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


FORM 10-Q

þ☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934


For the quarterly period ended September 30, 20172023
or
o☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934



For the transition period from    to


COMMISSION FILE NUMBER: 001-33988


Graphic Packaging Holding Company


(Exact name of registrant as specified in its charter)

Delaware26-0405422
(State or other jurisdiction of(I.R.S. employer
incorporation or organization)identification no.)
1500 Riveredge Parkway, Suite 100
Atlanta, GeorgiaGeorgia30328
(Address of principal executive offices)(Zip Code)


(770) 240-7200
(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common Stock, $0.01 par value per shareGPKNew York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None

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 þ☑ No o☐


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes þ☑ No o☐


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

Large accelerated filer☑Accelerated filer☐Smaller reporting company☐
Large accelerated filer þ
Accelerated filer o
Smaller reporting company o
Non-accelerated filero
☐(Do not check if a smaller reporting company)
Emerging growth companyo
☐


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 Rule 12b-2 of the Exchange Act). Yes o☐ No þ☑


As of October 23, 2017,30, 2023, there were 309,713,908306,052,865 shares of the registrant’s Common Stock, par value $0.01 per share, outstanding.









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INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
Information Concerning Forward-Looking Statements


Certain statements regarding the expectations of Graphic Packaging Holding Company (“GPHC” and, together with its subsidiaries, the “Company”), including, but not limited to, the effect of new accounting standards, the availability of net operating losses to offset U.S. federal income taxes and the timing related to the Company's future U.S. federal income tax payments, capital investment, available cash and liquidity, depreciation and amortization, interest expense, reclassification of Accumulated Other Comprehensive Loss to earnings, pension plan contributions, costs for exit activities, the timing of the sale of its operations in Russia, capital investment, and postretirement health care benefit payments,depreciation and amortization in this report constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from the Company’s historical experience and its present expectations. These risks and uncertainties include, but are not limited to, inflation of and volatility in raw material and energy costs, changes in consumer buying habits and product preferences, competition with other paperboard manufacturers and converters, product substitution, the Company’s ability to implement its business strategies, including strategic acquisitions, the Company's ability to successfully integrate acquisitions, productivity initiatives and cost reduction plans, the Company’s debt level, currency movements and other risks of conducting business internationally, and the impact of regulatory and litigation matters, including those that could impact the Company’s ability to utilize its net operating lossesU.S. federal income tax attributes to offset taxable income or U.S. federal income taxes and those that impact the Company's ability to protect and use its intellectual property. Undue reliance should not be placed on such forward-looking statements, as such statements speak only as of the date on which they are made and the Company undertakes no obligation to update such statements, except as may be required by law. Additional information regarding these and other risks is contained in Part I, “Item"Item 1A., Risk Factors”Factors" of the Company’s 2016Company's 2022 Annual Report on Form 10-K, and in other filings with the Securities and Exchange Commission.

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TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
4
ITEM 1. FINANCIAL STATEMENTS
4
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
2827
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
3638
ITEM 4. CONTROLS AND PROCEDURES
3638
PART II — OTHER INFORMATION
3739
ITEM 1. LEGAL PROCEEDINGS
3739
ITEM 1A. RISK FACTORS
3739
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
3739
ITEM 4. MINE SAFETY DISCLOSURES
3739
ITEM 5. OTHER INFORMATION
39
ITEM 6. EXHIBITS
3740
SIGNATURES
3941
EX-10.1
EX-31.1
EX-31.2EX-31.1
EX-32.1EX-31.2
EX-32.2EX-32.1
EX-32.2
XBRL Content




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PART I — FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS



GRAPHIC PACKAGING HOLDING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)


 Three Months Ended September 30,Nine Months Ended September 30,
In millions, except per share amounts2023202220232022
Net Sales$2,349 $2,451 $7,179 $7,054 
Cost of Sales1,799 1,940 5,563 5,715 
Selling, General and Administrative220 203 622 569 
Other Expense, Net15 6 48 6 
Business Combinations, Shutdown and Other Special Charges, and Exit Activities, Net28 9 62 126 
Income from Operations287 293 884 638 
Nonoperating Pension and Postretirement Benefit (Expense) Income(1)2 (2)5 
Interest Expense, Net(62)(53)(180)(143)
Income before Income Taxes224 242 702 500 
Income Tax Expense(54)(49)(175)(134)
Net Income$170 $193 $527 $366 
Net Income Per Share — Basic$0.55 $0.63 $1.71 $1.18 
Net Income Per Share — Diluted$0.55 $0.62 $1.70 $1.18 
 Three Months EndedNine Months Ended
 September 30,September 30,
In millions, except per share amounts2017 20162017 2016
Net Sales$1,137.6
 $1,103.7
$3,293.8
 $3,240.9
Cost of Sales946.0
 912.4
2,750.3
 2,637.1
Selling, General and Administrative90.6
 78.9
265.3
 260.7
Other Expense (Income), Net2.0
 (0.1)1.4
 2.0
Business Combinations and Shutdown and Other Special Charges3.6
 7.4
18.3
 23.2
Income from Operations95.4
 105.1
258.5
 317.9
Interest Expense, Net(22.6) (20.0)(66.4) (55.1)
Income before Income Taxes and Equity Income of Unconsolidated Entity72.8
 85.1
192.1
 262.8
Income Tax Expense(25.9) (28.0)(67.1) (71.3)
Income before Equity Income of Unconsolidated Entity46.9
 57.1
125.0
 191.5
Equity Income of Unconsolidated Entity0.4
 0.7
1.3
 1.6
Net Income$47.3
 $57.8
$126.3
 $193.1
       
Net Income Per Share — Basic$0.15

$0.18
$0.41

$0.60
Net Income Per Share — Diluted$0.15

$0.18
$0.40

$0.60
Cash Dividends Declared Per Share$0.075
 $0.05
$0.225
 $0.15


The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.


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GRAPHIC PACKAGING HOLDING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)



Three Months Ended September 30, 2023
In millionsGraphic Packaging Holding CompanyNoncontrolling InterestTotal
Net Income$170 $— $170 
Other Comprehensive Income (Loss), Net of Tax:
Derivative Instruments3 — 3 
Currency Translation Adjustment(53)1 (52)
Total Other Comprehensive (Loss) Income, Net of Tax(50)1 (49)
Total Comprehensive Income$120 $1 $121 

 Three Months Ended Nine Months Ended
 September 30, September 30,
In millions20172016 20172016
Net Income$47.3
$57.8
 $126.3
$193.1
Other Comprehensive (Loss) Income, Net of Tax:     
Derivative Instruments(0.6)2.1
 (4.5)5.1
Pension and Postretirement Benefit Plans0.7
5.2
 2.2
(15.5)
Currency Translation Adjustment10.8
(6.8) 46.9
(26.3)
Total Other Comprehensive Income (Loss), Net of Tax10.9
0.5
 44.6
(36.7)
Total Comprehensive Income$58.2
$58.3
 $170.9
$156.4
In millionsThree Months Ended September 30, 2022
Net Income$193 
Other Comprehensive Income (Loss), Net of Tax:
Derivative Instruments5 
Currency Translation Adjustment(99)
Total Other Comprehensive Loss, Net of Tax(94)
Total Comprehensive Income$99 


Nine Months Ended September 30, 2023
In millionsGraphic Packaging Holding CompanyNoncontrolling InterestTotal
Net Income$527 $— $527 
Other Comprehensive Income (Loss), Net of Tax:
Derivative Instruments6 — 6 
Pension and Postretirement Benefit Plans1 — 1 
Currency Translation Adjustment(29)1 (28)
Total Other Comprehensive (Loss) Income, Net of Tax(22)1 (21)
Total Comprehensive Income$505 $1 $506 

In millionsNine Months Ended September 30, 2022
Net Income$366 
Other Comprehensive Income (Loss), Net of Tax:
Derivative Instruments15 
Pension and Postretirement Benefit Plans(8)
Currency Translation Adjustment(222)
Total Other Comprehensive Loss, Net of Tax(215)
Total Comprehensive Income$151 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
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GRAPHIC PACKAGING HOLDING COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

In millions, except share and per share amountsSeptember 30,
2017
December 31, 2016In millions, except share and per share amountsSeptember 30, 2023December 31, 2022
ASSETS   ASSETS
   
Current Assets:   Current Assets:
Cash and Cash Equivalents$17.2
 $59.1
Cash and Cash Equivalents$146 $150 
Receivables, Net539.0
 426.8
Receivables, Net881 879 
Inventories, Net621.5
 582.9
Inventories, Net1,741 1,606 
Other Current Assets44.9
 46.1
Other Current Assets90 71 
Total Current Assets1,222.6
 1,114.9
Total Current Assets2,858 2,706 
Property, Plant and Equipment, Net1,820.8
 1,751.9
Property, Plant and Equipment, Net4,799 4,579 
Goodwill1,309.3
 1,260.3
Goodwill2,072 1,979 
Intangible Assets, Net449.6
 445.3
Intangible Assets, Net819 717 
Other Assets37.5
 31.0
Other Assets357 347 
Total Assets$4,839.8
 $4,603.4
Total Assets$10,905 $10,328 
   
LIABILITIES   LIABILITIES
   
Current Liabilities:   Current Liabilities:
Short-Term Debt and Current Portion of Long-Term Debt$49.6
 $63.4
Short-Term Debt and Current Portion of Long-Term Debt$762 $53 
Accounts Payable486.7
 466.5
Accounts Payable944 1,123 
Compensation and Employee Benefits116.5
 107.3
Compensation and Employee Benefits254 295 
Interest PayableInterest Payable45 51 
Other Accrued Liabilities164.6
 142.6
Other Accrued Liabilities433 411 
Total Current Liabilities817.4
 779.8
Total Current Liabilities2,438 1,933 
Long-Term Debt2,225.2
 2,088.5
Long-Term Debt4,821 5,200 
Deferred Income Tax Liabilities421.5
 408.0
Deferred Income Tax Liabilities679 668 
Accrued Pension and Postretirement Benefits161.2
 202.5
Accrued Pension and Postretirement Benefits104 111 
Other Noncurrent Liabilities80.8
 68.1
Other Noncurrent Liabilities322 266 


  
SHAREHOLDERS’ EQUITY   SHAREHOLDERS’ EQUITY
Preferred Stock, par value $.01 per share; 100,000,000 shares authorized; no shares issued or outstanding—
 —
Common Stock, par value $.01 per share; 1,000,000,000 shares authorized; 309,713,908 and 313,533,785 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively3.1
 3.1
Preferred Stock, par value $0.01 per share; 100,000,000 shares authorized; no shares issued or outstandingPreferred Stock, par value $0.01 per share; 100,000,000 shares authorized; no shares issued or outstanding— — 
Common Stock, par value $0.01 per share; 1,000,000,000 shares authorized; 306,869,053 and 307,116,089 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectivelyCommon Stock, par value $0.01 per share; 1,000,000,000 shares authorized; 306,869,053 and 307,116,089 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively3 3 
Capital in Excess of Par Value1,680.2
 1,709.0
Capital in Excess of Par Value2,059 2,054 
Accumulated Deficit(206.6) (268.0)
Retained EarningsRetained Earnings876 469 
Accumulated Other Comprehensive Loss(343.0) (387.6)Accumulated Other Comprehensive Loss(399)(377)
Total Shareholders' Equity1,133.7
 1,056.5
Total Graphic Packaging Holding Company Shareholders' EquityTotal Graphic Packaging Holding Company Shareholders' Equity2,539 2,149 
Noncontrolling Interest Noncontrolling Interest2 1 
Total EquityTotal Equity2,541 2,150 
Total Liabilities and Shareholders' Equity$4,839.8
 $4,603.4
Total Liabilities and Shareholders' Equity$10,905 $10,328 


The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

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GRAPHIC PACKAGING HOLDING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSEQUITY AND NONCONTROLLING INTEREST
(Unaudited)


Common StockCapital in Excess of Par ValueRetained EarningsAccumulated Other Comprehensive (Loss) IncomeNoncontrolling InterestsTotal Equity
In millions, except share amountsSharesAmount
Balances at December 31, 2022307,116,089 $3 $2,054 $469 $(377)$1 $2,150 
Net Income— — — 207 — — 207 
Other Comprehensive (Loss) Income, Net of Tax:
Derivative Instruments— — — — (5)— (5)
Currency Translation Adjustment— — — — 24 1 25 
Repurchase of Common Stock(a)
(1,210,000)— (7)(22)— — (29)
Dividends Declared— — — (31)— — (31)
Recognition of Stock-Based Compensation, Net— — (7)— — — (7)
Issuance of Shares for Stock-Based Awards1,221,873 — — — — — — 
Balances at March 31, 2023307,127,962 $3 $2,040 $623 $(358)$2 $2,310 
Net Income— — — 150 — — 150 
Other Comprehensive Income (Loss), Net of Tax:
Derivative Instruments— — — — 8 — 8 
Pension and Postretirement Benefit Plans— — — — 1 — 1 
Currency Translation Adjustment— — — — — (1)(1)
Repurchase of Common Stock(14,232)— — — — — — 
Dividends Declared— — — (30)— — (30)
Recognition of Stock-Based Compensation, Net— — 12 — — — 12 
Issuance of Shares for Stock-Based Awards89,097 — — — — — — 
Balances at June 30, 2023307,202,827 $3 $2,052 $743 $(349)$1 $2,450 
Net Income— — — 170 — — 170 
Other Comprehensive Income (Loss), Net of Tax:
Derivative Instruments— — — — 3 — 3 
Currency Translation Adjustment— — — — (53)1 (52)
Repurchase of Common Stock(b)
(360,283)— (2)(6)— — (8)
Dividends Declared— — — (31)— — (31)
Recognition of Stock-Based Compensation, Net— — 9 — — — 9 
Issuance of Shares for Stock-Based Awards11,803 — — — — — — 
Balances at September 30, 2023306,854,347 $3 $2,059 $876 $(399)$2 $2,541 
(a) Includes 60,000 shares repurchased but not yet settled as of March 31, 2023.
(b) Includes 14,706 shares repurchased but not yet settled as of September 30, 2023























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 Nine Months Ended
 September 30,
In millions2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES:   
Net Income$126.3
 $193.1
Non-cash Items Included in Net Income:   
Depreciation and Amortization237.2
 224.1
Deferred Income Taxes51.2
 55.1
Amount of Postretirement Expense Less Than Funding(39.6) (24.3)
Other, Net(3.1) 32.6
Changes in Operating Assets and Liabilities(65.5) (86.3)
Net Cash Provided by Operating Activities306.5
 394.3
    
CASH FLOWS FROM INVESTING ACTIVITIES:   
Capital Spending(185.8) (248.7)
Packaging Machinery Spending(12.0) (9.7)
Acquisition of Businesses, Net of Cash Acquired(120.9) (331.9)
Other, Net(0.4) (4.1)
Net Cash Used in Investing Activities(319.1) (594.4)
    
CASH FLOWS FROM FINANCING ACTIVITIES:   
Repurchase of Common Stock(62.1) (106.4)
Payments on Debt(18.8) (18.8)
Proceeds from Issuance of Debt—
 300.0
Borrowings under Revolving Credit Facilities814.0
 1,013.3
Payments on Revolving Credit Facilities(695.8) (933.3)
Repurchase of Common Stock related to Share-Based Payments(10.1) (10.6)
Debt Issuance Costs—
 (5.1)
Dividends Paid(70.2) (48.5)
Other, Net11.4
 (0.5)
Net Cash (Used In) Provided by Financing Activities(31.6) 190.1
Effect of Exchange Rate Changes on Cash2.3
 0.8
Net Decrease in Cash and Cash Equivalents(41.9) (9.2)
Cash and Cash Equivalents at Beginning of Period59.1
 54.9
CASH AND CASH EQUIVALENTS AT END OF PERIOD$17.2
 $45.7
GRAPHIC PACKAGING HOLDING COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY AND NONCONTROLLING INTEREST
(Unaudited)

Common StockCapital in Excess of Par ValueRetained EarningsAccumulated Other Comprehensive (Loss) IncomeNoncontrolling InterestsTotal Equity
In millions, except share amountsSharesAmount
Balances at December 31, 2021307,103,551 $3 $2,046 $66 $(224)$2 $1,893 
Net Income— — — 107 — — 107 
Other Comprehensive Income (Loss), Net of Tax:
Derivative Instruments— — — — 19 — 19 
Pension and Postretirement Benefit Plans— — — — (9)— (9)
Currency Translation Adjustment— — — — (28)— (28)
Dividends Declared— — — (23)— — (23)
Recognition of Stock-Based Compensation, Net— — (8)— — — (8)
Issuance of Shares for Stock-Based Awards1,184,737 — — — — — — 
Balances at March 31, 2022308,288,288 $3 $2,038 $150 $(242)$2 $1,951 
Net Income— — — 66 — — 66 
Other Comprehensive (Loss) Income, Net of Tax:
Derivative Instruments— — — — (9)— (9)
Pension and Postretirement Benefit Plans— — — — 1 — 1 
Currency Translation Adjustment— — — — (95)— (95)
Repurchase of Common Stock(a)
(379,000)— (2)(5)— — (7)
Dividends Declared— — — (23)— — (23)
Recognition of Stock-Based Compensation, Net— — 8 — — — 8 
Issuance of Shares for Stock-Based Awards123,102 — — — — — — 
Balances at June 30, 2022308,032,390 $3 $2,044 $188 $(345)$2 $1,892 
Net Income— — — 193 — — 193 
Other Comprehensive Income (Loss), Net of Tax:
Derivative Instruments— — — — 5 — 5 
Currency Translation Adjustment— — — — (99)— (99)
Repurchase of Common Stock(b)
(711,765)— (4)(12)— — (16)
Dividends Declared— — — (23)— — (23)
Recognition of Stock-Based Compensation, Net— — 6 — — — 6 
Issuance of Shares for Stock-Based Awards4,778 — — — — — — 
Balances at September 30, 2022307,325,403 $3 $2,046 $346 $(439)$2 $1,958 
(a) Includes 32,000 shares repurchased but not yet settled as of June 30, 2022.
(b) Includes 55,000 shares repurchased but not yet settled as of September 30, 2022.


The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
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GRAPHIC PACKAGING HOLDING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Nine Months Ended September 30,
In millions20232022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income$527 $366 
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization465 415 
Deferred Income Taxes18 67 
Amount of Postretirement Expense Less Than Funding(6)(17)
Asset Impairment Charges23 93 
Other, Net61 43 
Changes in Operating Assets and Liabilities(386)(347)
Net Cash Provided by Operating Activities702 620 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Spending(575)(429)
Packaging Machinery Spending(17)(16)
Acquisition of Businesses, Net of Cash Acquired(361)— 
Beneficial Interest on Sold Receivables110 83 
Beneficial Interest Obtained in Exchange for Proceeds(27)(2)
Other, Net(5)(3)
Net Cash Used in Investing Activities(875)(367)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of Common Stock(37)(22)
Payments on Debt(18)(10)
Borrowings under Revolving Credit Facilities3,631 3,166 
Payments on Revolving Credit Facilities(3,266)(3,387)
Repurchase of Common Stock related to Share-Based Payments(22)(18)
Dividends Paid(92)(69)
Other, Net(8)9 
Net Cash Provided by (Used In) Financing Activities188 (331)
Effect of Exchange Rate Changes on Cash(8)(11)
Net Increase (Decrease) in Cash and Cash Equivalents7 (89)
Cash and Cash Equivalents at Beginning of Period (includes $5 million classified as held for sale as of December 31, 2022)155 172 
Cash and Cash Equivalents at End of Period (includes $16 million and $1 million as classified as held for sale as of September 30, 2023 and 2022 respectively)$162 $83 
Non-cash Investing Activities:
Beneficial Interest Obtained in Exchange for Trade Receivables$104 $86 
Right-of-Use Assets Obtained in Exchange for New Operating Lease Liabilities$51 $36 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
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GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)






NOTE 1 — GENERAL INFORMATION


Nature of Business and Basis of Presentation


Graphic Packaging Holding Company (“GPHC” and, together with its subsidiaries, the “Company”) is committed to providing consumer packaging that makes a world of difference. The Company, is a leading fiber-based consumer packaging provider, of paper-based packaging solutions for a wide variety of products toserves the world's most widely-recognized food, beverage, foodservice and other consumer products companies.companies and brands. The Company operates on a global basis, and is one of the largest producers of folding cartons and fiber-based foodservice products in the United States ("U.S.") and Europe, and holds leading market positions in paperboard used to produce consumer packaging solutions including coated-recycled paperboard ("CRB"), coated unbleached kraft paperboard ("CUK") and coated-recycledsolid bleached sulfate paperboard ("CRB"SBS").


The Company’s customers include many of the world’s most widely recognized companies and brands with prominent market positions in beverage, food, foodservice, and other consumer products. The Company strives to provide its customers with innovative, fiber-based packaging solutions designed to deliver marketing and performance benefits at a competitive cost by capitalizing on its low-cost paperboard millsfacilities and converting plants,global packaging network, its proprietary carton and packaging designs, and its commitment to quality, service, and service.environmental stewardship.

GPHC conducts no significant business and has no independent assets or operations other than its ownership of all of Graphic Packaging International, Inc.'s ("GPII") outstanding common stock.


The Company’s Condensed Consolidated Financial Statements include all subsidiaries in which the Company has the ability to exercise direct or indirect control over operating and financial policies. Intercompany transactions and balances are eliminated in consolidation.


