Good morning. My name is [Camilia] and I will be your conference operator today. At this time, I would like to welcome everyone to the Graphic Packaging Holding Company second quarter 2010 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer period. (Operator Instructions) Thank you. I would now like to turn the conference over to Mr. Brad Ankerholz. Please go ahead sir.

Thank you, Camilia. Welcome to the Graphic Packaging Holding Company's second quarter 2010 earnings call. Commenting on results this morning are David Scheible, the Company's President and CEO and Dan Blount, Senior Vice President and CFO. 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 related to debt reduction, input cost, changes in pricing, working capital levels, fine closures, cash generation from the real estate, capital expenditures, cash pension contributions and pension expense, depreciation and amortization, interest expense, net debt reduction, and consumer purchasing trends 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 materials and energy costs, volatility in the credit and securities markets, cutbacks in consumer spending that could effect 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. And David, I'll now turn it over to you.

Thanks, Brad. We are pleased with our second quarter results as we deliver another strong operating performance and what continues to be a difficult operating environment. Volumes across all of our businesses were up and we offset nearly 35 million of price in inflationary treasures with improved operating efficiencies. As a result, our adjusted EBITDA remained relatively flat on both the sequential and year-over-year basis and we grew our adjusted earnings per share to $0.04 from a penny a year ago. We also generated over $125 million of cash in the quarter and reduced our net leverage ratio by more than a full turn to 4.6 times from 5.7 times a year ago. We put some of these cash to use their repurchasing $35 million of subordinated notes in the quarter and they called in additional 67 million of those notes for settlement on August 16. Looking out over the remainder of the year, we believe we have excellent position to achieve our net debt reduction target of $200 million. While fiber cost had moderated off of their peak. We expect to face rising inflationary costs across some of our input categories. However, demand is relatively stable, paperboard prices are rising and contract pricing should turn positive in the second half of this year. Our mills ran full for the quarter with no market related downtime and our operating rates remain in the mid of 90% range. We continue to see a slow but steady price in overall paperboard demand and backlogs to both our CUK and CRB products around four weeks, up four week over last year same period. Strong mill performances is being driven by our continuous improvement initiatives which have increased great degree cycle times by more than a day and term utilization by four percentage point.…

Thanks, David and good morning everyone. As you saw, second quarter was solid, with improved operating performance, offsetting despite the fiber cost and the impact of lower pricing. These results are in line with our expectations and put us clearly on track to achieve the full-year targets we shared on the last call. What is also important about the quarter is that we completed our integration activities and recorded our final non-recurring charges related to the combination with Altivity. In total, the integration of Altivity was a huge success as we realized over a 250 basis points improvement in EBITDA margins resulting from the delivery of over 150 million of ongoing annual benefit. Also free cash flow generated from the combined business, doubled. In total, the final integration charges were a rather large $47 million but what is really important about the charges is that they are either non-cash or payable over an extended 20-year-time period. Approximately 22 million of the charge is related to multi-employer pension plan withdrawal liabilities for the closed production facilities. These pension liabilities are expected to be paid out at a nominal amount of about one million per year over a 20-year period. The remaining charges are principally related to plant rationalization and adjusting real estate assets held for sales through fare market value. In total, we expect to generate about $30 million of cash from real estate that is being actively marketed at this time. To provide a more detailed review of second quarter results, we will discuss revenue and EBITDA performance then move to cash flow leverage and liquidity. As a reminder, when I refer to EBITDA and EBITDA margins, I am referring to both current year and prior year EBITDA results that are adjusted to produce comparable financial reporting. These adjustments are…

(Operator Instructions). Your first question comes from Joe Stivaletti with Goldman Sachs. Joe Stivaletti – Goldman Sachs: Good morning. Just a couple of quick things. One was, did I get the numbers right when you said you had repurchased $35 million of the 2013 bonds in the quarter and that you called another 67, is that what you mentioned?

That’s correct, Joe. Joe Stivaletti – Goldman Sachs: Okay. So you can’t do anything for a while, but then you’re going to expect to rebuild the basket, so you would still be expecting to use free cash flow to attack that that particular tranche, is that – that’s still your priority, I assume?

That’s priority. I think as you’d probably remember, our basket can be rebuilt as we pay down the bank debt, we can rebuild the basket that allows us to repurchase some of the 2013 bonds. And as I said, we expect to have about a $70 million basket available by year-end.

