Good morning. My name is Molly and I will be your conference operator today. At this time, I would like to welcome everyone to the Graphic Packaging Holding Company first quarter 2009 earnings 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, Thursday, May 7th, 2009. Thank you. I would now like to introduce Mr. Scott Wenhold, the company's Vice President and Treasurer. Mr. Wenhold, you may begin your conference.

Thank you, Molly. Good morning everyone. Welcome to Graphic Packaging Holding Company's first quarter 2009 earnings call. Commenting on results this morning are David Scheible, the company's President and CEO, and Dan Blount, the Senior Vice President and CFO. I would like to remind everyone that statements of our expectations on 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 debt reductions, targets, declines in raw material and commodity prices is expected to reflect on the company’s results, additional synergies from the Altivity transaction, consumer purchasing trends, pension contributions, and the performance of our Multi-wall Bag business 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, cutbacks in consumer spending that could affect demand for the company's products, continuing pressure for lower cost products and the company's ability to implement its business strategies, including productivity initiatives and cost reduction plans. 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. David, I’ll turn it over to you.

Thank you, Scott. Good morning, everyone. Thank you for joining us today to discuss our first quarter results. Arguably we are operating in one of the more challenging economic environments in history. Seems on a daily basis, there is elevated market volatility in the global economy entire credit markets. With that as the backdrop, however, I believe we have performed very well taking the necessary steps to successfully navigate this environment, 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 including progress on the synergies we realized from the combination with Altivity. I will conclude with a review of our key business and their performance and then I will provide some insights into our future direction. Following my comments, Dan Blount, our CFO will walk you through our financial results for the quarter in greater detail. Similar to our practice last year, we will include comparisons to the 2008 first quarter results restated on our pro forma basis, assuming the acquisition of Altivity that occurred on January 1st, 2008 and excluding the results for the two divested mills. This will give you a more apples-to-apples comparison between the periods. Once we have concluded our remarks, we will open the call and look forward to answering any questions you may have. Last night, we reported results for the first quarter of 2009. A quick recap shows that due to the slowing global economy and continued de-stocking of our customers, our pro forma sales decreased by about 7% year-on-year on lower volumes. The majority of this decline was in our Multi-wall Bag and Containerboard businesses as they were buffeted by the downturns in the construction and general economy. However on a more positive sign, sales to our…

Thank you, David. Good morning, everyone. David discussed the economic challenges and provided a brief overview of our quarterly results. I am going to walk you through a more detailed review of our first quarter results. As we move through the numbers, what will become clear is that our volumes held up well. But more importantly, on the strength of the synergies realized from the Altivity transaction, our cost structure improved. We delivered greater EBITDA on lower sales and we accelerated cash generation. To simplify today’s discussion, unless I specify otherwise, when I refer to net sales and EBITDA, I will be referring to the pro forma adjusted numbers, which provides an apples-to-apples comparison of operating performance to the prior year. A reconciliation table detailing the pro forma adjustments is included as an attachment to last night’s earnings release. Turning to results, first of all, I will cover the change in net sales then bridge EBITDA to the prior year and end with a review of cash flow. First quarter net sales at $1.19 billion were $77 million or 7% lower than the prior year. The change in net sales is broken down as follows. Pricing improved by $24 million or 2.2%. We realized pricing as a result of contractual, inflationary recovery and year-over-year increases in open market board pricings. Volumes, lower volumes resulted in reduced sales by approximately $92 million. The majority of this decline almost 60% was attributable to softer demand in construction, industrial plastics and corrugated markets. The largest volume declines were in our Multi-wall Bag segment and in Containerboard open market sales. Sales in our core food and beverage markets held up well as volumes were off only 3%. As we expected, our concentration in food and beverage demonstrated strong recession resistance. The remaining sales change…

(Operator instructions) And your first question comes from the line of Joe Stivaletti with Goldman Sachs. Joe Stivaletti – Goldman Sachs: Good morning, thanks for all the detail. I just wanted to follow up on your – some of your comments on the input costs. I know that was a very big challenge in ’08 and I understand the lag and the benefits of these lower costs showing up in EBITDA. Could you maybe help us a little bit though in terms of Q1 to Q2 type of bridge on input costs or what kind of reduction we might see in the input costs running through your income statements from Q1 to Q2?