In the Company’s opinion, the accompanying Condensed Consolidated Financial Statements contain all normal recurring adjustments necessary to presentstate fairly the financial position, results of operations and cash flows for the interim periods. The Company’s year endyear-end Condensed Consolidated Balance Sheet data was derived from audited financial statements. The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with instructions to Form 10-Q and Rule 10-01 of Regulation S-X and do not include all the information required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements. Therefore, these Condensed Consolidated Financial Statements should be read in conjunction with GPHC’sthe Company's 2022 Annual Report on Form 10-K for the year ended December 31, 2016.2022. In addition, the preparation of the Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from those estimates and changes in these estimates are recorded when known.


Revenue Recognition

The Company has two primary activities, manufacturing and the converting of paperboard for and into fiber-based consumer packaging, from which it generates revenue from contracts with customers. Revenue is disaggregated primarily by geography and type of activity as further explained in "Note 10 - Segment Information."All reportable segments and the Australia and Pacific Rim operating segments recognize revenue under the same method, allocate transaction price using similar methods, and have similar economic factors impacting the uncertainty of revenue and related cash flows.

Revenue is recognized on the Company's annual and multi-year supply contracts when the Company satisfies the performance obligation by transferring control over the product or service to a customer, which is generally based on shipping terms and passage of title under the point-in-time method of recognition. For a summarythe three months ended September 30, 2023 and 2022, the Company recognized $2,340 million and $2,445 million, respectively, of revenue from contracts with customers. For the nine months ended September 30, 2023 and 2022, the Company recognized $7,146 million and $7,035 million, respectively, of revenue from contracts with customers.

The transaction price allocated to each performance obligation consists of the stand-alone selling price, estimates of rebates and other sales or contract renewal incentives, and cash discounts and sales returns ("Variable Consideration") and excludes sales tax. Estimates are made for Variable Consideration based on contract terms and historical experience of actual results and are applied to the performance obligations as they are satisfied. Purchases by the Company’s significant accounting policies, please referprincipal customers are manufactured and shipped with minimal lead time, therefore performance obligations are generally satisfied shortly after manufacturing and shipment. The Company uses standard payment terms that are consistent with industry practice.

The Company's contract assets consist primarily of contract renewal incentive payments to GPHC’s Form 10-K forcustomers which are amortized over the year endedperiod in which performance obligations related to the contract renewal are satisfied. As of September 30, 2023 and December 31, 2016.2022, contract assets were $9 million and $8 million, respectively. The Company's contract liabilities consist principally of rebates, and as of September 30, 2023 and December 31, 2022 were $62 million and $65 million, respectively.


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GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Accounts Receivable and Allowances


Accounts receivable are stated at the amount owed by the customer, net of an allowance for estimated uncollectible accounts, returns and allowances, and cash discounts. The allowance for doubtful accounts is estimated based on historical experience, current economic conditions and the creditworthiness of customers. Receivables are charged to the allowance when determined to be no longer collectible.

The Company has entered into agreements for the purchasing and servicing of receivables to sell, on a revolving basis, certain trade accounts receivable to third party financial institutions. Transfers under these agreements meet the requirements to be accounted for as sales in accordance with the Transfers and Servicing topic of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification (the "Codification"). During the first nine months of 2017, the Company sold and derecognized approximately $1 billion of receivables, collected approximately $963 million on behalf of the financial institution, and received approximately $65 million in funding from the financial institutions, resulting in deferred proceeds of approximately $26 million as of September 30, 2017. During the same period of 2016, the Company sold and derecognized approximately $945 million of receivables, collected approximately $878 million on behalf of the financial institution, and received funding of approximately $95 million by the financial institution, resulting in deferred proceeds of approximately $23 million as of September 30, 2016. Cash proceeds related to the sales are included in cash from operating activities in the Condensed Consolidated Statements of Cash Flows in the Changes in Operating Assets and Liabilities line item. The loss on sale is not material and is included in Other Expense, (Income), Net line item on the Condensed Consolidated StatementStatements of Operations.

The Company has also entered into various factoring and supply chain financing arrangements which also qualifyfollowing table summarizes the activity under these programs for sale accounting in accordance with the Transfers and Servicing topic of the FASB Codification. For the nine months ended September 30, 20172023 and 2016,2022, respectively:

Nine Months Ended September 30,
In millions20232022
Receivables Sold and Derecognized$2,811 $2,422 
Proceeds Collected on Behalf of Financial Institutions2,697 2,230 
Net Proceeds Received From Financial Institutions59 212 
Deferred Purchase Price at September 30(a)
19 7 
Pledged Receivables at September 30173 161 
(a) Included in Other Current Assets on the CompanyCondensed Consolidated Balance Sheets and represents a beneficial interest in the receivables sold receivables of approximately $43 million and $33 million, respectively, related to these factoring arrangements.the financial institutions, which is a Level 3 fair value measure.


Receivables sold under all programs subject to continuing involvement, which consist principally of collection services, atwere $827 million and $753 million as of September 30, 20172023 and December 31, 2016, were approximately $4392022, respectively.

The Company also participates in supply chain financing arrangements offered by certain customers that qualify for sale accounting in accordance with the Transfers and Servicing topic of the FASB Codification. For the nine months ended September 30, 2023 and 2022, the Company sold receivables of $869 million and $376$824 million, respectively, under these arrangements.

Accounts Payable and Supplier Finance Program

The Company has arranged a supplier finance program ("SFP") with a financial intermediary, which provides certain suppliers the option to be paid by the financial intermediary earlier than the due date on the applicable invoice. The transactions are at the sole discretion of both the suppliers and financial institution, and GPHC is not a party to the agreements and has no economic interest in the supplier’s decision to sell a receivable. The range of payment terms negotiated by the Company with its suppliers is consistent, irrespective of whether a supplier participates in the program. The agreement with the financial intermediary does not require GPHC to provide assets pledged as security or other forms of guarantees for the supplier finance program. Amounts due to the Company’s suppliers that elected to participate in the SFP program are included in Accounts Payable on the Company’s Condensed Consolidated Balance Sheets and payments made under the SFP program are reflected in Cash Flows from Operating Activities in the Company’s Condensed Consolidated Statements of Cash Flows. Accounts Payable included $32 million and $34 million payable to suppliers who elected to participate in the SFP program as of September 30, 2023 and December 31, 2022, respectively.


Non-cash additions to Property, Plant and Equipment, Net included within Accounts Payable on the Company’s Condensed Consolidated Balance Sheets were $53 million and $55 million as of September 30, 2023 and December 31, 2022, respectively.

Share Repurchases and Dividends

During the first nine months of 2023, the Company's board of directors declared three regular quarterly dividends of $0.10 per share of common stock to shareholders of record as follows:

Date DeclaredRecord DatePayment Date
February 20, 2023March 15, 2023April 5, 2023
May 24, 2023June 15, 2023July 5, 2023
July 28, 2023September 15, 2023October 5, 2023

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GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



Capital Allocation Plan

During the first nine months of 2017, the Company's board of directors declared three regular quarterly dividends of $0.075 per share of common stock to shareholders of record as follows:
Date DeclaredRecord DatePayment Date
March 13, 2017March 29, 2017April 5, 2017
May 24, 2017June 15, 2017July 5, 2017
July 28, 2017September 15, 2017October 5, 2017


On January 10, 2017,July 27, 2023, the Company's board of directors authorized an additional share repurchase program to allow the Company to purchase up to $250$500 million of the Company's issued and outstanding shares of common stock through open market purchases, privately negotiated transactions and Rule 10b5-1 plans (the "2017"2023 share repurchase program"). The original $250previous $500 million share repurchase program was authorized on February 4, 2015January 28, 2019 (the "2015"2019 share repurchase program"). During the first nine months of 2017, the Company repurchased 4,462,263 shares at an aggregate average price of $13.08, including 1,440,697 shares repurchased under the 2015 share repurchase program thereby completing that program. The Company repurchased 8,448,292 shares at an average price of $12.74 during the nine months ended September 30, 2016 under the 2015 share repurchase program. As of September 30, 2017,2023, the Company has approximately $210$582 million available for additional repurchases under the 20172023 share repurchase program and the 2019 share repurchase program.


The following table presents the Company's share repurchases under the 2019 share repurchase program for the nine months ended September 30, 2023 and 2022 respectively:

Amount repurchased in millions, except share and per share amountsAmount RepurchasedNumber of Shares RepurchasedAverage Price per Share
2023$37 1,584,515 $23.57 
2022$23 1,090,765 $20.99 

Business Combinations, and Shutdown and Other Special Charges, and Exit Activities, Net


The following table summarizes the transactions recorded in Business Combinations, and Shutdown and Other Special Charges, and Exit Activities, Net in the Condensed Consolidated Statements of Operations:

Three Months Ended Nine Months Ended
September 30, September 30,Three Months Ended September 30,Nine Months Ended September 30,
In millions2017 2016 2017 2016In millions2023202220232022
Charges Associated with Business Combinations$2.3
 $5.0
 $10.0
 $15.4
Shutdown and Other Special Charges1.3
 2.4
 8.3
 7.8
Charges Associated with Business Combinations(a)
Charges Associated with Business Combinations(a)
$1 $7 $3 $20 
Shutdown and Other Special Charges(b)
Shutdown and Other Special Charges(b)
1 (1)9 1 
Exit Activities(c)
Exit Activities(c)
24 2 41 12 
Charges Associated with a Divestiture(d)
Charges Associated with a Divestiture(d)
2 1 9 93 
Total$3.6
 $7.4
 $18.3
 $23.2
Total$28 $9 $62 $126 

(a) These costs relate to the Americraft Carton, Inc., AR Packaging Group AB, Tama Paperboard, LLC, and the Bell Incorporated acquisitions.
(b) These costs include $7 million related to the devaluation of the Nigerian Naira in June 2023.
(c) Relates to the Company's closures of its three smaller CRB mills (which includes the Tama Paperboard, LLC mill), the closures of folding carton plants, and the discontinuation of the Texarkana swing capacity project (see "Note 13 - Exit Activities").
(d) Relates to the Company's planned divestiture of its Russian business (see "Note 14 - Impairment and Divestiture of Russian Business").

2023

On September 6, 2017,January 31, 2023, the Company announced that its will close its coated recycled paperboardcompleted the acquisition of Tama Paperboard, LLC ("Tama"), a CRB mill in Santa Clara, California by year end. This decision was made as a result of a thorough assessment of the facility's manufacturing capabilities and associated costs in the context of the Company's overall mill operating capability.  In addition to the shutdown costs in the above table, the Company recorded $7.1 million in accelerated depreciation for the three and nine months ended September 30, 2017.

On July 10, 2017, the Company acquired substantially all the assets of Carton Craft Corporation and its affiliate Lithocraft, Inc (collectively "Carton Craft"). The acquisition includes two converting facilities located in New Albany, Indiana, focused on the production of paperboard based air filter frames and folding cartons.

On April 29, 2016, the Company acquired Colorpak Limited ("Colorpak"), a leading folding carton supplier in Australia and New Zealand. Colorpak operates three folding carton facilities that convert paperboard into folding cartons for the food, beverage and consumer product markets.Tama, Iowa. The folding carton facilities are located in Melbourne, Australia, Sydney, Australia and Auckland, New Zealand.

On March 31, 2016, the Company acquired substantially all of the assets of Metro Packaging & Imaging, Inc. ("Metro"), a single converting facility located in Wayne, New Jersey.

On February 16, 2016, the Company acquired Walter G. Anderson, Inc., ("WG Anderson") a premier folding carton manufacturer with a focus on store branded food and consumer product markets. WG Anderson operates two world-class sheet-fed folding carton converting facilities located in Hamel, Minnesota and Newton, Iowa.

On January 5, 2016, the Company acquired G-Box, S.A. de C.V., ("G-Box"). The acquisition includes two folding carton converting facilities located in Monterrey, Mexico and Tijuana, Mexico that service the food, beverage, and consumer products markets.

Chargescosts associated with these acquisitionsthis acquisition were less than $1 million and are reflectedincluded in Charges Associated with Business Combinations in the above table.

table above. For more information, regarding the above acquisitions see "Note 3 - AcquisitionsBusiness Combinations".Subsequently, in the second quarter of 2023, the Company closed this facility. Charges associated with this project are included in Exit Activities in the table above. For more information, see "Note 13 - Exit Activities."


AdoptionOn February 7, 2023, the Company announced an approximately $1 billion investment in a new CRB mill in Waco, Texas. In conjunction with the completion of New Accounting Standardsthis project, the Company expects to close two additional smaller CRB mills in order to strategically expand capacity while lowering costs. Charges associated with this project are included in Exit Activities in the table above. For more information, see "Note 13 - Exit Activities."


During the second quarter of 2023, the Company announced the closure of three packaging facilities by the end of 2023. Production from these plants will be consolidated into other carton plants. Charges associated with these plant closures are included in Exit Activities in the table above. For more information, see "Note 13 - Exit Activities."

On September 8, 2023, the Company completed the acquisition of Bell Incorporated ("Bell"), an independent packaging company for $264 million, subject to customary working capital adjustments. The acquisition included three packaging facilities located in South Dakota and Ohio and is reported within the Americas Paperboard Packaging reportable segment. Charges Associated with this acquisition are included in Charges Associated with Business Combinations in the table above. For more information, see "Note 3 - Business Combinations".

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



Effective January 1, 2017During the third quarter of 2023, the Company adopteddecided to discontinue its previously announced project in Texarkana to modify an existing paper machine to add swing capacity between SBS and CUK in order to focus growth investments in the strategic expansion of coated recycled paperboard capacity. Through September 30, 2023, the Company incurred charges of $14 million related to the write-off of assets, which were primarily engineering, permitting, and consulting costs for this project. Charges associated with this project are included in Exit Activities in the table above. For more information, see "Note 13 - Exit Activities."

During the third quarter of 2023, the Company decided to permanently decommission the K3 CRB machine in Kalamazoo, Michigan as part of its CRB network optimization plan that the Company initiated in 2019. As of September 30, 2023, the Company incurred charges of $20 million related to the write-off of inventory and accelerated depreciation for the assets included in Costs of Good Sold on the Company’s Condensed Consolidated Statements of Operations. The Company expects to incur additional charges of $5 million to $10 million as it relates to the dismantling of the K3 CRB machine through 2023.

2022

In March 2022, the Company announced its decision to close the Norwalk, Ohio packaging facility and closed the facility in September 2022. Charges associated with this project are included in Exit Activities in the table above. For more information, see "Note 13 - Exit Activities."

In 2022, the Company began the process of divesting its interests in its two packaging facilities in Russia (the “Disposal Group”). Impairment charges associated with this divestiture are included in the table above for the three and nine months ended September 30, 2022 and 2023. For more information, see "Note 14 - Impairment and Divestiture of Russian Business."

Adoption of New Accounting Standards Update ("ASU") No. 2016-09, Compensation-Stock Compensation (Topic 718)

In September 2022, the FASB issued ASU 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Improvements to Employee Share-Based Payment AccountingDisclosure of Supplier Finance Program Obligations, which simplifiesis intended to enhance the accountingtransparency surrounding the use of supplier finance programs. Supplier finance programs may also be referred to as reverse factoring, payables finance, or structured payables arrangements. The amendments require a buyer that uses supplier finance programs to make annual disclosures about the program’s key terms, the balance sheet presentation of related amounts, the confirmed amount outstanding at the end of the period, and associated rollforward information. Only the amount outstanding at the end of the period must be disclosed in interim periods. The amendments are effective for income taxes, among other changes, relatedall entities for fiscal years beginning after December 15, 2022 on a retrospective basis, including interim periods with those fiscal years, except for the requirement to stock-based compensation. Indisclose rollforward information, which is effective prospectively for fiscal years beginning after December 15, 2023. The Company adopted this standard in the first quarter of 2017, the Company recorded a discrete benefit of approximately $2 million relatedfiscal 2023 and did not result in any changes in accounting principle upon transition. The impact to the excess benefit associated with share based payments to employees. The remaining $39 millionCompany’s overall financial position and results of previously unrecognized excess tax benefits, which were prohibited from recognition due to net operating loss carryforwards, were recognized in accumulated deficit.operations is immaterial.

In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method. This ASU expands and clarifies the portfolio layer method for fair value hedges of interest rate risk. The Company is continuing its practiceadopted this standard in the first quarter of estimating forfeitures and recording cash paid for withholding taxes as a financing activity.

Effective January 1, 2017 the Company adopted ASU No. 2015-11, Inventory (Topic 330); Simplifying the Measurement of Inventory. This amendment replaced the method of measuring inventories at lower of cost or marketfiscal 2023 with a lower of cost and net realizable value method. The adoption had no material impact on the Company's financial position and results of operationsoperations.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Acquired Contract Assets and cash flows.Contract Liabilities. Under the new guidance, the acquirer should determine what contract assets and/or contract liabilities it would have recorded under ASC 606 as of the acquisition date, as if the acquirer had entered into the original contract at the same date and on the same terms as the acquiree. The recognition and measurement of those contract assets and contract liabilities will likely be comparable to what the acquiree has recorded on its books under ASC 606 as of the acquisition date. The Company adopted this standard in the first quarter of fiscal 2023 with no material impact on the Company's financial position and results of operations.


Accounting Standards Not Yet Adopted


In August 2017,June 2022, the FASB issued ASU No. 2017-12, Derivatives and Hedging2022-03, Fair Value Measurement (Topic 815); Targeted Improvements820): Fair Value Measurement of Equity Securities Subject to Accounting for Hedging Activities. The amendmentsContractual Sale Restrictions. This ASU clarifies that contractual sale restrictions should not be considered in thismeasuring the fair value of equity securities. This ASU better align the risk management activities and financial reporting for these hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and presentation of hedge results. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company does not expect the adoption of this standard to have a material impact on the Company’s financial position, results of operations and cash flows.

In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718); Scope of Modification Accounting. The amendments in this ASU provide guidance that clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. If the value, vesting conditions or classification of the award changes, modification accounting will apply. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company does not expect the adoption of this standard to have a material impact on the Company’s financial position, results of operations and cash flows.

In March 2017, the FASB issued ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715); Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The amendments to this ASU require the service cost component of net periodic benefit cost be reported in the same income statement line or lines as other compensation costs for employees. The other components of net periodic benefit cost are required to be reported separately from service costs and outside a subtotal of income from operations. Only the service cost component is eligible for capitalization. The guidance is effective for fiscal years beginning after December 15, 2017,2023, including interim periods within those fiscal years. The amendments should be applied retrospectively for the income statement presentations and prospectively for the capitalization of service costs. The Company does not expect thetherein, with early adoption of this standard to have a material impact on the Company’s financial position, results of operations and cash flows.

In January 2017, the FASB issued ASU No. 2017-04 Intangibles - Goodwill and Other (Topic 350); Simplifying the Test for Goodwill Impairment which simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 of the goodwill impairment model. Step 2 measures a goodwill impairment loss by comparing the implied value of a reporting unit’s goodwill with the carrying amount of that goodwill. An entity would recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value; however, the loss recognized is limited to the amount of goodwill allocated to that reporting unit. The guidance is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted for any impairment tests performed after January 1, 2017.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805); Clarifying the Definition of a Business. The amendments in this ASU provide guidance in evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill and consolidation. The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, and will be applied prospectively.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230); Classification of Certain Cash Receipts and Cash Payments. This ASU provides guidance to clarify how certain cash receipts and payments should be presented in the statement of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption is permitted. The updated guidance requires a retrospective adoption method. The Company is evaluatingcontinuing to evaluate the impact of adoptionthis ASU.

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Table of this standard on the Company's statement of cash flows.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The amendments in this ASU require an entity to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. The amendments also require certain quantitative and qualitative disclosures about leasing arrangements. The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The updated guidance requires a modified retrospective adoption. The Company is evaluating the impact of adoption on the Company's financial position, results of operation and cash flows.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). Adoption of ASU No. 2014-09 requires that an entity recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. On July 9, 2015, the FASB deferred the effective date by one year to December 15, 2017 for interim and annual reporting periods beginning after that date and permitted early adoption of theContents
GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



standard but not before the original effective date of December 15, 2016, and can be applied using a full retrospective or modified retrospective approach. The Company is adopting this standard in the first quarter of fiscal 2018 and currently expects to use the modified retrospective approach. The Company has formed an implementation team including representatives from finance, sales, and legal to assist in the assessment and implementation of this standard. The Company considered whether the adoption may require acceleration of revenue for products produced by the Company without an alternative use and when the Company would have a legally enforceable right of payment. The Company has determined that for certain contracts, an enforceable right of payment may exist for products produced but not yet shipped and is evaluating modifications to these contracts in order to recognize all revenue under the point in time method; therefore acceleration of revenue would not be required. The Company is continuing its evaluation of all other aspects of the standard, and currently does not believe the adoption of the standard will have a material impact on the Company's financial position, results of operations and cash flows.



NOTE 2 — INVENTORIES, NET


Inventories, Net by major class:

In millionsSeptember 30, 2023December 31, 2022
Finished Goods$618 $515 
Work in Progress212 218 
Raw Materials653 645 
Supplies258 228 
Total$1,741 $1,606 

In millionsSeptember 30, 2017 December 31, 2016
Finished Goods$240.3
 $238.3
Work in Progress77.5
 73.5
Raw Materials214.0
 187.2
Supplies89.7
 83.9
Total$621.5
 $582.9


NOTE 3 — ACQUISITIONSBUSINESS COMBINATIONS


Bell Incorporated

On July 10, 2017,September 8, 2023, the Company acquired substantially allcompleted the assetsacquisition of Carton Craft CorporationBell Incorporated ("Bell"), adding three packaging facilities in Sioux Falls, South Dakota and its affiliate Lithocraft, Inc (collectively "Carton Craft"). The Company paid $120.9Groveport, Ohio for $264 million, for the Carton Craft acquisitionsubject to customary working capital adjustments, using existing cash and borrowings under its revolving line of credit.credit facility. The acquisition includes two folding carton converting facilities located in New Albany, Indiana, focused on the production of paperboard based air filter frames and folding cartons, and is included inreported within the Americas Paperboard Packaging reportable segment.



