | $        |             |          |   | $         | 3,432    |        
|                                           | Accounts payable                     |                            |           | 81,519   |         |        |         | 24           |         |              |       |             |       |              |         | 563      |          |   |          |             |          |   |           | 82,106   |        
|                                           | Other current liabilities            |                            |           | 66,543   |         |        |         | 23,691       |         |              |       | 2,536        |       |              |         | 651      |          |   |          | (23,970      | )        |   |           | 69,451   |        
|                                           |                                      |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |          |        
|                                           |                                      | Total current liabilities  |           |          | 150,038 |        |         |              | 23,715  |              |       |              | 2,536 |              |         |          | 2,670    |   |          |              | (23,970  | ) |           |          | 154,989 | 
|Long-term debt                             |                                      |                            | 472,798   |          |         |        |        |              |         |              |      |              |       |              | 235,383 |          |          |   | (233,282 | )            |          |   | 474,899   |         
|Other long-term liabilities                |                                      |                            | 185,968   |          |         |        | 1,826   |              |         |              |      |              |       |              |        |          |          |   | (103,854 | )            |          |   | 83,940    |         
|                                           |                                      |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |          |        
|                                           | Total liabilities                    |                            |           | 808,804  |         |        |         | 25,541       |         |              |       | 2,536        |       |              |         | 238,053  |          |   |          | (361,106     | )        |   |           | 713,828  |        
|Shareholders equity                       |                                      |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         
|                                           | Preferred stock                      |                            |           |         |         |        |         | 100,000      |         |              |       |             |       |              |         |         |          |   |          |             |          |   |           | 100,000  |        
|                                           | Common stock                         |                            |           |         |         |        |         | 335          |         |              |       | 1,829        |       |              |         | 1,540    |          |   |          | (3,369       | )        |   |           | 335      |        
|                                           | Paid-in capital                      |                            |           | 418,299  |         |        |         | 192,984      |         |              |       | 241,774      |       |              |         | (182,077 | )        |   |          | (257,353     | )        |   |           | 413,627  |        
|                                           | Retained earnings (deficit)          |                            |           | (194,701 | )       |        |         | 244,987      |         |              |       | (239,258     | )     |              |         | (1,111   | )        |   |          | 10,871       |          |   |           | (179,212 | )      
|                                           | Accumulated other
comprehensive loss |                            |           | (26,891  | )       |        |         |             |         |              |       |             |       |              |         | (821     | )        |   |          |             |          |   |           | (27,712  | )      
|                                           |                                      |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |          |        
|                                           |                                      | Total shareholders
equity |           |          | 196,707 |        |         |              | 538,306 |              |       |              | 4,345 |              |         |          | (182,469 | ) |          |              | (249,851 | ) |           |          | 307,038 | 
|                                           |                                      |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |          |        
|Total liabilities and
shareholders equity |                                      | $                          | 1,005,511 |          |         | $      | 563,847 |              |         | $            | 6,881 |              |       | $            | 55,584  |          |          | $ | (610,957 | )            |          | $ | 1,020,866 |         
|                                           |                                      |                            |           |          |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |          |        

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GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET

At December 31, 2001
(in thousands)

|                                           |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         |         | 
|------------------------------------------ | --------------------------------------------- | -------------------------- | --------- | ------- | ------- | ------ | ------- | ------------ | ------- | ------------ | ----- | ------------ | ----- | ------------ | ------- | -------- | -------- | - | -------- | ------------ | -------- | - | --------- | ------- | ------- | 
|                                           |                                               |                            |           |         |         |        |         |              |         |              |       | Guarantor    |       | Nonguarantor |         |          |          |   |          | Consolidated
|                                           |                                               |                            |           | Issuer  |         | Parent |         | Subsidiaries |         | Subsidiaries |       | Eliminations |       | Total       
|                                           |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |             
|ASSETS                                     |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |        
|Current assets                             |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |        
|                                           | Cash and cash equivalents                     |                            | $         | 1,145   |         |        | $       | 976          |         |              | $     |             |       |              | $       | 4,645    |          |   | $        |             |          |   | $         | 6,766   |        
|                                           | Accounts receivable, net                      |                            |           | 56,560  |         |        |         | 135,301      |         |              |       | 93           |       |              |         | 834      |          |   |          | (133,314     | )        |   |           | 59,474  |        
|                                           | Inventories                                   |                            |           | 92,154  |         |        |         |             |         |              |       |             |       |              |         | 254      |          |   |          |             |          |   |           | 92,408  |        
|                                           | Other assets                                  |                            |           | 33,101  |         |        |         |             |         |              |       |             |       |              |         | 24,024   |          |   |          | (23,969      | )        |   |           | 33,156  |        
|                                           |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         |        
|                                           |                                               | Total current assets       |           |         | 182,960 |        |         |              | 136,277 |              |       |              | 93    |              |         |          | 29,757   |   |          |              | (157,283 | ) |           |         | 191,804 | 
|                                           | Properties, net                               |                            |           | 434,549 |         |        |         |             |         |              |       |             |       |              |         | 9,163    |          |   |          |             |          |   |           | 443,712 |        
|                                           | Goodwill, net                                 |                            |           | 559,696 |         |        |         |             |         |              |       |             |       |              |         |         |          |   |          |             |          |   |           | 559,696 |        
|                                           | Other assets                                  |                            |           | 18,626  |         |        |         | 471,914      |         |              |       | 8,147        |       |              |         | 18,075   |          |   |          | (482,639     | )        |   |           | 34,123  |        
|                                           |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         |        
|Total assets                               |                                               | $                          | 1,195,831 |         |         | $      | 608,191 |              |         | $            | 8,240 |              |       | $            | 56,995  |          |          | $ | (639,922 | )            |          | $ | 1,229,335 |        
|                                           |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         |        
|LIABILITIES AND
SHAREHOLDERS EQUITY       |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |        
|Current liabilities                        |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |        
|                                           | Current maturities of
long-term debt          |                            | $         | 36,156  |         |        | $       |             |         |              | $     |             |       |              | $       | 1,217    |          |   | $        |             |          |   | $         | 37,373  |        
|                                           | Accounts payable                              |                            |           | 58,110  |         |        |         | 534          |         |              |       |             |       |              |         | 358      |          |   |          |             |          |   |           | 59,002  |        
|                                           | Other current liabilities                     |                            |           | 59,929  |         |        |         | 33,286       |         |              |       | 2,730        |       |              |         | 1,500    |          |   |          | (24,419      | )        |   |           | 73,026  |        
|                                           |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         |        
|                                           |                                               | Total current liabilities  |           |         | 154,195 |        |         |              | 33,820  |              |       |              | 2,730 |              |         |          | 3,075    |   |          |              | (24,419  | ) |           |         | 169,401 | 
|Long-term debt                             |                                               |                            | 579,006   |         |         |        |        |              |         |              |      |              |       |              | 2,055   |          |          |   | (92,675  | )            |          |   | 488,386   |        
|Other long-term liabilities                |                                               |                            | 208,823   |         |         |        | 1,959   |              |         |              |      |              |       |              | 233,357 |          |          |   | (370,239 | )            |          |   | 73,900    |        
|                                           |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         |        
|                                           | Total liabilities                             |                            |           | 942,024 |         |        |         | 35,779       |         |              |       | 2,730        |       |              |         | 238,487  |          |   |          | (487,333     | )        |   |           | 731,687 |        
|Shareholders equity                       |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |        
|                                           | Preferred stock                               |                            |           |        |         |        |         | 100,000      |         |              |       |             |       |              |         |         |          |   |          |             |          |   |           | 100,000 |        
|                                           | Common stock                                  |                            |           |        |         |        |         | 322          |         |              |       | 1,829        |       |              |         | 1,540    |          |   |          | (3,369       | )        |   |           | 322     |        
|                                           | Paid-in capital                               |                            |           | 283,787 |         |        |         | 234,975      |         |              |       | 243,012      |       |              |         | (180,753 | )        |   |          | (163,272     | )        |   |           | 417,749 |        
|                                           | Retained earnings (deficit)                   |                            |           | (8,993  | )       |        |         | 235,353      |         |              |       | (239,331     | )     |              |         | (1,643   | )        |   |          | 14,052       |          |   |           | (562    | )      
|                                           | Accumulated other
comprehensive income (loss) |                            |           | (20,987 | )       |        |         | 1,762        |         |              |       |             |       |              |         | (636     | )        |   |          |             |          |   |           | (19,861 | )      
|                                           |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         |        
|                                           |                                               | Total shareholders
equity |           |         | 253,807 |        |         |              | 572,412 |              |       |              | 5,510 |              |         |          | (181,492 | ) |          |              | (152,589 | ) |           |         | 497,648 | 
|                                           |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         |        
|Total liabilities and
shareholders equity |                                               | $                          | 1,195,831 |         |         | $      | 608,191 |              |         | $            | 8,240 |              |       | $            | 56,995  |          |          | $ | (639,922 | )            |          | $ | 1,229,335 |        
|                                           |                                               |                            |           |         |         |        |         |              |         |              |       |              |       |              |         |          |          |   |          |              |          |   |           |         |        

