BUSINESS COMBINATIONS

On January 1, 2018, the Company completed the NACP Combination. The NACP business produces SBS paperboard and paper-based foodservice products. The NACP business includes two SBS mills located in Augusta, Georgia and Texarkana, Texas, three converting facilities in the U.S. and one in the U.K.

Total consideration for the NACP Combination, including debt assumed of $660 million, was $1.9 billion. The acquisition accounting for the NACP Combination is preliminary based on the estimated fair values as of the combination date and is subject to adjustments in subsequent periods once the third party valuations are finalized. Management believes that the purchase price attributable to goodwill represents the benefits expected as the acquisition was made to continue to expand the Company's product offering, integrate paperboard from the Company's mills and to further optimize the Company's supply chain footprint.

In conjunction with the NACP Combination, the Company executed a Tax Receivable Agreement ("TRA") with IP. Pursuant to elections under Section 754 of the Internal Revenue Code, the Company expects to obtain an increase with respect to the tax basis in the assets of GPIP and certain of its subsidiaries when IP exchanges or redeems any of its membership interests. The Company generally expects to treat redemptions or exchanges of membership interests by IP as direct purchases of membership interests for U.S. federal income tax purposes. Increases in tax basis may reduce the amounts that we would otherwise pay in the future to various tax authorities. The TRA provides for the payment by the Company to IP of 50% of the amount of any tax benefits projected to be realized by the Company upon IP's exchange of the partnership units into GPHC common stock.

On June 12, 2018, the Company completed the PFP acquisition. The Company paid approximately $34 million using existing cash and borrowings under the line of credit. The acquisition includes two manufacturing facilities in Lebanon, Tennessee and Lancaster, Texas, focused on the production of paperboard-based air filter frames.

The Company expects that goodwill related to the NACP Combination will not be deductible for tax purposes. The Company expects that goodwill related to the PFP acquisition will be deductible for tax purposes.

The preliminary acquisition accounting for the NACP Combination and PFP acquisition is as follows:



In millions	Amounts Recognized as of Acquisition Dates		Measurement Period Adjustments			Amounts Recognized as of Acquisition Dates (as adjusted)
Purchase Price	$	1,270.2	$	(41.3	)	$	1,228.9
Assumed Debt	660.0		—			660.0
Total Purchase Consideration	$	1,930.2	$	(41.3	)	$	1,888.9

Receivables, Net	145.3		—			145.3
Inventories, Net	300.4		—			300.4
Other Current Assets	20.9		—			20.9
Property, Plant and Equipment, Net	1,221.6		12.5			1,234.1
Intangible Assets, Net ^(a)	103.6		0.2			103.8
Other Assets	6.0		—			6.0
Total Assets Acquired	1,797.8		12.7			1,810.5
Accounts Payable	112.6		—			112.6
Compensation and Employee Benefits	20.7		—			20.7
Current Liabilities	12.4		—			12.4
Other Noncurrent Liabilities	10.1		—			10.1
Total Liabilities Assumed	155.8		—			155.8
Net Assets Acquired	1,642.0		12.7			1,654.7
Goodwill	288.2		(54.0		)	234.2
Total Estimated Fair Value of Net Assets Acquired	$	1,930.2	$	(41.3	)	$	1,888.9

^(a)Intangible Assets, Net consists of customer relationships with a weighted average life of approximately 20 years.

The following unaudited pro forma consolidated results of operations data assumes that the NACP Combination occurred as of the beginning of the period presented. This pro forma data is based on historical information and does not necessarily reflect the actual results that would have occurred, nor is it indicative of future results of operations.



	Three Months Ended		Six Months Ended
	June 30,		June 30,
In millions, except per share data	2017		2017
Net Sales	$	1,471.8	$	2,899.6
Net Income Attributable to Graphic Packaging Holding Company	27.1		68.2
Income Per Share — Basic	0.09		0.22
Income Per Share — Diluted	0.09		0.22

Net sales and Income from Operations from the NACP Combination was $360.1 million and $34.9 million, respectively, for the three months ended June 30, 2018. Net Sales and Income from Operations from the NACP Combination was $719.6 million and $55.8 million, respectively, for the six months ended June 30, 2018.

Total Assets increased as a result of the NACP Combination for the Paperboard Mills and Americas Paperboard Packaging reportable segments by approximately $1.5 billion and $0.6 billion, respectively, as compared to December 31, 2017.

In connection with the NACP Combination, the Company entered into agreements with IP for transition services, fiber procurement and corrugated products and ink supply. Payments to IP for the six months ended June 30, 2018 under these agreements were $14.6 million, $8.5 million and $14.7 million, respectively. In addition, approximately $5 million of payments were made for purchases unrelated to these agreements.

As disclosed in "Note 1 - General Information," in 2017, the Company acquired Seydaco, Norgraft, and Carton Craft, which are referred to collectively as the "2017 Acquisitions." Seydaco and Carton Craft are included in the Americas Paperboard Packaging Segment. Norgraft is included in the Europe Paperboard Packaging Segment. The Company paid approximately $189 million, net of cash acquired, for the 2017 Acquisitions using existing cash and borrowings under its revolving line of credit, and assumed debt of approximately $14 million. During the second quarter of 2018, the Company made valuation adjustments of $0.5 million for Carton Craft, which was recorded to goodwill. In the first quarter of 2018, the Company paid an additional $2.4 million related to the working capital true-up for Seydaco, which was recorded to goodwill.