UNITEDTable STATESof Contents

IndicateTable by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨ Contents

(InTable thousands,of except per share data) Contents

GRAPHICTable PACKAGINGof INTERNATIONAL CORPORATION Contents

SeeTable Notesof to Consolidated Financial Statements. Contents

(InTable thousands)of Contents

GRAPHICTable PACKAGINGof INTERNATIONAL CORPORATION Contents

GRAPHICTable PACKAGINGof INTERNATIONAL CORPORATION Contents

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

8Table of Contents

•Table The Company used the proceeds from the refinancing transactions to retire GPIC’s then existing senior credit facilities, to repurchase $50 million of subordinated notes due to Golden Heritage, LLC, a related party, at par, to pay interest and expenses and for general corporate purposes.Contents

NoteTable 6. Assetof Sales Contents

TheTable Company’s reportable segments are based on its method of internal reporting, which is based on product category. The Company has one reportable segment—Packaging. In addition, the Company’s holdings and operations outside the United States are nominal. Therefore, no additional segment information is provided herein. Contents

NoteTable 9. Legalof Proceedings Contents

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

GRAPHICTable PACKAGINGof INTERNATIONAL CORPORATION Contents

13Table of Contents

(inTable thousands)of Contents

CONDENSEDTable CONSOLIDATINGof INCOME STATEMENT Contents

16Table of Contents

(inTable thousands)of Contents

GPICTable was incorporated in Colorado in August 1992 as a holding company for the packaging, ceramics, aluminum and developmental businesses formerly owned by Adolph Coors Company, or ACCo. In December 1992, ACCo distributed to its shareholders all outstanding shares of GPIC’s stock. During our initial years, we operated packaging, ceramics, aluminum and various developmental businesses. Through various acquisitions and divestitures, a spin-off and other transactions, we are now strategically focused on the folding carton segment of the fiber-based product packaging industry. Contents

amongTable our facilities. A substantial portion of our production is centrally planned and can be allocated among different plants in the system in order to take advantage of equipment optimization, capacity scheduling, staffing and freight. Our ability to work as an integrated business, as opposed to different units, has given us opportunities to reduce production overhead costs and to take advantage of economies of scale in purchasing, customer service, freight and other areas common to all of our facilities. In 2000, we began to introduce a company-wide Six Sigma process to reduce our variable manufacturing costs. The term “Six Sigma” refers to a measure of business capability. A company that performs at a Six Sigma level has demonstrated one of the following: Contents

balancesTable throughout 2002. The senior subordinated notes have a higher fixed interest rate of 8 5/8% as long term financing versus the shorter term variable rate bank financing they replaced. The Company’s interest expense in 2002 has also been impacted by net interest payments under several interest rate swap contracts that were entered into when market interest rates were significantly higher. While all the Company’s interest rate swap contracts have expired as of September 30, 2002, they resulted in net interest expense of approximately $1.5 million and $6.8 million for the three months and nine months ended September 30, 2002, respectively. In light of our recapitalization in February 2002, management has elected not to replace these contracts. Our fourth quarter 2002 interest expense will be positively impacted by the absence of these contracts by approximately $1.5 million when compared to the third quarter of 2002. Contents

GoodwillTable Accountingof Contents

WeTable enteredof into a warehouse sublease on September 1, 2002 with Rocky Mountain Bottle Company, a partnership partially owned by Coors Brewing Company, a related party. Monthly rent under the sublease is $8,250 and will continue through July 2006. Contents

WeTable used the net proceeds from the Refinancing Transactions to repay our existing bank debt, to repurchase the existing $50 million of subordinated notes at par from Golden Heritage, LLC, a related party, and to pay related interest, fees and expenses. Contents

OurTable maturities of long-term debt as of September 30, 2002 are as follows (in thousands): Contents

WeTable currently expect that cash flows from operations and borrowings under our new credit facility will be adequate to meet our needs for working capital, financing for capital expenditures, acquisitions, and debt repayments for the foreseeable future. Our working capital position (including current maturities of long term debt) at September 30, 2002 was $36.6 million, and $269.9 million was available under our revolving credit facility. Contents

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

PursuantTable to the requirements 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. Contents

~~SECURITIES~~FORM ~~AND EXCHANGE COMMISSION~~ 10-Q

~~Washington,~~UNITED ~~D.C.~~STATES SECURITIES ~~20549~~AND EXCHANGE COMMISSION

~~FORM~~Washington, ~~10-Q~~D.C. 20549

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended June 30, 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: 001-14060

~~For~~GRAPHIC ~~the~~PACKAGING ~~quarterly~~INTERNATIONAL ~~period ended September 30, 2002~~CORPORATION

OR(Exact name of registrant as specified in its charter)

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Colorado (State or other jurisdiction of incorporation or organization)		84-1208699 (I.R.S. Employer Identification No.)
4455 Table Mountain Drive, Golden, Colorado (Address of principal executive offices)		80403 (Zip Code)

~~For~~(303) 215-4600 (Registrant’s ~~the~~telephone ~~transition~~number, ~~period~~including ~~from~~area ~~to .~~code)

~~Commission~~Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file ~~number:~~such ~~0-20704~~reports), and (2) has been subject to such filing requirements for the past 90 days.

~~GRAPHIC~~Yes ~~PACKAGING~~x ~~INTERNATIONAL~~No ~~CORPORATION~~ o

~~(Exact~~Indicate ~~name~~by ofcheck mark whether the registrant asis ~~specified~~an accelerated filer (as defined in ~~its~~Rule 12b-2 ~~charter)~~of the Exchange Act).

Colorado		84-1208699
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)


Yes x		No o

4455 Table Mountain Drive, Golden, Colorado		80403
(Address of principal executive offices)		(Zip Code)

There were 36,136,176 shares of common stock outstanding as of August 1, 2003.

~~(303)~~TABLE ~~215-4600~~OF CONTENTS

(Registrant’s telephone number, including area code)


PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures about Market Risk
	Item 4. Controls and Procedures
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 4. Submission of Matters to a Vote of the Shareholders
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
Exhibit Index
EX-31 Certifications Pursuant to Section 302
EX-32 Certifications Pursuant to Section 906

~~There~~PART ~~were 32,926,055 shares of common stock outstanding as of September 30, 2002~~I. FINANCIAL INFORMATION

~~PART I~~Item 1. ~~FINANCIAL~~ ~~INFORMATION~~Financial Statements

~~Item~~GRAPHIC ~~1. Financial~~PACKAGING ~~Statements~~INTERNATIONAL CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (In thousands, except per share data)

GRAPHIC PACKAGING INTERNATIONAL CORPORATION


		Three months ended						Six months ended
		June 30,						June 30,

		2003			2002			2003			2002

Net sales		$	274,994		$	263,917		$	535,877		$	527,641
	Cost of goods sold		242,527			231,022			474,701			460,454

Gross profit			32,467			32,895			61,176			67,187
	Selling, general and administrative expense		18,483			15,808			35,151			30,695
	Merger and acquisition transaction costs		1,331			—			4,029			—

Operating income			12,653			17,087			21,996			36,492
Interest expense			(9,697	)		(12,453	)		(19,113	)		(23,749	)
Loss on early extinguishment of debt			—			—			—			(15,766	)

Income (loss) before income taxes and cumulative effect of change in accounting principle			2,956			4,634			2,883			(3,023	)
Income tax (expense) benefit			(1,212	)		(1,808	)		(1,182	)		1,178

Income (loss) before cumulative effect of change in accounting principle			1,744			2,826			1,701			(1,845	)
Cumulative effect of change in goodwill accounting, net of tax of $0			—			—			—			(180,000	)

Net income (loss)			1,744			2,826			1,701			(181,845	)
Preferred stock dividends declared			2,500			2,500			5,000			5,000

Net income (loss) attributable to common shareholders			($756	)	$	326			($3,299	)		($186,845	)

See Notes to Consolidated Financial Statements.

~~CONSOLIDATED INCOME STATEMENT~~ 2

	Three months ended September 30,						Nine months ended September 30,
	2002			2001			2002			2001
Net sales	$	270,002		$	270,818		$	797,643		$	842,514
Cost of goods sold		240,949			234,363			701,403			723,549
Gross profit		29,053			36,455			96,240			118,965
Selling, general and administrative expense		16,192			16,061			46,887			46,978
Goodwill amortization		—			5,175			—			15,487
Asset impairment and restructuring charges		—			—			—			3,000
Operating income		12,861			15,219			49,353			53,500
Gain on sale of assets		—			—			—			3,650
Interest expense		(11,310	)		(12,429	)		(35,059	)		(42,084	)
Income before income taxes, extraordinary item and cumulative effect of change in accounting principle		1,551			2,790			14,294			15,066
Income tax expense		(604	)		(1,160	)		(5,575	)		(6,026	)
Income before extraordinary item and cumulative effect of change in accounting principle		947			1,630			8,719			9,040
Extraordinary loss on early extinguishment of debt, net of tax of $6,149		—			—			(9,617	)		—
Income (loss) before cumulative effect of change in accounting principle		947			1,630			(898	)		9,040
Cumulative effect of change in goodwill accounting, net of tax of $0		—			—			(180,000	)		—
Net income (loss)		947			1,630			(180,898	)		9,040
Preferred stock dividends declared		(2,500	)		(2,500	)		(7,500	)		(7,500	)
Net income (loss) attributable to common shareholders	$	(1,553	)	$	(870	)	$	(188,398	)	$	1,540

GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)

See Notes to Consolidated Financial Statements.


	Three months ended					Six months ended
	June 30,					June 30,

	2003			2002		2003			2002

Net income (loss) attributable to common shareholders per basic and diluted share:
Before cumulative effect of change in accounting principle		($0.02	)	$	0.01		($0.10	)		($0.21	)
Cumulative effect of change in goodwill accounting		—			—		—			(5.55	)

		($0.02	)	$	0.01		($0.10	)		($5.76	)

Weighted average shares outstanding – basic		33,709			32,567		33,648			32,456

Weighted average shares outstanding — diluted		33,709			34,093		33,648			32,456

See Notes to Consolidated Financial Statements.

2 3

~~CONSOLIDATED~~GRAPHIC ~~INCOME~~PACKAGING INTERNATIONAL CORPORATION CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (In thousands)

(In thousands, except per share data)


		Three months ended					Six months ended
		June 30,					June 30,

		2003		2002			2003			2002

Net income (loss)		$	1,744	$	2,826		$	1,701			($181,845	)
Other comprehensive income (loss):
	Foreign currency translation adjustments		85		355			(132	)		341
	Recognition of hedge results to interest expense during the period, net of tax of $882 and $1,819, respectively		—		1,421			—			2,928
	Amortization of cancelled interest rate swap, net of tax of $137 and $183, respectively		—		220			—			293
	Change in fair value of cash flow hedges during the period, net of tax of $82 and $130, respectively		—		(132	)		—			(208	)

Other comprehensive income (loss)			85		1,864			(132	)		3,354

Comprehensive income (loss)		$	1,829	$	4,690		$	1,569			($178,491	)

See Notes to Consolidated Financial Statements.

	Three months ended September 30,						Nine months ended September 30,
	2002			2001			2002			2001
Net income (loss) attributable to common shareholders per basic and diluted share:
Before extraordinary item and cumulative effect of change in accounting principle	$	(0.05	)	$	(0.03	)	$	0.04		$	0.05
Extraordinary loss		—			—			(0.30	)		—
Cumulative effect of change in accounting principle		—			—			(5.52	)		—
	$	(0.05	)	$	(0.03	)	$	(5.78	)	$	0.05
Weighted average shares outstanding—basic		32,839			31,882			32,585			31,459
Weighted average shares outstanding—diluted		32,839			31,882			33,999			32,444

3GRAPHIC PACKAGING INTERNATIONAL CORPORATION CONSOLIDATED BALANCE SHEET (In thousands, except share data)

GRAPHIC PACKAGING INTERNATIONAL CORPORATION


				June 30,			December 31,
				2003			2002

ASSETS
Current assets:
Cash and cash equivalents				$	6,959		$	28,626
Accounts receivable, net					76,899			63,546
Inventories:
		Finished			63,693			50,771
		In process			9,754			11,298
		Raw materials			26,924			25,174

Total inventories					100,371			87,243
Other assets					22,589			21,686

			Total current assets		206,818			201,101

Properties, net					399,248			410,592
Goodwill, net					391,803			379,696
Other assets					28,099			29,477

Total assets				$	1,025,968		$	1,020,866

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current maturities of long-term debt				$	3,626		$	3,432
Accounts payable					93,673			82,106
Interest payable					9,958			11,117
Other current liabilities					56,118			58,334

		Total current liabilities			163,375			154,989
Long-term debt					471,512			474,899
Pension liability					43,191			42,310
Other long-term liabilities					42,789			41,630

		Total liabilities			720,867			713,828
Shareholders’ equity
Preferred stock, nonvoting, 20,000,000 shares authorized:
	Series A, $0.01 par value, no shares issued or outstanding Series B, $0.01 par value, 1,000,000 shares issued and outstanding at stated value of $100 per share				100,000			100,000
Common stock, $0.01 par value 100,000,000 shares authorized and 33,723,676 and 33,477,300 issued and outstanding at June 30, 2003, and December 31, 2002, respectively					337			335
Paid-in capital					412,231			416,048
Unearned compensation					(2,112	)		(2,421	)
Retained deficit					(177,511	)		(179,212	)
Accumulated other comprehensive loss					(27,844	)		(27,712	)

		Total shareholders’ equity			305,101			307,038

Total liabilities and shareholders’ equity				$	1,025,968		$	1,020,866

See Notes to Consolidated Financial Statements.

~~CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME~~ 5

	Three months ended September 30,					Nine months ended September 30,
	2002		2001			2002			2001
Net income (loss)	$	947	$	1,630		$	(180,898	)	$	9,040
Other comprehensive income:
Foreign currency translation adjustments		1		46			342			(284	)
Cumulative effect of change in accounting for interest rate swaps, net of tax of $2,012		—		—			—			(3,217	)
Recognition of hedge results to interest expense during the period, net of tax of $457, $214, $2,276, and $793, respectively		736		343			3,664			1,269
Amortization of cancelled interest rate swap, net of tax of $137 and $320, respectively		220		—			513			—
Change in fair value of cash flow hedges during the period, net of tax of $425, $969, $296, and $2,017, respectively		684		(1,551	)		476			(3,224	)
Other comprehensive income (loss)		1,641		(1,162	)		4,995			(5,456	)
Comprehensive income (loss)	$	2,588	$	468		$	(175,903	)	$	3,584

GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)

See Notes to Consolidated Financial Statements.


				Six months ended

							June 30,
				2003			2002

Cash flows from operating activities:
	Net income (loss)			$	1,701			($181,845	)
	Adjustments to reconcile net income (loss) to net cash provided by operating activities:
		Depreciation			31,201			30,716
		Amortization of debt issuance costs			1,152			1,945
		Loss on early extinguishment of debt			—			15,766
		Goodwill impairment			—			180,000
		Compensation expense settled in stock			1,422			2,237
		Change in current assets and current liabilities, net of effects of acquisition:
			Accounts receivable		(13,353	)		(14,935	)
			Inventory		(11,511	)		(5,554	)
			Other current assets		(903	)		5,833
			Accounts payable		9,967			(11,337	)
			Interest payable		(1,159	)		8,610
			Other current liabilities		(2,216	)		8,540
		Other			2,172			423

Net cash provided by operating activities					18,473			40,399

Cash flows from investing activities:
		Capital expenditures			(13,956	)		(15,454	)
		Acquisition of J.D. Cahill Co. assets			(18,088	)		—

Net cash used in investing activities					(32,044	)		(15,454	)

Cash flows from financing activities:
		Proceeds from borrowings			139,547			613,100
		Repayment of debt			(142,740	)		(619,343	)
		Preferred stock dividends paid			(5,000	)		(5,000	)
		Debt issuance costs			—			(15,922	)
		Common stock issuance and other			97			436

Net cash used in financing activities					(8,096	)		(26,729	)

Cash and cash equivalents:
	Net decrease in cash and cash equivalents				(21,667	)		(1,784	)
	Balance at beginning of period				28,626			6,766

	Balance at end of period			$	6,959		$	4,982

See Notes to Consolidated Financial Statements.

4 6

~~CONSOLIDATED~~GRAPHIC ~~BALANCE~~PACKAGING ~~SHEET~~INTERNATIONAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~(In~~Note ~~thousands,~~1. ~~except~~Significant ~~share~~Accounting ~~data)~~ Policies

	September 30, 2002			December 31, 2001
ASSETS
Current assets:
Cash and cash equivalents	$	10,646		$	6,766
Accounts receivable		68,755			59,474
Inventories:
Finished		52,504			55,057
In process		10,691			15,258
Raw materials		26,391			22,093
Total inventories		89,586			92,408
Other assets		27,520			33,156
Total current assets		196,507			191,804
Properties, net		419,240			443,712
Goodwill, net		379,696			559,696
Other assets		30,033			34,123
Total assets	$	1,025,476		$	1,229,335
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current maturities of long-term debt	$	3,610		$	37,373
Accounts payable		89,633			59,002
Other current liabilities		66,638			73,026
Total current liabilities		159,881			169,401
Long-term debt		475,300			488,386
Other long-term liabilities		71,288			73,900
Total liabilities		706,469			731,687
Shareholders’ equity
Preferred stock, nonvoting, 20,000,000 shares authorized:
Series A, $0.01 par value, no shares issued or outstanding Series B, $0.01 par value, 1,000,000 shares issued and outstanding at stated value of $100 per share		100,000			100,000
Common stock, $0.01 par value 100,000,000 shares authorized and 32,926,055 and 32,188,941 issued and outstanding at September 30, 2002, and December 31, 2001, respectively		329			322
Paid-in capital		415,004			417,749
Accumulated deficit		(181,460	)		(562	)
Accumulated other comprehensive loss		(14,866	)		(19,861	)
Total shareholders’ equity		319,007			497,648
Total liabilities and shareholders’ equity	$	1,025,476		$	1,229,335

Nature of Operations and Basis of Presentation: Graphic Packaging International Corporation (the Company or GPIC) is a manufacturer of packaging products used by consumer product companies as primary packaging for their end-use products.

~~See~~ The ~~Notes~~consolidated financial statements have been prepared by the Company pursuant to ~~Consolidated~~the ~~Financial~~rules ~~Statements~~and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures included herein are adequate to make the information presented not misleading. A description of the Company’s accounting policies and other financial information is included in the audited financial statements filed with the Securities and Exchange Commission in the Company’s Form 10-K/A for the year ended December 31, 2002.

5 In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to fairly state the financial position of the Company at June 30, 2003, and the results of operations and cash flows for the periods presented. All such adjustments are of a normal recurring nature. The results of operations for the three and six month periods ended June 30, 2003 are not necessarily indicative of the results that may be achieved for the full fiscal year and cannot be used to indicate financial performance for the entire year.

