Good morning. My name is Rachel and I will be your conference operator today. At this time, I would like to welcome everyone to the Graphic Packaging Corporation third 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 Wednesday, November 5, 2008. Thank you. I would now like to introduce Scott Wenhold, Mr. Wenhold, you may begin your conference.

Thank you, Rachel. Good morning everyone and welcome to Graphic Packaging Holding Company’s third quarter earnings call. With me this morning are David Scheible, the company’s President and CEO and Dan Blount, the Senior Vice President and CFO. Before we get going I would like to remind everyone that statements of our expectations in this call constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such statements including but not limited to statements relating to decline in commodity prices availability of the Company’s net operating loss and statements regarding our performance and our ability to recognize $90 million of annualized synergies by 2010 are based on currently available information and are subject to various risks and uncertainties that could cause actual results to differ materially from the Company's present expectations. These risks and uncertainties include, but are not limited to, the Company’s substantial amount of debt, inflation of and volatility in raw material and energy costs, volatility in the credit and securities markets, cut-backs and consumer spending that could affect demand the Company’s products, continuing pressure for lower cost products, the Company’s ability to implement its business strategies including productivity initiatives and cost reduction plans, currency movements and other risks of conducting business internationally, and the impact of regulatory and litigation matters including those that impact the Company’s ability to protect and use its intellectual property. 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, I will turn this mornings’ call over to David.

Thanks, Scott. Good morning everyone. Thank you for joining us today. Arguably, we are operating one of the more challenging economic environments in history. It seems that on a daily basis there is growing investor uncertainty as well as elevated market volatility with a growing global economy inside the credit market. However we believe we are taking the necessary steps to navigate this environment successfully and position Graphic Packaging for long term growth. This morning I am going to start by providing you with a brief overview of our quarterly results. And I am going to walk you through some of the recent steps that we have taken to ensure that we stay ahead of our cost inflation while continuing to explore growth opportunities. Next I will discuss the synergies we realized from the combination with Altivity continuous to prove the cost reduction we made during the quarter. Lastly, I will conclude 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 quarter in greater detail. Once we have concluded our remarks, we will open up the call and look forward to answering your any questions you may have. Last night we reported a net loss of $0.04 per share. This compares to a net loss of $0.07 per share in the prior year quarter. The recent pull back in raw material prices did not occur in time to benefit third quarter result as we experienced significantly higher costs for energy, chemicals, fiber and freight. Higher pricing, continuous improvement, cost reductions and synergy achievement combined to offset some of the higher costs. I expect a decline in commodity prices to begin to benefit us in the fourth quarter. Despite…

Thanks, David. Good morning everyone. As David discussed in the third quarter Graphic Packaging made solid progress, as we grew revenues and delivered on integration synergies and cost reduction initiatives. These gains however, were more than offset by the challenging economic environment most significantly higher input cost inflation. In today’s national review first we will cover operational results in more detail and then we will turn to cash flow and liquidity. Before getting into the financials, a reminder, that in order to provide more of an apples-to-apples comparison, I will use adjusted pro forma financial results in my discussion. These results are the appropriate comparative ones to use as results here as if the merger was completed as of January 1, 2007; and include add backs for non recurring merger and integration charges. In third quarter of 2008 add backs totaled $7.4 million and relate to one time charges which include severance related to synergy delivery. As an aid in understanding adjusted and pro forma reporting, reconciliation tables are provided as attachments to last night’s earnings release. To simplify today’s discussion, unless I specify otherwise, when I refer to net sales in EBITDA, I will be referring to the pro forma adjusted numbers. Turning to third quarter results, first, we will discuss the drivers of the increase to net sales, then, we will bridge the change in EBITDA from the prior year period. Third quarter net sales is $1.166 billion or 3.3% higher than net sales from third quarter of 2007. Adjusting for the sale of the two CRB mills, real sales growth is approximately four percent. The $37 million sales improvement is primarily driven by higher pricing and improved volume mix. During the third quarter we realized total price improvement as $25.7 million as pricing improved in all business…

(Operator instructions) your first question comes from the line of Joe Stivaletti – Goldman Sachs]. Your line is open.