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GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended December 31, 2002
(in thousands)

|                                                    |                                       |   |         |          |        |   |              |         |              |   |              |   |              |   |        |        |   |   |              |   |  |   |         |          |  
|--------------------------------------------------- | ------------------------------------- | - | ------- | -------- | ------ | - | ------------ | ------- | ------------ | - | ------------ | - | ------------ | - | ------ | ------ | - | - | ------------ | - |  | - | ------- | -------- | -
|                                                    |                                       |   |         |          |        |   |              |         |              |   | Guarantor    |   | Nonguarantor |   |        |        |   |   | Consolidated
|                                                    |                                       |   | Issuer  |          | Parent |   | Subsidiaries |         | Subsidiaries |   | Eliminations |   | Total       
|                                                    |                                       |   |         |          |        |   |              |         |              |   |              |   |             
|Net cash provided by (used
in) operating activities |                                       | $ | 115,898 |          |        | $ | 7,735        |         |              | $ |             |   |              | $ | (1,538 | )      |   | $ |             |   |  | $ | 122,095 |         
|                                                    |                                       |   |         |          |        |   |              |         |              |   |              |   |              |   |        |        |   |   |              |   |  |   |         |         
|Cash flows from investing
activities:               |                                       |   |         |          |        |   |              |         |              |   |              |   |              |   |        |        |   |   |              |   |  |   |         |         
|                                                    | Capital expenditures                  |   |         | (27,660  | )      |   |              |        |              |   |              |  |              |   |        | (46    | ) |   |              |  |  |   |         | (27,706  | )
|                                                    |                                       |   |         |          |        |   |              |         |              |   |              |   |              |   |        |        |   |   |              |   |  |   |         |         
|                                                    | Net cash used in
investing activities |   |         | (27,660  | )      |   |              |        |              |   |              |  |              |   |        | (46    | ) |   |              |  |  |   |         | (27,706  | )
|Cash flows from financing
activities:               |                                       |   |         |          |        |   |              |         |              |   |              |   |              |   |        |        |   |   |              |   |  |   |         |         
|                                                    | Proceeds from borrowings              |   |         | 759,677  |        |   |              |        |              |   |              |  |              |   |        |       |   |   |              |  |  |   |         | 759,677  |  
|                                                    | Repayment of debt                     |   |         | (807,105 | )      |   |              |        |              |   |              |  |              |   |        |       |   |   |              |  |  |   |         | (807,105 | )
|                                                    | Debt issuance costs                   |   |         | (16,390  | )      |   |              |        |              |   |              |  |              |   |        |       |   |   |              |  |  |   |         | (16,390  | )
|                                                    | Preferred stock dividends
paid        |   |         |         |        |   |              | (10,000 | )            |   |              |  |              |   |        |       |   |   |              |  |  |   |         | (10,000  | )
|                                                    | Common stock issuance
and other       |   |         |         |        |   |              | 1,289   |              |   |              |  |              |   |        |       |   |   |              |  |  |   |         | 1,289    |  
|                                                    |                                       |   |         |          |        |   |              |         |              |   |              |   |              |   |        |        |   |   |              |   |  |   |         |         
|Net cash used in financing
activities               |                                       |   | (63,818 | )        |        |   | (8,711       | )       |              |   |             |   |              |   |       |        |   |   |             |   |  |   | (72,529 | )       
|Cash and cash equivalents:                          |                                       |   |         |          |        |   |              |         |              |   |              |   |              |   |        |        |   |   |              |   |  |   |         |         
|                                                    | Net increase (decrease)               |   |         | 24,420   |        |   |              | (976    | )            |   |              |  |              |   |        | (1,584 | ) |   |              |  |  |   |         | 21,860   |  
|                                                    | Balance at beginning of year          |   |         | 1,145    |        |   |              | 976     |              |   |              |  |              |   |        | 4,645  |   |   |              |  |  |   |         | 6,766    |  
|                                                    |                                       |   |         |          |        |   |              |         |              |   |              |   |              |   |        |        |   |   |              |   |  |   |         |         
|                                                    | Balance at end of year                |   | $       | 25,565   |        |   | $            |        |              |   | $            |  |              |   | $      | 3,061  |   |   | $            |  |  |   | $       | 28,626   |  
|                                                    |                                       |   |         |          |        |   |              |         |              |   |              |   |              |   |        |        |   |   |              |   |  |   |         |         