Yes, Joe, I don’t know whether I want to give Q2 forward-looks on the input. If you look at our business and you sort of net out what Dan talked about what was hung up on the balance sheet, and you’re talking now just input raw material cost not labor. Labor production, labor let’s say on – for us it’s around $5 million a quarter or so inflation. And so our cash inflation costs went up in the quarter roughly $14 million or so in quarter-on-quarter increase. We still have some hedges – and our primary drivers, Joe, were energy and we still have some hedges in there. I think the second quarter hedges are going to average what Dan a little over $9.5, $9.25?

No, between $9 and $10.

So we’ll still have some energy hedges in there. Now that will improve versus Q2 of last year, because of course our natural gas costs were higher. OCC will be pretty flat which was our other big driver. So I think what we would expect that is that the raw material input cost will be relatively flat quarter-on-quarter on the macro. I just don’t have enough chemical and ink detail to go through that. That will be net of our synergy plans, okay? So I am saying just sort of the based inputs. Joe Stivaletti – Goldman Sachs: Right. But given that you don’t have some of the ’08 embedded costs in inventory, you should see a benefit from Q1 to Q2.

Well that’s correct. As Dan said, we cycle our inventories. You can look roughly 60 – every 60 days. So that $12 million that was hung up on the balance sheet, you would expect to cycle through in the second quarter, I think. So you would expect that to cycle through so you have more of a real number if you will for that year sort of thing. Joe Stivaletti – Goldman Sachs: Thanks. So Dan you mentioned one of your components of your debt reduction for the year, your target was working capital reduction. What part of that is working capital reduction for the year?

In terms of the $200 million. Joe Stivaletti – Goldman Sachs: Right. I am just wondering how much working capital reduction – what is your target for 2009?

Well, this year, I think we said that – Dan just said we were – did about $50 million worth of inventory. Most of that working capital was inventory reductions

And that was Q1 2008 versus Q1 2009.

Right.

So if you look at it, Joe, and I think you’ll understand it that we – we try to be fairly conservative with our estimates that we put out there in terms of cash. So that $50 million number that we put there, I think that that’s a pretty good estimate of what’s included in that $200 million number for cash generation. Joe Stivaletti – Goldman Sachs: Okay. And then the last question I had was, I didn’t see anything in your release unless I missed it on this big topic of the fuel tax refunds and what not. But I was just wondering where that stands as it relates to Graphic Packaging, if any benefits there are included in your $170 million to $200 million of debt reduction?

Well absolutely. I will tell you that there are no estimates what so ever in our – in the numbers that Dan and I talked related to the black liquor price that you’re talking about. We have made our – we certainly would qualify. We burned about I think 800,000 gallons of black liquor a day and we have made our application to the IRS. They’ve been here. They’ve been to our plants and our submission is in process. But really until we get that certificate in hand, Joe, it makes no sense to sort of put any numbers or estimates out there. And so none of the numbers that Dan and I have talked about cash flow or any of the margin improvements have any – would that be factored in. Joe Stivaletti – Goldman Sachs: Okay. Is it just that – is there any particular reason why it’s taking a little bit longer with your company to get the certification and get some of those things firmed up or I mean it shouldn’t be necessarily viewed as a sign as there is going to be any kind of reason that there is some like a problem qualifying?

No, not at all. No I would expect – we would expect pretty shortly to have news on that issue or on that process. But no, we’ve given – we had no indication whatsoever, we clearly qualify. Our Macon, Georgia facility and our West Monroe facility generate black liquor and we would expect to get those credits. I mean we’re aware of them. We’ve made our applications, we’ve been doing it for sometime and we would expect to – we had no reason to believe otherwise. We just didn’t think it was prudent until in the hand to be providing forward-looks or estimates to that process. But we fully expect to it materially – we fully expect to obtain those credits. Joe Stivaletti – Goldman Sachs: Okay, thank you.

Your next question comes from the line of Sandy Burns with Sterne Agee. Sandy Burns – Sterne Agee: Hi good morning.

Good morning, Sandy. Sandy Burns – Sterne Agee: Just big picture, when you look at market dynamics between the three paperboard grades, SPS, CUK and CRB, kind of given where we are in the economy, where you’re seeing activity? I mean there’s always a certain amount of customers who can switch between the three grades. I mean, is it getting more competitive than it typically would in this sort of environment or how would you characterize those dynamics overall?

