SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number 1-14060
A. GRAPHIC PACKAGING SAVINGS AND INVESTMENT PLAN
B. GRAPHIC PACKAGING INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Colorado 84-1208699
(State or other jurisdiction (IRS Employer
of incorporation or Identification No.)
organization)
4455 Table Mountain Drive
Golden, Colorado 80403
(Address of principal (Zip Code)
executive offices)
Graphic Packaging
Savings and Investment Plan
Financial Statements
December 31, 2002 and 2001
Graphic Packaging Savings and Investment Plan
Index to Financial Statements and Supplemental Schedules
Page
Report of Independent Auditors 2
Financial Statements:
Statements of Net Assets Available For Benefits as of
December 31, 2002 and 2001 3
Statements of Changes in Net Assets Available For
Benefits for the years ended December 31, 2002
and 2001 4
Notes to Financial Statements 5-10
Supplemental Schedule:
Schedule I - Schedule of Assets (Held at End of Year)
as of December 31, 2002 11-12
Report of Independent Auditors
To the Participants and Administrator of the
Graphic Packaging Savings and Investment Plan:
In our opinion, the accompanying modified cash basis statements
of net assets available for benefits and the related modified
cash basis statements of changes in net assets available for
benefits present fairly, in all material respects, the net assets
available for benefits of Graphic Packaging Savings and
Investment Plan (the "Plan") as of December 31, 2002 and 2001,
and the changes in net assets available for benefits for the
years then ended, on the basis of accounting described in Note 1.
These financial statements are the responsibility of the Plan's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require
that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
As described in Note 1, these financial statements and
supplemental schedule were prepared on a modified cash basis of
accounting, which is a comprehensive basis of accounting other
than generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion
on the basic financial statements taken as a whole. The
supplemental schedule of Assets (Held at End of Year) is
presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is
supplementary information required by the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974. This
supplemental schedule is the responsibility of the Plan's
management. The supplemental schedule has been subjected to the
auditing procedures applied in the audits of the basic financial
statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a
whole.
PricewaterhouseCoopers LLP
Denver, Colorado
June 19, 2003
Graphic Packaging Savings and Investment Plan
Statements of Net Assets Available for Benefits
(Modified Cash Basis)
December 31,
----------------------------
2002 2001
Assets
Investments at fair value (Note 1):
Cash and cash equivalents $ 741,476 $ 379,084
Common stock and other securities 2,459,845 1,962,228
Unitized employer stock fund 33,631,527 35,594,621
Mutual funds 112,617,068 119,575,234
Participant loans 6,299,480 5,831,601
------------ ------------
Net assets available for
benefits $155,749,396 $163,342,768
============ ============
The accompanying notes are an integral part of these financial
statements.
Graphic Packaging Savings and Investment Plan
Statements of Changes in Net Assets Available for Benefits
(Modified Cash Basis)
Year Ended December 31,
----------------------------
2002 2001
Additions to net assets
Investment income (loss) (Note 1):
Interest and dividend income $ 2,083,986 $ 3,823,198
Net appreciation
(depreciation) in
fair value of
investments (9,283,515) 10,856,347
------------ ------------
Total investment
income (loss) (7,199,529) 14,679,545
Contributions:
Participants 10,016,316 10,891,355
Employer 4,096,245 4,341,573
Total contributions 14,112,561 15,232,928
------------ ------------
Total additions 6,913,032 29,912,473
------------ ------------
Deductions from net assets
Benefit payments 14,438,177 16,946,520
Management fees 57,042 49,305
Net transfers out 11,185 16,167
------------ ------------
Total deductions 14,506,404 17,011,992
------------ ------------
Net increase (decrease) (7,593,372) 12,900,481
Net assets available for benefits
Beginning of year 163,342,768 150,442,287
------------ ------------
End of year $155,749,396 $163,342,768
============ ============
The accompanying notes are an integral part of these financial
statements.
