UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



ý☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the quarterly period ended September 30, ~~2019~~2020



¨☐			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: 1-13888

GRAFTECH INTERNATIONAL LTD.

(Exact name of registrant as specified in its charter)



Delaware			27-2496053
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)



982 Keynote Circle		44131
Brooklyn Heights, OH	OH	(Zip code)
(Address of principal executive offices)

Registrant’s telephone number, including area code: (216) 676-2000

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value per share	EAF	New York Stock Exchange

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 ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” ~~and~~ “smaller reporting ~~company”~~company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filero

☒

Accelerated Filero

☐

Emerging Growth Companyo

☐

Non-Accelerated Filer

☐

Smaller Reporting Company

☐

~~Non-Accelerated Filer~~ x

~~Smaller Reporting Company~~ o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes ¨☐ No ý☒

As of October 31, ~~2019, 289,532,927~~2020, 267,188,547 shares of common stock, par value $0.01 per share, were outstanding.

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TABLE OF CONTENTS

Presentation of Financial, Market and Legal Data

We present our financial information on a consolidated basis. Unless otherwise noted, when we refer to dollars, we mean U.S. dollars.

Unless otherwise specifically noted, market and market share data in this Quarterly Report on Form 10-Q for the quarterly period ended September 30, ~~2019~~2020 (the "Report") are our own estimates or derived from sources described in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 ("Annual Report on Form 10-K") filed on February ~~22, 2019.~~21, 2020. Our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under ~~“Forward Looking~~“Forward-Looking Statements” and “Risk Factors” in this Report and in our Annual Report on Form 10-K. We cannot guarantee the accuracy or completeness of this market and market share data and have not independently verified it. None of the sources has consented to the disclosure or use of data in this Report.

~~Forward Looking~~Forward-Looking Statements

Some of the statements under ~~"Management's~~“Management’s Discussion and Analysis of Financial Condition and Results of Operations,"” and elsewhere in this Report may contain forward-looking statements that reflect our current views with respect to, among other things, future events and financial performance. You can identify these forward-looking statements by the use of forward-looking words such as ~~"will,~~“will,” “may,” “plan,” “estimate,” “project,” “believe,” “anticipate,” “expect,” "foresee," ~~"may," "plan," "estimate," "project," "believe," "anticipate," "expect," "intend," "should," "would," "could," "target," "goal," "continue~~“intend,” “should,” “would,” “could,” “target,” “goal,” “continue to,~~" "positioned to"~~” “positioned to” or the negative ~~version~~versions of those words or other comparable words. Any forward-looking statements contained in this Report are based upon our historical performance and on our current plans, estimates and expectations in light of information currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us that the future plans, estimates or expectations contemplated by us will be achieved. ~~Our expectations and targets are not predictions of actual performance and historically our performance has deviated, often significantly, from our expectations and targets.~~ These forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to:

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•the ultimate impact that the COVID-19 pandemic has on our business, results of operations, financial condition and cash flows;

•the cyclical nature of our business and the selling prices of our products may lead to periods of reduced profitability and net losses in the future;

•the possibility that we may be unable to implement our business strategies, including our ~~initiative~~ability to secure and maintain longer-term customer contracts, in an effective manner;

•the risks and uncertainties associated with litigation, arbitration, and like disputes, including the recently filed stockholder litigation and disputes related to contractual commitments;

•the possibility that ~~tax legislation could~~global graphite electrode overcapacity may adversely affect ~~us or our stockholders;~~graphite electrode prices;

•pricing for graphite electrodes has historically been cyclical and the price of graphite electrodes may continue to decline in the future;

•the sensitivity of our business and operating results to economic conditions and the possibility others may not be able to fulfill their obligations to us in a timely fashion or at all;

•our dependence on the global steel industry generally and the electric arc furnace ~~("EAF")~~ steel industry in particular;

~~the possibility that global graphite electrode overcapacity may adversely affect graphite electrode prices;~~

•the competitiveness of the graphite electrode industry;

•our dependence on the supply of petroleum needle coke;

•our dependence on supplies of raw materials (in addition to petroleum needle coke) and energy;

•the possibility that our manufacturing operations are subject to hazards;

•changes in, or more stringent enforcement of, health, safety and environmental regulations applicable to our manufacturing operations and facilities;

•the legal, compliance, economic, social and political risks associated with our substantial operations in multiple countries;

•the possibility that fluctuation of foreign currency exchange rates could materially harm our financial results;

•the possibility that our results of operations could deteriorate if our manufacturing operations were substantially disrupted for an extended period, including as a result of equipment failure, climate change, regulatory issues, natural disasters, public health crises, such as the COVID-19 pandemic, political crises or other catastrophic events;

•our dependence on third parties for certain construction, maintenance, engineering, transportation, warehousing and logistics services;

•the possibility that we are unable to recruit or retain key management and plant operating personnel or successfully negotiate with the representatives of our employees, including labor unions;

•the possibility that we may divest or acquire businesses, which could require significant management attention or disrupt our business;

•the sensitivity of goodwill on our balance sheet to changes in the market;

•the possibility that we are subject to information technology systems failures, cybersecurity attacks, network disruptions and breaches of data security;

•our dependence on protecting our intellectual property;

•the possibility that third parties may claim that our products or processes infringe their intellectual property rights;

•the possibility that significant changes in our jurisdictional earnings mix or in the tax laws of those jurisdictions could adversely affect our business;

•the possibility that our indebtedness could limit our financial and operating activities or that our cash flows may not be sufficient to service our indebtedness;

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•the possibility that restrictive covenants in our financing agreements could restrict or limit our operations;

•the fact that borrowings under certain of our existing financing agreements ~~subjects~~subject us to interest rate risk;

•the possibility of a lowering or withdrawal of the ratings assigned to our debt;

•the possibility that disruptions in the capital and credit markets could adversely affect our results of operations, cash flows and financial condition, or those of our customers and suppliers;

•the possibility that highly concentrated ownership of our common stock may prevent minority stockholders from influencing significant corporate decisions;

•the possibility that we may not pay cash dividends on our common stock in the future;

•the fact that certain of our stockholders have the right to engage or invest in the same or similar businesses as us;

•the possibility that the market price of our common stock could be negatively affected by sales of substantial amounts of our common stock in the public markets, including by ~~Brookfield;~~Brookfield (as defined below);

•the fact that certain provisions of our Amended and Restated Certificate of Incorporation and our Amended and Restated By-Laws could hinder, delay or prevent a change of control;

•the fact that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders; and

•our status as a "controlled company" within the meaning of the New York Stock Exchange ~~("NYSE")~~ corporate governance standards, which allows us to qualify for exemptions from certain corporate governance requirements.

These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements, including the Risk Factors ~~section,~~sections, that are included in our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2020 and June 30, 2020, and other filings with the Securities and Exchange Commission ("SEC"). The ~~forward‑looking~~forward-looking statements made in this Report relate only to events as of the date on which the statements are made. We do not undertake any obligation to publicly update or review any ~~forward‑looking~~forward-looking statement except as required by law, whether as a result of new information, future developments or otherwise.

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from what we may have expressed or implied by these ~~forward‑looking~~forward-looking statements. We caution that you should not place undue reliance on any of our ~~forward‑looking~~forward-looking statements. You should specifically consider the factors identified in this Report that could cause actual results to differ before making an investment decision to purchase our common stock. Furthermore, new risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us. ~~All subsequent written and oral forward-looking statements by or attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors.~~

~~For a more complete discussion~~

Table of ~~these and other factors, see “Risk Factors” in Part II of this Report and the "Risk Factors" section included in our Annual Report on Form 10-K and other SEC filings.~~Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

~~Unaudited~~

(Unaudited)


	As of September 30, 2019			As of December 31, 2018				As of September 30, 2020		As of December 31, 2019
ASSETS							ASSETS
Current assets:							Current assets:
Cash and cash equivalents	$	381,164		$	49,880		Cash and cash equivalents	$	158,841	$	80,935
Accounts and notes receivable, net of allowance for doubtful accounts of $4,163 as of September 30, 2019 and $1,129 as of December 31, 2018	264,157			248,286
Accounts and notes receivable, net of allowance for doubtful accounts of $8,973 as of September 30, 2020 and $5,474 as of December 31, 2019							Accounts and notes receivable, net of allowance for doubtful accounts of $8,973 as of September 30, 2020 and $5,474 as of December 31, 2019	164,195		247,051
Inventories	314,955			293,717			Inventories	299,236		313,648
Prepaid expenses and other current assets	40,481			46,168			Prepaid expenses and other current assets	35,299		40,946

Total current assets	1,000,757			638,051			Total current assets	657,571		682,580
Property, plant and equipment	708,267			688,842			Property, plant and equipment	765,822		733,417
Less: accumulated depreciation	207,444			175,137			Less: accumulated depreciation	264,304		220,397
Net property, plant and equipment	500,823			513,705			Net property, plant and equipment	501,518		513,020
Deferred income taxes	48,237			71,707			Deferred income taxes	40,767		55,217
Goodwill	171,117			171,117			Goodwill	171,117		171,117
Other assets	104,735			110,911			Other assets	96,616		104,230
Total assets	$	1,825,669		$	1,505,491		Total assets	$	1,467,589	$	1,526,164
LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:							Current liabilities:
Accounts payable	$	73,856		$	88,097		Accounts payable	$	49,056	$	78,697
Short-term debt	70,861			106,323			Short-term debt	147		141
Accrued income and other taxes	58,916			82,255			Accrued income and other taxes	81,756		65,176
Other accrued liabilities	48,707			50,452			Other accrued liabilities	65,058		48,335
Related party payable - tax receivable agreement	23,852			—			Related party payable - tax receivable agreement	16,115		27,857
Total current liabilities	276,192			327,127			Total current liabilities	212,132		220,206
Long-term debt	1,965,501			2,050,311			Long-term debt	1,564,431		1,812,682
Other long-term obligations	77,759			72,519			Other long-term obligations	76,403		72,562
Deferred income taxes	50,484			45,825			Deferred income taxes	44,251		49,773
Related party payable - tax receivable agreement	62,625			86,478
Contingencies – Note 9
Related party payable - tax receivable agreement long-term							Related party payable - tax receivable agreement long-term	42,479		62,014

Contingencies - Note 8							Contingencies - Note 8
Stockholders’ equity:							Stockholders’ equity:
Preferred stock, par value $0.01, 300,000,000 shares authorized, none issued	—			—
Common stock, par value $0.01, 3,000,000,000 shares authorized, 289,658,478 shares issued and outstanding as of September 30, 2019 and 290,537,612 as of December 31, 2018	2,897			2,905
Preferred stock, par value $0.01, 300,000,000 shares authorized, NaN issued							Preferred stock, par value $0.01, 300,000,000 shares authorized, NaN issued	0		0
Common stock, par value $0.01, 3,000,000,000 shares authorized, 267,188,547 shares issued and outstanding as of September 30, 2020 and 270,485,308 as of December 31, 2019							Common stock, par value $0.01, 3,000,000,000 shares authorized, 267,188,547 shares issued and outstanding as of September 30, 2020 and 270,485,308 as of December 31, 2019	2,672		2,705
Additional paid-in capital	818,720			819,622			Additional paid-in capital	757,576		765,419
Accumulated other comprehensive loss	(23,677		)	(5,800		)	Accumulated other comprehensive loss	(39,161)		(7,361)
Accumulated deficit	(1,404,832		)	(1,893,496		)	Accumulated deficit	(1,193,194)		(1,451,836)
Total stockholders’ deficit	(606,892		)	(1,076,769		)	Total stockholders’ deficit	(472,107)		(691,073)

Total liabilities and stockholders’ equity	$	1,825,669		$	1,505,491		Total liabilities and stockholders’ equity	$	1,467,589	$	1,526,164

See accompanying Notes to Condensed Consolidated Financial Statements

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GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Dollars in ~~thousands)~~thousands, except share data)

(Unaudited)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,							For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2019			2018			2019			2018				2020		2019		2020		2019
CONSOLIDATED STATEMENTS OF OPERATIONS													CONSOLIDATED STATEMENTS OF OPERATIONS
Net sales	$	420,797		$	454,890		$	1,376,181		$	1,363,121		Net sales	$	286,987	$	420,797	$	886,351	$	1,376,181
Cost of sales	178,497			180,280			571,068			491,339			Cost of sales	131,862		178,497		401,379		571,068
Gross profit	242,300			274,610			805,113			871,782			Gross profit	155,125		242,300		484,972		805,113
Research and development	611			518			1,961			1,528			Research and development	650		611		2,072		1,961
Selling and administrative expenses	15,708			14,234			46,328			46,349			Selling and administrative expenses	19,062		15,708		49,995		46,328
Operating profit	225,981			259,858			756,824			823,905			Operating profit	135,413		225,981		432,905		756,824

Other (income) expense, net	(688		)	1,502			642			2,533
Related party Tax Receivable Agreement expense	—			—			—			61,801
Other expense (income), net													Other expense (income), net	694		(688)		(2,309)		642
Related party Tax Receivable Agreement benefit													Related party Tax Receivable Agreement benefit	0		0		(3,346)		0
Interest expense	31,803			33,855			98,472			100,387			Interest expense	22,474		31,803		69,026		98,472
Interest income	(1,765		)	(562		)	(2,910		)	(1,068		)	Interest income	(93)		(1,765)		(1,582)		(2,910)
Income from continuing operations before provision for income taxes	196,631			225,063			660,620			660,252
Income before provision for income taxes													Income before provision for income taxes	112,338		196,631		371,116		660,620
Provision for income taxes													Provision for income taxes	18,104		20,755		61,838		90,940

Provision for income taxes	20,755			24,871			90,940			36,250
Net income from continuing operations	175,876			200,192			569,680			624,002

(Loss) income from discontinued operations, net of tax	—			(726		)	—			585


Net income	$	175,876		$	199,466		$	569,680		$	624,587		Net income	$	94,234	$	175,876	$	309,278	$	569,680

Basic income per common share*:													Basic income per common share*:
Net income per share	$	0.61		$	0.67		$	1.96		$	2.08		Net income per share	$	0.35	$	0.61	$	1.15	$	1.96
Net income from continuing operations per share	$	0.61		$	0.68		$	1.96		$	2.08

Weighted average common shares outstanding	290,112,233			296,136,564			290,410,859			300,173,831			Weighted average common shares outstanding	267,265,705		290,112,233		267,908,427		290,410,859
Diluted income per common share*:													Diluted income per common share*:
Income per share	$	0.61		$	0.67		$	1.96		$	2.08		Income per share	$	0.35	$	0.61	$	1.15	$	1.96
Diluted income from continuing operations per share	$	0.61		$	0.68		$	1.96		$	2.08

Weighted average common shares outstanding	290,127,296			296,145,453			290,422,351			300,178,704			Weighted average common shares outstanding	267,279,555		290,127,296		267,920,890		290,422,351

STATEMENTS OF COMPREHENSIVE INCOME (LOSS)	STATEMENTS OF COMPREHENSIVE INCOME (LOSS)												STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net income	$	175,876		$	199,466		$	569,680		$	624,587		Net income	$	94,234	$	175,876	$	309,278	$	569,680
Other comprehensive income:													Other comprehensive income:
Foreign currency translation adjustments, net of tax of ($92), $0, ($128), and $0, respectively	(13,597		)	(3,601		)	(13,519		)	(17,379		)
Commodity and interest rate derivatives, net of tax of $6,972, $0, $1,065 and $0, respectively	(25,934		)	5,890			(4,358		)	31,629
Other comprehensive (loss) income, net of tax:	(39,531		)	2,289			(17,877		)	14,250
Foreign currency translation adjustments, net of tax of $0, $(92), $(162) and $(128), respectively													Foreign currency translation adjustments, net of tax of $0, $(92), $(162) and $(128), respectively	7,455		(13,597)		(6,083)		(13,519)
Commodity and interest rate derivatives, net of tax of $(740), $6,972, $7,224 and $1,065, respectively													Commodity and interest rate derivatives, net of tax of $(740), $6,972, $7,224 and $1,065, respectively	2,826		(25,934)		(25,717)		(4,358)
Other comprehensive income (loss), net of tax:													Other comprehensive income (loss), net of tax:	10,281		(39,531)		(31,800)		(17,877)
Comprehensive income	$	136,345		$	201,755		$	551,803		$	638,837		Comprehensive income	$	104,515	$	136,345	$	277,478	$	551,803

*See Notes 1 and 1312

See accompanying Notes to Condensed Consolidated Financial Statements

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GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in ~~thousands, unaudited)~~thousands)

(Unaudited)


	For the Nine Months Ended September 30,							For the Nine Months Ended September 30,
	2019			2018				2020		2019
Cash flow from operating activities:							Cash flow from operating activities:
Net income	$	569,680		$	624,587		Net income	$	309,278	$	569,680
Adjustments to reconcile net income to cash provided by operations:							Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization	46,387			47,746			Depreciation and amortization	45,074		46,387
Related party Tax Receivable Agreement expense	—			61,801
Deferred income tax provision (benefit)	28,696			(18,184		)
Loss on extinguishment of debt	—			23,827

Related party Tax Receivable Agreement benefit							Related party Tax Receivable Agreement benefit	(3,346)		0
Deferred income tax provision							Deferred income tax provision	16,237		28,696

Interest expense	4,764			3,747			Interest expense	4,768		4,764
Other charges, net	17,689			9,652			Other charges, net	2,335		17,689
Net change in working capital*	(80,311		)	(143,695		)	Net change in working capital*	85,098		(80,311)
Change in related party Tax Receivable Agreement							Change in related party Tax Receivable Agreement	(27,857)		0
Change in long-term assets and liabilities	(2,133		)	2,763			Change in long-term assets and liabilities	(14,922)		(2,133)
Net cash provided by operating activities	584,772			612,244			Net cash provided by operating activities	416,665		584,772
Cash flow from investing activities:							Cash flow from investing activities:
Capital expenditures	(44,053		)	(47,632		)	Capital expenditures	(30,688)		(44,053)
Proceeds from the sale of assets	98			866			Proceeds from the sale of assets	78		98

Net cash used in investing activities	(43,955		)	(46,766		)	Net cash used in investing activities	(30,610)		(43,955)
Cash flow from financing activities:							Cash flow from financing activities:
Short-term debt, net	—			(12,607		)
Revolving Facility reductions	—			(45,692		)
Debt issuance costs	—			(27,326		)
Proceeds from the issuance of long-term debt, net of original issuance discount	—			2,235,000
Repayment of Senior Notes	—			(304,782		)
Related party Promissory Note repayment	—			(750,000		)
Repurchase of common stock	(9,484		)	(225,000		)

Repurchase of common stock-non-related party							Repurchase of common stock-non-related party	(30,099)		(9,484)
Payment of tax withholdings related to net share settlement of equity awards							Payment of tax withholdings related to net share settlement of equity awards	(71)		0
Principal repayments on long-term debt	(125,000		)	(28,125		)	Principal repayments on long-term debt	(249,214)		(125,000)

Dividends paid to non-related-party	(15,505		)	(7,651		)	Dividends paid to non-related-party	(7,553)		(15,505)
Dividends paid to related-party	(58,507		)	(1,308,538		)	Dividends paid to related-party	(20,650)		(58,507)
Net cash used in financing activities	(208,496		)	(474,721		)	Net cash used in financing activities	(307,587)		(208,496)
Net change in cash and cash equivalents	332,321			90,757			Net change in cash and cash equivalents	78,468		332,321
Effect of exchange rate changes on cash and cash equivalents	(1,037		)	(1,615		)	Effect of exchange rate changes on cash and cash equivalents	(562)		(1,037)
Cash and cash equivalents at beginning of period	49,880			13,365			Cash and cash equivalents at beginning of period	80,935		49,880
Cash and cash equivalents at end of period	$	381,164		$	102,507		Cash and cash equivalents at end of period	$	158,841	$	381,164

* Net change in working capital due to changes in the following components:							* Net change in working capital due to changes in the following components:
Accounts and notes receivable, net	$	(20,727	)	$	(96,045	)	Accounts and notes receivable, net	$	78,408	$	(20,727)
Inventories	(19,908		)	(93,755		)	Inventories	10,371		(19,908)
Prepaid expenses and other current assets	5,703			7,828			Prepaid expenses and other current assets	5,437		5,703
Income taxes payable	(28,152		)	35,358			Income taxes payable	16,032		(28,152)
Accounts payable and accruals	(17,336		)	4,336			Accounts payable and accruals	(25,078)		(17,336)
Interest payable	109			(1,417		)	Interest payable	(72)		109
Net change in working capital	$	(80,311	)	$	(143,695	)	Net change in working capital	$	85,098	$	(80,311)

See accompanying Notes to Condensed Consolidated Financial Statements

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GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Dollars in thousands, except share data)

(Unaudited)


	Issued Shares of Common Stock	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income(Loss)		Retained Earnings (Accumulated Deficit)		Total Stockholders’ Equity (Deficit)
Balance as of December 31, 2019	270,485,308	$	2,705	$	765,419	$	(7,361)	$	(1,451,836)	$	(691,073)
Comprehensive income (loss):
Net income	—	—		—		—		122,268		122,268
Other comprehensive income (loss):
Commodity and interest rate derivatives income (loss), net of tax of $10,322	—	—		—		(37,577)		—		(37,577)
Commodity derivatives reclassification adjustments, net of tax of $605	—	—		—		(2,204)		—		(2,204)
Foreign currency translation adjustments, net of tax of $(163)	—	—		—		(17,168)		—		(17,168)
Total other comprehensive loss	—	—		—		(56,949)		—		(56,949)
Stock-based compensation	29,394	—		405		—		—		405
Dividends paid to related party stockholder ($0.085 per share)	—	—		—		—		(16,933)		(16,933)
Dividends paid to non-related party stockholders ($0.085 per share)	—	—		—		—		(5,926)		(5,926)
Common stock repurchased and retired (from non-related party)	(3,328,574)	(33)		(9,700)		—		(20,366)		(30,099)
Common stock withheld for taxes on equity award settlement	(7,465)	—		(21)		—		(25)		(46)
Adoption of ASC 326	—	—		—		—		(2,026)		(2,026)
Balance as of March 31, 2020	267,178,663	$	2,672	$	756,103	$	(64,310)	$	(1,374,844)	$	(680,379)
Comprehensive income (loss):
Net income	—	—		—		—		92,776		92,776
Other comprehensive income (loss):
Commodity and interest rate derivatives income (loss), net of tax of $(3,199)	—	—		—		12,132		—		12,132
Commodity derivatives reclassification adjustments, net of tax of $236	—	—		—		(894)		—		(894)
Foreign currency translation adjustments, net of tax of $1	—	—		—		3,630		—		3,630
Total other comprehensive income	—	—		—		14,868		—		14,868
Stock-based compensation	13,017	—		718		—		—		718
Dividends paid to related party stockholder ($0.01 per share)	—	—		—		—		(1,993)		(1,993)
Dividends paid to non-related party stockholders ($0.01 per share)	—	—		—		—		(679)		(679)

