Good morning, and welcome to the Graphic Packaging Fourth Quarter and Full Year 2011 Earnings Call. [Operator Instructions] As a reminder, today's call is being recorded. I would now like to introduce Brad Ankerholz, Vice President and Treasurer. Please begin.

Thank you, Rachel, and welcome to everybody on the phone to the Graphic Packaging Holding Companies fourth quarter and full year 2011 earnings call. Commenting on results this morning will be David Scheible, the company’s President and CEO; and Dan Blount, our Senior Vice President and CFO. To help you follow along with today's call, we have provided a slide presentation, which can be accessed by clicking on the Q4 earnings webcast link on the Investor Relations section of our website which is graphicpkg.com. I would like to remind everyone this morning 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 the effect of the combination with Delta Natural Kraft and Mid-America Packaging, recovery of raw material inflation costs, consumer demand and pricing trends, capital expenditures, cash pension contributions and pension expense, depreciation and amortization, interest expense, debt and leverage reduction, performance improvements, and cost reduction initiatives, including the closure of facilities, 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, cutbacks in consumer spending that could affect demand of 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 Securities and Exchange Commission. And with that, I'll turn it over to David.

Great. Thanks, Brad. Good morning, everyone. We are pleased with our fourth quarter results as we delivered higher sales and expanded margins. Volumes across the industry remains somewhat constrained in the quarter. The Graphic Packaging's fourth quarter volume and mix trends were positive as a result of overseas growth, new customer wins, new product launches and substrate substitution. The quarter, compared to 2010 fourth quarter, net sales increased roughly 4% to a little over $1 billion and adjusted EBITDA increased 10% to $147 million. Higher pricing, stronger operating performance and cost reduction initiatives more than offset higher input costs. Fourth quarter pricing increased by $27 million. We generated a $20 million net benefit from our ongoing cost reduction and supply chain optimization efforts. For the full year, pricing increased $116 million and we achieved our goal of over $70 million in cost reductions. Performance improvements are a critical part of our overall strategy, and they are not solely a result of cutting cost or driving lean manufacturing principles. We continue to put money back into our business, making strategic investments to streamline the business, reduce our long-term cost structure and add top line growth. In 2011, we invested $160 million on CapEx projects to efficiently maintain our assets and drive sales, operating margins and cash flow. One of our largest capital projects was the expansion of our Perry, Georgia and West Monroe, Louisiana carton facilities. And the reallocation of volume from other higher-cost plants that were closed during the year. Through our ongoing efforts to streamline our assets, we have been able to shrink our overall converting footprint without diminishing our total carton production capacity. A critical element of our asset optimization strategy is strategic acquisitions and partnerships. Our acquisition of Sierra Pacific last April, provided a strategic location in…

Thanks, David, and good morning, everyone. David covered the operational highlights of the quarter. I'll focus on the financial results. My comments track our posted presentation. Let's start with Q4 and full year financial highlights on Page 9. Adjusted Q4 results show strong operating improvement over the prior year. EBITDA up 10.4%, net income more than doubled to $0.06 per share. Main drivers of the improvement include revenue growth, improved operating margins and lower interest expense. In order to provide comparable financial reporting and a better baseline for gauging future performance, we adjusted results to remove nonrecurring transactions. Let's talk about the 3 principal Q4 adjustments. First, we recorded a value for $1.2 billion NOL tax shield on the balance sheet. Based on our 3-year track record of profitability and positive view of future earnings, a determination was made that it was more likely than not that we would fully monetize the NOL. We recognize the value of the NOL by recording a $265 million adjustment to set up a net tax asset. The adjustment includes $460 million for the value of the federal NOL using a 35% tax rate. This amount was netted against future tax liabilities, primarily related to depreciation and amortization timing differences. The change has no impact on our cash income tax obligation, as we continue to pay -- to not pay U.S. income taxes until the NOL is fully consumed. Currently, we project that we will not pay federal income taxes for 4 to 6 years. Going forward, we will record income tax expense and offset the expense against the tax asset. For those of you updating models, we expect an effective tax rate of approximately 38%. The second adjustment relates to the workforce reduction that we announced in October. The reduction will produce an…

[Operator Instructions] Your first question comes from Philip Ng with Jefferies. Philip Ng - Jefferies & Company, Inc., Research Division: Based on your comments about refi and what not, and leverage comfort zone, I guess, you guys could be in position to start returning cash as soon as sometime in 2013? Is that your assumption?

