At this time I would like to welcome everyone to the Graphic Packaging Holding Company fourth quarter and full year 2008 earnings call. (Operator Instructions) I would now like to introduce Mr. Scott Wenhold, the company's Vice President and Treasurer.

Good morning everyone. Thank you for joining us on Graphic Packaging Holding Company's fourth quarter and full year 2008 earnings call this morning. Commenting on our results this morning are Dave Scheible, the company's President and CEO, and Dan Blount, Senior Vice President and CFO. Before we get started I would like to remind everyone that statements of our expectations 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 declines in raw material and commodity prices, consumer purchasing trends, 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, 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 statement 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.

Good morning. Thank you for taking the time to be with us today. As we've done in the past, Dan Blount, our Chief Financial Officer and I will split the duties on this call. Once we've concluded our remarks, we'll open the call and look forward to answering any questions you may have. What a year 2008 turned out to be. We faced runaway inflation early in the year, a global recession as the year closed and sandwiched in between was the combination with Altivity. The last three quarters of 2008, we operated as a combined company and I'm pleased to report our integration efforts have exceeded expectations. Our network of manufacturing facilities is increasingly more efficient, and we are investing in the right places to create a productive, low cost manufacturing footprint to maintain our number one market share position. This has translated into solid debt reduction despite the economic headwinds. Last night we reported results for the fourth quarter and full year 2008. A quick recap shows the fourth quarter adjusted net loss was $0.11 per share compared to an adjusted net loss in prior year quarter of $0.04 per share. On a full year basis, despite incurring approximately $240 million of cost inflation, pro forma EBITDA of $502 million was relatively flat to 2007 pro forma EBITDA of $510 million. I'm also pleased to say that despite a difficult operating environment, we reduced net debt by approximately $119 million since the combination with Altivity last March. We believe our business is headed in the right direction and we are taking the necessary steps to navigate through this unprecedented market and improve our year on year results. Our combination with Altivity increased our position in the food and beverage end use market and while no sector of the…

Good morning everyone. As David discussed, we are carefully managing our production capacity to align with demand and are aggressively managing working capital. As a result of this disciplined management, we generated $140 million of operating cash flow in the fourth quarter and have reduced net debt since the combination with Altivity last March by $119 million. Our efforts are and will clearly remain on cash generation. Along with our disciplined cash management approach, we have and will continue to focus on high return synergy projects, cost reduction investments and product innovation efforts. These actions will position the company for incremental performance and improvement while strengthening cash generation. Moving to a more detailed review of financial performance, first we'll cover operating results and then turn to cash flow and liquidity. But before getting into the financials, a reminder that in order to provide an apples to apples comparison and an effective measure of operating EBITDA performance, I will use adjusted pro forma financial results in my discussion. These pro forma results include the following adjustments; we included Altivity results from January 2007 to the merger date in order to provide a full year of Altivity results for 2007 and 2008. We excluded fourth quarter 2007 results for the two recycle board mills that were divested last quarter. For 2008, we added back $15.5 million on non recurring non cash charges principally related to the permanent shut down of our paper machine number two in West Monroe. And finally, also for 2008 we added back charges associated with the combination with Altivity including severance related to synergy delivery. A reconciliation table detailing the pro forma adjustments is included as an attachment to last night's earnings release. Now to simplify today's discussion, unless I specify otherwise, when I refer to net sales…

(Operator Instructions) Your first call comes from [Jeff Hollis – Barclays Capital] [Jeff Hollis – Barclays Capital]: Can you talk about, on your last call you talked about pricing being 2009 being about $50 million to $60 million? Can you give us an update first on the pricing pass throughs.

I think what we said for the year, our pricing in 2008 was roughly $109 million to $110 million worth of pricing recovery in 2009. The fourth quarter was around $30 million or something roughly in price recovery. And that's all pricing. That includes pass through on contracts. That includes board pricing in the open market. So the total pricing across the company, and I think that for the year pricing in total was around 2.5% of our total sales, pretty close to that. [Jeff Hollis – Barclays Capital]: And how about for 2009 based on your contract pass throughs.

