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What changed in GRAPHIC PACKAGING HOLDING CO's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of GRAPHIC PACKAGING HOLDING CO's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+297 added−323 removedSource: 10-K (2024-02-21) vs 10-K (2023-02-09)

Top changes in GRAPHIC PACKAGING HOLDING CO's 2023 10-K

297 paragraphs added · 323 removed · 241 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

70 edited+14 added−17 removed18 unchanged
Biggest changeThe Company offers a variety of laminated, coated and printed packaging structures that are produced from its CRB, CUK and SBS board grades, as well as other grades of paperboard that are purchased from third-party suppliers. 7 Table of Contents Below is the production at each of the Company’s paperboard mills during 2022: Location Product # of Machines 2022 Net Tons Produced West Monroe, LA CUK 2 911,919 Macon, GA CUK 2 729,842 Augusta, GA SBS 2 605,596 Texarkana, TX SBS 2 575,011 Kalamazoo, MI CRB 3 904,790 Middletown, OH CRB 1 169,407 East Angus, Québec CRB 1 101,850 Battle Creek, MI (a) CRB 2 77,709 (a) Closed in the second quarter of 2022.
Biggest changeThe Company offers a variety of laminated, coated and printed packaging structures that are produced from its recycled, unbleached and bleached paperboard grades, as well as other grades of paperboard that are purchased from third-party suppliers. 6 Below is the production at each of the Company’s paperboard manufacturing facilities during 2023: Location Paperboard Product # of Machines 2023 Net Tons Produced West Monroe, LA Unbleached 2 863,482 Macon, GA Unbleached 2 693,847 Texarkana, TX Bleached 2 570,720 Augusta, GA Bleached 2 521,391 Kalamazoo, MI (a) Recycled 2 956,276 Middletown, OH Recycled 1 156,407 East Angus, Québec Recycled 1 90,088 Tama, IA (b) Recycled 1 15,407 (a) During the third quarter of 2023, the Company announced its decision to permanently decommission the K3 recycled paperboard machine in Kalamazoo, Michigan as part of its recycled paperboard network optimization plan that the Company initiated in 2019.
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™, KeelClip™, MicroFlex-Q™, MicroRite™, Quilt Wave™, Qwik Crisp™, Tite-Pak™, and Z-Flute™.
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 Boardio™, Fridge Vendor™, IntegraPak™, KeelClip™, MicroFlex-Q™, MicroRite™, Quilt Wave™, Qwik Crisp™, Tite-Pak™, and Z-Flute™.
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, handling, and delivery needs, including tear and wet strength, puncture resistance, durability and compression strength (providing the ability to ship products in their own branded carton and stacking strength to meet store display packaging requirements).
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, handling, and delivery needs, including wet and dry tear strength, puncture resistance, durability and compression strength (providing the ability to ship products in their own branded carton and stacking strength to meet store display packaging requirements).
Climate change challenges for the Company are likely to be driven by changes in the physical climate where our facilities are located, as well as changes in laws and regulations, including restrictions on greenhouse gas ("GHG") emissions, cap and trade systems, and taxes on GHG emissions, fuel, and energy.
Climate change challenges for the Company are likely to be driven by changes in the physical climate where our facilities are located, as well as changes in laws and regulations, including restrictions on greenhouse gas (“GHG”) emissions, cap and trade systems, and taxes on GHG emissions, fuel, and energy.
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 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, Proxy Statements 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”).
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 - Environmental and Legal Matters " in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” Climate change presents both challenges and opportunities for the Company and its communities.
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 - Environmental and Legal Matter ” in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” Climate change presents both challenges and opportunities for the Company and its communities.
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 procures its recycled fiber from external suppliers and internal packaging 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’s hedging program for natural gas is discussed in " Note 10 - Financial Instruments, Derivatives and Hedging Activities " in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” 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. 9 Table of Contents 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.
The Company’s hedging program for natural gas is discussed in “ Note 10 - Financial Instruments, Derivatives and Hedging Activities ” in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” 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. 8 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.
The Company provides a wide range of innovative, paperboard packaging solutions for the following end-use markets: • Beverage, including beer, seltzer, soft drinks, energy drinks, teas, water and juices; • Food, including cereal, desserts, frozen, refrigerated and microwavable foods, pet food; • Prepared food and drinks, including snacks, quick-serve food and drinks for restaurants and food service providers; • Household products, including dishwasher and laundry detergent, health care and beauty aids, and tissues and papers; • Air filter frames; and • Health and beauty.
The Company provides a wide range of innovative, paperboard packaging solutions for the following end-use markets: • Beverage, including beer, seltzer, soft drinks, energy drinks, teas, water and juices; • Food, including cereal, desserts, frozen, refrigerated, microwavable foods and pet food; • Prepared food and drinks, including snacks, quick-serve food and drinks for restaurants and food service providers; • Household products, including dishwasher and laundry detergent, tissues and papers; • Air filter frames; and • Healthcare and beauty aids.
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.
Bleached paperboard is manufactured primarily 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 paperboard machines, and clay-coated to provide an excellent printing surface for superior quality graphics and appearance characteristics.
For more information on research and development expenses see " Note 1 - Nature of Business and Summary of Significant Accounting Policies " in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” Patents and Trademarks As of December 31, 2022, the Company had a large patent portfolio, presently owning, controlling or holding rights to more than 2,600 U.S. and foreign patents, with more than 600 U.S. and foreign patent applications currently pending.
For more information on research and development expenses see “ Note 1 - Nature of Business and Summary of Significant Accounting Policies ” in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” Patents and Trademarks As of December 31, 2023, the Company had a large patent portfolio, presently owning, controlling or holding rights to more than 2,900 U.S. and foreign patents, with more than 850 U.S. and foreign patent applications currently pending.
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.
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 (other than labor).
Consumer concerns regarding the growing plastic packaging waste problem represents one of the strongest trends in the packaging industry, and the Company focuses on developing innovative, fiber-based consumer packaging solutions that are recyclable and help customers achieve their packaging sustainability goals.
Consumer concerns regarding the growing plastic packaging waste problem represents one of the strongest trends in the packaging industry, and the Company focuses on developing innovative, sustainable consumer packaging solutions that are recyclable and help customers achieve their packaging sustainability goals.
The joint venture agreement covers CUK supply, use of proprietary carton designs and marketing and distribution of packaging systems. Sales and Marketing The Company markets its products principally to multinational beverage, food, quick-service restaurants ("QSR"), health/beauty 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.
The joint venture agreement covers unbleached paperboard supply, use of proprietary carton designs and marketing and distribution of packaging systems. Sales and Marketing The Company markets its products principally to multinational beverage, food, quick-service restaurants, health/beauty and other well-recognized consumer products companies. The beverage companies include Anheuser-Busch, Inc., MillerCoors LLC, PepsiCo, Inc. and The Coca-Cola Company, among others.
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 from converting plants, and office and mixed paper bales. 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.
Recycled paperboard is manufactured entirely from recycled fibers, primarily old corrugated containers (“OCC”), doubled-lined kraft cuttings from corrugated box plants (“DLK”), old newspapers (“ONP”), box cuttings from manufacturing facilities, and office and mixed paper bales. The recycled fibers are re-pulped, formed on paperboard machines, and clay-coated to provide an excellent printing surface for superior quality graphics and appearance characteristics.
The Company considers its employee relations to be satisfactory. 10 Table of Contents 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.
The Company considers its employee relations to be satisfactory. 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.
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 Production. The Company is one of the largest North American producers of SBS.
Both wood and recycled fibers are pulped, formed on paperboard machines, and clay-coated to provide an excellent printing surface for superior quality graphics and appearance characteristics. Bleached Paperboard Production. The Company is one of the largest North American producers of bleached paperboard.
For more information, see " Note 18 - Exit Activities " in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” 2021 On July 1, 2021, the Company acquired substantially all the assets of Americraft Carton, Inc. (“Americraft”), the largest independent folding carton converter in North America.
For more information, see “ Note 18 - Exit Activities ” in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” 2021 On July 1, 2021, the Company acquired substantially all the assets of Americraft Carton, Inc. (“Americraft”), the largest independent operator of packaging facilities in North America.
For more information, see " Note 4 - Business Combinations " in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” On November 1, 2021, the Company acquired all the shares of AR Packaging Group AB ("AR Packaging"), Europe's second largest producer of fiber-based consumer packaging.
For more information, see “ Note 4 - Business Combinations ” in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” On November 1, 2021, the Company acquired all the shares of AR Packaging Group AB (“AR Packaging”), Europe's second largest producer of paperboard consumer packaging.
During 2022, 2021 and 2020, the Company did not have any one customer that represented 10% or more of its net sales. 8 Table of Contents 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.
During 2023, 2022 and 2021, 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.
Consumer product customers include Kraft Heinz Company, General Mills, Inc., Nestlé USA, Inc., Kellogg Company, Kimberly-Clark Corporation, among others. Quick-service restaurants ("QSR") customers include Chick-fil-A, McDonald's, Wendy's, Panda Express, Dairy Queen, Chipotle, Panera and KFC. Health/beauty include GlaxoSmithKline, Bayer, Johnson & Johnson, Abbott, Novartis, L’Oréal S.A., Proctor & Gamble, and Colgate.
Consumer product customers include Kraft Heinz Company, General Mills, Inc., Nestlé USA, Inc., WK Kellogg Co, Kellanova and Kimberly-Clark Corporation, among others. Quick-service restaurant customers include Chick-fil-A, McDonald's, Wendy's, Panda Express, Dairy Queen, Chipotle, Panera and KFC. Health/beauty customers include GlaxoSmithKline, Bayer, Johnson & Johnson, Abbott, Novartis, L’Oréal S.A., Proctor & Gamble, and Colgate.
The Company also sells paperboard in the open market to independent and integrated paperboard converters. 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.
The Company also sells paperboard in the open market to independent and integrated paperboard packaging producers. 7 Sales of the Company’s principal products are 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.
The Company’s development efforts include, but are not limited to, developing fiber-based packaging alternatives 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.
The Company’s development efforts include, but are not limited to, developing sustainable consumer packaging made from renewable resources, packaging alternatives 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.
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 recyclability (versus plastic alternatives), design flexibility, distribution, brand awareness, carton designs, package performance and package line speed.
Although plastics and corrugated packaging may be priced lower than unbleached paperboard, the Company believes that packaging made from unbleached paperboard offers advantages over these materials in areas such as recyclability (versus plastic alternatives), design flexibility, distribution, brand awareness, carton designs, package performance and package line speed.
The Company follows a due diligence process to ensure virgin fiber inputs are sourced from sustainability managed forests and do not contribute towards deforestation or habit loss for ecosystems with high conservation value.
The Company follows a due diligence process to ensure virgin fiber inputs are sourced from sustainaby managed forests and do not contribute to deforestation or habitat loss for ecosystems with high conservation value.
Paperboard Mills and Packaging Operations 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.
Paperboard Manufacturing and Packaging Operations Facilities The Company produces paperboard at its manufacturing facilities; prints, cuts, folds, and glues (“converts”) the paperboard into cartons, containers and other packaging at its packaging facilities; and designs and manufactures specialized, proprietary packaging machines that package bottles and cans and, to a lesser extent, non-beverage consumer products.
The acquisition included seven converting plants across the United States and is reported within the Americas Paperboard Packaging reportable segment.
The acquisition included seven packaging facilities across the United States and is reported within the Americas Paperboard Packaging reportable segment.
The acquisition included 30 converting plants in 13 countries and is reported within the Europe Paperboard Packaging reportable segment.
The acquisition included 30 packaging facilities in 13 countries and is reported within the Europe Paperboard Packaging reportable segment.
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. 12 Table of Contents
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. 11
The converting plants print, cut, fold and glue paperboard into cartons and containers designed to meet customer specifications. Joint Venture The Company, through its GPIL subsidiary, is a party to a Japanese joint venture, Rengo Riverwood Packaging, Ltd., in which it holds a 50% ownership interest.
The packaging facilities 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.
SBS is also coated with resin for wet strength liquid and food packaging end uses. CRB Production. The Company is the largest North American producer of CRB.
Bleached paperboard is also coated with resin for wet strength liquid and food packaging end uses. Recycled Paperboard Production. The Company is the largest North American producer of recycled paperboard.
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"), serving the food, beverage, and consumer product markets in the Americas.
Americas Paperboard Packaging includes paperboard packaging sold primarily to consumer packaged goods (“CPG”) companies and cups, lids and food containers sold primarily to foodservice companies and quick-service restaurants (“QSR”) serving the food, beverage, and consumer product markets in the Americas.
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 packaging operations.
For the West Monroe, LA, Macon, Georgia, Texarkana, Texas, and Augusta, Georgia paperboard manufacturing facilities, 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 packaging operations.
Financial Statements and Supplementary Data." 6 Table of Contents Paperboard Packaging The Company’s paperboard packaging products deliver brand, marketing, sustainability, and performance benefits at a competitive cost.
Financial Statements and Supplementary Data.” Paperboard Packaging The Company’s paperboard packaging products deliver brand, marketing, sustainability, and performance benefits at a competitive cost.
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.
The Company is the largest of four worldwide producers of unbleached paperboard. Unbleached paperboard is manufactured primarily 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.
For reportable segment and geographic area information for each of the last three fiscal years, see " Note 15 - Business Segment and Geographic Area Information " in the Notes to Consolidated Financial Statements included herein under “Item 8.
The Company operates in three geographic areas: the Americas, Europe and Asia Pacific. 5 For reportable segment and geographic area information for each of the last three fiscal years, see “ Note 15 - Business Segment and Geographic Area Information ” in the Notes to Consolidated Financial Statements included herein under “Item 8.
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 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. paperboard manufacturing facilities.
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, and East Angus, Quebec mills are made from 100% recycled fiber.
The Company believes that adequate supplies from both private landowners and open market fiber sellers currently are available in close proximity to its paperboard manufacturing facilities to meet its raw material needs. The paperboard grades produced at the Kalamazoo, Michigan, Middletown, Ohio, Tama, Iowa, and East Angus, Quebec paperboard manufacturing facilities are made from 100% recycled fiber.
For more information, see " Note 1 - Nature of Business and Summary of Significant Accounting Policies " in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” 5 Table of Contents Share Repurchases and Dividends On January 28, 2019, the Company's board of directors authorized a share repurchase program to allow the Company to purchase up to $500 million of the Company's issued and outstanding shares of common stock through open market purchases, privately negotiated transactions and Rule 10b5-1 plans (the "2019 share repurchase program").
For more information, see “ Note 4 - Business Combinations ” in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” Share Repurchases and Dividends On July 27, 2023, the Company's board of directors authorized an additional share repurchase program to allow the Company to purchase up to $500 million of the Company's issued and outstanding shares of common stock through open market purchases, privately negotiated transactions and Rule 10b5-1 plans (the “2023 share repurchase program”).
