UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~December~~March 2324, ~~2000~~2001

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number 333-13727

PRINTPACK, INC.
(Exact name of registrant as specified in its charter)

Georgia		58-0673779
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


Georgia (State or other jurisdiction of incorporation or organization)		58-0673779 (I.R.S. Employer Identification No.)

4335 Wendell Drive, S.W., Atlanta, Georgia 30336
(Address of principal executive offices) (Zip Code)

(404) 691-5830
(Registrant’s telephone number, including area code)

Not applicable
(Former name, former address and former fiscal year,
if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Total number of shares of outstanding stock (net of shares held in treasury) as of ~~January~~May 312, 2001:

Common stock, no par value~~....................~~ 4,218,560

PRINTPACK, INC.
INDEX

PART I	FINANCIAL INFORMATION:
	“SAFE HARBOR” STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
	Item 1.	Financial Statements
	Balance Sheets at
		December 23, 2000 and June 24, 2000
		March 24, 2001 and June 24, 2000
	Statements of Operations and Comprehensive Income
		for the 26 weeks ended December 23, 2000 and December 25, 1999
		for the 39 weeks ended March 24, 2001 and March 25, 2000
	Statements of Operations and Comprehensive Income
		for the 13 weeks ended December 23, 2000 and December 25, 1999
		for the 13 weeks ended March 24, 2001 and March 25, 2000
	Statements of Cash Flows
		for the 26 weeks ended December 23, 2000 and December 25, 1999
		for the 39 weeks ended March 24, 2001 and March 25, 2000
	Statement of Changes in Shareholders’ Equity (Deficit)
		for the 26 weeks ended December 23, 2000
		for the 39 weeks ended March 24, 2001
	Notes to Unaudited Financial Statements
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk
Part II	OTHER INFORMATION:
	Item 6.	Exhibits and Reports on Form 8-K
	Signatures

PART 1. FINANCIAL INFORMATION

“SAFE HARBOR” STATEMENT UNDER THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

From time to time, Printpack, Inc. (“Printpack” or the “Company”) makes oral and written statements that may constitute “forward-looking statements” (rather than historical facts) as defined in the Private Securities Litigation Reform Act of 1995 (the “Act”) or by the SEC in its rules, regulations and releases. The Company desires to take advantage of the “safe harbor” provisions in the Act for forward-looking statements made from time to time, including, but not limited to, the forward-looking statements made in this Report on Form 10-Q (the “Report”), as well as those made in other filings with the SEC. Forward-looking statements contained in this Report are based on management’s current plans and expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. In the preparation of this Report, where such forward-looking statements appear, the Company has sought to accompany such statements with meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those described in the forward-looking statements. Such factors include, but are not limited to: the level of consumer spending for consumer nondurable goods that use packaging made by the Company; fluctuations in raw material prices; possible environmental matters; competition; slowed growth in end user markets and pricing pressures; changes in economic conditions generally, both domestic and international; and possible implementation of future cost saving measures which could require the Company to take charges against earnings, including cash and non-cash charges. The preceding list of risks and uncertainties, however, is not intended to be exhaustive, and should be read in conjunction with other cautionary statements made herein and in the Company’s other publicly filed reports, including, but not limited to, the “Risk Factors” set forth in the Company’s Form 10-K for the fiscal year ended June 24, 2000.

The Company does not have, and expressly disclaims, any obligation to release publicly any updates or any changes in the Company’s expectations or any changes in events, conditions or circumstances on which any forward-looking statement is based.

ITEM 1. FINANCIAL STATEMENTS

PRINTPACK, INC.
BALANCE SHEETS

			December 23,			June 24,
			March 24,			June 24,
			2000			2000
			2001			2000
			(Unaudited)
			(in thousands)
ASSETS
Current assets
	Cash and cash equivalents		$	1,~~351~~483		$	870
	Trade accounts receivable, less allowance for doubtful accounts of $662 and $749			7879,~~740~~472			72,408
	Inventories			7984,~~840~~200			84,323
	Prepaid expenses and other current assets			1214,~~936~~664			13,678
	Deferred income taxes			1,~~569~~653			1,526
		Total current assets		~~174~~181,~~436~~472			172,805
Property, plant and equipment, net				~~297~~298,~~823~~114			309,328
Goodwill, less accumulated amortization of $27,307 and $25,391				40,762			42,678
Goodwill, less accumulated amortization of $28,260 and $25,391				39,809			42,678
Other assets				23,~~043~~730			24,822
Deferred income taxes				—			3,244
			$	~~536~~543,~~064~~125		$	552,877
LIABILITIES AND SHAREHOLDERS’ DEFICIT
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities
	Accounts payable and accrued expenses		$	7764,~~020~~902		$	74,477
	Accrued salaries, wages, benefits and bonuses			1419,~~673~~297			18,673
	Current maturities of long-term debt			9,769			9,769
	Current portion of capital lease obligation			522			—
	Short-term borrowings under line of credit			1,920			4,410
	Current maturities of long-term debt			9,709			9,769
		Total current liabilities		103,382			107,329
	Short-term borrowings under line of credit			5,577			4,410
Long-term debt				198,328			222,320
		Total current liabilities		100,007			107,329
Long-term debt				200,771			222,320
Subordinated long-term debt				210,305			210,305
Other long-term liabilities				25,454			23,556
Long-term capital lease obligation				1,931			—
Deferred income taxes				2,470			—
Other long-term liabilities				26,188			23,556
		Total liabilities		539,939			563,510
Deferred income taxes				3,800			—
Shareholders’ deficit
		Total liabilities		543,002			563,510
Shareholders’ equity (deficit)
	Common stock, no par value, 15,000,000 shares authorized, 4,218,560 shares issued and outstanding			1,011			1,011
	Additional paid-in capital			6,687			6,687
	Accumulated deficit			(73,~~170~~049	)		(14,937	)
	Receivable from parent			(3,587	)		(1,897	)
	Accumulated other comprehensive income			(~~816~~939	)		(1,497	)
		Total shareholders’ deficit		(3,875	)		(10,633	)
		Total shareholders’ equity (deficit)		123			(10,633	)
Commitments and contingencies				—			—
			$	~~536~~543,~~064~~125		$	552,877

