UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



ý☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the quarterly period ended ~~September 30, 2019~~March 31, 2020



¨☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from______ to ______

Commission file number: 1-13888

GRAFTECH INTERNATIONAL LTD.

(Exact name of registrant as specified in its charter)



Delaware	27-2496053
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)



982 Keynote Circle		44131
Brooklyn Heights,	OH	(Zip code)
(Address of principal executive offices)

Registrant’s telephone number, including area code: ~~(216)~~ (216) 676-2000

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value per share	EAF	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yesý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large Accelerated Filero	☒	Accelerated Filero	☐	Emerging Growth Companyo	☐
Non-Accelerated Filerx	☐	Smaller Reporting Companyo	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes ¨☐ No ý☒

As of ~~October 31, 2019~~April 23, 2020, ~~289,532,927~~267,178,663 shares of common stock, par value $0.01 per share, were outstanding.

TABLE OF CONTENTS



PART I. FINANCIAL INFORMATION:

Item 1. Financial Statements

Condensed Consolidated Balance Sheets (unaudited)	5

Condensed Consolidated Statements of Operations and Comprehensive Income (unaudited)	6

Condensed Consolidated Statements of Cash Flows (unaudited)	7

Condensed Consolidated Statements of Stockholders' Equity (unaudited)	8

Notes to Condensed Consolidated Financial Statements (unaudited)	109

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2722

Item 3. Quantitative and Qualitative Disclosures About Market Risk	3831

Item 4. Controls and Procedures	3932

PART II. OTHER INFORMATION:

Item 1. Legal Proceedings	4034

Item 1A. Risk Factors	4034

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds	4034

Item 6. Exhibits	4136

SIGNATURE	4237

Presentation of Financial, Market and Legal Data

We present our financial information on a consolidated basis. Unless otherwise noted, when we refer to dollars, we mean U.S. dollars.

Unless otherwise specifically noted, market and market share data in this Quarterly Report on Form 10-Q for the quarterly period ended ~~September 30, 2019~~March 31, 2020 (the "Report") are our own estimates or derived from sources described in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 ("Annual Report on Form 10-K") filed on February ~~22, 2019.~~21, 2020. Our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under “Forward Looking Statements” and “Risk Factors” in this Report and in our Annual Report on Form 10-K. We cannot guarantee the accuracy or completeness of this market and market share data and have not independently verified it. None of the sources has consented to the disclosure or use of data in this Report.

~~Forward Looking~~Forward-Looking Statements

Some of the statements under ~~"Management's~~“Management’s Discussion and Analysis of Financial Condition and Results of Operations,"” and elsewhere in this ~~Report~~report may contain ~~forward-looking~~forward‑looking statements that reflect our current views with respect to, among other things, future events and financial performance. You can identify these ~~forward-looking~~forward‑looking statements by the use of ~~forward-looking~~forward‑looking words such as ~~"will," "may," "plan," "estimate," "project," "believe," "anticipate," "expect," "intend," "should," "would," "could," "target," "goal," "continue~~“will,” “may,” “plan,” “estimate,” “project,” “believe,” “anticipate,” “expect,” “intend,” “should,” “would,” “could,” “target,” “goal,” “continue to,~~" "positioned to"~~” “positioned to” or the negative version of those words or other comparable words. Any ~~forward-looking~~forward‑looking statements contained in ~~Report~~this report are based upon our historical performance and on our current plans, estimates and expectations in light of information currently available to us. The inclusion of this ~~forward-looking~~forward‑looking information should not be regarded as a representation by us that the future plans, estimates or expectations contemplated by us will be achieved. ~~Our expectations and targets are not predictions of actual performance and historically our performance has deviated, often significantly, from our expectations and targets.~~ These ~~forward-looking~~forward‑looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to:

the ultimate impact that the COVID-19 pandemic has on our business, results of operations, financial condition and cash flows;

the cyclical nature of our business and the selling prices of our products may lead to periods of reduced profitability and net losses in the future;

the possibility that we may be unable to implement our business strategies, including our initiative to secure and maintain longer-term customer contracts, in an effective manner;

the possibility that ~~tax legislation could~~global graphite electrode overcapacity may adversely affect ~~us or our stockholders;~~graphite electrode prices;

pricing for graphite electrodes has historically been cyclical and the price of graphite electrodes may continue to decline in the future;

the sensitivity of our business and operating results to economic conditions and the possibility others may not be able to fulfill their obligations to us in a timely fashion or at all;

our dependence on the global steel industry generally and the electric arc furnace ("EAF") steel industry in particular;

~~the possibility that global graphite electrode overcapacity may adversely affect graphite electrode prices;~~

the competitiveness of the graphite electrode industry;

our dependence on the supply of petroleum needle coke;

our dependence on supplies of raw materials (in addition to petroleum needle coke) and energy;

the possibility that our manufacturing operations are subject to hazards;

changes in, or more stringent enforcement of, health, safety and environmental regulations applicable to our manufacturing operations and facilities;

the legal, compliance, economic, social and political risks associated with our substantial operations in multiple countries;

the possibility that fluctuation of foreign currency exchange rates could materially harm our financial results;

the possibility that our results of operations could deteriorate if our manufacturing operations were substantially disrupted for an extended period, including as a result of equipment failure, climate change, regulatory issues, natural disasters, public health crises, such as the COVID-19 pandemic, political crises or other catastrophic events;

our dependence on third parties for certain construction, maintenance, engineering, transportation, warehousing and logistics services;

the possibility that we are unable to recruit or retain key management and plant operating personnel or successfully negotiate with the representatives of our employees, including labor unions;

the possibility that we may divest or acquire businesses, which could require significant management attention or disrupt our business;

the sensitivity of goodwill on our balance sheet to changes in the market;

the possibility that we are subject to information technology systems failures, cybersecurity attacks, network disruptions and breaches of data security;

our dependence on protecting our intellectual property;

the possibility that third parties may claim that our products or processes infringe their intellectual property rights;

the possibility that significant changes in our jurisdictional earnings mix or in the tax laws of those jurisdictions could adversely affect our business;

the possibility that tax legislation could adversely affect us or our stockholders;

the possibility that our indebtedness could limit our financial and operating activities or that our cash flows may not be sufficient to service our indebtedness;

the possibility that restrictive covenants in our financing agreements could restrict or limit our operations;

the fact that borrowings under certain of our existing financing agreements ~~subjects~~subject us to interest rate risk;

the possibility of a lowering or withdrawal of the ratings assigned to our debt;

the possibility that disruptions in the capital and credit markets could adversely affect our results of operations, cash flows and financial condition, or those of our customers and suppliers;

the possibility that highly concentrated ownership of our common stock may prevent minority stockholders from influencing significant corporate decisions;

the possibility that we may not pay cash dividends on our common stock in the future;

the fact that certain of our stockholders have the right to engage or invest in the same or similar businesses as us;

the possibility that the market price of our common stock could be negatively affected by sales of substantial amounts of our common stock in the public markets, including by ~~Brookfield;~~Brookfield (as defined below);

the fact that certain provisions of our Amended and Restated Certificate of Incorporation and our Amended and Restated By-Laws could hinder, delay or prevent a change of control;

the fact that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders; and

our status as a "controlled company" within the meaning of the New York Stock Exchange ~~("NYSE")~~ corporate governance standards, which allows us to qualify for exemptions from certain corporate governance requirements.

These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements, including the Risk Factors section, that are included in our Annual Report on Form 10-K and other filings with the Securities and Exchange Commission ("SEC"). The forward‑looking statements made in this ~~Report~~report relate only to events as of the date on which the statements are made. We do not undertake any obligation to publicly update or review any forward‑looking statement except as required by law, whether as a result of new information, future developments or otherwise.

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from what we may have expressed or implied by these forward‑looking statements. We caution that you should not place undue reliance on any of our forward‑looking statements. You should specifically consider the factors identified in this ~~Report~~report that could cause actual results to differ before making an investment decision to purchase our common stock. Furthermore, new risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us. ~~All subsequent written and oral forward-looking statements by or attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors.~~

For a more complete discussion of these and other factors, see ~~“Risk Factors”~~"Risk Factors" in Part II of this ~~Report~~report and the "Risk Factors" section included in our Annual Report on Form 10-K and other SEC filings.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

Unaudited


	As of September 30, 2019			As of December 31, 2018			As of March 31, 2020			As of December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	381,164		$	49,880		$	152,109		$	80,935
Accounts and notes receivable, net of allowance for doubtful accounts of $4,163 as of September 30, 2019 and $1,129 as of December 31, 2018	264,157			248,286
Accounts and notes receivable, net of allowance for doubtful accounts of $7,385 as of March 31, 2020 and $5,474 as of December 31, 2019							198,943			247,051
Inventories	314,955			293,717			322,623			313,648
Prepaid expenses and other current assets	40,481			46,168			32,517			40,946
Total current assets	1,000,757			638,051			706,192			682,580
Property, plant and equipment	708,267			688,842			734,118			733,417
Less: accumulated depreciation	207,444			175,137			231,244			220,397
Net property, plant and equipment	500,823			513,705			502,874			513,020
Deferred income taxes	48,237			71,707			56,900			55,217
Goodwill	171,117			171,117			171,117			171,117
Other assets	104,735			110,911			97,133			104,230
Total assets	$	1,825,669		$	1,505,491		$	1,534,216		$	1,526,164
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	73,856		$	88,097		$	52,067		$	78,697
Short-term debt	70,861			106,323			138			141
Accrued income and other taxes	58,916			82,255			80,626			65,176
Other accrued liabilities	48,707			50,452			73,597			48,335
Related party payable - tax receivable agreement	23,852			—			16,115			27,857
Total current liabilities	276,192			327,127			222,543			220,206
Long-term debt	1,965,501			2,050,311			1,814,266			1,812,682
Other long-term obligations	77,759			72,519			90,522			72,562
Deferred income taxes	50,484			45,825			44,785			49,773
Related party payable - tax receivable agreement	62,625			86,478
Contingencies – Note 9
Related party payable - tax receivable agreement long-term							42,479			62,014
Contingencies – Note 8
Stockholders’ equity:
Preferred stock, par value $0.01, 300,000,000 shares authorized, none issued	—			—			—			—
Common stock, par value $0.01, 3,000,000,000 shares authorized, 289,658,478 shares issued and outstanding as of September 30, 2019 and 290,537,612 as of December 31, 2018	2,897			2,905
Common stock, par value $0.01, 3,000,000,000 shares authorized, 267,178,663 shares issued and outstanding as of March 31, 2020 and 270,485,308 as of December 31, 2019							2,672			2,705
Additional paid-in capital	818,720			819,622			756,103			765,419
Accumulated other comprehensive loss	(23,677		)	(5,800		)	(64,310		)	(7,361		)
Accumulated deficit	(1,404,832		)	(1,893,496		)	(1,374,844		)	(1,451,836		)
Total stockholders’ deficit	(606,892		)	(1,076,769		)	(680,379		)	(691,073		)

Total liabilities and stockholders’ equity	$	1,825,669		$	1,505,491		$	1,534,216		$	1,526,164

See accompanying Notes to Condensed Consolidated Financial Statements

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Dollars in thousands)

*See Notes 1 and 1312

See accompanying Notes to Condensed Consolidated Financial Statements

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands, unaudited)

See accompanying Notes to Condensed Consolidated Financial Statements

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Dollars in thousands, except share data)

Balance as of December 31, 2017⁽¹⁾

Balance as of March 31, 2018⁽¹⁾

⁽¹⁾ ~~On April 12, 2018, the Company effected a 3,022,259.23 to one split of the Company's common stock. We retrospectively applied this split to all previous periods presented.~~

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

GrafTech International Ltd. (the “Company”) is a leading manufacturer of high quality graphite electrode products essential to the production of electric arc furnace ("EAF") steel and other ferrous and non-ferrous metals. References herein to "GrafTech" “we,” “our,” or “us” refer collectively to GrafTech International Ltd. and its subsidiaries.

On August 15, 2015, we became an indirect wholly owned subsidiary of Brookfield Asset Management Inc. (together with its affiliates ~~“Brookfield”~~"Brookfield") ~~through a tender offer to our former stockholders and subsequent merger transaction. On~~. In April ~~23,~~ 2018, ~~the Company~~we completed ~~its~~our initial public offering ("IPO"). of 38,097,525 shares of our common stock held by Brookfield at a price of $15.00 per share. We did not receive any proceeds related to the IPO. Our common stock is listed on the NYSE under the symbol “EAF.” Brookfield owns approximately 74% of our outstanding common stock as of December 31, 2019.

The Company’s only reportable segment, Industrial Materials, is comprised of our ~~two~~2 major product categories: graphite electrodes and petroleum needle coke products. Needle coke is the key raw material used in the production of graphite electrodes. The Company's vision is to provide highly engineered graphite electrode services, solutions and products to EAF operators.

B. Basis of Presentation

The interim condensed consolidated financial statements are unaudited; however, in the opinion of management, they have been prepared in accordance with Rule 10-01 of Regulation S-X and in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The December 31, ~~2018~~2019 financial position data included herein was derived from the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 ("Annual Report on Form 10-K") filed on February ~~22, 2019~~21, 2020, but does not include all disclosures required by GAAP in audited financial statements. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the accompanying notes, contained in our Annual Report on Form ~~10-K filed on February 22, 2019.~~10-K.

The unaudited condensed consolidated financial statements reflect all adjustments (all of which are of a normal, recurring nature) which management considers necessary for a fair statement of financial position, results of operations, comprehensive income and cash flows for the interim periods presented. The results for the interim periods are not necessarily indicative of results which may be expected for any other interim period or for the full year.

~~Earnings per share~~

The calculation of basic earnings per share is based on the number of common shares outstanding after giving effect to the stock split effected on April 12, 2018 and the common stock repurchases on August 13, 2018 and during the third quarter of 2019. Diluted earnings per share recognizes the dilution that would occur if stock options, deferred stock units or restricted stock units were exercised or converted into common shares. See Note 13 "Earnings Per Share".

C. New Accounting Standards

Recently Adopted Accounting Standards

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases~~ (Topic 842). Under this new guidance, a company will now recognize most leases on its balance sheet as lease liabilities with corresponding right-of-use assets. This ASU is effective for fiscal years beginning after December 15, 2018. The Company adopted ASU No. 2016-02 on January 1, 2019. The adoption impact was not material to our financial position, results of operations or cash flows. See Note 3 "Leases" for information regarding this standard and its adoption.