Share repurchases are reflected as a reduction of common stock for the par value of the shares, with any excess of share repurchase price over par value allocated between capital in excess of par value and retained earnings.
The previous $500 million share repurchase program was authorized January 28, 2019 (the “2019 share repurchase program”). Share repurchases are reflected as a reduction of common stock for the par value of the shares, with any excess of share repurchase price over par value allocated between capital in excess of par value and retained earnings.
For more information, see " Note 19 - Impairment and Divestiture of Russian Business " in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” In September 2022, the Company closed its Norwalk, Ohio carton facility, which it had announced to close in March 2022.
For more information, see “ Note 18 - Exit Activities ” in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” 4 In September 2022, the Company closed its Norwalk, Ohio carton facility, which closure had been announced in March 2022.
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’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 innovative paperboard packaging solutions preferred by consumers.
Europe Paperboard Packaging includes paperboard packaging, primarily folding cartons, sold primarily to CPG companies serving the food, beverage and consumer product markets including healthcare and beauty primarily in Europe. The Company operates in three geographic areas: the Americas, Europe and Asia Pacific.
Europe Paperboard Packaging includes paperboard packaging sold primarily to CPG companies serving the food, beverage and consumer product markets, including healthcare and beauty, primarily in Europe.
The following presents the Company's share repurchases for the years ended December 31, 2022, 2021, and 2020: Amount repurchased in millions, except share and per share amounts Amount Repurchased Number of Shares Repurchased Average Price per Share 2022 $ 28 1,315,839 $ 20.91 2021 $ — — $ — 2020 $ 316 23,420,010 $ 13.48 At December 31, 2022, the Company had $119 million available for additional repurchases under the 2019 share purchase program.
The following presents the Company's share repurchases for the years ended December 31, 2023, 2022, and 2021: Amount repurchased in millions, except share and per share amounts Amount Repurchased Number of Shares Repurchased Average Price per Share 2023 $ 54 2,389,224 $ 22.80 2022 $ 28 1,315,839 $ 20.91 2021 $ — — $ — At December 31, 2023, the Company had $565 million available for additional repurchases under the 2023 and 2019 share repurchase programs.
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 packaging operations from its own mills. The Company purchases such paperboard requirements, including additional CRB and SBS, from outside vendors.
The Company believes there are adequate supplies of recycled fiber to serve its paperboard manufacturing facilities. In North America, the Company also utilizes a variety of other paperboard grades in its packaging operations, in addition to paperboard that is supplied to its packaging operations from its own paperboard manufacturing facilities.
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, and at licensees outside the United States ("U.S.").
The Company converts recycled, unbleached and bleached paperboard, as well as other grades of paperboard, into cartons, containers and other packaging for consumer goods products at packaging facilities the Company operates in various locations globally, including a packaging facility associated with the Company's joint venture in Japan, and at licensees outside the U.S.
ITEM 1. BUSINESS Overview Graphic Packaging Holding Company (“GPHC” and, together with its subsidiaries, the “Company”) is committed to providing consumer packaging that makes a world of difference. The Company, a leading fiber-based consumer packaging provider, serves the world’s most widely-recognized food, beverage, foodservice and other consumer products companies and brands.
ITEM 1. BUSINESS Overview Graphic Packaging Holding Company (“GPHC” and, together with its subsidiaries, the “Company”) is committed to providing consumer packaging that makes a world of difference.
The Paperboard Mills segment Net Sales represent the sale of paperboard only to external customers. The effect of intercompany transfers to the paperboard packaging segments has been eliminated from the Paperboard Mills segment to reflect the economics of the integration of these segments.
Paperboard not consumed internally is sold externally to a wide variety of paperboard packaging converters and brokers. The Paperboard Manufacturing segment's Net Sales represent the sale of paperboard only to external customers. The effect of intercompany transfers to the paperboard packaging segments has been eliminated from the Paperboard Manufacturing segment to reflect the economics of the integration of these segments.
As of December 31, 2022, 1,194 of the Company’s employees were working under expired contracts, which are currently being negotiated, and 2,055 were covered under collective bargaining agreements that expire within one year.
Approximately 58% of our employees were represented by labor unions and covered by collective bargaining agreements or covered by works councils in Europe. As of December 31, 2023, 550 of the Company’s employees were working under expired contracts, which are currently being negotiated, and 1,015 were covered under collective bargaining agreements that expire within one year.
Products The Company has three reportable segments as follows: Paperboard Mills includes the seven North American paperboard mills that produce primarily CRB, CUK, and SBS, which is consumed internally to produce paperboard packaging for the Americas and Europe Packaging segments. Paperboard not consumed internally is sold externally to a wide variety of paperboard packaging converters and brokers.
Products The Company has three reportable segments as follows: Paperboard Manufacturing , previously referred to as the Paperboard Mills reportable segment, includes the seven North American paperboard manufacturing facilities that produce unbleached, bleached and recycled paperboard, which is consumed internally to produce paperboard consumer packaging for the Americas and Europe Packaging segments.
The Company operates on a global basis, is one of the largest producers of folding cartons and fiber-based foodservice products in the United States ("U.S.") and Europe, and holds leading market positions in coated-recycled paperboard ("CRB"), coated unbleached kraft paperboard ("CUK") and solid bleached sulfate paperboard ("SBS").
The Company, a leading sustainable consumer packaging provider, operates on a global basis, is one of the largest producers of cartons and containers for the packaging of consumer goods and paperboard-based foodservice packaging solutions in the United States (“U.S.”) and Europe, and holds leading market positions in paperboard used to produce consumer packaging solutions, including recycled, unbleached and bleached paperboard.
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.
In beverage packaging, cartons made from unbleached paperboard compete with substitutes such as plastics and corrugated packaging for packaging glass or plastic bottles, cans and other primary containers.
As our business continues to evolve, we will adapt our workforce and invest in employees to ensure that we have the necessary human capital capabilities in place to support our growth strategy. As of December 31, 2022, the Company had approximately 24,000 employees based in 130 locations in 26 different countries around the world.
As our business continues to evolve, we will continue to invest in capability development areas that serve as a competitive advantage for the Company and we will adapt our workforce and invest in our employees to ensure that we have the necessary human capital capabilities in place to support our growth strategy.
Our Total Recordable Incident Rate, which is the annual rate of workplace injuries per 100 full-time employees, is 1.0, and we work to maintain a safety performance rating that outperforms the industry average. We strive to achieve an injury-free workplace through various safety initiatives and programs.
Our Total Recordable Incident Rate, which is the annual rate of workplace injuries per 100 full-time employees, is 1.0, reflecting better performance than the industry average.
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.
In non-beverage consumer packaging and foodservice, the Company’s paperboard competes with packaging utilizing unbleached paperboard, as well as recycled and bleached paperboard from numerous competitors, and, internationally, folding boxboard and white-lined chip. There are a large number of producers in the paperboard markets.
The Company consumes most of its coated board output in its converting operations, which is an integral part of the customer value proposition. In 2022, approximately 73.4% of combined mill production of CRB, CUK and SBS was consumed internally. CUK Production. The Company is the largest of four worldwide producers of CUK.
(b) Closed in the second quarter of 2023. The Company consumes most of its paperboard output in its packaging operations, which is an integral part of the customer value proposition. In 2023, approximately 78% of combined paperboard production of unbleached, bleached and recycled paperboard was consumed internally. Unbleached Paperboard Production.
In 2022, the Company spent $9 million of capital on projects to maintain compliance with environmental laws, regulations and the Company’s permits granted thereunder. In 2023 and 2024, the Company estimates it will spend $30 million and $23 million respectively, for such projects, primarily the waste water treatment system upgrades at the Augusta, Georgia mill.
In 2023, the Company spent $18 million of capital on projects to maintain compliance with environmental laws, regulations and the Company’s permits granted thereunder.
The Company strives to provide its customers with innovative, fiber-based packaging solutions designed to deliver marketing and performance benefits at a competitive cost by capitalizing on its low-cost paperboard mills and global packaging network, its proprietary carton and packaging designs, and its commitment to quality, service, and environmental stewardship.
The Company delivers marketing and performance benefits to its customers through its global packaging network, its proprietary carton and packaging designs, and its commitment to quality, service, and environmental stewardship.
For more information, see " Note 18 - Exit Activities " in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” In May 2022, the Company committed to sell its two folding carton plants in Russia and classified the facilities as held for sale, resulting in impairment charges of $96 million in 2022, including $12 million of goodwill impairment.
For more information, see “ Note 1 - Business Combinations, Exit Activities and Other Special Charges, Net ” in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” During the second quarter of 2022, the Company began the process of divesting its interest in its two packaging facilities in Russia (the “Russian Operations”).
Raw Materials The paperboard packaging produced by the Company comes from pine and hardwood trees and recycled fibers.
Raw Materials The Company's main raw materials are pine and hardwood trees and recycled fibers.
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 our behavioral norms.
We strive to achieve an injury-free workplace through various safety initiatives and programs, and our Vision 2030 goal is zero life injuries. 9 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.
For more information, see " Note 4 - Business Combinations " in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” 2020 On January 31, 2020, the Company acquired a folding carton facility from Quad/Graphics, Inc. ("Quad"), a commercial printing company.
For more information, see “ Note 19 - Impairment and Divestiture of Russian Business ” in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” 2022 In May 2022, the Company closed the Battle Creek, Michigan recycled paperboard manufacturing facility.
The Company’s Core Values underpin our commitment to our stakeholders and our strategy to deliver sustainable, recyclable packaging solutions. Our Vision 2025 outlines our plans for how we will grow the Company and the returns we expect to generate, all while prioritizing and focusing on our people and the planet.
The Company’s Core Values underpin our commitment to our stakeholders and our strategy to deliver sustainable, recyclable packaging solutions.
Our talent acquisition, development, succession and diversity and inclusion strategies are all critical components of the multi-year plan for our people.
Action plans have been developed at the local level in locations around the globe as we strive to further engage our employees. Additionally, our talent acquisition, development, succession and diversity and inclusion strategies are all critical components of our multi-year plan to focus on our people and our culture.
The majority of external paperboard purchases are acquired through long-term arrangements with other major industry suppliers. The Company's European packaging operations 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.
The Company purchases such paperboard requirements, including additional recycled and bleached paperboard, from outside vendors. The majority of external paperboard purchases are acquired through long-term arrangements with other major industry suppliers.
For more information, see " Note 1 - Nature of Business and Summary of Significant Accounting Policies " 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 plants that were acquired from Greif.
For more information, see “ Note 18 - Exit Activities ” in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” During 2023, the Company decided to close multiple packaging facilities by the end of 2023 and early 2024. Production from these facilities has been consolidated into our existing packaging facilities.
The converting facility is located in Omaha, Nebraska and is included in the Americas Paperboard Packaging reportable segment.
Bell is reported within the Americas Paperboard Packaging reportable segment.
During 2022 and 2021, the Company paid cash dividends of $92 million and $87 million, respectively. On September 22, 2022, the Company's board of directors voted to increase the quarterly dividend to $0.10 per share of common stock, a 33% increase from the prior quarterly dividend of $0.075.
During 2023, 2022 and 2021, GPHC paid cash dividends of $123 million, $92 million and $87 million, respectively. Though the decision to distribute cash dividends rests solely with the Board of Directors, the Company presently intends to maintain a quarterly cash dividend, subject to earnings and liquidity considerations.
For more information, see " Note 1 - Nature of Business and Summary of Significant Accounting Policies " 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.
For more information, see “ Note 18 - Exit Activities ” in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” On September 8, 2023, the Company completed the acquisition of Bell Incorporated (“Bell”) for $264 million, adding three packaging facilities in Sioux Falls, South Dakota and Groveport, Ohio.
For more information, see " Note 1 - Nature of Business and Summary of Significant Accounting Policies " in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” 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.
For more information, see “ Note 18 - Exit Activities ” in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” During the third quarter of 2023, the Company announced its decision to permanently decommission the K3 recycled paperboard machine in Kalamazoo, Michigan as part of its recycled paperboard network optimization plan that the Company initiated in 2019.
Removed
On January 1, 2018, GPHC, a Delaware corporation, International Paper Company, a New York corporation (“IP”), Graphic Packaging International Partners, LLC, a Delaware limited liability company formerly known as Gazelle Newco LLC and a wholly-owned subsidiary of the Company (“GPIP”), and Graphic Packaging International, LLC, a Delaware limited liability company formerly known as Graphic Packaging International, Inc. and a direct subsidiary of GPIP (“GPIL”), completed a series of transactions pursuant to an agreement dated October 23, 2017, among the foregoing parties (the “Transaction Agreement”).
Added
Acquisitions, Closures, and Dispositions The Company has successfully completed several acquisitions in the past three years and expects to pursue acquisition opportunities in the future as part of its overall growth strategy. 2023 In January 2023, the Company completed the acquisition of Tama Paperboard, LLC (“Tama”), a recycled paperboard manufacturing facility located in Tama, Iowa, from Greif Packaging LLC for approximately $100 million.
Removed
Pursuant to the Transaction Agreement (i) a wholly-owned subsidiary of the Company transferred its ownership interest in GPIL to GPIP; (ii) IP transferred its North America Consumer Packaging (“NACP”) business to GPIP, which was then subsequently transferred to GPIL; (iii) GPIP issued membership interests to IP, and IP was admitted as a member of GPIP; and (iv) GPIL assumed certain indebtedness of IP (the "NACP Combination").
Added
It is reported within the Paperboard Manufacturing reportable segment. Subsequently, in the second quarter of 2023, the Company closed this facility.
Removed
During 2020, GPIP purchased 32.5 million partnership units from IP for $500 million in cash, fully redeeming the 18.2 million partnership units that were required to be redeemed in cash. On February 16, 2021, the Company announced that IP had notified the Company of its intent to exchange additional partnership units.
Added
For more information, see “ Note 4 - Business Combinations ” in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” During the third quarter of 2023, the Company decided to discontinue its project in Texarkana to modify an existing paperboard machine to add swing capacity between bleached and unbleached paperboard in order to focus its growth investments in the strategic expansion of coated recycled paperboard capacity.
Removed
Per an agreement between the parties, on February 19, 2021, GPIP purchased 9.3 million partnership units from IP for $150 million in cash, and IP exchanged 15.3 million partnership units for an equivalent number of shares of GPHC common stock.
Added
The assets and liabilities to be disposed of in connection with this transaction met the held for sale criteria as of June 30, 2022 and each subsequent quarter end through the date of sale. On November 30, 2023, the Company completed the sale of its Russian Operations.
Removed
On May 21, 2021, IP exchanged its remaining 22.8 million partnership units for an equivalent number of shares of GPHC common stock. As required by the parties' agreement, these shares were immediately sold by IP. As a result, IP has no ownership interest remaining in GPIP as of May 21, 2021.
Added
The Company and WestRock Company are the two major unbleached paperboard producers in the U.S. Internationally, The Klabin Company in Brazil and Stora Enso in Sweden produce similar grades of paperboard.

