Second Quarter Highlights
- Net Loss and Adjusted Net Income were $(0.01) and $0.01 per share for second quarter of 2008 compared to a Net Loss of $(0.11) per share and a Pro Forma Net Loss of $(0.07) per share in the prior year quarter.
- EBITDA and Adjusted EBITDA were $129.0 million and $138.1 million for second quarter 2008 compared to EBITDA of $87.6 million and Pro Forma EBITDA of $130.4 million in the prior year quarter.
- Achieved annualized synergies in excess of $15 million. Expect to obtain $90 million target by 2010, earlier than 2012, as originally planned.
- Subsequent to quarter end, announced agreement to sell two coated- recycled board mills.
MARIETTA, Ga., Aug. 6 /PRNewswire-FirstCall/ -- Graphic Packaging Holding
Company (NYSE: GPK), a leading provider of packaging solutions to food,
beverage and other consumer products companies, today reported a Net Loss for
the second quarter 2008 of $(4.3) million, or $(0.01) per diluted share, based
upon 342.9 million shares. Excluding charges associated with the combination
with Altivity Packaging, LLC ('Altivity'), Adjusted Net Income was $4.8
million, or $0.01 per diluted share. This compares to a second quarter 2007
Net Loss of $(21.3) million, or $(0.11) per diluted share, based upon 201.8
million shares.
'We are pleased with our progress following the combination with Altivity
as results improved for the quarter despite unprecedented rising costs for
fiber, chemicals and energy,' said David W. Scheible, President and Chief
Executive Officer. 'Higher pricing, continuous improvement cost reductions and
synergy achievement combined to more than offset inflation and drive an
improvement over the prior year period.'
'The recent pullback in energy and energy related costs is certainly
welcome, but we also have a series of action plans in place to combat higher
costs. Our first priority is to ensure that the marketplace shares the
inflationary costs we are experiencing. As a result, we are pushing hard to
see that our recently announced price increases for both CUK and CRB are
completely implemented including our new freight allowances with these
customers. In concert with our board price moves, we continue to raise prices
on our contracted folding carton products as negotiated price escalators
reset.'
'In addition to driving price increases, we have expedited the timetable
for achieving the previously announced $90 million in annualized synergies
associated with the combination with Altivity. Specifically, by the end of
the second quarter, we had reached annualized synergies in excess of $15
million and now expect to reach our $90 million target by 2010.'
Net Sales
Net sales increased 83.2% to $1,141.7 million during second quarter 2008,
compared to second quarter 2007 net sales of $623.1 million. When comparing
against the prior year quarter, net sales in the first quarter of 2008 were
positively impacted by:
-- $496 million from the inclusion of Altivity results;
-- $14 million of favorable pricing; and
-- $9 million of favorable foreign currency exchange rates.
Attached is supplemental data showing second quarter 2008 net sales and
net tons sold by each of the Company's business segments: Paperboard
Packaging, Multi-wall Bag and Specialty Packaging. Pro forma net sales and
pro forma net tons sold are also shown assuming the combination with Altivity
occurred on January 1, 2007.
EBITDA
EBITDA for second quarter 2008 was $129.0 million. Excluding charges
associated with the combination with Altivity, Adjusted EBITDA was $138.1
million. This compares to second quarter 2007 EBITDA of $87.6 million. When
comparing against the prior year quarter, EBITDA was positively impacted by:
-- $35 million from the inclusion of Altivity results;
-- $14 million of favorable pricing;
-- $20 million of lower operating costs as a result of ongoing continuous
improvement programs and favorable performance;
-- $11 million related to the change in fair value of an interest rate
hedging contract which was assumed from Altivity; and
-- $4 million from a lawsuit settlement.
EBITDA was negatively impacted by:
-- $23 million of higher input costs primarily related to increased prices
for fiber, chemicals and energy;
-- $12 million related to a step-up in inventory basis to fair value as a
result of the combination with Altivity; and
-- $8 million of charges related to the combination with Altivity.