~~Accounting Standards Not Yet Adopted~~

In January 2017, the FASB issued ASU No. 2017‑04, Intangibles‑Goodwill and Other (Topic 350). This guidance was issued to simplify the accounting for goodwill impairment. The guidance removes the second step of the goodwill impairment test, which requires that a hypothetical purchase price allocation be performed to determine the amount of impairment, if any. Under this new guidance, a goodwill impairment charge will be based on the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ~~The guidance will become~~This ASU No. 2017‑04 is effective ~~on a prospective basis for the Company on~~beginning January 1, 2020 with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The ~~adoption of this standard is not expected~~Company adopted ASU No. 2017‑04 on January 1, 2020, with no impact to ~~have a material effect on the Company’s~~our financial position, results of operations or cash flows.

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments–Credit Losses (Topic 326), which introduces the Current Expected Credit Losses ("CECL") accounting model. CECL requires earlier recognition of credit losses, while also providing additional transparency about credit risk. CECL utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. ASU No. 2016-13 is effective for the ~~the~~ Company on January 1, 2020. The ~~Company is currently evaluating the impact~~adoption of ~~this standard.~~ASU No. 2016-13 resulted in a cumulative-effect adjustment of $2.0 million included as an adjustment to Accounts receivable reserve and to retained earnings on January 1, 2020.

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Disaggregation of Revenue

The following table provides information about disaggregated revenue by type of product and contract for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and ~~2018:~~2019:



	For the Three Months Ended March 31,
	2020		2019
	(Dollars in thousands)
Graphite Electrodes - Three-to-five-year take-or-pay contracts	$	276,379	$	396,040
Graphite Electrodes - Short-term agreements and spot sales	30,818		47,296
By-products and other	11,449		31,658
Total Revenues	$	318,646	$	474,994

For the Three Months Ended September 30, For the Nine Months
Ended September 30,
2019 2018 2019 2018
(Dollars in thousands)
Graphite Electrodes - Three-to-five-year take-or-pay contracts $ 334,097
$ 359,405
$ 1,107,742
$ 976,852
Graphite Electrodes - Short-term agreements and spot sales 67,704
51,475
191,249
261,949
By-products and other 18,996
44,010
77,190
124,320
Total Revenues $ 420,797
$ 454,890
$ 1,376,181
$ 1,363,121

~~Effective the first quarter of 2019, the~~The Graphite Electrodes revenue categories include only graphite electrodes manufactured by GrafTech. The revenue category “By-products and Other” ~~now~~ includes re-sales of low-grade electrodes purchased from third party suppliers, which represent a minimal contribution to our profitability. ~~For comparability purposes, the prior period has been recast to conform to this presentation.~~

Receivables, net of allowances for doubtful accounts, were ~~$264.2~~$198.9 million as of ~~September 30, 2019~~March 31, 2020 and ~~$248.3~~$247.1 million as of December 31, ~~2018.~~2019. Accounts receivables are recorded when the right to consideration becomes unconditional. Payment terms on invoices range from 30 to 120 days depending on the customary business practices of the jurisdictions in which we do business.

Certain short-term and longer-term sales contracts require up-front payments prior to the Company’s fulfillment of any performance obligation. These contract liabilities are recorded as current or long-term deferred revenue, depending on the lag between the pre-payment and the expected delivery of the related products. Additionally, under ASC 606, deferred revenue originates from contracts where the allocation of the transaction price to the performance obligations based on their relative stand-alone selling prices results in the timing of revenue recognition being different from the timing of the invoicing. In this case, deferred revenue is amortized into revenue based on the transaction price allocated to the remaining performance obligations.

Current deferred revenue is included in "Other accrued liabilities" and long-term deferred revenue is included in "Other long-term obligations" on the Condensed Consolidated Balance Sheets.

The following table provides information about deferred revenue from contracts with customers (in thousands):

Current deferred revenue Long-Term deferred revenue
(Dollars in thousands)
Balance as of December 31, 2018 $ 5,380
$ 7,716
Revenue recognized that was included in the deferred revenue balance
at the beginning of the period
(4,606 ) —
Increases due to cash received, excluding amounts recognized as revenue during the period 2,144
—
Foreign currency impact 4
(220 )
Balance as of September 30, 2019 $ 2,922
$ 7,496



	Current deferred revenue			Long-Term deferred revenue
	(Dollars in thousands)
Balance as of December 31, 2019	$	11,776		$	3,858
Increases due to cash received	9,189			—
Revenue recognized	(177		)	—
Revisions of estimates	—			—
Reclassifications between long-term and current	—			—
Foreign currency impact	(751		)	—
Balance as of March 31, 2020	$	20,037		$	3,858

Transaction Price Allocated to the Remaining Performance Obligations

As of December 31, 2019, under its long-term take-or-pay contracts, the Company expected to record revenues of $1,251 million for 2020. We now estimate that our long-term contract revenue in 2020 will be in the range of $950 million to $1,100 million. We recorded $276 million in the first quarter and we expect to record approximately $675 million to $825 million for the

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~Transaction Price Allocated~~remainder of 2020. The decreased expectation for 2020 includes the impact of the force majeure notices associated with the COVID-19 induced shutdowns of customers’ facilities as well as non-performance by certain other customers struggling with the impact of reduced steel demand. We expect that some of this decrease in 2020 long-term contract revenue will be recovered in future years.

Our contractual revenue for future years is $1,211 million for 2021, $1,145 million for 2022 and $29 million for 2023. The majority of the long-term take-or-pay contracts are defined as pre-determined fixed annual volume contracts while a small portion are defined with a specified volume range. For the year 2021 and beyond, the contractual revenue amounts above are based upon the mid-point of the volume range for those contracts with specified ranges. The actual revenue realized from these contracted volumes may vary in timing and total due to the ~~Remaining Performance Obligations~~

~~The following table presents estimated revenues expected to be recognized in the future~~credit risk associated with certain customers facing financial challenges as well as customer demand related to ~~performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. The estimated revenues do not include contracts with original duration of one year or less.~~

Three-to-five-year take-or-pay contracts
(Dollars in thousands)
Remainder of 2019 347,097
2020 1,366,579
2021 1,211,036
2022 1,144,574
Thereafter 29,461
Total $ 4,098,747

In addition to the expected remaining revenue to be recognized with the longer-term sales contracts, the Company recorded $1,107.7 million of revenue pursuant to these contracts in the nine months ended September 30, 2019.contracted volume ranges.

~~We lease certain transportation and mobile manufacturing equipment such as railcars and forklifts, as well as real estate.~~

The Company adopted ASU 2016-02 "Leases: (Topic 842) ("ASC 842") on January 1, 2019. ASC 842 requires that all leases, financing and operating, be included on the balance sheet. The Company adopted ASC 842 using the modified retrospective approach under which prior periods’ financial statements are not restated and a cumulative-effect adjustment to retained earnings at the beginning of the period of adoption is recorded, if applicable. The Company elected to adopt the transition package of practical expedients for lease identification, classification, initial direct costs and hindsight. At the adoption of ASC 842 on January 1, 2019, the Company recognized right-of-use ("RoU") assets and corresponding operating lease liabilities of $7.5 million, with no cumulative-effect adjustment to retained earnings.

We determine if an arrangement is a lease at lease inception. When an arrangement contains a lease, we then determine if it meets any of the criteria for a financing lease. Leases with a term of 12 months or less are not recorded on the balance sheet.

RoU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. RoU assets and lease liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term.

In order to compute the lease liability, when the rate implicit in the lease is not readily determinable, we discount the lease payments using our estimated incremental borrowing rate for secured fixed rate debt over the same term, derived from information available at the lease commencement date. Our lease term includes the option to extend the lease when it is reasonably certain that we will exercise that option.

The Company has elected to account for the lease and non-lease components as a single lease component, except for leases of warehouse space where they will be accounted for separately. Leases may include variable lease and variable non-lease components costs which are accounted for as variable lease expense in the income statement.

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~Components of lease expense are as follows:~~

For the Three Months Ended September 30, 2019 For the Nine
Months Ended September 30, 2019
(Dollars in thousands)
Operating lease cost 1,078
3,162
Short-term lease cost 2
12
Variable lease cost 49
234
Total lease cost $ 1,129
$ 3,408

~~Supplemental cash-flow and other information related to leases is as follows:~~

~~Supplemental balance sheet information related to leases is as follows:~~

~~As of September 30, 2019, lease commitments under non-cancelable operating leases extending for one year or more will require the following future payments:~~

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~As of September 30, 2019, we have not entered into any additional operating lease commitments that have yet to commence.~~

~~Disclosure related to periods prior to adoption of the new lease standard~~

~~As of December 31, 2018, lease commitments under non-cancelable operating leases required the following future payments:~~

~~Total lease expenses under non-cancelable operating leases approximated $4.9 million in 2018.~~

The components of our consolidated net pension costs are set forth in the following table:



	For the Three Months Ended March 31,
	2020			2019
	(Dollars in thousands)
Service cost	$	622		$	575
Interest cost	1,033			1,316
Expected return on plan assets	(1,284		)	(1,338		)
Net cost	$	371		$	553

The components of our consolidated net postretirement costs are set forth in the following table:



	For the Three Months Ended March 31,
	2020		2019
	(Dollars in thousands)
Interest cost	$	191	$	242
Net cost	$	191	$	242

We are required to review goodwill and indefinite-lived intangible assets annually for impairment. Goodwill impairment is tested at the ~~graphite electrodes~~ reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.

The following tables represent the ~~changes in the~~ carrying value of goodwill and intangibles for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020, which are reported in "Other assets" on the balance sheets:



Goodwill
(Dollars in thousands)
Balance as of December 31, 2019	$	171,117
Adjustments	—
Balance as of March 31, 2020	$	171,117

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



Intangible Assets
	As of March 31, 2020							As of December 31, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(Dollars in Thousands)
Trade name	$	22,500	$	(10,385	)	$	12,115	$	22,500	$	(9,861	)	$	12,639
Technological know-how	55,300		(30,416		)	24,884		55,300		(29,112		)	26,188
Customer–related intangible	64,500		(20,570		)	43,930		64,500		(19,473		)	45,027
Total finite-lived intangible assets	$	142,300	$	(61,371	)	$	80,929	$	142,300	$	(58,446	)	$	83,854

Goodwill
(Dollars in thousands)
Balance as of December 31, 2018 $ 171,117
Adjustments —
Balance as of September 30, 2019 $ 171,117

Intangible Assets
As of September 30, 2019 As of December 31, 2018

Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount
(Dollars in Thousands)
Trade name $ 22,500
$ (9,336 ) $ 13,164
$ 22,500
$ (7,721 ) $ 14,779
Technological know-how 55,300
(27,808 ) 27,492
55,300
(23,503 ) 31,797
Customer–related
intangible
64,500
(18,377 ) 46,123
64,500
(15,070 ) 49,430
Total finite-lived
intangible assets
$ 142,300
$ (55,521 ) $ 86,779
$ 142,300
$ (46,294 ) $ 96,006

Amortization expense of acquired intangible assets was ~~$3.0~~$2.9 million and ~~$3.2~~$3.1 million in the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and $9.2 million and $9.8 million in the nine months ended September 30, 2019 and 2018,~~ respectively. Estimated amortization expense will approximate ~~$2.9~~$8.5 million infor the remainder of ~~2019, $11.4 million in~~ 2020, $10.7 million in 2021, $10.1 million in 2022, ~~and~~ $9.2 million in ~~2023.~~2023, and $8.0 million in 2024.


~~(6)~~(5)	Debt and Liquidity

The following table presents our long-term debt:



	As of March 31, 2020			As of December 31, 2019
	(Dollars in thousands)
2018 Credit Facility (2018 Term Loan and 2018 Revolving Credit Facility)	$	1,813,785		$	1,812,204
Other debt	619			619
Total debt	1,814,404			1,812,823
Less: Short-term debt	(138		)	(141		)
Long-term debt	$	1,814,266		$	1,812,682

As of
September 30, 2019 As of
December 31, 2018
(Dollars in thousands)
2018 Credit Facility (2018 Term Loan and 2018 Revolving Facility) $ 2,035,624
$ 2,155,883
Other Debt 738
751
Total debt 2,036,362
2,156,634
Less: Short-term debt (70,861 ) (106,323 )
Long-term debt $ 1,965,501
$ 2,050,311

On February 13, 2019 and December 20, 2019, respectively, we repaid $125 million onand $225 million under our 2018 Term Loan ~~Facility.~~Facility (as defined below). These payments satisfied our current obligations relative to the minimum quarterly installments. The fair value of ~~debt approximated~~ the ~~book value of $2,036.4 million as of September 30, 2019.~~

~~Senior Notes and Old Credit Agreement~~

~~As of December 31, 2017, the Company had $300 million of principal amount of 6.375% Senior Notes due 2020 (the "Senior Notes"). The Senior Notes were scheduled to mature on November 15, 2020.~~

Additionally, as of December 31, 2017, the Company was party to the Amended and Restated Credit Agreement ("Old Credit Agreement") which consisted of the "Old Revolving Facility" and the "Old Term Loan Facility". As of December 31, 2017, the Company had $39.5 million of borrowings on the Old Revolving Facility and $8.7 million of letters of credit drawn against the Old Credit Facility. The balance of the Old2018 Term Loan Facility was ~~$18.7~~approximately $1,605 million as of ~~December~~March 31, ~~2017.~~2020. The fair value of the debt is measured using level 3 inputs.

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~As described below, the outstanding indebtedness under the Senior Notes, Old Revolving~~2018 Credit ~~Facility and the Old Term Loan was repaid as of February 12, 2018 and all commitments thereunder have been terminated.~~

~~Refinancing~~Agreement

On February 12, 2018, the Company entered into a credit agreement (the “2018 Credit Agreement”) among the Company, GrafTech Finance Inc.~~, a Delaware corporation and a wholly owned subsidiary of~~ (“GrafTech (“Finance”), GrafTech Switzerland SA ~~a Swiss corporation and a wholly owned subsidiary of GrafTech~~ (“Swissco”), GrafTech Luxembourg II S.à.r.l.~~, a Luxembourg société à responsabilité limitée and a wholly owned subsidiary of GrafTech (“~~(“Luxembourg Holdco” and, together with GrafTech Finance and Swissco, the “Co‑Borrowers”), the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A. as administrative agent (the "Administrative Agent") and as collateral agent, which provides for (i) a $1,500 million senior secured term facility (the “2018 Term Loan Facility”) and (ii) a $250 million senior secured revolving credit facility (the “2018 Revolving Credit Facility” and, together with the 2018 Term Loan Facility, the “Senior Secured Credit Facilities”), which may be used from time to time for revolving credit borrowings denominated in dollars or Euro, the issuance of one or more letters of credit denominated in dollars, Euro, Pounds Sterling or Swiss Francs and one or more swing line loans denominated in dollars. GrafTech Finance is the sole borrower under the 2018 Term Loan Facility while GrafTech Finance, Swissco and ~~Luxembourg~~Lux Holdco are Co‑Borrowers under the 2018 Revolving Credit Facility. On February 12, 2018, GrafTech Finance borrowed $1,500 million under the 2018 Term Loan Facility (the "2018 Term Loans"). The 2018 Term Loans mature on February 12, 2025. The maturity date for the 2018 Revolving Credit Facility is February 12, 2023.