… 21 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

33 edited+2 added−2 removed34 unchanged
Biggest changeThe Company pursues a currency hedging program in order to reduce the impact of foreign currency exchange fluctuations on financial results. 15 Table of Contents The Company is also subject to the following significant risks associated with operating in foreign countries: • Export compliance; • Compliance with and enforcement of environmental, health and safety, labor laws and data privacy and other regulations of the foreign countries in which the Company operates; • Difficulties moving funds from certain countries back to the U.S.; • 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.
Biggest changeThe Company is also subject to the following significant risks associated with operating in foreign countries: • Export compliance; • Compliance with and enforcement of environmental, health and safety, labor laws and data privacy and other regulations of the foreign countries in which the Company operates; • Difficulties moving funds from certain countries back to the U.S.; • 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. 14 Financial Risks The Company's indebtedness may adversely affect its financial condition and its ability to react to changes in its business.
Customer and consumer preferences are constantly changing based on, among other factors, the economy, convenience, cost and health considerations, as well as environmental and social concerns, and perceptions, such as pressure to reduce packaging waste by switching to reusable containers versus single-use packaging options.
Customer and consumer preferences are constantly changing based on, among other factors, the economy, convenience, cost and health considerations, as well as environmental, social concerns and perceptions, such as pressure to reduce packaging waste by switching to reusable containers versus single-use packaging options.
Any losses due to these events may not be covered by our existing insurance policies, and insurance coverage may be subject to significant deductibles. The premiums for insurance coverage have recently increased and may continue to increase, along with the level of deductibles.
Any losses due to these events may not be covered by our existing insurance policies and may be subject to significant deductibles. The premiums for insurance coverage have recently increased and may continue to increase, along with the level of deductibles.
In addition, the regulatory environment related to information security, data collection and use, and privacy is becoming increasingly rigorous, with new and requirements applicable to the Company's business. Compliance with such requirements could also result in additional costs.
In addition, the regulatory environment related to information security, data collection and use, and privacy is becoming increasingly rigorous, with new requirements applicable to the Company's business. Compliance with such requirements could also result in additional costs.
The Company must comply with a wide variety of environmental, health and safety laws and regulations, including those governing GHG emissions and other 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, waste disposal, recycling of packaging, extended producer responsibilities, deforestation risks, and the health and safety of employees.
The Company must comply with a wide variety of environmental, health and safety laws and regulations, including those governing GHG emissions and other discharges to air, soil and water and the management, treatment and disposal of hazardous substances, the investigation and remediation of contamination resulting from releases of hazardous substances, waste disposal, recycling of packaging, extended producer responsibilities, deforestation risks, and the health and safety of employees.
Moreover, with no unifying standards for both U.S. and international data privacy laws and regulations, the Company could incur additional compliance cost in order to comply with the large number of data privacy laws and regulations, which could result in a negative impact to the Company’s results of operations. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Moreover, with no unifying standards for both U.S. and international data privacy laws and regulations, the Company could incur additional compliance cost in order to comply with the large number of data privacy laws and regulations, which could result in a negative impact to the Company’s results of operations. ITEM 1B. UNRESOLVED STAFF COMMENTS None 15
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.
Because negotiated sales contracts and the market largely determine the pricing for our 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.
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, heat waves, freezing events, floods, droughts, fires and other extreme weather events, (all of which may be exacerbated by climate change), 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.
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, heat waves, freezing events, floods, droughts, fire and other extreme weather events, (all of which may be exacerbated by climate change), 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.
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, KeelClip, MicroFlex-Q, MicroRite, Opti-Cycle, PaperSeal Slice and PaperSeal Wedge, Produce Pack, Quilt Wave, Qwik Crisp, Tite-Pak, and Z-Flute technologies.
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, KeelClip, MicroFlex-Q, MicroRite, Opti-Cycle, PaperSeal Slice and PaperSeal Wedge, PaperSeal Shapes, Boardio, Produce Pack, Quilt Wave, Qwik Crisp, Tite-Pak, and Z-Flute technologies.
Paper manufacturing processes require significant energy and raw materials, the costs of which are subject to worldwide supply and demand factors, supply chain disruptions that can affect availability and result in increased prices, as well as trade regulations and tariffs, GHG emissions-based regulations, and other factors beyond our control.
Paperboard manufacturing processes require significant energy and raw materials, the costs of which are subject to worldwide supply and demand factors, supply chain disruptions that can affect availability and result in increased prices, as well as trade regulations and tariffs, GHG emissions-based regulations, and other factors beyond our control.
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.
Any future significant compromise or breach of data security, whether external or internal, or misuse of customer, employee, supplier or Company data, could result in significant costs, interrupted operations, lost sales, fines, lawsuits, and damage to the Company's reputation.
Additionally, the Company's Fourth Amended and Restated Credit Agreement (as amended, the "Current Credit Agreement") and the indentures governing the 0.821% Senior Notes due 2024, 4.125% Senior Notes due 2024, 1.512% Senior Notes due 2026, 4.75% Senior Notes due 2027, 3.50% Senior Notes due 2028, 3.50% Senior Notes due 2029, 2.625% Senior Notes due 2029 and 3.75% Senior Notes due 2030 (the “Indentures”), limit the Company's ability to incur additional indebtedness.
Additionally, the Company's Fourth Amended and Restated Credit Agreement (as amended, the “Current Credit Agreement”) and the indentures governing the 0.821% Senior Notes due 2024, 4.125% Senior Notes due 2024, 1.512% Senior Notes due 2026, 4.75% Senior Notes due 2027, 3.50% Senior Notes due 2028, 3.50% Senior Notes due 2029, 2.625% Senior Notes due 2029 and 3.75% Senior Notes due 2030 (the “Indentures”), limit the Company's ability to incur additional indebtedness.
These events may result in supply chain and transportation disruptions to and from our facilities and could impact the Company’s ability to operate its facilities and distribute products to its customers in a timely fashion.
These events may result in supply chain and transportation disruptions to and from our facilities and could impact the Company’s ability to operate its facilities and distribute products to its customers in a timely or cost-effective fashion.
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.
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 or other cyber-attack. To date, the Company has experienced no material impact on our business or operations from these types of attacks or events.
As of December 31, 2022, approximately 32% 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.
As of December 31, 2023, approximately 20% 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.
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.
These 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 business we acquire.
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.
The Company's ability 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 performance.
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’ forecasts. Any inability to do so could adversely affect the Company's financial results.
In addition, given the Company's integrated supply chain, managing board supply and properly planning for paperboard manufacturing outages and downtime must be integrated with the packaging facilities’ forecasts. Any inability to do so could adversely affect the Company's financial results.
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 core business.
If the Company is unable to realize desired 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 core business.
Product substitution may occur in response to price, quality and service issues, as well as environmental and social concerns, such as pressure to reduce packaging waste by switching to reusable containers versus single-use packaging options and the use of recycled post-consumer plastic and biobased materials in the production process.
Product substitution may occur in response to price, quality and service issues, as well as environmental and social concerns, such as the use of recycled post-consumer plastic and biobased materials in the production process.
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 buying habits and preferences for products by customers and consumers could have an effect on our sales volumes.
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. Competition and product substitution could have an adverse effect on the Company's financial results.
As a result of events such as COVID-19 and regional military and political unrest in Eastern Europe and Africa, there could be unpredictable disruptions to the Company’s operations that could limit production, reduce its future revenues and negatively impact the Company’s financial condition.
As a result of events, such as pandemics or other global health emergencies and widespread military and geopolitical conflicts and other social and political unrest in Eastern Europe, Africa and the Middle East, there could be unpredictable disruptions to the Company’s operations that could limit production, reduce its future revenues and negatively impact the Company’s financial condition.
The Company has converting plants and one paper mill in 21 countries outside of the U.S. and sells its products worldwide. For 2022, before intercompany eliminations, net sales from operations outside of the U.S. represented approximately 29% of the Company’s net sales. The Company’s revenues from foreign sales fluctuate with changes in foreign currency exchange rates.
The Company has packaging facilities and one paperboard manufacturing facility in 20 countries outside of the U.S. and sells its products worldwide. For 2023, before intercompany eliminations, net sales from operations outside of the U.S. represented approximately 30% of the Company’s net sales. The Company’s revenues from foreign sales fluctuate with changes in foreign currency exchange rates.
The Company works to maintain market share through efficiency, product innovations and strategic sourcing to its customers; however pricing and other competitive pressures, such as providing the lowest-carbon footprint packaging solution or delivering on GHG emissions reduction targets, may occasionally result in the loss of a customer relationship. 13 Table of Contents Operational Risks The Company could experience material disruptions at our facilities, that could adversely impact the Company's financial results and could increase the cost of insurance and level of deductibles.
The Company works to maintain market share through efficiency, product innovations and strategic sourcing to its customers; however pricing and other competitive pressures, such as providing the lowest-carbon footprint packaging solution or delivering on GHG emissions reduction targets, may occasionally result in the loss of a customer relationship.
This volatility and loss of employment may negatively impact consumer buying habits, which could adversely affect the Company’s financial results. 14 Table of Contents 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.
This volatility and loss of employment may negatively impact consumer buying habits, which could adversely affect the Company’s financial results. 13 The Company could be adversely impacted if the Company is unable to successfully integrate acquired businesses. The Company has made a significant number of acquisitions throughout its history and expects to make additional acquisitions in the future.
The Company’s operations and financial results could be adversely impacted by events outside the Company’s control, such as COVID-19 and military or geopolitical conflicts.
The Company’s operations and financial results could be adversely impacted by events outside the Company’s control, such as pandemics or other global health emergencies, or geopolitical conflicts and other social and political unrest or change.
Changing dietary habits and preferences have impacted sales growth for many of the food and beverage products the Company packages.
Changes in buying habits and preferences for products by customers and consumers could have an effect on our sales volumes. Changing dietary habits and preferences have impacted sales growth for many of the food and beverage products the Company packages.
The Company is tracking and taking actions to reduce our GHG and other air and water emissions to decrease the potential future impact of these regulatory matters.
The Company is tracking and taking actions to reduce our GHG and other air and water emissions to decrease the potential future impact of these regulatory matters. However, 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.
The Company's products compete with those made from other manufacturers' CUK, as well as SBS, FBB, and CRB, and other board substrates. Substitute products include plastic, shrink film, corrugated containers, biobased materials and other packaging options.
The Company competes with consumer packaging companies, both domestically and internationally, including paperboard packaging producers. The Company's products compete with those made from other manufacturers' paperboard, as well as consumer packaging made primarily from plastic, shrink film, paper, corrugated containers, biobased materials and other packaging materials.
In addition, at December 31, 2022, approximately 29% of the Company's total assets were denominated in currencies other than the U.S. dollar.
In addition, at December 31, 2023, approximately 27% of the Company's total assets were denominated in currencies other than the U.S. dollar. The Company pursues a currency hedging program in order to reduce the impact of foreign currency exchange fluctuations on financial results.
The Company may face a shortage of skilled workers and key management personnel 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 or resign.
The Company may face a shortage of skilled workers and key management personnel. The Company's ability to maintain or expand its business depends on our ability to attract, develop and retain a skilled workforce at all levels within our organization, including production employees and key managers.
However, 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. 16 Table of Contents Additionally, over the past few years, the number of data privacy laws and regulations has increased and become more complex and stringent in the U.S. and internationally.
Additionally, over the past few years, the number of data privacy laws and regulations has increased and become more complex and stringent in the U.S. and internationally.
Financial Risks The Company's indebtedness may adversely affect its financial condition and its ability to react to changes in its business. The Company had an aggregate principal amount of $5,283 million of outstanding debt as of December 31, 2022.
The Company had an aggregate principal amount of $5,396 million of outstanding debt as of December 31, 2023.
Removed
If these trends continue and the Company is unable to adapt to the trends, then 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.
Added
If these trends continue and the Company is unable to adapt to them, then the Company’s financial results could be adversely affected. 12 Operational Risks The Company could experience material disruptions at our facilities, that could adversely impact the Company's financial results and could increase the cost of insurance and level of deductibles.
Removed
The Company has made a significant number of acquisitions in recent years, including the AR Packaging acquisition, and expects to make additional strategic acquisitions in the future as part of its overall growth strategy.
Added
Changing demographics and workforce trends may result in a loss of knowledge and skills as experienced workers retire or resign.

