GRAPHIC PACKAGING HOLDING CO

Previous wording

Graphic Packaging is a leading global provider of consumer goods packaging made from renewable or recycled materials. The Company designs and manufactures sustainable packaging solutions including cartons, multipack cartons, trays, carriers, paperboard canisters, and cups and bowls, made primarily from unbleached paperboard, recycled paperboard, and bleached paperboard. Paperboard used in its packaging solutions comes from wood fiber, a renewable resource, and from secondary (reused) fiber. Graphic Packaging’s consumer packaging is designed to be recycled, and the Company works across the value chain to make it easier for people to recycle. With this focus, the Company plays an active role in support of the move to a more circular economy and a sustainable future for generations to come. Graphic Packaging’s commitment to reducing the environmental impact of everyday consumer packaging is fundamental to its strategy, our goals, and to our business purpose.

Current wording

Graphic Packaging is a leading global provider of consumer goods packaging made from renewable or recycled materials. The Company designs and manufactures sustainable packaging solutions including cartons, multipack cartons, trays, carriers, paperboard canisters, and cups and bowls, made primarily from unbleached paperboard, recycled paperboard, and bleached paperboard. Paperboard used in its packaging solutions comes from wood fiber, a renewable resource, and from secondary (reused) fiber. Graphic Packaging’s consumer packaging is designed to be recycled, and the Company works across the value chain to make it easier for people to recycle. With this focus, the Company plays an active role in support of the move to a more circular economy and a sustainable future for generations to come. Graphic Packaging’s commitment to reducing the environmental impact of everyday consumer packaging is fundamental to our strategy, our goals, and to our business purpose.

Previous wording

The Company serves a wide variety of consumer non-durables (consumer staples) markets, ranging from food and beverage, to foodservice, household products, beauty and heath care. It produces packaging solutions at over 100 locations in over 25 countries around the world, serving customers ranging from local consumer products companies to the largest multinationals. The Company believes that it offers one of the most comprehensive ranges of packaging design, manufacture, and execution capabilities available. Graphic Packaging manufactures a significant amount of the paperboard that it uses to produce packaging solutions, mainly where it believes that self-manufacture provides it with a competitive advantage and allows the Company to deliver better, more consistent results for customers. The Company currently manufactures most of the paperboard it consumes in the Americas and purchases from third parties the majority of the paperboard it consumes in its Europe segment.

Current wording

The Company serves a wide variety of consumer nondurables (consumer staples) markets, from food and beverage, to foodservice, to household products, beauty and heath care. It produces packaging solutions at over 100 locations in over 25 countries around the world, serving customers and brands ranging from local consumer products companies and retailers to the largest multinationals. The Company offers one of the most comprehensive ranges of packaging design, manufacture, and execution capabilities available. Graphic Packaging manufactures a significant amount of the paperboard that it uses to produce packaging solutions, mainly where it believes that self-manufacture provides it with a competitive advantage and allows the Company to deliver better, more consistent results for customers. The Company currently manufactures most of the paperboard it consumes in the Americas and purchases from third parties the majority of the paperboard it consumes in its Europe Paperboard Packaging segment.

Previous wording

•During 2023, the Company decided to close multiple packaging facilities by the end of 2023 and early 2024. Production from these facilities will be consolidated into our existing packaging network.

Current wording

•During the second quarter of 2024, the Company decided to close multiple packaging facilities by the end of 2024. These are in addition to the multiple packaging facilities for which the Company decided to close by the end of 2023 and early 2024. Production from these facilities will be consolidated into our existing packaging network. Current Assets within the Condensed Consolidated Balance Sheet also includes $11 million relating to multiple packaging facilities, which met the held for sale criteria as of June 30, 2024.

Previous wording

•In January 2023, the Company completed the acquisition of Tama, a recycled paperboard manufacturing facility located in Tama, Iowa, from Greif Packaging LLC for approximately $100 million. It is reported within the Paperboard Manufacturing reportable segment. Subsequently, in the second quarter of 2023, the Company closed this facility.