The accompanying notes are an integral part of the financial statements.

PRINTPACK, INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

		26 Weeks			26 Weeks
		39 Weeks			39 Weeks
		Ended			Ended
		December 23,			December 25,
		March 24,			March 25,
		2000			1999
		2001			2000
		(Unaudited)			(Unaudited)
		(in thousands)
Net sales		$	~~484~~725,~~133~~027		$	~~445~~666,~~366~~529
Cost of goods sold			~~402~~600,~~263~~770			~~375~~564,~~922~~120
Gross margin			81124,~~870~~257			69102,~~444~~409
Selling, administrative and research and development expenses			4467,~~043~~631			4163,~~350~~101
Amortization of goodwill			12,~~916~~869			12,~~916~~869
Income from operations			3553,~~911~~757			2636,~~178~~439
Other (income) expense
	Interest expense		2335,~~986~~307			2537,~~133~~547
	Other, net		(~~660~~499	)		78(342	)
Income before provision (benefit) for income taxes			12,585			967
Income (loss) before provision (benefit) for income taxes			18,949			(766	)
Provision (benefit) for income taxes			47,~~818~~061			(~~215~~489	)
Net income			7,767			1,182
Net income (loss)			11,888			(277	)
Other comprehensive income
Other comprehensive income Foreign currency translation adjustment (net of income tax expense of $208 and $225)			350			352
	Foreign currency translation adjustment (net of income tax expense (benefit) of $261 and ($95) )		420			(148	)
Comprehensive income		$	12,238		$	75
Comprehensive income		$	8,187		$	1,034

The accompanying notes are an integral part of the financial statements.

PRINTPACK, INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

		13 Weeks			13 Weeks
		Ended			Ended
		December 23,			December 25,
		March 24,			March 25,
		2000			1999
		2001			2000
		(Unaudited)			(Unaudited)
		(in thousands)
Net sales		$	~~238~~240,~~677~~894		$	~~225~~221,~~898~~163
Cost of goods sold			~~195~~198,~~702~~507			~~187~~188,~~586~~198
Gross margin			42,~~975~~387			3832,~~312~~965
Selling, administrative and research and development expenses			23,~~243~~583			2221,~~010~~751
Amortization of goodwill			958			958
Income from operations			1817,~~774~~846			1510,~~344~~256
Other (income) expense
	Interest expense		11,~~796~~321			12,~~551~~414
	Other, net		~~(412~~161	)		~~186~~(425	)
Income before provision for income taxes			7,390			2,607
Income (loss) before provision (benefit) for income taxes			6,364			(1,733	)
Provision for income taxes			2,975			512
Provision (benefit) for income taxes			2,243			(274	)
Net income			4,415			2,095
Net income (loss)			4,121			(1,459	)
Other comprehensive income
Other comprehensive income Foreign currency translation adjustment (net of income tax (benefit) expense of ($43) and $320 )			(80	)		500
	Foreign currency translation adjustment (net of income tax (benefit) expense of ($111) and $191)		(179	)		300
Comprehensive income (loss)		$	4,041		$	(959	)
Comprehensive income		$	4,236		$	2,395

The accompanying notes are an integral part of the financial statements.

PRINTPACK, INC.
STATEMENTS OF CASH FLOWS

			26 Weeks			26 Weeks
			39 Weeks			39 Weeks
			Ended			Ended
			December 23,			December 25,
			March 24,			March 25,
			2000			1999
			2001			2000
			(Unaudited)			(Unaudited)
			(in thousands)
Operating activities Net income			$	7,767		$	1,182
Operating activities
	Depreciation and amortization			28,173			28,085
	Net income (loss)		$	11,888		$	(277	)
	Other			6,473			4,791
	Depreciation and amortization			42,496			42,074
		Net cash provided by operating activities		42,413			34,058
	Other			(5,444	)		(1,229	)
Investing activities Purchases of property, plant and equipment				(13,868	)		(10,881	)
		Net cash provided by operating activities		48,940			40,568
	Proceeds from sale of property, plant and equipment			—			376
Investing activities
		Net cash used in investing activities		(13,868	)		(10,505	)
	Purchases of property, plant and equipment			(26,735	)		(15,409	)
Financing activities Principal payments on long-term debt				(29,884	)		(4,884	)
	Proceeds from sale of property, plant and equipment			271			376
	Net borrowings under revolving credit facility			5,000			—
		Net cash used in investing activities		(26,464	)		(15,033	)
Financing activities
	Principal payments on long-term debt			(32,325	)		(7,327	)
	Net borrowings under revolving credit facility			10,000			—
	Net borrowings (repayments) under receivable securitization facility			1,000			(14,000	)
	Net repayments on line of credit			(2,490	)		(5,099	)
	Net borrowings (repayments) on line of credit			1,167			(3,634	)
	Payment for receivable from parent			(1,690	)		(948	)
		Net cash used in financing activities		(28,064	)		(24,931	)
	Payments under capital lease obligations			(15	)		—
Increase (decrease) in cash and cash equivalents				481			(1,378	)
		Net cash used in financing activities		(21,863	)		(25,909	)
Increase (decrease) in cash and cash equivalents				613			(374	)
Cash and cash equivalents, beginning of period				870			1,565
Cash and cash equivalents, end of period			$	1,~~351~~483		$	~~187~~1,191