Common stock withheld for taxes on equity award settlement	(3,133)	—		(9)		—		(16)		(25)
Balance as of June 30, 2020	267,188,547	$	2,672	$	756,812	$	(49,442)	$	(1,284,756)	$	(574,714)
Comprehensive income (loss):
Net income	—	—		—		—		94,234		94,234
Other comprehensive income (loss):
Commodity and interest rate derivative income (loss), net of tax of $(1,009)	—	—		—		3,852		—		3,852
Commodity derivatives reclassification adjustments, net of tax of $269	—	—		—		(1,026)		—		(1,026)
Foreign currency translation adjustments, net of tax of $0	—	—		—		7,455		—		7,455
Total other comprehensive income	—	—		—		10,281		—		10,281
Stock-based compensation	0	—		764		—		—		764
Dividends paid to related party stockholder ($0.01 per share)	—	—		—		—		(1,724)		(1,724)
Dividends paid to non-related party stockholders ($0.01 per share)	—	—		—		—		(948)		(948)
Balance as of September 30, 2020	267,188,547	$	2,672	$	757,576	$	(39,161)	$	(1,193,194)	$	(472,107)

Table of Contents

Issued
Shares of
Common
Stock Common
Stock Additional
Paid-in
Capital Accumulated
Other
Comprehensive
Income(Loss) Retained Earnings (Accumulated
Deficit) Total
Stockholders’
Equity (Deficit)
Balance as of December 31, 2018 290,537,612
$ 2,905
$ 819,622
$ (5,800 ) $ (1,893,496 ) $ (1,076,769 )
Comprehensive income (loss):
Net income —
—
—
—
197,436
197,436
Other comprehensive income (loss):

Commodity and foreign currency derivatives income, net of tax of ($7,295) —
—
—
27,113
—
27,113
Commodity and foreign currency derivatives reclassification adjustments, net of tax of $392 —
—
—
(1,456 ) —
(1,456 )
Foreign currency translation adjustments, net of tax of ($3) —
—
—
(3,539 ) —
(3,539 )
   Total other comprehensive income —
—
—
22,118
—
22,118
Stock-based compensation 293
293
Dividends paid to related party
stockholder ($0.085 per share) —
—
—
—
(19,502 ) (19,502 )
Dividends paid to non-related party
stockholders ($0.085 per share) —
—
—
—
(5,194 ) (5,194 )
Balance as of March 31, 2019 290,537,612
$ 2,905
$ 819,915
$ 16,318
$ (1,720,756 ) $ (881,618 )
Comprehensive income (loss):
Net income —
—
—
—
196,368
196,368
Other comprehensive income (loss):
Commodity and foreign currency derivatives income, net of tax of $603 —
—
—
(2,472 ) —
(2,472 )
Commodity and foreign currency derivatives reclassification adjustments, net of tax of $393 —
—
—
(1,609 ) —
(1,609 )
Foreign currency translation adjustments, net of tax of ($33) —
—
—
3,617
—
3,617
   Total other comprehensive loss —
—
—
(464 ) —
(464 )
Stock-based compensation 570
570
Dividends paid to related party
stockholder ($0.085 per share) —
—
—
—
(19,503 ) (19,503 )
Dividends paid to non-related party
stockholders ($0.085 per share) —
—
—
—
(5,191 ) (5,191 )
Balance as of June 30, 2019 290,537,612
$ 2,905
$ 820,485
$ 15,854
$ (1,549,082 ) $ (709,838 )
Comprehensive income (loss):
Net income —
—
—
—
175,876
175,876
Other comprehensive loss:
Commodity, foreign currency and interest rate derivative income, net of tax of $6,306 —
—
—
(23,456 ) —
(23,456 )
Commodity and foreign currency derivatives reclassification adjustments, net of tax of $666 —
—
—
(2,478 ) —
(2,478 )
Foreign currency translation adjustments, net of tax of ($92) —
—
—
(13,597 ) —
(13,597 )
   Total other comprehensive loss —
—
—
(39,531 ) —
(39,531 )
Stock-based compensation 705
705
Dividends paid to related party
stockholder ($0.085 per share) —
—
—
—
(19,502 ) (19,502 )
Dividends paid to non-related party
stockholders ($0.085 per share) —
—
—
—
(5,118 ) (5,118 )
Common stock repurchases and retirement (879,134 ) (8 ) (2,470 ) (7,006 ) (9,484 )
Balance as of September 30, 2019 289,658,478
$ 2,897
$ 818,720
$ (23,677 ) $ (1,404,832 ) $ (606,892 )


	Issued Shares of Common Stock	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income(Loss)		Retained Earnings (Accumulated Deficit)		Total Stockholders’ Equity (Deficit)
Balance as of December 31, 2018	290,537,612	$	2,905	$	819,622	$	(5,800)	$	(1,893,496)	$	(1,076,769)
Comprehensive income (loss):
Net income	—	—		—		—		197,436		197,436
Other comprehensive income (loss):
Commodity derivatives foreign currency derivatives income (loss), net of tax of $(7,295)	—	—		—		27,113		—		27,113
Commodity derivatives reclassification adjustments, net of tax of $392	—	—		—		(1,456)		—		(1,456)
Foreign currency translation adjustments, net of tax $(3)	—	—		—		(3,539)		—		(3,539)
Total other comprehensive income	—	—		—		22,118		—		22,118
Stock-based compensation				293						293
Dividends paid to related party stockholder ($0.085 per share)	—	—		—		—		(19,502)		(19,502)
Dividends paid to non-related party stockholders ($0.085 per share)	—	—		—		—		(5,194)		(5,194)
Balance as of March 31, 2019	290,537,612	$	2,905	$	819,915	$	16,318	$	(1,720,756)	$	(881,618)
Comprehensive income (loss):
Net income	—	—		—		—		196,368		196,368
Other comprehensive income (loss):
Commodity derivatives income (loss), net of tax of $603	—	—		—		(2,472)		—		(2,472)
Commodity derivatives reclassification adjustments, net of tax of $393	—	—		—		(1,609)		—		(1,609)
Foreign currency translation adjustments, net of tax of $(33)	—	—		—		3,617		—		3,617
Total other comprehensive (loss)	—	—		—		(464)		—		(464)
Stock-based compensation				570						570

Dividends paid to related party stockholder ($0.085 per share)	—	—		—		—		(19,503)		(19,503)
Dividends paid to non-related party stockholders ($0.085 per share)	—	—		—		—		(5,191)		(5,191)
Balance as of June 30, 2019	290,537,612	$	2,905	$	820,485	$	15,854	$	(1,549,082)	$	(709,838)
Comprehensive income (loss):
Net income	—	—		—		—		175,876		175,876
Other comprehensive income (loss):
Commodity and foreign currency derivatives loss, net of tax of $6,306	—	—		—		(23,456)		—		(23,456)
Commodity derivatives reclassification adjustments, net of tax of $666	—	—		—		(2,478)		—		(2,478)
Foreign currency translation adjustments of $(92)	—	—		—		(13,597)		—		(13,597)
Total other comprehensive income	—	—		—		(39,531)		—		(39,531)
Stock-based compensation	—	—		705		—		—		705
Dividends paid to related party stockholder ($0.085 per share)	—	—		—		—		(19,502)		(19,502)
Dividends paid to non-related party stockholders ($0.085 per share)	—	—		—		—		(5,118)		(5,118)
Common stock repurchases and retirement	(879,134)	(8)		(2,470)		—		(7,006)		(9,484)
Balance as of September 30, 2019	289,658,478	$	2,897	$	818,720	$	(23,677)	$	(1,404,832)	$	(606,892)

Cont'd Issued
Shares of
Common
Stock Common
Stock Additional
Paid-in
Capital Accumulated
Other
Comprehensive
Income(Loss) Retained Earnings (Accumulated
Deficit) Total
Stockholders’
Equity (Deficit)
Balance as of December 31, 2017⁽¹⁾
302,225,923
$ 3,022
$ 851,315
$ 20,289
$ (261,411 ) $ 613,215
Comprehensive income (loss):
Net income —
—
—
—
223,673
223,673
Other comprehensive income (loss):
Commodity and foreign currency derivatives loss, net of tax of $0 —
—
—
(6,113 ) —
(6,113 )
Foreign currency translation adjustments —
—
—
5,040
—
5,040
   Total other comprehensive loss —
—
—
(1,073 ) —
(1,073 )
Dividends paid to related party
stockholder ($3.68 per share) —
—
—
—
(1,112,000 ) (1,112,000 )
Balance as of March 31, 2018⁽¹⁾
302,225,923
$ 3,022
$ 851,315
$ 19,216
$ (1,149,738 ) $ (276,185 )
Comprehensive income (loss):
Net income —
—
—
—
201,448
201,448
Other comprehensive income (loss):
Commodity and foreign currency derivatives loss, net of tax of $0 —
—
—
31,852
—
31,852
Foreign currency translation adjustments —
—
—
(18,818 ) —
(18,818 )
   Total other comprehensive income —
—
—
13,034
—
13,034
Stock-based compensation —
—
181
—
—
181
Related-party promissory note repayment —
—
—
—
(750,000 ) (750,000 )
Dividends paid to related party
stockholder ($0.59 per share) —
—
—
—
(177,040 ) (177,040 )
Dividends paid to non-related party
stockholders ($0.085 per share) —
—
—
—
(2,457 ) (2,457 )
Balance as of June 30, 2018 302,225,923
$ 3,022
$ 851,496
$ 32,250
$ (1,877,787 ) $ (991,019 )
Comprehensive income (loss):
Net income —
—
—
—
199,466
199,466
Other comprehensive income (loss):
Commodity and foreign currency derivatives loss, net of tax of ($9,871) —
—
—
5,890
—
5,890
Foreign currency translation adjustments —
—
—
(3,601 ) —
(3,601 )
   Total other comprehensive income —
—
—
2,289
—
2,289
Stock-based compensation —
—
475
—
—
475
Dividends paid to related party
stockholder ($0.085 per share) —
—
—
—
(19,498 ) (19,498 )
Dividends paid to non-related party
stockholders ($0.085 per share) —
—
—
(5,194 ) (5,194 )
Common stock repurchases and retirement (11,688,311 ) (117 ) (32,844 ) —
(192,042 ) (225,003 )
Balance as of September 30, 2018 290,537,612
$ 2,905
$ 819,127
$ 34,539
$ (1,895,055 ) $ (1,038,484 )

⁽¹⁾ ~~On April 12, 2018, the Company effected a 3,022,259.23 to one split of the Company's common stock. We retrospectively applied this split to all previous periods presented.~~

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1)Organization and Summary of Significant Accounting Policies


~~(1)~~	~~Organization and Summary of Significant Accounting Policies~~

A. Organization

GrafTech International Ltd. (the “Company”) is a leading manufacturer of high quality graphite electrode products essential to the production of electric arc furnace ~~("EAF")~~ steel and other ferrous and non-ferrous metals. References herein to "GrafTech," “we,” “our,” or “us” refer collectively to GrafTech International Ltd. and its subsidiaries.

On August 15, 2015, we became an indirect wholly owned subsidiary of Brookfield Asset Management Inc. (together with its affiliates, ~~“Brookfield”~~"Brookfield") ~~through a tender offer to our former stockholders and subsequent merger transaction. On~~. In April ~~23,~~ 2018, ~~the Company~~we completed ~~its~~our initial public offering ("IPO") of 38,097,525 shares of our common stock held by Brookfield at a price of $15.00 per share. We did not receive any proceeds related to the IPO. Our common stock is listed on the NYSE under the symbol “EAF.” On July 22, 2020, Brookfield distributed a portion of its GrafTech common stock to the owners in the Brookfield consortium, resulting in the reduction in Brookfield's ownership of outstanding shares of GrafTech common stock to 65%. Brookfield owned approximately 65% of our outstanding common stock as of September 30, 2020.

The Company’s only reportable segment, Industrial Materials, is comprised of our ~~two~~2 major product categories: graphite electrodes and petroleum needle coke products. ~~Needle~~Petroleum needle coke is ~~the~~a key raw material used in the production of graphite electrodes. The Company's vision is to provide highly engineered graphite electrode services, solutions and products to ~~EAF~~electric arc furnace operators.

B. Basis of Presentation

The interim condensed consolidated financial statements are unaudited; however, in the opinion of management, they have been prepared in accordance with Rule 10-01 of Regulation S-X and in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The December 31, ~~2018~~2019 financial position data included herein was derived from the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 ("Annual Report on Form 10-K"), filed on February ~~22, 2019~~21, 2020, but does not include all disclosures required by GAAP in audited financial statements. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the accompanying notes, contained in our Annual Report on Form ~~10-K filed on February 22, 2019.~~10-K.

The unaudited condensed consolidated financial statements reflect all adjustments (all of which are of a normal, recurring nature) which management considers necessary for a fair statement of financial position, results of operations, comprehensive income and cash flows for the interim periods presented. The results for the interim periods are not necessarily indicative of results which may be expected for any other interim period or for the full year.

~~Earnings per share~~

The calculation of basic earnings per share is based on the number of common shares outstanding after giving effect to the stock split effected on April 12, 2018 and the common stock repurchases on August 13, 2018 and during the third quarter of 2019. Diluted earnings per share recognizes the dilution that would occur if stock options, deferred stock units or restricted stock units were exercised or converted into common shares. See Note 13 "Earnings Per Share".

C. New Accounting Standards

Recently Adopted Accounting Standards

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases~~ (Topic 842). Under this new guidance, a company will now recognize most leases on its balance sheet as lease liabilities with corresponding right-of-use assets. This ASU is effective for fiscal years beginning after December 15, 2018. The Company adopted ASU No. 2016-02 on January 1, 2019. The adoption impact was not material to our financial position, results of operations or cash flows. See Note 3 "Leases" for information regarding this standard and its adoption.

~~Accounting Standards Not Yet Adopted~~

In January 2017, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued ASU No. ~~2017‑04,~~ ~~Intangibles‑Goodwill~~2017-04, Intangibles-Goodwill and Other (Topic 350). This guidance was issued to simplify the accounting for goodwill impairment. The guidance removes the second step of the goodwill impairment test, which requires that a hypothetical purchase price allocation be performed to determine the amount of impairment, if any. Under this new guidance, a goodwill impairment charge will be based on the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This ASU No. 2017-04 is effective beginning January 1, 2020. The ~~guidance will become effective on a prospective basis for the~~ Company adopted ASU No. 2017-04 on January 1, 2020, with ~~early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of this standard is not expected~~no impact to ~~have a material effect on the Company’s~~our financial position, results of operations or cash flows.

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments–Credit Losses (Topic 326), which introduces the Current Expected Credit Losses ("CECL") accounting model. CECL requires earlier recognition of credit losses, while also providing additional transparency about credit risk. CECL utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. ASU No. 2016-13 iswas effective for ~~the~~ the Company on January 1, 2020. The ~~Company~~adoption of ASU No. 2016-13 resulted in a cumulative-effect adjustment of $2.0 million included as an adjustment to our accounts receivable reserve and to retained earnings on January 1, 2020.

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Accounting Standards Not Yet Adopted

In March 2020, the FASB issued ASU No. 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848). This pronouncement contains optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform. ASU 2020-04 is elective and applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 can be elected for both interim and annual periods from March 12, 2020 through December 31, 2022. We plan to adopt ASU 2020-04 as of January 1, 2021. The adoption of ASU 2020-04 is not expected to have a material impact on our financial position, results of operations or cash flows.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to improve consistent application of Topic 740 and simplify the accounting for income taxes. This pronouncement removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance. ASU 2019-12 is effective for annual and interim reporting periods beginning after December 12, 2020, with early adoption permitted. The Company is currently evaluating the ~~impact~~effects of this ~~standard.~~on our financial position, results of operations or cash flows.


~~(2)~~	~~Revenue from Contracts with Customers~~

(2)Revenue from Contracts with Customers

Disaggregation of Revenue

The following table provides information about disaggregated revenue by type of product and contract for the three and nine months ended September 30, ~~2019~~2020 and ~~2018:~~2019:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2020		2019		2020		2019
	(Dollars in thousands)
Graphite Electrodes - Three-to-five-year take-or-pay contracts	$	250,011	$	334,097	$	771,400	$	1,107,742
Graphite Electrodes - Short-term agreements and spot sales	32,303		67,704		93,232		191,249
By-products and other	4,673		18,996		21,719		77,190
Total Revenues	$	286,987	$	420,797	$	886,351	$	1,376,181

For the Three Months Ended September 30, For the Nine Months
Ended September 30,
2019 2018 2019 2018
(Dollars in thousands)
Graphite Electrodes - Three-to-five-year take-or-pay contracts $ 334,097
$ 359,405
$ 1,107,742
$ 976,852
Graphite Electrodes - Short-term agreements and spot sales 67,704
51,475
191,249
261,949
By-products and other 18,996
44,010
77,190
124,320
Total Revenues $ 420,797
$ 454,890
$ 1,376,181
$ 1,363,121

~~Effective the first quarter of 2019, the~~The Graphite Electrodes revenue categories include only graphite electrodes manufactured by GrafTech. The revenue category “By-products and Other” ~~now~~ includes ~~re-sales~~resales of low-grade electrodes purchased from ~~third party~~third-party suppliers, which represent a minimal contribution to our profitability. ~~For comparability purposes, the prior period has been recast to conform to this presentation.~~

Contract Balances

Receivables, net of allowances for doubtful accounts, were ~~$264.2~~$164.2 million as of September 30, ~~2019~~2020 and ~~$248.3~~$247.1 million as of December 31, ~~2018.~~2019. Accounts receivables are recorded when the right to consideration becomes unconditional. Payment terms on invoices range from 30 to 120 days depending on the customary business practices of the jurisdictions in which we ~~do business.~~operate.

Certain short-term and longer-term sales contracts require up-front payments prior to the Company’s fulfillment of any performance obligation. These contract liabilities are recorded as current or long-term deferred revenue, depending on the lag between the pre-payment and the expected delivery of the related products. Additionally, under ASC 606, Revenue from Contracts with Customers, deferred revenue ~~originates~~or contract assets originate from contracts where the allocation of the transaction price to the performance obligations based on their relative stand-alone selling prices results in the timing of revenue recognition being different from the timing of the invoicing. In this case, deferred revenue is amortized into revenue based on the transaction price allocated to the remaining performance ~~obligations.~~obligations and contract assets are realized through the contract invoicing.

Contract assets as of September 30, 2020 were $0.8 million and are included in "Prepaid expenses and other current assets" on the Condensed Consolidated Balance Sheets. There were 0 contract assets as of December 31, 2019.

Current deferred revenue is included in "Other accrued liabilities" and long-term deferred revenue is included in "Other long-term obligations" on the Condensed Consolidated Balance Sheets.

~~The following table provides information about deferred revenue from contracts with customers (in thousands):~~

Current deferred revenue Long-Term deferred revenue
(Dollars in thousands)
Balance as of December 31, 2018 $ 5,380
$ 7,716
Revenue recognized that was included in the deferred revenue balance
at the beginning of the period
(4,606 ) —
Increases due to cash received, excluding amounts recognized as revenue during the period 2,144
—
Foreign currency impact 4
(220 )
Balance as of September 30, 2019 $ 2,922
$ 7,496

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table provides information about deferred revenue from contracts with customers (in thousands):


	Current Deferred Revenue		Long-Term Deferred Revenue
	(Dollars in thousands)
Balance as of December 31, 2019	$	11,776	$	3,858
Increases due to cash received	10,535		0
Revenue recognized	(3,684)		0


Foreign currency impact	(924)		0
Balance as of September 30, 2020	$	17,703	$	3,858

Transaction Price Allocated to the Remaining Performance Obligations

~~The following table presents estimated revenues~~

We estimate that our long-term contract revenue in 2020 will be in the range of $1,000 million to $1,080 million. We recorded $771 million of revenue in the first nine months of 2020, and we expect to record approximately $230 million to $310 million of revenue for the remainder of 2020. As a result of recent contract modifications, as well as on-going discussions with many of our customers, the remaining revenue associated with our long-term sales agreements is expected to be ~~recognized in the future related~~approximately as follows:


	2021	2022	2023 through 2024
	(Dollars in millions)
Estimated LTA revenue	$925-$1,025	$910-$1,010	$350-$450(1)

(1) Includes expected termination fees from a few customers that have failed to ~~performance~~meet certain obligations ~~that are unsatisfied (or partially unsatisfied) at the end~~under their long-term agreements ("LTAs").

The majority of the ~~reporting period. The estimated revenues do not include~~long-term take-or-pay contracts are defined as pre-determined fixed annual volume contracts while a small portion are defined with a specified volume range. For the year 2021 and beyond, the contractual revenue amounts above are based upon the minimum volume for those contracts with ~~original duration of one year or less.~~

Three-to-five-year take-or-pay contracts
(Dollars in thousands)
Remainder of 2019 347,097
2020 1,366,579
2021 1,211,036
2022 1,144,574
Thereafter 29,461
Total $ 4,098,747

~~In addition~~specified ranges. The actual revenue realized from these contracted volumes may vary in timing and total due to the ~~expected remaining revenue to be recognized~~credit risk associated with ~~the longer-term sales~~certain customers facing financial challenges and non-performance on contracts, ~~the Company recorded $1,107.7 million of revenue pursuant to these contracts in the nine months ended September 30, 2019.~~


~~(3)~~	~~Leases~~

~~We lease certain transportation and mobile manufacturing equipment such as railcars and forklifts,~~ as well as ~~real estate.~~customer demand related to contracted volume ranges. Some of our customers are struggling to take their committed volumes. This is causing some non-performance and disputes including a few arbitrations associated with, among other things, efforts to modify existing contracts.

(3)Retirement Plans and Postretirement Benefits

The Company adopted ASU 2016-02 "Leases: (Topic 842) ("ASC 842") on January 1, 2019. ASC 842 requires that all leases, financing and operating, be included on the balance sheet. The Company adopted ASC 842 using the modified retrospective approach under which prior periods’ financial statementscomponents of our consolidated net pension costs are not restated and a cumulative-effect adjustment to retained earnings at the beginning of the period of adoption is recorded, if applicable. The Company elected to adopt the transition package of practical expedients for lease identification, classification, initial direct costs and hindsight. At the adoption of ASC 842 on January 1, 2019, the Company recognized right-of-use ("RoU") assets and corresponding operating lease liabilities of $7.5 million, with no cumulative-effect adjustment to retained earnings.

We determine if an arrangement is a lease at lease inception. When an arrangement contains a lease, we then determine if it meets any of the criteria for a financing lease. Leases with a term of 12 months or less are not recorded on the balance sheet.

RoU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. RoU assets and lease liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term.