Well I would say that we have not seen an increased number of switching activities, right? There is going to be downward pressure in any of these board substrate grades in this kind of economy, where input costs are going down. But I would not – I am not seeing. The only conversions we really have seen is the ones that I talked about which is we have seen – we’ve been able to shift paperboard applications to Z-Flute laminated structures out of corrugate because there was a true sort of value proposition there how fast they run the customers plant and towards the sustainability weight factor. But as far as the really switching between grades, we had not seeing any inordinate amount of that by any way, shape or form. I think the demand differences is really, SPS and backlogs are tighter. CUK is also fairly tight, this is the beverage season and that’s what where a lot of that board is used, so you would expect it. And CRB tends to be more buffeted because there is some fair amount of CRB that is not included in beverage applications and toys and games and set-top boxes and shoe boxes, all those kinds of things are going to be buffeted so you would see a softness. However you’ve also seen materially greater downtime in the CRB business. Everybody has taken some downtime in the fourth quarter; we expect to take additional downtime whenever it’s necessary in that grade as well. And I think for the most part we are managing not to want to build inventory in any of those grades. Sandy Burns – Sterne Agee: Okay, great. That’s helpful. And just secondly in terms of the synergy benefits you were able to achieve your targets much quicker than you anticipated. Maybe it’s hard to quantify, but can you maybe give us some sense of how much more you think you can do going forward? Maybe there is a possibly like another $90 through the next – through 2010 or is it going to incrementally just be a little above where you originally budgeted those savings?

Yes, we haven’t really given any – the reason we don’t give future guidance on the synergy is because I think the way we look at this thing and – is that you get it in the first 18 months and then it really becomes part of your continuous improvement operations. At some point, it’s no longer a synergy, it’s just – you need to drive it out with lean sigma and six sigma. So we sort of challenged to get it done in the first 18 months because we have done this three times, right? We have double sized the company. Every time we sort of found out what you get is 75% to 80% in the first year and that’s exactly what we’ve seen here, in this case, a little accelerated, but we’re getting better at this because of the practice for sure and I have got grade to prove it. What I would tell you is that anything above and beyond, I think will just be the new targets for what we will see in continuous improvement. I mean our continuous improvement targets this year I think Dan said in the quarter we were $14 million or something like that Dan. So if you annualize that up, that’s actually a little bit higher than the guidance we have given you in the past. I would tell you that that’s where that will manifest itself. So we will continue to see $50 million to $60 million with the cost takeout on a go-forward basis beyond the synergy stuff. Sandy Burns – Sterne Agee: Okay. And just last question, pension contributions, the $65 million how much of that is already being expensed on the income statement, so it will just be an excess cash contribution?

For the year, we are expecting expense of about $40 million. So there is about 25 additional – $25 million additional on top of the expense. Sandy Burns – Sterne Agee: Okay, great. Thank you.

Sure.

Your next question comes from the line of Bruce Klein with Credit Suisse. Bruce Klein – Credit Suisse: Hi, good morning.

Good morning, Bruce. Bruce Klein – Credit Suisse: I am sorry, I was – maybe I missed something. But the free cash flow estimate of $170 million to $200 million that sort of clean number, no black liquor and the working capital component of it, did you tell us that?

No we said approximately $50 million. Bruce Klein – Credit Suisse: Five O.

Five Zero, yes. Bruce Klein – Credit Suisse: Okay. And the rest there is nothing else abnormal or unusual other than $120 million to $150 million.

Well our operating people would say it’s going to beat your sweat equity. But no, it is not going to be anything above just running more efficiently in the operation. And you look at the EBITDA margin improvement that’s really something that’s coming from, right? We’ll continue to expect our margins to get better. Bruce Klein – Credit Suisse: Okay. And if you were – I recognize you haven’t accrued for tax cuts as you haven’t had mills get certified. But is there an expectation to use the proceeds, if essentially you do receive? And is there any requirements by the banks or otherwise where you have to spend the money?

We have no requirements, but we would be looking to use those funds for debt reduction. Bruce Klein – Credit Suisse: All right. Thanks guys.

As we would – as we would for all free cash flow at this point in time. We’re not – we’re not unaware of the $2.9 billion in debt. So that is going to be our focus for all free cash flow. Bruce Klein – Credit Suisse: Got you. Thank you.