The accompanying notes are an integral part of the financial statements.

PRINTPACK, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)
(Unaudited)

				Additional								Other			Total
		Common		Paid-In		Accumulated			Receivable			Comprehensive			Equity
		Stock		Capital		Deficit			From Parent			Income			(Deficit)
		(in thousands)
Balance as of June 24, 2000		$	1,011	$	6,687	$	($14,937	)	$	($1,897	)	$	($1,497	)	$	($10,633	)
	Net income		—		—		711,~~767~~888			—			—			711,~~767~~888
	Payment for receivable from parent		—		—		—			(1,690	)		—			(1,690	)
	Foreign currency translation adjustment		—		—		—			—			~~681~~558			~~681~~558
Balance as of December 23, 2000		$	1,011	$	6,687		($7,170	)		($3,587	)		($816	)		($3,875	)
Balance as of March 24, 2001		$	1,011	$	6,687	$	(3,049	)	$	(3,587	)	$	(939	)	$	123

The accompanying notes are an integral part of the financial statements.

PRINTPACK, INC. NOTES TO UNAUDITED FINANCIAL ~~STATEMENTSDECEMBER~~STATEMENTS MARCH 2324, ~~2000~~2001

1. BASIS OF PRESENTATION

The accompanying unaudited interim financial statements of Printpack, Inc. (“Printpack” or the “Company”) have been prepared by Company management and are presented on a basis in accordance with the accounting policies stated in the June 24, 2000 and June 26, 1999 financial statements and should be read in conjunction with the Notes to Financial Statements appearing therein. In the opinion of Printpack management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of such financial statements have been included in the accompanying interim financial statements. The results of operations for the 2639 week and 13 week periods ended ~~December 23~~March 24, 2001 ~~2000~~ are not necessarily indicative of the results to be expected for the ~~full~~ full fiscal year.

2. INVENTORIES

Inventories are stated at the lower of cost or current market value. Cost is determined using the last-in, first-out (LIFO) method for domestic inventories and first-in, first-out (FIFO) method for international inventories.

Inventories are summarized as follows:

	December 23,		June 24,
	March 24,		June 24,
	2000		2000
	2001		2000
	(Unaudited)
	(in thousands)
Raw materials	$	3133,~~617~~918	$	35,205
Work-in-process		79,~~681~~609		9,996
Finished goods		6162,~~758~~542		60,222
		101,056		105,423
		106,069		105,423
Reduction to state inventories at last-in, first-out cost (LIFO)		21,~~216~~869		21,100
	$	7984,~~840~~200	$	84,323

3. CONTINGENCIES

Printpack is subject to legal proceedings and other claims which arise in the ordinary course of business. In the opinion of management, the outcome of these actions will not materially affect the financial position, results of operations or cash flows of the Company.

4. RECEIVABLES SECURITIZATION FACILITY

On August 22, 1996, the Company created a wholly owned, bankruptcy remote, special purpose subsidiary, Flexible Funding Corp. (“Flexible Funding”), for the sole purpose of facilitating financing transactions for the Company. The Company contributed approximately $100,000 of trade receivables in exchange for the equity in Flexible Funding. Subsequently, Flexible Funding entered into a revolving line of credit facility with a bank (the “Facility”). The Facility allows Flexible Funding to draw a maximum of $50 million on the established line of credit through December 2003, on a revolving basis, through note agreements bearing interest at a negotiated rate. The line of credit is collateralized by 100% of the trade receivables of Flexible Funding. At March ~~December 23~~24, ~~2000~~2001 and June 24, 2000, the Company had $44 million and $43 million, respectively, of notes outstanding under the Facility, collateralized by by approximately $~~69 million and $~~70 million, ~~respectively,~~ in trade receivables.

PRINTPACK, INC. NOTES TO UNAUDITED FINANCIAL STATEMENTS --— (Continued)

5. DERIVATIVE INSTRUMENTS

Effective June 25, 2000, the Company adopted Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities.” This Statement requires companies to record derivatives as assets or liabilities and measure those instruments at fair value. Gains or losses resulting from changes in the values of those derivatives are recorded either in current earnings or as a component of other comprehensive income. As As of ~~December~~March 2324, ~~2000~~2001, the Company’s derivative instruments included forward exchange contracts for which changes in fair value are included in current earnings.

