What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-14 compared with 2023-02-14 · 449 added, 317 removed, 1151 unchanged (40% of the section changed)

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Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Income

Consolidated Statements of Operations and Comprehensive ( Loss) Income

Consolidated Statements of Cash Flows

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We have audited the accompanying consolidated balance sheets of GrafTech International Ltd.

and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive income, stockholders' equity (deficit), and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive (loss) income, stockholders' equity (deficit), and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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Critical Audit Matter Description

The Company’s goodwill balance was $171.1 million as of December 31, 2022, which relates to one reporting unit.

The Company assesses goodwill for impairment testing annually or more frequently if events or changes in circumstances indicate that the carrying value of a reporting unit might be impaired.

In evaluating whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the Company performed a qualitative assessment of relevant events and circumstances that could impact the fair value of such reporting unit.

If, after assessing the totality of events and circumstances, it is deemed more likely than not that the fair value of the reporting unit is less than its carrying amount, the Company estimates the fair value of the reporting unit by performing a quantitative goodwill impairment assessment.

As a result of the analysis performed as of December 31, 2022, the Company determined that the goodwill was not more likely than not impaired, and no quantitative assessment was necessary.

Qualitative factors included macroeconomic conditions, industry and market considerations, current discount rates, cost factors, historical and forecasted financial results and events specific to the reporting unit, which required a higher degree of auditor judgment to evaluate.

We identified the evaluation of qualitative goodwill impairment indicators, or qualitative factors, as a critical audit matter as the assessment of the potential impact that these qualitative factors have on the reporting unit's fair value required the application of subjective auditor judgment.

The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value.

The Company determines the fair value of its reporting units using the income and market approaches.

The determination of the fair value using the income approach requires management to make significant estimates and assumptions related to forecasts of future revenues, earnings before interest, taxes, depreciation, and amortization (EBITDA), capital expenditures, and discount rates.

The determination of the fair value using the market approach requires management to make significant estimates and assumptions related to the forecasts of future revenues, EBITDA, and multiples that are applied to management’s forecasted EBITDA estimates.

The goodwill balance of $171.1 million as of December 31, 2023, which entirely related to the Graphite Electrode reporting unit, was fully impaired as part of the Company’s annual assessment and an impairment charge of $171.1 million was recorded within the Consolidated Statement of Operations for the year ended December 31, 2023.

Given the nature of the reporting unit’s operations, the sensitivity of the reporting unit to changes in the economy, the reporting unit’s historical performance, and the difference between its fair value and the carrying value, auditing management’s judgments regarding forecasts of future revenues, EBITDA, and capital expenditures, as well as the selection of the discount rate and the multiples applied to management’s forecasted EBITDA estimates for the reporting unit, required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the relevant qualitative factors in the Company’s December 31, 2022 qualitative assessment included the following, among others:

• Tested the effectiveness of controls related to the evaluation of the assumptions and inputs used as part of management’s review of the qualitative assessment.

• We evaluated the qualitative factors used by management for reasonableness, which included an assessment of the impact of those factors when applied to the Company’s last quantitative assessment performed.

• We compared the actual results of the reporting unit to the Company’s historical forecasted performance to evaluate the accuracy of management’s estimates.

• We evaluated whether the underlying assumptions of future performance for the reporting unit were consistent with information from analyst reports and macroeconomic industry and market considerations and whether there were other significant adverse considerations that would impact the underlying assumptions.

• With the assistance of our fair value specialists, we evaluated the impact of changes in discount rates by developing a range of independent estimates based upon industry peers, including testing the underlying information and the mathematical accuracy of the calculations.

Our audit procedures related to the forecasts of future revenues and EBITDA (“forecasts”), and the selection of the discount rate and selection of multiples applied to management’s forecasted EBITDA estimates (“market multiples”) for the Graphite Electrode reporting unit included the following, among others:

• We tested the effectiveness of controls over management’s goodwill impairment evaluation, such as controls related to management’s forecasts and the selection of the discount rate and market multiples used.

• We evaluated management’s ability to accurately forecast by comparing actual results to management’s historical forecasts.

• We evaluated the reasonableness of management’s forecasts by comparing the current forecasts to (1) historical results, (2) internal communications to management and the Board of Directors, and (3) forecasted information included in industry reports for the various industries the reporting unit operates within.

• With the assistance of our fair value specialists, we evaluated the discount rate, including testing the underlying source information and the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the discount rate selected by management.

• With the assistance of our fair value specialists, we evaluated the market multiples by evaluating the selected comparable publicly traded companies and the adjustments made for differences in growth prospects and risk profiles between the reporting unit and the comparable publicly traded companies.

We tested the underlying source information and mathematical accuracy of the calculations.

/s/ DELOITTE & TOUCHE LLP

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(Dollars in thousands, except per share data)

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Net sales $ 620,500 $ 1,281,250 $ 1,345,788

Cost of sales 726,373 701,335 563,864

Cost of goods sold 571,857 726,373 701,335

Lower of cost or market inventory valuation adjustment 12,431 — —

Gross profit 36,212 554,877 644,453

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Selling and administrative expenses 74,012 76,977 132,608

Operating income 474,259 508,074 588,609

Other (income) expense, net ( 10,064 ) ( 16,451 ) 3,330

Related party Tax Receivable Agreement (benefit) expense ( 83 ) 231 ( 21,090 )

Goodwill impairment charges 171,117 — —

Operating (loss) income ( 214,437 ) 474,259 508,074

Other expense (income), net 4,679 ( 10,147 ) ( 16,220 )

Interest expense 58,087 36,568 68,760

Interest income ( 3,439 ) ( 4,480 ) ( 872 )

Income before provision for income taxes 452,318 456,406 510,045

Provision for income taxes 69,356 68,076 75,671

Net income $ 382,962 $ 388,330 $ 434,374

Basic income per common share:

Net income per share $ 1.48 $ 1.46 $ 1.62

(Loss) income before (benefit) provision for income taxes ( 273,764 ) 452,318 456,406

(Benefit) provision for income taxes ( 18,514 ) 69,356 68,076

Net (loss) income $ ( 255,250 ) $ 382,962 $ 388,330

Basic (loss) income per common share:

Net (loss) income per share $ ( 0.99 ) $ 1.48 $ 1.46

Weighted average common shares outstanding 257,042,843 258,781,843 266,251,097

Diluted income per common share:

Net income per share 1.48 1.46 1.62

Diluted (loss) income per common share:

Net (loss) income per share ( 0.99 ) 1.48 1.46

Weighted average common shares outstanding 257,042,843 258,791,228 266,317,194

STATEMENTS OF COMPREHENSIVE INCOME

Net income $ 382,962 $ 388,330 $ 434,374

Other comprehensive (loss) income:

STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

Net (loss) income $ ( 255,250 ) $ 382,962 $ 388,330

Other comprehensive income (loss):

Foreign currency translation adjustments, net of

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( 3,388 ) ( 626 ) 12,197

Comprehensive income $ 382,336 $ 400,527 $ 422,094

Comprehensive (loss) income $ ( 258,638 ) $ 382,336 $ 400,527

See accompanying Notes to the Consolidated Financial Statements

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Cash flow from operating activities:

Net income $ 382,962 $ 388,330 $ 434,374

Adjustments to reconcile net income

to cash provided by operations:

Net (loss) income $ ( 255,250 ) $ 382,962 $ 388,330

Adjustments to reconcile net (loss) income to cash provided by operations:

Depreciation and amortization 56,889 55,496 65,716

Related party Tax Receivable Agreement (benefit) expense ( 83 ) 231 ( 21,090 )

Deferred income tax provision 17,022 ( 3,657 ) 20,241

Loss on extinguishment of debt — — 8,329

Deferred income tax (benefit) provision ( 28,123 ) 17,022 ( 3,657 )

Non-cash stock-based compensation expense 4,433 2,311 16,631

Non-cash interest expense 8,786 ( 2,428 ) 12,051

Goodwill impairment charges 171,117 — —

Lower of cost or market inventory valuation adjustment 12,431 — —

Other adjustments 5,077 ( 8,023 ) 7,107

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Cash flow from financing activities:

Interest rate swap settlements 27,453 6,423 ( 4,170 )

Debt issuance and modification costs ( 8,152 ) ( 2,232 ) ( 3,109 )

Proceeds from the issuance of long-term debt — — 500,000

Proceeds from the issuance of long-term debt, net of original issuance discount 438,552 — —

Principal payments on long-term debt ( 433,841 ) ( 110,124 ) ( 400,142 )

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Dividends paid to related party ( 1,280 ) ( 2,559 ) ( 3,206 )

Interest rate swap settlements 6,423 ( 4,170 ) —

Net cash used in financing activities ( 176,267 ) ( 471,792 ) ( 463,683 )

Principal payments under finance lease obligations ( 36 ) — —

Net cash provided by (used in) financing activities 18,713 ( 176,267 ) ( 471,792 )

Net change in cash and cash equivalents 41,454 76,391 ( 86,612 )

Effect of exchange rate changes on cash

and cash equivalents 736 ( 1,316 ) 240

Effect of exchange rate changes on cash and cash equivalents 783 736 ( 1,316 )

Cash and cash equivalents at beginning of period 134,641 57,514 145,442

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Net cash paid during the periods for:

Interest $ 39,503 $ 56,333 $ 86,962

$ 34,322 $ 39,503 $ 56,333

Income taxes 43,326 67,122 63,791

Non-cash investing activities:

Change in capital expenditures in accounts payable ( 9,431 ) 7,748 6,755

* Net change in working capital due to the following components:

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Net change in working capital $ 107,562 $ ( 99,575 ) $ ( 16,377 )

(1) Includes cash received/paid from the monthly settlements and the 2023 termination of our interest rate swaps.

See accompanying Notes to the Consolidated Financial Statements

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Net income — — — — 388,330 388,330

Other comprehensive (loss) income:

Commodity and interest rate derivatives loss, net of tax of $ 4,250

Other comprehensive income (loss):

Commodity and interest rate derivatives income, net of tax of $( 6,662 )

— — — 24,525 — 24,525

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— — — ( 19,605 ) — ( 19,605 )

Total other comprehensive loss — — — ( 12,280 ) — ( 12,280 )

Total other comprehensive income — — — 12,197 — 12,197

Repurchase of common stock ( 4,658,544 ) ( 46 ) ( 13,091 ) — ( 36,863 ) ( 50,000 )

Stock-based compensation 1,009,545 11 16,620 — — 16,631

Options exercised 33,500 — 351 — — 351

Payments for taxes related to net share settlement of equity awards ( 317,340 ) ( 4 ) ( 822 ) — ( 3,251 ) ( 4,077 )

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— — — — ( 7,439 ) ( 7,439 )

Adoption of ASC 326 — — — — ( 2,026 ) ( 2,026 )

Balance as of December 31, 2021 263,255,708 $ 2,633 $ 761,412 $ ( 7,444 ) $ ( 733,199 ) $ 23,402

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Other comprehensive income (loss):

Commodity and interest rate derivatives income, net of tax of $( 6,662 )

Commodity, interest rate and foreign currency derivatives income, net of tax of $( 5,060 )

— — — 15,829 — 15,829

Commodity and interest rate derivatives reclassification adjustments, net of tax of $( 1,970 )

Commodity, interest rate and foreign currency derivatives reclassification adjustments, net of tax of $ 2,469

— — — ( 9,431 ) — ( 9,431 )

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— — — ( 7,024 ) — ( 7,024 )

Total other comprehensive income — — — 12,197 — 12,197

Total other comprehensive loss — — — ( 626 ) — ( 626 )

Repurchase of common stock ( 6,662,421 ) ( 67 ) ( 18,721 ) — ( 41,212 ) ( 60,000 )

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Total other comprehensive loss — — — ( 3,388 ) — ( 3,388 )

Repurchase of common stock ( 6,662,421 ) ( 67 ) ( 18,721 ) — ( 41,212 ) ( 60,000 )

Stock-based compensation 258,153 2 4,431 — — 4,433

Options exercised 25,000 — 225 — — 225

Payments for taxes related to net share settlement of equity awards ( 23,625 ) — ( 68 ) — ( 61 ) ( 129 )

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We did not receive any proceeds related to the IPO.