In 2009 we expect our contracts that reflect that to be recovered and in fact in January and February we've already seen some of that. The customer contracts that are written have some escalators based on inflationary cost in 2008 on board price movements and all of those will be recovered throughout the year. [Jeff Hollis – Barclays Capital]: Are you willing to roughly quantify it?

I'm not going to give a forward look on pricing in 2009. What I would say is that we're comfortable that the 2009 pricing will be in line. [Jeff Hollis – Barclays Capital]: On inflation, $240 million of inflation, can you talk about how you see inflation? I know you have some natural gas hedging. Where does that stand for '09 and how are you currently planning on inflation?

Let me cover the natural gas hedging. Currently we're about 72% hedged for 2009 and if you look at the positions we've taken, that 72% averages about $10.80 in the first quarter and then we're around $9.25 to $9.50 for the remainder of the year. If you compare that to 2008 approximately we're about $10.00 per MMBTU in 2008 on an average for the whole year. What we've done is, we've gone ahead and put the forward curve for the non hedged piece and if you take that in, we have a blended price rate for 2009 at about $8.50 per MMBTU. Just another reminder, in terms of our overall energy costs, natural gas is about 60% so the other 40% is from other sources including public utilities.

We use about 14 million or so MMBTU's a year of natural gas roughly. It's primarily in the mills as you can well imagine. [Jeff Hollis – Barclays Capital]: On the Altivity synergies, what were the actions that brought you from the $25 million to the $67 million and what are the savings expected from the closing of the four plants?

I won't break out the individual plant closure. What I will tell you is really the acceleration of those was from two things. One, it was from the accelerating bringing the plants forward in the closure and then the other was from the integration of tons between the two organizations were the primary driver in this quarter, right now for those synergies. So what we're seeing is, if you look at our business we're at a $67 million dollar rate. I think your synergies in 2008 to the bottom line generated roughly $27 million, so you can see it's an accelerated rate going forward for 2009. That's why I think that's why Dan and I both are very comfortable that the $90 million level with certainly be met and most likely exceeded.

Your next question comes from [Faz Abit – D. A. Capital] [Faz Abit – D. A. Capital]: You mentioned $60 million to $70 million of cash pension contribution for 2009 as an estimate. How much of that goes to our EBITDA number already. In other words, how much is already expensed? What is the extra cash flow deduction we should be thinking about?

It's about $13 million to $14 million larger than the expense at the contribution level. [Faz Abit – D. A. Capital]: We're looking for some color. We understand your contracts have these price increases and you previously mentioned up to 80% of cost inflation is generally with a lag pass through. At the same time you have benefits from raw materials. I guess what we're wondering is if the volumes were to stay constant and there's no change to that, how much price benefit should accrue to you based on current raw material prices and how much prices the lag hasn't come through yet?

We're not going to honestly provide that much level of detail because the big assumption there is what if volume stays the same. So we built a hypothetical model there that's probably not one I'd want to opine going forward. What I will tell you is both Dan and I believe on a go forward basis that in 2009 we do expect our margins to expand. We do expect pricing to be good and we expect at least in the early half of the year for raw material prices to continue to trend down. As you get to the second half of 2009, it's a little bit difficult to think about it. For example, one of our primary raw materials is OCC, and right now OCC pricing is very favorable to 2008 levels. However, what we're also seeing is communities picking up less OCC because the price of OCC collection costs is so expensive. What has traditionally happened in that environment is therefore OCC prices start to creep up. So right now, we would say the margins will clearly stand between the Delta and pricing and raw materials for the entire year, virtually impossible for me to make a legitimate sort of how is that going to work out. And that is, as you said all tied into assuming volumes maintain in their current trends, and I don't know that I'm comfortable even including beverage giving forward demand curves on that to suggest where it's going to be. I like the early trends but I don't know what it's going to look like in August. [Faz Abit – D. A. Capital]: In terms of the debt reduction in 2009, did I hear you correctly that you said it would exceed $119 million from 20089?

