---

---

UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q/A

|ý                                                             | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|------------------------------------------------------------- | ----------------------------------------------------------------------------------------
|For the quarterly period ended March 31, 2003                
|OR                                                           
|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 1-13182

RIVERWOOD HOLDING, INC.(Exact name of registrant as specified in its charter)

|Delaware(State or other jurisdiction of
incorporation or organization) |  | 58-2205241(I.R.S. Employer
Identification No.)
|---------------------------------------------------------------------- |  | ----------------------------------------------

814 Livingston Court
Marietta, Georgia 30067(Address of principal executive offices)
(Zip Code)

(770) 644-3000(Registrant's telephone number, including area code)

(Former
name, former address and former fiscal year,
if changed since last report)

Indicate
by check mark whether the registrant (1) has filed all reports 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  o    No  ý

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

At
May 6, 2003 there were 7,054,930 shares and 500,000 shares of the registrant's Class A and Class B common stock, respectively, outstanding.

---

---

---



EXPLANATORY NOTE

The Company is, by means of this filing, clarifying and adding certain disclosure under Item 1Financial Statements and
Item 2Management's Discussion and Analysis of Financial Condition and Results of Operations. In addition, in connection with the filing of this amended Form 10-Q and
pursuant to the rules of the Securities and Exchange Commission, the Company is including with this amended Form 10-Q certain currently dated certifications.

This amended Form 10-Q 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-Q 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. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

As used in this Form 10-Q, unless the context otherwise requires: "RIC" refers to the corporation formerly named Riverwood International
Corporation; the "Predecessor" or the "Predecessor Company" refers to RIC and its subsidiaries in respect of periods prior to the 1996 Merger (as defined herein); the "Company" refers to the
registrant, Riverwood Holding, Inc., a Delaware corporation ("Riverwood Holding") and its subsidiaries; "RIC Holding" refers to RIC Holding, Inc., a Delaware corporation, successor by
merger to RIC and a wholly-owned subsidiary of Riverwood Holding; and "Riverwood" refers to Riverwood International Corporation, a Delaware corporation formerly named Riverwood International
USA, Inc. and a wholly-owned subsidiary of RIC Holding.

2

---



RIVERWOOD HOLDING, INC.  CONDENSED CONSOLIDATED BALANCE SHEETS  (In thousands of dollars)  (unaudited)

|                                                                                                                                                                   |                                                                                                                                                                                                                                                                    | March 31, 2003 |           | December 31,
2002 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------- | --------- | ----------------- | -
|ASSETS                                                                                                                                                             |                                                                                                                                                                                                                                                                    |                |           |                   |  
|Current Assets:                                                                                                                                                    |                                                                                                                                                                                                                                                                    |                |           |                   |  
|                                                                                                                                                                   | Cash and Equivalents                                                                                                                                                                                                                                               |                | $         | 10,622            |  
|                                                                                                                                                                   | Receivables, Net of Allowances                                                                                                                                                                                                                                     |                |           | 137,162           |  
|                                                                                                                                                                   | Inventories                                                                                                                                                                                                                                                        |                |           | 181,896           |  
|                                                                                                                                                                   | Prepaid Expenses                                                                                                                                                                                                                                                   |                |           | 10,619            |  
|                                                                                                                                                                   |                                                                                                                                                                                                                                                                    |                |           |                   |  
|Total Current Assets                                                                                                                                               |                                                                                                                                                                                                                                                                    |                | 340,299   |                   |  
|Property, Plant and Equipment, Net of Accumulated Depreciation of $799,931 in 2003 and $777,047 in 2002                                                            |                                                                                                                                                                                                                                                                    |                | 1,222,488 |                   |  
|Goodwill                                                                                                                                                           |                                                                                                                                                                                                                                                                    |                | 268,284   |                   |  
|Patents, Licenses and Trademarks, Net of Accumulated Amortization of $24,981 and $24,029 at March 31, 2003 and December 31, 2002, respectively.                    |                                                                                                                                                                                                                                                                    |                | 42,100    |                   |  
|Other Assets                                                                                                                                                       |                                                                                                                                                                                                                                                                    |                | 80,520    |                   |  
|                                                                                                                                                                   |                                                                                                                                                                                                                                                                    |                |           |                   |  
|Total Assets                                                                                                                                                       |                                                                                                                                                                                                                                                                    | $              | 1,953,691 |                   | $
|                                                                                                                                                                   |                                                                                                                                                                                                                                                                    |                |           |                   |  
|LIABILITIES                                                                                                                                                        |                                                                                                                                                                                                                                                                    |                |           |                   |  
|Current Liabilities:                                                                                                                                               |                                                                                                                                                                                                                                                                    |                |           |                   |  
|                                                                                                                                                                   | Short-Term Debt                                                                                                                                                                                                                                                    |                | $         | 98,560            |  
|                                                                                                                                                                   | Accounts Payable and Other Accrued Liabilities                                                                                                                                                                                                                     |                |           | 182,167           |  
|                                                                                                                                                                   |                                                                                                                                                                                                                                                                    |                |           |                   |  
|Total Current Liabilities                                                                                                                                          |                                                                                                                                                                                                                                                                    |                | 280,727   |                   |  
|Long-Term Debt, Less Current Portion                                                                                                                               |                                                                                                                                                                                                                                                                    |                | 1,430,130 |                   |  
|Other Noncurrent Liabilities                                                                                                                                       |                                                                                                                                                                                                                                                                    |                | 119,184   |                   |  
|                                                                                                                                                                   |                                                                                                                                                                                                                                                                    |                |           |                   |  
|Total Liabilities                                                                                                                                                  |                                                                                                                                                                                                                                                                    |                | 1,830,041 |                   |  
|                                                                                                                                                                   |                                                                                                                                                                                                                                                                    |                |           |                   |  
|Contingencies and Commitments (Note 4)                                                                                                                             |                                                                                                                                                                                                                                                                    |                |           |                   |  
|Class A Redeemable Common Stock $120/share redemption value; 54,930 and 57,930 shares issued and outstanding at March 31, 2003 and December 31, 2002, respectively |                                                                                                                                                                                                                                                                    |                | 6,591     |                   |  
|                                                                                                                                                                   |                                                                                                                                                                                                                                                                    |                |           |                   |  
|SHAREHOLDERS' EQUITY                                                                                                                                               |                                                                                                                                                                                                                                                                    |                |           |                   |  
|Common Stock par value $.01 per Share;                                                                                                                             |                                                                                                                                                                                                                                                                    |                |           |                   |  
|                                                                                                                                                                   | Class A Common Stock, 9,000,000 shares authorized; 7,054,930 and 7,057,930 shares designated at March 31, 2003 and December 31, 2002, respectively; 7,000,000 shares of non-redeemable Common Stock issued and outstanding at
March 31, 2003 and December 31, 2002 |                |           | 70                |  
|                                                                                                                                                                   | Class B Common Stock, 3,000,000 shares authorized; 500,000 shares of non-redeemable Common Stock issued and outstanding at March 31, 2003 and at December 31, 2002                                                                                                 |                |           | 5                 |  
|Capital in Excess of Par Value                                                                                                                                     |                                                                                                                                                                                                                                                                    |                | 748,748   |                   |  
|Accumulated Deficit                                                                                                                                                |                                                                                                                                                                                                                                                                    |                | (524,873  | )                 |  
|Accumulated Derivative Instruments Loss                                                                                                                            |                                                                                                                                                                                                                                                                    |                | (6,392    | )                 |  
|Minimum Pension Liability Adjustment                                                                                                                               |                                                                                                                                                                                                                                                                    |                | (71,304   | )                 |  
|Cumulative Currency Translation Adjustment                                                                                                                         |                                                                                                                                                                                                                                                                    |                | (29,195   | )                 |  
|                                                                                                                                                                   |                                                                                                                                                                                                                                                                    |                |           |                   |  
|Total Shareholders' Equity                                                                                                                                         |                                                                                                                                                                                                                                                                    |                | 117,059   |                   |  
|                                                                                                                                                                   |                                                                                                                                                                                                                                                                    |                |           |                   |  
|Total Liabilities and Shareholders' Equity                                                                                                                         |                                                                                                                                                                                                                                                                    | $              | 1,953,691 |                   | $
|                                                                                                                                                                   |                                                                                                                                                                                                                                                                    |                |           |                   |  

See Notes to Condensed Consolidated Financial Statements.

3

---



RIVERWOOD HOLDING, INC.        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS        AND COMPREHENSIVE (LOSS)        (In thousands of dollars)  (unaudited)

|                                      |                                                            | Three Months Ended |        
|------------------------------------- | ---------------------------------------------------------- | ------------------ | -------
|
|Net Sales                             |                                                            | $                  | 298,026
|Cost of Sales                         |                                                            |                    | 239,889
|Selling, General and Administrative   |                                                            |                    | 29,870 
|Research, Development and Engineering |                                                            |                    | 1,467  
|Other Expense (Income), Net           |                                                            |                    | 1,877  
|                                      |                                                            |                    |        
|Income from Operations                |                                                            |                    | 24,923 
|Interest Income                       |                                                            |                    | 103    
|Interest Expense                      |                                                            |                    | 33,980 
|                                      |                                                            |                    |        
|(Loss) before Income Taxes            |                                                            |                    | (8,954 
|Income Tax Expense                    |                                                            |                    | 1,016  
|Equity in Net Earnings of Affiliates  |                                                            |                    | 204    
|                                      |                                                            |                    |        
|Net (Loss)                            |                                                            |                    | (9,766 
|Other Comprehensive Income (Loss)     |                                                            |                    |        
|                                      | Derivative Instruments (Loss) Gain, Net of Tax of $0       |                    |        
|                                      | Foreign Currency Translation Adjustments, Net of Tax of $0 |                    |        
|                                      |                                                            |                    |        
|Comprehensive (Loss)                  |                                                            | $                  | (8,516 
|                                      |                                                            |                    |        

See
Notes to Condensed Consolidated Financial Statements.