Item 2. Properties

Properties — owned and leased real estate

7 edited+1 added−1 removed1 unchanged
Biggest change(b) Leased facility. 17 Table of Contents North American Converting Plants: International Converting Plants: Auburn, IN New Albany, IN (b) Aachen, Germany Kanfanar, Croatia Carol Stream, IL Newton, IA Auckland, New Zealand (a) Krakow, Poland Centralia, IL North Portland, OR Augsburg, Germany Leeds, United Kingdom Charlotte, NC Norwalk, OH (c) Bardon, United Kingdom Lund, Sweden (a)(b) Chicago, IL (a) Omaha, NE Bawen, Indonesia Magdeburg, Germany (a) Clarksville, TN Oroville, CA (a) Bekasi, Indonesia Maliaño, Spain Cobourg, Ontario (a) Pacific, MO Berlin, Germany (b) Masnieres, France (a) Elgin, IL Perry, GA Bremen, Germany (b) Melbourne, Australia (a) Elk Grove, IL (a)(b) Pineville, NC Bristol, United Kingdom Munich, Germany (a) Fort Smith, AR (b) Pittston, PA Cambridge, United Kingdom (a) Newcastle Upon Tyne, United Kingdom (a) Gordonsville, TN (a) Prosperity, SC Cholet, France (a) Perth, Australia Grand Rapids, MI Querétaro, Mexico (a) Coalville, United Kingdom (a) Portlaoise, Ireland (a) Gresham, OR (a) Randleman, NC Frankfurt, Germany (a) Poznan, Poland (b) Hamel, MN Shelbyville, IL Gateshead, United Kingdom (a) Requejada, Spain Irvine, CA Solon, OH Graz, Austria Rotherham, United Kingdom (a) Kalamazoo, MI St.-Hyacinthe, Québec (a) Halmstad, Sweden (a) Sneek, Netherlands Kendallville, IN St.
Biggest change(b) Leased facility. 17 North American Packaging Facilities: International Packaging Facilities: Auburn, IN (d) New Albany, IN (b) Aachen, Germany Kanfanar, Croatia Carol Stream, IL Newton, IA Auckland, New Zealand (a) Krakow, Poland Centralia, IL North Portland, OR Augsburg, Germany Leeds, United Kingdom Charlotte, NC Omaha, NE Bardon, United Kingdom (b) Lund, Sweden (a)(b) Chicago, IL (a) Oroville, CA (a) Bawen, Indonesia Magdeburg, Germany (a) Clarksville, TN Pacific, MO Bekasi, Indonesia Maliaño, Spain Cobourg, Ontario (a) Perry, GA Berlin, Germany (b) Masnières, France (a) Elgin, IL Pineville, NC Bremen, Germany (b) Melbourne, Australia (a) Elk Grove, IL (a)(b) Pittston, PA Bristol, United Kingdom (e) Munich, Germany (a) Fort Smith, AR (b) Prosperity, SC Cambridge, United Kingdom (a) Newcastle Upon Tyne, United Kingdom (a) Gordonsville, TN (a) Querétaro, Mexico (a) Cholet, France (a) Perth, Australia Grand Rapids, MI Randleman, NC Frankfurt, Germany (a) Portlaoise, Ireland (a) Gresham, OR (a) Shelbyville, IL Gateshead, United Kingdom (a) Poznan, Poland (b) Groveport, OH (a) Sioux Falls, SD (a)(b) Graz, Austria Requejada, Spain Hamel, MN Solon, OH Halmstad, Sweden (a) Rotherham, United Kingdom (a) Irvine, CA St.-Hyacinthe, Québec (a) Hannover, Germany Sneek, Netherlands Kalamazoo, MI St.
See " Note 14 - Environmental and Legal Matters " in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.”
See “ Note 14 - Environmental and Legal Matters ” in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.”
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.
ITEM 2. PROPERTIES Headquarters The Company leases its principal executive offices in Atlanta, Georgia. 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.
Petersburg, Russia (a)(d) Kingston Springs, TN Stone Mountain, GA (a) Hoogerheide, Netherlands Sydney, Australia (a) Lancaster, TX Sturgis, MI Ibadan, Nigeria Tabasalu, Estonia Lawrenceburg, TN Tijuana, Mexico (a) Igualada, Spain Tibro, Sweden Lebanon, TN (a) Tuscaloosa, AL Ingerois, Finland (a) Timashevsk, Russia (a)(d) Lowell, MA Valley Forge, PA Jundiai, Sao Paulo, Brazil Winsford, United Kingdom (a) Lumberton, NC Vancouver, WA (a) Marietta, GA Visalia, CA Marion, OH Wausau, WI Memphis, TN Wayne, NJ Mississauga, Ontario (a)(b) West Monroe, LA (b) Mitchell, SD Winnipeg, Manitoba Monroe, LA (a) Winston Salem, NC Monterrey, Mexico (a) Xenia, OH (a) (a) Leased facility.
Petersburg, Russia (d) Kenton, OH Stone Mountain, GA (a) Ibadan, Nigeria Sydney, Australia (a) Kingston Springs, TN Sturgis, MI Igualada, Spain Tabasalu, Estonia Lancaster, TX Tijuana, Mexico (a) Ingerois, Finland (a) Tibro, Sweden Lawrenceburg, TN Tuscaloosa, AL Jundiai, Sao Paulo, Brazil Timashevsk, Russia (d) Lebanon, TN (a) Valley Forge, PA Winsford, United Kingdom (a) Lowell, MA Vancouver, WA (a) Lumberton, NC Visalia, CA Marietta, GA Wausau, WI Marion, OH Wayne, NJ Memphis, TN West Monroe, LA (b) Mississauga, Ontario (a)(b)(c) Winnipeg, Manitoba Mitchell, SD Winston Salem, NC Monroe, LA (a) Xenia, OH (a)(c) Monterrey, Mexico (a) (a) Leased facility.
Location Related Products or Use of Facility Mills: Augusta, GA SBS Battle Creek, MI (a) CRB East Angus, Québec CRB Kalamazoo, MI CRB Macon, GA CUK Middletown, OH CRB Texarkana, TX SBS West Monroe, LA CUK, Research and Development Other: Atlanta, GA (b) Headquarters, Research and Development, Packaging Machinery and Design Clemson, SC (b) Research and Development Concord, NH (b) Research and Development, Design Center Crosby, MN Packaging Machinery Engineering, Design and Manufacturing Louisville, CO (b) Research and Development Menomonee Falls, WI Foodservice Rebuild Center (a) Closed in the second quarter of 2022.
The Company also leases certain smaller facilities, warehouses and office space throughout the U.S. and in foreign countries from time to time. 16 Location Related Products or Use of Facility Paperboard Manufacturing Facilities: Augusta, GA Bleached paperboard East Angus, Québec Recycled paperboard Kalamazoo, MI Recycled paperboard Macon, GA Unbleached paperboard Middletown, OH Recycled paperboard Tama, IA (a) Recycled paperboard Texarkana, TX Bleached paperboard West Monroe, LA Unbleached paperboard, Research and Development Other: Atlanta, GA (b) Headquarters, Research and Development, Packaging Machinery and Design Clemson, SC (b) Research and Development Concord, NH (b) Research and Development, Design Center Crosby, MN Packaging Machinery Engineering, Design and Manufacturing Louisville, CO (b) Research and Development Menomonee Falls, WI Foodservice Rebuild Center (a) Closed in the second quarter of 2023.
Paul, MN Hannover, Germany St. Gallen, Switzerland (a) Kenton, OH Staunton, VA Highbridge, United Kingdom (a) St.
Paul, MN Highbridge, United Kingdom (a) St. Gallen, Switzerland (a) Kendallville, IN Staunton, VA Hoogerheide, Netherlands St.
(b) Multiple facilities in this location. (c) Closed in the third quarter of 2022. (d) Location classified as held-for-sale. 18 Table of Contents ITEM 3 . LEGAL PROCEEDINGS The Company is a party to a number of lawsuits arising in the ordinary conduct of its business.
LEGAL PROCEEDINGS The Company is a party to a number of lawsuits arising in the ordinary conduct of its business.
Removed
The Company also leases certain smaller facilities, warehouses and office space throughout the U.S. and in foreign countries from time to time.
Added
(b) Multiple facilities in this location. (c) Closed in the third quarter of 2023. (d) Sold in the fourth quarter of 2023. (e) Multiple facilities in this location which includes a leased facility and an owned facility. 18 ITEM 3 .