Hi, Good morning. I was just wondering if you could clarify on the comment you made about your expectation that you expect to offset roughly 70% of 08-09 cost inflation with higher selling prices. I think that is what you said. But what is that assuming in terms of [3234]

Joe if you look at our inflationary rate for input inflation this year, we are going to end up I think $140 million or so and we put year-to-date our pricing as recovering roughly $80 and by the end of the year probably, we are doing about $25 million this quarter, we will probably see a similar or another $20 or so in fourth. So if you look at the problem, we are covered roughly 60% and so if you look at our input inflation that would be next year on a go forward basis. Based on the ways things look, we would expect another $50 to $60 million worth of additional pricing recovery in 2009. Traditionally for us, what we try to do is offset our labor benefits inflation with continuous improvement sort of focused in pricing driven to try and recover input inflation. That is sort of how we are tracking the business this year and expectations for next year as well.

Thanks. I guess I was trying to understand if you were in that number allowing or expecting a decent amount of decline in your input cost when you look at things like energy for 2009

We certainly think, I guess it really is a tough market forecast for input inflations you will know. As Dan said, certainly we have seen a reduction in things like OCC, and we clearly have seen a drop in energy prices, you know hedging for next year is certainly below our current rate. Some of the chemical prices have come down. What is really tough to figure out right now are things like caustic soda. We buy 35,000 tons a year of caustic soda and last year we paid $300.00 per ton, and this year $1100.00 per ton. So you know the supply-demand economics suggest that caustic soda will be back more in line in 2009. But right now, I am hesitant to predict that. So what I would tell you is that we would certainly expect a dampening of our inflation cost as we head into 2009. But I do not think I am good enough right now to give you a forecast on how that is going to roll through. What I would suggest however is that our contracts are based on board movement and embedded inflation, and so they will continue to run through and continue to accrue pricing into 2009.

Thanks. The other question I had was you indicted Dan that the fourth quarter 08 EBITDA roughly would be in line with the prior year, I wondered if you had, if you could share with us the pro forma of 2007 fourth quarter, and also give us some indication of, you know what we see is market prices for the commodities and what not, but I did not know if you could describe the level of hedges, you know whether your hedge on gas or things for the fourth quarter is probably is below the current level.

Yes, the pro forma of 2007 EBITDA is about $123-$124 million, it is between those two numbers. So that is currently our expectation. And just to let you know, there is a lot of caution in that expectation due to inability to predict what inflationary costs are going to do. So we have embedded in our inventory the higher cost that we have used to produce that product, and you know we turned about six times so that is about two months of that higher cost of flow through. So right now we are thinking that it should be around that $123 million for the fourth quarter. And then in terms of hedging going forward, we have had 75% of our expected gas requirements for 2009. It is going to be higher in the first quarter; it is going to be in that $10.00 range and will taper down into $9.00 for the remainder of the year. So I think if you use about $9.00 or $9.50 mark for average for the year, that is currently what we are hedged at; and I just want to repeat that the 25% of our need is floating right now. And we will look for hedge opportunities with that 25%. As soon as we become more certain that we are going to actually use as much natural gas as we projected.

Your next question comes from Bruce Klein - Credit Suisse

What was the debt reduction. That was at 4Q thought for $110 to $130 million incremental debt reduction?

That is right. And the way we are tracking our debt reduction is from the merger debts, merger date forward, so we are talking about March 10th forward; because as you know there was a lot of activity in terms of other types of merger related payments prior to that date. So that is from March 10th forward $110 to $130 million.

It is from March 10th, it is not from the third quarter?

Third quarter would be approximately in the $90 million range in terms of cash generation, I mean the fourth quarter would be about the $90 million in cash generation.

So about $40 million or so in this quarter, the third quarter and an additional $90 million will give you a full year of roughly $130 million since March, is the way we are looking at it.