Okay.

We may utilize some of that basket as we build it during the second half of the year as well. Joe Stivaletti – Goldman Sachs: Right. Right. The other thing was, on the selling price, the contractual selling price shifts, is it – as that starts to become more favorable in the third quarter, is it reasonable to look at that as sort of neutral on a year-over-year basis in terms of the impact of selling price changes or would it actually be more likely to be turning positive year-over-year? I know it’s been negative for the first six months?

I think Joe – I looked at that math recently. And what I would say is it will be sort of at best neutral to slightly negative for 2010 and then in 2011, it turns the other way because it just takes the time. We also mentioned that we had the board price increases out right – and most of that impact is going to be in the second half of the year. But as you annualize those for all of 2011 is where you start to see more pricing contribution. Joe Stivaletti – Goldman Sachs: Okay. Thank you.

Your next question comes from Ian Zaffino with Oppenheimer. Ian Zaffino – Oppenheimer: Great. Thank you. Couple of questions. The first one would be the resets, when do you start getting the benefit of contract repricing off of March [OCCIs]. And I have some follow-ups, thanks.

Ian, the resets will depend upon the individual contracts. Some of them will start in the subsequent quarter. For board pricing, it starts pretty quickly because it rolls through in the open market. For contract pricing in cartons, it can be up to a year for some of the resets. So it will be an ongoing calendar flow and that’s why I said that – for the year, we will be about neutral to slightly negative. And then in 2011, you’d start to see a higher level of contribution because you get – your pace of pricing going up and raw materials staying flat. Ian Zaffino – Oppenheimer: And these are contractual resets or are they negotiations?

They are contractual resets. The high, high majority of our business, 90 plus percent is under contract and those contracts have terms and conditions. And one of the primary terms and conditions is how the pricing moves in its – those resets, up or down are determined by industry price movements that can be tracked by our customers. Ian Zaffino – Oppenheimer: Okay.

Or costs that are tracked. Ian Zaffino – Oppenheimer: Okay. And then as far as your guidance, can you just give us some sensitivity, what would need to happen for you to beat the guidance? What would have to happen for you to fall short of the guidance?

Well, I mean Ian, I don’t really, as you know on these calls I don’t really get into sort of a hypothetical and in this environment, that doesn’t make a whole lot of sense. What I would tell you is that we’re comfortable with the numbers that we’ve given. I’d love to see volume come back differently, but our projection, as Dan said, for volume is, demand is pretty tepid. We haven’t seen a real bounce back in the sort of core sectors. And therefore, we’re staying pretty conservative in our forward looks. Ian Zaffino – Oppenheimer: Okay.

So I think for the most part, it’s how you feel about the economic recovery and demand more than any other real surprise in the input raw materials or some other [stroginous] sort of event. Ian Zaffino – Oppenheimer: Okay. And then last question would be, I know you’ve talked about maybe de-levering or accelerating your de-levering beyond what you could generate free cash flow. Where are you in that process or where are your thoughts on that right now?

I guess the, I mean, right now, our only, I’m not fully sure I understand the question. But what I would tell you is that our only de-levering plan right now is using free cash flow to reduce roughly $200 million of our debt. And as Dan said, our target will be to get the high cost debt out first, our 2013 bonds. And then to the extent that we need to continue to reduce bank debt to create a different basket or an additional basket, we’ll do that, but that’s our primary focus for debt reduction right now.

Yeah. The only thing that would be on top of that, the $200 million that we’ve laid out there as a target doesn’t include any sales of the real estate. And as you can see that we have some real estate that’s held-for-sale, we’re actively marketing it. But since we’re not sure of the timing, we didn’t include it in the target. So that’s a potential upside, but that was only around $30 million.

Yeah. We sold all of it.

Right. Ian Zaffino – Oppenheimer: Okay. Great. Thank you very much.

Your next question comes from the line of Mark Kaufman with Rafferty Capital Markets. Mark Kaufman – Rafferty Capital Markets: Good morning, gentlemen. How are you?

Good sir. Yourself? Mark Kaufman – Rafferty Capital Markets: Good. Thanks. Good, I had a question about the new products, I mean, typically you see in the third quarter, not typically, may not the last two years being typical. But prior to that, you would see a pickup in new product introductions on the part of your customers, you were remarking about you seeing new product sales up. And how does that work in conjunction with each other, what are your outlook for the third quarter on new product offerings? Are you seeing that pick up from the final markets like you had in the past, typically a few years ago?