Our common stock is listed on the NYSE under the symbol “EAF.” Brookfield has since distributed a portion of its GrafTech common stock to the owners in the Brookfield consortium and sold shares of GrafTech common stock in public and private transactions, resulting in reduction of Brookfield's ownership of outstanding shares of GrafTech common stock to 24.9 % as of December 31, 2022 and 24.3 % as of December 31, 2021.

See Note 14, "Stockholders' Equity," for more information.

The increase in Brookfield's share ownership from December 31, 2021 to December 31, 2022 reflects a reduction of the Company's total outstanding shares due to the repurchase and retirement of 6.7 million shares of its common stock in 2022.

Our common stock is listed on the NYSE under the symbol “EAF.” Brookfield has since distributed a portion of its GrafTech common stock to the owners in the Brookfield consortium and sold shares of GrafTech common stock in public and private transactions, resulting in a reduction of Brookfield's ownership of outstanding shares of GrafTech common stock to approximately 11.0 % and 24.9 % as of December 31, 2023 and 2022, respectively.

The Company’s only reportable segment, Industrial Materials, is comprised of its two major product categories:

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In most cases, control transfer is deemed to happen at the delivery point of the products defined under the incoterms, usually at time of loading the truck or the vessel.

The Company has elected to treat the

The Company has elected to treat the transportation activity as a fulfillment activity instead of as a distinct performance obligation, and outbound freight cost is accrued when the product delivery promises are satisfied.

GRAFTECH INTERNATIONAL LTD.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

transportation activity as a fulfillment activity instead of as a distinct performance obligation, and outbound freight cost is accrued when the product delivery promises are satisfied.

The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods to the customer.

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Under the most commonly negotiated terms, the accounting is such that it treats these modified contracts as the termination of the existing contract and the creation of a new contract.

Inventories are stated at the lower of cost or market.

Inventories are stated at the lower of cost or net realizable value.

Cost is principally determined using the first-in, first-out ("FIFO") or average cost, which approximates FIFO, methods.

Elements of cost in inventory include raw materials, energy costs, direct labor, manufacturing overhead and depreciation of manufacturing fixed assets.

The Company allocates fixed production overheads to the costs of conversion based on normal capacity utilization of the production facilities.

As of December 31, 2023, the market value of our inventories fell below their carrying amounts, and as a result, we recorded a LCM inventory valuation adjustment of $ 12.4 million in order to state our inventories at market.

The Company allocates fixed production overhead to the cost of conversion based on normal capacity utilization of the production facilities.

The Company recognizes abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) as current period charges.

As a result of reduced production levels, we recorded fixed manufacturing costs of $ 62.4 million and $ 16.0 million that would have otherwise been inventoried for years ended December 31, 2023 and 2022, respectively.

Property, Plant and Equipment

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Expenditures for replacements and betterments are capitalized and the replaced assets are retired.

Gains and losses from the sale of property, plant and equipment are included in cost of sales or other (income) expense, net on the Consolidated Statements of Operations.

Gains and losses from the sale of property, plant and equipment are included in cost of goods sold or other expense (income), net on the Consolidated Statements of Operations.

The Company depreciates its assets using the straight-line method over the estimated useful lives of the assets.

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Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Depreciation expense was $ 45.4 million, $ 55.0 million and $ 51.5 million in 2022, 2021 and 2020, respectively.

Accounts payable associated with capital expenditures totaled $ 23.4 million and $ 15.7 million as of December 31, 2022 and 2021, respectively.

GRAFTECH INTERNATIONAL LTD.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Depreciation expense was $ 47.7 million, $ 45.4 million and $ 55.0 million in 2023, 2022 and 2021, respectively.

Accounts payable associated with capital expenditures totaled $ 14.0 million and $ 23.4 million as of December 31, 2023 and 2022, respectively.

The Company determines if an arrangement is a lease at inception.

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When the underlying hedged transaction is realized, the gain or loss included in AOCL is recorded in earnings and reflected in the Consolidated Statement of Operations on the same line as the gain or loss on the hedged item attributable to the hedged risk.

For a net investment hedge, the effective portion of the change in the fair value of the derivative is recorded in cumulative translation adjustment, which is a component of AOCL in the Consolidated Balance Sheet and is de-recognized upon liquidation or sale of the entity.

For contracts not designated as hedging instruments, changes in fair value are adjusted through the statement of operations.

GRAFTECH INTERNATIONAL LTD.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For contracts not designated as hedging instruments, changes in fair value are adjusted through the statement of operations.

We formally document our hedge relationships, including the identification of the hedging instruments and the related hedged items, as well as our risk management objectives and strategies for undertaking the hedge transaction.

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When it is determined that a derivative ceases to be highly effective or that the hedged transaction is no longer probable of occurring, we discontinue hedge accounting.

Foreign Currency Derivatives

We enter into foreign currency derivatives from time to time to manage exposure to changes in currency exchange rates.

These instruments, which include, but are not limited to, forward exchange contracts and purchased currency options, attempt to hedge global currency exposures, relating to non-dollar denominated debt and identifiable foreign currency receivables, payables and commitments held by our foreign and domestic subsidiaries.

Forward exchange contracts are agreements to exchange different currencies at a specified future date and at a specified rate.

Purchased foreign currency options are instruments which give the holder the right, but not the obligation, to exchange different currencies at a specified rate at a specified date or over a range of specified dates.

The result is the creation of a range in which a best and worst price is defined, while minimizing option cost.

Forward exchange contracts and purchased currency options are carried at fair value.

These contracts may be designated as cash flow or fair value hedges to the extent that they are effective and are accounted for as described in section above (“Derivative Financial Instruments”).

For derivatives that are not designated as a hedge, any gain or loss is immediately recognized in cost of sales on the Consolidated Statements of Operations.

Derivatives used in this manner relate to risks resulting from assets or liabilities denominated in a foreign currency.

Commodity Contracts

We enter into derivative contracts for refined oil products from time to time.

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.

All commodity contracts are carried at fair value and are treated as cash flow hedges to the extent they are effective.

Changes in their fair values are included in AOCL in the Consolidated Balance Sheets until settlement.

Realized gains and losses resulting from settlement are first recognized in AOCL and are recorded in cost of sales on the Consolidated Statements of Operations when the underlying hedged item is realized.

Interest Rate Swap Contracts

We have entered into interest rate swap contracts that are "pay fixed, receive variable" with maturities of either two or five years .

The Company’s risk management objective is to fix its cash flows associated with the risk in variability in the one-month USD LIBOR for a portion of its outstanding debt under the 2018 Term Loan Facility (as defined in Note 5, "Debt and Liquidity").

It is expected that these swaps will fix the cash flows associated with the forecasted interest payments on this notional amount of debt.

Designated interest rate swaps are carried at their fair value and are treated as cash flow hedges.

Changes in their fair value are included in AOCL on the Consolidated Balance Sheets until settlement.

Realized gains and losses resulting from the settlement are recognized in interest expense in the period of settlement.

Changes in fair value of the de-designated portion of interest rate swaps are recorded in the statement of operations.

We file a consolidated U.S.

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Under the guidance on accounting for uncertainty in income taxes, we recognize the benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position.

The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

The guidance on accounting for uncertainty in income taxes also provides guidance on derecognition, classification, interest and penalties on income taxes, and accounting in interim periods.

GRAFTECH INTERNATIONAL LTD.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The Company treats taxes due on future U.S.

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See Note 13, "Income Taxes" for more information.

Recent Law Changes

On August 16, 2022, the U.S.

enacted the Inflation Reduction Act of 2022, which includes a 15% minimum tax on book income of certain large corporations, a 1% excise tax on net stock repurchases after December 31, 2022, and several tax incentives to promote clean energy.

The Company does not believe this legislation will have a material impact on its consolidated financial statements and will continue to assess the implications.

Related Party Tax Receivable Agreement

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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 Internal Revenue Code of 1986, as amended from time to time (the "Code"), foreign tax credits, and certain NOLs in Swissco (collectively, the "Pre-IPO Tax Assets").

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 LIBOR plus 1.00 % per annum.

The term of the Tax Receivable Agreement commenced on April 23, 2018 and will continue until there is no potential for any future tax benefit payments.

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retirement plan are made in accordance with the requirements of the Employee Retirement Income Security Act of 1974.

GRAFTECH INTERNATIONAL LTD.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Additional information with respect to benefits plans is set forth in Note 11, “Retirement Plans and Post-Employment Benefits.”

Stock-based Compensation

The Company recognizes stock-based compensation expense based on the grant date fair value of the award over the period during which an employee is required to provide service in exchange for the award.

Stock-based awards include stock options, restricted stock units ("RSUs") and deferred share units ("DSUs").

The Company recognizes stock-based compensation expense based on the grant date fair value of the award over the period during which an employee or director is required to provide service in exchange for the award.

Stock-based awards include stock options, restricted stock units ("RSUs"), performance-based restricted stock units (“PSUs”) and deferred share units ("DSUs").

The fair value of RSUs and DSUs is primarily based on the closing market price of a share of the Company's common stock on the date of grant, modified as appropriate to take into account the features of such grants.

The fair value of PSUs is determined using a Monte Carlo valuation on the date of grant.

Stock options are granted with an exercise price equal to the closing price of the Company's common shares on the date of grant.

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We have been in the past, and may become in the future, the subject of formal or informal enforcement actions or proceedings regarding noncompliance with these laws or the remediation of company-related substances released into the environment.

Historically, such matters have been resolved by negotiation with regulatory authorities resulting in commitments

GRAFTECH INTERNATIONAL LTD.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

to compliance, abatement or remediation programs and in some cases payment of penalties.

Historically, such matters have been resolved by negotiation with regulatory authorities resulting in commitments to compliance, abatement or remediation programs and in some cases payment of penalties.

Historically, neither the commitments undertaken nor the penalties imposed on us have been material.

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When payments are fixed or determinable, the liability is discounted using a rate at which the payments could be effectively settled.

The accrued liability relating to environmental remediation was $ 4.4 million and $ 4.9 million as of December 31, 2022 and 2021, respectively.

The accrued liability relating to environmental remediation was $ 4.4 million as of both December 31, 2023 and 2022.

Our environmental liabilities do not take into consideration possible recoveries of insurance proceeds.

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dollar, we remeasure non-monetary balance sheet accounts and the related income statement accounts at historical exchange rates.

Resulting gains and losses arising from the fluctuations in currency for monetary accounts are recognized in other (income) expense, net, in the Consolidated Statements of Operations.

Resulting gains and losses arising from the fluctuations in currency for monetary accounts are recognized in other expense (income), net, in the Consolidated Statements of Operations.

Gains and losses arising from fluctuations in currency exchange rates on transactions denominated in currencies other than the functional currency are recognized in earnings as incurred.

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One of these loans has been deemed to be essentially permanent prior to settlement and, as a result, remeasurement gains and losses on this loan were recorded as a component of AOCL on the Consolidated Balance Sheets.

The remaining loans are deemed to be temporary and, as a result, remeasurement gains and losses on these loans are recorded as currency (gains) losses in other (income) expense, net, on the Consolidated Statements of Operations.

The remaining loans are deemed to be temporary and, as a result, remeasurement gains and losses on these loans are recorded as currency (gains) losses in other expense (income), net, on the Consolidated Statements of Operations.

GRAFTECH INTERNATIONAL LTD.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Goodwill and Other Intangible Assets

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Customer-related intangibles 5 - 15

The carrying value of intangible assets is assessed when events and circumstances indicating impairment are present.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets.

If the assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

Additional information about goodwill and other intangibles is set forth in Note 6, “Goodwill and Other Intangible Assets.”

GRAFTECH INTERNATIONAL LTD.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Major Maintenance and Repair Costs

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Amortization of deferred maintenance costs totaled $ 7.5 million, $ 4.7 million and $ 4.6 million in 2023, 2022 and 2021, respectively.

Earnings per share

The calculation of basic earnings per share is based on the weighted average number of common shares outstanding.

Diluted earnings per share recognizes the dilution that would occur if stock options or restricted stock units were exercised or settled into common shares.

See Note 15, “Earnings per Share.”

(Loss) Earnings per share

The calculation of basic (loss) earnings per share is based on the weighted average number of common shares outstanding.

Diluted (loss) earnings per share reflects the assumed conversion of all dilutive common stock equivalents as appropriate using the treasury stock method.

See Note 15, “(Loss) Earnings per Share.”

Use of Estimates

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Reclassifications and Adjustments

Certain items previously reported in specific financial statement captions within the Consolidated Statements of Cash Flows have been reclassified between lines within cash flow from financing activities to conform to the current presentation.