~~GRAPHIC~~ Certain ~~PACKAGING~~prior ~~INTERNATIONAL~~year ~~CORPORATION~~amounts have been reclassified to conform with the current year presentation.

~~CONSOLIDATED~~ Segment ~~STATEMENT~~Information: OFThe ~~CASH~~Company’s ~~FLOWS~~reportable segments are based on its method of internal reporting, which is based on product category. The Company has one reportable segment – Packaging. In addition, the Company’s holdings and operations outside the United States are nominal. Therefore, no additional segment information is provided herein.

~~(In~~ Goodwill ~~thousands)~~Accounting: SFAS No. 142, “Goodwill and Other Intangible Assets,” became effective on January 1, 2002 for the Company. This statement establishes new accounting and reporting standards that, among other things, eliminate amortization of goodwill and certain intangible assets with indefinite useful lives. The Company does not have any intangible assets with indefinite useful lives; however, as required by the new standard, the Company’s goodwill will be evaluated annually for impairment using a fair-value based approach and, if there is impairment, the carrying amount of goodwill will be written down to its implied fair value. Management re-evaluated the Company’s goodwill for impairment upon signing the merger agreement discussed in Note 5 below. Management determined that the Company’s goodwill is not impaired.

	Nine months ended September 30,
	2002			2001
Cash flows from operating activities:
Net income (loss)	$	(180,898	)	$	9,040
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Goodwill impairment		180,000			—
Asset impairment charges		—			1,500
Extraordinary loss on early extinguishment of debt		15,766			—
Gain on sale of assets		—			(3,650	)
Depreciation		45,950			44,564
Amortization of goodwill		—			15,487
Amortization of debt issuance costs		2,539			5,920
Compensation expense settled in stock		3,377			4,140
Change in current assets and current liabilities:
Accounts receivable		(9,281	)		(8,245	)
Inventory		2,822			9,012
Other current assets		5,636			(727	)
Accounts payable		30,631			4,588
Other current liabilities		(1,735	)		8,073
Other		(726	)		3,894
Net cash provided by operating activities		94,081			93,596
Cash flows from investing activities:
Capital expenditures		(21,049	)		(22,135	)
Proceeds from sale of assets		—			8,950
Net cash used in investing activities		(21,049	)		(13,185	)
Cash flows from financing activities:
Repayment of debt		(730,426	)		(225,900	)
Proceeds from borrowings		683,577			155,235
Payment of debt issuance costs		(16,019	)		—
Payment of preferred stock dividends		(7,500	)		(9,583	)
Issuance of common stock and other		1,216			117
Net cash used in financing activities		(69,152	)		(80,131	)
Cash and cash equivalents:
Net increase in cash and cash equivalents		3,880			280
Balance at beginning of period		6,766			4,012
Balance at end of period	$	10,646		$	4,292

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

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

6 7

~~NOTES~~ Stock-Based TOCompensation: ~~CONSOLIDATED~~The ~~FINANCIAL~~Company ~~STATEMENTS~~applies Accounting Principles Board Opinion No. 25 and related interpretations in accounting for its stock-based compensation plans. Accordingly, no compensation expense has been recognized for stock options or the employee stock purchase plan as all options were granted at the market price. If the Company had elected to recognize compensation cost based on the fair value of the stock options at grant date as allowed by SFAS No. 123, “Accounting for Stock-Based Compensation,” pre-tax compensation expense of $0.3 million and $0.4 million would have been recorded for the quarterly periods ended June 30, 2003 and 2002, respectively; and $1.6 million and $0.8 million would have been recorded for the six month periods ended June 30, 2003 and 2002, respectively. Net loss attributable to common shareholders and loss per share would have been reduced to the pro forma amounts indicated below:

Note 1. Nature of Operations and Basis of Presentation


		Three Months Ended June 30,						Six Months Ended June 30,

		2003			2002			2003			2002

					(in thousands, except per share data)
Net income (loss) attributable to common shareholders, as reported			($756	)	$	326			($3,299	)		($186,845	)
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects			(177	)		(244	)		(944	)		(488	)

Pro forma net income (loss) attributable to common shareholders			($933	)	$	82			($4,243	)		($187,333	)

Income (loss) per share—basic and diluted:
	As reported		($0.02	)	$	0.01			($0.10	)		($5.76	)

	Pro forma		($0.03	)	$	—			($0.13	)		($5.77	)

~~Graphic Packaging~~Note ~~International~~2. ~~Corporation~~Loss ~~(the~~on ~~Company~~Early orExtinguishment ~~GPIC) is a manufacturer~~ of ~~packaging products used by consumer product companies as primary packaging for their end-use products.~~ Debt

~~The~~ It ~~consolidated~~is ~~financial statements have been prepared by~~ the Company’s ~~pursuant~~policy to ~~the~~implement ~~rules~~all ~~and~~new ~~regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted~~ accounting ~~principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the~~pronouncements ~~disclosures~~as ~~included~~they ~~herein~~ are ~~adequate~~issued toand ~~make~~become ~~the~~effective ~~information~~for ~~presented not misleading. A description of~~ the Company’s. ~~accounting~~During ~~policies and other financial information is included in~~ the ~~audited~~first ~~financial statements filed with the~~half ~~Securities~~of ~~and~~2003, ~~Exchange~~one ~~Commission~~new inaccounting ~~the~~pronouncement ~~Company’s~~was ~~Form 10-K/A for the year ended December 31, 2001~~adopted.

In ~~the opinion~~connection ofwith ~~management~~its first quarter 2002 refinancing transactions, the Company ~~accompanying~~incurred ~~unaudited~~a ~~financial~~non-cash ~~statements~~charge ~~contain~~in ~~all~~2002 ~~adjustments~~to ~~necessary~~write tooff ~~fairly~~its ~~state~~remaining unamortized debt issuance costs associated with the ~~financial~~refinanced ~~position~~debt of $15.8 million, pretax, which was reflected as an extraordinary loss in the ~~Company~~2002 statement atof ~~September~~operations. 30The FASB issued SFAS No. 145, ~~2002~~“Rescission of FASB Statements No. 4, 44, and ~~the~~64, ~~results~~Amendment of ~~operations~~FASB Statement No. 13, and ~~cash~~Technical Corrections,” ~~flows~~in ~~for~~April ~~the~~2002. ~~periods~~SFAS No. 145 includes, among other things, the ~~presented~~rescission of SFAS No. 4, ~~All~~which ~~such~~required ~~adjustments~~that ~~are~~gains and losses from early extinguishment of adebt ~~normal~~be ~~recurring~~classified ~~nature.~~as ~~The~~an ~~results~~extraordinary item, net of ~~operations~~related income ~~for~~tax effects. Under the ~~three~~new ~~months~~guidance ~~ended~~of ~~September~~SFAS 30No. 145, ~~2002~~losses from early extinguishment of debt are ~~not~~classified ~~necessarily~~as ~~indicative~~extraordinary ofitems only when the losses ~~results~~are ~~that~~considered ~~may~~unusual bein ~~achieved~~nature and infrequent in occurrence. SFAS No. 145 was effective for the ~~full~~Company ~~fiscal~~on ~~year~~January 1, ~~and~~2003, ~~cannot~~at bewhich ~~used~~time the Company toreclassified ~~indicate~~its ~~financial~~first ~~performance~~quarter ~~for~~2002 ~~the~~loss ~~entire~~on ~~year~~early extinguishment of debt ($.30 per share) as a non-extraordinary item.

~~Certain~~Note ~~prior~~3. ~~year~~Acquisition ~~amounts~~of ~~have~~J.D. ~~been~~Cahill ~~reclassified to conform with the current year presentation~~Co.

~~Note~~ On 2March 6, 2003, the Company acquired the business of J. ~~Goodwill~~D. ~~Accounting~~Cahill Co., Inc. in an asset acquisition for approximately $20.0 million, consisting of approximately $18.1 million in cash and assumption of approximately $1.9 million of liabilities. The assets acquired and liabilities assumed, which consisted of inventories, fixed assets, intangible assets and accounts payable, were valued at approximately $7.9 million, resulting in goodwill of $12.1 million. The change in the carrying amount of the Company’s goodwill during the first half of 2003 relates entirely to the Cahill acquisition. Consolidated operating results for the first half of 2003 include the results of Cahill beginning March 6, 2003. Among other expected benefits, the Company expects to avoid approximately $10 million of future capital spending as a result of this acquisition.

~~SFAS No. 142, Goodwill and Other Intangible Assets, was issued in 2001 and became effective on January 1, 2002 for the Company.~~ This statement establishes new accounting and reporting standards that, among other things, eliminate amortization of goodwill and certain intangible assets with indefinite useful lives. The Company does not have any intangible assets with8 indefinite useful lives; however, as required by the new standard, the Company’s goodwill will be evaluated annually for impairment using a fair-value based approach and, if there is impairment, the carrying amount of goodwill will be written ~~down to its implied fair value.~~

OfNote ~~the $560 million carrying value of goodwill at December 31, 2001, $418 million is deductible for Federal income tax purposes and $142 million is not deductible~~4. ~~The~~New ~~$180~~Accounting ~~million goodwill impairment charge consists of approximately $131 million of deductible~~Pronouncements goodwill and approximately $49 million of non-deductible goodwill. The $131 million tax deductible portion of the impairment charge resulted in a deferred tax benefit/asset of approximately $50 million. We recorded a 100% valuation allowance against the approximately $50 million deferred tax asset resulting from recognition of the transitional goodwill impairment loss. Therefore, the cumulative effect of change in accounting principle reflected in the accompanying income statement is net of $0 ~~tax benefit.~~

~~Effective~~ Financial Accounting Standards Board Interpretation (FIN) No. 46, “Consolidation of Variable Interest Entities,” was issued in January 12003. FIN No. 46 defines a variable interest entity as a legal entity in which, ~~2002~~among other things, the equity investments at risk are not sufficient to finance the operating and closing activities of the entity without additional subordinated financial support from the entity’s investors. The Company ~~stopped~~is ~~amortizing~~a ~~its~~partner ~~goodwill~~in the Kalamazoo Valley Group Partnership (KVG), which qualifies as ~~required~~a variable interest entity, as defined by ~~SFAS~~FIN No. ~~142~~ 46. KVG is a partnership formed to ~~The~~develop ~~annual~~and ~~reduction~~operate ina ~~amortization~~landfill ~~expense~~for isthe ~~approximately~~partners’ ~~$20~~disposal of paper residuals from their respective paperboard mills.6 ~~million~~KVG ~~before~~borrowed ~~taxes~~$1.5 million ~~Because~~for ~~some~~the construction of the ~~Company’s~~landfill, ~~goodwill~~of ~~amortization~~which isapproximately ~~nondeductible~~$300 ~~for~~thousand ~~tax~~remains unpaid ~~purposes~~at June 30, 2003. The partners contribute capital annually to meet the partnership’s operating losses. The Company’s ~~effective~~annual ~~tax~~contribution ~~rate~~for isthe ~~lower~~past two asyears ahas ~~result~~been approximately $200 thousand. The landfill has been in operation since December 1997; however, since 2000, two of the other partners ~~implementing~~have ~~SFAS~~closed ~~No.~~their ~~142~~paperboard mills and one minority partner was permitted to withdraw by the bankruptcy court. The ~~change~~Company inis evaluating its alternatives and liabilities under the ~~carrying~~partnership ~~amount~~agreement ofand related note, while continuing to use the landfill. However, if the partnership were to close the landfill, the Company’s ~~goodwill~~share of estimated closing costs, perpetual care obligations and debt repayment would approximate $2.5 million under the terms of the partnership agreement. The Company accounts for its interest in KVG using the ~~nine~~equity ~~months~~method. ~~ended~~The ~~September~~investment balance at June 30, ~~2002~~2003 ~~consists~~was negligible. ~~entirely~~Management is also evaluating its accounting method in light of the new ~~impairment~~requirements ofunder ~~$180~~FIN ~~million~~No. 46, and may conclude that its interest in KVG should be consolidated into the Company’s accounts. FIN No. 46 is effective for the Company’s 2003 third quarter.

7 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. SFAS No. 149 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 its financial statements.

~~The~~ In ~~Company~~May ~~recorded~~2003, ~~its~~the ~~transitional~~FASB ~~goodwill~~issued ~~impairment~~SFAS ~~charge~~No. 150, ~~during~~“Accounting ~~the~~for ~~second~~Certain Financial ~~quarter~~Instruments with Characteristics of ~~2002,~~Liabilities asand ~~permitted~~Equity,” byor SFAS No. 150. ~~142~~SFAS No. 150 ~~The~~establishes ~~following~~standards ~~table~~for ~~presents~~classification of certain financial instruments that have characteristics of both liabilities and equity in the ~~results~~statement of ~~operations~~financial position. SFAS No. 150 is effective for all contracts created or modified after the ~~first~~date ~~quarter~~the ofstatement ~~2002~~was ~~after~~issued ~~giving~~and otherwise ~~effect~~effective tofor the ~~goodwill~~Company ~~impairment~~July 1, ~~charge~~2003. ~~(in~~Management ~~thousands):~~does not expect the adoption of SFAS 150 to have a material impact on its financial statements.

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

Note 5. Proposed Merger with Riverwood

On March 25, 2003, GPIC entered into a merger agreement with Riverwood Holding, Inc. to effect a stock-for-stock merger with Riverwood. Riverwood will be the accounting acquiror of GPIC and will survive as the new public company listed on the New York Stock Exchange. The ~~following~~new ~~table~~company ~~illustrates~~will ~~net~~take ~~income~~the ~~(loss)~~name Graphic ~~attributable~~Packaging Corporation. Prior to the merger, Riverwood will complete a 15.21 to 1 stock split of its common stock. GPIC shareholders ~~and~~are ~~earnings~~expected ~~per~~to receive one share of Riverwood common stock for each share of GPIC common stock they hold. As a condition to closing the merger, ~~exclusive~~the Grover C. Coors Trust will convert its preferred shares into 48,484,848 shares of ~~goodwill~~common ~~amortization~~stock. ~~expense~~Assuming the inconversion occurs on August 8, 2003, Riverwood will pay the ~~prior~~Grover ~~year~~C. ~~periods~~Coors Trust ~~(in~~an ~~thousands):~~estimated $19.8 million as consideration for early conversion of the preferred stock. Immediately after the merger, GPIC shareholders will own approximately 42.5% and Riverwood shareholders will own approximately 57.5% of the combined company on a fully diluted basis.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2002			2001			2002			2001
Reported net income (loss) before extraordinary item attributable to common shareholders	$	(1,553	)	($	870	)	$	(178,781	)	$	1,540
Extraordinary item		—			—			(9,617	)		—
Reported net income (loss) attributable to common shareholders		(1,553	)		(870	)		(188,398	)		1,540
Goodwill amortization, net of tax		—			3,105			—			9,292
Adjusted net income (loss) attributable to common shareholders	$	(1,553	)	$	2,235		$	(188,398	)	$	10,832
Earnings per share—basic:
Reported net income (loss) before extraordinary item attributable to common shareholders	$	(0.05	)	($	0.03	)	$	(5.48	)	$	0.05
Extraordinary item		—			—			(0.30	)		—
Reported net income (loss) attributable to common shareholders		(0.05	)		(0.03	)		(5.78	)		0.05
Goodwill amortization, net of tax		—			0.10			—			0.29
Adjusted net income (loss) attributable to common shareholders	$	(0.05	)	$	0.07		$	(5.78	)	$	0.34
Earnings per share—diluted:
Reported net income (loss) before extraordinary item attributable to common shareholders	$	(0.05	)	($	0.03	)	$	(5.48	)	$	0.05
Extraordinary item		—			—			(0.30	)		—
Reported net income (loss) attributable to common shareholders		(0.05	)		(0.03	)		(5.78	)		0.05
Effect of additional dilutive securities(1)		—			0.05			—			0.06
Goodwill amortization, net of tax		—			0.04			—			0.12
Adjusted net income (loss) attributable to common shareholders	$	(0.05	)	$	0.06		$	(5.78	)	$	0.23

On May 12, 2003, the thirty-day waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR) expired. Accordingly, the condition to the merger requiring the expiration or termination of the HSR waiting period has been satisfied. In addition to this and other conditions to the merger, the merger must be approved by two-thirds of the combined voting power of GPIC common stock and two thirds of the preferred stock voting as a separate class. The Coors family shareholders, who collectively owned approximately 65.1% of the combined voting power of the Company before the merger, signed a voting agreement with Riverwood in which they agreed to vote in favor of the merger. At a meeting of the shareholders held on August 7, 2003, the merger was approved and is expected to be consummated on August 8, 2003.

(1) Includes the dilutive effect from the conversion of preferred stock into 48.5 million shares of common stock and the elimination of $2.5 million per quarter of preferred stock dividends, as well as the dilutive effect from the conversion of other common stock equivalents into 1.4 million shares of common stock for those periods where conversion is dilutive. 9

~~Note~~ The combined company has commitment letters from a banking syndicate for financing totaling $1.6 billion at the time of merger. Management estimates that up to $1.3 billion will be drawn at the time of merger to repay existing bank debt and to pay transaction costs. ~~New~~ ~~Accounting~~The ~~Pronouncements~~combined company may also refinance GPIC’s and Riverwood’s senior and senior subordinated notes in the principal amount of $850 million. Assuming the GPIC existing senior bank credit facility and the senior subordinated notes are refinanced, a loss on early extinguishment of debt will occur totaling approximately $20 million, consisting of cash tender premiums and non-cash unamortized debt issuance costs.

In For ~~2001,~~ the ~~FASB~~six ~~issued~~months ~~SFAS~~ended ~~No.~~June 30, ~~143~~2003, ~~Accounting~~the ~~for~~Company ~~Asset~~incurred ~~Retirement Obligations~~approximately $3.5 million ~~SFAS No. 143 requires the recognition~~ of ~~a liability~~merger ~~and~~related ~~offsetting~~costs. ~~asset~~Management ~~for~~expects ~~any~~to ~~legal~~incur ~~obligation~~an ~~associated~~estimated additional ~~with~~$9 million ~~the retirement~~ of ~~long-lived~~transaction ~~assets.~~costs ~~The~~prior ~~asset~~to ~~retirement~~closing ~~cost~~for ismerger related ~~depreciated~~investment ~~over~~banking, ~~the~~legal ~~life~~and ofaccounting ~~the related asset~~fees. ~~This~~For ~~statement~~the issix ~~effective~~months ~~for financial statements issued for~~ended ~~fiscal years beginning after~~ June 30, 152003, ~~2002.~~the ~~Management~~Company ~~does~~also ~~not~~incurred ~~believe~~approximately ~~SFAS~~$500 ~~No.~~thousand ~~143~~evaluating acquisitions ~~will~~that ~~have~~were anot ~~significant effect on the Company~~consummated.