Current wording

•In January 2023, the Company completed the acquisition of Tama Paperboard, LLC (“Tama”), a recycled paperboard manufacturing facility located in Tama, Iowa, from Greif Packaging LLC for approximately $100 million. It is reported within the Paperboard Manufacturing reportable segment. Subsequently, in the second quarter of 2023, the Company closed this facility.

Previous wording

•On September 8, 2023, the Company completed the acquisition of Bell, adding three packaging facilities in Sioux Falls, South Dakota and Groveport, Ohio for $262 million. Bell is reported within the Americas Paperboard Packaging reportable segment.

Current wording

•On September 8, 2023, the Company completed the acquisition of Bell Incorporated (“Bell”), adding three packaging facilities in Sioux Falls, South Dakota and Groveport, Ohio for $262 million. Bell is reported within the Americas Paperboard Packaging reportable segment.

Previous wording

Income from Operations for the three months ended March 31, 2024 decreased $52 million or 16% to $278 million from $330 million for the three months ended March 31, 2023 primarily due to lower production, pricing and sales of open market bleached paperboard. Lower packaging volumes, mix, and higher accelerated depreciation related to the closures of several packaging and paperboard facilities of $10 million (refer to“Note 13 - Exit Activities”in the Notes to Condensed Consolidated Financial Statements for additional information) decreased Income from Operations, and was offset by performance, primarily due to cost savings from continuous improvements and other programs, and productivity improvements, including benefits from capital projects. Inflation was relatively flat due to favorable commodity deflation (primarily external board and energy, partially offset by secondary fiber) and unfavorable other inflation (primarily labor and benefits).

Current wording

Income from Operations for the three months ended June 30, 2024 increased $57 million or 21% to $324 million from $267 million for the three months ended June 30, 2023 primarily due to the gain from the Augusta divestiture of $75 million, offset by bleached paperboard price and volume declines (including due to the divestiture), and incremental planned maintenance expense. Excluding those items, the negative impact of lower price, packaging volumes, non-commodity (primarily labor and benefits) cost inflation, and foreign exchange were offset by performance, including cost savings from continuous improvements and other programs, and productivity improvements, including benefits from capital projects, favorable commodity deflation (primarily external board and energy, partially offset by secondary fiber), and the acquisition of Bell in September 2023. Income from Operations was also favorably impacted by a reduction in impairment charges related to the sale of our Russian operations in 2023 (refer to “Note 14 - Divestitures” in the Notes to Condensed Consolidated Financial Statements for additional information) and a reduction in accelerated depreciation related to the closures of several packaging and paperboard facilities of $27 million (refer to “Note 13 - Exit Activities” in the Notes to Condensed Consolidated Financial Statements for additional information).

Previous wording

Interest Expense, Net was $59 million and $58 million for the three months ended March 31, 2024 and 2023, respectively, relatively flat as compared to the prior year. As of March 31, 2024, approximately 24% of the Company’s total debt was subject to floating interest rates.

Current wording

Interest Expense, Net was $60 million and $60 million for the three months ended June 30, 2024 and 2023, respectively, flat as compared to the prior year. As of June 30, 2024, approximately 30% of the Company’s total debt was subject to floating interest rates.

Previous wording

During the three months ended March 31, 2023, the Company recognized Income Tax Expense of $64 million on Income before Income Taxes of $271 million. The effective tax rate for the three months ended March 31, 2023 was different from the statutory rate primarily due to discrete tax adjustments including a tax benefit of $2 million related to excess tax benefits on restricted stock units that vested during the period in addition to the mix of earnings between foreign and domestic jurisdictions, including those with and without valuation allowances.

Current wording

During the three months ended June 30, 2024, the Company recognized Income Tax Expense of $74 million on Income before Income Taxes of $264 million. The effective tax rate for the six months ended June 30, 2024 is different from the statutory rate primarily due to the write off of non-deductible book goodwill associated with the divestiture of Augusta in addition to the mix of earnings between foreign and domestic jurisdictions, including those with and without valuation allowances.

