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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 June 30, 2021
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)

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 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 July 26, 2021, there were 307,048,826 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, projected sales, EBITDA and synergies from acquisitions, obtaining adequate wood and fiber supplies, the deductibility of goodwill for tax purposes, the availability of U.S. federal income tax attributes 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, charges associated with coated recycled paperboard 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, the effects of the COVID-19 pandemic on the Company's operations and business, 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 U.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 1A., Risk Factors" of the Company's 2020 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 EndedSix Months Ended
June 30,June 30,
In millions, except per share amounts2021202020212020
Net Sales$1,737 $1,611 $3,386 $3,210 
Cost of Sales1,482 1,349 2,882 2,627 
Selling, General and Administrative125 132 251 268 
Other Expense (Income), Net1 (5)4 1 
Business Combinations, Shutdown and Other Special Charges, and Exit Activities, Net34 20 46 39 
Income from Operations95 115 203 275 
Nonoperating Pension and Postretirement Benefit Income (Expense)1  3 (151)
Interest Expense, Net(29)(30)(59)(64)
Income before Income Taxes and Equity Income of Unconsolidated Entity67 85 147 60 
Income Tax Expense(26)(18)(44)(13)
Income before Equity Income of Unconsolidated Entity41 67 103 47 
Equity Income of Unconsolidated Entity1  1  
Net Income42 67 104 47 
Net Income Attributable to Noncontrolling Interest(4)(15)(12)(8)
Net Income Attributable to Graphic Packaging Holding Company$38 $52 $92 $39 
Net Income Per Share Attributable to Graphic Packaging Holding Company — Basic
$0.13 $0.19 $0.32 $0.14 
Net Income Per Share Attributable to Graphic Packaging Holding Company — Diluted
$0.13 $0.19 $0.32 $0.14 

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 June 30,
2021
In millionsGraphic Packaging Holding CompanyNoncontrolling InterestTotal
Net Income$38 $4 $42 
Other Comprehensive Income, Net of Tax:
Derivative Instruments2  2 
Pension and Postretirement Benefit Plans10  10 
Currency Translation Adjustment5 1 6 
Total Other Comprehensive Income, Net of Tax17 1 18 
Total Comprehensive Income$55 $5 $60 
2020
Graphic Packaging Holding CompanyNoncontrolling InterestRedeemable Noncontrolling InterestTotal
Net Income$52 $15 $ $67 
Other Comprehensive Income, Net of Tax:
Derivative Instruments2   2 
Pension and Postretirement Benefit Plans  1 1 
Currency Translation Adjustment12 3  15 
Total Other Comprehensive Income, Net of Tax14 3 1 18 
Total Comprehensive Income $66 $18 $1 $85 

Six Months Ended June 30,
2021
In millionsGraphic Packaging Holding CompanyNoncontrolling InterestTotal
Net Income $92 $12 $104 
Other Comprehensive Income, Net of Tax:
Derivative Instruments5 1 6 
Pension and Postretirement Benefit Plans20  20 
Currency Translation Adjustment1  1 
Total Other Comprehensive Income, Net of Tax26 1 $27 
Total Comprehensive Income $118 $13 $131 
2020
Graphic Packaging Holding CompanyNoncontrolling InterestRedeemable Noncontrolling InterestTotal
Net Income (Loss)$39 $13 $(5)47
Other Comprehensive Income (Loss), Net of Tax:
Derivative Instruments1   1
Pension and Postretirement Benefit Plans114 32 10 156
Currency Translation Adjustment(34)(7)(1)(42)
Total Other Comprehensive Income, Net of Tax81 25 9 115
Total Comprehensive Income $120 $38 $4 $162 