4

---



RIVERWOOD HOLDING, INC.        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS        (In thousands of dollars)  (unaudited)

|                                                    |                                                                                   | Three Months Ended |        
|--------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------ | -------
|
|Cash Flows from Operating Activities:               |                                                                                   |                    |        
|Net (Loss)                                          |                                                                                   | $                  | (9,766 
|Noncash Items Included in Net (Loss):               |                                                                                   |                    |        
|                                                    | Depreciation and Amortization                                                     |                    |        
|                                                    | Current and Deferred Income Taxes                                                 |                    |        
|                                                    | Pension, Postemployment and Postretirement Benefits Expense, Net of Contributions |                    |        
|                                                    | Equity in Net Earnings of Affiliates, Net of Dividends                            |                    |        
|                                                    | Amortization of Deferred Debt Issuance Costs                                      |                    |        
|                                                    | Other                                                                             |                    |        
|Changes in Operating Assets & Liabilities:          |                                                                                   |                    |        
|                                                    | Receivables                                                                       |                    |        
|                                                    | Inventories                                                                       |                    |        
|                                                    | Prepaid Expenses                                                                  |                    |        
|                                                    | Accounts Payable and Other Accrued Liabilities                                    |                    |        
|                                                    | Other Noncurrent Liabilities                                                      |                    |        
|                                                    |                                                                                   |                    |        
|Net Cash Provided by (Used in) Operating Activities |                                                                                   |                    | 17,142 
|                                                    |                                                                                   |                    |        
|Cash Flows from Investing Activities:               |                                                                                   |                    |        
|Purchases of Property, Plant and Equipment          |                                                                                   |                    | (19,582
|Increase in Other Assets                            |                                                                                   |                    | (1,075 
|                                                    |                                                                                   |                    |        
|Net Cash Used in Investing Activities               |                                                                                   |                    | (20,657
|                                                    |                                                                                   |                    |        
|Cash Flows from Financing Activities:               |                                                                                   |                    |        
|Borrowings under Revolving Credit Facilities        |                                                                                   |                    | 94,950 
|Payments on Revolving Credit Facilities             |                                                                                   |                    | (94,042
|Payments on Debt                                    |                                                                                   |                    | (162   
|Repurchases of Redeemable Common Stock              |                                                                                   |                    | (360   
|                                                    |                                                                                   |                    |        
|Net Cash Provided by Financing Activities           |                                                                                   |                    | 386    
|Effect of Exchange Rate Changes on Cash             |                                                                                   |                    | (6     
|                                                    |                                                                                   |                    |        
|Net (Decrease) Increase in Cash and Equivalents     |                                                                                   |                    | (3,135 
|Cash and Equivalents at Beginning of Period         |                                                                                   |                    | 13,757 
|                                                    |                                                                                   |                    |        
|Cash and Equivalents at End of Period               |                                                                                   | $                  | 10,622 
|                                                    |                                                                                   |                    |        

See
Notes to Condensed Consolidated Financial Statements.

5

---



RIVERWOOD HOLDING, INC.  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS        (unaudited)

NOTE 1ORGANIZATION AND BASIS OF PRESENTATION

Riverwood Holding, Inc. ("Riverwood Holding") and its wholly-owned subsidiary RIC Holding, Inc. ("RIC Holding") and the corporation formerly named
CDRO Acquisition Corporation were incorporated in 1995 to acquire the stock of its predecessor, the corporation formerly named Riverwood International Corporation ("RIC").

On
March 27, 1996, Riverwood Holding, through its wholly-owned subsidiaries, acquired all of the outstanding shares of common stock of RIC. On such date, CDRO Acquisition
Corporation was merged into RIC ("1996 Merger"). RIC, as the surviving corporation in the 1996 Merger, became a wholly-owned subsidiary of RIC Holding. On March 28, 1996, RIC transferred
substantially all of its properties and assets to the corporation formerly named Riverwood International USA, Inc., other than the capital stock of Riverwood International USA, Inc, and RIC was
merged into RIC Holding. Thereupon, Riverwood International USA, Inc. was renamed "Riverwood International Corporation." Upon consummation of the subsequent merger, RIC Holding, as the
surviving corporation in the subsequent merger, became the parent company of Riverwood International Corporation ("Riverwood International").

Riverwood
Holding and RIC Holding, a wholly-owned subsidiary, conducted no significant business and have no independent assets or operations other than in connection with the 1996 Merger
and related transactions through March 27, 1996. Riverwood Holding and RIC Holding fully and unconditionally guarantee substantially all of the debt of Riverwood International.

In
connection with the 1996 Merger, the purchase method of accounting was used to establish and record a new cost basis for the assets acquired and liabilities assumed. The difference
between the
purchase price and the fair market values of the assets acquired and liabilities assumed was recorded as goodwill.

References
to the "Company" are to Riverwood Holding and its subsidiaries.

The
accompanying Condensed Consolidated Financial Statements of the Company included herein have been prepared by the Company without an audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary for a fair presentation of
the financial position, results of operations and cash flows for the interim periods presented have been made. The Condensed Consolidated Balance Sheet as of December 31, 2002 was derived from
audited financial statements.

NOTE 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

For a summary of the Company's significant accounting policies, please refer to the Company's report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 2002.

The
preparation of the Condensed Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements
and

6

---

the
reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from those estimates.

The
Company's Condensed Consolidated Financial Statements include all significant subsidiaries in which the Company has the ability to exercise direct or indirect control over operating
and financial policies. Intercompany transactions and balances are eliminated in consolidation.

As
permitted by SFAS No. 123 "Accounting for Stock-Based Compensation", the Company continues to apply intrinsic value accounting
for its stock option plans under Accounting Principles Board Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to Employees". Compensation
cost for stock options, if
any, is measured as the excess of the market price of the Company's common stock at the date of grant over the exercise price to be paid by the grantee to acquire the stock. The Company has adopted
disclosure-only provisions of SFAS No. 123 and SFAS No. 148, "Accounting for Stock-Based CompensationTransition and
Disclosurean Amendment of FASB Statement No. 123". The Company's pro forma net earnings based upon the fair value at the grant dates for awards under the
Company's plans are disclosed below.

If
the Company had elected to recognize compensation expense based upon the fair value at the grant dates for awards under these plans, the Company's Net (Loss) would have been as
follows:

Three Months Ended(In thousand of dollars)

March 31,
2003

March 31,
2002Net (Loss), as reported

$
(9,766
)
$
(7,717
)Deduct: Total additional stock-based employee compensation cost, net of tax, that would have been included in Net (Loss) under fair value method


(123
)

(56
)Pro forma Net (Loss)

$
(9,889
)
$
(7,773
)


The
Company recognized compensation expense on stock options for which the exercise price was less than the fair value at the date of grant in the amount of $0.3 million and
$0.1 million for the three months ended March 31, 2003 and 2002, respectively.

The
Company has reclassified the presentation of certain prior period information to conform to the current presentation format.

The
Company has previously restated its results of operations for the first three quarters of 2002 to report its investment in Rengo Riverwood Packaging Ltd. ("Rengo") using the
equity method.

7

---

NOTE 3INVENTORIES

The major classes of inventories were as follows:

(In thousands of dollars)

March 31, 2003

December 31,
2002Finished goods

$
88,093

$
78,518Work-in-process


16,241


15,175Raw materials


40,292


42,841Supplies


37,270


37,849Total

$
181,896

$
174,383


Raw materials and consumables used in the production process such as wood chips and chemicals are valued at purchase cost on a FIFO basis upon receipt. Work in progress and finished
goods inventories are valued at the cost of raw material consumed plus direct manufacturing costs (such as labor, utilities and supplies) as incurred and a proportion of manufacturing overhead.

In
the fourth quarter of 2002, the Company changed its method of valuing inventory from the last-in, first-out ("LIFO") method to the first-in,
first-out ("FIFO") method as over time the FIFO method more closely matches revenues with costs. The FIFO method more accurately reflects the cost related to the actual physical flow of
raw materials and finished goods inventory. Accordingly, the Company believes the FIFO method of valuing inventory will result in a better measurement of operating results. All previously reported
results were restated to reflect the retroactive application of the accounting change as required by generally accepted accounting principles in the United States.

NOTE 4CONTINGENCIES AND COMMITMENTS

The Company is committed to compliance with all applicable foreign, federal, state and local environmental laws and regulations. Environmental law is, however,
dynamic rather than static. As a result, costs that are unforeseeable at this time, may be incurred when new laws are enacted, and when environmental agencies adopt or revise rules and regulations. In
general, the environmental laws that the Company is subject to regulate discharges and emissions of constituents to the air, soil and water, prescribe procedures for the use, reuse, reclamation,
recycling and disposal of designated waste materials and impose liability and requirements relating to the cleanup of contamination. In certain instances, state environmental laws may be stricter than
their federal counterparts.

The
federal Clean Air Act imposes stringent limits on air emissions, establishes a federal permit program (Title V) and provides for civil and criminal enforcement sanctions. In
response to these requirements, in the early 1990's the Company switched from solvent-based to water-based inks and varnishes at its converting operations in order to reduce and meet requirements with
respect to emissions of volatile organic compounds. Where necessary, the Company's plants have received or submitted an application to the appropriate permitting authority for a Title V permit.

The
federal Clean Water Act establishes a system of minimum national effluent standards for each industry, water quality standards for the nation's waterways and a permit program that
provides discharge limitations. It also regulates releases and spills of oil and hazardous materials and wastewater and stormwater discharges. The Company's mill in West Monroe, Louisiana is the only
one of the Company's facilities that is a direct discharger to a water body and a permit currently covers its

8

---

discharges
to the Ouachita River. The Company's other operations discharge to publicly owned treatment works and are subject to pretreatment requirements and limitations.

The federal Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") establishes liability for waste generators, current and former site owners and operators and
others in connection with releases of hazardous materials. In several instances, the Company has been identified



as a Potentially Responsible Party ("PRP") under CERCLA and similar state laws. These actions are not material.

In 1998, the U.S. Environmental Protection Agency adopted regulations (generally referred to as the "cluster rules") that mandated more stringent controls on air and water discharges
from United States pulp and paper mills. Over the next three years, the Company anticipates that it will spend approximately $22 million at its two U.S. mills to comply with these regulations.
These costs have not been accrued, but rather are a part of the Company's capital expenditure plan. Most of these costs are anticipated to be incurred in the first two quarters of 2005.

The Company is involved in environmental investigation and remediation projects for certain properties currently or formerly owned or operated by the Company, and at certain waste
disposal sites. Some of these projects are being addressed under federal and state statutes, such as the CERCLA and analogous state laws. The Company's costs in certain instances cannot be reliably
estimated until the remediation process is substantially underway or liability has been addressed. The Company accrues reserves for these contingencies when the liability is probable and the costs are
reasonably estimable. The Company has accrued the following amounts for environmental losses as of March 31, 2003: approximately $0.4 million for the Line Avenue Site described below,
approximately $0.3 million for the Shoreline Refinery Site described below, and approximately $0.1 million for general environmental matters. The Company is not aware of any material
unaccrued loss that is reasonably estimable where liability is probable. The Company believes that based on current information and regulatory requirements, its accruals for environmental matters are
adequate. However, there can be no assurance that the Company will not incur significant costs in excess of accrued amounts in connection with remediation activities and other environmental matters.

In late 1995, the Louisiana Department of Environmental Quality (the "DEQ") notified the Predecessor of potential liability for the remediation of hazardous substances at a former wood
treatment site in Shreveport, Louisiana (known as the Line Avenue Site) that the Predecessor or its predecessors previously operated. In August 2001, the Company entered into an agreement with
the DEQ and the landowners to remediate the site. The agreement required the removal of soils containing wood-treating constituents in excess of regulatory standards, consolidation of
these soils in a sub-portion of the site, capping of the sub-portion, land use restrictions, future operations and maintenance ("O&M") to ensure the integrity of the cap,
long-term monitoring of the groundwater, and a recorded prohibition on the use of on-site groundwater. The Company contracted with a qualified contractor to remediate the site
at a cost of approximately $1.3 million. In addition, each of the O&M and groundwater monitoring costs for the initial five years are expected to be approximately $0.1 million (no such
costs are estimated beyond the initial five-year period). As of March 31, 2003, all of the required soil excavation and consolidation has been completed. The Company expects to
complete construction of the cap by July 2003. As of March 31, 2003, the Company has paid its contractor approximately $1.0 million to remediate the site. The Company has been
reimbursed

9

---

approximately half of these costs from a PRP that has entered into a settlement agreement with the Company. The Company owes its contractor approximately $0.3 million in connection with
activities at the site.