~~In order to compute the lease liability, when the rate implicit~~set forth in the lease is not readily determinable, we discount the lease payments using our estimated incremental borrowing rate for secured fixed rate debt over the same term, derived from information available at the lease commencement date. Our lease term includes the option to extend the lease when it is reasonably certain that we will exercise that option.following table:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2020		2019		2020		2019
	(Dollars in thousands)
Service cost	$	623	$	574	$	1,863	$	1,724
Interest cost	1,033		1,316		3,098		3,948
Expected return on plan assets	(1,283)		(1,339)		(3,849)		(4,015)
Net cost	$	373	$	551	$	1,112	$	1,657

The ~~Company has elected to account for the lease and non-lease~~ components ~~as a single lease component, except for leases~~ of ~~warehouse space where they will be accounted for separately. Leases may include variable lease and variable non-lease components~~our consolidated net postretirement costs ~~which~~ are ~~accounted for as variable lease expense~~set forth in the ~~income statement.~~following table:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2020		2019		2020		2019
	(Dollars in thousands)

Interest cost	$	180	$	236	545		717
Net cost	$	180	$	236	$	545	$	717

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~Components of lease expense are as follows:~~

For the Three Months Ended September 30, 2019 For the Nine
Months Ended September 30, 2019
(Dollars in thousands)
Operating lease cost 1,078
3,162
Short-term lease cost 2
12
Variable lease cost 49
234
Total lease cost $ 1,129
$ 3,408

~~Supplemental cash-flow~~(4)Goodwill and ~~other information related to leases is as follows:~~Other Intangible Assets

For the Three Months Ended September 30, 2019 For the Nine
Months Ended September 30, 2019
(Dollars in thousands)
RoU assets obtained in exchange for new operating lease liabilities (non-cash) 676
2,752
Operating (use of cash) from operating leases (1,120 ) (3,192 )

~~Supplemental balance sheet information related to leases is as follows:~~

As of
September 30, 2019
(Dollars in thousands)
Operating RoU Assets* $ 7,228
*Amount included in Other assets

Current operating lease liabilities 3,752
Non-current operating lease liabilities 3,462
Total operating lease liabilities** $ 7,214
**Amounts included in other accrued liabilities and other long-term obligations

Weighted average remaining lease term (in years) 2.60
Weighted average discount rate - operating leases 5.62 %

~~As of September 30, 2019, lease commitments under non-cancelable operating leases extending for one year or more will require the following future payments:~~

(Dollars in thousands)
Remainder 2019 $ 1,085
2020 3,422
2021 2,085
2022 561
2023 322
2024 and thereafter 381
Total lease payments $ 7,856
Less: Imputed interest (642 )
Present value of lease payments 7,214
Less: Current operating lease liability (3,752 )
Non-current operating lease liability $ 3,462

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~As of September 30, 2019, we have not entered into any additional operating lease commitments that have yet to commence.~~

~~Disclosure related to periods prior to adoption of the new lease standard~~

~~As of December 31, 2018, lease commitments under non-cancelable operating leases required the following future payments:~~

(Dollars in thousands)
2019 $ 4,474
2020 2,747
2021 1,497
2022 334
2023 269
2024 and thereafter 343
Total lease payments $ 9,664

~~Total lease expenses under non-cancelable operating leases approximated $4.9 million in 2018.~~


~~(4)~~	~~Retirement Plans and Postretirement Benefits~~

~~The components of our consolidated net pension costs are set forth in the following table:~~

For the Three Months
Ended September 30, For the Nine Months
Ended September 30,
2019 2018 2019 2018
(Dollars in thousands)
Service cost $ 574
$ 498
$ 1,724
$ 1,494
Interest cost 1,316
1,239
3,948
3,721
Expected return on plan assets (1,339 ) (1,502 ) (4,015 ) (4,506 )
Net cost $ 551
$ 235
$ 1,657
$ 709

~~The components of our consolidated net postretirement costs are set forth in the following table:~~

For the Three Months
Ended September 30, For the Nine Months
Ended September 30,
2019 2018 2019 2018
(Dollars in thousands)
Service cost $ —
$ 3
$ —
$ 3
Interest cost 236
229
717
731
Net cost $ 236
$ 232
$ 717
$ 734


~~(5)~~	~~Goodwill and Other Intangible Assets~~

We are required to review goodwill and indefinite-lived intangible assets annually for impairment. Goodwill impairment is tested at the ~~graphite electrodes~~ reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.

The following tables represent the ~~changes in the~~ carrying value of goodwill and intangibles for the nine months ended September 30, ~~2019~~2020, which are reported in "Other assets" on the balance sheets:


Goodwill
(Dollars in thousands)
Balance as of December 31, 2019	$	171,117
Adjustments	0
Balance as of September 30, 2020	$	171,117


Intangible Assets
	As of September 30, 2020						As of December 31, 2019
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(Dollars in thousands)
Trade name	$	22,500	$	(11,425)	$	11,075	$	22,500	$	(9,861)	$	12,639
Technological know-how	55,300		(32,945)		22,355		55,300		(29,112)		26,188
Customer–related intangible	64,500		(22,759)		41,741		64,500		(19,473)		45,027
Total finite-lived intangible assets	$	142,300	$	(67,129)	$	75,171	$	142,300	$	(58,446)	$	83,854

Amortization expense of acquired intangible assets was $2.8 million and $3.0 million in the three months ended September 30, 2020 and 2019, respectively, and $8.7 million and $9.2 million in the nine months ended September 30, 2020 and 2019, respectively. Estimated amortization expense will be approximately $2.7 million for the remainder of 2020, $10.7 million in 2021, $10.1 million in 2022, $9.2 million in 2023 and $8.0 million in 2024.

(5)Debt and Liquidity

The following table presents our long-term debt:


	As of September 30, 2020		As of December 31, 2019
	(Dollars in thousands)


2018 Credit Facility (2018 Term Loan and 2018 Revolving Credit Facility)	$	1,563,903	$	1,812,204
Other debt	675		619
Total debt	1,564,578		1,812,823
Less: Short-term debt	(147)		(141)
Long-term debt	$	1,564,431	$	1,812,682

During 2019, we repaid a total of $350 million under our 2018 Term Loan Facility (as defined below). These payments satisfied our then-current obligations relative to the minimum quarterly installments. During the nine months ended September 30, 2020, we executed several transactions to repurchase a total of $80 million of principal of our 2018 Term Loan facility. Additionally, during the nine months ended September 30, 2020, we repaid a total of $173 million of principal of our 2018 Term Loan Facility. The fair value of the 2018 Term Loan Facility was approximately $1,576 million and $1,813 million as of September 30, 2020 and December 31, 2019, respectively. The fair value of the debt is measured using level 3 inputs.

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Goodwill
(Dollars in thousands)
Balance as of December 31, 2018 $ 171,117
Adjustments —
Balance as of September 30, 2019 $ 171,117

Intangible Assets
As of September 30, 2019 As of December 31, 2018

Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount
(Dollars in Thousands)
Trade name $ 22,500
$ (9,336 ) $ 13,164
$ 22,500
$ (7,721 ) $ 14,779
Technological know-how 55,300
(27,808 ) 27,492
55,300
(23,503 ) 31,797
Customer–related
intangible
64,500
(18,377 ) 46,123
64,500
(15,070 ) 49,430
Total finite-lived
intangible assets
$ 142,300
$ (55,521 ) $ 86,779
$ 142,300
$ (46,294 ) $ 96,006

~~Amortization expense of acquired intangible assets was $3.0 million and $3.2 million in the three months ended September 30, 2019 and~~ 2018 respectively, and $9.2 million and $9.8 million in the nine months ended September 30, 2019 and 2018, respectively. Estimated amortization expense will approximate $2.9 million in the remainder of 2019, $11.4 million in 2020, $10.7 million in 2021, $10.1 million in 2022 and $9.2 million in 2023.


~~(6)~~	~~Debt and Liquidity~~

~~The following table presents our long-term debt:~~

As of
September 30, 2019 As of
December 31, 2018
(Dollars in thousands)
2018 Credit Facility (2018 Term Loan and 2018 Revolving Facility) $ 2,035,624
$ 2,155,883
Other Debt 738
751
Total debt 2,036,362
2,156,634
Less: Short-term debt (70,861 ) (106,323 )
Long-term debt $ 1,965,501
$ 2,050,311

~~On February 13, 2019, we repaid $125 million on our 2018 Term Loan Facility. The fair value of debt approximated the book value of $2,036.4 million as of September 30, 2019.~~

~~Senior Notes and Old~~ Credit Agreement

~~As of December 31, 2017, the Company had $300 million of principal amount of 6.375% Senior Notes due 2020 (the "Senior Notes"). The Senior Notes were scheduled to mature on November 15, 2020.~~

Additionally, as of December 31, 2017, the Company was party to the Amended and Restated Credit Agreement ("Old Credit Agreement") which consisted of the "Old Revolving Facility" and the "Old Term Loan Facility". As of December 31, 2017, the Company had $39.5 million of borrowings on the Old Revolving Facility and $8.7 million of letters of credit drawn against the Old Credit Facility. The balance of the Old Term Loan Facility was $18.7 million as of December 31, 2017.

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

As described below, the outstanding indebtedness under the Senior Notes, Old Revolving Credit Facility and the Old Term Loan was repaid as of February 12, 2018 and all commitments thereunder have been terminated.

~~Refinancing~~

On February 12, 2018, the Company entered into a credit agreement (the “2018 Credit Agreement”) among the Company, GrafTech Finance Inc.~~, a Delaware corporation and a wholly owned subsidiary of~~ (“GrafTech (“Finance”), GrafTech Switzerland SA ~~a Swiss corporation and a wholly owned subsidiary of GrafTech~~ (“Swissco”), GrafTech Luxembourg II S.à.r.l.~~, a Luxembourg société à responsabilité limitée and a wholly owned subsidiary of GrafTech (“~~(“Luxembourg Holdco” and, together with GrafTech Finance and Swissco, the ~~“Co‑Borrowers”~~“Co-Borrowers”), the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A. as administrative agent (the "Administrative Agent") and as collateral agent, which provides for (i) a $1,500 million senior secured term facility (the “2018 Term Loan Facility”) and (ii) a $250 million senior secured revolving credit facility (the “2018 Revolving Credit Facility” and, together with the 2018 Term Loan Facility, the “Senior Secured Credit Facilities”), which may be used from time to time for revolving credit borrowings denominated in dollars or Euro, the issuance of one or more letters of credit denominated in dollars, ~~Euro, Pounds Sterling~~euro, pounds sterling or Swiss ~~Francs~~francs and one or more swing line loans denominated in dollars. GrafTech Finance is the sole borrower under the 2018 Term Loan Facility, while GrafTech Finance, Swissco and ~~Luxembourg~~Lux Holdco are ~~Co‑Borrowers~~Co-Borrowers under the 2018 Revolving Credit Facility. On February 12, 2018, GrafTech Finance borrowed $1,500 million under the 2018 Term Loan Facility (the "2018 Term Loans"). The 2018 Term Loans mature on February 12, 2025. The maturity date for the 2018 Revolving Credit Facility is February 12, 2023.

The proceeds of the 2018 Term Loans were used to (i) repay in full all outstanding indebtedness of the ~~Co‑Borrowers~~Co-Borrowers under ~~the Old Credit Agreement~~our previous credit agreement and terminate all commitments thereunder, (ii) redeem in full ~~the Senior Notes~~our previously held senior notes at a redemption price of 101.594% of the principal amount thereof plus accrued and unpaid interest to the date of redemption, (iii) pay fees and expenses incurred in connection with (i) and (ii) above and the Senior Secured Credit Facilities and related expenses, and (iv) declare and pay a dividend to the sole pre-IPO stockholder, with any remainder to be used for general corporate purposes. See Note 87 "Interest Expense" for a breakdown of expenses associated with these repayments. In connection with the repayment of ~~the Old Credit Agreement~~our previous credit agreement and redemption of ~~the Senior Notes,~~our previously held senior notes, all guarantees of obligations under the ~~Old Credit Agreement,~~previous credit agreement, the ~~Senior Notes~~senior notes and related indenture were terminated, all mortgages and other security interests securing obligations under the ~~Old Credit Agreement~~previous credit agreement were released and the ~~Old Credit Agreement and the~~ indenture ~~were~~was terminated.

Borrowings under the 2018 Term Loan Facility bear interest, at GrafTech Finance’s option, at a rate equal to either (i) the Adjusted LIBO Rate (as defined in the 2018 Credit Agreement), plus an applicable margin initially equal to 3.50% per annum or (ii) the ABR Rate (as defined in the 2018 Credit Agreement), plus an applicable margin initially equal to 2.50% per annum, in each case with one step down of 25 basis points based on achievement of certain public ratings of the 2018 Term Loans.

Borrowings under the 2018 Revolving Credit Facility bear interest, at the applicable ~~Co‑Borrower’s~~Co-Borrower’s option, at a rate equal to either (i) the Adjusted LIBO Rate, plus an applicable margin initially equal to 3.75% per annum or (ii) the ABR Rate, plus an applicable margin initially equal to 2.75% per annum, in each case with two 25 basis point step downs based on achievement of certain senior secured first lien net leverage ratios. In addition, the ~~Co‑Borrowers~~Co-Borrowers will be required to pay a quarterly commitment fee on the unused commitments under the 2018 Revolving Credit Facility in an amount equal to 0.25% per annum.

All obligations under the 2018 Credit Agreement are guaranteed by GrafTech, Finance and each domestic subsidiary of GrafTech, subject to certain customary exceptions, and all obligations under the 2018 Credit Agreement of each foreign subsidiary of GrafTech that is a Controlled Foreign Corporation (within the meaning of Section 956 of the Internal Revenue Code of 1986, as amended from time to time (the "Code")) are guaranteed by GrafTech Luxembourg I S.à.r.l., a Luxembourg société à responsabilité limitée and an indirect wholly owned subsidiary of GrafTech ("Luxembourg Parent"), Luxembourg Holdco and Swissco (collectively, the "Guarantors").

For borrowings under both the 2018 Term Loan Facility and the 2018 Revolving Credit Facility, if the Administrative Agent determines that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate and such circumstances are unlikely to be temporary or the relevant authority has made a public statement identifying a date after which the LIBO Rate shall no longer be used for determining interest rates for loans, then the Administrative Agent and the Co-Borrowers shall endeavor to establish an alternate rate of interest, which shall be effective so long as the majority in interest of the lenders for each Class (as defined in the 2018 Credit Agreement) of loans under the 2018 Credit Agreement do not notify the Administrative Agent otherwise. Until such an alternate rate of interest is determined, (a) any request for a borrowing denominated in dollars based on the Adjusted LIBO Rate will be deemed to be a request for a borrowing at the ABR Rate plus the applicable margin for an ABR Rate borrowing of such loan while any request for a borrowing denominated in any other currency will be ineffective and (b) any outstanding borrowings based on the Adjusted LIBO Rate denominated in dollars will be converted to a

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

borrowing at the ABR Rate plus the applicable margin for an ABR Rate borrowing of such loan while any outstanding borrowings denominated in any other currency will be repaid.

All obligations under the 2018 Credit Agreement are guaranteed by GrafTech Finance and each domestic subsidiary of GrafTech, subject to certain customary exceptions, and all obligations under the 2018 Credit Agreement of each foreign subsidiary of GrafTech that is a Controlled Foreign Corporation (within the meaning of Section 956 of the Internal Revenue Code of 1986, as amended from time to time (the "Code")) are guaranteed by GrafTech Luxembourg I S.à.r.l., a Luxembourg

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

société à responsabilité limitée and an indirect wholly owned subsidiary of GrafTech, Luxembourg Holdco and Swissco (collectively, the "Guarantors").

All obligations under the 2018 Credit Agreement are secured, subject to certain exceptions and Excluded Assets (as defined in the 2018 Credit Agreement), by: (i) a pledge of all of the equity securities of GrafTech Finance and each domestic Guarantor (other than GrafTech) and of each other direct, wholly owned domestic subsidiary of GrafTech and any Guarantor, (ii) a pledge on no more than 65% of the equity interests of each subsidiary that is a Controlled Foreign Corporation (within the meaning of Section 956 of ("the ~~Code)~~Code")), and (iii) security interests in, and mortgages on, personal property and material real property of GrafTech Finance and each domestic Guarantor, subject to permitted liens and certain exceptions specified in the 2018 Credit Agreement. The obligations of each foreign subsidiary of GrafTech that is a Controlled Foreign Corporation under the Revolving Credit Facility are secured by (i) a pledge of all of the equity securities of each Guarantor that is a Controlled Foreign Corporation and of each direct, wholly owned subsidiary of any Guarantor that is a Controlled Foreign Corporation, and (ii) security interests in certain receivables and personal property of each Guarantor that is a Controlled Foreign Corporation, subject to permitted liens and certain exceptions specified in the 2018 Credit Agreement.

The 2018 Term Loans amortize at a rate equal to 5% per annum of the original principal amount of the 2018 Term Loans payable in equal quarterly installments, with the remainder due at maturity. The ~~Co‑Borrowers~~Co-Borrowers are permitted to make voluntary prepayments at any time without premium or penalty, except in the case of prepayments made in connection with certain repricing transactions with respect to the 2018 Term Loans effected within twelve months of the closing date of the 2018 Credit Agreement, to which a 1.00% prepayment premium applies.penalty. GrafTech Finance is required to make prepayments under the 2018 Term Loans (without payment of a premium) with (i) net cash proceeds from ~~non‑ordinary~~non-ordinary course asset sales (subject to customary reinvestment rights and other customary exceptions and exclusions), and (ii) commencing with the Company’s fiscal year ~~ending~~ended December 31, 2019, 75% of Excess Cash Flow (as defined in the 2018 Credit Agreement), subject to ~~step‑downs~~step-downs to 50% and 0% of Excess Cash Flow based on achievement of a senior secured first lien net leverage ratio greater than 1.25 to 1.00 but less than or equal to 1.75 to 1.00 and less than or equal to 1.25 to 1.00, respectively. Scheduled quarterly amortization payments of the 2018 Term Loans during any calendar year reduce, on a ~~dollar‑for‑dollar~~dollar-for-dollar basis, the amount of the required Excess Cash Flow prepayment for such calendar year, and the aggregate amount of Excess Cash Flow prepayments for any calendar year reduce subsequent quarterly amortization payments of the 2018 Term Loans as directed by GrafTech Finance.

The 2018 Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to GrafTech and restricted subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, fundamental changes, dispositions, and dividends and other distributions. The 2018 Credit Agreement contains a financial covenant that requires GrafTech to maintain a senior secured first lien net leverage ratio not greater than 4.00:1.00 when the aggregate principal amount of borrowings under the 2018 Revolving Credit Facility and outstanding letters of credit issued under the 2018 Revolving Credit Facility (except for undrawn letters of credit in an aggregate amount equal to or less than $35 million), taken together, exceed 35% of the total amount of commitments under the 2018 Revolving Credit Facility. The 2018 Credit Agreement also contains customary events of default.

~~Brookfield Promissory Note~~

On April 19, 2018, we declared a dividend in the form of a $750 million promissory note (the “Brookfield Promissory Note”) to the sole pre-IPO stockholder. The $750 million Brookfield Promissory Note was conditioned upon (i) the Senior Secured First Lien Net Leverage Ratio (as defined in the 2018 Credit Agreement), as calculated based on our final financial results for the first quarter of 2018, being equal to or less than 1.75 to 1.00, (ii) no Default or Event of Default (each as defined in the 2018 Credit Agreement) having occurred and continuing or that would result from the $750 million Brookfield Promissory Note and (iii) the satisfaction of the conditions occurring within 60 days from the dividend record date. Upon publication of our 2018 first quarter report on Form 10-Q, these conditions were met and, as a result, the Brookfield Promissory Note became payable.

The Brookfield Promissory Note had a maturity of eight years from the date of issuance and bore interest at a rate equal to the Adjusted LIBO Rate (as defined in the Brookfield Promissory Note) plus an applicable margin equal to 4.50% per annum, with an additional 2.00% per annum starting from the third anniversary from the date of issuance. We were permitted to make voluntary prepayments at any time without premium or penalty. All obligations under the Brookfield Promissory Note were unsecured and guaranteed by all of our existing and future domestic wholly owned subsidiaries that guarantee, or are borrowers under, the Senior Secured Credit Facilities. No funds were lent or otherwise contributed to us by the pre-IPO stockholder in connection with the Brookfield Promissory Note. As a result, we received no consideration in connection with its issuance. As described below, the Promissory Note was repaid in full on June 15, 2018.

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

First Amendment to 2018 Credit Agreement

On June 15, 2018, the Company entered into a first amendment (the “First Amendment”) to its 2018 Credit Agreement. The First Amendment amended the 2018 Credit Agreement to provide for an additional $750 million in aggregate principal amount of incremental term loans (the “Incremental Term Loans”) to GrafTech Finance. The Incremental Term Loans increased the aggregate principal amount of term loans incurred by GrafTech Finance under the 2018 Credit Agreement from $1,500 million to $2,250 million. The Incremental Term Loans have the same terms as those applicable to the 2018 Term Loans, including interest rate, payment and prepayment terms, representations and warranties and covenants. The Incremental Term Loans mature on February 12, 2025, the same date as the 2018 Term Loans. GrafTech paid an upfront fee of 1.00% of the aggregate principal amount of the Incremental Term Loans on the effective date of the First Amendment.

The proceeds of the Incremental Term Loans were used to repay, in full, the $750 million of principal outstanding on a promissory note to the ~~Brookfield Promissory Note.~~Company's sole pre-IPO stockholder.


~~(7)~~	~~Inventories~~

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(6)Inventories

Inventories are comprised of the following:


	As of September 30, 2020		As of December 31, 2019
	(Dollars in thousands)
Inventories:
Raw materials	$	95,136	$	104,820
Work in process	126,673		137,230
Finished goods	77,427		71,598


Total	$	299,236	$	313,648

As of
September 30, 2019 As of
December 31, 2018
(Dollars in thousands)
Inventories:
Raw materials $ 94,471
$ 99,935
Work in process 143,192
125,767
Finished goods 77,292
68,015
Total $ 314,955
$ 293,717

~~(8)~~(7)Interest Expense

The following tables present the components of interest expense:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2019		2018		2019		2018			2020		2019		2020		2019
	(Dollars in thousands)									(Dollars in thousands)
Interest incurred on debt	$	30,222	$	32,278	$	93,731	$	67,751	Interest incurred on debt	$	20,893	$	30,222	$	64,285	$	93,731
Related-party Promissory Note interest expense	—		—		—		5,090
Senior Note redemption premium	—		—		—		4,782
Accretion of fair value adjustment on Senior Notes	—		—		—		19,414

Accretion of original issue discount on 2018 Term Loans	549		549		1,647		906		Accretion of original issue discount on 2018 Term Loans	549		549		1,647		1,647
Amortization of debt issuance costs	1,032		1,028		3,094		2,444		Amortization of debt issuance costs	1,032		1,032		3,094		3,094
Total interest expense	$	31,803	$	33,855	$	98,472	$	100,387	Total interest expense	$	22,474	$	31,803	$	69,026	$	98,472

Interest Rates

The 2018 Credit Agreement had an effective interest rate of ~~5.54%~~4.50% as of September 30, ~~2019. The Old Revolving Facility~~2020 and ~~Old Term Loan Facility had an effective interest rate of 4.57%~~5.30% as of December 31, ~~2018 and the Senior Notes had a fixed interest rate of 6.375%, both of which were repaid on February 12, 2018 as part of our refinancing (see Note 6 "Debt and Liquidity").~~2019. During the third quarter of 2019, the Company entered into four interest rate swap contracts to fix our cash flows associated with the risk in variability in the one-month U.S. London Interbank Offered Rate ("US ~~LIBO Rate~~LIBOR") for a portion of our outstanding debt. See Note 1110 "Derivative Instruments" for details of these transactions.