You look at net debts, net debts is going to be about $3 billion.

I understand. And then cost inflation versus cost savings, I guess there are a lot of cost savings numbers I found floating around that maybe was not totally clear to me, you know I was the only one, but what you said cost inflation was I think you said $140 million right for 2008; and in terms of what we sort of realized in 2008 in terms of cost savings, could you help with that so we can square what maybe the negative variance was. I know you are recovering a lot in price which is a separate topic but is there cost saving that you are actually realizing between the three bucks because I think you said was all Legacy GPK and Altivity and the combined company. Am I thinking about that right or is there a different way you advisors are thinking about it?

I think that what we said was, year-to-date our combined continuous improvement about $52 million and we are getting about $15 a quarter or so, so that ends up being about $65 million or so for the year and you have to add to that what we believe is to be our total actual synergies that we will capture this year which is a roughly $10 million, so you sort of get your full year impact of cost reduction $75 million or something like that, in that range. In year-to-date, we have the $52 million plus the $6 million, so roughly $60 million, right, a little less than that maybe.

Year-to-date $160 million of inflation cost of production. I think, right…

I was trying to compare cost savings you realized in 2008 versus cost inflation..

And so that is the cost reduction and cost inflation; as Dan said year-to-date is roughly $160 million and that includes all inflation, so that includes not just import inflation but labor inflation as well.

So it was a good mismatch for at least 2008. I mean loss inflation far exceeded like $80 million or something.

If you are looking at pure cost, right. That is why you really have to look at the price and cost relationship rate. The price cost reduction in relation to the inflation cost and pricing got at $82 million year-to-date….

So Bruce just to summarize, if we got an inflation of $160 million, and cost reduction is around $91 million year-to-date… that is what it says here.

No. It is about $52 million plus about $7 million, is about $65 million of combined and $82 million of pricing. And that is the way it works out year-to-date.

And remind us how much OCC you buy in a year.

We make about 850,000 tons of CRB, so if you combine OCC mixed paper and all that it is going to be roughly 850,000 tons of OCC and waste paper annually.

Right

Annually, and that takes out the two mills that we sold. So that is a run rate sort of number, okay?

Okay. I got it. And then the contracts that are, I guess when we think about the percent of your business that is up, in 2009, remind us, you know, a lot of the contracts that used to be medium term in length and now they are a lot shorter in my understanding, so how much of your business I guess is up in 2009. How do we think about that?

I have not really looked at that, we had a pretty heavy activity year for contracts in light of the merger, so it is going to be a much lower kind of percentage that what we saw in 2008. I will have to get back to you because I do not have at my fingertips what is the total numbers. I will tell you that from a business standpoint, we do not have mill beverage contracts for example or they will be up at all in 2009. Most of our major national account businesses in consumer products have been renegotiated and extended because of the merger because some of those would have expired by virtue of that. So it was going to be a pretty low year for contract renegotiations.

In terms of the contracts in the past, are they working sort of better than you thought, or worse than you thought?

I like these contracts better than the ones that they replaced, because if you remember, the ones that they replace were either get back contracts or no escalators and of course today, all of our contracts have some form of reset or escalator clause. So they are working much better and that is why we have $82 million worth of price recovery. If this quarter, we get, pricing improvement this quarter was 2.3% across our businesses, I know you can remember back in the days we were giving 1% average on back. So if you sort of think about the delta in our business, I realize some was driven by the inflationary impact, but in the past regardless of the input inflation was, we would have been eating all that so clearly I like this trajectory better.

Last question, are there any Legacy contracts that had those not as favorable positions or recover? Are there any left in '09 or they are gone?

We took care of those actually earlier this year, I think the last was in March or April this year, something like that.

Your next question comes from [Sandy Burns] [44.48] - KBC Financial [Sandy Burn] - KBC Financial: Just in looking at the segment information if you take the paperboard packaging segment revenues divided by tons sold, as an approximation for average realization, it looks like it is actually down both sequentially and year-over-year. And you have talked about the positive impact of pricing on your results, can you may be give a little color on what may be driving that as a product mix, you know the mix between the mill and converting businesses, maybe other issues at play there as well?

