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

FORM 10-Q

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

For the quarterly period ended September 30, 2019
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from to

COMMISSION FILE NUMBER: 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 ,Georgia30328
(Address of principal executive offices)(Zip Code)

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

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 No

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 No

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
Non-accelerated filer (Do not check if a smaller reporting company)Emerging growth company

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.

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

As of October 21, 2019, there were 290,246,907 shares of the registrant’s Common Stock, par value $0.01 per share, outstanding.




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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 deductibility of goodwill for tax purposes, 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, reclassification of loss on derivative instruments, termination of the U.S. pension plan and charges related thereto, charges associated with CRB mill exit activities, capital investment, depreciation and amortization, interest expense, pension plan contributions and post-retirement health care benefit payments 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 losses to offset taxable income 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 1A., Risk Factors" of the Company's 2018 Annual Report on Form 10-K, and in other filings with the Securities and Exchange Commission.


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TABLE OF CONTENTS

EX-31.1
EX-31.2
EX-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 EndedNine Months Ended
September 30,September 30,
In millions, except per share amounts2019201820192018
Net Sales$1,581.6  $1,531.8  $4,640.3  $4,520.1  
Cost of Sales1,315.2  1,273.5  3,820.0  3,800.4  
Selling, General and Administrative131.3  118.6  387.8  357.4  
Other Expense, Net4.2  0.7  7.1  4.1  
Business Combinations, Shutdown and Other Special Charges and (Gain) on Sale of Assets, Net
8.2  (27.4) 24.3  7.5  
Income from Operations122.7  166.4  401.1  350.7  
Nonoperating Pension and Postretirement Benefit Income (Expense)  4.1  (0.1) 12.4  
Interest Expense, Net(35.9) (31.0) (106.4) (90.1) 
Loss on Modification or Extinguishment of Debt      (1.9) 
Income before Income Taxes and Equity Income of Unconsolidated Entity86.8  139.5  294.6  271.1  
Income Tax Expense(16.9) (17.8) (60.9) (41.4) 
Income before Equity Income of Unconsolidated Entity69.9  121.7  233.7  229.7  
Equity Income of Unconsolidated Entity0.1  0.3  0.5  1.0  
Net Income70.0  122.0  234.2  230.7  
Net Income Attributable to Noncontrolling Interest(17.9) (27.7) (60.4) (57.1) 
Net Income Attributable to Graphic Packaging Holding Company$52.1  $94.3  $173.8  $173.6  
Net Income Per Share Attributable to Graphic Packaging Holding Company — Basic
$0.18  $0.30  $0.59  $0.56  
Net Income Per Share Attributable to Graphic Packaging Holding Company — Diluted
$0.18  $0.30  $0.59  $0.56  
Cash Dividends Declared Per Share$0.075  $0.075  $0.225  $0.225  

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,
2019
In millionsGraphic Packaging Holding CompanyNoncontrolling InterestRedeemable Noncontrolling InterestTotal
Net Income$52.1  $13.8  $4.1  $70.0  
Other Comprehensive Income (Loss), Net of Tax:
Pension and Postretirement Benefit Plans1.1  0.3  0.1  1.5  
Currency Translation Adjustment(14.6) (3.1) (0.9) (18.6) 
Total Other Comprehensive Loss, Net of Tax(13.5) (2.8) (0.8) (17.1) 
Total Comprehensive Income $38.6  $11.0  $3.3  $52.9  
2018
Net Income$94.3  $21.3  $6.4  $122.0  
Other Comprehensive Income, Net of Tax:
Derivative Instruments1.3      1.3  
Pension and Postretirement Benefit Plans0.7      0.7  
Currency Translation Adjustment1.2  0.8  0.2  2.2  
Total Other Comprehensive Income, Net of Tax3.2  0.8  0.2  4.2  
Total Comprehensive Income $97.5  $22.1  $6.6  $126.2  
Nine Months Ended September 30,
2019
In millionsGraphic Packaging Holding CompanyNoncontrolling InterestRedeemable Noncontrolling InterestTotal
Net Income$173.8  $46.6  $13.8  $234.2  
Other Comprehensive (Loss) Income, Net of Tax:
Derivative Instruments(4.8) (1.4) (0.4) (6.6) 
Pension and Postretirement Benefit Plans3.2  0.9  0.3  4.4  
Currency Translation Adjustment(13.3) (2.8) (0.9) (17.0) 
Total Other Comprehensive Loss, Net of Tax(14.9) (3.3) (1.0) (19.2) 
Total Comprehensive Income $158.9  $43.3  $12.8  $215.0  
2018
Net Income$173.6  $44.0  $13.1  $230.7  
Other Comprehensive Income (Loss), Net of Tax:
Derivative Instruments2.7  0.2  0.1  3.0  
Pension and Postretirement Benefit Plans2.0  0.2  0.1  2.3  
Currency Translation Adjustment(7.6) (0.7) (0.3) (8.6) 
Total Other Comprehensive Loss, Net of Tax(2.9) (0.3) (0.1) (3.3) 
Total Comprehensive Income $170.7  $43.7  $13.0  $227.4  