Graphic Packaging Savings and Investment Plan
Notes to Financial Statements
(Modified Cash Basis)
1.General Description of Plan and Trust and Summary of
Significant Accounting Policies
The Graphic Packaging Savings and Investment Plan (the Plan)
and the related Trust Agreement (the Trust) were established
effective December 28, 1992. The Plan's purpose is to
encourage employees of Graphic Packaging International
Corporation and subsidiaries (the Company or GPC) to
accumulate savings systematically to provide an additional
source of income upon retirement. Prior to December 28, 1992,
employees of Graphic Packaging Corporation, Golden Aluminum
Company, and certain developmental businesses of Golden
Technologies Company, Inc. (current and former subsidiaries of
GPC) were eligible to participate in the Coors Savings and
Investment Plan. On December 28, 1992, these participants'
accounts in the Coors Savings and Investment Plan were
transferred into the Graphic Packaging Savings and Investment
Plan concurrent with the spin-off of the Company from Adolph
Coors Company.
On March 25, 2003, the Company entered into a merger agreement
with Riverwood Holding, Inc. The merger has not been completed
as of June 19, 2003. The proposed merger's initial effect on
the Plan involves changing the form of employer-matching
contributions, as discussed below. If the merger is completed,
each share of GPC common stock held by the Plan in the unitized
employer stock fund will be converted into a share of Riverwood
Holding, Inc. common stock. Additional changes to the Plan as
a result of the proposed merger, if any, are not determinable
at this time.
Fidelity Management Trust Company serves as the Plan's Trustee.
Eligibility
All regular, full-time employees of the Company and certain
subsidiaries who are at least age 18 and expected to complete
1,000 hours of service or more per year, are eligible to
participate in the Plan. At December 31, 2002, employees of
the following groups were not eligible to participate in the
Plan:
o Graphic Packaging Corporation bargaining unit employees
covered by a labor agreement that does not include partici-
pation in this plan; and
o Graphic Packaging Corporation Canadian employees.
Contributions
Contributions are made to the Tax Effective Retirement Account
(TERA) of the Plan. Participants are allowed to make a basic
contribution of an amount no less than 1% of their eligible
compensation (including commissions and overtime, but
excluding bonuses). Additional contributions are to be in
whole, not fractional, percentage points. Effective January
1, 2002, the maximum contribution allowed for each participant
is the lower of 25% of eligible compensation or $11,000.
Any participant contributions deposited prior to December 1,
1986, as part of the Coors Savings and Investment Plan have
been taxed previously and are not taxable when paid to the
participant. Participant contributions deposited subsequent
to November 30, 1986, are taxable when paid to participants.
All eligible employees' basic contributions are matched at the
60% level. However, employer contributions are limited to a
maximum amount, as defined in the Plan.
Effective January 1, 1987, employer contributions to the Coors
Payroll Stock Ownership Plan (PAYSOP) were discontinued.
However, PAYSOP account values generated by prior employer
contributions remain in the Plan. Contributions were based on
total eligible employee compensation, as defined in the Plan,
not exceeding one-half of 1% thereof. (See Note 2).
From January 1, 2000 until March 24, 2003, all employer-matching
contributions have been made in shares of GPC common stock. All
employer-match shares were delivered to the GPC Stock Fund (the
unitized employer stock fund). Participants may transfer
interests in the GPC Stock Fund into other investment options at
any time. As a result of the proposed merger of the Company
with Riverwood Holding, Inc., effective March 24, 2003 all
employer-matching contributions have been made in cash.
Vesting
Participants are immediately vested in their entire account
balance, including their voluntary contributions, the
employer's contributions, and all investment earnings on those
funds.
Distributions
Participants may withdraw all or a portion of contributions
subject to certain conditions as specified in the Plan. A
participant or beneficiary entitled to receive benefits under
the Plan may generally elect the method of distribution.
Participant Loans
A participant may borrow up to 50% of the total value of his
or her Plan accounts, excluding the PAYSOP account. The
minimum loan amount is $1,000 and the maximum loan amount is
$50,000 minus the highest outstanding loan balance in the
preceding 12 months. These loans are available to active
employees who are participants. Only one loan may be
outstanding at any time. The loans are secured by the
participant's account balance. Loan terms are normally
available for 12 to 60 months, with a 120-month term available
for the purchase of a primary residence. Loans are normally
repaid by payroll deductions and these payments are credited
back to the participants' plan accounts and invested according
to the most current investment election. The interest rate is
set at 1% above the Wall Street Journal reported prime rate on
the first business day of each month and remains fixed
throughout the term of the loan. A loan origination fee is
charged to participants upon initiation of a loan. Loans are
subject to certain payment provisions upon termination of
employment, default, lay-off, unpaid leave of absence and
disability.