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 amountsJune 30,
2021
December 31,
2020
ASSETS
Current Assets:
Cash and Cash Equivalents$89 $179 
Receivables, Net593 654 
Inventories, Net1,105 1,128 
Other Current Assets90 59 
Total Current Assets1,877 2,020 
Property, Plant and Equipment, Net3,753 3,560 
Goodwill1,478 1,478 
Intangible Assets, Net409 437 
Other Assets325 310 
Total Assets$7,842 $7,805 
LIABILITIES
Current Liabilities:
Short-Term Debt and Current Portion of Long-Term Debt
$20 $497 
Accounts Payable837 825 
Compensation and Employee Benefits177 213 
Other Accrued Liabilities423 321 
Total Current Liabilities1,457 1,856 
Long-Term Debt3,742 3,147 
Deferred Income Tax Liabilities403 540 
Accrued Pension and Postretirement Benefits117 130 
Other Noncurrent Liabilities309 292 
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; 307,045,707 and 267,726,373 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively
3 3 
Capital in Excess of Par Value2,030 1,715 
Retained Earnings (Accumulated Deficit)1 (48)
Accumulated Other Comprehensive Loss(220)(246)
Total Graphic Packaging Holding Company Shareholders' Equity1,814 1,424 
 Noncontrolling Interest 416 
Total Equity1,814 1,840 
Total Liabilities and Shareholders' Equity$7,842 $7,805 

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 AND REDEEMABLE NONCONTROLLING INTEREST
(Unaudited)
Common StockCapital in Excess of Par Value(Accumulated Deficit) Retained Earnings Accumulated Other Comprehensive (Loss) Income
In millions, except share amountsSharesAmountNoncontrolling InterestTotal Equity
Balances at December 31, 2020
267,726,373 $3 $1,715 $(48)$(246)$416 $1,840 
Net Income
— — — 54 — 8 62 
Other Comprehensive Income (Loss), Net of Tax:
Derivative Instruments
— — — — 3 1 4 
Pension and Postretirement Benefit Plans
— — — — 10 — 10 
Currency Translation Adjustment
— — — — (4)(1)(5)
Reduction of IP's Ownership Interest15,307,000 — 70 — — (216)(146)
Dividends Declared
— — — (21)— — (21)
Distribution of Membership Interest
— — — — — (4)(4)
Recognition of Stock-Based Compensation, Net
— — (3)— — — (3)
Issuance of Shares for Stock-Based Awards
1,168,394 — — — — —  
Balances at March 31, 2021
284,201,767 $3 $1,782 $(15)$(237)$204 $1,737 
Net Income
— — — 38 — 4 42 
Other Comprehensive Income, Net of Tax:
Derivative Instruments
— — — — 2 — 2 
Pension and Postretirement Benefit Plans
— — — — 10 — 10 
Currency Translation Adjustment
— — — — 5 1 6 
Reduction of IP's Ownership Interest22,773,072 — 241 — — (207)34 
Dividends Declared
— — — (22)— — (22)
Distribution of Membership Interest
— — — — — (2)(2)
Recognition of Stock-Based Compensation, Net
— — 7 — — — 7 
Issuance of Shares for Stock-Based Awards
70,868 — — — — —  
Balances at June 30, 2021
307,045,707 $3 $2,030 $1 $(220)$ $1,814 

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Common StockCapital in Excess of Par ValueRetained Earnings (Accumulated Deficit)Accumulated Other Comprehensive (Loss) IncomeNoncontrolling InterestTotal EquityRedeemable Noncontrolling Interest
In millions, except share amountsSharesAmount
Balances at December 31, 2019
290,246,907 $3 $1,877 $56 $(367)$488 $2,057 $304 
Net Loss
— — — (13)— (2)(15)(5)
Other Comprehensive (Loss) Income, Net of Tax:
Derivative Instruments
— — — — (1)— (1)— 
Pension and Postretirement Benefit Plans
— — — — 114 32 146 9 
Currency Translation Adjustment
— — — — (46)(10)(56)(1)
Repurchase of Common Stock(a)
(9,667,034)— (53)(71)— — (124)— 
Dividends Declared
— — — (21)— — (21)— 
Redemption of IP's Ownership Interest— — — — — — — (250)
Redeemable Noncontrolling Interest Redemption Value Adjustment— — 18 — — — 18 (18)
Tax Effect of IP Redemption— — 7 — — — 7 
Distribution of Membership Interest
— — — — — (5)(5)(1)
Recognition of Stock-Based Compensation, Net
— — 4 — — — 4 — 
Issuance of Shares for Stock-Based Awards
788,561 — — — — —  — 
Balances at March 31, 2020
281,368,434 $3 $1,853 $(49)$(300)$503 $2,010 $38 
Net Income
— — — 52 — 15 67 — 
Other Comprehensive Income, Net of Tax:
Derivative Instruments
— — — — 2 — 2 — 
Pension and Postretirement Benefit Plans
— — — — — — — 1 
Currency Translation Adjustment
— — — — 12 3 15 — 
Repurchase of Common Stock(b)
(2,622,283)— (14)(19)— — (33)— 
Redeemable Noncontrolling Interest Redemption Value Adjustment— — (5)— — — (5)5 
Dividends Declared
— — (21)— .(21)— 
Distribution of Membership Interest
— — — — — (5)(5)— 
Recognition of Stock-Based Compensation, Net
— — 7 — — — 7 — 
Issuance of Shares for Stock-Based Awards
93,381 — — — — —  — 
Balances at June 30, 2020
278,839,532 $3 $1,841 $(37)$(286)$516 $2,037 $44 
(a) Includes 410,400 shares repurchased but not yet settled as of March 31, 2020.
(b) Includes 14,436 shares repurchased but not yet settled as of June 30, 2020.