Certain items previously reported in specific financial statement captions within the Consolidated Statements of Operations have been reclassified between lines to conform to the current presentation.

In addition, specific financial statement captions within the Consolidated Statements of Cash Flows have been reclassified between lines within cash flow from operating activities to conform to the current presentation.

GRAFTECH INTERNATIONAL LTD.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Subsequent Events

We evaluate events that occur after the balance sheet date but before financial statements are issued to determine if a material event requires our amending the financial statements or disclosing the event.

See Note 17, "Subsequent Events" for further details.

Recently Adopted Accounting Standards

In January 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-01, Reference Rate Reform (Topic 848):

Scope , which amended Topic 848 reference rate reform to clarify the scope and availability of expedients for certain derivative instruments affected by reference rate reform.

We have elected various optional expedients in Topic 848 related to hedging relationships and expect to make future elections related to contract modifications and other hedging relationships.

The future election and application of these expedients are not expected to have a material impact on our financial position, results of operations and cash flows.

Accounting Guidance Issued But Not Adopted

In September 2022, the FASB issued ASU 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50):

In September 2022, the FASB issued Accounting Standards Update (“ASU”) 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations , which requires disclosures intended to enhance the transparency of supplier finance programs.

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The amendments should be applied retrospectively to each period in which a balance sheet is presented, except for disclosure of rollforward information, which should be applied prospectively.

The Company is currently evaluating the impact of adopting this guidance on its disclosures.

The Company adopted this guidance on January 1, 2023.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The guidance is to be applied retrospectively to all prior periods presented in the financial statements.

Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption.

We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which is intended to enhance the transparency, decision usefulness and effectiveness of income tax disclosures.

The amendments in this ASU require a public entity to disclose a tabular tax rate reconciliation, using both percentages and currency, with specific categories.

A public entity is also required to provide a qualitative description of the states and local jurisdictions that make up the majority of the effect of the state and local income tax category and the net amount of income taxes paid, disaggregated by federal, state and foreign taxes and also disaggregated by individual jurisdictions.

The amendments also remove certain disclosures that are no longer considered cost beneficial.

The amendments are effective prospectively for annual periods beginning after December 15, 2024, and early adoption and retrospective application are permitted.

Although the ASU only modifies the Corporation's required income tax disclosures, the Corporation is currently evaluating the impact of adopting this guidance on the consolidated financial statements.

GRAFTECH INTERNATIONAL LTD.

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Total Revenues $ 620,500 $ 1,281,250 $ 1,345,788

The Graphite Electrodes revenue categories include only graphite electrodes manufactured by GrafTech.

Contract Balances

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In this case, deferred revenue is amortized into revenue based on the transaction price allocated to the remaining performance obligations and contract assets are realized through the contract invoicing.

The Company did not have any contract asset balances as of December 31, 2022.

Contract assets as of December 31, 2021 were $ 1.2 million, which are included in "Prepaid expenses and other current assets" on the Consolidated Balance Sheets.

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

The Company did not have any contract asset balances as of December 31, 2023 or 2022.

Current deferred revenue is included in "Other accrued liabilities" on the Consolidated Balance Sheets.

The following table provides our contract liability balances as of December 31, 2023 and 2022.

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Current deferred revenue $ 31,583 $ 27,878

Long-term deferred revenue — 4,303

The amount of revenue recognized in 2022 that was included in the December 31, 2021 deferred revenue current and long-term balances was $ 2.5 million and $ 0.1 million, respectively.

The increase in the December 31, 2022 current deferred revenue balance versus the prior year was primarily driven by shipments relative to some contractual prepayments being postponed to the following year.

Additionally, the balance includes cashed bank guarantees relative to outstanding arbitration proceedings whose outcome will determine timing of revenue recognition.

The amount of revenue recognized in 2023 that was included in the December 31, 2022 current deferred revenue balance was $ 13.0 million.

The increase in the December 31, 2023 current deferred revenue balance versus the prior year was primarily driven by the net difference between up-front payments received and the related shipments.

The amount of revenue recognized in 2022 that was included in the December 31, 2021 deferred revenue current balance was $ 2.5 million.

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Estimated LTA revenue $ 100 -$ 135 (1)

$ 100 -$ 135 (1)

(1) Includes expected termination fees from a few customers that have failed to meet certain obligations under their LTAs.

The majority of the LTAs are defined as pre-determined fixed annual volume contracts while a small portion are defined with a specified volume range.

For the years 2023 and 2024, the contractual revenue amounts above are based upon the minimum volume for those contracts with specified ranges.

For 2024, the contractual revenue amounts above are based upon the minimum volume for those contracts with specified ranges.

The actual revenue realized from these contracted volumes may vary in timing and total due to contract non-performance, force majeure notices, arbitrations, credit risk associated with certain customers facing financial challenges and customer demand related to contracted volume ranges.

As it relates to the conflict between Ukraine and Russia, we have provided force majeure notices with respect to certain impacted LTAs.

In the event of a force majeure, the LTAs provide our counterparties with the right to terminate the LTA if the force majeure event continues for more than six months after the delivery of the force majeure notice, with no continuing obligations of either party.

Certain of our LTA counterparties have challenged the force majeure notices, but we will continue to enforce our contractual rights, while other LTAs have been terminated as a result of the force majeure period elapsing.

The estimates of LTA revenue as set forth above in the immediately preceding table includes (i) our current view of the validity of such force majeure notices and (ii) our current expectations of termination fees from our customers who have failed to meet certain obligations under their LTAs.

GRAFTECH INTERNATIONAL LTD.

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(3) Stock-Based Compensation

The Company's Omnibus Equity Incentive Plan permits the granting of options and other stock-based awards (including restricted stock units ("RSUs") and deferred share units ("DSUs")).

The Company’s Omnibus Equity Incentive Plan permits the granting of options and other stock-based awards (including restricted stock units (“RSUs”), deferred restricted stock units (“DRSUs”) performance-based restricted stock units (“PSUs”) and deferred share units (“DSUs”)).

As of December 31, 2023, the aggregate number of shares authorized under the plan since its initial adoption was 15.0 million.

Shares issued upon vesting of awards or exercise of options are new share issuances.

Shares issued upon vesting or exercise are new share issuances.

Upon the vesting or payment of stock awards, an employee may elect receipt of the full share amount and either pay the resulting taxes or have the Company withhold shares to cover the tax obligation.

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Stock-based compensation expense was $ 4.4 million, $ 2.3 million and $ 16.6 million in 2023, 2022 and 2021, respectively.

A majority of the expense, $ 2.1 million in 2022, $ 14.6 million in 2021 and $ 2.3 million in 2020, was recorded as selling and administrative expenses in the Consolidated Statement of Operations, with the remaining expenses incurred as cost of sales.

A majority of the expense, $ 4.0 million in 2023, $ 2.1 million in 2022 and $ 14.6 million in 2021, was recorded as selling and administrative expenses in the Consolidated Statement of Operations, with the remaining expenses incurred as cost of goods sold.

Stock-based compensation expense for 2021 included $ 14.7 million, recorded in the second quarter of 2021, due to the Change in Control accelerated vesting provisions of certain of the Company’s awards.

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The Company derives a tax deduction measured by the excess of the market value over the grant price at the date stock-based compensation awards are exercised or vest.

The Company recognized tax benefits of less than $ 0.1 million, $ 1.8 million and $ 0.5 million in 2022, 2021 and 2020, respectively, relating to the issuance of common stock for the exercise/vesting of equity awards.

The Company recognized tax expense of $ 0.2 million in 2023 and tax benefits of less than $ 0.1 million and $ 1.8 million in 2022 and 2021, respectively, relating to the issuance of common stock for the exercise/vesting of equity awards.

Stock Options.

Non-qualified stock options may be granted to our employees and directors.

Stock options vest over a five-year period, with one-fifth of the award vesting on the anniversary date of the grant in each of the next five years and expire 10 years from the date of grant.

Option exercises are satisfied through the issuance of common shares.

Compensation expense for stock options is based on the estimated fair value of the option on the date of the grant.

We calculate the estimated fair value of the option using the Black-Scholes option-pricing model.

Stock options granted in 2023 vest over a three-year period, with one-third of the award vesting on the anniversary date of the grant in each of the next three years .

Stock options granted prior to 2023 vest over a five-year period, with one-fifth of the award vesting on the anniversary date of the grant in each of the five years following the grant date.

All stock options expire 10 years from the date of grant.

Stock option exercises are satisfied through the issuance of common shares.

Compensation expense for stock options is based on the fair value of the stock option on the date of the grant.

We calculate the fair value of stock options using the Black-Scholes option-pricing model.

The weighted average assumptions used in our Black-Scholes option pricing model for options granted in 2023, 2022 and 2021 were as follows:

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The expected life of awards granted represents the time period that the awards are expected to be outstanding.

We determined the expected term of the grants using the “simplified” method as described by the Securities and Exchange Commission, since we do not have a history of stock option awards to provide a reliable basis for estimating such term.

We determined the expected term of the grants using the “simplified” method as described by the SEC, since we do not have a history of stock option awards to provide a reliable basis for estimating such term.

GRAFTECH INTERNATIONAL LTD.

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2,027,611 $ 11.27 $ — 6.5 years

Vested and Expected to vest as of December 31, 2022 1,890,167 $ 12.30 $ — 7.1 years

Vested and Expected to vest as of December 31, 2023

2,027,611 $ 11.27 $ — 6.5 years

Exercisable at December 31, 2023

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Cash received from option exercises during 2022 and 2021 was $ 0.2 million and $ 0.4 million, respectively.

RSUs - Employees.

RSUs constitute an agreement to deliver shares of common stock to the participant at the end of a vesting period.

Compensation expense for RSUs is based on the closing price of our common stock on the date of grant, less forfeitures or cancellations of awards throughout the vesting period.

RSUs vest over a five year period, with one-fifth of the award vesting on the anniversary date of the grant in each of the next five years .

RSUs granted in 2023 vest over a three-year period, with one-third of the award vesting on the anniversary date of the grant in each of the next three years .

RSUs granted prior to 2023 vest over a five-year period, with one-fifth of the award vesting on the anniversary date of the grant in each of the five years following the grant date.

A summary of the status and changes of shares subject to RSU awards for employees and the related average price per share follows:

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885,365 $ 7.18

During 2022, 2021 and 2020, we recognized stock-based compensation expense of $ 0.7 million, $ 10.0 million and $ 1.0 million, respectively, relating to RSU awards for employees.

The total fair value of RSU awards vested during 2022 was less than $ 0.1 million.

The total fair value of RSU awards vested in 2021 and 2020 was $ 10.8 million and $ 0.6 million,

GRAFTECH INTERNATIONAL LTD.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

respectively.

During 2023, 2022 and 2021, we recognized stock-based compensation expense of $ 1.7 million, $ 0.7 million and $ 10.0 million, respectively, relating to RSU awards for employees.

The total fair value of RSU awards vested during 2023, 2022 and 2021 was $ 0.9 million, less than $ 0.1 million and $ 10.8 million, respectively.

As of December 31, 2023, $ 4.8 million of expense with respect to non-vested RSUs has yet to be recognized and will be amortized into expense over a weighted-average period of approximately 2.7 years.

DSUs are primarily granted to our independent directors in lieu of cash retainers and vest immediately upon grant.

Beginning in 2023, executive officers and selected other employees receive PSU awards.

Payouts, in the form of unrestricted common stock, vary between 0 % and 200 % based on the degree to which the Company’s total shareholder return relative to a peer group’s performance exceeds predetermined threshold, target and maximum performance goals over three-year performance periods with measurement periods after 12-, 24-, and 36-months.

No payout will occur unless threshold performance is achieved.

The following table summarizes the activity related to PSUs during 2023:

of Shares Weighted-

Outstanding as of December 31, 2022

Granted 544,801 7.30

Forfeited ( 196,786 ) 7.43

Outstanding as of December 31, 2023

348,015 $ 7.23

The fair value of grants of PSUs is determined using a Monte Carlo valuation.

Total compensation expense for PSUs in 2023 was $ 0.7 million.

As of December 31, 2023, there was $ 1.8 million of unrecognized compensation cost related to PSUs.

RSUs and DRSUs - Non-Employee Directors.

Beginning in 2023, non-employee directors receive annual grants of service-based RSUs that are expected to vest six months after the date of grant, subject generally to a non-employee director’s continued service on the Company’s Board of Directors.