As a result of our February 12, 2018 refinancing, we paid a prepayment premium for the redemption of our Senior Notes totaling $4.8 million. The accretion of the August 15, 2015 fair value adjustment to our Senior Notes totaling $19.4 million included

(8) Contingencies

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

accelerated accretion of $18.7 million for the nine months ended September 30, 2018 resulting from the prepayment. Amortization of debt issuance costs included $0.3 million of accelerated amortization related to the refinancing.


~~(9)~~	~~Contingencies~~

Legal Proceedings

We are involved in various investigations, lawsuits, claims, demands, environmental compliance programs and other legal proceedings arising out of or incidental to the conduct of our business. While it is not possible to determine the ultimate disposition of each of these matters, we do not believe that their ultimate disposition will have a material adverse effect on our financial position, results of operations or cash flows. Additionally, we are involved in the following legal proceedings described below.

~~Litigation~~Pending litigation in Brazil has been ~~pending in Brazil~~ brought by employees seeking to recover additional amounts and interest thereon under certain wage increase provisions applicable in 1989 and 1990 under collective bargaining agreements to which employers in the Bahia region of Brazil were a party (including our subsidiary in Brazil). Companies in Brazil have settled claims arising out of these provisions and, in May 2015, the litigation was remanded by the Brazilian Supreme Court in favor of the ~~employees.~~employees union. After denying an interim appeal by the Bahia region employers on June 26, 2019, the Brazilian Supreme Court finally ruled in favor of the employees union on September 26, 2019. The employers union ~~is currently evaluating the merits of seeking~~has determined not to seek annulment of such decision. Separately, on October 1, 2015, a related action was filed by current and former employees against our subsidiary in Brazil to recover amounts under such provisions, plus interest thereon, which amounts together with interest could be material to us. If the Brazilian Supreme Court proceeding above had been determined in favor of the employers union, it would also have resolved this proceeding in our favor. In the first quarter of 2017, the state court initially ruled in favor of the employees. We ~~have~~ appealed this state court ruling, ~~as well~~ and the appellate court issued a decision in our favor on May 19, 2020.The employees have further appealed and we intend to vigorously defend it. As of September 30, ~~2019,~~2020, we are unable to assess the

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

potential loss associated with these proceedings as the claims do not currently specify the number of employees seeking damages or the amount of damages being sought.

Product Warranties

We generally sell products with a limited warranty. We accrue for known warranty claims if a loss is probable and can be reasonably estimated. We also accrue for estimated warranty claims incurred based on a historical claims charge analysis. Claims accrued but not yet paid and the related activity within the accrual for the nine months ended September 30, ~~2019,~~2020, are presented below:

(Dollars in thousands)
Balance as of December 31, 2018 $ 1,528
Product warranty accruals and adjustments 700
Settlements (656 )
Balance as of September 30, 2019 $ 1,572


	(Dollars in thousands)
Balance as of December 31, 2019	$	1,835
Product warranty accruals and adjustments	920
Settlements	(613)
Balance as of September 30, 2020	$	2,142

Tax Receivable Agreement

On April 23, 2018, the Company entered into a tax receivable agreement (the "TRA") that provides Brookfield, as the sole pre-IPO stockholder, the right to receive future payments from us for 85% of the amount of cash savings, if any, in U.S. federal income tax and Swiss tax that we and our subsidiaries realize as a result of the utilization of certain tax assets attributable to periods prior to our IPO, including certain federal net operating losses ("NOLs"), previously taxed income under Section 959 of the Code, foreign tax credits, and certain NOLs in ~~Swissco (collectively, the "Pre‑IPO Tax Assets").~~GrafTech Switzerland SA. In addition, we will pay interest on the payments we will make to Brookfield with respect to the amount of these cash savings from the due date (without extensions) of our tax return where we realize these savings to the payment date at a rate equal to the LIBO Rate plus 1.00% per annum. The term of the TRA commenced on April 23, 2018 and will continue until there is no potential for any future tax benefit payments.

There was no liability recognized on the date we entered into the TRA as there was a full valuation allowance recorded against our deferred tax assets. During the second quarter of 2018, it was determined that the conditions were appropriate for the Company to release a valuation allowance of certain tax assets as we exited our three year cumulative loss position. This release ~~and subsequent adjustment~~resulted in the ~~fourth quarter resulted in an~~recording of a $86.5 million liability related to the TRA on the Consolidated Statements of Operationsas "Related Party Tax Receivable Agreement Expense."

As of December 31, ~~2018. In~~2019, the ~~first quarter~~total TRA liability was $89.9 million, of ~~2019, we reclassified $23.9~~which $27.9 million ~~to the~~was classified as a current liability in "Related party ~~payable - tax~~payable-tax receivable agreement" on the balance sheet, ~~as we expect this portion to be settled within twelve months. $62.6~~and $62.0 million of the liability ~~remains~~remained as a long-term liability in "Related party ~~payable - tax~~payable-tax receivable agreement" on the balance ~~sheet~~sheet. The 2019 current liability was settled in the first quarter of 2020. In the first quarter of 2020, the TRA liability was reduced by $3.3 million due to the revised profit expectation for 2020, caused by the COVID-19 pandemic. The reduction was recorded as a "Related Party Tax Receivable Agreement Benefit" on the Consolidated Statement of Operations. As of September 30, ~~2019.~~

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

2020, the total TRA liability was $58.6 million, of which $16.1 million was classified as a current liability in "Related party payable-tax receivable agreement" and $42.5 million remained as a long-term liability in "Related party payable-tax receivable agreement" on the balance sheet.

Long-term Incentive Plan

The long-term incentive plan ("LTIP") was adopted by the Company effective as of August 17, 2015, as amended and restated as of March 15, 2018. The purpose of the plan is to retain senior management of the Company, to incentivize them to make decisions with a long-term view and to influence behavior in a way that is consistent with maximizing value for the pre-IPO stockholder of the Company in a prudent manner. Each participant is allocated a number of profit units, with a maximum of 30,000 profit units ~~(or~~ ("Profit ~~Units)~~Units") available under the plan. Awards of Profit Units generally vest in equal increments over a five-year period beginning on the first anniversary of the grant date and subject to continued employment with the Company through each vesting date. Any unvested Profit Units that have not been previously forfeited will accelerate and become fully vested upon a ‘‘Change in Control’’ (as defined below).

Profit Units will generally be settled in a lump sum payment within 30 days following a Change in Control based on the ‘‘Sales Proceeds’’ (as defined below) received by Brookfield Capital Partners IV, L.P. ~~(or, together~~(together with its affiliates, ~~Brookfield~~"Brookfield Capital ~~IV)~~IV") in connection with the Change in Control. The LTIP defines ‘‘Change in Control’’ as any transaction

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

or series of transactions (including, without limitation, the consummation of a combination, share purchases, recapitalization, redemption, issuance of capital stock, consolidation, reorganization or otherwise) pursuant to which (a) a Person not affiliated with Brookfield Capital IV acquires securities representing more than seventy percent (70%) of the combined voting power of the outstanding voting securities of the Company or the entity surviving or resulting from such transaction, (b) following a public offering of the Company’s stock, Brookfield Capital IV has ceased to have a beneficial ownership interest in at least 30% of the Company’s outstanding voting securities (effective on the first of such date), or (c) the Company sells all or substantially all of the assets of the Company and its subsidiaries on a consolidated basis. It is intended that the occurrence of a Change in Control in which Sales Proceeds exceed the Threshold Value would constitute a ‘‘substantial risk of forfeiture’’ within the meaning of Section 409A of the Code. The LTIP defines ‘‘Threshold Value’’ as, as of any date of determination, an amount equal to $855,000,000 (which represents the amount of the total invested capital of Brookfield Capital IV as of August 17, 2015), plus the dollar value of any cash or other consideration contributed to or invested in the Company by Brookfield Capital IV after August 17, 2015. The Threshold Value shall be determined by the Company's Board of Directors in its sole discretion. The LTIP defines ‘‘Sales Proceeds’’ as, as of any date of determination, the sum of all proceeds actually received by the Brookfield Capital IV, net of all Sales Costs (as defined below), (i) as consideration (whether cash or equity) upon the Change in Control and (ii) as distributions, dividends, repurchases, redemptions or otherwise as a holder of such equity interests in the Company. Proceeds that are not paid upon or prior to or in connection with the Change in Control, including earn-outs, escrows and other contingent or deferred consideration shall become ‘‘Sale Proceeds’’ only as and when such proceeds are received by Brookfield Capital IV. ‘‘Sales Costs’’ means any costs or expenses (including legal or other ~~advisor~~advisory costs), fees (including investment banking fees), commissions or discounts payable directly by Brookfield Capital IV in connection with, arising out of or relating to a Change in Control, as determined by the Company's Board of Directors in its sole discretion.

Given the successful completion of the IPO in the second quarter of 2018, it is reasonably possible that a Change in Control, as defined above, may ultimately happen and that the awarded Profit Units will be subsequently paid out to the participants. ~~Assuming 100% vesting of the awarded Profit Units and depending~~Depending on Brookfield’s sales proceeds, the potential liability triggered by a Change in Control is estimated to be in the range of ~~$65~~$55 million to ~~$90~~$70 million. As of September 30, ~~2019,~~2020, the Profit Unit awards are ~~80%~~100% vested.


~~(10)~~	~~Income Taxes~~

(9) Income Taxes

We compute and apply to ordinary income an estimated annual effective tax rate on a quarterly basis based on current and forecasted business levels and activities, including the mix of domestic and foreign results and enacted tax laws. The estimated annual effective tax rate is updated quarterly based on actual results and updated operating forecasts. Ordinary income refers to income (loss) before income tax expense excluding significant, unusual or infrequently occurring items. The tax effect of an unusual or infrequently occurring item is recorded in the interim period in which it occurs as a discrete item of tax.

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

The following ~~tables summarize~~table summarizes the provision for income taxes for the three and nine months ended September 30, ~~2019~~2020 and 2019:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2020			2019			2020			2019
	(Dollars in thousands)
Tax expense	$	18,104		$	20,755		$	61,838		$	90,940
Pretax income	112,338			196,631			371,116			660,620
Effective tax rates	16.1		%	10.6		%	16.7		%	13.8		%

The effective tax rate for the three months ended September 30, ~~2018:~~2020 was 16.1%. This rate differs from the U.S. statutory rate of 21% primarily due to worldwide earnings from various countries taxed at different rates, which is partially offset by the net combined impact related to the U.S. taxation of global intangible low taxed income ("GILTI") and Foreign Tax Credits ("FTCs").

For the Three Months
Ended September 30,
For the Nine Months
Ended September 30,
2019 2018 2019 2018
(Dollars in thousands)

Tax expense $ 20,755
$ 24,871
$ 90,940
$ 36,250
Pretax income 196,631
225,063
660,620
660,252
Effective tax rates 10.6 % 11.1 % 13.8 % 5.5 %

The effective tax rate for the three months ended September 30, 2019 was 10.6%. This rate differs from the U.S. statutory rate of 21% primarily due to worldwide earnings from various countries taxed at different ~~rates and was further improved by the provision to return adjustment recorded in the third quarter of 2019 as a result of filing income tax returns in foreign jurisdictions.~~rates.

The ~~effective~~ tax ~~rate~~expense decreased from $20.8 million for the three months ended September 30, ~~2018 was 11.1%.~~2019 to $18.1 million for the three months September 30, 2020. This decrease is primarily related to the reduction in pretax income and worldwide earnings from various countries taxed at different rates, partially offset by a higher relative combined impact of GILTI and FTCs.

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the nine months ended September 30, 2020, the effective tax rate of 16.7% differs from the U.S. statutory rate of 21% primarily due to ~~the partial release of a valuation allowance recorded against the deferred tax asset related to U.S. tax attributes and the tax impact of~~ worldwide earnings from various countries taxed at different ~~rates.~~

~~Tax expense decreased from $24.9 million for~~rates which is partially offset by the ~~three months ended September 30, 2018 to $20.8 million for the three months September 30, 2019. This change is primarily~~net combined impact related to the ~~reduction in profits~~U.S. taxation of GILTI and ~~further reduced by the provision to return adjustment recorded in the third quarter of 2019 as a result of filing income tax returns in foreign jurisdictions.~~FTCs.

~~The effective tax rate for~~

For the nine months ended September 30, 2019, ~~was~~the effective tax rate of 13.8%~~. This rate~~ differs from the ~~2019~~ U.S. statutory rate of 21% primarily due to worldwide earnings from various countries taxed at different rates.

The ~~effective~~ tax ~~rate~~expense decreased from $90.9 million for the nine months ended September 30, ~~2018 was 5.5%.~~2019 to $61.8 million for the nine months ended September 30, 2020. This ~~rate differs from the U.S. statutory rate of 21%~~decrease is primarily ~~due~~related to the ~~partial release of a valuation allowance recorded against the deferred tax asset related to U.S. tax attributes~~reduction in pretax income and ~~the tax impact of~~ worldwide earnings from various countries taxed at different ~~rates.~~rates, partially offset by a higher relative combined impact ofGILTI and FTCs.

Tax expense increased from $36.3 million in the nine months ended September 30, 2018 to $90.9 million in the nine months ended September 30, 2019, primarily due to a partial release in the first nine months of 2018 of a valuation allowance recorded against the deferred tax asset related to U.S. tax attributes.

As of September 30, ~~2019,~~2020, we had unrecognized tax benefits of ~~$2.2~~$0.1 million, which, if recognized, would have a favorable impact on our effective tax rate.

We file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. All U.S. federal tax years prior to 2015 are generally closed by statute or have been audited and settled with the applicable domestic tax authorities. All other jurisdictions are still open to examination beginning after 2012.

We continue to assess the realization of our deferred tax assets based on determinations of whether it is more likely than not that deferred tax benefits will be realized through the generation of future taxable income. Appropriate consideration is given to all available evidence, both positive and negative, in assessing the need for a valuation allowance. Examples of positive evidence would include a strong earnings history, an event or events that would increase our taxable income through a continued reduction of expenses, and tax planning strategies that would indicate an ability to realize deferred tax assets. In circumstances where the significant positive evidence does not outweigh the negative evidence in regards to whether or not a valuation allowance is required, we have established and maintained valuation allowances on those net deferred tax assets.

~~Tax Cuts and Jobs Act~~(10) Derivative Instruments

On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (the "Tax Act"), which significantly revised the U.S. corporate income tax system. These changes included a federal statutory rate reduction from 35% to 21%, the elimination or reduction of certain domestic deductions and credits and limitations on the deductibility of interest expense and executive compensation. The Tax Act also transitions international taxation from a worldwide system to a modified territorial system and includes base erosion prevention measures which have the effect of subjecting certain earnings of our foreign subsidiaries to U.S. taxation as global intangible low taxed income ("GILTI"). In general, these changes were effective beginning in 2018. The

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~Tax Act also included a one-time mandatory deemed repatriation or transition tax on the accumulated previously untaxed foreign earnings of our foreign subsidiaries.~~

On August 1, 2018, the U.S. Department of Treasury and the U.S. Internal Revenue Service ("IRS") issued proposed regulations under code section 965 and on January 15, 2019, the IRS issued final 965 regulations. As of September 30, 2019, the tax impact of the final 965 regulations to the Company’s financial statements was immaterial. The Company continues to analyze the effects of the Tax Act and newly issued proposed regulation on its financial statements. The final impact of the Tax Act may differ from the amounts that have been recognized, possibly materially, due to, among other things, changes in the Company’s interpretation of the Tax Act, legislative or administrative actions to clarify the intent of the statutory language provided that differ from the Company’s current interpretation, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to estimates utilized to calculate the impacts, including changes to current year earnings estimates and applicable foreign exchange rates.

~~The Company also continues to evaluate the impact of the GILTI provisions under the Tax Act, which are complex and~~

subject to continuing regulatory interpretation by the IRS. The Company is required to make an accounting policy election of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current period expense when incurred (the “period cost method”) or (2) factoring such amounts into the Company’s measurement of its deferred taxes (the “deferred method”). The Company has elected to treat taxes due on future U.S. inclusions in taxable income related to GILTI as a current period expense when incurred.


~~(11)~~	~~Derivative Instruments~~

We use derivative instruments as part of our overall foreign currency, interest rate and commodity risk management strategies to manage the risk of exchange rate movements that would reduce the value of our foreign cash flows, manage the risk associated with fluctuations in interest rate indices and to minimize commodity price volatility. Foreign currency exchange rate movements create a degree of risk by affecting the value of sales made and costs incurred in currencies other than the U.S. dollar.

Certain of our derivative contracts contain provisions that require us to provide collateral. Since the counterparties to these financial instruments are large commercial banks and similar financial institutions, we do not believe that we are exposed to material counterparty credit risk. We do not anticipate nonperformance by any of the counterparties to our instruments. ~~Our~~

Foreign currency derivatives

We enter into foreign currency derivatives from time to time to attempt to manage exposure to changes in currency exchange rates. These foreign currency instruments, which include, but are not limited to, forward exchange contracts and purchased currency options, are used to hedge global currency exposures such as foreign currency denominated debt, sales, receivables, payables and purchases.

We have no foreign currency cash flow hedges outstanding as of September 30, 2020 and December 31, 2019 and, therefore, no unrealized gains or losses reported under accumulated other comprehensive income (loss).

As of September 30, 2020, we had outstanding Mexican peso, euro, Swiss franc, South African rand and Japanese yen currency contracts with an aggregate notional amount of $63.5 million. As of December 31, 2019, we had outstanding Mexican peso, South African rand, euro, Swiss franc and Japanese yen currency contracts, with an aggregate notional amount of $78.8 million. The foreign currency derivatives outstanding as of September 30, 2020 have maturities through December 31, 2020, and were not designated as hedging instruments.

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Commodity derivative ~~assets and liabilities~~contracts

We have entered into commodity derivative contracts for refined oil products. These contracts are ~~included~~entered into to protect against the risk that eventual cash flows related to these products will be adversely affected by future changes in prices. We had outstanding commodity derivative contracts as of September 30, 2020 with a notional amount of $67.2 million with maturities from October 2020 to June 2022. The outstanding commodity derivative contracts represented a pre-tax net unrealized loss within ~~"Other long-term assets", "Prepaid expenses and other current assets", "Long-term liabilities" and "Other current liabilities" on the Condensed Consolidated Balance Sheets and effects~~"Accumulated Other Comprehensive Income" of ~~these derivatives are recorded in "Other comprehensive income", "Cost~~$8.9 million as of ~~sales", "Interest expense" and "Other income (expense)" on the Condensed Consolidated Statements~~September 30, 2020. We had outstanding commodity derivative contracts as of ~~Operations.~~December 31, 2019 with a notional amount of $99.5 million representing a pre-tax net unrealized loss of $3.7 million.

Interest rate swap contracts

During the third quarter of 2019, the Company entered into four interest rate swap contracts. The contracts are "pay fixed, receive variable" with notional amounts of $500 million maturing in two years and another $500 million maturing in five years. The Company’s risk management objective was to fix its cash flows associated with the risk in variability in the one-month USU.S. LIBO Rate for a portion of our outstanding debt. It is expected that these swaps will fix the cash flows associated with the forecasted interest payments on this notional amount of debt to an effective fixed interest rate of 5.1%, which could be lowered to 4.85% depending on credit ratings. Within ~~Accumulated Other~~"Other Comprehensive ~~Income~~Income", we recorded a net unrealized pre-tax ~~gain~~loss of ~~$0.7~~$16.2 million ~~as of~~for the nine months ended September 30, ~~2019.~~2020. The fair value of these contracts was determined using Level 2 inputs.

~~Foreign currency derivatives~~Net investment hedges

We had no foreign currency cashflow hedges outstanding as of September 30, 2019 and December 31, 2018 and therefore, no unrealized gains or losses reported under accumulated other comprehensive income (loss).

As of September 30, 2019, we had outstanding Mexican peso, euro, Swiss franc, South African rand, and Japanese yen currency contracts with an aggregate notional amount of $75.1 million. These foreign currency derivatives outstanding as of

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

September 30, 2019 have maturities through December 31, 2019. As of December 31, 2018, we had outstanding Mexican peso, South African rand, euro, Swiss franc and Japanese yen currency contracts, with an aggregate notional amount of $19.6 million.

~~Commodity derivative contracts~~

We have entered into commodity derivative contracts for refined oil products. These contracts are entered into to protect against the risk that eventual cash flows related to these products will be adversely affected by future changes in prices. We had outstanding commodity derivative contracts as of September 30, 2019 with notional amount of $111.0 million with maturities from October 2019 to June 2022. The outstanding commodity derivative contracts represented a pre-tax net unrealized loss within "Other Comprehensive Income" of $17.2 million as of September 30, 2019. We had outstanding commodity derivative contracts as of December 31, 2018 with notional amount of $142.1 million representing a pre-tax net unrealized loss of $10.7 million.

~~Net Investment Hedges~~

We use certain intercompany debt to hedge a portion of our net investment in our foreign operations against currency exposure (net investment hedge). ~~Intercompany~~ In the second quarter of 2020, we discontinued our net investment hedge following a reduction in the investment that materially decreased the currency exposure. As of December 31, 2019, intercompany debt denominated in foreign currency and designated as a non-derivative net investment hedging instrument was ~~$9.0 million as of September 30, 2019 and $9.5 million as of December 31, 2018.~~$5.5 million. Within the currency translation adjustment portion of "Other Comprehensive Income", we recorded 0 pre-tax gains or losses and $1.2 million pre-tax gains for the three and nine months ended September 30, 2020, respectively. Within the currency translation adjustment portion of "Other Comprehensive Income", we recorded pre-tax loss of $0.7 million and $0.5 million for the three and nine months ended September 30, ~~2019, respectively. We recorded gains of $0.4 million and $1.9 million in the three and nine months ended September 30, 2018, respectively.~~2019.

