Shippers Warehouse, Inc. is a provider of supply chain services (3rd party logistics or 3PL). The Company operates over 4.5 million square feet in 8 facilities in the Dallas/Ft. Worth area and 500,000 square feet in Atlanta, Georgia. The Georgia facility packaging operations ships out over 3 billion bags per year. Shippers Warehouse is one of the largest co-packers in the Southeast. Shippers operate 9 packaging lines with a ready room that is a showcase for reducing any type of foreign matter. The facility handles a variety of food products, is a leader in recycling, & distribution of products. Shippers Warehouse, Inc. also has the distinction of having all of its locations ISO 9001:2008 certified. (ISO 9001:2008 certified by Management Certification of North America, an ANAB-accredited certification body.)
Regards,
Bill Stankiewicz Vice President & General Manager Shippers Warehouse Office: 678.364.3475 [email protected] www.shipperswarehouse.com
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This information is confidential and proprietary to Graphic Packaging International, Inc. Any reproduction or distribution to any third party is prohibited.
Any statements of the Company’s expectations in this presentation constitute "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995. Such statements, including but not limited to, market trends and debt reduction, are based on
tl il bl i f ti d bj t t i i k d t i ti th t ld t l lt t diff t i ll fcurrently available information and are subject to various risks and uncertainties that could cause actual results to differ materially from
the Company's present expectations. These risks and uncertainties include, but are not limited to, the Company’s substantial amount
of debt, inflation of and volatility in raw material and energy costs, volatility in the credit and securities markets, cutbacks in consumer
spending that could affect demand for the Company’s products or actions taken by our customers in response to the difficult economic
environment, continuing pressure for lower cost products, the Company’s ability to implement its business strategies, including
productivity initiatives and cost reduction plans, currency movements and other risks of conducting business internationally, and the
impact of regulatory and litigation matters, including the continued availability of the Company’s net operating loss offset to taxable
income, and those that impact the Company’s ability to protect and use its intellectual property. Undue reliance should not be placed
on such forward-looking statements, as such statements speak only as of the date on which they are made and the Company
undertakes no obligation to update such statements. Additional information regarding these and other risks is contained in the
New Product Technology Focused on New Product Technology Focused on These Consumer These Consumer TrendsTrends
Consumer Convenience: Active consumer, grab and goMicrowave +10%
• Fills fast convenient meal option needs of consumers• Fills fast convenient meal option needs of consumers• Major solutions launched at Nestle, Heinz and Kraft
Multipack experience double digit growth• US energy drink multipack share has reached 70%• Successful international launches in Poland, Mexico, China and Brazil
Value and Cost Reduction: Cost reduction; substitution
Z fl te replacing corr gated and plastics + 20% • Z-flute replacing corrugated and plastics + 20% • Significant growth in Club Store channel
B d B ildi Diff ti ti i d d Brand Building: Differentiating in a crowded space
The tables below set forth the calculation of the Company's earnings before interest expense, income tax expense, equity in the net earnings of the Company's affiliates, depreciation and amortization ("EBITDA") and Adjusted EBITDA. Adjusted EBITDA excludes charges associated with the Company's combination with Altivity Packaging, LLC and other Restructuring and Other Special Charges. The Company's management believes that the presentation of EBITDA and Adjusted EBITDA provides useful information to investors becauseCompany s management believes that the presentation of EBITDA and Adjusted EBITDA provides useful information to investors because these measures are regularly used by management in assessing the Company's performance. EBITDA and Adjusted EBITDA are financial measures not calculated in accordance with generally accepted accounting principles in the United States ("GAAP"), and are not measures of net income, operating income, operating performance or liquidity presented in accordance with GAAP.
EBITDA and Adjusted EBITDA should be considered in addition to results prepared in accordance with GAAP, but should not be considered substitutes for or superior to GAAP results. In addition, our EBITDA, and Adjusted EBITDA may not be comparable to Adj d EBITDA i il l i l d ili d b h i i h h i l l h
In millions 2010 2009 2010 2009
Nine Months EndedSeptember 30,
Twelve Months EndedSeptember 30,
Adjusted EBITDA or similarly titled measures utilized by other companies since such other companies may not calculate such measures in the same manner as we do.
