UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

☑			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the fiscal year ended December 31, 2019
			For the fiscal year ended December 31, 2020
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: 033-80475

GRAPHIC PACKAGING INTERNATIONAL, LLC

(Exact name of registrant as specified in its charter)


Delaware			84-0772929
(State or other jurisdiction of incorporation or organization)			(I.R.S. employer identification no.)
1500 Riveredge Parkway, Suite 100
Atlanta	,	Georgia	30328
(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:

None

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

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No þ

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 ☐

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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

☐

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☐ No ☑

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

No voting or non-voting common equity of the registrant was held by non-affiliates of the ~~registrar~~registrant as of June 30, ~~2019~~2020.

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TABLE OF CONTENTS OF FORM 10-K

INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS		3	3
	PART I
ITEM 1.	BUSINESS	4
ITEM 1A.	RISK FACTORS	1214
ITEM 1B.	UNRESOLVED STAFF COMMENTS	1517
ITEM 2.	PROPERTIES	1517
ITEM 3.	LEGAL PROCEEDINGS	1719
ITEM 4.	MINE SAFETY DISCLOSURES	1719
	EXECUTIVE OFFICERS OF THE REGISTRANT	1820
	PART II
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	1921
ITEM 6.	SELECTED FINANCIAL DATA	2021
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2122
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	3639
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	3841
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	9591
ITEM 9A.	CONTROLS AND PROCEDURES	9591
ITEM 9B.	OTHER INFORMATION	9592
	PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	9692
ITEM 11.	EXECUTIVE COMPENSATION	9692
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	9692
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	9692
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	9692
	PART IV
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	9793
SIGNATURES			101
ITEM 16.	FORM 10-K SUMMARY	96
SIGNATURES		97

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INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements regarding the expectations of Graphic Packaging International, LLC (“GPIL” and, together with its subsidiaries, the “Company”), including, but not limited to, pursuing strategic acquisition opportunities, obtaining adequate wood and fiber supplies, the anticipated reduction of International Paper Company's investment in Graphic Packaging International Partners, LLC, reclassification of loss on derivative instruments, termination of the U.S. pension plan and charges related thereto, charges associated with ~~CRB~~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 impact the Company's ability to protect and use its intellectual property. Additional information regarding these and other risks is contained in Part I, Item 1A., Risk Factors. Undue reliance should not be placed on 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.

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PART I

ITEM 1.BUSINESS

Overview

On December 29, 2017, Graphic Packaging International, Inc. ("GPII"), the primary operating subsidiary of Graphic Packaging Holding Company, a Delaware corporation (“GPHC”), underwent a statutory conversion and became a Delaware limited liability company. As a result, GPII’s name changed to Graphic Packaging International, LLC.

Graphic Packaging International, LLC ("GPIL" 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 paper-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, 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 GPHC~~ (“GPIP”), and GPIL, a direct subsidiary of GPIP, 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 GPHC 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"). GPIL is currently wholly-owned by GPIP, which is owned by GPI Holding III, LLC, a limited liability company that is classified as a partnership for U.S. Federal income tax purposes ("GPI Holding”) and IP. GPI Holding is a wholly-owned indirect subsidiary of GPHC and is the managing member of GPIP.

At the closing of the NACP Combination, GPIP issued 309,715,624 common units or 79.5% of the membership interests in GPIP to GPI Holding and 79,911,591 common units or 20.5% of the membership interests in GPIP to IP. Subject to certain restrictions, the common units held by IP are exchangeable into shares of common stock of GPHC or cash.

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The following diagram illustrates the ~~ownership~~organization ~~structure~~ of the Company on January 1, 2018, immediately subsequent to the transactions described above (not including subsidiaries of GPIL):

~~During~~On ~~2019~~January ~~and~~28, ~~2018~~2020, ~~the~~GPHC ~~Company~~announced ~~distributed~~that ~~$247.9 million~~IP tohad ~~GPIP~~notified GPHC of its intent to ~~allow~~begin the process of reducing its ownership interest in GPIP. toPer ~~repurchase~~the 20agreement between the parties, on January 29, 2020, GPIP purchased 15.81 million partnership units from ~~GPI~~IP ~~Holding,~~for ~~which~~$250 million ~~increased~~in cash. As a result, IP'’s ownership interest in GPIP decreased to 2118.63% atas ~~December~~of 31January 29, ~~2019~~2020.

On ~~January~~August 2810, 2020, GPHC announced that IP had notified GPHC of its intent to ~~begin~~exchange ~~the~~additional ~~process~~partnership ~~of reducing its ownership interest in GPIP~~units. Per the agreement between the parties, on ~~January~~August 2913, 2020, GPIP purchased 1517.14 million partnership units from IP for $250 million in cash, which included full redemption of the remaining 3.1 million partnership units that were required to be redeemed in cash. As a result, IP’'s ownership interest in GPIP decreased ~~from~~to 2114.65% toas 18of August 13, 2020.~~3%.~~

Unless otherwise negotiated by the parties, IP’s next opportunity to exchange ~~their~~its partnership units isbegins 180 days from the August 13, 2020 purchase date and is limited to the lesser of $250 million or 25% of the units owned immediately following the initial transaction, subject to a minimum. IP will have further opportunities to exchange ~~their~~its partnership units beginning 180 days after each ~~exchange~~purchase date. GPHC may choose to satisfy these exchanges using shares of its common stock, cash, or a combination thereof.

Acquisitions and Dispositions

Over the past five years, the Company has successfully completed over ten acquisitions and expects to pursue strategic acquisition opportunities in the future as part of its overall growth strategy.

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During 2020, 2019 and 2018, GPIP repurchased 44.2 million partnership units from GPI Holding. These repurchases increased IP's ownership interest in GPIP, which was 15.0% at December 31, 2020.

Acquisitions, Closures, and Dispositions

Over the past five years, the Company has successfully completed over ten acquisitions and expects to pursue strategic acquisition opportunities in the future as part of its overall growth strategy.

2020

In March 2020, the Company made the decision to close the White Pigeon, Michigan CRB mill and to shut down the PM1 containerboard machine in West Monroe, Louisiana. During the second quarter of 2020, the Company closed the White Pigeon, Michigan CRB mill and shut down the PM1 containerboard machine. For more information, see Note 18 in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.”

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 7 converting facilities across the United States, which are included in the Americas Paperboard Packaging reportable segment. For more information, see Note 4 in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.”

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 in the third quarter of 2020. For more information, see Note 18 in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.”

2019

On August 1, 2019, the Company acquired substantially all the assets of Artistic Carton Company ("Artistic"), a diversified producer of folding cartons and CRB. The acquisition included two converting facilities located in Auburn, Indiana and Elgin, Illinois (included in the Americas Paperboard Packaging reportable segment) and one CRB mill located in White Pigeon, Michigan (included in the Paperboard Mills reportable segment). For more information, see Note 4 in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.”

During 2019, the Company announced its plan to invest approximately $600 million in a new CRB mill in Kalamazoo, Michigan. In conjunction with the completion of this project, the Company currently expects to close two of its smaller CRB

Mills in 2022 in order to remain capacity neutral. For more information, see Note 18 in the Notes to Consolidated Financial

Statements included herein under “Item 8., Financial Statements and Supplementary Data.”

2018

OnAs ~~September~~mentioned 30above, on January 1, 2018, the Company ~~acquired~~completed ~~substantially all~~ the ~~assets~~NACP ofCombination. ~~the~~The ~~foodservice~~NACP business ofproduces ~~Letica~~SBS ~~Corporation,~~paperboard aand ~~subsidiary~~paper-based offoodservice ~~RPC~~products. ~~Group~~The ~~PLC~~NACP ~~("Letica~~business ~~Foodservice"),~~included atwo ~~producer~~SBS ofmills ~~paperboard-based~~located ~~cold~~in Augusta, Georgia and ~~hot~~Texarkana, ~~cups~~Texas ~~and~~(included ~~cartons.~~in ~~The~~Paperboard ~~acquisition~~Mills ~~included~~reportable ~~two~~segment), three converting facilities ~~located~~in the U.S. (included in ~~Clarksville,~~the ~~Tennessee~~Americas Paperboard Packaging reportable segment) and ~~Pittston,~~one ~~Pennsylvania.~~in ~~Letica~~the ~~Foodservice~~United ~~assets~~Kingdom ~~are~~("U.K.") (included in the ~~Americas~~Europe Paperboard Packaging reportable segment). For more information, see Note 4 in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.”

On ~~August~~June 3112, 2018, the Company ~~sold~~acquired substantially all the assets of PFP, LLC and its ~~previously~~related ~~closed~~entity, ~~CRB~~PFP ~~mill~~Dallas ~~site~~Converting, LLC (collectively, "PFP"), a converter focused on the production of paperboard based air filter frames. The acquisition included two facilities located in ~~Santa~~Lebanon, ~~Clara~~Tennessee and Lancaster, ~~California~~Texas. PFP assets are included in the Americas Paperboard Packaging reportable segment. For more information, see Note 4 in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.”

On June 12, 2018, the Company acquired substantially all the assets of PFP, LLC and its related entity, PFP Dallas Converting, LLC (collectively, "PFP"), a converter focused on the production of paperboard based air filter frames. The acquisition included two facilities located in Lebanon, Tennessee and Lancaster, Texas. PFP assets are included in the Americas Paperboard Packaging reportable segment.

As mentioned above, on January 1, 2018, the Company completed the NACP Combination. The NACP business produces SBS paperboard and paper-based foodservice products. The NACP business included two SBS mills located in Augusta, Georgia and Texarkana, Texas (included in Paperboard Mills reportable segment), three converting facilities in the U.S. (included in the Americas Paperboard Packaging reportable segment) and one in the United Kingdom ("U.K.") (included in the Europe Paperboard Packaging reportable segment).

PFP and Letica Foodservice are referred to collectively as the "2018 Acquisitions."

2017

On December 1, 2017, the Company acquired the assets of Seydaco Packaging Corp. and its affiliates, National Carton and Coating Co., and Groupe Ecco Boites Pliantes Ltée (collectively, "Seydaco"), a folding carton producer focused on the foodservice, food, personal care, and household goods markets. The acquisition included three folding carton facilities located in Mississauga, Ontario, St.-Hyacinthe, Québec, and Xenia, Ohio.

On December 1, 2017, the Company closed its coated recycled paperboard mill in Santa Clara, California. 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 capabilities and cost structure.

On October 4, 2017, the Company acquired Norgraft Packaging, S.A. ("Norgraft"), a leading folding carton producer in Spain focused on the food and household goods markets. The acquisition included two folding carton facilities located in Miliaño and Requejada, Spain.

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 included two folding carton facilities located in New Albany, Indiana, focused on the production of paperboard-based air filter frames and folding cartons.

The Seydaco, Norgraft, and Carton Craft transactions are referred to collectively as the "2017 Acquisitions." Seydaco and Carton Craft are included in the Americas Paperboard Packaging Segment. Norgraft is included in the Europe Paperboard Packaging Segment.

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On August 31, 2018, the Company sold its previously closed CRB mill site in Santa Clara, California.

On September 30, 2018, the Company acquired substantially all the assets of the foodservice business of Letica Corporation, a subsidiary of RPC Group PLC ("Letica Foodservice"), a producer of paperboard-based cold and hot cups and cartons. The acquisition included two facilities located in Clarksville, Tennessee and Pittston, Pennsylvania. Letica Foodservice assets are included in the Americas Paperboard Packaging reportable segment. For more information, see Note 4 in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.”

The acquisitions of PFP and Letica Foodservice are referred to collectively as the "2018 Acquisitions."

Products

The Company ~~reports~~has ~~its results in~~ three reportable segments as follows:

Americas Paperboard Packaging includes paperboard packaging, primarily folding cartons, sold primarily to Consumer Packaged Goods ("CPG") companies, and cups, lids and food containers sold primarily to foodservice companies and quick-service restaurants ("QSR"), ~~all~~ 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 in Europe.

The Company operates in three geographic areas: the Americas, Europe and Asia Pacific.

For reportable segment and geographic area information for each of the last three fiscal years, see Note 15 in the Notes to Consolidated Financial Statements included herein under “Item 8. Financial Statements and Supplementary Data."

Paperboard Packaging

The Company’s paperboard packaging products deliver brand, marketing, sustainability and performance benefits at a competitive cost. The Company supplies paperboard cartons, carriers and containers designed to protect and hold products while providing:

• Convenience ~~convenience~~ through ease of carrying, storage, delivery, dispensing of product and food preparation for consumers;

• aA smooth surface printed with high-resolution, multi-color graphic images that help improve brand awareness and visibility of products on store shelves; and

• ~~durability~~Durability, stiffness and wet and dry tear strength; leak, abrasion and heat resistance; barrier protection from moisture, oxygen, oils and greases, as well as enhanced microwave heating performance.

The Company provides a wide range of sustainable paperboard packaging solutions for the following end-use markets:

• ~~beverage~~Beverage, including beer, soft drinks, energy drinks, teas, water and juices;

• ~~food~~Food, including cereal, desserts, frozen, refrigerated and microwavable foods and pet foods;

• ~~prepared~~Prepared food and drinks, including snacks, quick-serve food and drinks for restaurants and food service providers;

• ~~household~~Household products, including dishwasher and laundry detergent, health care and beauty aids, and tissues and papers; and

• ~~air~~Air filter frames.

The Company’s packaging applications meet the needs of its customers for:

Strength Packaging. The Company's products provide sturdiness to meet a variety of packaging needs, including tear and wet strength, puncture resistance, durability and compression strength (providing stacking strength to meet store display packaging requirements).

Promotional Packaging. The Company offers a broad range of promotional packaging options that help differentiate its customers’ products in the marketplace. These promotional enhancements improve brand awareness and visibility on store shelves.

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~~Convenience~~The ~~Packaging. These~~Company’s packaging ~~solutions~~applications ~~improve~~meet ~~package~~the ~~usage~~needs ~~and~~of ~~food~~its ~~preparation~~customers for:

•Strength ~~beverage multiple-packaging~~Packaging. —The ~~multi-packs~~Company's ~~for~~products ~~beer~~provide sturdiness to meet a variety of packaging, ~~soft~~handling, ~~drinks~~and delivery needs, ~~energy~~including ~~drinks~~tear and wet strength, ~~teas~~puncture resistance, ~~water~~durability and ~~juices;~~compression strength (providing the ability to ship products in their own branded carton and stacking strength to meet store display packaging requirements).

•Promotional ~~active~~Packaging. The ~~microwave~~Company ~~technologies —~~offers ~~substrates~~a ~~that~~broad ~~improve~~range ~~the~~of ~~heating~~promotional ~~and~~packaging ~~browning~~options ofthat ~~foods~~help differentiate its customers’ products in the ~~microwave;~~ marketplace. These promotional enhancements improve brand awareness and visibility on store shelves.

•Convenience ~~easy opening~~ and ~~closing~~Cooking ~~features~~Packaging. —These ~~dispensing~~packaging ~~features,~~solutions ~~pour~~improve ~~spouts~~package usage and ~~sealable~~food ~~liners.~~preparation:

• Beverage multiple-packaging — multi-packs for beer, soft drinks, energy drinks, teas, water and juices;

• Active microwave technologies — substrates that improve the heating and browning of foods in the microwave; and

• Easy opening and closing features — dispensing features, pour spouts and sealable liners.

Barrier Packaging. The Company provides packages that protect against moisture, temperature (hot and cold), grease, oil, oxygen, sunlight, insects and other potential product-damaging factors.

Paperboard Mills and Folding Carton Facilities

The Company produces paperboard at its mills; prints, cuts, folds, and glues (“converts”) the paperboard into folding cartons and containers at its converting plants; and designs and manufactures specialized, proprietary packaging machines that package bottles and cans and, to a lesser extent, non-beverage consumer products. The Company also installs its packaging machines at customer plants and provides support, service and advanced performance monitoring of the machines.

The Company offers a variety of laminated, coated and printed packaging structures that are produced from its CRB, CUK and SBS mills, as well as other grades of paperboard that are purchased from third-party suppliers.

Below is the production at each of the Company’s paperboard mills during ~~2019~~2020:

Location	Product	# of Machines	~~2019~~2020 Net Tons Produced
West Monroe, LA	CUK	2	~~910~~911,~~759~~520
Macon, GA	CUK	2	~~708~~712,~~496~~326
Kalamazoo, MI	CRB	2	493,130
Texarkana, TX	SBS	2	623,207
Battle Creek, MI	CRB	2	210,673
Augusta, GA	SBS	2	596,821
Middletown, OH	CRB	1	169,475
Kalamazoo, MI	CRB	2	511,852
East Angus, Québec	CRB	1	97,921
Battle Creek, MI	CRB	2	215,610
White Pigeon, MI (a)	CRB	1	28,025
Middletown, OH	CRB	1	175,266
Texarkana, TX	SBS	2	607,330
East Angus, Québec	CRB	1	99,754
Augusta, GA	SBS	2	583,147
White Pigeon, MI(a)	CRB	1	34,098
West Monroe, LA	Corrugated Medium	1	121,929
West Monroe, LA(a)	Corrugated Medium	1	60,847

(a) Indicates net tons produced from ~~August~~January to ~~December~~June. For more information, see Note 20 in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.”

The Company consumes most of its coated board output in its converting operations, which is an integral part of the customer value proposition. In ~~2019~~2020, approximately 6870% of combined mill sales of CRB, CUK and SBS was consumed internally.

CRB Production. The Company is the largest North American producer of CRB. CRB is manufactured entirely from recycled fibers, primarily old corrugated containers (“OCC”), doubled-lined kraft cuttings from corrugated box plants (“DLK”), old newspapers (“ONP”), and box cuttings. The recycled fibers are re-pulped, formed on paper machines, and clay-coated to provide an excellent printing surface for superior quality graphics and appearance characteristics.

CUK Production. The Company is the largest of four worldwide producers of CUK. CUK is manufactured from pine-based wood fiber and is a specialized high-quality grade of coated paperboard with excellent wet and dry tear strength characteristics and printability for high resolution graphics that make it particularly well-suited for a variety of packaging applications. Both wood and recycled fibers are pulped, formed on paper machines, and clay-coated to provide an excellent printing surface for superior quality graphics and appearance characteristics.

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SBS Production. The Company is one of the largest North American producers of SBS. SBS is manufactured from bleached pine and hardwood-based wood fiber and is the highest quality paperboard substrate with excellent wet and dry strength characteristics and superior printability for high-end packaging. Both wood and recycled fibers are pulped, formed on paper machines, and clay-coated to provide an excellent printing surface for superior quality graphics and appearance characteristics. SBS is also coated with polyethylene resin for wet strength liquid and food packaging end uses.

~~Corrugated~~CRB ~~Medium~~Production. The Company ~~manufactures~~is the largest North American producer of CRB. CRB is manufactured entirely from recycled fibers, primarily old corrugated ~~medium~~containers ~~for~~(“OCC”), ~~internal~~doubled-lined ~~use~~kraft ~~and~~cuttings ~~sale~~from incorrugated ~~the~~box ~~open~~plants ~~market~~(“DLK”), old newspapers (“ONP”), and box cuttings. ~~Corrugated~~ ~~medium~~The isrecycled ~~combined~~fibers ~~with~~are ~~linerboard~~re-pulped, formed on paper machines, and clay-coated to ~~make~~provide ~~corrugated~~an ~~containers.~~excellent printing surface for superior quality graphics and appearance characteristics.

Corrugated Medium. The Company exited its corrugated medium production in June of 2020.

The Company converts CRB, CUK and SBS, as well as other grades of paperboard, into cartons and containers at converting plants the Company operates in various locations globally, including a converting plant associated with the Company's joint venture in Japan, contract converters and at licensees outside the U.S. The converting plants print, cut, fold and glue paperboard into cartons and containers designed to meet customer specifications.

Joint Venture

The Company is a party to a Japanese joint venture, Rengo Riverwood Packaging, Ltd., in which it holds a 50% ownership interest. The joint venture agreement covers CUK supply, use of proprietary carton designs and marketing and distribution of packaging systems.

~~Marketing~~Sales and ~~Distribution~~Marketing

The Company markets its products principally to multinational beverage, food, QSR, and other well-recognized consumer product companies. The beverage companies include Anheuser-Busch, Inc., MillerCoors LLC, PepsiCo, Inc. and The Coca-Cola Company, among others. Consumer product customers include Kraft Heinz Company, General Mills, Inc., Nestlé USA, Inc., Kellogg Company, HAVI Global Solutions, LLC and Kimberly-Clark Corporation, among others. QSR customers include McDonald's, Wendy's, Panda Express, Dairy Queen, Chipotle, Panera and ~~Kentucky Fried Chicken~~KFC, among others. The Company also sells paperboard in the open market to independent and integrated paperboard converters.

~~Distribution~~Sales of the Company’s principal products is primarily accomplished through sales offices in the U.S., Australia, Brazil, China, France, Germany, Italy, Japan, Mexico, Spain, the Netherlands and the United Kingdom, and, to a lesser degree, through broker arrangements with third parties.

During 2020, 2019 and 2018, the Company did not have any one customer that represented 10% or more of its net sales.

Competition

Although a relatively small number of large competitors hold a significant portion of the paperboard packaging market, the Company’s business is subject to strong competition. The Company and WestRock Company ("WestRock") are the two major CUK producers in the U.S. Internationally, The Klabin Company in Brazil and Stora Enso in Sweden produce similar grades of paperboard.

In non-beverage consumer packaging and foodservice, the Company’s paperboard competes with WestRock's CUK, as well as CRB and SBS from numerous competitors, and, internationally, folding boxboard and white-lined chip. There are a large number of producers in the paperboard markets. Suppliers of paperboard compete primarily on the basis of price, strength and printability of their paperboard, quality and service.

In beverage packaging, cartons made from CUK compete with substitutes such as plastics and corrugated packaging for packaging glass or plastic bottles, cans and other primary containers. Although plastics and corrugated packaging may be priced lower than CUK, the Company believes that cartons made from CUK offer advantages over these materials in areas such as distribution, brand awareness, carton designs, package performance, package line speed, environmental friendliness and design flexibility.

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Raw Materials

The paperboard packaging produced by the Company comes from pine and hardwood trees and recycled fibers. Pine pulpwood, hardwood pulp, paper and recycled fibers (including DLK, OCC and ONP) and energy used in the manufacture of paperboard, as well as poly sheeting, plastic resins and various chemicals used in the coating of paperboard, represent the largest components of the Company’s variable costs of paperboard production.

For the West Monroe, LA, Macon, GA, Texarkana, TX, and Augusta, GA mills, the Company relies on private landowners and the open market for all of its pine and hardwood pulp and recycled fiber requirements, supplemented by clippings that are obtained from its converting operations. The Company believes that adequate supplies from both private landowners and open market fiber sellers currently are available in close proximity to meet its fiber needs at these mills.

The paperboard grades produced at the Kalamazoo, MI, Battle Creek, MI, Middletown, OH, East Angus, Quebec and White Pigeon, MI mills are made from 100% recycled fiber. The Company procures its recycled fiber from external suppliers and internal converting operations. The market price of each of the various recycled fiber grades fluctuates with supply and demand. The Company’s internal recycled fiber procurement function enables the Company to pay lower prices for its recycled fiber needs given the Company’s highly fragmented supplier base. The Company believes there are adequate supplies of recycled fiber to serve its mills.

In North America, the Company also converts a variety of other paperboard grades, in addition to paperboard that is supplied to its converting operations from its own mills. The Company purchases such paperboard requirements, including additional CRB and SBS, from outside vendors. The majority of external paperboard purchases are acquired through long-term arrangements with other major industry suppliers. The Company's European converting plants consume CUK supplied from the Company's mills and also convert other paperboard grades such as white-lined chip and folding box board purchased from external suppliers.

Energy

Energy, including natural gas, fuel, oil and electricity, represents a significant portion of the Company’s manufacturing and distribution costs. The Company has entered into contracts designed to manage risks associated with future variability in cash flows and price risk related to future energy cost increases for a portion of its natural gas requirements at its U.S. mills. The Company’s hedging program for natural gas is discussed in Note 10 in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.”

Backlog

Orders from the Company’s principal customers are manufactured and shipped with minimal lead time. The Company did not have a material amount relating to backlog orders at December 31, 2019 or 2018.

Seasonality

The Company’s net sales, income from operations and cash flows from operations are subject to moderate seasonality, with demand usually increasing in the late spring through early fall due to increases in demand for beverage and food products.

Research and Development

The Company’s research and development team works directly with its sales, marketing and consumer insights personnel to understand long-term consumer and retailer trends and create relevant new packaging. These innovative solutions provide customers with differentiated packaging to meet customer needs. The Company’s development efforts include, but are not limited to, extending the shelf life of customers’ products; reducing production and waste costs; enhancing the heat-managing characteristics of food packaging; improving the sturdiness and compression strength of packaging to meet store display needs; and refining packaging appearance through new printing techniques and materials.

Sustainability represents one of the strongest trends in the packaging industry and the Company focuses on developing more sustainable and eco-friendly manufacturing processes and products. The Company’s strategy is to combine sustainability with innovation to create new packaging solutions for its customers.

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Research and Development

The Company’s research and development team works directly with its sales, marketing and consumer insights personnel to understand long-term consumer and retailer trends and create relevant new packaging. These innovative solutions provide customers with differentiated packaging to meet customer needs. The Company’s development efforts include, but are not limited to, developing sustainable packaging to replace plastic packaging, extending the shelf life of customers’ products; reducing production and waste costs; enhancing the heat-managing characteristics of food packaging; improving the sturdiness and compression strength of packaging to allow goods to ship in their own branded container and to meet store display needs; and refining packaging appearance through new printing techniques and materials.

Sustainability represents one of the strongest trends in the packaging industry and the Company focuses on developing more sustainable and eco-friendly products and manufacturing processes. The Company’s strategy is to combine sustainability with innovation to create new packaging solutions for its customers.

For more information on research and development expenses see Note 1 in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.”

Patents and Trademarks

As of December 31, ~~2019~~2020, the Company had a large patent portfolio, presently owning, controlling or holding rights to more than 2,400 U.S. and foreign patents, with more than ~~450~~500 U.S. and foreign patent applications currently pending. The Company’s patent portfolio consists primarily of patents relating to packaging machinery, manufacturing methods, structural carton designs, active microwave packaging technology and barrier protection packaging. These patents and processes are significant to the Company’s operations and are supported by trademarks such as Fridge Vendor™, IntegraPak™, ~~Keel Clip~~KeelClip™, MicroFlex-Q™, MicroRite™, Quilt Wave™, Qwik Crisp™, Tite-Pak™, and Z-Flute™. The Company takes significant steps to protect its intellectual property and proprietary rights.

~~Culture~~Human ~~and Employees~~Capital

~~The~~We believe that the Company’s ~~corporate~~greatest ~~vision —~~asset ~~Inspired~~is ~~packaging~~our workforce. ASolving ~~world~~day-to-day ofoperational ~~difference.~~and —business ~~and~~challenges ~~values~~in oforder ~~integrity,~~to ~~respect~~drive positive results for stakeholders requires attracting, ~~accountability~~developing, ~~relationships~~ and ~~teamwork~~retaining ~~guide~~talented ~~employee~~individuals ~~behavior~~with different skills, ~~expectations~~ideas, and ~~relations~~experiences. ~~The~~Our ~~Company’s~~Vision ~~ongoing~~2025 ~~efforts~~outlines tohow ~~build~~we awill ~~high-performance~~be ~~culture~~better stewards of our planet, supporters of our people, and ~~improve~~allies ~~the~~to ~~manner~~our inpartners, ~~which~~all ~~work~~while isgenerating ~~done~~returns ~~across~~for ~~the~~our ~~Company~~stakeholders. ~~includes~~Our employees play a ~~significant~~crucial ~~focus~~role onin ~~continuous~~achieving ~~improvement~~our ~~utilizing~~Vision ~~processes~~2025 ~~like~~and ~~Lean~~are ~~Sigma~~guided by our shared values and ~~Six~~growth ~~Sigma~~behaviors.

AsOur ofpeople ~~December 31,~~are ~~2019,~~one of the ~~Company~~pillars ~~had~~of ~~approximately~~our ~~18,000~~ Vision 2025 and we strive to engage employees ~~worldwide,~~in ofa ~~which~~high-performance ~~approximately~~culture. ~~41%~~In ~~were~~order ~~represented~~to byachieve ~~labor~~this, ~~unions~~we ~~and~~must ~~covered~~attract, bydevelop, ~~collective~~and ~~bargaining~~retain ~~agreements~~our ortalented ~~covered~~workforce by ~~works~~providing ~~councils~~opportunities infor ~~Europe~~growth and a conducive atmosphere. AsOur oftalent ~~December 31~~acquisition, ~~2019~~development, ~~422~~succession and diversity and inclusion strategies are all critical components of the ~~Company’s~~multi-year ~~employees~~plan ~~were~~for ~~working~~our ~~under~~people. ~~expired~~We ~~contracts~~will continue to invest in capability development areas that serve as a competitive advantage for the Company such as GPI University, which ~~are~~is ~~currently~~launching ~~being~~in ~~negotiated,~~2021 and 1will serve as a platform for all employees to access relevant training and development resources on topics related to technical skills and leadership effectiveness. Also,~~813~~ ~~were~~central ~~covered~~to ~~under~~capability ~~collective~~development ~~bargaining~~and ~~agreements~~talent management is challenging our team with new experiences that ~~expire~~will ~~within~~enhance ~~one~~their ~~year~~leadership skills and technical capabilities. ~~The~~We ~~Company~~will ~~considers~~also ~~its~~continuously ~~employee~~improve ~~relations~~our processes and use technology to bepromote ~~satisfactory~~safety, automate our manufacturing processes, and achieve greater efficiencies utilizing processes such as Lean Six Sigma.

~~Environmental~~We ~~Matters~~are evolving the capabilities of our workforce as our business and strategy change. We have invested in innovation, research and development, and digital capabilities to allow us to capture sustainability supported organic growth. As our business continues to change, we will adapt our workforce to ensure that we have the necessary human capital capabilities in place to support our strategy.

~~The~~ ~~Company~~As ~~is subject to a broad range~~ of ~~foreign~~December 31, ~~federal~~2020, ~~state~~the ~~and~~Company ~~local~~had ~~environmental~~approximately ~~regulations~~18,775 ~~and~~employees ~~employs~~worldwide abased ~~team of professionals~~ in ~~order~~over to90 ~~maintain~~locations ~~compliance~~in at15 ~~each~~different ofcountries ~~its~~around ~~facilities. In 2019,~~ the ~~Company~~world. ~~spent~~Approximately ~~approximately~~77% ~~$7 million~~ of ~~capital~~our onemployees ~~projects~~are toin ~~maintain~~the ~~compliance~~United ~~with~~States ~~environmental laws, regulations~~ and ~~the~~14% ~~Company’s~~are ~~permits~~in ~~granted thereunder~~Europe. ~~In 2020~~Worldwide, ~~2021,~~approximately ~~and~~41% ~~2022,~~were ~~the~~represented ~~Company~~by ~~estimates~~labor itunions ~~will spend approximately $10 million, $25 million~~ and ~~$35~~covered ~~million,~~by ~~respectively,~~collective ~~for~~bargaining ~~such~~agreements ~~projects,~~or ~~primarily~~covered ~~the~~by ~~waste~~works ~~water~~councils ~~treatment~~in ~~system~~Europe. ~~upgrades~~As atof ~~the~~December ~~Augusta~~31, ~~Georgia and Texarkana~~2020, ~~Texas~~none ~~mills.~~of ~~For~~the ~~additional~~Company’s ~~information~~employees onwere ~~such~~working ~~regulation~~under ~~and~~expired ~~compliance~~contracts, ~~see~~which ~~“Environmental~~are ~~Matters”~~currently inbeing ~~“Item 7.~~negotiated, ~~Management’s Discussion~~ and ~~Analysis~~2,462 ofwere ~~Financial~~covered ~~Condition~~under ~~and~~collective ~~Results~~bargaining ofagreements ~~Operations”~~that ~~and~~expire ~~Note~~within 14one inyear. ~~the~~The ~~Notes~~Company toconsiders ~~Consolidated~~its ~~Financial~~employee ~~Statements~~relations ~~included~~to ~~herein~~be ~~under “Item 8~~satisfactory.~~, Financial Statements and Supplementary Data.”~~

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Employee Health and Safety

Maintaining a safe work environment is vital to the Company, and we are committed to the health, safety and wellness of our employees. Our Recorded Incident Rate, which is the rate of workplace injuries per 100 full-time employees, is approximately 1%, and we work to maintain a safety performance rating that outperforms the industry average. We seek to achieve an injury-free workplace through various safety initiatives and programs.

In response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest of our employees, as well as the communities in which we operate, while continuing to service our customers. We quickly implemented remote working, enhanced safety measures for employees continuing critical, on-site work at our facilities such as walk-through temperature scanners, plexiglass barriers between employees, and other methods of encouraging social distancing, and paid employees during necessary quarantines due to COVID-19. We will continue to monitor local COVID-19 conditions and adjust our practices to ensure the health and safety of our employees. We also demonstrated our commitment to our employees and our communities though one-time aggregate payments of $5.0 million to front-line production employees and contributions of $0.5 million to local food banks in the communities where our manufacturing operations are located.

Diversity and Inclusion

We believe that a diverse and inclusive working environment encourages creativity, innovation, and collaboration and that a diverse and inclusive culture propels our ability to serve our global customers and communities. Our commitment to diversity and inclusion is reflected in the definitions of our core values, which dictate behavioral norms. The Compensation and Management Development Committee of our Board of Directors annually reviews the processes and practices related to workforce diversity and inclusion programs to ensure continued equitable treatment of all employees and a culture of inclusion. Our goal moving forward is to not only mirror the diversity of the communities where we operate, but also to excel in unlocking the potential that a diverse workforce can generate.

Community Engagement

Building connections between our employees, their families, and our communities creates a more meaningful, fulfilling and enjoyable workplace. Our employees around the world dedicate their time and talents to improve the communities in which we live and work. Driven by our core values, making a difference for our customers, our consumers, and our community is at the root of our community engagement strategy. The Company focuses on three pillars that guide the strategy for our community service activities and philanthropic commitments: (1) putting food on the table, (2) preserving the environment, and (3) investing in education.