Previous wording

The Company’s Net Sales for the three months ended March 31, 2024 decreased by $179 million or 7% to $2,259 million from $2,438 million for the three months ended March 31, 2023 due to lower open market paperboard sales ($93 million), primarily bleached paperboard, the divestiture of our two packaging facilities in Russia in 2023 ($28 million), lower packaging volumes driven by the timing of the Easter holiday and fewer shipping days and pricing declines including pass through of lower input costs in Europe, partially offset by the acquisition of Bell in September 2023 ($43 million), innovation sales growth ($37 million) driven by conversions to our sustainable consumer packaging solutions and favorable foreign currency exchange. Lower packaging sales in food and household markets were partially offset by higher packaging sales in foodservice and beverage markets.

Current wording

The Company’s Net Sales for the six months ended June 30, 2024 decreased by $334 million or 7% to $4,496 million from $4,830 million for the six months ended June 30, 2023 due to lower open market paperboard volumes and pricing, primarily bleached paperboard including the impact of the Augusta divestiture, the divestiture of our two packaging facilities in Russia in 2023 ($54 million), lower packaging volumes and pricing declines including pass through of lower input costs in Europe, and unfavorable foreign currency exchange, partially offset by the acquisition of Bell in September 2023 ($85 million). Innovation sales growth was $88 million driven by conversions to our sustainable consumer packaging solutions. Lower packaging sales in food, health and beauty, and household markets were partially offset by higher packaging sales in foodservice and beverage markets.

Previous wording

During the three months ended March 31, 2024, the Company recognized Income Tax Expense of $53 million on Income before Income Taxes of $218 million. The effective tax rate for the three months ended March 31, 2024 is different from the statutory rate primarily due to discrete tax adjustments including a tax benefit of $3 million related to excess tax benefits on restricted stock units that vested during the period in addition to the mix of earnings between foreign and domestic jurisdictions, including those with and without valuation allowances.

Current wording

During the six months ended June 30, 2024, the Company recognized Income Tax Expense of $127 million on Income before Income Taxes of $482 million. The effective tax rate for the six months ended June 30, 2024 is different from the statutory rate primarily due to the write off of non-deductible book goodwill associated with the divestiture of Augusta as well as discrete tax adjustments including a tax benefit of $3 million related to excess tax benefits on restricted stock units that vested during the period, and the mix of earnings between foreign and domestic jurisdictions, including those with and without valuation allowances.

Previous wording

Paperboard Manufacturing includes the seven North American paperboard manufacturing facilities that produce recycled, unbleached and bleached paperboard, which is consumed internally to produce paperboard consumer packaging for the Americas and Europe Packaging segments. Paperboard not consumed internally is sold externally to a wide variety of paperboard packaging converters and brokers. The Paperboard Manufacturing segment's Net Sales represent the sale of paperboard only to external customers. The effect of intercompany transfers to the paperboard packaging segments has been eliminated from the Paperboard Manufacturing segment to reflect the economics of the integration of these segments.

Current wording

Paperboard Manufacturing includes the six North American paperboard manufacturing facilities that produce recycled, unbleached and bleached paperboard, which is consumed internally to produce paperboard consumer packaging for the Americas and Europe Paperboard Packaging segments. Paperboard not consumed internally is sold externally to a wide variety of paperboard packaging converters and brokers. The Paperboard Manufacturing segment's Net Sales represent the sale of paperboard only to external customers. The effect of intercompany transfers to the paperboard packaging segments has been eliminated from the Paperboard Manufacturing segment to reflect the economics of the integration of these segments.

Previous wording

(c)Includes expenses related to business combinations, exit activities and other special charges. See “Note 1 - General Information” in the Notes to Condensed Consolidated Financial Statements for further information.

Current wording

(c)Includes expenses related to business combinations, exit activities and other special items. See “Note 1 - General Information” in the Notes to Condensed Consolidated Financial Statements for further information.