Yes, you heard us correct. [Faz Abit – D. A. Capital]: Are you giving any guidance on interest expense or CapEx? Any guidance on working capital, compared to last year?

I can tell you for last year, when you look at when we initially merged with Altivity, our inventory levels were above $600 million, and we have ended the year substantially lower than that. We're at below $570 million, so there was a substantial reduction in inventory levels. Also, inventory for the end of the year 2008 included much higher inflation which raised our inventory levels. So we saw substantial reduction. Included in the $119, we're not giving specific guidance on working capital at this point, is working capital reductions.

What we saw is pretty significant cycle improvement. In fact, in our mills our cycle time in our mills improved almost 30% between 2007 and 2008 quarter on quarter, fourth quarter. So that is allowing us the units are cycling much faster. As Dan said, you've got higher cost running through so the dollar looks different, but the velocity is much more improved. So working capital of $35 million or $40 million reduction in 2008 certainly we're going to continue to drive ongoing working capital reductions in 2009. We would be very disappointed if we didn't see significant reduction in working capital in 2009. We're going to continue, again the underlying assumption there of course is where volume, but I will tell you that we will continue to match volume to production. We don't plan market down time and that's sort of not something that we do, but we will continue to match our production output with our demand. We will not build inventory or put cash in inventory if we don't have a legitimate reason to believe we're going to sell those products in a short period of time.

Your next question comes from Joseph Stivaletti – Goldman Sachs. Joseph Stivaletti – Goldman Sachs: On the synergy front, is it correct that you have $27 million that you actually reported in 2008 that you were at a run rate of $67 million by year end?

That's exactly the right number. Joseph Stivaletti – Goldman Sachs: What do you think is reasonable to assume in terms of a reported number for '09 relative to '08 above and beyond that $27 million?

I guess we could do the simple math and suggest that you would expect to see a $40 million sort of number or an annualized rate of $67 million. We ended up at $27 million so you can sort of see the $40 million for sure as I think we are certainly comfortable with that. Obviously we gave you that math. I will also suggest that we are looking at accelerating some of the options. One of the things that happens, and you and I have talked about this before, the most difficult thing to forecast when you put integration plans together is how much productivity improvement you get in those plants. As you start to consolidate and you change your run profiles, you get improvement. So what that allows us to do is to run less overtime in our facilities, less temporary work and in a company the size of Graphic Packaging, 14,000 employees that is not an insignificant number. So what you see is that going through the synergy numbers as well. It's tough to predict because some of it is based on volume, assuming the volume stays at a certain level. But I would tell you that we would certainly expect synergy numbers to be trending towards that kind of number for the year. Joseph Stivaletti – Goldman Sachs: I know that it's hard to talk about anything in this environment looking over a 12 month period, but from a volume perspective, is it still reasonable to assume that your volumes for the full year given your exposure primarily in food and beverage would be hold in at least at '08 levels or up because that's very different from so many of our companies indicate for packaging.

Here's how I would answer that question. What I would say, and you know if you've followed us in the past, we tend to approximate GDP. We're sort of a little bit above GDP normally in our business on an annualized basis. So if you sort of look forward, you would expect food and beverage typically to be at the underlying GDP rate if you take out buying of homes and those kinds of things, because that's not really part of it. So if you look at that business, we would expect it to be pretty stable. You're also seeing some positive trends where people are eating at home, and they're also eating, and they're going to the center of the store. Both branded and private label are both doing well as we start the year, so we don't see a huge trend to some product line or some effort where we don't participate. So what I would tell you is I would expect, and our early trends are, that volume is hanging in there. It's pretty decent volume. But if the economy continues to deteriorate, I think it's really difficult for us to figure out what people will do, including packaged goods and packaged food services. When I talk to Kraft and General Mills, and Kellogg's they're not sure as they look forward to where all that works out. So I like where we're starting the year, but I am really reticent to give a long term forecast. I would certainly rather be making food and beverage cartons than some of the heavy industrial based products, but I'm not going to be tied into telling you what I think volume will do because I'm sure I would be wrong. Joseph Stivaletti – Goldman Sachs: In your press release, you talked about fourth quarter of '08 being affected by $13 million of costs relating to the shut down of your number two paper mill. Is that severance?