The preliminary purchase price allocation as of September 30, 2023 is as follows:

In millionsAmounts Recognized as of Acquisition Date
Purchase Price$264 
Cash & Cash Equivalents3 
Receivables, Net19 
Inventories, Net17 
Property, Plant and Equipment30 
Intangible Assets(a)
159 
Other Assets14 
Total Assets Acquired242 
Current Liabilities11 
Other Noncurrent Liabilities12 
Total Liabilities Assumed23 
Net Assets Acquired219 
Goodwill45 
Purchase Consideration Transferred$264 
(a) Intangible Assets consists of Customer Relationships with a weighted average life of approximately 15 years.

The purchase price for Carton Craft has been preliminarily allocated to assets acquired and liabilities assumed based on the estimated fair values as of the acquisition date. The excess of the purchase dateprice over the fair value of the net assets acquired was allocated to goodwill, which is expected to be deductible for tax purposes. The allocation of the purchase price remains preliminary and is subject to further adjustments in subsequent periods, once the third party valuation is completed. Management believes that the purchase price attributablepending additional refinement and completion of valuations, including but not limited to goodwill represents the benefits expected as the acquisition was made to continue to expand its product offering, integrate paperboard from the Company's millsvaluations of property and to further optimize the Company's supply chain footprint.equipment, customer relationships and other intangible assets.

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GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Tama Paperboard, LLC



The Company expects the goodwill recorded to be deductible for tax purposes. The preliminary purchase price allocation is as follows:
      
In millionsAmounts Recognized as of Acquisition Date Measurement Period Adjustments Amounts Recognized as of Acquisition Dates (as adjusted)
Purchase Price$120.9
 $—
 $120.9
      
Receivables, Net10.3
 —
 10.3
Inventories, Net14.8
 1.1
 15.9
Property, Plant and Equipment, Net5.3
 7.0
 12.3
Intangible Assets, Net—
 40.0
 40.0
  Total Assets Acquired30.4
 48.1
 78.5
Current Liabilities0.7
 0.1
 0.8
  Total Liabilities Assumed0.7
 0.1
 0.8
  Net Assets Acquired29.7
 48.0
 77.7
Goodwill91.2
 (48.0) 43.2
  Total Estimated Fair Value of Net Assets Acquired$120.9
 $—
 $120.9


As disclosed in "Note 1 - General Information," On January 31, 2023, the Company acquired Colorpak, Metro, WG Anderson, and G-Box, which are referred to collectively ascompleted the "2016 Acquisitions" and, exceptacquisition of Tama Paperboard, LLC, a CRB mill located in Tama, Iowa, from Greif Packaging LLC for Colorpak, are included in the Americas Paperboard Packaging Segment.

The Company paid approximately $333$100 million, net of cash acquired, for the 2016 Acquisitions using existing cash and borrowings under its revolving linecredit facility.

During the second quarter of credit,2023, the Company finalized the acquisition accounting adjustments for Tama and the purchase price has been allocated to assets acquired and liabilities assumed debtbased on the fair values as of approximately $31 million.the acquisition date. The excess of the purchase price over the fair value of the net assets acquired was allocated to goodwill, which is expected to be deductible for tax purposes, and is reported within the Paperboard Mills reportable segment.


NOTE 4 — DEBT


For more information regarding the Company’s debt, see “Note 5 — Debt” Short-Term Debt and Current Portion of the Notes to Consolidated Financial Statements of the Company’s 2016 Form 10-K.

Long-Term Debt is comprised of the following:

In millionsSeptember 30, 2023December 31, 2022
Short-Term Borrowings$17 $16 
Current Portion of Finance Lease Obligations8 11 
Current Portion of Long-Term Debt(a)
737 26 
Total Short-Term Debt and Current Portion of Long-Term Debt$762 $53 
(a) Includes the 0.821% and 4.125% Senior Notes due 2024.

15
In millionsSeptember 30, 2017 December 31, 2016
Senior Notes with interest payable semi-annually at 4.125%, effective rate of 4.19%, payable in 2024$300.0
 $300.0
Senior Notes with interest payable semi-annually at 4.875%, effective rate of 4.93%, payable in 2022250.0
 250.0
Senior Notes with interest payable semi-annually at 4.75%, effective rate of 4.79%, payable in 2021425.0
 425.0
Senior Secured Term Loan Facilities with interest payable at various dates at floating rates (2.74% at September 30, 2017) payable through 2019931.2
 950.0
Senior Secured Revolving Facilities with interest payable at floating rates (2.50% at September 30, 2017) payable in 2019322.0
 184.8
Capital Lease Obligations30.6
 17.9
Other25.6
 3.0
Total Long-Term Debt2,284.4
 2,130.7
Less: Current Portion45.9
 26.3
 2,238.5
 2,104.4
Less: Unamortized Deferred Debt Issuance Costs13.3
 15.9
Total$2,225.2
 $2,088.5

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GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Long-Term Debt is comprised of the following:

In millionsSeptember 30, 2023December 31, 2022
Senior Notes with interest payable semi-annually at 0.821%, effective rate of 0.82%, payable in 2024(a)
$400 $400 
Senior Notes with interest payable semi-annually at 4.125%, effective rate of 4.13%, payable in 2024(b)
300 300 
Senior Notes with interest payable semi-annually at 1.512%, effective rate of 1.52%, payable in 2026(a)
400 400 
Senior Notes with interest payable semi-annually at 4.75%, effective rate of 4.79%, payable in 2027(a)
300 300 
Senior Notes with interest payable semi-annually at 3.50%, effective rate of 3.53%, payable in 2028(a)
450 450 
Senior Notes with interest payable semi-annually at 3.50%, effective rate of 3.53%, payable in 2029(a)
350 350 
Senior Notes (€290 million) with interest payable semi-annually at 2.625%, effective rate of 2.65%, payable in 2029(a)
307 311 
Senior Notes with interest payable semi-annually at 3.75%, effective rate of 3.79%, payable in 2030(a)
400 400 
Green Bond, net of unamortized premium with interest payable at 4.00%, effective rate of 1.72%, payable in 2026(a)
107 108 
Senior Secured Term Loan A-2 Facility with interest payable quarterly at 2.67%, effective rate of 2.68% payable in 2028(a)
425 425 
Senior Secured Term Loan A-3 Facility with interest payable monthly payable at floating rates (6.57% at September 30, 2023), effective rate of 6.59%, payable in 2028(a)
250 250 
Senior Secured Term Loan Facilities with interest payable at various dates at floating rates (6.33% at September 30, 2023) payable through 2026(a)
515 529 
Senior Secured Term Loan Facility (€206 million) with interest payable at various dates at floating rates (5.03% at September 30, 2023) payable through 2026(a)
218 225 
Senior Secured Revolving Credit Facilities with interest payable at floating rates (6.90% at September 30, 2023) payable in 2026(a)(c)
997 634 
Finance Leases and Financing Obligations162 170 
Other10 15 
Total Long-Term Debt Including Current Portion5,591 5,267 
Less: Current Portion745 37 
Total Long-term Debt Excluding Current Portion4,846 5,230 
Less: Unamortized Debt Deferred Issuance Costs25 30 
Total Long-Term Debt$4,821 $5,200 
(a) Guaranteed by Graphic Packaging International Partners, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company ("GPIP") and certain domestic subsidiaries.
(b) Guaranteed by GPHC and certain domestic subsidiaries.
(c) The weighted average effective interest rates for the Company’s Senior Secured Revolving Credit Facilities were 6.50% and 3.52% as of September 30, 2023 and December 31, 2022, respectively.

2023

On February 7, 2023, Graphic Packaging International, LLC, a Delaware limited liability company and a direct subsidiary of GPIP (“GPIL”) entered into Amendment No. 3 to the Fourth Amended and Restated Credit Agreement (the “Third Amendment”). The Third Amendment provides for a future replacement floating interest rate benchmark (the Canadian Overnight Repo Rate Average “CORRA”) to take effect upon the cessation of the Canadian Dollar Offered Rate (“CDOR”) for Canadian Dollar borrowings under the domestic revolving credit facility. The Third Amendment also modified the borrowing mechanics for certain term Secured Overnight Financing Rate ("SOFR") loans under the domestic revolving line of credit.

16

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GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
At September 30, 2017,2023, the Company and its U.S. and international subsidiaries had the following commitments, amounts outstanding and amounts available under revolving credit facilities:


In millionsTotal CommitmentsTotal Outstanding
Total Available(a)
Senior Secured Domestic Revolving Credit Facility$1,850 $897 $948 
Senior Secured International Revolving Credit Facility191 100 91 
Other International Facilities55 27 28 
Total$2,096 $1,024 $1,067 
In millions
Total
Commitments
 
Total
Outstanding
 Total Available
Senior Secured Domestic Revolving Credit Facility(a)
$1,250.0
 $262.0
 $967.3
Senior Secured International Revolving Credit Facility185.1
 60.0

125.1
Other International Facilities58.2
 29.3
 28.9
Total$1,493.3
 $351.3
 $1,121.3
(a) In accordance with its debt agreements, the Company’s availability under its revolving credit facilities has been reduced by the amount of standby letters of credit issued of $5 million as of September 30, 2023. These letters of credit are primarily used as security against the Company's self-insurance obligations and workers’ compensation obligations. These letters of credit expire at various dates through 2023 and 2024 unless extended.


(a)
In accordance with its debt agreement, the Company’s availability under its revolving credit facilities has been reduced by the amount of standby letters of credit issued of $20.7 million as of September 30, 2017. These letters of credit are used primarily as security against its self-insurance obligations and workers’ compensation obligations. These letters of credit expire at various dates through 2018 unless extended.

Covenant Agreements

The Covenants in the Company's Fourth Amended and Restated Credit Agreement (as amended, the "Current Credit Agreement") and the indentures governing the 4.75%0.821% Senior Notes due 2021, 4.875% Senior Notes due 2022 and2024, 4.125% Senior Notes due 2024, 1.512% Senior Notes due 2026, 4.75% Senior Notes due 2027, 3.50% Senior Notes due 2028, 3.50% Senior Notes due 2029, 2.625% Senior Notes due 2029 and 3.75% Senior Notes due 2030 (the “Indentures”), limit the Company's ability to incur additional indebtedness. Additional covenants contained in the Current Credit Agreement and the Indentures may, among other things, restrict the ability of the Company to dispose of assets, incur guarantee obligations, prepay other indebtedness, repurchase stock, pay dividends and make other restricted payments, create liens, make equity or debt investments, make acquisitions, modify terms of the Indenture,Indentures, engage in mergers or consolidations, change the business conducted by the Company and its subsidiaries, and engage in certain transactions with affiliates. Such restrictions could limit the Company’s ability to respond to changing market conditions, fund its capital spending program, provide for unexpected capital investments or take advantage of business opportunities.


As of September 30, 2017,2023, the Company was in compliance with the covenants in the Current Credit Agreement and the Indentures.



NOTE 5 — STOCK INCENTIVE PLANS


The Company has one active equity compensation plan from which new grants may be made, the Graphic Packaging Holding Company 2014 Omnibus Stock and Incentive Compensation Plan (the “2014 Plan”). Under theThe 2014 Plan the Company may grantallows for granting shares of stock, options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), restricted stock awards (“RSAs”), and other types of stock-based and cash awards. Awards under the 2014 Plan generally vest and expire in accordance with terms established at the time of grant. Shares issued pursuant to awards under the 2014 Plan are from the Company’sGPHC’s authorized but unissued shares. Compensation costs are recognized on a straight-line basis over the requisite service period of the award.award and are adjusted for actual performance for performance-based awards. As of September 30, 2023, there were 8.8 million shares remaining available to be granted under the 2014 Plan.


Stock Awards, Restricted Stock and Restricted Stock Units


Under the 2014 Plan alland related RSU grant agreements, RSUs granted to employees generally vest and become payable in three years from the date of grant. RSUs granted to employees generally contain eithersome combination of service and performance conditionsobjectives based on various financial targets or service requirementsand relative total shareholder return that must be met for the sharesRSUs to vest. RSUs granted as deferred compensation for non-employee directors are fully vested but not payable until the distribution date elected by the director. Stock awards grantedissued to non-employee directors as part of their compensation for service on the Board are unrestricted on the grant date.


Data concerning RSUs and stock awardsStock Awards granted in the first nine months of 20172023 is as follows:

 Shares 
Weighted Average
Grant Date Fair
Value Per Share
RSUs — Employees1,537,388
 $13.34
Stock Awards — Board of Directors65,520
 $13.43
Weighted Average Grant Date Fair Value Per Share
RSUs — Employees and Non-Employee Directors1,768,346 $23.75 
Stock Awards - Board of Directors25,588 $25.01 


During the nine months ended September 30, 20172023 and 2016, $5.52022, $36 million and $16.2$24 million, respectively, were charged to compensation expense for stock incentive plans.plans and such amounts are included in Selling, General and Administrative expenses in the Condensed Consolidated Statements of Operations.


During the nine months ended September 30, 20172023 and 2016, approximately 1.02022, 1.4 million and 1.71.2 million shares were issued, respectively. The shares issued were primarily related to RSUs granted to employees during 20142020 and 2013, respectively.2019.


17
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GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 6 — PENSIONS AND OTHER POSTRETIREMENT BENEFITS


The Company maintains both defined benefit pension plans and postretirement health care plans that provide medical and life insurance coverage to eligible salaried and hourly retired employees in North America and their dependents. The Company maintains international defined benefit pension plans which are either noncontributory or contributory and are funded in accordance with applicable local laws. Pension or termination benefits are based primarily on years of service and the employee's compensation.

GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)




Pension and Postretirement Expense


The pension and postretirement expenses related to the Company’s plans consisted of the following:


Pension BenefitsPostretirement Benefits
 Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
In millions20232022202320222023202220232022
Components of Net Periodic Cost:
Service Cost$2 $3 $6 $10 $— $— $— $— 
Interest Cost5 3 16 9 1 — 1 — 
Expected Return on Plan Assets(5)(6)(17)(17)— — — — 
Amortization:
Actuarial Loss (Gain)1 1 4 3 (1)— (2)— 
Net Periodic Cost (Benefit)$3 $1 $9 $5 $— $— $(1)$— 
 Pension Benefits Postretirement Health Care Benefits
 Three Months Ended Nine Months Ended Three Months EndedNine Months Ended
 September 30, September 30, September 30,September 30,
In millions2017 2016 2017 2016 2017 2016 2017 2016
Components of Net Periodic Cost:               
Service Cost$2.3
 $2.5
 $6.8
 $7.4
 $0.2
 $0.2
 $0.6
 $0.6
Interest Cost10.7
 10.7
 31.9
 33.1
 0.3
 0.3
 1.0
 1.0
Administrative Expenses—
 0.2
 —
 0.7
 —
 —
 —
 —
Expected Return on Plan Assets(16.1) (15.5) (48.0) (45.7) —
 —
 —
 —
Net Curtailment/Settlement Loss—
 0.5
 —
 0.5
 —
 —
 —
 —
Amortization:               
 Prior Service Cost (Credit)0.1
 0.2
 0.4
 0.6
 (0.1) (0.1) (0.2) (0.2)
Actuarial Loss (Gain)1.6
 7.7
 4.8
 19.6
 (0.5) (0.4) (1.6) (1.6)
Net Periodic (Benefit) Cost$(1.4) $6.3
 $(4.1) $16.2
 $(0.1) $—
 $(0.2) $(0.2)


Employer Contributions


The Company made contributions of $33.6$13 million and $39.8$21 million of contributions to its pension plans during the first nine months of 20172023 and 2016,2022, respectively. In the first quarter of 2022, the Company made a $6 million contribution to its remaining U.S. defined benefit plan by effectively utilizing the excess balance related to the U.S. defined benefit plan terminated in 2020. The Company expects to make contributions in the range of approximately $35$10 million to $20 million for the full year 2017. During 2016, the Company made $51.4 million of contributions to its pension plans.2023.


The Company also made postretirement health care benefit payments of $1.7 million and $0.5$1 million during the first nine months of 20172023 and 2016, respectively. The2022. For the full year 2023, the Company estimatesexpects to make approximately $2 million in contributions to its postretirement health care benefit payments for the full year 2017 to be approximately $3 million. During 2016, the Company made postretirement health care benefit payments of $2.1 million.plans.



NOTE 7 — FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENT


The Company enters into derivative instruments for risk management purposes only, including derivatives designated as hedging instruments under the Derivatives and Hedging topic of the FASB Codification and those not designated as hedging instruments under this guidance. The Company uses interest rate swaps, natural gas swap contracts and forward exchange contracts. These derivative instruments are designated as cash flow hedges and, to the extent they are effective in offsetting the variability of the hedged cash flows, changes in the derivatives’ fair value are not included in current earnings but are included in Accumulated Other Comprehensive Loss. These changes in fair value will subsequently be reclassified to earnings, contemporaneously with and offsetting changes in the related hedged exposure.exposure and presented in the same line of the income statement expected for the hedged item.


For more information regarding the Company’s financial instruments and fair value measurement, see “Note 9 —10 - Financial Instruments, Derivatives and Hedging Activities” Activities”and“Note 10 —11 - Fair Value Measurement”Measurement” of the Notes to the Consolidated Financial Statements of the Company’s 2016Company's 2022 Annual Report on Form 10-K.


Interest Rate Risk


The Company uses interest rate swaps to manage interest rate risks on future interest payments caused by interest rate changes on its variable rate term loan facility.facilities. Changes in fair value will subsequently be reclassified into earnings as a component of Interest Expense, Net as interest is incurred on amounts outstanding under the term loan facility. facilities.

The following table summarizes the Company's current interest rate swap positions for each period presented as of September 30, 2017:2023:


StartEndNotional Amount (In Millions)Weighted Average Interest Rate
04/03/202304/01/2024$7504.71%

18
StartEnd
(In Millions) 
Notional Amount
Weighted Average Interest Rate
2/1/201712/1/2017$450.00.89%
12/01/201710/01/2018$250.01.16%
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GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)






These derivative instruments are designated as cash flow hedges and, to the extent they are effective in offsetting the variability of the hedged cash flows, changes in the derivatives fair value are not included in current earnings but are included in Accumulated Other Comprehensive Loss. Ineffectiveness measured in the hedging relationship is recorded in earnings in the period it occurs. During the first nine months of 2017 and 2016,2023, there were no amounts of ineffectiveness related to changes in the fair value of interest rate swap agreements.ineffectiveness. Additionally, there were no amounts excluded from the measure of effectiveness.


As discussed in "Note 8 - Income Taxes", a $10 million expense was recorded in the second quarter of 2022 to release the lingering tax expense remaining in Other Comprehensive Income after the settlement of interest rate swaps that occurred in January 2022.

Commodity Risk


To manage risks associated with future variability in cash flows and price risk attributable to purchases of natural gas, the Company enters into natural gas swap contracts to hedge prices for a designated percentage of its expected natural gas usage. Such contracts are designated as cash flow hedges. The contracts are carried at fair value with changes in fair value recognized in Accumulated Other Comprehensive Loss theand resulting gain or loss reclassified into Cost of Sales concurrently with the recognition of the commodity consumed, and the ineffective portion of the swap contracts’ change in fair value recognized immediately in earnings.consumed. The Company has hedged approximately 50%57% and 22%40% of its expected natural gas usage for the remainder of 20172023 and 2018,2024, respectively.


During the first nine months of 20172023 and 2016,2022, there were minimalno amounts of ineffectiveness related to changes in the fair value of natural gas swap contracts. Additionally, there were no amounts excluded from the measure of effectiveness.

Foreign Currency Risk

The Company enters into forward exchange contracts to manage risks associated with foreign currency transactions and future variability of cash flows arising from those transactions that may be adversely affected by changes in exchange rates. The contracts are carried at fair value with changes in fair value recognized in Accumulated Other Comprehensive Loss and gains/losses related to these contracts are recognized in Other Expense (Income), Net or Net Sales, when appropriate.

At September 30, 2017, multiple forward exchange contracts existed that expire on various dates through the remainder of 2017. Those purchased forward exchange contracts outstanding at September 30, 2017 and December 31, 2016, when aggregated and measured in U.S. dollars at contractual rates at September 30, 2017 and December 31, 2016, had notional amounts totaling $12.6 million and $55.9 million, respectively.

No amounts were reclassified to earnings during the first nine months of 2017 or during 2016 in connection with forecasted transactions that were considered probable of not occurring and there was no amount of ineffectiveness related to changes in the fair value of foreign currency forward contracts. Additionally, there were no amounts excluded from the measure of effectiveness.



Derivatives not Designated as Hedges


The Company enters into forward exchange contracts to effectively hedge substantially all of its accounts receivables resulting from sales transactions and intercompany loans denominated in foreign currencies in order to manage risks associated with variability in cash flows that may be adversely affected by changes in exchange rates. At September 30, 20172023 and December 31, 2016,2022, multiple foreign currency forward exchange contracts existed, with maturities ranging up to three months. Those foreign currency exchange contracts outstanding at September 30, 20172023 and December 31, 2016,2022, when aggregated and measured in U.S. dollars at exchangecontractual rates at September 30, 20172023 and December 31, 2016,2022, had net notional amounts totaling $72.6$152 million and $68.1$111 million, respectively. Unrealized gains and losses resulting from these contracts are recognized in Other Expense, (Income), Net and approximately offset corresponding recognized but unrealized gains and losses on the remeasurement of these accounts receivable.