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)
Six Months Ended
June 30,
In millions20212020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income$104 $47 
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization234 236 
Deferred Income Taxes31 (10)
Amount of Postretirement Expense (Less) Greater Than Funding(10)157 
Other, Net49 31 
Changes in Operating Assets and Liabilities(103)(317)
Net Cash Provided by Operating Activities305 144 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Spending(329)(293)
Packaging Machinery Spending(17)(14)
Acquisition of Businesses, Net of Cash Acquired (123)
Beneficial Interest on Sold Receivables64 53 
Beneficial Interest Obtained in Exchange for Proceeds(5)(5)
Other, Net(2)(7)
Net Cash Used in Investing Activities(289)(389)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of Common Stock (157)
Proceeds from Issuance of Debt1,225 450 
Retirement of Long-Term Debt(1,226) 
Payments on Debt(9)(18)
Redemption of Noncontrolling Interest(150)(250)
Borrowings under Revolving Credit Facilities1,827 1,535 
Payments on Revolving Credit Facilities(1,691)(1,308)
Repurchase of Common Stock related to Share-Based Payments(14)(9)
Debt Issuance Costs(14)(7)
Dividends and Distributions Paid to GPIP Partner(48)(54)
Other, Net(5)(1)
Net Cash (Used in) Provided by Financing Activities(105)181 
Effect of Exchange Rate Changes on Cash(1)(5)
Net Decrease in Cash and Cash Equivalents(90)(69)
Cash and Cash Equivalents at Beginning of Period179 153 
CASH AND CASH EQUIVALENTS AT END OF PERIOD$89 $84 
Non-cash Investing Activities:
Beneficial Interest Obtained in Exchange for Trade Receivables$66 $68 
Right-of-Use Assets Obtained in Exchange for New Operating Lease Liabilities$50 $49 
Non-cash Financing Activities:
Non-cash Exchange of Stock Issuance for Redemption of Noncontrolling Interest$(652)$ 

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

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 provider of sustainable, fiber-based packaging solutions for a wide variety of products to food, beverage, foodservice and other consumer products companies. The Company operates on a global basis, is one of the largest producers of folding cartons in the United States ("U.S.") and holds leading market positions in coated-recycled paperboard ("CRB"), coated unbleached kraft paperboard ("CUK") and solid bleached sulfate paperboard ("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 sustainable packaging solutions designed to deliver marketing and performance benefits at a competitive cost by capitalizing on its low-cost paperboard mills and converting facilities, its proprietary carton and packaging designs, and its commitment to quality and service.

On January 1, 2018, GPHC, a Delaware corporation, International Paper Company, a New York corporation (“IP”), Graphic Packaging International Partners, LLC, a Delaware limited liability company formerly known as Gazelle Newco LLC and a wholly- owned subsidiary of the Company (“GPIP”), and Graphic Packaging International, LLC, a Delaware limited liability company formerly known as Graphic Packaging International, Inc. and a direct subsidiary of GPIP (“GPIL”), completed a series of transactions pursuant to an agreement dated October 23, 2017, among the foregoing parties (the “Transaction Agreement”). Pursuant to the Transaction Agreement (i) a wholly-owned subsidiary of the Company transferred its ownership interest in GPIL to GPIP; (ii) IP transferred its North America Consumer Packaging (“NACP”) business to GPIP, which was then subsequently transferred to GPIL; (iii) GPIP issued membership interests to IP, and IP was admitted as a member of GPIP; and (iv) GPIL assumed certain indebtedness of IP (the "NACP Combination").