Well, our mixed clearly, as I mentioned our mix has clearly been changing because we have been integrating more internally. We buy outside roughly 150,000 tons of other boards that we do not manufacture and some of those businesses are honestly they are SBS based so it is a higher average board price and we have systematically exited that. So you do year-on-year comparison in the middle of a merger for that kind of thing is probably not a very good metric relative to overall. Now what I will tell you is that our growth in our core businesses, so our integrated board business was up 7%, so if we look at the business for us in food or that integrated portion that we want to do, that business is up significantly. But you have to net that against past businesses that we have exited, either here or global. Our mix include a fair amount of business that we do in Europe and outside and a number of those export forward markets, in light of the inflation of the impact of the businesses we have exited. So too much mix probably do that math. [Sandy Burn] - KBC Financial: Okay. Thank you. I just have a question, in terms of starting to think about 2009 any range you can give us on what CapEx might look like as well the Pension contribution especially given what is happening in the financial markets.

Yes, if you look at the CapEx, we expect it to be about the same level as 2008 and that is $200 million range. And in terms of pension contributions, we have looking at that and there are a couple of sides to that formula, but in any event we are thinking about somewhere around $60 million in terms of contributions, which is approximately a little bit higher than what we made this year, but it is in the same range. [Sandy Burn] - KBC Financial: Okay great. Last question; you have talked a little bit about the merger synergies and how it is progressing, I was wondering just maybe if with a little more detail we can talk about any positive and negative surprises you have found since you have really been able to go into the Altivity operations and what is your findings there in terms of what you may be able to do. And just given the slow down in the economy and likely in volume, does that impact you that the timing or magnitude of some of the benefits that you had expect to see at least in the short term.

What I would say is that if you look at the acceleration of our synergies versus what we thought when we did the original; we are certainly ahead of schedule, and that is really attributed mostly by virtue of the fact that as we looked at the combined companies we actually saw better damages than we thought. So a number of the Altivity plans are doing really well, and we are able to sort of use that lower cost structure. What I would tell you on a forward basis is that we are not walking off from any of the integration numbers we have seen at all. I would like very much the trajectory in that business. You have got to remember 80% of our businesses on a combined basis are in food and beverage, right. And so what I would say those businesses are not recession proof. I do not think there is a business that is recession proof. But certainly we have seen better insulation in that because we are basically with the staples in, so we are in cereals, in breakfast bars, and beer. And so what we are seeing are continuous strong demands and our backlog and our sales are solid as we move into the fourth quarter in those sectors. The softest we have seen in our volumes has really been what we consider as our non-core business or to some extent businesses that we have exited. We have shut down our label business in St. Charles, we have certainly seen a volume decline in that business, but that was not a core business for us to begin with. So in the businesses that we are counting on to produce volume in sales next year, at least right now we feel good about that focus in food and beverage.

Your next question comes from Bill Hoffman - UBS Bill Hoffman – UBS: Good morning. I was wondering if you talked a little bit, you went through pretty quickly about the folding carton operation that you have shut, and or rationalize etc, if you could just help give us some color on where you are from an integration standpoint, like how the business is operating at this point.

The plant closures are slightly ahead of schedule; for example on our original list, the Smyrna, Tennessee was not part of the list but as we looked at the integration activity, what we found was we were getting much better productivity in some of the plants, both Legacy Graphic and Legacy Altivity which, you know Bill in this environment made the most sense to say you know what, keeping a marginal plant or a higher cost plant open just made no sense. We had no real belief that volume was necessarily tick off or increase significantly so we sort of accelerated that. We are doing the same thing across a number of other facilities. We are continuing to evaluate a number of these facilities. I did a number on the investment of the Kalamazoo so $27 million in Kalamazoo investment is not going to expand that plant materially. 240,000 tons I think I said of paperboard is coming right from the mill. With that acceleration and once those presses gets installed there it is quite possible that we will end up running that more effectively than we planned; and if so what will happen then is higher cost facilities, running products that we can make there will come out of the mix. We have a view of what those facilities might be today, but honestly it could change in the light of what that productivity has increased. The integration teams are ahead of schedule and what that means is we are getting all these products transitioned at a much faster rate and so we are getting more efficiency in the actual printing and cutting these cartons, which means that we need to balance our converting capacity. If we do not need the plant or the capacity Bill, we are just taking it out of service. Bill Hoffman – UBS: Right. And have you quantified your target integration level and have the business operate that way?