Other Results
At the end of the second quarter of 2008, the Company's total debt was
$3,108.2 million, representing a $46.5 million decrease from total debt of
$3,154.7 million at the end of the first quarter 2008. Total debt was
$1,968.4 million at the end of second quarter 2007. Approximately $1.2 billion
of debt was assumed in the connection with the combination with Altivity. The
Company has a $400 million revolving facility. As of June 30, 2008, the
Company had available liquidity under this facility of $319.1 million.
Net interest expense was $57.1 million for second quarter 2008, as
compared to net interest expense of $43.0 million in second quarter 2007. The
increase was primarily due to the additional debt assumed in the combination
with Altivity.
In the second quarter of 2008, the Company incurred $9.6 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 second quarter 2008 were $47.4 million compared
to $22.8 million in the second quarter of 2007. Approximately $15.7 million
of second quarter 2008 capital expenditures were related to the inclusion of
Altivity results.
Under the terms of its Credit Agreement, as long as any commitment remains
outstanding under the revolving credit facility, the Company must comply with
a maximum consolidated secured leverage ratio. As of June 30, 2008, the
Company's ratio was 3.28 to 1.00, in compliance with the required maximum
ratio of 5.25 to 1.00. The calculation of this covenant along with a tabular
reconciliation of EBITDA, Adjusted EBITDA, Credit Agreement EBITDA and
Adjusted Net Loss to Net Loss is attached to this release.
On July 10, 2008, the Company announced that it had signed an agreement
with an affiliate of Sun Capital Partners, Inc. to sell two coated-recycled
board (CRB) mills as required by the U.S. Department of Justice pursuant to
the Consent Decree governing the combination of Graphic Packaging
International, Inc. and Altivity in March 2008. The mills being sold are
located in Philadelphia, Pennsylvania and Wabash, Indiana. The transaction is
subject to review by the U.S. Department of Justice and other customary
closing conditions.
Quarterly Pro Forma Comparisons
All pro forma results referenced in this release give effect to the
combination with Altivity as if it had occurred on January 1, 2007. The pro
forma information is not necessarily indicative of what the combined
companies' results of operations actually would have been if the combination
had been completed on the date indicated.
-- Second quarter 2008 Adjusted Net Income of $4.8 million or $0.01 per
share compares to second quarter 2007 Pro Forma Net Loss of $(22.6) million or
$(0.07) per share;
-- Second quarter 2008 Net Sales of $1,141.7 were 2.3 percent higher than
second quarter 2007 Pro Forma Net Sales of $1,115.9 million; and
-- Second quarter 2008 Adjusted EBITDA of $138.1 million compares to
second quarter 2007 Pro Forma EBITDA of $130.4 million.
Earnings Call
The Company will host a conference call at 10:00 am (EDT) on Thursday,
August 7, 2008 to discuss the results of the second 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# 55952154). 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, which include statements
regarding our performance and our ability to recognize $90 million of
annualized synergies by 2010, 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. These risks and
uncertainties include, but are not limited to, the Company's substantial
amount of debt, inflation of and volatility in raw material and energy costs,
continuing pressure for lower cost products, the Company's ability to
implement its business strategies, including productivity initiatives and cost
reduction plans, currency movements and other risks of conducting business
internationally, and the impact of regulatory and litigation matters,