Compensation expense for RSUs and DRSUs is based on the closing price of our common stock on the date of grant, less forfeitures or cancellations of awards throughout the vesting period.

Non-employee directors have the option to elect to defer receipt of their vested RSUs and instead be granted service-based DRSUs that are equivalent in value to the RSUs.

DRSUs will be paid out either as soon as practicable following the date of termination of the director’s service as a director (but in any event no later than the last day of the calendar year in which such termination occurs) in a single lump sum or in substantially equal 20% installments on the first five annual anniversaries of the date of termination of service as a director.

The following table summarizes RSU and DRSU activity during 2023 for our non-employee directors:

of Shares Weighted-

Outstanding as of December 31, 2022

Granted 154,894 4.24

Vested and delivered ( 23,971 ) 4.18

Outstanding vested and deferred as of December 31, 2023

130,923 $ 4.25

The Company recognized $ 0.6 million of expense related to these awards in 2023.

DSUs are primarily granted to our non-employee directors in lieu of cash retainers and vest immediately upon grant.

All whole DSUs will be settled in shares of our common stock after the Director's termination of service on the Board and any fractional shares will be settled in cash.

During 2022, we granted 169,010 DSUs to our independent directors with a weighted-average grant date fair value of $ 5.84 per share.

The following table summarizes DSU activity during 2023:

GRAFTECH INTERNATIONAL LTD.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

of Shares Weighted-

Outstanding as of December 31, 2022

362,640 $ 8.80

Granted 152,509 3.59

Distributed ( 137,609 ) 9.34

Outstanding vested and deferred as of December 31, 2023

377,540 $ 6.52

During 2023, 2022 and 2021, we recognized stock-based compensation expense of $ 0.6 million, $ 1.0 million and $ 0.7 million, respectively, relating to DSU awards.

The total fair value of DSU awards vested was $ 1.0 million in both 2022 and 2021 and $ 0.5 million in 2020.

The total fair value of DSU awards vested was $ 0.5 million in 2023 and $ 1.0 million in both 2022 and 2021.

(4) Segment Reporting

32 unchanged sentences

2020 Senior Secured Notes 500,000 500,000

2023 Senior Secured Notes 450,000 —

Other debt 139 268

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2018 Term Loan and 2018 Revolving Credit Facility

In February 2018, the Company entered into a credit agreement (as amended, the “2018 Credit Agreement”), which provides for (i) a $ 2,250 million senior secured term facility (the “2018 Term Loan Facility”) after giving effect to the June 2018 amendment (the “First Amendment”) that increased the aggregate principal amount of the 2018 Term Loan Facility from $ 1,500 million to $ 2,250 million and (ii) a $ 330 million senior secured revolving credit facility after giving effect to the May 2022 amendment that increased the revolving commitments under the 2018 Credit Agreement by $ 80 million from $ 250 million (the “2018 Revolving Credit Facility” and, together with the 2018 Term Loan Facility, the “Senior Secured Credit Facilities”).

In February 2018, the Company entered into a credit agreement (as amended, the “2018 Credit Agreement”), which provided for (i) a $ 2,250 million senior secured term facility (the “2018 Term Loan Facility”) after giving effect to the June 2018 amendment (the “First Amendment”) that increased the aggregate principal amount of the 2018 Term Loan Facility from $ 1,500 million to $ 2,250 million and (ii) a $ 330 million senior secured revolving credit facility after giving effect to the May 2022 amendment that increased the revolving commitments under the 2018 Credit Agreement by $ 80 million from $ 250 million (the “2018 Revolving Credit Facility”).

GrafTech Finance Inc.

(“GrafTech Finance”) is the sole borrower under the 2018 Term Loan Facility while GrafTech Finance, GrafTech Switzerland SA (“Swissco”) and GrafTech Luxembourg II S.à.r.l.

(“GrafTech Finance”) was the sole borrower under the 2018 Term Loan Facility while GrafTech Finance, GrafTech Switzerland SA (“Swissco”) and GrafTech Luxembourg II S.à.r.l.

(“Luxembourg Holdco” and, together with GrafTech Finance and Swissco, the “Co-Borrowers”) are co-borrowers under the 2018 Revolving Credit Facility.

The 2018 Term Loan Facility and the 2018 Revolving Credit Facility mature on February 12, 2025 and May 31, 2027, respectively.

As of December 31, 2022 and 2021, there was no debt outstanding on the 2018 Revolving Credit Facility and there was $ 3.0 million and $ 3.3 million of letters of credit drawn against the 2018 Revolving Credit Facility, respectively.

The 2018 Term Loan Facility bears interest, at our option, at a rate equal to either (i) the Adjusted LIBO Rate (as defined in the 2018 Credit Agreement), plus an applicable margin equal to 3.00 % per annum following an amendment in February 2021 (the “Second Amendment”) that decreased the Applicable Rate (as defined in the 2018 Credit Agreement) by 0.50 % for each pricing level or (ii) the ABR Rate (as defined in the 2018 Credit Agreement), plus an applicable margin equal to 2.00 % per annum following the Second Amendment, in each case with one step down of 25 basis points based on achievement of certain public ratings of the 2018 Term Loan Facility.

The Second Amendment also decreased the interest rate floor from 1.00 % to 0.50 % for the 2018 Term Loan Facility.

The 2018 Revolving Credit Facility matures on May 31, 2027.

The net proceeds from the 2023 Senior Secured Notes were used to repay outstanding borrowings under our 2018 Term Loan Facility.

As of December 31, 2023 and 2022, the availability under our 2018 Revolving Credit Facility was $ 112.4 million and $ 327.0 million, respectively.

As any borrowings under the 2018 Revolving Credit Facility remain subject to compliance with the financial covenant thereunder, our operating performance as of December 31, 2023 resulted in a reduction under the facility.

As of December 31, 2023 and 2022, there were no borrowings outstanding on the 2018 Revolving Credit Facility and there was $ 3.1 million and $ 3.0 million of letters of credit drawn against the 2018 Revolving Credit Facility as of each date, respectively.

The 2018 Revolving Credit Facility bears interest, at our option, at a rate equal to either (i) the Adjusted Term SOFR Rate and Adjusted EURIBOR Rate (each, as defined in the 2018 Credit Agreement), plus an applicable margin initially equal to 3.00 % per annum or (ii) the ABR Rate, plus an applicable margin initially equal to 2.00 % 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, we are 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.

The Senior Secured Credit Facilities are guaranteed by each of our domestic subsidiaries, subject to certain customary exceptions, and 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”) with respect to all obligations under the 2018 Credit Agreement of each of our foreign subsidiaries 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”)).

All obligations under the 2018 Credit Agreement are secured, subject to certain exceptions, by:

(i) a pledge of all of the equity securities of each domestic Guarantor 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 each domestic Guarantor, subject to permitted liens and certain exceptions specified in the 2018 Credit Agreement.

The 2018 Revolving Credit Facility is guaranteed by each of our domestic subsidiaries, subject to certain customary exceptions, and 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”) with respect to all obligations under the 2018 Revolving Credit Facility of each of our foreign subsidiaries 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”)).

Any obligations under the 2018 Revolving Credit Facility are secured, subject to certain exceptions, by:

The obligations of each foreign subsidiary of GrafTech that is a Controlled Foreign Corporation under the 2018 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

GRAFTECH INTERNATIONAL LTD.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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 Loan Facility amortizes at a rate of $ 112.5 million per year 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.

GrafTech Finance is required to make prepayments under the 2018 Term Loan Facility (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 ended 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 Loan Facility during any calendar year reduce, on a dollar-for-dollar basis, the amount of the required Excess Cash Flow prepayment for such calendar year, and the aggregate amount of Excess Cash Flow prepayments for any calendar year reduce subsequent quarterly amortization payments of the 2018 Term Loan Facility as directed by GrafTech Finance.

As of December 31, 2022, we had satisfied all required amortization installments through such date.

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 to 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 $ 35.0 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.

The Company was in compliance with all of its debt covenants as of December 31, 2022 and 2021.

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 Revolving Credit Facility.

The 2018 Revolving Credit Facility 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 Revolving Credit Facility contains a financial covenant that requires GrafTech to maintain a senior secured first lien net leverage ratio not greater than 4.00 to 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 $ 35.0 million), taken together, exceed 35 % of the total amount of commitments under the 2018 Revolving Credit Facility.

The 2018 Revolving Credit Facility also contains customary events of default.

We were in compliance with all of our debt covenants as of December 31, 2023 and 2022.

2020 Senior Secured Notes

In December 2020, GrafTech Finance issued $ 500.0 million aggregate principal amount of 4.625 % senior secured notes due 2028 (the “2020 Senior Secured Notes”) in a private offering.

The 2020 Senior Secured Notes and related guarantees are secured on a pari passu basis by the collateral securing the Senior Secured Credit Facilities.

All of the proceeds from the 2020 Senior Secured Notes were used to partially repay borrowings under our 2018 Term Loan Facility.

The 2020 Senior Secured Notes and related guarantees are secured on a pari passu basis by the collateral securing the 2018 Revolving Credit Facility and the 2023 Senior Secured Notes.

All of the net proceeds from the 2020 Senior Secured Notes were used to partially repay borrowings under our 2018 Term Loan Facility.

The 2020 Senior Secured Notes pay interest in arrears on June 15 and December 15 of each year, with the principal due in full on December 15, 2028.

Prior to December 15, 2023, up to 40 % of the 2020 Senior Secured Notes may be redeemed with the net cash proceeds of certain equity offerings at a price equal to 104.625 % of the principal amount thereof, together with accrued and unpaid interest, if any.

The 2020 Senior Secured Notes may be redeemed, in whole or in part, at any time prior to December 15, 2023 at a price equal to 100 % of the principal amount of the notes redeemed plus a premium together with accrued and unpaid interest, if any, to, but not including, the redemption date.

The 2020 Senior Secured Notes could have been redeemed, in whole or in part, at any time prior to December 15, 2023 at a price equal to 100 % of the principal amount of the notes redeemed plus a premium together with accrued and unpaid interest, if any, to, but not including, the redemption date.

Thereafter, the 2020 Senior Secured Notes may be redeemed, in whole or in part, at various prices depending on the date redeemed.

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The 2020 Indenture contains events of default customary for agreements of its type (with customary grace periods, as applicable) and provides that, upon the occurrence of an event of default arising from certain events of bankruptcy or insolvency with respect to the Company or GrafTech Finance, all outstanding 2020 Senior Secured Notes will become due and payable immediately without further action or notice.

If any other type of event of default occurs and is continuing, then the

If any other type of event of default occurs and is continuing, then the trustee or the holders of at least 30 % in principal amount of the then outstanding 2020 Senior Secured Notes may declare all of the 2020 Senior Secured Notes to be due and payable immediately.

We were in compliance with all of our debt covenants as of December 31, 2023 and 2022.

2023 Senior Secured Notes

In June 2023, GrafTech Global Enterprises Inc.

issued $ 450 million aggregate principal amount of 9.875 % senior secured notes due 2028 (the “2023 Senior Secured Notes”), including $ 11.4 million of original issue discount.

The 2023 Senior Secured Notes were issued at an issue price of 97.456 % of the principal amount thereof in a private offering.

The 2023 Senior Secured Notes and related guarantees are secured on a pari passu basis by the collateral securing the 2018 Revolving Credit Facility and the 2020 Senior Secured Notes.

The net proceeds from the 2023 Senior Secured Notes were used to repay borrowings under our 2018 Term Loan Facility.

The 2023 Senior Secured Notes pay interest in arrears on June 15 and December 15 of each year, with the principal due in full on December 15, 2028.

Prior to December 15, 2025, up to 40 % of the 2023 Senior Secured Notes may be redeemed with the net cash proceeds of certain equity offerings at a price equal to 109.875 % of the principal amount thereof, together with accrued and unpaid interest, if any.

The 2023 Senior Secured Notes may be redeemed, in whole or in part, at any time

GRAFTECH INTERNATIONAL LTD.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

trustee or the holders of at least 30 % in principal amount of the then outstanding 2020 Senior Secured Notes may declare all of the 2020 Senior Secured Notes to be due and payable immediately.

prior to December 15, 2025 at a price equal to 100 % of the principal amount of the notes redeemed plus a premium together with accrued and unpaid interest, if any, to, but not including, the redemption date.

