GRAPHIC PACKAGING HOLDING COGPK
GRAPHIC PACKAGING HOLDING CO Fair Value Disclosure
Fair Value Measurement
The Company follows the fair value guidance integrated into the Fair Value Measurements and Disclosures topic of the FASB Codification in regards to financial and nonfinancial assets and liabilities. Nonfinancial assets and nonfinancial liabilities include those measured at fair value in goodwill impairment testing, asset retirement obligations initially measured at fair value, and those assets and liabilities initially measured at fair value in a business combination.
The FASB's guidance defines fair value, establishes a framework for measuring fair value and expands the fair value disclosure requirements. The accounting guidance applies to accounting pronouncements that require or permit fair value measurements. It indicates, among other things, that a fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The guidance defines fair value based upon an exit price model, whereby fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance clarifies that fair value should be based on assumptions that market participants would use, including a consideration of non-performance risk.
Valuation Hierarchy
The Fair Value Measurements and Disclosures topic establishes a valuation hierarchy for disclosure of the inputs used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows:
Level 1 inputs — quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 inputs — quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.
Level 3 inputs — unobservable inputs based on the Company's own assumptions used to measure assets and liabilities at fair value.
An asset or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
The Company has determined that its financial assets and financial liabilities include derivative instruments which are carried at fair value and are valued using Level 2 inputs in the fair value hierarchy. The Company uses valuation techniques based on discounted cash flow analyses, which reflects the terms of the derivatives and uses observable market-based inputs, including forward rates and uses market price quotations obtained from third party derivatives brokers, corroborated with information obtained from third party pricing service providers.
Fair Value of Financial Instruments
As of December 31, 2025 and 2024, there has not been any significant impact to the fair value of the Company's derivative liabilities due to its own credit risk. Similarly, there has not been any significant adverse impact to the Company's derivative assets based on evaluation of the Company's counterparties' credit risks. The following table summarizes the fair value of the Company's derivative instruments:
Derivative Assets(a) | Derivative Liabilities(b) | |||||||||||||
| December 31, | December 31, | |||||||||||||
| In millions | 2025 | 2024 | 2025 | 2024 | ||||||||||
Derivatives Designated as Hedging Instruments: | ||||||||||||||
| Commodity Contracts | $ | — | $ | 1 | $ | 5 | $ | — | ||||||
| Foreign Currency Contracts | — | — | 1 | — | ||||||||||
| Interest Rate Swap Agreements | — | — | 1 | — | ||||||||||
Derivatives Not Designated as Hedging Instruments: | ||||||||||||||
| Foreign Currency Contracts | — | 3 | 1 | — | ||||||||||
| Total | $ | — | $ | 4 | $ | 8 | $ | — | ||||||
(a) Derivative assets of $4 million are included in Other Current Assets as of December 31, 2024.
(b) Derivative liabilities of $8 million are included in Other Accrued Liabilities as of December 31, 2025.
The fair values of the Company's other financial assets and liabilities at December 31, 2025 and 2024 approximately equal the carrying values reported on the Consolidated Balance Sheets except for Long-Term Debt. The fair value of the Company's Long-Term Debt (excluding finance leases and deferred financing fees) was $5,381 million and $4,894 million, as compared to the carrying amounts of $5,434 million and $5,046 million as of December 31, 2025 and 2024, respectively. The fair value of the Company's Total Debt, including the Senior Notes, is based on quoted market prices (Level 2 inputs). Level 2 valuation techniques for Long-Term Debt are based on quotations obtained from independent pricing service providers.
Effect of Derivative Instruments
The pre-tax effect of derivative instruments in cash flow hedging relationships in the Consolidated Statements of Operations for the years ended December 31, 2025, 2024 and 2023 was as follows:
| Amount of Loss (Gain) Recognized in Accumulated Other Comprehensive Loss | Location in Statement of Operations | Amount of (Gain) Loss Recognized in Statement of Operations | ||||||||||||||||||||||||
| Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||
| In millions | 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||||||||||||||||
| Commodity Contracts | $ | 6 | $ | 4 | $ | 32 | $ | — | $ | 14 | $ | 35 | ||||||||||||||
Foreign Currency Contracts | (1) | — | — | Other Expense, Net | (1) | — | — | |||||||||||||||||||
Interest Rate Swap Agreements | (1) | — | (4) | Interest Expense, Net | (2) | (1) | (3) | |||||||||||||||||||
| Total | $ | 4 | $ | 4 | $ | 28 | $ | (3) | $ | 13 | $ | 32 | ||||||||||||||
At December 31, 2025, the Company expects to reclassify $7 million of pre-tax loss in the next twelve months from Accumulated Other Comprehensive Loss to earnings, contemporaneously with and offsetting changes in the related hedged exposure. The actual amount that will be reclassified to future earnings may vary from this amount as a result of changes in market conditions.
The pre-tax effect of derivative instruments not designated as hedging instruments in the Consolidated Statements of Operations for the years ended December 31, 2025, 2024 and 2023 is as follows:
| In millions | 2025 | 2024 | 2023 | |||||||||||
| Foreign Currency Contracts | Other Expense, Net | $ | 8 | $ | (10) | $ | (3) | |||||||
Commodity Contracts(a) | Business Combinations, Exit Activities and Other Special Items, Net | — | 3 | — | ||||||||||
| Total | $ | 8 | $ | (7) | $ | (3) | ||||||||
(a) Relates to hedge dedesignation as a result of the Augusta Divestiture (see Note 10. Financial Instruments, Derivatives and Hedging Activities).
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Feb 12, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 9, 2023 | |
| 2021 | Feb 22, 2022 | |
| 2020 | Feb 16, 2021 | |
| 2019 | Feb 11, 2020 | |
| 2018 | Feb 13, 2019 | |
| 2017 | Feb 7, 2018 | |
| 2016 | Feb 8, 2017 | |
| 2015 | Feb 12, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.