The proceeds of the 2018 Term Loans were used to (i) repay in full all outstanding indebtedness of the Co‑Borrowers under ~~the Old Credit Agreement~~our previous credit agreement and terminate all commitments thereunder, (ii) redeem in full ~~the Senior Notes~~our previously held senior notes at a redemption price of 101.594% of the principal amount thereof plus accrued and unpaid interest to the date of redemption, (iii) pay fees and expenses incurred in connection with (i) and (ii) above and the Senior Secured Credit Facilities and related expenses, and (iv) declare and pay a dividend to the sole pre-IPO stockholder, with any remainder to be used for general corporate

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

purposes. See Note 87 "Interest Expense" for a breakdown of expenses associated with these repayments. In connection with the repayment of ~~the Old Credit Agreement~~our previous credit agreement and redemption of ~~the Senior Notes,~~our previously held senior notes, all guarantees of obligations under the ~~Old Credit Agreement,~~previous credit agreement, the ~~Senior Notes~~senior notes and related indenture were terminated, all mortgages and other security interests securing obligations under the ~~Old Credit Agreement~~previous credit agreement were released and the ~~Old Credit Agreement and the~~ indenture ~~were~~was terminated.

Borrowings under the 2018 Term Loan Facility bear interest, at GrafTech Finance’s option, at a rate equal to either (i) the Adjusted LIBO Rate (as defined in the 2018 Credit Agreement), plus an applicable margin initially equal to 3.50% per annum or (ii) the ABR Rate (as defined in the 2018 Credit Agreement), plus an applicable margin initially equal to 2.50% per annum, in each case with one step down of 25 basis points based on achievement of certain public ratings of the 2018 Term Loans.

Borrowings under the 2018 Revolving Credit Facility bear interest, at the applicable Co‑Borrower’s option, at a rate equal to either (i) the Adjusted LIBO Rate, plus an applicable margin initially equal to 3.75% per annum or (ii) the ABR Rate, plus an applicable margin initially equal to 2.75% per annum, in each case with two 25 basis point step downs based on achievement of certain senior secured first lien net leverage ratios. In addition, the Co‑Borrowers will be required to pay a quarterly commitment fee on the unused commitments under the 2018 Revolving Credit Facility in an amount equal to 0.25% per annum.

All obligations under the 2018 Credit Agreement are guaranteed by GrafTech, Finance and each domestic subsidiary of GrafTech, subject to certain customary exceptions, and all obligations under the 2018 Credit Agreement of each foreign subsidiary of GrafTech that is a Controlled Foreign Corporation (within the meaning of Section 956 of the Internal Revenue Code of 1986, as amended from time to time (the "Code")) are guaranteed by GrafTech Luxembourg I S.à.r.l., a Luxembourg société à responsabilité limitée and an indirect wholly owned subsidiary of GrafTech ("Luxembourg Parent"), Luxembourg Holdco and Swissco (collectively, the "Guarantors").

For borrowings under both the 2018 Term Loan Facility and the 2018 Revolving Credit Facility, if the Administrative Agent determines that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate and such circumstances are unlikely to be temporary or the relevant authority has made a public statement identifying a date after which the LIBO Rate shall no longer be used for determining interest rates for loans, then the Administrative Agent and the Co-Borrowers shall endeavor to establish an alternate rate of interest, which shall be effective so long as the majority in interest of the lenders for each Class (as defined in the 2018 Credit Agreement) of loans under the 2018 Credit Agreement do not notify the Administrative Agent otherwise. Until such an alternate rate of interest is determined, (a) any request for a borrowing denominated in dollars based on the Adjusted LIBO Rate will be deemed to be a request for a borrowing at the ABR Rate plus the applicable margin for an ABR Rate borrowing of such loan while any request for a borrowing denominated in any other currency will be ineffective and (b) any outstanding borrowings based on the Adjusted LIBO Rate denominated in dollars will be converted to a

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

borrowing at the ABR Rate plus the applicable margin for an ABR Rate borrowing of such loan while any outstanding borrowings denominated in any other currency will be repaid.

All obligations under the 2018 Credit Agreement are guaranteed by GrafTech Finance and each domestic subsidiary of GrafTech, subject to certain customary exceptions, and all obligations under the 2018 Credit Agreement of each foreign subsidiary of GrafTech that is a Controlled Foreign Corporation (within the meaning of Section 956 of the Code) are guaranteed by GrafTech Luxembourg I S.à.r.l., a Luxembourg société à responsabilité limitée and an indirect wholly owned subsidiary of GrafTech, Luxembourg Holdco and Swissco (collectively, the "Guarantors").

All obligations under the 2018 Credit Agreement are secured, subject to certain exceptions and Excluded Assets (as defined in the 2018 Credit Agreement), by: (i) a pledge of all of the equity securities of GrafTech Finance and each domestic Guarantor (other than GrafTech) and of each other direct, wholly owned domestic subsidiary of GrafTech and any Guarantor, (ii) a pledge on no more than 65% of the equity interests of each subsidiary that is a Controlled Foreign Corporation (within the meaning of Section 956 of the Code), and (iii) security interests in, and mortgages on, personal property and material real property of GrafTech Finance and each domestic Guarantor, subject to permitted liens and certain exceptions specified in the 2018 Credit Agreement. The obligations of each foreign subsidiary of GrafTech that is a Controlled Foreign Corporation under the Revolving Credit Facility are secured by (i) a pledge of all of the equity securities of each Guarantor that is a Controlled Foreign Corporation and of each direct, wholly owned subsidiary of any Guarantor that is a Controlled Foreign Corporation, and (ii) security interests in certain receivables and personal property of each Guarantor that is a Controlled Foreign Corporation, subject to permitted liens and certain exceptions specified in the 2018 Credit Agreement.

The 2018 Term Loans amortize at a rate equal to 5% per annum of the original principal amount of the 2018 Term Loans payable in equal quarterly installments, with the remainder due at maturity. The Co‑Borrowers are permitted to make voluntary prepayments at any time without premium or penalty, except in the case of prepayments made in connection with certain repricing transactions with respect to the 2018 Term Loans effected within twelve months of the closing date of the 2018 Credit Agreement, to which a 1.00% prepayment premium applies. GrafTech Finance is required to make prepayments under the 2018 Term Loans (without payment of a premium) with (i) net cash proceeds from non‑ordinary course asset sales (subject to customary reinvestment rights and other customary exceptions and exclusions), and (ii) commencing with the Company’s fiscal year ending December 31, 2019, 75% of Excess Cash Flow (as defined in the 2018 Credit Agreement), subject to step‑downs to 50% and 0% of Excess Cash Flow based on achievement of a senior secured first lien net leverage ratio greater than 1.25 to 1.00 but less than or equal to 1.75 to 1.00 and less than or equal to 1.25 to 1.00, respectively. Scheduled quarterly amortization payments of the 2018 Term Loans during any calendar year reduce, on a dollar‑for‑dollar basis, the amount of the required Excess Cash Flow prepayment for such

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

calendar year, and the aggregate amount of Excess Cash Flow prepayments for any calendar year reduce subsequent quarterly amortization payments of the 2018 Term Loans as directed by GrafTech Finance.

The 2018 Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to GrafTech and restricted subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, fundamental changes, dispositions, and dividends and other distributions. The 2018 Credit Agreement contains a financial covenant that requires GrafTech to maintain a senior secured first lien net leverage ratio not greater than 4.00:1.00 when the aggregate principal amount of borrowings under the 2018 Revolving Credit Facility and outstanding letters of credit issued under the 2018 Revolving Credit Facility (except for undrawn letters of credit in an aggregate amount equal to or less than $35 million), taken together, exceed 35% of the total amount of commitments under the 2018 Revolving Credit Facility. The 2018 Credit Agreement also contains customary events of default.

~~Brookfield Promissory Note~~

On April 19, 2018, we declared a dividend in the form of a $750 million promissory note (the “Brookfield Promissory Note”) to the sole pre-IPO stockholder. The $750 million Brookfield Promissory Note was conditioned upon (i) the Senior Secured First Lien Net Leverage Ratio (as defined in the 2018 Credit Agreement), as calculated based on our final financial results for the first quarter of 2018, being equal to or less than 1.75 to 1.00, (ii) no Default or Event of Default (each as defined in the 2018 Credit Agreement) having occurred and continuing or that would result from the $750 million Brookfield Promissory Note and (iii) the satisfaction of the conditions occurring within 60 days from the dividend record date. Upon publication of our 2018 first quarter report on Form 10-Q, these conditions were met and, as a result, the Brookfield Promissory Note became payable.

The Brookfield Promissory Note had a maturity of eight years from the date of issuance and bore interest at a rate equal to the Adjusted LIBO Rate (as defined in the Brookfield Promissory Note) plus an applicable margin equal to 4.50% per annum, with an additional 2.00% per annum starting from the third anniversary from the date of issuance. We were permitted to make voluntary prepayments at any time without premium or penalty. All obligations under the Brookfield Promissory Note were unsecured and guaranteed by all of our existing and future domestic wholly owned subsidiaries that guarantee, or are borrowers under, the Senior Secured Credit Facilities. No funds were lent or otherwise contributed to us by the pre-IPO stockholder in connection with the Brookfield Promissory Note. As a result, we received no consideration in connection with its issuance. As described below, the Promissory Note was repaid in full on June 15, 2018.

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

First Amendment to 2018 Credit Agreement

On June 15, 2018, the Company entered into a first amendment (the “First Amendment”) to its 2018 Credit Agreement. The First Amendment amended the 2018 Credit Agreement to provide for an additional $750 million in aggregate principal amount of incremental term loans (the “Incremental Term Loans”) to GrafTech Finance. The Incremental Term Loans increased the aggregate principal amount of term loans incurred by GrafTech Finance under the 2018 Credit Agreement from $1,500 million to $2,250 million. The Incremental Term Loans have the same terms as those applicable to the 2018 Term Loans, including interest rate, payment and prepayment terms, representations and warranties and covenants. The Incremental Term Loans mature on February 12, 2025, the same date as the 2018 Term Loans. GrafTech paid an upfront fee of 1.00% of the aggregate principal amount of the Incremental Term Loans on the effective date of the First Amendment.

The proceeds of the Incremental Term Loans were used to repay, in full, the $750 million of principal outstanding on a promissory note to the ~~Brookfield Promissory Note.~~Company's sole pre-IPO stockholder.


~~(7)~~(6)	Inventories

Inventories are comprised of the following:



	As of March 31, 2020		As of December 31, 2019
	(Dollars in thousands)
Inventories:
Raw materials	$	121,191	$	104,820
Work in process	124,944		137,230
Finished goods	76,488		71,598
Total	$	322,623	$	313,648

As of
September 30, 2019 As of
December 31, 2018
(Dollars in thousands)
Inventories:
Raw materials $ 94,471
$ 99,935
Work in process 143,192
125,767
Finished goods 77,292
68,015
Total $ 314,955
$ 293,717

~~(8)~~(7)Interest Expense

The following tables present the components of interest expense:



	For the Three Months Ended March 31,
	2020		2019
	(Dollars in thousands)
Interest incurred on debt	$	24,092	$	32,120
Accretion of fair value adjustment on Senior Notes	549		549
Amortization of debt issuance costs	1,031		1,031
Total interest expense	$	25,672	$	33,700

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Three Months Ended September 30, For the Nine Months
Ended September 30,
2019 2018 2019 2018
(Dollars in thousands)
Interest incurred on debt $ 30,222
$ 32,278
$ 93,731
$ 67,751
Related-party Promissory Note interest expense —
—
—
5,090
Senior Note redemption premium —
—
—
4,782
Accretion of fair value adjustment on Senior Notes —
—
—
19,414
Accretion of original issue discount on 2018 Term Loans 549
549
1,647
906
Amortization of debt issuance costs 1,032
1,028
3,094
2,444
Total interest expense $ 31,803
$ 33,855
$ 98,472
$ 100,387

Interest Rates

The 2018 Credit Agreement had an effective interest rate of ~~5.54%~~4.50% as of ~~September 30, 2019. The Old Revolving Facility~~March 31, 2020 and ~~Old Term Loan Facility had an effective interest rate of 4.57%~~5.30% as of December 31, ~~2018 and the Senior Notes had a fixed interest rate of 6.375%, both of which were repaid on February 12, 2018 as part of our refinancing (see Note 6 "Debt and Liquidity").~~2019. During the third quarter of 2019, the Company entered into four interest rate swap contracts to fix our cash flows associated with the risk in variability in the one-month US ~~LIBO~~London Interbank Offered Rate ("US LIBOR") for a portion of our outstanding debt. See Note 1110 "Derivative Instruments" for details of these transactions.

As a result of our February 12, 2018 refinancing, we paid a prepayment premium for the redemption of our Senior Notes totaling $4.8 million. The accretion of the August 15, 2015 fair value adjustment to our Senior Notes totaling $19.4 million included

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

accelerated accretion of $18.7 million for the nine months ended September 30, 2018 resulting from the prepayment. Amortization of debt issuance costs included $0.3 million of accelerated amortization related to the refinancing.


~~(9)~~(8)	Contingencies

Legal Proceedings

We are involved in various investigations, lawsuits, claims, demands, environmental compliance programs and other legal proceedings arising out of or incidental to the conduct of our business. While it is not possible to determine the ultimate disposition of each of these matters, we do not believe that their ultimate disposition will have a material adverse effect on our financial position, results of operations or cash flows.