Previous wording

First Quarter 2024 Compared to First Quarter 2023

Current wording

Second Quarter 2024 Compared to Second Quarter 2023

Previous wording

Income from Operations decreased due to lower pricing and lower packaging volumes, partially offset by commodity deflation, cost savings from continuous improvement and other programs and favorable foreign currency exchange. The commodity deflation was primarily related to external board, which is passed through to our customers, partially offset by other inflation (primarily labor and benefits). Income from Operations was also favorably impacted by a reduction in impairment charges related to the sale of our Russian operations in 2023. Refer to“Note 14 - Divestitures”in the Notes to Condensed Consolidated Financial Statements for additional information.

Current wording

Income from Operations increased due to commodity deflation, and cost savings from continuous improvement and other programs. The commodity deflation was primarily related to external board, which is passed through to our customers, partially offset by other inflation (primarily labor and benefits). Income from Operations was also favorably impacted by higher volumes and a reduction in impairment charges related to the sale of our Russian operations in 2023. Refer to“Note 14 - Divestitures”in the Notes to Condensed Consolidated Financial Statements for additional information, offset by lower pricing and mix.

Previous wording

Net Sales decreased due to lower open market paperboard volumes and pricing primarily related to bleached paperboard.

Current wording

Net Sales decreased due to lower open market paperboard volumes primarily related to the Augusta divestiture, mix and pricing primarily related to bleached paperboard.

Previous wording

Income from Operations decreased due to lower pricing, production and sales of open market paperboard primarily bleached and commodity and other inflation (primarily secondary fiber and labor and benefits offset by energy and chemicals). The decrease was partially offset by productivity improvements, including benefits from capital projects.

Current wording

Income from Operations increased due to the gain from the Augusta divestiture (refer to“Note 14 - Divestitures”in the Notes to Condensed Consolidated Financial Statements for additional information) and productivity improvements, including benefits from capital projects. The increase was partially offset by lower pricing, production and sales of open market paperboard primarily bleached, higher levels of maintenance downtime, mix and commodity and other inflation (primarily secondary fiber and labor and benefits offset by energy and freight). Income from Operations was also favorably impacted by a reduction in accelerated depreciation related to the closure of Tama (refer to“Note 13 - Exit Activities”in the Notes to Condensed Consolidated Financial Statements for additional information).

Previous wording

Net Sales decreased due to lower packaging volumes driven by the timing of the Easter holiday and fewer shipping days, partially offset by innovation sales growth driven by conversions to our sustainable consumer packaging solutions, the acquisition of Bell in September 2023 and favorable foreign currency exchange. Lower packaging sales in food and household markets were partially offset by higher packaging sales in foodservice and beverage markets.

Current wording

Net Sales decreased due to lower packaging volumes and pricing, partially offset by innovation sales growth driven by conversions to our sustainable consumer packaging solutions and the acquisition of Bell in September 2023. Lower packaging sales in food and household markets were partially offset by higher packaging sales in foodservice and beverage markets.

Previous wording

Income from Operations increased due to performance, primarily due to cost savings from continuous improvement and other programs, productivity improvements, including benefits from capital projects, innovation sales growth, and commodity deflation (primarily energy and external board offset by secondary fiber). These increases were partially offset by lower packaging volumes, other inflation (primarily labor and benefits), and higher accelerated depreciation and charges related to the closures of several packaging facilities (refer to“Note 13 - Exit Activities” in the Notes to Condensed Consolidated Financial Statements for additional information).

Current wording

Income from Operations decreased due to lower pricing and packaging volumes, incremental planned maintenance expenses, higher accelerated depreciation and charges related to the closures of several packaging facilities (refer to“Note 13 - Exit Activities” in the Notes to Condensed Consolidated Financial Statements for additional information), commodity inflation (primarily secondary fiber) and other inflation (primarily labor and benefits). These decreases were partially offset by performance, primarily due to cost savings from continuous improvement and other programs, productivity improvements, including benefits from capital projects, innovation sales growth, and the acquisition of Bell in September 2023.

Previous wording

Net cash provided by operating activities for the first three months of 2024 totaled $3 million compared to $60 million for the same period in 2023. The decrease was mainly due to lower income from operations offset by less use of cash for working capital. Pension contributions for the first three months of 2024 and 2023 were $2 million and $1 million, respectively.