~~SFAS~~ Relating ~~No.~~to ~~145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections, was issued on April 30, 2002. SFAS No. 145 includes, among other things,~~ the ~~rescission~~proposed ~~of SFAS No. 4~~merger, ~~which~~Riverwood ~~required~~filed ~~that~~a gains and losses from early extinguishment of debt be classified as an extraordinary item, net of related income tax effects. Under the new guidance of SFAS No. 145, losses from early extinguishment of debt will beregistration ~~classified~~statement aswith ~~extraordinary items only when~~ the ~~losses~~Securities ~~are considered unusual in nature~~ and ~~infrequent~~Exchange inCommission ~~occurrence. SFAS No.145 will be effective for the Company on January 1, 2003, at~~ which ~~time~~contains ~~the~~a ~~Company~~proxy statement/prospectus ~~will~~that ~~reclassify~~was ~~its~~sent ~~first~~to ~~quarter~~GPIC ~~2002 loss~~shareholders on ~~early~~July 18, ~~extinguishment of debt as a non-extraordinary item~~2003.

~~SFAS~~Note No6. ~~146~~Guarantees, ~~Accounting~~Commitments ~~for~~and ~~Costs~~Contingencies Associated with Exit or Disposal Activities, was issued on July 30, 2002. SFAS No. 146 will require companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an ~~exit or disposal plan. SFAS No. 146 is effective for the Company on January 1, 2003 and will have no effect on the Company’s historical financial results.~~

~~Note~~ In 4the ordinary course of business, the Company is subject to various pending claims, lawsuits and contingent liabilities, including claims by current or former employees. ~~Refinancing~~ ~~Transactions~~In each of these cases, the Company is vigorously defending against them. Although the eventual outcome cannot be predicted, it is management’s opinion that disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

On February 28 19, 2002, ~~the~~Chinyun Kim filed a putative class action claim in District Court, Jefferson County, Colorado against the Company ~~completed~~and certain ~~refinancing~~of its ~~transactions~~shareholders and directors. The complaint alleges that ~~replaced~~the ~~its~~defendants breached ~~then~~their ~~existing~~fiduciary ~~debt~~duties ~~instruments~~in connection with ~~longer-term~~the ~~facilities~~issuance ~~more~~on ~~conducive~~August 15, 2000, toof the Company’s ~~long-range~~Series B ~~needs~~Preferred Stock to the Grover C. Coors Trust (the Trust). Plaintiff is seeking damages in the amount of $43 million or, alternatively, to require transfer to the class of some or all of the Trust’s GPIC common stock into which the convertible preferred stock will be converted. The ~~refinancing~~court ~~consisted~~dismissed plaintiff’s claim against the Company for breach of fiduciary duty while allowing the ~~following~~plaintiff ~~concurrent~~to proceed against the named ~~transactions:~~directors and shareholders, including certain Coors family trusts. The Company is continuing to provide a defense to this action pursuant to its indemnification obligations. Currently, discovery is being conducted. By order dated June 12, 2003, the court certified a class comprised of all owners of GPIC common stock as of August 2, 2000, excluding the defendants and members of the Coors family and their affiliates and excluding any additional shares purchased by class members after August 2, 2000. The Company believes that the transaction was in the best interest of the Company and its shareholders.

• On ~~The~~April 2, 2003, two separate lawsuits were filed in District Court, Jefferson County, Colorado, against the Company, the Company’s ~~wholly~~directors ~~owned~~and Riverwood ~~subsidiary,~~relating ~~Graphic~~to ~~Packaging~~the ~~Corporation~~merger ~~(GPC)~~between GPIC and Riverwood pursuant to the merger agreement. The complaints were filed by Robert F. Smith and Harold Lightweis, ~~issued~~on ~~$300~~behalf ~~million~~of ~~aggregate~~themselves ~~principal~~and ~~amount~~all others similarly situated. Each of the 8two ~~5/8%~~complaints ~~senior~~alleges ~~subordinated~~breach ~~notes~~of ~~due~~fiduciary duties by the Company’s directors to the Company’s public shareholders in ~~2012~~connection with the merger and that Riverwood aided and abetted the alleged breach. The complaint alleges that the Coors family stockholders negotiated the merger consideration in atheir own ~~Rule~~interest ~~144A~~and ~~transaction~~not in the interest of the public stockholders. ~~Net~~The ~~proceeds~~complaint seeks ~~from~~an injunction against consummation of the ~~sale~~merger, rescission of the merger ~~notes~~if ~~totaled~~it ~~approximately~~is ~~$294~~consummated, unspecified damages, costs and other relief permitted by law and equity.1 ~~million~~On July 3, 2003, a third lawsuit was filed in District Court of Jefferson County in Colorado, on behalf of a purported class of the Company’s stockholders against the Company, the Company’s directors and Riverwood, alleging that the Company’s directors breached their fiduciary duties to the stockholders of the Company in connection with the negotiation of the proposed merger and that the Company and Riverwood aided and abetted the alleged breach. The complaint alleges that the defendants negotiated the terms of the merger in their own interest and in the interest of certain other insiders (including the Coors family stockholders), to the detriment of

• GPC entered into a new $450 million senior secured credit facility. The new facility includes a $175 million seven-year term note and a $275 million five-year revolving line of credit. Initial borrowings under the revolving line of credit totaled $62.6 million. Initial interest rates for the seven-year term note and the five-year revolving line of credit were 6.5% and 5.75%, respectively. Interest rates have subsequently dropped to 4.57% and 3.80%, respectively, at September 30, 2002. 10

~~Senior~~the ~~Subordinated~~public ~~Notes~~stockholders. The complaint, which is encaptioned James A. Bederka, On behalf of Himself and All Other Similarly Situated v. Riverwood Holdings Inc., et al., seeks certain equitable relief, including an injunction against the consummation of the merger, rescission of the merger if it is consummated, rescission of the sale on August 15, 2000 of the convertible preferred stock to the Trust and injunction against the conversion of the convertible preferred stock and costs. We believe that these three lawsuits are without merit.

~~The~~ During ~~senior~~its ~~subordinated~~normal ~~notes (the~~course ~~Notes) are unsecured senior subordinated obligations~~ of ~~GPC. Interest accrues at 8 5/8%~~business, ~~payable~~the ~~semi-annually~~Company onhas ~~August~~entered ~~15th~~into ~~and February 15th, beginning on August 15, 2002. The Notes will mature on February 15, 2012. The Notes are~~certain ~~unconditionally~~indemnification ~~and~~agreements ~~jointly~~with ~~and~~directors ~~severally guaranteed by GPIC~~ and ~~its~~officers ~~domestic~~of ~~subsidiaries. GPC may redeem~~ the ~~Notes,~~Company ~~but prior~~ to ~~2010,~~the maximum ~~must~~extent ~~pay~~permitted aunder ~~premium to do so. Upon a change in control,~~ the ~~holders~~laws of the ~~Notes~~State ~~may~~of ~~require~~Colorado, ~~GPC~~which ~~to repurchase~~are ~~the~~insured ~~Notes~~under atdirectors aand 1%officers ~~premium.~~liability policies.

~~GPC~~ In ~~issued~~connection with the ~~Notes~~sale ~~under~~of anvarious ~~indenture among GPC~~businesses, ~~as issuer, GPIC, as a guarantor,~~ the Company’s ~~domestic~~has periodically ~~subsidiaries,~~agreed asto guarantee the ~~subsidiary~~collectibility ~~guarantors,~~of ~~and~~accounts ~~Wells~~receivable ~~Fargo~~and indemnify ~~Bank~~purchasers ~~Minnesota,~~for ~~National~~certain ~~Association,~~liabilities asfor ~~trustee.~~a ~~GPC~~specified ~~and~~period ~~GPIC~~of ~~entered~~time. Such ~~into~~liabilities ainclude, ~~registration~~but ~~rights~~are ~~agreement~~not ~~which~~limited ~~provided~~to, ~~for~~environmental ~~them~~matters toand ~~use commercially~~the ~~reasonable~~indemnification ~~efforts~~periods togenerally ~~consummate~~last anfor ~~exchange~~2 ~~offer~~to ~~under~~15 years. ~~the~~At ~~Securities~~June 30, ~~Act of 1933~~2003, ~~within~~the Company ~~210~~has ~~days~~accrued ofapproximately ~~closing~~$3.0 million ~~The~~related ~~Company~~to ~~consummated~~these ~~the~~guarantees ~~exchange offer in August 2002~~and indemnifications.

9 In connection with the resale of its aluminum business in 1999, the Company guaranteed accounts receivable owed by the former owner of the business. After the resale, the former owner refused to pay the amounts owed, equal to $2.4 million. Pursuant to the terms of the resale agreement, the Company paid this amount and sued the former owner in the United States District Court for the District of Colorado on April 18, 2000. The former owner counterclaimed for an additional $11.0 million for certain spare parts, and the Company amended its claim to seek an additional $16.0 million in overpayment for raw materials to run the business prior to resale. This claim increased from $14.3 million to $16.0 million after making an adjustment for certain offsets to which the Company was entitled. The parties have filed motions for summary judgment. The Company does not believe that this litigation will have a material adverse effect on its consolidated financial position, results of operations or cash flows.

~~Senior~~Note ~~Secured~~7. ~~Credit~~Related ~~Facility~~Party Supply Agreement

~~GPC~~ On ~~is the borrower under the new senior secured credit facility (the Credit Facility). A syndicate of financial institutions serves as lenders~~December 28, ~~with Morgan Stanley Senior~~ ~~Funding~~1992, ~~Inc. and Credit Suisse First Boston as~~ the ~~joint~~Company ~~lead~~was ~~arrangers.~~spun ~~The~~off ~~Credit~~from ~~Facility~~Adolph ~~consists~~Coors ofCompany a(ACCo) ~~$275 million, five-year revolving credit facility, or the Revolver,~~ and ~~a $175 million, seven-year term loan, or the Term Loan. The Revolver~~ ~~bears~~since ~~interest~~that attime ~~various~~ACCo ~~pricing~~has ~~options,~~had ~~including LIBOR plus a spread tied to GPC’s leverage, with a single principal payment due at maturity. There were~~ no ~~outstanding~~ownership ~~borrowings~~interest ~~under~~in the ~~revolver at September 30, 2002~~Company. ~~The Term Loan bears~~ ~~interest at various pricing options~~However, ~~including~~certain ~~LIBOR~~Coors ~~plus~~family ~~275~~trusts ~~basis~~have ~~points,~~significant ~~with~~interests ~~principal~~in both ~~amortization~~GPIC ~~of 1% a year~~ and ~~the balance due at maturity~~ACCo. The ~~interest~~Company ~~rate~~has ~~for~~also ~~the~~entered ~~Term~~into ~~Loan was 4.57% at September 30, 2002. The Credit Facility must also~~various bebusiness ~~prepaid~~arrangements with athe ~~cash~~Coors ~~flow~~family ~~recapture~~trusts ~~calculation,~~ and ~~with~~related entities ~~certain proceeds~~ from ~~asset~~time-to-time ~~sales,~~since ~~and debt or equity offerings. The Credit Facility is collateralized by first priority liens on all material assets of~~ the ~~Company and all of its domestic subsidiaries~~spin-off. The Company’s policy ~~borrowing~~is ~~arrangements limit the ability~~ to ~~pay~~negotiate ~~dividends~~market ~~other~~prices ~~than permitted dividends on the preferred stock,~~ and ~~imposes~~competitive ~~limitations~~terms onwith ~~the incurrence of additional debt~~all parties, ~~acquisitions,~~including ~~capital~~related ~~expenditures and the sale of assets~~parties.

The Company originated as the packaging division of Coors Brewing Company, a subsidiary of ACCo. At the time of spin-off from ACCo the Company entered into an agreement with Coors Brewing to continue to supply their packaging needs. The initial agreement had a stated term of five years and has resulted in substantial revenues for GPIC. The Company continues to sell packaging products to Coors Brewing. Coors Brewing accounted for approximately 11% of the Company’s ~~borrowings~~consolidated gross ~~consist~~sales ofin the ~~following~~second (quarter of 2003 and 2002. The loss of Coors Brewing as a customer in ~~thousands):~~the foreseeable future could have a material effect on the Company’s results of operations. In the first quarter of 2003, the Company executed a new supply agreement, effective April 1, 2003, with Coors Brewing that will not expire until December 31, 2006.

	September 30, 2002		December 31, 2001
Seven-year term facility due 2009, variable interest currently at 4.57%	$	173,688	$	—
Five-year revolving credit facility due 2007, variable interest currently at 3.80%		—		—
8-5/8% senior subordinated notes due 2012		300,000		—
Five-year term facility, variable interest at 4.18%, refinanced in 2002		—		247,035
Revolving credit facility, variable interest at 4.18%, refinanced in 2002		—		222,750
10% subordinated notes, refinanced in 2002		—		50,000
Other notes payable		5,222		5,974
Total		478,910		525,759
Less current maturities		3,610		37,373
Long-term maturities	$	475,300	$	488,386

Note 8. Shareholders’ Rights Plan

In On ~~connection~~June 1, ~~with~~2000, the ~~refinancing~~Company ~~transactions,~~effected a dividend distribution of shareholder rights (the ~~Company~~Rights) that carry certain conversion rights in the ~~incurred~~event of a ~~non-cash~~significant ~~charge~~change in ~~2002~~beneficial ownership of the Company. One right is attached to ~~write~~each ~~off~~share ~~its~~of ~~remaining~~the ~~unamortized~~Company’s ~~debt~~common ~~issuance~~stock ~~costs~~outstanding and is not detachable until such time as beneficial ownership of 15% or more of the Company’s outstanding common stock has occurred (a Triggering Event) by a person or group of affiliated or associated ~~with~~persons (an Acquiring Person). Each Right entitles each registered holder (excluding the ~~refinanced~~Acquiring ~~debt~~Person) to purchase from the Company one-thousandth of a share of Series A Junior Participating Preferred Stock, par value $15.801 ~~million~~per share, ~~pretax~~at a purchase price of $42.00. Registered holders receive shares of the Company’s common stock valued at twice the exercise price of the Right upon exercise. Upon a Triggering Event, ~~which~~the ~~has~~Company ~~been~~is ~~reflected~~entitled asto anexchange ~~extraordinary~~one ~~loss~~share inof the ~~accompanying~~Company’s ~~income~~common stock ~~statement~~for each right outstanding or to redeem the Rights at the price of $.001 per Right. The Rights will expire on June 1, 2010.

~~Note~~ In 5connection with the proposed merger, the Company and the rights agent amended the terms of the rights agreement so that the execution and delivery of the merger agreement and voting agreement and the consummation of the transactions contemplated by the merger agreement will not constitute a triggering event. ~~Restructuring~~ ~~Charges~~This means that holders of the Company’s common stock will not obtain the detachable rights in connection with the proposed merger.

~~The~~Note ~~Company recorded restructuring charges totaling $2~~9.4 ~~million~~Supplemental ~~in the fourth quarter of 2001 in connection with the announced closure of the Newnan, Georgia plant. The~~Information restructuring charges relate to severance packages for 105 plant personnel that were communicated to employees in December 2001. The Company shut down the plant's operations during the third quarter of 2002 and plans to sell the plant's building and land which has a combined net book value of $1.8 million. The Company substantially completed the Newnan restructuring plan during the third quarter of 2002. Restructuring payments made during the first nine months of 2002 under this program totaled ~~$0.9 million.~~

10 Graphic Packaging Corporation (GPC), a wholly-owned subsidiary of GPIC, issued $300 million of senior subordinated notes on February 28, 2002. The senior subordinated notes are jointly and severally as well as fully and unconditionally guaranteed by GPIC and its other domestic subsidiaries. The Company’s foreign subsidiaries and a real estate development partnership do not guarantee the senior subordinated notes.

The ~~following~~accompanying ~~table~~supplemental ~~summarizes~~financial ~~accruals~~information ~~related~~presents tocondensed consolidating ~~all~~financial statements of ~~the~~(a) Graphic ~~Company’s~~Packaging Corporation (the ~~restructuring~~Issuer); ~~activities~~(b) Graphic ~~during~~Packaging ~~the~~International ~~first~~Corporation ~~nine~~(the Parent); ~~months~~(c) the ofguarantor ~~2002~~subsidiaries; (ind) the ~~millions~~nonguarantor subsidiaries; and (e): the Company on a consolidated basis.

	2000 Saratoga Springs Closure			2000/2001 Reduction in Force			2001 Newnan Plant Closure			Totals
Balance, December 31, 2001	$	0.1		$	0.2		$	2.4		$	2.7
Cash paid		(0.1	)		(0.2	)		—			(0.3	)
Balance, March 31, 2002		0.0			0.0			2.4			2.4
Cash paid		—			—			(0.2	)		(0.2	)
Balance, June 30, 2002		0.0			0.0			2.2			2.2
Cash paid		—			—			(0.7	)		(0.7	)
Balance, September 30, 2002	$	0.0		$	0.0		$	1.5		$	1.5

~~The~~ GPC ~~Company~~and ~~has~~GPIC ~~closed~~were ~~several~~co-borrowers ~~noncore~~under orthe ~~underperforming~~Company’s ~~facilities~~senior ~~over~~bank ~~the~~debt ~~past~~and subordinated ~~two~~debt ~~years.~~agreements ~~The~~in ~~Company~~effect ~~sold~~prior ~~its~~to ~~Saratoga~~the ~~Springs,~~refinancing ~~New~~transactions on ~~York~~February 28, ~~building~~2002. ~~and~~Interest ~~land~~expense inunder ~~June~~these ~~2001~~borrowing ~~and~~agreements ~~its~~was recorded ~~Perrysburg~~by GPC. In addition, ~~Ohio~~GPC ~~building~~incurred ~~and~~$2.5 million ~~land~~of ininterest ~~July~~expense ~~2001~~in the ~~for~~three ~~cash~~months ~~proceeds~~ended ofJune 30, ~~$3.4~~2003 ~~million~~and 2002, and $15.9 0 million of interest expense in the six months ended June 30, ~~respectively.~~2003 Noand ~~gain~~2002, orpursuant ~~loss~~to ~~was~~a ~~recognized~~$100 million onintercompany ~~the~~loan ~~sales.~~from GPIC.

In The ~~the~~following ~~first~~condensed ~~quarter~~consolidating offinancial ~~2001,~~statements aare ~~pre-tax~~presented on ~~gain~~the ofequity $3method.6 ~~million~~Under ~~was~~this ~~recognized~~method, ~~upon~~investments ~~receipt~~in ofsubsidiaries ~~additional~~are recorded ~~consideration~~at cost and adjusted for ~~assets~~the parent company’s share of the ~~Company~~subsidiaries’s ~~former~~cumulative ~~developmental~~results ~~businesses~~of operations, capital contributions, distributions and other equity changes. The elimination entries relate primarily to investments in subsidiaries, intercompany loans and other intercompany transactions.

