Graphic Packaging Corporation (NYSE: GPK) today reported a net loss for second quarter 2007 of $21.3 million or $(0.11) per diluted share, based upon 201.8 million shares. This compares to a second quarter 2006 net loss of $22.8 million, or $(0.11) per diluted share, based upon 201.1 million shares.

"For the third consecutive quarter, income from operations exceeded the prior year quarter," said David W. Scheible, President and Chief Executive Officer. "Despite approximately $7 million of higher priced inputs, we reported an approximate $13 million improvement in operating income compared to prior year second quarter. The improvement was driven by approximately $13 million of cost reductions from our continuous improvement programs and approximately $9 million of incremental price increases."

"On July 10, 2007, we announced the signing of a definitive agreement to combine Graphic Packaging and Altivity Packaging. We continue to make progress towards that goal and are on track to complete the transaction in the fourth quarter of 2007."

Net Sales

Net sales increased 3.5% to $647.3 million during second quarter 2007, compared to second quarter 2006 net sales of $625.5 million. When comparing against the prior year quarter, net sales in the second quarter of 2007 were positively impacted by:

- Approximately $9 million due to favorable pricing;
- Approximately $9 million resulting from increased volumes and favorable
     mix; and
- Approximately $4 million of favorable foreign currency exchange rates
     in Europe.

Attached is supplemental data showing net sales and net tons sold for each quarter of 2007 and 2006.

Income from Operations

Income from operations for second quarter 2007 was $37.4 million, compared to second quarter 2006 income from operations of $24.7 million. When comparing to the prior year quarter, income from operations was positively impacted by:

- Approximately $13 million of lower operating costs as a result of ongoing continuous improvement programs and other cost reduction initiatives;
- Approximately $9 million due to favorable pricing; and
- Approximately $4 million from increased volume and improved mix.

Income from operations was negatively impacted by:
- Approximately $7 million of higher input costs due to increased prices for fiber, partially offset by favorable energy prices;
- Approximately $4 million of higher manufacturing costs. The additional costs were primarily the result of expenses related to the continuing initiative to upgrade the West Monroe, LA mill's infrastructure; and
- Approximately $3 million of higher expenses primarily related to increased depreciation and amortization expense and other general corporate charges.

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