Plan Termination
The Company established the Plan with the intention that it
will continue indefinitely, but reserves the right to
terminate the Plan at anytime. If the Plan is terminated, all
accounts will be updated and the participants will be able to
choose to receive or transfer their funds. See above for
discussion of the proposed merger between the Company and
Riverwood Holding, Inc.
Plan Expenses
Expenses related to management of the assets are paid by the
Plan. The Company pays all expenses incurred related to
administration and record keeping of the Plan.
Basis of Presentation
The accounts of the Plan are maintained on the modified cash
basis of accounting as permitted by the Department of Labor
Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974 (ERISA). This
basis of accounting is not in accordance with generally
accepted accounting principles. Under the modified cash basis
of accounting, certain revenues and related assets are
recognized when received rather than when earned and certain
expenses are recognized when paid rather than when the
obligation is incurred. In effect, modified cash basis
accounting adjusts cash basis financial statements to reflect
investments at fair value.
The principal items which would be required to be reflected in
the financial statements by generally accepted accounting
principles (dollar amounts of which are not practicable to
determine) are as follows:
o Accrual of all contributions earned at each year end, but
not received until the following year;
o Accrual of dividends declared, but not paid; and
o Accrual of interest income from participant loans earned
at year-end, but not received until the following year.
Accounting Estimates and Assumptions
The preparation of the Plan's financial statements in
conformity with a modified cash basis of accounting requires
the Plan's administrator to make significant estimates and
assumptions that affect the reported amounts of net assets
available for benefits at the date of the financial
statements, and the changes in net assets during the reporting
period and, when applicable, disclosures of contingent assets
and liabilities at the date of the financial statements.
Actual results could differ from those estimates.
Risks and Uncertainties
The Plan provides for various investment options in any
combination of stocks, bonds, fixed income securities, mutual
funds, and other investment securities. Investment securities
are exposed to various risks, such as interest rate, market,
and credit risks. Due to the level of risk associated with
certain investment securities, it is at least reasonably
possible that changes in the values of investment securities
will occur in the near term and that such changes could
materially affect participants' account balances and the
amounts reported in the statement of net assets available for
benefits.
Participants' Accounts
Individual accounts are maintained for each Plan participant.
Each participant's account is directly credited with the
participant's contribution, the Company's matching
contribution, and any rollover contributions in the
participant's name. Net earnings (loss) from investments,
including appreciation (depreciation) in fair value, are
allocated to each participant's account based on the ratio
which the trust fund portion of that participant's account
balance bears to the total of the trust fund portion of all
participants' account balances.
Payment of Benefits
Benefits are recorded when paid. No amounts are owed at
December 31, 2002 to participants who have elected to withdraw
from the Plan, but have not been paid.
Valuation of Investments
Investments in GPC common stock and other actively traded
securities are stated at the quoted market price. Investments
in all other funds are stated at the funds' net asset value,
which is determined by the Plan's trustee based on market
values. Participant loans are stated at the outstanding
principal value, which approximates fair value.
The following investments (all of which are participant
directed) exceed 5% of net assets available for benefits:
December 31,
---------------------------
Identity Description 2002 2001
Fidelity Mid-Cap
Stock Fund Mutual Fund $10,887,593 $15,132,169
Fidelity Retiree
Money Market Mutual Fund 44,122,001 41,372,244
Fidelity Magellan
Fund Mutual Fund 18,846,342 24,674,582
GPC Stock Fund Unitized
Employer
Stock Fund 33,631,527 35,594,621
Fidelity Growth
and Income Fund Mutual Fund 7,843,247 8,790,548
Spartan U.S.
Equity Index
Fund Mutual Fund 5,335,732 6,117,361
The Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year)
appreciated (depreciated) in value as follows:
Year Ended December 31,
----------------------------
2002 2001
Mutual funds $(17,543,760) $(10,190,209)
Unitized employer stock
fund 9,041,208 20,714,056
Self-directed participant
accounts (780,963) 332,500
------------ ------------
$ (9,283,515) $ 10,856,347
============ ============
Participant Accounting Records
Fidelity Investments Institutional Operations Company
(Fidelity) is responsible for preparing, maintaining, and
allocating individual participants' accounting records.