PRINTPACK, INC.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the results of operations of Printpack, Inc. (“Printpack” or the “Company”) for the 2639 weeks and for the 13 weeks ended ~~December~~March 2324, ~~2000~~2001 is compared to the same time periods in fiscal 2000. The discussion and analysis of Printpack’s financial condition compares its condition at ~~December~~March 2324, ~~2000~~ 2001 to June 24, 2000.

This Item contains certain forward-looking statements that reflect the Company’s assessment of a number of risks and uncertainties. The Company’s actual results could differ materially from the results anticipated in such forward-looking statements as a result of certain factors set forth in this Report. Where such forward-looking statements appear, the Company has sought to accompany such statements with meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those described in the forward-looking statements. An additional statement made pursuant to the Private Securities Litigation Reform Act of 1995 and summarizing certain of the principal risks and uncertainties inherent in the Company’s business is included in Part I of this Report under the caption “‘"'Safe Harbor’ Statement Under the Private Securities Litigation Reform Act of 1995.”

Recent Developments

On April 4, 2001, the Company announced that it had entered into a letter of intent to acquire the business and assets of Independent Packaging, L.P. Independent Packaging is the third largest manufacturer in the United States of flexible film packaging for the wholesale bakery business. Independent Packaging employs 160 people at its Bloomington, Indiana manufacturing site and its offices in Dallas, Texas. The non-binding letter of intent contemplates that the parties will negotiate a definitive agreement for this purchase, which would include customary conditions to closing. The parties expect the transaction to be completed by the end of June 2001. Although the parties have executed a letter of intent, the Company cannot guarantee that negotiations with Independent Packaging will be successfully completed.

Results of Operations

~~Twenty~~Thirty-~~six~~nine weeks ended ~~December~~March 2324, ~~2000~~2001 compared to ~~December~~March 25, ~~1999~~2000

Net Sales. Net sales increased $3858.75 million or 8.78% to $~~484~~725.10 million in the fiscal 2001 period from $~~445~~666.45 million in the fiscal 2000 period,. ~~primarily due to higher sales volumes generated by~~ Printpack Enterprises, Ltd, the Company’s subsidiary acquired during fiscal 2000, accounted for approximately $27.3 million or 4.1% of the increase. The majority of the remaining increase was primarily due to higher sales volume.

Gross Margin. Cost of goods sold increased $2636.47 million or 76.05% to $~~402~~600.38 million in the fiscal 2001 period from $~~375~~564.91 million in the fiscal 2000 period. Cost of goods sold decreased to 8382.19% of net sales in the fiscal 2001 period from 84.46% in the fiscal 2000 period, primarily due to increases in sales prices and productivity improvements. Gross margin, consequently, increased $1221.59 million or 1821.04% to $81124.93 million in the fiscal 2001 period from $69102.4 million in the fiscal 2000 period.

Operating Expenses. Selling, administrative and research and development expenses increased $24.65 million or 67.31% to $4467.06 million in the fiscal 2001 period from $4163.41 million in the fiscal 2000 period. The increase is primarily a result of increases in salaries and related costs. In addition, the Company incurred additional operating expenses as a result of the acquisition described above. Selling, administrative and research and development expenses as a percentage of net sales decreased to 9.13% in the fiscal 2001 period from 9.35% in the fiscal 2000 period.

Operating Income. Income from operations increased $9.7 million or 37.0% to $35.9 million in the fiscal 2001 period compared to $26.2 million in the fiscal 2000 period. The increase was due to higher gross margins, partially offset by higher selling, administrative and research and development expenses as described above.

Other Income and Expense. Interest expense decreased $1.1 million or 4.4% to $24.0 million in the fiscal 2001 period from $25.1 million in the fiscal 2000 period. The decrease in interest expense for the fiscal 2001 period as compared to the fiscal 2000 period is primarily due to reductions in outstanding debt, partially offset by higher interest rates.

~~Employees. At~~The ~~December 23, 2000, the~~ Company ~~had~~recorded ~~approximately~~impairment ~~3,900 employees,~~charges of ~~which~~$786,000 ~~approximately~~and ~~800~~$656,000 ~~at five manufacturing facilities were~~during ~~covered~~fiscal by2001 ~~collective~~and ~~bargaining agreements. The Company considers relations with its employees to be generally good. In addition~~2000, ~~employees at the Company’s Orange~~respectively, ~~Texas facility voted~~ to ~~decertify the~~write-down ~~union at~~ the ~~Orange~~carrying ~~facility~~value ~~during first quarter~~ of ~~fiscal~~certain fixed ~~2001~~assets.

~~Thirteen~~ Operating ~~weeks~~Income. Income ~~ended~~from ~~December~~operations increased $17.4 ~~23,~~million ~~2000~~or 47.8% to $53.8 million in the fiscal 2001 period compared to ~~December~~$36.4 25million in the fiscal 2000 period. The increase was due to higher gross margins, partially ~~1999~~offset by higher selling, administrative and research and development expenses as described above.

