First Quarter Performance Mixed

CHICAGO, IL, USA—First quarter results are in, and statements received at PFFC indicate mixed performance for converting industry-related companies. Producer of specialty packaging Pactiv Corp. and converting-equipment manufacturer Valmet Converting reported "strong" Q1 results for 2003, while paper-related companies like Badger Paper and Rayonier reported losses, in part, due to higher energy costs. Below are excerpts from Q1 press releases:

Pactiv Reports Strong First Quarter Peformance; EPS from Continuing Operations Reaches $0.27 Driven by 11 Percent Sales Growth
LAKE FOREST, IL (April 23, 2003)—Pactiv Corp. today announced earnings per share from continuting operations for the quarter ended March 31 of $0.27 (USD), an increase of 4 percent from $0.26 per share last year. Net income from continuing operations of $44 million rose 5 percent from $42 million last year as strong volume increases, the impact of the company's productivity program, and cost-containment efforts more than offset a significant increase in raw material costs and lower pension income. "Core" earnings per share of $0.21 (which excludes the impact of non-cash pension income and the 2002 cumlative effect of change in accounting principles) rose 31 percent compared with $0.16 per share last year.

Sales of $717 million rose 11 percent from $647 million. Adjusting for the impact of foreign currency exchange, sales rose 8 percent on unit volume growth of 8 percent...."We are very pleased to report another quarter of strong operating performance, despite significantly higher raw materials costs, the impact of severe winter weather, and the effect of an uncertain economy on industry volume," says Richard L. Wambold, Pactiv's chairman and CEO.

Pactiv, a $2.9 billion company, is a leading provider of advanced packaging solutions for the consumer, foodservice/food packaging, and protective/flexible packaging markets....[The company] operates in 73 facilities in 14 countries. More information is available at pactiv.com

Strong First Quarter for Valmet Converting
BEDFORD, U.K.—Progress for the first quarter of 2003 has been very positive for Valmet Converting. The Group achieved a higher than expected level of sales volume, a record order backlog in most business units, and improving profitability in line with business targets.

"This is a very satisfactory outcome for the group's operations at this juncture, in view of the fragile nature of the world economy and the political insecurity in the Middle East," commented Mikko Helander, president of Valmet Converting.

"New products continue to be developed and launched. Our marketing effort has been particularly active during the first three months of 2003, with a strong commitment to exhibitions, new advertising and publicity campaigns," Helander continued.

"We expected that the 'due diligence' would be concluded with Bobst Group by the end of the first quarter of this year, but this is still on-going. However, the conclusion of negotiations is now expected before the end of the second quarter of 2003. For the time being, Valmet Converting continues to be part of Metso Paper," Helander confirmed. Visit Valmet at valmetconverting.com.

CFC International Inc. Reports 2003 First Quarter Results
Chicago Heights, IL (April, 24, 2003)—Worldwide holographic and specialty coated film manufacturer CFC Intl. Inc. today reported results for the first quarter of 2003. First quarter sales increased 5.8 percent to $15.7 million (USD) compared to $14.8 million in the first quarter of 2002. The increase of first quarter sales of 2003 was primarily due to European sales growth and the impact of the strength of the Euro being approximately 23 percent stronger than the US dollar as compared to the same period last year.

"We generated positive results in sales and earnings despite the continued challenges of an overall weak economy," said Roger Hruby, chairman and CEO. "Our earnings for the first quarter of 2003 are ahead of our internal forecast, which demonstrates our commitment to growing sales and reducing costs." Hruby further stated: "We are particularly pleased with the performance of our European operations. We continue to successfully integrate our global competencies throughout our organization and are reaping the benefits of continued growth and expanding opportunities on a worldwide basis."

Rayonier Reports First Quarter 2003 Earnings
JACKSONVILLE, FL (April 22, 2003)—Rayonier today reported first quarter net income of $6.1 million (USD), or 22 cents per share, compared to $12.9 million, or 46 cents per share, in fourth quarter 2002, and $9.4 million, or 33 cents per share, in first quarter 2002.

Lee Nutter, chairman, president, and CEO said: "Although first quarter results were negatively impacted by unusually high energy and hardwood costs in our Performance Fibers business, we are seeing a significant increase in demand for our cellulose specialty products and improving prices for absorbent materials as worldwide inventories tighten. While timber markets remain soft, our land sales program continues to generate strong results."