You mean from integration like from a board capacity standpoint? Bill Hoffman – UBS: Yes.

Well, we do not use a specific target for how many tons we are going to sell internally versus externally. What we simply do is we balance the book of converted business that we want. We certainly want to be in cereal, we want to be in pizza, we want to be in dry foods and so what we do is we lay that entire business out of cross those presses and then we blow that back to our board mill. And so for the grades and the cuts that makes sense in our board mill, then we will make those things internally. To the extent that we have products that we need to buy that really do not fit our internal structure, we will continue to buy on the outside. And that is across a number of grades. Today, in realigning, as I have said earlier we have integrated 45,000 tons of boards that Altivity bought on the outside before. But that does not mean that we do not continue to buy, it is just that what we buy is not a good mix for our mill system. And that is the way I will balance it, so our integration level is not the target, I think our integration level has probably run 80% or 85%, but I do not use that as my target, what we target is what board makes sense for us to convert at the lowest cost within our facilities and then we buy the rest of it. And then I guess the final comment on this, if it makes no sense at all, in other words, if we do not have the right to compete in that space and there are some spaces we do not, whether it is converting our board, then we will just exit that space. And we have; as I mentioned earlier, our Richmond facility closing, that business was very much dedicated to tobacco. But we did not really have a good solid position in converting or in board in that business so essentially we exited that business. So when you start doing some comparators relative to average EBITDA per ton it is a bad comparative because it looks high on the outside but in reality the contribution was pretty low. So it is a non-integrated play we cannot make money doing it, and we sort of exit the business; and that is how we are managing the mix for both board and carton. Bill Hoffman – UBS: Thank you, that is helpful. The second question is this price increase initiatives and what kind of response you are getting from the market. Given the time of the year one when obviously you will get some seasonal demand, obviously less so in consumer beverage, the demand is softening here and we are also seeing a pullback in most of the cost whether they be freight, chemicals, energy, etc. what kind of pushback are you getting on the pricing initiatives?

I rarely get a letter from all my customers telling me thanks for the price increase so we will start with that. On the other hand, you have got to remember that our customers, they honor their contracts as we honor ours; and as we got behind the curve in some of the inflationary impacts, we honor that but when it changes, they do as well. So, some of you will get some margin improvement if raw materials continue to drop and if pricing will not necessarily follow that. I think the key thing for Graphic Packaging as Dan said is that we need to make sure that we are not making products we cannot sell. As we look at paper machine number two CUK board, off of that machine, we made, I think we used roughly 40,000 tons of board in 2008 of that machine. As I look forward we just say we do not need that demand so we are shutting that machine down and so that will help sort of balance what we are doing appropriately from a working capital standpoint. Our operating rates are much like the industry on CUK and CRB we are in the upper 90s, on those board substrates right now. And that seems to be where the market is. And while there is certainly a demand drop, it is not necessarily in some of this food based products. Right now ready to eat cereal is still growing. It is still a better deal than eating out on the way to work. So that volume continues as we look to the fourth quarter to be solid, as does pizza, beer and those kinds of structures. Bill Hoffman – UBS: Right, thank you I appreciate that. And then I guess this is the final question. With regards to the mills that you sold, can you give us an indication what the EBITDA generation of this? Some idea of the valuation that came out of that.