~~Net~~Other ~~Sales~~Income and Expense. ~~Net~~Interest ~~sales~~expense ~~increased~~decreased $122.82 million or 5.79% to $~~238~~35.73 million in the ~~second quarter of~~ fiscal 2001 period from $~~225~~37.95 million in the fiscal ~~second~~2000 ~~quarter~~period. of The decrease in interest expense for the fiscal ~~2000,~~2001 period ~~primarily~~as ~~due~~compared to ~~higher~~the ~~sales~~fiscal ~~volumes~~2000 ~~generated~~period byis ~~Printpack~~primarily due to reductions in ~~Enterprises,~~outstanding ~~Ltd~~debt, ~~the~~partially ~~Company’s~~offset ~~subsidiary~~by ~~acquired~~higher ~~during~~interest ~~fiscal 2000~~rates.

~~Gross Margin~~Employees. ~~Cost~~At ~~of goods sold increased $8.1~~March ~~million~~24, or2001, ~~4.3% to $195.7 million in~~ the ~~second~~Company ~~quarter~~had ofapproximately ~~fiscal 2001 from $187.6 million in second~~3,750 ~~quarter~~employees, of ~~fiscal~~which ~~2000.~~approximately ~~Cost~~800 ofat ~~goods~~five ~~sold~~manufacturing ~~decreased~~facilities ~~to 82.0% of net sales in~~were ~~the~~covered ~~second~~by ~~quarter~~collective ofbargaining ~~fiscal 2001 from 83~~agreements.0% inThe ~~the~~Company ~~second~~considers ~~quarter of fiscal~~relations ~~2000,~~with ~~primarily~~its ~~due~~employees to ~~increases~~be ingenerally ~~sales~~good. ~~prices~~In ~~and~~addition, ~~productivity~~employees ~~improvements.~~at the ~~Gross~~Company’s ~~margin~~Orange, ~~consequently,~~Texas ~~increased~~facility ~~$4.7 million~~voted ~~or 12.3%~~ to ~~$43.0 million~~decertify in the ~~second~~union ~~quarter~~at ofthe ~~fiscal~~Orange facility ~~2001~~during ~~from~~first ~~$38.3 million in the second~~ quarter of fiscal ~~2000~~2001.

~~Operating~~Thirteen ~~Expenses. Selling,~~weeks ~~administrative~~ended ~~and research and development expenses increased $1.2~~March ~~million~~24, or2001 ~~5.5%~~compared to ~~$23.2~~March ~~million in the second quarter of fiscal 2001 from $22.0 million in the second quarter of fiscal 2000. The increase is primarily a result of increases in salaries and related costs. In addition~~25, the Company incurred additional operating expenses as a result of the acquisition described above. Selling, administrative and research and development expenses as a percentage of net sales was 9.7% in both the second quarter of fiscal 2001 and 2000.

~~Operating~~Net ~~Income~~Sales. ~~Income~~Net ~~from~~sales ~~operations~~ increased $319.57 million or 228.9% to $18240.89 million in the ~~second~~third quarter of fiscal 2001 ~~compared~~from to $15221.32 million in the ~~second~~third quarter of fiscal 2000. ~~The~~Printpack ~~increase~~Enterprises, ~~was~~Ltd, ~~due~~the toCompany’s ~~higher~~subsidiary ~~gross~~acquired ~~margins,~~during ~~partially~~fiscal ~~offset~~2000, byaccounted ~~higher~~for ~~selling,~~approximately ~~administrative~~$9.2 million ~~and~~or ~~research~~4.2% ~~and~~of the ~~development~~increase. ~~expenses~~The asmajority ~~described~~of ~~above~~the remaining increase was primarily due to higher sales volume.

~~Other~~Gross ~~Income and Expense~~Margin. ~~Interest~~Cost ~~expense~~of ~~decreased~~goods sold increased $010.83 million or 65.35% to $11198.8 5 million in the ~~second~~third quarter of fiscal 2001 from $12188.62 million in ~~the~~third ~~second~~ quarter of fiscal 2000. ~~The~~Cost ~~decrease~~of goods sold decreased to 82.4% of net sales in the ~~interest~~third ~~expense~~quarter ~~for~~of fiscal 2001 ~~period~~ asfrom ~~compared~~85.1% toin the ~~fiscal~~third ~~2000~~quarter ~~period~~of isfiscal 2000, primarily due to ~~reductions~~increases in sales prices and productivity improvements. ~~outstanding~~Gross ~~debt~~margin, ~~partially~~consequently, ~~offset~~increased by$9.4 million ~~higher~~or ~~interest~~28.5% ~~rates~~to $42.4 million in the third quarter of fiscal 2001 from $33.0 million in the third quarter of fiscal 2000.

~~Liquidity~~ Operating Expenses. Selling, administrative and ~~Capital~~research ~~Resources~~and development expenses increased $1.8 million or 8.3% to $23.6 million in the third quarter of fiscal 2001 from $21.8 million in the third quarter of fiscal 2000. The increase is primarily a result of increases in salaries and related costs. In addition, the Company incurred additional operating expenses as a result of the acquisition described above. Selling, administrative and research and development expenses as a percentage of net sales decreased to 9.8% in the fiscal 2001 period from 9.9% in the fiscal 2000 period. The Company recorded impairment charges of $786,000 and $656,000 during the third quarter of fiscal 2001 and 2000, respectively, to write-down the carrying value of certain fixed assets.