Fair Value of Financial Instruments


The Company’s derivative instruments are carried at fair value. The Company has determined that the inputs to the valuation of these derivative instruments are Level 2 in the fair value hierarchy. Level 2 inputs are defined as quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. The Company uses valuation techniques based on discounted cash flow analyses, which reflect the terms of the derivatives and use observable market-based inputs, including forward rates, and uses market price quotations obtained from independent derivatives brokers, corroborated with information obtained from independent pricing service providers.


As of September 30, 2017, the Company had a gross derivative asset of $1.5 million and a gross derivative liability of $0.7 million, related to interest rate, foreign currency and commodity contracts. As of September 30, 2017,2023, there has not been any significant impact to the fair value of the Company’s derivative liabilities due to its own credit risk. Similarly, there has not been any significant adverse impact to the Company’s derivative assets based on evaluation of the Company’s counterparties’ credit risks. As of September 30, 2023 and December 31, 2022, the Company had commodity contract derivative liabilities, which were included in Other Accrued Liabilities on the Condensed Consolidated Balance Sheet of $4 million and $12 million, respectively.


The fair values of the Company’s other financial assets and liabilities at September 30, 20172023 and December 31, 20162022 approximately equal the carrying values reported on the Condensed Consolidated Balance Sheets except for Long-Term Debt. The fair value of the Company’s Long-Term Debt (excluding capitalfinance leases and deferred financing fees) was $2,307.0$5,109 million and $2,132.7$4,749 million as compared to the carrying amounts of $2,253.9$5,429 million and $2,112.8$5,097 million as of September 30, 20172023 and December 31, 2016,2022, respectively. The fair value of the Company’s Total Debt, including the Senior Notes, areis based on quoted market prices (Level 2 inputs). Level 2 valuation techniques for Long-Term Debt are based on quotations obtained from independent pricing service providers.

19
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GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Effect of Derivative Instruments




The followingpre-tax effect of derivative instruments in cash flow hedging relationships on the Company’s Condensed Consolidated Statements of Operations is a rollforward of pre-tax Accumulated Other Comprehensive Loss pertaining to derivative instruments:as follows:

In millions 
Balance at December 31, 2016$7.5
Reclassification to Earnings(2.0)
Current Period Change in Fair Value(5.4)
Balance at September 30, 2017$0.1
Amount of (Gain) Loss Recognized in Accumulated Other Comprehensive LossLocation in Statement of OperationsAmount of (Gain) Loss Recognized in Statement of Operations
Three Months EndedNine Months EndedThree Months EndedNine Months Ended
September 30,September 30,September 30,September 30,
In millions20232022202320222023202220232022
Commodity Contracts$3 $(10)$22 $(10)Cost of Sales$7 $(5)$27 $(11)
Interest Rate Swap Agreements1 — (2)— Interest Expense, Net(1)— (2)— 
Total$4 $(10)$20 $(10)Total$6 $(5)$25 $(11)


At September 30, 2017,2023, the Company expects to reclassify immaterial gains$4 million of pre-tax gain in the next twelve months from Accumulated Other Comprehensive Loss to earnings, contemporaneously with and offsetting changes in the related hedged exposure. The actual amount that will be reclassified to future earnings may vary from this amount as a result of changes in market conditions.



The pre-tax effect of derivative instruments not designated as hedging instruments on the Company’s Condensed Consolidated Statements of Operations is as follows:

Three Months Ended September 30,Nine Months Ended September 30,
In millions2023202220232022
Foreign Currency ContractsOther Expense (Income), Net$(6)$(9)$(10)$(18)

NOTE 8 — INCOME TAXES


During the nine months ended September 30, 2017,2023, the Company recognized Income Tax Expense of $67.1$175 million on Income before Income Taxes and Equity Income of Unconsolidated Entity of $192.1$702 million. The effective tax rate for the nine months ended September 30, 20172023 is lower thandifferent from the statutory rate primarily due to the mixtax impact of the charges associated with the planned divestiture of the Company’s operations in Russia that result in no corresponding tax benefit, a tax benefit of $2 million related to excess tax benefits on restricted stock that vested during the period, U.S. federal provision to return true up tax benefits of $3 million, an increase in the Company’s valuation allowance against a portion of its net deferred tax assets in Sweden, a decrease in the Company’s valuation allowance against the net deferred tax assets in the Netherlands, and levelsthe mix of earnings between foreign and domestic jurisdictions, including those with and without valuation allowances.

Prior to September 1, 2022, substantially all the Company’s operations were held through its investment in GPIP, a subsidiary that was classified as a partnership for U.S. income tax jurisdictions. In addition,purposes and was generally not subject to domestic income tax expense. As a result, prior to September 1, 2022, the Company recorded a discrete benefitconsolidated financial statements exclude the domestic tax effect of approximately $3 million during the nine months ended September 30, 2017, of which approximately $2 million relatedearnings attributable to the excess benefit associated with share based payments to employees that vested duringnoncontrolling partner’s interest in GPIP for the period in accordance with the new guidance in ASU No. 2016-09, Compensation-Stock Compensation (Topic 718), which requires entities to recognize all income tax effectsportion of excess tax benefits and tax deficiencies in the income statement during the periodany year in which the awards vest or are settled. In addition, approximately $1 million was recordednoncontrolling partner held an interest. Effective September 1, 2022, as a result of statutory rate changes,internal restructuring, GPIP is no longer classified as a partnership for U.S. income tax creditspurposes and other discrete items.GPIP’s activities are directly subject to U.S. income tax. The Company no longer holds an interest in an entity classified as a partnership for U.S. income tax purposes.


During the nine months ended September 30, 2016,2022, the Company recognized Income Tax Expense of $71.3$134 million on Income before Income Taxes and Equity Income of Unconsolidated Entity of $262.8$500 million. The effective tax rate for the nine months ended September 30, 20162022 was significantly lower thandifferent from the statutory rate primarily due to an agreement executedthe discrete tax impact of the charges associated with the Internal Revenue Service. As a resultdivestiture of this agreement, the Company amended its 2011 and 2012 U.S. federal and stateCompany’s Russia business that results in no corresponding tax returns and utilized previously expired net operating loss carryforwards. The Companybenefit. Additional discrete tax adjustments were recorded a discrete benefit during the second quarterperiod, including tax benefits of $22.4$7 million to reflectassociated with the changes as a reductionrecognition of differences between the Company’s outside tax basis in its net long-terminvestment in GPIP and the Company’s inside tax basis in individual assets and liabilities due to the internal restructuring completed during the period, provision to return true-up tax benefits of $2 million, a tax benefit of $2 million related to the remeasurement of deferred taxes due to state law changes, tax expense of $10 million recorded to release the lingering tax expense remaining in Other Comprehensive Income after the settlement of certain swaps, and a tax benefit of $2 million related to excess tax benefits on restricted stock that vested during the period. In addition, the recognition of deferred tax liability. Theassets and liabilities on unrealized foreign currency activity related to intercompany loans where the entity’s functional currency and the loan denomination currency are different than the tax reporting currency resulted in a decrease in the effective tax rate for the nine months ended September 30, 2016 was also different from the statutory rate due to the mix and levelsperiod.

20
Table of earnings between foreign and domestic tax jurisdictions as well as other discrete items recorded during the nine months ended September 30, 2016.Contents

GRAPHIC PACKAGING HOLDING COMPANY
As of December 31, 2016, the Company had approximately $351 million of Net Operating Losses (“NOLs”) for U.S. federal income tax purposes which may be used to offset future taxable income.  During the three months ended March 31, 2017, the Company adopted ASU 2016-09 and as a result recorded additional federal and state NOLs of approximately $107 million that were generated through excess tax benefit deductions claimed on the Company’s 2011-2016 U.S. federal income tax returns and were previously prohibited from being recognized. The Company recognized the cumulative federal and state income tax effects of these previously unrecognized NOLs in accumulated deficit in accordance with ASU No. 2016-09. The Company will utilize NOLs during 2017 and expects to have approximately $375 million to $425 million of NOLs remaining at December 31, 2017.  Based on these NOLs and other tax benefits, the Company does not expect to be a meaningful U.S. federal cash taxpayer until 2020.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 9 — ENVIRONMENTAL AND LEGAL MATTERS


Environmental Matters


The Company is subject to a broad range of foreign, federal, state and local environmental, health and safety laws and regulations, including those governing discharges to air, soil and water, the management, treatment and disposal of hazardous substances, solid waste and hazardous wastes, the investigation and remediation of contamination resulting from historical site operations and releases of hazardous substances, the recycling of packaging and the health and safety of employees. Compliance initiatives could result in significant costs, which could negatively impact the Company’s consolidated financial position, results of operations or cash flows. Any failure to comply with environmental or health and safety laws and regulations or any permits and authorizations required thereunder could subject the Company to fines, corrective action or other sanctions.


Some of the Company’s current and former facilities are the subject of environmental investigations and remediations resulting from historichistorical operations and the release of hazardous substances or other constituents. Some current and former facilities have a history of industrial usage for which investigation and remediation obligations may be imposed in the future or for which indemnification claims may be asserted against the Company. Also, potential future closures or sales of facilities may necessitate further investigation and may result in future remediation at those facilities.

GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)




The Company has established reserves for those facilities or issues where a liability is probable and the costs are reasonably estimable. The Company believes that the amounts accrued for its loss contingencies, and the reasonably possible loss beyond the amounts accrued, are not material to the Company’s consolidated financial position, results of operations or cash flows. The Company cannot estimate with certainty other future corrective compliance, investigation or remediation costs. Some costs relating to historic usage that the Company considers to be reasonably possible of resulting in a liability are not quantifiable at this time. The Company will continue to monitor environmental issues at each of its facilities, as well as regulatory developments, and will revise its accruals, estimates and disclosures relating to past, present and future operations, as additional information is obtained.


Legal Matters


The Company is a party to a number of lawsuits arising in the ordinary conduct of its business. Although the timing and outcome of these lawsuits cannot be predicted with certainty, the Company does not believe that disposition of these lawsuits will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.



NOTE 10 — SEGMENT INFORMATION

Effective January 5, 2017, the consumer product and beverage operating segments (previously combined into the Americas Paperboard Packaging reporting segment) were reorganized and combined into an Americas Converting operating segment (Americas Paperboard Packaging reportable segment). As part of this reorganization, Australia, which was previously included as part of the Americas Paperboard Packaging reporting segment, is now an operating segment and included in Corporate/Other/Elimination. Prior periods have been recast.


The Company has three reportable segments as follows:


Paperboard Mills includes the seven North American paperboard mills whichthat produce primarily CRB, CUK, and CRB. The majority of the paperboardSBS, which is consumed internally to produce paperboard consumer packaging for the Americas and Europe Paperboard Packaging segments. The remaining paperboardPaperboard not consumed internally is sold externally to a wide variety of paperboard packaging converters and brokers. The Paperboard Mills segment Net Sales represent the sale of paperboard only to external customers. The effect of intercompany transfers to the paperboard packaging segments has been eliminated from the Paperboard Mills segment to reflect the economics of the integration of these segments.

Americas Paperboard Packaging includes paperboard packaging, primarily folding cartons, sold primarily to Consumer Packaged Goodsconsumer packaged goods ("CPG") companies, and cups, lids and food containers sold primarily to foodservice companies and quick-service restaurants ("QSR"), serving the food, beverage, and consumer product markets in the Americas.


Europe Paperboard Packaging includes paperboard packaging, primarily folding cartons, sold primarily to CPG companies serving the food, beverage and consumer product markets including healthcare and beauty primarily in Europe.

The Company allocates certain mill and corporate costs to the reportable segments to appropriately represent the economics of these segments. The Corporate and Other caption includes the Pacific Rim and Australia operating segments and unallocated corporate and one-time costs.


These segments are evaluated by the chief operating decision maker based primarily on Income from Operations, as adjusted for depreciation and amortization. The accounting policies of the reportable segments are the same as those described above in "Note 1 - General Information."


21
Table of Contents
GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



Segment information is as follows:

 Three Months Ended September 30,Nine Months Ended September 30,
In millions2023202220232022
NET SALES:
Paperboard Mills$236 $345 $804 $933 
Americas Paperboard Packaging1,569 1,577 4,684 4,533 
Europe Paperboard Packaging498 488 1,553 1,467 
Corporate/Other/Eliminations(a)
46 41 138 121 
Total$2,349 $2,451 $7,179 $7,054 
INCOME (LOSS) FROM OPERATIONS:
Paperboard Mills(b)(c)
$(36)$12 $(42)$17 
Americas Paperboard Packaging(b)(c)
286 229 829 589 
Europe Paperboard Packaging(d)
38 40 85 31 
Corporate and Other(c)
(1)12 12 1 
Total$287 $293 $884 $638 
DEPRECIATION AND AMORTIZATION:
Paperboard Mills(b)
$74 $60 $221 $183 
Americas Paperboard Packaging(b)
50 43 139 129 
Europe Paperboard Packaging27 27 81 84 
Corporate and Other10 7 24 19 
Total$161 $137 $465 $415 
(a) Includes revenue from customers for the Australia and Pacific Rim operating segments.
 Three Months Ended Nine Months Ended
 September 30, September 30,
In millions2017 2016 2017 2016
NET SALES:       
Paperboard Mills$105.1
 $95.6
 $300.1
 $293.9
Americas Paperboard Packaging833.2
 821.5
 2,438.7
 2,416.9
Europe Paperboard Packaging152.6
 142.1
 431.0
 435.3
Corporate/Other/Eliminations46.7
 44.5
 124.0
 94.8
Total$1,137.6
 $1,103.7
 $3,293.8
 $3,240.9
        
INCOME (LOSS) FROM OPERATIONS:       
Paperboard Mills$(13.4) $(2.5) $(36.0) $(2.0)
Americas Paperboard Packaging101.3
 100.7
 281.2
 314.1
Europe Paperboard Packaging10.2
 6.9
 26.2
 25.3
Corporate and Other(2.7) —
 (12.9) (19.5)
Total$95.4
 $105.1
 $258.5
 $317.9
        
DEPRECIATION AND AMORTIZATION:       
Paperboard Mills$39.5
 $29.6
 $101.3
 $90.3
Americas Paperboard Packaging31.6
 34.5
 91.3
 94.2
Europe Paperboard Packaging10.4
 10.4
 30.3
 31.0
Corporate and Other5.5
 3.7
 14.3
 8.6
Total$87.0
 $78.2
 $237.2
 $224.1
(b) Includes accelerated depreciation related to exit activities in 2023 and 2022 (see "Note 13 - Exit Activities").

(c) Includes expenses related to business combinations, shutdown and other special charges, and exit activities (see "Note 1 - General Information").

For more information regarding the Company’s business segments, see “(d) Includes impairment charges related to Russia (see "Note 14 —- Impairment and Divestiture of Russian Business Segment and Geographic Area Information” of the Notes to Consolidated Financial Statements of the Company’s 2016 Form 10-K.").



NOTE 11 — EARNINGS PER SHARE

 Three Months Ended September 30,Nine Months Ended September 30,
In millions, except per share data2023202220232022
Net Income$170 $193 $527 $366 
Weighted Average Shares:
Basic308.3 308.8 308.4 308.9 
Dilutive Effect of RSUs0.9 0.8 0.9 0.8 
Diluted309.2 309.6 309.3 309.7 
Earnings Per Share — Basic$0.55 $0.63 $1.71 $1.18 
Earnings Per Share — Diluted$0.55 $0.62 $1.70 $1.18 

22
 Three Months Ended Nine Months Ended
 September 30, September 30,
In millions, except per share data2017 2016 2017 2016
Net Income$47.3
 $57.8
 $126.3
 $193.1
Weighted Average Shares:       
Basic310.4

319.7

311.3

322.1
Dilutive Effect of RSUs0.5
 0.7
 0.6
 0.8
Diluted310.9

320.4

311.9

322.9
Income Per Share — Basic$0.15
 $0.18
 $0.41
 $0.60
 Income Per Share — Diluted$0.15
 $0.18
 $0.40
 $0.60


Table of Contents

GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



NOTE 12 — EQUITY

The following is a summary of the changes in total equity for the nine months ended September 30, 2017:

In millionsTotal Shareholders' Equity
Balance at December 31, 2016$1,056.5
Net Income126.3
Other Comprehensive Income, Net of Tax44.6
Dividends Declared(69.8)
Repurchase of Common Stock(58.4)
Pre-2017 Excess Tax Benefit related to Share-Based Payments39.1
Compensation Expense Under Share-Based Plans5.5
Repurchase of Common Stock related to Share-Based Payments(10.1)
Balance at September 30, 2017$1,133.7


NOTE 13 —CHANGES IN ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOMELOSS

The following represents changes in Accumulated Other Comprehensive (Loss) IncomeLoss attributable to Graphic Packaging Holding Company by each component of other comprehensive income for the nine months ended September 30, 2017 (a):2023:

In millionsDerivative Instruments Pension Benefit Plans Postretirement Benefit Plans Currency Translation Adjustment Total
Balance at December 31, 2016$(5.4) $(250.2) $14.7
 $(146.7) $(387.6)
Other Comprehensive (Loss) Income before Reclassifications(3.3) —
 —
 46.9
 43.6
Amounts Reclassified from Accumulated Other Comprehensive (Loss) Income(b)
(1.2) 3.3
 (1.1) —
 1.0
Net Current-period Other Comprehensive (Loss) Income(4.5) 3.3
 (1.1) 46.9
 44.6
Balance at September 30, 2017$(9.9) $(246.9) $13.6
 $(99.8) $(343.0)
In millions, net of taxDerivative InstrumentsPension and Postretirement Benefit PlansCurrency Translation AdjustmentsTotal
Balance at December 31, 2022$(4)$(103)$(270)$(377)
Other Comprehensive (Loss) before Reclassifications(13)(1)(28)(42)
Amounts Reclassified from Accumulated Other Comprehensive Loss(a)
19 2 — 21 
Net Current-period Other Comprehensive Income (Loss)6 1 (28)(21)
Less:
Net Current-period Other Comprehensive (Income) Attributable to Noncontrolling Interest— — (1)(1)
Balance at September 30, 2023$2 $(102)$(299)$(399)

(a)
All amounts are net of income taxes.
(b)(a) See following table for details about these reclassifications.



The following represents reclassifications out of Accumulated Other Comprehensive Loss for the nine months ended September 30, 2023:

In millions
Details about Accumulated Other Comprehensive Loss ComponentsAmount Reclassified from Accumulated Other Comprehensive LossAffected Line Item in the Statement Where Net Income is Presented
Derivatives Instruments:
Commodity Contracts$27 Cost of Sales
Interest Rate Swap Agreements(2)Other Expense, Net
25 Total before Tax
(6)Tax (Benefit)
$19 Total, Net of Tax
Amortization of Defined Benefit Pension Plans:
Actuarial Losses$4 (a)
4 Total before Tax
(1)Tax (Benefit)
$3 Total, Net of Tax
Amortization of Postretirement Benefit Plans:
Actuarial Gains$(2)(a)
(2)Total before Tax
1 Tax Expense
$(1)Total, Net of Tax
Total Reclassifications for the Period$21 Total Net of Tax
(a) These accumulated other comprehensive loss components are included in the computation of net periodic pension cost (see “Note 6 - Pensions and Other Postretirement Benefits").

23
Table of Contents
GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


NOTE 13 — EXIT ACTIVITIES


2023

On February 7, 2023, the Company announced its plan to invest approximately $1 billion in a new CRB mill in Waco, Texas. In conjunction with this project, the Company announced the closure of three smaller CRB mills to manage capacity while lowering costs. The following represents reclassifications outcosts associated with these exit activities are included in the table below for the three and nine months ended September 30, 2023.

In the second quarter of Accumulated2023, the Company announced its decision to accelerate the closure of one of these three CRB mills that is in Tama, Iowa and closed the facility in the second quarter of 2023. The costs associated with this closure are included in the table below for the three and nine months ended September 30, 2023.

During the second quarter of 2023, the Company announced the closure of three packaging facilities by the end of 2023. Production from these facilities will be consolidated into our existing packaging network. The costs associated with these exit activities are included in the table below for the three and nine months ended September 30, 2023.

During the third quarter of 2023, the Company decided to discontinue the project in Texarkana to modify an existing paper machine to add swing capacity between SBS and CUK in order to focus growth investments in the strategic expansion of coated recycled paperboard capacity. Through September 30, 2023, the Company incurred charges of $14 million related to the write-off of assets, which were primarily engineering, consulting, and permitting costs for this project. The costs associated with this project are included in the table below for the three and nine months ended September 30, 2023.

2022

In March 2022, the Company announced its decision to close the Norwalk, Ohio packaging facility and closed the facility in September 2022. The Company incurred charges associated with this exit activity for post-employment benefits, retention bonuses and incentives, which are included in the Severance Costs and Other Comprehensive (Loss) Incomeline item in the table below for the three and nine months ended September 30, 2022.

During 2019, the Company announced its plans to invest in a new CRB paper machine in Kalamazoo, Michigan. At the time of the announcement, the Company expected to close two of its smaller CRB Mills in 2022 in order to remain capacity neutral. During the third quarter of 2021, the Company decided to continue to operate one of the two original smaller CRB mills. In the second quarter of 2022, the Company closed the Battle Creek, MI CRB mill. The Company incurred charges associated with this exit activity for post-employment benefits, retention bonuses and incentives, which are included in the Severance costs and other line item in the table below for the three and nine months ended September 30, 2022.