First quarter income was below fourth quarter primarily due to the impact of limited hardwood fiber availability that constrained production and sales of high-value cellulose specialties, higher energy costs, and lower absorbent materials prices. These variances were partially offset by lower interest expense and the absence of fourth quarter's $2.7 million increase in disposition reserves.…

Outlook
"Second quarter results are expected to be significantly better than first quarter, primarily due to the April 14 closing of the previously announced $40 million (80 cents per share) Matanzas Marsh land sales," Nutter said. "But we also expect stronger results from Performance Fibers as product mix, volume, and absorbent materials prices improve."

Rayonier has more than 2 million acres of timber and land in the US and New Zealand and the world's premier supplier of high-performance specialty cellulose fibers. Approximately 40 percent of Rayonier's sales are outside the US to customers in more than 50 countries.Visit Rayonier at rayonier.com.

Bosch Rexroth AG Announces 2002 Financial Results: Growth in China Ensures Stable Order Input
HOFFMAN ESTATES, IL—Bosch Rexroth AG was able to sustain order input and staff levels in the financial year 2002 with only a minimal drop in sales, reported chairman of the board of directors Winfried Witte. For 2003, Bosch Rexroth is anticipating slight growth in sales and results. The Board is not anticipating any noticeable revival in the economic situation with respect to capital goods until 2004.

"The number of orders received is a measure of our assertion in the market," emphasized Witte.

As [a] drive and control company, Bosch Rexroth supplies essential drive and control technology for the machine construction industry, mobile applications, and large-scale projects. In spite of the poor economic situation in 2002, the company was able to sustain the number of orders received at the same, very high level of 2001's record year.

"We achieved a growth rate of 65 percent in China," stressed Witte. "We were also successful in Korea and Australia with high two-figure growth rates." Rexroth thus profited from the activities started some decades ago in the Asia-Pacific economic region. Witte announced a further expansion of production in China to permit even greater growth and share of this market.Visit Bosch Rexroth at boschrexroth-us.com.

Badger Paper Expects a First Quarter Loss Due to Rising Expenses
PESHTIGO, WI (March 19, 2003)—Badger Paper Mills Inc., one of the nation's growing leaders in the manufacture of flexible packaging and specialty papers, reported today the company expects to post a loss in the first quarter of 2003 because of rapidly rising operating expenses driven by pulp and natural gas since the start of the year and continued price pressures in many of the company's market segments.

According to Robert Olah, president and CEO, maintaining top-line revenues has not been a problem for the specialty paper manufacturer. "We have been shifiting our product mix away from commodity papers to specialty products for the last two years. Because of that, we have been sheltered, to a certain extent, from the volatile pricing swings in the overall nationwide paper market."

But while Badger's first quarter revenue levels appear comparable to the year-ago period, the company's margins have been under considerable pressure recently.

"Like so many other segments of the American economy, our energy costs are soaring," Olah continued. "The energy costs for our manufacturing operations have almost doubled this winter. Additionally we have been adversely affected by significant increases in the cost of pulp, our main raw material needed to manufacture paper."

Olah added: "We are disappointed to have to issue this earnings warning, especially after reporting solid profitability for 2002. We will continue to monitor our situation carefully, however. We still have a goal to grow revenues by 11 percent in 2003 by developing new specialty products and new customer relationships."

Graphic Packaging Announces First Quarter Results
GOLDEN, CO (April 29, 2003)—Graphic Packaging International Corp. announced today its financial results for the first quarter of 2003.

The net loss attributable to common shareholders was US $2.5 million ($0.08 per diluted share). The net loss attributable to common shareholders was $0.03 million ($0.01 per diluted share) and $187.2 million ($5.79 per diluted share) for the previous quarter and the first quarter of 2002 respectively. These results include a $15.8 million loss on the early extinguishment of debt and a $180 million cumlative effect of a change in goodwill accounting during the first quarter of 2002, and $2.7 million of merger-and-acquisition transaction costs expensed during the first quarter of 2003 primarily associated with the previously announced agreement to merge with Riverwood Holding and other acquisition activities.

Net sales for the quarter (Q1 2003) were $260.9 million, compared to $260.2 million for hte previous quarter and $263.7 for the first quarter of 2002. Demand from major customers continued to be weak during the quarter, reflecting the general economic conditions in the US. Sales were softer in the first half of the quarter, and strengthened significantly as the quarter continued.

Commeting on the results, the company's chairman and CEO Jeffrey H. Coors stated, "Consumer demand for our customers' products was unusally soft. However, we witnessed improvement toward the end of the quarter and expect further improvements as the markets gain more confidence. In addition, the acquisition of J.D. Cahill Co. adds significant capabilities in the value-added laminated structures growth markets. The big news, however, is the previously announced plan to merge with Riverwood that will create a new leader in paperboard packaging with enhanced financial strength and growth opportunities." Visit Graphic Packaging at graphicpackaging.com.

PFFC.

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