During 2020, GPIP purchased 32.5 million partnership units from IP for $500 million in cash, fully redeeming the 18.2 million partnership units that were required to be redeemed in cash.

On February 16, 2021, the Company announced that IP had notified the Company of its intent to exchange additional partnership units. Per an agreement between the parties, on February 19, 2021, GPIP purchased 9.3 million partnership units from IP for $150 million in cash, and IP exchanged 15.3 million partnership units for an equivalent number of shares of GPHC common stock.

On May 21, 2021, IP exchanged its remaining 22.8 million partnership units for an equivalent number of shares of GPHC common stock. As a result, IP has no ownership interest remaining in GPIP as of May 21, 2021.

In connection with both the February 19, 2021 and May 21, 2021 exchanges, pursuant to elections under Section 754 of the Internal Revenue Code, the Company expects to obtain an increase with respect to the tax basis in the assets of GPIP and certain of its subsidiaries. As a result, payments pursuant to the Tax Receivable Agreement (“TRA”), executed in connection with the formation of the partnership on January 1, 2018, are required. The TRA provides for the payment by the Company to IP of 50% of the present value of any tax benefits projected to be realized by the Company upon IP’s exchange of its membership interest into GPHC stock. As such, the Company recorded TRA liabilities of $43 million and $65 million, for the February 19, 2021 and May 21, 2021 exchanges, respectively. The TRA liabilities are included in Other Accrued Liabilities as of June 30, 2021, and were recorded through adjustments to Capital in Excess of Par Value during Q1 2021 and Q2 2021. In accordance with the terms of the TRA, the Company expects the liability for the February and May exchanges to be settled during the third quarter and fourth quarter of 2021, respectively. Additionally, the Company recorded an adjustment through Capital in Excess of Par Value to decrease its net domestic Deferred Tax Liability (“DTL”) by $58 million in connection with the February exchange and $109 million in connection with the May exchange. The decrease in the DTL reflects the change in the outside basis difference associated with the Company’s investment in the partnership and includes the impact of the tax basis step up triggered by the exchanges pursuant to Section 754 of the Internal Revenue Code in addition to other changes to book and tax basis as a result of the Company’s increased ownership interest in the partnership.

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. Certain reclassifications have been made to prior year amounts to conform to current year presentation.

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GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
In the Company’s opinion, the accompanying Condensed Consolidated Financial Statements contain all normal recurring adjustments necessary to state fairly the financial position, results of operations and cash flows for the interim periods. The Company’s year-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’s Form 10-K for the year ended December 31, 2020. 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 converting paperboard, 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 the three months ended June 30, 2021 and 2020, the Company recognized $1,731 million and $1,605 million, respectively, of revenue from contracts with customers. For the six months ended June 30, 2021 and 2020, the Company recognized $3,375 million and $3,200 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 principal 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 customers which are amortized over the period in which performance obligations related to the contract renewal are satisfied. As of June 30, 2021 and December 31, 2020, contract assets were $17 million and $15 million, respectively. The Company's contract liabilities consist principally of rebates, and as of June 30, 2021 and December 31, 2020 were $55 million and $56 million, respectively.

Accounts Receivable and Allowances

The Company has entered into agreements 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"). The loss on sale is not material and is included in Other Expense (Income), Net line item on the Condensed Consolidated Statement of Operations. The following table summarizes the activity under these programs for the six months ended June 30, 2021 and 2020, respectively:

Six Months Ended
June 30,
In millions20212020
Receivables Sold and Derecognized
$1,531 $1,357 
Proceeds Collected on Behalf of Financial Institutions1,421 1,318 
Net Proceeds Received From Financial Institutions100 31 
Deferred Purchase Price at June 30(a)
11 10 
Pledged Receivables at June 30158 261 
(a) Included in Other Current Assets on the Condensed Consolidated Balance Sheet and represents a beneficial interest in the receivables sold to the financial institutions, which is a Level 3 fair value measure.