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GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended December 31, 2001
(in thousands)

|                                                    |                                                     |   |          |          |        |   |              |         |              |   |              |       |              |   |     |       |  |   |              |   |  |   |          |          |  
|--------------------------------------------------- | --------------------------------------------------- | - | -------- | -------- | ------ | - | ------------ | ------- | ------------ | - | ------------ | ----- | ------------ | - | --- | ----- |  | - | ------------ | - |  | - | -------- | -------- | -
|                                                    |                                                     |   |          |          |        |   |              |         |              |   | Guarantor    |       | Nonguarantor |   |     |       |  |   | Consolidated
|                                                    |                                                     |   | Issuer   |          | Parent |   | Subsidiaries |         | Subsidiaries |   | Eliminations |       | Total       
|                                                    |                                                     |   |          |          |        |   |              |         |              |   |              |       |             
|Net cash provided by (used
in) operating activities |                                                     | $ | 141,944  |          |        | $ | 12,772       |         |              | $ | (3,650       | )     |              | $ | 633 |       |  | $ |             |   |  | $ | 151,699  |         
|                                                    |                                                     |   |          |          |        |   |              |         |              |   |              |       |              |   |     |       |  |   |              |   |  |   |          |         
|Cash flows from investing
activities:               |                                                     |   |          |          |        |   |              |         |              |   |              |       |              |   |     |       |  |   |              |   |  |   |          |         
|                                                    | Capital expenditures                                |   |          | (31,884  | )      |   |              |        |              |   |              |      |              |   |     |      |  |   |              |  |  |   |          | (31,884  | )
|                                                    | Proceeds from sale of
assets                        |   |          | 5,300    |        |   |              |        |              |   |              | 3,650 |              |   |     |      |  |   |              |  |  |   |          | 8,950    |  
|                                                    |                                                     |   |          |          |        |   |              |         |              |   |              |       |              |   |     |       |  |   |              |   |  |   |          |         
|                                                    | Net cash provided by (used
in) investing activities |   |          | (26,584  | )      |   |              |        |              |   |              | 3,650 |              |   |     |      |  |   |              |  |  |   |          | (22,934  | )
|Cash flows from financing
activities:               |                                                     |   |          |          |        |   |              |         |              |   |              |       |              |   |     |       |  |   |              |   |  |   |          |         
|                                                    | Proceeds from borrowings                            |   |          | 206,750  |        |   |              |        |              |   |              |      |              |   |     |      |  |   |              |  |  |   |          | 206,750  |  
|                                                    | Repayment of debt                                   |   |          | (320,965 | )      |   |              |        |              |   |              |      |              |   |     |      |  |   |              |  |  |   |          | (320,965 | )
|                                                    | Preferred stock dividends
paid                      |   |          |         |        |   |              | (12,083 | )            |   |              |      |              |   |     |      |  |   |              |  |  |   |          | (12,083  | )
|                                                    | Common stock issuance
and other                     |   |          |         |        |   |              | 287     |              |   |              |      |              |   |     |      |  |   |              |  |  |   |          | 287      |  
|                                                    |                                                     |   |          |          |        |   |              |         |              |   |              |       |              |   |     |       |  |   |              |   |  |   |          |         
|Net cash used in financing
activities               |                                                     |   | (114,215 | )        |        |   | (11,796      | )       |              |   |             |       |              |   |    |       |  |   |             |   |  |   | (126,011 | )       
|Cash and cash equivalents:                          |                                                     |   |          |          |        |   |              |         |              |   |              |       |              |   |     |       |  |   |              |   |  |   |          |         
|                                                    | Net increase                                        |   |          | 1,145    |        |   |              | 976     |              |   |              |      |              |   |     | 633   |  |   |              |  |  |   |          | 2,754    |  
|                                                    | Balance at beginning of year                        |   |          |         |        |   |              |        |              |   |              |      |              |   |     | 4,012 |  |   |              |  |  |   |          | 4,012    |  
|                                                    |                                                     |   |          |          |        |   |              |         |              |   |              |       |              |   |     |       |  |   |              |   |  |   |          |         
|                                                    | Balance at end of year                              |   | $        | 1,145    |        |   | $            | 976     |              |   | $            |      |              |   | $   | 4,645 |  |   | $            |  |  |   | $        | 6,766    |  
|                                                    |                                                     |   |          |          |        |   |              |         |              |   |              |       |              |   |     |       |  |   |              |   |  |   |          |         

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GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended December 31, 2000
(in thousands)