On July 6, 2000, the Company and the DEQ entered into a Settlement Agreement for remediation of a site in Caddo Parish, Louisiana (known as the Shoreline Refinery Site). The
principal contamination at this site was an approximately 5 acre impoundment of oil-based sludge that appeared to originate from an oil refinery that was operated by prior operators. The
remedial action contemplated by the Settlement Agreement required the neutralization, stabilization and consolidation of sludges and soils at the site, capping of the consolidated materials, the
establishment of a vegetative cover, and five years of post-closure care of the capped area. The Company contracted to complete the remedial action in accordance with the terms of the
Settlement Agreement. In a November 26, 2002 letter to the Company, the DEQ stated that all required construction activities were accomplished and that the five-year
post-closure care and reporting period would commence. The Company conveyed the property to its contractor on October 22, 2000. Based on the terms of the Settlement Agreement, the
DEQ's November 26, 2002 letter and the fact that the property has been sold to the Company's contractor, the Company does not expect to incur additional costs in connection with this site.

The Company is a party to a number of lawsuits arising out of the ordinary conduct of its business. While there can be no assurance as to their ultimate outcome, the Company does not
believe that these lawsuits will have a material impact on the results of operations, cash flows or financial condition of the Company. The Company has accrued an aggregate of approximately
$0.4 million for several tort, workers compensation and former employee related claims and lawsuits. The Company is not aware of any material unaccrued loss that is reasonably estimable where
liability is probable.

The
Company has been a plaintiff in actions filed in the U.S. District Court for the Northern District of Georgia against The MeadWestvaco Corporation ("MeadWestvaco"), successor by
merger to The Mead Corporation, and R.A. Jones Co. Inc. ("R.A. Jones") claiming infringement of the Company's patents for its packaging machines and seeking damages sufficient to compensate for
such infringement. The patents in suit were found infringed but invalid by a jury in a trial against R.A. Jones in August 2001. This finding of invalidity as to U.S. Patent Nos. 5,666,789 and
5,692,361 was appealed to the Court of Appeals for the Federal Circuit (the "CAFC"). The suit against MeadWestvaco was dismissed by mutual agreement, subject to being refiled, pending the outcome of
the appeal of the decision in the case against R.A. Jones. The CAFC vacated the holding of invalidity as to U.S. Patent Nos. 5,666,789 and 5,692,361 and remanded to the District Court for
determination of proper inventive entity. The finding of infringement was affirmed by the CAFC. Further proceedings consistent with the decision of the CAFC will follow in the District Court.

10

---



NOTE 5BUSINESS SEGMENT INFORMATION

The Company reports its results in two business segments: Coated Board and Containerboard. These segments are evaluated by the chief operating decision maker
based primarily on income from operations. The Company's reportable segments are strategic business units that offer different products. The Coated Board business segment includes the production and
sale of coated board for its beverage multiple packaging and consumer products packaging businesses from its West Monroe, Louisiana and Macon, Georgia mills and from its mill in Sweden; carton
converting facilities in the United States, Europe and Brazil; and the design, manufacture and installation of packaging machinery related to the assembly of beverage cartons. The Containerboard
business segment includes the production and sale of linerboard, corrugating medium and kraft paper from paperboard mills in the United States.

Business
segment information is as follows:

Three Months Ended(In thousands of dollars)

March 31,
2003

March 31,
2002NET SALES:Coated Board

$
275,912

$
272,026Containerboard


22,114


19,158$
298,026

$
291,184INCOME FROM OPERATIONS:Coated Board

$
38,880

$
44,138Containerboard


(6,677
)

(8,276
)Corporate And Eliminations


(7,280
)

(4,993
)$
24,923

$
30,869


NOTE 6DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company is exposed to fluctuations in interest rates on its variable rate debt and fluctuations in foreign currency transaction cash flows. The Company
actively monitors these fluctuations and uses derivative instruments from time to time to manage its exposure. In accordance with its risk management strategy, the Company uses derivative instruments
only for the purpose of managing risk associated with fluctuations in the cash flow of the underlying exposures identified by management. The Company does not trade or use derivative instruments with
the objective of earning financial gains on interest or currency rates, nor does it use leveraged instruments or instruments where there are no underlying exposures identified. The Company's use of
derivative instruments may result in short-term gains or losses and may increase volatility in its earnings.

The
following is a summary of the Company's derivative instruments as of March 31, 2003 and the accounting policies it employs:

Hedges of Anticipated Cash Flows

The following is a reconciliation of current period changes in the fair value of the interest rate swap agreements and foreign currency forward and option
contracts which have been recorded as

11

---

Accumulated
Derivative Instruments Loss in the accompanying Condensed Consolidated Balance Sheets at March 31, 2003 and December 31, 2002 and as Derivative Instruments (Loss) Gain in the
accompanying Condensed Consolidated Statement of Operations and Comprehensive (Loss) for the three months ended March 31, 2003.

|(In thousands of dollars)             |  |   |        |  
|------------------------------------- |  | - | ------ | -
|Balance at December 31, 2001          |  | $ | (4,570 | )
|Reclassification to earnings          |  |   | 6,014  |  
|Current period decrease in fair value |  |   | (7,579 | )
|                                      |  |   |       
|Balance at December 31, 2002          |  |   | (6,135 | )
|Reclassification to earnings          |  |   | 994    |  
|Current period decrease in fair value |  |   | (1,251 | )
|                                      |  |   |       
|Balance at March 31, 2003             |  | $ | (6,392 | )
|                                      |  |   |       

At
March 31, 2003, there was no material ineffective portion related to the changes in fair value of the interest rate swap agreements or foreign currency forward and option
contracts and there were no amounts excluded from the measure of effectiveness.

The
balance of $6.4 million recorded in Accumulated Derivative Instruments Loss at March 31, 2003 is expected to be reclassified into future earnings, contemporaneously
with and offsetting changes in the related hedged exposure. The estimated amount to be reclassified into future earnings as interest expense over the next twelve months through March 31, 2004
is approximately $4.4 million. The actual
amount that will be reclassified to future earnings over the next twelve months may vary from this amount as a result of changes in market conditions. No amounts were reclassified to earnings during
2003 in connection with forecasted transactions that were no longer considered probable of occurring.

The
Company uses interest rate swap agreements to fix a portion of its variable rate Term Loan Facility to a fixed rate in order to reduce the impact of interest rate changes on future
income. The differential to be paid or received under these agreements is recognized as an adjustment to interest expense related to the debt. At March 31, 2003, the Company had interest rate
swap agreements with a notional amount of $410 million, which expire on various dates through the year 2003 and 2004 under which the Company will pay fixed rates of 2.21% to 3.52% and receive
three-month LIBOR.

Derivatives not Designated as Hedges

The Company has foreign currency forward contracts used to hedge the exposure associated with foreign currency denominated receivables. These contracts are
presently being marked-to-market through the income statement and will continue to be marked-to-market through the income statement.

The
Company enters into fixed price natural gas contracts designed to effectively hedge prices for a substantial portion of its natural gas requirements at its two U.S. mills. The
purpose of the fixed price natural gas contracts is to eliminate or reduce price risk with a focus on making cash flows more predictable. As of March 31, 2003, the Company had entered into
contracts to hedge substantially all of its natural gas requirements for its two U.S. mills through October 31, 2003. The contract price and fair value of these natural gas contracts was
approximately $10.8 million and $14.9 million, respectively.

12

---

These
contracts are not accounted for as derivative instruments under SFAS No. 133, as they qualify for the normal purchase exemption.

NOTE 7NEW ACCOUNTING PRONOUNCEMENTS

In June 2001, the FASB issued SFAS No. 143,"Accounting for Asset Retirement Obligations"("SFAS
No. 143"), which is effective January 1, 2003. SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. The Company adopted SFAS No. 143 effective January 1, 2003 and the adoption did not have a significant impact on
its financial position and results of operations.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections as of April 2002"("SFAS No. 145"). This statement rescinds SFAS No. 4,"Reporting Gains and Losses from
Extinguishment of Debt"("SFAS No. 4") and an amendment of the Statement, SFAS No. 64,"Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements."This Statement also rescinds SFAS No. 44,"Accounting for Intangible Assets of Motor
Carriers."This statement amends SFAS No. 13,"Accounting for Leases", to eliminate an inconsistency between the required
accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback
transactions. The Company adopted SFAS No. 145 effective January 1, 2003 and the adoption resulted in a reclassification of expenses from Extraordinary Loss on Early Extinguishment of
Debt to Loss on Early Extinguishment of Debt included in (Loss) before Income Taxes and Equity in Net Earnings of Affiliates of approximately $11.5 million, $8.7 million and
$2.1 million for the years ended December 31, 2002, 2001 and 2000, respectively, associated with the rescission of SFAS No. 4.

In
July 2002, the FASB issued SFAS No. 146,"Accounting for Costs Associated with Exit or Disposal Activities"("SFAS
No. 146"), which was effective December 31, 2002. SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies
Emerging Issues Task Force ("EITF") Issue No. 94-3,"Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)."This Statement requires that a liability for a cost associated with an exit or disposal activity be recognized when the
liability is incurred, and concludes that an entity's commitment to an exit plan does not by itself create a present obligation that meets the definition of a liability. This Statement also
establishes that fair value is the objective of initial measurement of the liability. The provisions of this Statement are effective for exit or disposal activities that are initiated after
December 31, 2002, with early application encouraged. The Company adopted SFAS No. 146 effective January 1, 2003 and the adoption did not have a significant impact on its
financial position and results of operations.

In
December 2002, the FASB issued SFAS No. 148,"Accounting for Stock-Based CompensationTransition and Disclosure, Amendment of SFAS
No. 123"("SFAS No. 148"). This Statement provides additional transition guidance for those entities that elect to voluntarily adopt the provisions of SFAS
No. 123,"Accounting for Stock-Based Compensation."Furthermore, SFAS No. 148 mandates new disclosures in both interim and
year-end financial statements within the Company's Significant Accounting Policies footnote. The Company has elected not to adopt the recognition provisions of SFAS No. 123, as
amended by SFAS No. 148 (See Note 2).