Well, as we said, we're entering our target range at the end of 2012, so that's going to open up a lot of opportunities for us in terms of what to do with the cash. Philip Ng - Jefferies & Company, Inc., Research Division: Okay. And then when I look at your price cost, Brad, it's obviously narrowing quite a bit and it's tracking more favorably and it sounds like the impact of OCC coming in should kick in a little more fully in Q1 and a recent pull back in that -- so should we see a neutral or even perhaps a positive price cost spread in Q1?

I have -- it will depend upon what our mix on OCC-based products are. What I would tell you is yes I mean, I think if you record the quarter, probably we'll see an additional improvement in the quarter. But I don't -- and talk about this before [indiscernible] -- I don't really think the long-term driver of improved margins is really around this, around a pure question of inflation and pricing because ultimately, it becomes a transitory process. It goes up, we get it back; it runs through the deal. What you are going to see the margin expansion, I think, is going to be growth, and then through the capitalization of some of these projects that we talked about like the risk -- and the shutdown of high-cost manufacturing facilities, the integration of Delta Natural Kraft and Sierra Pacific. So I think that's where the margin really comes from. Not this inflation price arbitrage because I think it's from a quarter-to-quarter standpoint, it's kind of arbitrary. Philip Ng - Jefferies & Company, Inc., Research Division: Okay. That's helpful. And just lastly, I mean David, I think you called it out last quarter, if I remember correctly, that bonds are actually starting to stabilize a bit here in [indiscernible] so what you are hearing from your customers? And it sounds like some for your beverage customers are at least stepping up promotional spending, so I just want to get sense on it. And unemployment is a little bit better on the margin, so...

Yes, I mean what I would tell you is that I like the momentum going into -- I like the momentum going into the first quarter based on what we've seen already. I will remind you Philip that I had the same sort of feeling going into the first quarter of 2011, and there was good momentum and then the year just sort of kind of petered out. But right now, we're busy, backlogs are good and our customers are definitely promoting. We've got a lot of new product wins that are starting the year as opposed to back-end of the year loaded. So I'm feeling okay about volumes going into 2012.

Your next question comes from Ghansham Panjabi with Robert W. Baird. Matthew R. Wooten - Robert W. Baird & Co. Incorporated, Research Division: It's Matt Wooten sitting in for Ghansham today. A few questions, if I may. Those your expectation of reaching the price cost parity, and assuming that that's not going to be the primary driver, but does that assume the successful implementation of the February CUK price increase?

Yes. I don't think we've had a lot -- I don't think we've ever really projected much price increase in board for our 2012 look forward. We are seeing some lift in CUK. I mean CUK pricing year-on-year was up something like $80 a ton, or something like that, 10%. And some of that came in the second half of the year, so we'll get more of the run rate of that as we go into 2012. But at this point in time, we don't have a lot factored in for pricing improvement necessarily coming from board movement in the first half of the year. Matthew R. Wooten - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then of the $200 million or so in CapEx, how much of that would you consider maintenance CapEx?

We can run this -- let's see I've got to add the Delta Natural Kraft. But I would think we can run this business on $105 million to $106 million a year in CapEx, if we really, really had to. Matthew R. Wooten - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then lastly, the trajectory of the DNK synergies. Is that something we should see start accruing in the second half of 2012? Or is that something that's not going to happen until 2013?

It's really more into 2013. We've begun the announcement on some things we're doing in plant consolidation, so on and so forth, but some those synergies are really around how we integrate some of that board and get out some old bad contracts and so and so forth that will take some time for those to run their course. But those synergies, I mean, if we didn't believe those $20 million of synergies were there, I wouldn't be telling you they were.

Your next question comes from the Phil Gresh with JPMorgan. Phil M. Gresh - JP Morgan Chase & Co, Research Division: So just on the end market, some of your food customers have been talking pretty cautiously on the volume side. What do you see on that front?