The Company participates in supply chain financing arrangements offered by certain customers and has entered into various factoring arrangements that also qualify for sale accounting in accordance with the Transfers and Servicing topic of the FASB Codification. For the six months ended June 30, 2021 and 2020, the Company sold receivables of $249 million and $151 million, respectively, related to these factoring arrangements.
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GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Receivables sold under all programs subject to continuing involvement, which consists principally of collection services, were $727 million and $621 million as of June 30, 2021 and December 31, 2020, respectively.

Share Repurchases and Dividends

On February 25, 2021 and May 26, 2021, the Company's board of directors declared a regular quarterly dividend of $0.075 per share of common stock payable on April 5, 2021 and July 5, 2021 to shareholders of record as of March 15, 2021 and June 15, 2021, respectively.
On January 28, 2019, the Company's board of directors authorized a share repurchase program to allow the Company to purchase up to $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 "2019 share repurchase program"). During the first six months of 2021, the Company did not repurchase any shares of its common stock under the 2019 share repurchase program. During the six months ended June 30, 2020, the Company repurchased 12,289,317 shares of its common stock at an average price of $12.82 under the 2019 share repurchase program. As of June 30, 2021, the Company has $147 million available for additional repurchases under the 2019 share repurchase program.

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

The following table summarizes the transactions recorded in Business Combinations, Shutdown and Other Special Charges, and Exit Activities, Net in the Condensed Consolidated Statements of Operations:
Three Months EndedSix Months Ended
June 30, June 30,
In millions2021202020212020
Charges Associated with Business Combinations
$23 $(6)$23 $(4)
Shutdown and Other Special Charges
7 22 15 26 
Exit Activities(a)
4 4 8 17 
Total
$34 $20 $46 $39 
(a) Relates to the Company's CRB mills, converting facility closures and the PM1 containerboard machine exit activities (see "Note 13 — Exit Activities").

2021

During 2019, the Company announced its plans to invest in a new CRB paper machine in Kalamazoo, Michigan. In conjunction with the completion of this project, the Company currently expects to close two of its smaller CRB Mills in order to remain capacity neutral. Severance, retention, and other charges associated with this project are included in Exit Activities in the table above in the three and six months ended June 30, 2021 and 2020. For more information, see "Note 13 — Exit Activities." The Company also expects to incur start-up charges of approximately $15 million for the new CRB paper machine in 2021. These start-up charges are included in Exit Activities in the table above.

During 2019, the Company began a three-year program to dismantle and dispose of idle and abandoned assets primarily at the paperboard mills. Charges related to this program during the three months ended June 30, 2021 and 2020 were $6 million and $2 million, respectively. Charges related to this program during the six months ended June 30, 2021 and 2020 were $9 million and $4 million, respectively. Expected charges for this program for 2021 are approximately $26 million. Charges associated with this program are included in Shutdown and Other Special Charges in the table above.

On May 12, 2021, the Company announced its intent to acquire all of the shares of AR Packaging Group AB ("AR Packaging"), Europe's second largest producer of fiber-based consumer packaging, for approximately $1.45 billion in cash, subject to customary adjustments. The costs associated with this acquisition are included in Charges Associated with Business Combinations in the table above. The $1.45 billion acquisition price will be paid in Euros at close. As such, on May 14, 2021, the Company entered into deal contingent, foreign exchange forward contracts, with no upfront cash cost, to hedge 700 million Euros of the acquisition price. These forward contracts expire if the deal terminates or does not close by May 13, 2022 and are accounted for as derivatives under ASC 815, Derivatives and Hedging. Unrealized gains and losses resulting from these contracts are recognized in earnings and are included in Charges Associated with Business Combinations in the table above. For more information, see "Note 6 — Financial Instruments and Fair Value Measurement."