No. That cost is unabsorbed burden. It's a fixed cost base for shutting down number two machine. That's what it refers to. We're not operating the machines. There's still some of the fixed costs we haven't got out. Joseph Stivaletti – Goldman Sachs: Is that something that would be out of the system by now? Is that going to take you awhile to sort of lower your fixed cost relating to it. I'm just trying to understand if that's an ongoing kind of thing.

No, that's not an ongoing type of thing. We're taking actions. We're eliminating the costs and we're actually reducing production on some of the other machines because we have an ability to do that because we shut down number two. So I think it's an issue that you will not see in 2009 going forward.

Your next question comes from [Gerard Worshton – U.S. Steel] [Gerard Worshton – U.S. Steel]: I had a question regarding the ink manufacturing side of things for the corporation such as Riverdale Industries. Do you have plans to close any of those facilities?

We don't ever really give guidance at what we're looking at across the board. I don't have any sort of real plans right now for additional plant structure changes at this point in time so I can't help you with that answer. I think you're talking about our Handschy ink facilities which is of course we use to primarily make internally to service our own facilities and right now we continue to operate those facilities. [Gerard Worshton – U.S. Steel]: I was concerned because of the high cost of material such as chemicals in order to make the ink, if that was affecting your business right now.

It's a good question. When we start talking about the fourth quarter of course is that we really didn't see much of the chemical cost come down in the fourth quarter. Those things have tended to lag, oil prices. But what we are starting to see in the first quarter of course is our chemical prices coming down for most of our products like latex in our codings with the possible exception of caustic soda. It continues to be pretty high. I think there are other market dynamics at work on caustic soda, but a lot of the input raw materials for those inks which are for the most part petro chemical based for the most part. We have seen them drop and of course we will reflect those as we look at the first and second quarter next year, we would expect those costs to go down. [Gerard Worshton – U.S. Steel]: Another thing too, I never saw the stock of a corporation so cheap as it is. I think it hit a rock bottom of $0.57. I was concerned if the company at all is going to have a reverse split or any kind of split in the foreseeable future.

I don't think we're going to talk about stock prices here, but no we have no anticipation of a reverse stock split. [Gerard Worshton – U.S. Steel]: I don't think you ever had a stock split as far as that's concerned in history.

Not that I'm aware of. [Gerard Worshton – U.S. Steel]: I hope things can prosper for the company as far as the shareholders. Like I said, I never saw the stock this cheap.

I would tend to agree with you. You and I are aligned on that. [Gerard Worshton – U.S. Steel]: Do you think the stock will go lower here or nobody knows right now as far as the recession and the market place for your company?

I can't provide guidance on stock and I think based on my own portfolio, you certainly wouldn't want to be following my advice on the stock market as well. Who knows? I think what we're going to do as I said earlier, we're going to operate effectively. We're going to reduce our debt, improve our margins in 2009 and we'll let the stock take care of itself. But I appreciate your question. [Gerard Worshton – U.S. Steel]: Another thing too, I noticed that there was a report that you're building a new plant in Kalamazoo, Michigan, right?

We're not building a new plant, but as we announced in the fourth quarter last year, we're making about a $40 million expansion to our existing facility in Kalamazoo, Michigan. That facility is where we make a lot of cereal and dry food products and we're going to add about 160 jobs or so in that area as we expand that facility. We've already started the work and yes, that's a very important Kalamazoo mill and Kalamazoo is important to us and we're excited about that investment. So it's not all about the plant take out. In some cases, it's about investment and doing the right things.