It really -- it's really by -- it's very sectorial. So cereal is actually doing pretty good. Pizza is still sort of difficult, but some of the snacks and things are good. Beverage, as somebody mentioned, Coca-Cola and Pepsi are doing pretty well from a volume standpoint. So it really depends on the core end-use market. I think the bigger impact on that is going to be what do we really think the impact of oil prices are going to be vis-à-vis natural gas, right? I mean -- I'm sorry, vis-à-vis the consumer's pocketbook, right? And predicting that will be interesting. I think the President's down in Florida talking about energy today probably anxiously waiting for that outcome. But right now, what you're seeing for us in the real short-term is energy prices translating into fuel surcharges and that while it doesn't necessarily affect our P&L directly, it affects my end-use consumer. Phil M. Gresh - JP Morgan Chase & Co, Research Division: Okay, so you're not really seeing anything that for example, General Mills I believe is talking about weaknesses as quarter progress. And I think some of these customers even said January was kind of weak. So you're not really seeing that at this stage?

No, not across the entire spectrum. Phil M. Gresh - JP Morgan Chase & Co, Research Division: Okay. And then the driver of outperformance on the tissue side, what would you attribute that to?

Some of it's share, some of it's just sort of mix. Phil M. Gresh - JP Morgan Chase & Co, Research Division: Okay. And then the question on CapEx, $105 million is what you could run at. But what's kind of a realistic run rate kind of ex the bio-mass project moving forward? How much was -- is bio-mass this year?

I think Dan has always said that our target in CapEx is somewhere between $160 million and $175 million a year, because we have enough good cost reduction and growth projects that we would fund during that period of time. So we're not going to run the company on $105 million. The question was what could you? And I'm saying we could. But the reality is that if I'm modeling in and I model forward with my board, I'm thinking between $160 million and $175 million is a really good CapEx project. The $85 million -- $80 million boiler project hits a lot of it in -- most of that comes through in 2012. I think there's some catch-up in 2013, some carryover in the first quarter. But predominantly, it's 2012. Because the heavy constructions going on now, all the boiler is being built, it will be installed at the end of this year that type of thing. Phil M. Gresh - JP Morgan Chase & Co, Research Division: Okay. And then just on the synergies that you talked about -- you're talking about kind of a head start on 2013 in saves. So should we interpret that to mean the synergies will be part of the standard $60 million to $80 million? Or is that incremental to the standard performance opportunities?

Well, I have no -- I think it really has virtually no impact in 2012, right? Phil M. Gresh - JP Morgan Chase & Co, Research Division: I'm sorry, I meant 2013.

So in 2013, those synergies should be separate from our cost reduction plans. Phil M. Gresh - JP Morgan Chase & Co, Research Division: Okay, okay. I just wanted to be clear on that.

I don't mean to caution, but I have a hard time forecasting out the quarters, and now we're talking about cost reductions in 2013, and what I would say is, right now, we are plans would be to have it be incremental, and that assumes that the economy looks something reasonable. But good lord knows. Phil M. Gresh - JP Morgan Chase & Co, Research Division: Understood. Understood. Thank you and last question is on the acquisition front. Are you thinking you would be looking at more bolt-on opportunities this year? Or are you really just kind of targeting that debt paydown at this stage?

Well, I think what we would say is we ought to be able to do both. I mean, last year, we did 2 nice little bolt-ons and still paid down $200 million of debt from plus from operations. So the focus is to get the debt down to our ratios. Now when we make the acquisitions, we pick up some EBITDA. So what I'm trying to do is get the ratio into that -- between 2.5 and 3, right? So the little bolt-on acquisitions don't take us off of that path.

Your next question comes from George Staphos from Bank of America.

It's Benjamin Wong sitting in for George, George is traveling. Just 2 questions. On new products, you had the nice win recently with the CUK carton and Kraft. Can you comment about how you feel about new products in 2012? Are there any other possible launches this year?

