Good morning. My name is Mendy and I will be your conference operator today. At this time, I would like to welcome everyone to the Graphic Packaging Holding Company’s second quarter 2008 earnings release conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer period. (Operator instructions) As a reminder ladies and gentlemen, this conference is being recorded today August 7, 2008. Thank you. I would now like to introduce Scott Wenhold, Vice President and Treasurer of Graphic Packaging. Mr. Wenhold, you may begin.

Thank you, Mendy. Good morning everyone and welcome to Graphic Packaging Holding Company’s second quarter earnings call. Commenting on results this morning are David Scheible, the company’s President and CEO and Dan Blount, Senior Vice President and CFO. Before we get started I would like to remind everyone that statements of our expectations including but not limited to the achievement of synergies and debt reduction, pension contributions, capital spending, interest expense and integration expenses constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from the company's historical experience and its present expectations. These risks and uncertainties include, but are not limited to, inflation of and volatility in raw material and energy costs, the company’s substantial amount of debt, continuing pressure for lower cost products, the company’s ability to implement its business strategies including productivity initiatives and cost reduction plans, currency translation movements and other risks of conducting business internationally, the impact of regulatory and litigation matters and the company’s ability to fully integrate Altivity Packaging, and fully recognize the anticipated benefits of combining the operations of Graphic Packaging International Inc. and Altivity Packaging. Undue reliance should not be placed on such forward-looking statements as such statements speak only as of the date on which they are made and the company undertakes no obligation to update such statements. Additional information regarding these and other risks is contained in the company's periodic filings with the SEC. With that David, I’ll turn it over to you.

Thanks, Scott. First, I need to apologize for my voice this morning. I have been battling a tough cold and this is about as good as I can do this morning. I want to thank you all for joining us today. This morning I would like to begin my remarks with a brief overview of our consolidated results for the quarter, next I am going to comment on the impact of rising raw material cost and the steps that we have taken to ensure we stay ahead of this cost inflation. Then I will talk to you the progression of Altivity integration and the synergies that we have seen after just one quarter. Finally, I will close my remarks with review of our key segments and their performance in relation to general industry trends. Following my comments Dan Blount our CFO will walk you through our financial results for the period in greater detail. Once we have concluded our remarks, we will open up the call and look forward to answering your questions. Last night we reported adjusted net income of $0.01 per share compared to a net loss of $0.11 per share and a pro forma net loss of $0.07 per share in the prior year quarter. I am encouraged by our performance during the second quarter especially given the difficult operating environment, increased pricing, solid new product commercializations, benefits from our cost-cutting initiatives and achievement of integration synergies all contributed to more than offset the negative impact of cost inflation. This is the seventh quarter in a row that we have reported increased operating income versus the prior year period and our position in the marketplace is strengthening. As I had mentioned, Dan will discuss the financial results in more detail. In order to give you more of…

Thanks, David. Good morning everyone. Before I start, I would like to remind everyone that this is our first full quarter reporting combined results with Altivity. As we discussed last quarter, financial statements solely prepared in accordance with GAAP are not conducive to evaluating the financial performance of recently merged companies. Specifically our GAAP results do not look for run rate performance very well because they include non-recurring transaction cost and Altivity results only from the March 10, 2008 closing date forward. In addition our GAAP comparison to prior year is not very meaningful since it only includes legacy Graphicresults. To aid in understanding year-over-year financial performance, we prepared pro forma financial results that assume the combination with Altivity had been completed as of January 1, 2007. We believe the pro formas give us an apples-to-apples comparison to the prior year. We will use these pro formas to better guide us in our discussion of Q2 and year-to-date financial performance. Also as part of today’s discussion, we will reconcile the pro forma results to the GAAP results so you will be able to clearly tie out the source of our adjustments. As a further aid, reconciliation tables for our justice and pro forma results were provided as attachments to last night’s earnings release. Now after the operating performance review, we’ll provide comments on synergy delivery, cash flow, and credit agreement compliance. First, a couple of comments about the preparation of the pro forma financial results. We used audited financial results from both Altivity and Graphics to prepare the pro formas that combine 2007 company results. The year to date 2008 results are also prepared pro forma to include Altivity results prior to the February 10 closing. Pro forma comparisons will include both revenues and EBITDA. Now before moving to the…

(Operator instructions) your first question comes from Vic Kumar from South Coast Partners. Your line is open. Vic Kumar – South Coast Partners: Hi guys, great results. Just wanted to ask about the interest rate swap that you guys mentioned in the press release and in the call earlier, what exactly is that and what is the expectation on that going forward?