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,
2019
December 31, 2018
ASSETS
Current Assets:
Cash and Cash Equivalents$48.7  $70.5  
Receivables, Net591.9  572.9  
Inventories, Net1,075.2  1,014.4  
Other Current Assets55.2  106.0  
Total Current Assets1,771.0  1,763.8  
Property, Plant and Equipment, Net3,208.0  3,239.7  
Goodwill1,468.4  1,460.6  
Intangible Assets, Net481.0  523.8  
Other Assets265.7  71.3  
Total Assets$7,194.1  $7,059.2  
LIABILITIES
Current Liabilities:
Short-Term Debt and Current Portion of Long-Term Debt
$54.4  $52.0  
Accounts Payable628.7  711.6  
Compensation and Employee Benefits144.2  154.4  
Other Accrued Liabilities264.5  254.3  
Total Current Liabilities1,091.8  1,172.3  
Long-Term Debt2,935.0  2,905.1  
Deferred Income Tax Liabilities495.1  462.2  
Accrued Pension and Postretirement Benefits102.1  107.5  
Other Noncurrent Liabilities264.2  117.8  
Redeemable Noncontrolling Interest (Note 14)271.3  275.8  
SHAREHOLDERS’ EQUITY
Preferred 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; 290,244,799 and 299,891,585 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively
2.9  3.0  
Capital in Excess of Par Value1,901.4  1,944.4  
Retained Earnings45.1  10.0  
Accumulated Other Comprehensive Loss(392.8) (377.9) 
Total Graphic Packaging Holding Company Shareholders' Equity1,556.6  1,579.5  
 Noncontrolling Interest478.0  439.0  
Total Equity2,034.6  2,018.5  
Total Liabilities and Shareholders' Equity$7,194.1  $7,059.2  

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 EQUITY
(Unaudited)

Common StockCapital in Excess of Par ValueRetained EarningsAccumulated Other Comprehensive (Loss) Income
In millions, except share amountsSharesAmountNoncontrolling InterestsTotal Equity
Balances at December 31, 2018
299,807,779  $3.0  $1,944.4  $10.0  $(377.9) $439.0  $2,018.5  
Net Income
—  —  —  57.9  —  15.6  73.5  
Other Comprehensive (Loss) Income, Net of Tax:
Derivative Instruments
—  —  —  —  (0.4) (0.1) (0.5) 
Pension and Postretirement Benefit Plans
—  —  —  —  1.2  0.2  1.4  
Currency Translation Adjustment
—  —  —  —  3.9  0.9  4.8  
Repurchase of Common Stock(a)
(5,033,426) (0.1) (27.2) (32.2) —  —  (59.5) 
Dividends Declared
—  —  —  (22.1) —  —  (22.1) 
Reclassification of Redeemable Noncontrolling Interest for Share Repurchases
—  —  —  —  —  (6.7) (6.7) 
Distribution of Membership Interest
—  —  —  —  —  (5.0) (5.0) 
Recognition of Stock-Based Compensation, Net
—  —  0.9  —  —  —  0.9  
Issuance of Shares for Stock-Based Awards
530,196    —  —  —  —    
Balances at March 31, 2019
295,304,549  $2.9  $1,918.1  $13.6  $(373.2) $443.9  $2,005.3  
Net Income
—  —  —  63.8  —  17.2  81.0  
Other Comprehensive (Loss) Income, Net of Tax:
Derivative Instruments
—  —  —  —  (4.4) (1.3) (5.7) 
Pension and Postretirement Benefit Plans
—  —  —  —  0.9  0.4  1.3  
Currency Translation Adjustment
—  —  —  —  (2.6) (0.6) (3.2) 
Repurchase of Common Stock
(1,428,470)   (7.7) (10.6) —  —  (18.3) 
Dividends Declared
—  —  —  (22.1) —  —  (22.1) 
Reclassification of Redeemable Noncontrolling Interest for Share Repurchases
—  —  —  —  —  19.1  19.1  
Distribution of Membership Interest
—  —  —  —  —  (6.4) (6.4) 
Recognition of Stock-Based Compensation, Net
—  —  5.9  —  —  —  5.9  
Issuance of Shares for Stock-Based Awards
94,327    —  —  —  —    
Balances at June 30, 2019
293,970,406  $2.9  $1,916.3  $44.7  $(379.3) $472.3  $2,056.9  
Net Income
—  —  —  52.1  —  13.8  65.9  
Other Comprehensive Income (Loss), Net of Tax:
Pension and Postretirement Benefit Plans
—  —  —  —  1.1  0.3  1.4  
Currency Translation Adjustment
—  —  —  —  (14.6) (3.1) (17.7) 
Repurchase of Common Stock
(3,729,361)   (20.2) (29.9) —  —  (50.1) 
Dividends Declared
—  —  —  (21.8) —  —  (21.8) 
Distribution of Membership Interest
—  —  —  —  —  (5.3) (5.3) 
Recognition of Stock-Based Compensation, Net
—  —  5.3  —  —  —  5.3  
Issuance of Shares for Stock-Based Awards
3,754    —  —  —  —    
Balances at September 30, 2019
290,244,799  $2.9  $1,901.4  $45.1  $(392.8) $478.0  $2,034.6  
(a) Includes 33,263 shares repurchased but not yet settled as of March 31, 2019.