Governmental Regulations

The Company is subject to a broad range of foreign, federal, state and local environmental, employee health and safety, and other governmental regulations and employs a team of professionals in order to maintain compliance at each of its facilities. In 2020, the Company spent approximately $8.2 million of capital on projects to maintain compliance with environmental laws, regulations and the Company’s permits granted thereunder. In 2021, 2022, and 2023, the Company estimates it will spend approximately $10 million, $27 million and $20 million, respectively, for such projects, primarily the waste water treatment system upgrades at the Augusta, Georgia and Texarkana, Texas mills. For additional information on such regulation and compliance, see “Environmental Matters” in “Item 7., Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 14 in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.”

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Available Information

The Company’s website is located at http://www.graphicpkg.com. The Company makes available, free of charge through its website, its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after such materials are electronically filed or furnished to the Securities and Exchange Commission (the “SEC”). The Company also makes certain investor presentations and access to analyst conference calls, as well as certain environmental, social, and governance information available through its website. The information contained or incorporated into the Company’s website is not a part of this Annual Report on Form 10-K.

The SEC maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers like the Company that file electronically with the SEC at http://www.SEC.gov.

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ITEM 1A. RISK FACTORS

The following risks could affect (and in some cases have affected) the Company's actual results and could cause such results to differ materially from current estimates or expectations ~~reflected in certain forward-looking statements~~:

Industry Risks

Changes in consumer buying habits and preferences for products could have an effect on our sales volumes.

Changing consumer dietary habits and preferences have impacted sales growth for many of the food and beverage products the Company packages. Preferences are constantly changing based on, among other factors, convenience, cost and health considerations, as well as environmental and social concerns and perceptions. If these trends continue and the Company is unable to adapt to the trends, then the Company’s financial results could be adversely affected.

The Company's financial results could be adversely impacted if there are significant increases in prices for raw materials, energy, transportation and other necessary supplies, and the Company is unable to raise prices, or improve productivity to reduce costs.

Limitations on the availability of, and increases in, the costs of raw materials, including secondary fiber, petroleum-based materials, energy, wood, transportation and other necessary goods and services, could have an adverse effect on the Company's financial results. Because 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 uses productivity improvements to reduce costs and offset inflation. These include global continuous improvement initiatives that use statistical process control to help design and manage many types of activities, including production and maintenance. The Company's ability to realize anticipated savings from these improvements is subject to significant operational, economic and competitive uncertainties and contingencies, many of which are beyond the Company's control. If the Company cannot successfully implement 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.

Changes in consumer buying habits and preferences for products could have an effect on our sales volumes.

Changing consumer dietary habits and preferences have slowed sales growth for many of the food and beverage products the Company packages. If these trends continue, the Company’s financial results could be adversely affected.

Competition and product substitution could have an adverse effect on the Company's financial results.

The Company competes with other paperboard manufacturers and carton converters, both domestically and internationally. The Company's products compete with those made from other manufacturers' CUK, as well as SBS and CRB, and other board substrates. Substitute products 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 the Company may not be successful in renewing such contracts on favorable terms or at all. The Company works to maintain market share through efficiency, product innovations and strategic sourcing to its customers; however, pricing and other competitive pressures may occasionally result in the loss of a customer relationship.

Operational Risks

The Company’s financial results could be adversely impacted by global events outside the Company’s control, such as the current COVID-19 pandemic.

As a result of global events such as the current COVID-19 pandemic, there could be unpredictable disruptions to the Company’s operations that could reduce its future revenues and negatively impact the Company’s financial condition. The COVID-19 pandemic may result in supply chain and transportation disruptions to and from our 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, the COVID-19 pandemic has resulted in extreme volatility and disruptions in the capital and credit markets as well as widespread furloughs and layoffs for workers in the broader economy. This volatility and loss of employment may negatively impact consumer buying habits, which could adversely affect the Company’s financial results.

The Company's future growth and financial results could be adversely impacted if the Company is unable to identify strategic acquisitions and to successfully integrate the acquired businesses.

The Company has made a significant number of acquisitions in recent years, including the NACP Combination, and expects to make additional strategic acquisitions in the future as part of its overall growth strategy. The Company's ability to continue to make strategic acquisitions from time to time and to integrate the acquired businesses successfully, including obtaining anticipated cost savings or synergies and expected operating results within a reasonable period of time, is an important factor in the Company's future growth. If the Company is unable to properly estimate, account for and realize the expected revenue and cash flow growth and other benefits from its acquisitions, the Company may be required to spend additional time or money on integration efforts that would otherwise have been spent on the development and expansion of its business.

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The Company’s information technology systems could suffer interruptions, failures or breaches and our business operations could be disrupted, adversely affecting results of operations and the Company’s reputation.

The Company’s information technology systems, some of which are dependent on services provided by third parties, serve an important role in the operation of the business. These systems could be damaged or cease to function properly due to any number of causes, such as catastrophic events, power outages, security breaches, computer viruses or cyber-based attacks. The Company has contingency plans in place to prevent or mitigate the impact of these events, however, if they are not effective on a timely basis, business interruptions could occur which may adversely impact results of operations.

The Company has been, and likely will continue to be, subject to computer hacking, acts of vandalism or theft, malware, ransomware, computer viruses or other malicious codes, phishing, employee error or malfeasance, catastrophes, unforeseen events or other cyber-attacks. To date, the Company has seen no material impact on our business or operations from these attacks or events. Any future significant compromise or breach of data security, whether external or internal, or misuse of customer, associate, supplier or Company data, could result in significant costs, interrupted operations, lost sales, fines, lawsuits, and damage to the Company's reputation. However, the ever-evolving threats mean the Company and its third-party service providers and vendors must continually evaluate and adapt their respective systems and processes and overall security environment, as well as those of any companies acquired. There is no guarantee that these measures will be adequate to safeguard against all data security breaches, system compromises or misuses of data. In addition, the regulatory environment related to information security, data collection and use, and privacy is becoming increasingly rigorous, with new and constantly changing requirements applicable to the Company's business. Compliance with such requirements could also result in additional costs.

The Company could experience material disruptions at our facilities or increases in the cost of insurance.

Although the Company takes appropriate measures to minimize the risk and effect of material disruptions to the business conducted at our facilities, natural disasters such as earthquakes, hurricanes, tornadoes, floods and fires, as well as other unexpected disruptions such as the unavailability of critical raw materials, power outages and equipment breakdowns or failures can reduce production and increase manufacturing costs. These types of disruptions, whether caused by climate change or other events, could materially adversely affect our earnings, depending upon the duration of the disruption and our ability to shift business to other facilities or find other sources of materials or energy. Any losses due to these events may not be covered by our existing insurance policies and insurance coverage may be subject to certain deductibles. The premiums for insurance coverage have recently increased and may continue to increase, along with the level of deductibles. In addition, the availability of some insurance coverage may decline due to insurance company losses from extensive property damage caused by natural disasters and increased cyber security breaches. In addition, given the Company's integrated supply chain, managing board supply and properly planning for mill outages and downtime must be integrated with the converting plants forecast. Any inability to do so could adversely affect the Company's financial results.

The Company may not be able to develop and introduce new products and adequately protect its intellectual property and proprietary rights, which could harm its future success and competitive position.

The Company works to increase market share and profitability through product innovation and the introduction of new products. The inability to develop new or better products that satisfy customer and consumer preferences in a timely manner may impact the Company's competitive position.

12The Company's future success and competitive position also depends, in part, upon its ability to obtain and maintain protection for certain proprietary carton and packaging machine technologies used in its value-added products, particularly those incorporating the Fridge Vendor, IntegraPak, KeelClip, MicroFlex-Q, MicroRite, Quilt Wave, Qwik Crisp, Tite-Pak, and Z-Flute technologies. Failure to protect the Company's existing intellectual property rights may result in the loss of valuable technologies or may require it to license other companies' intellectual property rights. It is possible that any of the patents owned by the Company may be invalidated, rendered unenforceable, circumvented, challenged or licensed to others or any of its pending or future patent applications may not be issued within the scope of the claims sought by the Company, if at all. Further, others may develop technologies that are similar or superior to the Company's technologies, duplicate its technologies or design around its patents, and steps taken by the Company to protect its technologies may not prevent misappropriation of such technologies.

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The Company's future success and competitive position also depends, in part, upon its ability to obtain and maintain protection for certain proprietary carton and packaging machine technologies used in its value-added products, particularly those incorporating the Fridge Vendor, IntegraPak, Keel Clip, MicroFlex-Q, MicroRite, Quilt Wave, Qwik Crisp, Tite-Pak, and Z-Flute technologies. Failure to protect the Company's existing intellectual property rights may result in the loss of valuable technologies or may require it to license other companies' intellectual property rights. It is possible that any of the patents owned by the Company may be invalidated, rendered unenforceable, circumvented, challenged or licensed to others or any of its pending or future patent applications may not be issued within the scope of the claims sought by the Company, if at all. Further, others may develop technologies that are similar or superior to the Company's technologies, duplicate its technologies or design around its patents, and steps taken by the Company to protect its technologies may not prevent misappropriation of such technologies.

The Company's capital spending may not achieve the desired benefits, which could adversely impact future financial results.

The Company invests significant amounts of cash on capital projects each year which have expected returns to the Company. The Company's ability to execute on these projects in order to achieve planned outcomes, including obtaining expected returns and strategic long-term goals within a reasonable period of time, is an important factor in the Company's financial results and commitments to the market. As these investments start up, the Company may experience unanticipated business disruptions and not achieve the desired benefits or timelines. In addition, the Company's acquisitions may require more capital than expected to achieve synergies or expected operating results. Additional spending and unachieved benefits may adversely affect the Company's cash flow and results of operations.

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The Company may face a shortage of a skilled workforce at its facilities.

The Company's ability to maintain or expand its business depends on attracting, training and retaining a skilled workforce. Changing demographics and workforce trends may result in a loss of knowledge and skills as experienced workers retire. Failure to attract and retain a skilled workforce may result in operational inefficiencies or require additional capital investments to reduce reliance on labor, which may adversely impact the Company's results.

The Company could experience material disruptions at our facilities.

Although the Company takes appropriate measures to minimize the risk and effect of material disruptions to the business conducted at our facilities, natural disasters such as hurricanes, tornadoes, floods and fires, as well as other unexpected disruptions such as the unavailability of critical raw materials, power outages and equipment failures can reduce production and increase manufacturing costs. These types of disruptions could materially adversely affect our earnings, depending upon the duration of the disruption and our ability to shift business to other facilities or find other sources of materials or energy. Any losses due to these events may not be covered by our existing insurance policies or may be subject to certain deductibles. In addition, given the Company's integrated supply chain, managing board supply and properly planning for mill outages and downtime must be integrated with the converting plants forecast. Any inability to do so could adversely affect the Company's financial results.

The Company is subject to the risks of doing business in foreign countries.

The Company has converting plants and one paper mill in 11 countries outside of the U.S. and sells its products worldwide. For ~~2019~~2020, before intercompany eliminations, net sales from operations outside of the U.S. represented approximately 2021% of the Company’s net sales. The Company’s revenues from foreign sales fluctuate with changes in foreign currency exchange rates. The Company pursues a currency hedging program in order to reduce the impact of foreign currency exchange fluctuations on financial results. In addition, at December 31, ~~2019~~2020, approximately 1716% of the Company's total assets were denominated in currencies other than the U.S. dollar.

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The Company is also subject to the following significant risks associated with operating in foreign countries:

•Compliance with and enforcement of environmental, health and safety and labor laws and other regulations of the foreign countries in which the Company operates;

•Export compliance;

•Imposition or increase of withholding and other taxes on remittances and other payments by foreign subsidiaries; and

•Imposition of new or increases in capital investment requirements and other financing requirements by foreign governments.

In addition to these general risks, uncertainties surrounding the United Kingdom’s ~~pending~~ withdrawal from the European Union (commonly referred to as “Brexit”) could adversely affect our U.K. business, including potentially the Company's relationships with customers, suppliers and employees. ~~The effects of Brexit will depend on the agreements, if any, the U.K. makes to retain access to European markets either during a transition period or more permanently.~~

~~The~~Financial Company’s information technology systems could suffer interruptions, failures or breaches and our business operations could be disrupted adversely affecting results of operations and the Company’s reputation.Risks

The Company has been, and likely will continue to be, subject to computer hacking, acts of vandalism or theft, malware, computer viruses or other malicious codes, phishing, employee error or malfeasance, catastrophes, unforeseen events or other cyber-attacks. To date, the Company has seen no material impact on our business or operations from these attacks or events. Any future significant compromise or breach of data security, whether external or internal, or misuse of customer, associate, supplier or Company data, could result in significant costs, lost sales, fines, lawsuits, and damage to the Company's reputation. However, the ever-evolving threats mean the Company and its third-party service providers and vendors must continually evaluate and adapt their respective systems and processes and overall security environment, as well as those of any companies acquired. There is no guarantee that these measures will be adequate to safeguard against all data security breaches, system compromises or misuses of data. In addition, as the regulatory environment related to information security, data collection and use, and privacy becomes increasingly rigorous, with new and constantly changing requirements applicable to the Company's business. Compliance with such requirements could also result in additional costs.

The Company is subject to environmental, health and safety laws and regulations, and costs to comply with such laws and regulations, or any liability or obligation imposed under new laws or regulations, could negatively impact its financial condition and results of operations.

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, the investigation and remediation of contamination resulting from releases of hazardous substances, and the health and safety of employees. The Company cannot currently assess the impact that future emission standards, climate control initiatives and enforcement practices will have on the Company's operations and capital expenditure requirements. Environmental liabilities and obligations may result in significant costs, which could negatively impact the Company's financial position, results of operations or cash flows. See Note 14 in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.”

The Company's indebtedness may adversely affect its financial condition and its ability to react to changes in its business.

As of December 31, ~~2019~~2020, the Company had an aggregate principal amount of $23,~~872~~666.86 million of outstanding debt.

Because of the Company's debt level, a portion of its cash flows from operations is dedicated to payments on indebtedness and the Company's ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes may be restricted in the future.

14Additionally, the Company’s Third Amended and Restated Credit Agreement (as amended by the Incremental Facility Amendment) and the Amended and Restated Credit Agreement (collectively, the “Current Credit Agreement”) and the indentures governing the 4.75% Senior Notes due 2021 (redeemed January 2021), 4.875% Senior Notes due 2022, 4.125% Senior Notes due 2024, 4.75% Senior Notes due 2027, 3.50% Senior Notes due 2028 and 3.50% Senior Notes due 2029 (the “Indentures”) may prohibit or restrict, among other things, the disposal of assets, the incurrence of additional indebtedness (including guarantees), the incurrence of liens, distributions, the making of acquisitions and other investments and certain other types of transactions. These restrictions could limit the Company’s flexibility to respond to changing market conditions and competitive pressures. The debt obligations and 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.

As of December 31, 2020, approximately 35% of the Company’s debt is subject to variable rates of interest and exposes the Company to increased debt service obligations in the event of increased market interest rates.

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~~Additionally,~~Legal ~~the Company’s Amended~~ and ~~Restated~~Regulatory Credit Agreement, Term Loan Credit Agreement and the indentures governing the 4.75% Senior Notes due 2021, 4.875% Senior Notes due 2022, 4.125% Senior Notes due 2024 and 4.75% Senior Notes due 2027 (the “Indentures”) may prohibit or restrict, among other things, the disposal of assets, the incurrence of additional indebtedness (including guarantees), the incurrence of liens, payment of dividends, the making of acquisitions and other investments and certain other types of transactions. These restrictions could limit the Company’s flexibility to respond to changing market conditions and competitive pressures. The debt obligations and 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. Risks

AsThe ofCompany ~~December 31,~~is ~~2019~~subject to environmental, ~~approximately~~health ~~34%~~and ofsafety ~~the~~laws ~~Company’s~~and ~~debt~~regulations, isand ~~subject~~costs to ~~variable~~comply ~~rates~~with ofsuch ~~interest~~laws and ~~exposes~~regulations, ~~the~~or ~~Company~~any toliability ~~increased~~or ~~debt~~obligation ~~service~~imposed ~~obligations~~under innew ~~the~~laws ~~event~~or ofregulations, ~~increased~~could ~~market~~negatively ~~interest~~impact ~~rates~~its financial condition and results of operations.

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, the investigation and remediation of contamination resulting from releases of hazardous substances, recycling of packaging, and the health and safety of employees. The Company cannot currently assess the impact that future emission standards, climate control initiatives, regulation changes and enforcement practices will have on the Company's operations and capital expenditure requirements. Environmental liabilities and obligations may result in significant costs, which could negatively impact the Company's financial position, results of operations or cash flows. See Note 14 in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.”

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Headquarters

The Company leases its principal executive offices in Atlanta, GA.

Operating Facilities

A listing of the principal properties owned or leased and operated by the Company is set forth below. The Company’s buildings are adequate and suitable for the business of the Company and have sufficient capacity to meet current requirements. The Company also leases certain smaller facilities, warehouses and office space throughout the U.S. and in foreign countries from time to time.

Location Related Products or Use of Facility Mills: Augusta, GA SBS Battle Creek, MI CRB East Angus, Québec CRB Kalamazoo, MI CRB Macon, GA CUK Middletown, OH CRB Texarkana, TX SBS West Monroe, LA CUK; Corrugated Medium(a); Research and Development White Pigeon, MI(a) CRB Other: Atlanta, GA(ab) Headquarters, Research and Development, Packaging Machinery and Design Concord, NH(ab) Research and Development, Design Center Crosby, MN Packaging Machinery Engineering, Design and Manufacturing Louisville, CO(ab) Research and Development Menomonee Falls, WI Foodservice Rebuild Center

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North American Converting Plants: International Converting Plants: Atlanta, GA(ab) ~~Monterrey~~Monroe, ~~Mexico~~LA(ab) Auckland, New Zealand(ab) Auburn, IN ~~New Albany~~Monterrey, INMexico(b) Bremen, Germany(ab) Burlington, NC(c) New Albany, IN(d) Bristol, United Kingdom Carol Stream, IL Newton, IA ~~Bristol~~Coalville, United Kingdom(b) Centralia, IL North Portland, OR ~~Coalville~~Gateshead, United Kingdom(ab) Charlotte, NC ~~Oroville~~Omaha, CANE Hoogerheide, Netherlands Chicago, IL(ab) ~~Gateshead~~Oroville, ~~United Kingdom~~CA(ab) Igualada, Spain Clarksville, TN Pacific, MO ~~Hoogerheide~~Jundiai, ~~Netherlands~~Sao Paulo, Brazil Cobourg, Ontario(ab) Perry, GA ~~Newcastle Upon Tyne~~Leeds, United Kingdom~~(a)~~ Elgin, IL ~~Pittston~~Pineville, PANC ~~Igualada~~Masnieres, ~~Spain~~France(b) Elk Grove, IL(ab)(bd) ~~Prosperity~~Pittston, SCPA ~~Jundiai~~Melbourne, ~~Sao~~Australia(b) ~~Paulo, Brazil~~ Fort Smith, AR(d) Prosperity, SC Miliaño, Spain Gordonsville, TN(b) Queretaro, Mexico(ab) ~~Leeds~~Newcastle Upon Tyne, United Kingdom(b) ~~Gordonsville~~Grand Rapids, ~~TN(a)~~MI ~~Shelbyville~~Randleman, ILNC ~~Masnieres~~Portlaoise, ~~France~~Ireland(ab) Gresham, OR(ab) ~~Solon~~Shelbyville, OHIL ~~Melbourne~~Requejada, ~~Australia(a)~~Spain Hamel, MN ~~Staunton~~Solon, VAOH ~~Miliaño~~Sneek, ~~Spain~~Netherlands Irvine, CA ~~St.-Hyacinthe~~Staunton, ~~Québec(a)~~VA ~~Portlaoise~~Sydney, ~~Ireland~~Australia(ab) Kalamazoo, MI ~~Tijuana~~St.-Hyacinthe, ~~Mexico~~Québec(ab) ~~Requejada~~Winsford, ~~Spain~~United Kingdom (b) Kendallville, IN ~~Tuscaloosa~~Tijuana, ALMexico(b) ~~Sneek, Netherlands~~ Kenton, OH ~~Vancouver~~Tuscaloosa, ~~WA(a)~~AL ~~Sydney,~~Kingston ~~Australia(a) Lancaster~~Springs, TXTN Valley Forge, PA ~~Winsford~~Lancaster, ~~United~~TX ~~Kingdom~~Vancouver, WA(ab) Lawrenceburg, TN Visalia, CA Lebanon, TN (ab) ~~Wayne~~Wausau, NJWI ~~Lumberton~~Los Angeles, NCCA(b)(c) ~~Wausau~~Wayne, WINJ ~~Marion~~Lumberton, OHNC West Monroe, LA(bd) Marion, OH Winnipeg, Manitoba Mississauga, Ontario(ab)(bd) Xenia, OH(ab) Mitchell, SD ~~Winnipeg, Manitoba Monroe, LA (a)~~

Note:

(a) Closed in the second quarter of 2020. (b) Leased facility. (bc) Closed in third quarter of 2020. (d) Multiple facilities in this location.

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ITEM 3. 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. See Note 14 in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.”

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

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EXECUTIVE OFFICERS OF THE REGISTRANT

The following list is included as an unnumbered item in Part I of this Report in lieu of being included in the amendment to this Annual Report on Form 10-K that will be filed within 120 days after December 31, ~~2019~~2020.

Michael P. Doss, 5354, is a Director and the President and Chief Executive Officer of Graphic Packaging Holding Company and GPIL. He was elected to the Board of Directors on May 20, 2015. Prior to January 1, 2016, Mr. Doss held the position of President and Chief Operating Officer from May 20, 2015 through December 31, 2015 and Chief Operating Officer from January 1, 2014 until May 19, 2015. Prior to these positions he served as the Executive Vice President, Commercial Operations of Graphic Packaging Holding Company and GPIL. Prior to this Mr. Doss held the position of Senior Vice President, Consumer Packaging Division. Prior to March 2008, he had served as Senior Vice President, Consumer Products Packaging of Graphic Packaging Corporation since September 2006. From July 2000 until September 2006, he was the Vice President of Operations, Universal Packaging Division. Mr. Doss was Director of Web Systems for the Universal Packaging Division prior to his promotion to Vice President of Operations. Since joining Graphic Packaging International Corporation in 1990, Mr. Doss has held positions of increasing management responsibility, including Plant Manager at the Gordonsville, TN and Wausau, WI plants.

Stephen R. Scherger, 5556, is the Executive Vice President and Chief Financial Officer of Graphic Packaging Holding Company and GPIL. From October 1, 2014 through December 31, 2014, Mr. Scherger was the Senior Vice President, - Finance. From April 2012 through September 2014, Mr. Scherger served as Senior Vice President, Consumer Packaging Division. Mr. Scherger joined Graphic Packaging Holding Company and GPIL in April of 2012 from MeadWestvaco Corporation, where he served as President, Beverage and Consumer Electronics. Mr. Scherger was with MeadWestvaco Corporation from 1986 to 2012 and held positions including Vice President, Corporate Strategy; Vice President and General Manager, Beverage Packaging; Vice President and Chief Financial Officer, Papers Group, Vice President Asia Pacific and Latin America, Beverage Packaging, Chief Financial Officer Beverage Packaging and other executive‐level positions.

Michael Farrell, 5354, became the Executive Vice President, Mills Division of Graphic Packaging Holding Company and GPIL in September 2018. Prior to that, he served as the Senior Vice President, Supply Chain from January to September 2018. Prior to January 2018, Mr. Farrell served as Vice President, Recycled Board Mills of Graphic Packaging International, LLC and its predecessor companies ("GPI") from January 1, 2013; and Senior Manufacturing Manager of GPI from October 28, 2009 until December 31, 2012. From December 11, 2008 until October 27, 2009, Mr. Farrell was the Manufacturing Manager of the West Monroe, Louisiana mill and from September 1, 2006 until December 10, 2008 he was the General Manager of the Middletown, Ohio mill of GPI.

~~Lauren~~Jean-Francois ~~S. Tashma~~Roche, ~~53,~~54 is the ~~Executive~~Senior Vice President and President, ~~General~~Europe, ~~Counsel~~Middle East and ~~Secretary~~Africa of Graphic Packaging Holding Company and GPIL. ~~She~~Prior ~~joined~~to ~~the~~assuming ~~Company~~his incurrent ~~February~~position, ~~2014~~Mr. ~~Previously~~ Roche served as Vice President, MsGlobal Accounts from October 2018 through December 2019. ~~Tashma~~From April 2015 through December 2019, Mr. Roche also served as ~~Senior~~the Vice President, ~~General~~Sales, ~~Counsel~~Europe, Middle East and ~~Secretary~~Africa ofConsumer ~~Fortune~~Products. ~~Brands~~Mr. ~~Home~~Roche &joined ~~Security,~~Graphic ~~Inc.,~~Packaging in April 2015 from LGR Packaging where ~~she~~he ~~led~~served ~~the~~as ~~legal,~~Chief ~~compliance~~Sales and ~~EHS~~Marketing ~~functions~~Officer. Prior to that, MsMr. ~~Tashma~~Roche ~~had~~spent ~~various~~25 ~~roles~~years ~~with~~at ~~Fortune~~A&R ~~Brands~~Packaging, ~~Inc.~~a large Scandinavian-based multinational consumer packaging provider, ~~including~~working in positions of increasing responsibility culminating the position of Senior Vice President, Sales and ~~Associate~~Marketing. ~~General~~Mr. ~~Counsel~~Roche also serves as the President of the European Carton Makers Association, Europe’s folding carton industry association.

~~Stacey~~Lauren ~~Valy~~S. ~~Panayiotou~~Tashma, 4754, is the Executive Vice President, ~~Human~~General ~~Resources~~Counsel and Secretary of Graphic Packaging Holding Company and GPIL. She joined the Company onin ~~April~~February 222014. Previously, ~~2019~~Ms. ~~from~~Tashma ~~The~~served ~~Coca-Cola~~as ~~Company,~~Senior ~~where~~Vice ~~she held a variety of senior HR leadership roles~~President, ~~including~~General ~~Global~~Counsel ~~Vice~~and ~~President~~Secretary of ~~Talent~~Fortune ~~and~~Brands ~~Development~~Home ~~and~~& ~~Vice President~~Security, HRInc., ~~Europe,~~where ~~Middle~~she ~~East~~led &the ~~Africa~~legal, ~~which~~compliance ~~consisted~~and ofEHS ~~over 120 countries~~functions. Prior to ~~her global talent position~~that, Ms. ~~Panayiotou~~Tashma ~~served~~had asvarious ~~Vice~~roles ~~President~~with ofFortune ~~Talent and Development~~Brands, ~~Organizational Effectiveness and Diversity and Inclusion and Learning for the Coca-Cola North America Group~~Inc. ~~Prior to that~~, ~~she~~including ~~was~~ Vice President ~~of HR for the West business unit of Coca-Cola Enterprises, Inc. (CCE)~~ and ~~worked~~Associate inGeneral ~~corporate HR with The Coca-Cola Company~~Counsel. ~~She also led the organization development function for Pactiv Corporation. Ms. Panayiotou was with The Coca-Cola Company from February 2006 through April 2019.~~

18Stacey Valy Panayiotou, 48, is the Executive Vice President, Human Resources of Graphic Packaging Holding Company and GPIL. She joined the Company on April 22, 2019 from The Coca-Cola Company, where she held a variety of senior Human Resources leadership roles, including Global Vice President of Talent and Development and Vice President, HR, Europe, Middle East and Africa, which consisted of over 120 countries. Prior to her global talent position, Ms. Panayiotou served as Vice President of Talent and Development, Organizational Effectiveness and Diversity and Inclusion and Learning for the Coca-Cola North America Group. Prior to that, she was Vice President of HR for the West business unit of Coca-Cola Enterprises, Inc. (CCE) and worked in corporate HR with The Coca-Cola Company. She also led the organization development function for Pactiv Corporation. Ms. Panayiotou was with The Coca-Cola Company from February 2006 through April 2019.

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~~Hilde~~Joseph ~~Van~~P. ~~Moeseke~~Yost, 4953, is the ~~Senior~~Executive Vice President, ~~Finance~~and ~~Americas~~President, ~~effective~~Americas ~~January 1, 2020,~~ of Graphic Packaging Holding Company and GPIL. ~~From~~Prior ~~July 2017~~ to ~~December~~January ~~2019~~5, Ms2017, Mr. ~~Van~~Yost ~~Moeseke~~ served as ~~an executive officer as~~ Senior Vice President ~~and President~~, ~~Europe,~~Global ~~Middle~~Beverage ~~East~~ and ~~Africa~~Europe offrom ~~Graphic~~September ~~Packaging~~1, ~~Holding~~2015 ~~Company~~to ~~and~~January ~~GPIL.~~4, ~~From~~2017, ~~January~~Senior ~~2017~~Vice toPresident, ~~July~~Europe from March 1, ~~2017,~~2014 ~~Ms.~~to ~~Van~~August ~~Moeseke~~31, ~~served~~2015 asand Senior Vice President, ~~Finance~~European ~~Europe~~Chief ~~and~~Integration ~~Interim~~Officer/Chief ~~EMEA~~Financial ~~Leader~~Officer offrom ~~Graphic~~February ~~Packaging~~2013 ~~International,~~until ~~Inc~~February 2014. From ~~July~~2009 ~~2015~~ until ~~January~~February ~~2017~~2013, MsMr. ~~Van~~Yost ~~Moeseke~~ was the Senior Vice President, ~~Finance~~Supply ~~Europe~~Chain of Graphic Packaging ~~International,~~Holding ~~Inc~~Company. ~~Ms.~~From ~~Van~~2006 ~~Moeseke~~to ~~joined~~2009, ~~the~~he ~~Company~~served ~~in January 2014~~ as ~~Director~~Vice ~~Controlling and was promoted to Director~~President, ~~Finance~~Operations ~~Europe~~Support in- ~~July~~Consumer ~~2014.~~Packaging ~~Prior~~for toGraphic ~~January~~Packaging ~~2014~~International, MsInc. ~~Van~~Mr. ~~Moeseke~~Yost ~~held~~has ~~the~~also ~~position~~served ofin ~~Group~~the ~~Controller,~~following ~~Project~~positions: ~~Management~~Director, ~~Shared~~Finance ~~Service Center~~ and ~~Accounting~~Centralized ~~at Azelis Corporate~~ Services ~~S.A.~~from ~~for~~2003 ~~two~~to ~~years.~~2006 ~~She~~with ~~has~~Graphic ~~also~~Packaging ~~worked~~International, ~~for~~Inc. ~~the~~and ~~Walt~~from ~~Disney~~2000 ~~Company~~to in2003 ~~Europe~~with ~~for~~Graphic ~~six~~Packaging ~~years~~Corporation; ~~in the positions of Director Finance and Controllership~~Manager, ~~Director~~Operations ~~Regional~~Planning ~~Studio Controllership, Regional Studio Controllership~~ and ~~Senior~~Analysis ~~Manager.~~- ~~Ms.~~Consumer ~~Van~~Products ~~Moeseke~~Division ~~has~~from ~~also~~1999 ~~served~~to as2000 awith ~~member~~Graphic ofPackaging ~~the~~Corporation; ~~Board~~and ofother ~~Directors~~management ~~for~~positions ~~the~~from ~~European~~1997 ~~Carton~~to ~~Makers~~1999 ~~Association~~with ~~since~~Fort ~~September~~James ~~2018~~Corporation.

Joseph P. Yost, 52, is the Executive Vice President, and President, Americas of Graphic Packaging Holding Company and GPIL. Prior to January 5, 2017, Mr. Yost served as Senior Vice President, Global Beverage and Europe from September 1, 2015 to January 4, 2017, Senior Vice President, Europe from March 1, 2014 to August 31, 2015 and Senior Vice President, European Chief Integration Officer/Chief Financial Officer from February 2013 until February 2014. From 2009 until February 2013, Mr. Yost was the Senior Vice President, Supply Chain of Graphic Packaging Holding Company. From 2006 to 2009, he served as Vice President, Operations Support - Consumer Packaging for Graphic Packaging International, Inc. Mr. Yost has also served in the following positions: Director, Finance and Centralized Services from 2003 to 2006 with Graphic Packaging International, Inc. and from 2000 to 2003 with Graphic Packaging Corporation; Manager, Operations Planning and Analysis - Consumer Products Division from 1999 to 2000 with Graphic Packaging Corporation; and other management positions from 1997 to 1999 with Fort James Corporation.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

OnGPIL ~~June~~has ~~25,~~no ~~2019,~~publicly ~~the~~traded ~~Company~~equity ~~completed a private offering of $300 million aggregate principal amount of its 4~~securities.75% senior unsecured notes due 2027 in a private placement in reliance on Rule 144A and Regulation S under the Securities Exchange Act, as amended. The offering was completed pursuant to a purchase agreement between Graphic Packaging Holding Company, the Company and Field Container Queretaro (USA), L.L.C. and BofA Securities, Inc. as representative of the initial purchasers. The Company received net proceeds of the offering of approximately $295 million, after deducting the initial purchasers' discount and other transaction costs. The net proceeds of the offering were used to repay a portion of the outstanding borrowings under the Company's revolving credit facility under its senior secured credit facility.

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ITEM 6. SELECTED FINANCIAL DATA

The selected consolidated financial data set forth below should be read in conjunction with “Item 7., Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements of the Company and the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.”

Year Ended December 31,

In millions

~~2019~~2020

~~2018~~2019

~~2017~~2018

~~2016~~2017

~~2015~~2016

Statement of Operations Data:

Net Sales

6,~~160~~559.19

6,~~029~~160.41

46,~~405~~029.64

4,~~301~~405.06

4,~~163~~301.40

Income from Operations

~~533~~523.68

~~458~~533.56

~~327~~458.95

~~407~~327.49

~~430~~407.14

Net Income

~~333~~232.59

~~337~~333.25

~~576~~337.42

~~228~~576.04

~~230~~228.10

Balance Sheet Data:

(as of period end)

Cash and Cash Equivalents

~~148~~178.72

70148.57

4470.15

5944.1

5459.91

Total Assets

7,~~276~~794.7

7,~~048~~276.87

47,~~821~~048.38

4,~~603~~821.43

4,~~256~~603.14

Total Debt

23,~~860~~644.32

2,~~957~~860.13

2,~~274~~957.51

2,~~151~~274.95

12,~~875~~151.59

Total Member's Interest

2,~~856~~373.68

2,~~745~~856.36

12,~~569~~745.3

1,~~056~~569.53

1,~~101~~056.75

Additional Data:

Depreciation and Amortization

~~447~~475.28

~~430~~447.62

~~330~~430.36

~~299~~330.3

~~280~~299.53

Capital Spending, including Packaging Machinery

352.9

395.2

260.1

294.6

244.1

Capital Spending, including Packaging Machinery(a)

646.3

352.9

395.2

260.1

294.6

(a) During 2019, the Company announced its plan to invest approximately $600 million in a new CRB mill in Kalamazoo, Michigan. See Note 20 in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.”