Current wording

Net cash provided by operating activities for the first six months of 2024 totaled $164 million compared to $291 million for the same period in 2023. The decrease was mainly due to lower cash generated from operations offset by less use of cash for working capital. Pension contributions were $4 million for the first six months of 2024 and 2023.

Previous wording

Net cash used in investing activities for the first three months of 2024 totaled $311 million compared to $273 million for the same period in 2023. The Company had capital spending of $331 million ($278 million was capitalized) and $196 million ($181 million was capitalized) in 2024 and 2023, respectively. The increase in capital spending has been driven by the construction of the Company's new recycled paperboard manufacturing facility in Waco, Texas. For further discussion of the Company's new recycled paperboard manufacturing facility and continued investments made as part of the integration of acquisitions, see “Note 13 - Exit Activities” in the Notes to the Condensed Consolidated Financial Statements. Net cash receipts related to the accounts receivable securitization and sale programs were $20 million and $24 million in 2024 and 2023, respectively. In the prior year the Company completed the acquisition of Tama on January 31, 2023, from Greif Packaging LLC for approximately $100 million. For further discussion of the Company's CRB mill acquisition, see “Note 3 - Business Combinations” in the Notes to the Condensed Consolidated Financial Statements.

Current wording

Net cash provided by investing activities for the first six months of 2024 totaled $175 million compared to $437 million used in for the same period in 2023. The Company had capital spending of $580 million ($553 million was capitalized) and $385 million ($395 million was capitalized) in 2024 and 2023, respectively. The increase in capital spending was driven by the construction of the Company's new recycled paperboard manufacturing facility in Waco, Texas. For further discussion of the Company's new recycled paperboard manufacturing facility and continued investments made as part of the integration of acquisitions, see “Note 13 - Exit Activities” in the Notes to the Condensed Consolidated Financial Statements. On May 1, 2024, the Company completed the sale to Clearwater Paper Corporation of the Augusta Paperboard Manufacturing Facility for total cash consideration of $711 million. For further discussion of the Company's Divestiture of the Augusta Paperboard Manufacturing Facility, see “Note 14 - Divestitures” in the Notes to the Condensed Consolidated Financial Statements. Net cash receipts related to the accounts receivable securitization and sale programs were $46 million and $51 million in 2024 and 2023, respectively. In the prior year the Company completed the acquisition of Tama on January 31, 2023, from Greif Packaging LLC for approximately $100 million. For further discussion of the Tama acquisition, see “Note 3 - Business Combinations” in the Notes to the Condensed Consolidated Financial Statements.

Previous wording

Net cash provided by financing activities for the first three months of 2024 and 2023 totaled $287 million and $177 million respectively. Current year financing activities include a debt drawing of the new incremental term facilities which consist of a $50 million Incremental Term A-5 Facility (the “Incremental A-5 Loan”) and a $200 million Incremental Term A-6 Facility (the “Incremental Term A-6 Loan”). The net proceeds were used by the Company to repay a portion of the outstanding borrowings under its senior secured revolving credit facility. For further discussion of the Company's newly acquired debt, see “Note 4 - Debt” in the Notes to the Condensed Consolidated Financial Statements. Other current year activities include borrowings under revolving credit facilities primarily for capital spending, and payments on debt of $10 million. The Company also paid dividends of $31 million and withheld $22 million of restricted stock units to satisfy tax withholding obligations related to the payout of restricted stock units. In the prior year the Company also made borrowings under revolving credit facilities primarily for capital spending, repurchase of common stock of $28 million, and payments on debt of $5 million. The Company also paid dividends and distributions of $31 million and withheld $20 million of restricted stock units to satisfy tax withholding payments related to the payout of restricted stock units.