2020

On January 31, 2020, the Company acquired a folding carton facility from Quad/Graphics, Inc. ("Quad"), a commercial printing company. The converting facility is located in Omaha, Nebraska and is included in the Americas Paperboard Packaging reportable segment. The Company paid $41 million using existing cash and borrowings under its revolving credit facility. The costs associated with this acquisition are included in Charges Associated with Business Combinations in the table above. During the first quarter of 2021, the acquisition accounting for Quad was finalized.
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GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
In March 2020, the Company made the decision to close the White Pigeon, Michigan CRB mill and shut down the PM1 containerboard machine in West Monroe, Louisiana. Charges associated with these projects are included in Exit Activities in the table above. For more information, see "Note 13 — Exit Activities."

On April 1, 2020, the Company acquired the Consumer Packaging Group business from Greif, Inc. ("Greif"), a leader in industrial packaging products and services. The acquisition included seven converting facilities across the United States and will allow the Company to increase its mill-to-converting plant integration over time. The Company paid approximately $80 million using existing cash and borrowings under its revolving credit facility. The costs associated with this acquisition are included in Charges Associated with Business Combinations in the table above. During the second quarter of 2021, the acquisition accounting for Greif was finalized.

In June 2020, the Company made the decision to close certain converting facilities that were acquired from Greif. The Burlington, North Carolina converting facility and the Los Angeles, California converting facility were closed during 2020. Charges associated with these projects are included in Exit Activities in the table above. For more information, see "Note 13 — Exit Activities."

The Company has established estimated liabilities related to the partial or complete withdrawal from certain multi-employment benefit plans for facilities which have been closed. During the second quarter of 2020, the Company increased its estimated withdrawal liability for these plans by $12 million, which is included in Shutdown and Other Special Charges in the table above. For more information, see "Note 5 — Pensions and Other Postretirement Benefits."

During the second quarter of 2020, the Company made one-time payments to front-line production employees and made contributions to local food banks in the communities where our manufacturing operations are located. The charges associated with these payments are included in Shutdown and Other Special Charges in the table above.

Adoption of New Accounting Standards

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This amendment modifies ASC 740 to simplify the accounting for income taxes. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company adopted this new guidance during the three months ended March 31, 2021. The Company’s adoption did not result in any changes in accounting principle upon transition and the impact to the Company’s overall financial statements is immaterial.

Accounting Standards Not Yet Adopted

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This standard provides temporary optional expedients and exceptions for applying GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the LIBOR and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). The ASU can be adopted after its issuance date through December 31, 2022. The Company is currently evaluating the impact of this new accounting guidance.

NOTE 2 — INVENTORIES, NET

Inventories, Net by major class:
In millionsJune 30,
2021
December 31,
2020
Finished Goods$427 $471 
Work in Progress141 133 
Raw Materials355 349 
Supplies182 175 
Total$1,105 $1,128 


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GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3 — DEBT

2021

On March 8, 2021, GPIL completed a private offering of $400 million aggregate principal amount of its 0.821% Senior Secured Notes due 2024 and $400 million aggregate principal amount of its 1.512% Senior Secured Notes due 2026. The net proceeds were used by the Company to repay a portion of the outstanding borrowings under GPIL's term loan credit facilities, which is under its senior secured credit facility.

On April 1, 2021, GPIL entered into a Fourth Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”) to extend the maturity date of certain of its Senior Secured Term Loan Facilities and Senior Secured Revolving Credit Facilities and to amend certain other terms of the agreement including revised debt covenants and collateral requirements. Under the terms of the agreement, $975 million of the Company’s Senior Secured Term Loan Facilities remains outstanding. The Company added approximately $400 million to its Senior Secured Revolving Credit Facilities. $550 million of the Senior Secured Term Loan Facilities and all of the Senior Secured Revolving Credit Facility loans continue to bear interest at a floating rate per annum ranging from LIBOR plus 1.25% to LIBOR plus 2.00%, determined using a pricing grid based upon the Company’s consolidated total leverage ratio from time to time, and the maturity for these loans were extended from January 1, 2023 to April 1, 2026. $425 million of the Senior Secured Term Loan Facilities continue to bear interest at a fixed rate per annum equal to 2.67% and mature on their originally scheduled maturity date of January 14, 2028.