~~Litigation~~Pending litigation in Brazil has been ~~pending in Brazil~~ brought by employees seeking to recover additional amounts and interest thereon under certain wage increase provisions applicable in 1989 and 1990 under collective bargaining agreements to which employers in the Bahia region of Brazil were a party (including our subsidiary in Brazil). Companies in Brazil have settled claims arising out of these provisions and, in May 2015, the litigation was remanded by the Brazilian Supreme Court in favor of the ~~employees.~~employees union. After denying an interim appeal by the Bahia region employers on June 26, 2019, the Brazilian Supreme Court finally ruled in favor of the employees union on September 26, 2019. The employers union ~~is currently evaluating the merits of seeking~~has determined not to seek annulment of such decision. Separately, on October 1, 2015, a related action was filed by current and former employees against our subsidiary in Brazil to recover amounts under such provisions, plus interest thereon, which amounts together with interest could be material to us. If the Brazilian Supreme Court proceeding above had been determined in favor of the employers union, it would also have resolved this proceeding in our favor. In the first quarter of 2017, the state court initially ruled in favor of the employees. We have appealed this state court ruling as well and intend to vigorously defend it. As of ~~September 30, 2019,~~ March 31, 2020,we are unable to assess the potential loss associated with these proceedings as the claims do not currently specify the number of employees seeking damages or the amount of damages being sought.

Product Warranties

We generally sell products with a limited warranty. We accrue for known warranty claims if a loss is probable and can be reasonably estimated. We also accrue for estimated warranty claims incurred based on a historical claims charge analysis. Claims accrued but not yet paid and the related activity within the accrual for the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, are presented below:



	(Dollars in thousands)
Balance as of December 31, 2019	$	1,835
Product warranty accruals and adjustments	14
Settlements	(97		)
Balance as of March 31, 2020	$	1,752

(Dollars in thousands)
Balance as of December 31, 2018 $ 1,528
Product warranty accruals and adjustments 700
Settlements (656 )
Balance as of September 30, 2019 $ 1,572

Tax Receivable Agreement

On April 23, 2018, the Company entered into a tax receivable agreement (the "TRA") that provides Brookfield, as the sole pre-IPO stockholder, the right to receive future payments from us for 85% of the amount of cash savings, if any, in U.S. federal income tax and Swiss tax that we and our subsidiaries realize as a result of the utilization of certain tax assets attributable to periods prior to our IPO, including certain federal net operating losses ("NOLs"), previously taxed income under Section 959 of the Code, foreign tax credits, and certain NOLs in ~~Swissco (collectively, the "Pre‑IPO Tax Assets").~~GrafTech Switzerland SA. In addition, we will pay interest on the payments we will make to Brookfield with respect to the amount of these cash savings from the due date (without extensions) of our tax return where we realize these savings to the payment date at a rate equal to LIBO Rate plus 1.00% per annum. The term of the TRA commenced on April 23, 2018 and will continue until there is no potential for any future tax benefit payments.

There was no liability recognized on the date we entered into the TRA as there was a full valuation allowance recorded against our deferred tax assets. During the second quarter of 2018, it was determined that the conditions were appropriate for the Company to release a valuation allowance of certain tax assets as we exited our three year cumulative loss position. This release ~~and subsequent adjustment~~resulted in the ~~fourth quarter resulted in an~~recording of a $86.5 million liability related to the TRA ~~as of December 31, 2018. In the first quarter of 2019, we reclassified $23.9 million to the current liability "Related party payable - tax receivable agreement"~~ on the ~~balance sheet,~~ Consolidated Statements of Operationsas ~~we expect this portion to be settled within twelve months. $62.6 million of the liability remains as a long-term liability in~~ "Related ~~party payable - tax receivable agreement" on the balance sheet as of September 30, 2019.~~Party Tax Receivable Agreement Expense".

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

As of December 31, 2019, the total TRA liability was $89.9 million, of which $27.9 million was classified as a current liability in "Related party payable - tax receivable agreement" on the balance sheet, and $62.0 million of the liability remained as a long-term liability in "Related party payable - tax receivable agreement" on the balance sheet. The 2019 current liability was settled in the first quarter of 2020. In the first quarter of 2020, the TRA liability was reduced by $3.3 million due to the revised profit expectation for 2020, caused by the COVID-19 pandemic. The reduction was recorded as a "Related Party Tax Receivable Agreement Benefit" on the Consolidated Statement of Operations. As of March 31, 2020, the total TRA liability was $58.6 million, of which $16.1 million was classified as a current liability in "Related party payable-tax receivable agreement" and $42.5 million remained as a long-term liability in "Related party payable -tax receivable agreement" on the balance sheet.

Long-term Incentive Plan

The long-term incentive plan ("LTIP") was adopted by the Company effective as of August 17, 2015, as amended and restated as of March 15, 2018. The purpose of the plan is to retain senior management of the Company, to incentivize them to make decisions with a long-term view and to influence behavior in a way that is consistent with maximizing value for the pre-IPO stockholder of the Company in a prudent manner. Each participant is allocated a number of profit units, with a maximum of 30,000 profit units ~~(or~~ ("Profit ~~Units)~~Units") available under the plan. Awards of Profit Units generally vest in equal increments over a five-year period beginning on the first anniversary of the grant date and subject to continued employment with the Company through each vesting date. Any unvested Profit Units that have not been previously forfeited will accelerate and become fully vested upon a ‘‘Change in Control’’ (as defined below).

Profit Units will generally be settled in a lump sum payment within 30 days following a Change in Control based on the ‘‘Sales Proceeds’’ (as defined below) received by Brookfield Capital Partners IV, L.P. ~~(or, together~~(together with its affiliates, ~~Brookfield~~"Brookfield Capital ~~IV)~~IV") in connection with the Change in Control. The LTIP defines ‘‘Change in Control’’ as any transaction or series of transactions (including, without limitation, the consummation of a combination, share purchases, recapitalization, redemption, issuance of capital stock, consolidation, reorganization or otherwise) pursuant to which (a) a Person not affiliated with Brookfield Capital IV acquires securities representing more than seventy percent (70%) of the combined voting power of the outstanding voting securities of the Company or the entity surviving or resulting from such transaction, (b) following a public offering of the Company’s stock, Brookfield Capital IV has ceased to have a beneficial ownership interest in at least 30% of the Company’s outstanding voting securities (effective on the first of such date), or (c) the Company sells all or substantially all of the assets of the Company and its subsidiaries on a consolidated basis. It is intended that the occurrence of a Change in Control in which Sales Proceeds exceed the Threshold Value would constitute a ‘‘substantial risk of forfeiture’’ within the meaning of Section 409A of the Code. The LTIP defines ‘‘Threshold Value’’ as, as of any date of determination, an amount equal to $855,000,000, (which represents the amount of the total invested capital of Brookfield Capital IV as of August 17, 2015), plus the dollar value of any cash or other consideration contributed to or invested in the Company by Brookfield Capital IV after August 17, 2015. The Threshold Value shall be determined by the Company's Board of Directors in its sole discretion. The LTIP defines ‘‘Sales Proceeds’’ as, as of any date of determination, the sum of all proceeds actually received by the Brookfield Capital IV, net of all Sales Costs (as defined below), (i) as consideration (whether cash or equity) upon the Change in Control and (ii) as distributions, dividends, repurchases, redemptions or otherwise as a holder of such equity interests in the Company. Proceeds that are not paid upon or prior to or in connection with the Change in Control, including earn-outs, escrows and other contingent or deferred consideration shall become ‘‘Sale Proceeds’’ only as and when such proceeds are received by Brookfield Capital IV. ‘‘Sales Costs’’ means any costs or expenses (including legal or other ~~advisor~~advisory costs), fees (including investment banking fees), commissions or discounts payable directly by Brookfield Capital IV in connection with, arising out of or relating to a Change in Control, as determined by the Company's Board of Directors in its sole discretion.

Given the successful completion of the IPO in the second quarter of 2018, it is reasonably possible that a Change in Control, as defined above, may ultimately happen and that the awarded Profit Units will be subsequently paid out to the participants. Assuming 100% vesting of the awarded Profit Units and depending on Brookfield’s sales proceeds, the potential liability triggered by a Change in Control is estimated to be in the range of ~~$65~~$60 million to ~~$90~~$85 million. As of ~~September 30, 2019,~~March 31, 2020, the awards are 80% vested.


~~(10)~~(9)	Income Taxes

We compute and apply to ordinary income an estimated annual effective tax rate on a quarterly basis based on current and forecasted business levels and activities, including the mix of domestic and foreign results and enacted tax laws. The estimated annual effective tax rate is updated quarterly based on actual results and updated operating forecasts. Ordinary income refers to income (loss) before income tax expense excluding significant, unusual or infrequently occurring items. The tax effect of an unusual or infrequently occurring item is recorded in the interim period in which it occurs as a discrete item of tax.

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following ~~tables summarize~~table summarizes the provision for income taxes for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and ~~September 30, 2018:~~March 31, 2019:



	For the Three Months Ended March 31,
	2020			2019
	(Dollars in thousands)

Tax expense	$	23,946		$	32,418
Pretax income	146,214			229,854
Effective tax rates	16.4		%	14.1		%

For the Three Months
Ended September 30,
For the Nine Months
Ended September 30,
2019 2018 2019 2018
(Dollars in thousands)

Tax expense $ 20,755
$ 24,871
$ 90,940
$ 36,250
Pretax income 196,631
225,063
660,620
660,252
Effective tax rates 10.6 % 11.1 % 13.8 % 5.5 %

The effective tax rate for the three months ended ~~September 30, 2019~~March 31, 2020 was ~~10.6%~~16.4%. This rate differs from the U.S. statutory rate of 21% primarily due to worldwide earnings from various countries taxed at different rates, ~~and was further improved~~which is partially offset by the ~~provision~~net combined impact related to ~~return adjustment recorded in~~ the ~~third quarter~~U.S. taxation of ~~2019 as a result of filing~~global intangible low taxed income ~~tax returns in foreign jurisdictions.~~("GILTI") and Foreign Tax Credits ("FTCs").

The effective tax rate for the three months ended ~~September 30, 2018~~March 31, 2019 was ~~11.1%~~14.1%. This rate differs from the U.S. statutory rate of 21% primarily due to the partial release of a valuation allowance recorded against the deferred tax asset related to U.S. tax attributes and the tax impact of worldwide earnings from various countries taxed at different rates.

Tax expense decreased from $24.9 million for the three months ended September 30, 2018 to $20.8 million for the three months September 30, 2019. This change is primarily related to the reduction in profits and further reduced by the provision to return adjustment recorded in the third quarter of 2019 as a result of filing income tax returns in foreign jurisdictions.

~~The effective tax rate for the nine months ended September 30, 2019 was 13.8%. This rate differs from the 2019~~ U.S. statutory rate of 21% primarily due to worldwide earnings from various countries taxed at different rates.

The ~~effective~~ tax ~~rate~~expense decreased from $32.4 million for the ~~nine~~three months ended ~~September 30, 2018 was 5.5%.~~March 31, 2019 to $23.9 million for the three months March 31, 2020. This ~~rate differs from the U.S. statutory rate of 21%~~decrease is primarily ~~due~~related to the ~~partial release of a valuation allowance recorded against the deferred tax asset related to U.S. tax attributes~~reduction in pretax income and ~~the tax impact of~~ worldwide earnings from various countries taxed at different ~~rates.~~

~~Tax expense increased from $36.3 million in the nine months ended September 30, 2018 to $90.9 million in the nine months ended September 30, 2019, primarily due to~~rates, partially offset by a ~~partial release in the first nine months~~higher relative combined impact of ~~2018 of a valuation allowance recorded against the deferred tax asset related to U.S. tax attributes.~~GILTI and FTCs.

As of ~~September 30, 2019,~~March 31, 2020, we had unrecognized tax benefits of ~~$2.2~~$0.2 million which, if recognized, would have a favorable impact on our effective tax rate.

We file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. All U.S. federal tax years prior to 2015 are generally closed by statute or have been audited and settled with the applicable domestic tax authorities. All other jurisdictions are still open to examination beginning after 2012.

We continue to assess the realization of our deferred tax assets based on determinations of whether it is more likely than not that deferred tax benefits will be realized through the generation of future taxable income. Appropriate consideration is given to all available evidence, both positive and negative, in assessing the need for a valuation allowance. Examples of positive evidence would include a strong earnings history, an event or events that would increase our taxable income through a continued reduction of expenses, and tax planning strategies that would indicate an ability to realize deferred tax assets. In circumstances where the significant positive evidence does not outweigh the negative evidence in regards to whether or not a valuation allowance is required, we have established and maintained valuation allowances on those net deferred tax assets.

~~Tax Cuts and Jobs Act~~

On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (the "Tax Act"), which significantly revised the U.S. corporate income tax system. These changes included a federal statutory rate reduction from 35% to 21%, the elimination or reduction of certain domestic deductions and credits and limitations on the deductibility of interest expense and executive compensation. The Tax Act also transitions international taxation from a worldwide system to a modified territorial system and includes base erosion prevention measures which have the effect of subjecting certain earnings of our foreign subsidiaries to U.S. taxation as global intangible low taxed income ("GILTI"). In general, these changes were effective beginning in 2018. The

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~Tax Act also included a one-time mandatory deemed repatriation or transition tax on the accumulated previously untaxed foreign earnings of our foreign subsidiaries.~~

On August 1, 2018, the U.S. Department of Treasury and the U.S. Internal Revenue Service ("IRS") issued proposed regulations under code section 965 and on January 15, 2019, the IRS issued final 965 regulations. As of September 30, 2019, the tax impact of the final 965 regulations to the Company’s financial statements was immaterial. The Company continues to analyze the effects of the Tax Act and newly issued proposed regulation on its financial statements. The final impact of the Tax Act may differ from the amounts that have been recognized, possibly materially, due to, among other things, changes in the Company’s interpretation of the Tax Act, legislative or administrative actions to clarify the intent of the statutory language provided that differ from the Company’s current interpretation, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to estimates utilized to calculate the impacts, including changes to current year earnings estimates and applicable foreign exchange rates.

~~The Company also continues to evaluate the impact of the GILTI provisions under the Tax Act, which are complex and~~

subject to continuing regulatory interpretation by the IRS. The Company is required to make an accounting policy election of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current period expense when incurred (the “period cost method”) or (2) factoring such amounts into the Company’s measurement of its deferred taxes (the “deferred method”). The Company has elected to treat taxes due on future U.S. inclusions in taxable income related to GILTI as a current period expense when incurred.


~~(11)~~(10)	Derivative Instruments

We use derivative instruments as part of our overall foreign currency, interest rate and commodity risk management strategies to manage the risk of exchange rate movements that would reduce the value of our foreign cash flows, manage the risk associated with fluctuations in interest rate indices and to minimize commodity price volatility. Foreign currency exchange rate movements create a degree of risk by affecting the value of sales made and costs incurred in currencies other than the U.S. dollar.