Current wording

Net cash used in financing activities for the first six months of 2024 totaled $368 million compared to net cash provided by of $131 million for the same period in 2023. Current year financing activities include a debt drawing of the new incremental term facilities which consist of a $50 million Incremental Term A-5 Facility (the “Incremental A-5 Loan”), a $200 million Incremental Term A-6 Facility (the “Incremental Term A-6 Loan”), an offering of $500 million aggregate principal amount of 6.375% Senior Unsecured Notes due 2032. The net proceeds were used by the Company to repay a portion of the outstanding borrowings under its senior secured revolving credit facility. The Company also drew $400 million from the senior secured domestic revolving credit facilities and used the proceeds, together with cash on hand, to redeem it's 0.821% Senior Notes due in 2024. For further discussion of the Company's newly acquired debt and redemption, see “Note 4 - Debt” in the Notes to the Condensed Consolidated Financial Statements. Other current year activities include borrowings under revolving credit facilities primarily for capital spending, repurchase of common stock of $200 million and payments on debt of $19 million. The Company also paid dividends of $61 million and withheld $23 million of restricted stock units to satisfy tax withholding obligations related to the payout of restricted stock units. In the prior year the Company also made borrowings under revolving credit facilities primarily for capital spending, repurchase of common stock of $29 million, and payments on debt of $10 million. The Company also paid dividends and distributions of $61 million and withheld $20 million of restricted stock units to satisfy tax withholding payments related to the payout of restricted stock units.

Previous wording

The results of operations, assets, and liabilities for GPHC and GPIL are substantially the same. Therefore, the summarized financial information below is presented on a combined basis, consisting of the Issuer and Subsidiary Guarantors (collectively, the “Obligor Group”), and is presented after the elimination of: (i) intercompany transactions and balances among the Issuer and Subsidiary Guarantors, and (ii) equity in earnings from and investments in the Nonguarantor Subsidiaries.

Current wording

The results of operations, assets, and liabilities for Graphic Packaging Holding Company (“GPHC”) and GPIL are substantially the same. Therefore, the summarized financial information below is presented on a combined basis, consisting of the Issuer and Subsidiary Guarantors (collectively, the “Obligor Group”), and is presented after the elimination of: (i) intercompany transactions and balances among the Issuer and Subsidiary Guarantors, and (ii) equity in earnings from and investments in the Nonguarantor Subsidiaries.

Previous wording

(a)Includes Net Sales to Nonguarantor Subsidiaries of $151 million.

Current wording

(a)Includes Net Sales to Nonguarantor Subsidiaries of $317 million.

Previous wording

The Company expects its material cash requirements for the next nine months will be for: capital expenditures, periodic required income tax payments, periodic interest and debt service payments on associated debt, as discussed in “Note 5 - Debt” of the Notes to the Consolidated Financial Statements of the Company's 2023 Annual Report on Form 10-K, lease agreements which have fixed lease payment obligations, as discussed in “Note 6 - Leases” of the Notes to the Consolidated Financial Statements of the Company's 2023 Annual Report on Form 10-K, and minimum purchase commitments as discussed in “Note 13 - Commitments” of the Notes to the Consolidated Financial Statements of the Company's 2023 Annual Report on Form 10-K along with ongoing operating costs, working capital, share repurchases and dividend payments. The Company expects its primary sources of liquidity to be cash flows from sales and operating activities in the normal course of operations and availability from its revolving credit facilities, as needed. In addition, the Company expects a future source of liquidity from the proceeds of the Augusta sale (refer to “Note 14 - Divestitures” in the Notes to Condensed Consolidated Financial Statements for further information). The Company expects that these sources will be sufficient to fund ongoing cash requirements for the foreseeable future, including at least the next twelve months.

Current wording

The Company expects its material cash requirements for the next six months will be for: capital expenditures, periodic required income tax payments, periodic interest and debt service payments on associated debt, as discussed in “Note 5 - Debt” of the Notes to the Consolidated Financial Statements of the Company's 2023 Annual Report on Form 10-K, lease agreements which have fixed lease payment obligations, as discussed in “Note 6 - Leases” of the Notes to the Consolidated Financial Statements of the Company's 2023 Annual Report on Form 10-K, and minimum purchase commitments as discussed in “Note 13 - Commitments” of the Notes to the Consolidated Financial Statements of the Company's 2023 Annual Report on Form 10-K along with ongoing operating costs, working capital, share repurchases and dividend payments. The Company expects its primary sources of liquidity to be cash flows from sales and operating activities in the normal course of operations and availability from its revolving credit facilities, as needed. The Company expects that these sources will be sufficient to fund ongoing cash requirements for the foreseeable future, including at least the next twelve months.