During the nine months ended September 30, 2017:2023 and 2022, the Company recorded $80 million and $19 million of exit costs, respectively, associated with these restructurings. The following table summarizes the costs incurred during the three and nine months ended September 30, 2023 and 2022 related to these restructurings:


Three Months Ended September 30,Nine Months Ended September 30,
In millionsLocation in Statement of Operations2023202220232022
Severance Costs and Other(a)
Business Combinations, Shutdown and Other Special Charges, and Exit Activities, Net$8 $— $20 $1 
Asset Write-Offs and Start-Up Costs(b)
Business Combinations, Shutdown and Other Special Charges, and Exit Activities, Net16 2 21 11 
Accelerated DepreciationCost of Sales7 — 39 7 
Total$31 $2 $80 $19 
(a) Costs incurred include activities for post-employment benefits, retention bonuses, incentives and professional services (see "Note 1 - Business Combinations, Shutdown and Other Special Charges and Exit Activities, net").
(b) Costs incurred include non-cash write-offs for items such as machinery, supplies and inventory.

24
In millions    
Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income (Loss) Affected Line Item in the Statement Where Net Income is Presented
Derivatives Instruments:    
Commodity Contracts $(1.0) Cost of Sales
Foreign Currency Contracts (0.7) Other Expense (Income), Net
Interest Rate Swap Agreements (0.3) Interest Expense, Net
  (2.0) Total before Tax
  0.8
 Tax Expense
  $(1.2) Net of Tax
     
Amortization of Defined Benefit Pension Plans:    
Prior Service Costs $0.4
(c) 
 
Actuarial Losses 4.8
(c) 
 
  5.2
 Total before Tax
  (1.9) Tax Benefit
  $3.3
 Net of Tax
     
Amortization of Postretirement Benefit Plans:    
Prior Service Credits $(0.2)
(c) 
 
Actuarial Gains (1.6)
(c) 
 
  (1.8) Total before Tax
  0.7
 Tax Expense
  $(1.1) Net of Tax
     
Total Reclassifications for the Period $1.0
  

(c)
These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see “Note 6 — Pensions and Other Postretirement Benefits").


NOTE 14 — GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
These consolidating financial statements reflect GPHC (“the Parent”); GPII (the "Subsidiary Issuer"); and the Subsidiary Guarantors, which consistTable of all material 100% owned subsidiaries of GPII other than its foreign subsidiaries; and the nonguarantor subsidiaries (herein referred to as “Nonguarantor Subsidiaries”). The Nonguarantor Subsidiaries include all of GPII's foreign subsidiaries and immaterial domestic subsidiaries. Separate complete financial statements of the Subsidiary Guarantors are not presented because the guarantors are jointly and severally, fully and unconditionally liable under the guarantees.



Contents
GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


The following table summarizes the balance of accrued expenses related to restructuring:


In millionsTotal
Balance at December 31, 2022$1 
Costs Incurred20 
Payments(4)
Adjustments(a)
(1)
Balance at September 30, 2023$16 
(a) Adjustments related to changes in estimates of severance costs.

Due to the closure of Tama in the second quarter of 2023, the Company incurred charges for post-employment benefits, retention bonuses and incentives of $3 million, and accelerated depreciation and inventory and asset write-offs of $27 million through September 30, 2023. No further charges or accelerated depreciation are expected related to Tama.

In addition, due to the expected closures of the additional two CRB mills, the Company incurred charges for post-employment benefits, retention bonuses and incentives of $11 million, and accelerated depreciation and inventory and asset write-offs of $4 million through September 30, 2023. The Company expects to incur total charges associated with these exit activities for post-employment benefits, retention bonuses and incentives in the range of $20 million to $25 million and for accelerated depreciation and inventory and asset write-offs in the range of $15 million to $20 million through 2026.

Due to the expected closures of the folding carton plants, the Company incurred charges for post-employment benefits, retention bonuses and incentives of $5 million, and accelerated depreciation and inventory and asset write-offs of $8 million through September 30, 2023. The Company expects to incur total charges associated with these exit activities for post-employment benefits, retention bonuses and incentives in the range of $5 million to $10 million and for accelerated depreciation and inventory and asset write-offs in the range of $8 million to $10 million through 2023.

Additionally, the Company has incurred start-up charges for the new CRB mill in Waco of $1 million through September 30, 2023. The Company expects to incur total start-up charges of approximately $25 million to $30 million for the new CRB mill through 2026.

NOTE 14 — IMPAIRMENT AND DIVESTITURE OF RUSSIAN BUSINESS

In 2022, the Company began the process of the divesting its interests in two packaging facilities in Russia, which met the criteria to be considered a business, through a sale of 100% of the Disposal Group’s outstanding shares. The Company expects the sale to be completed in 2023. The assets and liabilities to be disposed of in connection with this transaction met the held for sale criteria as of September 30, 2023.

The carrying value of the net assets held for sale, inclusive of the cumulative translation adjustment balance attributable to the business, was greater than their fair value, less costs to sell, resulting in a pre-tax cumulative loss of $93 million (including $2 million of impairment charges incurred in Q3 2023), which is included in the Business, Combinations, Shutdown and Other Special Charges, and Exit Activities, Net in the Condensed Consolidated Statement of Operations in 2022 and 2023. The assets related to the sale, inclusive of the valuation allowance, and liabilities related to the sale were classified as Other Current Assets and Other Accrued Liabilities, respectively, within the Condensed Consolidated Balance Sheet as of September 30, 2023. Excluded from the assets classified as held for sale within the Condensed Consolidated Balance Sheet is an intercompany note receivable totaling $32 million from the Company to the Disposal Group. The intercompany note will be sold as part of the transaction and, thus, should be considered when calculating the carrying value of the Disposal Group and the allowance to adjust the carrying value to the fair value less costs to sell. Upon consummation of the sale of the Disposal Group, the Company will reclassify this note from intercompany to the applicable liability line item in the Condensed Consolidated Balance Sheet as it will represent a liability to an external third party. The cumulative translation adjustment attributable to the business of $5 million is included within Accumulated Other Comprehensive Loss within the Condensed Consolidated Balance Sheet as of September 30, 2023. Goodwill totaling $12 million associated with the Disposal Group was determined to be impaired in 2022.

As the sale of the Disposal Group is not considered a strategic shift that will have a major effect on the Company’s operations or financial results, it was not reported as discontinued operations. The Company will continue to evaluate the Disposal Group for future impairments until it is sold. The Disposal Group is reported within the Europe Paperboard Packaging segment.

25
 Three Months Ended September 30, 2017
In millionsParent Subsidiary Issuer Combined Guarantor Subsidiaries Combined Nonguarantor Subsidiaries Consolidating Eliminations Consolidated
Net Sales$—
 $911.0
 $0.6
 $308.7
 $(82.7) $1,137.6
Cost of Sales—
 756.4
 (0.3) 272.6
 (82.7) 946.0
Selling, General and Administrative—
 68.8
 —
 21.8
 —
 90.6
Other (Income) Expense, Net—
 (0.6) —
 2.6
 —
 2.0
Business Combinations and Shutdown and Other Special Charges—
 2.5
 —
 1.1
 —
 3.6
Income (Loss) from Operations—
 83.9
 0.9
 10.6
 —
 95.4
Interest Expense, Net—
 (21.5) —
 (1.1) —
 (22.6)
Income before Income Taxes and Equity Income of Unconsolidated Entity—
 62.4
 0.9
 9.5
 —
 72.8
Income Tax (Expense) Benefit—
 (20.8) (1.5) (3.6) —
 (25.9)
Income (Loss) before Equity Income of Unconsolidated Entities—
 41.6
 (0.6) 5.9
 —
 46.9
Equity Income of Unconsolidated Entity—
 —
 —
 0.4
 —
 0.4
Equity in Net Earnings of Subsidiaries47.3
 5.7
 (0.8) —
 (52.2) —
Net Income (Loss)$47.3
 $47.3
 $(1.4) $6.3
 $(52.2) $47.3
            
Comprehensive Income (Loss)$58.2
 $58.2
 $(1.5) $24.6
 $(81.3) $58.2


 Three Months Ended September 30, 2016
In millionsParent Subsidiary Issuer Combined Guarantor Subsidiaries Combined Nonguarantor Subsidiaries Consolidating Eliminations Consolidated
Net Sales$—
 $872.6
 $27.1
 $281.2
 $(77.2) $1,103.7
Cost of Sales—
 715.9
 23.6
 250.1
 (77.2) 912.4
Selling, General and Administrative—
 53.6
 4.5
 20.8
 —
 78.9
Other (Income) Expense, Net—
 (1.5) —
 1.4
 —
 (0.1)
Business Combinations and Shutdown and Other Special Charges—
 7.1
 —
 0.3
 —
 7.4
Income (Loss) from Operations—
 97.5
 (1.0) 8.6
 —
 105.1
Interest Expense, Net—
 (19.0) —
 (1.0) —
 (20.0)
Income (Loss) before Income Taxes and Equity Income of Unconsolidated Entity—
 78.5
 (1.0) 7.6
 —
 85.1
Income Tax (Expense) Benefit—
 (24.6) 0.7
 (4.1) —
 (28.0)
Income (Loss) before Equity Income of Unconsolidated Entity—
 53.9
 (0.3) 3.5
 —
 57.1
Equity Income of Unconsolidated Entity—
 —
 —
 0.7
 —
 0.7
Equity in Net Earnings of Subsidiaries57.8
 3.9
 0.9
 —
 (62.6) —
Net Income (Loss)$57.8
 $57.8
 $0.6
 $4.2
 $(62.6) $57.8
            
Comprehensive Income (Loss)$58.3
 $58.3
 $(0.7) $(3.8) $(53.8) $58.3




Table of Contents
GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


The following table summarizes the Company’s assets and liabilities held for sale by major class:

In millionsSeptember 30, 2023
Cash and Cash Equivalents$16 
Receivables, Net14 
Inventories, Net11 
Property, Plant and Equipment, Net23 
Intangible Assets, Net14 
Other Assets2 
Assets Held for Sale80 
Valuation Allowance to Adjust Carrying Value of Russian Operations to Fair Value Less Costs to Sell(93)
Total Assets Held for Sale, Net Included in Other Current Assets$(13)
Accounts Payable4 
Other Accrued Liabilities2 
Deferred Income Tax Liabilities7 
Total Liabilities Held for Sale Included in Other Accrued Liabilities$13 

26

 Nine Months Ended September 30, 2017
In millionsParent Subsidiary Issuer Combined Guarantor Subsidiaries Combined Nonguarantor Subsidiaries Consolidating Eliminations Consolidated
Net Sales$—
 $2,646.1
 $50.1
 $843.3
 $(245.7) $3,293.8
Cost of Sales—
 2,206.4
 41.0
 748.6
 (245.7) 2,750.3
Selling, General and Administrative—
 200.8
 3.5
 61.0
 —
 265.3
Other (Income) Expense, Net—
 (5.9) 0.1
 7.2
 —
 1.4
Business Combinations and Shutdown and Other Special Charges—
 10.6
 —
 7.7
 —
 18.3
Income from Operations—
 234.2
 5.5
 18.8
 —
 258.5
Interest Expense, Net—
 (63.2) —
 (3.2) —
 (66.4)
Income before Income Taxes and Equity Income of Unconsolidated Entity—
 171.0
 5.5
 15.6
 —
 192.1
Income Tax Expense—
 (57.5) (3.2) (6.4) —
 (67.1)
Income before Equity Income of Unconsolidated Entity—
 113.5
 2.3
 9.2
 —
 125.0
Equity Income of Unconsolidated Entity—
 —
 —
 1.3
 —
 1.3
Equity in Net Earnings of Subsidiaries126.3
 12.8
 (5.3) —
 (133.8) —
Net Income (Loss)$126.3
 $126.3
 $(3.0) $10.5
 $(133.8) $126.3
            
Comprehensive Income (Loss)$170.9
 $170.9
 $(23.5) $69.8
 $(217.2) $170.9


 Nine Months Ended September 30, 2016
In millionsParent Subsidiary Issuer Combined Guarantor Subsidiaries Combined Nonguarantor Subsidiaries Consolidating Eliminations Consolidated
Net Sales$—
 $2,612.8
 $72.4
 $783.9
 $(228.2) $3,240.9
Cost of Sales—
 2,117.0
 61.5
 686.8
 (228.2) 2,637.1
Selling, General and Administrative—
 193.1
 8.2
 59.4
 —
 260.7
Other (Income) Expense, Net—
 (4.1) —
 6.1
 —
 2.0
Business Combinations and Shutdown and Other Special Charges—
 21.6
 —
 1.6
 —
 23.2
Income from Operations—
 285.2
 2.7
 30.0
 —
 317.9
Interest Expense, Net—
 (52.1) —
 (3.0) —
 (55.1)
Income before Income Taxes and Equity Income of Unconsolidated Entity—
 233.1
 2.7
 27.0
 —
 262.8
Income Tax Expense—
 (60.7) (1.0) (9.6) —
 (71.3)
Income before Equity Income of Unconsolidated Entity—
 172.4
 1.7
 17.4
 —
 191.5
Equity Income of Unconsolidated Entity—
 —
 —
 1.6
 —
 1.6
Equity in Net Earnings of Subsidiaries193.1
 20.7
 (2.6) —
 (211.2) —
Net Income (Loss)$193.1
 $193.1
 $(0.9) $19.0
 $(211.2) $193.1
            
Comprehensive Income (Loss)$156.4
 $156.4
 $(4.1) $(22.0) $(130.3) $156.4

GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



 September 30, 2017
In millionsParent 
Subsidiary
Issuer
 
Combined
Guarantor
Subsidiaries
 
Combined
Nonguarantor
Subsidiaries
 
Consolidating
Eliminations
 Consolidated
ASSETS           
            
Current Assets:           
Cash and Cash Equivalents$—
 $13.6
 $—
 $3.6
 $—
 $17.2
Receivables, Net—
 237.3
 —
 301.7
 —
 539.0
Inventories, Net—
 414.6
 —
 206.9
 —
 621.5
Intercompany—
 1,153.8
 204.2
 —
 (1,358.0) —
Other Current Assets—
 33.3
 —
 11.6
 —
 44.9
Total Current Assets—
 1,852.6
 204.2
 523.8
 (1,358.0) 1,222.6
Property, Plant and Equipment, Net—
 1,521.9
 0.1
 298.8
 —
 1,820.8
Investment in Consolidated Subsidiaries1,533.8
 —
 15.6
 —
 (1,549.4) —
Goodwill—
 1,154.4
 —
 154.9
 —
 1,309.3
Other Assets—
 350.6
 —
 136.5
 —
 487.1
Total Assets$1,533.8
 $4,879.5
 $219.9
 $1,114.0
 $(2,907.4) $4,839.8
            
LIABILITIES           
Current Liabilities:           
Short-Term Debt and Current Portion of Long-Term Debt$—
 $45.3
 $—
 $4.3
 $—
 $49.6
Accounts Payable—
 370.2
 —
 116.5
 —
 486.7
Intercompany400.1
 —
 —
 983.5
 (1,383.6) —
Other Accrued Liabilities—
 212.5
 —
 68.6
 —
 281.1
Total Current Liabilities400.1
 628.0
 —
 1,172.9
 (1,383.6) 817.4
Long-Term Debt—
 2,142.6
 —
 82.6
 —
 2,225.2
Deferred Income Tax Liabilities—
 395.9
 —
 25.6
 —
 421.5
Other Noncurrent Liabilities—
 179.2
 —
 62.8
 —
 242.0
            
EQUITY           
Total Equity1,133.7
 1,533.8
 219.9
 (229.9) (1,523.8) 1,133.7
Total Liabilities and Equity$1,533.8
 $4,879.5
 $219.9
 $1,114.0
 $(2,907.4) $4,839.8


GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



 December 31, 2016
In millionsParent 
Subsidiary
Issuer
 
Combined
Guarantor
Subsidiaries
 
Combined
Nonguarantor
Subsidiaries
 
Consolidating
Eliminations
 Consolidated
ASSETS           
            
Current Assets:           
Cash and Cash Equivalents$—
 $0.9
 $1.2
 $57.0
 $—
 $59.1
Receivables, Net—
 183.7
 10.1
 233.0
 —
 426.8
Inventories, Net—
 403.8
 16.1
 163.0
 —
 582.9
Intercompany—
 1,077.5
 73.3
 —
 (1,150.8) —
Other Current Assets—
 36.4
 —
 9.7
 —
 46.1
Total Current Assets—
 1,702.3
 100.7
 462.7
 (1,150.8) 1,114.9
Property, Plant and Equipment, Net—
 1,435.8
 64.1
 252.0
 —
 1,751.9
Investment in Consolidated Subsidiaries1,362.9
 —
 12.3
 —
 (1,375.2) —
Goodwill—
 1,098.9
 55.5
 105.9
 —
 1,260.3
Other Assets—
 314.8
 65.6
 95.9
 —
 476.3
Total Assets$1,362.9
 $4,551.8
 $298.2
 $916.5
 $(2,526.0) $4,603.4
            
LIABILITIES           
Current Liabilities:           
Short-Term Debt and Current Portion of Long-Term Debt$—
 $26.0
 $—
 $37.4
 $—
 $63.4
Accounts Payable—
 354.3
 8.5
 103.7
 —
 466.5
Intercompany306.4
 —
 —
 913.0
 (1,219.4) —
Other Accrued Liabilities—
 178.6
 3.0
 68.3
 —
 249.9
Total Current Liabilities306.4
 558.9
 11.5
 1,122.4
 (1,219.4) 779.8
Long-Term Debt—
 2,042.4
 —
 46.1
 —
 2,088.5
Deferred Income Tax Liabilities—
 342.1
 43.3
 22.6
 —
 408.0
Other Noncurrent Liabilities—
 245.5
 —
 25.1
 —
 270.6
 

 

 

 

 

 

EQUITY           
Total Equity1,056.5
 1,362.9
 243.4
 (299.7) (1,306.6) 1,056.5
Total Liabilities and Equity$1,362.9
 $4,551.8
 $298.2
 $916.5
 $(2,526.0) $4,603.4
GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



 Nine Months Ended September 30, 2017
In millionsParent 
Subsidiary
Issuer
 
Combined
Guarantor
Subsidiaries
 
Combined
Nonguarantor
Subsidiaries
 
Consolidating
Eliminations
 Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:           
Net Income (Loss)$126.3
 $126.3
 $(3.0) $10.5
 $(133.8) $126.3
Non-cash Items Included in Net Income (Loss):           
Depreciation and Amortization—
 186.0
 4.8
 46.4
 —
 237.2
Deferred Income Taxes—
 48.0
 3.1
 0.1
 —
 51.2
Amount of Postretirement Expense Less Than Funding—
 (34.8) —
 (4.8) —
 (39.6)
Equity in Net Earnings of Subsidiaries(126.3) (12.8) 5.3
 —
 133.8
 —
Other, Net—
 (3.2) —
 0.1
 —
 (3.1)
Changes in Operating Assets and Liabilities—
 11.3
 (11.4) (65.4) —
 (65.5)
Net Cash Provided by (Used in) Operating Activities—
 320.8
 (1.2) (13.1) —
 306.5
            
CASH FLOWS FROM INVESTING ACTIVITIES:           
Capital Spending—
 (145.0) —
 (40.8) —
 (185.8)
Packaging Machinery Spending—
 (12.0) —
 —
 —
 (12.0)
Acquisition of Business, Net of Cash Acquired—
 (120.9) —
 —
 —
 (120.9)
Other, Net142.4
 (0.4) —
 —
 (142.4) (0.4)
Net Cash Provided by (Used in) Investing Activities142.4
 (278.3) —
 (40.8) (142.4) (319.1)
            
CASH FLOWS FROM FINANCING ACTIVITIES:           
Repurchase of Common Stock(62.1) —
 —
 —
 —
 (62.1)
Payments on Debt—
 (18.8) —
 —
 —
 (18.8)
Borrowings under Revolving Credit Facilities—
 772.6
 —
 41.4
 —
 814.0
Payments on Revolving Credit Facilities—
 (652.6) —
 (43.2) —
 (695.8)
Dividends Paid(70.2) —
 —
 —
 —
 (70.2)
Repurchase of Common Stock related to Share-Based Payments(10.1) —
 —
 —
 —
 (10.1)
Other, Net—
 (131.0) —
 —
 142.4
 11.4
Net Cash (Used in) Provided by Financing Activities(142.4) (29.8) —
 (1.8) 142.4
 (31.6)
            
Effect of Exchange Rate Changes on Cash—
 —
 —
 2.3
 —
 2.3
            
Net Increase (Decrease) in Cash and Cash Equivalents—
 12.7
 (1.2) (53.4) —
 (41.9)
Cash and Cash Equivalents at Beginning of Period—
 0.9
 1.2
 57.0
 —
 59.1
CASH AND CASH EQUIVALENTS AT END OF PERIOD$—
 $13.6
 $—
 $3.6
 $—
 $17.2

GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



 Nine Months Ended September 30, 2016
In millionsParent 
Subsidiary
Issuer
 
Combined
Guarantor
Subsidiaries
 
Combined
Nonguarantor
Subsidiaries
 
Consolidating
Eliminations
 Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:           
Net Income (Loss)$193.1
 $193.1
 $(0.9) $19.0
 $(211.2) $193.1
Non-cash Items Included in Net Income (Loss):           
Depreciation and Amortization—
 174.7
 10.8
 38.6
 —
 224.1
Deferred Income Taxes—
 51.8
 0.8
 2.5
 —
 55.1
Amount of Postretirement Expense Less Than Funding—
 (20.3) —
 (4.0) —
 (24.3)
Equity in Net Earnings of Subsidiaries(193.1) (20.7) 2.6
 —
 211.2
 —
Other, Net—
 32.2
 —
 0.4
 —
 32.6
Changes in Operating Assets and Liabilities—
 (27.2) (12.7) (46.4) —
 (86.3)
Net Cash Provided By Operating Activities—
 383.6
 0.6
 10.1
 —
 394.3
            
CASH FLOWS FROM INVESTING ACTIVITIES:           
Capital Spending—
 (208.5) —
 (40.2) —
 (248.7)
Packaging Machinery Spending—
 (9.7) —
 —
 —
 (9.7)
Acquisition of Business, Net of Cash Acquired—
 (173.1) —
 (158.8) —
 (331.9)
Other, Net165.5
 (164.1) —
 —
 (5.5) (4.1)
Net Cash Provided by (Used in) Investing Activities165.5
 (555.4) —
 (199.0) (5.5) (594.4)
            
CASH FLOWS FROM FINANCING ACTIVITIES:           
Repurchase of Common Stock(106.4) —
 —
 —
 —
 (106.4)
Payments on Debt—
 (18.8) —
 —
 —
 (18.8)
Proceeds from Issuance of Debt—
 300.0
 —
 —
 —
 300.0
Borrowings under Revolving Credit Facilities—
 955.9
 —
 57.4
 —
 1,013.3
Payments on Revolving Credit Facilities—
 (887.7) —
 (45.6) —
 (933.3)
Debt Issuance Cost—
 (5.1) —
 —
 —
 (5.1)
Dividends Paid(48.5) —
 —
 —
 —
 (48.5)
Repurchase of Common Stock related to Share-Based Payments(10.6) —
 —
 —
 —
 (10.6)
Other, Net—
 (166.0) —
 160.0
 5.5
 (0.5)
Net Cash (Used in) Provided by Financing Activities(165.5) 178.3
 —
 171.8
 5.5
 190.1
            
Effect of Exchange Rate Changes on Cash—
 —
 —
 0.8
 —
 0.8
            
Net Increase (Decrease) in Cash and Cash Equivalents—
 6.5
 0.6
 (16.3) —
 (9.2)
Cash and Cash Equivalents at Beginning of Period—
 0.1
 —
 54.8
 —
 54.9
CASH AND CASH EQUIVALENTS AT END OF PERIOD$—
 $6.6
 $0.6
 $38.5
 $—
 $45.7

GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



NOTE 15. SUBSEQUENT EVENTS

On October 24, 2017, the Company announced it will combine its business with International Paper’s (NYSE: IP) North America Consumer Packaging business. The Company will own 79.5 percent of the partnership and will be the sole operator. The revenue of the combined business is approximately $6 billion.
On October 4, 2017, the Company completed the acquisition of Norgraft Packaging, S.A., a leading folding carton producer in Spain focused on the food and household goods markets. The acquisition includes two converting plants located in Miliaño and Requejada, Spain.