|                                                    |                                                               |   |         |          |        |   |              |         |              |   |              |       |              |   |        |        |   |   |              |   |  |   |         |          |  
|--------------------------------------------------- | ------------------------------------------------------------- | - | ------- | -------- | ------ | - | ------------ | ------- | ------------ | - | ------------ | ----- | ------------ | - | ------ | ------ | - | - | ------------ | - |  | - | ------- | -------- | -
|                                                    |                                                               |   |         |          |        |   |              |         |              |   | Guarantor    |       | Nonguarantor |   |        |        |   |   | Consolidated
|                                                    |                                                               |   | Issuer  |          | Parent |   | Subsidiaries |         | Subsidiaries |   | Eliminations |       | Total       
|                                                    |                                                               |   |         |          |        |   |              |         |              |   |              |       |             
|Net cash provided by (used
in) operating activities |                                                               | $ | 379,095 |          |        | $ | (308,154     | )       |              | $ | (5,850       | )     |              | $ | (2,212 | )      |   | $ |             |   |  | $ | 62,879  |         
|                                                    |                                                               |   |         |          |        |   |              |         |              |   |              |       |              |   |        |        |   |   |              |   |  |   |         |         
|Cash flows from investing
activities:               |                                                               |   |         |          |        |   |              |         |              |   |              |       |              |   |        |        |   |   |              |   |  |   |         |         
|                                                    | Capital expenditures                                          |   |         | (30,870  | )      |   |              |        |              |   |              | (57   | )            |   |        | (4     | ) |   |              |  |  |   |         | (30,931  | )
|                                                    | Proceeds from sales of
assets                                 |   |         | 37,673   |        |   |              |        |              |   |              | 5,907 |              |   |        |       |   |   |              |  |  |   |         | 43,580   |  
|                                                    | Collection on note
receivable                                 |   |         |         |        |   |              | 200,000 |              |   |              |      |              |   |        |       |   |   |              |  |  |   |         | 200,000  |  
|                                                    |                                                               |   |         |          |        |   |              |         |              |   |              |       |              |   |        |        |   |   |              |   |  |   |         |         
|Net cash provided by (used
in) investing activities |                                                               |   | 6,803   |          |        |   | 200,000      |         |              |   | 5,850        |       |              |   | (4     | )      |   |   |             |   |  |   | 212,649 |         
|Cash flows from financing
activities:               |                                                               |   |         |          |        |   |              |         |              |   |              |       |              |   |        |        |   |   |              |   |  |   |         |         
|                                                    | Proceeds from borrowings                                      |   |         | 52,015   |        |   |              |        |              |   |              |      |              |   |        |       |   |   |              |  |  |   |         | 52,015   |  
|                                                    | Repayment of debt                                             |   |         | (431,996 | )      |   |              |        |              |   |              |      |              |   |        |       |   |   |              |  |  |   |         | (431,996 | )
|                                                    | Proceeds from preferred
stock issuance, net of
issuance costs |   |         |         |        |   |              | 98,558  |              |   |              |      |              |   |        |       |   |   |              |  |  |   |         | 98,558   |  
|                                                    | Preferred stock dividends
paid                                |   |         |         |        |   |              | (1,306  | )            |   |              |      |              |   |        |       |   |   |              |  |  |   |         | (1,306   | )
|                                                    | Common stock issuance
and other                               |   |         |         |        |   |              | 1,656   |              |   |              |      |              |   |        |       |   |   |              |  |  |   |         | 1,656    |  
|                                                    | Debt issuance costs                                           |   |         | (6,312   | )      |   |              |        |              |   |              |      |              |   |        |       |   |   |              |  |  |   |         | (6,312   | )
|                                                    |                                                               |   |         |          |        |   |              |         |              |   |              |       |              |   |        |        |   |   |              |   |  |   |         |         
|                                                    | Net cash provided by (used
in) financing activities           |   |         | (386,293 | )      |   |              | 98,908  |              |   |              |      |              |   |        |       |   |   |              |  |  |   |         | (287,385 | )
|Cash and cash equivalents:                          |                                                               |   |         |          |        |   |              |         |              |   |              |       |              |   |        |        |   |   |              |   |  |   |         |         
|                                                    | Net decrease                                                  |   |         | (395     | )      |   |              | (9,246  | )            |   |              |      |              |   |        | (2,216 | ) |   |              |  |  |   |         | (11,857  | )
|                                                    | Balance at beginning of
year                                  |   |         | 395      |        |   |              | 9,246   |              |   |              |      |              |   |        | 6,228  |   |   |              |  |  |   |         | 15,869   |  
|                                                    |                                                               |   |         |          |        |   |              |         |              |   |              |       |              |   |        |        |   |   |              |   |  |   |         |         
|                                                    | Balance at end of year                                        |   | $       |         |        |   | $            |        |              |   | $            |      |              |   | $      | 4,012  |   |   | $            |  |  |   | $       | 4,012    |  
|                                                    |                                                               |   |         |          |        |   |              |         |              |   |              |       |              |   |        |        |   |   |              |   |  |   |         |         

61



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##### Table of Contents



SCHEDULE II

GRAPHIC PACKAGING INTERNATIONAL CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)

|                                       |      |  |            |       |            |  |           |        |            |  |         |     |      |  |         |        |      |  |   |        | 
|-------------------------------------- | ---- |  | ---------- | ----- | ---------- |  | --------- | ------ | ---------- |  | ------- | --- | ---- |  | ------- | ------ | ---- |  | - | ------ | 
|                                       |      |  |            |       |            |  | Additions |        |            |  |         |     |      |  |         |        |      |  |  
|                                       |      |  | Balance at |       | Charged to |  |           |        |            |  |         |     |      |  | Balance
|                                       |      |  | beginning  |       | Costs and  |  |           |        |            |  |         |     |      |  | at end 
|                                       |      |  | of year    |       | Expenses   |  | Other     |        | Deductions |  | of year
|                                       |      |  |            |       |            |  |           |        |            |  |        
|Allowance for doubtful receivables     |      |  |            |       |            |  |           |        |            |  |         |     |      |  |         |        |      |  |   |       
|Year Ended December 31,                |      |  |            |       |            |  |           |        |            |  |         |     |      |  |         |        |      |  |   |       
|                                       | 2000 |  | $          | 2,260 |            |  | $         | 1,425  |            |  | $       | (22 | )(1) |  | $       | (693   | )(2) |  | $ | 2,970  | 
|                                       | 2001 |  | $          | 2,970 |            |  | $         | 728    |            |  | $       |    |      |  | $       | (1,929 | )(2) |  | $ | 1,769  | 
|                                       | 2002 |  | $          | 1,769 |            |  | $         | 901    |            |  | $       |    |      |  | $       | (275   | )(2) |  | $ | 2,395  | 
|Deferred tax asset valuation allowance |      |  |            |       |            |  |           |        |            |  |         |     |      |  |         |        |      |  |   |       
|Year Ended December 31,                |      |  |            |       |            |  |           |        |            |  |         |     |      |  |         |        |      |  |   |       
|                                       | 2000 |  | $          | 123   |            |  | $         | 215    | (3)        |  | $       |    |      |  | $       |       |      |  | $ | 338    | 
|                                       | 2001 |  | $          | 338   |            |  | $         |       |            |  | $       |    |      |  | $       | (82    | )(3) |  | $ | 256    | 
|                                       | 2002 |  | $          | 256   |            |  | $         | 51,043 | (3)        |  | $       |    |      |  | $       |       |      |  | $ | 51,299 | 



---

|(1) |  | The 2000 disposition of the Malvern, Pennsylvania plant.                                                                                                                                                       
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Write off of uncollectible accounts.                                                                                                                                                                           
|   
|(3) |  | Adjustments to the deferred tax asset valuation allowance relate to
uncertainty surrounding the ultimate deductibility of the goodwill
impairment charge in 2002 and a foreign net operating loss carryforward.




ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Within the last two fiscal years there have been no changes in the
Companys independent accountants or disagreements on accounting and financial
statement disclosure matters.

62



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##### Table of Contents






PART III




ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Pursuant to Instruction G(3) to Form 10-K, the information relating to
Directors of the Registrant required by Item 10 is incorporated by reference
from the Registrants definitive proxy statement which is to be filed pursuant
to Regulation 14A within 120 days after the end of the Registrants fiscal year
ended December 31, 2002.

For information pertaining to Executive Officers of the Registrant, as
required by Instruction 3 of Paragraph (b) of Item 401 of Regulation S-K, refer
to the Executive Officers of the Registrant section of Part I of this
document.