What happened there is we inherited about $550 million interest rate swap from Altivity during the merger of the two companies. We did not get hedge accounting on that swap during the first quarter and that caused us to have to market to fair value and that resolved in $11 million gain for the quarter from the fair value mark to market on the swap. Since that time, you will not see a mark to market as we are qualified for hedge accounting on that particular swap, so it will not really impact financial results going forward. Vic Kumar – South Coast Partners: So, it will just be hedging your interest expenses going forward?

Yes, it hedges the great expenses going forward and since we get the hedge accounting, the mark to market will go through equity rather than through P&L. Vic Kumar – South Coast Partners: Got it. Then the last question I had is what are your thoughts now that on the total I guess integration expenses to get everything integrated and to achieve your synergies over the next couple of years?

As we put out, overall we had guidance of about I think in terms of overall CapEx it was about $200 million this year. We expect spending next year to be in about the same range and then we will come back in 2010 to more of a normalized range to $150 million to $160 million for CapEx. So, overall in terms of CapEx, that increase that we are experiencing is really the result of integration type activity.

This is David Scheible. You may have seen our announcement on the Kalamazoo expansion for example. We spent $27 million in that facility that will allow us to consolidate a number of other facilities, moves and process and create a much lower cost overall carton facility and that is really where a lot of – those are the kinds of projects that we are spending, in fact, that’s probably the single biggest CapEx project we have relative to integration plans. So, that is one of the reasons we did it first. Vic Kumar – South Coast Partners: So, that is the CapEx, what about I guess through the P&L, are there any additional expenses to think about or?

Yes, there are going to be additional expenses to the P&L. We have done it in two ways. In the purchase accounts, we were able to put some reserves up from shut down in some of the Altivity locations and that if it impacts really our Graphic Packaging legacy location, it will flow through the P&L. But if you look at those overall numbers, there is going to be an impact, I would put out a number of $30 million to $40 million from those activities. Also what we need to consider when we talk about the cash impacts is when we exit a location that creates a location that is available to be sold so we should have some additional cash from really sale of our plant locations going forward as well and additionally we should have benefits from working capital reductions at the same time. So, I don’t think the $30 million to $40 million will translate into actual cash reduction going forward, I think it will actually be up when we consider all three of those components. Vic Kumar – South Coast Partners: The working capital and –

And the sale of the plant locations that we are vacating. Vic Kumar – South Coast Partners: Okay, those are my questions, thanks guys.

Sure.

Your next question comes from Mark Kaufman from MLK Asset Management. Your line is open. Mark Kaufman – MLK Asset Management: Hi, I was just wondering if you could comment on the Inbev and Anheuser-Busch combination and how that might impact you or what opportunities you might get from that?

Well, I won’t certainly talk much about Inbev and AB specifically for what they are doing but Inbev is a large company of ours in Europe, AB is an important customer here. Really, if you look at our beverage business in the last three years, we have seen nothing but a number of combinations SAB acquiring Miller, Molson Coors and then now SAB, Coors Molson and in every one of those combinations we fared pretty well. As Dan said in his results, beer volume, take-home volume was up. Our mix has improved in that space. So, overall, the consolidation in that space has been a positive for Graphic Packaging, I see no reason why the Inbev and Anheuser-Busch combination won’t be the same thing. Mark Kaufman – MLK Asset Management: Thank you.

Your next question comes from Kevin Doherty [ph] from Prospector, your line is open. Kevin Doherty – Prospector: Hello, how are you? Congratulations on the quarter.

Thank you. Kevin Doherty – Prospector: Just wanted to talk a little bit more about the nature of the contract resets next January, how do those work on average and what percentile of overall inflation would you expect to be captured at that point?