Thereafter, the 2023 Senior Secured Notes may be redeemed, in whole or in part, at various prices depending on the date redeemed.

The indenture governing the 2023 Senior Secured Notes (the “2023 Indenture”) contains certain covenants that, among other things, limit the Company’s ability, and the ability of certain of its subsidiaries, to incur or guarantee additional indebtedness or issue preferred stock, pay distributions on, redeem or repurchase capital stock or redeem or repurchase subordinated debt, incur or suffer to exist liens securing indebtedness, make certain investments, engage in certain transactions with affiliates, consummate certain asset sales and effect a consolidation or merger, or sell, transfer, lease or otherwise dispose of all or substantially all assets.

Pursuant to the 2023 Indenture, if our pro forma consolidated first lien net leverage ratio is no greater than 2.00 to 1.00, we can make restricted payments so long as no default or event of default has occurred and is continuing.

If our pro forma consolidated first lien net leverage ratio is greater than 2.00 to 1.00, we can make restricted payments pursuant to certain baskets.

The 2023 Indenture contains events of default customary for agreements of its type (with customary grace periods, as applicable) and provides that, upon the occurrence of an event of default arising from certain events of bankruptcy or insolvency with respect to the Company or GrafTech Global Enterprises Inc., all outstanding 2023 Senior Secured Notes will become due and payable immediately without further action or notice.

If any other type of event of default occurs and is continuing, then the trustee or the holders of at least 30 % in principal amount of the then outstanding 2023 Senior Secured Notes may declare all of the 2023 Senior Secured Notes to be due and payable immediately.

We were in compliance with all of our debt covenants as of December 31, 2023.

Maturities on long-term debt instruments as of December 31, 2023 are as follows:

(Dollars in thousands)

2029 and thereafter —

Total $ 950,139

(6) Goodwill and Other Intangible Assets

Goodwill and indefinite-lived intangible assets are required to be reviewed annually for impairment.

Goodwill is tested for impairment at the 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 Company's annual impairment tests performed in 2022, 2021 and 2020 did not result in the fair value of its reporting unit being less than its carrying value.

We performed the step 0 qualitative assessment in 2022 and 2021.

The goodwill balance, which relates to one reporting unit, was $ 171.1 million as of each of December 31, 2022 and 2021.

Goodwill arises from the purchase price for acquired businesses exceeding the fair value of tangible and intangible assets acquired less assumed liabilities.

The Company has two reporting units, Graphite Electrodes and Needle Coke.

The acquisition of the Company by Brookfield in 2015 generated a goodwill amount of $ 171.1 million, which was allocated entirely to the Graphite Electrode reporting unit.

Goodwill is tested for impairment annually as of December 31 and between annual tests whenever events or circumstances indicate that the carrying value of a reporting unit may exceed its fair value.

For the 2023 annual impairment testing, the Company performed a quantitative assessment of the fair value of the reporting unit, using a combination of the income approach and the market approach (Level 3 in the fair value hierarchy) from a market participant’s perspective.

The valuation of the Graphite Electrode reporting unit is performed with cash flows that are adjusted to present this reporting unit as purchasing petroleum needle coke entirely from third parties at anticipated market prices.

GRAFTECH INTERNATIONAL LTD.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The income approach was based on discounted projected debt-free cash flows for the graphite electrode reporting unit.

The forecast of cash flows included several assumptions regarding future sales growth, revenues, earnings before interest, taxes, depreciation and amortization (“EBITDA”), capital expenditures and working capital changes.

In addition to the estimates of future cash flows, the income approach involves the determination of the discount rate based upon market participant’s assumptions.

The market approach fair value was based on valuation multiples that were applied to the graphite electrode reporting unit’s actual and projected EBITDA.

The multiples were derived under the guideline public company method from analyzing market multiples of EBITDA for a group of comparable public companies.

The techniques used in the Company’s assessment incorporate a number of assumptions that the Company believes to be reasonable and to reflect known market conditions at the measurement date.

Key assumptions relate to customer demand and sales growth, graphite electrode and needle coke pricing trends, operating costs and capital expenditures.

Assumptions in estimating future cash flows are subject to a degree of judgment.

The testing determined that the fair value of the Graphite Electrode reporting unit was less than its carrying amount by more than the amount of goodwill.

As a result, we recorded a full impairment charge of $ 171.1 million, which was recorded in Goodwill impairment charges in the Consolidated Statements of Income.

The goodwill impairment was caused primarily by reduced sales of graphite electrodes due to softening demand and the deterioration of the electrode spot pricing.

For the 2022 and 2021 annual goodwill impairment testing, the Company performed a qualitative assessment first to determine whether it was more likely than not that the fair value of the Graphite Electrode reporting unit was less than its carrying amount.

We assessed relevant events and circumstances, including industry, market and macroeconomic conditions, as well as Company and reporting unit-specific factors.

Based on this review, we determined that it was not more likely than not that the fair value of the Graphite Electrode reporting unit was less than its carrying amount and concluded that the quantitative goodwill impairment test was not required.

No impairment of goodwill resulted from our annual impairment tests in 2022 and 2021.

Intangible Assets

The following table summarizes acquired intangible assets with determinable useful lives by major category which are included in "Other assets" on our Consolidated Balance Sheets:

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Estimated annual amortization expense for the next five years will approximate $ 8.0 million in 2024, $ 7.3 million in 2025, $ 6.7 million in 2026, $ 6.1 million in 2027 and $ 5.5 million in 2028.

GRAFTECH INTERNATIONAL LTD.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(7) Interest Expense

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Interest incurred on debt $ 56,219 $ 43,609 $ 56,731

Accretion of original issue discount on 2018 Term Loan Facility 1,200 3,387 5,340

Accretion of original issue discount 2,524 1,200 3,387

Amortization of debt issuance and modification costs 4,631 3,475 8,642

Unrealized mark-to-market gain on de-designated interest rate swap ( 7,111 ) — —

Gain upon partial termination of embedded derivative ( 4,605 ) — —

Amortization of interest rate swap deferred gains ( 5,480 ) — —

Unrealized (gain) loss on termination of de-designated interest rate swap 7,111 ( 7,111 ) —

Realized gain on termination of de-designated interest rate swap ( 6,918 ) ( 4,605 ) —

Total interest expense $ 58,087 $ 36,568 $ 68,760

Interest rates

The 2020 Senior Secured Notes carry a fixed interest rate of 4.625 %.

The 2018 Term Loan Facility had an interest rate of 7.38 % as of December 31, 2022, 3.50 % as of December 31, 2021 and 4.50 % as of December 31, 2020.

The Company has several interest rate swap contracts to fix its cash flows associated with the risk in variability in the one-month USD London Interbank Offered Rate ("USD LIBOR") for the 2018 Term Loan Facility.

The interest rate swaps fixed the cash flows associated with the payments on our Term Loan Facility to an effective fixed interest rate of 4.2 % throughout 2022.

See Note 5, "Debt and Liquidity" for details of our debt and Note 8, "Fair Value Measurements and Derivative Instruments" for additional details on our interest rate swaps and embedded derivative.

In June 2023, the net proceeds from the issuance of the 2023 Senior Secured Notes were used to repay the $ 433.7 million of principal outstanding on the 2018 Term Loan Facility.

The repayment of the 2018 Term Loan Facility was accounted for as a debt extinguishment and triggered $ 1.2 million of accelerated accretion of the original issue discount and $ 1.9 million of accelerated amortization of debt issuance costs.

The 2023 Senior Secured Notes were accounted for as new debt and the related discount and debt issuance costs were deferred.

In connection with the repayment of the 2018 Term Loan Facility in June 2023, we terminated the outstanding interest rate swap contracts that were in place to fix the cash flows associated with the risk in variability in the one-month USD London Interbank Offered Rate (“USD LIBOR”) for the 2018 Term Loan Facility.

As a result of the swaps termination, we recorded in interest expense realized gains of $ 6.9 million relative to our de-designated swap and we deferred realized gains of $ 13.5 million in accumulated other comprehensive income (“AOCI”) in connection with our designated swap.

The gains deferred into AOCI for the designated swap will amortize into interest expense until August 2024, consistent with the term of the discontinued cash-flow hedging relationship.

The 2023 Senior Secured Notes and the 2020 Senior Secured Notes carry fixed interest rates of 9.875 % and 4.625 %, respectively.

The 2018 Term Loan Facility, which was paid off in its entirety in June 2023, had an effective interest rate of 7.38 % as of December 31, 2022.

In 2022, the Company made voluntary prepayments of $ 110.0 million under its 2018 Term Loan Facility.

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The Company also recorded $ 1.6 million of modification costs related to the 2018 Term Loan Facility repricing in the first quarter of 2021.

In December 2020, the proceeds from the issuance of the $ 500.0 million 2020 Senior Secured Notes were used to repay $ 500.0 million of principal on the 2018 Term Loan Facility.

The repayment of the 2018 Term Loan Facility was accounted for as a partial debt extinguishment and triggered $ 3.2 million of accelerated accretion of the original issue discount and $ 5.2 million of accelerated amortization of the debt issuance costs.

The 2020 Senior Secured Notes were accounted for as new debt and the related debt issuance costs were deferred.

See Note 5, “Debt and Liquidity” for details of our debt and Note 8, “Fair Value Measurements and Derivative Instruments” for additional details on our interest rate swaps and embedded derivative.

(8) Fair Value Measurements and Derivative Instruments

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Foreign currency derivatives $ 630 $ — $ 630 $ —

Interest rate swap contracts 27,384 — 27,384 —

Total assets at fair value $ 630 $ — $ 630 $ —

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Foreign currency derivatives $ 92 $ — $ 92 $ —

Commodity derivative contracts 8,469 — 8,469 —

Interest rate swap contracts 27,384 — 27,384 —

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Foreign currency derivatives $ 282 $ — $ 282 $ —

Interest rate swap contracts 140 — 140 —

Total liabilities at fair value $ 282 $ — $ 282 $ —

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Derivative Instruments

In the normal course of business, we are exposed to certain risks related to fluctuations in currency exchange rates, commodity prices and interest rates.

We use various derivative financial instruments, primarily foreign currency derivatives, commodity derivative contracts and interest rate swaps as part of our overall strategy to manage risks from these market fluctuations.

In the normal course of business, we are exposed to certain risks related to fluctuations in currency exchange rates.

We use derivative financial instruments, primarily foreign currency derivatives, and have in the past used commodity derivative contracts and interest rate swaps as part of our overall strategy to manage risks from these market fluctuations.

Certain of our derivative contracts contain provisions that require us to provide collateral.

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These derivatives are fair value hedges.

Gains and losses from these derivatives are recorded in cost of sales and they are largely offset by the financial impact of translating foreign currency-denominated payables and receivables.

In the first quarter of 2022, we entered into foreign currency derivatives with maturities of one month to 12 months in order to protect against the risk that cash flows associated with certain sales and purchases denominated in a currency other than

Gains and losses from these derivatives are recorded in cost of goods sold and they are largely offset by the financial impact of translating foreign currency-denominated payables and receivables.

In the first quarter of 2022 and in the second, third and fourth quarters of 2023, we entered into foreign currency derivatives with maturities of one month to 12 months in order to protect against the risk that cash flows associated with certain sales and purchases denominated in a currency other than the U.S.

dollar will be adversely affected by future changes in foreign exchange rates.

These derivatives are designated as cash flow hedges.

The resulting unrealized gains or losses from these derivatives are recorded in AOCL and subsequently, when realized, are reclassified to net sales or cost of goods sold in the Consolidated Statements of Operations when the hedged exposures affect earnings.

GRAFTECH INTERNATIONAL LTD.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dollar will be adversely affected by future changes in foreign exchange rates.

These derivatives are designated as cash flow hedges.

The resulting unrealized gains or losses from these derivatives are recorded in AOCL and subsequently, when realized, are reclassified to net sales or cost of sales in the Consolidated Statements of Operations when the hedged exposures affect earnings.

Commodity derivative contracts

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These contracts were entered into to protect against the risk that eventual cash flows related to these products will be adversely affected by future changes in prices.

In the fourth quarter of 2017, we began to enter into LTAs with many of our customers and began to hedge the cash flows related to these contracts.

The unrealized gains or losses related to commodity derivative contracts designated as cash flow hedges are recorded in accumulated other comprehensive income ("AOCI") and subsequently, when realized, are reclassified to the Consolidated Statement of Operations when the hedged item impacts earnings, which is when the finished product is sold.