Pursuant to Instruction G(3) to Form 10-K, the information relating to
compliance with Section 16(a) required by Item 10 is incorporated by reference
from the Registrants definitive proxy statement which is to be filed pursuant
to Regulation 14A within 120 days after the end of the Registrants fiscal year
ended December 31, 2002.




ITEM 11. EXECUTIVE COMPENSATION

Pursuant to Instruction G(3) to Form 10-K, the information required by
Item 11 is incorporated by reference from the Registrants definitive proxy
statement which is to be filed pursuant to Regulation 14A within 120 days after
the end of the Registrants fiscal year ended December 31, 2002.




ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Pursuant to Instruction G(3) to Form 10-K, the information required by
Item 12 is incorporated by reference from the Registrants definitive proxy
statement which is to be filed pursuant to Regulation 14A within 120 days after
the end of the Registrants fiscal year ended December 31, 2002.




ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant to Instruction G(3) to Form 10-K, the information required by
Item 13 is incorporated by reference from the Registrants definitive proxy
statement which is to be filed pursuant to Regulation 14A within 120 days after
the end of the Registrants fiscal year ended December 31, 2002.




ITEM 14. CONTROLS AND PROCEDURES

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

63



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##### Table of Contents






PART IV




ITEM 15. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULE AND
REPORTS ON FORM 8-K



|(a) |  | Financial Statements and Financial Statement Schedule.
|--- |  | ------------------------------------------------------
|   




| |  | The following are filed as a part
of this Report on Form 10-K/A (see Item 8)
| |  | ----------------------------------------------------------------------------
|




|(1) |  | Managements Report to Shareholders                                                                       
|--- |  | ----------------------------------------------------------------------------------------------------------
|   
|    |  | Report of Independent Accountants                                                                         
|   
|    |  | Consolidated Statement of Operations for the years ended December 31,
2002, 2001 and 2000                 
|   
|    |  | Consolidated Statement of Comprehensive Income (Loss) for the years ended
December 31, 2002, 2001 and 2000
|   
|    |  | Consolidated Balance Sheet at December 31, 2002 and 2001                                                  
|   
|    |  | Consolidated Statement of Cash Flows for the years ended December 31, 2002,
2001 and 2000                 
|   
|    |  | Consolidated Statement of Shareholders Equity for the years ended
December 31, 2002, 2001 and 2000       
|   
|    |  | Notes to Consolidated Financial Statements                                                                
|   
|(2) |  | Schedule IIValuation and Qualifying Accounts for the years ended
December 31, 2002, 2001 and 2000        
|   
|(3) |  | Exhibit list                                                                                              

|        |  |                                                                                                                                                                                                                                             
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                             
|Number  |  | Document Description                                                                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                             
|2.1     |  | Recommended Cash Offers by Baring Brothers International Limited on behalf of ACX (UK) Limited, a
wholly-owned subsidiary of ACX Technologies, Inc. for Britton Group plc. (Incorporated by reference to
Form 8-K filed on January 29, 1998)
|        |  |                                                                                                                                                                                                                                             
|2.2     |  | Distribution Agreement between ACX Technologies, Inc. and CoorsTek, Inc. (Incorporated by reference to
Form 10-K filed on March 29, 2000)                                                                                                   
|        |  |                                                                                                                                                                                                                                             
|3.1     |  | Articles of Incorporation of Registrant. (Incorporated by reference to Form 10 filed on October 6, 1992)                                                                                                                                    
|        |  |                                                                                                                                                                                                                                             
|3.1A    |  | Articles of Amendment to Articles of Incorporation of Registrant. (Incorporated by reference to Form 8
filed on December 3, 1992)                                                                                                           
|        |  |                                                                                                                                                                                                                                             
|3.1B    |  | Articles of Amendment to Articles of Incorporation of Registrant. (Incorporated by reference to Form
10-Q filed May 15, 2000)                                                                                                               
|        |  |                                                                                                                                                                                                                                             
|3.1C    |  | Articles of Amendment to the Articles of Incorporation Setting Forth the Designations of the Series A
Junior Participating Preferred Stock. (Incorporated by reference to Form 10-K filed on March 12, 2002)                                
|        |  |                                                                                                                                                                                                                                             
|3.1D    |  | Articles of Amendment to the Articles of Incorporation Setting Forth the Designations of All 10% Series
B Convertible Preferred Stock. (Incorporated by reference to Form 8-K filed August 31, 2000)                                        
|        |  |                                                                                                                                                                                                                                             
|3.2     |  | Bylaws of Registrant, as amended and restated May 9, 2000. (Incorporated by reference to Form 10-Q filed
on May 15, 2000)                                                                                                                   
|        |  |                                                                                                                                                                                                                                             
|3.3     |  | Restated Certificate of Incorporation of Graphic Packaging Corporation. (Incorporated by reference to
Form S-4 filed on April 9, 2002)                                                                                                      
|        |  |                                                                                                                                                                                                                                             
|3.4     |  | Bylaws of Graphic Packaging Corporation, as amended (formally known as C.P. Acquisition Corp).
(Incorporated by reference to Form S-4 filed on April 9, 2002)                                                                               
|        |  |                                                                                                                                                                                                                                             
|4.1     |  | Form of Stock Certificate of Common Stock. (Incorporated by reference to Form 10-Q filed August 14, 2000)                                                                                                                                   
|        |  |                                                                                                                                                                                                                                             
|4.2     |  | Rights Agreement, dated as of May 31, 2000, between the Company and Norwest Bank Minnesota, N.A., as
Rights Agent. (Incorporated by reference to Form 8-A filed May 31, 2000                                                                
|        |  |                                                                                                                                                                                                                                             
|4.3     |  | Preferred Stock Purchase Agreement, dated as of August 15, 2000, between the Company and the Grover C.
Coors Trust. (Incorporated by reference to Form 8-K filed August 31, 2000)                                                           
|        |  |                                                                                                                                                                                                                                             
|4.4     |  | Registration Rights Agreement dated as of August 15, 2000, between the Company and the Grover C. Coors
Trust. (Incorporated by reference to Form 8-K filed August 31, 2000)                                                                 
|        |  |                                                                                                                                                                                                                                             
|4.5     |  | 10% Series B Convertible Preferred Stock Certificate. (Incorporated by reference to Form 8-K filed
August 31, 2000)                                                                                                                         

