Graphic Packaging Holding Company
Reports First Quarter 2008 Results
First Quarter Highlights
- Completed combination with Altivity Packaging, LLC ("Altivity")
on March 10, 2008; therefore, the first quarter 2008 includes
approximately three weeks of Altivity results.
- Net Sales were $724.3 million, up approximately 24 percent from the
prior year period. Excluding Altivity Net Sales, Adjusted Net Sales
increased approximately 5 percent over the prior year period.
- Excluding charges related to the combination with Altivity, Adjusted Net
Loss was $(0.00) per share compared to $(0.19) per share in the prior year
period.
- Excluding charges related to the combination with Altivity, Adjusted
EBITDA was $98.4 million compared to $64.8 million in the prior year
period.
- Announced new reporting business segments: Paperboard Packaging;
Multiwall Bag and Specialty Packaging.
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.
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
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