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

10 edited+0 added−0 removed9 unchanged
Biggest changePrior 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.
Biggest changePrior 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, Inc. and its predecessor companies from January 1, 2013; and Senior Manufacturing Manager of Graphic Packaging International, Inc. from October 28, 2009 until December 31, 2012.
Maggie Bidlingmaier , 52, joined Graphic Packaging Holding Company as the Executive Vice President and President, Americas business unit on January 28, 2022. Maggie was most recently President, Performance Solutions for Invista, a subsidiary of Koch Industries, Inc., where she led numerous multimillion-dollar global businesses within the flooring, apparel and airbag fiber segments.
Maggie Bidlingmaier , 53, joined Graphic Packaging Holding Company as the Executive Vice President and President, Americas business unit on January 28, 2022. Maggie was most recently President, Performance Solutions for Invista, a subsidiary of Koch Industries, Inc., where she led numerous multimillion-dollar global businesses within the flooring, apparel and airbag fiber segments.
Prior to that, she was Vice President, Surfaces at Invista, following a successful career with Avery Dennison in global sales and marketing roles of increasing responsibility. Michael Farrell , 56, became the Executive Vice President, Mills Division of Graphic Packaging Holding Company in September 2018.
Prior to that, she was Vice President, Surfaces at Invista, following a successful career with Avery Dennison in global sales and marketing roles of increasing responsibility. Michael Farrell , 57, became the Executive Vice President, Mills Division of Graphic Packaging Holding Company in September 2018.
Tashma , 56, is the Executive Vice President, General Counsel and Secretary of Graphic Packaging Holding Company. She joined the Company in February 2014. Previously, Ms. Tashma served as Senior Vice President, General Counsel and Secretary of Fortune Brands Home & Security, Inc., where she led the legal, compliance and EHS functions. Prior to that, Ms.
Tashma , 57, is the Executive Vice President, General Counsel and Secretary of Graphic Packaging Holding Company. She joined the Company in February 2014. Previously, Ms. Tashma served as Senior Vice President, General Counsel and Secretary of Fortune Brands Home & Security, Inc., where she led the legal, compliance and EHS functions. Prior to that, Ms.
Tashma had various roles with Fortune Brands, Inc., including Vice President and Associate General Counsel. Joseph P. Yost , 55, is the Executive Vice President and President, International of Graphic Packaging Holding Company. Prior to January 5, 2022, he served as Executive Vice President and President, Americas. Prior to January 5, 2017, Mr.
Tashma had various roles with Fortune Brands, Inc., including Vice President and Associate General Counsel. Joseph P. Yost , 56, is the Executive Vice President and President, International of Graphic Packaging Holding Company. Prior to January 5, 2022, he served as Executive Vice President and President, Americas. Prior to January 5, 2017, Mr.
Scherger , 58, is the Executive Vice President and Chief Financial Officer of Graphic Packaging Holding Company. 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 , 59, is the Executive Vice President and Chief Financial Officer of Graphic Packaging Holding Company. 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.
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. Elizabeth Spence, 43 , is the Executive Vice President, Human Resources. She joined the Company on April 1, 2022.
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. Elizabeth Spence, 44 , is the Executive Vice President, Human Resources. She joined the Company on April 1, 2022.
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. 20 Table of Contents PART II
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. 20 PART II
ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. 19 Table of Contents EXECUTIVE OFFICERS OF THE REGISTRANT Pursuant to General Instruction G.(3) of Form 10-K, the following list is included as an unnumbered item in Part I of this Report in lieu of being included in the definitive proxy statement that will be filed within 120 days after December 31, 2022.
ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. 19 EXECUTIVE OFFICERS OF THE REGISTRANT Pursuant to General Instruction G.(3) of Form 10-K, the following list is included as an unnumbered item in Part I of this Report in lieu of being included in the definitive proxy statement that will be filed within 120 days after December 31, 2023. Michael P.
Michael P. Doss , 56, is the President and Chief Executive Officer of Graphic Packaging Holding Company. He was elected to the Board of Directors on May 20, 2015. Prior to January 1, 2016, Mr.
Doss , 57, is the President and Chief Executive Officer of Graphic Packaging Holding Company. He was elected to the Board of Directors on May 20, 2015. Prior to January 1, 2016, Mr.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+4 added−26 removed1 unchanged
Biggest changeThe following presents the Company's share repurchases for the years ended December 31, 2022, 2021, and 2020: Amount repurchased in millions, except share and per share amounts Amount Repurchased Number of Shares Repurchased Average Price per Share 2022 $ 28 1,315,839 $ 20.91 2021 $ — — $ — 2020 $ 316 23,420,010 $ 13.48 At December 31, 2022, the Company had $119 million available for additional repurchases under the 2019 share purchase program. 2022 On November 4, 2022, GPIL entered into Amendment No. 2 to the Fourth Amended and Restated Credit Agreement (the “Second Amendment”).
Biggest changeThe following presents the Company's share repurchases for the years ended December 31, 2023, 2022, and 2021: Amount repurchased in millions, except share and per share amounts Amount Repurchased Number of Shares Repurchased Average Price per Share 2023 $ 54 2,389,224 $ 22.80 2022 $ 28 1,315,839 $ 20.91 2021 $ — — $ — 2023 On February 7, 2023, Graphic Packaging International, LLC (“GPIL”), a Delaware limited liability company and a direct subsidiary of Graphic Packaging International Partners, LLC (“GPIP”), a Delaware limited liability company and a wholly-owned subsidiary of the Company entered into Amendment No. 3 to the Fourth Amended and Restated Credit Agreement (the “Third Amendment”).
On January 28, 2019, the Company's board of directors authorized a share repurchase program to allow the Company to purchase up to $500 million of the Company's issued and outstanding shares of common stock through open market purchases, privately negotiated transactions and Rule 10b5-1 plans (the "2019 share repurchase program").
On January 28, 2019, the Company's board of directors authorized a share repurchase program to allow the Company to purchase up to $500 million of the Company's issued and outstanding shares of common stock through open market purchases, privately negotiated transactions and Rule 10b5-1 plans (the “2019 share repurchase program”).
Container & Packaging Index. The graph assumes $100 invested on December 31, 2017 in GPHC’s common stock and each of the indices.
Container & Packaging Index. The graph assumes $100 invested on December 31, 2018 in GPHC’s common stock and each of the indices.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES GPHC’s common stock is traded on the New York Stock Exchange under the symbol “GPK.” On February 8, 2023, there were approximately 955 stockholders of record and approximately 100,738 beneficial holders of GPHC's common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES GPHC’s common stock is traded on the New York Stock Exchange under the symbol “GPK.” On February 20, 2024, there were approximately 911 stockholders of record and approximately 126,193 beneficial holders of GPHC's common stock.
Share repurchases are reflected as a reduction of common stock for the par value of the shares, with any excess of share repurchase price over par value allocated between capital in excess of par value and retained earnings.
As of December 31, 2023, the Company had $565 million available for additional repurchases under the 2023 and 2019 share repurchase programs. Share repurchases are reflected as a reduction of common stock for the par value of the shares, with any excess of share repurchase price over par value allocated between capital in excess of par value and retained earnings.
The stock price performance on the following graph is not necessarily indicative of future stock price performance. 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Graphic Packaging Holding Company $ 100.00 $ 70.41 $ 112.53 $ 116.97 $ 136.83 $ 158.54 S&P 500 Stock Index 100.00 95.62 125.72 148.85 191.58 156.89 Dow Jones U.S.
The stock price performance on the following graph is not necessarily indicative of future stock price performance. 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Graphic Packaging Holding Company $ 100.00 $ 159.82 $ 166.14 $ 194.34 $ 225.18 $ 253.58 S&P 500 Stock Index 100.00 131.49 155.68 200.37 164.08 207.21 Dow Jones U.S.
On November 15, 2022, the Company drew $250 million from the senior secured domestic revolving credit facilities and used the proceeds, together with cash on hand, to redeem its 4.875% Senior Notes due in 2022. 2021 On January 14, 2021, the Company drew the $425 million Incremental Term A-2 Facility (as hereinafter defined) and used the proceeds, together with cash on hand, to redeem its 4.75% Senior Notes due in 2021.
On November 15, 2022, the Company drew $250 million from the senior secured domestic revolving credit facilities and used the proceeds, together with cash on hand, to redeem its 4.875% Senior Notes due in 2022. 21 Total Return to Stockholders The following graph compares the total returns (assuming reinvestment of dividends) of the common stock of Graphic Packaging Holding Company, the Standard & Poor’s (“S&P”) 500 Stock Index and the Dow Jones (“DJ”) U.S.
During 2022 and 2021, GPHC paid cash dividends of $92 million and $87 million, respectively.
During 2023, 2022 and 2021, GPHC paid cash dividends of $123 million, $92 million and $87 million, respectively. Though the decision to distribute cash dividends rests solely with the Board of Directors, the Company presently intends to maintain a quarterly cash dividend, subject to earnings and liquidity considerations.
Removed
On March 8, 2021, GPIL completed a private offering of $400 million aggregate principal amount of its 0.821% Senior Secured Notes due 2024 and $400 million aggregate principal amount of its 1.512% Senior Secured Notes due 2026.
Added
On July 27, 2023, the Company's board of directors authorized an additional share repurchase program to allow the Company to purchase up to $500 million of the Company's issued and outstanding shares of common stock through open market purchases, privately negotiated transactions and Rule 10b5-1 plans (the “2023 share repurchase program”).
Removed
The net proceeds were used by the Company to repay a portion of the outstanding borrowings under GPIL's term loan credit facilities, which is under its senior secured credit facility.
Added
The Third Amendment provides for a future replacement floating interest rate benchmark (the Canadian Overnight Repo Rate Average) to take effect upon the cessation of the Canadian Dollar Offered Rate for Canadian Dollar borrowings under the domestic revolving credit facility.
Removed
On April 1, 2021, GPIL entered into the Fourth Amended and Restated Credit Agreement (the “Fourth Amended and Restated Credit Agreement”) to extend the maturity date of certain of its senior secured term loan facilities and senior secured revolving credit facilities and to amend certain other terms of the agreement, including revised debt covenants and collateral requirements.
Added
The Third Amendment also modified the borrowing mechanics for certain term Secured Overnight Financing Rate (“SOFR”) loans under the domestic revolving line of credit. 2022 On November 4, 2022, GPIL entered into Amendment No. 2 to the Fourth Amended and Restated Credit Agreement (the “Second Amendment”).
Removed
Under the terms of the agreement, $975 million of the Company’s senior secured term loan facilities remains outstanding.
Added
Container & Packaging Index 100.00 128.59 155.76 172.84 142.07 152.91 ITEM 6. [RESERVED] 22
Removed
The Company added approximately $400 million to its senior secured revolving credit facilities. $550 million of the senior secured term loan facilities and all of the senior secured revolving credit facility loans continue to bear interest at a floating rate per annum ranging from LIBOR plus 1.25% to LIBOR plus 2.00%, determined using a pricing grid based upon the Company’s consolidated total leverage ratio from time to time, and the maturity for these loans were extended from January 1, 2023 to April 1, 2026. $425 million of the senior secured term loan facilities is a Farm Credit System incremental term loan (the “Incremental Term A-2 Facility”) that bears interest at a fixed rate per annum equal to 2.67% and matures on its originally scheduled maturity date of January 14, 2028.
Removed
As long as the Incremental Term A-2 Facility is outstanding, GPIL will be eligible to receive an annual patronage credit from the participating banks, which will be paid in cash and stock in the lead member bank.
Removed
Patronage payable each year is variable and based on the individual financial performance of each of the member banks then participating in the loan. 21 Table of Contents On July 22, 2021, GPIL entered into an Incremental Facility Amendment to the Fourth Amended and Restated Credit Agreement for a second Farm Credit System incremental term loan (the “Incremental Term A-3 Facility”).
Removed
The Incremental Term A-3 Facility is a senior secured term loan in the aggregate principal amount of $250 million maturing on July 22, 2028. The Incremental Term A-3 Facility bears interest at a floating rate ranging from LIBOR plus 1.50% to LIBOR plus 2.25%, determined using a pricing grid based upon GPIL’s consolidated leverage ratio.
Removed
As long as the Incremental Term A-3 Facility is outstanding, GPIL will be eligible to receive an annual patronage credit from the participating banks, which will be paid in cash and stock in the lead member bank.
Removed
Patronage payable each year is variable and based on the individual financial performance of each of the member banks then participating in the loan.
Removed
The Incremental Term A-3 Facility is governed by the same covenants as are set forth in the Fourth Amended and Restated Credit Agreement and is secured by a first priority lien and security interest in certain assets of GPIL.
Removed
On July 23, 2021, GPIL entered into Amendment No. 1 to the Fourth Amended and Restated Credit Agreement and the Fourth Amended and Restated Guarantee and Collateral Agreement and Incremental Facility Amendment (the “First Amendment”).
Removed
The First Amendment provided for a delayed draw term loan facility in an aggregate amount of €210 million and a €25 million increase to the existing Euro-denominated revolving credit facility.
Removed
The new term loan facility was drawn on October 29, 2021, and bears interest at a floating rate ranging from EURIBOR plus 1.125% to EURIBOR plus 1.75%, determined using a pricing grid based upon GPIL’s consolidated total leverage ratio from time to time.
Removed
The Company designated this Euro-denominated debt as a non-derivative net investment hedge of a portion of our net investment in Euro functional currency denominated subsidiaries to offset currency fluctuations.
Removed
The new term loan facility is governed by the same covenants as set forth in the Fourth Amended and Restated Credit Agreement and is secured by a first priority lien and security interest in certain assets of GPIL.
Removed
On September 29, 2021, GPIL completed a $100 million tax-exempt green bond transaction through the Michigan Strategic Fund’s Private Activity Bond Program (the “Green Bonds”).
Removed
The Green Bonds are special limited obligations of the Michigan Strategic Fund, as issuer, payable from and secured by a pledge of payments to be made by GPIL under a loan agreement between the Michigan Strategic Fund and GPIL. The Green Bonds mature in 2061 and include a mandatory purchase on October 1, 2026.
Removed
The Green Bonds were issued at a price of 110.99% and bear interest at an annual rate of 4.0%. The equivalent yield is 1.70%. The net proceeds of $109.5 million were used to fund a portion of its spend on the CRB platform optimization project that includes the construction of a new CRB machine at its Kalamazoo, Michigan mill.
Removed
The bonds have been designated as Green Bonds primarily because the proceeds were used to finance a solid waste disposal/recycling facility resulting in diversion of waste from landfills. In addition to the solid waste recycling aspect, the project improves the environmental footprint of its CRB mill system through expected reductions in water usage, energy consumption and GHG emissions.
Removed
On October 6, 2021, GPIL entered into a $400 million Incremental Facility Amendment to the Fourth Amended and Restated Credit Agreement (the "Incremental Term A-4 Facility"). The Incremental Term A-4 Facility has a delayed draw feature, and the Company funded the new term loan on October 29, 2021.
Removed
The Incremental Term A-4 Facility was collateralized by the same assets as GPIL’s Senior Secured Facilities on a pari passu basis. The Incremental Term A-4 Facility bore interest at a floating rate per annum equal to the Base Rate, the Euro currency Rate plus 0.875%, or the Daily Floating LIBOR Rate plus 0.875%, as selected by the Company.
Removed
The loan was repaid on November 19, 2021 with the proceeds from the 3.75% senior unsecured notes due 2030. On November 19, 2021, GPIL completed a private offering of $400 million aggregate principal amount of 3.750% senior unsecured notes due 2030 (the “Dollar Notes”) and €290 million aggregate principal amount of 2.625% senior unsecured notes due 2029 (the “Euro Notes”).
Removed
The net proceeds of the Dollar Notes were used to repay in full the term loan borrowed under the Incremental Term A-4 Loan, which was under its senior secured credit facility. The net proceeds of the Euro Notes were used to repay revolver borrowings outstanding under its senior secured credit facility.
Removed
The Company designated this Euro-denominated debt as a non-derivative net investment hedge of a portion of our net investment in Euro functional currency denominated subsidiaries to offset currency fluctuations. 22 Table of Contents Total Return to Stockholders The following graph compares the total returns (assuming reinvestment of dividends) of the common stock of Graphic Packaging Holding Company, the Standard & Poor’s (“S&P”) 500 Stock Index and the Dow Jones (“DJ”) U.S.
Removed
Container & Packaging Index 100.00 81.55 104.86 127.03 140.95 115.86 ITEM 6. [RESERVED] 23 Table of Contents

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

2 edited+0 added−0 removed0 unchanged
Biggest changeITEM 6. [RESERVED] 23 ITEM 7 . MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 24 ITEM 7 A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK 37 ITEM 8 . FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 39 ITEM 9 . CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 88 ITEM 9 A .
Biggest changeITEM 6. [RESERVED] 22 ITEM 7 . MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 23 ITEM 7 A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK 36 ITEM 8 . FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 37 ITEM 9 . CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 84 ITEM 9 A .
CONTROLS AND PROCEDURES 88 ITEM 9 B. OTHER INFORMATION 88
CONTROLS AND PROCEDURES 84 ITEM 9 B. OTHER INFORMATION 84