Yes, there are. What I would simply say is that the whole concept of using solid fiber to replace some of these litho-lam carton is a good play for us. It's not only a good play for us, it's a good play for other people in the space. I just hope we get our unfair share of that pie. But I like the trends, I like what -- how CUK performs from a property standpoint versus other substrates, makes me feel very positive heading into 2012. There are lots of things we're working on, a number of things we've already done. Much smaller in scope, but nonetheless, we probably added another 9,000 to 10,000 tons of new products in that space as we've started this year. So Kraft was great. We love the Capri Sun. We've had an incredible partner with those guys on that, but that's not the only thing we're working on in those kind of new product opportunities.

Okay, we'll keep a look out for them. And then just based on your comments, it seems you would be in a position to return value to shareholders pretty soon. Can you talk about your preference towards either dividends or buybacks or both?

Well, what I would say is we've been returning shareholder value at this point of time since the stock has responded, and so you're talking about specifically the potential of using cash as a direct dividend payment back to shareholders. And what I would tell you is that's not a 2012 thing for us. I mean, we took a $200 million worth of debt reduction we've got to get done, to get down to the right credit ratio for us that's certainly one of a number of things we'll have to think through as we get into 2013, but right now, I'm sort of focused on the things that are right in front of us, simply because it really is in this economy, all about execution.

Your next question comes from Mark Wilde with Deutsche bank.

I wondered if you can give us just a little more color on sort of the dynamics of acquiring and integrating Delta into your business? And sort of where those synergies will come from in just broad terms?

Sure, I'd be glad to. So if you think about our Flexible business before, Mark, it was a complete converting business, right? And those margins were trending at 7% to 8% or something like that. What Delta Natural Kraft allows us to do is to take the Pine Bluff, Arkansas mill and balance production between that mill and our West Monroe facility because you may -- I think you are aware that we have a bag machine in West Monroe. We don't talk about it much, but paper machine #5 is the bag line there. But it’s sort of the sub-optimized mix because this is the only thing we can do. We have the opportunity not to -- mix manage and make and sell internally a higher value product than we are currently making out of West Monroe and stop purchasing it on the outside of that expensive paper. That cash and that EBITDA all towards directly to Graphic Packaging. So in much like we did with Altivity acquisition, so think about the same thing we did in integrating those cartons and those tons into our business had a huge impact on EBITDA and cash flow. Then the second thing is Mid-America Packaging had 3 converting facilities, and we had a number of more as you well know. We don't need all those, so we're integrating those and moving -- relocating that business to lower-cost facilities, much like we did with Altivity. So if you put all that together, along with the purchase, you can imagine Graphic Packaging had more purchasing power than Delta Natural Kraft did. We were a stronger company, we bought more, financially more stable. So the purchasing savings sort of a newer soon as those contract expires. So if you sort of think of the split, maybe 25% is plant, smaller portion is purchasing, and then a big part of it is paper integration, just like Altivity. And that's sort of where the $20 million comes from. So really more of a time question than -- I think we're going to get it. Yes, we're going to get it. It's just we've got to be -- we've got to get it when the contracts allow us to do so.

And just in general terms, Dave kind of what's the timing on those contract roll-offs?

Most of them come off by the fourth quarter of '12.

Okay. And then just in terms of D&A in the new Flexible segment. Can you give us that number?

We are looking at each other right now, so I guess the answer is -- we're not sure, we'll have to get back to you. I don't have it the fingertip depreciation, amortization of the new thing. We'll let you know, Mark.

That's fine. I just wanted a question about that business. Pine Bluff is a fairly old mill, and I'm just curious what type of capital needs you may have identified at Pine Bluff over the next say 3 to 5 years?

What we've identified is going into this year, we've already put in -- we're going to spend about $20 million, okay, to get to capture those synergies. And included in that $20 million is enough money to bring up those that mill up to Graphic Packaging standards. And currently, we have our mill people looking at that mill and they're identifying areas of improvement where we can get productivity improvement beyond what we have built into the $20 million run rate for synergies.

Do you have -- Dan, do you have just a kind of general sense of what type of stuff that's --

It's $6 million.

It's about $6 million is what we'll have to --

-- to $20 million.

Incremental. And if you -- more and get more money for it, using our hurdle rates, we'll end up doing it.

Okay. And then another question. I wonder if you can talk little just a bit about what you see going on in the bleach board market. There have been some reports said that market is a little bit soft right now. I think the backlogs have come down.