13

---

NOTE 8DEFINITIVE MERGER AGREEMENT

On March 25, 2003, Riverwood Holding, Riverwood Acquisition Sub LLC, a Delaware limited liability company and a wholly-owned subsidiary of Riverwood
Holding ("Merger Sub") and Graphic Packaging





International Corporation, a Colorado corporation ("Graphic") entered into an Agreement and Plan of Merger (the "Merger Agreement"). Pursuant to the Merger Agreement and other related transaction
documents, Graphic will merge with and into Merger Sub (the "Graphic Merger"). Prior to consummation of the Graphic Merger, Riverwood Holding will effect a stock split. In connection with the Graphic
Merger, the shareholders of Graphic will receive one share of Riverwood Holding common stock and associated Riverwood Holding shareholder rights for each share of Graphic common stock and associated
Graphic shareholder rights they own immediately prior to the Graphic Merger. Upon completion of the transaction, holders of Riverwood Holding common stock will own 57.5% and holders of Graphic common
stock will own 42.5% of the common stock of Riverwood Holding, each calculated on a fully diluted basis. The Merger Agreement has been approved by the respective Boards of Directors of Riverwood
Holding and Graphic. Consummation of the Graphic Merger is subject to customary closing conditions, including approval by Graphic's shareholders and regulatory approvals.

In
connection with the execution of the Merger Agreement, Riverwood Holding and certain major shareholders of Graphic entered into a Voting Agreement dated March 25, 2003 (the
"Voting Agreement") pursuant to which such shareholders agreed to vote for the Graphic Merger and against any other transaction involving Graphic. In addition, pursuant to the Voting Agreement and as
a condition to the effectiveness of the Graphic Merger, The Grover C. Coors Trust (the "Trust"), the holder of Graphic's 10% Series B Convertible Preferred Stock (the "Preferred Stock") has
agreed to convert all of the outstanding shares of the Preferred Stock into Graphic common stock. In consideration for the Trust's conversion of the Preferred Stock, Riverwood Holding has agreed to
pay the Trust, in cash, a conversion payment, in an amount equal to the estimated present value, calculated using a discount rate of 8.5%, of dividends payable to the Trust on the Preferred Stock from
the effective time of the Graphic Merger through August 15, 2005, the first date on which Graphic could have redeemed the Preferred Stock. While the exact amount that will be paid to the Trust
by Riverwood Holding depends upon the date of completion of the Graphic Merger, assuming that the effective time of the Graphic Merger will occur on July 1, 2003, Riverwood Holding currently
anticipates that the payment in consideration for the conversion of the Preferred Stock will be approximately $19.7 million.

On
May 3, 2002, Riverwood Holding filed a Form S-1 registration statement with the Securities and Exchange Commission ("SEC") for the registration under the
Securities Act of 1933 of $350 million of its common stock in a proposed initial public offering. On March 27, 2003, Riverwood Holding filed with the SEC an application to withdraw the
registration statement. As a result, the Company recorded an approximate $1.9 million charge in the first quarter of 2003 to write off costs it had deferred associated with the proposed
transaction.

NOTE 9SUBSEQUENT EVENT

On May 2, 2003, Riverwood Holding filed a Form S-4 registration statement with the SEC for the registration under the Securities Act of
1933 of the shares of Riverwood Holding common stock being issued to Graphic shareholders in the Graphic Merger.

14

---

NOTE 10SUBSEQUENT ADOPTION OF AN ACCOUNTING PRONOUNCEMENT

As discussed in Note 7, the Company adopted SFAS No. 145 effective January 1, 2003 and the adoption resulted in a reclassification of
expenses from Extraordinary Loss on Early Extinguishment of Debt to Loss on Early Extinguishment of Debt included in (Loss) before Income Taxes and Equity in Net Earnings of Affiliates of
approximately $11.5 million, $8.7 million and $2.1 million for the years ended December 31, 2002, 2001 and 2000, respectively, associated with the rescission of SFAS
No. 4.

15

---

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

The Company reports its results in two business segments: Coated Board (relating to the Company's coated unbleached kraft paperboard ("CUK Board") used in its
beverage multiple packaging and consumer products packaging businesses) and Containerboard. The Coated Board business segment includes (1) the production and sale of CUK Board for cartons from
the Company's West Monroe, Louisiana and Macon, Georgia mills and white lined chip board ("WLC") from its paper mill in Norrköping, Sweden; (2) carton converting plants in the
United States, Europe and Brazil; and (3) the design, manufacture and installation of packaging machinery related to the assembly of cartons for beverage and non-beverage consumer
products applications. The Containerboard business segment includes the production and sale of linerboard, corrugating medium and kraft paper from paperboard mills in the United States. The Company
intends to stop producing linerboard as it continues to shift production capacity to higher margin CUK Board.

The table below sets forth EBITDA as defined in the Company's Senior Secured Credit Agreement (defined below), which we refer to as "Credit Agreement EBITDA". Credit Agreement EBITDA as
presented below is a financial measure that is used in the Company's Senior Secured Credit Agreement. Credit Agreement EBITDA is not a defined term under accounting principles generally accepted in
the United States and should not be considered as an alternative to income from operations or net income as a measure of operating results or cash flows as a measure of liquidity. Credit Agreement
EBITDA differs from the term "EBITDA" (earnings before interest expense, income tax expense, and depreciation and amortization) as it is commonly used. In addition to adjusting net income to exclude
interest expense, income tax expense, and depreciation and amortization, Credit Agreement EBITDA also adjusts net income by excluding certain other items and expenses, as specified below. The
Company's Senior Secured Credit Agreement requires it to comply with a specified debt to Credit Agreement EBITDA leverage ratio and a specified consolidated Credit Agreement EBITDA to interest expense
ratio for specified periods. The specific ratios are set out under "Financial Condition, Liquidity and Capital Resources" below.

Borrowings under the Senior Secured Credit Agreement are a key source of the Company's liquidity. The Company's ability to borrow under the Senior Secured Credit Agreement is dependent
on, among other things, its compliance with the financial ratio covenants referred to in the preceding paragraph. Failure to comply with these financial ratio covenants would result in a violation of
the Senior Secured Credit Agreement and, absent a waiver or amendment from the lenders under such agreement, permit the acceleration of all outstanding borrowings under the Senior Secured Credit
Agreement.

16

---

The calculation of Credit Agreement EBITDA for the periods indicated is set forth below.

(In thousands of dollars)For the Three Months Ended March 31, 2003Net (Loss) Income

$
(9,766
)Income Tax Expense


1,016Interest Expense, Net


33,877Depreciation and Amortization


31,161Equity in Net Earnings of Affiliates


(204
)Other non-cash charges (A)


3,558Credit Agreement EBITDA (B)

$
59,642For the Three Months Ended March 31, 2002Net (Loss) Income

$
(7,717
)Income Tax Expense


95Interest Expense, Net


38,605Depreciation and Amortization


32,103Equity in Net Earnings of Affiliates


(114
)Other non-cash charges (A)


(724
)Dividends from equity investments


612Credit Agreement EBITDA (B)

$
62,860


---

Notes:

Business Trends and Initiatives

The Company's net sales, income from operations and cash flow from operations are influenced by sales volume and selling prices for its products and raw material
and energy costs, and are affected by a number of significant business, economic and competitive factors. Many of these factors are not within the Company's control. Historically, in the Coated Board
business segment, the Company has experienced stable pricing for its integrated beverage carton products, and moderate cyclical pricing for its cartonboard, which historically has been principally
sold in the open market. The Company's cartonboard sales are affected by competition from competitors' CUK Board and other substratessolid bleached sulfate ("SBS"), recycled clay coated
news ("CCN") and, internationally, WLCas well as by general market conditions.

In
the Containerboard business segment, conditions in the cyclical worldwide commodity paperboard markets have a substantial impact on the Company's Containerboard sales. During the
first quarter of 2003, the Company did not take any market related downtime at its U.S. mills. The Company expects to take 7 days, or approximately 2,700 tons, of medium market related downtime
during 2003 on its medium machine, but the amount of downtime could change depending upon market conditions. The downtime results from a number of factors, but principally a weak containerboard market
and production above planned rates. As a result of expected downtime during

17

---

2003,
the Company estimates the impact on earnings at its U.S. mills to be approximately $0.5 million related to the under-absorption of fixed costs.

Energy,
including natural gas, fuel oil and electricity, represents a significant portion of the Company's manufacturing costs. During the first quarter of 2003, the Company's financial
results were negatively affected by energy costs when compared to the first quarter of 2002. The Company entered into fixed price natural gas contracts designed to mitigate the impact of future cost
increases for its natural gas requirements at its two U.S. mills through and including October 2003, and will continue to evaluate its hedge position.

In the fourth quarter of 2002, the Company was notified by Coca-Cola Enterprises ("CCE") that CCE will not renew its supply contract with the Company. Under this contract,
which expired on March 31, 2003, the Company supplied to CCE beverage cartons made from the Company's CUK Board, packaging machines and related services. The Company's supply contracts with its
independent Coca-Cola bottling company customers are not subject to CCE's non-renewal notification. CCE's action did not impact the Company's 2002 results of operations. The
impact on the Company's 2003 results of operations will depend, in part, on the extent to which the Company supplies beverage cartons to CCE during a phase-out period beginning
April 1, 2003, which the Company continues to discuss with CCE. The Company continues to explore opportunities to replace the volumes that it will lose as a result of CCE's decision by seeking
to increase sales to existing and new customers and to develop new applications for its CUK Board. The Company continues to evaluate the impact of these developments and the recent increase in
beverage market competitiveness on its future pricing for its beverage packaging products. The Company can provide no assurances that it will be able to replace all or any portion of the volumes it
had expected to supply to CCE in 2003 and future periods or that it will be able to maintain current pricing levels on its beverage packaging products. If the Company cannot replace such volumes, the
Company estimates that its volumes will be negatively impacted by approximately 17,000 tons in 2003 and 36,000 tons in 2004 and thereafter. In 2002, the CCE business represented approximately 5% of
the Company's consolidated net sales.

The
Company is pursuing a number of long-term initiatives designed to improve productivity and profitability. The Company realigned its business into commercially-focused
operating units, implemented a global restructuring program, implemented a number of cost saving measures and effected several management changes. The Company is continuing to implement a global Total
Quality Systems ("TQS") initiative which uses statistical process control to help design and manage all types of activities including production and maintenance.

In
addition, the Company is continuing to implement a strategy focused on the expansion into the high-growth segments of the consumer products packaging market. The Company
is targeting segments of the non-beverage consumer products packaging market where it intends to capitalize on its expertise in beverage multiple packaging.

The
Company plans to implement an initiative designed to enhance the competitiveness of its beverage carton converting operations. This initiative is expected to add new manufacturing
technology, add press capacity and consolidate certain of the Company's beverage carton converting operations. The Company expects to make a capital investment of approximately $75 million, as
well as related costs, over the next 30 months.

The
Company expects capital expenditures will range from $110 million to $120 million in 2003 as the Company invests to improve its process capabilities, in packaging
machinery, and to comply with environmental cluster rules. See "Environmental and Legal Matters." The Company is accelerating certain capital driven cost reduction projects that will
deliver benefits in 2004 and 2005. The Company continues to evaluate its current operations and assets with a view to rationalizing its operations and improving profitability, in particular with
respect to its international converting assets and strategy. Finally, the Company is continuing to focus on reducing working capital and increasing liquidity.