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

101 edited+35 added−32 removed41 unchanged
Biggest changeRESULTS OF OPERATIONS Year Ended December 31, In millions 2022 2021 2020 Net Sales $ 9,440 $ 7,156 $ 6,560 Income from Operations $ 906 $ 407 $ 524 Nonoperating Pension and Postretirement Benefit Income (Expense) 7 5 (151) Interest Expense, Net (197) (123) (129) Income before Income Taxes and Equity Income of Unconsolidated Entity $ 716 $ 289 $ 244 Income Tax Expense (194) (74) (42) Income before Equity Income of Unconsolidated Entity $ 522 $ 215 $ 202 Equity Income of Unconsolidated Entity — 1 1 Net Income $ 522 $ 216 $ 203 26 Table of Contents 2022 COMPARED WITH 2021 Net Sales The components of the change in Net Sales are as follows: Year Ended December 31, Variances In millions 2021 Price Volume/Mix Foreign Exchange 2022 Increase Percent Change Consolidated $ 7,156 $ 1,131 $ 1,283 $ (130) $ 9,440 $ 2,284 32 % The Company's Net Sales in 2022 increased by $2,284 million or 32%, to $9,440 million from $7,156 million for the same period in 2021, due to $1,088 million of net sales related to the acquisitions of Americraft in Q3 2021 and AR Packaging in Q4 2021, higher selling prices, increased volume from conversions to fiber-based packaging solutions, new product introductions and higher volume of open market sales, partially offset by unfavorable foreign exchange rates, primarily the Euro, British Pound, Canadian dollar, Australian dollar, Japanese Yen, and Mexican Peso.
Biggest changeAs of December 31, 2023, the Company has $565 million available for additional repurchases under the 2023 and 2019 share repurchase programs. • During 2023, the Company declared and paid cash dividends of $123 million. 25 RESULTS OF OPERATIONS Year Ended December 31, In millions 2023 2022 2021 Net Sales $ 9,428 $ 9,440 $ 7,156 Income from Operations $ 1,174 $ 906 $ 407 Nonoperating Pension and Postretirement Benefit (Expense) Income (3) 7 5 Interest Expense, Net (239) (197) (123) Income before Income Taxes and Equity Income of Unconsolidated Entity $ 932 $ 716 $ 289 Income Tax Expense (210) (194) (74) Income before Equity Income of Unconsolidated Entity $ 722 $ 522 $ 215 Equity Income of Unconsolidated Entity 1 — 1 Net Income $ 723 $ 522 $ 216 2023 COMPARED WITH 2022 Net Sales The components of the change in Net Sales are as follows: Year Ended December 31, Variances In millions 2022 Price Volume/Mix Foreign Exchange 2023 Decrease Percent Change Consolidated $ 9,440 $ 556 $ (580) $ 12 $ 9,428 $ (12) (0.1) % The Company's Net Sales in 2023 decreased by $12 million or 0.1%, to $9,428 million from $9,440 million for the same period in 2022, due to lower organic sales and lower volumes of open market sales.
Covenants in the Company’s Fourth Amended and Restated Credit Agreement (as amended, the “Current Credit Agreement”) and the indentures governing the 0.821% Senior Notes due 2024, 4.125% Senior Notes due 2024, 1.512% Senior Notes due 2026, 4.75% Senior Notes due 2027, 3.50% Senior Notes due 2028, 3.50% Senior Notes due 2029, 2.625% Senior Notes due 2029 and 3.75% Senior Notes due 2030 (the “Indentures”) may, among other things, restrict the ability of the Company to dispose of assets, incur guarantee obligations, prepay other indebtedness, repurchase stock, pay dividends, make other restricted payments and make acquisitions or other investments.
The Covenants in the Company’s Fourth Amended and Restated Credit Agreement (as amended, the “Current Credit Agreement”) and the indentures governing the 0.821% Senior Notes due 2024, 4.125% Senior Notes due 2024, 1.512% Senior Notes due 2026, 4.75% Senior Notes due 2027, 3.50% Senior Notes due 2028, 3.50% Senior Notes due 2029, 2.625% Senior Notes due 2029 and 3.75% Senior Notes due 2030 (the “Indentures”) may, among other things, restrict the ability of the Company to dispose of assets, incur guarantee obligations, prepay other indebtedness, repurchase stock, pay dividends, make other restricted payments and make acquisitions or other investments.
Additional information regarding our acquisitions is included in " Note 4 - Business Combinations" in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” 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.
Additional information regarding our acquisitions is included in “ Note 4 - Business Combinations ” in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” 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.
Liquidity and Capital Resources The Company expects its material cash requirements for the next twelve months will be for: capital expenditures, periodic required estimated income tax payments, periodic interest and debt service payments on associated debt, as discussed in Note 5, lease agreements which have fixed lease payment obligations, as discussed in Note 6, and minimum purchase commitments as discussed in Note 13 along with ongoing operating costs, working capital, share repurchases and dividend payments.
Liquidity and Capital Resources The Company expects its material cash requirements for the next twelve months will be for: capital expenditures, periodic required income tax payments, periodic interest and debt service payments on associated debt (as discussed in Note 5), lease agreements which have fixed lease payment obligations (as discussed in Note 6), and minimum purchase commitments (as discussed in Note 13) along with ongoing operating costs, working capital, share repurchases and dividend payments.
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.
If the Company cannot successfully implement its 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 anticipated efficiencies and savings could adversely affect the Company’s financial results. Competition and Market Factors.
The accounting policies of the reportable segments are the same as those described in " Note 1 - Nature of Business and Summary of Significant Accounting Policies " in the Notes to Consolidated Financial Statements included herein under “Item 8.
The accounting policies of the reportable segments are the same as those described in “ Note 1 - Nature of Business and Summary of Significant Accounting Policies ” in the Notes to Consolidated Financial Statements included herein under “Item 8.
Significant assumptions in valuing this asset included the discount rate, annual revenue growth rates, customer attrition rates, projected operating expenses, projected earnings before interest, taxes, depreciation, and amortization ("EBITDA") margins, tax rate, depreciation, contributory asset charge, and future earnings projections among others. The Company believes the estimates applied to be based on reasonable assumptions, but which are inherently uncertain.
Significant assumptions in valuing this asset included the discount rate, annual revenue growth rates, customer attrition rates, projected operating expenses, projected earnings before interest, taxes, depreciation, and amortization (“EBITDA”) margins, tax rate, depreciation, contributory asset charge, and future earnings projections among others. The Company believes the estimates applied to be based on reasonable assumptions, but which are inherently uncertain.
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 2023.
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 2024.
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 are driven by consumer buying habits in the markets its customers serve.
The Company works to maintain market share through efficiency, product innovation, improved circularity, 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 are driven by consumer buying habits in the markets its customers serve.
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").
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”).
The effective tax rate for 2022 is different from the statutory rate primarily due to impairment charges from the planned sale of the Company’s Russian business that resulted in no corresponding tax benefit in addition to the mix of earnings between foreign and domestic jurisdictions, including those with and without valuation allowances.
The effective tax rate for 2022 was different from the statutory rate primarily due to impairment charges from the planned sale of the Company’s Russian business that resulted in no corresponding tax benefit in addition to the mix of earnings between foreign and domestic jurisdictions, including those with and without valuation allowances.
The following will be discussed and analyzed: • Overview of Business • Overview of 2022 Results • Results of Operations • Financial Condition, Liquidity and Capital Resources • Critical Accounting Policies • New Accounting Standards • Business Outlook A detailed discussion of the fiscal 2022 year-over-year changes can be found below and a detailed discussion of fiscal 2021 year-over-year changes can be found in Item 7.
The following will be discussed and analyzed: • Overview of Business • Overview of 2023 Results • Results of Operations • Financial Condition, Liquidity and Capital Resources • Critical Accounting Policies • New Accounting Standards • Business Outlook A detailed discussion of the fiscal 2023 year-over-year changes can be found below and a detailed discussion of fiscal 2022 year-over-year changes can be found in Item 7.
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. The Company performed its annual goodwill impairment tests as of October 1, 2022.
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. The Company performed its annual goodwill impairment tests as of October 1, 2023.
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, 2022, the Company performed a quantitative impairment test.
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, 2023, the Company performed a quantitative impairment test.
As further discussed in “Note 5 – Debt ” in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data,” current year activities included the redemption of the 4.875% Senior Notes due 2022 of $250 million.
As further discussed in “Note 5 - Debt ” in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data,” 2022 activities included the redemption of the 4.875% Senior Notes due 2022 of $250 million.
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, 2022, the Company had seven reporting units, five of which had goodwill.
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, 2023, the Company had seven reporting units, five of which had goodwill.
These global events 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.
Global events may result in supply chain and transportation disruptions to and from facilities and affected employees could impact the Company’s ability to operate its facilities and distribute products to its customers in a timely fashion.
Receivables sold under all programs subject to continuing involvement, which consist principally of collection services, were approximately $753 million and $613 million as of December 31, 2022 and 2021, respectively. The Company also participates in supply chain financing arrangements offered by certain customers that qualify for sale accounting in accordance with the Transfers and Servicing topic of the FASB Codification.
Receivables sold under all programs subject to continuing involvement, which consist principally of collection services, were approximately $770 million and $753 million as of December 31, 2023 and 2022, respectively. The Company also participates in supply chain financing arrangements offered by certain customers that qualify for sale accounting in accordance with the Transfers and Servicing topic of the FASB Codification.
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. 24 Table of Contents The Company’s operations and financial results could be adversely impacted by global events outside of the Company’s control.
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. 23 The Company’s operations and financial results could be adversely impacted by global events outside of the Company’s control.
Significant Factors That Impact the Company’s Business and Results of Operations Impact of Inflation/Deflation. The Company’s cost of sales consists primarily of energy (including natural gas, fuel oil and electricity), pine and hardwood fiber, chemicals, secondary fibers, purchased paperboard, aluminum foil, ink, plastic films and resins, depreciation expense and labor. Costs increased year over year by $710 million in 2022.
Significant Factors That Impact the Company’s Business and Results of Operations Impact of Inflation/Deflation. The Company’s cost of sales consists primarily of energy (including natural gas, fuel, oil and electricity), pine and hardwood fiber, chemicals, secondary fibers, purchased paperboard, aluminum foil, ink, plastic films and resins, depreciation expense and labor. Costs increased year over year by $175 million in 2023.
The Company determined that no deferred tax liability should be recorded related to the outside basis difference of its Canadian subsidiary as of December 31, 2022.
The Company determined that no deferred tax liability should be recorded related to the outside basis difference of its Canadian subsidiary as of December 31, 2023.
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 Current Credit Agreement and the Indentures could limit the Company’s flexibility to respond to changing market conditions and competitive pressures.
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 Current Credit Agreement and the Indentures could limit the Company’s flexibility to respond to changing market conditions and competitive pressures.
The effect of changes in the U.S. dollar exchange rate against these currencies produced a net currency translation adjustment loss of $148 million, which was recorded in Other Comprehensive (Loss) Income for the year ended December 31, 2022. The magnitude and direction of this adjustment in the future depends on the relationship of the U.S. dollar to other currencies.
The effect of changes in the U.S. dollar exchange rate against these currencies produced a net currency translation adjustment loss of $65 million, which was recorded in Other Comprehensive (Loss) Income for the year ended December 31, 2023. The magnitude and direction of this adjustment in the future depends on the relationship of the U.S. dollar to other currencies.
The Company has not provided for deferred U.S. income taxes on outside basis differences of approximately $44 million in its other international subsidiaries because of the Company’s intention to indefinitely reinvest these earnings outside the U.S.
The Company has not provided for deferred U.S. income taxes on outside basis differences of approximately $92 million in its other international subsidiaries because of the Company’s intention to indefinitely reinvest its earnings outside the U.S.
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 2022 and 2023.
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 2024.
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 has previously used interest rate swaps to manage interest rate risks on future interest payments caused by interest rate changes on its variable rate term loan facility.
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.
Europe Paperboard Packaging includes paperboard packaging, primarily folding cartons, sold primarily to CPG companies serving the food, beverage and consumer product markets including healthcare and beauty primarily in Europe. The Company allocates certain mill and corporate costs to the reportable segments to appropriately represent the economics of these segments.
Europe Paperboard Packaging includes paperboard packaging, primarily cartons, sold primarily to CPG companies serving the food, beverage and consumer product markets including healthcare and beauty products primarily in Europe. The Company allocates certain paperboard manufacturing and corporate costs to the reportable segments to appropriately represent the economics of these segments.
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.
Such restrictions, as well as 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.
For 2022, before intercompany eliminations, net sales from operations outside of the U.S. represented approximately 29% of the Company’s net sales. The Company’s revenues from export sales fluctuate with changes in foreign currency exchange rates. In addition, at December 31, 2022, approximately 29% of the Company's total assets were denominated in currencies other than the U.S. dollar.
For 2023, before intercompany eliminations, net sales from operations outside of the U.S. represented approximately 30% of the Company’s net sales. The Company’s revenues from export sales fluctuate with changes in foreign currency exchange rates. In addition, at December 31, 2023, approximately 27% of the Company's total assets were denominated in currencies other than the U.S. dollar.
As further discussed in “ Note 5 – Debt ” 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 subsidiary holding companies, domestic subsidiaries and in certain instances by the Company (a Parent guarantee) (collectively "the Guarantors").
As discussed in “ Note 5 - Debt ” 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 the issuer other than its foreign subsidiaries, and in certain instances by the Company (a Parent guarantee) (collectively “the Guarantors”).
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 9.0%, and we utilized a transaction multiple of 9.1 times to calculate terminal period cash flows.
The Company concluded that all reporting units with goodwill have a fair value that exceeded their carrying value, and thus goodwill was not impaired. The discount rate used for each reporting unit ranged from 8% to 9%, and we utilized a transaction multiple of 8.0 times to calculate terminal period cash flows.
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, packaging products and applications that benefit from consumer-led sustainability trends; and (iv) to continue to reduce costs by focusing on operational improvements.
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 paperboard manufacturing and packaging facilities; (iii) to develop and market innovative, packaging products and applications that benefit from consumer-led sustainability trends; and (iv) to continue to reduce costs by focusing on operational improvements.
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 Europe reporting units had goodwill totaling $43 million and $481 million, respectively.
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 Europe reporting unit had goodwill totaling $462 million.
The critical judgments by management relate to acquisitions, pension benefits, future cash flows associated with impairment testing for goodwill and long-lived assets, and deferred income taxes. 33 Table of Contents Acquisitions The Company uses the acquisition method of accounting for acquired businesses.
The critical judgments by management relate to acquisitions, future cash flows associated with impairment testing for goodwill and long-lived assets, and deferred income taxes. Acquisitions The Company uses the acquisition method of accounting for acquired businesses.
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.
As some products can be packaged in different types of materials, the Company’s sales are affected by competition from other manufacturers’ recycled, bleached and unbleached paperboard, folding box board, and recycled clay-coated news. Additional substitute products also include plastic, shrink film, corrugated containers and reusables.
NEW ACCOUNTING STANDARDS For a discussion of recent accounting pronouncements impacting the Company, see " Note 1 - Nature of Business and Summary of Significant Accounting Policies " in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” BUSINESS OUTLOOK Total capital investment for 2023 is expected to be in the range of 7% to 8% of sales.
NEW ACCOUNTING STANDARDS For a discussion of recent accounting pronouncements impacting the Company, see “ Note 1 - Nature of Business and Summary of Significant Accounting Policies ” in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” BUSINESS OUTLOOK Total capital investment for 2024 is expected to be approximately $950 million.
GPIL's remaining subsidiaries (the “Nonguarantor Subsidiaries”) include all of GPIL’s foreign subsidiary holding companies, foreign subsidiaries and immaterial domestic subsidiaries. The Subsidiary Guarantors are jointly and severally, fully and unconditionally liable under the guarantees. Other than tax related items, the results of operations, assets, and liabilities for GPHC and GPIL are substantially the same.
GPIL's remaining subsidiaries (the “Nonguarantor Subsidiaries”) include all of GPIL’s foreign subsidiaries and immaterial domestic subsidiaries. The Subsidiary Guarantors are jointly and severally, fully and unconditionally liable under the guarantees. The results of operations, assets, and liabilities for GPHC and GPIL are substantially the same.
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"), serving the food, beverage, and consumer product markets in the Americas.
Americas Paperboard Packaging includes paperboard packaging sold primarily to consumer packaged goods (“CPG”) companies and cups, lids and food containers sold primarily to foodservice companies and quick-service restaurants (“QSR”) serving the food, beverage, and consumer product markets in the Americas.
The following table summarizes the activity under these programs for the year ended December 31, 2022 and 2021, respectively: Year Ended December 31, In millions 2022 2021 Receivables Sold and Derecognized $ 3,299 $ 2,947 Proceeds Collected on Behalf of Financial Institutions 3,179 2,970 Net Proceeds Received From (Paid to) Financial Institutions 152 (6) Deferred Purchase Price at December 31 (a) — 4 Pledged Receivables at December 31 197 180 (a) Included in Other Current Assets on the Consolidated Balance Sheets and represents a beneficial interest in the receivables sold to the financial institutions, which is a Level 3 fair value measure.
The following table summarizes the activity under these programs for the year ended December 31, 2023 and 2022, respectively: Year Ended December 31, In millions 2023 2022 Receivables Sold and Derecognized $ 3,696 $ 3,299 Proceeds Collected on Behalf of Financial Institutions 3,646 3,179 Net Proceeds Received from Financial Institutions 28 152 Deferred Purchase Price at December 31 (a) 1 — Pledged Receivables at December 31 150 197 (a) Included in Other Current Assets on the Consolidated Balance Sheets and represents a beneficial interest in the receivables sold to the financial institutions, which is a Level 3 fair value measure.
Equity Income of Unconsolidated Entity Equity Income of Unconsolidated Entity was less than $1 million in 2022 and $1 million in 2021 and is related to the Company’s equity investment through its GPIL subsidiary, in the Rengo Riverwood Packaging, Ltd. joint venture.
Equity Income of Unconsolidated Entity Equity Income of Unconsolidated Entity was $1 million in 2023 and less than $1 million in 2022 and is related to the Company’s equity investment in the Rengo Riverwood Packaging, Ltd. joint venture.
In the first quarter of 2022 and 2021, the Company made a $6 million and $14 million contribution respectively to its remaining U.S. defined benefit plan by effectively utilizing the excess balance related to its U.S. defined benefit plan terminated in 2020. Net cash used in investing activities in 2022 totaled $435 million, compared to $2,392 million in 2021.