Previous wording

Principal and interest payments under the term loan facilities and the revolving credit facilities, together with principal and interest payments on the Company's 0.821% Senior Notes due 2024, 4.125% Senior Notes due 2024, 1.512% Senior Notes due 2026, 4.75% Senior Notes due 2027, 3.50% Senior Notes due 2028, 3.50% Senior Notes due 2029, 2.625% Senior Notes due 2029 and 3.75% Senior Notes due 2030 (the “Notes”), represent liquidity requirements for the Company. Based upon current levels of operations, anticipated cost savings and expectations as to future growth, the Company believes that cash generated from operations, together with amounts available under its revolving credit facilities and other available financing sources, will be adequate to permit the Company to meet its debt service obligations, necessary capital expenditure program requirements and ongoing operating costs and working capital needs, although no assurance can be given in this regard. The Company's future financial and operating performance, ability to service or refinance its debt and ability to comply with the covenants and restrictions contained in its debt agreements (see “Covenant Restrictions” below) will be subject to future economic conditions, including conditions in the credit markets, and to financial, business and other factors, many of which are beyond the Company's control, and will be substantially dependent on the selling prices and demand for the Company's products, raw material and energy costs, and the Company's ability to successfully implement its overall business and profitability strategies.

Current wording

Principal and interest payments under the term loan facilities and the revolving credit facilities, together with principal and interest payments on the Company's 4.125% Senior Notes due 2024, 1.512% Senior Notes due 2026, 4.75% Senior Notes due 2027, 3.50% Senior Notes due 2028, 3.50% Senior Notes due 2029, 2.625% Senior Notes due 2029, 3.75% Senior Notes due 2030 and 6.375% Notes due 2032 (the “Notes”), represent liquidity requirements for the Company. Based upon current levels of operations, anticipated cost savings and expectations as to future growth, the Company believes that cash generated from operations, together with amounts available under its revolving credit facilities and other available financing sources, will be adequate to permit the Company to meet its debt service obligations, necessary capital expenditure program requirements and ongoing operating costs and working capital needs, although no assurance can be given in this regard. The Company's future financial and operating performance, ability to service or refinance its debt and ability to comply with the covenants and restrictions contained in its debt agreements (see “Covenant Restrictions” below) will be subject to future economic conditions, including conditions in the credit markets, and to financial, business and other factors, many of which are beyond the Company's control, and will be substantially dependent on the selling prices and demand for the Company's products, raw material and energy costs, and the Company's ability to successfully implement its overall business and profitability strategies.

Previous wording

The Company has entered into agreements to sell, on a revolving basis, certain trade accounts receivable to third party financial institutions. Transfers under these agreements meet the requirements to be accounted for as sales in accordance with the Transfers and Servicing topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (the “Codification”). The loss on sale is included in Other Expense, Net in the Condensed Consolidated Statements of Operations. The following table summarizes the activity under these programs for the three months ended March 31, 2024 and 2023, respectively:

Current wording

The Company has entered into agreements to sell, on a revolving basis, certain trade accounts receivable to third party financial institutions. Transfers under these agreements meet the requirements to be accounted for as sales in accordance with the Transfers and Servicing topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (the “Codification”). The loss on sale is included in Other Expense, Net in the Condensed Consolidated Statements of Operations. The following table summarizes the activity under these programs for the six months ended June 30, 2024 and 2023, respectively:

Previous wording

Receivables sold under all programs subject to continuing involvement, which consist principally of collection services, were $797 million and $770 million as of March 31, 2024 and December 31, 2023, respectively.

Current wording

Receivables sold under all programs subject to continuing involvement, which consist principally of collection services, were $781 million and $770 million as of June 30, 2024 and December 31, 2023, respectively.

Previous wording

The Company also participates in supply chain financing arrangements offered by certain customers that qualify for sale accounting in accordance with the Transfers and Servicing topic of the FASB Codification. For the three months ended March 31, 2024 and 2023, the Company sold receivables of $250 million and $301 million, respectively, related to these arrangements.

