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News and Information Article
YORK, Pa., Aug. 11 // -- Graham Packaging Holdings Company,
parent company of Graham Packaging Company, L.P., reported an $8.6 million
increase in net sales and a $2.8 million gain in operating income for the
second quarter of 2006, compared to the second quarter of 2005.
Net sales for the three months ended June 30, 2006, totaled $653.3
million, an increase of $8.6 million, or 1.3 percent, from net sales of
$644.7 million for the three months ended June 30, 2005.
Net sales for the six-month period ended June 30, 2006 totaled $1,298.3
million, an increase of $33.0 million, or 2.6 percent, from $1,265.3
million in net sales in the same period of 2005.
Chairman and CEO Philip R. Yates attributed the second-quarter gain in
net sales primarily to increases in resin pricing and an overall 4.6
percent increase in container units sold versus the same period last year.
Yates said Food & Beverage was the companys strongest product category
in the second quarter this year, producing an 8.1 percent gain in net sales
over the second quarter of last year. Household, Automotive Lubricants, and
Personal Care/Specialty trailed their year-ago quarterly sales
performances.
On a geographic basis, net sales in the second quarter were up in North
America, but down in Europe and South America, compared to last year. Yates
attributed the decrease to a shift to smaller containers in the latter
markets, offset slightly by favorable exchange rates.
"Despite the increase in both unit and dollar sales on a year-over-year
basis, we continued to see softening volume and the impact of the sales
runoff from the OIPC acquisition," said Yates.
Chief Financial Officer John E. Hamilton said operating income for the
second quarter of 2006 totaled $49.1 million, an increase of $2.8 million,
or 6.0 percent, compared to $46.3 million in the second quarter of 2005.
Operating income for the six months ended June 30, 2006 was $86.5
million, a decline of $2.3 million, or 2.6 percent, when compared to the
six-month period in 2005.
Hamilton said the company experienced a net loss of $15.3 million in
the second quarter, compared to net income of $4.1 million in the same
quarter last year. For the six-month period ended June 30, 2006 the company
experienced a net loss of $25.3 million, compared to a net loss of $7.4
million in the same period the previous year.
The companys net interest expense totaled $54.0 million during the
second quarter of 2006, an increase of $10.5 million over the second
quarter of 2005.
Hamilton said covenant compliance EBITDA (earnings before interest,
taxes, depreciation, and amortization)* was $439.4 million for the four
quarters ended June 30, 2006, compared to $463.3 million for the four
quarters ended June 30, 2005.
Reconciliation of net loss to EBITDA
Four quarters ended June 30, 2006
(In millions)
Net loss $(70.5)
Interest income (0.7)
Interest expense 203.2
Income tax provision 12.9
Depreciation and amortization 195.4
EBITDA $340.3
Reconciliation of EBITDA to covenant compliance EBITDA
Four quarters ended June 30, 2006
(In millions)
EBITDA $340.3
Impairment charges 6.8
Other non-cash charges (a) 14.5
Fees related to monitoring agreements (b) 5.0
Non-recurring items (c) 54.8
Pro forma adjustments (d) 18.0
Covenant compliance EBITDA $439.4
(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 in the table below:
Four quarters ended June 30, 2006
(In millions)
Reorganization and other costs (i) $36.7
Project startup costs (ii) 18.1
$54.8
(i) Represents non-recurring costs related to the integration of
O-I Plastic, aborted acquisitions, expenses related to the
hurricanes in the United States in the second half of 2005,
global reorganization costs and other costs.
(ii) Represents non-recurring costs associated with project
startups.
(d) The company is required to adjust EBITDA for synergy cost savings,
as defined in the Credit Agreement.
Graham Packaging, currently operating with 85 plants worldwide, is a
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 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; and the number-one supplier in the U.S., Canada, and Brazil of
one-quart/one-liter plastic HDPE (high-density polyethylene) containers for
motor oil.
The Blackstone Group of New York is the majority owner of Graham
Packaging.
*Covenant compliance EBITDA is defined as EBITDA (i.e., 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 Agreements and the Notes.
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
quarterly report on Form 10-Q is appropriate to provide additional
information to investors about the calculation of certain financial
covenants in the Credit Agreements 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.
This news release contains forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended.
The companys future operating results will be affected by various
uncertainties and risk factors, many of which are beyond the companys
control. For a description of these uncertainties and risk factors, and for
a more complete description of the companys results of operations, see the
companys Annual Report on Form 10-K for the year ended December 31, 2005,
filed with the Securities and Exchange Commission.
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