In the first quarter of 2022, the Company made a $6 million contribution to its remaining U.S. defined benefit plan by effectively utilizing the excess balance related to its U.S. defined benefit plan terminated in 2020. Net cash used in investing activities in 2023 totaled $1,025 million, compared to $435 million in 2022.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. OVERVIEW OF BUSINESS The Company’s objective is to strengthen its position as a leading provider of recyclable, fiber-based consumer packaging solutions.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. OVERVIEW OF BUSINESS The Company’s objective is to strengthen its position as a leading provider of consumer packaging made from renewable resources.
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.
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.
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 $5,283 million of outstanding debt obligations as of December 31, 2022.
New product introductions and promotional activity by the Company’s customers can also impact its sales. Debt Obligations. The Company had an aggregate principal amount of $5,396 million of outstanding debt obligations as of December 31, 2023.
Other current year activities included borrowings under revolving credit facilities primarily for capital spending, repurchase of common stock of $28 million and payments on debt of $14 million. The Company also paid dividends of $92 million and withheld $18 million of shares to satisfy tax withholding obligations related to the payout of restricted stock units.
Current year financing activities included borrowings under revolving credit facilities primarily for capital spending, repurchase of common stock of $54 million and payments on debt of $26 million. The Company also paid dividends of $123 million and withheld $22 million of restricted stock units to satisfy tax withholding obligations related to the payout of restricted stock units.
For further discussion of the Company’s environmental matters, see " Note 14 - Environmental and Legal Matters " in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data." International Operations The Company has converting plants and one paper mill in 21 countries outside of the U.S. and sells its products worldwide.
For further discussion of the Company’s environmental matters, see “ Note 14 - Environmental and Legal Matters ” in the Notes to Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data.” 32 International Operations The Company has packaging facilities and one paperboard manufacturing facility in 20 countries outside of the U.S. and sells its products worldwide.
Recently, the Company has seen net organic sales growth driven by the consumers' desire for recyclable, fiber-based packaging solutions. Changes in consumer dietary habits and preferences, increases in the costs of living, unemployment rates, access to credit markets, as well as other macroeconomic factors, may negatively affect consumer spending behavior.
The Company has historically reported net organic sales growth supported by its introduction of new packaging products to meet the consumers' desire for recyclable, sustainable consumer packaging solutions. Changes in consumer dietary habits and preferences, increases in the costs of living, unemployment rates, access to credit markets, as well as other macroeconomic factors, may negatively affect consumer spending behavior.
Income Tax Expense During 2022 and 2021, the Company recognized Income Tax Expense of $194 million and $74 million, on Income before Income Taxes of $716 million and $289 million, respectively.
Income Tax Expense During 2023 and 2022, the Company recognized Income Tax Expense of $210 million and $194 million, on Income before Income Taxes of $932 million and $716 million, respectively.
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.
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.
As of December 31, 2021, a total valuation allowance of $38 million was recorded. As of December 31, 2022, the Company has provided for deferred U.S. income taxes attributable to future withholding tax expense related to the Company's equity investment in the joint venture, Rengo Riverwood Packaging, Ltd.
As of December 31, 2023, the Company has provided for deferred U.S. income taxes attributable to future withholding tax expense related to the Company's equity investment in the joint venture, Rengo Riverwood Packaging, Ltd.
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.
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. 34 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.
Income from Operations The components of the change in Income from Operations are as follows: Year Ended December 31, Variances In millions 2021 Price Volume/Mix Inflation Foreign Exchange Other (a) 2022 Increase Percent Change Consolidated $ 407 $ 1,131 $ 173 $ (710) $ (37) $ (58) $ 906 $ 499 123 % (a) Includes the Company's cost reduction initiatives, planned mill maintenance costs, expenses related to acquisitions and integration activities, exit activities, and shutdown and other special charges.
Income from Operations The components of the change in Income from Operations are as follows: Year Ended December 31, Variances In millions 2022 Price Volume/Mix Inflation Foreign Exchange Other (a) 2023 Increase Percent Change Consolidated $ 906 $ 556 $ (204) $ (175) $ (11) $ 102 $ 1,174 $ 268 30 % (a) Includes the Company's cost reduction initiatives, planned mill maintenance costs and market downtime, expenses related to acquisitions and integration activities, exit activities, and other special charges.
In millions December 31, 2022 SUMMARIZED BALANCE SHEET Current assets (excluding intercompany receivable from Nonguarantor) $ 1,386 Noncurrent assets 5,852 Intercompany receivables from Nonguarantors 1,399 Current liabilities 1,355 Noncurrent liabilities 5,360 Covenant Restrictions Covenants contained in the Current Credit Agreement and the Indentures may, among other things, limit the ability to incur additional indebtedness, restrict the ability of the Company to dispose of assets, incur guarantee obligations, prepay other indebtedness, repurchase shares, pay dividends and make other restricted payments, create liens, make equity or debt investments, make acquisitions, modify terms of the indentures under which the Notes are issued, engage in mergers or consolidations, change the business conducted by the Company and its subsidiaries, and engage in certain transactions with affiliates.
In millions Twelve Months Ended December 31, 2023 SUMMARIZED STATEMENTS OF OPERATIONS Net Sales (a) $ 7,166 Cost of Sales 5,458 Income from Operations 1,032 Net Income 631 (a) Includes Net Sales to Nonguarantor Subsidiaries of $520 million. 31 In millions December 31, 2023 SUMMARIZED BALANCE SHEET Current assets (excluding intercompany receivable from Nonguarantor) $ 1,612 Noncurrent assets 6,463 Intercompany receivables from Nonguarantors 1,300 Current liabilities 2,067 Noncurrent liabilities 5,478 Covenant Restrictions Covenants contained in the Current Credit Agreement and the Indentures may, among other things, limit the Company's ability to incur additional indebtedness, dispose of assets, incur guarantee obligations, prepay other indebtedness, repurchase shares, pay dividends and make other restricted payments, create liens, make equity or debt investments, make acquisitions, modify terms of the Indentures under which the Notes are issued, engage in mergers or consolidations, change the business conducted by the Company and its subsidiaries, and engage in certain transactions with affiliates.
Interest Expense, Net Interest Expense, Net was $197 million and $123 million in 2022 and 2021, respectively. Interest Expense, Net increased due to higher debt balances and interest rates. As of December 31, 2022, approximately 32% of the Company’s total debt was subject to floating interest rates.
Interest Expense, Net increased due to higher interest rates and higher debt balances. As of December 31, 2023, approximately 20% of the Company’s total debt was subject to floating interest rates.
Financial Statements and Supplementary Data." 28 Table of Contents Year Ended December 31, In millions 2022 2021 2020 NET SALES: Paperboard Mills $ 1,290 $ 1,007 $ 988 Americas Paperboard Packaging 6,015 4,996 4,650 Europe Paperboard Packaging 1,973 992 765 Corporate/Other/Eliminations (a) 162 161 157 Total $ 9,440 $ 7,156 $ 6,560 INCOME (LOSS) FROM OPERATIONS: Paperboard Mills (b)(d) $ 45 $ (10) $ (110) Americas Paperboard Packaging 800 456 639 Europe Paperboard Packaging (c) 59 82 66 Corporate and Other (d) 2 (121) (71) Total $ 906 $ 407 $ 524 (a) Includes revenue from contracts with customers for the Australia and Pacific Rim operating segments.
Financial Statements and Supplementary Data.” 27 Year Ended December 31, In millions 2023 2022 2021 NET SALES: Paperboard Manufacturing $ 1,022 $ 1,290 $ 1,007 Americas Paperboard Packaging 6,200 6,015 4,996 Europe Paperboard Packaging 2,024 1,973 992 Corporate/Other/Eliminations (a) 182 162 161 Total $ 9,428 $ 9,440 $ 7,156 INCOME (LOSS) FROM OPERATIONS: Paperboard Manufacturing (b)(c) $ (23) $ 45 $ (10) Americas Paperboard Packaging (c)(d) 1,088 800 456 Europe Paperboard Packaging (c)(e) 127 59 82 Corporate and Other (c) (18) 2 (121) Total $ 1,174 $ 906 $ 407 (a) Includes revenue from contracts with customers for the Australia and Pacific Rim operating segments.
The Paperboard Mills segment Net Sales represent the sale of paperboard only to external customers. The effect of intercompany transfers to the paperboard packaging segments has been eliminated from the Paperboard Mills segment to reflect the economics of the integration of these segments.
Paperboard not consumed internally is sold externally to a wide variety of paperboard packaging converters and brokers. The Paperboard Manufacturing segment's Net Sales represent the sale of paperboard only to external customers. The effect of intercompany transfers to the paperboard packaging segments has been eliminated from the Paperboard Manufacturing segment to reflect the economics of the integration of these segments.
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. 25 Table of Contents 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.
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.
Capitalized interest was $5 million and $14 million as of December 31, 2022 and 2021, respectively. 32 Table of Contents 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.
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.
The favorable increase was mainly due to improved income from operations. Pension contributions in 2022 and 2021 were $24 million and $33 million, respectively.
The favorable increase was mainly due to an increase in income from operations, offset by higher levels of working capital. Pension contributions in 2023 and 2022 were $15 million and $24 million, respectively.
In addition, these global events may result in extreme volatility and disruptions in the capital and credit markets as well as widespread furloughs and layoffs for workers in the broader economy.
In addition, these global events may result in extreme volatility and disruptions in the capital and credit markets as well as widespread furloughs and layoffs for workers in the broader economy. Commitment to Cost Reduction. The Company has programs in place that are designed to reduce costs, improve productivity and increase profitability.
Segment Reporting The Company has three reportable segments as follows: Paperboard Mills includes the seven North American paperboard mills that produce primarily CRB, CUK, and SBS, which is consumed internally to produce paperboard packaging for the Americas and Europe Packaging segments. Paperboard not consumed internally is sold externally to a wide variety of paperboard packaging converters and brokers.
Segment Reporting The Company has three reportable segments as follows: Paperboard Manufacturing , previously referred to as the Paperboard Mills reportable segment, includes the seven North American paperboard manufacturing facilities that produce recycled, unbleached and bleached paperboard, which is consumed internally to produce paperboard consumer packaging for the Americas and Europe Packaging segments.
During the fourth quarter of 2022, the Company finalized acquisition accounting, which resulted in a decrease of $38 million to customer relationships.
The Company identified that the acquired assets included customer relationships, which were assigned a fair value of $439 million using a discounted cash flow analysis. During the fourth quarter of 2022, the Company finalized acquisition accounting, which resulted in a decrease of $38 million to customer relationships.
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. 35 Table of Contents As of December 31, 2022, the Company has a valuation allowance of $57 million against its net deferred tax assets in certain foreign jurisdictions and against domestic deferred tax assets related to certain federal tax credit carryforwards, certain state net operating loss carryforwards and certain state tax credit carryforwards.
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.
The commodity inflation was primarily due to higher prices for chemicals, energy, wood, secondary fiber, and freight. Americas Paperboard Packaging Net Sales increased due to higher pricing, the acquisition of Americraft in Q3 2021, organic sales growth, including conversions to our fiber-based packaging solutions, mix and new product introductions, partially offset by unfavorable foreign currency exchange rates.
The commodity inflation was primarily due to higher prices for external board, chemicals, and factoring, partially offset by lower costs for secondary fiber, energy, freight and wood. 28 Europe Paperboard Packaging Net Sales increased due to higher pricing, mix, new product introductions driven by conversions to our sustainable consumer packaging solutions and favorable foreign currency exchange, partially offset by lower organic sales in beverage, convenience, healthcare and food partially offset by higher volumes in foodservice and beauty.
The Company must also comply with a minimum Consolidated Interest Expense Ratio of 3.00 to 1.00. At December 31, 2022, the Company was in compliance with such covenant and the ratio was 8.44 to 1.00. As of December 31, 2022, the Company's credit was rated BB+ by Standard & Poor's and Ba1 by Moody's Investor Services.
At December 31, 2023, the Company was in compliance with such covenant and the ratio was 2.58 to 1.00. The Company must also comply with a minimum Consolidated Interest Expense Ratio of 3.00 to 1.00. At December 31, 2023, the Company was in compliance with such covenant and the ratio was 7.96 to 1.00.
Therefore, the summarized financial information below is presented on a combined basis, consisting of GPIL and Subsidiary Guarantors (collectively, the “Obligor Group”), and is presented after the elimination of: (i) intercompany transactions and balances among GPIL and Subsidiary Guarantors, and (ii) equity in earnings from and investments in the Nonguarantor Subsidiaries. 31 Table of Contents In millions Twelve Months Ended December 31, 2022 SUMMARIZED STATEMENTS OF OPERATIONS Net Sales (a) $ 7,274 Cost of Sales 5,878 Income from Operations 829 Net Income 655 (a) Includes Net Sales to Nonguarantor Subsidiaries of $534 million.
Therefore, the summarized financial information below is presented on a combined basis, consisting of the Issuer and Subsidiary Guarantors (collectively, the “Obligor Group”), and is presented after the elimination of: (i) intercompany transactions and balances among the Issuer and Subsidiary Guarantors, and (ii) equity in earnings from and investments in the Nonguarantor Subsidiaries.
Commodity inflation was primarily due to external board ($173 million), mill chemicals ($128 million), energy ($110 million), wood ($55 million), freight ($44 million), converting chemicals ($40 million) secondary fiber ($31 million), and other costs ($17 million).
Commodity inflation was primarily due to external board ($50 million), mill chemicals ($38 million), factoring ($36 million), converting chemicals ($7 million) and other costs ($15 million) offset by reduced costs for secondary fiber ($55 million), energy ($40 million), freight ($27 million), and wood ($18 million).
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 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.
Income from Operations decreased primarily due to impairment charges of $96 million related to the Company's classification of its Russian operations as held for sale in the second quarter. Refer to " Note 19 - Impairment and Divestiture of Russian Business " in the Notes to Condensed Consolidated Financial Statements for additional information.
Income from Operations also increased due to a reduction in impairment charges related to the sale of its Russian operations. Refer to “ Note 19 - Impairment and Divestiture of Russian Business ” in the Notes to Consolidated Financial Statements included herein under “Item 8. Financial Statements and Supplementary Data,” for additional information.
The Company also recognized $10 million of tax expense to release the tax expense remaining in Other Comprehensive Income after the settlement of certain swaps during the period, which increased the effective tax rate. 27 Table of Contents The effective tax rate for 2021 is different from the statutory rate due to due to the tax effect of income attributable to noncontrolling interests as well as the mix of earnings between foreign and domestic jurisdictions.
The Company also recognized $10 million of tax expense to release the tax expense remaining in Other Comprehensive Income after the settlement of certain swaps during the period, which increased the effective tax rate.
Income from Operations increased due to higher pricing, higher core converting volume and increased volume from conversions to our fiber based packaging solutions, mix, and cost savings from continuous improvement and other programs, partially offset by commodity inflation and other inflation (primarily labor and benefits).
Income from Operations increased due to higher pricing and cost savings from continuous improvement and other programs, partially offset by commodity inflation primarily related to external board, energy and other inflation (primarily labor and benefits), unfavorable foreign currency exchange and lower organic sales.
(b) Includes accelerated depreciation related to exit activities in 2022, 2021, and 2020. (c) Includes impairment charges of $96 million related to Russia incurred in 2022. See "Note 19 - Impairment and Divestiture of Russian Business" in the Notes to Condensed Consolidated Financial Statements for further information.
(b) Includes accelerated depreciation related to exit activities in 2023, 2022, and 2021. See “ Note 18 - Exit Activities ” in the Notes to Condensed Consolidated Financial Statements included herein under “Item 8., Financial Statements and Supplementary Data,” for further information. (c) Includes expenses related to business combinations, exit activities and other special charges.
As of December 31, 2022 and 2021, the Company sold receivables of $1,124 million and $693 million, respectively, related to these arrangements. 30 Table of Contents Cash Flows Years Ended December 31, In millions 2022 2021 Net Cash Provided by Operating Activities $ 1,090 $ 609 Net Cash Used in Investing Activities $ (435) $ (2,392) Net Cash Provided by (Used in) Financing Activities $ (666) $ 1,778 Net cash provided by operating activities in 2022 totaled $1,090 million, compared to $609 million in 2021.
Cash Flows Years Ended December 31, In millions 2023 2022 Net Cash Provided by Operating Activities $ 1,144 $ 1,090 Net Cash Used in Investing Activities $ (1,025) $ (435) Net Cash Used in Financing Activities $ (106) $ (666) 30 Net cash provided by operating activities in 2023 totaled $1,144 million, compared to $1,090 million in 2022.
Core converting volumes were up driven by cereal, dry foods, and frozen pizza, and partially offset by lower volumes in beverage, frozen foods, and bakery.
Core packaging volumes were lower in beverage, cereal, dry foods, frozen foods, dairy, convenience, and healthcare, partially offset by higher packaging volumes in foodservice, tissue and beauty.
The Foodservice and Europe reporting units had fair values that exceed their respective carrying values by 83% and 42%, respectively, whereas all other reporting units exceeded by more than 50%.
The Europe reporting unit had a fair value that exceeded its respective carrying value by 26%, whereas all other reporting units exceeded by more than 90%.
The Company’s operations and financial results could be adversely impacted by global events outside of the Company’s control, such as the COVID-19 pandemic and the conflict between Russia and Ukraine.
The Company’s operations and financial results could be adversely impacted by global events outside of the Company’s control, such as pandemics or other global health emergencies, or geopolitical conflicts and other social and political unrest or change.
The Company allocated the fair value of purchase consideration transferred to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values on the date of the acquisition. The Company identified that the acquired assets included customer relationships, which were assigned a fair value of $439 million using a discounted cash flow analysis.
AR Packaging’s results of operations have been included in the Company’s financial results since the acquisition date. The Company allocated the fair value of purchase consideration transferred to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values on the date of the acquisition.
Inflation in 2022 increased due to higher commodity inflation costs ($598 million), labor and benefits ($50 million), and other costs, net ($62 million). Commodity inflation was primarily due to external board ($173 million), mill chemicals ($128 million), energy ($110 million), wood ($55 million), freight ($44 million), converting chemicals ($40 million) secondary fiber ($31 million), and other costs ($17 million).
Commodity inflation was primarily due to external board ($50 million), mill chemicals ($38 million), factoring ($36 million), converting chemicals ($7 million) and other costs ($15 million), offset by secondary fiber ($55 million), energy ($40 million), freight ($27 million), and wood ($18 million). Interest Expense, Net Interest Expense, Net was $239 million and $197 million in 2023 and 2022, respectively.
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 Current Credit Agreement, which contains the definitions of these covenants, was filed as an exhibit to the Company's Form 8-K filed on April 1, 2021.
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 Current Credit Agreement requires that the Company maintain a maximum Consolidated Total Leverage Ratio of less than 4.25 to 1.00.
The higher costs in 2022 were due to higher commodity inflation costs ($598 million), labor and benefits ($50 million), and other costs, net ($62 million).
The higher costs in 2023 were due to higher labor and benefits ($96 million), other costs, net ($73 million) and commodity inflation costs ($6 million). Other costs, net include manufacturing supplies, property taxes, worker's compensation costs and other insurance costs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