Certain of our derivative contracts contain provisions that require us to provide collateral. Since the counterparties to these financial instruments are large commercial banks and similar financial institutions, we do not believe that we are exposed to material counterparty credit risk. We do not anticipate nonperformance by any of the counterparties to our instruments. ~~Our~~

Foreign currency derivatives

We enter into foreign currency derivatives from time to time to attempt to manage exposure to changes in currency exchange rates. These foreign currency instruments, which include, but are not limited to, forward exchange contracts and purchased currency options, are used to hedge global currency exposures such as foreign currency denominated debt, sales, receivables, payables, and purchases.

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

We have no foreign currency cashflow hedges outstanding as of March 31, 2020 and December 31, 2019 and, therefore, no unrealized gains or losses reported under accumulated other comprehensive income (loss).

As of March 31, 2020, we had outstanding Mexican peso, euro, Swiss franc, South African rand and Japanese yen currency contracts with an aggregate notional amount of $39.8 million. As of December 31, 2019, we had outstanding Mexican peso, South African rand, euro, Swiss franc and Japanese yen currency contracts, with an aggregate notional amount of $78.8 million. The foreign currency derivatives outstanding as of March 31, 2020 have maturities through June 30, 2020, and were not designated as hedging instruments.

Commodity derivative ~~assets and liabilities~~contracts

We have entered into commodity derivative contracts for refined oil products. These contracts are ~~included~~entered into to protect against the risk that eventual cash flows related to these products will be adversely affected by future changes in prices. We had outstanding commodity derivative contracts as of March 31, 2020 with a notional amount of $85.7 million with maturities from April 2020 to June 2022. The outstanding commodity derivative contracts represented a pre-tax net unrealized loss within ~~"Other long-term assets", "Prepaid expenses and other current assets", "Long-term liabilities" and "Other current liabilities" on the Condensed Consolidated Balance Sheets and effects~~"Accumulated Other Comprehensive Income" of ~~these derivatives are recorded in "Other comprehensive income", "Cost~~$33.7 million as of ~~sales", "Interest expense" and "Other income (expense)" on the Condensed Consolidated Statements~~March 31, 2020. We had outstanding commodity derivative contracts as of ~~Operations.~~December 31, 2019 with a notional amount of $99.5 million representing a pre-tax net unrealized loss of $3.7 million.

Interest rate swap contracts

During the third quarter of 2019, the Company entered into four interest rate swap contracts. The contracts are "pay fixed, receive variable" with notional amounts of $500 million maturing in two years and another $500 million maturing in five years. The Company’s risk management objective was to fix its cash flows associated with the risk in variability in the one-month US LIBO Rate for a portion of our outstanding debt. It is expected that these swaps will fix the cash flows associated with the forecasted interest payments on this notional amount of debt to an effective fixed interest rate of 5.1%, which could be lowered to 4.85% depending on credit ratings. Within ~~Accumulated Other~~"Other Comprehensive ~~Income~~Income", we recorded a net unrealized pre-tax ~~gain~~loss of ~~$0.7~~$16.7 million ~~as of September 30, 2019.~~for the three months ended March 31, 2020. The fair value of these contracts was determined using Level 2 inputs.

~~Foreign currency derivatives~~

We had no foreign currency cashflow hedges outstanding as of September 30, 2019 and December 31, 2018 and therefore, no unrealized gains or losses reported under accumulated other comprehensive income (loss).

As of September 30, 2019, we had outstanding Mexican peso, euro, Swiss franc, South African rand, and Japanese yen currency contracts with an aggregate notional amount of $75.1 million. These foreign currency derivatives outstanding as of

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

September 30, 2019 have maturities through December 31, 2019. As of December 31, 2018, we had outstanding Mexican peso, South African rand, euro, Swiss franc and Japanese yen currency contracts, with an aggregate notional amount of $19.6 million.

~~Commodity derivative contracts~~

We have entered into commodity derivative contracts for refined oil products. These contracts are entered into to protect against the risk that eventual cash flows related to these products will be adversely affected by future changes in prices. We had outstanding commodity derivative contracts as of September 30, 2019 with notional amount of $111.0 million with maturities from October 2019 to June 2022. The outstanding commodity derivative contracts represented a pre-tax net unrealized loss within "Other Comprehensive Income" of $17.2 million as of September 30, 2019. We had outstanding commodity derivative contracts as of December 31, 2018 with notional amount of $142.1 million representing a pre-tax net unrealized loss of $10.7 million.

Net Investment Hedges

We use certain intercompany debt to hedge a portion of our net investment in our foreign operations against currency exposure (net investment hedge). Intercompany debt denominated in foreign currency and designated as a non-derivative net investment hedging instrument was ~~$9.0~~$4.3 million as of ~~September 30, 2019~~March 31, 2020 and ~~$9.5~~$5.5 million as of December 31, ~~2018.~~2019. Within the currency translation adjustment portion of "Other Comprehensive Income", we recorded pre-tax gains of ~~$0.7 million and $0.5~~$1.2 million for the three ~~and nine~~ months ended ~~September 30, 2019, respectively. We recorded gains of $0.4 million~~March 31, 2020, and ~~$1.9 million in~~no gain or loss for the three ~~and nine~~ months ended ~~September 30, 2018, respectively.~~March 31, 2019.

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The fair value of all derivatives is recorded as assets or liabilities on a gross basis in our Condensed Consolidated Balance Sheets. As of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the fair value of our derivatives and their respective balance sheet locations are presented in the following ~~table:~~tables:


	Asset Derivatives			Liability Derivatives			Asset Derivatives			Liability Derivatives
	Location	Fair Value		Location	Fair Value		Location	Fair Value		Location	Fair Value
As of September 30, 2019	(Dollars in thousands)
As of March 31, 2020							(Dollars in thousands)
Derivatives designated as cash flow hedges:	Derivatives designated as cash flow hedges:						Derivatives designated as cash flow hedges:
Commodity derivative contracts	Prepaid and other current assets	$	6	Other accrued liabilities	$	9,290	Prepaid and other current assets	$	—	Other accrued liabilities	$	18,002
	Other long-term assets	49		Other long-term obligations	7,940		Other long-term assets	—		Other long-term obligations	15,739
Interest rate swap contracts	Prepaid and other current assets	1,033		Other accrued liabilities	—		Prepaid and other current assets	—		Other accrued liabilities	5,869
	Other long-term assets	22		Other long-term obligations	317		Other long-term assets	—		Other long-term obligations	7,922
Total fair value		$	1,110		$	17,547		$	—		$	47,532

As of December 31, 2018
As of December 31, 2019
Derivatives designated as cash flow hedges:	Derivatives designated as cash flow hedges:						Derivatives designated as cash flow hedges:
Commodity derivative contracts	Prepaid and other current assets	$	90	Other accrued liabilities	$	4,630	Prepaid and other current assets	$	104	Other accrued liabilities	$	1,872
	Other long-term assets	260		Other long-term obligations	6,393		Other long-term assets	369		Other long-term obligations	2,255
Interest rate swap contracts							Prepaid and other current assets	253		Other accrued liabilities	—
							Other long-term assets	2,684		Other long-term obligations	72
Total fair value		$	350		$	11,023		$	3,410		$	4,199



	Asset Derivatives			Liability Derivatives
	Location	Fair Value		Location	Fair Value
As of March 31, 2020	(Dollars in thousands)
Derivatives not designated as hedges:
Foreign currency derivatives	Prepaid and other current assets	$	90	Other current liabilities	$	135
Commodity derivatives contracts	Prepaid and other current assets	—		Other accrued liabilities	450
		$	90		$	585
As of December 31, 2019
Derivatives not designated as hedges:
Foreign currency derivatives	Prepaid and other current assets	$	239	Other current liabilities	$	81
Commodity derivatives contracts	Prepaid and other current assets	376		Other accrued liabilities	—
		$	615		$	81

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Asset Derivatives Liability Derivatives
Location Fair Value Location Fair Value
As of September 30, 2019 (Dollars in thousands)
Derivatives not designated as hedges:
Foreign currency derivatives Prepaid and other current assets $ 189
Other current liabilities $ 971

As of December 31, 2018
Derivatives not designated as hedges:
Foreign currency derivatives Prepaid and other current assets $ —
Other current liabilities $ 43

The realized (gains) losses resulting from the settlement of commodity derivative contracts remain in ~~Accumulated~~"Accumulated Other Comprehensive ~~Income~~Income" until they are recognized in the Statement of Operations when the hedged item impacts earnings, which is when the finished product is sold. As of ~~September 30,~~March 31, 2020 and March 31, 2019, ~~and September 30, 2018,~~ net realized pre-tax losses of $0.5 million and pre-tax gains of ~~$7.3 million and $5.4~~$8.4 million, respectively, were reported under ~~Accumulated~~"Accumulated Other Comprehensive ~~Income~~Income" and will be and were, respectively, released to earnings within the following 12 months. See table below for amounts recognized in the Statement of Operations.

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The location and amount of ~~pre-tax~~ realized (gains) losses on ~~commodity~~ derivatives ~~interest rate swaps and on undesignated foreign currency derivatives~~are recognized in the ~~Statement~~Statements of Operations as follows for the periods ended ~~September 30, 2019~~March 31, 2020 and ~~September 30, 2018 are as follows :~~March 31, 2019:



		Amount of (Gain)/Loss Recognized
	Location of (Gain)/Loss Recognized in the Consolidated Statement of Operations	For the Three Months Ended March 31,
		2020			2019
Derivatives designated as cash flow hedges:		(Dollars in thousands)
Commodity derivative contracts	Cost of sales	$	(2,809	)	$	(1,848	)
Interest rate swap	Interest expense	(206		)	—

Derivatives not designated as hedges:
Foreign currency derivatives	Cost of sales, Other (income) expense	$	(499	)	(677		)
Commodity derivative contracts	Cost of sales	(139		)	—

Amount of (Gain)/Loss

The balance in our accumulated other comprehensive income (loss) is set forth in the following table:



	As of March 31, 2020			As of December 31, 2019
	(Dollars in thousands)
Foreign currency translation adjustments, net of tax	$	(26,461	)	$	(9,293	)
Commodity and interest rate derivatives, net of tax	(37,849		)	1,932
Total accumulated comprehensive income (loss)	$	(64,310	)	$	(7,361	)

As of
September 30, 2019 As of
December 31, 2018
(Dollars in thousands)
Foreign currency translation adjustments, net of tax $ (16,441 ) $ (2,922 )
Commodities, interest rate and foreign currency derivatives, net of tax (7,236 ) (2,878 )
Total accumulated comprehensive income (loss) $ (23,677 ) $ (5,800 )

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

During the three months ended March 31, 2020, we repurchased 3,328,574 shares of our common stock under the repurchase program that was approved on July 30, 2019. These shares were subsequently retired.

The following table shows the information used in the calculation of our basic and diluted earnings per share calculation as of ~~September 30, 2019~~March 31, 2020 and ~~September 30, 2018.~~March 31, 2019:



	For the Three Months Ended March 31,
	2020	2019

Weighted average common shares outstanding for basic calculation	269,216,820	290,559,025
Add: Effect of stock options, deferred share units and restricted stock units	19,742	7,138
Weighted average common shares outstanding for diluted calculation	269,236,562	290,566,163

For the Three Months Ended September 30, For the Nine Months
Ended September 30,
2019 2018 2019 2018

Weighted average common shares outstanding for basic calculation 290,112,233
296,136,564
290,410,859
300,173,831
Add: Effect of stock options, deferred stock units and restricted stock units 15,063
8,889
11,492
4,873
Weighted average common shares outstanding for diluted calculation 290,127,296
296,145,453
290,422,351
300,178,704

Basic earnings per common share are calculated by dividing net income (loss) by the weighted average number of common shares outstanding, which includes ~~36,546~~53,204 and ~~28,914~~21,413 shares of participating securities in the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019, ~~respectively, and 8,890 and 2,996 shares of participating securities in the three and nine months ended September 30, 2018,~~ respectively. Diluted earnings per share are calculated by dividing net income (loss) by the sum of the weighted average number of common shares outstanding plus the additional common shares that would have been outstanding if potentially dilutive securities had been issued.

The weighted average common shares outstanding for the diluted earnings per share calculation excludes consideration of 1,303,854 and 1,203,220 equivalent shares in the three and nine months ended September 30, 2019, respectively, and 946,610 and 544,292 equivalent shares in the three and nine months ended September 30, 2018, respectively, as these shares are anti-dilutive. During the three months ended September 30, 2019, we repurchased 879,134 shares of our common stock under the previously announced repurchase program. These shares were subsequently retired.

~~(14) Stock-Based Compensation~~

~~Stock-based compensation awards granted by our Board of Directors for the three and nine months ended September 30, 2019 and 2018 were as follows:~~

For the Three Months Ended September 30, For the Nine Months
Ended September 30,
2019 2018 2019 2018
Award type:
Stock options —
67,000
207,000
979,790
Deferred stock units 16,176
9,286
23,121
28,621
Restricted stock units 1,551
—
235,170
6,740

In the three months ended September 30, 2019 and 2018, we recognized $0.7 million and $0.5 million, respectively, in stock-based compensation expense. A majority of the expense, $0.6 million and $0.4 million respectively, was recorded as selling and administrative expenses in the Consolidated Statement of Operations, with the remaining expenses incurred as cost of sales and research and development.

In the nine months ended September 30, 2019 and 2018, we recognized $1.6 million and $0.7 million, respectively, in stock-based compensation expense. A majority of the expense, $1.4 million and $0.6 million respectively, was recorded as selling and administrative expenses in the Consolidated Statement of Operations, with the remaining expenses incurred as cost of sales and research and development.

As of September 30, 2019, unrecognized compensation cost related to non-vested stock options, deferred stock units and restricted stock units represents $7.9 million, which will be recognized over the remaining weighted average life of 4.0 years.

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The weighted average common shares outstanding for the diluted earnings per share calculation excludes consideration of 1,297,661 equivalent shares in the three months ended March 31, 2020 and 981,330 equivalent shares in the three months ended March 31, 2019 as these shares are anti-dilutive.