64



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##### Table of Contents






|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|Number  |  | Document Description                                                                                                                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|4.6     |  | Letter Agreement between the Company and the Companys preferred stockholder, dated as of August 15, 2001
(Incorporated by reference to Form 8-K filed August 31, 2001).                                                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|4.7     |  | 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 Form S-4 filed on
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. (Incorporated by reference to Form S-4 filed on
April 9, 2002)                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|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 Form S-4 filed on April 9, 2002)                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|4.10    |  | The form of New Note is included as Exhibit A to the Indenture included as Exhibit 4.7 hereto.
(Incorporated by reference to Form S-4 filed on April 9, 2002)                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|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 Form S-4 filed on 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 Amro Incorporated, U.S. Bancorp Piper Jaffray Inc., and Wells Fargo
Brokerage Services, LLC. (Incorporated by reference to Form S-4 filed on April 9, 2002).
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.0    |  | Credit Agreement among ACX Technologies, Inc., Bank of America, as agent, and other financial institutions
party thereto. (Incorporated by reference to Form 8-K filed on August 17, 1999)                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.0A   |  | First Amendment to Revolving Credit and Term Loan Agreement. (Incorporated by reference to Form 10-Q filed
on May 15, 2000)                                                                                                                                                                                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.0B   |  | Second Amendment to Revolving Credit and Term Loan Agreement, dated as of July 28, 2000, among the Company
and its one-year term lenders. (Incorporated by reference to Form 8-K filed August 31, 2000)                                                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.0C   |  | Third Amendment to Revolving Credit and Term Loan Agreement, dated as of August 14, 2000, among the Company
and its lenders. (Incorporated by reference to Form 8-K filed August 31, 2000)                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.0D   |  | Fourth Amendment to Revolving Credit and Term Loan Agreement, effective as of August 15, 2001, among the
Company and its lenders. (Incorporated by reference to Form 8-K file August 31, 2001)                                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.0E   |  | Fifth Amendment to Revolving Credit and Term Loan Agreement, effective as of January 28, 2002, among the
Company and its lenders. (Previously filed)                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.1    |  | Supply Agreement between Graphic Packaging Corporation and Coors Brewing Company. (Incorporated by
reference to Form 8-K filed on November 2, 1998) (Confidential treatment has been granted for portions of
the Exhibit)                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.1A   |  | Second Amendment to Supply Agreement, dated December 30, 2002, by and between Coors Brewing Company and
Graphic Packaging Corporation. (Incorporated by reference to Form 8-K filed on December 31, 2002)                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.2    |  | Asset Purchase Agreement between ACX Technologies and Sonoco Products Company. (Incorporated by reference
to Form 8-K filed on September 17, 1999)                                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.3    |  | Tax Sharing Agreement between ACX Technologies, Inc. and CoorsTek, Inc. (Incorporated by reference to Form
10-K filed on March 29, 2000)                                                                                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.4    |  | Environmental Responsibility Agreement between ACX Technologies, Inc. and CoorsTek, Inc. (Incorporated by
reference to Form 10-K filed on March 29, 2000)                                                                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.5    |  | Master Transition Materials and Services Agreement between ACX Technologies, Inc. and CoorsTek, Inc.
(Incorporated by reference to Form 10-K filed on March 29, 2000)                                                                                                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.6*   |  | Form of Officers Salary Continuation Agreement, as amended. (Incorporated by reference to Form 10-K filed
on March 20, 1995)                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.7*   |  | Graphic Packaging Equity Incentive Plan, as amended. (Incorporated by reference to Form 10-K filed on March
23, 2001)                                                                                                                                                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.8*   |  | Graphic Packaging Equity Compensation Plan for Non-Employee Directors, as amended. (Incorporated by
reference to Form 10-K filed March 23, 2001)                                                                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.9*   |  | ACX Technologies, Inc. Phantom Equity Plan. (Incorporated by reference to Form 8 filed on November 19, 1992)                                                                                                                                                                                                                                                                                        




65



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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Number  |  | Document Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.10*  |  | Graphic Packaging Excess Benefit Plan, as restated. (Incorporated
by reference to Form 10-K filed on March 23, 2001)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.11*  |  | Graphic Packaging Supplemental Retirement Plan, as restated.
(Incorporated by reference to Form 10-K filed on March 23, 2001)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.12*  |  | ACX Technologies, Inc. Deferred Compensation Plan, as amended.
(Incorporated by reference to Form 10-K filed on March 7, 1996)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.13*  |  | First Amendment to Graphic Packaging Deferred Compensation Plan.
(Incorporated by reference to Form 10-K filed on March 23, 2001)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.14*  |  | Graphic Packaging Executive Incentive Plan as amended and restated
February 1, 2002. (Incorporated by reference to Form 10-Q filed on
October 31, 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 Form S-4 filed on April 9, 2002)                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.15A* |  | First Amendment to 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. (Previously filed)                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.15B* |  | Second Amendment to 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. (Previously filed)                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.16   |  | $50 million 10% Senior Subordinated Note Agreement, dated as of
August 15, 2001 (Incorporated by reference to the Companys Form
8-K filed August 31, 2001)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.17   |  | 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
Form S-4 filed on April 9, 2002)
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.18*  |  | Description of Arrangement with Gail A. Constancio dated as of
March 2001 (Incorporated by reference to Form 10-K filed on March
23, 2001)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.19*  |  | Description of Arrangement with Luis E. Leon dated May 2001
(Incorporated by reference to Form 10-Q filed on August 10, 2001)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.20*  |  | Form of Employment Agreement Entered Into By and Between Luis E.
Leon and the Company. (Incorporated by reference to Form 10-Q
filed on November 14, 2001)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.21*  |  | General Release of Legal Rights Agreement Entered Into By and
Between Gail A. Constancio and the Company. (Incorporated by
reference to Form 10-Q filed on November 14, 2001)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.22   |  | Asset Purchase Agreement between ACX Technologies and Fort James
Corporation. (Incorporated by reference to Form 8-K filed August
17, 1999)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.23   |  | Asset Purchase Agreement between Golden Aluminum Company and Alcoa
Inc. dated November 5, 1999. (Incorporated by reference to Form
10-K filed on March 29, 2000)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|21      |  | Subsidiaries of the Registrant (Previously filed)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|23      |  | Consent of PricewaterhouseCoopers LLP, independent accountants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     






---

|* |  | Management contracts or compensatory plans, contracts or arrangements
required to be filed as an Exhibit pursuant to Item 15(c).
|- |  | --------------------------------------------------------------------------------------------------------------------------------

The Registrant will furnish to a requesting security holder any Exhibit
requested upon payment of the Registrants reasonable copying charges and
expenses in furnishing the Exhibit.



|(b) |  | Reports on Form 8-K.
|--- |  | --------------------

On December 31, 2002, the Company filed a Current Report on Form 8-K
disclosing a Second Amendment to the Supply Agreement by and between Coors
Brewing Company and Graphic Packaging Corporation.



|(c) |  | Exhibits.
|--- |  | ---------

The exhibits at 15(a)(3) above are filed pursuant to the requirements of
Item 601 of Regulation S-K.