~~Cash~~Operating ~~provided by operating activities totaled $42~~Income.4 ~~million~~Income infrom ~~the~~operations ~~first 26 weeks~~increased ~~of fiscal 2001 compared to~~ $347.15 million inor ~~the corresponding period of fiscal 2000~~72. ~~After adding back depreciation and amortization~~ 8% to ~~net income, the Company’s operations provided~~ $3517.98 million in ~~cash in~~ the ~~first~~third ~~26 weeks~~ quarter of fiscal 2001 compared to $2910.3 million in the ~~corresponding~~third ~~period~~quarter of fiscal 2000. AnThe ~~additional~~increase ~~$6.5 million in the first 26 weeks of fiscal 2001, primarily from decreases in inventory and increases in accounts payable and accrued expenses,~~ was ~~provided~~due ~~compared~~ to ~~$4.8 million~~higher ~~provided in the~~gross ~~corresponding~~margins, ~~period~~partially ofoffset ~~fiscal~~by ~~2000~~higher ~~primarily~~selling, ~~from~~administrative ~~reductions in prepaid expenses~~ and ~~other~~research ~~current assets. Depreciation~~ and ~~amortization for the first~~ ~~26 weeks~~development ofexpenses ~~fiscal~~as ~~2001~~described ~~were $28~~above.~~2 million compared to $28.1 million for the~~ ~~corresponding period of fiscal 2000.~~

~~Capital~~Other ~~expenditures~~Income ofand Expense. Interest expense decreased $131.1 million or 8.9% to $11.3 million in the ~~first~~third ~~26 weeks~~quarter of fiscal 2001 ~~and~~ from $1012.94 million in the third ~~corresponding~~quarter ~~period~~ of fiscal 2000. ~~continued~~The todecrease ~~be principally~~in ~~for~~interest ~~new~~expense ~~property,~~for ~~plant and equipment. Proceeds from~~ the fiscal ~~disposition~~2001 ofperiod ~~property~~as ~~and~~compared ~~equipment~~to ~~were~~the ~~negligible~~fiscal ~~for~~2000 ~~the~~period ~~first~~is ~~26 weeks~~primarily ofdue to ~~both~~reductions ~~fiscal~~in ~~2001~~outstanding ~~and fiscal 2000~~debt.

~~Cash~~Liquidity used in financing activities in the first 26 weeks of fiscal 2001 was $28.1 million as compared to cash used in financing activities of $24.9 million in the corresponding period of fiscal 2000. The cash used in financing activities during the fiscal 2001 period is primarily a result of the Company paying down on its long-term debt partially off-set by net borrowings under the company’s other bank credit facilities. The Company also advanced approximately $1,690,000 and ~~$948,000~~Capital ~~to its parent, Printpack Holdings, Inc. during the~~Resources ~~first 26~~ weeks of fiscal 2001 and 2000, respectively. Total outstanding debt at December 23, 2000 of approximately $420.3 million included $110.0 million of floating rate and $310.3 million of fixed rate obligations.

~~The~~Cash ~~Company’s~~provided ~~primary~~by ~~sources~~operating ofactivities ~~liquidity~~totaled ~~have~~$48.9 million ~~been~~in ~~cash~~the ~~flows from~~first ~~operations~~39 weeks ~~and~~of ~~borrowings~~fiscal ~~under~~2001 ~~bank~~compared ~~credit~~to ~~facilities~~$40.6 million ~~The~~in ~~Company~~the ~~has~~corresponding ~~used~~period ~~borrowings~~of ~~under~~fiscal ~~the~~2000. ~~bank~~After ~~credit~~adding ~~facilities~~back todepreciation ~~meet~~and ~~seasonal~~amortization ~~fluctuations~~to innet income, ~~working~~the ~~capital~~Company’s ~~requirements,~~operations ~~which~~provided ~~generally~~$54.4 million ~~peak~~in ~~during~~cash ~~January~~in ~~through~~the ~~March~~first 39 weeks ~~when~~of ~~sales~~fiscal ~~volumes~~2001 ~~generally~~compared ~~are~~to ~~lowest~~$41.8 million ~~The~~in ~~credit~~the ~~facilities~~corresponding ~~consist~~period of ~~term~~fiscal ~~loans~~2000. ~~totaling~~An additional $595.14 million, awas ~~$60.0 million~~used ~~revolving~~in ~~credit~~the ~~facility,~~first ~~a $10.0~~39 ~~million~~weeks ~~line~~ of ~~credit~~fiscal ~~and~~2001 as acompared to $501.02 million ~~receivables~~used ~~securitization~~in the corresponding period of fiscal 2000, ~~facility~~primarily for working capital increases. AtDepreciation ~~December 23,~~and ~~2000~~amortization for the first ~~Company~~39 weeks ~~had~~of ~~approximately~~fiscal 2001 were $6742.45 million ~~available~~ compared to $42.1 million for the ~~borrowings~~corresponding ~~under~~period ~~its~~of ~~credit~~fiscal ~~agreements~~2000.