18

---

Packaging
machinery placements during the first quarter of 2003 decreased approximately 47% when compared to the first quarter of 2002. This decrease was partially due to the timing of
shipments. The Company expects packaging machinery placements for 2003 to be comparable to 2002. The Company has been and will continue to be selective in future packaging machinery placements to
ensure appropriate returns.

On
May 3, 2002, Riverwood Holding filed a Form S-1 registration statement with the Securities and Exchange Commission for the registration under the Securities
Act of 1933 of $350 million of its common stock in a proposed initial public offering. On March 27, 2003, Riverwood Holding filed with the SEC an application to withdraw the registration
statement. As a result, the Company recorded an approximate $1.9 million charge in the first quarter of 2003 to write off costs it had deferred associated with the proposed transaction.

On March 25, 2003, Riverwood Holding, Riverwood Acquisition Sub LLC, a Delaware limited liability company and a wholly-owned subsidiary of Riverwood Holding ("Merger Sub") and
Graphic Packaging International Corporation, a Colorado corporation ("Graphic") entered into an Agreement and Plan of Merger (the "Merger Agreement"). Pursuant to the Merger Agreement and other
related transaction



documents, Graphic will merge with and into Merger Sub (the "Graphic Merger"). Prior to consummation of the Graphic Merger, Riverwood Holding will effect a stock split. In connection with the Graphic
Merger, the shareholders of Graphic will receive one share of Riverwood Holding common stock and associated Riverwood Holding shareholder rights for each share of Graphic common stock and associated
Graphic shareholder rights they own immediately prior to the Graphic Merger. Upon completion of the transaction, holders of Riverwood Holding common stock will own 57.5% and holders of Graphic common
stock will own 42.5% of the common stock of Riverwood Holding, each calculated on a fully diluted basis. The Merger Agreement has been approved by the respective Boards of Directors of Riverwood
Holding and Graphic. Consummation of the Graphic Merger is subject to customary closing conditions, including approval by Graphic's shareholders and regulatory approvals.

In
connection with the execution of the Merger Agreement, Riverwood Holding and certain major shareholders of Graphic entered into a Voting Agreement dated March 25, 2003 (the
"Voting Agreement") pursuant to which such shareholders agreed to vote for the Graphic Merger and against any other transaction involving Graphic. In addition, pursuant to the Voting Agreement and as
a condition to the effectiveness of the Graphic Merger, The Grover C. Coors Trust (the "Trust"), the holder of Graphic's 10% Series B Convertible Preferred Stock (the "Preferred Stock") has
agreed to convert all of the outstanding shares of the Preferred Stock into Graphic common stock. In consideration for the Trust's conversion of the Preferred Stock, Riverwood Holding has agreed to
pay the Trust, in cash, a conversion payment, in an amount equal to the estimated present value, calculated using a discount rate of 8.5%, of dividends payable to the Trust on the Preferred Stock from
the effective time of the Graphic Merger through August 15, 2005, the first date on which Graphic could have redeemed the Preferred Stock. While the exact amount that will be paid to the Trust
by Riverwood Holding depends upon the date of completion of the Graphic Merger, assuming that the effective time of the Graphic Merger will occur on July 1, 2003, Riverwood Holding currently
anticipates that the payment in consideration for the conversion of the Preferred Stock will be approximately $19.7 million.

On
May 2, 2003, Riverwood Holding filed a Form S-4 registration statement with the Securities and Exchange Commission for the registration under the Securities
Act of 1933 of the shares of Riverwood Holding common stock being issued to Graphic shareholders in the Graphic Merger.

Outlook

The Company expects that its 2003 full year income from operations will be comparable to its 2002 income from operations, although no assurance can be given in
this regard. The achievement of this expectation is dependent upon (among other things) a number of profit improvement initiatives,

19

---

including increasing worldwide beverage and North American consumer products sales volumes above 2002 levels, improving U.S. mill throughput, continued cost savings from other actions taken to date
and stable pricing for the Company's products. In 2003, the Company expects sales volume increases in its worldwide beverage markets, and continued growth in its North American consumer products
markets. The Company expects containerboard sales and margins to be negatively affected in 2003 due to the continued negative market pressures on containerboard pricing and sales volumes. The Company
believes that energy costs will negatively impact its results for 2003.

Critical Accounting Policies

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires the Company to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. These estimates and assumptions are based on historical experience and various other factors that are believed to be reasonable under the
circumstances. Actual results could differ from these estimates under different assumptions or conditions.

The Company believes the following accounting policies are the most critical since these policies require significant judgment or involve complex estimations that are important to the
portrayal of the Company's financial conditions and operating results:





20

---



21

---



RESULTS OF OPERATIONS

The Company has previously restated its results of operations for the first three quarters of 2002, to report its investment in Rengo Riverwood
Packaging Ltd. ("Rengo") using the equity method and to report its change in its method of determining the cost of inventories from the last-in, first-out method to the
first-in, first-out method.

|                                              |                            | Three Months Ended |        
|--------------------------------------------- | -------------------------- | ------------------ | -------
|
|Net Sales (Segment Data):                     |                            |                    |        
|                                              | Coated Board               |                    | $      
|                                              | Containerboard             |                    |        
|                                              |                            |                    |        
|Net Sales                                     |                            |                    | 298,026
|Cost of Sales                                 |                            |                    | 239,889
|                                              |                            |                    |        
|Gross Profit                                  |                            |                    | 58,137 
|Selling, General and Administrative           |                            |                    | 29,870 
|Research, Development and Engineering         |                            |                    | 1,467  
|Other Expense (Income), Net                   |                            |                    | 1,877  
|                                              |                            |                    |        
|Income from Operations                        |                            | $                  | 24,923 
|                                              |                            |                    |        
|Income (Loss) from Operations (Segment Data): |                            |                    |        
|                                              | Coated Board               |                    | $      
|                                              | Containerboard             |                    |        
|                                              | Corporate and Eliminations |                    |        
|                                              |                            |                    |        
|Income from Operations                        |                            | $                  | 24,923 
|                                              |                            |                    |        
|Other Financial Data:                         |                            |                    |        
|Net Sales:                                    |                            |                    |        
|                                              | Carrierboard               |                    | $      
|                                              | Cartonboard                |                    |        
|                                              | White lined chip board     |                    |        
|                                              | Containerboard             |                    |        
|                                              | Other (A)                  |                    |        

---

Note:

Paperboard Shipments

The following represents shipments of coated board and containerboard to outside customers. Shipments of coated board represent sales to customers of beverage
carrierboard and folding cartonboard. Shipments of white lined chip board represent sales to customers of WLC produced at the Swedish Mill. Shipments of containerboard represent sales to customers of
linerboard, corrugating

22

---

medium,
kraft paper and various other items. Other primarily represents shipments of certain by-products. Total shipments for the first quarters ended March 31, 2003 and 2002 were
as follows:

Three Months Ended(In thousands of tons)

March 31, 2003

Increase (Decrease) From Prior Period

March 31, 2002Coated BoardCarrierboard

152.4

(1.5
)%
154.7Cartonboard

90.0

1.0

89.1White Lined Chip Board

43.0

9.4

39.3Containerboard

65.1

13.2

57.5Other

3.6

(44.6
)
6.5354.1

2.0
%
347.1


Net Sales

As a result of the factors described below, the Company's Net Sales in the first quarter of 2003 increased by $6.9 million, or 2.3%, to
$298.0 million from $291.1 million in the first quarter of 2002. Net Sales in the Coated Board business segment increased by $3.9 million, or 1.4%, to $275.9 million in the
first quarter of 2003 from $272.0 million in the first quarter of 2002, due primarily to the positive impact of foreign currency exchange rates, higher sales volume in North American consumer
products markets resulting principally from the Company's increased efforts designed to generate growth in the consumer packaged goods sector, and higher sales volumes from the Swedish Mill as a
result of market share gains. These increases were somewhat offset by lower pricing in North American beverage markets as a result of increased beverage market competitiveness. Net Sales in the
Containerboard business segment increased by $2.9 million, or 15.4%, to $22.1 million in the first quarter of 2003 from $19.2 million in the first quarter of 2002, due primarily
to higher medium volumes and higher linerboard pricing as a result of slightly improved market conditions.

Gross Profit

As a result of the factors discussed below, the Company's Gross Profit for the first quarter of 2003 increased by $0.8 million, or 1.4%, to
$58.1 million from $57.3 million in the first quarter of 2002. The Company's gross profit margin decreased to 19.5% in the first quarter of 2003 from 19.7% in the first quarter of 2002.

The following table displays the gross profit for each of the Company's segments:

Three Months
Ended
March 31,
2003

Increase
(Decrease) From Prior Period

Three Months
Ended
March 31,
2002Coated BoardNet Sales

$
275,912

1.4
%
$
272,026Cost of Sales


212,219

2.3


207,469Gross Profit

$
63,693

(1.3
)%
$
64,557ContainerboardNet Sales

$
22,114

15.4
%
$
19,158Cost of Sales


27,670

4.9


26,386Gross Profit

$
(5,556
)
23.1
%
$
(7,228
)


23

---

Gross Profit in the Coated Board business segment decreased by $0.9 million, or 1.3%, to $63.7 million in the first quarter of 2003 from $64.6 million in the first
quarter of 2002, while gross profit margin decreased to 23.1% in the first quarter of 2003 from 23.7% in the first quarter of 2002. The decrease in Coated Board Gross Profit was due primarily to the
lower pricing in North American beverage markets as a result of increased beverage market competitiveness, higher energy costs and higher non-cash pension costs as a result of the decline
in market values of the Company's pension assets due to unfavorable market conditions. These decreases were somewhat offset by higher Net Sales as a result of the factors discussed above and worldwide
cost reductions as a result of savings gained from the Company's TQS and other initiatives. Gross Profit in the Containerboard business segment increased by $1.6 million to a loss of
$5.6 million in the first quarter of 2003 from a loss of $7.2 million in the first quarter of 2002, while its gross profit margin increased to (25.1)% in the first quarter of 2003 from
(37.7)% in the first quarter of 2002. The increase in Containerboard Gross Profit resulted principally from higher linerboard pricing as a result of slightly improved market conditions.

Selling, General and Administrative

Selling, General and Administrative expenses increased by $2.3 million, or 8.2%, to $29.9 million in the first quarter of 2003 from
$27.6 million in the first quarter of 2002, due primarily to increased activities to support the Company's consumer products packaging business, inflation and higher non-cash
pension costs as a result of the decline in market values of the Company's pension assets due to unfavorable market conditions. As a percentage of Net Sales, Selling, General and Administrative
expenses increased to 10.0% in the first quarter of 2003 from 9.5% in the first quarter of 2002.

Research, Development and Engineering

Research, Development and Engineering expenses increased by $0.2 million, or 11.5%, to $1.5 million in the first quarter of 2003 from
$1.3 million in the first quarter of 2002.