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 EQUITY
(Unaudited)

Common StockCapital in Excess of Par Value(Accumulated Deficit) Retained EarningsAccumulated Other Comprehensive (Loss) Income
In millions, except share amountsSharesAmountNoncontrolling InterestsTotal Equity
Balances at December 31, 2017
309,715,624  $3.1  $1,683.6  $(56.0) $(338.8) $  $1,291.9  
NACP Combination
—  —  395.1  —  —  439.8  834.9  
Net Income
—  —  —  29.9  —  9.9  39.8  
Other Comprehensive (Loss) Income, Net of Tax:
Derivative Instruments
—  —  —  —  (0.6) (0.2) (0.8) 
Pension and Postretirement Benefit Plans
—  —  —  —  0.5  0.1  0.6  
Currency Translation Adjustment
—  —  —  —  16.0  3.2  19.2  
Dividends Declared
—  —  —  (23.3) —  —  (23.3) 
Distribution of Membership Interest
—  —  —  —  —  (3.6) (3.6) 
Recognition of Stock-Based Compensation, Net
—  —  (0.9) —  —  —  (0.9) 
Issuance of Shares for Stock-Based Awards
563,903    —  —  —  —    
Balances at March 31, 2018
310,279,527  $3.1  $2,077.8  $(49.4) $(322.9) $449.2  $2,157.8  
NACP Combination
—  —  (5.0) —  —  3.9  (1.1) 
Net Income
—  —  —  49.4  —  12.8  62.2  
Other Comprehensive Income (Loss), Net of Tax:
Derivative Instruments
—  —  —  —  2.0  0.4  2.4  
Pension and Postretirement Benefit Plans
—  —  —  —  0.8  0.1  0.9  
Currency Translation Adjustment
—  —  —  —  (24.8) (4.7) (29.5) 
Dividends Declared
—  —  —  (23.3) —  —  (23.3) 
Distribution of Membership Interest
—  —  —  —  —  (5.8) (5.8) 
Recognition of Stock-Based Compensation, Net
—  —  4.8  —  —  —  4.8  
Issuance of Shares for Stock-Based Awards
64,309    —  —  —  —    
Balances at June 30, 2018
310,343,836  $3.1  $2,077.6  $(23.3) $(344.9) $455.9  $2,168.4  
NACP Combination
—  —  0.1  —  —  (0.1)   
Net Income
—  —  —  94.3  —  21.3  115.6  
Other Comprehensive Income (Loss), Net of Tax:
Derivative Instruments
—  —  —  —  1.3    1.3  
Pension and Postretirement Benefit Plans
—  —  —  —  0.7    0.7  
Currency Translation Adjustment
—  —  —  —  1.2  0.8  2.0  
Dividends Declared
—  —  —  (23.2) —  —  (23.2) 
Distribution of Membership Interest
—  —  —  —  —  (4.8) (4.8) 
Recognition of Stock-Based Compensation, Net
—  —  1.7  —  —  —  1.7  
Issuance of Shares for Stock-Based Awards
1,087    —  —  —  —    
Balances at September 30, 2018
310,344,923  $3.1  $2,079.4  $47.8  $(341.7) $473.1  $2,261.7  

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 millions20192018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income$234.2  $230.7  
Adjustments to Reconcile Net Income to Net Cash Used in Operating Activities:
Depreciation and Amortization337.8  331.8  
Deferred Income Taxes34.0  19.9  
Amount of Postretirement Expense Greater (Less) Than Funding0.6  (2.5) 
Gain on the Sale of Assets  (38.6) 
Other, Net18.4  31.5  
Changes in Operating Assets and Liabilities(324.3) (872.8) 
Net Cash Provided by (Used in) Operating Activities300.7  (300.0) 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Spending(213.1) (258.6) 
Packaging Machinery Spending(16.8) (11.4)