I won’t talk about individual contracts, tell you in general, the escalator process is really made of a couple of different ways. Some of them are directly through board inflation, so as board prices move up, being as board is over 70% of the total cost, they tend to drive the escalators of the reset. Some of the more recent contracts are actually built on cost so as our actual costs go up for fiber, energy or chemicals, then with the lag as the number reset then the customer – we translate that into increase in the selling price. As Dan said, this year we are averaging a little over 50% recovery of our inflationary impact and the primary reason is because it is really sort of unprecedented to see the kind of inflation impact we have had in a single year. So, the contracts are really aimed towards sort of – as inflation rolls up one year it looks basically the same as the following year and therefore you get a high level of recovery. This year we are only going to see about 50% but as Dan said, by the end of 2009, we will see over 70% of the inflationary impact that we will see in ’08 and ’09, we are covered through pricing. Then with continuous improvement result in synergies, you would expect the overall margins to improve as EBITDA in the year to date is sort of an indicator of where the inflation will be rolled through our business and price recovery. About 70% of our business is under contract, some sort of a long-term contract. That number for those of you that call legacy Graphic is down in the past we were well into the mid 80s. So it has changed a little bit, that means more of the business is open or it is done on a transaction basis or it is more open market board which tends to be not under a contractual environment. So businesses like Multi-Wall Bag and some at the open market tend to recover prices faster. We will have to sort of see what the experience is for that because some of that is obviously new for this management team. Kevin Doherty – Prospector: Thank you.

Your next question comes from Jeff Harlib from Lehman Brothers, your line is open. Kishore – Lehman Brothers: Hi, this is Kishore [ph]. Just had a couple of confirmations, the $110 million to $140 million free cash flow number you gave, is that after CapEx and the asset sale proceeds, can you please confirm those?

You want me to repeat the numbers? I didn’t understand you completely. Kishore – Lehman Brothers: Yes.

Okay. The guidance I gave is $110 million to $140 million for the year in terms of debt reduction. Kishore – Lehman Brothers: That’s after CapEx

After CapEx, that’s correct. The numbers we gave for the asset sale was a sales price of $35 million, $28 million will come up on the closing day we expect that to happen in 2008 and $7 million will come about based on an earn out formula that could go out as long as two years. Kishore – Lehman Brothers: Okay, thanks.

Your next question comes from Ashwin Reddy from Vernor Capital [ph]. Your line is open. Mike Ortel [ph] – Vernor Capital [ph]: Hi guys, it is Mike Ortel. Quick question, just on your $90 million of synergies, can you talk a little bit about kind of if that number could actually be exceeded and in the past if you have ever, when you did kind of Riverwood graph how that went down from your original guidance to where you ended up?

As we reported already, that $90 million was originally expected to be achieved by 2012. So, we’ve accelerated the achievement to almost two years. Our experience in Riverwood Graphic combination was that we did in fact exceed our external synergy targets. It is somewhat a different market at that point in time. We certainly were dealing with a $120 oil and $11 natural gas but I will tell you if you look at where our synergies are coming from, some of them are in purchasing and a number of them in overhead reduction and also plant rationalization. Those synergies have been very solid and in fact they have been accelerated. As we have combined the two facilities, the two companies, there is a lot more overlap in manufacturing capabilities in this merger than there was in Riverwood. So, what we are finding is we are operating those plants more efficiently than we originally expected which allows us therefore honestly to operate less facilities than we originally expected. So, some of the synergies will come from accelerating plant closures and potentially additional plant closures that originally we thought we might need to operate but based on operating metrics we just will not need to. So, I feel good about the synergy number and the acceleration that we are seeing right now. Mike Ortel – Vernor Capital: How much did you exceed the synergies back at the last transaction from the original amount?

We exceeded it by a substantial amount, at the last transaction it was closer to double actually. But if you look at the way we actually run the synergy program, first off, the $90 million is at the low end of our synergy range and I think we have told you that before. Secondly, the way we operate this, we have a huge pool of synergy opportunities from which to pick and the $90 million is the projects, are really in process at this point. So, can we go above the $90 million, the answer is definitely yes, and the other guidance we will give you on it is the $90 million is really at the low end of our range. Mike Ortel – Vernor Capital: One more question for you guys. Dave, we had talked to you guys about just kind of the transition from kind of the cardboard containers that were holding beer bottles to kind of the CUK packaging and just kind of increasing just overall volumes and market share because of that, do you think you could talk a little about the progress for that, kind of how you foresee that continuing over the next couple of years.