Other Expense (Income), Net

Other Expense (Income), Net, was $1.9 million in the first quarter of 2003 as compared to $(2.5) million in the first quarter of 2002. This change was
principally due to a non-cash pension adjustment recorded in the first quarter of 2002 and the approximate $1.9 million charge in the first quarter of 2003 recorded to write off
deferred costs associated with the proposed initial public offering (see "Business Trends and Initiatives").

Income from Operations

Primarily as a result of the factors discussed above, the Company's Income from Operations in the first quarter of 2003 decreased by $6.0 million, or
19.3%, to $24.9 million from $30.9 million in the first quarter of 2002, while its operating margin decreased to 8.4% in the first quarter of 2003 from 10.6% in the first quarter of
2002. Income from Operations in the Coated Board business segment decreased by $5.2 million, or 11.9%, to $38.9 million in the first quarter of 2003 from $44.1 million in the
first quarter of 2002, while the operating margin decreased to 14.1% in the first quarter of 2003 from 16.2% in the first quarter of 2002, primarily as a result of the factors described above. Income
from Operations in the Containerboard business segment increased by $1.6 million, or 19.3%, to a loss of $6.7 million in the first quarter of 2003 from a loss of $8.3 million in
the first quarter of 2002, while the operating margin increased to (30.2)% in the first quarter of 2003 from (43.2)% in the first quarter of 2002, primarily as a result of the factors described above.

Fluctuations in U.S. Currency Exchange Rates

The weakening of the U.S. dollar currency exchange rates as compared to the Euro and other European currencies and the Japanese Yen had a modest impact on Net
Sales, Gross Profit, Income from Operations, and operating expenses during the first quarter of 2003.

24

---



INTEREST INCOME, INTEREST EXPENSE, INCOME TAX EXPENSE, AND   EQUITY IN NET EARNINGS OF AFFILIATES

Interest Income

Interest Income decreased by $0.4 million to $0.1 million in the first quarter of 2003 from $0.5 million in the first quarter of 2002 due
primarily to lower average interest rates and interest received in the first quarter of 2002 on monies held in escrow.

Interest Expense

Interest Expense decreased by $5.1 million to $34.0 million in the first quarter of 2003 from $39.1 million in the first quarter of 2002 due
primarily to lower average interest rates as a result of market interest rates and the second quarter 2002 refinancing.

Income Tax Expense

During the first quarter of 2003, the Company recognized an income tax expense of $1.0 million on (Loss) before Income Taxes of $(9.0) million. During the
first quarter of 2002, the Company recognized an income tax expense of $0.1 million on (Loss) before Income Taxes of $(7.7) million. Income Tax Expense on income earned in the United States and
certain foreign countries for the first quarter of both 2003 and 2002 was fully offset by a reduction to valuation allowances recorded for those countries. Income Tax Expense for the first quarter of
2003 and 2002 primarily represents Income Tax Expense on income earned in other foreign countries where no valuation allowance is recorded. Since income earned in those foreign countries was higher
for the first quarter of 2003 in comparison to the first quarter of 2002, Income Tax Expense was higher for the same period.

Equity in Net Earnings of Affiliates

Equity in Net Earnings of Affiliates increased by $0.1 million to $0.2 million in the first quarter of 2003 from $0.1 million in the first
quarter of 2002 as a result of the Company's equity in net earnings of Rengo.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

The Company broadly defines liquidity as its ability to generate sufficient cash flow from operating activities to meet its obligations and commitments. In
addition, liquidity includes the ability to obtain appropriate debt and equity financing and to convert into cash those assets that are no longer required to meet existing strategic and financial
objectives. Therefore, liquidity cannot be considered separately from capital resources that consist of current or potentially available funds for use in achieving long-range business
objectives and meeting debt service commitments.

The Company's net sales, income from operations and cash flows from its operations are subject to moderate seasonality with demand usually increasing in the spring and summer due to the
seasonality of the worldwide beverage multiple packaging markets.

Cash Flows

Cash and Equivalents decreased by approximately $3.1 million in the first quarter of 2003. Cash provided by operating activities in the first quarter of
2003 totaled $17.1 million, compared to a use of cash of $0.5 million in the first quarter of 2002. This improvement was principally due to favorable changes in operating assets and
liabilities, primarily receivables and accounts payable and other accrued liabilities, as the Company continues to focus on reducing its working capital levels. Cash used in investing activities in
the first quarter of 2003 totaled $20.7 million, compared to $13.2 million in the first quarter of 2002. This change was principally due to a 59.4% increase in purchases of property,

25

---

plant, and equipment. Cash provided by financing activities in the first quarter of 2003 totaled $0.4 million, compared to $18.9 million in the first quarter of 2002. This change was
principally due to higher net borrowings under the Company's revolving credit facilities. Depreciation and amortization during the first quarter of 2003 totaled approximately $31.1 million and
is expected to be approximately $125 million to $135 million in 2003.

Liquidity and Capital Resources

The Company's liquidity needs arise primarily from debt service on its substantial indebtedness and from the funding of its capital expenditures, ongoing
operating costs and working capital.

The
Senior Secured Credit Agreement, dated August 10, 2001, among the Company and certain lenders, as amended (the "Senior Secured Credit Agreement"), provides for a
$335 million term loan facility (the "2001 Term Loan Facility"), a $250 million term loan facility (the "2002 Term Loan Facility" and, together under the 2001 Term Loan Facility, the
"Term Loan Facilities") and a $300 million revolving credit facility (the "Revolving Facility" and collectively, the "Facilities").

As
of March 31, 2003, the Company had outstanding approximately $1,504 million of long-term debt, consisting primarily of $400 million of its
107/8% Senior Subordinated Notes due 2008 (the "Senior Subordinated Notes"), $500 million of its 105/8% Senior Notes due 2007 ("Senior Notes"), $584 million
outstanding under the Term Loan Facilities, $17 million under the Revolving Facility, and other debt issues and facilities.

The
Company currently anticipates entering into the following financing transactions (the "Related Financing Transactions") in connection with the Graphic Merger:



Debt Service

Principal and interest payments under the 2001 Term Loan Facility, the Revolving Facility and the 2002 Term Loan Facility, together with principal and interest
payments on the Senior Notes and the Senior Subordinated Notes, represent significant liquidity requirements for the Company. The 2001 Term Loan Facility matures on December 31, 2006 and
amortizes in semi-annual installments of $37.5 million beginning June 30, 2003 and of $46.25 million beginning June 30, 2005, amounting to principal payments of
$75.0 million, $75.0 million, $92.5 million and $92.5 million in 2003, 2004, 2005 and 2006 respectively. The 2002 Term Loan Facility amortizes in semi-annual
installments of $2.5 million annually in each of 2003, 2004, 2005 and 2006 with the remaining principal due at maturity on March 31, 2007. The Revolving Facility matures on
December 31, 2006.

The
loans under the Facilities bear interest at floating rates based upon the interest rate option elected by the Company. The term loans under the Senior Secured Credit Agreement bore
interest as of March 31, 2003 at an average rate per annum of 4.06%. The Senior Notes and the Senior Subordinated Notes bear interest at rates of 105/8% and
107/8%, respectively. The loans under the Revolving Facility bore interest as of March 31, 2003 at an average rate per annum of 5.10%.

26

---

Interest
expense in 2003 is expected to be approximately $130 million to $135 million, including approximately $7 million of non-cash amortization of
deferred debt issuance costs. During the first quarter of 2003, cash paid for interest was approximately $35.7 million.

The
Company expects that its working capital and business needs will require it to continue to have access to the Revolving Facility or a similar revolving credit facility after the
maturity date, and that the Company accordingly will have to extend, renew, replace or otherwise refinance such facility at or prior to such date. No assurance can be given that it will be able to do
so. The Company has in the past refinanced and in the future may seek to refinance its debt prior to the respective maturities of such debt.

The
Company uses interest rate swap agreements to fix a portion of its variable rate term loans to a fixed rate in order to reduce the impact of interest rate changes on future income.
The difference to be paid or received under these agreements is recognized as an adjustment to interest expense related to that debt. At March 31, 2003, the Company had interest rate swap
agreements with a notional amount of $410 million, under which the Company will pay fixed rates of 2.21% to 3.52% and receive three-month LIBOR.

Covenant Restrictions

The Senior Secured Credit Agreement, which governs the Facilities, imposes restrictions on the Company's ability to make capital expenditures and both the Senior
Secured Credit Agreement and the indentures governing the Senior Subordinated Notes and the Senior Notes limit the Company's ability to incur additional indebtedness. Such restrictions, together with
the highly leveraged nature of the Company, could limit the Company's ability to respond to market conditions, meet its capital spending program, provide for unanticipated capital investments or take
advantage of business opportunities. The covenants contained in the Senior Secured Credit Agreement, among other things, restrict the ability of the Company and its subsidiaries to dispose of assets,
incur additional indebtedness, incur guarantee obligations, prepay other indebtedness or amend other debt instruments, pay dividends, create liens on assets, enter into sale and leaseback
transactions, make investments, loans or advances, make acquisitions, engage in mergers or consolidations, change the business conducted by Riverwood and its subsidiaries, make capital expenditures
and engage in certain transactions with affiliates. The covenants contained in the indentures governing the Senior Subordinated Notes and the Senior Notes also impose restrictions on the operation of
the Company's business.

The
financial covenants in the Senior Secured Credit Agreement specify, among other things, the following requirements for each four quarter period ended during the following test
periods:

Test Period

Consolidated Debt to Credit Agreement EBITDA Leverage Ratio

Consolidated Credit
Agreement EBITDA to
Interest Expense RatioDecember 31, 2002December 30, 2003

5.50 to 1.00

2.00 to 1.00December 31, 2003December 30, 2004

5.00 to 1.00

2.10 to 1.00December 31, 2004December 30, 2005

4.70 to 1.00

2.25 to 1.00December 31, 2005December 30, 2006

4.40 to 1.00

2.25 to 1.00December 31, 2006March 31, 2007

4.40 to 1.00

2.25 to 1.00


At
March 31, 2003, the Company was in compliance with the financial covenants in the Senior Secured Credit Agreement. The Company's ability to comply in future periods with the
financial covenants in the Senior Secured Credit Agreement will depend on its ongoing financial and operating performance, which in turn will be subject to economic conditions and to financial,
business and other factors, many of which are beyond the Company's control and will be substantially dependent on the selling prices for the Company's products, raw material and energy costs, and the
Company's ability to successfully implement its overall business and profitability strategies (see "Outlook"). If a violation

27

---

of
any of the covenants occurred, the Company would attempt to get a waiver or an amendment from its lenders, although no assurance can be given that the Company would be successful in this regard.
The Senior Secured Credit Agreement and the indentures governing the Senior Subordinated Notes and the Senior Notes have covenants as well as certain cross-default or cross-acceleration provisions;
failure to comply with these covenants in any agreement could result in a violation of such agreement which could, in turn, lead to violations of other agreements pursuant to such cross-default or
cross-acceleration provisions.

The
Senior Secured Credit Agreement is collateralized by substantially all of the Company's assets.