~~Note 7. Segment Information~~ 12

~~Note~~GRAPHIC ~~8. Kalamazoo~~PACKAGING ~~Labor~~INTERNATIONAL ~~Dispute~~CORPORATION CONDENSED CONSOLIDATING INCOME STATEMENT

~~The~~Three ~~labor~~Months ~~agreement~~Ended ~~between GPC and the Paper~~June 30, ~~Allied-Industrial, Chemical and Energy Workers International~~ 2003 (~~PACE)~~in ~~and PACE Local 6-1010, which represents approximately 400 workers at the Kalamazoo,~~thousands) Michigan paperboard mill and folding carton plant, expired on July 27, 2002, following a four-day extension. On July 22, 2002, the membership of the local voted against ratification of the Company’s offer and voted to strike pending the approval of the international leadership of PACE. As a result of the union’s failure to ratify the contract or act on the strike vote by the end of the extension, the Company staffed the operations of the two facilities with salaried and non-union employees of GPC to ensure the uninterrupted supply of product to its customers. The Company locked out the union employees pending resolution of the contract issues. It is not possible at this time to estimate how long the lockout at these plants will last. Net incremental costs to the Company due to this labor dispute were approximately $4.5 million before tax through September 30, 2002. These costs include labor, the incremental cost of outside paperboard purchases, additional security, travel and lodging for temporary workers, and other related expenses. By mid-September, both facilities were running at normal or higher production rates and efficiencies compared to levels prior to the labor dispute and, as a result, management believes the labor


							Guarantor			Nonguarantor						Consolidated
	Issuer			Parent			Subsidiaries			Subsidiaries			Eliminations			Total

Net sales	$	273,511		$	—		$	—		$	1,483		$	—		$	274,994
Cost of goods sold		241,197			—			—			1,330			—			242,527

Gross profit		32,314			—			—			153			—			32,467
Selling, general and administrative expense and merger and acquisition transaction costs		19,814			—			—			—			—			19,814
Equity in (earnings) of subsidiaries subsidiaries		115			(219	)		(53	)		—			157			—

Operating income		12,385			219			53			153			(157	)		12,653
Interest (expense) income		(11,935	)		2,500			(6	)		(256	)		—			(9,697	)

Income (loss) before taxes		450			2,719			47			(103	)		(157	)		2,956
Income tax (expense) benefit		(185	)		(1,114	)		(79	)		102			64			(1,212	)

Net income (loss)		265			1,605			(32	)		(1	)		(93	)		1,744
Preferred stock dividends declared		—			(2,500	)		—			—			—			(2,500	)

Net income (loss) attributable to common shareholders	$	265			($895	)		($32	)		($1	)		($93	)		($756	)

~~dispute will not have a material impact on the Company’s future results of operations, financial~~ ~~position, or cash flows.~~ 13

OnGRAPHIC ~~February~~PACKAGING ~~19,~~INTERNATIONAL ~~2002, Chinyun Kim filed a putative class action claim in District Court, Jefferson County, Colorado against the Company and certain of its shareholders~~CORPORATION ~~and~~CONDENSED ~~directors~~CONSOLIDATING ~~alleging~~INCOME breach of fiduciary duty in connection with the issuance on August 15, 2000, of the Company’s Series B Preferred Stock to the Grover C. Coors Trust. The Court dismissed Plaintiff’s claim against the Company forSTATEMENT breach of fiduciary duty while allowing the Plaintiff to proceed against the named directors and shareholders, including certain Coors Family Trusts. The Company believes that the transaction was in the best interests of the Company and its ~~shareholders and that it acted appropriately. It intends to continue to provide a vigorous defense to this action.~~

~~Note 10. Related~~Three ~~Party~~Months ~~Transaction~~Ended June 30, 2002 (in thousands)

The Company entered into a warehouse sublease on September 1, 2002 with Rocky Mountain Bottle Company, a partnership partially owned by Coors Brewing Company, a related party. Monthly rent under the sublease is $8,250 and will continue through July 2006.


							Guarantor			Nonguarantor						Consolidated
	Issuer			Parent			Subsidiaries			Subsidiaries			Eliminations			Total

Net sales	$	262,199		$	—		$	—		$	1,718		$	—		$	263,917
Cost of goods sold		229,779			—			—			1,243			—			231,022

Gross profit		32,420			—			—			475			—			32,895
Selling, general and administrative expense		15,787			—			—			21			—			15,808
Equity in (earnings) of subsidiaries subsidiaries		(250	)		(10,926	)		(402	)		—			11,578			—

Operating income		16,883			10,926			402			454			(11,578	)		17,087
Interest (expense) income		(14,968	)		2,500			—			15			—			(12,453	)

Income before taxes		1,915			13,426			402			469			(11,578	)		4,634
Income tax (expense) benefit		(757	)		(5,227	)		(319	)		(21	)		4,516			(1,808	)

Net income		1,158			8,199			83			448			(7,062	)		2,826
Preferred stock dividends declared		—			(2,500	)		—			—			—			(2,500	)

Net income attributable to common shareholders	$	1,158		$	5,699		$	83		$	448			($7,062	)	$	326

~~Note 11. Supplemental Information~~ 14

~~The~~GRAPHIC ~~accompanying~~PACKAGING ~~supplemental~~INTERNATIONAL ~~financial information presents condensed consolidating financial statements of (a) Graphic Packaging Corporation (the Issuer); (b) Graphic Packaging International~~CORPORATION ~~Corporation~~CONDENSED ~~(the~~CONSOLIDATING ~~Parent)~~INCOME ~~and a guarantor; (c) the guarantor subsidiaries; (d) the nonguarantor subsidiaries; and (e) the Company on a consolidated basis.~~ STATEMENT

~~GPC~~Six ~~and~~Months ~~GPIC~~Ended ~~were co-borrowers under the Company’s senior bank debt and subordinated debt agreements in effect prior to the refinancing transactions on February 28~~June 30, ~~2002. Interest expense under~~2003 ~~these borrowing agreements was recorded by GPC. In addition, GPC incurred $2.5 million of interest expense~~ (in ~~the three months ended September 30, 2002, and $7.5 million of interest expense in the nine months ended September 30, 2002, pursuant to a~~thousands) $100 million intercompany loan from GPIC. In the three-month and nine-month periods ended September 30, 2001, GPC incurred $2.2 million and $6.6 million, respectively, of interest pursuant to the same intercompany note that totaled $92.7 million in ~~2001.~~

The following condensed consolidating financial statements are presented using the equity method. Under this method, investments in subsidiaries are recorded at cost and adjusted for the parent company’s share of the subsidiaries’ cumulative results of operations, capital contributions, distributions and other equity changes. The elimination entries relate primarily to investments in subsidiaries, intercompany loans and other intercompany transactions.


								Guarantor			Nonguarantor						Consolidated
		Issuer			Parent			Subsidiaries			Subsidiaries			Eliminations			Total

Net sales		$	532,835		$	—		$	—		$	3,042		$	—		$	535,877
Cost of goods sold			471,786			—			—			2,915			—			474,701

Gross profit			61,049			—			—			127			—			61,176
Selling, general and administrative expense and merger and acquisition transaction costs			39,180			—			—			—			—			39,180
Equity in (earnings) of subsidiaries			167			1,326			(26	)		—			(1,467	)		—

Operating income (loss)			21,702			(1,326	)		26			127			1,467			21,996
Interest (expense) income			(23,833	)		5,000			—			(280	)		—			(19,113	)

Income (loss) before taxes			(2,131	)		3,674			26			(153	)		1,467			2,883
Income tax (expense) benefit			873			(1,506	)		(70	)		123			(602	)		(1,182	)

Net income (loss)			(1,258	)		2,168			(44	)		(30	)		865			1,701
Preferred stock dividends declared			—			(5,000	)		—			—			—			(5,000	)

	Net income (loss) attributable to common shareholders common shareholders		($1,258	)		($2,832	)		($44	)		($30	)	$	865		$	(3,299	)

12 15

GRAPHIC PACKAGING INTERNATIONAL CORPORATION CONDENSED CONSOLIDATING INCOME STATEMENT

~~Three~~ Six Months Ended ~~September~~ June 30, 2002 (in thousands)

(in thousands)


							Guarantor			Nonguarantor						Consolidated
	Issuer			Parent			Subsidiaries			Subsidiaries			Eliminations			Total

Net sales	$	524,551		$	—		$	—		$	3,090		$	—		$	527,641
Cost of goods sold		457,898			—			—			2,556			—			460,454

Gross profit		66,653			—			—			534			—			67,187
Selling, general and administrative expense		30,651			—			—			44			—			30,695
Equity in (earnings) of subsidiaries subsidiaries		(269	)		(4,695	)		(460	)		—			5,424			—

Operating income		36,271			4,695			460			490			(5,424	)		36,492
Interest (expense) income		(28,745	)		5,000			—			(4	)		—			(23,749	)
Loss on early extinguishment of debt		(15,766	)		—			—			—			—			(15,766	)

Income (loss) before taxes and cumulative effect of change in accounting principle		(8,240	)		9,695			460			486			(5,424	)		(3,023	)
Income tax (expense) benefit		3,213			(3,781	)		(369	)		—			2,115			1,178

Income (loss) before cumulative effect of change in accounting principle		(5,027	)		5,914			91			486			(3,309	)		(1,845	)
Cumulative effect of change in goodwill accounting, net of tax		(180,000	)		—			—			—			—			(180,000	)

Net income (loss)		(185,027	)		5,914			91			486			(3,309	)		(181,845	)
Preferred stock dividends declared		—			(5,000	)		—			—			—			(5,000	)

Net income (loss) attributable to common shareholders		($185,027	)	$	914		$	91		$	486			($3,309	)		($186,845	)

	Issuer			Parent			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminations			Consolidated Total
Net sales	$	268,616		$	—		$	—		$	1,386		$	—		$	270,002
Cost of goods sold		239,754			—			—			1,195			—			240,949
Gross profit		28,862			—			—			191			—			29,053
Selling, general and administrative expense		16,187			—			—			5			—			16,192
Equity in losses (earnings) of subsidiaries subsidiaries		(89	)		593			11			—			(515	)		—
Operating income (loss)		12,764			(593	)		(11	)		186			515			12,861
Interest (expense) income		(13,792	)		2,500			—			(18	)		—			(11,310	)
Income (loss) before taxes		(1,028	)		1,907			(11	)		168			515			1,551
Income tax (expense) benefit		401			(744	)		3			(64	)		(200	)		(604	)
Net income (loss)		(627	)		1,163			(8	)		104			315			947
Preferred stock dividends declared		—			(2,500	)		—			—			—			(2,500	)
Net income (loss) attributable to common shareholders	$	(627	)	$	(1,337	)	$	(8	)	$	104		$	315		$	(1,553	)

GRAPHIC PACKAGING INTERNATIONAL CORPORATION CONDENSED CONSOLIDATING BALANCE SHEET

~~CONDENSED~~At ~~CONSOLIDATING~~June 30, ~~INCOME~~2003 (in ~~STATEMENT~~ thousands)

Three Months Ended September 30, 2001


									Guarantor			Nonguarantor						Consolidated
				Issuer			Parent		Subsidiaries			Subsidiaries			Eliminations			Total

ASSETS Current assets Cash and cash equivalents				$	1,441		$	2,375	$	—		$	3,143		$	—		$	6,959
	Accounts receivable				74,169			2,437		—			293			—			76,899
	Inventories				99,775			—		—			596			—			100,371
	Other assets				22,500			—		—			24,059			(23,970	)		22,589

			Total current assets		197,885			4,812		—			28,091			(23,970	)		206,818
	Properties, net				390,656			—		—			8,592			—			399,248
	Goodwill, net				391,803			—		—			—			—			391,803
	Other assets				27,924			816,839		6,554			18,393			(841,611	)		28,099

			Total assets	$	1,008,268		$	821,651	$	6,554		$	55,076			($865,581	)	$	1,025,968

LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Current maturities of long-term debt				$	2,129		$	—	$	—		$	1,497		$	—		$	3,626
	Accounts payable				93,290			—		—			383			—			93,673
	Interest payable				9,958			—		—			—			—			9,958
	Other current liabilities				52,635			24,359		2,525			569			(23,970	)		56,118

			Total current liabilities		158,012			24,359		2,525			2,449			(23,970	)		163,375
Long-term debt					471,512			—		—			233,281			(233,281	)		471,512
Other long-term liabilities					187,957			1,863		—			—			(103,840	)		85,980

	Total liabilities				817,481			26,222		2,525			235,730			(361,091	)		720,867
Shareholders’ equity:
	Preferred stock				—			100,000		—			—			—			100,000
	Common stock				—			337		1,829			1,540			(3,369	)		337
	Paid-in capital				413,637			447,937		241,459			(180,057	)		(512,857	)		410,119
	Retained earnings (deficit)				(195,959	)		247,155		(239,259	)		(1,184	)		11,736			(177,511	)
		Accumulated other comprehensive income (loss)			(26,891	)		—		—			(953	)		—			(27,844	)

			Total shareholders’ equity		190,787			795,429		4,029			(180,654	)		(504,490	)		305,101

Total liabilities and shareholders’ equity				$	1,008,268		$	821,651	$	6,554		$	55,076			($865,581	)	$	1,025,968

~~(in thousands)~~ 17

	Issuer			Parent			Guarantor Subsidiaries			Nonguarantor Subsidiaries		Eliminations			Consolidated Total
Net sales	$	270,150		$	—		$	—		$	668	$	—		$	270,818
Cost of goods sold		233,700			—			—			663		—			234,363
Gross profit		36,450			—			—			5		—			36,455
Selling, general and administrative expense		16,039			—			22			—		—			16,061
Goodwill amortization		5,175			—			—			—		—			5,175
Equity in (earnings) of subsidiaries		(5	)		(382	)		(17	)		—		404			—
Operating income (loss)		15,241			382			(5	)		5		(404	)		15,219
Interest (expense) income		(14,610	)		2,155			22			4		—			(12,429	)
Income before taxes		631			2,537			17			9		(404	)		2,790
Income tax expense		(262	)		(1,048	)		(14	)		3		161			(1,160	)
Net income		369			1,489			3			12		(243	)		1,630
Preferred stock dividends declared		—			(2,500	)		—			—		—			(2,500	)
Net income (loss) attributable to common shareholders	$	369		($	1,011	)	$	3		$	12	$	(243	)	$	(870	)

14GRAPHIC PACKAGING INTERNATIONAL CORPORATION CONDENSED CONSOLIDATING BALANCE SHEET

~~GRAPHIC~~At ~~PACKAGING~~December 31, ~~INTERNATIONAL~~2002 (in ~~CORPORATION~~ thousands)

CONDENSED CONSOLIDATING INCOME STATEMENT


								Guarantor			Nonguarantor
			Issuer			Parent		Subsidiaries			Subsidiaries			Eliminations			Consolidated Total

ASSETS Current assets Cash and cash equivalents			$	25,565		$	—	$	—		$	3,061		$	—		$	28,626
	Accounts receivable			60,231			2,437		—			878			—			63,546
	Inventories			86,740			—		—			503			—			87,243
	Other assets			21,609			—		1			24,046			(23,970	)		21,686

		Total current assets		194,145			2,437		1			28,488			(23,970	)		201,101
	Properties, net			401,889			—		—			8,703			—			410,592
	Goodwill, net			379,696			—		—			—			—			379,696
	Other assets			29,781			561,410		6,880			18,393			(586,987	)		29,477

Total assets			$	1,005,511		$	563,847	$	6,881		$	55,584			($610,957	)	$	1,020,866

LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Current maturities of long-term debt			$	1,976		$	—	$	—		$	1,456		$	—		$	3,432
	Accounts payable			81,519			24		—			563			—			82,106
	Interest payable			11,117			—		—			—			—			11,117
	Other current liabilities			55,426			23,691		2,536			651			(23,970	)		58,334

		Total current liabilities		150,038			23,715		2,536			2,670			(23,970	)		154,989
Long-term debt				472,798			—		—			235,383			(233,282	)		474,899
Other long-term liabilities				185,968			1,826		—			—			(103,854	)		83,940

	Total liabilities			808,804			25,541		2,536			238,053			(361,106	)		713,828
Shareholders’ equity:
	Preferred stock			—			100,000		—			—			—			100,000
	Common stock			—			335		1,829			1,540			(3,369	)		335
	Paid-in capital			418,299			192,984		241,774			(182,077	)		(257,353	)		413,627
	Retained earnings (deficit)			(194,701	)		244,987		(239,258	)		(1,111	)		10,871			(179,212	)
	Accumulated other comprehensive loss			(26,891	)		—		—			(821	)		—			(27,712	)

		Total shareholders’ equity		196,707			538,306		4,345			(182,469	)		(249,851	)		307,038

Total liabilities and shareholders’ equity			$	1,005,511		$	563,847	$	6,881		$	55,584			($610,957	)	$	1,020,866

~~Nine~~ ~~Months Ended September 30, 2002~~ 18

	Issuer			Parent			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminations			Consolidated Total
Net sales	$	793,167		$	—		$	—		$	4,476		$	—		$	797,643
Cost of goods sold		697,652			—			—			3,751			—			701,403
Gross profit		95,515			—			—			725			—			96,240
Selling, general and administrative expense		46,838			—			—			49			—			46,887
Equity in (earnings) of subsidiaries		(358	)		(4,102	)		(449	)		—			4,909			—
Operating income		49,035			4,102			449			676			(4,909	)		49,353
Interest (expense) income		(42,537	)		7,500			—			(22	)		—			(35,059	)
Income before taxes, extraordinary item and cumulative effect of change in accounting principle		6,498			11,602			449			654			(4,909	)		14,294
Income tax expense		(2,535	)		(4,525	)		(366	)		(64	)		1,915			(5,575	)
Income before extraordinary item and cumulative effect of change in accounting principle		3,963			7,077			83			590			(2,994	)		8,719
Extraordinary loss on early extinguishment of debt, net of tax		(9,617	)		—			—			—			—			(9,617	)
Income (loss) before cumulative effect of change in accounting principle		(5,654	)		7,077			83			590			(2,994	)		(898	)
Cumulative effect of change in goodwill accounting, net of tax		(180,000	)		—			—			—			—			(180,000	)
Net income (loss)		(185,654	)		7,077			83			590			(2,994	)		(180,898	)
Preferred stock dividends declared		—			(7,500	)		—			—			—			(7,500	)
Net income (loss) attributable to common shareholders	$	(185,654	)	$	(423	)	$	83		$	590		$	(2,994	)	$	(188,398	)

GRAPHIC PACKAGING INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Six Months Ended June 30, 2003
(in thousands)


								Guarantor		Nonguarantor				Consolidated
		Issuer			Parent			Subsidiaries		Subsidiaries		Eliminations		Total

Net cash provided by operating activities		$	11,113		$	7,278		$	—	$	82	$	—	$	18,473