Certainly we made progress in this quarter. Of course it is interesting because when we started all the projects before, Graphic Packaging only made CUK products and didn’t make, as you said, the corrugated construction. But of course one of the manufacturers of some of that corrugated volume ended up being Altivity. So, we sort of had an improvement in mix and an improvement in gain on the CUK side but that business in corrugated part of it was in our mix, so we sort of swapped that out. But I will tell you what we are seeing in the trends that I mentioned is the plastics right now both films and other core petrochemical based plastic alternatives, we have seen a much higher rise in their cost and ours too from that perspective. We buy a lot of films and (inaudible) and that side of our business has seen unprecedented increases. So, what that translates into as you are seeing more demand in fiberboard, as customers are looking at transitioning from plastics to fiberboard, I mentioned in my comments that even in Latin America, which has traditionally not been a huge fiberboard market certainly in beer, you are starting to see new packages show up in fiber. So, I think our trends are going to be really more around fiberboard transition from film as far as a long-term driver versus just sort of moving from corrugated to solid fiber. I did mention in the quarter that outside of beverage and Z-flute, we saw additional transitions and that is basically the same phenomena, that is moving from a corrugated, laminated structure to a Z-flute, which is a solid fiber and we had great progress in that. So, that trend continues but I think at this point in time we are also seeing the underlying trend of plastics being incrementally disadvantaged if you will to fiberboard inflationary impacts. Mike Ortel – Vernor Capital: Just finally, can you just repeat a few, if you have already done so just the capacity utilizations you are seeing in CUK and CRB right now?

You mean ours – actually our CUK mills are pretty tight from a capacity standpoint, our operating REITs are well in the upper 90s. In our CRB mills, in light of some of the capacity take-outs that is occurring and customers adjusting for that, that capacity utilization has also moved up dramatically. I am encouraged by CRB because lead times are going out, backlogs are building but we will watch that pretty carefully as we go into the second half of the year. I am certainly not declaring victory on the CRB side of the equation but our (inaudible) has been very, very strong. Mike Ortel – Vernor Capital: Thank you.

Your next question comes from Vic Kumar from South Coast Partners. Your line is open. Vic Kumar – South Coast Partners: Hi guys, I just wanted to ask a follow-up question which is I guess I want to get a sense for your contracts, let’s say inflation in 2007 had been similar to 2008, what sort of percent of inflation would be covered? I know this year you said it will be 50% because inflation is a lot higher but I want to get a sense for what they are in a normalized basis if inflation is similar from one year to the next?

If you crack our results over the last couple of years, we are seeing increased recovery from pricing. We used to really in many – back in 2004, 2005 time we actually had price reductions and inflation going up so our recovery was well below 20%. We have been averaging over 50% the last couple of years and is down going forward. We think by the end of 2009, we will get over 70%. So our price recovery is accelerating with the new structure in those contracts. Vic Kumar – South Coast Partners: So do you think of 70% as sort of normalized to what we should expect going forward?

You know, talking about normalized is difficult in this environment. So, what I would tell you, based on what we think our inflationary impact that’s a good number. But oil is $120 today, was $147 and I have got people telling me it could be $200. So, it is really difficult to hound [ph] in what I would say is right now, based on what we believe inflation will do, we are looking at 70% plus recovery of our inflationary cost in pricing by the end of ’09. That’s about as good as I can do at this point. Vic Kumar – South Coast Partners: Does that assume something like oil going up to $200 or –

No. I am planning my business on $200, but I am certainly recognizing where oil has been and recognizing that we have to be able to deal with oil at elevated prices. Vic Kumar – South Coast Partners: Okay. Thanks.

At this time, there are no more questions.

All right, Mendy. Thank you everyone for joining us on Graphic Packaging Holding’s second quarter earnings call. Thank you.

This concludes today’s call. You may now disconnect.