The fair value of all derivatives is recorded as assets or liabilities on a gross basis in our Condensed Consolidated Balance Sheets. As of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the fair value of our derivatives and their respective balance sheet locations are presented in the following ~~table:~~tables:


	Asset Derivatives			Liability Derivatives
	Location	Fair Value		Location	Fair Value
As of September 30, 2020	(Dollars in thousands)
Derivatives designated as cash flow hedges:
Commodity derivative contracts	Prepaid and other current assets	$	1	Other accrued liabilities	$	4,653
	Other long-term assets	0		Other long-term obligations	4,261
Interest rate swap contracts	Prepaid and other current assets	0		Other accrued liabilities	5,730
	Other long-term assets	0		Other long-term obligations	7,609
Total fair value		$	1		$	22,253

As of December 31, 2019
Derivatives designated as cash flow hedges:
Commodity derivative contracts	Prepaid and other current assets	$	104	Other accrued liabilities	$	1,872
	Other long-term assets	369		Other long-term obligations	2,255
Interest rate swap contracts	Prepaid and other current assets	253		Other accrued liabilities	0
	Other long-term assets	2,684		Other long-term obligations	72
Total fair value		$	3,410		$	4,199

Asset Derivatives Liability Derivatives
Location Fair Value Location Fair Value
As of September 30, 2019 (Dollars in thousands)
Derivatives designated as cash flow hedges:
Commodity derivative contracts Prepaid and other current assets $ 6
Other accrued liabilities $ 9,290
Other long-term assets 49
Other long-term obligations 7,940
Interest rate swap contracts Prepaid and other current assets 1,033
Other accrued liabilities —
Other long-term assets 22
Other long-term obligations 317
Total fair value $ 1,110
$ 17,547

As of December 31, 2018
Derivatives designated as cash flow hedges:
Commodity derivative contracts Prepaid and other current assets $ 90
Other accrued liabilities $ 4,630
Other long-term assets 260
Other long-term obligations 6,393
Total fair value $ 350
$ 11,023

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	Asset Derivatives			Liability Derivatives
	Location	Fair Value		Location	Fair Value
As of September 30, 2020	(Dollars in thousands)
Derivatives not designated as hedges:
Foreign currency derivatives	Prepaid and other current assets	$	817	Other current liabilities	$	161
Commodity derivatives contracts	Prepaid and other current assets	165		Other accrued liabilities	0

		$	982		$	161
As of December 31, 2019
Derivatives not designated as hedges:
Foreign currency derivatives	Prepaid and other current assets	$	239	Other current liabilities	$	81
Commodity derivatives contracts	Prepaid and other current assets	376		Other accrued liabilities	0

		$	615		$	81

Asset Derivatives Liability Derivatives
Location Fair Value Location Fair Value
As of September 30, 2019 (Dollars in thousands)
Derivatives not designated as hedges:
Foreign currency derivatives Prepaid and other current assets $ 189
Other current liabilities $ 971

As of December 31, 2018
Derivatives not designated as hedges:
Foreign currency derivatives Prepaid and other current assets $ —
Other current liabilities $ 43

The realized (gains) losses resulting from the settlement of commodity derivative contracts designated as hedges remain in ~~Accumulated~~"Accumulated Other Comprehensive ~~Income~~Income" until they are recognized in the Statement of Operations when the hedged item impacts earnings, which is when the finished product is sold. As of September 30, ~~2019~~2020 and ~~September 30, 2018,~~2019, net realized pre-tax losses of $8.0 million and pre-tax gains of $7.3 million, ~~and $5.4 million,~~ respectively, were reported under ~~Accumulated~~"Accumulated Other Comprehensive ~~Income~~Income" and will be and were, respectively, released to earnings within the following 12 months. See the table below for amounts recognized in the Statement of Operations.

The location and amount of ~~pre-tax~~ realized (gains) losses on ~~commodity~~ derivatives ~~interest rate swaps and on undesignated foreign currency derivatives~~are recognized in the ~~Statement~~Statements of Operations as follows for the periods ended September 30, ~~2019~~2020 and ~~September 30, 2018 are as follows :~~2019:


		Amount of (Gain)/Loss Recognized
	Location of (Gain)/Loss Recognized in the Consolidated Statement of Operations	For the Three Months Ended September 30,
		2020		2019
Derivatives designated as cash flow hedges:		(Dollars in thousands)
Commodity derivative contracts	Cost of sales	$	(1,295)	$	(3,145)
Interest rate swap	Interest expense	1,537		(323)

Derivatives not designated as hedges:
Foreign currency derivatives	Cost of sales, Other (income) expense	$	(243)	$	173
Commodity derivative contracts	Cost of sales	(207)		0

		Amount of (Gain)/Loss Recognized
	Location of (Gain)/Loss Recognized in the Consolidated Statement of Operations	For the Nine Months Ended September 30,
		2020		2019
Derivatives designated as cash flow hedges:		(Dollars in thousands)
Commodity contract hedges	Cost of sales	$	(5,234)	$	(6,994)
Interest rate swap contracts	Interest expense	2,852		(323)

Derivatives not designated as hedges:
Foreign currency derivatives	Cost of sales, Other (income) expense	$	(959)	$	(648)
Commodity derivative contracts	Cost of sales	(321)		0

Amount of (Gain)/Loss
Recognized
Location of (Gain)/Loss Recognized in the Consolidated Statement of Operations For the Three Months Ended September 30,
2019 2018
Derivatives designated as cash flow hedges: (Dollars in thousands)
Commodity contract hedges Cost of sales $ (3,145 ) $ 421
Interest rate swap contracts Interest expense (323 ) —
$ (3,468 ) $ 421

Derivatives not designated as hedges:
Foreign currency derivatives Cost of sales, Other (income) expense $ 173
(159 )

Amount of (Gain)/Loss
Recognized
Location of (Gain)/Loss Recognized in the Consolidated Statement of Operations For the Nine Months Ended September 30,
2019 2018
Derivatives designated as cash flow hedges: (Dollars in thousands)
Commodity contract hedges Cost of sales $ (6,994 ) 421
Interest rate swap contracts Interest expense (323 ) —
$ (7,317 ) $ 421

Derivatives not designated as hedges:
Foreign currency derivatives Cost of sales, Other (income) expense $ (648 ) 137


~~(12)~~	~~Accumulated Other Comprehensive Income (Loss)~~

~~The balance in our accumulated other comprehensive income (loss) is set forth in the following table:~~

As of
September 30, 2019 As of
December 31, 2018
(Dollars in thousands)
Foreign currency translation adjustments, net of tax $ (16,441 ) $ (2,922 )
Commodities, interest rate and foreign currency derivatives, net of tax (7,236 ) (2,878 )
Total accumulated comprehensive income (loss) $ (23,677 ) $ (5,800 )

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(11) Accumulated Other Comprehensive Income (Loss)


~~(13)~~	~~Earnings per Share~~

The balance in our accumulated other comprehensive income (loss) is set forth in the following table:


	As of September 30, 2020		As of December 31, 2019
	(Dollars in thousands)
Foreign currency translation adjustments, net of tax	$	(15,376)	$	(9,293)
Commodity and interest rate derivatives, net of tax	(23,785)		1,932
Total accumulated comprehensive income (loss)	$	(39,161)	$	(7,361)

(12) Earnings per Share

During the nine months ended September 30, 2020, we repurchased 3,328,574 shares of our common stock under the repurchase program that was approved on July 30, 2019. These shares were subsequently retired. There were 0 shares repurchased under this program during the three months ended September 30, 2020.

The following table shows the information used in the calculation of our basic and diluted earnings per share calculation ~~as of~~for the three and nine months ended September 30, ~~2019~~2020 and ~~September 30, 2018.~~2019:


	For the Three Months Ended September 30,		For the Nine Months Ended September 30,			For the Three Months Ended September 30,		For the Nine Months Ended September 30,
	2019	2018	2019	2018		2020	2019	2020	2019

Weighted average common shares outstanding for basic calculation	290,112,233	296,136,564	290,410,859	300,173,831	Weighted average common shares outstanding for basic calculation	267,265,705	290,112,233	267,908,427	290,410,859
Add: Effect of stock options, deferred stock units and restricted stock units	15,063	8,889	11,492	4,873
Add: Effect of stock options, deferred share units and restricted stock units					Add: Effect of stock options, deferred share units and restricted stock units	13,850	15,063	12,463	11,492
Weighted average common shares outstanding for diluted calculation	290,127,296	296,145,453	290,422,351	300,178,704	Weighted average common shares outstanding for diluted calculation	267,279,555	290,127,296	267,920,890	290,422,351

Basic earnings per common share are calculated by dividing net income (loss) by the weighted average number of common shares outstanding, which includes 77,157 and 65,264 shares of participating securities in the three and nine months ended September 30, 2020, respectively, and 36,546 and 28,914 shares of participating securities in the three and nine months ended September 30, ~~2019, respectively, and 8,890 and 2,996 shares of participating securities in the three and nine months ended September 30, 2018, respectively.~~2019. Diluted earnings per share are calculated by dividing net income (loss) by the sum of the weighted average number of common shares outstanding plus the additional common shares that would have been outstanding if potentially dilutive securities had been issued.

The weighted average common shares outstanding for the diluted earnings per share calculation excludes consideration of 1,730,960 and 1,644,002 equivalent shares in the three and nine months ended September 30, 2020, respectively, and 1,303,854 and 1,203,220 equivalent shares in the three and nine months ended September 30, 2019, respectively, ~~and 946,610 and 544,292 equivalent shares in the three and nine months ended September 30, 2018, respectively,~~ as these shares are anti-dilutive. ~~During the three months ended September 30, 2019, we repurchased 879,134 shares of our common stock under the previously announced repurchase program. These shares were subsequently retired.~~

~~(14)~~(13) Stock-Based Compensation

Stock-based compensation awards granted by our Board of Directors for the three and nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 were as follows:

For the Three Months Ended September 30, For the Nine Months
Ended September 30,
2019 2018 2019 2018
Award type:
Stock options —
67,000
207,000
979,790
Deferred stock units 16,176
9,286
23,121
28,621
Restricted stock units 1,551
—
235,170
6,740

In the three months ended September 30, 2019 and 2018, we recognized $0.7 million and $0.5 million, respectively, in stock-based compensation expense. A majority of the expense, $0.6 million and $0.4 million respectively, was recorded as selling and administrative expenses in the Consolidated Statement of Operations, with the remaining expenses incurred as cost of sales and research and development.

In the nine months ended September 30, 2019 and 2018, we recognized $1.6 million and $0.7 million, respectively, in stock-based compensation expense. A majority of the expense, $1.4 million and $0.6 million respectively, was recorded as selling and administrative expenses in the Consolidated Statement of Operations, with the remaining expenses incurred as cost of sales and research and development.

As of September 30, 2019, unrecognized compensation cost related to non-vested stock options, deferred stock units and restricted stock units represents $7.9 million, which will be recognized over the remaining weighted average life of 4.0 years.


	For the Three Months Ended September 30,		For the Nine Months Ended September 30,
	2020	2019	2020	2019
Award type:
Stock options	4,000	0	304,000	207,000
Deferred share units	20,027	16,176	44,670	23,121
Restricted stock units	16,729	1,551	328,720	235,170

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In the three months ended September 30, 2020 and 2019, we recognized $0.8 million and $0.7 million, respectively, in stock-based compensation expense. A majority of the expense, $0.7 million and $0.6 million respectively, was recorded as selling and administrative expense in the Consolidated Statement of Operations, with the remaining expenses incurred as cost of sales.

In the nine months ended September 30, 2020 and 2019, we recognized $1.9 million and $1.6 million, respectively, in stock-based compensation expense. A majority of the expense, $1.6 million and $1.4 million, respectively, was recorded as selling and administrative expense in the Consolidated Statement of Operations, with the remaining expenses incurred as cost of sales.

As of September 30, 2020, unrecognized compensation cost related to non-vested stock options, deferred share units and restricted stock units was $8.4 million, which will be recognized over the remaining weighted average life of 3.6 years.

Stock Option, Deferred ~~Stock~~Share Unit and Restricted Stock Unit awards activity under the Omnibus Equity Incentive Plan for the nine months ended September 30, ~~2019~~2020 was as follows:

Stock ~~options~~Options


					Number of Shares	Weighted- Average Exercise Price
	Number of Shares		Weighted- Average Exercise Price
Outstanding unvested as of December 31, 2018	968,720		15.68
Outstanding unvested as of December 31, 2019				Outstanding unvested as of December 31, 2019	931,658	$	15.06
Granted	207,000		13.03	Granted	304,000	8.99
Vested	(188,810	)	15.70	Vested	(186,162)	15.20
Forfeited	(52,622	)	15.00	Forfeited	(143,960)	14.82
Outstanding unvested as of September 30, 2019	934,288		15.13
Outstanding unvested as of September 30, 2020				Outstanding unvested as of September 30, 2020	905,536	$	13.03

Deferred ~~Stock~~Share Unit and Restricted Stock Unit awards


	Number of Shares	Weighted- Average Grant Date Fair Value
Outstanding unvested as of December 31, 2019	282,716	$	12.83
Granted	373,390	8.77
Vested	(87,112)	10.18
Forfeited	(45,760)	12.24
Outstanding unvested as of September 30, 2020	523,234	$	10.43

Number
of Shares

Weighted-
Average
Grant Date
Fair Value
Outstanding unvested as of December 31, 2018 27,570
12.88
Granted 258,291
12.85
Vested (22,687 ) 12.52
Outstanding unvested as of September 30, 2019 263,174
12.95

~~(15)~~(14) Subsequent Events

In October 2020, we repaid an additional $60 million under our term loan. We will continue to prioritize balance sheet flexibility and expect to use the majority of fourth quarter incremental free cash flow to further repay debt.

On November ~~6, 2019, the~~2, 2020, our Board of Directors declared ~~our regular~~a quarterly dividend of ~~$0.085~~$0.01 per share to stockholders of record as of the close of business on November ~~29, 2019,~~30, 2020, to be paid on December 31, ~~2019.~~2020.

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~Outlook~~The Company

GrafTech is a leading manufacturer of graphite electrodes, the critical consumable for the electric arc furnace ~~("EAF")~~ industry. We are the only graphite electrode producer that is substantially vertically integrated into petroleum needle coke, ~~the~~a key raw material for graphite electrodes. Vertical integration has allowed us to adopt a commercial strategy with long-term, fixed price, fixed volume, take-or-pay contracts providing earnings stability and visibility. These contracts define volumes and prices, along with ~~price‑escalation~~price-escalation mechanisms for inflation, and include significant termination payments (typically, 50% to 70% of remaining contracted revenue) and, in certain cases, parent guarantees and collateral arrangements to manage our customer credit risk.

The ~~outstanding three‑to‑five‑~~environmental and economic advantages of electric arc furnace steel production positions both that industry and the graphite electrode industry for continued long-term growth.

We believe GrafTech's leadership position, strong cash flows, and advantaged low cost structure and vertical integration are sustainable competitive advantages. Our services and solutions we provide will position our customers and us for a better future.

COVID-19 and Operational Update

GrafTech continues to proactively manage through the COVID-19 crisis. Our executive-led COVID-19 response team meets three times per week to monitor the ongoing situation and respond as needed.

Our plants have remained operational through the current pandemic and maintained a 98% on-time delivery rate. Our global footprint gives us the flexibility to move or adjust production if needed.

We continue to focus on containing our costs and aligning production to current sales levels for the remainder of the year. We expect to meet our reduced full year ~~take‑or‑pay contracts represent~~capital expenditure estimate of approximately ~~146,000, 142,000, 125,000~~$35 million.

Commercial Update

GrafTech services customers at over 300 locations across the globe, all of which have been impacted by COVID-19. We are seeing a measured recovery in the global steel markets compared to the second quarter, with each region recovering at different rates, and ~~117,000~~anticipate this will have a positive influence on graphite electrode demand. In the third quarter, the global (ex-China) steel market capacity utilization rate improved to over 60%. In the U.S., the third quarter capacity utilization rate was approximately 64%. By late October, the capacity utilization rate in the U.S. steel market approached 70%.

The commercial team has worked diligently to achieve solid results in the current environment. Year-to-date sales volumes through the third quarter were 98 thousand metric tons ("MT") ~~in 2019, 2020, 2021~~, consisting of LTA volumes of 82 thousand MT and ~~2022, respectively. These amounts are slightly lower than amounts reported in previous quarters due to the financial condition~~non-LTA volumes of certain of our customers. Approximately 83% of these volumes are under pre-determined fixed annual volume contracts, while approximately 17% of the volumes are under contracts with a specified volume range. The aggregate difference between the midpoint and the minimum volumes across our cumulative portfolio of take-or-pay contracts with specified volume ranges is approximately 5,000 MT per year. Volumes per year may further vary based on the actual timing of product shipments and the financial condition of our customers. We have contracted approximately two-thirds of our production capacity through these contracts.16 thousand MT.

We have announced a series of operational improvement projects at our Monterrey and St. Marys facilities. These projects are intended to help optimize our manufacturing footprint while improving environmental performance and increasing production flexibility. We expect these projects to be completed in the first half of 2021, at which time we will be able to shift additional graphitization and machining from Monterrey to St. Marys. We estimate that capital spending would be near current levels which includes these projects as well as maintenance and capital projects, subject to the approval by our Board.

~~Our weighted average realized price of GrafTech manufactured electrodes was $9,960 per MT in~~During the third quarter, ~~of 2019 compared~~our average price from LTAs declined slightly to ~~$9,664~~approximately $9,300 per MT, reflecting the impacts of product mix, LTA modifications and other adjustments. Due to favorable mix in the quarter, the average price for our non-LTA business increased slightly to approximately $5,700 per MT. However, as anticipated, we believe the general spot price of graphite electrodes continued to trend lower during the third quarter. Given the continuing uncertainty caused by the pandemic and the macro-economic headwinds we and our customers face, we expect overall demand and pricing for our graphite electrodes to remain low for the remainder of 2020 as our customers continue to work through their existing graphite electrode inventories.

The current market conditions are challenging for our customers, including those with LTAs, and we have some customers that are continuing to struggle to take their committed volumes. This is causing some non-performance and disputes, including a few arbitrations associated with, among other things, efforts to modify existing contracts. As such, we will continue to work to preserve our rights under the LTAs.

We are working hard with our valued customers to develop mutually beneficial solutions and have successfully negotiated LTA modifications with several of these customers during the third quarter. We are able to provide near-term relief in exchange for additional contractual commitments going forward. We expect to continue to finalize more of these beneficial negotiations in the coming months.

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

Capital Structure and Capital Allocation

During the third quarter, we reduced our debt by approximately $150 million. After the quarter end, we further reduced our debt by an additional $60 million, bringing 2020 debt reduction to $313 million through the end of 2018, which has been recast as described below. While spot prices have come down from recent historic highs, they still remain well above their historical average. Strong economics for the EAF producers that we serve has led to EAF production since 2016 resuming growth in line with its historical trend (2.8% annually from 1984-2017) in recent history. Steelmakers have announced EAF capacity expansions representing a potential 15 to 20% increase in graphite electrode demand in the U.S. by 2022. However, recent steel production and graphite electrode consumption has slowed in some regions, notably Europe and South America.

A tight needle coke market is also contributing to these elevated prices. Needle coke demand from electric vehicle batteries is currently disrupting the supply chain and resulting in increased pricing and higher costs of sales. Although our vertical integration largely protects us from the increase in needle coke costs, we expect to purchase approximately one third of our needle coke supply from third parties. These higher needle coke costsOctober. We will continue to ~~impact~~prioritize balance sheet flexibility and expect to use the majority of fourth quarter incremental free cash flow to reduce debt.

Outlook

For the remainder of 2020, we anticipate our ~~earnings.~~

We are impacted in varying degrees, both positively and negatively, as global, regional or country economic conditions fluctuate. Our discussions about market data and global economic conditions below are derived from published industry accounts and statistics. In its October 2019 report,full year LTA sales volumes to be above the International Monetary Fund ("IMF") reported that they were again lowering their 2019 growth forecast from their July forecast by 0.2% to 3.0% and lowering their 2020 forecast by 0.1% to 3.4%, as rising trade and geopolitical tensions have increased uncertainty about the futuremidpoint of the ~~global trading system.~~expected range of 100 thousand - 115 thousand MT. We now expect our full year LTA revenue will be between $1,000 million and $1,080 million in 2020.

~~Graphite electrode demand is primarily linked~~With the LTA modifications and ongoing customer discussions, we are able to provide estimated shipments of graphite electrodes for the ~~global production~~final two years of ~~steel in EAFs,~~the initial term under our LTAs and for the years 2023 through 2024 as follows:


	2021	2022	2023 through 2024
Estimated LTA volume(1)	98-108	95-105	35-45
Estimated LTA revenue(2)	$925-$1,025	$910-$1,010	$350-$450(3)

(1) In thousands of metric tons

(2) In millions

(3) Includes expected termination fees from a few customers that have failed to ~~a lesser extent, with the total production of steel and~~meet certain ~~other metals. The World Steel Association's ("WSA") October 2019 Short Range Outlook estimated that global steel demand outside of China increased by 1.6% in 2018, which was revised down 0.6% from~~obligations under their April 2019 estimate. WSA also decreased their growth forecast for steel demand outside of China for 2019 from 1.7% in their April forecast to 0.2% as uncertainty, trade tensions and geopolitical issues have weighed on investment and trade. WSA's growth forecast for steel demand outside of China for 2020 was revised down to 2.5% from their April estimate of 2.8%.LTAs

Key metrics used by management to measure performance

In addition to measures of financial performance presented in our ~~Condensed~~ Consolidated Financial Statements in accordance with ~~GAAP,~~U.S. generally accepted accounting principles ("GAAP"), we use certain other financial measures and operating metrics to analyze the performance of our company. The ~~“non‑GAAP”~~“non-GAAP” financial measures consist of EBITDA ~~from continuing operations~~ and adjusted EBITDA, ~~from continuing operations,~~ which help us evaluate growth trends, establish budgets, assess operational efficiencies and evaluate our overall financial performance. The key operating metrics consist of sales volume, ~~weighted average realized price,~~ production volume, production capacity and capacity utilization.

~~PART I (CONT’D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

Key financial measures


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(in thousands)	2020		2019		2020		2019
Net sales	$	286,987	$	420,797	$	886,351	$	1,376,181
Net income	94,234		175,876		309,278		569,680
EBITDA (1)	150,960		242,026		483,634		802,569
Adjusted EBITDA (1)	153,105		245,454		483,408		813,673

For the Three Months Ended September 30, For the Nine Months
Ended September 30,
(in thousands) 2019 2018 2019 2018
Net sales $ 420,797
$ 454,890
$ 1,376,181
$ 1,363,121
Net income 175,876
199,466
569,680
624,587
EBITDA from continuing operations⁽¹⁾
242,026
274,406
802,569
807,317
Adjusted EBITDA from continuing operations⁽¹⁾
245,454
276,812
813,673
879,108

⁽¹⁾ Non-GAAP financial measures; see below for information and a reconciliation of EBITDA and adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP.