Current wording

The Company also participates in supply chain financing arrangements offered by certain customers that qualify for sale accounting in accordance with the Transfers and Servicing topic of the FASB Codification. For the six months ended June 30, 2024 and 2023, the Company sold receivables of $516 million and $591 million, respectively, related to these arrangements.

Previous wording

The Company has arranged a supplier finance program (“SFP”) with a financial intermediary, which provides certain suppliers the option to be paid by the financial intermediary earlier than the due date on the applicable invoice. The transactions are at the sole discretion of both the suppliers and financial institution, and the Company is not a party to the agreements and has no economic interest in the supplier’s decision to sell a receivable. The range of payment terms negotiated by the Company with its suppliers is consistent, irrespective of whether a supplier participates in the program. The agreement with the financial intermediary does not require the Company to provide assets pledged as security or other forms of guarantees for the supplier finance program. Amounts due to the Company’s suppliers that elected to participate in the SFP program are included in Accounts Payable on the Company's Condensed Consolidated Balance Sheets and payments made under the SFP program are reflected in Cash Flows from Operating Activities in the Company's Condensed Consolidated Statements of Cash Flows. Accounts payable included $30 million and $30 million payable to suppliers who elected to participate in the SFP program as of March 31, 2024 and December 31, 2023, respectively.

Current wording

The Company has arranged a supplier finance program (“SFP”) with a financial intermediary, which provides certain suppliers the option to be paid by the financial intermediary earlier than the due date on the applicable invoice. The transactions are at the sole discretion of both the suppliers and financial institution, and the Company is not a party to the agreements and has no economic interest in the supplier’s decision to sell a receivable. The range of payment terms negotiated by the Company with its suppliers is consistent, irrespective of whether a supplier participates in the program. The agreement with the financial intermediary does not require the Company to provide assets pledged as security or other forms of guarantees for the supplier finance program. Amounts due to the Company’s suppliers that elected to participate in the SFP program are included in Accounts Payable on the Company's Condensed Consolidated Balance Sheets and payments made under the SFP program are reflected in Cash Flows from Operating Activities in the Company's Condensed Consolidated Statements of Cash Flows. Accounts payable included $31 million and $30 million payable to suppliers who elected to participate in the SFP program as of June 30, 2024 and December 31, 2023, respectively.

Previous wording

The Current Credit Agreement requires that the Company maintain a maximum Consolidated Total Leverage Ratio of less than 4.25 to 1.00. At March 31, 2024, the Company was in compliance with such covenant and the ratio was 2.83 to 1.00.

Current wording

The Current Credit Agreement requires that the Company maintain a maximum Consolidated Total Leverage Ratio of less than 4.25 to 1.00. At June 30, 2024, the Company was in compliance with such covenant and the ratio was 2.70 to 1.00.

Previous wording

The Company must also comply with a minimum Consolidated Interest Expense Ratio of 3.00 to 1.00. At March 31, 2024, the Company was in compliance with such covenant and the ratio was 7.68 to 1.00.

Current wording

The Company must also comply with a minimum Consolidated Interest Expense Ratio of 3.00 to 1.00. At June 30, 2024, the Company was in compliance with such covenant and the ratio was 7.50 to 1.00.

Previous wording

The Company performed its annual goodwill impairment tests as of October 1, 2023. The Company concluded that all reporting units with goodwill have a fair value that exceeds their carrying value, and thus goodwill was not impaired. The Europe reporting unit had a fair value that exceeded its respective carrying value by 26%, whereas all other reporting units exceeded by more than 90%. The Europe reporting unit had goodwill totaling $476 million at March 31, 2024.

Current wording

The Company performed its annual goodwill impairment tests as of October 1, 2023. The Company concluded that all reporting units with goodwill have a fair value that exceeds their carrying value, and thus goodwill was not impaired. The Europe reporting unit had a fair value that exceeded its respective carrying value by 26%, whereas all other reporting units exceeded by more than 90%. The Europe reporting unit had goodwill totaling $477 million at June 30, 2024.