66



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

GRAPHIC PACKAGING INTERNATIONAL CORPORATIONBy:
    
    /s/ JEFFREY H. COORSJeffrey H. CoorsPresident and Chief Executive Officer





Date: July 25, 2003





By:
    
    /s/ LUIS E. LEONLuis E. LeonChief Financial Officer





Date: July 25, 2003





By:
    
    /s/ JOHN S. NORMANJohn S. NormanVice President and Controller





Date: July 25, 2003





Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

By:
    
    /s/ JEFFREY H. COORSJeffrey H. CoorsChairman of the Board of Directors,President and Chief Executive Officer





Date: July 25, 2003








By:John D. BeckettDirector








Date: July 25, 2003





By:
    
    /s/ WILLIAM K. COORSWilliam K. CoorsDirector





Date: July 25, 2003





By:
    
    /s/ HAROLD R. LOGAN, JR.Harold R. Logan, Jr.Director





Date: July 25, 2003





By:
    
    /s/ JAMES K. PETERSONJames K. PetersonDirector





Date: July 25, 2003





By:
    
    /s/ JOHN HOYT STOOKEYJohn Hoyt StookeyDirector





Date: July 25, 2003





67



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##### Table of Contents






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




In connection with the Annual Report of Graphic Packaging International
Corporation (the Company) on Form 10-K/A for the year ended December 31, 2002 as
filed with the Securities and Exchange Commission on the date hereof (the
Report), we, Jeffrey H. Coors, Chief Executive Officer and President of the
Company, and Luis E. Leon, Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:






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




|                    |  |                         |  |                                      
|------------------- |  | ----------------------- |  | -------------------------------------
|Date: July 25, 2003 |  | By /s/ Jeffrey H. Coors
|                    |  |                         |  |                                      
|                    |  |                         |  | Jeffrey H. Coors                     
|                    |  |                         |  | Chief Executive Officer and President
|                    |  |                         |  |                                      
|Date: July 25, 2003 |  | By /s/ Luis E. Leon    
|                    |  |                         |  |                                      
|                    |  |                         |  | Luis E. Leon                         
|                    |  |                         |  | Chief Financial Officer              




68



---



##### Table of Contents



CERTIFICATIONS

I, Jeffrey H. Coors, certify that:




1.     I have
reviewed this annual report on Form 10-K/A of Graphic Packaging
International Corporation;




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

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

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



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

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



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

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




July 25, 2003




|                                     
|-------------------------------------
|By /s/ Jeffrey H. Coors              
|                                     
|Jeffrey H. Coors                     
|Chief Executive Officer and President

69



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##### Table of Contents



CERTIFICATIONS

I, Luis E. Leon, certify that:




1.     I have
reviewed this annual report on Form 10-K/A of Graphic Packaging
International Corporation;




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

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

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



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

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



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

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




July 25, 2003




|                       
|-----------------------
|By /s/ Luis E. Leon    
|                       
|Luis E. Leon           
|Chief Financial Officer

70



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##### Table of Contents






EXHIBIT INDEX

|        |  |                                                                                                                                                                                                                                             
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                             
|Number  |  | Document Description                                                                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                             
|2.1     |  | Recommended Cash Offers by Baring Brothers International Limited on behalf of ACX (UK) Limited, a
wholly-owned subsidiary of ACX Technologies, Inc. for Britton Group plc. (Incorporated by reference to
Form 8-K filed on January 29, 1998)
|        |  |                                                                                                                                                                                                                                             
|2.2     |  | Distribution Agreement between ACX Technologies, Inc. and CoorsTek, Inc. (Incorporated by reference to
Form 10-K filed on March 29, 2000)                                                                                                   
|        |  |                                                                                                                                                                                                                                             
|3.1     |  | Articles of Incorporation of Registrant. (Incorporated by reference to Form 10 filed on October 6, 1992)                                                                                                                                    
|        |  |                                                                                                                                                                                                                                             
|3.1A    |  | Articles of Amendment to Articles of Incorporation of Registrant. (Incorporated by reference to Form 8
filed on December 3, 1992)                                                                                                           
|        |  |                                                                                                                                                                                                                                             
|3.1B    |  | Articles of Amendment to Articles of Incorporation of Registrant. (Incorporated by reference to Form
10-Q filed May 15, 2000)                                                                                                               
|        |  |                                                                                                                                                                                                                                             
|3.1C    |  | Articles of Amendment to the Articles of Incorporation Setting Forth the Designations of the Series A
Junior Participating Preferred Stock. (Incorporated by reference to Form 10-K filed on March 12, 2002)                                
|        |  |                                                                                                                                                                                                                                             
|3.1D    |  | Articles of Amendment to the Articles of Incorporation Setting Forth the Designations of All 10% Series
B Convertible Preferred Stock. (Incorporated by reference to Form 8-K filed August 31, 2000)                                        
|        |  |                                                                                                                                                                                                                                             
|3.2     |  | Bylaws of Registrant, as amended and restated May 9, 2000. (Incorporated by reference to Form 10-Q filed
on May 15, 2000)                                                                                                                   
|        |  |                                                                                                                                                                                                                                             
|3.3     |  | Restated Certificate of Incorporation of Graphic Packaging Corporation. (Incorporated by reference to
Form S-4 filed on April 9, 2002)                                                                                                      
|        |  |                                                                                                                                                                                                                                             
|3.4     |  | Bylaws of Graphic Packaging Corporation, as amended (formally known as C.P. Acquisition Corp).
(Incorporated by reference to Form S-4 filed on April 9, 2002)                                                                               
|        |  |                                                                                                                                                                                                                                             
|4.1     |  | Form of Stock Certificate of Common Stock. (Incorporated by reference to Form 10-Q filed August 14, 2000)                                                                                                                                   
|        |  |                                                                                                                                                                                                                                             
|4.2     |  | Rights Agreement, dated as of May 31, 2000, between the Company and Norwest Bank Minnesota, N.A., as
Rights Agent. (Incorporated by reference to Form 8-A filed May 31, 2000                                                                
|        |  |                                                                                                                                                                                                                                             
|4.3     |  | Preferred Stock Purchase Agreement, dated as of August 15, 2000, between the Company and the Grover C.
Coors Trust. (Incorporated by reference to Form 8-K filed August 31, 2000)                                                           
|        |  |                                                                                                                                                                                                                                             
|4.4     |  | Registration Rights Agreement dated as of August 15, 2000, between the Company and the Grover C. Coors
Trust. (Incorporated by reference to Form 8-K filed August 31, 2000)                                                                 
|        |  |                                                                                                                                                                                                                                             
|4.5     |  | 10% Series B Convertible Preferred Stock Certificate. (Incorporated by reference to Form 8-K filed
August 31, 2000)                                                                                                                         