Key operating metrics

~~In an effort to improve transparency, beginning in the first quarter of 2019, we recast the key operating metrics of sales~~


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(in thousands, except price data)	2020		2019		2020		2019
Sales volume (MT)(1)	33		40		98		130
Production volume (MT)(2)	32		40		98		136
Production capacity excluding St. Marys (MT)(3)(4)	48		48		150		150
Capacity utilization excluding St. Marys (3)(5)	67	%	83	%	65	%	91	%
Total production capacity (MT)(4)(6)	55		55		171		171
Total capacity utilization(5)(6)	58	%	73	%	57	%	80	%

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

(1) Sales volume ~~and weighted average realized price per metric ton as set forth in the table below to include~~reflects only graphite electrodes manufactured by GrafTech. This better reflects management’s assessment of our revenue and profitability and excludes re-sales of low grade graphite electrodes manufactured by third-party suppliers. For comparability purposes, the prior periods have been recast to conform to this presentation.

For the Three Months Ended September 30, For the Nine Months
Ended September 30,
(in thousands, except price data) 2019 2018 2019 2018
Sales volume (MT)⁽¹⁾
40
42
130
126
Weighted average realized price⁽²⁾
$ 9,960
$ 9,664
$ 9,977
$ 9,811
Production volume (MT)⁽³⁾
40
39
136
127
Production capacity excluding St. Marys during idle period (MT)⁽⁴⁾⁽⁵⁾
48
39
150
128
Capacity utilization excluding St. Marys during idle period⁽⁴⁾⁽⁶⁾
83 % 100 % 91 % 99 %
Total production capacity (MT)⁽⁵⁾⁽⁷⁾
55
46
171
149
Total capacity utilization⁽⁶⁾⁽⁷⁾
73 % 85 % 80 % 85 %

⁽¹⁾ Sales volume has been recast to reflect the total sales volume of GrafTech manufactured electrodes for which revenue has been recognized during the period. For additional information see "Key Operating Metrics" below.

⁽²⁾ Weighted average realized price has been recast to reflect the total revenues from sales of GrafTech manufactured electrodes for the period divided by the GrafTech manufactured electrode volume for that period. For additional information see "Key Operating Metrics" below.

⁽³⁾ Production volume reflects graphite electrodes we produced during the period.

⁽⁴⁾ ~~The St. Marys, Pennsylvania facility was temporarily idled effective the second quarter of 2016 except for the machining of semi‑finished products sourced from other plants.~~(3) In the first quarter of 2018, our St. Marys facility began graphitizing a limited amount of electrodes sourced from our Monterrey, Mexico facility.

⁽⁵⁾(4) Production capacity reflects expected maximum production volume during the period under normal operating conditions, standard product mix and expected maintenance outage. Actual production may vary.

⁽⁶⁾(5) Capacity utilization reflects production volume as a percentage of production capacity.

⁽⁷⁾(6) Includes graphite electrode facilities in Calais, France; Monterrey, Mexico; Pamplona, Spain and St. Marys, Pennsylvania.

~~Non‑GAAP~~Non-GAAP financial measures

In addition to providing results that are determined in accordance with GAAP, we have provided certain financial measures that are not in accordance with GAAP. EBITDA ~~from continuing operations~~ and adjusted EBITDA ~~from continuing operations~~ are ~~non‑GAAP~~non-GAAP financial measures. We define EBITDA, ~~from continuing operations,~~ a ~~non‑GAAP~~non-GAAP financial measure, as net income or loss plus interest expense, minus interest income, plus income taxes, ~~discontinued operations~~ and depreciation and ~~amortization from continuing operations.~~amortization. We define adjusted EBITDA ~~from continuing operations~~ as EBITDA ~~from continuing operations~~ plus any pension and other post-employment benefit ("OPEB") plan expenses, initial and follow-on public offering and related expenses, ~~non‑cash~~non-cash gains or losses from foreign currency remeasurement of ~~non‑operating~~non-operating assets and liabilities in our foreign subsidiaries where the functional currency is the U.S. dollar, related party Tax Receivable Agreement ~~expense,~~adjustment, stock-based compensation and ~~non‑cash~~non-cash fixed asset ~~write‑offs.~~write-offs. Adjusted EBITDA ~~from continuing operations~~ is the primary metric used by our management and our ~~board~~Board of ~~directors~~Directors to establish budgets and operational goals for managing our business and evaluating our performance.

~~PART I (CONT’D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

We monitor adjusted EBITDA ~~from continuing operations~~ as a supplement to our GAAP measures, and believe it is useful to present to investors, because we believe that it facilitates evaluation of our ~~period‑to‑period~~period-to-period operating performance by eliminating items that are not operational in nature, allowing comparison of our recurring core business operating results over multiple periods unaffected by differences in capital structure, capital investment cycles and fixed asset base. In addition, we believe adjusted EBITDA ~~from continuing operations~~ and similar measures are widely used by investors, securities analysts, ratings agencies, and other parties in evaluating companies in our industry as a measure of financial performance and ~~debt‑service~~debt-service capabilities.

Our use of adjusted EBITDA ~~from continuing operations~~ has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

•adjusted EBITDA ~~from continuing operations~~ does not reflect changes in, or cash requirements for, our working capital needs;

•adjusted EBITDA ~~from continuing operations~~ does not reflect our cash expenditures for capital equipment or other contractual commitments, including any capital expenditure requirements to augment or replace our capital assets;

•adjusted EBITDA ~~from continuing operations~~ does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our indebtedness;

•adjusted EBITDA ~~from continuing operations~~ does not reflect tax payments that may represent a reduction in cash available to us;

•adjusted EBITDA ~~from continuing operations~~ does not reflect expenses relating to our pension and OPEB plans;

•adjusted EBITDA ~~from continuing operations~~ does not reflect the ~~non‑cash~~non-cash gains or losses from foreign currency remeasurement of ~~non‑operating~~non-operating assets and liabilities in our foreign subsidiaries where the functional currency is the U.S. dollar;

•adjusted EBITDA ~~from continuing operations~~ does not reflect initial and follow-on public offering and related expenses;

•adjusted EBITDA ~~from continuing operations~~ does not reflect related party Tax Receivable Agreement ~~expense;~~adjustments;

•adjusted EBITDA ~~from continuing operations~~ does not reflect stock-based compensation or the ~~non‑cash write‑off~~non-cash write-off of fixed assets; and

•other companies, including companies in our industry, may calculate EBITDA ~~from continuing operations~~ and adjusted EBITDA ~~from continuing operations~~ differently, which reduces its usefulness as a comparative measure.

In evaluating EBITDA ~~from continuing operations~~ and adjusted EBITDA, ~~from continuing operations,~~ you should be aware that in the future, we will incur expenses similar to the adjustments in this presentation. Our presentations of EBITDA ~~from continuing operations~~ and adjusted EBITDA ~~from continuing operations~~ should not be construed as suggesting that our future results will be unaffected by these expenses or any unusual or ~~non‑recurring~~non-recurring items. When evaluating our performance, you should consider EBITDA ~~from continuing operations~~ and adjusted EBITDA ~~from continuing operations~~ alongside other financial performance measures, including our net income (loss) and other GAAP measures.

2926

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

The following table reconciles our ~~non‑GAAP~~non-GAAP key financial measures to the most directly comparable GAAP measures:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2019		2018		2019		2018			2020		2019		2020		2019
	(in thousands)									(in thousands)
Net income	175,876		199,466		569,680		624,587		Net income	$	94,234	$	175,876	$	309,278	$	569,680
Add:									Add:
Discontinued operations	—		726		—		(585	)

Depreciation and amortization	15,357		16,050		46,387		47,746		Depreciation and amortization	16,241		15,357		45,074		46,387
Interest expense	31,803		33,855		98,472		100,387		Interest expense	22,474		31,803		69,026		98,472
Interest income	(1,765	)	(562	)	(2,910	)	(1,068	)	Interest income	(93)		(1,765)		(1,582)		(2,910)
Income taxes	20,755		24,871		90,940		36,250		Income taxes	18,104		20,755		61,838		90,940
EBITDA from continuing operations	242,026		274,406		802,569		807,317
EBITDA									EBITDA	150,960		242,026		483,634		802,569
Adjustments:									Adjustments:
Pension and OPEB plan expenses ⁽¹⁾	800		483		2,397		1,478		Pension and OPEB plan expenses (1)	583		800		1,666		2,397
Initial and follow-on public offering expenses ⁽²⁾	160		43		1,409		5,164
Non‑cash loss on foreign currency remeasurement ⁽³⁾	(185	)	1,404		842		1,629

Initial and follow-on public offering and related expenses (2)									Initial and follow-on public offering and related expenses (2)	—		160		4		1,409
Non-cash loss (gain) on foreign currency remeasurement (3)									Non-cash loss (gain) on foreign currency remeasurement (3)	798		(185)		(441)		842
Stock-based compensation ⁽⁴⁾	706		476		1,568		657		Stock-based compensation (4)	764		706		1,891		1,568
Non‑cash fixed asset write-off ⁽⁵⁾	1,947		—		4,888		1,062
Related party Tax Receivable Agreement expense ⁽⁶⁾	—		—		—		61,801
Adjusted EBITDA from continuing operations	245,454		276,812		813,673		879,108
Non-cash fixed asset write-off (5)									Non-cash fixed asset write-off (5)	—		1,947		—		4,888
Related party Tax Receivable Agreement adjustment(6)									Related party Tax Receivable Agreement adjustment(6)	—		—		(3,346)		—
Adjusted EBITDA									Adjusted EBITDA	$	153,105	$	245,454	$	483,408	$	813,673


~~(1)~~	~~Service and interest cost of our OPEB plans. Also includes a mark‑to‑market loss (gain) for plan assets as of December of each year.~~


~~(2)~~	~~Legal, accounting, printing and registration fees associated with the initial and follow-on public offerings.~~


~~(3)~~	~~Non‑cash loss from foreign currency remeasurement of non‑operating liabilities of our non‑U.S. subsidiaries where the functional currency is the U.S. dollar.~~


~~(4)~~	~~Non-cash expense for stock-based compensation grants.~~


~~(5)~~	~~Non‑cash fixed asset write‑off recorded for obsolete assets.~~


~~(6)~~	~~Non-cash expense for future payment to our sole pre-IPO stockholder for tax assets that are expected to be utilized.~~

(1)Service and interest cost of our OPEB plans. Also includes a mark-to-market loss (gain) for plan assets as of December of each year.

(2)Legal, accounting, printing and registration fees associated with the initial and follow-on public offering and related expenses.

(3)Non-cash gains and losses from foreign currency remeasurement of non-operating assets and liabilities of our non-U.S. subsidiaries where the functional currency is the U.S. dollar.

(4)Non-cash expense for stock-based compensation grants.

(5)Non-cash fixed asset write-off recorded for obsolete assets.

(6)Non-cash expense adjustment for future payment to our sole pre-IPO stockholder for tax assets that are expected to be utilized.

Key Operating Metrics

~~Key~~In addition to measures of financial performance presented in accordance with GAAP, we use certain operating metrics to analyze the performance of our company. The key operating metrics consist of sales volume, ~~weighted average realized price,~~ production volume, production capacity and capacity utilization.

Sales volume reflects the total volume of GrafTech manufactured graphite electrodes sold for which revenue has been recognized during the period. Weighted average realized price reflects the total revenues from sales of GrafTech manufactured graphite electrodes for the period divided by the sales volume of the GrafTech manufactured electrodes for that period. Beginning in the first quarter of 2019, sales volume and weighted average realized price are presented excluding re-sales of low-grade graphite electrodes manufactured by third-party suppliers. Sales of these third-party manufactured electrodes are now included in the revenue category of “by-products and other,” which represents a minimal contribution to our profitability. This change aligns these These metrics align with management's assessment of our revenue performance and profit margin and will help investors understand the factors that drive our profitability.

Sales volume reflects only graphite electrodes manufactured by GrafTech. For ~~comparability purposes,~~a discussion of our revenue recognition policy, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies-Revenue Recognition.” in our Annual Report on Form 10-K. Sales volume helps investors understand the ~~prior period sales volume and weighted average realized price have been recast to conform to this presentation.~~ factors that drive our net sales.

Production volume reflects graphite electrodes produced during the period. Production capacity reflects expected maximum production volume during the period under normal operating conditions, standard product mix and expected maintenance downtime. Capacity utilization reflects production volume as a percentage of production capacity. Production volume, production capacity and capacity utilization help us understand the efficiency of our production, evaluate cost of sales and consider how to approach our contract initiative.

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

Results of Operations

The Three Months Ended September 30, ~~2019~~2020 Compared to the Three Months Ended September 30, ~~2018~~2019

The tables presented in our period-over-period comparisons summarize our Condensed Consolidated Statements of Operations and illustrate key financial indicators used to assess the consolidated financial results. Throughout our Management's Discussion and Analysis ("MD&A"), insignificant changes may be deemed not meaningful and are generally excluded from the discussion.


	For the Three Months Ended September 30,				Increase/ Decrease		% Change
	2020		2019
	(Dollars in thousands)

Net sales	$	286,987	$	420,797	$	(133,810)	(32)	%
Cost of sales	131,862		178,497		(46,635)		(26)	%
Gross profit	155,125		242,300		(87,175)		(36)	%
Research and development	650		611		39		6	%
Selling and administrative expenses	19,062		15,708		3,354		21	%
Operating income	135,413		225,981		(90,568)		(40)	%
Other expense (income), net	694		(688)		1,382		(201)	%

Interest expense	22,474		31,803		(9,329)		(29)	%
Interest income	(93)		(1,765)		1,672		(95)	%
Income before provision for income taxes	112,338		196,631		(84,293)		(43)	%
Provision for income taxes	18,104		20,755		(2,651)		(13)	%
Net income	$	94,234	$	175,876	$	(81,642)	(46)	%

For the Three Months Ended September 30, Increase/ Decrease % Change
2019 2018
(Dollars in thousands)

Net sales $ 420,797
$ 454,890
$ (34,093 ) (7 )%
Cost of sales 178,497
180,280
(1,783 ) (1 )%
Gross profit 242,300
274,610
(32,310 ) (12 )%
Research and development 611
518
93
18 %
Selling and administrative expenses 15,708
14,234
1,474
10 %
Operating income 225,981
259,858
(33,877 ) (13 )%
Other (income) expense, net (688 ) 1,502
(2,190 ) (146 )%
Interest expense 31,803
33,855
(2,052 ) (6 )%
Interest income (1,765 ) (562 ) (1,203 ) 214 %
Income from continuing operations before
provision for income taxes 196,631
225,063
(28,432 ) (13 )%
Provision for income taxes 20,755
24,871
(4,116 ) (17 )%
Net income from continuing operations 175,876
200,192
(24,316 ) (12 )%
Loss from discontinued operations, net of tax —
(726 ) 726
(100 )%
Net income $ 175,876
$ 199,466
$ (23,590 ) (12 )%

Net sales. Net sales decreased from ~~$454.9 million in the three months ended September 30, 2018 to~~ $420.8 million in the three months ended September 30, ~~2019. The decrease was primarily driven by a 5% decrease in sales volume of graphite electrodes. Partially offsetting this decrease in volumes was an increase in the weighted average realized price~~2019 to ~~$9,960 per MT~~$287.0 million in the three months ended September 30, ~~2019~~2020. Lower net sales reflect an 18% decrease in sales volume driven primarily by the impact of COVID-19 on steel production levels and continued customer inventory destocking. We realized lower average spot prices resulting from ~~$9,664 per MT~~this lower demand. Prices achieved from our long-term agreements ("LTAs") were also lower in the three months ended September 30, 2020 as compared to the same period of ~~the prior year. These increases were partially offset by decreased sales of by-products~~2019 due primarily to mix, LTA modifications and ~~other.~~other adjustments.

Cost of sales. We experienced a decrease in cost of sales from ~~$180.3 million in the three months ended September 30, 2018 to~~ $178.5 million in the three months ended September 30, 2019 ~~as a result of lower sales volume. This decrease was partially offset by sales of inventory that was manufactured using higher priced third-party needle coke.~~

~~Selling and administrative expenses.~~ ~~Selling and administrative expenses increased by $1.5 million, or 10%, from $14.2~~to $131.9 million in the three months ended September 30, ~~2018~~2020, primarily due to the 18% decrease in sales volume of manufactured electrodes. Additionally, cost of sales was lower due to less usage of third-party needle coke.

Selling and administrative expenses. Selling and administrative expenses increased from $15.7 million in the three months ended September 30, ~~2019. This change was primarily due~~2019 to ~~the write-off of receivables related to a customer that entered into bankruptcy proceedings.~~

~~Other expense (income).~~ Other expense (income) decreased from $1.5 million of expense in the three months ended September 30, 2018 to $0.7 million of income in the three months ended September 30, 2019, primarily due to $1.6 million of advantageous non‑cash foreign currency impacts on non‑operating assets and liabilities.

~~Interest Expense. Interest expense decreased from $33.9~~$19.1 million in the three months ended September 30, ~~2018,~~2020 primarily due to higher legal costs.

Interest expense. Interest expense decreased from $31.8 million in the three months ended September 30, 2019 to $22.5 million in the three months ended September 30, 2020, primarily due to lower interest rates and lower average borrowings. During the three months ended September 30, 2020, we reduced ~~borrowings~~our term loan by $150.0 million. We realized a $0.8 million benefit to interest expense resulting from ~~our $125.0 million payment~~gains on ~~our term loans~~certain of these transactions in ~~February 2019.~~

the three months ended September 30, 2020.

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

Provision for income taxes. The following table summarizes the expense for income taxes:


	For the Three Months Ended September 30,
	2020			2019
	(Dollars in thousands)

Tax expense	$	18,104		$	20,755
Pretax income	112,338			196,631
Effective tax rates	16.1		%	10.6		%

For the Three Months Ended September 30,
2019 2018
(Dollars in thousands)

Tax expense $ 20,755
$ 24,871
Pretax income 196,631
225,063
Effective tax rates 10.6 % 11.1 %

The effective tax rate for the three months ended September 30, 2020 was 16.1%. This rate differs from the U.S. statutory rate of 21% primarily due to worldwide earnings from various countries taxed at different rates which are offset by the net increase related to the U.S. taxation of global intangible low taxed income ("GILTI") and the Section 250 Deduction and Foreign Tax Credits ("FTC").

The effective tax rate for the three months ended September 30, 2019 was 10.6%. This rate differs from the U.S. statutory rate of 21% primarily due to worldwide earnings from various countries taxed at different ~~rates and further improved by the provision to return adjustment recorded in the third quarter as a result of filing income tax returns in foreign jurisdictions~~

The effective tax rate for the three months ended September 30, 2018 was 11.1%. This rate differs from the U.S. statutory rate of 21% primarily due to the partial release of a valuation allowance recorded against the deferred tax asset related to U.S. tax attributes and the tax impact of worldwide earnings from various countries taxed at different rates.

Tax expense decreased from ~~$24.9 million for the three months ended September 30, 2018 to~~ $20.8 million for the three months ended September 30, ~~2019.~~2019 to $18.1 million for the three months ended September 30, 2020. This change is primarily related to the reduction in ~~profits and further reduced by the provision to return adjustment recorded in the third quarter as a result of filing income tax returns in foreign jurisdictions.~~profits.

The Nine Months Ended September 30, ~~2019~~2020 Compared to the Nine Months EndedSeptember 30, ~~2018~~2019

The tables presented in our period-over-period comparisons summarize our Condensed Consolidated Statements of Operations and illustrate key financial indicators used to assess the consolidated financial results. Throughout our MD&A, insignificant changes may be deemed not meaningful and are generally excluded from the discussion.


	For the Nine Months Ended September 30,				Increase/ Decrease		% Change
	2020		2019
	(Dollars in thousands)

Net sales	$	886,351	$	1,376,181	$	(489,830)	(36)	%
Cost of sales	401,379		571,068		(169,689)		(30)	%

Gross profit	484,972		805,113		(320,141)		(40)	%
Research and development	2,072		1,961		111		6	%
Selling and administrative expenses	49,995		46,328		3,667		8	%
Operating income	432,905		756,824		(323,919)		(43)	%
Other (income) expense	(2,309)		642		(2,951)		(460)	%
Related party Tax Receivable Agreement benefit	(3,346)		—		(3,346)		N/A
Interest expense	69,026		98,472		(29,446)		(30)	%
Interest income	(1,582)		(2,910)		1,328		(46)	%
Income before provision for income taxes	371,116		660,620		(289,504)		(44)	%
Provision for income taxes	61,838		90,940		(29,102)		(32)	%


Net income	$	309,278	$	569,680	$	(260,402)	(46)	%

For the Nine Months
Ended September 30, Increase/ Decrease % Change
2019 2018
(Dollars in thousands)

Net sales $ 1,376,181
$ 1,363,121
$ 13,060
1 %
Cost of sales 571,068
491,339
79,729
16 %
Gross profit 805,113
871,782
(66,669 ) (8 )%
Research and development 1,961
1,528
433
28 %
Selling and administrative expenses 46,328
46,349
(21 ) — %
Operating income 756,824
823,905
(67,081 ) (8 )%
Other expense 642
2,533
(1,891 ) (75 )%
Related party Tax Receivable Agreement expense —
61,801
(61,801 ) N/A
Interest expense 98,472
100,387
(1,915 ) (2 )%
Interest income (2,910 ) (1,068 ) (1,842 ) 172 %
Income from continuing operations before
provision for income taxes 660,620
660,252
368
— %
Provision for income taxes 90,940
36,250
54,690
151 %
Net income from continuing operations 569,680
624,002
(54,322 ) (9 )%
Income from discontinued operations, net of tax —
585
(585 ) (100 )%
Net income $ 569,680
$ 624,587
$ (54,907 ) (9 )%

Net sales. Net sales ~~increased~~decreased by ~~$13.1~~$489.8 million, or 1%36%, from ~~$1,363.1 million in the nine months ended September 30, 2018 to~~ $1,376.2 million in the nine months ended September 30, ~~2019. This increase was driven by~~2019 to $886.4 million in the nine months ended September 30, 2020. Lower net sales reflect a ~~3% increase~~25% decrease in sales volume driven primarily by the impact of COVID-19 on steel production levels and continued customer inventory destocking. Additionally, during the same period, spot prices declined significantly and we experienced a reduction in the resale of purchased electrodes.

Cost of sales. Cost of sales decreased by $169.7 million, or 30%, from $571.1 million in the nine months ended September 30, 2019 ~~compared~~ to $401.4 million in the ~~same period in 2018,~~nine months ended September 30, 2020. This decrease was primarily due to the ~~completion of our~~

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

25% decrease in sales volume of manufactured electrodes, as well as less usage of third-party needle coke. Additionally, cost of sales was lower due to a reduction in the resale of purchased electrodes.