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


INTRODUCTION


This management’s discussion and analysis of financial conditions and results of operations is intended to provide investors with an understanding of the Company's past performance, financial condition and prospects. The following will be discussed and analyzed:

ØOverview of Business

ØOverview of 2017 Results

ØResults of Operations

ØFinancial Condition, Liquidity and Capital Resources

ØCritical Accounting Policies

ØNew Accounting Standards

ØBusiness Outlook



ØOverview of Business

ØOverview of Third Quarter 2023 Results

ØResults of Operations

ØFinancial Condition, Liquidity and Capital Resources

ØCritical Accounting Policies

ØNew Accounting Standards

ØBusiness Outlook

OVERVIEW OF BUSINESS


The Company’s objective is to strengthen its position as a leading provider of paper-basedrecyclable, fiber-based consumer packaging solutions. To achieve this objective, the Company offers customers its cartons, foodservice containers, cups, lids, paperboard cartons and packaging machines, either as an integrated solution or separately. Cartons, carriers and carrierscontainers are designed to protect and containhold products. ProductPackaging offerings include a variety of laminated, coated and printed packaging structures that are produced from the Company’s coated recycled paperboard ("CRB"), coated unbleached kraft (“CUK”paperboard ("CUK") and coated recycled board (“CRB”), as well as other grades ofsolid bleached sulfate paperboard that are purchased from third party suppliers.("SBS"). Innovative designs and combinations of paperboard, films, foils, metallization, holographicsholographic and embossing are customized to the individual needs of the customers.


The Company is implementing strategies (i) to expand market share in its current markets and to identify and penetrate new markets; (ii) to capitalize on the Company’s customer relationships, business competencies, and integrated mills and convertingpackaging assets; (iii) to develop and market innovative, sustainablepackaging products and applications;applications that benefit from consumer-led sustainability trends; and (iv) to continue to reduce costs by focusing on operational improvements. The Company’s ability to fully implement its strategies and achieve its objectives may be influenced by a variety of factors, many of which are beyond its control, such as inflation of raw material and other costs, which the Company cannot always pass through to its customers, and the effect of overcapacity in the worldwide paperboard packaging industry.


Significant Factors That Impact Thethe Company’s Business and Results of Operations


Impact of Inflation/Deflation. The Company’s cost of sales consists primarily of energy (including natural gas, fuel oil and electricity), pine pulpwood,and hardwood fiber, chemicals, secondary fibers, purchased paperboard, aluminum foil, ink, plastic films and resins, factoring, depreciation expense and labor. Costs increased infor the first nine months of 2017ended September 30, 2023 by $78.8$149 million, compared to the first nine months of 2016. The higher costs in the nine months ended September 30, 2017 were2022 due to secondary fiberhigher commodity inflation costs ($37.618 million), higher labor and benefit costsbenefits ($17.0 million), chemicals ($10.8 million), freight ($9.1 million), net energy related costs ($2.574 million) and other costs, net ($1.857 million).
Commodity inflation was primarily due to external board ($53 million), mill chemicals ($40 million), factoring ($32 million), converting chemicals ($5 million), and other costs ($15 million) offset by secondary fiber ($56 million), energy ($32 million), freight ($26 million), and wood ($13 million). Because the price of natural gas experiences significant volatility, the Company has entered into contracts designed to manage risks associated with future variability in cash flows caused by changes in the price of natural gas. The Company has entered into natural gas swap contracts to hedge prices for a portion of its expected usage for the remainder of 20172023 and 2018.2024. Since negotiated sales contracts and the market largely determine the pricing for its products, the Company is at times limited in its ability to raise prices and pass through to its customers any inflationary or other cost increases that the Company may incur.


The Company’s operations and financial results could be adversely impacted by global events outside of the Company’s control. The Company’s operations and financial results could be adversely impacted by global events outside of the Company’s control, such as the conflict between Russia and Ukraine. As a result of such global events, there could be unpredictable disruptions to the Company’s operations that could limit production, reduce its future revenues and negatively impact the Company’s financial condition. Global events may result in supply chain and transportation disruptions to and from facilities and affected employees could impact the Company’s ability to operate its facilities and distribute products to its customers in a timely fashion. In addition, these global events may result in extreme volatility and disruptions in the capital and credit markets as well as widespread furloughs and layoffs for workers in the broader economy. During 2022, the Company began the process of selling its interests in its two packaging facilities in Russia, which it expects to be completed in 2023. The Company is adhering to all U.S., U.K., and EU sanctions. For the nine months ended September 30, 2023, the Company's Russian Operations provided approximately 1% of the Company’s Net Sales and less than 1% of the Company's EBITDA. Refer to "Note 14 - Impairment and Divestiture of Russian Business" in the Notes to Condensed Consolidated Financial Statements for additional information and Part I, "Item 1A., Risk Factors" of the Company's 2022 Annual Report on Form 10-K, and in other filings with the Securities and Exchange Commission.

27
Table of Contents
Commitment to Cost Reduction. In light of increasing margin pressure throughout the packaging industry, theThe Company has programs in place that are designed to reduce costs, improve productivity and increase profitability. The Company utilizes a global continuous improvement initiative that uses statistical process control to help design and manage many types of activities, including production and maintenance. This includes a Six Sigma process focused on reducing variable and fixed manufacturing and administrative costs. The Company expandedcosts and the continuous improvement initiative to include the deploymentuse of Lean Sigma principles intoin manufacturing and supply chain services.processes.


The Company’s ability to continue to successfully implement its business strategies and to realize anticipated savings and operating efficiencies is subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s control. If the Company cannot successfully implement the strategic cost reductions or other cost savings plans, it may not be able to continue to compete successfully against other manufacturers. In addition, any failure to generate the anticipated efficiencies and savings could adversely affect the Company’s financial results.


Competition and Market Factors. As some products can be packaged in different types of materials, the Company’s sales are affected by competition from other manufacturers’ CRB, CUK, SBS, folding box board, CRB and other paper substrates such as solid bleached sulfate and recycled clay-coated news. Additional substitute products also include plastic, shrink film and corrugated containers. In addition, while the Company has long-term relationships with many of its customers, the underlying contracts may be re-bid or renegotiated from time to time, and
Table of Contents



the Company may not be successful in renewing on favorable terms or at all. The Company works to maintain market share through efficiency, product innovation, service and strategic sourcing to its customers; however, pricing and other competitive pressures may occasionally result in the loss of a customer relationship.


In addition, the Company’s sales historically are driven by consumer buying habits in the markets its customers serve. The Company has historically reported net organic sales growth supported by its introduction of new packaging products to meet the consumers' desire for recyclable, fiber-based packaging solutions. Changes in consumer dietary habits and preferences, increases in the costs of living, unemployment rates, access to credit markets, as well as other macroeconomic factors, may negatively affect consumer spending behavior. New product introductions and promotional activity by the Company’s customers and the Company’s introduction of new packaging productscan also impact its sales.


Debt Obligations. The Company had $2,288.1an aggregate principal amount of $5,608 million of outstanding debt obligations as of September 30, 2017.2023. This debt has consequences for the Company, as it requires a portion of cash flow from operations to be used for the payment of principal and interest, exposes the Company to the risk of increased interest rates and restrictsmay restrict the Company’s ability to obtain additional financing. The Covenants in the Company'sCompany’s Fourth Amended and Restated Credit Agreement (as amended, the "Current Credit Agreement") and Indenturesthe indentures governing the 0.821% Senior Notes due 2024, 4.125% Senior Notes due 2024, 1.512% Senior Notes due 2026, 4.75% Senior Notes due 2027, 3.50% Senior Notes due 2028, 3.50% Senior Notes due 2029, 2.625% Senior Notes due 2029 and 3.75% Senior Notes due 2030 (the “Indentures”) may, among other things, restrict the ability of the Company to dispose of assets, incur guarantee obligations, prepay other indebtedness, repurchase stock, pay dividends, and make other restricted payments.payments and make acquisitions or other investments. The Current Credit Agreement also requires compliance with a maximum consolidated leverage ratio and a minimum consolidated interest coverage ratio.The Company’s ability to comply in future periods with the financial covenants will depend on its ongoing financial and operating performance, which in turn will be subject to many other factors, many of which are beyond the Company’s control. See "Covenant Restrictions" in “Financial Condition, Liquidity and Capital Resources — Liquidity and Capital Resources” for additional information regarding the Company’s debt obligations.


The debt and the restrictions under the Current Credit Agreement and the Indentures could limit the Company’s flexibility to respond to changing market conditions and competitive pressures. The outstanding debt obligations and the restrictions may also leave the Company more vulnerable to a downturn in general economic conditions or its business, or unable to carry out capital expenditures that are necessary or important to its growth strategy and productivity improvement programs.



OVERVIEW OF THIRD QUARTER 20172023 RESULTS


This management’s discussion and analysis contains an analysis of Net Sales, Income from Operations and other information relevant to an understanding of the Company's results of operations. Onoperations on a Consolidated basis:


•Net Sales for the three months ended September 30, 2017, increased $33.92023 decreased $102 million or 3.1%4% to $1,137.6$2,349 million from $1,103.7$2,451 million for the three months ended September 30, 2016,2022 due to the Carton Craft acquisition discussed below, increasedlower organic sales and lower volume and favorable currency exchange rates,of open market sales partially offset by lower selling prices.higher pricing, new product introductions and favorable foreign exchange.


•Income from Operations for the three months ended September 30, 20172023 decreased $9.7$6 million or 9.2%2% to $95.4$287 million from $105.1$293 million for the three months ended September 30, 20162022 due to higher inflation accelerated depreciation and charges related to the Company's decision to decommission its K3 CRB machine in Kalamazoo, Michiganand the discontinuation of the Texarkana swing capacity project, unfavorable other inflation (primarily labor and benefits), higher level of market downtime, lower selling prices. These decreases wereopen market volume, lower organic sales, accelerated depreciation related to the closure of two smaller CRB mills, charges related to the closures of folding carton plants, and additional impairment charges related to the Company's commitment to sell its Russian operations, partially offset by higher pricing, cost savings throughfrom continuous improvement and other programs.programs, new product introductions, favorable commodity deflation and favorable foreign exchange.


Capital Allocations

Acquisitions and Dispositions

•In January 2023, the Company completed the acquisition of Tama Paperboard, LLC ("Tama"), a CRB mill located in Tama, Iowa, from Greif Packaging LLC for approximately $100 million. It is reported within the Paperboard Mills reportable segment. Subsequently, in the second quarter of 2023, the Company closed this facility.

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•During the second quarter of 2023, the Company announced the closure of three packaging facilities by the end of 2023. Production from these facilities will be consolidated into other carton plants.

•On September 8, 2023, the Company completed the acquisition of Bell Incorporated ("Bell"), adding three packaging facilities in Sioux Falls, South Dakota and Groveport, Ohio for $264 million. Bell is reported within the Americas Paperboard Packaging reportable segment.

•During the third quarter of 2023, the Company announced its decision to permanently decommission the K3 CRB machine in Kalamazoo, Michigan as part of its CRB network optimization plan that the Company initiated in 2019.

•During the third quarter of 2023, the Company decided to discontinue the project in Texarkana to modify an existing paper machine to add swing capacity between SBS and CUK in order to focus growth investments in the strategic expansion of coated recycled paperboard capacity.

•In May 2022, the Company committed to sell its two packaging facilities in Russia and classified the facilities as held for sale resulting in cumulative impairment charges of $105 million in 2022 and 2023, including $12 million of goodwill impairment.

•In May 2022, the Company closed the Battle Creek, MI CRB mill.

•In September 2022, the Company closed its Norwalk, Ohio packaging facility, which it had announced to close in March 2022.

Share Repurchases and Dividends

•On July 28, 2017, the Company's board of directors declared a quarterly dividend of $0.075 per share of common stock paid on October 5, 2017 to shareholders of record as of September 15, 2017.
On January 10, 2017,27, 2023, the Company's board of directors authorized an additional share repurchase program to allow the Company to purchase up to $250$500 million of the Company's issued and outstanding shares of common stock through open market purchases, privately negotiated transactions and Rule 10b5-1 plans (the "2017"2023 share repurchase program"). The original $250previous $500 million share repurchase program was authorized on February 4, 2015January 28, 2019 (the "2015"2019 share repurchase program"). During the first nine months of 2017,2023, the Company repurchased 4,462,2631,584,515 shares of its common stock at an aggregate average price of $13.08, including 1,440,697 shares repurchased$23.57, all under the 20152019 share repurchase program thereby completing that plan.program. During the first nine months of 2022, the Company repurchased 1,090,765 shares of its common stock at an average price of $20.99 under the 2019 share repurchase program. As of September 30, 2017,2023, the Company has approximately $210$582 million remainingavailable for additional repurchases under the 20172023 share repurchase program and the 2019 share repurchase program.


Acquisitions and Dispositions

•On September 6, 2017, the Company announced that it will close its coated recycled paperboard mill in Santa Clara, California by year end. This decision was made as a result of a thorough assessment of the facility's manufacturing capabilities and associated costs in the context ofJuly 28, 2023, the Company's overall mill operating capability. board of directors declared a regular quarterly dividend of $0.10 per share of common stock payable on October 5, 2023 to shareholders of record as of September 15, 2023.


On July 10, 2017, the Company acquired substantially all the assets of Carton Craft Corporation and its affiliate Lithocraft, Inc (collectively "Carton Craft"). The acquisition includes two converting facilities located in New Albany, Indiana, focused on the production of paperboard based air filter frames and folding cartons.

During 2016, the Company acquired G-Box, S.A. de C.V., ("G-Box"), Walter G. Anderson, Inc., ("WG Anderson"), Metro Packaging & Imaging, Inc. ("Metro"), and Colorpak Limited ("Colorpak"). These transactions are referred to collectively as the "2016 Acquisitions."





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RESULTS OF OPERATIONS

Three Months Ended September 30,Nine Months Ended September 30,
In millions2023202220232022
Net Sales$2,349 $2,451 $7,179 $7,054 
Income from Operations287 293 884 638 
Nonoperating Pension and Postretirement Benefit Income (Expense)(1)2 (2)5 
Interest Expense, Net(62)(53)(180)(143)
Income before Income Taxes224 242 702 500 
Income Tax Expense(54)(49)(175)(134)
Net Income$170 $193 $527 $366 


 Three Months Ended Nine Months Ended
 September 30, September 30,
 In millions    2017 2016 2017 2016
Net Sales$1,137.6
 $1,103.7
 $3,293.8
 $3,240.9
Income from Operations95.4
 105.1
 258.5
 317.9
Interest Expense, Net(22.6) (20.0) (66.4) (55.1)
Income before Income Taxes and Equity Income of Unconsolidated Entity72.8
 85.1
 192.1
 262.8
Income Tax Expense(25.9) (28.0) (67.1) (71.3)
Income before Equity Income of Unconsolidated Entity46.9
 57.1
 125.0
 191.5
Equity Income of Unconsolidated Entity0.4
 0.7
 1.3
 1.6
Net Income$47.3
 $57.8
 $126.3
 $193.1



THIRD QUARTER 20172023 COMPARED WITH THIRD QUARTER 20162022


Net Sales

  Three Months Ended September 30,
 
In millions    
2017 2016 Increase 
Percent
Change
Consolidated$1,137.6
 $1,103.7
 $33.9
 3.1%




The components of the change in Net Sales are as follows:

 Three Months Ended September 30,
Variances
In millions2022PriceVolume/MixExchange2023DecreasePercent Change
Consolidated$2,451 $92 $(223)$29 $2,349 $(102)(4)%

29
  Three Months Ended September 30,
   Variances  
In millions2016 Price Volume/Mix Exchange Total 2017
Consolidated$1,103.7

$(3.6) $29.7
 $7.8
 $33.9
 $1,137.6
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The Company’s Net Sales for the three months ended September 30, 2017 increased2023 decreased by $33.9$102 million or 3.1%4% to $1,137.6$2,349 million from $1,103.7$2,451 million for the three months ended September 30, 2016,2022 due to Net Sales of $15.3 million from the Carton Craft acquisition, increased converting volume due to new products, increasedlower organic sales and lower volumes of open market paperboard, andsales partially offset by higher pricing, new product introductions, favorable currencyforeign exchange, rates, primarily the Euro. These increases wereEuro, British Pound, Mexican Peso, offset by the Canadian dollar, Australian Dollar and Japanese Yen, and the acquisition of Bell Incorporated in September 2023. Core packaging volumes were lower selling pricesin beverage, cereal, dry foods, frozen foods, dairy, pet care, frozen pizza, healthcare, and continued softnessconvenience partially offset by higher packaging volumes in consumer product markets (cereal and dry foods) and a slight decline in global beverage volumes.foodservice.



Income from Operations

  Three Months Ended September 30,
 
In millions    
2017 2016 Decrease 
Percent
Change
Consolidated$95.4
 $105.1
 $(9.7) (9.2)%


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The components of the change in Income from Operations are as follows:


 Three Months Ended September 30,
Variances
In millions2022PriceVolume/MixInflationExchange
Other (a)
2023DecreasePercent Change
Consolidated$293 $92 $(66)$(11)$3 $(24)$287 $(6)(2)%
  Three Months Ended September 30,
   Variances  
In millions2016 Price Volume/Mix  Inflation Exchange 
Other (a)
 Total 2017
Consolidated$105.1
 $(3.6) $3.6
  $(24.4) $—
 $14.7
 $(9.7) $95.4

(a)Includes the Company's cost reduction initiatives, andmarket downtime costs, planned mill maintenance costs, expenses related to acquisitions and integration activities, exit activities and shutdown and other special charges.


Income from Operations for the three months ended September 30, 20172023 decreased $9.7$6 million or 9.2%2% to $95.4$287 million from $105.1$293 million for the three months ended September 30, 20162022 due to higher inflation, includingaccelerated depreciation and charges related to the impactCompany's decision to decommission its K3 CRB machine in Kalamazoo, Michiganand the discontinuation of the hurricanes,Texarkana swing capacity project, unfavorable other inflation (primarily labor and benefits), higher level of market downtime, lower open market volume, lower organic sales, accelerated depreciation related to the lower selling prices, and higher incentive compensation costs dueclosure of two smaller CRB mills, charges related to a decrease recordedthe closures of folding carton plants (refer to "Note 13 - Exit Activities" in the prior year of approximately $10 million. These decreases wereNotes to Condensed Consolidated Financial Statements for additional information), and additional impairment charges related to the Company's commitment to sell its Russian operations, partially offset by higher pricing, cost savings throughfrom continuous improvement and other programs. The prior year quarter was also negatively impacted by operational issues related to the onboarding ofprograms, new or transferred business related to the closed or announced closure of facilities. product introductions, favorable commodity deflation and favorable foreign exchange.

Inflation increased for the three months ended September 30, 20172023 by $11 million, compared to the three months ended September 30, 2022 due to increased labor and benefits ($22 million) and other costs, net ($21 million), offset by commodity deflation costs ($32 million). Commodity deflation was primarily due to energy ($24 million), secondary fiber ($12.1 million), labor and benefits ($5.714 million), freight ($4.98 million), wood ($4 million), and converting chemicals ($2.81 million), partially offset by factoring ($10 million), external board ($4 million), mill chemicals ($2 million), and other costs net ($1.13 million).