10 edited+0 added−4 removed3 unchanged
Biggest changeNet Investment Hedge On October 29, 2021 and November 19, 2021, the Company drew the full amount of the €210 million delayed draw term loan facility and completed a private offering of €290 million aggregate principal amount of the 2.625% senior unsecured notes due 2029, respectively.
Biggest changeLong-Term Debt Principal Amount by Maturity-Average Interest Rate Expected Maturity Date In millions 2024 2025 2026 2027 2028 Thereafter Total Fair Value Total Debt Fixed Rate $719 $27 $960 $300 $1,125 $1,071 $ 4,202 $ 4,036 Average Interest Rate 2.34% 7.60% 4.05% 4.75% 3.87% 3.33% Variable Rate $20 $16 $978 $— $— $1 $ 1,015 $ 1,003 SOFR+Spread SOFR+Spread SOFR+Spread SOFR+Spread SOFR+Spread SOFR+ Spread Net Investment Hedge On October 29, 2021 and November 19, 2021, the Company drew the full amount of the €210 million delayed draw term loan facility and completed a private offering of €290 million aggregate principal amount of the 2.625% senior unsecured notes due 2029, respectively.
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, 2022, multiple foreign currency forward exchange contracts existed, with maturities ranging up to three months.
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, 2023, multiple foreign currency forward exchange contracts existed, with maturities ranging up to three months.
For more information, see "Note 1 - General Information" of the Company's 2021 Annual Report on Form 10-K for the year ended December 31, 2021. Natural Gas Contracts The Company has hedged a portion of its expected natural gas usage for 2023.
For more information, see “ Note 1 - General Information ” of the Company's 2021 Annual Report on Form 10-K for the year ended December 31, 2021. Natural Gas Contracts The Company has hedged a portion of its expected natural gas usage for 2024.
Realized losses of $48 million for the year ended December 31, 2021 resulting from these contracts are recognized in Business Combinations, Shutdown and Other Special Charges, and Exit Activities, Net on the Company’s Consolidated Statements of Operations.
Realized losses of $48 million for the year ended December 31, 2021 resulting from these contracts are recognized in Business Combinations, Exit Activities and Other Special Charges, Net in the Consolidated Statements of Operations.
The carrying amount and fair value of the natural gas swap contracts is a net liability of $12 million as of December 31, 2022. 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 in Shareholders’ Equity.
The carrying value and fair value of the natural gas swap contracts is a net liability of $7 million as of December 31, 2023. 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 in Shareholders’ Equity.
The resulting gain or loss is reclassified into Cost of Sales concurrently with the recognition of the commodity consumed. 38 Table of Contents
The resulting gain or loss is reclassified into Cost of Sales concurrently with the recognition of the commodity consumed. 36
The Company continuously monitors these forward exchange contracts and adjusts accordingly to minimize the exposure. 37 Table of Contents Deal Contingent Hedge On May 14, 2021, in connection with the AR Packaging acquisition, the Company entered into deal contingent foreign exchange forward contracts, with no upfront cash cost, to hedge €700 million of the acquisition price.
Deal Contingent Hedge On May 14, 2021, in connection with the AR Packaging acquisition, the Company entered into deal contingent foreign exchange forward contracts, with no upfront cash cost, to hedge €700 million of the acquisition price.
Those forward currency exchange contracts outstanding at December 31, 2022, when aggregated and measured in U.S. dollars at December 31, 2022 contractual rates, had net notional amounts totaling $111 million.
Those forward currency exchange contracts outstanding at December 31, 2023, when aggregated and measured in U.S. dollars at December 31, 2023 contractual rates, had net notional amounts totaling $131 million. The Company continuously monitors these forward exchange contracts and adjusts accordingly to minimize the exposure.
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 has previously used interest rate swap agreements effectively to fix the LIBOR rate on certain variable rate borrowings.
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 swaps to manage interest rate risks on future interest payments caused by interest rate changes on its variable rate term loan facilities.
At December 31, 2022, the Company had no outstanding interest rate swaps. The table below sets forth interest rate sensitivity information related to the Company’s debt.
At December 31, 2023, the Company had active interest rate swap agreements with a notional amount of $750 million expiring in April 2024. The table below sets forth interest rate sensitivity information related to the Company’s debt.
Removed
Long-Term Debt Principal Amount by Maturity-Average Interest Rate Expected Maturity Date In millions 2023 2024 2025 2026 2027 Thereafter Total Fair Value Total Debt Fixed Rate $— $713 $— $509 $300 $1,936 $ 3,458 $ 3,140 Average Interest Rate —% 2.41% 2.25% 2.04% 4.75% 3.23% Variable Rate $26 $39 $39 $1,285 $— $250 $ 1,639 $ 1,609 SOFR+Spread SOFR+Spread SOFR+Spread SOFR+Spread SOFR+ Spread — — Foreign Exchange Rates The Company has previously entered 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.
Removed
The contracts are carried at fair value with changes in fair value recognized in Accumulated Other Comprehensive Loss and gains/losses related to these contracts are recognized in Other Expense (Income), Net or Net Sales, when appropriate. As of December 31, 2022 and 2021, the Company had no outstanding forward exchange contracts.
Removed
As of December 31, 2020, multiple forward exchange contracts existed that expired on various dates throughout the following year No amounts were reclassified to earnings during 2022, 2021 or 2020 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.
Removed
Additionally, there were no amounts excluded from the measure of effectiveness during 2022, 2021 or 2020. The Company has not entered into any foreign exchange contracts in 2022.

Other GPK 10-K year-over-year comparisons