including those that impact the Company's ability to protect and use its
intellectual property. 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)
In millions, except share and per June 30, December 31,
share amounts 2008 2007
ASSETS
Current Assets:
Cash and Cash Equivalents $15.8 $9.3
Receivables, Net 427.0 226.7
Inventories 585.5 318.6
Other Current Assets 44.9 31.7
Assets Held for Sale 20.4 -
Total Current Assets 1,093.6 586.3
Property, Plant and Equipment, Net 1,984.1 1,376.2
Goodwill 1,173.8 641.5
Intangible Assets, Net 687.5 140.4
Other Assets 51.0 32.9
Assets Held for Sale 28.9 -
Total Assets $5,018.9 $2,777.3
LIABILITIES
Current Liabilities:
Short Term Debt and Current Portion
of Long Term Debt $23.3 $6.6
Accounts Payable 343.1 222.4
Other Accrued Liabilities 260.6 177.8
Liabilities Held for Sale 21.7 -
Total Current Liabilities 648.7 406.8
Long Term Debt 3,084.9 1,871.8
Deferred Tax Liabilities 155.2 141.5
Accrued Pension and Postretirement
Benefits 179.0 170.3
Other Noncurrent Liabilities 47.1 42.9
Total Liabilities 4,114.9 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; 342,253,121 and
200,978,569 shares issued and
outstanding at June 30, 2008
and December 31, 2007, respectively 3.4 2.0
Capital in Excess of Par Value 1,954.6 1,191.6
Accumulated Deficit (1,003.3) (975.7)
Accumulated Other Comprehensive Loss (50.7) (73.9)
Total Shareholders' Equity 904.0 144.0
Total Liabilities and Shareholders'
Equity $5,018.9 $2,777.3
GRAPHIC PACKAGING HOLDING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
In millions, except per share June 30, June 30,
amounts 2008 2007 2008 2007
Net Sales $1,141.7 $623.1 $1,866.0 $1,207.2
Cost of Sales 998.1 541.2 1,635.8 1,069.3
Selling, General and
Administrative 89.7 43.2 151.0 85.4
Research, Development and
Engineering 1.9 2.1 3.9 4.5
Other Income, Net (9.9) (2.4) (12.1) (3.8)
Income from Operations 61.9 39.0 87.4 51.8
Interest Income 0.4 0.1 0.5 0.3
Interest Expense (57.5) (43.1) (100.3) (86.4)
Loss on Early Extinguishment
of Debt - (9.5) - (9.5)
Income (Loss) before Income
Taxes and Equity in Net
Earnings of Affiliates 4.8 (13.5) (12.4) (43.8)
Income Tax Expense (9.6) (6.4) (16.0) (13.8)
Loss before Equity in Net
Earnings of Affiliates (4.8) (19.9) (28.4) (57.6)
Equity in Net Earnings
of Affiliates 0.5 0.3 0.8 0.5
Loss from Continuing
Operations (4.3) (19.6) (27.6) (57.1)
Loss from Discontinued
Operations, Net of Taxes - (1.7) - (2.9)
Net Loss $(4.3) $(21.3) $(27.6) $(60.0)
Loss Per Share - Basic
Continuing Operations $(0.01) $(0.10) $(0.10) $(0.28)
Discontinued Operations - (0.01) - (0.02)
Total $(0.01) $(0.11) $(0.10) $(0.30)
Loss Per Share - Diluted
Continuing Operations $(0.01) $(0.10) $(0.10) $(0.28)
Discontinued Operations - (0.01) - (0.02)
Total $(0.01) $(0.11) $(0.10) $(0.30)
Weighted Average Number
of Shares Outstanding
- Basic 342.9 201.8 288.7 201.5
Weighted Average Number
of Shares Outstanding
- Diluted 342.9 201.8 288.7 201.5
GRAPHIC PACKAGING HOLDING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
In millions 2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(27.6) $(60.0)
Noncash Items Included in Net Loss:
Depreciation and Amortization 117.7 103.5
Loss on Early Extinguishment of Debt - 9.5
Deferred Income Taxes 13.2 9.2
Pension, Postemployment and
Postretirement Benefits
Expense, Net of Contributions (20.6) 6.2
Amortization of Deferred Debt
Issuance Costs 3.7 4.2
Other, Net 14.4 4.2
Changes in Operating Assets &
Liabilities (84.8) (67.8)
Net Cash Provided by Operating
Activities 16.0 9.0
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Spending (83.3) (42.6)
Acquisitions Costs Related to
Altivity (29.8) -
Cash Acquired Related to Altivity 60.2 -
Proceeds from Disposal of Property 0.7 -
Other, Net (2.3) (1.6)