Interest Expense, Net


Interest Expense, Net was $22.6$62 million and $20.0$53 million for the three months ended September 30, 20172023 and 2016,2022, respectively. Interest Expense, Net increased due primarily to higher average interest rates, as compared to the same period in the prior year.partially offset by lower debt balances. As of September 30, 2017,2023, approximately 36%23% of the Company’s total debt was subject to floating interest rates.


Income Tax Expense


During the three months ended September 30, 2017,2023, the Company recognized Income Tax Expense of $25.9$54 million on Income before Income Taxes and Equity Income of Unconsolidated Entity of $72.8$224 million. The effective tax rate for the three months ended September 30, 20172023 is different thanfrom the statutory rate primarily due to the mixtax impact of the charges associated with the planned divestiture of the Company’s operations in Russia that results in no corresponding tax benefit, U.S. federal provision to return true up tax benefits of $3 million, decrease in the Company's valuation allowance against the net deferred tax assets in the Netherlands and levelsthe mix of earnings between foreign and domestic tax jurisdictions. In addition, approximately $1 million was recorded as a result of statutory rate changes, income tax creditsjurisdictions, including those with and other discrete items.without valuation allowances.


During the three months ended September 30, 2016,2022, the Company recognized Income Tax Expense of $28.0$49 million on Income before Income Taxes and Equity Income of Unconsolidated Entity of $85.1$242 million. The effective tax rate for the three months ended September 30, 20162022 was different thanfrom the statutory rate primarily due to discrete tax benefits of $7 million associated with the mixrecognition of differences between the Company’s outside tax basis in its investment in GPIP and levels between foreignthe Company’s inside tax basis in individual assets and domestic earnings, including losses in jurisdictions with full valuation allowances as well as certain discrete benefits recordedliabilities due to the internal restructuring that was completed during the quarter.quarter, and provision to return tax benefits of $2 million. In addition, the recognition of deferred tax assets and liabilities on unrealized FX activity related to intercompany loans where the entity functional currency and the loan denomination is different than the tax reporting currency, resulted in an increase in the effective tax rate for the period.


As of December 31, 2016,Based on the Company had approximately $351 million of Net Operating Losses (“NOLs”) forfinal 2022 U.S. federal income tax purposesreturn, the Company's remaining U.S. federal net operating loss carryforward was approximately $292 million. As such, based on the remaining net operating loss carryforward as well as tax credit carryforwards, which may be usedare available to offset future taxable income.  The Company will utilize NOLs during 2017 and expects to have approximately $375 million to $425 million of NOLs remaining at December 31, 2017.  Based on these NOLs and otherU.S. federal income tax, benefits, the Company does not expect to be a meaningfulexpects its U.S. federal cash taxpayer until 2020.tax liability in 2023 to be reduced by approximately $112 million.

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FIRST NINE MONTHS 2017OF 2023 COMPARED WITH FIRST NINE MONTHS 2016OF 2022


Net Sales

 Nine Months Ended September 30,
 
In millions    
2017 2016 Increase 
Percent
Change
Consolidated$3,293.8
 $3,240.9
 $52.9
 1.6%




The components of the change in Net Sales are as follows:
Nine Months Ended September 30,
Variances
In millions2022PriceVolume/MixExchange2023IncreasePercent Change
Consolidated$7,054 $516 $(382)$(9)$7,179 $125 2 %
 Nine Months Ended September 30,
   Variances  
In millions2016 Price Volume/Mix Exchange Total 2017
Consolidated$3,240.9
 $(27.6) $98.9
 $(18.4) $52.9
 $3,293.8



The Company’s Net Sales for the nine months ended September 30, 20172023 increased by $52.9$125 million or 1.6%2% to $3,293.8$7,179 million from $3,240.9$7,054 million for the nine months ended September 30, 2016, primarily2022 due to Net Sales of $77.7 million for the 2016 and Carton Craft Acquisitionshigher pricing and new product introductions partially offset by lower selling pricesvolumes of open market sales, lower organic sales and unfavorable currencyforeign exchange, rates,
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primarily the British Pound.Canadian dollar, Australian Dollar and Japanese Yen partially offset by the Mexican Peso. Core packaging volumes were stable as globallower in beverage, cereal, dry foods, frozen foods, dairy, convenience, and healthcare partially offset by higher packaging volumes were up while softness continued for certain consumer products, primarily cerealin foodservice, frozen pizza, tissue and frozen foods.beauty.



Income (Loss) from Operations

 Nine Months Ended September 30,
 
In millions    
2017 2016 Decrease 
Percent
Change
Consolidated$258.5
 $317.9
 $(59.4) (18.7)%



The components of the change in Income (Loss) from Operations are as follows:


Nine Months Ended September 30,
Variances
In millions2022PriceVolume/MixInflationExchange
Other (a)
2023IncreasePercent Change
Consolidated$638 $516 $(137)$(149)$(15)$31 $884 $246 39 %
 Nine Months Ended September 30,
   Variances  
In millions2016 Price Volume/Mix  Inflation Exchange 
Other (a)
 Total 2017
Consolidated$317.9
 $(27.6) $(3.7)  $(78.8) $(6.2) $56.9
 $(59.4) $258.5

(a) Includes the Company's cost reduction initiatives, andmarket downtime costs, planned mill maintenance costs, expenses related to acquisitions and integration activities, exit activities and shutdown and other special charges.



Income from Operations for the nine months ended September 30, 2017 decreased $59.42023 increased $246 million or 18.7%39% to $258.5$884 million from $317.9$638 million for the nine months ended September 30, 20162022 due to higher inflation, the lower selling prices, and unfavorable foreign currency exchange rates. These decreases were partially offset bypricing, cost savings throughfrom continuous improvement and other programs and new product introductions partially offset by lower compensation expensesopen market volume, unfavorable commodity inflation and other general expenses. inflation (primarily labor and benefits), higher level of maintenance and market downtime, unfavorable foreign exchange, lower organic sales, accelerated depreciation related to the closure of three smaller CRB mills, charges related to the closures of folding carton plants (refer to "Note 13 - Exit Activities" in the Notes to Condensed Consolidated Financial Statements for additional information) and accelerated depreciation and charges related to the Company's decision to decommission its K3 CRB machine in Kalamazoo, Michigan and the discontinuation of the Texarkana swing capacity project during the third quarter of 2023. Income from Operations also increased due to a reduction in impairment charges in the first nine months of 2023 compared to 2022 related to the Company's planned divestiture of its Russian operations. Refer to "Note 14 - Impairment and Divestiture of Russian Business" in the Notes to Condensed Consolidated Financial Statements for additional information.

Inflation increased for the nine months ended September 30, 2017, increased2023 by $149 million, compared to the first nine months of 2022 due to secondary fiberhigher commodity inflation costs ($37.618 million), labor and benefits ($17.0 million), chemicals ($10.8 million), freight ($9.1 million), net energy related costs ($2.574 million) and other costs, net ($1.857 million). Commodity inflation was primarily due to external board ($53 million), mill chemicals ($40 million), factoring ($32 million), converting chemicals ($5 million), and other costs ($15 million) offset by secondary fiber ($56 million), energy ($32 million), freight ($26 million), and wood ($13 million).


Interest Expense, Net


Interest Expense, Net was $66.4$180 million and $55.1$143 million for the nine months ended September 30, 20172023 and 2016,2022, respectively. Interest Expense, Net increased due primarily to higher average interest rates, as compared to the same period in the prior year.partially offset by lower debt balances.


Income Tax Expense


During the nine months ended September 30, 20172023, the Company recognized Income Tax Expense of $67.1$175 million on Income before Income Taxes and Equity Income of Unconsolidated Entity of $192.1$702 million. The effective tax rate for the nine months ended September 30, 20172023 is lower thandifferent from the statutory rate primarily due to the mixtax impact of the charges associated with the planned divestiture of the Company’s operations in Russia that result in no corresponding tax benefit, a tax benefit of $2 million related to excess tax benefits on restricted stock that vested during the period, U.S. federal provision to return true up tax benefits of $3 million, an increase in the Company's valuation allowance against a portion of its net deferred tax assets in Sweden along with a decrease in the Company's valuation allowance against the net deferred tax assets in the Netherlands, and levelsthe mix of earnings between foreign and domestic tax jurisdictions. In addition, the Company recorded a discrete benefitjurisdictions, including those with and without valuation allowances.
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Table of approximately $3 million during the nine months ended September 30, 2017, of which approximately $2 million related to the excess tax benefit associated with share based payments to employees that vested during the period in accordance with the new guidance in ASU No. 2016-09, Compensation-Stock Compensation (Topic 718), which requires entities to recognize all income tax effects of excess tax benefits and tax deficiencies in the income statement during the period in which the awards vest or are settled. In addition, approximately $1 million was recorded as a result of statutory rate changes, income tax credits and other discrete items.Contents

During the nine months ended September 30, 2016,2022, the Company recognized Income Tax Expense of $71.3$134 million on Income before Income Taxes and Equity Income of Unconsolidated Entity of $262.8$500 million. The effective tax rate for the nine months ended September 30, 2016 was significantly lower2022 is different than the statutory rate primarily due to an agreement executedthe impairment charges associated with the Internal Revenue Service. As a resultCompany’s Russia business that results in no corresponding tax benefit. Additionally, discrete tax adjustments were recorded during the period, including discrete tax benefits of $7 million associated with the agreement,recognition of differences between the Company amendedCompany’s outside tax basis in its 2011investment in GPIP and 2012 U.S. federalthe Company’s inside tax basis in individual assets and stateliabilities due to the internal restructuring that was completed during the period, provision to return tax returns and utilized previously expired net operating loss carryforwards. The Company recorded a discrete benefit of $22.4$2 million, a tax benefit of $2 million recorded to reflect the changes asdecrease in the state statutory tax rate, tax expense of $10 million, recorded to release the lingering tax expense remaining in Other Comprehensive Income after the settlement of certain swaps and a reduction in its net long-termtax benefit of $2 million related to excess tax benefits on restricted stock that vested during the period. In addition, the recognition of deferred tax liability. Theassets and liabilities on unrealized foreign currency activity related to intercompany loans where the entity's functional currency and the loan denomination currency are different than the tax reporting currency resulted in a decrease in the effective tax rate for the nine months ended September 30, 2016 was also different from the statutory rate due to the mix and levels of earnings between foreign and domestic tax jurisdictions as well as other discrete items recorded during the nine months ended September 30, 2016.period.



Segment Reporting

Effective January 5, 2017, the consumer product and beverage operating segments (previously combined into the Americas Paperboard Packaging reporting segment) were reorganized and combined into an Americas Converting operating segment (Americas Paperboard Packaging reportable segment). As part of this reorganization, Australia, which was previously included as part of the Americas Paperboard Packaging reporting segment, is now an operating segment and included in Corporate/Other/Elimination. Prior periods have been recast.

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The Company has three reportable segments as follows:

Paperboard Millsincludes the seven North American paperboard mills whichthat produce primarily CRB, CUK, and CRB. The majority of the paperboardSBS, which is consumed internally to produce paperboard packaging for the Americas and Europe Paperboard Packaging segments. The remaining paperboardPaperboard not consumed internally is sold externally to a wide variety of paperboard packaging converters and brokers. The Paperboard Mills segment Net Sales representsrepresent the sale of paperboard only to external customers.customers only. The effect of intercompany transfers to the paperboard packaging segments has been eliminated from the Paperboard Mills segment to reflect the economics of the integration of these segments.

Americas Paperboard Packagingincludes paperboard packaging, primarily folding cartons, sold primarily to Consumer Packaged Goodsconsumer packaged goods ("CPG") companies, and cups, lids and food containers sold primarily to foodservice companies and quick-service restaurants ("QSR") serving the food, beverage, and consumer product markets in the Americas.


Europe Paperboard Packagingincludes paperboard packaging, primarily folding cartons, sold primarily to CPG companies serving the food, beverage and consumer product markets, including healthcare and beauty products, primarily in Europe.

The Company allocates certain mill and corporate costs to the reportable segments to appropriately represent the economics of these segments. The Corporate and Other caption includes the Pacific Rim and Australia operating segments and unallocated corporate and one-time costs.


These segments are evaluated by the chief operating decision maker based primarily on Income from Operations, as adjusted for depreciation and amortization. The accounting policies of the reportable segments are the same as those described above in "Note 1 - General Information" in the Notes to Condensed Consolidated Financial Statements.


Three Months Ended September 30,Nine Months Ended September 30,
In millions2023202220232022
NET SALES:
Paperboard Mills$236 $345 $804 $933 
Americas Paperboard Packaging1,569 1,577 4,684 4,533 
Europe Paperboard Packaging498 488 1,553 1,467 
Corporate/Other/Eliminations(a)
46 41 138 121 
Total$2,349 $2,451 $7,179 $7,054 
(LOSS) INCOME FROM OPERATIONS:
Paperboard Mills(b)(c)
$(36)$12 $(42)$17 
Americas Paperboard Packaging(b)(c)
286 229 829 589 
Europe Paperboard Packaging(d)
38 40 85 31 
Corporate and Other(c)
(1)12 12 1 
Total$287 $293 $884 $638 
(a) Includes revenue from customers for the Australia and Pacific Rim operating segments.
(b) Includes accelerated depreciation related to exit activities in 2023 and 2022. See "Note 13 - Exit Activities" in the Notes to Condensed Consolidated Financial Statements for further information.
(c) Includes expenses related to business combinations, shutdown and other special charges, and exit activities. See "Note 1 - General Information" in the Notes to Condensed Consolidated Financial Statements for further information.
(d) Includes impairment charges related to Russia. See "Note 14 - Impairment and Divestiture of Russian Business" in the Notes to Condensed Consolidated Financial Statements for further information.
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 Three Months Ended Nine Months Ended
 September 30, September 30,
In millions2017 2016 2017 2016
NET SALES:       
Paperboard Mills$105.1
 $95.6
 $300.1
 $293.9
Americas Paperboard Packaging833.2
 821.5
 2,438.7
 2,416.9
Europe Paperboard Packaging152.6
 142.1
 431.0
 435.3
Corporate/Other/Eliminations46.7
 44.5
 124.0
 94.8
Total$1,137.6
 $1,103.7
 $3,293.8
 $3,240.9
        
INCOME (LOSS) FROM OPERATIONS:       
Paperboard Mills$(13.4) $(2.5) $(36.0) $(2.0)
Americas Paperboard Packaging101.3
 100.7
 281.2
 314.1
Europe Paperboard Packaging10.2
 6.9
 26.2
 25.3
Corporate and Other(2.7) —
 (12.9) (19.5)
Total$95.4
 $105.1
 $258.5
 $317.9


20172023 COMPARED WITH 20162022


Third Quarter 20172023 Compared to Third Quarter 20162022

Paperboard Mills

Net Sales decreased due to lower open market volume partially offset by higher pricing.

Income from Operations decreased due to lower open market volume, higher levels of market downtime, accelerated depreciation related to the closure of two smaller CRB mills (refer to "Note 13 - Exit Activities" in the Notes to Condensed Consolidated Financial Statements for additional information), and accelerated depreciation and charges related to the Company's decision to decommission its K3 CRB machine in Kalamazoo, Michigan and the discontinuation of the Texarkana swing capacity project. The decrease is partially offset by higher pricing, favorable commodity deflation and productivity improvements, including benefits from capital projects.

Americas Paperboard Packaging

Net Sales decreased due to lower organic sales, partially offset by higher pricing, new product introductions driven by conversions to our fiber-based packaging solutions and the acquisition of Bell Incorporated in September 2023. Lower packaging volumes in beverage, cereal, dry foods, frozen foods, dairy, pet care, and frozen pizza were partially offset by higher packaging volumes in foodservice. In beverage, packaging volumes decreased in big beer and soft drinks partially offset by increased volumes in craft beer and specialty beverages.

Income from Operations increased due to higher pricing and cost savings from continuous improvement and other programs partially offset by inflation (primarily labor and benefits and other costs offset by commodity deflation), higher levels of market downtime and charges related to the closure of folding carton plants (refer to "Note 13 - Exit Activities" in the Notes to Condensed Consolidated Financial Statements for additional information). The commodity deflation was primarily due to energy, secondary fiber, freight and wood offset by factoring and external board.

Europe Paperboard Packaging

Net Sales increased due to increase volumes for both CUKhigher pricing, mix and CRB, higher selling prices, primarily for CUK,new product introductions driven by conversions to our fiber-based packaging solutions, and favorable foreign currency exchange rates.partially offset by lower packaging volumes in food, beverage, and healthcare partially offset by higher foodservice sales.


LossIncome from Operations increaseddecreased due to commodity inflation primarily related to energy and external board, other inflation (primarily labor and benefits), and lower organic sales partially offset by higher pricing and cost savings from continuous improvement and other programs. Income from Operations also decreased due to an increase in impairment charges in the third quarter of 2023 compared to 2022 related to the Company's planned divestiture of its Russian operations. Refer to "Note 14 - Impairment and Divestiture of Russian Business" in the Notes to Condensed Consolidated Financial Statements for additional information.

First Nine Months of 2023 Compared to First Nine Months of 2022

Paperboard Mills

Net Sales decreased due to lower open market volume partially offset by higher pricing.

Income from Operations decreased due to lower open market volume, higher levels of maintenance and market downtime, accelerated depreciation related to the closure of the three CRB mills (refer to "Note 13 - Exit Activities" in the Notes to Condensed Consolidated Financial Statements for additional information), other inflation (primarily labor and benefits) and accelerated depreciation and charges related to the Company's decision to decommission its K3 CRB machine and the discontinuation of the Texarkana swing capacity project. The decrease is partially offset by higher pricing, productivity improvements, including benefits from capital projects, and commodity deflation, primarily secondary fiber, energy, wood and freight partially offset by productivity improvements and the increased sales volume.chemicals.


Americas Paperboard Packaging

Net Sales increased due to the Carton Craft acquisitionhigher pricing and new productionproduct introductions driven by conversions to our fiber-based packaging solutions and the acquisition of Bell Incorporated in September 2023, partially offset by lower selling pricesorganic sales. Lower packaging volumes in beverage, cereal, dry foods, frozen foods, and lower volume for beverage and certain consumer products.

Income from Operations was flat due to higher inflation and the lower selling prices,dairy were partially offset by cost savings through continuous improvement programs.higher packaging volumes in foodservice, frozen pizza and tissue. In beverage, packaging volumes decreased in big beer, craft beer, specialty beverages and soft drinks.
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Europe Paperboard Packaging
Net Sales increased due to increased volumes primarily for beverage and convenience products and favorable foreign currency exchange rates, partially offset by lower selling prices.


Income from Operations increased due to the higher volumepricing and cost savings from continuous improvement and other cost savings programs, partially offset by the lower selling prices.commodity inflation and other inflation (primarily labor and benefits) and higher levels of maintenance and market downtime. The commodity inflation was primarily due to higher prices for external board, chemicals, and factoring partially offset by secondary fiber, energy, freight and wood.



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First Nine Months 2017 Compared to First Nine Months 2016Europe Paperboard Packaging
Paperboard Mills
Net Sales increased as increased volume and favorabledue to higher pricing, mix, new product introductions driven by conversions to our fiber-based packaging solutions partially offset by unfavorable foreign currency exchange rates wereand lower organic sales in beverage, convenience, healthcare and food partially offset by lower selling prices.higher volumes in foodservice and beauty.


LossIncome from Operations increased due to higher inflation, primarily secondary fiber ($37.6 million),pricing and the lower selling prices,cost savings from continuous improvement and other programs partially offset by productivity improvements. During 2017 in West Monroe, LA, there was an approximate $14 million impactcommodity inflation primarily related to the second quarter maintenance cold outageexternal board and an approximate $18 million impact related to the first quarter planned downtime taken to upgrade a paper machine. During 2016, there was an approximate $15 million impact related to downtime taken in the second quarter to upgrade a paper machine in West Monroe, LA.

Americas Paperboard Packaging
Net Sales increased primarily due to the 2016energy, other inflation (primarily labor and Carton Craft Acquisitions, higher beverage volumes and new product introductions, partially offset by lower selling prices and lower volume for certain consumer products.

Income from Operations decreased due to the lower selling prices and higher inflation, partially offset by cost savings through continuous improvement programs.

Europe Paperboard Packaging
Net Sales decreased primarily due tobenefits), unfavorable foreign currency exchange rates and lower pricing, partially offset by higher volume primarily for beverage and convenience products.

organic sales. Income from Operations also increased as a result of improved operating performance due to capital investments, other cost savings programs,a reduction in impairment charges in the first nine months of 2023 compared to 2022 related to the Company's planned divestiture of its Russian operations. Refer to "Note 14 - Impairment and Divestiture of Russian Business" in the higher volume, partially offset by the lower selling prices and unfavorable foreign currency exchange rates.Notes to Condensed Consolidated Financial Statements for additional information.



FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES


The Company broadly defines liquidity as its ability to generate sufficient funds from both internal and external sources to meet its obligations and commitments. In addition, liquidity includes the ability to obtain appropriate debt and equity financing and to convert into cash those assets that are no longer required to meet existing strategic and financial objectives. Therefore, liquidity cannot be considered separately from capital resources that consist of current or potentially available funds for use in achieving long-range business objectives and meeting debt service commitments.