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##### Table of Contents






|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|Number  |  | Document Description                                                                                                                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|4.6     |  | Letter Agreement between the Company and the Companys preferred stockholder, dated as of August 15, 2001
(Incorporated by reference to Form 8-K filed August 31, 2001).                                                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|4.7     |  | 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 Form S-4 filed on
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. (Incorporated by reference to Form S-4 filed on
April 9, 2002)                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|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 Form S-4 filed on April 9, 2002)                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|4.10    |  | The form of New Note is included as Exhibit A to the Indenture included as Exhibit 4.7 hereto.
(Incorporated by reference to Form S-4 filed on April 9, 2002)                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|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 Form S-4 filed on 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 Amro Incorporated, U.S. Bancorp Piper Jaffray Inc., and Wells Fargo
Brokerage Services, LLC. (Incorporated by reference to Form S-4 filed on April 9, 2002).
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.0    |  | Credit Agreement among ACX Technologies, Inc., Bank of America, as agent, and other financial institutions
party thereto. (Incorporated by reference to Form 8-K filed on August 17, 1999)                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.0A   |  | First Amendment to Revolving Credit and Term Loan Agreement. (Incorporated by reference to Form 10-Q filed
on May 15, 2000)                                                                                                                                                                                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.0B   |  | Second Amendment to Revolving Credit and Term Loan Agreement, dated as of July 28, 2000, among the Company
and its one-year term lenders. (Incorporated by reference to Form 8-K filed August 31, 2000)                                                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.0C   |  | Third Amendment to Revolving Credit and Term Loan Agreement, dated as of August 14, 2000, among the Company
and its lenders. (Incorporated by reference to Form 8-K filed August 31, 2000)                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.0D   |  | Fourth Amendment to Revolving Credit and Term Loan Agreement, effective as of August 15, 2001, among the
Company and its lenders. (Incorporated by reference to Form 8-K file August 31, 2001)                                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.0E   |  | Fifth Amendment to Revolving Credit and Term Loan Agreement, effective as of January 28, 2002, among the
Company and its lenders. (Previously filed)                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.1    |  | Supply Agreement between Graphic Packaging Corporation and Coors Brewing Company. (Incorporated by
reference to Form 8-K filed on November 2, 1998) (Confidential treatment has been granted for portions of
the Exhibit)                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.1A   |  | Second Amendment to Supply Agreement, dated December 30, 2002, by and between Coors Brewing Company and
Graphic Packaging Corporation. (Incorporated by reference to Form 8-K filed on December 31, 2002)                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.2    |  | Asset Purchase Agreement between ACX Technologies and Sonoco Products Company. (Incorporated by reference
to Form 8-K filed on September 17, 1999)                                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.3    |  | Tax Sharing Agreement between ACX Technologies, Inc. and CoorsTek, Inc. (Incorporated by reference to Form
10-K filed on March 29, 2000)                                                                                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.4    |  | Environmental Responsibility Agreement between ACX Technologies, Inc. and CoorsTek, Inc. (Incorporated by
reference to Form 10-K filed on March 29, 2000)                                                                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.5    |  | Master Transition Materials and Services Agreement between ACX Technologies, Inc. and CoorsTek, Inc.
(Incorporated by reference to Form 10-K filed on March 29, 2000)                                                                                                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.6*   |  | Form of Officers Salary Continuation Agreement, as amended. (Incorporated by reference to Form 10-K filed
on March 20, 1995)                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.7*   |  | Graphic Packaging Equity Incentive Plan, as amended. (Incorporated by reference to Form 10-K filed on March
23, 2001)                                                                                                                                                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.8*   |  | Graphic Packaging Equity Compensation Plan for Non-Employee Directors, as amended. (Incorporated by
reference to Form 10-K filed March 23, 2001)                                                                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|10.9*   |  | ACX Technologies, Inc. Phantom Equity Plan. (Incorporated by reference to Form 8 filed on November 19, 1992)                                                                                                                                                                                                                                                                                        








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##### Table of Contents






|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Number  |  | Document Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.10*  |  | Graphic Packaging Excess Benefit Plan, as restated. (Incorporated
by reference to Form 10-K filed on March 23, 2001)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.11*  |  | Graphic Packaging Supplemental Retirement Plan, as restated.
(Incorporated by reference to Form 10-K filed on March 23, 2001)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.12*  |  | ACX Technologies, Inc. Deferred Compensation Plan, as amended.
(Incorporated by reference to Form 10-K filed on March 7, 1996)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.13*  |  | First Amendment to Graphic Packaging Deferred Compensation Plan.
(Incorporated by reference to Form 10-K filed on March 23, 2001)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.14*  |  | Graphic Packaging Executive Incentive Plan as amended and restated
February 1, 2002. (Incorporated by reference to Form 10-Q filed on
October 31, 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 Form S-4 filed on April 9, 2002)                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.15A* |  | First Amendment to 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. (Previously filed)                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.15B* |  | Second Amendment to 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. (Previously filed)                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.16   |  | $50 million 10% Senior Subordinated Note Agreement, dated as of
August 15, 2001 (Incorporated by reference to the Companys Form
8-K filed August 31, 2001)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.17   |  | 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
Form S-4 filed on April 9, 2002)
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.18*  |  | Description of Arrangement with Gail A. Constancio dated as of
March 2001 (Incorporated by reference to Form 10-K filed on March
23, 2001)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.19*  |  | Description of Arrangement with Luis E. Leon dated May 2001
(Incorporated by reference to Form 10-Q filed on August 10, 2001)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.20*  |  | Form of Employment Agreement Entered Into By and Between Luis E.
Leon and the Company. (Incorporated by reference to Form 10-Q
filed on November 14, 2001)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.21*  |  | General Release of Legal Rights Agreement Entered Into By and
Between Gail A. Constancio and the Company. (Incorporated by
reference to Form 10-Q filed on November 14, 2001)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.22   |  | Asset Purchase Agreement between ACX Technologies and Fort James
Corporation. (Incorporated by reference to Form 8-K filed August
17, 1999)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.23   |  | Asset Purchase Agreement between Golden Aluminum Company and Alcoa
Inc. dated November 5, 1999. (Incorporated by reference to Form
10-K filed on March 29, 2000)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|21      |  | Subsidiaries of the Registrant (Previously filed)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|23      |  | Consent of PricewaterhouseCoopers LLP, independent accountants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     






---

|* |  | Management contracts or compensatory plans, contracts or arrangements
required to be filed as an Exhibit pursuant to Item 15(c).
|- |  | --------------------------------------------------------------------------------------------------------------------------------