The last of our commodity derivative contracts matured as of June 30, 2022 and no new contracts were entered during 2022.

The unrealized gains or losses related to commodity derivative contracts designated as cash flow hedges are recorded in AOCL and subsequently, when realized, are reclassified to the Consolidated Statement of Operations when the hedged item impacts earnings, which is when the finished product is sold.

The last of our commodity derivative contracts matured as of June 30, 2022 and we have not entered into any new contracts as of December 31, 2023.

Interest rate swap contracts

We utilize interest rate swaps to limit exposure to market fluctuations on our variable-rate debt.

Each derivative agreement's unrealized gain or loss is recorded in AOCL and, when realized, is recorded to interest expense.

In the third quarter of 2019, we entered into interest rate swap contracts that are "pay fixed, receive variable." Our risk management objective was to fix our cash flows associated with the risk of variability in the one-month USD LIBOR for a portion of our outstanding debt.

We have utilized interest rate swaps in the past to limit exposure to market fluctuations on our variable-rate debt.

For each derivative agreement that is designated as a cash flow hedge, the unrealized gain or loss is recorded in AOCL and, when realized, is recorded in interest expense.

Upon discontinuance of a designated cash flow hedging relationship, when interest payments are still probable of occurring, the fair value at the date of discontinuance is deferred into AOCL and amortized into interest expense based upon the term of the cash flow hedging relationship.

We entered into interest rate swap contracts that were "pay fixed, receive variable." Our risk management objective was to fix our cash flows associated with the risk of variability in the one-month USD LIBOR for a portion of our outstanding debt.

It was expected that the swaps would fix the cash flows associated with the forecasted interest payments on our debt to an effective fixed interest rate of 4.2 %, which could be lowered to 3.95 % depending on credit ratings.

Since their modification concurrent with the 2018 Term Loan Facility modification in the first quarter of 2021, the swaps contain an other-than-insignificant financing element.

As such, they are considered hybrid instruments composed of a debt host and an embedded derivative and the associated cash (outflows)/inflows are classified as financing (use)/source of cash.

The debt host portion amounted to a liability of $ 3.8 million as of December 31, 2022, with $ 2.3 million included in "Other accrued liabilities" and $ 1.5 million in "Other long-term obligations" on the Consolidated Balance Sheets.

As of December 31, 2021, the debt host portion amounted to a liability of $ 7.0 million, with $ 2.6 million included in "Other accrued liabilities" and $ 4.4 million included in "Other long-term obligations" on the Consolidated Balance Sheets.

The corresponding loss is accounted for in AOCL and is being amortized over the remaining life of the swaps.

The associated embedded derivative is treated as a cash flow hedge.

In the first quarter of 2022, in connection with the repayment of principal on our 2018 Term Loan Facility discussed in Note 4, "Debt and Liquidity," and our probability assessment of the variable-rate debt remaining outstanding through the term of the swaps, we de-designated one interest rate swap contract with a $ 250.0 million notional amount, maturing in the third quarter of 2024.

The fair value of the embedded derivative at the de-designation date was a gain of $ 6.6 million and was recorded in AOCI and will be amortized into interest expense over the remaining life of the swap.

The change in fair value of the de-designated embedded derivative in 2022 resulted in a gain of $ 7.1 million and was recorded in interest expense in the Consolidated Statements of Operations.

In the third quarter of 2022, we redeemed $ 67.0 million of our $ 250.0 million notional amount de-designated interest rate swap and recorded in interest expense in the Consolidated Statements of Operations a gain of $ 4.6 million on the reduction of the embedded derivative.

The partial redemption of the interest rate swap also triggered a $ 0.7 million accelerated settlement of the associated debt host.

Since their modification concurrent with the 2018 Term Loan Facility modification in the first quarter of 2021, the swaps contained an other-than-insignificant financing element.

As such, they were considered hybrid instruments composed of a debt host and an embedded derivative and the associated cash flows are classified as financing (uses)/sources of cash.

The embedded derivative was treated as a cash flow hedge.

In the first quarter of 2022, in connection with the partial repayment of principal on our 2018 Term Loan Facility and our probability assessment of the variable-rate debt remaining outstanding through the term of the swaps, we de-designated one interest rate swap contract with a $ 250.0 million notional amount, originally scheduled to mature in the third quarter of 2024.

The fair value of the embedded derivative at the de-designation date was a gain of $ 6.6 million and was recorded in AOCL and is being amortized into interest expense over the remaining life of the swap.

In the third quarter of 2022, we redeemed $ 67.0 million of our $ 250.0 million notional amount de-designated interest rate swap.

The change in fair value of the de-designated embedded derivative for the year ended December 31, 2023 resulted in a loss of $ 7.1 million, compared to a gain of $ 7.1 million for the year ended December 31, 2022, recorded in interest expense in the Consolidated Statements of Operations.

In the second quarter of 2023, in connection with the repayment of the $ 433.7 million outstanding balance on our 2018 Term Loan Facility, we terminated our $ 183.0 million notional de-designated interest rate swap and our $ 250.0 million notional designated interest rate swap and received net cash of $ 20.4 million.

The net cash received included a $ 23.1 million gain on the embedded derivatives, partially offset by a $ 2.8 million loss on the settlement of our debt host liability as of the termination date.

As of December 31, 2022, the debt host liability was $ 3.8 million, with $ 2.3 million included in "Other accrued liabilities" and $ 1.5 million included in "Other long-term obligations" on the Consolidated Balance Sheets.

As of December 31, 2023, a cumulative loss of $ 1.8 million related to the debt host liability was recorded in AOCL and will be amortized into interest expense using the effective interest method through August 2024.

Out of the $ 23.1 million gain on the embedded derivatives, $ 6.9 million for the de-designated swap was recorded in interest expense and $ 16.2 million for the designated swap was recorded in AOCI and will be amortized into interest expense using the effective interest method through August 2024.

All derivatives are recorded on the balance sheet at fair value.

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The ineffective portion of a derivative's fair value, if any, is recognized in earnings immediately.

If a derivative is not a hedge, changes in the fair value are adjusted through earnings.

If a derivative is not a hedge, changes in its fair value are adjusted through earnings.

The fair values of the outstanding derivatives are recorded on the balance sheet as assets (if the derivatives are in a gain position) or liabilities (if the derivatives are in a loss position).

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Derivative instruments designated as hedges:

Commodity derivative contracts $ — $ 19,474

Foreign currency derivatives $ 10,684 $ —

Interest rate swap contracts — 250,000

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Prepaid and other current assets

Commodity derivative contracts $ — $ 8,469

Interest rate swap contracts 10,246 —

Total $ 10,246 $ 8,469

Foreign currency derivatives $ 386 $ —

Interest rate swap contracts — 10,246

Total $ 386 $ 10,246

Other accrued liabilities

Interest rate swap contracts $ — $ 5,575

Total $ — $ 5,575

Net asset $ 15,821 $ 14,389

As a result of the settlement of commodity derivative contracts and foreign currency derivatives, as of December 31, 2022, net realized pre-tax gains of $ 17.6 million and net realized pre-tax losses of $ 5.5 million were reported in AOCL and will be released to earnings within the following 12 months.

In addition, we recorded $ 0.8 million of ineffectiveness income to cost of sales in the Consolidated Statements of Operations in 2022 related to the settlement of commodity derivative contracts.

Total asset $ 386 $ 15,821

As a result of the settlement of commodity derivative contracts and interest rate swaps, as of December 31, 2023, net realized pre-tax gains of $ 2.5 million and $ 9.2 million, respectively, were reported in AOCL and will be released to earnings within the next 12 months.

As of December 31, 2023, net realized pre-tax losses of $ 0.4 million related to our foreign currency derivatives were reported in AOCL and will be released to earnings within the next 12 months.

In addition, we recorded $ 0.8 million of ineffectiveness income to cost of goods sold in the Consolidated Statements of Operations in 2022 related to the settlement of commodity derivative contracts.

No ineffectiveness expense was recorded in 2023 or 2021.

See the table below for amounts recognized on the effective portion of our commodity derivative contracts in the Statement of Operations.

GRAFTECH INTERNATIONAL LTD.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The realized (gains) losses on cash flow hedges are recognized in the Statements of Operations when the hedged item impacts earnings and are as follows for the years ended December 31, 2023, 2022 and 2021:

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(Dollars in thousands)

Foreign currency derivatives Cost of sales $ 1,975 $ — $ —

Commodity derivative contracts Cost of sales ( 11,452 ) 6,440 ( 4,134 )

Foreign currency derivatives Cost of goods sold $ 5,541 $ 1,975 $ —

Commodity derivative contracts Cost of goods sold ( 15,089 ) ( 11,452 ) 6,440

Interest rate swaps Interest expense ( 10,617 ) ( 2,423 ) 1,846

GRAFTECH INTERNATIONAL LTD.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Pre-tax gains and losses on non-designated derivatives recognized in earnings are as follows:

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(Dollars in thousands)

Foreign currency derivatives Cost of sales, other (income) expense, net $ ( 938 ) $ 3,895 $ ( 2,671 )

Commodity derivative contracts Cost of sales — ( 1,399 ) ( 530 )

Foreign currency derivatives Cost of goods sold, other expense (income), net $ ( 314 ) $ ( 938 ) $ 3,895

Commodity derivative contracts Cost of goods sold — — ( 1,399 )

Interest rate swaps Interest expense ( 2,957 ) ( 11,716 ) 866

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Foreign currency derivatives ( 519 ) ( 282 )

Net asset $ 11,373 $ 386

Net (liability) asset $ ( 275 ) $ 11,373

GRAFTECH INTERNATIONAL LTD.

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Balance at beginning of year $ 8,019 $ 6,835 $ 8,243

Charge to retained earnings - ASC 326 adoption impact — — 2,026

Charge (credit) to income 1,585 ( 1,266 ) 1,458

(Credit) charge to income ( 439 ) 1,585 ( 1,266 )

Deductions 128 ( 401 ) ( 142 )

Balance at end of year $ 7,708 $ 8,019 $ 6,835

Supplier Finance Program (“SFP”) Obligations

GrafTech Mexico S.A.

(“GrafTech Mexico”) participates in an electronic vendor voucher payment program supported by the Mexican Government through one of its national banks, whereby suppliers can factor their invoices through a financial intermediary.

This program gives GrafTech Mexico’s suppliers the option to settle trade receivables by obtaining payment for a discounted amount from the financial intermediary prior to the invoice due date.

GrafTech Mexico’s responsibility is limited to making payment on the terms originally negotiated with its supplier, regardless of whether the supplier elects to receive early payment.

The range of payment terms GrafTech Mexico negotiates with its suppliers is consistent, irrespective of whether a supplier participates in the program.

SFP obligations are included in accounts payable on the Consolidated Balance Sheets and upon settlement, are reflected as cash flow from operating activities in the Consolidated Statements of Cash Flows.

See below for a rollforward of our SFP obligations.

(Dollars in thousands)

Confirmed obligations outstanding as of December 31, 2022 $ —

Invoices confirmed during the year 24,368

Confirmed invoices paid during the year ( 19,732 )

Confirmed obligations outstanding as of December 31, 2023 $ 4,636

GRAFTECH INTERNATIONAL LTD.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The Company leases certain transportation and mobile manufacturing equipment such as railcars and forklifts, as well as real estate.