Cash Flows
Nine Months Ended September 30,
In millions20232022
Net Cash Provided by Operating Activities$702 $620 
Net Cash Used in Investing Activities(875)(367)
Net Cash Provided by (Used In) Financing Activities188 (331)
 Nine Months Ended
 September 30,
In millions2017 2016
Net Cash Provided by Operating Activities$306.5
 $394.3
Net Cash Used in Investing Activities$(319.1) $(594.4)
Net Cash (Used In) Provided by Financing Activities$(31.6) $190.1


Net cash provided by operating activities for the first nine months of 20172023 totaled $306.5$702 million compared to $394.3$620 million for the same period in 2016.2022. The decreasefavorable increase was mainly due primarily to lower operating results as discussed above.an increase in income from operations offset by higher levels of working capital. Pension contributions for the first nine months of 20172023 and 20162022 were $33.6$13 million and $39.8$21 million, respectively. In the first quarter of 2022, the Company made a $6 million contribution to its remaining U.S. defined benefit plan by effectively utilizing the excess balance related to its U.S. defined benefit plan terminated in 2020.


Net cash used in investing activities for the first nine months of 20172023 totaled $319.1$875 million compared to $594.4$367 million for the same period in 2016.2022. The Company completed the acquisition of Tama, a CRB mill located in Tama, Iowa on January 31, 2023, from Greif Packaging LLC for approximately $100 million. The Company also completed the acquisition of Bell Incorporated, adding three packaging facilities in Sioux Falls, South Dakota and Groveport, Ohio for $264 million on September 8, 2023 including cash acquired of $3 million. For further discussion of the Company's newly acquired CRB mill and Converting facilities, see "Note 3 - Business Combinations" in the Notes to the Condensed Consolidated Financial Statements. Capital spending was $197.8$592 million and $258.4$445 million in 20172023 and 2016,2022, respectively. In 2017,The increase in capital spending has been driven by the Company paid $120.9construction of the Company's new CRB mill in Waco, Texas. For more information on the construction of the new CRB mill in Waco, Texas, refer to the Capital Investment section below. Net cash receipts related to the accounts receivable securitization and sale programs were $83 million for the Carton Craft acquisition. In 2016, the Company paid $331.9and $81 million net of cash acquired, for the 2016 Acquisitions.in 2023 and 2022, respectively.


Net cash used inprovided by financing activities for the first nine months of 20172023 totaled $31.6$188 million compared to net cash provided byused in financing activities of $190.1$331 million for the same period in 2016.2022. Current year financing activities include net borrowings under revolving credit facilities of $118.2 million, primarily for the Carton Craft acquisition,capital spending, repurchase of common stock of $37 million and payments on debt of $18.8$18 million. The Company also paid dividends
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of $70.2$92 million repurchased $62.1 million of its common stock, and withheld $10.1$22 million of restricted stock units to satisfy tax withholding paymentsobligations related to the payout of restricted stock units. In the prior period,year the Company had netalso made borrowings under revolving credit facilities of $80.0 million, primarily for the 2016 Acquisitions,capital spending and madeinterest and payments on debt of $18.8$10 million. In addition, theThe Company completed its debt offering of $300 million aggregated principal amount of 4.125% senior notes due 2024 in a registered public offering and used the net proceeds to repay a portion of its outstanding borrowing of its senior secured revolving credit facility. Additionally, the Companyalso paid dividends and distributions of $48.5$69 million repurchased $106.4 million of its common stock and withheld $10.6$18 million of restricted stock units to satisfy tax withholding payments related to the payout of restricted stock units.



Supplemental Guarantor Financial Information

As discussed in “Note 4 - Debt” in the Notes to Condensed Consolidated Financial Statements, the Senior Notes issued by GPIL (the “Issuer”) are guaranteed by certain domestic subsidiaries (the “Subsidiary Guarantors”), which consist of all material 100% owned subsidiaries of GPIL other than its foreign subsidiaries, and in certain instances by the Company (a Parent guarantee) (collectively "the Guarantors"). GPIL's remaining subsidiaries (the “Nonguarantor Subsidiaries”) include all of GPIL’s foreign subsidiaries and immaterial domestic subsidiaries. The Subsidiary Guarantors are jointly and severally, fully and unconditionally liable under the guarantees.

The results of operations, assets, and liabilities for GPHC and GPIL are substantially the same. Therefore, the summarized financial information below is presented on a combined basis, consisting of the Issuer and Subsidiary Guarantors (collectively, the “Obligor Group”), and is presented after the elimination of: (i) intercompany transactions and balances among the Issuer and Subsidiary Guarantors, and (ii) equity in earnings from and investments in the Nonguarantor Subsidiaries.
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In millionsNine Months Ended September 30, 2023
SUMMARIZED STATEMENTS OF OPERATIONS
Net Sales(a)
$5,446 
Cost of Sales4,151 
Income from Operations799 
Net Income482 
(a) Includes Net Sales to Nonguarantor Subsidiaries of $397 million.

In millionsSeptember 30, 2023December 31, 2022
SUMMARIZED BALANCE SHEET
Current assets (excluding intercompany receivable from Nonguarantor)$1,603 $1,386 
Noncurrent assets6,310 5,852 
Intercompany receivables from Nonguarantor1,341 1,399 
Current liabilities1,949 1,355 
Noncurrent liabilities5,549 5,360 

Liquidity and Capital Resources


The Company's liquidity needs arise primarily fromCompany expects its material cash requirements for the next three months will be for capital expenditures, periodic required estimated income tax payments, periodic interest and debt service payments on its indebtednessassociated debt, as discussed in "Note 5 - Debt" of the Notes to the Consolidated Financial Statements of the Company's 2022 Annual Report on Form 10-K, lease agreements which have fixed lease payment obligations, as discussed in "Note 6 - Leases" of the Notes to the Consolidated Financial Statements of the Company's 2022 Annual Report on Form 10-K, and fromminimum purchase commitments as discussed in "Note 13 - Commitments" of the fundingNotes to the Consolidated Financial Statements of its capital expenditures,the Company's 2022 Annual Report on Form 10-K along with ongoing operating costs, working capital, share repurchases and working capital. dividend payments. The Company expects its primary sources of liquidity to be cash flows from sales and operating activities in the normal course of operations and availability from its revolving credit facilities, as needed. The Company expects that these sources will be sufficient to fund our ongoing cash requirements for the foreseeable future, including at least the next twelve months.

Principal and interest payments under the term loan facilityfacilities and the revolving credit facilities, together with principal and interest payments on the Company's 4.75%0.821% Senior Notes due 2021, 4.875% Senior Notes due 2022 and2024, 4.125% Senior Notes due 2024, 1.512% Senior Notes due 2026, 4.75% Senior Notes due 2027, 3.50% Senior Notes due 2028, 3.50% Senior Notes due 2029, 2.625% Senior Notes due 2029 and 3.75% Senior Notes due 2030 (the “Notes”“Indentures”), represent liquidity requirements for the Company. Based upon current levels of operations, anticipated cost savings and expectations as to future growth, the Company believes that cash generated from operations, together with amounts available under its revolving credit facilities and other available financing sources, will be adequate to permit the Company to meet its debt service obligations, necessary capital expenditure program requirements and ongoing operating costs and working capital needs, although no assurance can be given in this regard. The Company's future financial and operating performance, ability to service or refinance its debt and ability to comply with the covenants and restrictions contained in its debt agreements (see “Covenant Restrictions” below) will be subject to future economic conditions, including conditions in the credit markets, and to financial, business and other factors, many of which are beyond the Company's control, and will be substantially dependent on the selling prices and demand for the Company's products, raw material and energy costs, and the Company's ability to successfully implement its overall business and profitability strategies.


Accounts receivable are stated at the amount owed by the customer, net of an allowance for estimated uncollectible accounts, returns and allowances, and cash discounts. The allowance for doubtful accounts is estimated based on historical experience, current economic conditions and the creditworthiness of customers. Receivables are charged to the allowance when determined to be no longer collectible.

The Company has entered into agreements for the purchasing and servicing of receivables to sell, on a revolving basis, certain trade accounts receivable to third party financial institutions. Transfers under these agreements meet the requirements to be accounted for as sales in accordance with the Transfers and Servicing topic of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification (the "Codification"). During the first nine months of 2017, the Company sold and derecognized approximately $1 billion of receivables, collected approximately $963 million on behalf of the financial institution, and received approximately $65 million in funding from the financial institutions, resulting in deferred proceeds of approximately $26 million as of September 30, 2017. During the same period of 2016, the Company sold and derecognized approximately $945 million of receivables, collected approximately $878 million on behalf of the financial institution, and received funding of approximately $95 million by the financial institution, resulting in deferred proceeds of approximately $23 million as of September 30, 2016. Cash proceeds related to the sales are included in cash from operating activities on the Condensed Consolidated Statements of Cash Flows in the Changes in Operating Assets and Liabilities line item. The loss on sale is not material and is included in Other Expense, (Income), Net line item on the Condensed Consolidated StatementStatements of Operations.

The Company has also entered into various factoring and supply chain financing arrangements which also qualifyfollowing table summarizes the activity under these programs for sale accounting in accordance with the Transfers and Servicing topic of the FASB Codification. For the nine months ended September 30, 20172023 and 2016,2022, respectively:

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Nine Months Ended September 30,
In millions20232022
Receivables Sold and Derecognized$2,811 $2,422 
Proceeds Collected on Behalf of Financial Institutions2,697 2,230 
Net Proceeds Received From Financial Institutions59 212 
Deferred Purchase Price at September 30(a)
19 7 
Pledged Receivables at September 30173 161 
(a) Included in Other Current Assets on the CompanyCondensed Consolidated Balance Sheets and represents a beneficial interest in the receivables sold receivables of approximately $43 million and $33 million, respectively, related to these factoring arrangements.the financial institutions, which is a Level 3 fair value measure.


Receivables sold under all programs subject to continuing involvement, which consist principally of collection services, atwere $827 million and $753 million as of September 30, 20172023 and December 31, 2016, were approximately $4392022, respectively.

The Company also participates in supply chain financing arrangements offered by certain customers that qualify for sale accounting in accordance with the Transfers and Servicing topic of the FASB Codification. For the nine months ended September 30, 2023 and 2022, the Company sold receivables of $869 million and $376$824 million, respectively, under these arrangements.

The Company has arranged a supplier finance program ("SFP") with a financial intermediary, which provides certain suppliers the option to be paid by the financial intermediary earlier than the due date on the applicable invoice. The transactions are at the sole discretion of both the suppliers and financial institution, and GPHC is not a party to the agreements and has no economic interest in the supplier’s decision to sell a receivable. The range of payment terms negotiated by the Company with its suppliers is consistent, irrespective of whether a supplier participates in the program. The agreement with the financial intermediary does not require the Company to provide assets pledged as security or other forms of guarantees for the supplier finance program. Amounts due to the Company’s suppliers that elected to participate in the SFP program are included in Accounts Payable on the Company’s Condensed Consolidated Balance Sheets and payments made under the SFP program are reflected in Cash Flows from Operating Activities in the Company’s Condensed Consolidated Statements of Cash Flows. Accounts payable included $32 million and $34 million payable to suppliers who elected to participate in the SFP program as of September 30, 2023 and December 31, 2022, respectively.



Covenant Restrictions


Covenants contained in the Current Credit Agreement and the Indentures may, among other things, limit the ability to incur additional indebtedness, restrict the ability of the Company to dispose of assets, incur guarantee obligations, prepay other indebtedness, repurchase shares, pay dividends and make other restricted payments, create liens, make equity or debt investments, make acquisitions, modify terms of the indentures under which the Notes are issued, engage in mergers or consolidations, change the business conducted by the Company and its subsidiaries, and engage in certain transactions with affiliates. Such restrictions, together with disruptions in the credit markets, could limit the Company's ability to respond to changing market conditions, fund its capital spending program, provide for unexpected capital investments or take advantage of business opportunities.


Under the terms of the Current Credit Agreement, the Company must comply with a maximum Consolidated Total Leverage Ratio covenant and a minimum Consolidated Interest Expense Ratio covenant. The Second Amended and RestatedCurrent Credit Agreement, which contains the definitions of these covenants, was filed as an exhibit to the Company's Form 8-K filed on October 7, 2014.April 1, 2021.


The Current Credit Agreement requires that the Company must maintain a maximum Consolidated Total Leverage Ratio of less than 4.25 to 1.00. At September 30, 2017,2023, the Company was in compliance with the Consolidated Total Leverage Ratiosuch covenant in the Credit Agreement and the ratio was 3.182.74 to 1.00.


The Company must also comply with a minimum Consolidated Interest Expense Ratio of 3.00 to 1.00. At September 30, 2017,2023, the Company was in compliance with the minimum Consolidated Interest Expense Ratiosuch covenant in the Credit Agreement and the ratio was 8.647.98 to 1.00.


As of September 30, 2017,2023, the Company's credit was rated BB+ by Standard & Poor's and Ba1 by Moody's Investor Services. Standard & Poor's and Moody's Investor Services' ratings on the Company included a stable outlook.
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Capital Investment


The Company’s capital investmentinvestments in the first nine months of 20172023 were $587 million ($592 million was $197.8 millionpaid) compared to $258.4$313 million ($445 million was paid) in the first nine months of 2016.2022. The capital investments incurred during the first nine months of 2023 were for plant, machinery, and equipment. The increase is primarily driven by the ongoing construction of the Company's new CRB mill in Waco, Texas. For further discussion of the Company's new CRB mill and continued investments made as part of the integration of acquisitions, see "Note 13 - Exit Activities" in the Notes to the Condensed Consolidated Financial Statements. For the first nine months of 2022, capital investments were primarily due to planned asset upgrades at the U.S.-based mills, and continued investments madeincluding the now completed CRB paper machine in Kalamazoo, Michigan.

Interest is capitalized on assets under construction for one year or longer with an estimated spending of $1 million or more. The capitalized interest is recorded as part of the integrationasset to which it relates and is amortized over the asset’s estimated useful life. During the first nine months ended September 30, 2023, the Company incurred $3 million in costs as it relates to capitalized interest. For the nine months ended September 30, 2022, $4 million in capitalized interest costs were incurred.
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Environmental Matters


Some of the Company’s current and former facilities are the subject of environmental investigations and remediations resulting from historical operations and the release of hazardous substances or other constituents. Some current and former facilities have a history of industrial usage for which investigation and remediation obligations may be imposed in the future or for which indemnification claims may be asserted against the Company. Also, potential future closures or sales of facilities may necessitate further investigation and may result in future remediation at those facilities. The Company has established reserves for those facilities or issues where a liability is probable and the costs are reasonably estimable. The Company believes that the amounts accrued for its loss contingencies, and the reasonably possible loss beyond the amounts accrued, are not material to the Company’s consolidated financial position, results of operations or cash flows.


For further discussion of the Company’s environmental matters, see "Note 9 - Environmental and Legal Matters" in the Notes to Condensed Consolidated Financial Statements.


CRITICAL ACCOUNTING POLICIES


The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting period. Actual results could differ from these estimates, and changes in these estimates are recorded when known. The critical accounting policies used by management in the preparation of the Company’s condensed consolidated financial statements are those that are important both to the presentation of the Company’s financial condition and results of operations and require significant judgments by management with regard to estimates used.


The Company’s most critical accounting policies, which require significant judgment or involve complex estimations, are described in GPHC’sthe Company's 2022 Annual Report on Form 10-K for the year ended December 31, 2016.2022.


The Company performed its annual goodwill impairment tests as of October 1, 2022. The Company concluded that all reporting units with goodwill have a fair value that exceeds their carrying value, and thus goodwill was not impaired. The Foodservice and Europe reporting units had fair values that exceed their respective carrying values by 83% and 42%, respectively, whereas all other reporting units exceeded by more than 50%. The Foodservice and Europe reporting units had goodwill totaling $43 million and $462 million, respectively at September 30, 2023.

In 2022, the Company began the process of divesting its interests in its two packaging plants in Russia. The Company reviewed the goodwill assigned to these facilities for impairment and recorded a $12 million non-cash impairment charge, thereby reducing the carrying value of goodwill for these facilities to zero. Refer to "Note 14 - Impairment and Divestiture of Russian Business" in the Notes to Condensed Consolidated Financial Statements for additional information.

NEW ACCOUNTING STANDARDS


For a discussion of recent accounting pronouncements impacting the Company, see "Note 1 - General Information" Information"in the Notes to Condensed Consolidated Financial Statements.


BUSINESS OUTLOOK


Total capital investment for 20172023 is expected to be approximately $250 million and is expected to relate principally to the Company’s maintenance and process capability improvements (approximately $230 million) and acquiring capital spares (approximately $20 million).$800 million.


The Company also expects the following in 2017:2023:


•Depreciation and amortization expense between $300$615 million and $320$625 million.


Interest expense of $85 million to $90 million, including approximately $5 million to $6 million of non-cash interest expense associated with amortization of debt issuance costs.

Cash flow of approximately $360 million available for net debt reduction, dividends, and share repurchases, excluding mergers and acquisitions and capital market activity.

•Pension plan contributions between $10 million and $20 million.
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Table of approximately $35 million.Contents


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK


For a discussion of certain market risks related to the Company, see Part II, “Item 7A, Quantitative and Qualitative Disclosure about Market Risk”, in GPHC’sthe Company's 2022 Annual Report on Form 10-K for the year ended December 31, 2016. There have been no significant developments2022.

The Company is exposed to changes in interest rates, primarily as a result of its short-term and long-term debt, which include both fixed and floating rate debt. The Company uses interest rate swap agreements effectively to fix the SOFR rate on certain variable rate borrowings. At September 30, 2023, the Company had active interest rate swap agreements with respect to derivatives or exposure to market risk during the first nine monthsa notional amount of 2017. For a discussion of the Company’s Financial Instruments, Derivatives and Hedging Activities, see GPHC’s Form 10-K for the year ended December 31, 2016 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition, Liquidity and Capital Resources.”$750 million expiring April 1, 2024.



ITEM 4. CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures


The Company’s management has carried out an evaluation, with the participation of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 of the Securities Exchange
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Act of 1934, as amended. Based upon such evaluation, management has concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2017.2023.


Changes in Internal Control over Financial Reporting


There was no change in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended September 30, 20172023 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II — OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS


The Company is a party to a number of lawsuits arising in the ordinary conduct of its business. Although the timing and outcome of these lawsuits cannot be predicted with certainty, the Company does not believe that disposition of these lawsuits will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. For more information see "Note 9 - Environmental and Legal Matters"Matters" in the Notes to Condensed Consolidated Financial Statements.


ITEM 1A. RISK FACTORS


There have been no material changes from the risk factors previously disclosed in GPHC’sthe Company's 2022 Annual Report on Form 10-K for the year ended December 31, 2016.2022.


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


The Company purchases shares of its common stock from time to time pursuant to the 20152023 and 20172019 share repurchase programsprogram announced on February 4, 2015,July 27, 2023 and January 10, 2017,28, 2019 respectively. Each program allows managementManagement is authorized to purchase up to $250$500 million of the Company's issued and outstanding common stock.stock per the 2023 and 2019 share repurchase programs, respectively.


During the third quarter of 2017,2023, the Company purchased shares of its common stock under the 2019 share repurchase program through a broker in the open market as follows:


Issuer Purchases of Equity Securities
Issuer Purchases of Equity Securities
Period (2023)
Total Number of Shares Purchased (a)
Average Price Paid for SharesTotal Number of Shares Purchased as Part of the Publicly Announced Plan or Program
Maximum Number of Shares That May Yet Be Purchased Under the Publicly Announced Program(a)
July 1, through July 31,— $— 69,007,381 3,700,893 
August 1, through August 31,141,004 21.78 69,148,385 3,888,968 
September 1, through September 30,219,279 21.91 69,367,664 3,666,318 
Total360,283 $21.86 
Period Total Number
of Shares
Purchased		 Average
Price Paid
Per Share		 Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs		 Maximum Number of Shares That May Yet Be Purchased Under the Publicly Announced Program (a)
 
July 1, 2017 through July 31, 2017 —
 $—
 22,095,935
 16,111,839
August 1, 2017 through August 31, 2017 178,264
 $12.88
 22,274,199
 16,108,692
September 1, 2017 through September 30, 2017 15,700
 $13.01
 22,289,899
 15,054,819
 
Total 193,964
   





(a)Based Related to the 2019 Share repurchase program and based on the closing price of the Company's common stock atas of the end of each period.



ITEM 4. MINE SAFETY DISCLOSURES


None.Not Applicable.


ITEM 5. OTHER INFORMATION

During the quarter ended September 30, 2023, no director or officer adopted or terminated any contract, instruction or written plan for the purchase or sale of securities of the Company intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any non-Rule 10b5-1 trading arrangement (as defined in Regulation S-K Item 408(c)).

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ITEM 6. EXHIBITS
Exhibit NumberDescription
Exhibit NumberDescription
10.1
Graphic Packaging International, Inc. Non-Qualified Deferred Compensation Plan, as amended and restated effective November 1, 2017.
31.1
31.2
32.1
32.2
101.INSInstance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.INSXBRL Instance Document
101.SCH
101.SCHXBRL Taxonomy Extension Schema
101.CALXBRL Taxonomy Extension Calculation Linkbase
101.DEFXBRL Taxonomy Extension Definition Linkbase
101.LABXBRL Taxonomy Extension Label Linkbase
101.PREXBRL Taxonomy Extension Presentation Linkbase
104Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document (included in Exhibit 101).





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SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) 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.


GRAPHIC PACKAGING HOLDING COMPANY
(Registrant)    
(Registrant)

/s/ STEPHEN R. SCHERGERSeniorExecutive Vice President and Chief Financial Officer (Principal Financial Officer)October 25, 201731, 2023
Stephen R. Scherger
/s/ DEBORAH R. FRANKCHARLES D. LISCHERSenior Vice President and Chief Accounting Officer (Principal Accounting Officer)October 25, 201731, 2023
Deborah R. FrankCharles D. Lischer







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