~~The~~Capital ~~Company~~expenditures ~~believes~~of ~~that~~$26.7 million ~~its~~in ~~future~~the ~~primary~~first ~~liquidity~~39 weeks ~~needs will consist~~ of ~~capital~~fiscal ~~expenditures, debt service~~ 2001 and ~~working capital~~$15.4 million ~~Estimated~~in ~~annual capital~~the ~~expenditures~~corresponding ~~for~~period ~~the~~of ~~Company~~fiscal ~~are~~2000 ~~expected~~continued to be ~~approximately $40.0 to~~ ~~$45.0 million~~principally for ~~fiscal~~new ~~2001.~~property, ~~Approximately~~plant ~~$15~~and equipment.~~0 million~~ isProceeds ~~expected~~from ~~to be~~the ~~used~~disposition ~~for~~of ~~replacements~~property and ~~other~~equipment ~~capital~~were ~~expenditures,~~negligible ~~with~~for the ~~balance~~first ~~expected~~39 weeks of toboth befiscal ~~used~~2001 ~~for productivity improvements~~ and tofiscal ~~meet the specific needs of the Company’s customers~~2000.

Cash used in financing activities in the first 39 weeks of fiscal 2001 was $21.9 million as compared to cash used in financing activities of $25.9 million in the corresponding period of fiscal 2000. The cash used in financing activities during the fiscal 2001 period is primarily a result of the Company paying down its long-term debt partially off-set by net borrowings under the company’s other bank credit facilities. The Company also advanced approximately $1,690,000 and $948,000 to its parent, Printpack Holdings, Inc., during the first 39 weeks of fiscal 2001 and 2000, respectively. Total outstanding debt at March 24, 2001 of approximately $426.4 million included $116.1 million of floating rate and $310.3 million of fixed rate obligations.

The Company’s primary sources of liquidity have been cash flows from operations and borrowings under bank credit facilities. The Company has used borrowings under the bank credit facilities to meet seasonal fluctuations in working capital requirements, which generally peak during January through March when sales volumes generally are lowest. The credit facilities consist of term loans totaling $56.4 million, a $60.0 million revolving credit facility, a $10.0 million line of credit and a $50.0 million receivables securitization facility. At March 24, 2001 the Company had approximately $58.8 million available for borrowings under its credit agreements.

The Company believes that its future primary liquidity needs will consist of capital expenditures, debt service and working capital. Estimated annual capital expenditures for the Company are expected to be approximately $40.0 to $45.0 million for fiscal 2001, excluding the Independent Packaging, L.P. acquisition described above. Approximately $15.0 million is expected to be used for replacements and other capital expenditures, with the balance expected to be used for productivity improvements and to meet the specific needs of the Company’s customers.

Based upon current levels of operations and continued cost saving measures, the Company believes that cash flow from operations, borrowings under the credit agreement, sales of accounts receivable under its receivables securitization facility and other sources of liquidity, will be adequate to meet the Company’s anticipated requirements for working capital, capital expenditures, interest payments and scheduled principal payments for at least the next 12 months. There can be no assurance, however, that the Company’s business will continue to generate cash flows from operations at or above current levels or that anticipated improvements in operations and cost savings will be realized.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following discussion should be read in conjunction with the Notes to Unaudited Financial Statements contained herein, as well as the Notes to Financial Statements contained in the Company’s Form 10-K for the fiscal year ended June 24, 2000.

This Item contains certain forward-looking statements that reflect the Company’s assessment of a number of risks and uncertainties. The Company’s actual results could differ materially from the results anticipated in such forward-looking statements as a result of certain factors set forth in this Report. Where ~~such forward-looking statements appear, the Company has sought~~ to accompany such statements with meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those described in the forward-looking statements. An additional statement made pursuant to the Private Securities Litigation Reform Act of 1995 and summarizing certain of the principal risks and uncertainties inherent in the Company’s business is included in Part I of this Report under the caption “‘Safe Harbor’ Statement Under the Private Securities Litigation Reform Act of 1995.”

INTEREST RATE RISK

~~2004~~such ~~(final~~forward-looking ~~installment~~statements ~~due March 2004)~~appear, ~~with~~ anthe ~~interest~~Company ~~rate~~has ~~tied to LIBOR and payable quarterly; (ii) $5,749,000 (at~~sought ~~December 23, 2000) secured notes~~ to aaccompany ~~bank~~such ~~payable~~statements inwith ~~annual~~meaningful ~~installments~~cautionary ~~of $1,474,000~~statements ~~each beginning in fiscal 2002 and continuing through fiscal 2004 and~~identifying aimportant ~~final~~factors ~~payment~~that ofcould ~~$1,327,000~~cause ~~during~~actual ~~fiscal~~results ~~2005 (final installment due July 2004), with an interest rate tied~~ to ~~the~~differ ~~bank’s~~materially ~~Base Rate as published~~ from ~~time~~those todescribed ~~time and payable monthly; (iii) a $60,000,000 revolving credit facility with banks due~~ in ~~December 2003~~the ~~with~~forward-looking anstatements. ~~interest~~An ~~rate~~additional ~~tied to LIBOR and payable~~statement ~~quarterly~~made ~~($5,000,000~~pursuant ~~at December 23, 2000 was outstanding under this facility); (iv) a $10,000,000 line of credit with an interest rate tied~~ to the ~~Federal~~ ~~Funds~~Private ~~rate~~Securities ~~(approximately~~Litigation ~~$1,920,000~~Reform ~~outstanding~~Act atof ~~December 23,~~1995 ~~2000);~~ and ~~(v) $44,000,000 (at December 23, 2000)~~ ~~outstanding~~summarizing ~~under~~certain aof ~~$50,000,000~~the ~~accounts~~principal ~~receivable~~risks ~~securitization facility with a bank due in December 2003, with an interest rate tied to LIBOR~~ and ~~payable~~uncertainties ~~quarterly.~~inherent ~~While changes~~ in ~~LIBOR,~~ the ~~Federal Funds rate and a~~ ~~bank~~Company’s ~~Base~~business ~~Rate~~is ~~would~~included ~~affect~~in ~~the~~Part ~~cost~~I of ~~these~~this ~~funds~~Report inunder the ~~future, the~~caption ~~Company~~“‘Safe ~~does~~Harbor’ ~~not~~Statement ~~consider~~Under ~~its current exposure to changes in such rates to be material, and~~ the ~~Company~~Private ~~believes~~Securities ~~that~~Litigation ~~the~~Reform ~~effect,~~Act ~~if any,~~ of ~~reasonably~~ ~~possible near-term changes in interest rates on the Company’s financial position, results of operations or cash flows would not be material~~1995. ~~The~~” ~~carrying amounts of the Company’s variable rate long-term debt approximate~~ ~~their fair values.~~