Your next question comes from Sandy Burns – KBC Financial. Sandy Burns – KBC Financial: In terms of the contract re-pricing that's occurring, does most of that kick in at the beginning of the year, or is it more spread throughout the year? Also, given the environment can you tell us how well it's been going overall?

Our contracts do come out all throughout the year. There isn't like January is a major reset for any individual contract. They roll through whenever those contracts were signed, and they're signed throughout the year. What I will tell you about our customers are no different than us. Nobody necessarily wants a price increase but our customers under their contracts, just like we did when inflation was going through the roof last year, we honored and sold and manufactured at a tough time for Graphic Packaging. We haven't had to have difficult conversations with our customers. They understand the benefit they've gotten and that's really not a problem for Graphic. Sandy Burns – KBC Financial: Anything you can say right now in terms of what you're down time is looking like in the first quarter on either Containerboard or CRB?

Those are three different questions so let's talk about them. In our CRB that primarily drives food and beverage and of course that is a pretty busy time of the year for us as you can well imagine cereal and macaroni and cheese cartons and beverage and beer. So those are pretty busy right now. The Containerboard business, we only have a small medium machine down in West Monroe, Louisiana. We make less that 100,000 tons externally and we have taken some downtime in January in that machine just because the market demand is offset 19%. It's a pretty small impact overall to the corporation as you can well imagine. It's a very, very small machine, but there is no good reason for us to continue to produce. Now what we have started to see as we're heading into the end of February and March is that that business is beginning to recover. As I think most Containerboard people will tell you, there is some light at the end of that, but for us, clearly we are the tail wagging that dog. So our major mills are running. If things change, I'll take them down but we have no current plans to take additional down time. Sandy Burns – KBC Financial: What's the capacity on the number two machine that's being shut?

I think it was 150,000 tons roughly. Sandy Burns – KBC Financial: So certainly one of the small machines in the system.

One of the small machines in the system. It was what we call the swing machine. We make liner board on it, but when it was full operating it was between 150,000 and 175,000. I'm hesitating because a lot of it depends upon how much, what grade you're making, heavy caliber, low caliber but it's in that range. It's not a 700,000 ton machine like the other ones in West Monroe.

Your next question comes from Matthew Armas – Goldman Sachs. Matthew Armas – Goldman Sachs: Can you provide fourth quarter volume numbers by major segments and that being food, beverage and industrial.

We do not break that out. Matthew Armas – Goldman Sachs: Can you provide some qualitative?

As I mentioned, food was pretty flat. Beverage was down only slightly. Beer was up and soft drink continued to decline. On average the difference between '07 and '08 in those businesses was negligible from a carton standpoint. The volume drop off in our business was primarily around Containerboard or medium if you will, and multi wall bag. That business was mostly affected by the industrial. Our international markets were pretty good. They were pretty much on line with what they did last year. Open market, what we would call board that was sold to other converters. That was slightly down in the quarter as well because that board is not only used in food and beverage, it's used in a variety of applications and they struggled a little bit in the quarter. So our core businesses were flat to slightly up. The rest of it was more dependent upon, other sectors were down. Matthew Armas – Goldman Sachs: Given that in your distribution of outcomes for the year, it sounds like volumes could be good, volumes could be very bad, you're not willing to call the back half. But looking at your covenant step down in the third quarter, would it be prudent to go back to the bank? Have you started discussions with the bank on potentially amending the step down to provide some more flexibility?

No we have not started any of those discussions. In our forward looks we see no issues with the credit agreement and we really like our credit agreement and the flexibility it gives us to run the business.

If you look at the cushion under the calculus, it's over full term, almost a term and a half, so there's no forward scenario that would suggest we should be looking at that. Matthew Armas – Goldman Sachs: On your natural gas hedging policy, can you remind us what the institutionalized policy on a go forward basis is forward hedging natural gas and have you thought about reigning that in a little bit given that it seems to be the second year of three where you're kind of locked in longer term higher prices.