(Operator instructions) Your next question comes from the line of Jeff Hollis [ph] with Barclays Capital. Jeff Hollis – Barclays Capital: Hi, good morning.

Good morning. Jeff Hollis – Barclays Capital: Just on pricing. I know you have talked before about offsetting I think 70% of inflation with pricing. Do you see a downward adjustments now with OCC and other input costs coming down based on some of your quarterly adjusters as you look at the full year?

I don’t think you’re going to see a lot of adjustments on carton prices this year. I mean 2010 is where you will manifest most of those changes, right? I mean if you really look at – if you look at pricing this quarter, we had $24 million worth of pricing and $14 million worth of cash inflation in input cost, right? So probably in this case, we actually saw pricing improve the margins. But as you go through the year, I think you are going to see additional pressure on pricing especially in the open market board business. But carton prices remained relatively flat. We don’t have that many contracts that actually have quarterly adjustments, in fact very few. Most of them are plastics [ph] and many of them are annual. Jeff Hollis – Barclays Capital:

That’s a great question. I mean, our primary drivers are energy, chemicals and fiber. And so what we would say is we’re hedged about 72% so we sort of know what our energy is going to be for the rest of the year. And relative to the year-on-year, it will be positive on a comparative basis because the energy was pretty expensive for us in the middle of last year. On a fiber basis, I think it’s slightly down year-over-year, but OCC kicked back up and so there was a divergent of opinions on when China will start to buy again and that that will have some impact. I think chemical prices are prudently are going to be flat to maybe slightly down simply because it’s the petrochemical complex that drives chemicals. And when I see chemicals, I mean latex coating chemicals and to some extent ink. So what I would say is I would think there is more downward pressure on input costs and upward pressure for the remaining part of the year for what we can see right now. But the problem is trying to figure out what you think the economy is going to do in the second half of the year and I don’t know if that I am the right guy to ask for that. Jeff Hollis – Barclays Capital: Okay. And just paperboard packaging volumes, I realize you’re very high on food and beverage, but they were down 11%. I don’t think corrugated or Containerboard was much more than 10%. Are there other applications in there that were way down? I am just trying to understand.

Yes, so if you start to think about it, it was actually about half – about 5% to 6% was just pure downtime. We shutdown paper machine number-two if you’ll remember in West Monroe and last year we ran that machine during the first quarter. We took 19 days of downtime on paper machine number-one, that’s our corrugated medium machine and other two days – I am sorry, another five days in Pekin. And so we had about 35,000 to 40,000 tons just came out of just pure machinery we didn’t operate last year. And so then that leaves rest of it really from market dislocation. And the majority of that honestly is – it was not in the grades that we necessarily make. I think we mentioned last year that we decided to get out of the tobacco market. And despite the fact those were tons – when we talk about sold tons, it isn’t just tons that we make, we buy. On average, Graphic Packaging buys, I don’t know almost 200,000 tons of board on the outside in an annual period. So those external purchases for that we’re SPS for food services. And for tobacco, were really soft in this quarter. One, we exited tobacco and the second is that food services a pretty soft quarter. People eating out don’t use it. So those tons were down, but that’s why the EBITDA and the cash flow were not particularly affected significantly, because they were not integrated tons for the most part. So our integrated tons drop is really pretty consistent with what we saw, that Dan reported in those sorts of 3% or 4% sort of numbers. Jeff Hollis – Barclays Capital: Okay, that makes sense.

Yes. Jeff Hollis – Barclays Capital:

No, cans are all packaged. I think the incremental – and so this is a detail that you probably don’t even care about but we do. And that is that bottles use incrementally more because if you think about a bottle wrappers to the can wrap you slightly more board in a bottle wrap. But cans are cans. And when they’re packed, they’re multi-packed as well. So, the incremental change is not significant to Graphic Packaging, but the guys that run that business think it’s the end of the earth. So yes what we do – what you’re seeing although is increased canned volume. So people are eating at home, so what’s happening is that that cans that were sold in a restaurant that is not packed in ours is now coming home to be packaged. So the net change is positive which is why we saw actually beer up in the quarter. It’s a mixed change if you will. Jeff Hollis – Barclays Capital: Thank you.

There are no more questions at this time. That concludes the call.

Okay.

Thank you very much.

Thank you very much.

Thank you for participating in today’s conference call. You may now disconnect.