Well, only thing I know about bleach is that we buy it. And so, what I would tell you is that our bleach board business has been okay. Now when I say that, Mark, you know that we do a fair amount of substitution from our bleached board business into CNK. So I say that the applications that we're selling into are still there and they seem strong, but we don't necessarily use -- we don't necessarily use as much bleach as we used to into those end-use applications.

Okay. And then just one last question, this Sierra Pacific business that you bought. Did they do any of that sort of bag and box business out there?

No. Graphic actually does some. We do bag -- you're talking wine, right?

Yes, exactly. Because I cover the Smarvard-Kappa guys, and they love that business. They've been talking about how that's kind of growing worldwide. They don't have any presence here. So I was just curious what you were seeing.

Yes, we are in that -- now I'm surprised that you are a bag and box wine drinker, but the reality is that we are in that business on the West Coast with the legacy graphic facilities, and Sierra Pacific was out there. We have a lesser -- they have specific assets left to hammer out there in our facility that we purchased in Sierra Pacific in Norville. So we're in that space.

Okay, remember we're all value guys, Dave.

[Operator Instructions] Your next question comes from Alex Ovshey with Goldman Sachs.

A couple of questions. Can we just talk about how to think about the EBITDA bridge for '12? If we assume that price cost is even and you normally get $60 million of productivity plus you have the benefit of the Sierra Pacific acquisition for the entire year, plus incremental CUK volume, are we thinking the EBITDA is at $50 million in 2012 versus '11?

We sort of as you well know do not give guidance on EBITDA for the quarter -- I'm sorry, for the year. What I would say is that and it's obvious, as cryptic as I can, what I would say is I like our trends year-on-year in EBITDA. I don't know what the inflation price curve will actually be. You guys are saying at all -- I don't really know. It's pretty early in the year to figure out what that's going to look like because who knows what OCC inflation is going to be in the second half of the year. I hope that's a flat -- I'm guessing it's probably more like what we saw this year, which is we were still a little bit negative in 2011. I would think it would be a little bit as well. I think we'll get a little bit of bump from the new product activity in the overall process and performance will be in that $60 million, $70 million. So I think it moves directionally good, but whether it's $40 million or $50 million, I'm not going to -- but I will tell you is that we feel pretty comfortable with our projections on cash flow, the $200 million, despite the refinancing costs of about $25 million, and the increased boiler investment in Georgia, we still think $200 million of debt reduction is doable.

That's helpful, David. If you think about the M&A pipelines for the business, are you seeing more opportunities on the converting paperboard side? On the flexible side? And do you have a number that you want to spend on bolt-on acquisitions in 2012?

We don't really target a number. What I would tell you is that I like the things we did with Sierra Pacific. Those are $50 million to $60 million companies in the geographically or end-use sector. That's what we're going to be focusing on. So if there's some integration there, or they're regionally advantageous for us, and I think those guys are out there, right? Sierra Pacific has really been a very good acquisition. We brought a good asset, we brought a great team, who -- and they all stayed. Allen Ennis and his team, they stayed and they've grown that business. So those kinds of things are what we're looking for. It takes a while, though. Allen and I started talking about that a long time ago. So it's kind of hard to project year-on-year, but we do think there are opportunities out there, and we will be smart about it. It needs to be accretive for Graphic Packaging, but that's our goal.

Understood. Thanks and last question for Dan, what is the other cash items that we should be thinking about? Do you have a number for cash taxes, working capital and any incremental cash costs that you expect to incur in order to realize the synergies for DNK?

Yes, we expect cash taxes to be about $10 million. Working capital, we're looking for improvement there but if I was a betting man -- may I say based on the growth of our business, I think we're main pretty much neutral where we are today with the working capital and did you have one other item?

Yes. Incremental cash costs in order to realize synergies from DNK?

Well, we've included that in our projection to come up with the $200 million. I mean there's about $20 million in total that we're going to spend either through some type of severance payments or in terms of our CapEx.

And at this time, there are no additional questions. So then including -- concluding remarks.

So we thank everybody for listening in and we'll talk to next quarter.