(13) Stock-Based Compensation

Stock-based compensation awards granted by our Board of Directors for the three months ended March 31, 2020 and 2019 were as follows:



	For the Three Months Ended March 31,
	2020	2019
Award type:
Stock options	298,000	157,000
Deferred share units	12,552	280
Restricted stock units	309,389	181,905

In the three months ended March 31, 2020 and 2019, we recognized $0.4 million and $0.3 million, respectively, in stock-based compensation expense. A majority of the expense, $0.3 million and $0.2 million respectively, was recorded as selling and administrative expense in the Consolidated Statement of Operations, with the remaining expenses incurred as cost of sales.

As of March 31, 2020, unrecognized compensation cost related to non-vested stock options, deferred share units and restricted stock units was $9.5 million, which will be recognized over the remaining weighted average life of 4.0 years.

Stock Option, Deferred ~~Stock~~Share Unit and Restricted Stock Unit awards activity under the Omnibus Equity Incentive Plan for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 was as follows:



	Number of Shares		Weighted- Average Exercise Price
Outstanding unvested as of December 31, 2019	931,658		15.06
Granted	298,000		9.01
Vested	(23,800	)	13.73
Forfeited	(141,960	)	14.87
Outstanding unvested as of March 31, 2020	1,063,898		13.42

Deferred ~~Stock~~Share Unit and Restricted Stock Unit awards



	Number of Shares		Weighted- Average Grant Date Fair Value
Outstanding unvested as of December 31, 2019	282,716		12.83
Granted	321,941		9.02
Vested	(42,035	)	11.90
Forfeited	(43,734	)	12.27
Outstanding unvested as of March 31, 2020	518,888		10.59

~~(15)~~(14) Subsequent Events

On ~~November 6, 2019, the~~May 5, 2020, our Board of Directors declared ~~our regular~~a reduced quarterly dividend of ~~$0.085~~$0.01 per share to stockholders of record as of the close of business on ~~November~~May 29, ~~2019,~~2020, to be paid on ~~December 31, 2019.~~June 30, 2020.

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~Outlook~~The Company

GrafTech is a leading manufacturer of graphite electrodes, the critical consumable for the electric arc furnace ("EAF") industry. We are the only graphite electrode producer that is substantially vertically integrated into petroleum needle coke, ~~the~~a key raw material for graphite electrodes. Vertical integration has allowed us to adopt a commercial strategy with long-term, fixed price, fixed volume, take-or-pay contracts providing earnings stability and visibility. These contracts define volumes and prices, along with price‑escalation mechanisms for inflation, and include significant termination payments (typically, 50% to 70% of remaining contracted revenue) and, in certain cases, parent guarantees and collateral arrangements to manage our customer credit risk.

GrafTech has been proactive from the onset of the COVID-19 crisis. We created a COVID-19 response team composed of senior management that meets three to five times per week to monitor conditions and formulate appropriate action plans. These initial meetings resulted in early actions to cancel travel and eliminate in-person meetings. Our team members are working from home where possible, and we have established a "Safe-Work Playbook" for our sites. Our plant procedures include temperature measurements where permitted, personal protective equipment, mandatory use of gloves, social distancing, frequent cleaning and disinfecting, and the use of daily check sheets to keep team members highly focused on these new procedures. These actions have been very successful, as over 99% of our workforce has remained healthy through this crisis. In addition, we have developed return to work protocols so when the time is right, we may have team members currently working from home safely return to the office.

We have worked hard during this COVID-19 crisis to minimize the impact on our employees, our customers, and our operations. We have navigated and implemented eight different sets of government controls and guidelines to keep all of our plants open and operating safely. Despite this challenging environment, we met all customer orders and achieved a 96% on-time delivery rate for the first quarter of 2020. At the same time, we achieved record levels of safety and environmental performance.

We service customers at over 300 locations across the globe and most of them have been impacted as a result of this pandemic. In spite of the steel industry being deemed an essential business in many countries, a number of our customers have temporarily suspended or otherwise reduced operations. This is having a significant impact on demand, which we expect to last through the remainder of this year, and into 2021.

The ~~outstanding three‑to‑five‑year take‑or‑pay~~impact of the virus has induced over 20 of our long-term contract customers to submit force majeure notices. The long-term contracts ~~represent~~provide for the deferral of volume during the force majeure period and extension of the term of the agreement for the length of such period.

Other long-term contract customers have been impacted by plant closures and lower steel demand, and are struggling to take their committed electrode volumes. We have had no additional customer bankruptcies at this point, but as a result of the above factors we are experiencing some delays and non-performance from certain customers on their long-term agreements. As a result of this macro environment spot pricing is now below the long-term contract price, and some customers are attempting to renegotiate their contracts or delay shipments.

We will continue to work with our valued customers who have benefited from these long-term contracts in recent years while contract prices have been below spot prices, but we will take every measure to ensure that our customers fulfill their legal obligations and commitments under these contracts.

We have contracted to sell approximately ~~146,000,~~ 142,000, 125,000 and 117,000 metric tons ("MT") in ~~2019,~~ 2020, 2021 and 2022, respectively. ~~These amounts are slightly lower than amounts reported in previous quarters due to~~The weighted average contract price for the ~~financial condition of certain of our customers.~~contracted volumes over the next three years is approximately $9,600 per MT. Approximately 83% of these volumes are under ~~pre-determined~~pre‑determined fixed annual volume contracts, while approximately 17% of the volumes are under contracts with a specified volume range. The aggregate difference between the ~~midpoint~~midpoints above and the minimum or maximum volumes across our cumulative portfolio of ~~take-or-pay~~take‑or‑pay contracts with specified volume ranges is approximately 5,000 MT per ~~year. Volumes per~~ year in 2020, 2021 and 2022. Contracted volumes may ~~further~~ vary ~~based on~~in timing and total due to the ~~actual timing of product shipments~~credit risk associated with certain customers facing financial challenges as well as customer demand related to contracted volume ranges. In our previous disclosures, we estimated that long-term contract volumes in 2020 would be approximately 130,000 MT. Given the current pandemic and the factors noted above, our long-term contracts are being impacted by deferrals due to force majeure events or other take or pay shortfalls, and potential losses due to financial ~~condition~~distress or disputes. We now estimate that our long-term contract

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

volume in 2020 will be in the range of ~~our customers. We have contracted approximately two-thirds of our production capacity through these contracts.~~

~~We have announced a series of operational improvement projects at our Monterrey and St. Marys facilities. These projects are intended~~100,000 to ~~help optimize our manufacturing footprint while improving environmental performance and increasing production flexibility.~~115,000 MT. We expect ~~these projects~~that some of this decrease in 2020 long-term contract volume will be recovered in future years.

Electrode spot prices continue to ~~be completed~~trend lower. Our average price for non-long-term agreement business in the first quarter of 2020 was approximately $6,500 per MT. As a result of the COVID-19 pandemic and the reduction in overall demand, we expect the spot price for graphite electrodes will decrease further.

Due to the COVID-19 impact and the resulting decrease in customer demand, we have reduced the operating level of our graphite electrode plants. We will operate our electrode plants to match customer demand while meeting customer requirements with continued high levels of on-time delivery performance.

We have been successful at continuing to operate our Seadrift needle coke plant at full capacity during this COVID-19 crisis.We have scheduled our planned biannual Seadrift maintenance outage for later in the second quarter this year. This outage will last about four weeks. We have adequate needle coke inventory to cover this outage.

Steel production levels are down significantly as a result of this pandemic and the associated impact on all manufacturing supply chains. Our customers' graphite electrode destocking initiatives were progressing as expected in the first quarter of 2020 prior to the COVID-19 outbreak. We had expected this process to complete in the second half of ~~2021,~~2020 but now expect destocking to continue through the end of the year, and depending on levels of activity across metal based manufacturing supply chains, potentially into 2021.

Cost Reduction Initiatives

In response to the challenging environment created by the global pandemic, we have proactively taken concrete actions to reduce costs and preserve cash. We have eliminated all discretionary spending and have reduced our full-time workforce and adjusted production to our expected sales. We have also eliminated our temporary workforce and substantially eliminated contractors. In total, our headcount at ~~which time we~~electrode plants is being reduced by 15%. We are also reducing our fixed costs at our electrode plants by 15%, and variable costs will be ~~able~~lower in 2020 as a result of the lower utilization rates.

Capital expenditures totaled $14 million in the first quarter of 2020, and we are reducing our planned capital expenditures for the full year by approximately one-half to ~~shift additional graphitization~~a level of $30 to $35 million. Due to timing of purchases, inventory levels increased during the first quarter, but we are managing to reduce levels to match demand moving forward and ~~machining from Monterrey~~expect overall inventory levels to ~~St. Marys. We estimate that capital spending would be near current levels which includes these projects as well as maintenance~~come down over the course of the year.

Capital Structure and ~~capital projects, subject~~Capital Allocation

In addition to the ~~approval by~~cost reduction initiatives outlined above, we are actively taking steps to further strengthen our ~~Board.~~balance sheet and increase our financial flexibility. Given the extent and duration of the impact of the pandemic on the macro environment, our quarterly dividend is being reduced to $0.01 per share. The Board will revisit the dividend level as conditions improve and the business environment becomes clearer.

~~Our weighted average realized price~~We are also reprioritizing our capital allocation to focus on liquidity and balance sheet flexibility. In the first quarter of ~~GrafTech manufactured electrodes was $9,960 per MT~~2020, we returned over $50 million to shareholders in the ~~third quarter~~form of 2019 compared to $9,664 per MT in the third quarter of 2018, which has been recast as described below. While spot prices have come down from recent historic highs, they still remain well above their historical average. Strong economics for the EAF producers that we serve has led to EAF production since 2016 resuming growth in line with its historical trend (2.8% annually from 1984-2017) in recent history. Steelmakers have announced EAF capacity expansions representing a potential 15 to 20% increase in graphite electrode demand in the U.S. by 2022. However, recent steel productionshare repurchases and ~~graphite electrode consumption has slowed in some regions, notably Europe and South America.~~

A tight needle coke market is also contributing to these elevated prices. Needle coke demand from electric vehicle batteries is currently disrupting the supply chain and resulting in increased pricing and higher costs of sales. Although our vertical integration largely protects us from the increase in needle coke costs, wedividends. We now expect to ~~purchase approximately one third~~use the majority of our ~~needle coke supply from third parties. These higher needle coke costs~~incremental free cash flow in 2020 to reduce debt, but will continue to ~~impact our earnings.~~examine opportunities to repurchase stock.

We remain fully confident in the long-term growth trajectory of electric arc furnace ("EAF") steel production. Global warming and other environmental concerns are ~~impacted in varying degrees, both positively and negatively, as global, regional or country economic conditions fluctuate. Our discussions about market data~~critical issues facing society and global ~~economic conditions below~~companies, and the EAF steelmakers are ~~derived from published industry accounts and statistics. In its October 2019 report,~~among the ~~International Monetary Fund ("IMF") reported that they were again lowering their 2019~~largest recycling industries in the world. EAF steel making produces 75% less carbon emissions than traditional blast oxygen furnace steel making. EAF growth ~~forecast from their July forecast by 0.2% to 3.0% and lowering their 2020 forecast by 0.1% to 3.4%, as rising trade and geopolitical tensions have increased uncertainty about the future~~is continuing with significant capacity additions having been announced.

GrafTech is one of the ~~global trading system.~~

~~Graphite~~largest graphite electrode ~~demand is primarily linked~~producers in the world and a mission critical supplier to the ~~global production~~EAF industry. We have three of ~~steel~~the most efficient and largest graphite electrode plants in ~~EAFs,~~the world and are the only substantially vertically integrated producer. With this backdrop, and the decisive actions we have taken to ~~a lesser extent, with~~manage through the total production of steel and certain other metals. The World Steel Association's ("WSA") October 2019 Short Range Outlook estimated that global steel demand outside of China increased by 1.6% in 2018, which was revised down 0.6% from their April 2019 estimate. WSA also decreased their growth forecast for steel demand outside of China for 2019 from 1.7% in their April forecastCOVID-19 pandemic, we are well positioned to 0.2% as uncertainty, trade tensions and geopolitical issues have weighed on investment and trade. WSA's growth forecast for steel demand outside of China for 2020 was revised down to 2.5% from their April estimate of 2.8%.weather this downturn.

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

Key metrics used by management to measure performance

In addition to measures of financial performance presented in our ~~Condensed~~ Consolidated Financial Statements in accordance with ~~GAAP,~~U.S. generally accepted accounting principles ("GAAP"), we use certain other financial measures and operating metrics to analyze the performance of our company. The “non‑GAAP” financial measures consist of EBITDA ~~from continuing operations~~ and adjusted EBITDA, ~~from continuing operations,~~ which help us evaluate growth trends, establish budgets, assess operational efficiencies and evaluate our overall financial performance. The key operating metrics consist of sales volume, ~~weighted average realized price,~~ production volume, production capacity and capacity utilization.

~~PART I (CONT’D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

Key financial measures

EBITDA from continuing operations⁽¹⁾

Adjusted EBITDA from continuing operations⁽¹⁾

Adjusted EBITDA ⁽¹⁾

⁽¹⁾ Non-GAAP financial measures; see below for information and a reconciliation of EBITDA and adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP.

Key operating metrics

Sales volume (MT)⁽¹⁾

Production volume (MT)⁽²⁾

Production capacity excluding St. Marys (MT)⁽³⁾⁽⁴⁾

Capacity utilization excluding St. Marys ⁽³⁾⁽⁵⁾

Total production capacity (MT)⁽⁴⁾⁽⁶⁾

⁽¹⁾ Sales volume ~~and weighted average realized price per metric ton as set forth in the table below to include~~reflects only graphite electrodes manufactured by GrafTech. This better reflects management’s assessment of our revenue and profitability and excludes re-sales of low grade graphite electrodes manufactured by third-party suppliers. For comparability purposes, the prior periods have been recast to conform to this presentation.

Sales volume (MT)⁽¹⁾

Weighted average realized price⁽²⁾

Production volume (MT)⁽³⁾

Production capacity excluding St. Marys during idle period (MT)⁽⁴⁾⁽⁵⁾

Capacity utilization excluding St. Marys during idle period⁽⁴⁾⁽⁶⁾

Total production capacity (MT)⁽⁵⁾⁽⁷⁾

Total capacity utilization⁽⁶⁾⁽⁷⁾

⁽¹⁾ Sales volume has been recast to reflect the total sales volume of GrafTech manufactured electrodes for which revenue has been recognized during the period. For additional information see "Key Operating Metrics" below.

⁽²⁾ Weighted average realized price has been recast to reflect the total revenues from sales of GrafTech manufactured electrodes for the period divided by the GrafTech manufactured electrode volume for that period. For additional information see "Key Operating Metrics" below.