~~debottlenecking initiative. The weighted average realized price of GrafTech manufactured graphite electrodes was $9,977 per MT~~Selling and administrative expenses. Selling and administrative expenses increased from $46.3 million in the nine months ended September 30, 2019 ~~which was slightly higher than the $9,811 per MT we realized in the nine months ended September 30, 2018. These increases were partially offset by decreased sales of by-products and other.~~

~~Cost of sales.~~ ~~Cost of sales increased by $79.7 million, or 16%, from $491.3~~to $50.0 million in the nine months ended September 30, ~~2018~~2020 primarily due to $571.1 million in the nine months ended September 30, 2019. This increase was primarily the result of higher input costs for needle coke and higher volumes, increasing as a result of our debottlenecking projects coming online.increased legal costs.

~~Selling and administrative expenses.~~ Selling and administrative expenses were flat for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 as decreased costs related to our public offerings of $3.8 million were offset by an increase to the allowance for doubtful accounts related to a customer that entered into bankruptcy proceedings and the ongoing costs of being a public company.

Other (income) expense.Other expense ~~(income).~~ ~~Other~~changed by $3.0 million, from an expense ~~decreased by $1.9 million, or 75%, from $2.5 million in the nine months ended September 30, 2018 to~~of $0.6 million in the nine months ended September 30, ~~2019.~~2019 to income of $2.3 million in the nine months ended September 30, 2020. This ~~decrease~~change was primarily due to advantageous ~~non‑cash~~non-cash foreign currency impacts on ~~non‑operating~~non-operating assets and liabilities.

Related party Tax Receivable Agreement ~~expense.~~ benefit. During the ~~second~~first quarter of ~~2018,~~2020, the Company recorded ~~$61.8~~an adjustment to our Related-party payable-Tax Receivable Agreement liability resulting in a benefit of $3.3 million ~~of expense as a result of our tax receivable agreement liability, after it was estimated that we would realize certain deferred tax assets.~~due to the revised profit expectation for the year 2020, primarily caused by the COVID-19 pandemic.

Interest expense. Interest expense ~~was largely consistent~~decreased by $29.4 million from $98.5 million in the nine months ended September 30, 2019 ~~compared~~ to $69.0 million in the same period of ~~2018. In~~2020, primarily due to lower interest rates and lower average borrowings. We made repayments of $125 million on our term loans in the first quarter of ~~2018,~~2019 and $225 million in the fourth quarter of 2019. During the nine months ended September 30, 2020, we ~~redeemed~~reduced our ~~Senior Notes~~term loan by $253 million. We realized a $3.8 million benefit to interest expense resulting ~~in accelerated accretion~~from gains on certain of ~~the fair value adjustment on the Senior Notes of $18.7 million and a premium redemption of $4.8 million. This decrease was offset by increased borrowing costs due to higher levels of debt~~these transactions in the nine months ended September 30, ~~2019.~~2020.

Provision for income taxes. The following table summarizes the expense for income taxes:


	For the Nine Months Ended September 30,
	2020			2019
	(Dollars in thousands)

Tax expense	$	61,838		$	90,940
Pre-tax income	371,116			660,620
Effective tax rates	16.7		%	13.8		%

For the Nine Months Ended September 30,
2019 2018
(Dollars in thousands)

Tax expense $ 90,940
$ 36,250
Pretax income 660,620
660,252
Effective tax rates 13.8 % 5.5 %

The effective tax rate for the nine months ended September 30, ~~2019~~2020 was ~~13.8%~~16.7%. This rate differs from the U.S. statutory rate of 21% primarily due to worldwide earnings from various countries taxed at different ~~rates.~~rates,which was offset by a net increase related to the U.S. taxation of GILTI and FTC.

The tax expense decreased from $90.9 million for the nine months ended September 30, 2019 to $61.8 million for the nine months ended September 30, 2020 primarily from the decrease in earnings.

The effective tax rate for the nine months ended September 30, ~~2018~~2019 was ~~5.5%~~13.8%.This rate differed from the U.S. statutory rate of 21% primarily due to ~~the partial release of a valuation allowance recorded against the deferred tax asset related to U.S. tax attributes~~ worldwide earnings from various countries taxed at different rates.

~~Tax expense increased from $36.3 million for~~GrafTech has considered the ~~nine months ended September 30, 2018,~~tax impact of COVID-19 legislation, including the U.S. Coronavirus Aid, Relief and Economic Security (CARES) Act and has concluded that there is no material tax impact. The Company continues to ~~$90.9 million for~~monitor the ~~nine months ended September 30, 2019. This change is primarily due to a partial release in the first nine months~~tax effects of ~~2018 of a valuation allowance recorded against the deferred tax asset related to US tax attributes.~~any legislative changes.

Effects of Changes in Currency Exchange Rates

When the currencies of non-U.S. countries in which we have a manufacturing facility decline (or increase) in value relative to the U.S. dollar, this has the effect of reducing (or increasing) the U.S. dollar equivalent cost of sales and other expenses with respect to those facilities. In certain countries in which we have manufacturing facilities, and in certain export markets, we sell in currencies other than the U.S. dollar. Accordingly, when these currencies increase (or decline) in value relative to the U.S. dollar, this has the effect of increasing (or reducing) net sales. The result of these effects is to increase (or decrease) operating profit and net income.

~~PART I (CONT’D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

Many of the non-U.S. countries in which we have a manufacturing facility have been subject to significant economic and political changes, which have significantly impacted currency exchange rates. We cannot predict changes in currency

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

exchange rates in the future or whether those changes will have net positive or negative impacts on our net sales, cost of sales or net income.

The impact of these changes in the average exchange rates of other currencies against the U.S. dollar on our net sales was an increase of ~~$0.2~~$2.5 million and ~~a decrease of $4.0~~$0.5 million for the three and nine months ended September 30, ~~2019,~~2020, respectively, compared to the same period of ~~2018.~~2019. The impact of these changes on our cost of sales was ~~decreases~~a decrease of ~~$2.1~~$0.7 million and ~~$10.6~~$5.0 million for the three and nine months ended September 30, ~~2019,~~2020, respectively, compared to the same period of ~~2018.~~2019.

We have in the past and may in the future use various financial instruments to manage certain exposures to risks caused by currency exchange rate changes, as described under “Part I, Item 3–Quantitative and Qualitative Disclosures about Market ~~Risk”.~~Risk.”

Liquidity and Capital Resources

Our sources of funds have consisted principally of cash flow from operations and debt, including our credit facilities (subject to continued compliance with the financial covenants and representations). Our uses of those funds (other than for operations) have consisted principally of dividends, capital expenditures, scheduled debt repayments, optional debt ~~prepayments,~~repayments, share repurchases and other obligations. Disruptions in the U.S. and international financial markets could adversely affect our liquidity and the cost and availability of financing to us in the future.

We believe that we have adequate liquidity to meet our needs. As of September 30, ~~2019,~~2020, we had liquidity of ~~$628.1~~$405.7 million, consisting of $246.9 million of availability onunder our 2018 Revolving Facility (subject to continued compliance with the financial covenants and representations) and cash and cash equivalents of ~~$381.2~~$158.8 million. We had ~~long‑term~~long-term debt of ~~$1,965.5~~$1,564.4 million and ~~short‑term~~short-term debt of ~~$70.9~~$0.1 million as of September 30, ~~2019.~~2020. As of December 31, ~~2018,~~2019, we had liquidity of ~~$295.4~~$327.8 million consisting of ~~$245.5~~$246.9 million available on our 2018 Revolving Facility (subject to continued compliance with the financial covenants and representations) and cash and cash equivalents of ~~$49.9~~$80.9 million. We had ~~long‑term~~long-term debt of ~~$2,050.3~~$1,812.7 million and ~~short‑term~~short-term debt of ~~$106.3~~$0.1 million as of December 31, ~~2018.~~2019.

As of September 30, ~~2019~~2020 and December 31, ~~2018, $176.6~~2019, $130.3 million and ~~$38.4~~$41.4 million, respectively, of our cash and cash equivalents were located outside of the ~~United States.~~U.S. We repatriate funds from our foreign subsidiaries through dividends. All of our subsidiaries face the customary statutory limitation that distributed dividends do not exceed the amount of retained and current earnings. In addition, for our subsidiary in South Africa, the South Africa Central Bank requires that certain solvency and liquidity ratios remain above defined levels after the dividend distribution, which historically has not materially affected our ability to repatriate cash from this jurisdiction. The cash and cash equivalents balances in South Africa were ~~$1.6~~$0.6 million and ~~$0.2~~$0.8 million as of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. Upon repatriation to the ~~United States,~~U.S., the foreign source portion of dividends we receive from our foreign subsidiaries is no longer subject to U.S. federal income tax as a result of ~~the~~The Tax ~~Act.~~Cuts and Jobs Act (the "Tax Act").

Cash flow and plans to manage ~~liquidity~~.liquidity. Our cash flow typically fluctuates significantly between quarters due to various factors. These factors include customer order patterns, fluctuations in working capital requirements, timing of tax payments, timing of capital expenditures, acquisitions, divestitures and other factors. Cash flow from operations is expected to remain at positive sustained levels due to the predictable earnings generated by our three-to-five-year sales contracts with our customers.

~~As of September 30, 2019, we had access to the $250 million 2018 Revolving Facility.~~ We had ~~$3.1 million of letters of credit, for a total~~ availability onunder the 2018 Revolving Facility of $246.9 ~~million. We also had $2.5~~ million ~~of surety bonds outstanding~~ as of September 30, ~~2019. As of~~2020 and December 31, ~~2018, we had availability on~~2019, which consisted of the ~~2018 Revolving Faciltity of $245.5~~$250 million ~~resulting from $4.5~~limit reduced by $3.1 million of outstanding letters of credit. ~~We also had $0.5 million of surety bonds outstanding as of December 31, 2018.~~

On February 12, 2018, we entered into the 2018 Credit Agreement, which provides for the 2018 Revolving Facility and the 2018 Term Loan Facility. On February 12, 2018, our wholly owned subsidiary, GrafTech Finance, borrowed $1,500 million under the 2018 Term Loan Facility. The funds received were used to pay off our outstanding debt, including borrowings under our ~~Old Credit Agreement~~prior credit facility and the ~~Senior Notes~~previously outstanding senior notes and accrued interest relating to those borrowings and the ~~Senior Notes,~~senior notes, declare and pay a dividend of ~~$1,112.0~~$1,112 million to our sole pre-IPO stockholder, pay fees and expenses incurred in connection therewith and for other general corporate purposes.

On April 19, 2018, we declared a dividend in the form of the Brookfield Promissory Note to the sole pre-IPO stockholder. The $750 million Brookfield Promissory Note was conditioned upon (i) the Senior Secured First Lien Net Leverage Ratio (as defined in the 2018 Credit Agreement), as calculated based on our final financial results for the first quarter of 2018, being equal to or less than 1.75 to 1.00, (ii) no Default or Event of Default (each as defined in the 2018 Credit Agreement) having occurred and continuing or that would result from the $750 million Brookfield Promissory Note and (iii) the satisfaction of the conditions

~~PART I (CONT’D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

described in (i) and (ii) above occurring within 60 days from the dividend record date. Upon publication of our 2018 first quarter report on Form 10-Q, these conditions were met and, as a result, the Brookfield Promissory Note became payable.

The Brookfield Promissory Note had a maturity of eight years from the date of issuance and bore interest at a rate equal to the Adjusted LIBO Rate (as defined in the Brookfield Promissory Note) plus an applicable margin equal to 4.50% per annum, with an additional 2.00% per annum starting from the third anniversary from the date of issuance. We were permitted to make voluntary prepayments at any time without premium or penalty. All obligations under the Brookfield Promissory Note were unsecured and guaranteed by all of our existing and future domestic wholly owned subsidiaries that guarantee, or are borrowers under, the Senior Secured Credit Facilities. No funds were lent or otherwise contributed to us by Brookfield in connection with the Brookfield Promissory Note. As a result, we received no consideration in connection with its issuance. As described below, the Brookfield Promissory Note was repaid, in full, on June 15, 2018.

On April 19, 2018, we declared a $160 million cash dividend payable to Brookfield, the sole pre-IPO stockholder. Payment of this dividend was conditional upon (i) the Senior Secured First Lien Net Leverage Ratio (as defined in the 2018 Credit Agreement), as calculated based on our final financial results for the first quarter of 2018, being equal to or less than 1.75 to 1.00, (ii) no Default or Event of Default (as defined in the 2018 Credit Agreement) having occurred and continuing or that would result from the payment of the dividend and (iii) the payment occurring within 60 days from the dividend record date. The conditions of this dividend were met upon filing of our first quarter 2018 report on Form 10-Q and the dividend was paid on May 8, 2018.

On June 15, 2018, GrafTech entered into the First Amendment to its 2018 Credit Agreement. The First Amendment amends the 2018 Credit Agreement to provide for ~~the~~an additional $750 million in aggregate principal amount of the Incremental Term Loans to GrafTech Finance. The Incremental Term Loans increase the aggregate principal amount of term loans incurred by GrafTech Finance under the 2018 Credit Agreement from $1,500 million to $2,250 million. The Incremental Term Loans have the same terms as those applicable to the existing term loans under the 2018 Credit Agreement, including interest rate,

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

payment and prepayment terms, representations and warranties and covenants. The Incremental Term Loans mature on February 12, 2025, the same date as the existing term loans. GrafTech paid an upfront fee of 1.00% of the aggregate principal amount of the Incremental Term Loans on the effective date of the First Amendment. The proceeds of the Incremental Term Loans were used to repay, in full, the $750 million ~~in principal outstanding on the Brookfield Promissory Note.~~

On August 13, 2018, the Company repurchased 11,688,311 shares directly from Brookfield. These shares were retired upon repurchase. The price per share paid by the Company was equal to the price at which the underwriters purchased the shares from Brookfield in Brookfield’s August 2018 public secondary offering of 23,000,000 shares of our ~~common stock, net of underwriting commissions and discounts. GrafTech funded the share repurchase from cash on hand.~~existing debt to our sole pre-IPO stockholder.

On July 30, 2019, our Board of Directors authorized a program to repurchase up to $100 million of our outstanding common stock. We may purchase shares from time to time on the open market, including under Rule 10b5-1 and/or Rule 10b-18 plans. The amount and timing of repurchases are subject to a variety of factors including liquidity, stock price, applicable legal requirements, other business objectives and market conditions. ~~As of September 30, 2019 we had~~We have repurchased ~~879,134~~4,333,259 shares of common stock ~~totaling $9.5~~for a total purchase price of $40.9 million under this ~~program.~~program since inception. There were no shares repurchased under this program during the three months ended September 30, 2020.

~~We currently pay~~In April 2020, as a ~~quarterly cash~~result of the deteriorating economic environment, our Board of Directors reduced our dividend ~~of $0.085~~rate to $0.01 per share or ~~an aggregate of $0.34 per share~~$0.04 on an annualized basis. ~~Additionally, on December 31, 2018, we paid a special~~We expect our Board of Directors to revisit the dividend ~~of $0.70 per share totaling $203.4 million.~~level when economic conditions improve. There can be no assurance that we will pay dividends in the future in these amounts or at all. Our Board of Directors may change the timing and amount of any future dividend payments or eliminate the payment of future dividends in its sole discretion, without any prior notice to our stockholders. Our ability to pay dividends will depend upon many factors, including our financial position and liquidity, results of operations, legal requirements, restrictions that may be imposed by the terms of our current and future credit facilities and other debt obligations and other factors deemed relevant by our Board of Directors.

~~On February 13, 2019, we~~We repaid ~~$125~~$350 million on our 2018 Term Loan ~~Facility. We are targeting to return approximately 50-60%~~Facility in 2019. During the three and nine months ended September 30, 2020, we retired $149.7 million and $253.0 million of principal of our term loans, respectively. Subsequent to September 30, 2020, we repaid an additional $60.0 million of our term loans. In light of the recent economic downturn, we are now prioritizing balance sheet flexibility and debt repayment. We anticipate using a majority of the cash flow ~~after capital expenditures~~that we generate to ~~stockholders~~repay debt, but we will continue to examine opportunities to repurchase our common stock. As a result of government enacted COVID-19 relief in ~~2019 with the remainder~~a foreign jurisdiction, we were able to defer a tax payment of approximately $50 million that was scheduled to be ~~used for debt repayment.~~made in the first quarter of 2020 until the fourth quarter of 2020. During the nine months ended September 30, ~~2019,~~2020, we paid ~~$87.0~~$31.9 million to various tax collecting agencies worldwide.

Potential uses of our liquidity include dividends, share repurchases, capital expenditures, acquisitions, scheduled debt repayments, optional debt ~~prepayments~~repayments and other general purposes. An improving economy, while resulting in improved results of operations, could increase our cash requirements to purchase inventories, make capital expenditures and fund payables and other obligations until increased accounts receivable are converted into cash. A downturn, including the current downturn caused by the COVID-19 pandemic, could significantly and negatively impact our results of operations and cash flows, which, coupled with increased borrowings, could negatively impact our credit ratings, our ability to comply with debt covenants, our ability to secure additional financing and the cost of such financing, if available.

~~PART I (CONT’D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

In order to seek to minimize our credit risks, we may reduce our sales of, or refuse to sell (except for prepayment, cash on delivery or under letters of credit or parent guarantees), our products to some customers and potential customers. Our unrecovered trade receivables worldwide have not been material during the last two years individually or in the aggregate.

We manage our capital expenditures by taking into account quality, plant reliability, safety, environmental and regulatory requirements, prudent or essential maintenance requirements, global economic conditions, available capital resources, liquidity, ~~long‑term~~long-term business strategy and return on invested capital for the relevant expenditures, cost of capital and return on invested capital of the Company as a whole and other factors.

Capital expenditures totaled $30.7 million in the nine months ended September 30, 2020. We ~~have announced~~previously reduced our planned capital expenditures for the full year by approximately one-half to a ~~series~~level of ~~operational improvement projects at our Monterrey~~approximately $35 million and ~~St. Marys facilities. These projects~~we remain committed to this goal. We are ~~intended~~managing inventory levels to ~~help optimize our manufacturing footprint while improving environmental performance and increasing production flexibility.~~match demand. Due to timing of purchases, inventory levels increased during the first quarter of 2020. We expect ~~these projects~~overall inventory levels to ~~be completed in~~decrease over the ~~first half~~remainder of 2021, at which time we will be able to shift additional graphitization and machining from Monterrey to St. Marys. We estimate that capital spending would be near current levels which includes these projects as well as maintenance and capital projects, subject to the approval by our Board.2020.

In the event that operating cash flows fail to provide sufficient liquidity to meet our business needs, including capital expenditures, any such shortfall would need to be made up by increased borrowings under our 2018 Revolving Facility, to the extent available.

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

Cash Flows

The following table summarizes our cash flow activities:


	For the Nine Months Ended September 30,							For the Nine Months Ended September 30,
	2019			2018				2020		2019
	in millions							(in millions)
Cash flow provided by (used in):							Cash flow provided by (used in):
Operating activities	$	584.8		$	612.2		Operating activities	$	416.7	$	584.8
Investing activities	$	(44.0	)	$	(46.8	)	Investing activities	$	(30.6)	$	(44.0)
Financing activities	$	(208.5	)	$	(474.7	)	Financing activities	$	(307.6)	$	(208.5)

Operating Activities

Cash flow from operating activities represents cash receipts and cash disbursements related to all of our activities other than investing and financing activities. Operating cash flow is derived by adjusting net income (loss) for:

•Non-cash items such as depreciation and amortization, impairment, post retirement obligations, and severance and pension plan changes;

•Gains and losses attributed to investing and financing activities such as gains and losses on the sale of assets and unrealized currency transaction gains and losses; and

•Changes in operating assets and liabilities, which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in results of operations.

The net impact of the changes in working capital (operating assets and liabilities), which are discussed in more detail below, include the impact of changes in: receivables, inventories, prepaid expenses, accounts payable, accrued liabilities, accrued taxes, interest payable and payments of other current liabilities.

During the nine months ended September 30, 2020, changes in working capital resulted in a net source of funds of $85.1 million, which was impacted by:

•net cash inflows in accounts receivable of $78.4 million from the decrease in accounts receivable due to lower sales;

•net cash inflows in inventory of $10.4 million from our efforts to reduce inventory levels and lower production levels;

•net cash inflows of $5.4 million from the decrease in other current assets primarily due to value-added tax refunds received from foreign governments;

•net cash inflows from increased income taxes payable of $16.0 million resulting from our ability to defer approximately $50.0 million of tax payment in a foreign jurisdiction resulting from government enacted COVID-19 relief, partially offset by lower required tax payments due to lower profitability; and

•net cash outflows from decreases in accounts payable and accruals of $25.1 million, due to lower purchases of third-party needle coke and payments.

Uses of cash in the nine months ended September 30, 2020 included contributions to pension and other benefit plans of $5.3 million, cash paid for interest of $68.0 million, payments under our Tax Receivable Agreement of $27.9 million and taxes paid of $31.9 million.

During the nine months ended September 30, 2019, changes in working capital resulted in a net use of funds of $80.3 million, which was impacted by:

•net cash outflows in accounts receivable of $20.7 million from the increase in accounts receivable due to the timing of sales and collections;

•net cash outflows from increases in inventory of $19.9 million, due primarily to higher priced raw materials;

~~net cash inflows from the utilization of prepaid assets of $5.7 million;~~

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

•net cash inflows from the utilization of prepaid assets of $5.7 million;

•net cash outflows from decreased income taxes payable of $28.2 million, resulting from required tax payments as our profitability has increased; and

•net cash ~~outflows~~inflows from ~~decreases~~increases in accounts payable and accruals of $17.3 million, due to the timing of payments.

Uses of cash in the ~~nine~~six months ended September 30, 2019 included contributions to pension and other benefit plans of $2.3 million, cash paid for interest of $93.6 million and taxes paid of $87.0 million.

~~During~~Investing Activities

Net cash used in investing activities was $30.6 million during the nine months ended September 30, ~~2018, changes in working capital resulted in a net use of funds of $143.7 million which was impacted by:~~

net cash outflows in accounts receivable of $96.0 million from the increase in accounts receivable due to increased sales driven by higher weighted average realized prices, partially offset by improved collections;

~~net cash outflows from increases in inventory of $93.8 million, due primarily to higher priced raw materials;~~

~~net cash inflows from increases in accounts payable of $4.3 million, due primarily to higher priced raw materials;~~

~~net cash inflows from decreased prepaid expense of $7.8 million due to the reduction of advanced payments; and~~

~~net cash inflows from increased income taxes payable of $35.4 million~~2020, resulting from ~~increased profitability.~~

Other uses of cash in the nine months ended September 30, 2018 included contributions to pension and other benefit plans of $6.6 million, cash paid for interest of $74.5 million and taxes paid of $19.4 million.

~~Investing Activities~~capital expenditures.

Net cash used in investing activities was $44.0 million during the nine months ended September 30, 2019, resulting from capital expenditures.

Financing Activities

Net cash ~~used in investing~~outflow from financing activities was ~~$46.8~~$307.6 million during the nine months ended September 30, ~~2018, resulting from capital expenditures~~2020, which was the result of ~~$47.6~~the repayment of $249.2 million ~~partially offset by proceeds from the sale~~on our Term Loans, $28.2 million of ~~fixed assets~~total dividends to stockholders and $30.1 million of ~~$0.9 million.~~

~~Financing Activities~~stock repurchases.