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Operating lease cost $ 4,896 $ 5,441 $ 5,399

Finance lease cost:

Amortization of lease assets 39 — —

Interest on lease liabilities 13 — —

Short-term lease cost 123 163 408

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(Dollars in thousands)

RoU assets obtained in exchange for new operating lease liabilities (non-cash) $ 2,303 $ 5,584 $ 5,262

Cash payments for operating leases ( 4,015 ) ( 5,466 ) ( 6,177 )

Cash paid for amounts included in the measurement of lease liabilities

Operating cash outflows - payments on operating leases $ ( 3,919 ) $ ( 4,015 ) $ ( 5,466 )

Operating cash outflows - interest payments on finance leases ( 13 ) — —

Financing cash outflows - payments on finance lease obligations ( 36 ) — —

Right-of-use assets obtained in exchange for operating lease obligations 2,621 2,303 5,584

Right-of-use assets obtained in exchange for finance lease obligations 291 — —

GRAFTECH INTERNATIONAL LTD.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Supplemental balance sheet information related to leases is as follows:

(Dollars in thousands)

Operating RoU lease assets Other assets $ 5,741 $ 7,646

Operating Leases

Operating lease right-of-use assets Other assets $ 5,003 $ 5,741

Current operating lease liabilities Other accrued liabilities 2,568 3,575

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Total operating lease liabilities $ 5,110 $ 5,879

Weighted average remaining lease term (in years) 2.1 2.3

Finance Leases

Property, plant and equipment Property, plant and equipment $ 330 $ —

Accumulated depreciation Accumulated depreciation 39 —

Finance lease assets, net $ 291 $ —

Other liabilities and accrued items Other liabilities and accrued items $ 83 $ —

Finance lease liabilities Other long-term obligations 210 —

Total principal payable on finance leases $ 293 $ —

Weighted-Average Remaining Lease Term

Operating leases 2.4 years 2.1 years

Finance leases 4.1 years 0 years

Weighted-Average Discount Rate

GRAFTECH INTERNATIONAL LTD.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Operating leases 6.63 % 4.65 %

Finance leases 7.93 % — %

As of December 31, 2023, future minimum lease payments under noncancellable operating leases were as follows:

Finance Leases Operating Leases

(Dollars in thousands)

2024 $ 87 $ 2,640

2025 87 1,700

2029 and thereafter — —

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Present value of lease payments $ 293 $ 5,110

As of December 31, 2022, the Company has not entered into any additional operating lease commitments that have yet to commence.

As of December 31, 2023, the Company has not entered into any material lease commitments that have yet to commence.

GRAFTECH INTERNATIONAL LTD.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(11) Retirement Plans and Post-Employment Benefits

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Net periodic benefit (credit) cost $ ( 661 ) $ 5,173 $ 491 $ ( 6,994 ) $ ( 2,351 ) $ ( 412 )

The mark-to-market loss in 2023 was the result of an unfavorable change in the discount rate on our foreign plans.

The mark-to-market gain in 2022 was primarily the result of a favorable change in the discount rate, partially offset by a worse than expected return on plan assets.

The mark-to-market gain in 2021 was the result of a favorable change in the discount rate and favorable foreign currency translation, as well as a better than expected return on plan assets, particularly for the U.S.

GRAFTECH INTERNATIONAL LTD.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The mark-to-market gain in 2022 was primarily the result of a favorable change in the discount rate, partially offset by a worse than expected return on plan assets.

The mark-to-market loss in 2020 was the result of an unfavorable change in the discount rate, new employee obligations and unfavorable foreign currency translation, partially offset by a better than expected return on plan assets, particularly for the U.S.

The reconciliation of the beginning and ending balances of our pension plans’ benefit obligations, fair value of assets, and funded status at December 31, 2023 and 2022 are shown below.

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Participant contributions — 501 — 557

Plan settlements — ( 1,609 ) — —

Foreign currency exchange changes — 2,983 — ( 660 )

Actuarial gain ( 24,202 ) ( 7,293 ) ( 4,316 ) ( 1,104 )

Actuarial loss (gain) 1,516 3,694 ( 24,202 ) ( 7,293 )

Benefits paid ( 10,392 ) ( 1,076 ) ( 10,343 ) ( 1,557 )

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Foreign currency exchange rate changes — 2,609 — ( 325 )

Plan settlements — ( 1,609 ) — —

Employer contributions 400 1,203 449 972

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Foreign government bonds – Valued by the trustees using various pricing services of financial institutions.

GRAFTECH INTERNATIONAL LTD.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Fixed insurance contracts – Valued at the present value of the guaranteed payment streams.

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The net asset value is primarily based on quoted market prices of the underlying securities for which quoted market prices of the underlying securities of the funds.

Some of the underlying investments include securities for which quoted market prices are not available and are valued using data obtained by the trustee from the best available source or market value.

Some of the underlying investments include securities for which quoted market prices are not

GRAFTECH INTERNATIONAL LTD.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

available and are valued using data obtained by the trustee from the best available source or market value.

This method may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.

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The estimated liability for post-employment benefit plans was $ 14.3 million and $ 13.5 million as of December 31, 2023 and 2022, respectively.

The Company recognized income of $ 0.9 million in the Consolidated Statement of Operations for post-employment benefits in 2022 and expense of $ 0.5 million and $ 0.7 million for 2021 and 2020, respectively.

Included in post-employment benefit expense are mark-to-market gains of $ 1.6 million and $ 0.1 million in 2022 and 2021, respectively, and a mark-to-market gain of less than $ 0.1 million for 2020.

The Company recognized expense of $ 2.0 million in 2023, income of $ 0.9 million in 2022 and expense of $ 0.5 million in 2021 in the Consolidated Statement of Operations for post-employment benefits.

Included in post-employment benefit expense are mark-to-market losses of $ 1.1 million in 2023 and mark-to-market gains of $ 1.6 million and $ 0.1 million in 2022 and 2021, respectively.

Our employee savings plan provides eligible employees the opportunity for long-term savings and investment.

The plan allows employees to contribute up to 5 % of pay as a basic contribution and an additional 45 % of pay as supplemental contribution.

In 2022, 2021 and 2020, the Company's contributions to our savings plan were $ 3.0 million, $ 2.5 million and $ 2.2 million, respectively.

The Company's contributions to our savings plan were $ 3.0 million in both 2023 and 2022 and $ 2.5 million in 2021.

GRAFTECH INTERNATIONAL LTD.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(12) Commitments and Contingencies

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(collectively, the “Claimants”) initiated a single arbitration proceeding against two of the Company’s subsidiaries in the International Chamber of Commerce in June 2020.

In June 2021, the Claimants filed their statement of claim, seeking approximately $ 61.0 million plus interest in monetary relief and/or reimbursement in respect of several fixed price LTAs that were executed between such subsidiaries and the Claimants in 2017 and 2018.

On December 16, 2022, the Claimants revised their calculation of damages to approximately $ 178.9 million including interest, covering the period from the first quarter of 2020 through the end of the third quarter of 2022 and interest covering the period from June 2020 through December 16, 2022.

The Claimants argue, among other things, that they should no longer be required to comply with the terms of the LTAs that they signed due to an alleged drop in market prices for graphite electrodes in January 2020.

Alternatively, the Claimants argue that they should not be required to comply with the LTAs that they signed due to alleged market circumstances at the time of execution.

On December 16, 2022, the Claimants revised their calculation of alleged damages to approximately $ 178.9 million including interest, with damages covering the period from the first quarter of 2020 through the end of the third quarter of 2022 and interest covering the period from June 2020 through December 16, 2022.

In March 2023, an International Chamber of Commerce hearing was held before the party-appointed sole arbitrator with the Claimants, the Company, and witnesses in attendance.

On March 31, 2023, the Claimants further revised their calculation of alleged damages to approximately $ 171.7 million, including interest, for the period covering the first quarter of 2020 through 2022.

In June of 2023, the Claimants again revised their calculation of alleged damages to approximately $ 188.2 million, including interest, for the period covering the first quarter of 2020 through the first quarter of 2023.

We believe we have valid defenses to these claims.

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As of December 31, 2023, 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.

GRAFTECH INTERNATIONAL LTD.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Product Warranties

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federal income tax and Swiss tax that we and our subsidiaries realize as a result of the utilization of the pre-IPO Tax Assets.

On April 10, 2023, the Tax Receivable Agreement was amended and restated to change the applicable interest rate from LIBOR plus 1.00 % per year to the one-month period secured overnight financing rate administered by the Federal Reserve Bank of New York plus 1.10 %.

The term of the Tax Receivable Agreement commenced on April 23, 2018 and will continue until there is no potential for any future tax benefit payments.

As of December 31, 2022, total Tax Receivable Agreement liability was $ 15.5 million, of which $ 4.6 million was classified as a current liability "Related party payable - Tax Receivable Agreement" on the Consolidated Balance Sheets and $ 10.9 million was classified as a long-term liability in "Related party payable - Tax Receivable Agreement long-term" on the Consolidated Balance Sheets.

As of December 31, 2021, the total Tax Receivable Agreement liability was $ 19.3 million, of which $ 3.8 million was classified as a current liability "Related party payable - Tax Receivable Agreement" on the Consolidated Balance Sheets and $ 15.5 million was classified as a long-term liability in "Related party payable - Tax Receivable Agreement long-term" on the Consolidated Balance Sheets.

As of December 31, 2023, total Tax Receivable Agreement liability was $ 11.1 million, of which $ 5.4 million was classified as a current liability in "Related party payable - Tax Receivable Agreement" on the Consolidated Balance Sheets and $ 5.7 million was classified as a long-term liability in "Related party payable - Tax Receivable Agreement long-term" on the Consolidated Balance Sheets.

As of December 31, 2022, the total Tax Receivable Agreement liability was $ 15.5 million, of which $ 4.6 million was classified as a current liability and $ 10.9 million was classified as a long-term liability.

Long-term Incentive Plan

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In the event that, in connection with a Change in Control, Brookfield Capital IV disposes of less than 100 % of its ownership interest in the Company, the amount of the Sale Proceeds in excess of the Threshold Value shall be determined on a pro-rata basis by reference to the percentage of ownership interest disposed, as determined by the Board of Directors of the Company.

GRAFTECH INTERNATIONAL LTD.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The May 2021 secondary offering of our common stock by Brookfield Capital IV constituted a Change in Control under the LTIP.

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Accordingly, the Company settled the vested Profit Units in lump sum payments within 30 days following the Change in Control.

In the second quarter 2021, the settlement of the Profit Units resulted in the recording of a pre-tax charge of $ 73.4 million, of which $ 30.7 million was recorded in cost of sales and $ 42.7 million was recorded in selling and administrative expense.

In the second quarter 2021, the settlement of the Profit Units resulted in the recording of a pre-tax charge of $ 73.4 million, of which $ 30.7 million was recorded in cost of goods sold and $ 42.7 million was recorded in selling and administrative expense.

To date, $ 71.8 million of the charges have been settled in cash by the Company while the remainder of the liability, related to payroll taxes, is expected to be paid in subsequent quarters, which will satisfy all obligations under the LTIP.

Mexico Value-Added Tax ("VAT")

In July 2019, the Mexican Tax Authority ("MTA") opened an audit of the VAT filings of one of the Company's subsidiaries in Mexico for the period of January 1 to April 30, 2019.

In July 2019, the Mexican Tax Authority (“MTA”) opened an audit of the VAT filings of GrafTech Comercial de Mexico S.

(“GrafTech Commercial Mexico”) for the period of January 1 to April 30, 2019.

In September 2021, the MTA issued a tax assessment, claiming improper use of a certain VAT exemption rule for purchases from a foreign affiliate.

The Company filed an administrative appeal against the tax assessment with the MTA's appeals office.

In November 2022, the MTA appeal's office concluded its review and confirmed the tax assessment.

The Company believes that the purchases from a foreign affiliate are exempt from VAT back-up withholding and in December 2022, the Company filed a Claim for Nullity with the Chamber Specialized in exclusive resolution of substance of the Federal Court of Administrative Justice.

At the time of filing, the tax assessment for the four month period under audit amounted to approximately $ 23.5 million, including penalties, inflation and interest.

After the filing of the Claim for Nullity, in January 2023, the MTA notified the same subsidiary in Mexico of its intent to assess $ 51.0 million, including penalties, inflation and interest for the period January 1 to December 31, 2018, asserting the same improper use of certain VAT exemption rules on purchases from a foreign affiliate.In Mexico, each tax assessment requires a separate claim.

The Company intends to pursue administrative appeal procedures with the MTA to try and resolve this matter.

The Company believes that its application of the VAT exemption rules is appropriate and, accordingly, does not believe that it is probable that it will incur a loss related to this matter for either of the two periods under the MTA's audit.

The Company intends to vigorously defend its position.

As of December 31, 2023, the tax assessment for the four month period under audit amounted to approximately $ 28.8 million, including penalties, inflation and interest.

Interest will continue to accrue up to five years from the date the corresponding VAT returns were filed and inflation will continue to accrue with the passage of time.

GrafTech Commercial Mexico filed an administrative appeal against the tax assessment with the MTA's appeals office.

In November 2022, the MTA’s appeals office concluded its review and confirmed the tax assessment.

GrafTech Commercial Mexico believes that the purchases from a foreign affiliate are exempt from VAT back-up withholding, and in December 2022, GrafTech Commercial Mexico filed a Claim for Nullity with the Chamber Specialized in exclusive resolution of substance of the Federal Court of Administrative Justice.