Net Cash Used in Investing Activities (54.5) (44.2)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of Debt 1,200.0 1,135.0
Payments on Debt (1,174.5) (1,135.0)
Borrowings under Revolving Credit
Facilities 381.8 466.9
Payments on Revolving Credit
Facilities (345.9) (421.0)
Debt Issuance Costs (16.3) (7.0)
Other, Net (0.6) 0.5
Net Cash Provided by Financing
Activities 44.5 39.4
EFFECT OF EXCHANGE RATE CHANGES ON CASH 0.5 0.3
Net Increase in Cash and Cash
Equivalents 6.5 4.5
Cash and Cash Equivalents at
Beginning of Period 9.3 7.3
Cash and Cash Equivalents at End of
Period $15.8 $11.8
Reconciliation of Non-GAAP Financial Measures
The table below sets forth the Company's earnings before interest expense,
income tax expense, equity in the net earnings of the Company's affiliates,
loss on early extinguishment of debt, depreciation and amortization
('EBITDA'), Adjusted EBITDA, and Adjusted Net Income (Loss). Adjusted EBITDA
and Adjusted Net Income (Loss) exclude charges associated with the Company's
combination with Altivity Packaging, LLC. The Company's management believes
that the presentation of EBITDA, Adjusted EBITDA and Adjusted Net Income
(Loss) provides useful information to investors because these measures are
important measures that management uses in assessing the Company's
performance. EBITDA, Adjusted EBITDA and Adjusted Net Income (Loss) are
financial measures not calculated in accordance with generally accepted
accounting principles in the United States ('GAAP'), and are not measures of
net income, operating income, operating performance or liquidity presented in
accordance with GAAP. EBITDA, Adjusted EBITDA and Adjusted Net Income (Loss)
should be considered in addition to results prepared in accordance with GAAP,
but should not be considered substitutes for or superior to GAAP results. In
addition, our Adjusted EBITDA and Adjusted Net Income (Loss) may not be
comparable to Adjusted EBITDA or similarly titled measures utilized by other
companies since such other companies may not calculate Credit Agreement EBITDA
in the same manner as we do.
Three Months Ended Six Months Ended
June 30, June 30,
In Millions 2008 2007 2008 2007
Net Loss $(4.3) $(21.3) $(27.6) $(60.0)
Add (Subtract):
Income Tax Expense 9.6 6.4 16.0 13.8
Equity in Net Earnings of
Affiliates (0.5) (0.3) (0.8) (0.5)
Interest Expense, Net 57.1 43.0 99.8 86.1
Loss on Early Extinguishment
of Debt - 9.5 - 9.5
Depreciation and Amortization 67.1 50.3 117.7 103.5
EBITDA 129.0 87.6 205.1 152.4
Charges Associated with
Combination with Altivity 9.1 - 31.4 -
Adjusted EBITDA $138.1 $87.6 $236.5 $152.4
Net Loss $(4.3) $(21.3) $(27.6) $(60.0)
Charges Associated with
Combination with Altivity 9.1 - 31.4 -
Adjusted Net Income (Loss) $4.8 $(21.3) $3.8 $(60.0)
Per Share - Basic
Net Loss $(0.01) $(0.11) $(0.10) $(0.30)
Charges Associated with
Combination with Altivity 0.02 - 0.11 -
Adjusted Net Income (Loss) $0.01 $(0.11) $0.01 $(0.30)
Per Share - Diluted
Net Loss $(0.01) $(0.11) $(0.10) $(0.30)
Charges Associated with
Combination with Altivity 0.02 - 0.11 -
Adjusted Net Income (Loss) $0.01 $(0.11) $0.01 $(0.30)
GRAPHIC PACKAGING HOLDING COMPANY
Reconciliation of Non-GAAP Financial Measures (continued)
Pro Forma Results
The following pro forma results for the three months and six months ended
June 30, 2007, respectively, and the six months ended June 30, 2008, give
effect to Graphic Packaging Corporation's acquisition of Altivity Packaging,
LLC as if it had occurred on January 1, 2007. The Company's management
believes that the pro forma presentation provides useful information to
investors that in light of the Company's recent combination with Altivity
Packaging, LLC. The pro forma information is not necessarily indicative of
what the combined companies' results of operations actually would have been if
the transaction had been completed on the date indicated.