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 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:

Overview of Business

Overview of ~~2019~~2020 Results

Results of Operations

Financial Condition, Liquidity and Capital Resources

Critical Accounting Policies

New Accounting Standards

Business Outlook

OVERVIEW OF BUSINESS

The Company’s objective is to strengthen its position as a leading provider of sustainable paper-based packaging solutions. To achieve this objective, the Company offers customers its paperboard, cartons, cups, lids, foodservice containers and packaging machines, either as an integrated solution or separately. Cartons, carriers and containers are designed to protect and hold products. Product offerings include a variety of laminated, coated and printed packaging structures that are produced from the Company’s CRB, CUK, and SBS paperboard. Innovative designs and combinations of paperboard, films, foils, metallization, holographics 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 mills and folding carton assets; (iii) to develop and market innovative, sustainable products and applications that benefit from ~~the~~ 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 the Company’s Business and Results of Operations

~~Impact~~COVID-19 ~~of Inflation/Deflation~~Pandemic. ~~The~~ ~~Company’s~~Many ~~cost~~uncertainties ofremain ~~sales~~regarding ~~consists~~the ~~primarily~~current ofnovel ~~energy~~coronavirus (“COVID-19”) pandemic, including ~~natural~~the ~~gas~~anticipated duration of the pandemic, ~~fuel~~and ~~oil~~the extent of local and ~~electricity)~~worldwide social, ~~pine~~political, and ~~hardwood~~economic ~~fiber~~disruption it may cause. While the COVID-19 pandemic has not materially impacted the Company's overall business, ~~chemicals~~operations, ~~secondary~~or ~~fibers,~~financial ~~purchased~~results ~~paperboard~~to date, ~~aluminum~~it ~~foil,~~may ~~ink~~have far-reaching impacts on many aspects of the Company's operations, ~~plastic~~including ~~films~~impacts on customer and ~~resins~~consumer behaviors, ~~depreciation~~business ~~expense~~and manufacturing operations, inventory, accounts receivable, the Company’s employees, and ~~labor~~the market generally. ~~Costs~~The ~~increased~~Company ~~year~~will ~~over~~continue ~~year~~to byassess ~~$79.1 million~~the inevolving ~~2019~~impact of the COVID-19 pandemic and ~~increased~~intends ~~year~~to ~~over~~make ~~year~~adjustments byto ~~$73.6 million~~its inbusiness ~~2018.~~accordingly, ~~The~~such ~~higher~~as ~~costs~~to inmatch ~~2019~~the ~~were~~Company's ~~due~~supply towith ~~labor~~demand by adjusting mill maintenance outages and ~~benefit~~taking ~~costs~~market ~~($40.4~~downtime ~~million),~~where ~~wood~~appropriate ~~($39.6~~such ~~million),~~as ~~external~~the ~~board~~uncoated ~~($12.1~~SBS ~~million),~~cupstock ~~partially~~paper ~~offset~~machine bymarket ~~lower~~downtime ~~secondary~~that ~~fiber~~the ~~cost~~Company ~~($10.5~~took ~~million),~~in ~~and~~Q3 ~~other~~of ~~costs,~~2020 ~~net~~to ~~($2.5~~reflect ~~million).~~reduced demand for paperboard packaging from foodservice customers.

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 2020 and 2021. 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.22

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~~Commitment~~Impact toof ~~Cost Reduction~~Inflation/Deflation. InThe ~~light~~Company’s cost of ~~continuing~~sales ~~margin~~consists ~~pressure~~primarily ~~throughout~~of ~~the~~energy ~~packaging~~(including ~~industry~~natural gas, ~~the~~fuel ~~Company~~oil ~~has~~and ~~programs~~electricity), inpine ~~place~~and ~~that~~hardwood ~~are~~fiber, ~~designed~~chemicals, tosecondary ~~reduce~~fibers, ~~costs~~purchased paperboard, ~~improve~~aluminum ~~productivity~~foil, ink, plastic films and ~~increase~~resins, ~~profitability~~depreciation expense and labor. ~~The~~Costs ~~Company~~increased ~~utilizes~~year aover ~~global~~year ~~continuous~~by ~~improvement~~$29.9 million ~~initiative~~in ~~that~~2020 ~~uses~~and ~~statistical~~increased ~~process~~year ~~control~~over year by $79.1 million in 2019. The higher costs in 2020 were due to ~~help~~costs ~~design~~of labor and ~~manage~~benefits ~~many~~($45.1 ~~types~~million), ofsecondary ~~activities~~fiber ($22.5 million), ~~including~~freight ~~production~~($8.7 million), and ~~maintenance~~other costs, net ($1.9 ~~This~~million), ~~includes~~partially aoffset ~~Six~~by ~~Sigma~~lower ~~process~~costs ~~focused~~of onwood ~~reducing~~($32.7 ~~variable~~million), ~~and~~energy ~~fixed~~($9.9 ~~manufacturing~~million) and ~~administrative~~external ~~costs~~board ($5.7 million). The ~~Company~~higher ~~has~~costs ~~expanded~~in ~~the~~2019 ~~continuous~~were ~~improvement~~due ~~initiative~~ to ~~include~~costs ~~the~~of ~~deployment~~labor ofand ~~Lean~~benefits ~~Sigma~~($40.4 ~~principles~~million), ~~into~~wood ~~manufacturing~~($39.6 million), external board ($12.1 million), partially offset by lower costs of secondary fiber ($10.5 million), and ~~supply~~other ~~chain~~costs, ~~services~~net ($2.5 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 2021 and 2022. 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.

Commitment to Cost Reduction. In light of continuing margin pressure throughout the packaging industry, the 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 and the use of Lean Sigma principles in manufacturing and supply chain 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, 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 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, and recently we have seen net organic sales growth driven by the consumers’ desire for sustainable packaging solutions and increased at home consumption. 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 products also impact its sales.

Debt Obligations. The Company had an aggregate principal amount of $23,~~872~~666.86 million of outstanding debt obligations as of December 31, ~~2019~~2020. 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 may restrict the Company’s ability to obtain additional financing. Covenants in the Company’s ~~Amended~~Current ~~and Restated~~ Credit Agreement, ~~the Term Loan Credit Agreement~~ and Indentures may, among other things, restrict the ability of the Company to dispose of assets, incur guarantee obligations, prepay other indebtedness, pay membership distributions, and make other restricted payments, ~~and~~create liens, make ~~acquisitions~~equity or ~~other~~debt investments., ~~The~~make ~~Amended~~acquisitions, ~~and~~modify ~~Restated~~terms ~~Credit~~of ~~Agreement~~the ~~and~~indentures under which the ~~Term~~Notes ~~Loan~~are issued, engage in mergers or consolidations, change the business conducted by the Company and its subsidiaries, and engage in certain transactions with affiliates. The Current Credit Agreement also ~~require~~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” for additional information regarding the Company’s debt obligations.

The debt and the restrictions under the Amended and Restated Credit Agreement, the Term Loan 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.23

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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 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. On a consolidated basis:

• Net Sales in ~~2019~~2020 increased by $~~130~~399.78 million or 26.25%, to $6,~~160~~559.19 million from $6,~~029~~160.41 million in ~~2018~~2019 due to ~~higher~~organic ~~selling~~sales ~~prices~~growth, and the ~~Artistic~~Greif, Quad and ~~2018~~Artistic ~~Acquisitions discussed below~~acquisitions, partially offset by lower open market volume of our paperboard and unfavorable foreign currency exchange rates.

22• Income from Operations in 2020 decreased by $9.8 million or 1.8%, to $523.8 million from $533.6 million in 2019 Transactions recorded in Business Combinations, Shutdown and Other Special Charges and Exit Activities, Net increased $23.4 million driven by higher charges for exit activities, including those related to our announced closures of White Pigeon, Michigan, CRB mill and West Monroe, Louisiana, PM1 containerboard machine, costs related to COVID-19, and increases in estimated liabilities related to the withdrawal from certain multi-employment benefit plans for facilities which have been closed. In addition, Income from Operations was negatively impacted in 2020 as compared to 2019 by non-commodity inflation (primarily labor and benefits), product mix, higher levels of planned maintenance and higher levels of market downtime at the uncoated SBS cupstock paper machine, and higher depreciation and amortization. Income from Operations was positively impacted in 2020 as compared to 2019 by higher volumes from organic sales growth and acquisitions, cost savings from continuous improvement and other programs, and commodity deflation.

~~Table~~Acquisitions, ofClosures, ~~Contents~~and Dispositions

• ~~Income~~On ~~from~~January ~~Operations~~31, ~~in 2019 increased by $75.1 million or 16.4%~~2020, ~~to $533.6 million from $458.5 million in 2018 due to~~ the ~~higher~~Company ~~selling~~acquired ~~prices,~~a ~~cost~~folding ~~savings~~carton ~~through~~facility ~~continuous improvement programs, benefits~~ from ~~completed capital projects~~Quad, ~~and~~a ~~the~~commercial ~~Augusta,~~printing ~~Georgia mill outage in 2018~~company. ~~These~~The ~~increases~~converting ~~were~~facility ~~partially~~is ~~offset~~located byin ~~higher inflation~~Omaha, ~~start-up~~Nebraska ~~costs~~and ~~associated~~is ~~with~~included ~~the~~in ~~Monroe, Louisiana folding carton facility,~~ the ~~gain~~Americas onPaperboard ~~the~~Packaging ~~sale~~reportable ~~of Santa Clara in 2018, increased incentive costs and unfavorable foreign currency exchange rates~~segment.

~~Acquisitions~~•On April 1, 2020, the Company acquired the Consumer Packaging Group business from Greif, a leader in industrial packaging products and ~~Dispositions~~services. The acquisition included seven converting facilities across the United States, which are included in the Americas Paperboard Packaging reportable segment.

•On August 1, 2019, the Company acquired substantially all the assets of Artistic, a diversified producer of folding cartons and CRB. The acquisition included two converting facilities located in Auburn, Indiana and Elgin, Illinois (included in the Americas Paperboard Packaging reportable segment) and one CRB mill located in White Pigeon, Michigan (included in the Paperboard Mills reportable segment).

•During 2018, the Company completed the NACP Combination and the 2018 Acquisitions which included PFP and Letica Foodservice, and sold its previously closed CRB mill site in Santa Clara, California.

~~•During 2017, the Company completed the 2017 Acquisitions which included Seydaco, Norgraft and Carton Craft.~~ 24

RESULTS OF OPERATIONS

	Year Ended December 31,
In millions	2019		2018		2017
Net Sales	$	6,160.1	$	6,029.4	$	4,405.6
Income from Operations	$	533.6	$	458.5	$	327.9
Nonoperating Pension and Postretirement Benefit (Expense) Income	(39.5)		14.9		14.8
Interest Expense, Net	(140.6)		(123.7)		(89.7)
Loss on Modification or Extinguishment of Debt	—		(1.9)		—
Income before Income Taxes and Equity Income of Unconsolidated Entity	$	353.5	$	347.8	$	253.0
Income Tax (Expense) Benefit	(20.4)		(11.8)		321.7
Income before Equity Income of Unconsolidated Entity	$	333.1	$	336.0	$	574.7
Equity Income of Unconsolidated Entity	0.4		1.2		1.7
Net Income	$	333.5	$	337.2	$	576.4

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~~2019~~RESULTS ~~COMPARED~~OF ~~WITH 2018~~ OPERATIONS


	Year Ended December 31,
In millions	2020		2019		2018
Net Sales	$	6,559.9	$	6,160.1	$	6,029.4
Income from Operations	$	523.8	$	533.6	$	458.5
Nonoperating Pension and Postretirement Benefit (Expense) Income	(151.5)		(39.5)		14.9
Interest Expense, Net	(128.9)		(140.6)		(123.7)
Loss on Modification or Extinguishment of Debt	—		—		(1.9)
Income before Income Taxes and Equity Income of Unconsolidated Entity	$	243.4	$	353.5	$	347.8
Income Tax Expense	(11.4)		(20.4)		(11.8)
Income before Equity Income of Unconsolidated Entity	$	232.0	$	333.1	$	336.0
Equity Income of Unconsolidated Entity	0.9		0.4		1.2
Net Income	$	232.9	$	333.5	$	337.2

2020 COMPARED WITH 2019

Net Sales

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

Year Ended December 31,

Variances

In millions

~~2018~~2019

Price

Volume/Mix

Foreign Exchange

~~2019~~2020

Increase

Percent Change

Consolidated

6,~~029~~160.41

~~131~~(1.2)

50408.20

(~~50.~~7.0)

6,~~160~~559.19

~~130~~399.78

26.25

The Company's Net Sales in ~~2019~~2020 increased by $~~130~~399.78 million or 26.25%, to $6,~~160~~559.19 million from $6,~~029~~160.41 million for the same period in ~~2018~~2019, due to ~~higher selling prices and~~ Net Sales of ~~approximately~~ $~~115~~ 268.6 million from the Greif, Artistic and ~~2018~~Quad Acquisitions and organic sales growth including new product introductions and conversions to our paperboard packaging solutions. These increases were partially offset by ~~modestly~~ lower ~~converting~~open ~~volumes~~market involume ~~the~~of ~~first~~our ~~half~~paperboard, ofproduct ~~the~~mix, ~~year~~ and unfavorable foreign currency exchange rates, primarily the ~~Euro~~Brazilian Real, ~~British~~Mexican ~~Pound~~Peso, and ~~Australian~~Canadian ~~dollar.~~Dollar ~~The~~as ~~higher~~well as lower selling prices. ~~are~~Core ~~the~~converting ~~results~~volumes ofwere ~~announced~~up, ~~price~~primarily ~~increases~~in ~~which~~global ~~benefit~~beverage, ~~from~~dry ~~inflationary~~foods, ~~pass~~frozen ~~throughs~~foods, indairy ~~the~~products ~~converting~~and ~~business~~cereal, asoffset ~~well~~by asdeclines ~~open~~in ~~market~~foodservice ~~sales~~packaging, including cups. ~~Core~~The ~~converting~~COVID-19 ~~volumes~~pandemic ~~were~~had ~~down,~~a inpositive ~~dry~~impact ~~and~~on ~~frozen~~volumes ~~foods~~in ~~and~~2020 ~~dairy~~for ~~products,~~food ~~partially~~and beverage packaging offset by ~~higher~~a ~~global~~reduction ~~beverage~~in ~~volumes~~demand ~~and~~for ~~new~~some ~~product~~foodservice ~~introductions~~products.

Income from Operations

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

	Year Ended December 31,
			Variances
In millions	~~2018~~2019		Price		Volume/Mix		Inflation		Foreign Exchange		Other (a)		~~2019~~2020		~~Increase~~Decrease		Percent Change
Consolidated	$	~~458~~533.56	$	~~131~~(1.2)	$	~~(31~~13.2)5	$	(7529.19)	$	(60.2)3	$	567.40	$	~~533~~523.68	$	75(9.18)	16(1.48)	%

(a) Includes the Company's cost reduction initiatives, planned mill maintenance costs, mill market downtime costs, expenses related to acquisitions and integration activities, exit activities, ~~gain on sale of assets~~ and shutdown and other special charges.

The Company's Income from Operations for 2019 increased $75.1 million or 16.4%, to $533.6 million from $458.5 million for the same period in 2018 due to the higher selling prices, cost savings through continuous improvement programs, the Augusta, Georgia mill outage in 2018 (approximately $52 million), and benefits from completed capital projects and synergies. These increases were partially offset by higher inflation, product mix, the gain on the sale of the Santa Clara mill site in 2018, costs to dispose of idle and abandoned assets, costs associated with exit activities, start-up costs associated with the Monroe, Louisiana folding carton facility, increased incentive costs and unfavorable foreign currency exchange rates. Inflation for 2019 increased due to labor and benefit costs ($40.4 million), wood ($39.6 million), external board ($12.1 million), partially offset by lower secondary fiber cost ($10.5 million), and other costs, net ($2.5 million).25

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The Company's Income from Operations for 2020 decreased $9.8 million or 1.8%, to $523.8 million from $533.6 million for the same period in 2019. Transactions recorded in Business Combinations, Shutdown and Other Special Charges and Exit Activities, Net increased $23.4 million driven by higher charges for exit activities, including those related to our announced closures of White Pigeon, Michigan, CRB mill and West Monroe, Louisiana, PM1 containerboard machine, costs related to COVID-19, and increases in estimated liabilities related to the withdrawal from certain multi-employment benefit plans for facilities which have been closed. In addition, Income from Operations was negatively impacted in 2020 as compared to 2019 by non-commodity inflation (primarily labor and benefits), product mix, higher levels of planned maintenance and higher levels of market downtime at the uncoated SBS cupstock paper machine, and higher depreciation and amortization. Income from Operations was positively impacted in 2020 as compared to 2019 by higher volumes from organic sales growth and acquisitions, cost savings from continuous improvement and other programs, and commodity deflation.

Inflation for 2020 increased due to higher costs of labor and benefits ($45.1 million), secondary fiber ($22.5 million), freight ($8.7 million), and other costs, net ($1.9 million), partially offset by lower costs for wood ($32.7 million), energy ($9.9 million) and external board ($5.7 million).

Nonoperating Pension and Postretirement Benefit

Nonoperating Pension and Postretirement Benefit was an expense of $39151.5 million in ~~2019~~2020 versus ~~income of~~ $1439.95 million in ~~2018~~2019. The increase ~~in expense~~ was due to a settlement charge of $39152.2 5 million incurred during the first quarter of 2020 associated with ~~lump~~the ~~sum~~Company's ~~payments,~~purchase asof ~~well~~a asgroup ~~lower~~annuity ~~expected~~contract ~~return~~that ontransferred ~~assets,~~the ~~and~~remaining ~~higher~~pension ~~interest~~benefit ~~costs~~obligation under the largest U.S. Plan of approximately $713 million to an insurance company.

Interest Expense, Net

Interest Expense, Net ~~increased~~decreased by $1611.97 million to $~~140~~128.69 million in ~~2019~~2020 from $~~123~~140.76 million in ~~2018~~2019. Interest Expense, Net ~~increased~~decreased due ~~primarily~~ to ~~higher~~lower ~~average~~interest ~~debt~~rates, ~~balances~~partially ~~slightly~~ offset by ~~lower~~higher ~~average~~debt ~~interest~~balances ~~rates~~ as compared to ~~the~~ prior year. As of December 31, ~~2019~~2020, approximately 3435% of the Company’s total debt was subject to floating interest rates.

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Income Tax Expense

During ~~2019~~2020, the Company recognized Income Tax Expense of $2011.4 million on Income before Income Taxes and Equity Income of Unconsolidated Entity of $~~353~~243.54 million. During ~~2018~~2019, the Company recognized Income Tax Expense of $1120.84 million on Income before Income Taxes and Equity Income of Unconsolidated Entity of $~~347~~353.85 million. As a result of the NACP Combination, the Company is treated as a disregarded entity for U.S. federal and state income tax purposes. As such, income taxes are not recorded with respect to consolidated domestic earnings, resulting in a difference between the effective tax rate and the statutory tax rate. ~~During~~In ~~2019~~addition, during 2020, the Company recorded a discrete ~~expense~~benefit of $47.8 6 million ~~for~~related to the release of the valuation allowances previously recorded against the net deferred tax assets of two of its Canadian subsidiaries as a result of a planned internal restructuring. In 2019, the Company’s effective tax rate was higher than the statutory tax rate due to the establishment of a valuation allowance against the net deferred tax assets of the Company’s subsidiary in Australia. The effective tax rate in ~~2019~~2020 is higher than the effective tax rate in ~~2018~~2019 primarily due to ~~this valuation allowance establishment. Also, during 2018,~~ the ~~Company~~contrasting ~~released its~~ valuation allowance ~~against~~changes ~~the~~on ~~net~~a ~~deferred~~year ~~tax~~over ~~assets~~year ~~of its French subsidiary~~basis.

Equity Income of Unconsolidated Entity

Equity Income of Unconsolidated Entity was $0.49 million in ~~2019~~2020 and $10.24 million in ~~2018~~2019 and is related to the Company’s equity investment in the joint venture, Rengo Riverwood Packaging, Ltd.

~~2018 COMPARED WITH 2017~~ 26

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2019 COMPARED WITH 2018

Net Sales

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

	Year Ended December 31,
			Variances
In millions	~~2017~~2018		Price		Volume/Mix		Foreign Exchange		~~2018~~2019		Increase		Percent Change
Consolidated	$	46,~~405~~029.64	$	52131.92	$	~~1,551~~50.82	$	19(50.17)	$	6,~~029~~160.41	$	~~1,623~~130.87	362.92	%

The Company’s Net Sales in ~~2018~~2019 increased by $~~1,623~~130.87 million, or 362.92% to $6,~~029~~160.41 million from $46,~~405~~029.64 million in ~~2017~~2018 due to higher selling prices and Net Sales of approximately $~~1,547.9~~115 million from the ~~NACP~~Artistic ~~Combination~~ and ~~the~~2018 ~~2017~~ Acquisitions. ~~and~~These increases were partially offset by modestly lower converting volumes in the ~~2018~~first ~~Acquisitions,~~half ~~higher~~of ~~selling~~the ~~prices~~year and ~~favorable~~unfavorable foreign currency exchange rates, primarily the Euro, ~~and the~~ British Pound. ~~These~~and ~~increases~~Australian ~~were~~dollar. ~~offset~~The byhigher ~~lower~~selling ~~open~~prices ~~market~~are ~~volumes as~~ the ~~Company~~result ~~internalized~~of ~~more~~announced ~~paperboard~~price ~~due~~increases towhich ~~the~~benefit ~~shutdown~~from ofinflationary ~~the~~pass ~~Santa~~throughs ~~Clara~~in ~~mill~~the ~~site~~converting inbusiness ~~the~~as ~~fourth~~well ~~quarter~~as ofopen ~~2017~~market sales. Core converting volumes were ~~stable~~down, ~~due~~in todry ~~new~~and ~~product~~frozen ~~introductions~~foods ~~offset~~and bydairy ~~lower~~products, ~~beverage~~partially ~~volumes.~~offset ~~The~~by higher ~~selling~~global ~~prices~~beverage ~~are~~volumes ~~the~~and ~~result~~new ofproduct ~~announced price increases which benefit open market sales as well as inflationary pass throughs in the converting businesses~~introductions.

Income from Operations

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

	Year Ended December 31,
			Variances
In millions	~~2017~~2018		Price		Volume/Mix ~~(a)~~		Inflation		Foreign Exchange		Other (ba)		~~2018~~2019		Increase		Percent Change
Consolidated	$	~~327~~458.95	$	52131.92	$	38(31.2)	$	(7379.61)	$	1(6.52)	$	~~111~~60.64	$	~~458~~533.56	$	~~130~~75.61	3916.84	%

(a) Includes the Company’s cost reduction initiatives and expenses related to ~~the~~business ~~Augusta~~combinations, ~~Georgia~~gain ~~mill~~on ~~outage~~sale ~~and~~of ~~inflation~~assets ~~for~~and ~~the~~shutdown ~~NACP~~and ~~Combination~~other ofspecial ~~approximately $26 million~~charges.

~~(b) Includes~~The ~~the~~ Company’'s Income from Operations for 2019 increased $75.9 million or 16.6%, to $534.1 million from $458.2 million for the same period in 2018 due to the higher selling prices, cost ~~reduction~~savings ~~initiatives~~through continuous improvement programs, the Augusta, Georgia mill outage in 2018 (approximately $52 million), and ~~expenses~~benefits ~~related~~from tocompleted ~~business~~capital ~~combinations~~projects and synergies. These increases were partially offset by higher inflation, product mix, the gain on the sale of the Santa Clara mill site in 2018, costs to dispose of idle and abandoned assets, costs associated with exit activities, start-up costs associated with the Monroe, Louisiana folding carton facility, increased incentive costs and ~~shutdown~~unfavorable foreign currency exchange rates. Inflation for 2019 increased due to labor and benefit costs ($40.4 million), wood ($39.6 million), external board ($12.1 million), partially offset by lower secondary fiber cost ($10.5 million), and other ~~special~~costs, ~~charges~~net ($2.5 million).

25Nonoperating Pension and Postretirement Benefit

~~Table~~Nonoperating Pension and Postretirement Benefit was an expense of ~~Contents~~$39.5 million in 2019 versus income of $14.9 million in 2018. The increase in expense was due to a settlement charge of $39.2 million associated with lump sum payments, as well as lower expected return on assets and higher interest costs.

The Company's Income from Operations for 2018 increased $130.6 million or 39.8%, to $458.5 million from $327.9 million for the same period in 2017 due to the NACP Combination, the 2017 Acquisitions and the 2018 Acquisitions, the higher selling prices, a gain of $37.1 million from the sale of the Santa Clara mill, cost savings through continuous improvement and other programs and the impact related to planned downtime taken in 2017 to upgrade a paper machine in West Monroe, Louisiana. These increases were partially offset by inflation, the Augusta, Georgia mill outage (approximately $52 million), expenses related to the NACP Combination and integration activities and higher incentive compensation costs. Inflation for 2018 increased due to freight ($25.9 million), labor and benefit costs ($20.9 million), chemicals ($19.4 million), external board ($17.7 million), and other costs, net ($4.2 million), partially offset by lower secondary fiber cost ($14.5 million).

Interest Expense, Net

Interest Expense, Net increased by $3416.~~0 million~~9 million to $~~123~~140.7 6 million in ~~2018~~ 2019 from $89123.7 ~~million~~ million in ~~2017~~ 2018. Interest Expense, Net increased due primarily to higher average debt balances ~~and~~slightly offset by lower average interest rates as compared to the prior year. As of December 31, ~~2018~~2019, approximately 4134% of the Company'’s total debt was subject to floating interest rates.

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Income Tax Expense

During ~~2018~~2019, the Company recognized Income Tax Expense of $1120.84 million on Income before Income Taxes and Equity Income of Unconsolidated Entity of $~~347~~353.85 million. During ~~2017~~2018, the Company recognized Income Tax Benefit of $~~321~~11.78 million on Income before Income Taxes and Equity Income of Unconsolidated Entity of $~~253~~347.08 million. As a result of the NACP Combination, the Company is treated as a disregarded entity for U.S. federal and state income tax purposes. As such, income taxes are not recorded with respect to consolidated domestic earnings, resulting in a difference between the effective tax rate and the statutory tax rate. InDuring ~~addition~~2019, inthe ~~2018,~~Company recorded discrete expense of $4.8 million for the ~~Company~~establishment ~~reduced~~of ~~its~~a valuation allowance against ~~certain~~the net deferred tax assets. Ofof the ~~total~~Company’s ~~reduction~~subsidiary ~~approximately~~in $2Australia. ~~million~~The ~~was~~effective tax rate in 2019 is higher than the effective tax rate in 2018 primarily ~~attributable~~due to ~~the~~this ~~release~~valuation ofallowance establishment. Also, during 2018, the Company released its valuation allowance against the net deferred tax assets of ~~the~~its ~~Company’s~~French ~~wholly-owned~~ subsidiary ~~in France~~.

Equity Income of Unconsolidated Entity

Equity Income of Unconsolidated Entity was $10.24 million in ~~2018~~2019 and $1.72 million in ~~2017~~2018 and is related to the Company’s equity investment in the joint venture, Rengo Riverwood Packaging, Ltd.

Segment Reporting

The Company has three reportable segments as follows:

Paperboard Mills includes the ~~nine~~eight North American paperboard mills ~~which~~that produce primarily CRB, CUK, and SBS, which is ~~primarily~~ consumed internally to produce paperboard packaging for the Americas and Europe ~~Paperboard~~ Packaging segments. The remaining paperboard is sold externally to a wide variety of paperboard packaging converters and brokers. The Paperboard Mills segment Net Sales ~~represent~~represents 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 Good ("CPG") companies, and cups, lids, and food containers sold primarily to ~~consumer~~foodservice ~~packaged~~companies ~~goods,~~and quick-service restaurants ~~and~~("QSR") ~~foodservice companies~~ serving the food, beverage, and consumer product markets in the Americas.

Europe Paperboard Packaging includes paperboard packaging, primarily folding cartons, sold primarily to ~~consumer~~CPG ~~packaged goods~~ companies serving the food, beverage and consumer product markets 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.

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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 in Note 1 in the Notes to Consolidated Financial Statements included herein under “Item 8. Financial Statements and Supplementary Data."

Year Ended December 31,

In millions

~~2019~~2020

~~2018~~2019

~~2017~~2018

NET SALES:

Paperboard Mills

~~1,094~~988.81

1,~~078~~094.18

~~399~~1,078.71

Americas Paperboard Packaging

4,~~233~~650.71

4,~~098~~233.37

34,~~245~~098.13

Europe Paperboard Packaging

~~689~~764.36

~~695~~689.93

~~593~~695.59

Corporate/Other/Eliminations(a)

~~142~~157.31

~~157~~142.13

~~167~~157.31

Total

6,~~160~~559.19

6,~~029~~160.41

46,~~405~~029.64

INCOME (LOSS) FROM OPERATIONS:

(LOSS) INCOME FROM OPERATIONS:

Paperboard Mills(b)

33(109.19)

3033.61

~~(35~~30.0)6

Americas Paperboard Packaging

~~477~~638.75

~~420~~477.17

~~358~~420.21

Europe Paperboard Packaging

6065.39

4660.13

3746.31

Corporate and Other(c)

(3770.57)

(3837.35)

(3238.63)

Total

~~533~~523.68

~~458~~533.56

~~327~~458.95

(a) Includes revenue from contracts with customers for the Australia and Pacific Rim operating segments.

(b) Includes accelerated depreciation related to exit activities in 2020 and 2019, excludes $29.6 million related to the Augusta, Georgia mill outage in 2018 ~~and includes accelerated depreciation related to shutdown of the Santa Clara mill in 2017~~.

(c) Includes expenses related to business combinations, exit activities, idle and abandoned assets, gain on sale of assets and shutdown and other special charges.

2020 COMPARED WITH 2019

Paperboard Mills - Net Sales decreased from prior year due to customer mix, lower open market volume primarily of containerboard due to the shutdown of the PM1 containerboard machine and CUK as the Company internalized more paperboard tons, and lower selling prices.

Income from Operations decreased due to the lower selling prices, lower open market volume, higher levels of planned maintenance at the mills, higher levels of market downtime at the SBS cupstock paper machine, higher labor and benefits costs, increased depreciation expense including accelerated depreciation related to exit activities, and customer mix of open market volume partially offset by productivity improvements, including benefits from capital projects, and commodity deflation. The commodity deflation was primarily due to lower prices for wood and energy offset by higher prices for secondary fiber.

Americas Paperboard Packaging - Net Sales increased due to higher selling prices, the Greif, Artistic, and Quad acquisitions, organic sales growth including conversions to our paperboard packaging solutions, and new product introductions offset by unfavorable foreign currency exchange rates. Higher volumes in global beverage, dry foods, frozen foods, dairy products and cereal were offset by declines in foodservice packaging, including cups. In beverage, volumes increased in all categories including soft drink, craft and specialty, and big beer. COVID-19 had a positive impact on volumes in 2020 for food and beverage packaging offset by a reduction in demand for some foodservice products.

Income from Operations increased due to higher volumes including from organic sales growth and acquisitions, higher selling prices, cost savings through continuous improvement and other programs, and commodity deflation, partially offset by other inflation (primarily labor and benefits), higher levels of market downtime at the SBS cupstock paper machine, and unfavorable foreign currency exchange rates. The commodity deflation was primarily due to lower prices for wood, energy, and external board offset by higher prices for secondary fiber and freight.

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Europe Paperboard Packaging - Net Sales increased due to higher pricing, increased volumes led by beverage, machine sales, and convenience, favorable mix, and favorable foreign currency exchange rates.

Income from Operations increased due to higher selling prices, increased volumes, commodity deflation, and favorable foreign currency exchange rates partially offset by higher labor and benefits, unfavorable mix, and COVID-19 costs.

2019 COMPARED WITH 2018

Paperboard Mills - Net Sales increased from prior year due to higher selling prices and higher open market volume of SBS and CRB, due to the White Pigeon Mill acquired as part of the Artistic acquisition, partially offset by lower open market volume for CUK. The Company also internalized more CUK and SBS paperboard.

Income from Operations increased due to the higher selling prices and productivity improvements, including benefits from capital projects. These increases were partially offset by product mix, inflation, accelerated depreciation related to exit activities and modest market downtime taken for SBS. The higher inflation was primarily due to wood and labor and benefits, partially offset by lower prices for secondary fiber and energy.

Americas Paperboard Packaging - Net Sales increased due to higher selling prices and the Artistic and 2018 Acquisitions, partially offset by modestly lower converting volumes in the first half of the year. Certain consumer products, primarily dry and frozen foods and dairy products, experienced decreased volume, which was partially offset by increased volume from new product introductions. Beverage volumes rose across all categories except big beer.

Income from Operations increased due to the higher selling prices and productivity improvements partially offset by higher inflation and start-up costs associated with the Monroe, Louisiana folding carton facility. The higher inflation was primarily for labor and benefits and external board.

Europe Paperboard Packaging - Net Sales decreased slightly as unfavorable foreign currency exchange rates were partially offset by increased beverage, consumer product and convenience volumes and higher selling prices. The higher volumes reflect the increase in multi-pack beverage and a shift from plastics into paperboard solutions.

Income from Operations increased due to the higher selling prices, the improved volumes and cost savings through continuous improvement programs, partially offset by inflation, primarily labor and benefits and external board, unfavorable foreign currency exchange rates and higher outsourcing costs.

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2018 COMPARED WITH 2017

Paperboard Mills - Net sales increased due to the NACP Combination and increased selling prices, partially offset by lower open market volume of CRB and CUK as the Company internalized more paperboard due to the closure of the Santa Clara Mill in the fourth quarter of 2017. During 2018, the Company announced a series of price increases related to its CRB, CUK and SBS open market paperboard.