Cash flows from investing activities:
	Capital expenditures		(13,956	)		—			—		—		—		(13,956	)
	Acquisition of J.D Cahill Co. assets		(18,088	)		—			—		—		—		(18,088	)

Net cash used in investing activities			(32,044	)		—			—		—		—		(32,044	)
Cash flows from financing activities:
	Proceeds from borrowings		139,547			—			—		—		—		139,547
	Repayment of debt		(142,740	)		—			—		—		—		(142,740	)
	Preferred stock dividends paid		—			(5,000	)		—		—		—		(5,000	)
	Common stock issuance and other		—			97			—		—		—		97

Net cash used in financing activities			(3,193	)		(4,903	)		—		—		—		(8,096	)
Cash and cash equivalents:
	Net increase (decrease)		(24,124	)		2,375			—		82		—		(21,667	)
	Balance at beginning of period		25,565			—			—		3,061		—		28,626

	Balance at end of period	$	1,441		$	2,375		$	—	$	3,143	$	—	$	6,959

~~GRAPHIC PACKAGING INTERNATIONAL CORPORATION~~ 19

~~Nine~~GRAPHIC PACKAGING INTERNATIONAL CORPORATION CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Six Months Ended ~~September~~ June 30, ~~2001~~2002 (in thousands)

(in thousands)


								Guarantor			Nonguarantor						Consolidated
		Issuer			Parent			Subsidiaries			Subsidiaries			Eliminations			Total

Net cash provided by (used in) operating activities		$	37,767		$	3,588			($1,200	)	$	244		$	—		$	40,399

Cash flows from investing activities:
	Capital expenditures		(15,454	)		—			—			—						(15,454	)
	Other investing activities		—			—			1,200			—			(1,200	)		—

Net cash provided by (used in) investing activities			(15,454	)		—			1,200			—			(1,200	)		(15,454	)
Cash flows from financing activities:
	Proceeds from borrowings		613,100			—			—			—			—			613,100
	Repayment of debt		(619,343	)		—			—			—			—			(619,343	)
	Preferred stock dividends paid		—			(5,000	)		—			—			—			(5,000	)
	Debt issuance costs		(15,922	)		—			—			—			—			(15,922	)
	Common stock issuance and other		—			436			—			(1,200	)		1,200			436

Net cash used in financing activities			(22,165	)		(4,564	)		—			(1,200	)		1,200			(26,729	)
Cash and cash equivalents:
	Net increase (decrease)		148			(976	)		—			(956	)		—			(1,784	)
	Balance at beginning of period		1,145			976			—			4,645			—			6,766

	Balance at end of period	$	1,293		$	—		$	—		$	3,689		$	—		$	4,982

	Issuer			Parent			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminations			Consolidated Total
Net sales	$	839,928		$	—		$	—		$	2,586		$	—		$	842,514
Cost of goods sold		721,037			—			—			2,512			—			723,549
Gross profit		118,891			—			—			74			—			118,965
Selling, general and administrative expense		46,886			—			47			45			—			46,978
Goodwill amortization		15,487			—			—			—			—			15,487
Asset impairment and restructuring charges		3,000			—			—			—			—			3,000
Equity in (earnings) of subsidiaries		(2,463	)		(5,178	)		(141	)		—			7,782			—
Operating income		55,981			5,178			94			29			(7,782	)		53,500
Gain on sale of assets		—			—			3,650			—			—			3,650
Interest (expense) income		(49,008	)		6,464			300			160			—			(42,084	)
Income before taxes		6,973			11,642			4,044			189			(7,782	)		15,066
Income tax expense		(2,765	)		(4,673	)		(1,666	)		(19	)		3,097			(6,026	)
Net income		4,208			6,969			2,378			170			(4,685	)		9,040
Preferred stock dividends declared		—			(7,500	)		—			—			—			(7,500	)
Net income (loss) attributable to common shareholders	$	4,208		$	(531	)	$	2,378		$	170		$	(4,685	)	$	1,540

~~GRAPHIC~~Item 2. ~~PACKAGING~~Management’s ~~INTERNATIONAL~~Discussion ~~CORPORATION~~and Analysis of Financial Condition and Results of Operations

~~CONDENSED CONSOLIDATING BALANCE SHEET~~ Overview

At We ~~September~~are 30the leading manufacturer of folding cartons in North America according to Paperboard Packaging Magazine (January 2003). We have achieved our leadership position by focusing our operations on the folding carton segment of the fiber-based product packaging industry. Our business strategy is to maintain and improve our customer relationships and market leadership, while ~~2002~~leveraging our low cost position.

( GPIC was incorporated in ~~thousands)~~Colorado in August 1992 as a holding company for the packaging, ceramics, aluminum and developmental businesses formerly owned by Adolph Coors Company, or ACCo. In December 1992, ACCo distributed to its shareholders all outstanding shares of GPIC’s stock. During our initial years, we operated packaging, ceramics, aluminum and various developmental businesses. Through various acquisitions and divestitures, a spin-off and other transactions, we are now strategically focused on the folding carton segment of the fiber-based product packaging industry.

	Issuer			Parent		Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminations			Consolidated Total
ASSETS
Current assets
Cash and cash equivalents	$	6,940		$	—	$	—		$	3,706		$	—		$	10,646
Accounts receivable		65,394			2,437		—			924			—			68,755
Inventories		89,194			—		—			392			—			89,586
Other assets		27,484			—		1			24,008			(23,973	)		27,520
Total current assets		189,012			2,437		1			29,030			(23,973	)		196,507
Properties, net		410,414			—		—			8,826			—			419,240
Goodwill, net		379,696			—		—			—			—			379,696
Other assets		30,375			560,667		7,356			18,055			(586,420	)		30,033
Total assets	$	1,009,497		$	563,104	$	7,357		$	55,911		$	(610,393	)	$	1,025,476
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term debt	$	2,252		$	—	$	—		$	1,358		$	—		$	3,610
Accounts payable		88,957			166		—			510			—			89,633
Other current liabilities		63,145			23,851		2,532			1,083			(23,973	)		66,638
Total current liabilities		154,354			24,017		2,532			2,951			(23,973	)		159,881
Long-term debt		473,291			—		—			235,291			(233,282	)		475,300
Other long-term liabilities		165,588			1,809		—			—			(96,109	)		71,288
Total liabilities		793,233			25,826		2,532			238,242			(353,364	)		706,469
Shareholders’ equity:
Preferred stock		—			100,000		—			—			—			100,000
Common stock		—			329		1,829			1,540			(3,369	)		329
Paid-in capital		424,996			194,519		242,244			(182,037	)		(264,718	)		415,004
Retained earnings (deficit)		(194,647	)		242,430		(239,248	)		(1,053	)		11,058			(181,460	)
Accumulated other comprehensive income (loss)		(14,085	)		—		—			(781	)		—			(14,866	)
Total shareholders’ equity		216,264			537,278		4,825			(182,331	)		(257,029	)		319,007
Total liabilities and shareholders’ equity	$	1,009,497		$	563,104	$	7,357		$	55,911		$	(610,393	)	$	1,025,476

As discussed below, we recently announced our intention to merge with Riverwood Holding, Inc. (Riverwood) in the third quarter of 2003. Riverwood is an integrated provider of paperboard packaging solutions to multinational beverage and consumer products companies.

17Segment Information

~~GRAPHIC~~ Our ~~PACKAGING~~reportable ~~INTERNATIONAL~~segments ~~CORPORATION~~are based on our method of internal reporting, which is based on product category. Since 1999, we have operated principally in the United States and in only one reportable segment.

~~CONDENSED~~Factors ~~CONSOLIDATING~~That ~~BALANCE~~Impact ~~SHEET~~Our Business

At Sales. We sell our products primarily to major consumer product ~~December~~manufacturers 31in non-cyclical industries, ~~2001~~such as food and beverage providers. Sales are driven primarily by consumer buying habits in the markets our customers serve. Recent economic conditions in the United States have had a significant impact on consumer buying even in non-cyclical industries. New product introductions and promotional activity by our customers, and our introduction of innovative packaging solutions, also impact our sales.

( Our products are used in ~~thousands)~~the following end-use markets:

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

	•		food — cereal; desserts; frozen and microwave foods; pet foods; prepared foods; snacks; and food service products;

	•		household products — dishwasher and laundry detergent; sporting goods; healthcare; and tissues and papers;

	•		beverage — bottle and can carriers and cases; and

	•		tobacco — fliptop boxes and cartons.

18 We market our products directly to our customers through a relatively small internal sales force. Our top 20 customers represent approximately 80% of our gross sales in the first six months of 2003. Our competition includes other large national folding carton companies, as well as numerous smaller regional companies. Our primary competitors include: Caraustar Industries, Inc., Field Container Company, L.P., Gulf States Paper Corporation, MeadWestvaco, Rock-Tenn Company and Smurfit-Stone Container Corporation. We work to maintain our market share through quality, service, efficiency, innovation, competitive pricing and strategic sourcing to our customers.

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

~~CONDENSED~~ Cost ~~CONSOLIDATING~~of ~~STATEMENT~~Goods OFSold. ~~CASH~~Our ~~FLOWS~~costs of goods sold consist primarily of recycled paper fiber, purchased paperboard, paper, aluminum foil, ink, plastic films, resins and labor, which are all variable cost components. Energy is also a component of our costs, particularly or our Kalamazoo, Michigan recycled paperboard mill, where

~~Nine Months Ended September 30, 2002~~ 21

	Issuer			Parent			Guarantor Subsidiaries		Nonguarantor Subsidiaries			Eliminations		Consolidated Total
Net cash provided by (used in) operating activities	$	89,667		$	5,308		$	—	$	(894	)	$	—	$	94,081
Cash flows from investing activities:
Capital expenditures		(21,049	)		—			—		—			—		(21,049	)
Net cash used in investing activities		(21,049	)		—			—		—			—		(21,049	)
Cash flows from financing activities:
Repayment of debt		(730,381	)		—			—		(45	)		—		(730,426	)
Proceeds from borrowings		683,577			—			—		—			—		683,577
Payment of debt issuance costs		(16,019	)		—			—		—			—		(16,019	)
Payment of preferred stock dividends		—			(7,500	)		—		—			—		(7,500	)
Issuance of common stock and other		—			1,216			—		—			—		1,216
Net cash used in financing activities		(62,823	)		(6,284	)		—		(45	)		—		(69,152	)
Cash and cash equivalents:
Net increase (decrease)		5,795			(976	)		—		(939	)		—		3,880
Balance at beginning of period		1,145			976			—		4,645			—		6,766
Balance at end of period	$	6,940		$	—		$	—	$	3,706		$	—	$	10,646

energy represents approximately 14% of cost of goods sold year-to-date. Consolidated variable costs are estimated to be 79% and fixed costs to be 21% of total costs year-to-date.

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

GRAPHIC PACKAGING INTERNATIONAL CORPORATION

	1.		the amount of variation in its process is so tightly controlled that there are six standard deviations between the mean and the nearest customer specification (upper and lower control limit); or

	2.		the company produces products with a defect rate of not more than 3.4 defects for every 1 million opportunities.

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

~~Nine~~ We ~~Months~~have ~~Ended~~also ~~September~~taken 30steps to reduce our fixed manufacturing and corporate overhead costs, consisting of selling, general and administrative costs. In ~~2001~~addition to closing plants and moving equipment and business to other facilities, we have also undertaken downsizing initiatives to reduce fixed personnel costs and are using the Six Sigma program to make our non-production business processes more cost effective.

~~(in~~Results ~~thousands)~~of Operations

	Issuer			Parent			Guarantor Subsidiaries			Nonguarantor Subsidiaries		Eliminations		Consolidated Total
Net cash provided by (used in) operating activities	$	87,500		$	9,466		$	(3,650	)	$	280	$	—	$	93,596
Cash flows from investing activities:
Capital expenditures		(22,135	)		—			—			—		—		(22,135	)
Proceeds from sale of assets		5,300			—			3,650			—		—		8,950
Net cash provided by (used in) investing activities		(16,835	)		—			3,650			—		—		(13,185	)
Cash flows from financing activities:
Repayment of debt		(225,900	)		—			—			—		—		(225,900	)
Proceeds from borrowings		155,235			—			—			—		—		155,235
Payment of preferred stock dividends		—			(9,583	)		—			—		—		(9,583	)
Issuance of common stock and other		—			117			—			—		—		117
Net cash used in financing activities		(70,665	)		(9,466	)		—			—		—		(80,131	)
Cash and cash equivalents:
Net increase		—			—			—			280		—		280
Balance at beginning of period		—			—			—			4,012		—		4,012
Balance at end of period	$	—		$	—		$	—		$	4,292	$	—	$	4,292

Net sales for the three months ended June 30, 2003 were $275.0 million, an increase of $11.1 million, or 4.2%, compared to the second quarter of 2002. Sales for the six months ended June 30, 2003 were $535.9 million, an increase of $8.3 million, or 1.6 %, compared to the same period in 2002. Net sales related to the March 6, 2003 J.D. Cahill Co. acquisition were $5.7 million in the second quarter of 2003 and $7.2 million in the six months ended June 30, 2003. Excluding the Cahill sales in 2003, net sales increased by $5.4 million or 2% quarter over quarter and increased by $1.1 million or 0.2% comparing the six month periods. We started to see stronger orders from our largest customers, beginning at the end of the first quarter of 2003, although increases in volume continue to be somewhat softened by pressures on pricing. We have added new business during the first half of 2003, totaling $6.7 million in sales, that also contributed to the improvement year-over-year.

20 Gross profit, as a percentage of net sales, was 11.8% for the second quarter of 2003 and 11.4% for the six months ended June 30, 2003. Gross profit, as a percentage of net sales, was 12.5% and 12.7% for the comparable periods in 2002. Price pressure and product mix contributed to the lower margins in 2003. Product mix issues in the first half of 2003 included costs such as scrap and learning curve inefficiencies associated with the introduction of new business.

~~Item~~ Selling, general and administrative expenses, before merger and acquisition costs, were $18.5 million, or 6.7% of net sales, for the three months ended June 30, 2003, and $35.2 million, or 6. ~~Management’s~~6% ~~Discussion~~of net sales, for the six months ended June 30, 2003. In the comparable periods of 2002, these expenses were $15.8 million and ~~Analysis~~$30.7 million, or 6.0% and 5.8% as a percentage of ~~Financial~~sales, ~~Condition~~respectively. The quarter-on-quarter increase relates to additional overhead expenses from the acquired J.D. Cahill business, additional legal expenses associated with litigation and patent ~~Results~~activity, ofincreased ~~Operations~~marketing efforts, and other general administrative spending. Increases from the previous year, in addition to those listed above, include additional depreciation and other expenses related to our information systems that had been placed in service during 2002 as well as changes in benefit plan expenses.

~~Overview~~ Our merger and acquisition activities in the first half of 2003 resulted in related expenses totaling $4.0 million, which are non-recurring to our business and separately presented in our statement of operations. We anticipate that our total merger and acquisition expenses, including costs related to the Riverwood merger will total approximately $13 million in 2003.

~~We are the leading manufacturer of folding cartons in North America according to a Corrugated and Paperboard Boxes study, dated February 2002, prepared by the Freedonia~~ ~~Group, Inc. We have an estimated 13% market share. Our business strategy is to maintain and improve our customer relationships and market leadership, while leveraging our low cost position.~~ 22

~~Segment~~ Interest ~~Information~~expense decreased $2.8 million, or 22%, in the second quarter of 2003, compared to the second quarter of 2002. Year-to-date 2003 interest expense is lower than year-to-date 2002 by $4.6 million, or 20%, primarily as a result of lower debt balances, lower market interest rates, and the absence of unfavorable interest swap agreements that were in place during the first half of 2002.

~~Our~~ The ~~reportable~~effective ~~segments~~tax ~~are~~rate ~~based~~for onthe ~~our~~first ~~method~~half of ~~internal~~2003 ~~reporting,~~was ~~which~~approximately is41%, compared ~~based~~to on39% ~~product~~in ~~category.~~the ~~Since~~first ~~January~~half 1,of ~~2000,~~2002. weThe ~~have~~effective ~~operated~~tax ~~principally~~rate could increase in the ~~United~~future ~~States~~due ~~and~~to inmerger-related ~~only~~costs ~~one~~that ~~reportable~~we ~~segment—Packaging~~expect will be nondeductible upon consummation of the Riverwood merger.

~~Factors~~New ~~That~~Accounting ~~Impact Our Business~~ Pronouncements

~~Sales~~ Financial Accounting Standards Board Interpretation (FIN) No. We 46, “Consolidation ~~sell~~of ~~our~~Variable ~~products~~Interest ~~primarily~~Entities,” was issued in January 2003. FIN No. 46 defines a variable interest entity as a legal entity in which, among other things, the equity investments at risk are not sufficient to ~~major~~finance ~~consumer~~the operating ~~product~~and ~~manufacturers~~closing activities of the entity without additional subordinated financial support from the entity’s investors. We are a partner in ~~non-cyclical~~the Kalamazoo ~~industries~~Valley Group Partnership (KVG), ~~such~~which qualifies as ~~food~~a variable interest entity, as defined by FIN No. 46. KVG is a partnership formed to develop and ~~beverage~~operate ~~providers~~a landfill for the partners’ disposal of paper residuals from their respective paperboard mills. KVG borrowed $1.5 million for the ~~Sales~~construction ~~are~~of ~~driven~~the ~~primarily~~landfill, byof ~~consumer~~which ~~buying~~approximately ~~habits~~$300 inthousand remains unpaid at June 30, 2003. The partners contribute capital annually to meet the partnership’s ~~markets~~operating ~~our~~losses. ~~customers~~Our ~~serve~~annual contribution for the past two years has been approximately $200 thousand. ~~New~~The ~~product~~landfill ~~introductions~~has been in operation since December 1997; however, since 2000, two of the other partners have closed their paperboard mills and ~~promotional~~one ~~activity~~minority partner was permitted to withdraw by the bankruptcy court. We are evaluating our ~~customers,~~alternatives and liabilities under the partnership agreement and related note, while continuing to use the landfill. However, if the partnership were to close the landfill, our ~~introduction~~share of ~~innovative~~estimated closing ~~packaging~~costs, ~~solutions~~perpetual care obligations and debt repayment would approximate $2.5 million under the terms of the partnership agreement. We account for our interest in KVG using the equity method. The investment balance at June 30, 2003 was negligible. Management is also ~~impact~~evaluating its accounting method in light of the new requirements under FIN No. 46, and may conclude that its interest in KVG should be consolidated into our ~~sales~~accounts. FIN No. 46 is effective for our 2003 third quarter.

~~Our~~ In ~~products~~April ~~are~~2003, ~~used~~the inFASB 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. SFAS No. 149 will be applicable to existing contracts and new contracts entered into after June 30, 2003. We do not expect that the ~~following~~adoption ~~end-use~~of ~~markets:~~SFAS No. 149 will have a material effect on our financial statements.