Three Months Ended Six Months Ended
June 30, June 30,
In Millions 2008 2007 2008 2007
Net Sales $1,141.7 $623.1 $1,866.0 $1,207.2
Altivity Net Sales - 492.8 391.1 978.3
Pro Forma Net Sales $1,141.7 $1,115.9 $2,257.1 $2,185.5
Pro Forma Net Loss $(4.3) $(22.6) $(48.4) $(70.3)
Add (Subtract):
Income Tax Expense 9.6 7.0 16.7 14.9
Equity in Net Earnings of
Affiliates (0.5) (0.3) (0.8) (0.5)
Interest Expense, Net 57.1 62.6 131.3 124.9
Loss on Early Extinguishment of
Debt - 9.5 - 9.5
Depreciation and Amortization 67.1 74.2 137.1 152.4
Pro Forma EBITDA 129.0 130.4 235.9 230.9
Charges Associated with
Combination with Altivity 9.1 - 31.4 -
Pro Forma Adjusted EBITDA $138.1 $130.4 $267.3 $230.9
Pro Forma Net Loss $(4.3) $(22.6) $(48.4) $(70.3)
Charges Associated with
Combination with Altivity 9.1 - 31.4 -
Pro Forma Adjusted Net Income
(Loss) $4.8 $(22.6) $(17.0) $(70.3)
Per Share - Basic
Pro Forma Net Loss $(0.01) $(0.07) $(0.14) $(0.21)
Charges Associated with
Combination with Altivity 0.02 - 0.09 -
Pro Forma Adjusted Net Income
(Loss) $0.01 $(0.07) $(0.05) $(0.21)
Per Share - Diluted
Pro Forma Net Loss $(0.01) $(0.07) $(0.14) $(0.21)
Charges Associated with
Combination with Altivity 0.02 - 0.09 -
Pro Forma Adjusted Net Income
(Loss) $0.01 $(0.07) $(0.05) $(0.21)
GRAPHIC PACKAGING HOLDING COMPANY
Reconciliation of Non-GAAP Financial Measures
(Continued)
The Company's Senior Secured Credit Agreement, or the 'Credit Agreement',
and the indentures governing the Company's 8.5% Senior Notes due 2011 and its
9.5% Senior Subordinated Notes due 2013, collectively, the 'Notes', limit the
Company's ability, among other things, to incur additional indebtedness,
dispose of assets, incur guarantee obligations, prepay other indebtedness,
make dividend and other restricted payments, create liens, make equity or debt
investments, make acquisitions, modify terms of the indentures under which the
Notes are issued, engage in mergers or consolidations, change the business
conducted by the Company and its subsidiaries, and engage in certain
transactions with affiliates. Such restrictions, together with the highly
leveraged nature of the Company, could limit the Company's ability to respond
to changing market conditions, fund its capital spending program, provide for
unexpected capital investments or take advantage of business opportunities.
Under the terms of the Credit Agreement, as long as any commitment remains
outstanding under the revolving credit facility, the Company must comply with
a maximum consolidated secured leverage ratio, which is defined as the ratio
of: (a) total long-term and short-term indebtedness of the Company and its
consolidated subsidiaries as determined in accordance with generally accepted
accounting principles in the United States ('GAAP'), plus the aggregate cash
proceeds received by the Company and its subsidiaries from any receivables or
other securitization but excluding therefrom (i) all unsecured indebtedness,
(ii) all subordinated indebtedness permitted to be incurred under the Credit
Agreement and (iii) all secured indebtedness of foreign subsidiaries to (b)
Adjusted EBITDA, which we refer to as Credit Agreement EBITDA(a). Pursuant to
this financial covenant, the Company must maintain a maximum consolidated
secured leverage ratio of less than the following:
Maximum Consolidated
Secured
Leverage Ratio (a)
January 1, 2008 - September 30, 2008 5.25 to 1.00
October 1, 2008 - September 30, 2009 5.00 to 1.00
October 1, 2009 and thereafter 4.75 to 1.00
(a) Credit Agreement EBITDA is defined in the Credit Agreement as
consolidated net income before consolidated net interest expense, non-
cash expenses and charges, total income tax expense, depreciation
expense, expense associated with amortization of intangibles and other
assets, non-cash provisions for reserves for discontinued operations,
extraordinary, unusual or non-recurring gains or losses or charges or
credits, gain or loss associated with sale or write-down of assets not
in the ordinary course of business, any income or loss accounted for
by the equity method of accounting, and projected run rate cost
savings, prior to or within a twelve month period.