On February 17, 2023, the MTA filed the response to the nullity petition.

On May 31, 2023, the court held a hearing to determine the scope of the issues to be decided in the proceedings.

At the court’s request, GrafTech Commercial Mexico submitted formal pleadings on August 1, 2023.

On January 8, 2024, the court ruled in GrafTech Commercial Mexico’s favor and annulled the tax assessment.

On January 31, 2024, the MTA filed an appeal for review.

In March 2022, the MTA opened another audit of the VAT filings of GrafTech Commercial Mexico for the period January 1 to December 31, 2018.

In the proposed assessment received in January 2023, the MTA is alleging the same improper use of certain VAT exemption rules on purchases from a foreign affiliate and has provided notice of its intent to assess approximately $ 51.0 million, including penalties, inflation and interest.

In Mexico, each tax assessment requires a separate claim.

In the first quarter of 2023, GrafTech Commercial Mexico requested a conclusive agreement with the Mexican ombudsman (“PRODECON”) to reach a settlement with the MTA.

The MTA responded to GrafTech Commercial Mexico’s request on May 30, 2023.

On August 2, 2023, GrafTech Commercial Mexico filed a motion exhibiting additional information and reaffirming its position.

On September 22, 2023, the MTA responded to GrafTech Commercial Mexico’s motion.

On October 2, 2023, GrafTech Commercial Mexico filed a motion requesting a formal meeting with the MTA and PRODECON, which occurred on November 14, 2023.

During the meeting, the parties agreed that GrafTech Commercial Mexico will provide additional documentation and information to be evaluated by the MTA, and, on November 29, 2023, GrafTech Commercial Mexico filed the information requested.

On January 24, 2024, the MTA filed its response.

On that same day, GrafTech Commerical Mexico submitted before PRODECON the favorable ruling it obtained on January 8, 2024 in connection with the 2019 preceding for the MTA’s consideration.

On February 1, 2024, the MTA confirmed its position, holding that GrafTech Commercial Mexico was required to withhold the VAT.

GrafTech Commercial Mexico plans to challenge the assessment.

The $ 51.0 million includes interest and inflation.

Interest will continue to accrue up to five years from the date the corresponding VAT returns were filed and inflation will continue to accrue with the passage of time.

As evidenced by the favorable court decision issued on January 8, 2024, GrafTech Commercial Mexico’s application of the VAT exemption rules is appropriate and, accordingly, GrafTech Commercial Mexico does not believe that it is probable that it will incur a loss related to this matter for either of the two periods under the MTA's audit.

The Company intends to vigorously defend its position in these proceedings.

GRAFTECH INTERNATIONAL LTD.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(13) Income Taxes

Income before the provision for income taxes was derived from the following sources:

(Loss) income before the (benefit) provision for income taxes was derived from the following sources:

Year Ended December 31,

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Foreign ( 161,943 ) 397,211 525,493

Income before provision for income taxes $ 452,318 $ 456,406 $ 510,045

GRAFTECH INTERNATIONAL LTD.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The provision for income taxes consists of the following:

(Loss) income before (benefit) provision for income taxes $ ( 273,764 ) $ 452,318 $ 456,406

The (benefit) provision for income taxes consisted of the following:

Year Ended December 31,

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( 5,742 ) 52,464 65,299

Provision for income taxes $ 69,356 $ 68,076 $ 75,671

The increase in the provision for income taxes in 2022 versus 2021 is primarily due to the mix of worldwide earnings from various countries taxed at different rates and the U.S.

taxation of GILTI, partially offset by the reduction in pre-tax income.

The provision for income taxes differed from the amount computed by applying the U.S.

federal income tax rate of 21 % for the years ended December 31, 2022, 2021 and 2020 to income before the provision for income taxes as set forth in the following table:

(Benefit) provision for income taxes $ ( 18,514 ) $ 69,356 $ 68,076

The provision for income taxes represented a benefit for the year ended December 31, 2023 compared to an expense for the year ended December 31, 2022.

Total pre-tax earnings shifted from a profit position to a loss position and the Company recorded a goodwill impairment charge that is not tax deductible.

A reconciliation of income taxes at the U.S.

statutory rate to the (benefit) provision for income taxes follows:

Year Ended December 31,

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Change-in-Control-related compensation — ( 1,432 ) 10,626

Impact of non-deductible goodwill impairment 24,570 — —

Other ( 1,669 ) ( 3,624 ) ( 6,804 )

Provision for income taxes $ 69,356 $ 68,076 $ 75,671

(Benefit) provision for income taxes $ ( 18,514 ) $ 69,356 $ 68,076

GRAFTECH INTERNATIONAL LTD.

46 unchanged sentences

state NOL carryforwards during the year.

The reduction in the valuation allowance in 2021 resulted primarily from expirations of NOL carryforwards upon which a valuation allowance was previously recorded.

The reduction in the valuation allowance in 2022 resulted primarily from changes in expected future utilization, state law changes and expiration of U.S.

state NOL carryforwards during the year.

As of December 31, 2023, the Company had a total foreign tax credit carryforward of $ 4.5 million.

4 unchanged sentences

state tax credits of $ 0.2 million as of December 31, 2023.

The Company's foreign loss carryforwards on a gross basis were $ 6.8 million as of December 31, 2022 and may be carried forward indefinitely.

As of December 31, 2022, the Company had unrecognized tax benefits of $ 0.1 million, which, if recognized, would have a favorable impact on the effective tax rate.

The Company's U.S.

interest limitations and foreign loss carryforwards on a gross basis were $ 40.0 million and $ 7.5 million, respectively, as of December 31, 2023.

These carryforwards do not expire.

As of December 31, 2023, the Company had no unrecognized tax benefits.

No material amounts of accrued interest or penalties have been recorded as of December 31, 2023 or 2022.

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Balance as of December 31, 2023

It is reasonably possible that there will be no more unrecognized tax benefits within 12 months due to settlements and the expiration of statutes of limitation.

We do not expect there will be new unrecognized tax benefits within 12 months.

The Company files income tax returns in the U.S.

12 unchanged sentences

The stock repurchase program does not have an expiration date.

The Company repurchased 6,662,421 shares of its common stock for $ 60.0 million in 2022, 4,658,544 shares of its common stock for $ 50.0 million in 2021 and 3,328,574 shares of its common stock for $ 30.1 million in 2020, under the stock repurchase program.

The Company did not repurchase any of its common stock in 2023.

The Company repurchased 6,662,421 shares of its common stock for $ 60.0 million in 2022 and 4,658,544 shares of its common stock for $ 50.0 million in 2021, under the stock repurchase program.

The amount and timing of repurchases are subject to a variety of factors including liquidity, stock price, applicable legal requirements, other business objectives and market conditions.

3 unchanged sentences

As of December 31, 2023 , approximately $ 99.0 million remained available for stock repurchases under this authorization.

The Company paid quarterly dividends of $ 0.085 through the first quarter of 2020.

Effective in the second quarter of 2020, the quarterly dividend was reduced to $ 0.01 per share.

The Company paid quarterly dividends of $ 0.01 per share through the second quarter of 2023.

On August 2, 2023, the Company’s Board of Directors elected to suspend the quarterly cash dividend of $ 0.01 per common share.

Accumulated other comprehensive loss

6 unchanged sentences

Total AOCL $ ( 11,458 ) $ ( 8,070 )

(15) Earnings per Share ("EPS")

The following table presents a reconciliation of the numerator and denominator of basic and diluted EPS:

(15) (Loss) Earnings per Share

The following table presents a reconciliation of the numerator and denominator of basic and diluted (loss) earnings per share:

Year Ended December 31,

1 unchanged sentence

(Dollars in thousands, except per share amounts)

Numerator for basic and diluted EPS:

Net income $ 382,962 $ 388,330 $ 434,374

Numerator for basic and diluted (loss) earnings per share:

Net (loss) income $ ( 255,250 ) $ 382,962 $ 388,330

Weighted average common shares outstanding for basic calculation 257,042,843 258,781,843 266,251,097

1 unchanged sentence

Weighted average common shares outstanding for diluted calculation 257,042,843 258,791,228 266,317,194

Basic EPS $ 1.48 $ 1.46 $ 1.62

Diluted EPS $ 1.48 $ 1.46 $ 1.62

Basic EPS is calculated by dividing net income by the weighted average number of common shares outstanding, which included 243,006 , 130,624 and 73,320 shares of participating securities in 2022, 2021 and 2020, respectively.

Diluted EPS is calculated by dividing net income 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 2,240,655 , 1,499,128 and 1,667,325 equivalent shares in 2022, 2021 and 2020, respectively, as these shares are anti-dilutive.

Basic (loss) earnings per share $ ( 0.99 ) $ 1.48 $ 1.46

Diluted (loss) earnings per share $ ( 0.99 ) $ 1.48 $ 1.46

Basic (loss) earnings per share is calculated by dividing net (loss) income by the weighted average number of common shares outstanding, which included 290,449 , 243,006 and 130,624 shares of participating securities in 2023, 2022 and 2021, respectively.

Diluted (loss) earnings per share is calculated by dividing net (loss) income 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 (loss) earnings per share calculation for the year ended December 31, 2023 excludes the dilutive effect of approximately 41,198 shares, primarily related to restricted stock units, as their inclusion would have been anti-dilutive due to the Company's net loss.

Additionally, the weighted average common shares outstanding for the diluted (loss) earnings per share calculation excludes consideration of 3,033,561 , 2,240,655 and 1,499,128 equivalent shares in 2023, 2022 and 2021, respectively, as their effect would have been anti-dilutive.

See Note 14, "Stockholders' Equity" for details of the Company's common stock repurchases in 2023, 2022 and 2021.

2 unchanged sentences

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(16) Other (Income) Expense, net

The following table presents the details of other (income) expense:

(16) Other Expense (Income), net

The following table presents the details of other expense (income), net:

Year Ended December 31,

2 unchanged sentences

Brazil value-added tax credit $ — $ — $ ( 11,511 )

Non-service pension and other post-employment (income) expense ( 9,950 ) ( 5,298 ) 3,584

Non-service pension and other post-employment expense (income) 3,771 ( 9,950 ) ( 5,298 )

Bank charges 757 938 1,098

Other 151 ( 1,135 ) ( 509 )

Total other (income) expense, net $ ( 10,064 ) $ ( 16,451 ) $ 3,330

Total other expense (income), net $ 4,679 $ ( 10,147 ) $ ( 16,220 )

In May 2021, the Brazilian Supreme Court ruled definitely to exclude the ICMS (state value-added tax) from the basis of calculation of certain federal value-added taxes, specifically the tax relative to the program of social integration ("PIS") and to the contribution for the financing of social security ("COFINS"), and confirmed the methodology for calculating the PIS-COFINS tax credit to which taxpayers are entitled.

2 unchanged sentences

In the fourth quarter of 2021, the Company's subsidiary obtained approval by the Brazilian Tax Authorities to start offsetting the PIS-COFINS credit against the current federal value-added tax payable and recorded the one-time credit as a realizable gain.

As of December 31, 2022, the Company had offset $ 9.7 million of the credit.

The balance of the PIS-COFINS credit is expected to be utilized within the next 12 months and is reported within "Prepaid expenses and other current assets" on the Consolidated Balance Sheet.

Non-service pension and other post-employment (income) expense includes the components of pension and post-employment costs other than service cost.

The Company recognized non-service pension and other post-employment income in 2022 and 2021 due to the recognition of mark-to-market gains of $ 9.6 million and $ 3.8 million, respectively.

In 2020, the Company recognized mark-to-market losses of $ 3.2 million.

As of December 31, 2023, the Company has offset the entire amount of this credit.

Non-service pension and other post-employment expense (income) includes the components of pension and post-employment costs other than service cost.

Non-service pension and other post-employment expense (income) included mark-to-market losses of $ 3.0 million in 2023, compared to mark-to-market gains of $ 9.6 million and $ 3.8 million, respectively, in 2022 and 2021.

See Note 11, "Retirement Plans and Post-Employment Benefits" for further discussion.

(17) Subsequent Events

Dividend declaration

On February 9, 2023, the Board of Directors declared a dividend of $ 0.01 per share of common stock to stockholders of record as of the close of business on February 28, 2023, to be paid on March 31, 2023.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data