In millions 2010 2009 2010 2009
Net Sales 3,083.4$ 3,117.2$ 4,062.0$ 4,164.9$
Net (Loss) Income (8.9)$ 24.6$ 22.9$ (33.1)$ Add (Subtract):
Income Tax Expense 29.8 29.7 24.2 39.1 Equity in Net Earnings of Affiliates (1 4) (0 8) (1 9) (0 7)Equity in Net Earnings of Affiliates (1.4) (0.8) (1.9) (0.7) Interest Expense, Net 134.0 158.0 172.4 216.2 Depreciation and Amortization 225.2 244.0 308.0 319.7
EBITDA 378.7 455.5 525.6 541.2 Charges Associated with Combination with Altivity 55.1 61.6 65.2 64.9 Asset Impairment and Shutdown Charges - 2.3 10.7 17.8 Loss on Modification or Extinguishment of Debt 7 4 7 1 7 4 7 1
Loss on Modification or Extinguishment of Debt 7.4 7.1 7.4 7.1 Alternative Fuel Tax Credits Net of Expenses - (93.8) (44.0) (93.8) Adjusted EBITDA 441.2$ 432.7$ 564.9$ 537.2$
ReconciliationReconciliation
Twelve Months EndedIn millions September 30, 2010 2010 2009 2009 2008 2007Net Sales 4,062.0$ 3,083.4$ 3,117.2$ 4,095.8$ 4,079.4$ 2,421.2$ Altivity Net Sales - - - - 335.6 1,902.1 Consolidated Pro Forma Net Sales 4,062.0$ 3,083.4$ 3,117.2$ 4,095.8$ 4,415.0$ 4,323.3$
Year EndedDecember 31,
Nine Months EndedSeptember 30,
Pro Forma Net Income (Loss) 22.9$ (8.9)$ 24.6$ 56.4$ (124.2)$ (89.6) Add (Subtract):
Income Tax Expense 24.2 29.8 29.7 24.1 35.1 26.9 Equity in Net Earnings of Affiliates (1.9) (1.4) (0.8) (1.3) (1.1) (0.9) Interest Expense, Net 172.4 134.0 158.0 196.4 246.9 244.9 Depreciation and Amortization 308.0 225.2 244.0 326.8 287.7 295.6
P F EBITDA 2 6 378 7 4 602 4 444 4 476 9Pro Forma EBITDA 525.6 378.7 455.5 602.4 444.4 476.9 Charges Associated with Combination with Altivity 65.2 55.1 61.6 71.7 17.7 - Asset Impairment and Shutdown Charges 10.7 - 2.3 13.0 15.5 18.6 Inventory Step Up Related to Altivity - - - - 24.4 - Loss on Modification or Extinguishment of Debt 7.4 7.4 7.1 7.1 - 9.5 Alternative Fuel Tax Credits Net of Expenses (44.0) - (93.8) (137.8) - - Consolidated Pro Forma Adjusted EBITDA 564.9$ 441.2$ 432.7$ 556.4$ 502.0$ 505.0
Pro Forma Net Sales by Segments:Paperboard Packaging 3,393.3$ 2,575.7$ 2,605.9$ 3,423.5$ 3,565.7$ Multi-wall Bag and Specialty Packaging 668.7 507.7 511.3 672.3 849.3 Total Pro Forma Net Sales 4,062.0$ 3,083.4$ 3,117.2$ 4,095.8$ 4,415.0$
Pro Forma Adjusted EBITDA by Segments:Pro Forma Adjusted EBITDA by Segments:Paperboard Packaging 541.0$ 430.8$ 432.3$ 542.5$ 484.0$ Multi-wall Bag and Specialty Packaging 52.6 36.9 39.2 54.9 76.1 Corporate (28.7) (26.5) (38.8) (41.0) (58.1) Total Pro Forma Adjusted EBITDA 564.9$ 441.2$ 432.7$ 556.4$ 502.0$
Pro Forma Adjusted EBITDA Margin by Segment:Paperboard Packaging 15 9% 16 7% 16 6% 15 8% 13 6%
Paperboard Packaging 15.9% 16.7% 16.6% 15.8% 13.6%Multi-wall Bag and Specialty Packaging 7.9% 7.3% 7.7% 8.2% 9.0%Total Pro Forma Adjusted EBITDA Margin 13.9% 14.3% 13.9% 13.6% 11.4%
ReconciliationReconciliation
The table below sets forth the calculation of the Company's Total Net Debt and Net Leverage Ratio. The Company's management believes that the presentation of Total Net Debt and Net Debt Leverage provides useful information to investors because these measures are regularlythat the presentation of Total Net Debt and Net Debt Leverage provides useful information to investors because these measures are regularly used by management in assessing the Company's performance. Total Net Debt is a financial measure not calculated in accordance with generally accepted accounting principles in the United States ("GAAP"). Total Net Debt and Net Leverage Ratio should be considered in addition to results prepared in accordance with GAAP, but should not be considered superior to GAAP results. In addition, our Total Net Debt and Net Leverage Ratio may not be comparable to similarly titled measures utilized by other companies since other companies may not calculate such a measure in the same manner as we do.
September 30, December 31, December 31, March 31,Calculation of Net Debt: 2010 2009 2008 2008Short-Term Debt and Current Portion of Long-Term Debt 28.8$ 17.6$ 18.6$ 20.3$ Long-Term Debt 2 696 9 2 782 6 3 165 2 3 134 4Long-Term Debt 2,696.9 2,782.6 3,165.2 3,134.4 Less: Cash and Cash Equivalents (166.3) (149.8) (170.1) (21.9) Total Net Debt 2,559.4$ 2,650.4$ 3,013.7$ 3,132.8$