MARIETTA, Ga., May 8 /PRNewswire-FirstCall/ -- Graphic Packaging Holding
Company (NYSE: GPK), formerly Graphic Packaging Corporation ("Graphic"), a
leading provider of packaging solutions to food, beverage and other consumer
products companies, today reported a Net Loss for the first quarter 2008 of
$(23.3) million, or $(0.10) per diluted share, based upon 234.5 million
shares. This compares to a first quarter 2007 Net Loss of $(38.7) million, or
$(0.19) per diluted share, based upon 201.3 million shares. Excluding
charges related to the combination with Altivity, Adjusted Net Loss was $(1.0)
million, or $(0.00) per diluted share.
"We are excited that the combination of Graphic and Altivity was
consummated on March 10th and we are now focused on moving toward recognizing
the benefits of the transaction," said David W. Scheible, President and Chief
Executive Officer. "Despite the many hours dedicated to completing the
transaction, I am proud that our teams never lost focus on the day-to-day
operations and delivered another solid quarter of performance. This
represents the sixth consecutive quarter that income from operations has
exceeded the prior year quarter, despite operating in a rapidly rising
inflationary environment."
On March 10, 2008, the businesses of Graphic and Altivity were combined
through a series of transactions. As a result, a new publicly traded parent
company, Graphic Packaging Holding Company, was formed. The combination has
been accounted for as a purchase transaction. The first quarter 2008
statement of operations includes approximately three weeks of Altivity's
results and three months of Graphic's results. 2007 period results reflect
Graphic only.
Net Sales
Net Sales increased approximately 24% to $724.3 million during first
quarter 2008, compared to first quarter 2007 Net Sales of $584.1 million.
When comparing against the prior year quarter, net sales in the first quarter
of 2008 were positively impacted by approximately:
-- $113 million from the inclusion of Altivity results;
-- $11 million of favorable pricing;
-- $9 million of favorable foreign currency exchange rates; and
-- $8 million of higher volume and favorable mix.
Attached is supplemental data showing first quarter 2008 net sales and net
tons sold by each of the Company's newly defined business segments:
Paperboard Packaging, Multi-wall Bag and Specialty Packaging.
Income from Operations
Income from Operations for first quarter 2008 was $25.5 million, compared
to first quarter 2007 Income from Operations of $12.8 million. When comparing
to the prior year quarter, Income from Operations was positively impacted by
approximately:
-- $22 million of improved manufacturing and operational efficiencies,
primarily the result of stronger performance at the Company's West
Monroe, LA mill;
-- $13 million of lower operating costs as a result of ongoing continuous
improvement programs and other cost reduction initiatives;
-- $11 million of favorable pricing;
-- $9 million of lower depreciation and amortization;
-- $2 million from the inclusion of Altivity results; and
-- $3 million of higher volume and favorable mix.
Income from Operations was negatively impacted by approximately:
-- $27 million of higher input costs primarily related to increased prices
for fiber and chemicals;
-- $13 million related to a step-up in inventory basis to fair value as a
result of the combination with Altivity; and
-- $10 million of charges related to the combination with Altivity;
Other Results
Net interest expense was $42.7 million for first quarter 2008, as compared
to net interest expense of $43.1 million for first quarter 2007. The decrease
was primarily due to lower interest rates on the unhedged portion of the
Company's floating rate debt.
At the end of the first quarter of 2008, the Company's total debt was
$3,154.7 million, as compared to $1,977.7 million at the end of first quarter
2007. Approximately $1.2 billion of additional debt was assumed in connection
with the combination with Altivity.
In the first quarter of 2008, the Company incurred $6.4 million of income
tax expense, which was predominately attributable to the noncash expense
associated with the amortization of goodwill for tax purposes. The Company
has a $1.4 billion net operating loss that is available to offset future
taxable income in the United States.
Capital expenditures for first quarter 2008 were $35.9 million compared to
$19.8 million in the first quarter of 2007. Approximately $6 million of first
quarter 2008 capital expenditures were related to the inclusion of Altivity
results.
EBITDA for first quarter 2008 was $76.1 million versus EBITDA of $64.8
million for first quarter 2007. Excluding charges related to the combination
with Altivity, Adjusted EBITDA was $98.4 million. Approximately $7 million of
first quarter 2008 Adjusted EBITDA was related to the inclusion of Altivity
results. A tabular reconciliation of EBITDA, Adjusted EBITDA and Adjusted Net
Loss to Net Loss is attached to this release.