AtINTEREST ~~December 23,~~RATE ~~2000, the Company’s fixed interest rate long-term debt~~RISK ~~instruments included: (i) $200,000,000 in 10.625% unsecured senior~~ subordinated notes payable in August 2006 with interest payable semi-annually; (ii) $100,000,000 in 9.875% unsecured senior notes payable in August 2004 with interest payable semi-annually; and (iii) $10,305,000 in 11% unsecured subordinated notes to shareholders of Printpack Holdings, Inc. payable in an installment of $3,422,000 in May 2005 and the remaining principal payable in May 2014 with interest payable annually. There is no material market risk related to the Company’s fixed interest rate long-term debt.

With respect to its credit facilities entered into for other than trading purposes, the Company is subject to market risk exposure related to changes in interest rates. The Company is the obligor on the following variable interest rate long-term debt instruments: (i) $50,905,000 (at March 24, 2001) secured senior notes to banks payable in quarterly installments of $2,442,000 each through the second quarter of fiscal 2002, $2,383,000 in the third quarter of fiscal 2002, $220,000 in the fourth quarter of fiscal 2002 and continuing through the second quarter of fiscal 2004 and a final payment of $39,656,000 during the third quarter of fiscal 2004 (final installment due March 2004), with an interest rate tied to LIBOR and payable quarterly; (ii) $5,575,000 (at March 24, 2001) secured notes to a bank payable in annual installments of $1,429,000 each beginning in fiscal 2002 and continuing through fiscal 2004 and a final payment of $1,288,000 during fiscal 2005 (final installment due July 2004), with an interest rate tied to the bank’s Base Rate as published from time to time and payable monthly; (iii) a $60,000,000 revolving credit facility with banks due in December 2003 with an interest rate tied to LIBOR and payable quarterly ($10,000,000 at March 24, 2001 was outstanding under this facility); (iv) a $10,000,000 line of credit with an interest rate tied to the Federal Funds rate (approximately $5,577,000 outstanding at March 24, 2001); and (v) $44,000,000 (at March 24, 2001) outstanding under a $50,000,000 accounts receivable securitization facility with a bank due in December 2003, with an interest rate tied to LIBOR and payable quarterly. While changes in LIBOR, the Federal Funds rate and a bank’s Base Rate would affect the cost of these funds in the future, the Company does not consider its current exposure to changes in such rates to be material, and the Company believes that the effect, if any, of reasonably possible near-term changes in interest rates on the Company’s financial position, results of operations or cash flows would not be material. The carrying amounts of the Company’s variable rate long-term debt approximate their fair values.

At March 24, 2001, the Company’s fixed interest rate long-term debt instruments included: (i) $200,000,000 in 10.625% unsecured senior subordinated notes payable in August 2006 with interest payable semi-annually; (ii) $100,000,000 in 9.875% unsecured senior notes payable in August 2004 with interest payable semi-annually; and (iii) $10,305,000 in 11% unsecured subordinated notes to shareholders of Printpack Holdings, Inc. payable in an installment of $3,422,000 in May 2005 and the remaining principal payable in May 2014 with interest payable annually. There is no material market risk related to the Company’s fixed interest rate long-term debt.

FOREIGN CURRENCY RISK

The Company’s revenue derived from international operations is not material and, therefore, the risk related to foreign currency exchange rates is not material.

The Company periodically uses foreign exchange derivative instruments or spot purchases to hedge its known liabilities in foreign currencies to reduce the impact of foreign currency gains and losses in its financial results. It is the Company’s policy not to enter into derivative transactions for speculative purposes.

INVESTMENT PORTFOLIO

The Company does not use financial instruments for trading purposes. The Company invests its excess cash in short-term, highly liquid investments consisting primarily of overnight repurchase agreements. The market risk on such investments is minimal.

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K


(a)		Exhibits

		None





(b)		Reports on Form 8-K





		No reports on Form 8-K were filed during the quarter for which this report is filed.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	PRINTPACK, INC.
Dated: January 31, 2001	By:	/s/ R. Michael Hembree
Dated: May 2, 2001	By: /s/ R. Michael Hembree
	R. Michael Hembree Vice President-Finance (Principal Financial Officer and a duly authorized officer)
	R. Michael Hembree
	Vice President-Finance
	(Principal Financial Officer and a duly
	authorized officer)

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