Income from Operations increased due to the NACP Combination, the impact of the 2017 maintenance cold outage in West Monroe, Louisiana, productivity improvements and the higher selling prices, partially offset by the Augusta, Georgia mill outage, and higher inflation. Inflation increased primarily for chemicals, freight and labor and benefits, partially offset by lower secondary fiber and energy costs.

Americas Paperboard Packaging - Net sales increased due to the NACP Combination, the 2017 Acquisitions and the 2018 Acquisitions, higher selling prices and new product introductions, partially offset by lower volume for beverage and certain consumer products. The higher selling prices are inflationary pass throughs related to announced paperboard price increases.

Income from Operations increased due to the NACP Combination, the 2017 Acquisitions and the 2018 Acquisitions, the higher selling prices and cost savings through continuous improvement programs, partially offset by higher inflation, primarily for freight, labor and benefits and external board.

Europe Paperboard Packaging - Net Sales increased due to the Norgraft acquisition and NACP Combination, favorable foreign currency exchange rates, increased volumes for beverage, consumer and convenience products and higher selling prices. The higher selling prices are related to board inflationary pass throughs.

Income from Operations increased due to the same factors increasing Net Sales as well as, continuous improvement and other cost savings programs, partially offset by higher inflation, primarily external paperboard.

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

	Years Ended December 31,
In millions	~~2019~~2020		~~2018~~2019
Net Cash Provided by (Used in) Operating Activities	$	661.6	$	(350.5)
Net Cash Provided by Operating Activities	$	823.9	$	661.6
Net Cash (Used in) Provided by Investing Activities	$	(224.3)	$	689.1
Net Cash Used in Investing Activities	$	(647.8)	$	(224.3)
Net Cash Used In Financing Activities	$	(360.8)	$	(310.7)
Net Cash Used in Financing Activities	$	(147.8)	$	(360.8)

Effective January 1, 2018, the Company adopted ASU No. 2016-15, Statement of Cash Flows (Topic 230); Classification of Certain Cash Receipts and Cash Payments, which required the Company to classify consideration received for beneficial interest obtained for transferring trade receivables as investing activities instead of operating activities.

Net cash provided by operating activities in 2019 totaled $661.6 million, compared to $350.5 million used in operating activities in 2018. The increase was due primarily to the restructuring of certain of the Company's accounts receivable sale and securitization programs. Pension contributions in 2019 and 2018 were $11.3 million and $5.8 million, respectively.30

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Net cash ~~used~~provided inby ~~investing~~operating activities in ~~2019~~2020 totaled $~~224~~823.39 million, compared to $~~689~~661.16 million ~~provided by investing activities~~ in ~~2018~~2019. ~~Capital~~The ~~spending~~increase was ~~$352.9~~due ~~million~~primarily ~~and~~to ~~$395.2 million in 2019 and 2018, respectively. In 2019,~~ the Company paid the remaining $2.0 million for the Letica acquisition and paid $52.5 million for the Artistic acquisition, including the working capital true-up. Net beneficial interest decreased as a result of the restructuring of certain of the Company's accounts receivable sale and securitization programs. Inas ~~the~~well ~~prior~~as ~~year,~~improved ~~the~~operations ~~Company~~as ~~paid~~compared ~~$89.4~~to ~~million,~~prior ~~net of cash acquired, for the 2018 Acquisitions~~year. ~~The~~Pension ~~Company~~contributions ~~also received cash from the sale of assets of $49.4 million~~ in ~~2018.~~2020 ~~Net cash receipts related to the accounts receivable securitization~~ and ~~sale~~2019 ~~programs~~ were $~~187~~19.71 million and $~~1,131~~11.23 million ~~in 2019 and 2018~~, respectively.

Net cash used in ~~financing~~investing activities in ~~2019~~2020 totaled $~~360~~647.8 million, compared to $~~310~~224.73 million in ~~2018~~2019. ~~Current~~Capital ~~year~~spending ~~activities~~was ~~include~~$646.3 amillion ~~debt~~and ~~offering of~~ $~~300~~352.9 million ~~aggregate~~in ~~principal~~2020 ~~amount~~and of2019, 4respectively.~~75%~~ ~~senior~~In ~~notes~~2020, ~~due~~the ~~2027. The~~ Company ~~used~~paid ~~the~~approximately ~~net~~$41 ~~proceeds~~million toand ~~repay~~$80 million afor ~~portion~~the ofQuad ~~its~~and ~~outstanding~~Greif ~~borrowings~~acquisitions, ~~under its senior secured revolving credit facility~~respectively. ~~Additionally,~~Net ~~the~~beneficial ~~Company~~interest ~~made~~decreased ~~borrowings~~as ~~under~~a ~~revolving~~result ~~credit~~of ~~facilities~~the ~~primarily~~restructuring ~~for~~of ~~capital~~certain ~~spending and payments on debt~~ of ~~$36.5~~the ~~million. The~~ Company's ~~also~~accounts ~~paid~~receivable ~~membership~~sale ~~distributions~~and ofsecuritization ~~$248~~programs.5 ~~million to GPIP.~~ In the prior year, the Company ~~had~~paid ~~net borrowings under revolving credit facilities of~~ $8954.45 million, ~~primarily~~net ~~for~~of ~~the~~cash ~~2018 Acquisitions~~acquired, ~~pension~~for ~~contributions~~the of2019 $5Acquisitions.8 ~~million,~~Net ~~and~~cash ~~payments~~receipts onrelated ~~debt~~to ofthe ~~$152.4~~accounts ~~million.~~receivable ~~The~~securitization ~~Company~~and ~~also~~sale ~~paid~~programs ~~membership~~were ~~distributions of~~ $~~241~~127.90 million toand ~~GPIP~~$187.7 million in ~~the~~2020 ~~prior~~and ~~year~~2019, respectively.

Net cash used in financing activities in 2020 totaled $147.8 million, compared to $360.8 million in 2019. Current year activities include a debt offering of $450 million aggregate principal amount of 3.50% senior notes due 2028, and a debt offering of $350 million aggregate principal amount of 3.50% senior notes due 2029. The Company used the net proceeds to repay a portion of its outstanding borrowings under its senior secured revolving credit facility. The Company also made membership distributions of $925.4 million including $500 million to allow GPIP to purchase 32.6 million partnership units from International Paper Company and $315.6 million to allow GPIP to repurchase 23.4 million partnership units from GPI Holding. Additionally, the Company made borrowings under revolving credit facilities primarily for capital spending, membership distributions and payments on debt of $36.5 million. In the prior year, the Company made a debt offering of $300 million aggregate principal amount of 4.75% senior notes due 2027. The Company also made borrowings under revolving credit facilities primarily for capital spending and payments on debt of $36.5 million. The Company also paid membership distributions of $248.5 million to GPIP, which is primarily made up of $128.8 million to allow GPIP to repurchase 10.2 million partnership units from GPI Holding.

Supplemental Guarantor Financial Information

As further discussed in Note 5 in the Notes to Consolidated Financial Statements included herein under “Item 8. Financial Statements and Supplementary Data," 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. The Company’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.

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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.


In millions	Year Ended December 31, 2020
SUMMARIZED STATEMENTS OF OPERATIONS
Net Sales(a)	$	5,399.8
Cost of Sales	4,515.0
Income from Operations	429.4
Net Income	144.6

(a) Includes Net Sales to Nonguarantor Subsidiaries of $536.9 million



In millions	December 31, 2020
SUMMARIZED BALANCE SHEET
Current assets (excluding intercompany receivable from Nonguarantor)	$	1,131.4
Noncurrent assets	5,032.7
Intercompany receivables from Nonguarantor	334.3
Current liabilities	1,512.9
Noncurrent liabilities	3,411.4

Liquidity and Capital Resources

The Company's liquidity needs arise primarily from the funding of its capital expenditures, debt service on its indebtedness, ongoing operating costs, working capital, and membership distributions. Principal and interest payments under the term loan facilities and the revolving credit facilities, together with principal and interest payments on the Company's 4.75% Senior Notes due 2021 (redeemed in January 2021), 4.875% Senior Notes due 2022, 4.125% Senior Notes due 2024, ~~and~~ 4.75% Senior Notes due 2027, 3.50% Senior Notes due 2028, and 3.50% Senior Notes due 2029 (the “Notes”), 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.

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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, Net line item on the Consolidated Statement of Operations. The following table summarizes the activity under these programs for the year ended December 31, ~~2019~~2020 and ~~2018~~2019, respectively:

	Year Ended December 31,
In millions	~~2019~~2020		~~2018~~2019
Receivables Sold and Derecognized	$	2,~~654~~849.28	$	32,~~314~~654.82
Proceeds Collected on Behalf of Financial Institutions	2,~~254~~787.94		32,~~153~~254.49
Net Proceeds Received From (Paid to) Financial Institutions	66.5		13.4
Net Proceeds Received From Financial Institutions	54.9		66.5
Deferred Purchase Price at December 31(a)	05.73		660.97
Pledged Receivables at December 31	~~177~~201.50		43177.05

(a) Included in Other Current Assets and represents a beneficial interest in the receivables sold to the financial institutions, which is a Level 3 fair value measure.

The Company has also entered into various factoring and supply chain financing arrangements which also qualify for sale accounting in accordance with the Transfers and Servicing topic of the FASB Codification. For the years ended December 31, ~~2019~~2020 and ~~2018~~2019, the Company sold receivables of approximately $~~238~~368 million and $~~119~~238 million, respectively, related to these factoring arrangements.

Receivables sold under all programs subject to continuing involvement, which consist principally of collection services, were approximately $~~562~~621 million and $~~559~~562 million as of December 31, ~~2019~~2020 and ~~2018~~2019, respectively.

Covenant Restrictions

Covenants contained in the ~~Amended~~Current ~~and Restated~~ Credit Agreement, ~~the Term Loan Credit Agreement (collectively, the "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, pay membership distributions 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 Third Amended and Restated Credit Agreement, which contains the definitions of these covenants, was filed as an exhibit to the Company's Form 8-K filed on January 2, 2018.

The Current Credit Agreement requires that the Company maintain a maximum Consolidated Total Leverage Ratio of less than 4.25 to 1.00. At December 31, ~~2019~~2020, the Company was in compliance with such covenant and the ratio was 23.5007 to 1.00.

The Company must also comply with a minimum Consolidated Interest Expense Ratio of 3.00 to 1.00. At December 31, ~~2019~~2020, the Company was in compliance with such covenant and the ratio was 78.7889 to 1.00.

As of December 31, ~~2019~~2020, 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.

Capital Investment

The Company’s capital investments in ~~2019~~2020 were $~~359~~651.13 million ($~~352~~646.93 million was paid), compared to $~~409~~359.21 million ($~~395~~352.29 million was paid) in ~~2018~~2019. During ~~2019~~2020, the Company had capital spending of $~~307~~605.87 million for improving process capabilities, $2915.34 million for capital spares and $2230.02 million for manufacturing packaging machinery.

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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, closures or sales of facilities may necessitate further investigation and may result in remediation at those facilities. The Company has established reserves for those facilities or issues where liability is probable and the costs are reasonably estimable.

For further discussion of the Company’s environmental matters, see Note 14 in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.”

Contractual Obligations and Commitments

A summary of our contractual obligations and commitments as of December 31, ~~2019~~2020 is as follows:

	Payments Due by Period
In millions	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Debt Obligations	$	23,~~738~~527.62	$	45492.82	$	~~617~~1,631.63	$	~~1,771~~300.65	$	~~303~~1,103.62
Operating Leases	~~225~~234.60		6064.81		8792.0		4743.16		3034.73
Finance Leases	~~220~~207.38		12.56		24.86		24.89		~~158~~145.27
Interest Payable	~~513~~464.15		~~137~~98.09		~~221~~150.40		63104.48		91110.38
Purchase Obligations (a)	221.2		57.8		49.5		36.8		77.1
Purchase Obligations(a)	691.8		379.4		157.5		96.1		58.8
Total Contractual Obligations (b)	$	3,918.8	$	313.9	$	1,000.3	$	1,943.7	$	660.9
Total Contractual Obligations(b)	$	5,125.3	$	1,047.2	$	2,055.4	$	569.9	$	1,452.8

(a) Purchase obligations primarily consist of commitments for the purchase of fiber and chip processing along with commitments associated with building the new CRB paper machine in Kalamazoo, Michigan.

(b) Certain amounts included in this table are based on management’s estimates and assumptions about these obligations. Because these estimates and assumptions are necessarily subjective, the obligations the Company will actually pay in the future periods may vary from those reflected in the table.

International Operations

For ~~2019~~2020, before intercompany eliminations, net sales from operations outside of the U.S. represented approximately 2021% of the Company’s net sales. The Company’s revenues from export sales fluctuate with changes in foreign currency exchange rates. At December 31, ~~2019~~2020, approximately 1716.0% of the Company’s total assets were denominated in currencies other than the U.S. dollar. The Company has significant operations in countries that use the euro, British pound sterling, the Australian dollar, the Canadian dollar, the Mexico peso or the Japanese yen as their functional currencies. The effect of changes in the U.S. dollar exchange rate against these currencies produced a net currency translation adjustment gain of $1217.47 million, which was recorded in Other Comprehensive (Loss) Income for the year ended December 31, ~~2019~~2020. The magnitude and direction of this adjustment in the future depends on the relationship of the U.S. dollar to other currencies. The Company pursues a currency hedging program in order to reduce the impact of foreign currency exchange fluctuations on financial results. See “Financial Instruments” below.

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Financial Instruments

The Company pursues a currency hedging program which utilizes derivatives to reduce the impact of foreign currency exchange fluctuations on its consolidated financial results. Under this program, the Company has entered into forward exchange contracts in the normal course of business to hedge certain foreign currency denominated transactions. Realized and unrealized gains and losses on these forward contracts are included in the measurement of the basis of the related foreign currency transaction when recorded. The Company also pursues a hedging program that utilizes derivatives designed to manage risks associated with future variability in cash flows and price risk related to future energy cost increases. Under this program, the Company has entered into natural gas swap contracts to hedge a portion of its forecasted natural gas usage for ~~2020~~2021 and ~~2021~~2022. Realized gains and losses on these contracts are included in the financial results concurrently with the recognition of the commodity consumed. In addition, 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. The Company does not hold or issue financial instruments for trading purposes. See “Item 7A., Quantitative and Qualitative Disclosure About Market Risk.”

~~CRITICAL ACCOUNTING POLICIES~~34

~~The~~Table ~~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 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 critical judgments by management relate to pension benefits, retained insurable risks, future cash flows associated with impairment testing for goodwill and long-lived assets, and deferred income taxes.Contents

future interest payments caused by interest rate changes on its variable rate term loan facility. The Company does not hold or issue financial instruments for trading purposes. See “Item 7A., Quantitative and Qualitative Disclosure About Market Risk.”

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES

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 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 critical judgments by management relate to pension benefits, future cash flows associated with impairment testing for goodwill and long-lived assets, and deferred income taxes.

• Pension Benefits

The Company sponsors defined benefit pension plans (the “Plans”) for eligible employees in North America and certain international locations. The funding policy for the U.S. qualified defined benefit plans is to, at a minimum, contribute assets as required by the Internal Revenue Code Section 412. Nonqualified defined benefit U.S. plans providing benefits in excess of limitations imposed by the U.S. income tax code are not funded.

The Company’s pension expense for defined benefit pension plans was $54167.9 million in ~~2019~~2020 compared to $354.3 9 million in ~~2018~~2019. The 2020 expense includes a $153.7 million charge associated with the termination and settlement of its largest U.S. plan. The 2019 expense includes a $39.2 million charge associated with lump-sum settlements with certain participants. Pension expense is calculated based upon a number of actuarial assumptions applied to each of the defined benefit plans. The weighted average expected long-term rate of return on pension fund assets used to calculate pension expense was 4.74% and 4.86% in 2019 and 2018, respectively. The expected long-term rate of return on pension assets was determined based on several factors, including historical rates of return, input from our pension investment consultants and projected long-term returns of broad equity and bond indices. The Company evaluates its long-term rate of return assumptions annually and adjusts them as necessary.

The ~~Company~~weighted ~~determined~~average ~~pension~~expected ~~expense~~long-term ~~using~~rate ~~both~~of ~~the~~return ~~fair~~on ~~value~~pension offund assets ~~and~~used ato ~~calculated~~calculate ~~value~~pension ~~that~~expense ~~averages~~was ~~gains~~4.12% and ~~losses over a period of years~~4.74% ~~Investment~~in ~~gains~~2020 ~~or losses represent the difference between the expected~~ and ~~actual return on assets. As of December 31,~~ 2019, ~~the net actuarial loss was $279~~respectively.9 ~~million.~~The ~~These~~expected ~~net~~long-term ~~losses~~rate ~~may~~of ~~increase~~return ~~future~~on pension ~~expense~~assets ifwas ~~not~~determined ~~offset~~based byon ~~(i) actual~~several ~~investment returns that exceed the assumed investment returns, or (ii) other~~ factors, including ~~reduced~~historical ~~pension liabilities arising from higher discount~~ rates ~~used~~of ~~to calculate pension obligations~~return, orinput ~~(iii) other~~from ~~actuarial~~our ~~gains,~~pension ~~including~~investment ~~whether~~consultants ~~such~~and ~~accumulated~~projected ~~actuarial~~long-term ~~losses~~returns atof ~~each~~broad ~~measurement~~equity ~~date~~and ~~exceed~~bond ~~the “corridor” determined under the Compensation — Retirement Benefits topic of the FASB Codification~~indices. The ~~actuarial~~Company ~~loss~~evaluates isits ~~amortized~~long-term ~~over~~rate ~~the average remaining life expectancy period~~ of ~~employees~~return ~~expected~~assumptions toannually ~~receive~~and ~~benefits.~~adjusts Inthem ~~January~~as ~~2020, following the purchase of a group annuity to transfer the benefit obligation to an insurance company, the Company expects the remaining actuarial loss to be approximately $90 million~~necessary.

The ~~discount~~Company ~~rate~~determined ~~used~~pension toexpense ~~determine~~using both the ~~present~~fair value of ~~future~~assets ~~pension~~and ~~obligations~~a atcalculated ~~December 31,~~value ~~2019~~that ~~was~~averages ~~based~~gains onand losses over a ~~yield~~period ~~curve~~of ~~constructed~~years. ~~from~~Investment agains ~~portfolio~~or oflosses ~~high-quality~~represent ~~corporate~~the ~~debt~~difference ~~securities~~between ~~with~~the ~~maturities~~expected ~~ranging~~and ~~from~~actual ~~1 year~~return toon 30assets. As of December ~~years~~31, 2020, the net actuarial loss was $105.5 ~~Each~~million. ~~year’s~~These ~~expected~~net losses may increase future ~~benefit~~pension ~~payments~~expense ~~were~~if ~~discounted~~not tooffset ~~their~~by ~~present~~(i) actual ~~value~~investment atreturns that exceed the ~~spot~~assumed ~~yield~~investment ~~curve~~returns, ~~rate~~or ~~thereby~~(ii) other ~~generating~~factors, ~~the~~including ~~overall~~reduced pension liabilities arising from higher discount ~~rate~~rates ~~for~~used ~~the~~to ~~Company’s~~calculate pension obligations., ~~The~~or ~~weighted~~(iii) other ~~average~~actuarial ~~discount~~gains, ~~rate~~including ~~used~~whether tosuch ~~determine~~accumulated actuarial losses at each measurement date exceed the ~~pension~~“corridor” ~~obligations~~determined ~~was~~under ~~2.69%~~the ~~and~~Compensation — 4Retirement Benefits topic of the FASB Codification.~~14%~~ inThe ~~2019~~actuarial ~~and~~loss ~~2018,~~is ~~respectively~~amortized over the average remaining life expectancy period of employees expected to receive benefits.

32The discount rate used to determine the present value of future pension obligations at December 31, 2020 was based on a yield curve constructed from a portfolio of high-quality corporate debt securities with maturities ranging from 1 year to 30 years. Each year’s expected future benefit payments were discounted to their present value at the spot yield curve rate thereby generating the overall discount rate for the Company’s pension obligations. The weighted average discount rate used to determine the pension obligations was 2.11% and 2.69% in 2020 and 2019, respectively.

The Company’s pension expense is estimated to be approximately $13.3 million in 2021. The estimate is based on a weighted average expected long-term rate of return of 3.59%, a weighted average discount rate of 2.11% and other assumptions. Pension expense beyond 2020 will depend on future investment performance, the Company’s contribution to the plans, changes in discount rates and other factors related to covered employees in the plans.

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~~The~~If ~~Company’s~~the ~~pension~~discount ~~expense~~rate isassumptions ~~estimated~~for tothe beCompany’s ~~approximately $164 million (includes approximately $150 million in settlement charges) in 2020~~U.S. plans ~~The~~were ~~estimate~~reduced isby ~~based on a weighted average expected long-term rate of return of 4~~0.1225%, apension ~~weighted average discount rate of 2.69% and other assumptions. Pension~~ expense ~~beyond~~would ~~2020~~increase ~~will~~by ~~depend~~approximately on$1 ~~future~~million ~~investment~~and ~~performance,~~ the ~~Company’s contribution to the plans~~December 31, ~~changes~~2020 inprojected ~~discount~~benefit ~~rates~~obligation ~~and~~would ~~other~~increase ~~factors~~approximately ~~related~~$10 ~~to covered employees in the plans~~million.

IfThe ~~the~~fair ~~discount~~value ~~rate~~of ~~assumptions~~assets ~~for~~in the Company’s Uplans was $516.S.3 ~~plans~~million ~~were~~at ~~reduced~~December 31, by2020 0and $1,172.~~25%~~4 million at December 31, ~~pension~~2019. ~~expense~~The ~~would~~projected ~~increase~~benefit byobligations ~~approximately~~exceed the fair value of plan assets by $176.5 million and $83.0 million ~~and~~as ~~the~~of December 31, 2020 and 2019, ~~projected~~respectively. The accumulated benefit obligation ~~would~~(“ABO”) ~~increase~~exceeded ~~approximately~~the fair value of plan assets by $2871.8 million at the end of 2020. At the end of 2019, the ABO exceeded the fair value of plan assets by $77.4 million.

The fair value of assets in the Company’s plans was $1,172.4 million at December 31, 2019 and $1,186.5 million at December 31, 2018. The projected benefit obligations exceed the fair value of plan assets by $83.0 million and $58.7 million as of December 31, 2019 and 2018, respectively. The accumulated benefit obligation (“ABO”) exceeded plan assets by $77.4 million at the end of 2019. At the end of 2018, the ABO exceeded the fair value of plan assets by $53.7 million.

• Retained Insurable Risks

The Company is self-insured for certain losses relating to workers’ compensation claims and employee medical and dental benefits. Provisions for expected losses are recorded based on the Company’s estimates, on an undiscounted basis, of the aggregate liabilities for known claims and estimated claims incurred but not reported. The Company has purchased stop-loss coverage or insurance with deductibles in order to limit its exposure to significant claims. The Company also has an extensive safety program in place to minimize its exposure to workers’ compensation claims. Self-insured losses are accrued based upon estimates of the aggregate uninsured claims incurred using certain actuarial assumptions, loss development factors followed in the insurance industry and historical experience.

• Goodwill

The Company evaluates goodwill for potential impairment annually as of October 1, as well as whenever events or changes in circumstances suggest that the fair value of a reporting unit may no longer exceed its carrying amount. Potential impairment of goodwill is measured at the reporting unit level by comparing the reporting unit’s carrying amount, including goodwill, to the estimated fair value of the reporting unit. As of October 1, ~~2019~~2020, the Company had seven reporting units, five of which had goodwill.

Periodically, the Company may perform a qualitative impairment analysis of goodwill associated with each of its reporting units to determine if it is more likely than not that the carrying value of a reporting unit exceeded its fair value. If the results of the qualitative analysis of any of the reporting units is inconclusive, or if significant changes in the business have occurred since the last quantitative impairment assessment, the Company will perform a quantitative analysis for those reporting units.

As of October 1, ~~2019~~2020, the Company performed a quantitative impairment test. The quantitative analysis involves calculating the fair value of each reporting unit by utilizing a discounted cash flow analysis based on the Company’s business plans, discounted using a weighted average cost of capital and market indicators of terminal year cash flows based upon a multiple of earnings before interest, taxes, depreciation and amortization ("EBITDA").

Estimating the fair value of the reporting unit involves uncertainties as it requires management to consider a number of factors, including but not limited to, future operating results, business plans, economic projections of revenues and operating margins, estimated future cash flows, and market data and analysis, including market capitalization. Fair value determinations are sensitive to changes in the factors described above. There are inherent uncertainties related to these factors and judgments used to estimate reporting unit fair value and the related analysis of potential goodwill impairment.

The variability of the assumptions that management uses to perform the goodwill impairment test depends on a number of conditions, including uncertainty about future events and cash flows. Accordingly, the Company’s accounting estimates may materially change from period to period due to changing market factors. If the Company had used other assumptions and estimates or if different conditions occur in future periods, future operating results and cash flows could be materially impacted, and judgments and conclusions about the recoverability of goodwill could change. The assumptions used in the goodwill impairment testing process could also be adversely impacted by certain of the risks discussed in “Item 1A., Risk Factors” and thus could result in future goodwill impairment charges.

33The Company performed its annual goodwill impairment tests as of October 1, 2020. 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 discount rate used for each reporting unit ranged from 7.0% to 8.0%, and we utilized an EBITDA multiple of 8.5 times to calculate terminal period cash flows. The Foodservice and Australia reporting units had fair values that exceed their respective carrying values by 17% and 37%, respectively, whereas all other reporting units exceeded by more than 45%. If we had concluded that it was appropriate to increase the discount rate we used by 100 basis points to estimate the fair value of our respective reporting units, the fair value of each reporting unit would have continued to exceed its carrying amount. The Foodservice and Australia reporting units had goodwill totaling $42.9 million and $14.7 million, respectively. The Company does not believe it is likely that there will be material changes in the assumptions or estimates used to calculate the reporting unit fair values.

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The Company performed its annual goodwill impairment tests as of October 1, 2019. 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 discount rate used for each reporting unit ranged from 7.5% to 8.0%, and we utilized an EBITDA multiple of 8.5 times to calculate terminal period cash flows. The Foodservice and Australia reporting units had fair values that exceed their respective carrying values by 32% and 17%, respectively, whereas all other reporting units exceeded by more than 50%. If we had concluded that it was appropriate to increase the discount rate we used by 100 basis points to estimate the fair value of our respective reporting units, the fair value of each reporting unit would have continued to exceed its carrying amount. The Foodservice and Australia reporting units had goodwill totaling $43.0 million and $14.4 million, respectively. The Company does not believe it is likely that there will be material changes in the assumptions or estimates used to calculate the reporting unit fair values.

• Recovery of Long-Lived Assets

The Company evaluates the recovery of its long-lived assets by analyzing operating results and considering significant events or changes in the business environment that may have triggered impairment. The Company reviews long-lived assets (including property, plant and equipment and intangible assets) for impairment whenever events or changes in circumstances indicate that the carrying amount of such long-lived assets may not be fully recoverable by undiscounted cash flows. Measurement of the impairment loss, if any, is based on the fair value of the asset, which is determined by an income, cost or market approach.

• Deferred Income Taxes and Potential Assessments

According to the Income Taxes topic of the FASB Codification, a valuation allowance is required to be established or maintained when, based on currently available information and other factors, it is more likely than not that all or a portion of a deferred tax asset will not be realized. The FASB Codification provides important factors in determining whether a deferred tax asset will be realized, including whether there has been sufficient taxable income in recent years and whether sufficient income can reasonably be expected in future years in order to utilize the deferred tax asset. The Company has evaluated the need to maintain a valuation allowance for deferred tax assets based on its assessment of whether it is more likely than not that deferred tax benefits would be realized through the generation of future taxable income. Appropriate consideration was given to all available evidence, both positive and negative, in assessing the need for a valuation allowance. In determining whether a valuation allowance is required, many factors are considered, including the specific taxing jurisdiction, the carryforward period, reversals of existing taxable temporary differences, cumulative pretax book earnings, income tax strategies and forecasted earnings for the entities in each jurisdiction.

As of December 31, ~~2019~~2020, the Company has recorded a valuation allowance of $3124.86 million against its net deferred tax assets in certain foreign jurisdictions. As of December 31, ~~2018~~2019, a total valuation allowance of $2631.18 million was recorded.

As of December 31, ~~2019~~2020, the Company ~~has~~intends ~~not~~to ~~provided~~indefinitely ~~for~~reinvest ~~deferred~~the ~~income~~earnings ~~taxes~~of onits ~~any~~foreign ofsubsidiaries ~~its~~outside ~~undistributed~~the ~~earnings~~U.S, inwith ~~international~~the ~~subsidiaries~~exception ~~because~~of earnings attributable to the Company's isequity ~~classified~~investment asin athe ~~disregarded~~joint ~~entity~~venture, ~~for~~Rengo URiverwood Packaging, Ltd.S. ~~income~~and ~~tax~~with ~~purposes~~respect ~~and~~to asany ~~such~~excess iscash ~~not~~on ~~subject~~hand toafter ~~federal~~consideration ~~income~~of ~~tax~~working capital needs and ~~additionally~~other ~~has~~debt ~~determined~~settlement, ~~that~~of noits ~~withholding~~Canadian ~~tax~~subsidiary, ~~should~~Graphic ~~apply~~Packaging toInternational ~~potential~~Canada, ~~distributions~~ULC. ~~The~~As ~~Company~~of ~~intends~~December 31, to2020, ~~indefinitely reinvest~~ the ~~earnings~~ ofCompany ~~its~~has ~~foreign~~not ~~subsidiaries~~provided ~~outside~~for ~~the~~deferred U.S,. ~~with~~federal ~~the~~income ~~exception~~taxes on any of its undistributed earnings ~~attributable~~in tointernational subsidiaries because the Company's ~~equity~~is ~~investment~~classified inas ~~the~~a ~~joint~~disregarded ~~venture,~~entity ~~Rengo~~for ~~Riverwood~~U.S. ~~Packaging,~~income ~~Ltd.~~tax purposes and ~~with~~as ~~respect~~such is not subject to ~~any~~federal ~~excess~~income ~~cash~~tax. onThe ~~hand~~Company ~~after~~has ~~consideration~~provided ofdeferred ~~working~~income ~~capital~~taxes ~~needs~~related ~~and~~to ~~other~~future ~~debt~~withholding ~~settlement,~~tax ofon ~~its~~the ~~Canadian~~excess ~~subsidiary,~~cash available for distribution from Graphic Packaging International Canada, ULC and on its investment in Rengo Riverwood Packaging, Ltd.

The Company records liabilities for potential assessments. The accruals relate to uncertain tax positions in a variety of taxing jurisdictions and are based on what management believes will be the most likely outcome of these positions. These liabilities may be affected by changing interpretations of laws, rulings by tax authorities, or the expiration of the statute of limitations.

NEW ACCOUNTING STANDARDS

For a discussion of recent accounting pronouncements impacting the Company, see Note 1 in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.”

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BUSINESS OUTLOOK

Total capital investment for ~~2020~~2021 is expected to be in the range of $~~600~~690 million to $~~625~~ 710 million.

The Company also expects the following in ~~2020, subject to finalization of acquisition accounting for the Artistic acquisition~~2021:

• Depreciation and amortization expense ~~between~~of ~~$455 million~~approximately ~~and~~ $~~465~~ 460 million, excluding approximately $5 million of pension amortization and $2024 million of accelerated depreciation related to exit activities.

• Pension plan contributions between $10 million and $20 million.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company does not trade or use derivative instruments with the objective of earning financial gains on interest or currency rates, nor does it use leveraged instruments or instruments where there are no underlying exposures identified.

Interest Rates

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 LIBOR rate on certain variable rate borrowings. At December 31, ~~2019~~2020, the Company had active interest rate swap agreements with a notional amount of $~~500~~200 million ~~with $150 million~~ expiring onin January ~~1, 2020 and the remaining in October 2020 and~~ 2022.

The table below sets forth interest rate sensitivity information related to the Company’s debt.

Long-Term Debt Principal Amount by Maturity-Average Interest Rate

	Expected Maturity Date
In millions	~~2020~~2021			~~2021~~2022			~~2022~~2023			~~2023~~2024			~~2024~~2025			Thereafter			Total		Fair Value
Total Debt
Fixed Rate	$	—425.0		$	~~425~~250.57		$	0.5		$	~~250~~300.45		$	~~300.4~~—		$	~~303~~1,103.62		$	12,~~280~~079.49	$	12,~~340~~173.10
Average Interest Rate	—4.75		%	4.7586		%	1.8273		%	4.8712		%	~~4.12~~—		%	43.7183		%
Variable Rate	$	3663.59		$	63127.97		$	~~127~~1,252.74		$	~~1,220.8~~—		$	—		$	—		$	1,~~448~~444.90	$	1,~~448~~451.57
	LIBOR + Spread			LIBOR + Spread			LIBOR + Spread			~~LIBOR + Spread~~—			—			—			—		—

Total Interest Rate Swaps-Notional Amount by Expiration-Average Swap Rate

	Expected Maturity Date
In millions	~~2020~~2021			~~2021~~2022			~~2022~~2023			~~2023~~2024			~~2024~~2025			Thereafter			Total
Notional	$	~~300.0~~—		$	—200.0		$	~~200.0~~—		$	—		$	—		$	—		$	~~500~~200.0
Average Pay Rate	~~2.31~~—		%	—2.87		%	~~2.87~~—		%	—		%	—		%	—		%	—		%
Average Receive Rate	~~LIBOR~~—			—LIBOR			~~LIBOR~~—			—			—			—			—

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Foreign Exchange Rates

The Company enters into forward exchange contracts to effectively hedge substantially all receivables resulting from transactions denominated in foreign currencies. The purpose of these forward exchange contracts is to protect the Company from the risk that the eventual functional currency cash flows resulting from the collection of these receivables will be adversely affected by changes in exchange rates. At December 31, 2019, multiple foreign currency forward exchange contracts existed, with maturities ranging up to three months. Those forward currency exchange contracts outstanding at December 31, 2019, when aggregated and measured in U.S. dollars at December 31, 2019 contractual rates, had net notional amounts totaling $77.4 million. The Company continuously monitors these forward exchange contracts and adjusts accordingly to minimize the exposure.