Earnings Call
The Company will host a conference call at 10:00 am (EDT) on Friday, May
9, 2008 to discuss the results of the first quarter of 2008. To access the
conference call, listeners calling from within North America should dial
800-392-9489 at least 10 minutes prior to the start of the conference call
(Conference ID# 44348067). Listeners may also access the audio webcast at the
Investor Relations section of the Graphic Packaging website:
http://www.graphicpkg.com. Replays of the call can be accessed for one week
by dialing 800-642-1687.
Forward Looking Statements
Any statements of the Company's expectations in this press release
constitute "forward-looking statements" as defined in the Private Securities
Litigation Reform Act of 1995. Such statements are based on currently
available information and are subject to various risks and uncertainties that
could cause actual results to differ materially from the Company's present
expectations. Undue reliance should not be placed on such forward-looking
statements, as such statements speak only as of the date on which they are
made and the Company undertakes no obligation to update such statements.
Additional information regarding these and other risks is contained in the
Company's periodic filings with the SEC.
About Graphic Packaging Holding Company
Graphic Packaging Holding Company (NYSE:GPK), headquartered in Marietta,
Georgia, is a leading provider of packaging solutions for a wide variety of
products to food, beverage and other consumer products companies. The Company
is one of the largest producers of folding cartons and holds a leading market
position in coated-recycled boxboard and specialty bag packaging. The
Company's customers include some of the most widely recognized companies in
the world. Additional information about Graphic Packaging, its business and
its products is available on the Company's web site at www.graphicpkg.com.
GRAPHIC PACKAGING HOLDING COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
In millions, except share and per share amounts 2008 2007
ASSETS
Current Assets:
Cash and Equivalents $21.9 $9.3
Receivables, Net 410.7 226.7
Inventories 603.4 318.6
Other Current Assets 44.5 31.7
Assets Held for Sale 18.7 -
Total Current Assets 1,099.2 586.3
Property, Plant and Equipment, Net 2,000.2 1,376.2
Goodwill 1,133.5 641.5
Intangible Assets, Net 688.7 140.4
Other Assets 53.5 32.9
Assets Held for Sale 42.4 -
Total Assets $5,017.5 $2,777.3
LIABILITIES
Current Liabilities:
Short Term Debt $20.3 $6.6
Accounts Payable 360.0 222.4
Other Accrued Liabilities 210.1 177.8
Liabilities Held for Sale 17.5 -
Total Current Liabilities 607.9 406.8
Long Term Debt 3,134.4 1,871.8
Deferred Tax Liabilities 147.2 141.5
Accrued Pension and Postretirement Benefits 176.3 170.3
Other Noncurrent Liabilities 62.1 42.9
Total Liabilities 4,127.9 2,633.3
SHAREHOLDERS' EQUITY
Preferred Stock, par value $.01 per
share; 100,000,000 shares authorized;
no shares issued or outstanding - -
Common Stock, par value $.01 per
share; 1,000,000,000 shares authorized;
341,623,425 and 200,978,569 shares
issued and outstanding at March 31, 2008
and December 31, 2007, respectively 3.4 2.0
Capital in Excess of Par Value 1,954.9 1,191.6
Accumulated Deficit (999.0) (975.7)
Accumulated Other Comprehensive Loss (69.7) (73.9)
Total Shareholders' Equity 889.6 144.0
Total Liabilities and Shareholders' Equity $5,017.5 $2,777.3
GRAPHIC PACKAGING HOLDING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
In millions, except per share amounts 2008 2007
Net Sales $724.3 $584.1
Cost of Sales 637.7 528.1
Selling, General and Administrative 61.3 42.2
Research, Development and Engineering 2.0 2.4
Other Income, Net (2.2) (1.4)
Income from Operations 25.5 12.8
Interest Income 0.1 0.2
Interest Expense (42.8) (43.3)
Loss before Income Taxes and Equity
in Net Earnings of Affiliates (17.2) (30.3)
Income Tax Expense (6.4) (7.4)
Loss before Equity in Net Earnings of Affiliates (23.6) (37.7)
Equity in Net Earnings of Affiliates 0.3 0.2
Loss from Continuing Operations (23.3) (37.5)
Loss from Discontinued Operations, Net of Taxes - (1.2)
Net Loss $(23.3) $(38.7)
Loss Per Share - Basic