At June 30, 2008, the Company was in compliance with the financial
covenant in the Credit Agreement and the ratio was as follows:
Consolidated Secured Leverage Ratio - 3.28 to 1.00
The Company's management believes that the presentation of the
consolidated secured leverage ratio and Credit Agreement EBITDA provides
useful information to investors because borrowings under the Credit Agreement
are a key source of the Company's liquidity, and the Company's ability to
borrow under the Credit Agreement is dependent on, among other things, its
compliance with this financial covenant. Any failure by the Company to comply
with this financial covenant could result in an event of default, absent a
waiver or amendment from the lenders under such agreement, in which case the
lenders may be entitled to declare all amounts owed to be due and payable
immediately.
Credit Agreement EBITDA is a financial measure not calculated in
accordance with GAAP, and is not a measure of net income, operating income,
operating performance or liquidity presented in accordance with GAAP. Credit
Agreement EBITDA should be considered in addition to results prepared in
accordance with GAAP, but should not be considered a substitute for or
superior to GAAP results. In addition, our Credit Agreement EBITDA may not be
comparable to EBITDA or similarly titled measures utilized by other companies
since such other companies may not calculate Credit Agreement EBITDA in the
same manner as we do.
The calculations of the components of the maximum consolidated secured
leverage ratio for and as of the period ended June 30, 2008 are listed below:
Twelve Months
In millions Ended
June 30, 2008(a)
Pro Forma Net Loss $(74.7)
Income Tax Expense 28.0
Interest Expense, Net 246.0
Depreciation and Amortization 289.6
Dividends Received, Net of Earnings of Equity Affiliates (1.2)
Non-Cash Provisions for Reserves for Discontinued Operations 23.7
Other Non-Cash Charges 6.8
Merger Related Expenses 35.9
Gains/Losses Associated with Sale/Writedown of Assets (0.2)
Other Non-Recurring/Extraordinary/Unusual Items 69.6
Projected Run Rate Cost Savings 62.4
Credit Agreement EBITDA $685.9
As of
In millions June 30, 2008
Short Term Debt $23.3
Long Term Debt 3,084.9
Total Debt $3,108.2
Less Adjustment (b) 856.8
Consolidated Secured Indebtedness $2,251.4
(a) As defined by the Credit Agreement, this calculation includes the
historical results of Altivity for the last twelve months.
As defined by the Credit Agreement, represents projected cost savings
expected by the Company to be realized as a result of specific actions
taken or expected to be taken prior to or within twelve months of the
period in which Credit Agreement EBITDA is to be calculated, net of
the amount of actual benefits realized or expected to be realized from
such actions.
The terms of the Credit Agreement limit the amount of projected run
rate cost savings that may be used in calculating Credit Agreement
EBITDA by stipulating that such amount may not exceed the lesser of
(i) ten percent of EBITDA as defined in the Credit Agreement for the
last twelve-month period (before giving effect to projected run rate
cost savings) and (ii) $100 million.
As a result, in calculating Credit Agreement EBITDA above, the Company
used projected run rate cost savings of $62.4, or ten percent of
EBITDA as calculated in accordance with the Credit Agreement, which
amount is lower than total projected cost savings identified by the
Company, net of actual benefits realized for the twelve month period
ended June 30, 2008. Projected run rate cost savings were calculated
by the Company solely for its use in calculating Credit Agreement
EBITDA for purposes of determining compliance with the maximum
consolidated secured leverage ratio contained in the Credit Agreement
and should not be used for any other purpose.