First of all we do some natural gas hedging just because it's sort of the covenant process with the banks and our credit facility. We typically hedge about 70% of the quarter we're in, and the rest of it we go on the open market. I don't suspect we will do materially different than that. We are hedged significantly into the first quarter of 2010, although we have some small position going into that. So we'll continue to follow our overall policy. The hedge policy for us is to really just make sure that understand our input costs. We're really not in it for speculation or finding out the low end of the market in the process. It's pretty stable. We use it basically to control cash flow not as an up and down plan.

Your next question comes from [Raza Alliace – Nike] [Raza Alliace – Nike]: I wanted to see if you could give me an idea of where your volumes stand right now after the shut downs and integrations and where is your capacity right now by segment?

We don't provide production capacity by segment. I will tell you that we roughly make about 2.3 million tons a year between our capacities. That capacity is down only by the 150,000 or so thousand tons that we took in our paper machine number two. On an annual basis, we see maybe a percent of creep or something like that, so our tons don't move materially so our tons don't move materially around that. At this point in time, our forward look is that we'll need all those tons globally. If it becomes different, we'll take the appropriate down time.

If you look in the 10-K as well, you'll see some additional information in regards to production capacity in the mills.

Your next question comes from Terry Dougherty – Capital Source Bank Terry Dougherty – Capital Source Bank: Just a quick question regarding revolver expectations for 2009. While it was noted that you have approximately $160 invested, do you foresee any additional investment draw downs or any repayments in the near term?

We're currently evaluating our lenders and we're looking at what are the appropriate times to really restart our program of borrowing money when we need it, and not carrying excess cash on hand. Currently we're still in the evaluation process and when it's appropriate, we'll adjust back to our original cash management program.

Your next question comes from Aaron Rickles – Oppenheimer Aaron Rickles – Oppenheimer: I had a question regarding the credit facility EBITDA and the reconciliation of that to your pro forma EBITDA and really the question is some of the adjustments. How do they roll off in 2009? Can you go through that a little bit?

I don't think I'd like to go through that in detail, but what I will tell you is we have projected out our adjustments and we have modeled our credit agreement EBITDA not only through 2009 but well into 2010 and through that period, we see that we have a substantial cushion of between the credit agreements minimum and the expected amount that is calculated based on business performance. So that's what we've done. Aaron Rickles – Oppenheimer: You can't be more specific?

Our credit agreement has you can see by the attachment to the press release is very complex. There's a lot of moving pieces in that and it's just not something that you can do on a call like this. Aaron Rickles – Oppenheimer: Your CapEx, I was hoping you could go into a little bit more depth. The guidance is helpful but is it possible to break that out a little bit more in terms of what you view as maintenance versus reinvestment in the business?

Probably my mill guys would come hunting for me, but I would tell you that Graphic Packaging on a pure maintenance basis, we probably, we run our business on $110 million to $115 million of CapEx. The rest of it is related to our synergies and our IT integration for this year. Last year we spent $183 million. We expect as Dan said to be somewhere in the $170 million to $180 million this year and still heavily oriented because we're expanding as I mentioned earlier $40 million to our Kalamazoo facility. We've got some IT investment in the process, so CapEx will walk down over time but to run the thing on a bare bones sort of thing, I'm sure we're much closer to $100 million that $180 million. Aaron Rickles – Oppenheimer: How are you thinking about 2010 in terms of walking it down? Do you think it steps down quickly or are there still things in the pipeline.

I'm trying to get through the first quarter of 2009, so right now I don't mean to be flip but the reality is, looking out to 2010 for CapEx, not sure what volume or needs are going to be from customers is really difficult. Of course we have a long term three year plan, but I wouldn't want to give you insight into that because I really think we have to figure out what '09 is going to be. I think it will potentially change a lot of different things for companies including Graphics. So I'm comfortable with our plans for '09. I like the early trends in the business but I don't really want to try to give guidance for 2010 CapEx.

Thank you everybody for joining us on our fourth quarter earnings call.