The Company also enters into forward exchange contracts to hedge certain other anticipated foreign currency transactions. The purpose of these contracts is to protect the Company from the risk that the eventual functional currency cash flows resulting from anticipated foreign currency transactions will be adversely affected by changes in exchange rates.

During the years ended December 31, ~~2019~~2020 and ~~2018~~2019, there were no amounts reclassified to earnings in connection with forecasted transactions that were no longer considered probable of 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 during the years ended December 31, ~~2019~~2020 and ~~2018~~2019.

Foreign Exchange Rates Contractual Amount by Expected

Maturity-Average Contractual Exchange Rate

	December 31, 2019
	December 31, 2020
In millions	Contract Amount		Fair Value
FORWARD EXCHANGE AGREEMENTS:
Receive $US/Pay Yen	$	1718.5	$	—(0.2)
Weighted average contractual exchange rate	~~107~~104.861
Receive $US/Pay Euro	$	4253.98	$	(01.86)
Weighted average contractual exchange rate	1.112
Receive $US/Pay GBP	$	2729.23	$	(01.71)
Weighted average contractual exchange rate	1.303

Derivatives not Designated as Hedges

The Company enters into forward exchange contracts to effectively hedge substantially all receivables resulting from transactions denominated in foreign currencies. The purpose of these forward exchange contracts is to protect the Company from the risk that the eventual functional currency cash flows resulting from the collection of these receivables will be adversely affected by changes in exchange rates. At December 31, 2020, multiple foreign currency forward exchange contracts existed, with maturities ranging up to two months. Those forward currency exchange contracts outstanding at December 31, 2020, when aggregated and measured in U.S. dollars at December 31, 2020 contractual rates, had net notional amounts totaling $80.0 million. The Company continuously monitors these forward exchange contracts and adjusts accordingly to minimize the exposure.

Natural Gas Contracts

The Company has hedged a portion of its expected natural gas usage for ~~2020~~2021 and ~~2021~~2022. The carrying amount and fair value of the natural gas swap contracts is a net ~~liability~~asset of $32.41 million as of December 31, ~~2019~~2020. Such contracts are designated as cash flow hedges and are accounted for by deferring the quarterly change in fair value of the outstanding contracts in Accumulated Other Comprehensive (Loss) ~~Income~~ in Member's Interest. The resulting gain or loss is reclassified into Cost of Sales concurrently with the recognition of the commodity consumed.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

			Page
GRAPHIC PACKAGING INTERNATIONAL, LLC
Consolidated Statements of Operations for each of the three years in the period ended December 31, 2019			39
Consolidated Statements of Operations for each of the three years in the period ended December 31, 2020			42
Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 31, 2019			40
Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 31, 2020			43
Consolidated Balance Sheets as of December 31, 2019 and 2018			41
Consolidated Balance Sheets as of December 31, 2020 and 2019			44
Consolidated Statements of Member's Interest for each of the three years in the period ended December 31, 2019			42
Consolidated Statements of Member's Interest for each of the three years in the period ended December 31, 2020			45
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2019			43
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2020			46
Notes to Consolidated Financial Statements			4447
Report of Independent Registered Public Accounting Firm			94
Reports of Independent Registered Public Accounting Firms			88

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GRAPHIC PACKAGING INTERNATIONAL, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,
In millions, except per share amounts	~~2019~~2020		~~2018~~2019		~~2017~~2018
Net Sales	$	6,~~160~~559.19	$	6,~~029~~160.41	$	46,~~405~~029.64
Cost of Sales	5,~~067~~459.57		5,~~077~~067.05		35,~~696~~077.10
Selling, General and Administrative	~~511~~512.94		~~471~~511.89		~~347~~471.58
Other Expense, Net	9.2.7		79.2		37.02
Business Combinations, Shutdown and Other Special Charges and Gain on Sale of Assets, Net	37.9		14.9		31.1
Business Combinations, Shutdown and Other Special Charges, Exit Activities and Gain on Sale of Assets, Net	61.3		37.9		14.9
Income from Operations	~~533~~523.68		~~458~~533.56		~~327~~458.95
Nonoperating Pension and Postretirement Benefit (Expense) Income	(39151.5)		14(39.95)		14.89
Interest Expense, Net	(~~140~~128.69)		(~~123~~140.76)		(89123.7)
Loss on Modification or Extinguishment of Debt	—		~~(1.9)~~—		—(1.9)
Income before Income Taxes and Equity Income of Unconsolidated Entity	~~353~~243.54		~~347~~353.85		~~253~~347.08
Income Tax (Expense) Benefit	(20.4)		(11.8)		321.7
Income Tax Expense	(11.4)		(20.4)		(11.8)
Income before Equity Income of Unconsolidated Entity	~~333~~232.10		~~336~~333.01		~~574~~336.70
Equity Income of Unconsolidated Entity	0.49		10.24		1.72
Net Income	$	~~333~~232.59	$	~~337~~333.25	$	~~576~~337.42

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

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GRAPHIC PACKAGING INTERNATIONAL, LLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Year Ended December 31,
In millions	~~2019~~2020		2019		2018		~~2018~~		~~2017~~
Net Income	$	~~333~~232.59	$	333.5	$	337.2	$	~~337.2~~	$	~~576.4~~
Other Comprehensive (Loss) Income, Net of Tax:
Other Comprehensive Income (Loss), Net of Tax:
Derivative Instruments	(83.9)5		(8.9)		(1.6)		~~(1.6)~~		~~(4.9)~~
Pension and Postretirement Benefit Plans	13174.61		13.6		(32.4)		~~(32.4)~~		~~8.8~~
Currency Translation Adjustment	12.4		12.4		(24.5)		~~(24.5)~~		~~44.9~~
Total Other Comprehensive Income (Loss)	17190.10		17.1		(58.5)		~~(58.5)~~		~~48.8~~
Total Comprehensive Income	$	~~350~~422.69	$	350.6	$	278.7	$	~~278.7~~	$	~~625.2~~

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

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GRAPHIC PACKAGING INTERNATIONAL, LLC

CONSOLIDATED BALANCE SHEETS

	December 31,
In millions, except share and per share amounts	~~2019~~2020		~~2018~~2019
ASSETS
Current Assets:
Cash and Cash Equivalents	$	~~148~~178.72	$	70148.57
Receivables, Net	~~500~~649.20		~~570~~500.32
Inventories, Net	1,~~095~~127.96		1,~~014~~095.49
Other Current Assets	5056.15		~~102~~50.1
Total Current Assets	12,~~794~~011.93		1,~~757~~794.39
Property, Plant and Equipment, Net	3,~~253~~560.80		3,~~239~~253.78
Goodwill	1,~~477~~476.07		1,~~459~~477.70
Intangible Assets, Net	~~477~~436.39		~~523~~477.83
Other Assets	~~273~~309.78		68273.37
Total Assets	$	7,~~276~~794.7	$	7,~~048~~276.87
LIABILITIES
Current Liabilities:
Short-Term Debt and Current Portion of Long-Term Debt	$	50497.42	$	5250.04
Accounts Payable	~~716~~825.10		~~711~~716.61
Compensation and Employee Benefits	~~168~~213.41		~~154~~168.4
Interest Payable	2430.73		1324.67
Other Accrued Liabilities	~~216~~261.98		~~215~~216.9
Total Current Liabilities	1,~~176~~827.54		1,~~147~~176.5
Long-Term Debt	23,~~809~~147.90		2,~~905~~809.19
Deferred Income Tax Liabilities	2726.74		2627.57
Accrued Pension and Postretirement Benefits	~~140~~129.48		~~107~~140.54
Other Noncurrent Liabilities	~~265~~290.63		~~116~~265.96
Commitments (Note 13)	—		—
MEMBER'S INTEREST
Member's Interest	32,~~236~~564.80		3,~~142~~236.68
Accumulated Other Comprehensive Loss	(~~380~~190.2)		(~~397~~380.32)
Total Member's Interest	2,~~856~~373.68		2,~~745~~856.36
Total Liabilities and Member's Interest	$	7,~~276~~794.7	$	7,~~048~~276.87

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

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GRAPHIC PACKAGING INTERNATIONAL, LLC

CONSOLIDATED STATEMENTS OF MEMBER'S INTEREST

			Capital in Excess of Par Value		(Accumulated Deficit) Retained Earnings		Member's Interest		Accumulated Other Comprehensive (Loss) Income
	Member's Interest		Accumulated Other Comprehensive (Loss) Income
In millions, except share amounts	~~Common Stock~~				Total Equity								~~Total Equity~~
Balances at December 31, 2016	$	3.1	$	1,709.0	$	(268.0)	$	—	$	(387.6)	$	1,056.5
Balances at December 31, 2017	$	1,908.1	$	(338.8)	$	1,569.3
Net Income	—337.2		—		~~300~~337.2		~~276.2~~		—		~~576.4~~
Other Comprehensive (Loss) Income, Net of Tax:
Derivative Instruments	—		—(1.6)		—(1.6)		—		~~(4.9)~~		~~(4.9)~~
Pension and Postretirement Benefit Plans	—		—(32.4)		—(32.4)		—		~~8.8~~		~~8.8~~
Currency Translation Adjustment	—		—(24.5)		—(24.5)		—		~~44.9~~		~~44.9~~
Repurchase of Common Stock	—		(24.2)		(34.2)		—		—		(58.4)
NACP Combination	1,112.2		—		1,112.2
Pre-2017 Excess Tax Benefit	—		—		39.1		—		—		39.1
Distribution of Membership Interest	(241.9)		—		(241.9)
Dividends Declared	—		—		(93.1)		—		—		(93.1)
Contributions	27.0		—		27.0
Contributions	—		—		—		1.2		—		1.2
Balances at December 31, 2018	$	3,142.6	$	(397.3)	$	2,745.3
Recognition of Stock-Based Compensation	—		(1.2)		—		—		—		(1.2)
Net Income	333.5		—		333.5
Formation of Partnership	(3.1)		(1,683.6)		56.0		1,630.7		—		—
Other Comprehensive Loss, Net of Tax:
Balances at December 31, 2017	$	—	$	—	$	—	$	1,908.1	$	(338.8)	$	1,569.3
Derivative Instruments	—		(8.9)		(8.9)
Net Income	—		—		—		337.2		—		337.2
Pension and Postretirement Benefit Plans	—		13.6		13.6
Other Comprehensive Loss, Net of Tax:
Currency Translation Adjustment			12.4		12.4
Derivative Instruments	—		—		—		—		(1.6)		(1.6)
Distributions of Membership Interest	(256.9)		—		(256.9)
Pension and Postretirement Benefit Plans	—		—		—		—		(32.4)		(32.4)
Contributions	17.6		—		17.6
Currency Translation Adjustment	—		—		—		—		(24.5)		(24.5)
Balances at December 31, 2019	$	3,236.8	$	(380.2)	$	2,856.6
NACP Combination	—		—		—		1,112.2		—		1,112.2
Net Income	232.9		—		232.9
Distributions of Membership Interest	—		—		—		(241.9)		—		(241.9)
Other Comprehensive (Loss) Income, Net of Tax:
Contributions	—		—		—		27.0		—		27.0
Derivative Instruments	—		3.5		3.5
Balances at December 31, 2018	$	—	$	—	$	—	$	3,142.6	$	(397.3)	$	2,745.3
Pension and Postretirement Benefit Plans	—		174.1		174.1
Net Income	—		—		—		333.5		—		333.5
Currency Translation Adjustment	—		12.4		12.4
Other Comprehensive (Loss) Income, Net of Tax:
Distributions of Membership Interest	(930.4)		—		(930.4)
Derivative Instruments	—		—		—		—		(8.9)		(8.9)
Contributions	24.7		—		24.7
Pension and Postretirement Benefit Plans	—		—		—		—		13.6		13.6
Balances at December 31, 2020	$	2,564.0	$	(190.2)	$	2,373.8
Currency Translation Adjustment	—		—		—		—		12.4		12.4
Distributions of Membership Interest	—		—		—		(256.9)		—		(256.9)
Contributions	—		—		—		17.6				17.6
Balances at December 31, 2019	$	—	$	—	$	—	$	3,236.8	$	(380.2)	$	2,856.6

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

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GRAPHIC PACKAGING INTERNATIONAL, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
In millions	~~2019~~2020		~~2018~~2019		~~2017~~2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	~~333~~232.59	$	~~337~~333.25	$	~~576~~337.42
Adjustments to Reconcile Net Income to Net Cash Provided by (Used in) Operating Activities:
Depreciation and Amortization	~~447~~475.28		~~430~~447.62		~~330~~430.36
Amortization of Deferred Debt Issuance Costs	45.7		4.47		54.14
Deferred Income Taxes	5(9.86)		(5.5)8		(~~346~~5.85)
Amount of Postretirement Expense Greater (Less) Than Funding	41147.51		(441.7)5		(~~127~~4.17)
Gain on the Sale of Assets, net	—		~~(38.6)~~—		(338.76)
Other, Net	1512.19		5215.31		252.03
Changes in Operating Assets and Liabilities, Net of Acquisitions (See Note 3)	(~~186~~40.29)		(~~1,126~~186.2)		(~~652~~1,126.02)
Net Cash Provided by (Used in) Operating Activities	~~661~~823.69		~~(350~~661.5)6		(~~215~~350.85)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Spending	(~~330~~616.91)		(~~378~~330.89)		(~~240~~378.98)
Packaging Machinery Spending	(2230.02)		(1622.40)		(1916.24)
Acquisition of Businesses, Net of Cash Acquired	(54120.56)		(8954.45)		(~~189~~89.4)
Proceeds Received from Sale of Assets, Net of Selling Costs	—		~~49.4~~—		749.94
Beneficial Interest on Sold Receivables	~~343~~135.65		~~1,476~~343.76		~~806.~~1,476.7
Beneficial Interest Obtained in Exchange for Proceeds	(~~155~~8.95)		(~~345~~155.59)		(97345.45)
Other, Net	(47.69)		(64.96)		1(6.09)
Net Cash (Used in) Provided by Investing Activities	(~~224~~647.38)		~~689~~(224.13)		~~268~~689.1
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on Debt	(36.5)		(~~152~~36.45)		(25152.04)
Proceeds from Issuance of Debt	~~300~~800.0		—300.0		—
Borrowings under Revolving Credit Facilities	2,~~497~~613.5		12,~~876~~497.95		1,~~202~~876.9
Payments on Revolving Credit Facilities	(2,~~865~~596.18)		(12,~~787~~865.51)		(1,~~090~~787.85)
Debt Issuance Costs	(513.09)		(75.90)		—(7.9)
Dividends and Distributions Paid	—		—		(150.3)
Membership Distributions	(925.4)		(248.5)		(241.9)
Membership Distributions	(248.5)		(241.9)		—
Other, Net	11.3		(3.2)		2.1
Other, Net	(3.2)		2.1		(6.6)
Net Cash Used In Financing Activities	(147.8)		(360.8)		(310.7)
Net Cash Used In Financing Activities	(360.8)		(310.7)		(69.8)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	1.2		1.7		(1.5)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	1.7		(1.5)		2.5
Net Increase in Cash and Cash Equivalents	29.5		78.2		26.4
Net Increase (Decrease) in Cash and Cash Equivalents	78.2		26.4		(15.0)
Cash and Cash Equivalents at Beginning of Year	148.7		70.5		44.1
Cash and Cash Equivalents at Beginning of Year	70.5		44.1		59.1
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	178.2	$	148.7	$	70.5
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	148.7	$	70.5	$	44.1
Non-cash Investing Activities:
Beneficial Interest (Sold) Obtained in Exchange for Trade Receivables	$	~~(68~~135.8)2	$	~~1,025~~(68.78)	$	~~734~~1,025.7
Non-cash Investment in NACP Combination	—		1,111.2		—
Right-of-Use Assets Obtained in Exchange for New Operating Lease Liabilities	$	70.5	$	73.1	$	—
Non-cash Investing Activities	$	(68.8)	$	2,136.9	$	734.7
Non-cash Investment in NACP Combinations	$	—	$	—	$	1,111.2
Non-cash Financing Activities:
Non-cash Financing of NACP Combination	$	—	$	660.0	$	—
Right-of-Use Assets Obtained in Exchange for New Finance Lease Liabilities	$	0.1	$	15.5	$	—
Non-Cash Financing Activities	$	—	$	660.0	$	—
Non-cash Financing of NACP Combination	$	—	$	—	$	660.0

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

4346

Table of Contents

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Graphic Packaging International, LLC ("GPIL" 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, paper-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").

On January 1, 2018, GPHC, 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 GPHC (“GPIP”), and 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 GPHC 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"). GPIL is currently wholly-owned by GPIP, which is owned by GPI Holding III, LLC, a limited liability company that is classified as a partnership for U.S. Federal income tax purposes ("GPI Holding”) and IP. GPI Holding is a wholly-owned indirect subsidiary of GPHC and is the managing member of GPIP.

4447

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

On ~~January~~August 2810, 2020, GPHC announced that IP had notified ~~GPHC~~the Company of its intent to ~~begin~~exchange ~~the~~additional ~~process~~partnership ~~of reducing its ownership interest in GPIP~~units. Per the agreement between the parties, on ~~January~~August 2913, 2020, GPIP purchased 1517.14 million partnership units from IP for $250 million in cash, which included full redemption of the remaining 3.1 million partnership units that were required to be redeemed in cash. As a result, IP’'s ownership interest in GPIP decreased ~~from~~to 2114.65% toas 18of August 13, 2020.~~3%.~~

4548

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

During 2020, 2019 and 2018, GPIP repurchased 44.2 million partnership units from GPI Holding. These repurchases increased IP's ownership interest in GPIP, which was 15.0% at December 31, 2020.

Basis of Presentation and Principles of Consolidation

The Company’s 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.

The Company, ~~holds~~through aits ~~50%~~subsidiary, ~~ownership~~is ~~interest~~a inparty to a Japanese joint venture, ~~called~~ Rengo Riverwood Packaging, Ltd. (in ~~Japan)~~ which it holds a 50% ownership interest that is accounted for using the equity method.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“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 periods. Actual results could differ from these estimates, and changes in these estimates are recorded when known. Estimates are used in accounting for, among other things, pension benefits, retained insurable risks, slow-moving and obsolete inventory, allowance for doubtful accounts, useful lives for depreciation and amortization, impairment testing of goodwill and long -lived assets, fair values related to acquisition accounting, fair value of derivative financial instruments, and loss contingencies.

Cash and Cash Equivalents

Cash and cash equivalents include bank deposits and other marketable securities that are highly liquid with maturities of three months or less.

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 credit worthiness of customers. Receivables are charged to the allowance when determined to be no longer collectible.

	Year Ended December 31,
In millions	~~2019~~2020		~~2018~~2019
Receivables Sold and Derecognized	$	2,~~654~~849.28	$	32,~~314~~654.82
Proceeds Collected on Behalf of Financial Institutions	2,~~254~~787.94		32,~~153~~254.49
Net Proceeds Received From (Paid to) Financial Institutions	66.5		13.4
Net Proceeds Received From Financial Institutions	54.9		66.5
Deferred Purchase Price at December 31(a)	05.73		660.97
Pledged Receivables at December 31	~~177~~201.50		43177.05

(a) Included in Other Current Assets and represents a beneficial interest in the receivables sold to the financial institutions, which is a Level 3 fair value measure.

The Company has also entered into various factoring and supply chain financing arrangements which also qualify for sale accounting in accordance with the Transfers and Servicing topic of the FASB Codification. For the years ended December 31, 2019 and 2018, the Company sold receivables of approximately $238 million and $119 million respectively, related to these factoring arrangements. 49

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

~~Receivables~~The ~~sold~~Company ~~under~~has ~~all~~also ~~programs~~entered ~~subject~~into tovarious ~~continuing~~factoring ~~involvement,~~and supply chain financing arrangements which ~~consists~~also ~~principally~~qualify offor ~~collection~~sale ~~services,~~accounting ~~were~~in ~~approximately~~accordance ~~$562~~with ~~million~~the Transfers and ~~$559~~Servicing ~~million~~topic as of the FASB Codification. For the years ended December 31, ~~2019~~2020 and ~~2018~~2019, the Company sold receivables of approximately $368 million and $238 million respectively., related to these factoring arrangements.

Receivables sold under all programs subject to continuing involvement, which consists principally of collection services, were approximately $621 million and $562 million as of December 31, 2020 and 2019, respectively.

Concentration of Credit Risk

The Company’s cash, cash equivalents, and accounts receivable are potentially subject to concentration of credit risk. Cash and cash equivalents are placed with financial institutions that management believes are of high credit quality. Accounts receivable are derived from revenue earned from customers located in the U.S. and internationally and generally do not require collateral. AsFor ~~of and for~~ the years ended December 31, 2020, 2019, and 2018, no customer accounted for more than 10% of net sales.

Inventories

Inventories are stated at the lower of cost and net realizable value with cost determined based on standard (which approximates actual), average or actual cost. Work in progress and finished goods inventories are valued at the cost of raw material consumed plus direct manufacturing costs (such as labor, utilities and supplies) as incurred and an applicable portion of manufacturing overhead. Inventories are stated net of an allowance for slow-moving and obsolete inventory.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Betterments, renewals and extraordinary repairs that extend the life of the asset are capitalized; other repairs and maintenance charges are expensed as incurred. The Company’s cost and related accumulated depreciation applicable to assets retired or sold are removed from the accounts and the gain or loss on disposition is included in income from operations.

Interest is capitalized on assets under construction for one year or longer with an estimated spending of $1.0 million or more. The capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset’s estimated useful life. Capitalized interest was $26.89 million, $2.8 million and $1.2.8 million for the years ended December 31, ~~2019~~2020, ~~2018~~2019 and ~~2017~~2018, respectively.

The Company assesses its long-lived assets, including certain identifiable intangibles, for impairment whenever events or circumstances indicate that the carrying value of an asset may not be recoverable. To analyze recoverability, the Company projects future cash flows, undiscounted and before interest, over the remaining life of such assets. If these projected cash flows are less than the carrying amount, an impairment would be recognized, resulting in a write-down of assets with a corresponding charge to earnings. The impairment loss is measured based upon the difference between the carrying amount and the fair value of the assets. The Company assesses the appropriateness of the useful life of its long-lived assets periodically.

Depreciation and Amortization

Depreciation is computed using the straight-line method based on the following estimated useful lives of the related assets:


Buildings			40 years
Land improvements			15 years
Machinery and equipment			3 to 40 years
Furniture and fixtures			10 years
Automobiles, trucks and tractors			3 to 5 years

Depreciation expense, including the depreciation expense of assets under capital leases, for ~~2019~~2020, ~~2018~~2019 and ~~2017~~2018 was $~~387~~413.97 million, $~~360~~387.69 million and $~~268~~360.56 million, respectively.

Intangible assets with a determinable life are amortized on a straight-line or accelerated basis over their useful lives. The amortization expense for each intangible asset is recorded in the Consolidated Statements of Operations according to the nature of that asset.50

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

~~Goodwill~~Intangible is the Company’s only intangible asset not subject to amortization. The following table displays the intangible assets that continue to be subject to amortization and accumulated amortization expense as of December 31, 2019 and 2018:Assets

	December 31, 2019										December 31, 2018
In millions	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizable Intangible Assets:
Customer Relationships	$	946.5	$	(497.6)	$	448.9	$	937.3	$	(442.7)	$	494.6
Patents, Trademarks, Licenses, and Leases	138.8		(110.4)		28.4		133.7		(104.5)		29.2
Total	$	1,085.3	$	(608.0)	$	477.3	$	1,071.0	$	(547.2)	$	523.8

~~The~~Goodwill is the Company’s ~~recorded~~only intangible asset not subject to amortization. ~~expense~~The ~~for~~following table displays the ~~years~~intangible ~~ended~~assets ~~December 31,~~that ~~2019,~~continue ~~2018~~to be subject to amortization and ~~2017~~accumulated ofamortization ~~$59.3~~expense ~~million~~as of December 31, 2020 and 2019:

$70.0 million and $61.8 million, respectively. The Company expects amortization expense for the next five consecutive years to be as follows: $62 million, $59 million, $57 million, $55 million, and $53 million.


	December 31, 2020						December 31, 2019
In millions	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizable Intangible Assets:
Customer Relationships	$	965.2	$	(556.4)	$	408.8	$	946.5	$	(497.6)	$	448.9

Patents, Trademarks, Licenses, and Leases	141.1		(113.0)		28.1		138.8		(110.4)		28.4

Total	$	1,106.3	$	(669.4)	$	436.9	$	1,085.3	$	(608.0)	$	477.3

The Company recorded amortization expense for the years ended December 31, 2020, 2019 and 2018 of $62.1 million,$59.3 million and $70.0 million, respectively. The Company expects amortization expense for the next five consecutive years to be approximately as follows: $60 million, $57 million, $55 million, $53 million, and $49 million.

Goodwill

The Company tests goodwill for impairment annually as of October 1, as well as whenever events or changes in circumstances suggest that the estimated fair value of a reporting unit may no longer exceed its carrying amount.

The Company tests goodwill for impairment at the reporting unit level, which is an operating segment or a level below an operating segment, which is referred to as a component. A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and management regularly reviews the operating results of that component. ~~However,~~Two ~~two~~ or more components of an operating segment are aggregated and deemed a single reporting unit if the components have similar economic characteristics.

Potential goodwill impairment is measured at the reporting unit level by comparing the reporting unit’s carrying amount (including goodwill), to the fair value of the reporting unit. When performing the quantitative analysis, the estimated fair value of each reporting unit is determined by utilizing a discounted cash flow analysis based on the Company’s forecasts, discounted using a weighted average cost of capital and market indicators of terminal year cash flows based upon a multiple of EBITDA. If the carrying amount of a reporting unit exceeds its estimated fair value, goodwill is considered impaired. In determining fair value, management relies on and considers a number of factors, including but not limited to, future operating results, business plans, economic projections of revenues and operating margins, forecasts including future cash flows, and market data and analysis, including market capitalization. The assumptions used are based on what a hypothetical market participant would use in estimating fair value. Fair value determinations are sensitive to changes in the factors described above. There are inherent uncertainties related to these factors and judgments in applying them to the analysis of goodwill impairment.

Periodically, the Company may perform a qualitative impairment analysis of goodwill associated with each of its reporting units to determine if it is more likely than not that the carrying value of a reporting unit exceeded its fair value. However, the Company performed a quantitative impairment test as of October 1, ~~2019~~2020, and concluded goodwill was not impaired for any of its reporting units.

4851

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following is a rollforward of goodwill by reportable segment:

In millions	Paperboard Mills		Americas Paperboard Packaging		Europe Paperboard Packaging		Corporate/Other(a)		Total
Balance at December 31, 2017	$	408.5	$	839.0	$	59.5	$	16.0	$	1,323.0
Acquisition of Businesses	97.6		42.9		(0.1)		—		140.4
Foreign Currency Effects	—		0.1		(2.2)		(1.6)		(3.7)
Balance at December 31, 2018	$	506.1	$	882.0	$	57.2	$	14.4	$	1,459.7
Acquisition of Businesses	—		12.9		—		—		12.9
Foreign Currency Effects	—		1.8		2.6		—		4.4
Balance at December 31, 2019	$	506.1	$	896.7	$	59.8	$	14.4	$	1,477.0
Acquisition of Businesses	—		—		—		—		—
Foreign Currency Effects	(0.5)		2.2		(1.0)		(1.0)		(0.3)
Balance at December 31, 2020	$	505.6	$	898.9	$	58.8	$	13.4	$	1,476.7

(a) Includes Australia operating segment.

Retained Insurable Risks

It is the Company’s policy to self-insure or fund a portion of certain expected losses related to group health benefits and workers’ compensation claims. Provisions for expected losses are recorded based on the Company’s estimates, on an undiscounted basis, of the aggregate liabilities for known claims and estimated claims incurred but not reported.

Asset Retirement Obligations

Asset retirement obligations are accounted for in accordance with the provisions of the Asset Retirement and Environmental Obligations topic of the FASB Codification. A liability and asset are recorded equal to the present value of the estimated costs associated with the retirement of long-lived assets where a legal or contractual obligation exists and the liability can be reasonably estimated. The liability is accreted over time and the asset is depreciated over the remaining life of the asset. Upon settlement of the liability, the Company will recognize a gain or loss for any difference between the settlement amount and the liability recorded. Asset retirement obligations with indeterminate settlement dates are not recorded until such time that a reasonable estimate may be made. The Company's asset retirement obligations consist primarily of landfill closure and post-closure costs at certain of our mills. At December 31, 2020 and 2019, the Company had liabilities of $11.4 million and $10.1 million, respectively. The liabilities are primarily reflected as Other Noncurrent Liabilities in the Company's Consolidated Balance Sheets.

International Currency

The functional currency of the international subsidiaries is the local currency for the country in which the subsidiaries own their primary assets. The translation of the applicable currencies into U.S. dollars is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for revenue and expense accounts using an average exchange rate during the period. Any related translation adjustments are recorded directly to a separate component of Member’s Interest, unless there is a sale or substantially complete liquidation of the underlying foreign investments. Gains and losses on foreign currency transactions are included in Other Expense, Net for the period in which the exchange rate changes.

~~Revenue Recognition~~52

The Company has two primary activities, manufacturing and converting paperboard, from which it generates revenue from contracts with customers, and revenue is disaggregated primarily by geography and type of activity as further explained in "Note 15-Business Segment and Geographic Area 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.

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 years ended December 31, 2019, 2018 and 2017, the Company recognized $6,140.8 million, $6,011.9 million and $4,384.9 million, respectively, of revenue from contracts with customers.Recognition

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 years ended December 31, 2020, 2019 and 2018, the Company recognized $6,536.5 million, $6,140.8 million and $6,011.9 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 December 31, ~~2019~~2020 and ~~2018~~2019, contract assets were $2415.3 million and $1924.63 million, respectively. The Company's contract liabilities consist principally of rebates, and as of December 31, ~~2019~~2020 and ~~2018~~2019 were $4956.61 million and $4249.56 million, respectively.

The Company did not have a material amount relating to backlog orders at December 31, ~~2019~~2020 or ~~2018~~2019.

Shipping and Handling

The Company includes shipping and handling costs in Cost of Sales.

Research and Development

Research and development costs, which relate primarily to the development and design of new packaging machines and products and are recorded as a component of Selling, General and Administrative expenses, are expensed as incurred. Expenses for the years ended December 31, ~~2019~~2020, ~~2018~~2019 and ~~2017~~2018 were $910.2 million, $89.72 million and $148.47 million, respectively.

Business Combinations, Shutdown and Other Special Charges, Exit Activities, and (Gain) on Sale of Assets, Net

The following table summarizes the transactions recorded in Business Combinations, Shutdown and Other Special Charges, Exit Activities and Gain on Sale of Assets, Net in the Consolidated Statements of Operations for the year ended December 31:

In millions	~~2019~~2020		~~2018~~2019		~~2017~~2018
Charges Associated with Business Combinations	$	4(1.1)	$	464.81	$	1646.28
Shutdown and Other Special Charges	2337.68		623.76		~~18.~~6.7
Exit Activities	10.2		—		—
Exit Activities(a)	24.6		10.2		—
Gain on Sale of Assets	—		~~(38.6)~~—		(338.76)
Total	$	3761.93	$	1437.9	$	3114.19

(a) Relates to the Company's CRB mills, converting facility closures and the PM1 containerboard machine exit activities (see "Note 20 — Exit Activities").

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

2020

During the fourth quarter of 2020, the Company incurred incremental costs associated with paying payroll to employees during necessary quarantines due to COVID-19. 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 costs and payments were recorded in Shutdown and Other Special Charges in the table above.

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 $12.2 million. During the fourth quarter of 2020, the Company entered into a settlement agreement with one of its closed multi-employment benefit plans and recorded a $3.9 million reduction in its estimated withdrawal liability for this plan. These items were recorded in Shutdown and Other Special Charges in the table above. For more information, see "Note 8 — Pensions and Other Postretirement Benefits."

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. During the second quarter of 2020, the Company recorded a bargain purchase gain of $6.6 million as the net fair value of assets acquired and liabilities assumed was greater than the purchase price. The gain associated with this acquisition is included in Charges Associated with Business Combinations in the table above. For more information, see "Note 4 — Business Combinations."

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. During the second quarter of 2020, the Company closed the White Pigeon, Michigan CRB mill and shut down the PM1 containerboard machine. Charges associated with these projects are included in Exit Activities in the table above. For more information, see "Note 18 — 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 which are included in 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 4 — Business Combinations."

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 in the third quarter of 2020. Charges associated with the shutdown of these converting facilities are included in Exit Activities in the table above. For more information, see "Note 18 — Exit Activities."

2019

On September 24, 2019, the Company announced its plan to invest approximately $600 million in a new CRB mill in Kalamazoo, Michigan. In conjunction with the completion of this project, the Company currently expects to close two of its smaller CRB Mills in 2022 in order to remain capacity neutral. Charges associated with this project are included in Exit Activities in the table above. For more information, see "Note 18 — Exit Activities."

On August 1, 2019, the Company acquired substantially all the assets of Artistic Carton Company ("Artistic"), a diversified producer of folding cartons and CRB. The acquisition included two converting facilities located in Auburn, Indiana and Elgin, Illinois (included in the Americas Paperboard Packaging reportable segment) and one CRB paperboard mill located in White Pigeon, Michigan (included in the Paperboard Mills reportable segment).

50On September 24, 2019, the Company announced its plan to invest approximately $600 million in a new CRB mill in Kalamazoo, Michigan. In conjunction with the completion of this project, the Company currently expects to close two of its smaller CRB Mills in 2022 in order to remain capacity neutral. Charges associated with this project are included in Exit Activities in the table above. For more information, see "Note 18 — Exit Activities."

2018

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

2018

On September 30, 2018, the Company acquired substantially all the assets of the foodservice business of Letica Corporation, a subsidiary of RPC Group PLC ("Letica Foodservice"), a producer of paperboard-based cold and hot cups and cartons. The acquisition included two facilities located in Clarksville, Tennessee and Pittston, Pennsylvania. Letica Foodservice is included in the Americas Paperboard Packaging reportable segment.

On August 31, 2018, the Company sold its previously closed coated recycled paperboard mill site in Santa Clara, California, resulting in a gain on sale of assets of $37.1 million.