Capital Expenditures

The Company's capital spending for the first quarter of 2003 was approximately $19.6 million, up 59.4% from $12.3 million in the first quarter of
2002. During the first quarter of 2003, the Company had capital spending of approximately $15.1 million for improving process capabilities, approximately $4.1 million for manufacturing
packaging machinery and approximately $0.4 million for compliance with cluster rules. Total capital spending for 2003 is expected to be between $110 million and $120 million, and
is expected to relate principally to improving the Company's process capabilities (approximately $98 million to $108 million), the production of packaging machinery (approximately
$10 million) and environmental cluster rules compliance (approximately $2 million). The Company is accelerating certain capital driven cost reduction projects that will deliver benefits
in 2004 and 2005. Over the next three years, the Company anticipates that it will spend approximately $22 million at its two U.S. mills to comply with the cluster rules.

Financing Sources and Cash Flows

The Revolving Facility matures on December 31, 2006. At March 31, 2003, the Company and its U.S. and international subsidiaries had the following
amounts of commitments, amounts outstanding and amounts available under revolving credit facilities:

(In thousands of dollars)

Total Amount of
Commitments

Total Amount
Outstanding

Total Amount
Available (A)Revolving Facility

$
300,000

$
16,950

$
282,408International Facilities


18,606


12,495


6,111$
318,606

$
29,445

$
288,519


---

Note:

The
Company is required by its insurance company to have a standby letter of credit to secure payment of Workers' Compensation claims. The letter of credit, with a value of
$0.4 million, expired on February 20, 2003 and was subsequently extended. The letter of credit will automatically be extended without amendment for successive one year periods from the
current expiration date and any future expiration date unless at least 45 days prior to the expiration date the Company is notified that the financial institution elects not to renew.

28

---

In addition, the Ohio Bureau of Workers' Compensation requires the Company to have a standby letter of credit for non-performance according to the conditions and obligations
as provided under Workers' Compensation law. It is a further condition of the letter of credit to cover all injuries or occupational disease claims incurred in any period prior to and/or during the
present term should the Company not perform. The letter of credit, with a value of $0.2 million, was renewed on September 20, 2002 and is automatically extended without amendment for
successive one year periods from the current expiration date and any future expiration date unless at least 60 days prior to the expiration date the Company is notified that the financial
institution elects not to renew.

The
Company anticipates pursuing additional working capital financing for its foreign operations as necessary. The Company believes that cash generated from operations, together with
amounts available under its Revolving Facility and other available financing sources, will be adequate to permit the Company to meet its debt service obligations, capital expenditure program
requirements, ongoing operating costs and working capital needs until the maturity of the Revolving Facility, although no assurance can be given in this regard. The Company's future financial and
operating performance, ability to service or refinance its debt and ability to comply with the covenants and restrictions contained in its debt agreements (see "Covenant Restrictions"),
will be subject to future economic conditions and to financial, business and other factors, many of which are beyond the Company's control and will be substantially dependent on the selling prices and
demand for the Company's products, raw material and energy costs, and the Company's ability to successfully implement its overall business and profitability strategies.

Derivative Instruments and Hedging Activities

The Company is exposed to fluctuations in interest rates on its variable rate debt and fluctuations in foreign currency transaction cash flows. The Company
actively monitors these fluctuations and uses derivative instruments from time to time to manage its exposure. In accordance with its risk management strategy, the Company uses derivative instruments
only for the purpose of managing risk associated with fluctuations in the cash flow of the underlying exposures identified by management. The Company does not trade or use derivative instruments with
the objective of earning financial gains on interest or currency rates, nor does it use leveraged instruments or instruments where there are no underlying exposures identified. The Company's use of
derivative instruments may result in short-term gains or losses and may increase volatility in its earnings.

The
following is a summary of the Company's derivative instruments as of March 31, 2003 and the accounting policies it employs:

Hedges of Anticipated Cash Flows

The following is a reconciliation of current period changes in the fair value of the interest rate swap agreements and foreign currency forward and option
contracts which have been recorded as Accumulated Derivative Instruments Loss in the accompanying Condensed Consolidated Balance Sheets at March 31, 2003 and December 31, 2002 and as
Derivative Instruments (Loss) Gain in the

29

---

accompanying
Condensed Consolidated Statement of Operations and Comprehensive (Loss) for the three months ended March 31, 2003.

Balance at December 31, 2001

$
(4,570
)Reclassification to earnings


6,014Current period decrease in fair value


(7,579
)Balance at December 31, 2002


(6,135
)Reclassification to earnings


994Current period decrease in fair value


(1,251
)Balance at March 31, 2003

$
(6,392
)


At
March 31, 2003, there was no material ineffective portion related to the changes in fair value of the interest rate swap agreements or foreign currency forward and option
contracts and there were no amounts excluded from the measure of effectiveness.

The
balance of $6.4 million recorded in Accumulated Derivative Instruments Loss at March 31, 2003 is expected to be reclassified into future earnings, contemporaneously
with and offsetting changes in the related hedged exposure. The estimated amount to be reclassified into future earnings as interest expense over the next twelve months through March 31, 2004
is approximately $4.4 million. The actual
amount that will be reclassified to future earnings over the next twelve months may vary from this amount as a result of changes in market conditions. No amounts were reclassified to earnings during
2003 in connection with forecasted transactions that were no longer considered probable of occurring.

The
Company uses interest rate swap agreements to fix a portion of its variable rate Term Loan Facility to a fixed rate in order to reduce the impact of interest rate changes on future
income. The differential to be paid or received under these agreements is recognized as an adjustment to interest expense related to the debt. At March 31, 2003, the Company had interest rate
swap agreements with a notional amount of $410 million, which expire on various dates through the year 2003 and 2004 under which the Company will pay fixed rates of 2.21% to 3.52% and receive
three-month LIBOR.

Derivatives not Designated as Hedges

The Company has foreign currency forward contracts used to hedge the exposure associated with foreign currency denominated receivables. These contracts are
presently being marked-to-market through the income statement and will continue to be marked-to-market through the income statement.

The
Company enters into fixed price natural gas contracts designed to effectively hedge prices for a substantial portion of its natural gas requirements at its two U.S. mills. The
purpose of the fixed price natural gas contracts is to eliminate or reduce price risk with a focus on making cash flows more predictable. As of March 31, 2003, the Company had entered into
contracts to hedge substantially all of its natural gas requirements for its two U.S. mills through October 31, 2003. The contract price and fair value of these natural gas contracts was
approximately $10.8 million and $14.9 million, respectively. These contracts are not accounted for as derivative instruments under SFAS No. 133, as they qualify for the normal
purchase exemption.

Environmental and Legal Matters

The Company is committed to compliance with all applicable foreign, federal, state and local environmental laws and regulations. Environmental law is, however,
dynamic rather than static. As a result, costs that are unforeseeable at this time, may be incurred when new laws are enacted, and when environmental agencies adopt or revise rules and regulations. In
general, the environmental laws that the Company is subject to regulate discharges and emissions of constituents to the air, soil and water, prescribe procedures for the use, reuse, reclamation,
recycling and disposal of designated waste

30

---

materials
and impose liability and requirements relating to the cleanup of contamination. In certain instances, state environmental laws may be stricter than their federal counterparts.

The
federal Clean Air Act imposes stringent limits on air emissions, establishes a federal permit program (Title V) and provides for civil and criminal enforcement sanctions. In
response to these requirements, in the early 1990's the Company switched from solvent-based to water-based inks and varnishes at its converting operations in order to reduce and meet requirements with
respect to emissions of volatile organic compounds. Where necessary, the Company's plants have received or submitted an application to the appropriate permitting authority for a Title V permit.

The
federal Clean Water Act establishes a system of minimum national effluent standards for each industry, water quality standards for the nation's waterways and a permit program that
provides discharge limitations. It also regulates releases and spills of oil and hazardous materials and wastewater and stormwater discharges. The Company's mill in West Monroe, Louisiana is the only
one of the Company's facilities that is a direct discharger to a water body and a permit currently covers its discharges to the Ouachita River. The Company's other operations discharge to publicly
owned treatment works and are subject to pretreatment requirements and limitations.

The federal Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") establishes liability for waste generators, current and former site owners and operators and
others in connection with releases of hazardous materials. In several instances, the Company has been identified as a Potentially Responsible Party ("PRP") under CERCLA and similar state laws. These
actions are not material.

In 1998, the U.S. Environmental Protection Agency adopted regulations (generally referred to as the "cluster rules") that mandated more stringent controls on air and water discharges
from United States pulp and paper mills. Over the next three years, the Company anticipates that it will spend approximately $22 million at its two U.S. mills to comply with these regulations.
These costs have not been accrued, but rather are a part of the Company's capital expenditure plan. Most of these costs are anticipated to be incurred in the first two quarters of 2005.

The Company is involved in environmental investigation and remediation projects for certain properties currently or formerly owned or operated by the Company, and at certain waste
disposal sites. Some of these projects are being addressed under federal and state statutes, such as the CERCLA and analogous state laws. The Company's costs in certain instances cannot be reliably
estimated until the remediation process is substantially underway or liability has been addressed. The Company accrues reserves for these contingencies when the liability is probable and the costs are
reasonably estimable. The Company has accrued the following amounts for environmental losses as of March 31, 2003: approximately $0.4 million for the Line Avenue Site described below,
approximately $0.3 million for the Shoreline Refinery Site described below, and approximately $0.1 million for general environmental matters. The Company is not aware of any material
unaccrued loss that is reasonably estimable where liability is probable. The Company believes that based on current information and regulatory requirements, its accruals for environmental matters are
adequate. However, there can be no assurance that the Company will not incur significant costs in excess of accrued amounts in connection with remediation activities and other environmental matters.

In late 1995, the Louisiana Department of Environmental Quality (the "DEQ") notified the Predecessor of potential liability for the remediation of hazardous substances at a former wood
treatment site in Shreveport, Louisiana (known as the Line Avenue Site) that the Predecessor or its predecessors previously operated. In August 2001, the Company entered into an agreement with
the DEQ and the landowners to remediate the site. The agreement required the removal of soils containing wood-treating constituents in excess of regulatory standards, consolidation of
these soils in a sub-portion of the site, capping of the sub-portion, land use restrictions, future operations and maintenance ("O&M") to ensure the integrity of the cap,
long-term monitoring of the groundwater,

31

---

and a recorded prohibition on the use of on-site groundwater. The Company contracted with a qualified contractor to remediate the site at a cost of approximately $1.3 million. In
addition, each of the O&M and groundwater monitoring costs for the initial five years are expected to be approximately $0.1 million (no such costs are estimated beyond the initial
five-year period). As of March 31, 2003, all of the required soil excavation and consolidation has been completed. The Company expects to complete construction of the cap by
July 2003. As of March 31, 2003, the Company has paid its contractor approximately $1.0 million to remediate the site. The Company has been reimbursed approximately half of these
costs from a PRP that has entered into a settlement agreement with the Company. The Company owes its contractor approximately $0.3 million in connection with activities at the site.