It’s interesting because as you know for our business, the third quarter tends to follow back-to-school trends. And traditionally or typically, customers do start back-to-school promotions. They’ll change the stereo box, or they will do a promotional lunchables or those kinds or macro and cheese stuff. What I would tell you is that I think the activity in that level has been muted relative to historical levels and we’ve seen it increased over where we were in 2009 because 2009 Q3 we really saw nothing. So we clearly have seen year-on-year improvement, but if you’re thinking about sort of historical levels which was the basis of your question, I’d say it’s still pretty muted. Our customers are – they’re playing pretty close to their best as well, they are maintaining their cash, almost all the advertising brochure we’re seeing is on the box, which is typically not particularly expensive for them, but it’s also pretty leveraging for the consumer and so we’re seeing that. But what we’re not really seeing is a lot of promotional boxes or a lot more new designs or things like that that traditionally we have seen, at least not to historical levels. And I don’t expect that to change into a consumer spending trend start to adjust. Mark Kaufman – Rafferty Capital Markets: Okay. These new products that you have been introducing, is it basically replacing existing products? And if so, do you feel you have opportunity for better margins on these products or are they product line expansions?

It’s a little bit of everything. And microwave product for example is generally something that was not microwave before that was done traditionally in the oven and our customers wanted to provide a more convenient or quick cook. So those are almost all new, it’s rare that those things are substituting, I can’t even think of it, example of one. Our deep blue packages are often substitutions, not necessarily for folding cartons, but for corrugated. So what we’re working in there is we’re replacing corrugated packaging with the folding carton or laminated structures. So for us, it’s not new, for the industry, it’s really a switch of substitution of one kind of fiber for another and that’s mostly cost and sustainability sort of process. There is always a level of substitution at some level when a customer decides they’re going to change a package for the club store, it very well may be that there was a different kind of package doing a similar product, but they’ve changed it to get a different price point or a different promotional point and that ends up being really more cannibalization of some sector of the market. We have all of them, the predominance of it though is really more new things to the overall mix. And for us, those new products tend to carry much higher margin, so they help maintain, in a tough operating environment, they help us maintain our EBITDA margins. So I’m always happy when that occurs initially because it does help in a tough operating environment to have new product stuff. Mark Kaufman – Rafferty Capital Markets: If I may just a couple more quick questions. What’s your internal usage rate now in the boxboard plants? And my other question is, is there any natural gas hedge there for 2011 yet?

Well, let me talk about – we would call them, we’re not going to call them boxboard plants necessary. Mark Kaufman – Rafferty Capital Markets: Sorry.

We’ll go with converting facilities, since we are not – Mark Kaufman – Rafferty Capital Markets: I’m sorry.

But what I would say is, utilization rate in our folding carton plants is not materially changed. It’s probably 75% or something like that is the capacity. For the most part though, in our business, but we tend to look at the capacity utilization of the mill that tends to drive more of the economics in our business. And as I said earlier, those utilization rates are well under the mid and upper 90s with backlogs moving out. Mark Kaufman – Rafferty Capital Markets: Maybe I didn’t phrase it properly. How much of the mills are you using internally in your packaging plants?

About 80%, north of 80% of the board that we manufacture, we use internally, which is really about our optimal balance. Now we are a net buyer of board and I mean by that, we convert more board than we manufacture across our entire space. So by doing that, it sort of allows me to manage my mix and optimize my trims across the base. So, on a net integration basis, we’re a net buyer. I don’t see your integration directly getting much higher than 80% to 85%. That just becomes inefficient in the operating system because we don’t make every grade or every caliber or every split that’s necessary in the board mills.

And your other question regards to natural gas hedging, we’ve only placed a small amount of hedges in 2011. We’ve concentrated on the higher risk quarter, which is the first quarter. We have 25% of our expected need hedged in that quarter at a rate of about $5.30. And the $5.30 is favorable to our actual amount in 2010. Mark Kaufman – Rafferty Capital Markets: Thanks very much.

There are no further questions at this time. Do you have any closing remarks?

No. We’d just like to thank everybody for their interest in Graphic Packaging.

Thank you.