On June 12, 2018, the Company acquired substantially all the assets of PFP, LLC and its related entity, PFP Dallas Converting, LLC (collectively, "PFP"), a converter focused on the production of paperboard based air filter frames. The acquisition included two facilities located in Lebanon, Tennessee and Lancaster, Texas. PFP is included in the Americas Paperboard Packaging reportable segment.

On ~~January~~August 131, 2018, the Company ~~completed~~sold ~~the~~its ~~NACP~~previously ~~Combination.~~closed ~~The~~coated ~~NACP~~recycled ~~business~~paperboard ~~produces~~mill ~~SBS~~site ~~and paper-based foodservice products. The NACP business included two SBS mills located~~ in ~~Augusta,~~Santa ~~Georgia and Texarkana~~Clara, ~~Texas (included in Paperboard Mills reportable segment)~~California, ~~three~~resulting ~~converting facilities~~ in ~~the~~a ~~U.S.~~gain ~~(included~~on insale ~~Americas~~of ~~Paperboard~~assets ~~Packaging~~of ~~reportable segment) and one in the United Kingdom ("U~~$37.~~K.")~~1 ~~(included in the Europe Paperboard Packaging reportable segment)~~million.

On September 30, 2018, the Company acquired substantially all the assets of the foodservice business of Letica Corporation, a subsidiary of RPC Group PLC ("Letica Foodservice"), a producer of paperboard-based cold and hot cups and cartons. The acquisition included two facilities located in Clarksville, Tennessee and Pittston, Pennsylvania. Letica Foodservice is included in the Americas Paperboard Packaging reportable segment.

PFP and Letica Foodservice are referred to collectively as the "2018 Acquisitions."

~~2017~~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 in 2019 and 2020 were $10.4 million and $13.6 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 October 4, 2017, the Company acquired Norgraft Packaging, S.A., ("Norgraft"), a leading folding carton producer in Spain focused on the food and household goods markets. The acquisition included two folding carton facilities located in Miliaño and Requejada, Spain.

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 included two folding carton facilities located in New Albany, Indiana, focused on the production of paperboard based air filter frames and folding cartons.

In October 2017, the Company completed the sale of its Renton, WA facility which was classified as Asset Held for Sale on December 31, 2016. The financial impact is reflected in Gain on Sale of Assets, Net in the table above.

Charges associated with all acquisitions are included in Charges Associated with Business Combinations in the table above. For more information regarding these acquisitions see Note 4 - Business Combinations.

During 2019, the Company began a three-year program to dismantle and dispose of idle and abandoned assets primarily at the paperboard mills. Expected charges for this program are approximately $40 million. Charges associated with this program are included in Shutdown and Other Special Charges in the table above.

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Adoption of New Accounting Standards

Effective January 1, ~~2019~~2020, the Company adopted Accounting Standards Update ("ASU") No. ~~2017~~2016-1213, ~~Derivatives~~Financial ~~and~~Instruments ~~Hedging~~- Credit Losses (Topic ~~815~~326);: ~~Targeted~~Measurement ~~Improvements~~of toCredit ~~Accounting~~Losses ~~for~~on ~~Hedging~~Financial ~~Activities.~~Instruments ~~The~~which ~~amendments~~amends inthe ~~this~~FASB's ~~ASU~~guidance ~~better~~on ~~align~~ the ~~risk~~impairment ~~management~~of ~~activities~~financial ~~and~~instruments. ~~financial~~The ~~reporting~~ASU ~~for~~adds ~~these~~to ~~hedging~~U.S. ~~relationships~~GAAP ~~through~~an ~~changes~~impairment tomodel ~~both~~(known as the ~~designation~~"current ~~and~~expected ~~measurement~~credit ~~guidance~~loss ~~for~~model") ~~qualifying~~that ~~hedging~~is ~~relationships~~based ~~and~~on ~~presentation~~expected oflosses ~~hedge~~rather ~~results~~than incurred losses. The adoption of this standard did not have a material impact on the Company’'s financial position, results of operations and cash flows.

Effective January 1, ~~2019~~2020, the Company adopted ASU No. 2018-0213, ~~Income~~Fair ~~Statement~~Value -Measurement ~~Reporting Comprehensive Income~~ (Topic ~~220~~820): ~~Reclassification~~Disclosure ofFramework ~~Certain~~- ~~Tax~~Changes ~~Effects from Accumulated Other Comprehensive Income. The amendment allows a reclassification from accumulated other comprehensive income~~ to ~~retained earnings for stranded tax effects resulting from~~ the ~~2017~~Disclosure ~~Tax~~Requirements ~~Cuts~~for ~~and~~Fair ~~Job~~Value ~~Act (“The Act”)~~Measurement. ~~The~~This ~~Company adopted the~~ amendment ~~effective~~modifies ~~January 1, 2019 and elected not to reclassify~~ the ~~income~~disclosure ~~tax~~requirements ~~effects~~on offair ~~The~~value ~~Act from other comprehensive income to retained earnings~~measurements. The ~~Company’s~~adoption ~~policy~~of ~~with~~this ~~respect~~standard todid ~~stranded~~not ~~income~~have ~~tax~~a ~~effects~~material inimpact ~~accumulated~~on ~~other comprehensive loss is to release these effects using~~ the ~~aggregate~~Company's ~~portfolio~~financial ~~approach~~disclosures.

InEffective ~~February~~January ~~2016~~1, 2020, the ~~FASB~~Company ~~issued~~adopted ASU No. ~~2016~~2018-0215, ~~Leases~~Intangibles ~~(Topic~~- ~~842)~~Goodwill ~~("ASC~~and ~~842").~~Other ~~The~~- ~~amendments~~Internal-Use inSoftware ~~this~~(Subtopic ~~ASU~~350-40): ~~require~~Customer's anAccounting ~~entity~~for toImplementation ~~recognize~~Costs aIncurred ~~right-of-use~~in ~~asset~~a ~~and~~Cloud ~~lease~~Computing ~~liability~~Arrangement ~~for~~That ~~all~~Is ~~leases~~a ~~with~~Service ~~terms~~Contract. ofThis ~~more~~ASU ~~than~~broadens 12the ~~months.~~scope ~~Recognition,~~of ~~measurement~~Accounting ~~and~~Standards ~~presentation~~Codification of("ASC") ~~expenses~~350-40 ~~will~~with ~~depend~~an onupdated ~~classification~~definition asof a ~~finance~~hosting orarrangement ~~operating~~and ~~lease.~~clarifies ~~The amendments also require~~ certain ~~quantitative~~aspects ~~and~~of ~~qualitative~~accounting ~~disclosures~~for ~~about~~implementation ~~leasing~~costs ~~arrangements.~~incurred ~~The~~in ~~Company~~a ~~adopted~~cloud ~~ASC~~computing ~~842~~arrangement ~~effective~~that ~~January~~is 1,a ~~2019,~~service ~~prospectively~~contract. The adoption of this standard ~~had~~did not have a material impact on the Company’'s financial position, ~~with no material impact on the~~ results of operations and cash flows ~~(see "Note 6 - Leases")~~.

InEffective January ~~2017~~1, 2020, the ~~FASB~~Company ~~issued~~adopted ASU No. ~~2017~~2018-0414, ~~Intangibles~~Compensation - ~~Goodwill~~Retirement ~~and~~Benefits ~~Other~~- ~~(Topic~~Defined ~~350);~~Benefit ~~Simplifying~~Plans ~~the~~- ~~Test~~General ~~for~~(Subtopic ~~Goodwill~~715-20); ~~Impairment~~Disclosure ~~which~~Framework ~~simplifies~~- ~~how~~Changes ~~an entity is required~~ to ~~test~~the ~~goodwill~~Disclosure Requirements for ~~impairment~~Defined byBenefit ~~eliminating Step 2 of the goodwill impairment model~~Plans. ~~Step~~This 2ASU ~~measures~~removes acertain ~~goodwill~~disclosures ~~impairment loss by comparing the implied value of a reporting unit’s goodwill with the carrying amount of~~ that ~~goodwill.~~are Annot ~~entity~~considered ~~would~~cost ~~recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value; however~~beneficial, ~~the~~clarifies ~~loss~~certain ~~recognized~~required isdisclosures ~~limited~~and toadds ~~the~~additional ~~amount of goodwill allocated to that reporting unit~~disclosures. The ~~Company adopted the amendment effective October 1, 2019. The~~ adoption of this standard did not have ana material impact on the Company’'s financial position, results of operations and cash flows.

~~Accounting~~Effective ~~Standards~~April ~~Not~~1, ~~Yet~~2020, ~~Adopted~~the Company adopted amendments to the financial disclosure requirements for guarantors and issuers of guaranteed securities, as well for affiliates whose securities collateralize a registrant’s securities. The amendments revise Rules 3-10 and 3-16 of Regulation S-X, and relocate part of Rule 3-10 and all of Rule 3-16 to the new Article 13 in Regulation S-X, which is comprised of new Rules 13-01 and 13-02. With the adoption of these amendments, the Company replaced guarantor condensed consolidating financial information with summarized financial information for the consolidated obligor group (Parent, Issuer, and Guarantor Subsidiaries) as well as excluded guarantor cash flow information, financial information for non-guarantor subsidiaries, and a reconciliation to the consolidated results.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments which amends the FASB's guidance on the impairment of financial instruments. The ASU adds to U.S. GAAP an impairment model (known as the "current expected credit loss model") that is based on expected losses rather than incurred losses. ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years. The Company is currently evaluating the impact that this new guidance will have on its financial position, results of operations, cash flows and related disclosures.55

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. This amendment modifies the disclosure requirements on fair value measurements. The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that this new guidance will have on its related disclosures.

In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20); Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans. This amendment removes certain disclosures that are not considered cost beneficial, clarifies certain required disclosures and adds additional disclosures. The guidance is effective for fiscal years ending after December 15, 2020 and would be applied on a retrospective basis. The Company is currently evaluating the impact this guidance will have on its related disclosures.

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Accounting Standards Not Yet Adopted

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 is currently evaluating the impact of this new accounting guidance.

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. SUPPLEMENTAL BALANCE SHEET DATA

The following tables provide disclosure related to the components of certain line items included in our consolidated balance sheets.

Receivables, Net:

In millions	~~2019~~2020		~~2018~~2019
Trade	$	~~462~~608.75	$	~~475~~462.97
Less: Allowance	(11.59)		(1011.45)
	451.2		465.5
	596.6		451.2
Other	4952.04		~~104~~49.80
Total	$	~~500~~649.20	$	~~570~~500.32

Inventories, Net by major class:

In millions	~~2019~~2020		~~2018~~2019
Finished Goods	$	~~434~~471.83	$	~~426~~434.98
Work in Progress	~~123~~132.45		~~102~~123.24
Raw Materials	~~370~~348.05		~~319~~370.90
Supplies	~~167~~175.73		~~165~~167.47
Total	$	1,~~095~~127.96	$	1,~~014~~095.49

~~Other~~Property, ~~Current~~Plant ~~Assets:~~and Equipment, Net:

In millions	~~2019~~2020		~~2018~~2019
Deferred Purchase Price	$	0.7	$	66.9
Property, Plant and Equipment, at Cost:
Prepaid Assets	39.0		24.7
Land and Improvements	$	137.2	$	130.4
Contract Assets, current portion	10.4		9.8
Buildings(a)	671.3		655.5
Fair Value of Derivatives, current portion	—		0.7
Machinery and Equipment(b)	6,082.0		5,832.6
Total	$	50.1	$	102.1
Construction-in-Progress	478.3		202.6
	7,368.8		6,821.1
Less: Accumulated Depreciation(a)(b)	(3,808.8)		(3,567.3)
Total	$	3,560.0	$	3,253.8

5356

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

~~Property~~(a) Includes gross assets under finance lease of $105.5 million and related accumulated depreciation of $10.7 million as of December 31, ~~Plant~~2020, and ~~Equipment~~gross assets under finance lease of $105.5 million and related accumulated depreciation of $5.4 million as of December 31, ~~Net:~~2019.

In millions	2019		2018
Property, Plant and Equipment, at Cost:
Land and Improvements	$	130.4	$	134.1
Buildings (a)	655.5		608.5
Machinery and Equipment (b)	5,832.6		5,716.2
Construction-in-Progress	202.6		201.2
	6,821.1		6,660.0
Less: Accumulated Depreciation (a) (b)	(3,567.3)		(3,420.3)
Total	$	3,253.8	$	3,239.7

(b) Includes gross assets under finance lease of $36.8 million and related accumulated depreciation of $9.4 million as of December 31, 2020, and gross assets under finance lease of $36.6 million and related accumulated depreciation of $6.8 million as of December 31, 2019.

(a) Includes gross assets under finance lease of $105.5 million and related accumulated depreciation of $5.4 million as of December 31, 2019, and gross assets under finance lease of $95.5 million and related accumulated depreciation of $0.4 million as of December 31, 2018.

(b) Includes gross assets under finance lease of $36.6 million and related accumulated depreciation of $6.8 million as of December 31, 2019 and gross assets under finance lease of $39.6 million and related accumulated depreciation of $10.0 million as of December 31, 2018.

Other Assets:

In millions	2019		2018
Deferred Debt Issuance Costs, Net of Amortization of $14.1 million and $12.5 million for 2019 and 2018, respectively	$	4.8	$	6.4
Deferred Income Tax Assets	3.0		8.3
Pension Assets	25.6		19.0
Contract Assets, noncurrent portion	13.9		9.8
Fair Value of Derivatives, noncurrent portion	—		0.1
Operating Lease Right-of-Use Asset	202.8		—
Other	23.6		24.7
Total	$	273.7	68.3

Other Accrued Liabilities:

In millions	~~2019~~2020		~~2018~~2019
Deferred Revenue	~~15.2~~$	21.1	~~14.0~~$	15.2
Accrued Customer Rebates	3640.5		3036.25
Fair Value of Derivatives, current portion	8.5		18.35
Other Accrued Taxes	3847.05		4238.20
Accrued Payables	3137.46		3031.34
Liabilities Payable to a Financial Institution	—		62.6
Operating Lease Liabilities, current portion	60.5		54.8
Operating Lease Liabilities, current portion	54.8		—
Other	46.1		32.5
Other	32.5		35.3
Total	$	261.8	$	216.9
Total	$	216.9	$	215.9

54Other Noncurrent Liabilities:


In millions	2020		2019
Deferred Revenue	$	6.5	$	5.3
Multi-employer Plans	20.0		30.8
Workers Compensation Reserve	8.7		9.5
Fair Value of Derivatives, noncurrent portion	0.4		3.0

Unfavorable Supply Agreement	26.6		28.9
Deferred Compensation	16.5		12.1
Operating Lease Liabilities, noncurrent portion	157.2		151.5
Other	54.4		24.5
Total	$	290.3	$	265.6

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Other Noncurrent Liabilities:

In millions	2019		2018
Deferred Revenue	$	5.3	$	5.2
Multi-employer Plans	30.8		32.4
Workers Compensation Reserve	9.5		9.9
Fair Value of Derivatives, noncurrent portion	3.0		2.1
Unfavorable Supply Agreement	28.9		31.2
Operating Lease Liabilities, noncurrent portion	151.5		—
Other	36.6		36.1
Total	$	265.6	116.9

NOTE 3. SUPPLEMENTAL CASH FLOW INFORMATION

Cash Flow (Used In) Provided by Operations Due to Changes in Operating Assets and Liabilities, net of acquisitions:

In millions	~~2019~~2020		~~2018~~2019		~~2017~~2018
Receivables, Net	$	(~~103~~210.43)	$	(~~1,155~~103.54)	$	(~~658~~1,155.85)
Inventories, Net	~~(72~~34.8)		(8272.08)		(682.50)
Other Current Assets	(72.35)		4(7.23)		04.82
Other Assets	(621.35)		1(6.93)		~~(32~~1.8)9
Accounts Payable	(870.6)9		76(8.26)		2776.02
Compensation and Employee Benefits	1240.93		2612.9		326.59
Income Taxes	(41.27)		(14.02)		18(1.90)
Interest Payable	85.46		(48.1)4		(14.71)
Other Accrued Liabilities	~~(17~~10.0)4		12(17.0)		~~(16~~12.6)0
Other Noncurrent Liabilities	1233.1		(412.8)1		14(4.28)
Total	$	(~~186~~40.29)	$	(~~1,126~~186.2)	$	(~~652~~1,126.02)

Cash paid for interest and cash paid, net of refunds, for income taxes was as follows:

In millions	~~2019~~2020		~~2018~~2019		~~2017~~2018
Interest	$	~~126~~119.85	$	~~125~~126.08	$	81125.80
Income Taxes	$	1816.56	$	1718.35	$	1517.93

NOTE 4. BUSINESS COMBINATIONS

~~2019~~2020

On ~~August~~January 131, ~~2019~~2020, the Company ~~completed~~acquired ~~the~~a ~~acquisition~~folding ofcarton ~~Artistic~~facility from Quad, a ~~diversified~~commercial ~~producer~~printing ~~of folding cartons and CRB~~company. The ~~acquisition included two~~ converting ~~facilities~~facility is located in ~~Auburn~~Omaha, ~~Indiana and Elgin~~Nebraska, ~~Illinois~~close ~~and~~to ~~one~~many ~~CRB~~of ~~paperboard~~the ~~mill~~Company's ~~located~~existing infood ~~White~~and ~~Pigeon,~~beverage ~~Michigan~~customers. The Company paid ~~$52.5~~approximately $41 million using existing cash and borrowings under its revolving credit facility. The ~~acquisition~~purchase ~~accounting~~price ~~for~~has ~~the~~been ~~Artistic~~allocated ~~acquisition~~to isassets ~~preliminary~~acquired asand liabilities assumed based on the ~~Company~~estimated isfair ~~still~~values ~~reviewing~~as of the ~~measurement~~acquisition ofdate. ~~tangible~~The ~~and~~Company recorded $4.7 million related to identifiable intangible assets. ~~Management~~(customer ~~believes~~relationships ~~that~~with ~~the~~useful ~~purchase~~lives ~~price~~of ~~attributable~~fifteen years), $42.8 million related to ~~goodwill~~net ~~represents~~tangible ~~the~~assets ~~benefits~~(primarily ~~expected~~working capital, land/buildings and equipment) and a bargain purchase gain of $6.6 million as the ~~acquisition~~net ~~was~~fair ~~made~~value toof ~~continue~~assets toacquired ~~integrate~~and ~~paperboard~~liabilities ~~from~~assumed ~~the~~was ~~Company’s~~greater ~~mills,~~than tothe ~~expand~~purchase ~~its~~price. ~~product~~During ~~offering~~2020, Net Sales and toLoss ~~further~~from ~~optimize~~Operations for the ~~Company’s~~Quad ~~supply~~acquisition ~~chain~~were ~~footprint~~$78.5 million and $0.7 million, respectively.

55On April 1, 2020, the Company acquired the Consumer Packaging Group business from Greif, Inc., 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 purchase price has been preliminarily allocated to assets acquired and liabilities assumed based on the estimated fair values as of the acquisition date and is subject to adjustments in subsequent periods once the third-party valuations are finalized. The Company recorded $13.2 million related to identifiable intangible assets (customer relationships with useful lives of fifteen years) and $66.9 million related to net tangible assets (primarily working capital, land/buildings and equipment). During 2020, Net Sales and Loss from Operations for the Consumer Packaging Group acquisition were $164.5 million and $14.3 million, respectively.

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

2019

On August 1, 2019, the Company completed the acquisition of Artistic, a diversified producer of folding cartons and CRB. The acquisition included two converting facilities located in Auburn, Indiana and Elgin, Illinois and one CRB paperboard mill located in White Pigeon, Michigan. The Company paid $52.5 million using existing cash and borrowings under its revolving credit facility. Management believes that the purchase price attributable to goodwill represents the benefits expected as the acquisition was made to continue to integrate paperboard from the Company’s mills, to expand its product offering and to further optimize the Company’s supply chain footprint.

Tangible assets and liabilities were valued as of the acquisition date using a market analysis and intangible assets were valued using a discounted cash flow analysis, which represents a Level 3 measurement. The Company recorded $6.5 million related to identifiable intangible assets (customer relationships), $38.5 million related to tangible assets (primarily working capital, land/buildings and equipment) and $7.5 million related to goodwill. Goodwill was recorded in the Americas Paperboard Packaging segment.

During 2019, Net Sales and Income from Operations from the Artistic acquisition were $31.2 million and $2.0 million, respectively.

2018

On January 1, 2018, the Company completed the NACP Combination. The NACP business produces SBS and paper-based foodservice products. The NACP business included two SBS mills located in Augusta, Georgia and Texarkana, Texas, three converting facilities in the U.S. and one in the U.K.

Total consideration for the NACP Combination, including debt assumed of $660 million, was $1.8 billion. Management believes that the purchase price attributable to goodwill represents the benefits expected, as the acquisition was made to continue to expand the Company's product offering, integrate paperboard from the Company's mills and to further optimize the Company's supply chain footprint.

On September 30, 2018, the Company completed the Letica Foodservice acquisition. The acquisition included two facilities in Clarksville, Tennessee and Pittston, Pennsylvania, focused on the production of paperboard-based cold and hot cups and cartons. The Company paid approximately $95 million using existing cash and borrowings under its revolving credit facility.

On June 12, 2018, the Company completed the PFP acquisition. The Company paid approximately $34 million using existing cash and borrowings under its revolving credit facility. The acquisition included two manufacturing facilities in Lebanon, Tennessee and Lancaster, Texas, focused on the production of paperboard-based air filter frames.

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The acquisition accounting for the NACP Combination, PFP and the Letica Foodservice acquisitions as of December 31, 2018 was as follows:

In millions	Amounts Recognized as of Acquisition Date		Measurement Period Adjustments		Amounts Recognized as of Acquisition Dates (as adjusted)
Purchase Price(a)	$	1,241.7	$	(40.9)	$	1,200.8
Assumed Debt(b)	660.0		—		660.0
Total Purchase Consideration	$	1,901.7	$	(40.9)	$	1,860.8
Receivables, Net	145.3		—		145.3
Inventories, Net	314.2		0.8		315.0
Other Current Assets	20.9		(9.2)		11.7
Property, Plant and Equipment, Net	1,242.6		32.0		1,274.6
Intangible Assets, Net(c)	136.6		13.5		150.1
Other Assets	6.0		(6.0)		—
Total Assets Acquired	1,865.6		31.1		1,896.7
Accounts Payable	112.6		—		112.6
Compensation and Employee Benefits	21.0		(5.7)		15.3
Current Liabilities	18.0		(0.1)		17.9
Other Noncurrent Liabilities	38.7		(1.7)		37.0
Total Liabilities Assumed	190.3		(7.5)		182.8
Net Assets Acquired	1,675.3		38.6		1,713.9
Goodwill	226.4		(79.5)		146.9
Total Estimated Fair Value of Net Assets Acquired	$	1,901.7	$	(40.9)	$	1,860.8

(a) Includes a $123.5 million adjustment for discounting the purchase price for lack of marketability of the membership interests issued for the NACP Combination and measurement period adjustments of $40.5 million, related to working capital true-ups, offset by pension settlements.

(b) Assumed Debt was valued at fair market value based on quoted market prices (Level 2 inputs) obtained from independent pricing services.

(c) Intangible Assets, Net consists of customer relationships which are generally amortized using either a straight-lined method, when the amortization pattern is not reliably determinable, or an accelerated method, generally over approximately 20 years. The value of customer relationships was determined using a discounted cash flow model, which includes an approximate 5% attrition rate. Beyond the twenty-year life, the present value of cash flows were not meaningful.

As of December 31, 2018, the acquisition accounting for the NACP Combination and PFP Acquisition was complete and the acquisition accounting for Letica Foodservice was preliminary based on the estimated fair values of all assets and liabilities as of the acquisition date.

During the quarter ended March 31, 2019, the acquisition accounting for Letica Foodservice was finalized, resulting in an approximately $5 million reduction in the value of property, plant and equipment.

57Net Sales and Income from Operations from the NACP Combination was $1,407.1 million and $134.7 million, respectively, for the year ended December 31, 2018.

During 2018, Net Sales and Loss from Operations from the Letica Foodservice and PFP acquisitions were $42.4 million and $1.4 million, respectively.

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

~~The~~In ~~following~~connection ~~unaudited~~with ~~pro~~the ~~forma~~NACP ~~consolidated~~Combination, ~~results~~the ofCompany ~~operations~~entered ~~data~~into ~~assumes~~agreements ~~that~~with IP for transition services, fiber procurement fees, and corrugated products and ink supply. Payments to IP for the ~~NACP~~year ~~Combination~~ended ~~occurred~~December 31, as2020 for fiber procurement fees and corrugated products were $12.1 million (related to pass through wood purchases of approximately $204 million) and $28.4 million, respectively. There were no payments to IP for transition services during the ~~beginning~~year ofended December 31, 2020. Payments to IP for the ~~period~~year ~~presented~~ended December 31, 2019 under these agreements were $0.1 million, ~~This~~$12.4 million ~~pro~~(related ~~forma~~to ~~data~~pass isthrough ~~based~~wood onpurchases ~~historical~~of ~~information~~approximately $229.1 million) and ~~does~~$26.6 million, ~~not~~respectively. ~~necessarily~~Payments ~~reflect~~to IP for the ~~actual~~year ~~results~~ended ~~that~~December 31, ~~would~~2018 ~~have~~under ~~occurred~~these agreements were $22.0 million, ~~nor~~$15.9 million is(related itto ~~indicative~~pass through wood purchases of ~~future~~approximately ~~results~~$194 million) and $28.5 million, respectively. In addition, approximately $4 million and $6 million of ~~operations~~payments were made for purchases unrelated to these agreements for the years ended December 31, 2019 and 2018, respectively.

In millions, except per share data	Year Ended December 31, 2017
Net Sales	$	5,912.5
Net Income	490.9

Net Sales and Income from Operations from the NACP Combination was $1,407.1 million and $134.7 million, respectively, for the year ended December 31, 2018. Total Assets increased as a result of the NACP Combination for the Paperboard Mills and Americas Paperboard Packaging reportable segments by approximately $1.5 billion and $0.6 billion, respectively, as compared to December 31, 2017.

During 2018, Net Sales and Loss from Operations from the Letica Foodservice and PFP acquisitions were $42.4 million and $1.4 million, respectively.

In connection with the NACP Combination, the Company entered into agreements with IP for transition services, fiber procurement fees and corrugated products and ink supply. Payments to IP for the year ended December 31, 2019 under these agreements were $0.1 million, $12.4 million (related to pass through wood purchases of approximately $229.1 million) and $26.6 million, respectively. Payments to IP for the year ended December 31, 2018 under these agreements were $22.0 million, $15.9 million (related to pass through wood purchases of approximately $194 million) and $28.5 million, respectively. In addition, approximately $4 million and $6 million of payments were made for purchases unrelated to these agreements for the year ended December 31, 2019 and 2018, respectively.

2017

As disclosed in "Note 1 - General Information," in 2017, the Company acquired Seydaco, Norgraft, and Carton Craft, which are referred to collectively as the "2017 Acquisitions," for a total purchase price of approximately $189 million.

NOTE 5. DEBT

Short-Term Debt is comprised of the following:

In millions	~~2019~~2020		~~2018~~2019
Short Term Borrowings	$	93.3	$	119.73
Current Portion of Finance Lease Obligations	45.60		34.86
Current Portion of Long-Term Debt	36488.59		36.5
Total	$	50497.42	$	5250.04

Short-term borrowings are principally at the Company’s international subsidiaries. The weighted average interest rate on short-term borrowings as of December 31, ~~2019~~2020 and ~~2018~~2019 was 24.19% and 82.41%, respectively.

On June 25, 2019, GPIL completed a private offering of $300.0 million aggregate principal amount of its senior unsecured notes due 2027. The Senior Notes will bear interest at an annual rate of 4.75%. The net proceeds were used by the Company to repay a portion of the outstanding borrowings under GPIL's revolving credit facility, which is under its senior secured credit facility.60

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Long-Term Debt is comprised of the following:

In millions	~~2019~~2020		~~2018~~2019
Senior Notes with interest payable semi-annually at 4.75%, effective rate of 4.82%, payable in 2027	$	300.0	$	—
Senior Notes with interest payable semi-annually at 3.50%, effective rate of 3.55%, payable in 2029	$	350.0	$	—
Senior Notes with interest payable semi-annually at 4.125%, effective rate of 4.17%, payable in 2024	300.0		300.0
Senior Notes with interest payable semi-annually at 3.50%, effective rate of 3.55%, payable in 2028	450.0		—
Senior Notes with interest payable semi-annually at 4.875%, effective rate of 4.91%, payable in 2022	250.0		250.0
Senior Notes with interest payable semi-annually at 4.75%, effective rate of 4.81%, payable in 2027	300.0		300.0
Senior Notes with interest payable semi-annually at 4.75%, effective rate of 4.76%, payable in 2021	425.0		425.0
Senior Notes with interest payable semi-annually at 4.125%, effective rate of 4.16%, payable in 2024	300.0		300.0
Senior Secured Term Loan Facilities with interest payable at various dates at floating rates (3.28% at December 31, 2019) payable through 2023	1,396.1		1,432.6
Senior Notes with interest payable semi-annually at 4.875%, effective rate of 4.90%, payable in 2022	250.0		250.0
Senior Secured Revolving Credit Facilities with interest payable at floating rates (1.50% at December 31, 2019) payable in 2023	52.8		399.0
Senior Notes with interest payable semi-annually at 4.75%, effective rate of 4.75%, payable in 2021	425.0		425.0
Finance Leases	134.2		122.9
Senior Secured Term Loan Facilities with interest payable at various dates at floating rates (1.67% at December 31, 2020) payable through 2023	1,359.6		1,396.1
Other	5.4		26.5
Senior Secured Revolving Credit Facilities with interest payable at floating rates (1.50% at December 31, 2020) payable in 2023(a)	84.4		52.8
Total Long-Term Debt	2,863.5		2,956.0
Finance Leases and Financing Obligations	139.4		134.2
Less: Current Portion	41.1		40.3
Other	4.9		5.4
	2,822.4		2,915.7
Total Long-Term Debt	3,663.3		2,863.5
Less: Unamortized Deferred Debt Issuance Costs	12.5		10.6
Less: Current Portion	493.9		41.1
Total	$	2,809.9	$	2,905.1
	3,169.4		2,822.4
Less: Unamortized Deferred Debt Issuance Costs	22.4		12.5
Total	$	3,147.0	$	2,809.9

~~Long-Term~~(a) ~~Debt~~The ~~maturities~~effective ~~(excluding~~interest ~~finance~~rates ~~leases)~~for ~~are~~the Company’s Senior Secured Revolving Credit Facilities were 2.06% and 3.40% as ~~follows:~~of December 31, 2020 and 2019, respectively.

In millions
2020	$	36.5
2021	489.4
2022	128.2
2023	1,471.2
2024	300.4
After 2024	303.6
Total	$	2,729.3

2020

59On March 6, 2020, GPIL completed a private offering of $450.0 million aggregate principal amount of its senior unsecured notes due 2028. The Senior Notes bear interest at an annual rate of 3.50%. The net proceeds were used by the Company to repay a portion of the outstanding borrowings under GPIL's revolving credit facility, which is under its senior secured credit facility.

On August 28, 2020, GPIL completed a private offering of $350.0 million aggregate principal amount of its senior unsecured notes due 2029. The Senior Notes bear interest at an annual rate of 3.50%. The net proceeds were used by the Company to repay a portion of the outstanding borrowings under GPIL's revolving credit facility, which is under its senior secured credit facility.

2019

Long-Term Debt maturities (excluding finance leases and finance obligations) are as follows:

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


In millions
2021	$	488.9
2022	378.4
2023	1,252.9
2024	300.5
2025	—
After 2025	1,103.2
Total	$	3,523.9

Credit Facilities

The following describes the ~~Senior~~Company's ~~Secured~~senior ~~Term~~secured ~~Loan~~term loans and ~~Revolving~~revolving ~~Credit~~credit ~~Facilities~~facilities:

Date

Document(a)

Provision

Expiration~~(b)~~

March 2012

Amended and Restated Credit Agreement

•$1.0 billion revolving credit facility •$1.0 billion amortizing term loan facility •LIBOR plus variable spread (between 175 basis points and 275 basis points) depending on consolidated total leverage ratio

January 2018

Third Amended and Restated Credit Agreement

•Increased the domestic revolving credit facility by $200 million to $1,450 million and reduced the term loan by approximately $125 million to $800 million. LIBOR plus variable spread (between 125 basis points and 200 basis points) depending on consolidated total leverage ratio•Includes €138 million revolving credit facility for borrowings in Euro and Pound Sterling and a ¥2.5 billion revolving credit facility for borrowings in Yen

January 2023

December 2012

Amendment No. 1 to Credit Agreement

•$300 million incremental term loan

January 2018

Amended and Restated Credit Agreement

•This term loan indebtedness was assumed by the Company as part of the NACP Combination in an aggregate amount of $660 million

January 2023

September 2013

Amendment No. 2 to Credit Agreement

•Added €75 million (approximately $100 million) revolving credit facility for borrowings in Euro and Pound Sterling and a ¥2.5 billion (approximately $25 million) revolving credit facility for borrowings in Yen. LIBOR plus variable spread (between 150 basis points and 250 basis points) depending on consolidated total leverage ratio

October 2020

Incremental Facility Amendment to the Third Amended and Restated Credit Agreement

•Incremental $425 million term loan facility under the Third Amended and Restated Credit Agreement with a delayed draw feature, which was exercised in January 2021

January 2028

June 2014

Amendment No. 3 to Credit Agreement

•Increased revolving credit facility under which borrowings can be made in Euros or Sterling by €63 million (approximately $86 million)

October 2014

Second Amended and Restated Credit Agreement

•Increased the domestic revolving credit facility by $250 million and reduced the term loan by approximately $169 million. LIBOR plus variable spread (between 125 basis points and 225 basis points) depending on consolidated total leverage ratio

January 2018

Third Amended and Restated Credit Agreement

•Increased the domestic revolving credit facility by $200 million to $1,450 million and reduced the term loan by approximately $125 million to $800 million. LIBOR plus variable spread (between 125 basis points and 200 basis points) depending on consolidated total leverage ratio•Assumed the term loan indebtedness as part of the NACP Combination in an aggregate amount of $660.0 million

January 2023

(a) The Company's obligations under the Third Amended and Restated Credit Agreement (as amended by the Incremental Facility Amendment) and the Amended and Restated Credit Agreement (collectively, the “Current Credit Agreement”) are secured by substantially all of the Company's domestic assets.