• In ~~food—cereal;~~May ~~desserts;~~2003, ~~frozen~~the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Liabilities and ~~microwave~~Equity,” ~~foods;~~or ~~pet~~SFAS No. 150. ~~foods;~~SFAS ~~prepared~~No. 150 ~~foods;~~establishes ~~snacks;~~standards for classification of certain financial instruments that have characteristics of both liabilities and ~~food~~equity in ~~service~~the ~~products;~~statement of financial position. SFAS No. 150 is effective for all contracts created or modified after the date the statement was issued and otherwise effective for us July 1, 2003. We do not expect the adoption of SFAS 150 to have a material impact on our financial statements.

•Related ~~beverage—bottle~~Party ~~and can carriers; labels and cases;~~Transaction

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

• Our ~~tobacco—fliptop~~company originated ~~boxes~~as the packaging division of the Coors Brewing Company, a subsidiary of ACCo. At the time of spin-off from ACCo, we entered into an agreement with Coors Brewing to continue to supply their packaging needs. The initial agreements had a stated term of five years and ~~cartons~~have resulted in substantial revenues for us. We continue to sell packaging products to Coors Brewing. Coors Brewing accounted for approximately 11% of our consolidated gross sales in the second quarter of 2003 and 2002. The loss of Coors Brewing as a customer in the foreseeable future could have a material effect on our results of operations. In the fist quarter of 2003, we executed a new supply agreement, effective April 1, 2003, with Coors Brewing that will not expire until December 31, 2006.

WeLiquidity ~~market our products directly to our customers through an internal sales force~~ and, toCapital ~~a lesser extent, through brokers. Our top 20 customers, with whom we have long-term relationships, represent~~Resources approximately 80% of our gross sales in the first nine months of 2002. Our competition includes other large national folding carton companies, as well as numerous smaller regional companies. Our primary competitors include: Caraustar Industries, Inc., Field Container Company, L.P., Gulf States Paper Corporation, Rock-Tenn Company and Smurfit-Stone Container Corporation. We work to maintain our market share through quality, service, efficiency, innovation, competitive pricing and strategic ~~sourcing to our customers.~~

In We ~~addition,~~generate weour ~~believe~~liquidity ~~that~~from weboth ~~have~~internal ~~the~~and ~~opportunity~~external tosources ~~expand~~and ~~the folding carton~~use ~~market~~it byto ~~developing~~fund ~~new~~short-term ~~products~~working ~~that~~capital ~~can~~needs, ~~replace~~capital ~~other~~expenditures ~~types~~(estimated ofto be ~~packaging.~~$42 million ~~Our research and development organization is closely involved with our customers~~ in ~~the~~2003), ~~development~~preferred ofstock ~~new~~dividends ~~packaging~~and ~~alternatives~~acquisitions.

~~Cost~~Capital ~~of Goods Sold. Our costs of goods sold consist primarily of recycled paper fiber, purchased paperboard,~~Structure ~~ink, plastic films, resins and labor, which are all variable cost components. Variable costs are approximately 80% and fixed costs are approximately 20% of total costs.~~

In On ~~light~~February 28, of2002, ~~rising~~we ~~margin~~refinanced ~~pressure~~our ~~throughout~~then ~~our~~existing ~~industry,~~senior webank ~~have~~credit facility ~~aggressively~~with ~~reduced~~$300 million ~~costs.~~of Wesenior ~~have~~subordinated ~~controlled~~notes, ~~costs~~carrying ininterest ~~our~~at ~~converting~~8 5/8%, ~~facilities~~payable bysemi-annually ~~coordinating~~and due in 2012, and a new $450 million senior bank ~~determining~~credit facility. This refinancing provided the ~~optimal~~financial ~~configuration~~flexibility to consider acquisitions and converted a significant amount of ~~equipment~~our borrowings into long-term borrowings. We collectively refer to these transactions as the “Refinancing Transactions.”

21 23

1. We used the ~~amount~~net ofproceeds ~~variation~~from inthe ~~its~~Refinancing ~~process~~Transactions isto sorepay ~~tightly~~our then ~~controlled~~existing ~~that~~bank ~~there~~debt, ~~are~~to ~~six~~repurchase ~~standard~~our ~~deviations~~then ~~between~~existing ~~the~~$50.0 million ~~mean~~of subordinated notes at par, and ~~the~~to ~~nearest~~pay ~~customer~~related ~~specification~~interest, ~~(upper~~fees and ~~lower~~expenses. ~~control~~In ~~limit);~~connection orwith the Refinancing Transactions, we incurred a non-cash charge to write off our then remaining unamortized debt issuance costs from the refinanced debt. These costs were $15.8 million before taxes at February 28, 2002.

~~2. it~~ In ~~produces~~connection ~~products~~ with athe ~~defect~~Riverwood ~~rate~~merger (discussed below), a change of control ~~not~~will ~~more~~occur ~~than~~as 3defined in the $300 million senior subordinated bond indenture.4 ~~defects~~Under ~~for~~the terms of the indenture, the change of control requires us ~~every~~to commence an offer to purchase all of the senior subordinated notes at 101% of the principal amount outstanding. As of August 1, 2003, we have received acceptance on $297.9 million ~~opportunities~~of an anticipatory offer to purchase these bonds at a price of 102.25% of the principle amount outstanding. In addition, these bondholders have consented to remove a majority of the financial covenants contained in the bond indenture. Consequently, these bonds will be refinanced in connection with the merger, as well as the $450 million senior bank credit facility and any additional bondholders that accept an offer to purchase subsequent to the merger.

To In ~~achieve~~the ~~Six~~event ~~Sigma~~the Riverwood merger is not consummated, we ~~identify~~intend to fund future working capital needs, capital expenditures, preferred stock dividends and ~~address~~acquisitions ~~the~~through ~~Cost~~cash flow generated from operations and borrowings under our senior bank credit facility. One of ~~Poor~~our ~~Quality~~wholly-owned insubsidiaries, Graphic ~~both~~Packaging Corporation (GPC), is the borrower under the senior bank ~~manufacturing~~credit facility and ~~transactional~~the ~~processes~~senior ~~through~~subordinated notes, and GPIC has guaranteed the loans. The senior bank credit facility consists of a ~~disciplined~~$275.0 million, five-year ~~project~~revolving ~~methodology~~credit ~~(Measure~~facility, ~~Analyze~~or the Revolver, ~~Improve~~and a $175.0 million, seven-year term loan, or the Term Loan. The Revolver bears interest at LIBOR or Prime Rate plus a spread tied to our leverage, with a single principal payment due at maturity. At August 1, 2003, the Revolver’s interest rate was 5.25%. The Term Loan bears interest at LIBOR or Prime Rate plus a spread, with principal amortization of 1% a year and ~~Control)~~the ~~executed~~balance bydue ~~skilled~~at ~~project~~maturity. ~~leaders~~At ~~called~~August 1, ~~Black~~2003, ~~Belts~~the Term Loan’s interest rate was 5.75%. The facilities must also be prepaid with an annual cash flow recapture calculation, and ~~Green~~with ~~Belts~~certain proceeds from asset sales, and debt or equity offerings. The senior bank credit facility is secured with first priority liens on all of GPIC’s, GPC’s and our domestic subsidiaries’ material assets. The facility limits our ability to pay dividends other than permitted dividends on the preferred stock, and imposes limitations on the incurrence of additional debt, acquisitions, capital expenditures, repurchase of Company stock and sale of assets.

We Our ~~have~~borrowings ~~also~~consist ~~taken~~of steps to reduce our fixed manufacturing and selling, general and administrative costs. In addition to closing plants and moving equipment and business to other facilities, we have eliminated positions to reduce fixed personnel costs and have begun to use the ~~Six~~following ~~Sigma~~(in ~~program to make our non-production business processes more cost effective.~~ thousands):

Results of Operations


	June 30,		December 31,
	2003		2002

Seven-year term loan due 2009 (variable interest rate at 3.87%)	$	172,375	$	173,250
Five-year revolving credit facility due 2007 (variable interest rate at 3.37%)		—		—
8-5/8% senior subordinated notes due 2012		300,000		300,000
Various notes payable (1)		2,763		5,081

Total		475,138		478,331
Less current maturities		3,626		3,432

Long-term maturities	$	471,512	$	474,899

~~Net~~(1) ~~sales~~The ~~for~~notes ~~the~~bear ~~three~~interest ~~months~~at ~~ended~~rates ~~September~~ranging ~~30,~~from ~~2002 were $270~~4.000% ~~million, a nominal decrease of $0.8 million, compared~~ to ~~the third quarter of 2001~~13. ~~Sales for the nine months ended September 30, 2002 were $797.6 million, a decrease of $44.9 million, or 5~~06%, ~~compared to the same period in 2001. In the first nine months of 2001, we enjoyed exceptionally strong sales to customers for one-time product promotions~~ and ~~new,~~mature ~~value-added~~from ~~business.~~2003 ~~By the end of the third quarter of 2001, we started to experience lower sales, which trend has continued~~ through ~~the third quarter of 2002~~2008. We believe our customers are focused on managing their inventories as they face an uncertain economy and, in some cases, have experienced lost sales due to recent industry consolidation and due to a softening in the dry foods market. This trend resulted in lower orders from customers and, in some cases, temporary plant shutdowns by our customers. The impact on our company has been primarily reduced volume.

~~Gross~~Our ~~profit,~~maturities ~~as a percentage~~ of ~~net~~long-term ~~sales,~~debt ~~was~~as ~~10.8% for the third quarter~~ of ~~2002~~ ~~and 12.1% for the nine months ended September~~ June 30, ~~2002.~~2003 ~~Gross~~are ~~profit,~~ as afollows ~~percentage of net sales, was 13.5% and 14.1% for the comparable periods~~ (in ~~2001. Gross profit as a percentage of sales in the first nine months of 2002 was negatively~~ impacted by lower sales and the resulting lower absorption of fixed costs, as well as increases in recycled paper fiber costs at our Kalamazoo mill totaling approximately $2.9 million year-to-date. Furthermore, our year-to-date costs in 2002 havethousands): increased over 2001 levels due to the incremental costs related to the Kalamazoo labor dispute of an estimated $4.5 million and the depreciation and maintenance costs of a new manufacturing information technology system totaling $3.5 million. Absent these additional costs, our gross profit percentage for the nine months ended September 30, 2002 would have been 13.4%. Our system-wide optimization and restructuring activities and emphasis on cost control programs, like Six Sigma, have partially offset some of the margin decreases.

Selling, general and administrative expenses were $16.2 million, or 6.0% of net sales, for the three months ended September 30, 2002, and $46.9 million, or 5.9% of net sales, for the nine months ended September 30, 2002. In the comparable periods of 2001, these expenses were $16.1 million and $47.0 million, or 5.9% and 5.6% of sales, respectively. SG&A expenses have been relatively consistent year over year, with reduced management incentives being offset by costs related to the installation of an ERP information system in 2002. Our goal is to keep selling, general and administrative expense at or under 6% of net sales.


2003 (next twelve months)	$	3,626
2004		2,103
2005		2,018
2006		1,920
Thereafter		465,471

	$	475,138

~~Interest~~ We ~~expense~~maintain ~~decreased~~an ~~$1.1~~interest ~~million,~~rate orrisk-management ~~9%,~~strategy inthat ~~the~~uses derivative ~~third~~instruments ~~quarter of 2002, compared~~ to ~~the~~minimize ~~third quarter of 2001. Year-to-date 2002 interest expense is lower than 2001 by $7.0 million~~significant, orunanticipated ~~17%,~~earnings ~~primarily~~fluctuations asthat may aarise ~~result~~from ofvolatility ~~lower~~in ~~debt balances and lower market~~ interest rates. ~~The~~Our ~~interest~~specific ~~rate~~goals ~~impact from~~are ~~our February 28, 2002 senior subordinated notes issuance partially offsets the favorable impact of lower market interest rates and lower debt~~

22 24

~~The~~to ~~effective~~(1) manage ~~tax~~interest rate ~~for~~sensitivity by modifying the ~~first~~re-pricing ~~nine~~or maturity ~~months~~characteristics of ~~2002~~some ~~was~~of ~~approximately~~our ~~39%,~~debt ~~compared~~and to(2) lower ~~40%~~(where inpossible) the cost ~~first~~of ~~nine~~our ~~months~~borrowed ~~of 2001~~funds. ~~Because some~~In ofaccordance with our ~~goodwill~~interest ~~amortization~~rate risk-management isstrategy, ~~nondeductible~~we ~~for~~had ~~tax~~contracts ~~purposes~~in place at December 31, ~~our~~2001 ~~effective~~to hedge ~~tax~~the ~~rate~~interest isrates ~~lower~~on asour avariable ~~result~~rate borrowings in the form of ~~implementing~~swap agreements ~~SFAS~~on No$225.0 million ~~142,~~of ~~which~~borrowings ~~eliminated~~and ~~goodwill~~cap ~~amortization~~agreements ~~expense~~on ~~for~~$350.0 million of ~~financial~~borrowings. ~~reporting~~The ~~purposes~~swap ~~effective~~agreements ~~January~~locked 1,in ~~2002. See~~an ~~discussion~~average LIBOR rate of ~~our~~6.5%. $150 million ~~new~~of ~~goodwill~~the ~~accounting~~caps ~~below.~~provided Weupside ~~expect~~protection to ~~maintain~~us anif ~~effective~~LIBOR ~~tax~~moved ~~rate~~above 6.75%, and $200.0 million of ~~approximately~~the 39caps provided upside protection to us if LIBOR moved above 8.13%. ~~for~~The ~~the~~hedging ~~remainder~~instruments ofexpired in 2002. and were not replaced, principally because a significant portion of our referenced debt carries a fixed rate.

~~Kalamazoo~~ Our ~~Labor~~capital ~~Dispute~~structure also includes $100 million of Series B preferred stock, issued on August 15, 2000 to the Grover C. Coors Trust, a related party. The Series B preferred stock is convertible into shares of our common stock at $2.0625 per share and is entitled to receive a dividend payable quarterly at an annual rate of 10%. We may redeem the Series B preferred stock beginning on August 15, 2005 at 105% of par. This premium decreases by 1% per year until August 15, 2010, at which time we can elect to redeem the shares at par. The Series B preferred stock has a liquidation preference over our common stock and is entitled to one vote for every two shares held on an as-converted basis.

~~The~~Cash ~~labor agreement between GPC and the Paper, Allied-Industrial,~~Flows Chemical and Energy Workers International (PACE) and PACE Local 6-1010, which represents approximately 400 workers at our Kalamazoo, Michigan paperboard mill and folding carton plant, expired on July 27, 2002, following a four-day extension. On July 22, 2002, the membership of the local voted against ratification of our company’s offer and voted to strike pending the approval of the international leadership of PACE. As a result of the union’s failure to ratify the contract or act on the strike vote by the end of the extension, we staffed the operations of the two facilities with salaried and non-union employees of GPC to ensure the uninterrupted supply of product to our customers. We locked out the union employees pending resolution of the contract issues. It is not possible at this time to estimate how long the lockout at these plants will last. Net incremental costs to our company due to this labor dispute were approximately $4.5 million before tax through September 30, 2002. These costs include labor, the incremental cost of outside paperboard purchases, additional security, travel and lodging for temporary workers, and other related expenses. By mid-September, both facilities were running at normal or higher production rates and efficiencies compared to levels prior to the labor dispute and, as a result, management believes the labor dispute will not have a material impact on our future results of operations, financial position, or cash flows.

~~Restructuring~~ Cash ~~Charges~~and cash equivalents decreased $21.7 million during the first half of 2003, which was the net effect of positive cash flows from operations totaling $18.5 million, capital expenditures of $14.0 million, the purchase of J.D. Cahill Co., Inc. assets for $18.1 million and cash used in financing activities of $8.1 million. Cash provided by operating activities decreased $21.9 million in the first half of 2003 compared to the comparable period in 2002 due primarily to reduced operating income and a use of cash for working capital of $19.2 million in the first half of 2003, compared to a use of cash of $8.8 million in the first six months of 2002. The increase in cash used for working capital in 2003 results primarily from increases in inventories due to stronger sales and accrued interest and other accrued liabilities. Cash used for capital expenditures declined in the first half of 2003 compared to the same period in 2002 primarily due to reduced spending on the Company’s enterprise resource planning system and other information technology projects.

WeWorking ~~recorded restructuring charges totaling $2.4 million in the fourth quarter of 2001 in connection with the announced closure of the Newnan, Georgia plant. The restructuring charges relate to~~Capital severance packages for 105 plant personnel that were communicated to employees in December 2001. We shut down the plant’s operations during the third quarter of 2002 and plan to sell the plant’s building and land which has a combined net book value of $1.8 million. We substantially completed the Newnan restructuring plan during the third quarter of 2002. Restructuring payments made during the first nine months of 2002 under this program totaled $0.9 million.

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

~~The~~ We ~~following~~currently ~~table~~expect ~~summarizes~~that ~~accruals~~cash ~~related~~flows tofrom ~~all~~operations ofand borrowings under our ~~restructuring~~credit facility will be adequate to meet our needs for working capital, ~~activities~~post-retirement ~~during~~obligations, temporary financing for capital expenditures and debt repayments for the ~~first~~foreseeable ~~nine~~future. ~~months~~Our ofworking ~~2002~~capital position (inincluding ~~millions~~current maturities of long term debt): at June 30, 2003 was $43.4 million. We had $19.1 million borrowed against our revolver at August 1, 2003, with $247.5 million of availability under our $275.0 million facility, due to $8.4 million of letters of credit outstanding. Our letters of credit are used as security against our self-insurance obligations and an outstanding note payable.

	2000 Saratoga Springs Closure			2000/2001 Reduction in Force			2001 Newnan Plant Closure			Totals
Balance, December 31, 2001	$	0.1		$	0.2		$	2.4		$	2.7
Cash paid		(0.1	)		(0.2	)		—			(0.3	)
Balance, March 31, 2002		0.0			0.0			2.4			2.4
Cash paid		—			—			(0.2	)		(0.2	)
Balance, June 30, 2002		0.0			0.0			2.2			2.2
Cash paid		—			—			(0.7	)		(0.7	)
Balance, September 30, 2002	$	0.0		$	0.0		$	1.5		$	1.5

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

~~Asset~~Pension ~~Sales~~Plan Assumptions

We ~~have~~contributed ~~closed~~$6.5 million, ~~several~~$2.3 million ~~noncore~~and ~~or underperforming facilities over the past two years~~$1.4 million Weto ~~sold~~ our ~~Saratoga~~defined benefit ~~Springs,~~retirement ~~New~~plan ~~York building and land~~ in ~~June~~2002, 2001 and ~~our Perrysburg~~2000, ~~Ohio~~respectively. ~~building~~Contributions ~~and~~to the ~~land~~pension plan in ~~July~~the ~~2001~~first ~~for~~half ~~cash proceeds~~ of ~~$3.4~~2003 ~~million~~totaled ~~and~~ $12.9 5 million~~, respectively~~. NoWe expect ~~gain~~to orcontribute ~~loss~~a ~~was~~total ~~recognized~~of on$10.0 million to the ~~sales.~~plan in 2003.