On July 6, 2000, the Company and the DEQ entered into a Settlement Agreement for remediation of a site in Caddo Parish, Louisiana (known as the Shoreline Refinery Site). The
principal contamination at this site was an approximately 5 acre impoundment of oil-based sludge that appeared to originate from an oil refinery that was operated by prior operators. The
remedial action contemplated by the Settlement Agreement required the neutralization, stabilization and consolidation of sludges and soils at the site, capping of the consolidated materials, the
establishment of a vegetative cover, and five years of post-closure care of the capped area. The Company contracted to complete the remedial action in accordance with the terms of the
Settlement Agreement. In a November 26, 2002 letter to the Company, the DEQ stated that all required construction activities were accomplished and that the five-year
post-closure care and reporting period would commence. The Company conveyed the property to its contractor on October 22, 2000. Based on the terms of the settlement agreement, the
DEQ's November 26, 2002 letter and the fact that the property has been sold to the Company's contractor, the Company does not expect to incur additional costs in connection with this site.

The Company is a party to a number of lawsuits arising out of the ordinary conduct of its business. While there can be no assurance as to their ultimate outcome, the Company does not
believe that these lawsuits will have a material impact on the results of operations, cash flows or financial condition of the Company.

The
Company has been a plaintiff in actions filed in the U.S. District Court for the Northern District of Georgia against The MeadWestvaco Corporation ("MeadWestvaco"), successor by
merger to The
Mead Corporation, and R.A. Jones Co. Inc. ("R.A. Jones") claiming infringement of the Company's patents for its packaging machines and seeking damages sufficient to compensate for such
infringement. The patents in suit were found infringed but invalid by a jury in a trial against R.A. Jones in August 2001. This finding of invalidity as to U.S. Patent Nos. 5,666,789 and
5,692,361 was appealed to the Court of Appeals for the Federal Circuit (the "CAFC"). The suit against MeadWestvaco was dismissed by mutual agreement, subject to being refiled, pending the outcome of
the appeal of the decision in the case against R.A. Jones. The CAFC vacated the holding of invalidity as to U.S. Patent Nos. 5,666,789 and 5,692,361 and remanded to the District Court for
determination of proper inventive entity. The finding of infringement was affirmed by the CAFC. Further proceedings consistent with the decision of the CAFC will follow in the District Court.

Information Concerning Forward-Looking Statements

Certain of the statements contained in this report (other than the financial statements and other statements of historical fact) are forward-looking statements,
including, without limitation, (i) the statements in "Business Trends and Initiatives" concerning (a) the Company's expectation regarding downtime during 2003,
(b) the improvements which the Company's long-term initiatives, including, without limitation, its TQS initiative, are designed to achieve, (c) the Company's expectation that
capital expenditures will range from $110 million to $120 million in 2003, (d) the Company's expectations regarding the impact of CCE's non-renewal notification,
(e) the Company's expectation regarding its beverage carton converting operations initiative, (f) the closing of the Graphic Merger is

32

---

subject to the satisfaction of a number of significant conditions, and (g) the Company's expectation regarding packaging machinery placements; (ii) the statements in
"Outlook" concerning (a) the Company's expectation that its 2003 income from operations will be comparable to its 2002 income from operations as well as each of the factors which
the Company believes support such expectation, (b) the Company's expectations regarding sales volumes in its worldwide beverage markets and continued growth in its North American consumer
product markets, (c) the Company's expectation regarding containerboard sales and margins, and (d) the Company's expectations regarding energy costs; (iii) the statements in
"Financial Condition, Liquidity and Capital Resources" concerning (a) the Company's expectation that depreciation and amortization for 2003 will be approximately
$125 million to $135 million, (b) the Company's expectation about entering into the Related Financing Transactions, (c) the Company's expectation that 2003 interest expense
will be approximately $130 million to $135 million, including approximately $7 million of non-cash amortization of deferred debt issuance costs, (d) the
Company's belief that cash generated from operations, together with amounts available under available financing sources, will be adequate to permit the Company to meet its debt service obligations,
capital expenditure program requirements, ongoing operating costs and working capital needs until the maturity of the Revolving Facility, and (e) the Company's expectations with respect to
capital spending that may be required to comply with the cluster rules and that, based on current knowledge, environmental costs are not expected to have a material impact on the results of
operations, cash flows or financial condition of the Company, (iv) other statements as to management's or the Company's expectations and beliefs presented in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

Forward-looking
statements are made based upon management's current expectations and beliefs concerning future developments and their potential effects upon the Company. There can be no
assurance that future developments will be in accordance with management's expectations or that the effect of future developments on the Company will be those anticipated by management. The important
factors described elsewhere in this report (including, without limitation, those discussed in "Financial Condition, Liquidity and Capital Resources"), the Company's Report on
Form 10-K for the year ended December 31, 2002 or in other Securities and Exchange Commission filings of the Company, could affect (and in some cases have affected) the
Company's actual results and could cause such results to differ materially from estimates or expectations reflected in such forward-looking statements.

While
the Company periodically reassesses material trends and uncertainties affecting the Company's results of operations and financial condition in connection with its preparation of
management's discussion and analysis of results of operations and financial condition contained in its quarterly and annual reports, the Company does not intend to review or revise any particular
forward-looking statement referenced in this report in light of future events.

Recent Accounting Pronouncements

In June 2001, the FASB issued SFAS No. 143,"Accounting for Asset Retirement Obligations"("SFAS
No. 143"), which is effective January 1, 2003. SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. The Company adopted SFAS No. 143 effective January 1, 2003 and the adoption did not have a significant impact on
its financial position and results of operations.

In April 2002, the FASB issued SFAS No. 145,"Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections as of April 2002"("SFAS No. 145"). This statement rescinds SFAS No. 4,"Reporting Gains and Losses from
Extinguishment of Debt"("SFAS No. 4") and an amendment of the Statement, SFAS No. 64,"Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements."This Statement also rescinds SFAS No. 44,"Accounting for Intangible Assets of Motor
Carriers."This statement amends SFAS No. 13,"Accounting for Leases", to eliminate an inconsistency between the required
accounting for sale-leaseback transactions and the required

33

---

accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. The Company adopted SFAS No. 145 effective January 1,
2003 and the adoption resulted in a reclassification of expenses from Extraordinary Loss on Early Extinguishment of Debt to Loss on Early Extinguishment of Debt included in (Loss) Income before Income
Taxes and Equity in Net Earnings of Affiliates of approximately $11.5 million, $8.7 million and $2.1 million for the years ended December 31, 2002, 2001 and 2000,
respectively, associated with the rescission of SFAS No. 4.

In
July 2002, the FASB issued SFAS No. 146,"Accounting for Costs Associated with Exit or Disposal Activities"("SFAS
No. 146"), which was effective December 31, 2002. SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies
Emerging Issues Task Force ("EITF") Issue No. 94-3,"Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)."This Statement requires that a liability for a cost associated with an exit or disposal activity be recognized when the
liability is incurred, and concludes that an entity's commitment to an exit plan does not by itself create a present obligation that meets the definition of a liability. This Statement also
establishes that fair value is the objective of initial measurement of the liability. The provisions of this Statement are effective for exit or disposal activities that are initiated after
December 31, 2002, with early application encouraged. The Company adopted SFAS No. 146 effective January 1, 2003 and the adoption did not have a significant impact on its
financial position and results of operations.

In
December 2002, the FASB issued SFAS No. 148,"Accounting for Stock-Based CompensationTransition and Disclosure, Amendment of SFAS
No. 123"("SFAS No. 148"). This Statement provides additional transition guidance for those entities that elect to voluntarily adopt the provisions of SFAS
No. 123,"Accounting for Stock-Based Compensation."Furthermore, SFAS No. 148 mandates new disclosures in both interim and
year-end financial statements within the Company's Significant Accounting Policies footnote. The Company has elected not to adopt the recognition provisions of SFAS No. 123, as
amended by SFAS No. 148. See Note 2 in Notes to the Condensed Consolidated Financial Statements.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities,"
or SFAS No. 149. This statement will be applied prospectively and is effective for contracts entered into or modified after June 30, 2003. The statement will be applicable to existing
contracts and new contracts entered into after June 30, 2003. The Company does not expect that the adoption of SFAS No. 149 will have a material effect on the Company's financial
statements.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Liabilities and
Equity," or SFAS No. 150. This statement establishes standards for classification of certain financial instruments that have characteristics of both liabilities and
equity in the statement of financial position. This Statement is effective for all contracts created or modified after the date the Statement was issued and otherwise effective at the beginning of the
first interim period beginning after June 15, 2003. Management does not expect the adoption of SFAS No. 150 to have a material impact on its financial conditions or results of
operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

For a discussion of certain market risks related to the Company, see Part II, Item 7A, "Quantitative and Qualitative Disclosure about Market Risk", in the
Company's Annual Report on Form 10-K for the fiscal period ended December 31, 2002. There have been no significant developments with respect to derivatives or exposure to
market risk during the first quarter of 2003. See Note 6 in Notes to Condensed Consolidated Financial Statements.

34

---

ITEM 4. CONTROLS AND PROCEDURES

PART IIOTHER INFORMATION

ITEM 1. Legal Proceedings.

Not applicable

ITEM 2. Changes in Securities and Use of Proceeds.

Not applicable

ITEM 3. Defaults Upon Senior Securities.

Not applicable

ITEM 4. Submission of Matters to a Vote of Security Holders.

On
March 24, 2003, a written consent of stockholders in lieu of a special meeting was executed by the stockholders of the Company to approve and adopt the Merger Agreement and the
Restated Certificate of Incorporation of the Company and to approve the Company's 2003 Long-Term Incentive Plan.

ITEM 5. Other Information.

Not applicable

ITEM 6. Exhibits and Reports on Form 8-K.

Filed
on March 27, 2003 reporting a definitive Merger Agreement with Graphic Packaging International Corporation.

35

---



SIGNATURE

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 as of 24th day of July, 2003.

|                    |  |     |  | RIVERWOOD HOLDING, INC.                                                                                  
|------------------- |  | --- |  | ---------------------------------------------------------------------------------------------------------
|                    |  |     |  | (Registrant)                                                                                             
|Date: July 24, 2003 |  | By: |  | /s/    EDWARD W. STROETZ JR.Edward W. Stroetz Jr.
        Secretary                                      
|Date: July 24, 2003 |  | By: |  | /s/    DANIEL J. BLOUNTDaniel J. Blount
        Senior Vice President and
        Chief Financial Officer

36

---

CERTIFICATIONS

I, Stephen M. Humphrey, certify that:

| |  |  | Date: July 24, 2003                                                            
| |  |  | -------------------------------------------------------------------------------
| |  |  | /s/STEPHEN M. HUMPHREYStephen M. Humphrey
President and Chief Executive Officer

37

---



CERTIFICATIONS

I, Daniel J. Blount, certify that:

| |  |  | Date: July 24, 2003                                                                  
| |  |  | -------------------------------------------------------------------------------------
| |  |  | /s/DANIEL J. BLOUNTDaniel J. Blount
Senior Vice President and
Chief Financial Officer

38

---

QuickLinks