On January 1, 2018 the Company assumed the term loan indebtedness previously incurred by IP (bthe “Amended and Restated Credit Agreement”) ~~Expiration~~ ~~date~~in isan ~~amended~~aggregate amount of $660 million, repayable pursuant to ~~most~~the ~~recent~~same ~~expiration~~amortization schedule (expressed as a percentage of the principal amount thereof) as the Term Loan A under the Third Amended and Restated Credit Agreement and having the same maturity date of January 1, 2023. The applicable margin interest rate pricing grid, covenants and other terms are substantially equivalent to those contained in the Third Amended and Restated Credit Agreement. The term loan under the Amended and Restated Credit Agreement is secured by a lien and security interest in substantially all of the assets of GPIL on a pari passu basis with the liens and security interests securing the Third Amended and Restated Credit Agreement pursuant to the terms of a customary intercreditor agreement among the parties.

6062

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

InOn ~~addition~~October 15, to2020, ~~the~~GPIL ~~Amended~~entered ~~and~~into ~~Restated~~a ~~Credit~~new ~~Agreement,~~$425 million onterm ~~January~~loan 1,facility ~~2018~~under the ~~Company~~Third ~~assumed~~Amended ~~the~~and ~~term~~Restated ~~loan~~Credit ~~indebtedness~~Agreement ~~previously~~with ~~incurred~~member bybanks IPof (the ~~“Term~~Farm ~~Loan~~ Credit ~~Agreement”)~~System in(the an"Incremental ~~aggregate~~Term ~~amount~~A-2 ofFacility"). ~~$660~~The ~~million,~~Incremental ~~repayable~~Term ~~pursuant~~A-2 toFacility ~~the~~had ~~same~~a ~~amortization~~delayed ~~schedule~~draw ~~(expressed~~feature, asand athe ~~percentage~~Company ofdrew the ~~principal~~entire ~~amount~~facility ~~thereof)~~on asJanuary 14, ~~the~~2021. ~~Term~~On ~~Loan~~January 15, A2021, ~~under~~the Company used the ~~Amended~~proceeds, ~~and~~together ~~Restated~~with ~~Credit~~cash ~~Agreement~~on ~~and~~hand, ~~has~~to ~~the~~redeem ~~same~~its ~~maturity~~4.75% ~~date~~Senior ofNotes ~~January~~due 1,in ~~2023~~2021 at par. The ~~applicable~~redemption ~~margin~~included ~~interest~~the ~~rate~~outstanding ~~pricing~~principal ~~grid,~~amount ~~covenants~~plus accrued and ~~other~~unpaid ~~terms~~interest. ~~are~~The ~~substantially~~Incremental ~~equivalent~~Term toA-2 ~~those~~Facility ~~contained~~bears ininterest ~~the~~at ~~Amended~~a ~~and~~fixed ~~Restated~~rate ~~Credit~~of ~~Agreement~~2.67% ~~The~~due ~~Term~~quarterly, ~~Loan~~matures ~~Credit~~January 14, ~~Agreement~~2028, isand ~~secured~~does bynot aamortize. ~~lien~~As ~~and~~long ~~security~~as ~~interest~~the inloan ~~substantially~~is ~~all~~outstanding, ofGPIL ~~the~~will ~~assets~~be ofeligible ~~the~~to ~~Company~~receive onan aannual ~~pari~~patronage ~~passu~~credit ~~basis~~from ~~with~~ the ~~liens~~participating ~~and~~banks, ~~security~~which ~~interests~~will ~~securing~~be ~~the~~paid ~~Amended~~in cash and ~~Restated~~stock ~~Credit~~in ~~Agreement pursuant to~~ the ~~terms~~lead ofmember abank. ~~customary~~Patronage ~~intercreditor~~payable ~~agreement~~each ~~among~~year ~~the~~is ~~parties.~~variable ~~The~~and ~~Amended~~based ~~and~~on ~~Restated~~the ~~Credit~~individual ~~Agreement~~financial ~~and~~performance ~~Term~~of ~~Loan~~each ~~Credit~~of ~~Agreement~~the ~~are~~member ~~collectively~~banks ~~referred~~then toparticipating asin the ~~"Credit Agreement~~loan."

At December 31, ~~2019~~2020, the Company and its U.S. and international subsidiaries had the following commitments, amounts outstanding and amounts available under revolving credit facilities:

In millions	Total Commitments		Total Outstanding		Total Available
Senior Secured Domestic Revolving Credit Facility (a)	$	1,450.0	$	—	$	1,~~432~~429.13
Senior Secured International Revolving Credit Facilities	~~178~~193.0		5284.84		~~125~~108.26
Other International Facilities	5957.75		148.63		4549.12
Total	$	1,~~687~~700.75	$	6792.47	$	1,~~602~~587.41

(a) In accordance with its debt agreements, the Company's availability under its ~~Revolving~~revolving ~~Credit~~credit ~~Facility~~facility has been reduced by the amount of standby letters of credit issued of $1720.97 million as of December 31, ~~2019~~2020. These letters of credit are primarily used as security against its self-insurance obligations and workers' compensation obligations. These letters of credit expire at various dates through 2021 ~~2020~~ unless extended.

The facilities under the Current Credit Agreement and the 4.75% Senior Notes due 2027, the 3.50% Senior Notes due 2028 and the 3.50% Senior Notes due 2029 are guaranteed by GPIP and certain domestic subsidiaries,. ~~and~~The ~~the~~ 4.75% Senior Notes due 2021 (redeemed January 15, 2021), 4.875% Senior Notes due 2022 and 4.125% Senior Notes due 2024 are guaranteed by GPHC. ~~For~~and ~~additional~~certain ~~information~~domestic ~~on the financial statements of GPIP, see "Note 19 - Guarantor Consolidating Financial Statements~~subsidiaries.”

The Current Credit Agreement and the indentures governing the 4.75% Senior Notes due 2021, 4.875% Senior Notes due 2022, 4.125% Senior Notes due 2024, ~~and~~ 4.75% Senior Notes due 2027, 3.50% Senior Notes due 2028 and 3.50% Senior Notes due 2029 (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 December 31, ~~2019~~2020, the Company was in compliance with the covenants in the ~~Amended~~Current ~~and Restated~~ Credit Agreement, ~~the Term Loan Credit Agreement~~ and the Indentures.

NOTE 6. LEASES

Effective January 1, 2019, the Company adopted ASC 842, which requires recognition of a right-of-use asset and lease liability for all leases at the commencement date based on the present value of lease payments over the lease term. Additional qualitative and quantitative disclosures regarding the Company's leasing arrangements are also required. The Company adopted ASC 842 prospectively and elected the package of transition practical expedients that does not require reassessment of: (1) whether any existing or expired contracts are or contain leases, (2) lease classification and (3) initial direct costs. In addition, the Company has elected other available practical expedients to not separate lease and ~~nonlease~~non-lease components, which consist principally of common area maintenance charges, for all classes of underlying assets and to exclude leases with an initial term of 12 months or less.

6163

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company determines if a contract is or contains a lease at inception. The Company has operating and finance leases for warehouses, corporate and regional offices, and machinery and equipment. The Company enters into lease contracts ranging from one to 25 years with the majority of leases having terms of three to seven years, many of which include options to extend in various increments. Variable lease costs consist primarily of variable warehousing costs, common area maintenance, taxes, and insurance. The Company’s leases do not have any significant residual value guarantees or restrictive covenants.

As the implicit rate is not readily determinable for most of the Company’s leases agreements, the Company uses an estimated incremental borrowing rate to determine the initial present value of lease payments. These discount rates for leases are calculated using the Company's credit spread adjusted for current market factors, including fixed rate swaps, LIBOR, and foreign currency rates.

The components of lease costs are as follows:

			Twelve Months Ended
	Year Ended December 31,
In millions	2020		~~December 31,~~ 2019
Finance lease costs:
Amortization of right-of-use asset	$	7.9	$	7.6
Interest on lease liabilities	7.9		7.8
Operating lease costs	72.1		64.8
Short-term lease costs	12.6		12.9
Variable lease costs	10.3		4.4
Total lease costs, net	$	110.8	$	97.5

Supplemental cash flow information related to leases was as follows:

	Twelve Months Ended
	Year Ended December 31,
In millions	~~December 31, 2019~~2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6471.79	$	64.7
Operating cash flows from finance leases	7.89		7.8
Financing cash flows from finance leases	4.26		4.2
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	7370.15		73.1
Finance leases	150.51		15.5

6264

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Supplemental balance sheet information related to leases was as follows:

In millions, except lease term and discount rate	Balance Sheet Classification	December 31, 2019
	Balance Sheet Classification	December 31,
Operating Leases:
In millions, except lease term and discount rate		2020			2019
Operating lease right-of-use asset	Other Assets	$	202.8
Operating Leases:
Current operating lease liabilities	Other Current Liabilities	$	54.8
Operating lease right-of-use asset	Other Assets	$	208.3		$	202.8
Noncurrent operating lease liabilities	Other Noncurrent Liabilities	151.5
Current operating lease liabilities	Other Accrued Liabilities	$	60.5		$	54.8
Total operating lease liabilities		$	206.3
Noncurrent operating lease liabilities	Other Noncurrent Liabilities	157.2			151.5
Finance Leases:
Total operating lease liabilities		$	217.7		$	206.3
Property, Plant and Equipment		$	142.1
Finance Leases:
Accumulated depreciation		(12.2)
Property, Plant and Equipment		$	142.3		$	142.1
Property, Plant and Equipment, net		$	129.9
Accumulated depreciation		(20.1)			(12.2)
Current finance lease liabilities	Short-Term Debt and Current Portion of Long-Term Debt	$	4.6
Property, Plant and Equipment, net		$	122.2		$	129.9
Noncurrent finance lease liabilities	Long-Term Debt	129.6
Current finance lease liabilities	Short-Term Debt and Current Portion of Long-Term Debt	$	5.0		$	4.6
Total finance lease liabilities		$	134.2
Noncurrent finance lease liabilities	Long-Term Debt	134.4			129.6
Total finance lease liabilities		$	139.4		$	134.2
Weighted Average Remaining Lease Term (Years)
Operating leases		5			5
Finance leases		1716			17
Weighted Average Discount Rate
Operating leases		3.5724		%	3.57		%
Finance leases		5.60		%	5.60		%

Maturities of lease liabilities are as follows:

In millions
Year ending December 31,	Operating Leases		Finance Leases
2020	$	60.8	$	12.5
2021	$	64.1	$	12.6
2021	48.4		12.6
2022	53.0		12.2
2022	38.6		12.2
2023	39.0		12.4
2023	29.0		12.4
2024	25.6		12.4
2024	18.1		12.4
2025	18.0		12.5
Thereafter	3034.73		~~158~~145.27
Total lease payments	~~225.6~~$	234.0	~~220.3~~$	207.8
Less imputed interest	(1916.3)		(8678.12)
Total	$	~~206~~217.37	$	~~134~~129.26

6365

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTE 7. EQUITY COMPENSATION

The Company compensates certain of its employees with grants of restricted stock units ("RSUs") under the Graphic Packaging Holding Company 2014 Omnibus Stock and Incentive Compensation Plan as amended (the "2014 Plan"). Compensation costs related to the grants are recognized in the Consolidated Statements of Operations with a corresponding adjustment to Member's Interest. ~~Under~~The ~~the~~ 2014 Plan, ~~GPHC~~allows ~~may~~for ~~also~~GPHC to grant to20.1 million shares of the Company's employees stock options, stock appreciation rights, restricted stock, 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 December 31, 2020, there were 12.6 million shares available to be granted under the 2014 Plan.

Stock Awards, Restricted Stock and Restricted Stock Units

Under the 2014 Plan, all RSUs generally vest and become payable in three years from date of grant. RSUs granted to employees generally contain ~~some combination of~~ service ~~and~~or performance objectives based on various financial targets and relative total shareholder return that must be met for the ~~shares~~RSUs to vest. Stock awards granted 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 awards granted in the years ended December 31:

	2019		2018		2017
	2020		2019		2018
RSUs — Employees	21,~~187~~655,~~603~~854		12,~~951~~187,~~738~~603		1,~~472~~951,~~995~~738
Weighted-average grant date fair value	$	1215.3740	$	1412.8637	$	1314.5286
Stock Awards — Board of Directors	7471,~~760~~160		5174,~~226~~760		6551,~~520~~226
Weighted-average grant date fair value	$	1213.8449	$	1512.0384	$	1315.4303

A summary of the changes in the number of unvested RSUs from December 31, ~~2016~~2017 to December 31, ~~2019~~2020 is presented below:

	Shares	Weighted Average Grant Date Fair Value
	RSUs	Weighted Average Grant Date Fair Value
Outstanding — December 31, 2016	4,667,675	$	12.21
Granted(a)	1,472,995	13.52
Released	(1,720,327)	10.05
Forfeited	(622,463)	13.13
Performance adjustment(b)	74,054	9.93
Outstanding — December 31, 2017	3,871,934	$	13.10
Granted(a)	1,951,738	14.86
Released	(744,757)	14.90
Forfeited	(210,553)	13.49
Performance adjustment(b)	(408,328)	15.10
Outstanding — December 31, 2018	4,460,034	$	13.27
Granted(a)	2,187,603	12.37
Released	(900,516)	12.00
Forfeited	(187,729)	13.66
Performance adjustment(b)	(499,702)	11.57
Outstanding — December 31, 2019	5,059,690	$	13.27
Granted(a)	1,655,854	15.40
Released	(1,415,365)	12.91
Forfeited	(158,473)	14.25
Outstanding — December 31, 2020	5,141,706	$	14.02

(a) Grant activity for all performance-based RSUs is disclosed at target.

(b) Reflects the number of RSUs above and below target levels based on actual performance measured at the end of the performance period.

6466

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The initial value of the service-based RSUs is based on the market value of GPHC's common stock on the date of grant. The ~~2019~~2020 performance-based RSU grants were valued using a Monte Carlo simulation as the total shareholder return contains a market condition. GPHC's contribution of RSUs are recorded in Member's Interest. The unrecognized expense at December 31, ~~2019~~2020 is approximately $31 million and is expected to be recognized over a weighted average period of 2 years.

The value of stock awards granted to the Company's directors are based on the market value of GPHC's common stock on the date of grant. These awards are unrestricted on the date of grant.

During ~~2019~~2020, ~~2018~~2019, and ~~2017~~2018, $2133.78 million, $1321.87 million and $813.98 million, respectively, were charged to compensation expense for stock incentive plans. and is primarily included in Selling, General and Administrative expenses in the Consolidated Statements of Operations.

During ~~2019~~2020, ~~2018~~2019, and ~~2017~~2018, RSUs with an aggregate fair value of $1122.17 million, $1311.71 million and $2313.27 million, respectively, vested and were paid out. The RSUs vested and paid out in ~~2019~~2020 were granted primarily during ~~2016~~2017.

NOTE 8. PENSIONS AND OTHER POSTRETIREMENT BENEFITS

DEFINED BENEFIT PLANS

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 employees’ compensation.

Currently, the North American plans are closed to newly-hired employees except as noted below. Effective July 1, 2011, the North American plans were frozen for most salaried and non-union hourly employees and replaced with a defined contribution plan.

During 2018, the ~~fourth~~Company began the process of terminating its largest U.S. pension plan (the "U.S. Plan"). This included freezing the plan as of December 31, 2018 and spinning off the active participants to the plan established as part of the NACP Combination (the "NACP Plan"). The NACP Plan is open for union and non-union hourly employees of locations that were part of the NACP Combination. During the third quarter of ~~2017~~2019, the Company ~~made~~offered ana ~~additional~~lump-sum benefit option to certain participants in the U.S. Plan. Lump sum payments of $75150.2 million ~~contribution~~were topaid ~~its~~in the fourth quarter of 2019 and the Company recognized a non-cash settlement charge of $39.2 million associated with the payouts. In the first quarter of 2020, the Company, using the assets held within the pension trust, purchased a group annuity contract that transferred the remaining pension obligation under the U.S. ~~defined~~Plan ~~benefit~~of ~~plan~~approximately ~~and~~$713 million ~~also~~to ~~made~~an insurance company. The Company incurred an additional ~~contribution~~non-cash settlement charge of $6153.87 million related to ~~its~~this Utransfer.K. ~~defined~~These ~~benefit~~non-cash ~~plan~~settlement charges relate to Net Actuarial Loss previously recognized in Accumulated Other Comprehensive Loss.

During 2018, the Company began the process of terminating its largest U.S. pension plan (the "US Plan"). This included freezing the plan as of December 31, 2018 and spinning off the active participants to the plan established as part of the NACP Combination (the "NACP Plan"). The NACP Plan is open for union and non-union hourly employees of locations that were part of the NACP Combination. During the third quarter of 2019, the Company offered a lump-sum benefit option to certain participants in the US Plan. Lump sum payments of $150.2 million were paid in the fourth quarter of 2019 and the Company recognized a non-cash settlement charge of $39.2 million associated with the payouts. In the first quarter of 2020, the Company agreed to purchase a group annuity contract that will transfer the remaining pension benefit obligation under the US Plan of approximately $750 million to an insurance company and expects to incur an additional non-cash settlement charge of approximately $150 million related to this transfer. These non-cash settlement charges relate to Net Actuarial Loss recognized in Accumulated Other Comprehensive Loss. 67

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Pension and Postretirement Expense

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

	Pension Benefits						Postretirement Benefits				~~Postretirement Benefits~~
	Year Ended December 31,
In millions	~~2019~~2020		~~2018~~2019		~~2017~~2018		~~2019~~2020		~~2018~~2019		~~2017~~2018
Components of Net Periodic Cost:
Service Cost	$	1415.04	$	1714.30	$	817.23	$	0.5	$	0.65	$	0.86
Interest Cost	4614.10		4146.81		4241.68		1.20		1.2		1.32
Expected Return on Plan Assets	(5421.90)		(6354.69)		(6463.16)		—		—		—
Amortization:
Prior Service Cost (Credit)	0.2		0.42		0.54		(0.3)		(0.3)		(0.3)
Actuarial Loss (Gain)	105.04		510.90		6.5.9		(21.37)		(12.83)		(2.1.8)
Net Curtailment/Settlement Loss	39153.27		139.02		—1.0		—		—		—
Other	0.32		0.53		0.85		—		—		—
Net Periodic Cost (Benefit)	$	54167.9	$	354.39	$	(53.5)3	$	(0.95)	$	(0.39)	$	(0.3)

Certain assumptions used in determining the pension and postretirement expenses were as follows:

	Pension Benefits						Postretirement Benefits				~~Postretirement Benefits~~
	Year Ended December 31,
	2019		2018		2017		2019		2018		2017
	2020		2019		2018		2020		2019		2018
Weighted Average Assumptions:
Discount Rate	42.1469	%	34.4914	%	43.0149	%	43.2922	%	34.6429	%	43.1064	%
Rate of Increase in Future Compensation Levels	2.3736	%	2.0937	%	12.4509	%	—		—		—
Expected Long-Term Rate of Return on Plan Assets	4.7412	%	4.8674	%	54.7986	%	—		—		—
Initial Health Care Cost Trend Rate	—		—		—		96.0065	%	9.00	%	79.4500	%
Ultimate Health Care Cost Trend Rate	—		—		—		4.50	%	4.50	%	4.50	%
Ultimate Year	—		—		—		2028		~~2027~~2028		~~2024~~2027

6668

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Funded Status

The following table sets forth the funded status of the Company’s pension and postretirement plans as of December 31:

	Pension Benefits						Postretirement Benefits			~~Postretirement Benefits~~
In millions	~~2019~~2020			~~2018~~2019			~~2019~~2020			~~2018~~2019
Change in Benefit Obligation:
Benefit Obligation at Beginning of Year	$	1,~~245~~255.24		$	1,~~367~~245.12		$	3435.19		$	3734.31
Service Cost	1415.04			1714.30			0.5			0.65
Interest Cost	4614.10			4146.81			1.20			1.2
Actuarial Loss (Gain)	157.8			(101.9)			1.1			(3.0)
Net Actuarial Loss	61.9			157.8			—			1.1
Foreign Currency Exchange	98.29			~~(14~~9.8)2			~~0.1~~—			(0.2)1
Settlements	(~~150~~742.27)			—(150.2)			—			—
Benefits Paid	(6720.24)			(6567.42)			(1.2)			(1.92)
Other	0.53			10.15			0.1			0.1
Benefit Obligation at End of Year	$	~~1,255~~592.48		$	1,~~245~~255.24		$	3536.93		$	3435.19
Change in Plan Assets:
Fair Value of Plan Assets at Beginning of Year	$	1,~~186~~172.54		$	1,~~340~~186.75		$	—		$	—
Actual Return on Plan Assets	~~181~~57.78			~~(79~~181.6)7			—			—
Employer Contributions	1119.31			511.83			1.2			1.92
Foreign Currency Exchange	108.31			~~(15~~10.0)3			—			—
Benefits Paid	(6720.24)			(6567.42)			(1.2)			(1.92)
Settlements	(~~150~~720.27)			—(150.2)			—			—
Fair Value of Plan Assets at End of Year	$	~~1,172~~516.43		$	1,~~186~~172.54		$	—		$	—
Plan Assets Less than Projected Benefit Obligation	$	(8376.05)		$	(5883.70)		$	(3536.93)		$	(3435.19)
Amounts Recognized in the Consolidated Balance Sheets Consist of:
Pension Assets	$	2521.62		$	1925.06		$	—		$	—
Accrued Pension and Postretirement Benefits Liability — Current	$	(1.78)		$	(1.87)		$	(2.45)		$	(2.54)
Accrued Pension and Postretirement Benefits Liability — Noncurrent	$	(~~106~~96.90)		$	(75106.9)		$	(33.58)		$	(3133.65)
Accumulated Other Comprehensive Income:
Net Actuarial Loss (Gain)	$	~~279~~105.95		$	~~297~~279.39		$	(0.89)		$	(10.68)
Prior Service Cost (Credit)	$	3.68		$	3.6		$	(1715.3)		$	(2017.23)
Weighted Average Calculations:
Discount Rate	2.6911		%	42.1469		%	32.2252		%	43.2922		%
Rates of Increase in Future Compensation Levels	23.3662		%	2.3736		%	—			—
Initial Health Care Cost Trend Rate	—			—			6.6540		%	96.0065		%
Ultimate Health Care Cost Trend Rate	—			—			4.50		%	4.50		%
Ultimate Year	—			—			2028			~~2027~~2028

6769

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company determined pension expense using both the fair value of assets and a calculated value that averages gains and losses over a period of years. Investment gains or losses represent the difference between the expected and actual return on assets. As of December 31, ~~2019~~2020, the net actuarial loss was $~~279~~105.95 million. These net losses may increase future pension expense if not offset by (i) actual investment returns that exceed the assumed investment returns, or (ii) other factors, including reduced pension liabilities arising from higher discount rates used to calculate pension obligations, or (iii) other actuarial gains, including whether such accumulated actuarial losses at each measurement date exceed the “corridor” determined under the Compensation — Retirement Benefits topic of the FASB Codification. For the largest plan, the actuarial loss is amortized over the average remaining ~~life~~service ~~expectancy~~ period of employees expected to receive benefits.

The discount rate used to determine the present value of future pension obligations at December 31, ~~2019~~2020 was based on a yield curve constructed from a portfolio of high-quality corporate debt securities with maturities ranging from 1 year to 30 years. Each year’s expected future benefit payments were discounted to their present value at the spot yield curve rate thereby generating the overall discount rate for the Company’s pension obligations. The weighted average discount rate used to determine the pension obligations was 2.6911% and 42.1469% in ~~2019~~2020 and ~~2018~~2019, respectively.

The net actuarial loss of $61.9 million was primarily due to changes in the discount rate of $51.2 million. The weighted average discount rate at December 31, 2020 was 2.11% compared to 2.69% at December 31, 2019. The net actuarial loss was also impacted by revised census data and actual experience versus expected.

Accumulated Benefit Obligation

The accumulated benefit obligation, (“ABO”), for all defined benefit pension plans was $~~1,249~~588.81 million and $1,~~240~~249.28 million at December 31, ~~2019~~2020 and ~~2018~~2019, respectively. ~~There~~The ~~are~~projected ~~three~~benefit ~~plans~~obligation ~~where~~(“PBO”) ~~the~~and ~~ABO~~fair ~~and~~value ~~projected~~of ~~benefit~~plan ~~obligation~~assets ("where the PBO") ~~exceed~~exceeded plan assets. ~~The~~were ~~aggregate~~$361.1 million ~~ABO~~and $266.0 million, ~~PBO~~respectively. The ABO and fair value of plan assets ~~for~~where ~~these~~the ~~plans~~ABO ~~are~~exceeded ~~$1,043.0~~plan ~~million,~~assets were $~~1,048~~356.6 5 million and $~~942~~266.9 0 million, respectively.

Employer Contributions

The Company made contributions of $1119.31 million and $511.83 million to its pension plans during ~~2019~~2020 and ~~2018~~2019, respectively. The Company also made postretirement health care benefit payments of $1.2 million ~~and $1.9 million~~ during ~~2019~~2020 and ~~2018, respectively~~2019. For ~~2020~~2021, the Company expects to make contributions in the range of $10 million to $20 million to its pension plans and approximately $3 million to its postretirement health care plans.

Pension Assets

The Company’s overall investment strategy is to achieve a mix of investments for long-term growth and near-term benefit payments through diversification of asset types, fund strategies and fund managers. Investment risk is measured on an on-going basis through annual liability measurements, periodic asset/liability studies, and quarterly investment portfolio reviews. The plans invest in the following major asset categories: cash, equity securities, fixed income securities, real estate and diversified growth funds. At December 31, ~~2019~~2020 and ~~2018~~2019, pension investments did not include any direct investments in the Company’s stock or the Company’s debt.

The Company implemented a de-risking or liability driven investment strategy for its U.S. and U.K. pension plans. This strategy moved assets from return seeking (equities) to investments that mirror the underlying benefit obligations (fixed income).

The weighted average allocation of plan assets and the target allocation by asset category is as follows:

	Target		~~2019~~2020		~~2018~~2019
Cash	0.24	%	131.62	%	513.06	%
Equity Securities	822.48		724.72		87.17
Fixed Income Securities	8560.27		6861.69		7968.56
Other Investments	616.21		1012.17		710.41
Total	100.0	%	100.0	%	100.0	%

The plans’ investment in equity securities primarily includes investments in U.S. and international companies of varying sizes and industries. The strategy of these investments is to 1) exceed the return of an appropriate benchmark for such equity classes and 2) through diversification, reduce volatility while enhancing long term real growth.70

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The plans’ investment in fixed income securities includes government bonds, investment grade bonds and non-investment grade bonds across a broad and diverse issuer base. The strategy of these investments is to provide income and stability and to diversify the fixed income exposure of the plan assets, thereby reducing volatility.

The Company’s approach to developing the expected long-term rate of return on pension plan assets is based on fair values and combines an analysis of historical investment performance by asset class, the Company’s investment guidelines and current and expected economic fundamentals.

The following tables set forth, by category and within the fair value hierarchy, the fair value of the Company’s pension assets at December 31, ~~2019~~2020 and ~~2018~~2019:

	Fair Value Measurements at December 31, 2019
			Fair Value Measurements at December 31, 2020
In millions	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Net Asset Value at December 31, 2020
Asset Category:
Cash (a)	$	159.6	$	0.3	$	159.3	$	—
Cash	$	6.2	$	0.3	$	2.3	$	—	$	3.6
Equity Securities:
Domestic (a)	82.9		4.7		78.2		—
Domestic	117.8		4.9		11.6		—		101.3
Foreign (a)	7.0		7.0		—		—
Foreign	7.2		7.2		—		—		—
Fixed Income Securities (a)	852.5		17.0		835.3		0.2
Fixed Income Securities	319.6		18.7		300.6		0.3		—
Other Investments:
Real estate	2122.9		—		8.9		1314.0		—
Diversified growth fund (b)	48.5		—		48.5		—
Diversified growth fund (a)	42.6		—		42.6		—		—
Total	$	~~1,172~~516.43	$	2931.01	$	~~1,130~~366.20	$	1314.23	$	104.9

	Fair Value Measurements at December 31, 2018
			Fair Value Measurements at December 31, 2019
In millions	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Net Asset Value at December 31, 2019
Asset Category:
Cash (a)	$	58.8	$	0.3	$	58.5	$	—
Cash	$	159.6	$	0.3	$	35.0	$	—	$	124.3
Equity Securities:
Domestic (a)	86.4		3.6		82.8		—
Domestic	82.9		4.7		—		—		78.2
Foreign (a)	9.2		5.3		3.8		—
Foreign	7.0		7.0		—		—		—
Fixed Income Securities (a)	980.1		15.0		962.3		2.8
Fixed Income Securities	852.5		17.0		835.3		0.2		—
Other Investments:
Real estate	921.29		—		78.69		113.60		—
Diversified growth fund (b)	42.8		—		41.5		1.4
Diversified growth fund (a)	48.5		—		48.5		—		—
Total	$	1,~~186~~172.54	$	2429.20	$	~~1,156~~927.57	$	513.82	$	202.5

(a) The ~~Level~~fund 2invests ~~investments~~in ~~are~~a ~~held~~combination inof ~~pooled~~traditional ~~funds~~investments ~~and~~(equities, ~~fair~~bonds, ~~value~~and isforeign ~~determined~~exchange), byseeking ~~net~~to ~~asset~~achieve ~~value,~~returns ~~based~~through onactive ~~the~~asset ~~underlying~~allocation ~~investments,~~over asa ~~reported~~three onto ~~the~~five-year ~~valuation date~~horizon.

~~(b) The fund invests in a combination of traditional investments (equities, bonds, and foreign exchange), seeking to achieve returns through active asset allocation over a three to five-year horizon.~~71

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

A reconciliation of fair value measurements of plan assets using significant unobservable inputs (Level 3) is as follows:

In millions	~~2019~~2020		~~2018~~2019
Balance at January 1,	$	513.82	$	05.8
Transfers In	71.41		57.04
Return on Assets Held at December 31	—		—
Balance at December 31,	$	14.3	$	13.2
Balance at December 31,	$	13.2	$	5.8

Postretirement Health Care Trend Rate Sensitivity

Assumed health care cost trend rates affect the amounts reported for postretirement health care benefit plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects on 2019 data:

	One Percentage Point
In millions	Increase		Decrease
Health Care Cost Trend Rate Sensitivity:
Effect on Total Interest and Service Cost Components	$	0.1	$	(0.1)
Effect on Year-End Postretirement Benefit Obligation	$	2.1	$	(1.8)

Estimated Future Benefit Payments

The following represents the Company’s estimated future pension and postretirement health care benefit payments through the year ~~2029~~2030:

In millions	Pension Plans		Postretirement Health Care Benefits
2020	$	71.4	$	2.4
2021	$	24.1	$	2.5
2021	73.0		2.5
2022	26.5		2.5
2022	74.5		2.6
2023	28.8		2.5
2023	75.9		2.6
2024	30.6		2.6
2024	76.9		2.8
2025	32.5		2.3
2025— 2029	384.5		11.4
2026— 2030	181.0		10.4

Amounts in Accumulated Other Comprehensive Loss Expected to Be Recognized in Net Periodic Benefit Costs in 2020

During 2020, amounts recorded in Accumulated Other Comprehensive Loss expected to be recognized in Net Periodic Benefit Costs are as follows:

In millions	Pension Benefits		Postretirement Health Care Benefits
Recognition of Prior Service Cost	$	0.2	$	(0.3)
Recognition of Actuarial Loss (Gain)(a)	4.9		(2.1)

(a) Estimate excludes approximately $150 million of expense that we expect to recognize in 2020 related to the settlement of $750 million of pension obligations through the purchase of a group annuity contract.

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Multi-Employer Plans

Certain of the Company’s employees participate in multi-employer plans that provide both pension and other postretirement health care benefits to employees under union-employer organization agreements. Expense related to ongoing participation in these plans for the years ended December 31, ~~2019~~2020 and ~~2018~~2019 was $0.61 million and $30.46 million, respectively.

Estimated liabilities have been established related to the partial or complete withdrawal from certain multi-employment benefit plans for facilities ~~which~~that have been closed. During the second quarter of 2020, the Company increased its estimated withdrawal liability for these plans by $12.2 million. During the fourth quarter of 2020, the Company entered into a settlement agreement with one of its closed multi-employment benefit plans and recorded a $3.9 million reduction in its estimated withdrawal liability for this plan. Under the terms of this settlement agreement, the Company will pay $17.2 million in the first quarter of 2021. At December 31, ~~2019~~2020, and December 31, ~~2018~~2019, the Company has withdrawal liabilities of $3037.82 million and $3230.48 million, respectively, related to these plans, which is recorded inas Compensation and Employee Benefits and Other Noncurrent Liabilities ~~for~~in ~~these~~the ~~withdrawal~~Company's ~~liabilities~~Consolidated Balance Sheets, which represents the Company's best estimate of the expected withdrawal liability.

In 2019, the Company made a complete withdrawal from the Graphic Communication Conference of the International Brotherhood of Teamster Pension Fund ("GCC/IBT") and the PACE Industry Union-Management Pension Fund ("PIUMPF"). Liabilities of $4.4 million were recorded associated with these withdrawals.

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company's remaining participation in a multi-employer pension plan consists of contributions to one plan under the terms contained in collective bargaining agreements. The risks of participating in these multi-employer plans are different from single-employer plans in the following ways:

a. Assets contributed to the multi-employers plan by one employer may be used to provide benefits to employees of other participating employers.

b. If a participating employer stops contributing to the plan, the unfunded obligation of the plan may be borne by the remaining participating employers.

c. If a company chooses to stop participating in a multi-employer plan, a company may be required to pay that plan an amount based on the underfunded status of the plan, referred to as the withdrawal liability.

