Graham Packaging Announces First Quarter 2008 Results

YORK, Pa., May. 12 /PRNewswire/ --

YORK, Pa., May 12 /PRNewswire/ -- Graham Packaging Holdings Company, parent company of Graham Packaging Company, L.P., today reported a 7.7 percent increase in net sales in the first quarter of 2008, as compared with the same quarter last year. The company reported an increase of 38.2 percent in operating income in the first quarter.

Net sales for the quarter ended March 31, 2008, were $669.4 million, an increase of $47.6 million over net sales of $621.8 million in the first quarter of 2007.

Operating income was $60 million, an increase of $16.6 million, over operating income of $43.4 million in the first quarter of 2007.

Sales were up 6.3 percent in North America, 15.4 percent in Europe, and 21.8 percent in South America. Sales in the food and beverage category were up 11.0 percent over the first quarter of last year. Sales in the automotive lubricants category also went up, by 27.9 percent, while sales in both household and personal care/specialty categories declined compared to the same period last year.

The overall increase in net sales was attributed primarily to an increase in resin costs passed through to customers and the positive impact of changes in exchange rates, offset slightly by lower volume and competition-induced price reductions. The number of container units the company sold in the first quarter decreased by 1 percent.

Overall, the company recorded net income of $3.8 million in the quarter ended March 31, 2008, compared to a net loss of $15.6 million in the same period last year.

Covenant compliance EBITDA* (earnings before interest, taxes, depreciation and amortization) totaled $449.7 million for the four quarters ended March 31, 2008, compared to $418.6 million for the four quarters ended March 31, 2007.

* Covenant compliance EBITDA is defined as EBITDA (earnings before interest, taxes, depreciation and amortization) further adjusted to exclude non-recurring items, non-cash items and other adjustments required in calculating covenant compliance under the Credit Agreement and the Notes, as shown in the table below. Covenant compliance EBITDA is not intended to represent cash flow from operations as defined by generally accepted accounting principles and should not be used as an alternative to net income as an indicator of operating performance or to cash flow as a measure of liquidity. The company believes that the inclusion of covenant compliance EBITDA is appropriate to provide additional information to investors about the calculation of certain financial covenants in the Credit Agreement and the Notes. Because not all companies use identical calculations, these presentations of covenant compliance EBITDA may not be comparable to other similarly titled measures of other companies. Reconciliation of net loss to EBITDA Four quarters ended March 31, 2008 (In millions) Net loss $(186.7) Interest income (0.8) Interest expense 205.5 Income tax provision 22.9 Depreciation and amortization 197.1 EBITDA $238.0 Reconciliation of EBITDA to covenant compliance EBITDA Four quarters ended March 31, 2008 (In millions) EBITDA $238.0 Asset impairment charges 157.9 Other non-cash charges (a) 19.4 Fees related to monitoring agreements (b) 5.0 Non-recurring items (c) 29.4 Covenant compliance EBITDA $449.7 (a) Represents the net loss on disposal of fixed assets and stock-based compensation expense. (b) Represents annual fees paid to Blackstone Management Partners III L.L.C. and a limited partner of Holdings under monitoring agreements. ( c ) The Company is required to adjust EBITDA, as defined above, for the following non-recurring items as defined in the Credit Agreement: Four quarters ended March 31, 2008 (In millions) Reorganization and other costs (i) $20.2 Project startup costs (ii) 9.2 $29.4 (i) Represents non-recurring costs related to consulting expenses associated with restructuring of the business, employee severance, an aborted acquisition, and other costs defined in the Credit Agreement. (ii) Represents non-recurring costs associated with project startups.

Graham Packaging, based in York, is a worldwide leader in the design, manufacture, and sale of technology-based, customized blow-molded plastic containers for the branded food and beverage, household, personal care/specialty, and automotive lubricants product categories. The company has an extensive blue-chip customer base that includes many of the world's largest branded consumer products companies. It produces more than 20 billion container units annually at 83 plants in North America, Europe, and South America, and had sales of $2.49 billion in 2007.

The company is a leading U.S. supplier of plastic containers for hot-fill juice and juice drinks, sports drinks, drinkable yogurt and smoothies, nutritional supplements, wide-mouth food, dressings, condiments, and beers; the leading global supplier of plastic containers for yogurt drinks; a leading supplier of plastic containers for liquid fabric care products, dish care products, and hard-surface cleaners; and the leading supplier in the U.S., Canada, and Brazil of one-quart/one-liter plastic motor oil containers.

The Blackstone Group of New York is the majority owner of Graham Packaging.

This news release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. The Company's future operating results will be affected by various uncertainties and risk factors, many of which are beyond the Company's control. For a description of these uncertainties and risk factors, and for a more complete description of the Company's results of operations, see the Company's Annual Report on Form 10-K for the year ended December 31, 2007, filed with the Securities and Exchange Commission.