Continuing Operations $(0.10) $(0.18)
Discontinued Operations - (0.01)
Total $(0.10) $(0.19)
Loss Per Share - Diluted
Continuing Operations $(0.10) $(0.18)
Discontinued Operations - (0.01)
Total $(0.10) $(0.19)
Weighted Average Number of Shares
Outstanding - Basic 234.5 201.3
Weighted Average Number of Shares
Outstanding - Diluted 234.5 201.3
GRAPHIC PACKAGING HOLDING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
In millions 2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(23.3) $(38.7)
Noncash Items Included in Net Loss:
Depreciation and Amortization 50.6 53.2
Deferred Income Taxes 5.1 4.3
Pension, Postemployment and Postretirement
Benefits
Expense, Net of Contributions (25.6) 5.8
Amortization of Deferred Debt Issuance Costs 1.6 2.2
Other, Net 4.4 1.9
Changes in Operating Assets & Liabilities (86.2) (61.5)
Net Cash Used in Operating Activities (73.4) (32.8)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Spending (35.9) (19.8)
Acquisitions Fees (29.1) -
Cash Acquired 60.2 -
Proceeds from Disposal of Property 0.7 -
Other, Net (2.4) (0.8)
Net Cash Used in Investing Activities (6.5) (20.6)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of Debt 1,200.0 -
Payment on Debt (1,168.4) -
Borrowing under Revolving Credit Facilities 251.0 142.9
Payments on Revolving Credit Facilities (174.8) (87.9)
Increase in Debt Issuance Costs (15.1) -
Other, Net (0.6) 0.8
Net Cash Provided by Financing Activities 92.1 55.8
EFFECT OF EXCHANGE RATE CHANGES ON CASH 0.4 -
Net Increase in Cash and Equivalents 12.6 2.4
Cash and Equivalents at Beginning of Period 9.3 7.3
Cash and Equivalents at End of Period 21.9 9.7
GRAPHIC PACKAGING HOLDING COMPANY
Reconciliation of Non-GAAP Financial Measures
The table below sets forth the Company's Adjusted Net Sales, earnings
before interest expense, income tax expense, equity in the net earnings of the
Company's affiliates, depreciation and amortization ("EBITDA"), Adjusted
EBITDA, and Adjusted Net Loss. The Company believes Adjusted Net Sales,
EBITDA, Adjusted EBITDA and Adjusted Net Loss are also important measures of
its performance. Adjusted Net Sales, EBITDA, Adjusted EBITDA and Adjusted Net
Loss are not defined terms under accounting principles generally accepted in
the United States and should not be considered as alternatives to income from
operations or net income as a measure of operating results or cash flows as a
measure of liquidity.
Three Months Ended
March 31,
In Millions 2008 2007
Net Sales 724.3 584.1
Altivity Net Sales 113.0 -
Adjusted Net Sales 611.3 584.1
Net Loss $(23.3) $(38.7)
Add (Subtract):
Income Tax Expense 6.4 7.4
Equity in Net Earnings of Affiliates (0.3) (0.2)
Interest Expense, Net 42.7 43.1
Depreciation and Amortization 50.6 53.2
EBITDA 76.1 64.8
Charges Associated with Combination with Altivity 22.3 -
Adjusted EBITDA $98.4 $64.8
Net Loss $(23.3) $(38.7)
Charges Associated with Combination with Altivity 22.3 -
Adjusted Net Loss $(1.0) $(38.7)
Per Share - Basic
Net Loss (0.10) (0.19)
Charges Associated with Combination with Altivity 0.10 -
Adjusted Net Loss - (0.19)
Per Share - Diluted
Net Loss (0.10) (0.19)
Charges Associated with Combination with Altivity 0.10 -
Adjusted Net Loss - (0.19)
GRAPHIC PACKAGING HOLDING COMPANY
Unaudited Supplemental Data
Three Months Ended
March 31, June 30, September 30, December 31,
2008
Net Tons Sold (000's):
Paperboard Packaging 522.2 - - -
Multi-wall Bag 15.8 - - -
Specialty Packaging (1) - - - -
Total $538.0 $- $- $-
Net Sales ($ Millions):
Paperboard Packaging $678.7 $- $- $-
Multi-wall Bag 33.4 - - -
Specialty Packaging 12.2 - - -
Total $724.3 $- $- $-
(1) Tonnage is not applicable to the Specialty Packaging segment due to
the nature of products sold (e.g. inks, labels, etc.)
2007
Net Tons Sold (000's):
Paperboard Packaging 474.7 496.9 484.3 469.6
Multi-wall Bag - - - -
Specialty Packaging - - - -
Total 474.7 496.9 484.3 469.6
Net Sales ($ Millions):
Paperboard Packaging $584.1 $623.1 $612.1 $601.9
Multi-wall Bag - - - -
Specialty Packaging - - - -
Total $584.1 $623.1 $612.1 $601.9
Note: Tonnage and net sales amounts have been retrospectively adjusted for
discontinued operations.
SOURCE Graphic Packaging Holding Company