Net cash outflow from financing activities was $208.5 million during the nine months ended September 30, 2019, which was the result of our $125.0 million payment on our ~~long-term~~Term Loan debt, $74.0 million of total dividends to stockholders and $9.5 million of stock repurchases.

Net cash outflow from financing activities was $474.7 million during the nine months ended September 30, 2018, which was the net impact of our February 12, 2018 refinancing and subsequent amendment, proceeds of which were used to repay outstanding debt, pay dividends of $1,316.2 million, and repay the $750 million Brookfield Promissory Note to Brookfield. We also repurchased $225 million of our common stock from Brookfield on August 13, 2018.

Related Party Transactions

We have engaged ~~from time to time,~~ in transactions with affiliates or related parties during 2020 and we expect to continue to do so in the future. These transactions include ~~among others, entry into agreements with Brookfield such as the Stockholder Rights Agreement, the Registration Rights Agreement,~~ongoing obligations under the Tax Receivable Agreement, Stockholders Rights Agreement and ~~the Share Repurchase Agreement.~~ Registration Rights Agreement, each with Brookfield.

We have also reimbursed certain costs incurred by Brookfield as required under the Investment Agreement dated May 4, 2015 between Brookfield and GrafTech, including in connection with, transactions with our current or former subsidiaries, compensatory transactions with directors and officers including employee benefits (including reimbursement to Brookfield for compensation costs incurred by it for certain personnel who devote substantially all of their working time to us), stock option and restricted stock grants, compensation deferral, stock purchases, and customary indemnification and expense advancement arrangements.

Recent Accounting Pronouncements

We discuss recently adopted accounting standards in Note 1, ~~“Organization~~"Organization and Summary of Significant Accounting ~~Policies”~~Policies" of the Notes to Condensed Consolidated Financial Statements.

~~PART I (CONT’D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

Description of Our Financing Structure

We discuss our financing structure in more detail in Note ~~6, “Debt~~5, "Debt and ~~Liquidity”~~Liquidity" of the Notes to Condensed Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risks, primarily from changes in interest rates, currency exchange rates, energy commodity prices and commercial energy rates. From time to time, we enter into transactions that have been authorized according to documented policies and procedures in order to manage these risks. These transactions primarily relate ~~primarily~~ to financial instruments described below. Since the counterparties to these financial instruments are large commercial banks and similar financial institutions, we do not believe that we are exposed to material counterparty credit risk. We do not use financial instruments for trading purposes.

Our exposure to changes in interest rates results primarily from floating rate ~~long‑term~~long-term debt tied to LIBO Rate or Euro LIBO Rate.

Our exposure to changes in currency exchange rates results primarily from:

•sales made by our subsidiaries in currencies other than local currencies;

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GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

•raw material purchases made by our foreign subsidiaries in currencies other than local currencies; and

•investments in and intercompany loans to our foreign subsidiaries and our share of the earnings of those subsidiaries, to the extent denominated in currencies other than the U.S. dollar.

Our exposure to changes in energy commodity prices and commercial energy rates results primarily from the purchase or sale of refined oil products and the purchase of natural gas and electricity for use in our manufacturing operations.

Interest rate risk management. We periodically enter into agreements with financial institutions that are intended to limit our exposure to additional interest expense due to increases in variable interest rates. These instruments effectively cap our interest rate exposure. During the third quarter of 2019, we entered into interest rate swaps resulting in a net unrealized pre-tax ~~gain~~loss of ~~$0.7~~$13.3 million as of September 30, 2020 and net unrealized pre-tax gain of $2.9 million as of December 31, 2019.

Currency rate management. We enter into foreign currency derivatives from time to time to attempt to manage exposure to changes in currency exchange rates. These foreign currency derivatives, which include, but are not limited to, forward exchange contracts and purchased currency options, attempt to hedge global currency exposures. Forward exchange contracts are agreements to exchange different currencies at a specified future date and at a specified rate. Purchased currency options are instruments which give the holder the right, but not the obligation, to exchange different currencies at a specified rate at a specified date or over a range of specified dates. Forward exchange contracts and purchased currency options are carried at ~~market~~fair value.

The outstanding foreign currency derivatives represented a$0.7 million pre-tax net ~~loss of $0.8 million~~gain as of September 30, ~~2019~~2020 and noa net pre-tax gain ~~or loss~~of $0.2 million as of December 31, ~~2018.~~2019.

Energy commodity management. We have entered into commodity derivative contracts to effectively fix some or all of our exposure to refined oil products. The outstanding commodity derivative contracts represented a net unrealized pre-tax loss of ~~$17.2~~$8.9 million and ~~$10.7~~$3.7 million as of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

Sensitivity analysis. We use sensitivity analysis to quantify potential impacts that market rate changes may have on the underlying exposures as well as on the fair values of our derivatives. The sensitivity analysis for the derivatives represents the hypothetical changes in value of the hedge position and does not reflect the related gain or loss on the forecasted underlying transaction.

A hypothetical increase in interest rates of 100 basis points (1%) would have increased our interest expense by ~~$15.0~~$3.5 million, net of the impact of our interest rate swap, for the nine months ended September 30, ~~2019.~~2020. The same 100 basis points increase would have resulted in an increase of ~~$28.9~~$13.7 million in the fair value of our interest rate swap portfolio.

As of September 30, ~~2019,~~2020, a 10% appreciation or depreciation in the value of the U.S. dollar against foreign currencies from the prevailing market rates would have resulted in a corresponding decrease of ~~$4.8~~$5.3 million or a corresponding increase of ~~$4.8~~$5.3 million, respectively, in the fair value of the foreign currency hedge portfolio.

~~PART I (CONT’D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

A 10% increase or decrease in the value of the underlying commodity prices that we hedge would have resulted in a corresponding increase or decrease of ~~$11.1~~$6.7 million in the fair value of the commodity hedge portfolio as of September 30, ~~2019.~~2020. Because of the high correlation between the hedging instrument and the underlying exposure, fluctuations in the value of the instruments are generally offset by reciprocal changes in the value of the underlying exposure.

For further information related to the financial instruments described above, see Note 1110 "Derivative Instruments" to the Notes to Condensed Consolidated Financial Statements.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. Management is responsible for establishing and maintaining adequate disclosure controls and procedures at the reasonable assurance level. Disclosure controls and procedures are designed to ensure that information required to be disclosed by a reporting company in the reports that it files or submits under ~~the~~ Section 13 or 15(d) of the Securities ~~and~~ Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by it in the reports that it files under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, ~~2019.~~2020. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these controls and procedures ~~are~~were effective at the reasonable assurance level as of September 30, ~~2019.~~2020.

Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting that occurred during the three months ended September 30, ~~2019~~2020 that materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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PART II. OTHER INFORMATION

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

Item 1. Legal Proceedings

We are involved in various investigations, lawsuits, claims, demands, labor disputes and other legal proceedings, including with respect to environmental and human exposure or other personal injury matters, arising out of or incidental to the conduct of our business. While it is not possible to determine the ultimate disposition of each of these matters and proceedings, we do not believe that their ultimate disposition will have a material adverse effect on our financial position, results of operations or cash flows. Additionally, we are involved in the following legal proceedings.

~~Litigation~~We are involved in various arbitrations pending before the International Chamber of Commerce with several customers who, among other things, have failed to perform under their LTAs and in certain instances are seeking to modify or frustrate their contractual commitments to us. We intend to vigorously enforce our rights under these agreements.

On September 30, 2020, a stockholder of the Company filed a lawsuit in the Delaware Court of Chancery. The stockholder challenges the fairness of the Company's repurchase of shares of its common stock from Brookfield Asset Management Inc. (“Brookfield”), for $250 million pursuant to a December 3, 2019 share repurchase agreement and also a related block trade by Brookfield of GrafTech shares of common stock. The stockholder, on behalf of an alleged class of holders of GrafTech shares of common stock as of December 3, 2019 and also purportedly on behalf of the Company, asserts claims for breach of fiduciary duty against certain members of the Company’s Board of Directors and Brookfield. The stockholder also challenges the appointment of the newest independent director to the Company's Board of Directors, as allegedly in violation of the Company's Amended and Restated Certificate of Incorporation and the Stockholder Rights Agreement with certain Brookfield entities and affiliates. The stockholder seeks, among other things, an award of monetary relief to the Company and a declaration that the appointment of the newest independent director to the Board of Directors is invalid.

Pending litigation in Brazil has been ~~pending in Brazil~~ brought by employees seeking to recover additional amounts and interest thereon under certain wage increase provisions applicable in 1989 and 1990 under collective bargaining agreements to which employers in the Bahia region of Brazil were a party (including our subsidiary in Brazil). Companies in Brazil have settled claims arising out of these provisions and, in May 2015, the litigation was remanded by the Brazilian Supreme Court in favor of the ~~employees.~~employees union. After denying an interim appeal by the Bahia region employers on June 26, 2019, the Brazilian Supreme Court finally ruled in favor of the employees union on September 26, 2019. The employers union ~~is currently evaluating the merits of seeking~~has determined not to seek annulment of such decision. Separately, on October 1, 2015, a related action was filed by current and former employees against our subsidiary in Brazil to recover amounts under such provisions, plus interest thereon, which amounts together with interest could be material to us. If the Brazilian Supreme Court proceeding above had been determined in favor of the employers union, it would also have resolved this proceeding in our favor. In the first quarter of 2017, the state court initially ruled in favor of the employees. We ~~have~~ appealed this state court ruling, ~~as well~~ and the appellate court issued a decision in our favor on May 19, 2020.The employees have further appealed and we intend to vigorously defend it. As of September 30, ~~2019,~~2020, we are unable to assess the potential loss associated with these proceedings as the claims do not currently specify the number of employees seeking damages or the amount of damages being sought.

~~On March 1, 2019, the Department of Sustainable Development of the State of Nuevo León provided notice of~~The National Water Commission in Mexico ("CONAGUA"), initiated an administrative proceeding with respect to water usage at the ~~Company's~~Company’s Monterrey facility on November 26, 2018. The inquiry relates to an audit of historical water usage fees and related assessments for the facility. The ~~proceeding requires the~~ Company ~~to design and implement certain corrective measures involving certain potential violations of state environmental law relating to emissions. The Company cooperated~~is cooperating with ~~the Department~~CONAGUA with respect to this ~~matter, including payment of certain fines that were not material to the Company. In September 2019, the Department of Sustainable Development formally closed the proceeding.~~matter.

Item 1A. Risk Factors

~~There have been no material changes to~~The following disclosure modifies the ~~Risk Factors~~discussion of certain risks and uncertainties previously disclosed in Part I - Item 1A1A. of our Annual Report on Form 10-K. These risks and uncertainties, along with those previously disclosed, could materially adversely affect our business or financial results. Additional risks and uncertainties that are not presently known to us or that we deem immaterial may also impact our business or financial results.

The COVID-19 pandemic has had, and is expected to continue to have, an adverse impact on our business, results of operations, financial position and cash flows.

In December 2019, there was an outbreak of a novel strain of coronavirus ("COVID-19") identified in China that has since spread to nearly all regions of the world. The outbreak was subsequently declared a pandemic by the World Health Organization in March 2020. To date, the COVID-19 outbreak and preventative measures taken to contain or mitigate the outbreak have caused, and are continuing to cause, business slowdowns or shutdowns in affected areas and significant disruption in the financial markets and economy both globally and in the U.S.

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In response to the pandemic and related mitigation measures, we began implementing changes in our business in February 2020 to protect our employees and customers, and to support appropriate health and safety protocols, which included: (i) canceling travel and eliminating in-person meetings, (ii) working from home where possible, and (iii) establishing a "Safe-Work Playbook" for our sites. Our plant procedures include temperature measurements where permitted, personal protective equipment, mandatory use of gloves, social distancing, frequent cleaning and disinfecting and the use of daily check sheets to keep team members highly focused on these new procedures. As the pandemic continues, we continue to limit travel and have certain employees working from home on rotations so that all employees are not in our offices at the same time. While all of these measures have been necessary and appropriate, they have resulted in additional costs and have adversely impacted our business and financial performance.

While the outbreak had begun to subside in certain areas of the world where we operate and serve our customers, the infection rates in some of these areas have experienced a resurgence in the spread of COVID-19 and the infection rates in other areas continue to escalate.As a result, we are unable to predict the ultimate impact of the COVID-19 outbreak at this time.The pandemic has adversely affected, and is expected to continue to adversely affect, our business, results of operations, financial position and cash flows. Such effects may be material and the potential impacts include, but are not limited to:

•adverse impact on our customers, and resultant impact on demand for our products;

•disruptions at our facilities, including reductions in operating hours, labor shortages and changes in operating procedures, including for additional cleaning and disinfecting procedures;

•disruptions in our supply chain due to transportation delays, travel restrictions, raw material cost increases and shortages, and closures of businesses or facilities;

•reductions in our operating effectiveness due to workforce disruptions from COVID-19 restrictions and social distancing resulting from, among other things, “shelter in place” and “stay at home” orders, and the unavailability of key personnel necessary to conduct our business activities; and

•volatility in the global financial markets, which could have a negative impact on our ability to access capital and additional sources of financing in the future.

In addition, we cannot predict the impact that the COVID-19 pandemic will have on our customers, employees, suppliers and distributors, and any adverse impacts on these parties may have a material adverse impact on our business. The impact of the COVID-19 pandemic may also exacerbate other risks discussed in Item 1A, “Risk Factors” section included in our Annual Report on Form 10-K ~~filed~~for the fiscal year ended December 31, 2019, any of which could have a material effect on ~~February 22, 2019.~~us. This situation is continues to change rapidly and additional impacts may arise that we are not aware of currently.

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds

The table below sets forth the information on a monthly basis regarding GrafTech's purchases of its common stock, par value $0.01 per share, during the third quarter of ~~2019.~~2020.


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)

July 1 through July 31, 2020	—	$	—	—	$	59,030,305
August 1 through August 31, 2020	—	$	—	—	$	59,030,305
September 1 through September 30, 2020	—	$	—	—	$	59,030,305
Total	—			—

Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs

July 1 through July 31, 2019 —
$ —
—
$ —
August 1 through August 31, 2019 879,134
$ 10.79
879,134
90,515,936
September 1 through September 30, 2019 —
$ —
—
$ —
Total 879,134
$ 10.79
879,134
$ 90,515,936

(1) ~~Represents shares repurchased in open market transactions pursuant to the Share Repurchase Program.~~

~~(2) Share repurchases were made~~ Authorization remaining pursuant to our previously announced program to repurchase, which was authorized by our Board of Directors on July 30, 2019 (the “Share Repurchase Program”). The Share Repurchase Program was announced on July 31, 2019 and allows for the purchase of up to $100 million of outstanding shares of our common stock from time to time on the open market, including under Rule 10b5-1 and/or Rule 10b-18 plans.

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PART II. OTHER INFORMATION

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

Item 6. Exhibits

The exhibits listed in the following table have been filed as part of this Report.



Exhibit Number			Description of Exhibit








3.1		Amended and Restated Certificate of Incorporation of GrafTech International Ltd. (incorporated by reference to Exhibit 3.1 to GrafTech International Ltd.'s Quarterly Report on Form 10-Q filed May 1, 2019).

3.2		Amended and Restated By Laws of GrafTech International Ltd. (incorporated by reference to Exhibit 3.2 to GrafTech International Ltd.'s Registration Statement on Form S 1/A (Registration No. 333 223791) filed April 13, 2018).

31.1*		Certification pursuant to Rule 13a-14(a) under the Exchange Act by David J. Rintoul, President and Chief Executive Officer (Principal Executive Officer).

31.2*		Certification pursuant to Rule 13a-14(a) under the Exchange Act by Quinn JJ. Coburn, ~~Vice President and~~ Chief Financial Officer, Vice President Finance and Treasurer (Principal Financial Officer).

32.1*		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by David J. Rintoul, President and Chief Executive Officer (Principal Executive Officer).

32.2*		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Quinn JJ. Coburn, ~~Vice President and~~ Chief Financial Officer, Vice President Finance and Treasurer (Principal Financial Officer).

~~101.INS~~	~~XBRL Instance Document~~

~~101.SCH~~	~~XBRL Taxonomy Extension Schema Document~~

~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Linkbase Document~~

~~101.DEF~~	~~XBRL Taxonomy Extension Definition Linkbase Document~~

~~101.LAB~~	~~XBRL Taxonomy Extension Label Linkbase Document~~

~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase Document~~

~~____________________________~~


*101			~~Filed herewith~~The following financial information from GrafTech International Ltd.'s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020 formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), (iii) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Stockholders' Equity (Deficit), and (vi) Notes to the Condensed Consolidated Financial Statements.

104			Cover Page Interactive Data file (formatted as Inline XBRL and contained in Exhibit 101).

____________________________

* Filed herewith

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SIGNATURE

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.



	GRAFTECH INTERNATIONAL LTD.
Date:	November ~~7, 2019~~3, 2020	By:	/s/ Quinn J. Coburn
			Quinn J. Coburn
			Chief Financial Officer, Vice President Finance and Treasurer (Principal Financial Officer)


PART I. FINANCIAL INFORMATION:

~~PART I. FINANCIAL INFORMATION:~~

Item 1. Financial Statements

Condensed Consolidated Balance Sheets (unaudited)			5

Condensed Consolidated Statements of Operations and Comprehensive Income (unaudited)			6

Condensed Consolidated Statements of Cash Flows (unaudited)			7

Condensed Consolidated Statements of Stockholders' Equity (unaudited)			8

Notes to Condensed Consolidated Financial Statements (unaudited)			10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2724

Item 3. Quantitative and Qualitative Disclosures About Market Risk			3834

Item 4. Controls and Procedures			3935

PART II. OTHER INFORMATION:

Item 1. Legal Proceedings			4037

Item 1A. Risk Factors			4037

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds			4037

Item 6. Exhibits			4139

SIGNATURE			4240



Cont'd	Issued Shares of Common Stock		Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Income(Loss)			Retained Earnings (Accumulated Deficit)			Total Stockholders’ Equity (Deficit)
Balance as of December 31, 2017⁽¹⁾	302,225,923		$	3,022		$	851,315		$	20,289		$	(261,411	)	$	613,215
Comprehensive income (loss):
Net income	—		—			—			—			223,673			223,673
Other comprehensive income (loss):
Commodity and foreign currency derivatives loss, net of tax of $0	—		—			—			(6,113		)	—			(6,113		)
Foreign currency translation adjustments	—		—			—			5,040			—			5,040
Total other comprehensive loss	—		—			—			(1,073		)	—			(1,073		)
Dividends paid to related party stockholder ($3.68 per share)	—		—			—			—			(1,112,000		)	(1,112,000		)
Balance as of March 31, 2018⁽¹⁾	302,225,923		$	3,022		$	851,315		$	19,216		$	(1,149,738	)	$	(276,185	)
Comprehensive income (loss):
Net income	—		—			—			—			201,448			201,448
Other comprehensive income (loss):
Commodity and foreign currency derivatives loss, net of tax of $0	—		—			—			31,852			—			31,852
Foreign currency translation adjustments	—		—			—			(18,818		)	—			(18,818		)
Total other comprehensive income	—		—			—			13,034			—			13,034
Stock-based compensation	—		—			181			—			—			181
Related-party promissory note repayment	—		—			—			—			(750,000		)	(750,000		)
Dividends paid to related party stockholder ($0.59 per share)	—		—			—			—			(177,040		)	(177,040		)
Dividends paid to non-related party stockholders ($0.085 per share)	—		—			—			—			(2,457		)	(2,457		)
Balance as of June 30, 2018	302,225,923		$	3,022		$	851,496		$	32,250		$	(1,877,787	)	$	(991,019	)
Comprehensive income (loss):
Net income	—		—			—			—			199,466			199,466
Other comprehensive income (loss):
Commodity and foreign currency derivatives loss, net of tax of ($9,871)	—		—			—			5,890			—			5,890
Foreign currency translation adjustments	—		—			—			(3,601		)	—			(3,601		)
Total other comprehensive income	—		—			—			2,289			—			2,289
Stock-based compensation	—		—			475			—			—			475
Dividends paid to related party stockholder ($0.085 per share)	—		—			—			—			(19,498		)	(19,498		)
Dividends paid to non-related party stockholders ($0.085 per share)	—		—			—						(5,194		)	(5,194		)
Common stock repurchases and retirement	(11,688,311	)	(117		)	(32,844		)	—			(192,042		)	(225,003		)
Balance as of September 30, 2018	290,537,612		$	2,905		$	819,127		$	34,539		$	(1,895,055	)	$	(1,038,484	)



	Three-to-five-year take-or-pay contracts
	(Dollars in thousands)
Remainder of 2019	347,097
2020	1,366,579
2021	1,211,036
2022	1,144,574
Thereafter	29,461
Total	$	4,098,747



	For the Three Months Ended September 30, 2019		For the Nine Months Ended September 30, 2019
	(Dollars in thousands)
Operating lease cost	1,078		3,162
Short-term lease cost	2		12
Variable lease cost	49		234
Total lease cost	$	1,129	$	3,408



	As of September 30, 2019
	(Dollars in thousands)
Operating RoU Assets*	$	7,228
*Amount included in Other assets

Current operating lease liabilities	3,752
Non-current operating lease liabilities	3,462
Total operating lease liabilities**	$	7,214
**Amounts included in other accrued liabilities and other long-term obligations

Weighted average remaining lease term (in years)	2.60
Weighted average discount rate - operating leases	5.62		%



	(Dollars in thousands)
Remainder 2019	$	1,085
2020	3,422
2021	2,085
2022	561
2023	322
2024 and thereafter	381
Total lease payments	$	7,856
Less: Imputed interest	(642		)
Present value of lease payments	7,214
Less: Current operating lease liability	(3,752		)
Non-current operating lease liability	$	3,462



	(Dollars in thousands)
2019	$	4,474
2020	2,747
2021	1,497
2022	334
2023	269
2024 and thereafter	343
Total lease payments	$	9,664



Intangible Assets
	As of September 30, 2019							As of December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(Dollars in Thousands)
Trade name	$	22,500	$	(9,336	)	$	13,164	$	22,500	$	(7,721	)	$	14,779
Technological know-how	55,300		(27,808		)	27,492		55,300		(23,503		)	31,797
Customer–related intangible	64,500		(18,377		)	46,123		64,500		(15,070		)	49,430
Total finite-lived intangible assets	$	142,300	$	(55,521	)	$	86,779	$	142,300	$	(46,294	)	$	96,006



Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs

July 1 through July 31, 2019	—	$	—	—	$	—
August 1 through August 31, 2019	879,134	$	10.79	879,134	90,515,936
September 1 through September 30, 2019	—	$	—	—	$	—
Total	879,134	$	10.79	879,134	$	90,515,936