2020

On October 15, 2020, GPIL entered into a new $425 million term loan facility under the Third Amended and Restated Credit Agreement with member banks of the Farm Credit System (the "Incremental Term A-2 Facility")(collectively, the "Current Credit Agreement"). The Incremental Term A-2 Facility had a delayed draw feature, and the Company drew the entire facility on January 14, 2021. On January 15, 2021, the Company used the proceeds, together with cash on hand, to redeem its 4.75% Senior Notes due in 2021 at par. The redemption included the outstanding principal amount plus accrued and unpaid interest. The Incremental Term A-2 Facility bears interest at a fixed rate of 2.67% due quarterly, matures January 14, 2028, and does not amortize. As long as the loan is outstanding, GPIL will be eligible to receive an annual patronage credit from the participating banks, which will be paid in cash and stock in the lead member bank. Patronage payable each year is variable and based on the individual financial performance of each of the member banks then participating in the loan.

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GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Long-Term Debt is comprised of the following:

In millionsJune 30, 2021December 31, 2020
Senior Notes with interest payable semi-annually at 3.50%, effective rate of 3.55%, payable in 2029(a)
$350 $350 
Senior Notes with interest payable semi-annually at 3.50%, effective rate of 3.55%, payable in 2028(a)
450 450 
Senior Notes with interest payable semi-annually at 4.75%, effective rate of 4.81%, payable in 2027(a)
300 300 
Senior Notes with interest payable semi-annually at 1.512%, effective rate of 1.52%, payable in 2026(a)
400  
Senior Notes with interest payable semi-annually at 4.125%, effective rate of 4.15%, payable in 2024(b)
300 300 
Senior Notes with interest payable semi-annually at 0.821%, effective rate of 0.83%, payable in 2024(a)
400  
Senior Notes with interest payable semi-annually at 4.875%, effective rate of 4.89%, payable in 2022(b)
250 250 
Senior Notes with interest payable semi-annually at 4.75%(b)
 425 
Senior Secured Term Loan A-2 Facility with interest payable quarterly at 2.67%, effective rate of 2.68% payable in 2028(a)
425  
Senior Secured Term Loan Facilities with interest payable at various dates at floating rates (1.59% at June 30, 2021) payable through 2026(a)
550 1,360 
Senior Secured Revolving Facilities with interest payable at floating rates (1.59% at June 30, 2021) payable in 2026(a)(c)
220 84 
Finance Leases and Financing Obligations137 139 
Other4 5 
Total Long-Term Debt3,786 3,663 
Less: Current Portion18 494 
Total Long-Term Debt Excluding Current Portion3,768 3,169 
Less: Unamortized Deferred Debt Issuance Costs26 22 
Total$3,742 $3,147 
(a) Guaranteed by GPIP and certain domestic subsidiaries.
(b) Guaranteed by GPHC and certain domestic subsidiaries.
(c) The effective interest rates for the Company’s Senior Secured Revolving Credit Facilities were 1.57% and 2.06% as of June 30, 2021 and December 31, 2020, respectively.

At June 30, 2021, the Company and its U.S. and international subsidiaries had the following commitments, amounts outstanding and amounts available under revolving credit facilities:
In millionsTotal
Commitments
Total
Outstanding
Total Available
Senior Secured Domestic Revolving Credit Facility(a)
$1,850 $143 $1,684 
Senior Secured International Revolving Credit Facility187 77 110 
Other International Facilities55 6 49 
Total$2,092 $226 $1,843 
(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 $23 million as of June 30, 2021. 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 2021 and 2022 unless extended.

The Current Credit Agreement and the indentures governing the 3.50% Senior Notes due 2029, 3.50% Senior Notes due 2028, 4.75% Senior Notes due 2027, 1.512% Senior Notes due 2026, 0.821% Senior Notes due 2024, 4.125% Senior Notes due 2024, and 4.875% Senior Notes due 2022 (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 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 June 30, 2021, the Company was in compliance with the covenants in the Credit Agreement and the Indentures.

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GRAPHIC PACKAGING HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 4 — 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”). The 2014 Plan allows 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 GPHC’s authorized but unissued shares. Compensation costs are recognized on a straight-line basis over the requisite service period of the award and are adjusted for actual performance for performance-based awards. As of June 30, 2021, there were 11.5 million shares remaining available to be granted under the 2014 Plan.

Stock Awards, Restricted Stock and Restricted Stock Units

Under the 2014 Plan, all RSUs granted to employees generally vest and become payable in