~~In the first quarter of 2001, a pre-tax gain of $3.6 million was recognized upon receipt of additional consideration for assets of our former developmental businesses.~~ 25

~~SFAS~~ Our ~~No.~~retirement ~~142,~~plan ~~Goodwill~~assets and ~~Other~~liabilities ~~Intangible~~are ~~Assets,~~measured ~~was~~at ~~issued~~December 31 each inyear ~~2001~~for ~~and~~financial ~~became~~reporting ~~effective~~purposes. ~~for~~Market usreturns on ~~January~~assets 1,invested in ~~2002.~~by ~~This~~the ~~statement~~defined ~~establishes~~benefit ~~new~~retirement ~~accounting~~plan ~~and~~trust ~~reporting~~were ~~standards~~negative ~~that,~~during ~~among~~the ~~other~~past year. ~~things~~Additionally, ~~eliminate amortization~~because of ~~goodwill~~the ~~and~~declines ~~certain~~in ~~intangible~~interest ~~assets~~rates ~~with~~and ~~indefinite~~a corresponding ~~useful~~decrease ~~lives.~~in Wethe dodiscount ~~not~~rates ~~have~~used ~~any~~to ~~intangible~~estimate ~~assets~~our ~~with~~pension liability, ~~indefinite~~we ~~useful~~recorded ~~lives;~~after-tax ~~however,~~charges asto ~~required~~other bycomprehensive ~~the~~income ~~new~~of ~~standard,~~$12.8 million ~~our~~and ~~goodwill~~$13.8 million ~~will~~to bereflect ~~evaluated~~minimum ~~annually~~pension ~~for~~liabilities ~~impairment using~~in a2002 ~~fair-value~~and 2001, ~~based~~respectively. ~~approach~~If ~~and,~~asset ifreturns ~~there~~do isnot ~~impairment,~~improve ~~the~~or ~~carrying~~interest ~~amount~~rates ofremain low, ~~goodwill~~additional ~~will~~funding may be ~~written~~required ~~down~~ to ~~its~~the ~~implied~~defined ~~fair~~benefit ~~value.~~retirement plan.

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

Of On ~~the~~March 25, ~~$560~~2003, ~~million~~we ~~carrying~~entered ~~value~~into ofa ~~goodwill~~merger atagreement ~~December~~with 31Riverwood Holding, ~~2001,~~Inc. ~~$418~~to ~~million~~effect isa ~~deductible~~ stock-for-stock ~~Federal~~merger ~~income~~with ~~tax~~Riverwood. ~~purposes~~Riverwood will be the accounting acquiror of GPIC and ~~$142~~will ~~million~~survive isas ~~not~~the ~~deductible~~new public company listed on the New York Stock Exchange. The ~~$180~~new company will take the name ~~million~~Graphic ~~goodwill~~Packaging ~~impairment~~Corporation. ~~charge~~Prior ~~consists~~to the merger, Riverwood will complete a 15.21 to 1 stock split of ~~approximately~~its ~~$131~~common ~~million~~stock. GPIC shareholders are expected to receive one share of ~~deductible~~Riverwood ~~goodwill~~common ~~and~~stock ~~approximately~~for ~~$49~~each ~~million~~share of ~~non-deductible~~GPIC ~~goodwill.~~common ~~The~~stock they ~~$131~~hold. ~~million~~As ~~tax~~a ~~deductible~~condition ~~portion~~to ofclosing the ~~impairment~~merger, ~~charge~~the ~~resulted~~Grover inC. aCoors ~~deferred~~Trust ~~tax~~will ~~benefit/asset~~convert ofits ~~approximately~~preferred ~~$50~~shares ~~million~~into 48,484,848 shares of common stock. WeAssuming the ~~recorded~~conversion aoccurs ~~100%~~on ~~valuation~~August 8, ~~allowance~~2003, ~~against~~Riverwood will pay the ~~approximately~~Grover ~~$50~~C. ~~million~~Coors Trust ~~deferred~~an ~~tax~~estimated ~~asset~~$19.8 million ~~resulting~~as ~~from~~consideration ~~recognition~~for early conversion of the preferred ~~transitional~~stock. ~~goodwill~~Immediately ~~impairment~~after ~~loss.~~the ~~Therefore~~merger, ~~the~~GPIC ~~cumulative~~shareholders ~~effect~~will ofown ~~change~~approximately in42.5% ~~accounting~~and ~~principle~~Riverwood ~~reflected~~shareholders inwill ~~the~~own ~~accompanying~~approximately ~~income~~57.5% ~~statement~~of the iscombined ~~net~~company ofon $0a ~~tax~~fully ~~benefit.~~diluted basis.

~~Effective January~~ On 1May 12, ~~2002~~2003, wethe ~~stopped~~thirty-day ~~amortizing~~waiting ~~our~~period ~~goodwill~~under asthe ~~required~~Hart-Scott-Rodino Antitrust byImprovements ~~SFAS~~Act Noof 1976 (HSR) expired. ~~142~~Accordingly, the condition to the merger requiring the expiration or termination of the HSR waiting period has been satisfied. In addition to this and other conditions to the merger, the merger must be approved by two-thirds of the combined voting power of GPIC common stock and two-thirds of the preferred stock voting as a separate class. The ~~annual~~Coors ~~reduction~~family inshareholders, ~~amortization~~who ~~expense~~collectively isowned approximately ~~$20~~65.61% ~~million~~of the combined voting power of the Company before ~~taxes~~the merger, signed a voting agreement with Riverwood in which they agreed to vote in favor of the merger. ~~Because~~At ~~some~~a meeting of ~~our~~the ~~goodwill~~shareholders held on August 7, 2003, the merger was approved and is expected to be consummated on August 8, 2003.

24 The combined company has commitment letters from a banking syndicate for financing totaling $1.6 billion at the time of merger. We estimate that up to $1.3 billion will be drawn at the time of merger and this, together with the new issuance of $850 million of senior subordinated notes, will be used to repay existing bank debt, transaction costs and to refinance GPIC’s and Riverwood’s senior and senior subordinated notes. Assuming the GPIC existing senior bank credit facility and the senior subordinated notes are refinanced, a loss on early extinguishment of debt will occur totaling approximately $20 million, consisting of cash tender premiums and non-cash unamortized debt issuance costs.

~~amortization~~ For isthe ~~nondeductible~~six ~~for~~months ~~tax~~ended ~~purposes~~June 30, ~~our~~2003, ~~effective~~we ~~tax~~incurred ~~rate~~approximately is$3.5 million ~~lower as a result~~ of ~~implementing~~merger ~~SFAS~~related Nocosts. ~~142.~~We ~~The~~expect ~~change~~to inincur ~~the carrying~~an ~~amount~~estimated additional $9 million of ~~our~~transaction ~~goodwill~~costs ~~consists~~prior ~~entirely~~to ofclosing ~~the~~for ~~impairment~~merger ~~loss~~related investment ofbanking, ~~$180~~legal ~~million~~and ~~for~~accounting fees. For the ~~nine~~six months ended ~~September~~ June 30, ~~2002.~~2003, we also incurred approximately $500 thousand evaluating acquisitions that were not consummated.

~~New~~ Relating ~~Accounting~~to ~~Pronouncements~~the proposed merger, Riverwood filed a registration statement with the Securities and Exchange Commission which contains a proxy statement/prospectus that was sent to GPIC shareholders on July 18, 2003.

~~In 2001, the FASB issued SFAS No~~Item 3. ~~143,~~Quantitative ~~Accounting for Asset Retirement Obligations. SFAS No. 143 requires the recognition of a liability~~ and ~~offsetting~~Qualitative ~~asset~~Disclosures ~~for~~about ~~any~~Market ~~legal obligation associated with the retirement of long-lived assets. The asset retirement cost is depreciated over the life of the~~Risk ~~related asset. This statement is effective for financial statements issued for fiscal years beginning after June 15, 2002. We do not believe SFAS No. 143 will have a significant effect on our company.~~

~~SFAS~~Interest ~~No.~~Rate ~~145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections, was~~Risk issued on April 30, 2002. SFAS No. 145 includes, among other things, the rescission of SFAS No. 4, which required that gains and losses from early extinguishment of debt be classified as an extraordinary item, net of related income tax effects. Under the new guidance of SFAS No. 145, losses from early extinguishment of debt will be classified as extraordinary items only when the losses are considered unusual in nature and infrequent in occurrence. SFAS No.145 will be effective for us on ~~January 1, 2003, at which time we will reclassify our first quarter 2002 loss on early extinguishment of debt as a non-extraordinary item.~~

~~SFAS~~ As ~~No.~~of ~~146~~August 1, ~~Accounting for Costs Associated with Exit or Disposal Activities~~2003, ~~was~~the ~~issued~~Company’s oncapital ~~July~~structure ~~30,~~includes ~~2002~~$191.5 million ~~SFAS~~that ~~No.~~bears ~~146~~interest ~~will~~based ~~require~~upon ~~companies~~an tounderlying ~~recognize~~rate ~~costs~~that ~~associated~~fluctuates with short-term ~~exit~~interest orrates, ~~disposal~~specifically ~~activities~~LIBOR ~~when~~or ~~they are~~Prime ~~incurred~~Rate. ~~rather~~As ~~than~~of atAugust 1, 2002, the ~~date~~Company’s ofcapital astructure ~~commitment~~included to$202.8 million anof ~~exit~~debt orthat bears ~~disposal~~interest ~~plan.~~based ~~SFAS~~upon ~~No.~~an ~~146~~underlying israte ~~effective~~that ~~for~~fluctuated uswith onshort-term interest ~~January 1~~rates, ~~2003~~specifically ~~and~~LIBOR. ~~will~~At ~~have~~August 1, no2002, ~~effect~~the ~~on our company’s historical financial results.~~ Company

~~Related Party Transaction~~ 26

~~Liquidity~~ ~~and~~had ~~Capital~~interest ~~Resources~~rate swap agreements that locked LIBOR at 5.94% on $65 million of its borrowings. With the Company’s interest rate protection contracts in place last year, a 1% rise in interest rates would have impacted annual pre-tax results by approximately $1.4 million. Currently, a 1% rise in interest rates would impact the Company’s annual pre-tax results by approximately $1.9 million.

~~Our~~Item 4. ~~liquidity~~Controls ~~is generated from both internal~~ and ~~external sources and is used to fund short-term working capital needs, capital expenditures (estimated to be $30 million~~Procedures ~~in 2002), preferred stock dividends and other general corporate purposes.~~

~~Capital~~ We ~~Structure~~maintain a system of controls and procedures designed to provide reasonable assurance as to the reliability of the financial statements and other disclosures included in this report, as well as to safeguard assets from unauthorized use or disposition. We evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in Exchange Act Rule 13a-14 under supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, as of June 30, 2003. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic Securities and Exchange Commission filings. No significant changes were made to our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

OnFactors ~~February~~That ~~28,~~May ~~2002,~~Affect weFuture ~~refinanced our existing senior bank credit facility with $300 million of senior subordinated notes, carrying~~Results ~~interest at 8 5/8%, payable semi-annually and due in 2012, and a new $450 million senior bank credit facility. We collectively refer to these transactions as the Refinancing Transactions.~~

We Certain ~~intend~~statements toin ~~fund~~this ~~future~~document ~~working~~constitute ~~capital~~“forward-looking statements” ~~needs~~within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may include words such as “anticipate,” ~~capital~~“estimate,” “expect,” ~~expenditures~~“project,” ~~preferred~~“intend,” ~~stock~~“plan,” ~~dividends~~“believe” and ~~acquisitions~~other ~~through~~words ~~cash~~and ~~flow~~terms ~~generated~~of similar ~~from~~meaning ~~operations~~in connection with any discussion of the timing or nature of future operating or financial performance or other events. Such forward-looking statements involve known and ~~borrowings~~unknown risks, uncertainties and ~~under~~other factors that may cause our ~~new~~actual ~~senior~~results, ~~bank~~performance ~~credit~~or ~~facility.~~achievements ~~GPC~~to be ismaterially ~~the~~different ~~borrower~~from ~~under~~any ~~the~~future ~~new~~results, ~~senior~~performance ~~bank~~or ~~credit~~achievements expressed ~~facility~~or ~~and~~implied by the ~~senior~~forward-looking ~~subordinated~~statements. ~~notes~~Specifically, a) we are dependent on key customers and ~~GPIC~~strategic ~~has~~relationships, ~~guaranteed~~and the ~~loans.~~loss ~~The~~of ~~new~~key customers ~~senior~~or ~~bank~~these ~~credit~~relationships ~~facility~~could ~~consists~~adversely affect our business, financial condition and results of aoperations; ~~$275~~b) ~~million~~we face intense competition and, ~~five-year~~if we ~~revolving~~are ~~credit~~unable ~~facility~~to compete successfully against other manufacturers of folding cartons, we could lose customers and/or market share and our revenues may decline; c) sales might be lower than expected due to the ~~Revolver~~economy, lower prices, loss of business and acustomer ~~$175~~inventory ~~million,~~adjustments; ~~seven~~d) market share estimations are based on third-~~year~~party ~~term~~information ~~loan,~~that may be or ~~the~~become ~~Term~~obsolete or ~~Loan.~~inaccurate; ~~The~~e) ~~Revolver~~we ~~bears~~have ~~interest~~made atand ~~various~~may ~~pricing~~make ~~options~~acquisitions, ~~including~~and ~~LIBOR~~are ~~plus~~currently anticipating a ~~spread~~merger ~~tied~~with toRiverwood ~~our~~Holding, ~~leverage~~Inc. which entails certain risks, ~~with~~and we cannot guarantee that we will realize the expected benefits from future acquisitions, the merger or that our existing operations will not be harmed as a ~~single~~result; f) ~~principal~~price ~~payment~~fluctuations ~~due~~in atraw ~~maturity.~~materials ~~The~~and ~~interest~~energy ~~rate~~costs ~~for~~could adversely affect our manufacturing costs and ability to obtain the ~~Revolver~~materials ~~was~~we ~~3.80%~~need atto ~~September~~manufacture ~~30,~~our ~~2002,~~products; ~~although~~g) nowe may ~~amounts~~not ~~were~~be ~~outstanding~~able atto ~~September~~adequately 30protect our intellectual property and proprietary rights, ~~2002.~~which ~~The~~could ~~Term~~harm ~~Loan~~our ~~bears~~future ~~interest~~success atand ~~various~~competitive ~~pricing~~position; ~~options,~~h) ~~including~~new products ~~LIBOR~~in ~~plus~~development ~~275~~may ~~basis~~not ~~points,~~become ~~with~~commercially viable and anticipated new ~~principal~~orders ~~amortization~~may ofnot 1%materialize; ai) ~~year~~we are subject to environmental laws and ~~the~~other governmental ~~balance~~regulations, ~~due~~and atcosts ~~maturity.~~related ~~The~~to ~~interest~~compliance ~~rate~~with, or any liability for ~~the~~failure ~~Term~~to ~~Loan~~comply ~~was~~with, ~~4.57%~~existing ator ~~September~~future 30laws and regulations could adversely affect our business, ~~2002.~~financial ~~The~~condition ~~facilities~~and ~~must~~results ~~also~~of operations; bej) ~~prepaid~~we ~~with~~may aencounter ~~cash~~difficulties ~~flow~~in ~~recapture~~our ~~calculation,~~restructuring and reorganization ~~with~~efforts, ~~certain~~which ~~proceeds~~could prevent us from accommodating our existing ~~asset~~business ~~sales,~~and capturing new business; k) various Coors family trusts own a significant interest in us and ~~debt~~may orexercise ~~equity~~their ~~offerings.~~control ~~The~~in ~~facility~~a ismanner detrimental ~~collateralized~~to byour ~~first~~other ~~priority~~investors’ ~~liens~~interests; l) terrorist attacks, such as those that occurred on ~~all~~September 11, ~~material~~2001, ~~assets~~and acts of bioterrorism have contributed to economic instability in the ~~Company~~United States and ~~all~~further acts of terrorism, ~~its~~bioterrorism, ~~domestic~~violence ~~subsidiaries.~~or ~~The~~war ~~facility~~could ~~limits~~affect the ~~Company’s~~markets ~~ability~~in towhich ~~pay~~we operate, ~~dividends~~our business operations, our expectations and other ~~than~~forward-looking ~~permitted~~statements ~~dividends~~contained in this document; m) we may be subject to losses that might not be covered in whole or in part by existing insurance coverage, and these uninsured losses could adversely affect our business, financial condition and results of operations; n) selling, general and administrative costs might increase based on ~~the~~adding ~~preferred~~more ~~stock~~staff and programs (including costs to meet increasing corporate compliance requirements), and ~~imposes~~general ~~limitations~~cost increases; o) we may be exposed to higher than predicted interest rates on our debt and on any new debt we might incur; p) if we are unable to meet the ~~incurrence~~financial covenants ofon ~~additional~~our debt, ~~acquisitions~~we could be subject to higher interest rates or possible default (which could lead to our insolvency); q) we may not be able to maintain our effective tax rate due to the current and future tax laws, ~~capital~~our ~~expenditures~~ability to identify and ~~the~~use ~~sale~~our oftax ~~assets.~~credit s and other factors; r) purchase savings initiatives, and cost

25 27

Inreduction ~~connection~~and ~~with~~efficiency ~~the~~programs, ~~Refinancing~~such ~~Transactions~~as Six Sigma, might not realize significant future benefits; s) we ~~incurred~~might anot ~~non-cash~~be ~~charge~~able into ~~2002~~maintain our position as one of the lowest cost producers due to ~~write~~competitors ~~off~~more ~~our~~effectively reducing ~~remaining~~their ~~unamortized~~costs and improving efficiencies; t) capital expenditures may be more or less than projected and may not be adequate to cover all possible business requirements; u) the company’s ability to generate cash flow may differ from past performance and the cash that is generated may not be used to reduce debt; ~~issuance~~v) ~~costs~~the ~~associated~~merger with Riverwood Holding may not result in a new leader in the paperboard industry or improved financial strengths or growth ~~refinanced~~opportunities ~~debt.~~due ~~These~~to ~~costs~~market ~~amounted~~conditions, customer response to ~~$15.8~~the ~~million~~merger, integration ~~pretax~~issues, atand ~~February~~similar ~~28,~~issues; ~~2002~~and w) the merger with Riverwood Holding may not be completed becaused of failure to meet other conditions detailed in the merger agreement. Investors are encouraged to read the proxy statement related to the proposed merger with Riverwood Holding that was mailed in July.