The Company's participation in these plans for the year ended December 31, ~~2019~~2020, ~~2018~~2019 and ~~2017~~2018 is shown in the table below:

Pension Protection Act Zone Status

Company Contributions (in millions)

~~Company Contributions (in millions)~~

Multi-employer Pension Fund

EIN/Pension Plan Number

~~2019~~2020

~~2018~~2019

FIP/RP Status Implemented

~~2019~~2020

~~2018~~2019

~~2017~~2018

Surcharge Imposed

Expiration Date of Bargaining Agreement

Central States Southeast and Southwest Areas Pension Fund

36-6044243/001

Red

Yes

0.1

Yes

7/31/2023

PIUMPF(a)

11-6166763/001

Red

Yes

—

~~0.1~~—

0.1

Yes

6/15/2022

GCC/IBT(a)

52-6118568/001

Red

Yes

~~0.1~~—

0.31

0.3

Yes

4/30/2022

Total

0.21

0.52

0.5

(a) As noted above, the Company withdrew from these plans in 2019.

The EIN Number column provides the Employer Identification Number (EIN). Unless otherwise noted, the most recent Pension Protection Act (PPA) zone status available in ~~2019~~2020 and ~~2018~~2019 is for the plan's year-end at December 31, ~~2018~~2019 and December 31, ~~2017~~2018, respectively. The zone status is based on information that the Company receives from the plan and is certified by the plan's actuary. Among other factors, plans in the red zone are generally less than 65 percent funded, plans in the yellow zone are less than 80 percent funded, and plans in the green zone are at least 80 percent funded. The "FIP/RP Status Implemented" column indicates plans for which a Financial Improvement Plan (FIP) or Rehabilitation Plan (RP) has been implemented. The Company's share of the contributions to these plans did not exceed 5% of total plan contributions for the most recent plan year.

71DEFINED CONTRIBUTION PLANS

The Company provides defined contribution plans for certain eligible employees. The Company’s contributions to the plans are based upon employee contributions, a percentage of eligible compensation, and the Company’s annual operating results. Contributions to these plans for the years ended December 31, 2020, 2019 and 2018 were $62.0 million, $57.6 million and $54.6 million, respectively.

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DEFINED CONTRIBUTION PLANS

The Company provides defined contribution plans for certain eligible employees. The Company’s contributions to the plans are based upon employee contributions, a percentage of eligible compensation, and the Company’s annual operating results. Contributions to these plans for the years ended December 31, 2019, 2018 and 2017 were $57.6 million, $54.6 million and $37.7 million, respectively. The increase of $16.9 million from 2017 to 2018 is due primarily to the NACP Combination.

NOTE 9. INCOME TAXES

The U.S. and international components of Income before Income Taxes and Equity Income of Unconsolidated Entity consisted of the following:

Year Ended December 31,

In millions

~~2019~~2020

~~2018~~2019

~~2017~~2018

U.S.

~~304~~179.9

~~299~~304.39

~~227~~299.53

International

4863.65

48.56

2548.5

Income before Income Taxes and Equity Income of Unconsolidated Entity

~~353~~243.54

~~347~~353.85

~~253~~347.08

The provisions for Income Tax (Expense) Benefit on Income before Income Taxes and Equity Income of Unconsolidated Entity consisted of the following:

	Year Ended December 31,
In millions	~~2019~~2020		~~2018~~2019		~~2017~~2018
Current Expense:
Current (Expense) Benefit:
U.S.	$	(1.16)	$	(1.61)	$	(151.96)
International	(1319.54)		(1513.75)		(915.27)
Total Current	$	(1421.60)	$	(1714.36)	$	(2517.13)
Deferred (Expense) Benefit:
Deferred Benefit (Expense):
U.S.	(0.8)3		(0.18)		~~343~~(0.81)
International	(59.0)3		(5.60)		35.06
Total Deferred	$	(59.8)6	$	(5.58)	$	~~346~~5.85
Income Tax (Expense) Benefit	$	(20.4)	$	(11.8)	$	321.7
Income Tax Expense	$	(11.4)	$	(20.4)	$	(11.8)

72A reconciliation of Income Tax (Expense) Benefit on Income before Income Taxes and Equity Income of Unconsolidated Entity at the federal statutory rate of 21.0% compared with the Company’s actual Income Tax (Expense) Benefit is as follows:


	Year Ended December 31,
In millions	2020		Percent		2019		Percent		2018		Percent
Income Tax Expense at U.S. Statutory Rate	$	(51.1)	21.0	%	$	(74.2)	21.0	%	$	(73.1)	21.0	%
U.S. State and Local Tax Expense	(1.2)		0.5		(0.9)		0.2		(1.5)		0.5



Permanent Items	0.4		(0.2)		(1.0)		0.3		(8.1)		2.3
Income Taxed at Corporate Partners	37.4		(15.3)		65.4		(18.5)		71.3		(20.5)


Change in Valuation Allowance	7.5		(3.0)		(5.6)		1.5		2.9		(0.8)

International Tax Rate Differences	(3.0)		1.2		(1.6)		0.5		(1.9)		0.5
Foreign Withholding Tax	(0.8)		0.3		(0.7)		0.2		(0.5)		0.2


Change in Tax Rates	(0.9)		0.4		(0.7)		0.2		(0.5)		0.1

Uncertain Tax Positions	0.2		(0.1)		(0.1)		0.1		—		—

Other	0.1		(0.1)		(1.0)		0.3		(0.4)		0.1
Income Tax Expense	$	(11.4)	4.7	%	$	(20.4)	5.8	%	$	(11.8)	3.4	%

The Company is treated as a disregarded entity for U.S. federal and state income tax purposes. As such, income taxes are not recorded with respect to consolidated domestic earnings, resulting in a difference between the effective tax rate and the statutory tax rate.

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

ADuring ~~reconciliation~~2020, ofthe ~~Income~~Company ~~Tax~~recognized ~~(Expense)~~a ~~Benefit~~tax onbenefit ~~Income~~of ~~before~~approximately ~~Income~~$7.6 million ~~Taxes~~attributable ~~and~~to ~~Equity~~the ~~Income~~release of ~~Unconsolidated~~a ~~Entity~~valuation atallowance recorded against the ~~federal~~net ~~statutory~~deferred ~~rate~~tax assets of ~~21%~~two ~~compared~~of ~~with~~its ~~the~~wholly ~~Company’s~~owned ~~actual~~subsidiaries ~~Income~~in ~~Tax~~Canada ~~(Expense)~~as ~~Benefit~~a isresult asof ~~follows:~~internal restructuring.

	Year Ended December 31,
In millions	2019		Percent		2018		Percent		2017		Percent
Income Tax Expense at U.S. Statutory Rate	$	(74.2)	21.0	%	$	(73.1)	21.0	%	$	(88.5)	35.0	%
U.S. State and Local Tax Expense	(0.9)		0.2		(1.5)		0.5		(8.7)		3.4
Permanent Items	(1.0)		0.3		(8.1)		2.3		(2.7)		1.0
Income Taxed at Corporate Partners	65.4		(18.5)		71.3		(20.5)		—		—
U.S. Tax Reform	—		—		—		—		158.5		(62.7)
Change in Valuation Allowance due to Tax Reform	—		—		—		—		(2.0)		0.8
Change in Valuation Allowance	(5.6)		1.5		2.9		(0.8)		(3.5)		1.4
Change in Valuation Allowance due to Tax Status	—		—		—		—		20.3		(8.0)
International Tax Rate Differences	(1.6)		0.5		(1.9)		0.5		3.2		(1.3)
Foreign Withholding Tax	(0.7)		0.2		(0.5)		0.2		(0.4)		0.2
Change in Tax Rates	(0.7)		0.2		(0.5)		0.1		(3.0)		1.2
U.S. Federal & State Tax Credits	—		—		—		—		10.2		(4.0)
Uncertain Tax Positions	(0.1)		0.1		—		—		(0.3)		0.1
Change in Tax Status	—		—		—		—		235.4		(93.0)
Other	(1.0)		0.3		(0.4)		0.1		3.2		(1.3)
Income Tax (Expense) Benefit	$	(20.4)	5.8	%	$	(11.8)	3.4	%	$	321.7	(127.2)	%

During 2019, the Company recognized tax expense of approximately $4.8 million associated with the establishment of a valuation allowance against the net deferred tax assets of its Australian subsidiary.

~~The~~During Company is treated as a disregarded entity for U.S. federal and state income tax purposes. As such, income taxes are not recorded with respect to consolidated domestic earnings, resulting in a difference between the effective tax rate and the statutory tax rate. In addition, in 2018, the Company reduced its valuation allowance against certain deferred tax assets. Of the total reduction, approximately $2 million was primarily attributable to the release of the valuation allowance against the net deferred tax assets of the Company’s wholly-owned subsidiary in France.

During 2017, the Company executed a series of restructuring steps to facilitate the NACP Combination. As a result of the restructuring steps, on December 29, 2017, GPII converted from a C-corporation to a Delaware limited liability company. As a result of the conversion, the Company’s tax status changed from taxable to disregarded (or non-taxable) for U.S. federal and state income tax purposes and the Company derecognized substantially all of its net deferred tax liability and other income tax balances totaling $255.7 million. In addition, during 2017, the Company recognized a provisional net income tax benefit of $156.5 million as a result of the effect of the enactment of the Tax Cuts and Jobs Act (the “Act”) on December 22, 2017. The Act significantly reduced the U.S. federal corporate income tax rate which resulted in an income tax benefit as a result of the remeasurement of the Company’s domestic net Deferred Tax Liabilities.

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The tax effects of differences that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities as of December 31 were as follows:

In millions	~~2019~~2020		~~2018~~2019
Deferred Income Tax Assets:
Compensation Based Accruals	$	3.75	$	23.87
Net Operating Loss Carryforwards	3033.50		2930.45
Postretirement Benefits	01.72		0.87
Tax Credits	01.74		10.57
Other	13.94		1.9
Valuation Allowance	(3124.86)		(2631.18)
Total Deferred Income Tax Assets	$	517.79	$	105.37
Deferred Income Tax Liabilities:
Property, Plant and Equipment	(1618.30)		(1416.83)
Goodwill	(1.89)		(1.58)
Other Intangibles	(1211.10)		(12.21)
Other	(0.35)		—(0.3)
Net Noncurrent Deferred Income Tax Liabilities	$	(3031.54)	$	(2830.5)
Net Deferred Income Tax Liability	$	(2413.85)	$	(1824.28)

According to the Income Taxes topic of the FASB Codification, a valuation allowance is required to be established or maintained when, based on currently available information and other factors, it is more likely than not that all or a portion of a deferred tax asset will not be realized. The FASB Codification provides important factors in determining whether a deferred tax asset will be realized, including whether there has been sufficient pretax income in recent years and whether sufficient income can reasonably be expected in future years in order to utilize the deferred tax asset. The Company has evaluated the need to maintain a valuation allowance for deferred tax assets based on its assessment of whether it is more likely than not that deferred tax assets will be realized through the generation of future taxable income. Appropriate consideration was given to all available evidence, both positive and negative, in assessing the need for a valuation allowance.

The Company reviewed its deferred income tax assets as of December 31, ~~2019~~2020 and ~~2018~~2019, respectively, and determined that it is more likely than not that a portion will not be realized. A valuation allowance of $3124.86 million and $2631.18 million at December 31, ~~2019~~2020 and ~~2018~~2019, respectively, is maintained on the deferred income tax assets for which the Company has determined that realization is not more likely than not. Of the total valuation allowance at December 31, ~~2019~~2020, $3124.86 million relates to net deferred tax assets in certain foreign jurisdictions. The need for a valuation allowance is made on a jurisdiction-by-jurisdiction basis. As of December 31, ~~2019~~2020, the Company concluded that due to cumulative pretax losses and the lack of sufficient future taxable income of the appropriate character, realization is less than more likely than not on the net deferred income tax assets related primarily to the Company’s Australia, Brazil, China and Germany operations as well as the Company's previously discontinued Canadian operations.

~~The following table represents a summary of the valuation allowances against deferred tax assets as of and for the three years ended December 31, 2019, 2018, and 2017, respectively:~~75

	December 31,
In millions	2019		2018		2017
Balance Beginning of Period	$	26.1	$	31.2	$	45.5
Charges to Costs and Expenses	5.6		(2.9)		(14.8)
Additions (Deductions)	0.1		(2.2)		0.5
Balance at End of Period	$	31.8	$	26.1	$	31.2

International net operating loss carryforward amounts total $110.0 million, of which substantially all have no expiration date.

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

~~Tax~~The ~~Credit~~following ~~carryforwards~~table ~~total~~represents ~~$0.7~~a ~~million~~summary ~~which~~of ~~expire~~the invaluation ~~various~~allowances against deferred tax assets as of and for the three years ~~from~~ended December 31, 2020, 2019, ~~through~~and ~~2037.~~2018, respectively:


	December 31,
In millions	2020		2019		2018
Balance Beginning of Period	$	31.8	$	26.1	$	31.2
Adjustments for (Income) and Expenses	(7.5)		5.6		(2.9)
Additions (Deductions)	0.3		0.1		(2.2)
Balance at End of Period	$	24.6	$	31.8	$	26.1

International net operating loss carryforward amounts total $119.5 million, of which substantially all have no expiration date.

Tax Credit carryforwards total $1.1 million which expire in various years from 2020 through 2038.

Uncertain Tax Positions

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

In millions	~~2019~~2020		~~2018~~2019		~~2017~~2018
Balance at January 1,	$	12.80	$	1.8	$	1.8
Additions for Tax Positions of Current Year	~~0.1~~—		—0.1		—
Additions for Tax Positions of Prior Years	0.1		0.1		0.1
Reductions for Tax Positions of Prior Years	—(0.4)		~~(0.1)~~—		(0.1)
Balance at December 31,	$	21.07	$	12.80	$	1.8

At December 31, ~~2019~~2020, $21.07 million of the total gross unrecognized tax benefits, if recognized, would affect the annual effective income tax rate.

The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits within its global operations in Income Tax Expense. The Company had an accrual for the payment of interest and penalties of $0.1 million and $0.1 million at December 31, ~~2019~~2020 and ~~2018~~2019, respectively.

The Company anticipates that ~~none~~$0.1 million of the total unrecognized tax benefits at December 31, ~~2019~~2020 will change within the next 12 months.

The Company’s domestic operations are included in U.S. federal and state income tax returns filed by its direct and indirect parent companies. In addition, the Company’s foreign subsidiaries file income tax returns in their respective foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local tax examinations for years before ~~2014~~2015 or non-U.S. income tax examinations for years before ~~2008~~2009.

The Company intends to indefinitely reinvest the earnings of its foreign subsidiaries outside the U.S, with the exception of earnings attributable to the Company's equity investment in the joint venture, Rengo Riverwood Packaging, Ltd. and with respect to any excess cash on hand after consideration of working capital needs and other debt settlement, of its Canadian subsidiary, Graphic Packaging International Canada, ULC. As of December 31, ~~2019~~2020, the Company has not provided for deferred U.S. federal income taxes on any of its undistributed earnings in international subsidiaries because the Company is classified as a disregarded entity for U.S. income tax purposes and as such is not subject to federal income tax. ~~and~~The ~~additionally~~Company has ~~determined~~provided ~~that~~deferred noincome ~~withholding~~taxes ~~tax~~related ~~should apply~~ to ~~certain~~future ~~potential~~withholding ~~distributions.~~tax ~~The~~on ~~Company~~the ~~intends~~excess tocash ~~indefinitely~~available ~~reinvest~~for ~~the~~distribution ~~earnings~~from ofGraphic ~~its~~Packaging ~~foreign~~International ~~subsidiaries outside the U.S~~Canada, ~~with~~ULC ~~the~~and ~~exception~~on ofits ~~earnings attributable to the Company's equity~~ investment in ~~the joint venture,~~ Rengo Riverwood Packaging, Ltd. ~~and with respect to any excess cash on hand after consideration of working capital needs and other debt settlement, of its Canadian subsidiary, Graphic Packaging International Canada, ULC.~~

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTE 10. FINANCIAL INSTRUMENTS, DERIVATIVES AND HEDGING ACTIVITIES

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, and presented in the same line of the income statement expected for the hedged item.

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. The following table summarizes the Company's current interest rate swap positions for each period presented as of December 31, 2020:


Start	End	(In Millions) Notional Amount	Weighted Average Interest Rate



12/03/2018	01/01/2022	$120.0	2.92%
12/03/2018	01/04/2022	$80.0	2.79%

~~GRAPHIC~~These ~~PACKAGING~~derivative ~~INTERNATIONAL~~instruments are designated as cash flow hedges and, ~~LLC~~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 2020 and 2019, there were no amounts of ineffectiveness. During 2020 and 2019, there were no amounts excluded from the measure of effectiveness.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table summarizes the Company's current interest rate swap positions for each period presented as of December 31, 2019:

Start	End	(In Millions) Notional Amount	Weighted Average Interest Rate
04/03/2018	01/01/2020	$150.0	2.25%
04/03/2018	10/01/2020	$150.0	2.36%
12/03/2018	01/01/2022	$120.0	2.92%
12/03/2018	01/04/2022	$80.0	2.79%

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 2019 and 2018, there were no amounts of ineffectiveness. During 2019 and 2018, there were no amounts excluded from the measure of effectiveness.

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 and resulting gain or loss reclassified into Cost of Sales concurrently with the recognition of the commodity consumed. The Company has hedged approximately 44% and 11% of its expected natural gas usage for 2021 and 2022, respectively.

~~Such~~During ~~contracts~~2020 ~~are~~and ~~designated~~2019, asthere ~~cash~~were ~~flow~~no ~~hedges.~~amounts ~~The~~of ~~contracts~~ineffectiveness ~~are~~related ~~carried~~to ~~at fair value with~~ changes in the fair value ~~recognized~~of innatural ~~Accumulated~~gas ~~Other~~swap ~~Comprehensive~~contracts. ~~Loss~~Additionally, ~~and~~there ~~resulting~~were ~~gain~~no oramounts ~~loss~~excluded ~~reclassified~~from ~~into Cost of Sales concurrently with~~ the ~~recognition~~measure of ~~the commodity consumed~~effectiveness. ~~The Company has hedged approximately 51% and 14% of its expected natural gas usage for 2020 and 2021, respectively.~~

During 2019 and 2018, there were no and minimal amounts of ineffectiveness related to changes in the fair value of natural gas swap contracts, respectively. 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, Net or Net Sales, when appropriate.

At December 31, ~~2019~~2020 and ~~2018~~2019, multiple forward exchange contracts existed that expire on various dates throughout the following year. Those purchased forward exchange contracts outstanding at December 31, ~~2019~~2020 and ~~2018~~2019, when aggregated and measured in U.S. dollars at contractual rates at December 31, ~~2019~~2020 and ~~2018~~2019, had notional amounts totaling $87101.6 million and $5187.6 million, respectively.

No amounts were reclassified to earnings during ~~2019~~2020 and ~~2018~~2019 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 during ~~2019~~2020 and ~~2018~~2019.

7677

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 December 31, ~~2019~~2020 and ~~2018~~2019, multiple foreign currency forward exchange contracts existed, with maturities ranging up to ~~three~~two months. Those foreign currency contracts outstanding at December 31, ~~2019~~2020 and ~~2018~~2019, when aggregated and measured in U.S. dollars at contractual rates at December 31, ~~2019~~2020 and ~~2018~~2019, respectively, had net notional amounts totaling $7780.40 million and $6277.24 million. Unrealized gains and losses resulting from these contracts are recognized in Other Expense, Net and approximately offset corresponding recognized but unrealized gains and losses on the remeasurement of these accounts receivable.

Foreign Currency Movement Effect

For the year ended December 31, 2020, 2019, and 2018, net currency exchange (gains)/losses included in determining Income from Operations were $2.37 million~~. For the year ended December 31~~, ~~2018 and 2017, net currency exchange losses included in determining Income from Operations were~~ $1(2.63) million, and $3.1.6 million, respectively.

NOTE 11. FAIR VALUE MEASUREMENT

The Company follows the fair value guidance integrated into the Fair Value Measurements and Disclosures topic of the FASB Codification in regards to financial and nonfinancial assets and liabilities. Nonfinancial assets and nonfinancial liabilities include those measured at fair value in goodwill impairment testing, asset retirement obligations initially measured at fair value, and those assets and liabilities initially measured at fair value in a business combination.

The FASB’s guidance defines fair value, establishes a framework for measuring fair value and expands the fair value disclosure requirements. The accounting guidance applies to accounting pronouncements that require or permit fair value measurements. It indicates, among other things, that a fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The guidance defines fair value based upon an exit price model, whereby fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance clarifies that fair value should be based on assumptions that market participants would use, including a consideration of non-performance risk.

Valuation Hierarchy

The Fair Value Measurements and Disclosures topic establishes a valuation hierarchy for disclosure of the inputs used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows:

Level 1 inputs — quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 inputs — 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.

Level 3 inputs — unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value.

An asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The Company has determined that its financial assets and financial liabilities include derivative instruments which are carried at fair value and are valued using Level 2 inputs in the fair value hierarchy. The Company uses valuation techniques based on discounted cash flow analyses, which reflects the terms of the derivatives and uses observable market-based inputs, including forward rates and uses market price quotations obtained from ~~independent~~third party derivatives brokers, corroborated with information obtained from ~~independent~~third party pricing service providers.

7778

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Fair Value of Financial Instruments

As of December 31, ~~2019~~2020 and ~~2018~~2019, 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. The following table summarizes the fair value of the Company's derivative instruments:

	Derivative Assets(a)				Derivative Liabilities(b)		~~Derivative Liabilities(b)~~
	December 31,				December 31,		~~December 31,~~
In millions	~~2019~~2020		~~2018~~2019		~~2019~~2020		~~2018~~2019
Derivatives designated as hedging instruments:
Interest rate contracts	$	—	$	~~0.8~~—	$	6.60	$	26.76
Foreign currency contracts	—		—		12.59		01.5
Commodity contracts	—2.1		—		~~3.4~~—		03.24
Total Derivatives	$	—2.1	$	~~0.8~~—	$	118.59	$	311.45

(a) Derivative assets of $01.76 million are included in Other Current Assets as of December 31, ~~2018~~2020. Derivative ~~assets~~asset of $0.15 million are included in Other Accrued Assets as of December 31, ~~2018~~2020.

(b) Derivative liabilities of $8.5 million and $18.35 million are included in Other Accrued Liabilities as of December 31, ~~2019~~2020 and December 31, ~~2018~~2019, respectively. Derivative liabilities of $3.0.4 million and $23.10 million are included in Other Noncurrent Liabilities as of December 31, ~~2019~~2020 and December 31, ~~2018~~2019, respectively.

The fair values of the Company’s other financial assets and liabilities at December 31, ~~2019~~2020 and ~~2018~~2019 approximately equal the carrying values reported on the Consolidated Balance Sheets except for Long-Term Debt. The fair value of the Company’s Long-Term Debt (excluding finance leases and deferred financing fees) was $23,~~788~~624.67 million and $2,~~762~~788.56 million, as compared to the carrying amounts of $23,~~729~~523.39 million and $2,~~833~~729.13 million as of December 31, ~~2019~~2020 and ~~2018~~2019, respectively. The fair value of the Company's Total Debt, including the Senior Notes, are based on quoted market prices (Level 2 inputs). Level 2 valuation techniques for Long-Term Debt are based on quotations obtained from ~~independent~~third party pricing service providers.

Effect of Derivative Instruments

The pre-tax effect of derivative instruments in cash flow hedging relationships on the Company’s Consolidated Statements of Operations for the year ended December 31, ~~2019~~2020 and ~~2018~~2019 is as follows:

	Amount of Loss (Gain) Recognized in Accumulated Other Comprehensive Loss				Location in Statement of Operations	~~Location~~Amount of (Gain) Loss Recognized in Statement of Operations		~~Amount of (Gain) Loss Recognized in Statement of Operations~~
	Year Ended December 31,					Year Ended December 31,				~~Year Ended December 31,~~
In millions	~~2019~~2020		~~2018~~2019			2020		2019		~~2018~~
Commodity Contracts	$	10.49	$	(01.7)4	Cost of Sales	$	(16.8)3	$	(01.48)
Foreign Currency Contracts	02.1		(0.3)1		Other Expense, Net	(10.35)		0(1.73)
Interest Rate Swap Agreements	5.8		25.08		Interest Expense, Net	16.45		(01.9)4
Total	$	78.38	$	17.03		$	(112.7)3	$	(01.67)

The effect of derivative instruments not designated as hedging instruments on the Company’s Consolidated Statements of Operations for the years ended December 31, ~~2019~~2020 and ~~2018~~2019 is as follows:

In millions						~~2019~~2020			~~2018~~2019
Foreign Currency Contracts			Other Expense ~~(Income)~~, Net			$	(08.9)7		$	(50.69)

7879

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Accumulated Derivative Instruments (Loss) Income

The following is a rollforward of pre-tax Accumulated Derivative Instruments (Loss) Income which is included in the Company’s Consolidated Balance Sheets and Consolidated Statements of Member's Interest as of December 31:

In millions	~~2019~~2020		~~2018~~2019		~~2017~~2018
Balance at January 1	$	(110.9)	$	(01.39)	$	7(0.53)
Reclassification to Earnings	(112.7)3		(01.67)		(20.16)
Current Period Change in Fair Value	(78.38)		(17.03)		(51.70)
Balance at December 31	$	(107.94)	$	(110.9)	$	(01.39)

At December 31, ~~2019~~2020, the Company expects to reclassify $75.89 million of pre-tax losses 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.

NOTE 12. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The components of Other Comprehensive Income (Loss) are as follows:

	Year Ended December 31,
In millions	~~2019~~2020						2019				~~2018~~		2018						~~2017~~
	Pretax Amount		Tax Effect		Net Amount		Pretax Amount		Tax Effect		Net Amount		Pretax Amount		Tax Effect		Net Amount
Derivative Instruments (Loss) Gain	$	(8.9)	$	—	$	(8.9)	$	(1.6)	$	—	$	(1.6)	$	(7.8)	$	2.9	$	(4.9)
Derivative Instruments Gain (Loss)	$	3.5	$	—	$	3.5	$	(8.9)	$	—	$	(8.9)	$	(1.6)	$	—	$	(1.6)
Pension and Postretirement Benefit Plans	13172.63		—1.8		13174.61		~~(32~~13.2)6		~~(0.2)~~—		~~(32~~13.4)6		12(32.32)		(30.52)		8(32.84)
Currency Translation Adjustment	12.4		—		12.4		~~(24~~12.5)4		—		~~(24~~12.5)4		44(24.95)		—		44(24.95)
Other Comprehensive Income (Loss)	$	17188.12	$	—1.8	$	17190.10	$	~~(58~~17.3)1	$	~~(0.2)~~—	$	~~(58~~17.5)1	$	49(58.43)	$	(0.62)	$	48(58.85)

The balances of Accumulated Other Comprehensive Loss, net of applicable taxes are as follows:

	December 31,
In millions	~~2019~~2020		~~2018~~2019
Accumulated Derivative Instruments Loss	$	(2017.83)	$	(1120.98)
Pension and Postretirement Benefit Plans	(~~245~~71.54)		(~~259~~245.15)
Currency Translation Adjustment	(~~113~~101.95)		(~~126~~113.39)
Accumulated Other Comprehensive Loss	$	(~~380~~190.2)	$	(~~397~~380.32)

7980

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTE 13. COMMITMENTS

The Company has entered into other long-term contracts principally for the purchase of fiber and chip processing along with commitments associated with building the new CRB paper machine in Kalamazoo, Michigan. The minimum purchase commitments extend beyond ~~2024~~2025. At December 31, ~~2019~~2020, total commitments under these contracts were as follows:

In millions
2020	$	57.8
2021	$	379.4
2021	30.0
2022	90.5
2022	19.5
2023	67.0
2023	18.3
2024	48.4
2024	18.5
2025	47.7
Thereafter	7758.18
Total	$	~~221~~691.28

NOTE 14. 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 historic 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, closures or sales of facilities may necessitate investigation and may result in remediation activities 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. The Company cannot estimate with certainty other future compliance, investigation or remediation costs. Some costs relating to historic usage that the Company considers to be reasonably possible of resulting in 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

8081

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTE 15. BUSINESS SEGMENT AND GEOGRAPHIC AREA INFORMATION

The Company has three reportable segments as follows:

Paperboard Mills includes the ~~nine~~eight North American paperboard mills ~~which~~that produce primarily CRB, CUK, and SBS, which is consumed internally to produce paperboard packaging for the Americas and Europe Packaging segments. The remaining paperboard is sold externally to a wide variety of paperboard packaging converters and brokers. The Paperboard Mills segment Net Sales ~~represent~~represents 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.

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

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 - Nature of Business and Summary of Significant Accounting Policies."

The Company did not have any one customer who accounted for 10% or more of the Company’'s net sales during ~~2019~~2020, ~~2018~~2019 or ~~2017~~2018.

8182

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Business segment information is as follows:

	Year Ended December 31,
In millions	~~2019~~2020		~~2018~~2019		~~2017~~2018
NET SALES:
Paperboard Mills	$	~~1,094~~988.81	$	1,~~078~~094.18	$	~~399~~1,078.71
Americas Paperboard Packaging	4,~~233~~650.71		4,~~098~~233.37		34,~~245~~098.13
Europe Paperboard Packaging	~~689~~764.36		~~695~~689.93		~~593~~695.59
Corporate/Other/Eliminations(a)	~~142~~157.31		~~157~~142.13		~~167~~157.31
Total	$	6,~~160~~559.19	$	6,~~029~~160.41	$	46,~~405~~029.64
INCOME (LOSS) FROM OPERATIONS:
(LOSS) INCOME FROM OPERATIONS:
Paperboard Mills(b)	$	33(109.19)	$	3033.61	$	~~(35~~30.0)6
Americas Paperboard Packaging	~~477~~638.75		~~420~~477.17		~~358~~420.21
Europe Paperboard Packaging	6065.39		4660.13		3746.31
Corporate and Other(c)	(3770.57)		(3837.35)		(3238.63)
Total	$	~~533~~523.68	$	~~458~~533.56	$	~~327~~458.95
CAPITAL EXPENDITURES:
Paperboard Mills	$	~~208~~444.02	$	~~240~~208.10	$	~~111~~240.41
Americas Paperboard Packaging	94119.7		~~104~~94.37		98104.83
Europe Paperboard Packaging	3439.57		1934.5		1719.35
Corporate and Other	1542.7		3115.37		3231.63
Total	$	~~352~~646.93	$	~~395~~352.29	$	~~260~~395.12
DEPRECIATION AND AMORTIZATION:
Paperboard Mills	$	~~224~~248.47	$	~~197~~224.54	$	~~143~~197.75
Americas Paperboard Packaging	~~165~~163.10		165.41		~~125~~165.34
Europe Paperboard Packaging	3641.71		4836.97		4248.19
Corporate and Other	2123.0		1821.80		1918.28
Total	$	~~447~~475.28	$	~~430~~447.62	$	~~330~~430.36

(a) Includes revenue from contracts with customers for the Australia and Pacific Rim operating segments.

(b) Includes Augusta, Georgia mill outage in 2018 ~~and accelerated depreciation related to shutdown of the Santa Clara mill in 2017~~.

(c) Includes expenses related to business combinations, exit activities, idle and abandoned assets, gain on sale of assets and shutdown and other special charges.

December 31,

In millions

~~2019~~2020

~~2018~~2019

~~2017~~2018

ASSETS AT DECEMBER 31:

Paperboard Mills

23,~~912~~096.25

32,~~005~~912.62

13,~~487~~005.06

Americas Paperboard Packaging

3,~~392~~326.37

3,~~143~~392.63

23,~~478~~143.76

Europe Paperboard Packaging

~~686~~745.39

~~603~~686.43

~~607~~603.14

Corporate and Other

~~285~~625.96

~~296~~285.29

~~248~~296.52

Total

7,~~276~~794.7

7,~~048~~276.87

47,~~821~~048.38

8283

GRAPHIC PACKAGING INTERNATIONAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Business geographic area information is as follows:

	Year Ended December 31,
In millions	~~2019~~2020		~~2018~~2019		~~2017~~2018
NET SALES:
Americas(a)	$	5,328.5	$	5,176.4	$	3,644.8
United States	$	5,199.9	$	4,913.2	$	4,780.9
Europe	689.3		695.9		593.5
International(a)	1,360.0		1,246.9		1,248.5
Asia Pacific	219.3		217.8		215.7
Total	$	6,559.9	$	6,160.1	$	6,029.4
Corporate and Other	(77.0)		(60.7)		(48.4)
Total	$	6,160.1	$	6,029.4	$	4,405.6

In millions	~~2019~~2020		~~2018~~2019		~~2017~~2018
ASSETS AT DECEMBER 31:
LONG-LIVED ASSETS AT DECEMBER 31:
Americas(a)	$	6,383.1	$	6,249.7	$	4,004.7
United States	$	3,252.7	$	2,975.9	$	2,954.3
Europe	686.3		603.4		607.1
International(a)	307.3		277.9		285.4
Asia Pacific	207.3		195.7		209.5
Total	$	3,560.0	$	3,253.8	$	3,239.7
Total	$	7,276.7	$	7,048.8	$	4,821.3

(a) ~~Includes~~ ~~North~~Net ~~America~~Sales and ~~Brazil.~~long-lived assets of individual countries outside of the United States are not material.

NOTE 16. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Results of operations for the four quarters of ~~2019~~2020 and ~~2018~~2019 are shown below.

	2019
	2020
In millions, except per share amounts	First		Second		Third		Fourth~~(a)~~		Total
Statement of Operations Data:
Net Sales	$	1,~~505~~599.91	$	1,~~552~~611.80	$	1,~~581~~697.67	$	1,~~519~~652.81	$	6,~~160~~559.19
Gross Profit	~~266~~320.18		~~287~~262.81		~~266~~255.45		~~272~~261.38		1,~~092~~100.62
Business Combinations, Shutdown and Other Special Charges and Gain on Sale of Assets, Net	6.2		9.9		8.2		13.6		37.9
Business Combinations, Shutdown and Other Special Charges and Exit Activities, Net	18.7		20.5		9.0		13.1		61.3
Income from Operations	~~134~~160.21		~~144~~115.41		~~122~~119.91		~~132~~129.15		~~533~~523.68
Net Income	95.3		104.4		83.5		50.3		333.5
Net (Loss) Income	(23.5)		80.5		89.2		86.7		232.9

2019

In millions, except per share amounts

First

Second

Third

Fourth(a)

Total

Statement of Opera

Filing Compare · GRAPHIC PACKAGING INTERNATIONAL, LLC