Watson Wyatt & Company was utilized to process and transmit
payroll data to Fidelity through September 2001. Beginning in
October 2001, the Company processes and transmits payroll data
directly to Fidelity.
Fiduciary Responsibility, Investment of Funds, and Plan
Administration
The GPC Benefits Committee (the Committee), consisting of
employees appointed by the Board of Directors of GPC, acts as
fiduciary and administrator for the Plan. In accordance with
its powers as fiduciary, the Committee has entered into trust
and asset management agreements with Fidelity. Based upon
particular elections, funds are invested in the various
investment options. At December 31, 2002 there were 4,282
participants of which 3,943 had account balances.
2.Investments in Employer Stock
Payroll Stock Ownership Plan
During 1983, the Coors Savings and Investment Plan was amended
to establish and include a PAYSOP. Annual employer
contributions to the PAYSOP were made in the form of cash to
purchase Adolph Coors Company Class B non-voting common stock
for the Plan years commencing January 1, 1983 through January
1, 1986. An annual allocation was made to individual accounts
for eligible employees in proportion to each employee's base
pay received in the respective year (up to $100,000).
Employees own the stock, which is held in trust until the
employees are eligible to receive it, subject to specified
withdrawal rules. Dividends are credited to employee accounts.
Individual income taxes are deferred until withdrawal of the
stock and the employee has a choice of receiving either the
stock or an equivalent value in cash upon withdrawal.
The Plan administrator, in accordance with Internal Revenue
Service regulations, began liquidating Adolph Coors Company
shares in January 1993. The proceeds were then used to
purchase GPC shares so that the PAYSOP portion of the Plan was
invested only in GPC stock. During 1995, GPC received
authorization to liquidate the PAYSOP portion of this Plan if
a participant elects to do so.
Fidelity holds the PAYSOP assets in one of the Plan's
investment choices, the GPC Stock Fund. The GPC Stock Fund
allows participants to be invested in their company's stock
while allowing for daily trading similar to a mutual fund.
The fund is comprised of underlying GPC stock and a short-term
cash component. Participants may also elect to have payroll
deductions invested in the GPC Stock Fund. Participants may
elect to transfer their investments in the GPC Stock Fund to
any of the other investment choices at any time.
Information about the significant components of the changes in
net assets relating to the GPC Stock Fund is as follows:
Year Ended December 31,
---------------------------
2002 2001
Interest income $ 125,798 $ 172,280
Net appreciation 9,041,208 20,714,056
Contributions 6,009,914 6,138,417
Benefit payments (3,078,227) (1,329,389)
Participant loan
activity (262,874) (187,150)
Net transfers (13,798,913) 3,982,430
----------- -----------
Net increase (decrease) (1,963,094) 29,490,644
Net assets at beginning
of year 35,594,621 6,103,977
----------- -----------
Net assets at end of
year $33,631,527 $35,594,621
=========== ===========
3.Income Tax Status
The Internal Revenue Service (IRS) has determined and informed
the Company that the Plan satisfies applicable sections of the
Internal Revenue Code. Accordingly, no provision for federal
or state income taxes has been provided. The Company applied
for a new determination letter for 2001 and as of the date of
this report has not received a response from the IRS. However,
the Plan administrator and counsel believe the Plan is designed
and is currently being operated in compliance with the
applicable requirements of the Internal Revenue Code.
4.Realized Gains on Investment Transactions
The cost of investments sold or transferred is determined on a
participant level by the average cost method.
The Department of Labor Form 5500 requires gains and losses to
be determined based on revalued cost - that is, the current
value of the assets as of the beginning of the Plan year, as
carried forward from the end of the prior Plan year - or
historical cost if the investment was acquired since the
beginning of the Plan year. Realized and unrealized
investment gains and losses disclosed in the Statement of
Changes in Net Assets Available for Benefits have been
calculated based upon historical cost. The Form 5500 requires
that all income (including realized and unrealized gain and
losses, and dividend income) from registered investment
companies be combined in one line item. In both 2002 and
2001, the Form 5500 presentation differs from the presentation
using the modified cash basis. In 2002 and 2001, investment
losses from registered investment companies in the Form 5500
total ($16,711,542) and ($8,784,182), respectively. The 2002
Form 5500 net unrealized gain was $1,248,566 and the net
realized gain was $7,075,118. The 2001 Form 5500 net
unrealized gain was $20,328,049 and the net realized gain was
$811,783.