(b) Represents consolidated indebtedness/securitization that is either (i)
unsecured, or (ii) Permitted Subordinated Indebtedness as defined in
the Credit Agreement, or secured indebtedness permitted to be incurred
by the Company's foreign subsidiaries per the Credit Agreement.
The Company's ability to comply in future periods with the financial
covenant in the 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 strategies, and meet
its profitability objective. If a violation of the financial covenant or any
of the other covenants occurred, the Company would attempt to obtain a waiver
or an amendment from its lenders, although no assurance can be given that the
Company would be successful in this regard. The Credit Agreement and the
indentures governing the Notes have 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. If an event of default occurs, the lenders are
entitled to declare all amounts owed to be due and payable immediately. The
Credit Agreement is collateralized by substantially all of the Company's
domestic assets.
GRAPHIC PACKAGING HOLDING COMPANY
Unaudited Supplemental Data
Three Months Ended
March 31, June 30, Sept. 30, Dec. 31,
2008
Net Tons Sold (000's):
Paperboard Packaging 508.6 705.5 - -
Multi-wall Bag 29.4 82.6 - -
Specialty Packaging (1) - - - -
Total 538.0 788.1 - -
Net Sales ($ Millions):
Paperboard Packaging $657.1 $928.5 $- $-
Multi-wall Bag 55.0 166.5 - -
Specialty Packaging 12.2 46.7 - -
Total $724.3 $1,141.7 $- $-
(1) Tonnage is not applicable to the Specialty Packaging segment due to
the nature of products sold (e.g. inks, labels, etc.)
2007
Net Tons Sold (000's):
Paperboard Packaging 462.3 484.9 470.6 456.1
Multi-wall Bag 12.4 12.0 13.7 13.5
Specialty Packaging - - - -
Total 474.7 496.9 484.3 469.6
Net Sales ($ Millions):
Paperboard Packaging $565.0 $604.7 $590.6 $580.3
Multi-wall Bag 19.1 18.4 21.5 21.6
Specialty Packaging - - - -
Total $584.1 $623.1 $612.1 $601.9
Note: Tonnage and net sales amounts have been retrospectively adjusted
for discontinued operations.
GRAPHIC PACKAGING HOLDING COMPANY
Unaudited Supplemental Data (continued)
Pro Forma Results
The following pro forma results for the three months and six months ended
June 30, 2007, respectively, and the six months ended June 30, 2008, give
effect to Graphic Packaging Corporation's acquisition of Altivity Packaging,
LLC as if it had occurred on January 1, 2007. The Company's management
believes that the pro forma presentation provides useful information to
investors that in light of the Company's recent combination with Altivity
Packaging, LLC. The pro forma information is not necessarily indicative of
what the combined companies' results of operations actually would have been if
the transaction had been completed on the date indicated.
Three Months Ended
March 31, June 30, Sept. 30, Dec. 31,
2008
Net Tons Sold (000's):
Paperboard Packaging 696.3 705.5 - -
Multi-wall Bag 80.4 82.6 - -
Specialty Packaging (1) - - - -
Total 776.7 788.1 - -
Net Sales ($ Millions):
Paperboard Packaging $900.9 $928.5 $- $-
Multi-wall Bag 166.4 166.5 - -
Specialty Packaging 48.1 46.7 - -
Total $1,115.4 $1,141.7 $- $-
(1) Tonnage is not applicable to the Specialty Packaging segment
due to the nature of products sold (e.g. inks, labels, etc.)
2007
Net Tons Sold (000's):
Paperboard Packaging 700.4 727.5 718.8 702.0
Multi-wall Bag 77.6 77.5 81.7 79.5
Specialty Packaging - - - -
Total 778.0 805.0 800.5 781.5
Net Sales ($ Millions):
Paperboard Packaging $868.8 $916.7 $914.9 $877.3
Multi-wall Bag 155.4 152.0 161.5 158.3
Specialty Packaging 45.4 47.2 52.6 48.9
Total $1,069.6 $1,115.9 $1,129.0 $1,084.5
Note: Tonnage and net sales amounts have been retrospectively adjusted
for discontinued operations.
SOURCE Graphic Packaging Holding Company