~~Our~~ These ~~borrowings~~statements atshould ~~September~~be read in conjunction with the financial 30statements and notes thereto included in the Company’s Form 10-K/A for the year ended December 31, 2002. ~~and~~The ~~December~~accompanying 31financial statements have not been examined by independent accountants in accordance with generally accepted auditing standards, ~~2001~~but ~~consist~~in the opinion of management, such financial statements include all adjustments necessary to summarize fairly the ~~following~~Company’s (financial position and results of operations. Except for certain reclassifications made to consistently report the information contained in ~~thousands):~~the financial statements, all adjustments made to the interim financial statements presented are of a normal recurring nature. The results of operations for the second quarter ended June 30, 2003, may not be indicative of results that may be expected for the year ending December 31, 2003.

	September 30, 2002		December 31, 2001
Seven-year term facility due 2009, variable interest currently at 4.57%	$	173,688	$	—
Five-year revolving credit facility due 2007, variable interest currently at 3.8%		—		—
8- 5/8% senior subordinated notes due 2012		300,000		—
Five-year term facility, variable interest at 4.18%, refinanced in 2002		—		247,035
Revolving credit facility, variable interest at 4.18%, refinanced in 2002		—		222,750
10% subordinated notes, refinanced in 2002		—		50,000
Other notes payable		5,222		5,974
Total		478,910		525,759
Less current maturities		3,610		37,373
Long-term maturities	$	475,300	$	488,386

2002 (remaining three months)	$	2,126
2003		1,927
2004		1,923
2005		1,941
Thereafter		470,993
	$	478,910

PART II. OTHER INFORMATION

~~Our policies permit the use of derivative instruments to minimize significant, unanticipated earnings fluctuations that may arise from volatility in interest rates. Specifically, our goals are to (~~Item 1~~) manage interest rate sensitivity by modifying the re-pricing or maturity characteristics of some of our debt and (2) lower (where possible) the cost of our borrowed funds~~. InLegal ~~accordance with our interest rate risk-management strategy, we had contracts in place at December 31, 2001 to hedge the interest rates on our variable rate borrowings in the form of swap~~Proceedings agreements on $225 million of borrowings. On February 28, 2002, we terminated a $35 million notional value interest rate swap contract and the remaining swap contracts expired by the end of September 2002. We paid net interest on these contracts of approximately $1.5 million and $6.8 million for the three months and nine months ended September 30, 2002, respectively. In light of our recapitalization in February 2002, we have not elected to enter into replacement swap contracts at this time, ~~although our policy allows management to enter into new contracts in the future.~~

~~Our~~ On ~~capital~~February 19, ~~structure~~2002, ~~also includes~~Chinyun ~~$100~~Kim ~~million~~filed ofa ~~Series~~putative Bclass ~~preferred~~action ~~stock,~~claim ~~issued~~in District onCourt, ~~August~~Jefferson 15County, ~~2000~~Colorado toagainst the ~~Grover~~Company C.and ~~Coors~~certain ~~Trust,~~of its ashareholders ~~related~~and ~~party~~directors. The ~~Series~~complaint Balleges ~~preferred~~that ~~stock~~the isdefendants breached ~~convertible~~their ~~into~~fiduciary ~~shares~~duties in connection with the issuance on August 15, 2000, of ~~our~~the ~~common~~Company’s ~~stock~~Series B atPreferred $2Stock to the Grover C.~~0625~~ ~~per~~Coors ~~share~~Trust (the ~~and~~Trust). Plaintiff is ~~entitled~~seeking todamages ~~receive~~in athe amount of $43 million or, ~~dividend~~alternatively, ~~payable~~to ~~quarterly~~require attransfer anto ~~annual~~the ~~rate~~class of ~~10%.~~some Weor ~~may~~all ~~redeem~~of the ~~Series~~Trust’s GPIC Bcommon stock into which the convertible preferred stock ~~beginning~~will onbe ~~August~~converted. The ~~15,~~court ~~2005~~dismissed atplaintiff’s ~~105%~~claim against the Company for breach of fiduciary ~~par.~~duty ~~This~~while ~~premium~~allowing ~~decreases~~the byplaintiff 1%to ~~per~~proceed ~~year~~against ~~until~~the ~~August~~named directors ~~15,~~and ~~2010~~shareholders, atincluding ~~which~~certain ~~time~~Coors wefamily ~~can~~trusts. ~~elect~~The Company is continuing to ~~redeem~~provide ~~the~~a ~~shares~~defense to this action pursuant to its atindemnification ~~par~~obligations. ~~The~~Currently, ~~Series~~discovery Bis ~~preferred~~being ~~stock~~conducted. ~~has~~By order dated June 12, 2003, the court certified a ~~liquidation~~class ~~preference~~comprised ~~over~~of ~~our~~all owners of GPIC common stock as of August 2, 2000, excluding the defendants and ismembers of ~~entitled~~the toCoors ~~one~~family ~~vote~~and ~~for~~their ~~every~~affiliates ~~two~~and excluding any additional shares purchased ~~held~~by onclass anmembers ~~as-converted~~after ~~basis~~August 2, 2000. The Company believes that the transaction was in the best interest of the Company and its shareholders.

26 In connection with the resale of its aluminum business in 1999, the Company guaranteed accounts receivable owed by the former owner of the business. After the resale, the former owner refused to pay the amounts owed, equal to $2.4 million. Pursuant to the terms of the resale agreement, the Company paid this amount and sued the former owner in the United States District Court for the District of Colorado on April 18, 2000. The former owner counterclaimed for an additional $11.0 million for certain spare parts, and the Company amended its claim to seek an additional $16.0 million in overpayment for raw materials to run the business prior to resale. This claim increased from $14.3 million to $16.0 million after making an adjustment for certain offsets to which the Company was entitled. The parties have filed motions for summary judgment. The Company does not believe that this litigation will have a material adverse effect on its consolidated financial position, results of operations or cash flows.

~~Working~~ On ~~Capital~~April 2, 2003, two separate lawsuits were filed in District Court, Jefferson County, Colorado, against the Company, the Company’s directors and Riverwood relating to the merger between GPIC and Riverwood pursuant to the merger agreement. The complaints were filed by Robert F. Smith and Harold Lightweis, on behalf of themselves and all others similarly situated. Each of the two complaints alleges breach of fiduciary duties by the Company’s directors to the Company’s public shareholders in connection with the merger and that Riverwood aided and abetted the alleged breach. The complaint alleges that the Coors family stockholders negotiated the merger consideration in their own interest and not in the interest of the public stockholders. The complaint seeks an injunction against consummation of the merger, rescission of the merger if it is consummated, unspecified damages, costs and other relief permitted by law and equity. On July 3, 2003, a third lawsuit was filed in District Court of Jefferson County in Colorado, on behalf of a purported class of the Company’s stockholders against the Company, the Company’s directors and Riverwood, alleging that the Company’s directors breached their fiduciary duties to the stockholders of the Company in connection with the negotiation of the proposed merger and that the Company and Riverwood aided and abetted the alleged breach. The complaint alleges that the defendants negotiated the terms of the merger in their own interest and in the interest of certain other insiders (including the Coors family stockholders), to the detriment of the public stockholders. The complaint, which is encaptioned James A. Bederka, On behalf of Himself and All Other Similarly Situated v. Riverwood Holdings Inc., et al., seeks certain equitable relief, including an injunction against the consummation of the merger, rescission of the merger if it is consummated, rescission of the sale on August 15, 2000 of the convertible preferred stock to the Trust and injunction against the conversion of the convertible preferred stock and costs. We believe that these three lawsuits are without merit.

~~Our working capital before current maturities of long-term debt decreased $19.5 million during the nine months ended September 30, 2002. Our working capital is dependent~~ upon our ability to manage our inventories, collect our receivables on a timely basis, and maintain favorable terms with our vendors. Our working capital can be negatively impacted if our operations run less efficiently, particularly at times when29 business is moved among plants or new plants are acquired, or if inventories build up due to lower than planned sales during a period. The decrease in working capital during the nine months ended September 30, 2002 reflects better management of our ~~payables and cash, partially offset by increased receivables after having unusually low sales volume during December 2001.~~

WeItem 4. ~~expect~~Submission ~~our~~of ~~capital~~Matters ~~expenditures for 2002~~ to bea ~~approximately~~Vote ~~$30~~of ~~million,~~the ~~and expect to fund our capital requirements with net cash~~Shareholders ~~from operations.~~

~~Pension~~ At ~~Plan~~the ~~Assumptions~~May 13, 2003 annual meeting of the Company’s shareholders, the following matters were submitted for a vote of the shareholders. The report of the Inspectors of Election is below.

~~Based~~ There ~~upon~~were ~~preliminary~~57,946,100 ~~actuarial~~shares ~~valuations~~of ~~for~~common ~~the~~stock ~~year~~(including ~~ended~~voting ~~December~~rights ~~31,~~of preferred ~~2002,~~stock) weentitled ~~anticipate a significant increase~~ to ~~our~~vote ~~minimum pension liability~~ at ~~year~~the ~~end.~~meeting ~~We are in compliance with our required minimum pension contributions~~ and ~~expect~~a tototal ~~maintain~~of ~~this status; however~~50,709,614 shares we(87.51%) ~~did~~were ~~make~~represented ~~additional~~at ~~contributions to~~ the ~~pension plan in the third quarter of 2002 totaling $2~~meeting.~~3 million.~~

~~Inflation~~ (1) Election of two directors for a three-year term.

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


	FOR		WITHHOLD
John D. Beckett		47,656,537		3,053,077
William K. Coors		50,245,054		464,560

27The other directors whose term of office continued after the meeting are Jeffrey H. Coors, Harold R. Logan, Jr., James K. Peterson and John H. Stookey.

~~Item~~ (2) Approval ~~3. Quantitative~~of an amendment and ~~Qualitative~~restatement ~~Disclosures~~to ~~about~~the ~~Market~~Company’s ~~Risk~~Executive Incentive Plan to, among other things, add additional financial measures which may be used to set financial goals for plan participants.

Interest Rate Risk


FOR	AGAINST		ABSTAIN		BROKER NON-VOTE
46,507,801		700,568		973,815		2,527,430

As At ofthe ~~September 30~~August 7, ~~2002,~~2003 ~~our~~special ~~capital~~meeting ~~structure includes $173.7 million~~ of ~~debt~~the ~~that~~Company’s ~~bears interest based upon an underlying rate that fluctuates with short-term interest rates~~shareholders, ~~specifically LIBOR.~~the ~~Since~~following ~~January~~matter 1,was ~~2001,~~submitted ~~one-month~~for ~~LIBOR rates have fluctuated from~~ a ~~high~~vote of ~~5.6%~~the ~~in early 2001 to a low of 1~~shareholders.8% atThe ~~present.~~report ~~A 1% rise in interest rates would impact annual pre-tax results by approximately $1.7 million. As~~ of ~~November 1, 2001, our~~ capital structure included $514 million of debt that bore interest based upon an underlying rate that fluctuated with short-term interest rates, specifically LIBOR. In 2001, we had interest rate swap agreements that locked LIBOR at 5.94% on $100 million of our borrowings and 6.98% on $125 million of our borrowings. Until May 2002, we had interest contracts that capped the ~~LIBOR~~Inspectors ~~interest rate at 8.13% on $200 million~~ of ~~borrowings~~Election ~~and~~is 6below.~~75% on $150 million of borrowings. Due to the LIBOR~~ declines in 2001 and 2002, our interest rate protection contracts were negatively impacting our interest expense. One year ago, a 1% rise in interest rates would have impacted annual pre-tax results by approximately $2.7 million.

~~Item~~ There 4were 57,966,100 shares of common stock and 1,000,000 shares of 10% Series B Convertible Preferred Stock entitled to vote at the meeting. ~~Controls~~ A total of 46,064,883 shares of common stock (79.5%) and ~~Procedures~~1,000,000 shares of Preferred Stock (100%) were represented at the meeting.

We (1) Approval ~~maintain a system~~ of ~~controls and procedures designed to provide reasonable assurance as to~~ the ~~reliability~~Agreement ~~of the financial statements~~ and ~~other~~Plan ~~disclosures included in this report, as well as to safeguard assets from unauthorized use or disposition. We evaluated the effectiveness~~ of ~~the~~Merger ~~design~~by and ~~operation~~among ~~of our disclosure controls and procedures under supervision and with the participation of management, including our Chief~~Riverwood ~~Executive Officer and Chief Financial Officer~~Holding, ~~within 90 days prior to the filing date of this report~~Inc., ~~Based~~Riverwood ~~upon~~Acquisition ~~that~~Sub ~~evaluation~~LLC, ~~our Chief Executive Officer~~ and ~~Chief~~Graphic ~~Financial Officer concluded that our disclosure controls and procedures are~~Packaging ~~effective~~International ~~in timely alerting them to material information required to be included in our periodic Securities and Exchange Commission filings~~Corporation. ~~No significant changes were made to our internal controls or other factors that could significantly affect~~ ~~these controls subsequent to the date of their evaluation.~~

~~Factors That May Affect Future Results~~ 30

~~These~~Item 6. ~~statements~~Exhibits ~~should be read in conjunction with the financial statements~~ and ~~notes~~Reports ~~thereto~~on ~~included in the Company’s~~ Form 10 8-K/A for the year ended December 31, 2001. The accompanying financial statements have not been examined by independent accountants in accordance with generally accepted auditing standards, but in the opinion of management, such financial statements include all adjustments necessary to summarize fairly the Company’s financial position and results of operations. Except for certain reclassifications made to consistently report the information contained in the financial statements, all adjustments made to the interim financial statements presented are of a normal recurring nature. The results of operations for the third quarter ended September 30, 2002, may not be indicative of results that may be expected for the ~~year ending December 31, 2002.~~

29 (a) Exhibits:

PART II. OTHER INFORMATION


Exhibit
Number		Document Description

2.1		Amendment No. 1 to Agreement and Plan of Merger, dated as of July 11, 2003, among Riverwood Holding, Inc., Riverwood Acquisition Sub LLC and Graphic Packaging International Corporation. (Incorporated by reference to Amendment No. 3 of Form S-4 filed on July 17, 2003)
2.2		Amendment No. 1 to Voting Agreement, dated as of July 11, 2003, between Riverwood Holding, Inc. and persons listed on the signature pages thereof. (Incorporated by reference to Amendment No. 3 of Form S-4 filed on July 17, 2003)
10.1		Amendment No. 2 to Stockholders Agreement, dated as of June 12, 2003, by and among Riverwood Holding, Inc., the Family Stockholders named therein, Clayton Dubilier & Rice Fund V Limited Partnership and EXOR Group S.A. (Incorporated by reference to Amendment No. 1 of Form S-4 filed June 13, 2003)
31		Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32		Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~Item~~ (b) Reports ~~1. Legal~~on ~~Proceedings~~ Form 8-K

On ~~February 19~~April 16, ~~2002~~2003, ~~Chinyun~~the ~~Kim~~Company filed a ~~putative~~Current ~~class~~Report ~~action~~on ~~claim in District Court, Jefferson County, Colorado against the Company and certain of its shareholders and directors alleging breach of fiduciary duty in~~Form 8-K ~~connection~~disclosing ~~with~~two ~~the~~putative ~~issuance~~class onaction ~~August~~lawsuits ~~15,~~relating ~~2000, of the Company’s Series B Preferred Stock~~ to the ~~Grover~~proposed ~~C. Coors Trust. The Court dismissed Plaintiff’s claim against the Company for breach of fiduciary duty while allowing the Plaintiff to~~merger ~~proceed against the named directors and shareholders, including certain Coors Family Trusts. The Company believes that the~~ transaction ~~was~~between in the ~~best interests of the~~ Company and ~~its~~Riverwood ~~shareholders~~Holding, ~~and that it acted appropriately~~Inc. ~~It intends to~~ ~~continue to provide a vigorous defense to this action.~~

~~Item~~ On ~~6. Exhibits~~May 5, ~~and~~2003, ~~Reports~~the Company filed a Current Report on Form 8-K disclosing the first quarter 2003 earnings release on April 29, 2003, plus additional disclosures made during the subsequent conference call.

~~(a) Exhibits:~~ 31

Exhibit Number		Document Description
10.1		Graphic Packaging Executive Incentive Plan as amended and restated February 1, 2002

~~(b) Reports on Form 8-K~~ SIGNATURES

NoPursuant ~~reports~~to ~~were~~the ~~filed~~requirements onof ~~Form~~the ~~8-K~~Securities ~~during~~Exchange Act of 1934, the Registrant ~~third~~has ~~quarter~~duly ofcaused ~~2002.~~this report to be signed on its behalf by the undersigned thereunto duly authorized.


		GRAPHIC PACKAGING INTERNATIONAL CORPORATION

Date: August 7, 2003		By /s/ Luis E. Leon Luis E. Leon (Chief Financial Officer)

Date: August 7, 2003		By /s/ John S. Norman John S. Norman (Vice President and Controller)

~~SIGNATURES~~ 32

BROKER NON-VOTE

~~By: /s/ LUIS E. LEON Luis E. Leon (Chief Financial Officer)~~Exhibit Index

Date: October 31, 2002


Exhibit
Number		Document Description

2.1		Amendment No. 1 to Agreement and Plan of Merger, dated as of July 11, 2003, among Riverwood Holding, Inc., Riverwood Acquisition Sub LLC and Graphic Packaging International Corporation. (Incorporated by reference to Amendment No. 3 of Form S-4 filed on July 17, 2003)
2.2		Amendment No. 1 to Voting Agreement, dated as of July 11, 2003, between Riverwood Holding, Inc. and persons listed on the signature pages thereof. (Incorporated by reference to Amendment No. 3 of Form S-4 filed on July 17, 2003)
10.1		Amendment No. 2 to Stockholders Agreement, dated as of June 12, 2003, by and among Riverwood Holding, Inc., the Family Stockholders named therein, Clayton Dubilier & Rice Fund V Limited Partnership and EXOR Group S.A. (Incorporated by reference to Amendment No. 1 of Form S-4 filed June 13, 2003)
31		Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32		Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~By: /s/ JOHN S. NORMAN John S. Norman (Vice President and Controller)~~33

Date: October 31, 2002

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Graphic Packaging International Corporation (the Company) on Form 10-Q for the period ended September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the Report), we, Jeffrey H. Coors, Chief Executive Officer and President of the Company, and Luis E. Leon, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By: /s/ JEFFREY H. COORS Jeffrey H. Coors Chief Executive Officer and President

Date: October 31, 2002

By: /s/ LUIS E. LEON Luis E. Leon Chief Financial Officer

Date: October 31, 2002

CERTIFICATIONS

I, Jeffrey H. Coors, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Graphic Packaging International Corporation;

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

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

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

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

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

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

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

By: /s/ JEFFREY H. COORS Jeffrey H. Coors Chief Executive Officer and President

October 31, 2002

CERTIFICATIONS

I, Luis E. Leon, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Graphic Packaging International Corporation;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

By: /s/ LUIS E. LEON Luis E. Leon Chief Financial Officer

October 31, 2002

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