Graphic Packaging Holding Company, a leading provider of packaging solutions to food, beverage and other consumer products companies, today reported Net Income for second quarter 2012 of $42.4 million, or $0.11 per share, based upon 397.8 million weighted average diluted shares. This compares to second quarter 2011 Net Income of $32.1 million, or $0.08 per share, based upon 384.5 million weighted average diluted shares.

When adjusted for $3.2 million of special charges related primarily to Graphic Flexible Packaging integration costs, Adjusted Net Income for the second quarter of 2012 was $45.6 million, or $0.11 per diluted share. This compares to second quarter 2011 Adjusted Net Income of $34.6 million, or $0.09 per diluted share. When comparing to the prior year period, second quarter 2012 Net Income was impacted by $21.2 million, or $0.05 per share, from higher Income Tax Expense. Due to a fourth quarter 2011 tax valuation allowance release, the Company now utilizes a more normalized tax rate. If the Company had used a more normalized tax rate of 38.5% in the second quarter of 2011, Adjusted Net Income would have been $26.1 million or $0.07 per diluted share in the second quarter of 2011.

“I’m very pleased with our second quarter results, particularly the strong expansion in our margins,” said CEO David Scheible. “Our investments to expand our Perry, GA beverage plant, strong mill performance and optimization of our converting network are all contributing to the margin improvement. While a pickup in market demand would be nice, this is not factored into our near-term outlook and we will continue driving the business through product innovation and operating improvements.”

Net Sales

Net Sales increased 2.9% to $1,111.9 million during second quarter 2012, compared to second quarter 2011 Net Sales of $1,080.7 million. The $31.2 million increase resulted from $25.2 million of favorable volume/mix and $12.0 million of higher pricing, partially offset by $6.0 million of unfavorable exchange rates.

On a segment basis, Paperboard Packaging sales, which comprised 83.5% of total second quarter Net Sales, increased 0.2% compared to the second quarter of 2011. Net sales in the Flexible Packaging segment increased 19.0% compared to the second quarter of 2011. The increase was primarily the result of the addition of Delta Natural Kraft, LLC and Mid-America Packaging, LLC on December 8, 2011 along with inflationary price recovery.

Attached is supplemental data showing Net Tons Sold, Net Sales and Income (Loss) from Operations by business segment for the first and second quarters of 2012 and each quarter of 2011.

EBITDA

EBITDA for second quarter 2012 was $171.2 million. Excluding $5.2 million of special charges primarily related to Graphic Flexible Packaging integration costs, Adjusted EBITDA was $176.4 million. This compares to second quarter 2011 EBITDA of $147.6 million and Adjusted EBITDA of $150.1 million.

When comparing against the prior year quarter, Adjusted EBITDA in the second quarter of 2012 was positively impacted by $29.1 million of improved operating performance and cost reduction initiatives, $12.0 million of higher pricing and $5.1 million of favorable volume/mix. These benefits were partially offset by $18.1 million of cost inflation and $1.8 million of unfavorable exchange rates/other.

Other Results

Taking cash and cash equivalents into account, Total Net Debt at the end of the second quarter 2012 was $2,042.7 million. This represents a reduction of $203.9 million in Total Net Debt since June 30, 2011. At the end of the second quarter 2012, the Company had available domestic liquidity of $588.3 million, including the undrawn availability under its $1 billion revolving credit facility.

The Company generated $110.0 million of Net Cash Provided by Operating Activities in the second quarter of 2012, compared to $111.5 million in the second quarter of 2011. Net Interest Expense was $27.4 million in second quarter 2012, compared to $36.6 million in second quarter 2011. The decrease was due to both lower debt balances and lower effective interest rates. Capital expenditures for second quarter 2012 were $39.2 million compared to $34.0 million in the second quarter of 2011.

Second quarter 2012 Income Tax Expense was $28.6 million, compared to $7.4 million in the second quarter of 2011. The increase was primarily due to an increase in the Company’s effective tax rate to a more normalized level as a result of the fourth quarter 2011 release of a tax valuation allowance. The valuation allowance release was based on the Company’s assessment that it is more likely than not that the Company’s U.S. federal and a substantial portion of its state deferred tax assets will be realized. The Company has approximately $1.1 billion of NOLs for U.S. federal income tax purposes, which may be used to offset future taxable income.

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