I think David talked about the cash received in terms of the EBITDA; for most mills, based on the current run rate in 2008, we expected them to be around $10 million for the entire year. Bill Hoffman – UBS: It seems like a pretty low multiple

Well I do not know how to factor a low multiple for a business that is sold under DOJ restrictions, I mean it was not as if it was open auction that allowed us to sort of think through the process. We sold it because it was required by the Federal Government to close the merger and we did that. And so what I will tell you is that we have an ongoing supply agreement with them, we are glad to get the assets sold so that we can consummate the business. I will tell you we like the four CRB board mills that we have left in our business; if you think of Kalamazoo, Middletown, Battle Creek and Sta. Clara, if you look at the average cash cost of making CRB in those four board mills, I am pretty sure that by far we are the average lowest cost in the entire industry. So taking Philadelphia and Warbash out of our mix from an overall cost standpoint did not hurt us by any means. Bill Hoffman – UBS: Thanks, it is shame to see those unintended consequences.

That is the price of the addition.

Your next question comes from [Beau Hunt] – Bank of America. [Beau Hunt] – Bank of America: Hi guys. If you would, I would like to talk a little bit more on the contract, in particular, I am wondering, how long does it typically take to realize price increased from contractual pass throughs and inflationary costs, it differs by contract. But I would just like to get a feel for the average there.

In many ways you answered your question, it does depend on individual contracts not only when the escalators go through but on what products; it also talks about when is the expiration of that contract or the next period for that contract may occur. But if you look at what we are doing, we are averaged, year-to-date we are $82 million on pricing recovery. And in this quarter, I think Dan said we are roughly $25 million right so you can sort of see an accelerated rate in that process but I think for the most part, it sort of smoothens out the business from a pricing standpoint. And as we said earlier, I will expect interior overpricing probably another $50 to $60 million in pricing just based on just what we sort of know now. Having said that, with everybody, all the lawyers in the room, the answer is I do not know what the economy is going to do and I do not know where inflationary will go exactly but that is roughly my over-the-trenche sort of the look on pricing for what I know in '09. Beyond that I do not really know how to lay it out any better. [Beau Hunt] – Bank of America: Okay. So there is not a specific, you know we have not [5911] the triggers at the end of the March 31 quarter and three months later we have XYZ price increase. That is not the way it works.

Generally not; I mean generally it is based on previous board price movement or reset for some economic figure and when that calendar time hits it, it goes up; a board price increase that rolls through that with the reflected. And it rolled throughout the percentage of the cost of the board and you know all sorts of different escalators. As many contracts as we have, we have different levels of escalators. Every customer has his own preference in the process. I think in most cases you end up at the same place but nonetheless it is sort of all over the map. [Beau Hunt] – Bank of America: Okay, I understand. And when commodity prices are falling you do experience the exact same lag time, you know, you get to enjoy the full benefit of the decline?

That is right. [Beau Hunt] – Bank of America: Does it work out generally, you know I have spoken before about expecting the recovery level was 70%-80% of your 08-09 cost inflation, do your contracts generally call for a partial pass through over time or is it a 100% pass through over time; it just takes a while to fully reflect itself.

Again every contract is different and that is why we are saying you know it all really depends, on which raw material is going up or how that structure is, whether it is based of board movement or direct inflation; some of them are based on economic expansion, GDP deflators and so forth. So what I would say, is typically from input inflation, will eventually get it, but it takes a while. [Beau Hunt] – Bank of America: I should have known better. And then just a last thing on this, roughly what percentage of your contracts would have on that pass throughs and in case contracts do not, do they tend to behave roughly the same except it is more of a negotiated base?

Really I do not know of any contracts that we have that do not address escalators. If we have a contract, that is one of the reasons we have it right and so and a majority of our business is under contract, then the pricing is done almost on a transaction basis, on an order by order or shipment by shipment basis. That is a small percentage of our business as you can imagine, we are not doing business with Kraft or General Mills or Anheuser Bush on a call it up and we will price an order, but in some of the smaller businesses, it tends to be transaction based.

Alright Rachel, I think we are going to end it there.

Okay.

I want to thank everybody for joining us on our third quarter call.

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