Graphic Packaging Savings and Investment Plan
Schedule of Assets (Held at End of Year)
December 31, 2002 Schedule I
(a) (b) (c) (d) (e)
Identity of Current
Issuer Description Cost Value
Self-
directed
Brokerage
Accounts(1) Common stocks and
limited partnerships $ 3,247,920 $ 2,138,805
Mutual funds 534,856 321,040
------------ ------------
3,782,776 2,459,845
Fidelity
Brokerage
Services,
Inc.(2) Cash and cash
equivalents 741,476 741,476
------------ ------------
Total
self-
directed
brokerage
accounts 4,524,252 3,201,321
------------ ------------
* Graphic Unitized employer
Packaging stock fund
International investing in
Corporation(3) shares of Graphic
Packaging
International
Corporation
common stock 25,746,316 33,631,527
Miller Anderson MAS Value Advisor
& Sherrerd Mutual Fund 4,509,124 4,001,299
Franklin
Templeton Templeton
Developing
Markets Trust
A Mutual Fund 482,698 442,423
Morgan Stanley
Investment
Management,
Inc. MSI Value Equity
Bond Fund 120,149 101,880
Pacific
Investment
Management
Company PIMCO Total Return
Fund 2,128,653 2,123,413
* Fidelity
Investments(2) Fidelity Magellan
Mutual Fund 25,651,146 18,846,342
* Fidelity
Investments(2) Fidelity Growth and
Income Mutual Fund 9,637,900 7,843,247
* Fidelity
Investments(2) Fidelity Diversified
International
Mutual Fund 2,693,535 2,610,627
* Fidelity
Investments(2) Fidelity Low Price
Stock Mutual Fund 5,271,161 4,940,684
* Fidelity
Investments(2) Fidelity Equity
Income Fund 326,200 273,688
* Fidelity
Investments(2) Fidelity Growth Fund 212,577 185,378
* Fidelity
Investments(2) Fidelity Mid-Cap Stock
Fund 12,394,925 10,887,593
* Fidelity
Investments(2) Fidelity Freedom
Income Fund 333,959 326,031
* Fidelity
Investments(2) Fidelity Freedom Fund
2000 1,475,060 1,340,816
* Fidelity
Investments(2) Fidelity Freedom Fund
2010 6,579,644 5,346,241
* Fidelity
Investments(2) Fidelity Freedom Fund
2020 2,795,159 2,178,224
* Fidelity
Investments(2) Fidelity Freedom Fund
2030 2,083,459 1,602,739
* Fidelity
Investments(2) Fidelity Freedom Fund
2040 124,320 108,710
* Fidelity
Investments(2) Fidelity Retiree Money
Market 44,122,001 4,122,001
* Fidelity
Investments(2) Spartan US Equity
Index Mutual Fund 6,715,028 5,335,732
------------ ------------
Total mutual fund
investments 127,656,698 112,617,068
------------ ------------
Participant Interest rates ranging
loans from 5.25% to 10.5%,
repayable over a
term up to five
years, except for
loans used to
purchase a principal
residence, which are
repayable over
a term up to ten
years. 6,299,480 6,299,480
------------ ------------
Total investments held $164,226,746 $155,749,396
============ ============
* Signifies a party-in-interest.
(1) Numerous public and nongovernmental entities, as managed and
directed by Plan participants through brokerage accounts with
Fidelity Brokerage Services, Inc.
(2) Fidelity Investments and Fidelity Brokerage Services, Inc. are
parties-in-interest due to their affiliate relationships with
Fidelity Management Trust Company, which serves as the trustee
of the Plan.
(3) Graphic Packaging International Corporation is a party-in-
interest as the sponsor of the Plan. See Note 2 to the
financial statements.
Exhibits
--------
Exhibit
Number Document Description
23 Consent of Independent Auditors
99.1 Certifications Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Trustee has duly caused this annual report to be
signed by the undersigned thereunto duly authorized.
Graphic Packaging Savings and
Investment Plan
Date: June 27, 2003 By: /s/ John S. Norman
-------------------------------
John S. Norman, Vice President
and Controller