⁽³⁾ Production volume reflects graphite electrodes we produced during the period.

⁽⁴⁾⁽³⁾ ~~The St. Marys, Pennsylvania facility was temporarily idled effective the second quarter of 2016 except for the machining of semi‑finished products sourced from other plants.~~ In the first quarter of 2018, our St. Marys facility began graphitizing a limited amount of electrodes sourced from our Monterrey, Mexico facility.

⁽⁵⁾⁽⁴⁾Production capacity reflects expected maximum production volume during the period under normal operating conditions, standard product mix and expected maintenance outage. Actual production may vary.

⁽⁶⁾⁽⁵⁾ Capacity utilization reflects production volume as a percentage of production capacity.

⁽⁷⁾⁽⁶⁾ Includes graphite electrode facilities in Calais, France; Monterrey, Mexico; Pamplona, Spain and St. Marys, Pennsylvania.

Non‑GAAP financial measures

In addition to providing results that are determined in accordance with GAAP, we have provided certain financial measures that are not in accordance with GAAP. EBITDA ~~from continuing operations~~ and adjusted EBITDA ~~from continuing operations~~ are non‑GAAP financial measures. We define EBITDA, ~~from continuing operations,~~ a non‑GAAP financial measure, as net income or loss plus interest expense, minus interest income, plus income taxes, ~~discontinued operations~~ and depreciation and ~~amortization from continuing operations.~~amortization. We define adjusted EBITDA ~~from continuing operations~~ as EBITDA ~~from continuing operations~~ plus any pension and ~~other post-employment benefit ("OPEB")~~OPEB plan expenses, initial and follow-on public offering and related expenses, non‑cash gains or losses from foreign currency remeasurement of non‑operating liabilities in our foreign subsidiaries where the functional currency is the U.S. dollar, related party Tax Receivable Agreement expense, stock-based compensation and non‑cash fixed asset write‑offs. Adjusted EBITDA ~~from continuing operations~~ is the primary metric used by our management and our board of directors to establish budgets and operational goals for managing our business and evaluating our performance.

~~PART I (CONT’D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

We monitor adjusted EBITDA ~~from continuing operations~~ as a supplement to our GAAP measures, and believe it is useful to present to investors, because we believe that it facilitates evaluation of our period‑to‑period operating performance by eliminating items that are not operational in nature, allowing comparison of our recurring core business operating results over multiple periods unaffected by

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

differences in capital structure, capital investment cycles and fixed asset base. In addition, we believe adjusted EBITDA ~~from continuing operations~~ and similar measures are widely used by investors, securities analysts, ratings agencies, and other parties in evaluating companies in our industry as a measure of financial performance and debt‑service capabilities.

Our use of adjusted EBITDA ~~from continuing operations~~ has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

In evaluating EBITDA ~~from continuing operations~~ and adjusted EBITDA, ~~from continuing operations,~~ you should be aware that in the future, we will incur expenses similar to the adjustments in this presentation. Our presentations of EBITDA ~~from continuing operations~~ and adjusted EBITDA ~~from continuing operations~~ should not be construed as suggesting that our future results will be unaffected by these expenses or any unusual or non‑recurring items. When evaluating our performance, you should consider EBITDA ~~from continuing operations~~ and adjusted EBITDA ~~from continuing operations~~ alongside other financial performance measures, including our net income (loss) and other GAAP measures.

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

The following table reconciles our non‑GAAP key financial measures to the most directly comparable GAAP measures:

Pension and OPEB plan expenses ⁽¹⁾

Initial and follow-on public offering expenses ⁽²⁾

Non‑cash loss on foreign currency remeasurement ⁽³⁾

Initial and follow-on public offering and related expenses ⁽²⁾

Non‑cash (gain) loss on foreign currency remeasurement ⁽³⁾

Stock-based compensation ⁽⁴⁾

Non‑cash fixed asset write-off ⁽⁵⁾

Related party Tax Receivable Agreement expense ⁽⁶⁾

Related party Tax Receivable Agreement benefit⁽⁶⁾

Key Operating Metrics

~~Key~~In addition to measures of financial performance presented in accordance with GAAP, we use certain operating metrics to analyze the performance of our company. The key operating metrics consist of sales volume, ~~weighted average realized price,~~ production volume, production capacity and capacity utilization.

Sales volume reflects the total volume of GrafTech manufactured graphite electrodes sold for which revenue has been recognized during the period. Weighted average realized price reflects the total revenues from sales of GrafTech manufactured graphite electrodes for the period divided by the sales volume of the GrafTech manufactured electrodes for that period. Beginning in the first quarter of 2019, sales volume and weighted average realized price are presented excluding re-sales of low-grade graphite electrodes manufactured by third-party suppliers. Sales of these third-party manufactured electrodes are now included in the revenue category of “by-products and other,” which represents a minimal contribution to our profitability. This change aligns these These metrics align with management's assessment of our revenue performance and profit margin and will help investors understand the factors that drive our profitability.

Sales volume reflects only graphite electrodes manufactured by GrafTech. For ~~comparability purposes,~~a discussion of our revenue recognition policy, see our Annual Report on Form 10-K “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies-Revenue Recognition.” Sales volume helps investors understand the ~~prior period sales volume and weighted average realized price have been recast to conform to this presentation.~~ factors that drive our net sales.

Production volume reflects graphite electrodes produced during the period. Production capacity reflects expected maximum production volume during the period under normal operating conditions, standard product mix and expected maintenance downtime. Capacity utilization reflects production volume as a percentage of production capacity. Production volume, production capacity and capacity utilization help us understand the efficiency of our production, evaluate cost of sales and consider how to approach our contract initiative.

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

~~Results of Operations~~

The Three Months Ended ~~September 30, 2019~~March 31, 2020 Compared to the Three Months Ended ~~September 30, 2018~~

The tables presented in our period-over-period comparisons summarize our Condensed Consolidated Statements of Operations and illustrate key financial indicators used to assess the consolidated financial results. Throughout our Management's Discussion and Analysis ("MD&A"), insignificant changes may be deemed not meaningful and are generally excluded from the discussion.

For the Three Months Ended September 30, Increase/ Decrease % Change
2019 2018
(Dollars in thousands)

Net sales $ 420,797
$ 454,890
$ (34,093 ) (7 )%
Cost of sales 178,497
180,280
(1,783 ) (1 )%
Gross profit 242,300
274,610
(32,310 ) (12 )%
Research and development 611
518
93
18 %
Selling and administrative expenses 15,708
14,234
1,474
10 %
Operating income 225,981
259,858
(33,877 ) (13 )%
Other (income) expense, net (688 ) 1,502
(2,190 ) (146 )%
Interest expense 31,803
33,855
(2,052 ) (6 )%
Interest income (1,765 ) (562 ) (1,203 ) 214 %
Income from continuing operations before
provision for income taxes 196,631
225,063
(28,432 ) (13 )%
Provision for income taxes 20,755
24,871
(4,116 ) (17 )%
Net income from continuing operations 175,876
200,192
(24,316 ) (12 )%
Loss from discontinued operations, net of tax —
(726 ) 726
(100 )%
Net income $ 175,876
$ 199,466
$ (23,590 ) (12 )%


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
CONSOLIDATED STATEMENTS OF OPERATIONS
Net sales	$	420,797		$	454,890		$	1,376,181		$	1,363,121		$	318,646		$	474,994
Cost of sales	178,497			180,280			571,068			491,339			138,917			195,524
Gross profit	242,300			274,610			805,113			871,782			179,729			279,470
Research and development	611			518			1,961			1,528			712			637
Selling and administrative expenses	15,708			14,234			46,328			46,349			14,932			15,226
Operating profit	225,981			259,858			756,824			823,905			164,085			263,607

Other (income) expense, net	(688		)	1,502			642			2,533			(3,314		)	467
Related party Tax Receivable Agreement expense	—			—			—			61,801
Related party Tax Receivable Agreement benefit													(3,346		)	—
Interest expense	31,803			33,855			98,472			100,387			25,672			33,700
Interest income	(1,765		)	(562		)	(2,910		)	(1,068		)	(1,141		)	(414		)
Income from continuing operations before provision for income taxes	196,631			225,063			660,620			660,252

Income before provision for income taxes													146,214			229,854
Provision for income taxes	20,755			24,871			90,940			36,250			23,946			32,418
Net income from continuing operations	175,876			200,192			569,680			624,002

(Loss) income from discontinued operations, net of tax	—			(726		)	—			585

Net income	$	175,876		$	199,466		$	569,680		$	624,587		$	122,268		$	197,436

Basic income per common share*:
Net income per share	$	0.61		$	0.67		$	1.96		$	2.08		$	0.45		$	0.68
Net income from continuing operations per share	$	0.61		$	0.68		$	1.96		$	2.08
Weighted average common shares outstanding	290,112,233			296,136,564			290,410,859			300,173,831			269,216,820			290,559,025
Diluted income per common share*:
Income per share	$	0.61		$	0.67		$	1.96		$	2.08		$	0.45		$	0.68
Diluted income from continuing operations per share	$	0.61		$	0.68		$	1.96		$	2.08
Weighted average common shares outstanding	290,127,296			296,145,453			290,422,351			300,178,704			269,236,562			290,566,163

STATEMENTS OF COMPREHENSIVE INCOME (LOSS)	STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net income	$	175,876		$	199,466		$	569,680		$	624,587		$	122,268		$	197,436
Other comprehensive income:
Foreign currency translation adjustments, net of tax of ($92), $0, ($128), and $0, respectively	(13,597		)	(3,601		)	(13,519		)	(17,379		)
Commodity and interest rate derivatives, net of tax of $6,972, $0, $1,065 and $0, respectively	(25,934		)	5,890			(4,358		)	31,629
Foreign currency translation adjustments, net of tax of ($163) and $0, respectively													(17,168		)	(3,539		)
Commodity and interest rate derivatives, net of tax of $10,927 and ($6,903), respectively													(39,781		)	25,657
Other comprehensive (loss) income, net of tax:	(39,531		)	2,289			(17,877		)	14,250			(56,949		)	22,118
Comprehensive income	$	136,345		$	201,755		$	551,803		$	638,837		$	65,319		$	219,554


	For the Nine Months Ended September 30,						For the Three Months Ended March 31,
	2019			2018			2020			2019
Cash flow from operating activities:
Net income	$	569,680		$	624,587		$	122,268		$	197,436
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization	46,387			47,746			14,284			15,585
Related party Tax Receivable Agreement expense	—			61,801
Deferred income tax provision (benefit)	28,696			(18,184		)
Loss on extinguishment of debt	—			23,827
Related party Tax Receivable Agreement benefit							(3,346		)	—
Deferred income tax provision							6,348			6,427
Interest expense	4,764			3,747			1,594			1,588
Other charges, net	17,689			9,652			(838		)	3,268
Net change in working capital*	(80,311		)	(143,695		)	(130		)	(71,443		)
Change in long-term assets and liabilities	(2,133		)	2,763			(897		)	3,956
Net cash provided by operating activities	584,772			612,244			139,283			156,817
Cash flow from investing activities:
Capital expenditures	(44,053		)	(47,632		)	(13,901		)	(14,569		)
Proceeds from the sale of assets	98			866			62			74
Net cash used in investing activities	(43,955		)	(46,766		)	(13,839		)	(14,495		)
Cash flow from financing activities:
Short-term debt, net	—			(12,607		)
Revolving Facility reductions	—			(45,692		)
Debt issuance costs	—			(27,326		)
Proceeds from the issuance of long-term debt, net of original issuance discount	—			2,235,000
Repayment of Senior Notes	—			(304,782		)
Related party Promissory Note repayment	—			(750,000		)
Repurchase of common stock	(9,484		)	(225,000		)
Repurchase of common stock-non-related party							(30,099		)	—
Payment of tax withholdings related to net share settlement of equity awards							(46		)	—
Principal repayments on long-term debt	(125,000		)	(28,125		)	—			(125,000		)
Dividends paid to non-related-party	(15,505		)	(7,651		)	(5,926		)	(5,194		)
Dividends paid to related-party	(58,507		)	(1,308,538		)	(16,933		)	(19,502		)
Net cash used in financing activities	(208,496		)	(474,721		)	(53,004		)	(149,696		)
Net change in cash and cash equivalents	332,321			90,757			72,440			(7,374		)
Effect of exchange rate changes on cash and cash equivalents	(1,037		)	(1,615		)	(1,266		)	(217		)
Cash and cash equivalents at beginning of period	49,880			13,365			80,935			49,880
Cash and cash equivalents at end of period	$	381,164		$	102,507		$	152,109		$	42,289

* Net change in working capital due to changes in the following components:
Accounts and notes receivable, net	$	(20,727	)	$	(96,045	)	$	40,743		$	(31,389	)
Inventories	(19,908		)	(93,755		)	(17,236		)	(4,705		)
Prepaid expenses and other current assets	5,703			7,828			7,411			7,425
Income taxes payable	(28,152		)	35,358			14,238			(38,333		)
Accounts payable and accruals	(17,336		)	4,336			(45,245		)	(5,305		)
Interest payable	109			(1,417		)	(41		)	864
Net change in working capital	$	(80,311	)	$	(143,695	)	$	(130	)	$	(71,443	)



	For the Three Months Ended September 30, 2019		For the Nine Months Ended September 30, 2019
	(Dollars in thousands)
RoU assets obtained in exchange for new operating lease liabilities (non-cash)	676		2,752
Operating (use of cash) from operating leases	(1,120	)	(3,192	)



	As of September 30, 2019
	(Dollars in thousands)
Operating RoU Assets*	$	7,228
*Amount included in Other assets

Current operating lease liabilities	3,752
Non-current operating lease liabilities	3,462
Total operating lease liabilities**	$	7,214
**Amounts included in other accrued liabilities and other long-term obligations

Weighted average remaining lease term (in years)	2.60
Weighted average discount rate - operating leases	5.62		%



	(Dollars in thousands)
Remainder 2019	$	1,085
2020	3,422
2021	2,085
2022	561
2023	322
2024 and thereafter	381
Total lease payments	$	7,856
Less: Imputed interest	(642		)
Present value of lease payments	7,214
Less: Current operating lease liability	(3,752		)
Non-current operating lease liability	$	3,462


