Graham Packaging Announces 2007 Results

YORK, Pa., March 31 /PRNewswire/ -- Graham Packaging Holdings Company,
parent company of Graham Packaging Company, L.P., today announced results for
the year ended December 31, 2007.
The company reported net sales of $2,493.5 million for 2007, compared to
$2,520.9 million for 2006, a decrease of $27.4 million, or 1.1 percent on a
0.4 percent increase in units sold. The results were driven primarily by
increased sales of lower-priced products and price reductions in response to
competitive pressures, offset by an increase in resin costs which was passed
along to customers and to the positive impact of changes in exchange rates.
Sales were down $80.4 million, or 3.6 percent, in North America, primarily
due to higher sales of lower-priced products, price reductions due to
competitive pressures, and fewer units sold. Sales were up $42 million, or
17.8 percent, in Europe, due to an increase in units sold and currency
conversion. Sales were up $11 million, or 17.1 percent, in South America, due
to increased volume and currency conversion.
Operating income for 2007 was $25.4 million, compared to $116.4 million in
2006, a decrease of 78.2 percent. Excluding impairment charges of $157.9
million for 2007 and $25.9 million for 2006, operating income would have
increased $41.0 million year-over-year.
During the fourth quarter of 2007, the company recorded non-cash
impairment charges on fixed and intangible assets to reflect their net
realizable value. These impairment charges were necessitated by the steady
conversion to concentrate in the liquid laundry detergent market, which has
resulted in the use of small and fewer bottles; an ongoing reduction in one-
quart motor oil containers as customers convert to multi-quart containers; and
the obsolescence of older machinery used in the food and beverage sector.
As a result of all of the foregoing factors, the company experienced a net
loss of $206.1 million for the year ended December 31, 2007, compared to a net
loss of $120.4 million for the year ended December 31, 2006, a decline of 71.2
percent.
Covenant compliance EBITDA* (earnings before interest, taxes, depreciation
and amortization) totaled $440.8 million in 2007, compared to $418.2 million
in 2006.
"We succeeded in growing our 2007 EBITDA by more than 5 percent by
focusing on cost saving, productivity gains, quality improvement initiatives,
and strategic pricing programs that offset the flat sales in our current
economic environment," said Warren Knowlton, CEO of Graham Packaging. "We will
continue to focus on these same priorities in 2008."
*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 in this annual report on Form 10-K 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

Year Ended
December 31, 2007
(In millions)
Net loss $(206.1)
Interest income (0.9)
Interest expense 210.6
Income tax provision 19.8
Depreciation and amortization 203.0
EBITDA 226.4

Reconciliation of EBITDA to Covenant Compliance EBITDA

Year ended
December 31, 2007
(In millions)
EBITDA $ 226.4
Asset impairment charges 157.9
Other non-cash charges (a) 19.5
Fees related to monitoring agreements (b) 5.0
Non-recurring items (c) 32.0
Covenant compliance EBITDA 440.8

(a) Represents the net loss on disposal of fixed assets.
(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:

Year ended
December 31, 2007
(In millions)
Reorganization and other costs (i) $ 22.3
Project startup costs (ii) 9.7
32.0

(i) Represents non-recurring costs related to consulting expenses
associated with restructuring of the business, employee severance,
the integration of O-I Plastic, aborted acquisitions, 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.
SOURCE Graham Packaging Holdings Company

Donald C. Sarvey of Editorial Enterprises, Inc., +1-717-236-7716,
editorialenterprises@earthlink.net, for Graham Packaging Holdings Company