																		Issued Shares of Common Stock		Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Income(Loss)			Retained Earnings (Accumulated Deficit)			Total Stockholders’ Equity (Deficit)
Balance as of December 31, 2019																		270,485,308		$	2,705		$	765,419		$	(7,361	)	$	(1,451,836	)	$	(691,073	)
Comprehensive income (loss):
Net income																		—		—			—			—			122,268			122,268
Other comprehensive income (loss):
Commodity and interest rate derivatives income (loss), net of tax of $10,322																		—		—			—			(37,577		)	—			(37,577		)
Commodity derivatives reclassification adjustments, net of tax of $605																		—		—			—			(2,204		)	—			(2,204		)
Foreign currency translation adjustments, net of tax of ($163)																		—		—			—			(17,168		)	—			(17,168		)
Total other comprehensive income																		—		—			—			(56,949		)	—			(56,949		)
Stock-based compensation																		29,394		—			405			—			—			405
Dividends paid to related party stockholder ($0.085 per share)																		—		—			—			—			(16,933		)	(16,933		)
Dividends paid to non-related party stockholders ($0.085 per share)																		—		—						—			(5,926		)	(5,926		)
Common stock repurchased and retired (from non-related party)																		(3,328,574	)	(33		)	(9,700		)	—			(20,366		)	(30,099		)
Common stock withheld for taxes on equity award settlement																		(7,465	)				(21		)				(25		)	(46		)
Adoption of ASC 326																				—						—			(2,026		)	(2,026		)
Balance as of March 31, 2020																		267,178,663		$	2,672		$	756,103		$	(64,310	)	$	(1,374,844	)	$	(680,379	)
	Issued Shares of Common Stock		Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Income(Loss)			Retained Earnings (Accumulated Deficit)			Total Stockholders’ Equity (Deficit)
Balance as of December 31, 2018	290,537,612		$	2,905		$	819,622		$	(5,800	)	$	(1,893,496	)	$	(1,076,769	)	290,537,612		$	2,905		$	819,622		$	(5,800	)	$	(1,893,496	)	$	(1,076,769	)
Comprehensive income (loss):
Net income	—		—			—			—			197,436			197,436			—		—			—			—			197,436			197,436
Other comprehensive income (loss):
Commodity and foreign currency derivatives income, net of tax of ($7,295)	—		—			—			27,113			—			27,113
Commodity and foreign currency derivatives reclassification adjustments, net of tax of $392	—		—			—			(1,456		)	—			(1,456		)
Foreign currency translation adjustments, net of tax of ($3)	—		—			—			(3,539		)	—			(3,539		)
Total other comprehensive income	—		—			—			22,118			—			22,118
Commodity and interest rate derivatives foreign currency derivatives income (loss), net of tax of ($7,295)																		—		—			—			27,113			—			27,113
Commodity derivatives reclassification adjustments, net of tax of $392																		—		—			—			(1,456		)	—			(1,456		)
Foreign currency translation adjustments, net of tax ($3)																		—		—			—			(3,539		)	—			(3,539		)
Total other comprehensive loss																		—		—			—			22,118			—			22,118
Stock-based compensation						293									293								293									293
Dividends paid to related party stockholder ($0.085 per share)	—		—			—			—			(19,502		)	(19,502		)	—		—			—			—			(19,502		)	(19,502		)
Dividends paid to non-related party stockholders ($0.085 per share)	—		—			—			—			(5,194		)	(5,194		)	—		—			—			—			(5,194		)	(5,194		)
Balance as of March 31, 2019	290,537,612		$	2,905		$	819,915		$	16,318		$	(1,720,756	)	$	(881,618	)	290,537,612		$	2,905		$	819,915		$	16,318		$	(1,720,756	)	$	(881,618	)
Comprehensive income (loss):
Net income	—		—			—			—			196,368			196,368
Other comprehensive income (loss):
Commodity and foreign currency derivatives income, net of tax of $603	—		—			—			(2,472		)	—			(2,472		)
Commodity and foreign currency derivatives reclassification adjustments, net of tax of $393	—		—			—			(1,609		)	—			(1,609		)
Foreign currency translation adjustments, net of tax of ($33)	—		—			—			3,617			—			3,617
Total other comprehensive loss	—		—			—			(464		)	—			(464		)
Stock-based compensation						570									570
Dividends paid to related party stockholder ($0.085 per share)	—		—			—			—			(19,503		)	(19,503		)
Dividends paid to non-related party stockholders ($0.085 per share)	—		—			—			—			(5,191		)	(5,191		)
Balance as of June 30, 2019	290,537,612		$	2,905		$	820,485		$	15,854		$	(1,549,082	)	$	(709,838	)
Comprehensive income (loss):
Net income	—		—			—			—			175,876			175,876
Other comprehensive loss:
Commodity, foreign currency and interest rate derivative income, net of tax of $6,306	—		—			—			(23,456		)	—			(23,456		)
Commodity and foreign currency derivatives reclassification adjustments, net of tax of $666	—		—			—			(2,478		)	—			(2,478		)
Foreign currency translation adjustments, net of tax of ($92)	—		—			—			(13,597		)	—			(13,597		)
Total other comprehensive loss	—		—			—			(39,531		)	—			(39,531		)
Stock-based compensation						705									705
Dividends paid to related party stockholder ($0.085 per share)	—		—			—			—			(19,502		)	(19,502		)
Dividends paid to non-related party stockholders ($0.085 per share)	—		—			—			—			(5,118		)	(5,118		)
Common stock repurchases and retirement	(879,134	)	(8		)	(2,470		)				(7,006		)	(9,484		)
Balance as of September 30, 2019	289,658,478		$	2,897		$	818,720		$	(23,677	)	$	(1,404,832	)	$	(606,892	)



Cont'd	Issued Shares of Common Stock		Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Income(Loss)			Retained Earnings (Accumulated Deficit)			Total Stockholders’ Equity (Deficit)
Balance as of December 31, 2017⁽¹⁾	302,225,923		$	3,022		$	851,315		$	20,289		$	(261,411	)	$	613,215
Comprehensive income (loss):
Net income	—		—			—			—			223,673			223,673
Other comprehensive income (loss):
Commodity and foreign currency derivatives loss, net of tax of $0	—		—			—			(6,113		)	—			(6,113		)
Foreign currency translation adjustments	—		—			—			5,040			—			5,040
Total other comprehensive loss	—		—			—			(1,073		)	—			(1,073		)
Dividends paid to related party stockholder ($3.68 per share)	—		—			—			—			(1,112,000		)	(1,112,000		)
Balance as of March 31, 2018⁽¹⁾	302,225,923		$	3,022		$	851,315		$	19,216		$	(1,149,738	)	$	(276,185	)
Comprehensive income (loss):
Net income	—		—			—			—			201,448			201,448
Other comprehensive income (loss):
Commodity and foreign currency derivatives loss, net of tax of $0	—		—			—			31,852			—			31,852
Foreign currency translation adjustments	—		—			—			(18,818		)	—			(18,818		)
Total other comprehensive income	—		—			—			13,034			—			13,034
Stock-based compensation	—		—			181			—			—			181
Related-party promissory note repayment	—		—			—			—			(750,000		)	(750,000		)
Dividends paid to related party stockholder ($0.59 per share)	—		—			—			—			(177,040		)	(177,040		)
Dividends paid to non-related party stockholders ($0.085 per share)	—		—			—			—			(2,457		)	(2,457		)
Balance as of June 30, 2018	302,225,923		$	3,022		$	851,496		$	32,250		$	(1,877,787	)	$	(991,019	)
Comprehensive income (loss):
Net income	—		—			—			—			199,466			199,466
Other comprehensive income (loss):
Commodity and foreign currency derivatives loss, net of tax of ($9,871)	—		—			—			5,890			—			5,890
Foreign currency translation adjustments	—		—			—			(3,601		)	—			(3,601		)
Total other comprehensive income	—		—			—			2,289			—			2,289
Stock-based compensation	—		—			475			—			—			475
Dividends paid to related party stockholder ($0.085 per share)	—		—			—			—			(19,498		)	(19,498		)
Dividends paid to non-related party stockholders ($0.085 per share)	—		—			—						(5,194		)	(5,194		)
Common stock repurchases and retirement	(11,688,311	)	(117		)	(32,844		)	—			(192,042		)	(225,003		)
Balance as of September 30, 2018	290,537,612		$	2,905		$	819,127		$	34,539		$	(1,895,055	)	$	(1,038,484	)


(1)	Organization and Summary of Significant Accounting Policies



	Three-to-five-year take-or-pay contracts
	(Dollars in thousands)
Remainder of 2019	347,097
2020	1,366,579
2021	1,211,036
2022	1,144,574
Thereafter	29,461
Total	$	4,098,747



	(Dollars in thousands)
2019	$	4,474
2020	2,747
2021	1,497
2022	334
2023	269
2024 and thereafter	343
Total lease payments	$	9,664



	For the Three Months Ended March 31,
(in thousands, except price data)	2020		2019
Sales volume (MT)⁽¹⁾	34		45
Production volume (MT)⁽²⁾	33		48
Production capacity excluding St. Marys (MT)⁽³⁾⁽⁴⁾	51		51
Capacity utilization excluding St. Marys ⁽³⁾⁽⁵⁾	65	%	94	%
Total production capacity (MT)⁽⁴⁾⁽⁶⁾	58		58
Total capacity utilization(5)(6)	57	%	83	%


(1)	Service and interest cost of our OPEB plans. Also includes a mark‑to‑market loss (gain) for plan assets as of December of each year.


(2)	Legal, accounting, printing and registration fees associated with the initial and follow-on public ~~offerings.~~offering and related expenses.


(3)	Non‑cash ~~loss~~gains and losses from foreign currency remeasurement of non‑operating liabilities of our non‑U.S. subsidiaries where the functional currency is the U.S. dollar.


(5)	Non‑cash fixed asset write‑off recorded for obsolete assets.


~~(4)~~	Retirement Plans and Postretirement Benefits


(6)	Non-cash expense adjustment for future payment to our sole pre-IPO stockholder for tax assets that are expected to be utilized.



	For the Three Months Ended September 30,						Increase/ Decrease			% Change
	2019			2018			Increase/ Decrease			% Change
	(Dollars in thousands)

Net sales	$	420,797		$	454,890		$	(34,093	)	(7	)%
Cost of sales	178,497			180,280			(1,783		)	(1	)%
Gross profit	242,300			274,610			(32,310		)	(12	)%
Research and development	611			518			93			18	%
Selling and administrative expenses	15,708			14,234			1,474			10	%
Operating income	225,981			259,858			(33,877		)	(13	)%
Other (income) expense, net	(688		)	1,502			(2,190		)	(146	)%
Interest expense	31,803			33,855			(2,052		)	(6	)%
Interest income	(1,765		)	(562		)	(1,203		)	214	%
Income from continuing operations before provision for income taxes	196,631			225,063			(28,432		)	(13	)%
Provision for income taxes	20,755			24,871			(4,116		)	(17	)%
Net income from continuing operations	175,876			200,192			(24,316		)	(12	)%
Loss from discontinued operations, net of tax	—			(726		)	726			(100	)%
Net income	$	175,876		$	199,466		$	(23,590	)	(12	)%


	For the Nine Months Ended September 30,						For the Three Months Ended March 31,
	2019			2018			2020			2019
	(Dollars in thousands)						(Dollars in thousands)

Tax expense	$	90,940		$	36,250		$	23,946		$	32,418
Pretax income	660,620			660,252
Pre-tax income							146,214			229,854
Effective tax rates	13.8		%	5.5		%	16.4		%	14.1		%



Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs

July 1 through July 31, 2019	—	$	—	—	$	—
August 1 through August 31, 2019	879,134	$	10.79	879,134	90,515,936
September 1 through September 30, 2019	—	$	—	—	$	—
Total	879,134	$	10.79	879,134	$	90,515,936



Period	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs

January 1 through January 31, 2020	104,646	$	11.01	104,646	$	87,981,000
February 1 through February 29, 2020	1,449,675	$	10.80	1,449,675	$	72,325,000
March 1 through March 31, 2020	1,774,253	$	7.49	1,774,253	$	59,036,000
Total	3,328,574			3,328,574



3.1	Amended and Restated Certificate of Incorporation of GrafTech International Ltd. (incorporated by reference to Exhibit 3.1 to GrafTech International Ltd.'s Quarterly Report on Form 10-Q filed May 1, 2019).

3.2	Amended and Restated By Laws of GrafTech International Ltd. (incorporated by reference to Exhibit 3.2 to GrafTech International Ltd.'s Registration Statement on Form S 1/A (Registration No. 333 223791) filed April 13, 2018).

10.1+	Form of Restricted Stock Unit Agreement under the GrafTech International Ltd. Omnibus Equity Incentive Plan.(incorporated by reference to Exhibit 10.39 to GrafTech International Ltd.'s Annual Report on Form 10-K filed February 21, 2020).

10.2+*	Separation Agreement, Waiver and Release as of January 10, 2020 between GrafTech International Holdings Inc. and Brian M. Boutte.

31.1*	Certification pursuant to Rule 13a-14(a) under the Exchange Act by David J. Rintoul, President and Chief Executive Officer (Principal Executive Officer).

31.2*	Certification pursuant to Rule 13a-14(a) under the Exchange Act by Quinn JJ. Coburn, ~~Vice President and~~ Chief Financial Officer, Vice President Finance and Treasurer (Principal Financial Officer).

32.1*	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by David J. Rintoul, President and Chief Executive Officer (Principal Executive Officer).

32.2*	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Quinn JJ. Coburn, ~~Vice President and~~ Chief Financial Officer, Vice President Finance and Treasurer (Principal Financial Officer).

~~101.INS~~101	The following financial information from GrafTech International Ltd.'s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020 formatted in Inline XBRL ~~Instance Document~~(Extensible Business Reporting Language) includes: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), (iii) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Stockholders' Equity (Deficit), and (vi) Notes to the Condensed Consolidated Financial Statements.

~~101.SCH~~104	Cover Page Interactive Data file (formatted as Inline XBRL ~~Taxonomy Extension Schema Document~~and contained in Exhibit 101).

~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Linkbase Document~~

~~101.DEF~~	~~XBRL Taxonomy Extension Definition Linkbase Document~~

~~101.LAB~~	~~XBRL Taxonomy Extension Label Linkbase Document~~

~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase Document~~


+	Indicates management contract or compensatory plan or arrangement



			GRAFTECH INTERNATIONAL LTD.
Date:	~~November 7, 2019~~May 6, 2020	By:	/s/ Quinn J. Coburn
			Quinn J. Coburn
			Chief Financial Officer, Vice President Finance and Treasurer (Principal Financial Officer)