##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q





(Mark One)



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2010

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from
 to

Commission file number: 333-53603-03





GRAHAM
PACKAGING HOLDINGS COMPANY

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Pennsylvania                                                   |  | 23-2553000                          
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|2401 Pleasant Valley Road                                      |  |                                     
|York, Pennsylvania                                             |  | 17402                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

(717)
849-8500

(Registrants telephone number, including area code)





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

The registrant has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate
Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to
submit and post such files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  | x  (Do not check if a smaller reporting company) |  | Smaller reporting company |  |  ̈

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









---

##### Table of Contents



GRAHAM PACKAGING
HOLDINGS COMPANY

INDEX



|                              |  |                                                                                                                               |    |            |    | 
|----------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------- | -- | ---------- | -- | 
|                              |  |                                                                                                                               |    | PageNumber |   
|PART I. FINANCIAL INFORMATION |  |                                                                                                                               |    |           
|                              |  |                                                                                                                              
|Item 1:                       |  | Financial Statements:                                                                                                         |    |            |    | 
|                              |  |                                                                                                                              
|                              |  | CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)  At September 30, 2010 and December 31, 2009                               |    |            | 3  | 
|                              |  |                                                                                                                              
|                              |  | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)  For the three and nine months ended September 30, 2010 and 2009 |    |            | 4  | 
|                              |  |                                                                                                                              
|                              |  | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)  For the nine months ended September 30, 2010 and 2009           |    |            | 5  | 
|                              |  |                                                                                                                              
|                              |  | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)                                                              |    |            | 6  | 
|                              |  |                                                                                                                              
|                              |  | Cautionary Statement Regarding Forward-looking Statements                                                                     |    |            | 37 | 
|                              |  |                                                                                                                              
|Item 2:                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                         |    |            | 37 | 
|                              |  |                                                                                                                              
|Item 3:                       |  | Quantitative and Qualitative Disclosures About Market Risk                                                                    |    |            | 51 | 
|                              |  |                                                                                                                              
|Item 4:                       |  | Controls and Procedures                                                                                                       |    |            | 53 | 
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                                                               |    |           
|                              |  |                                                                                                                              
|Item 1:                       |  | Legal Proceedings                                                                                                             |    |            | 54 | 
|                              |  |                                                                                                                              
|Item 1A:                      |  | Risk Factors                                                                                                                  |    |            | 54 | 
|                              |  |                                                                                                                              
|Item 2:                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                   |    |            | 55 | 
|                              |  |                                                                                                                              
|Item 6:                       |  | Exhibits                                                                                                                      |    |            | 55 | 
|                              | 
|Signature                     |  |                                                                                                                               | 56 |           



2



---

##### Table of Contents



PART I.
FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

GRAHAM PACKAGING HOLDINGS COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)



|                                                             |  |                   |           |   |                                                   |   |           |  
|------------------------------------------------------------ |  | ----------------- | --------- | - | ------------------------------------------------- | - | --------- | -
|                                                             |  | September 30,2010 |           |   | December 31,2009(Adjusted forpush-downaccounting) |  
|                                                             |  | (In thousands)    |          
|ASSETS                                                       |  |                   |           |   |                                                   |   |           |  
|Current assets:                                              |  |                   |           |   |                                                   |   |           |  
|Cash and cash equivalents                                    |  | $                 | 169,955   |   |                                                   | $ | 147,808   |  
|Accounts receivable, net                                     |  |                   | 276,146   |   |                                                   |   | 191,685   |  
|Inventories                                                  |  |                   | 231,183   |   |                                                   |   | 194,702   |  
|Deferred income taxes                                        |  |                   | 4,402     |   |                                                   |   | 3,446     |  
|Prepaid expenses and other current assets                    |  |                   | 48,022    |   |                                                   |   | 59,091    |  
|                                                             |  |                   |           |   |                                                   |   |           |  
|Total current assets                                         |  |                   | 729,708   |   |                                                   |   | 596,732   |  
|Property, plant and equipment, net                           |  |                   | 1,217,770 |   |                                                   |   | 1,017,778 |  
|Intangible assets, net                                       |  |                   | 201,163   |   |                                                   |   | 43,012    |  
|Goodwill                                                     |  |                   | 641,030   |   |                                                   |   | 437,058   |  
|Other non-current assets                                     |  |                   | 50,597    |   |                                                   |   | 32,506    |  
|                                                             |  |                   |           |   |                                                   |   |           |  
|Total assets                                                 |  | $                 | 2,840,268 |   |                                                   | $ | 2,127,086 |  
|                                                             |  |                   |           |   |                                                   |   |           |  
|LIABILITIES AND PARTNERS CAPITAL (DEFICIT)                  |  |                   |           |   |                                                   |   |           |  
|Current liabilities:                                         |  |                   |           |   |                                                   |   |           |  
|Current portion of long-term debt                            |  | $                 | 46,282    |   |                                                   | $ | 100,657   |  
|Accounts payable                                             |  |                   | 175,292   |   |                                                   |   | 111,013   |  
|Accrued expenses and other current liabilities               |  |                   | 220,436   |   |                                                   |   | 186,103   |  
|Deferred revenue                                             |  |                   | 27,273    |   |                                                   |   | 30,245    |  
|                                                             |  |                   |           |   |                                                   |   |           |  
|Total current liabilities                                    |  |                   | 469,283   |   |                                                   |   | 428,018   |  
|Long-term debt                                               |  |                   | 2,813,643 |   |                                                   |   | 2,336,206 |  
|Deferred income taxes                                        |  |                   | 27,020    |   |                                                   |   | 17,646    |  
|Other non-current liabilities                                |  |                   | 83,334    |   |                                                   |   | 99,854    |  
|Commitments and contingent liabilities (see Notes 16 and 17) |  |                   |           |   |                                                   |   |           |  
|Partners capital (deficit):                                 |  |                   |           |   |                                                   |   |           |  
|General partners                                             |  |                   | (27,150   | ) |                                                   |   | (36,603   | )
|Limited partners                                             |  |                   | (514,762  | ) |                                                   |   | (691,776  | )
|Notes and interest receivable for ownership interests        |  |                   | (1,444    | ) |                                                   |   | (1,795    | )
|Accumulated other comprehensive income (loss)                |  |                   | (9,656    | ) |                                                   |   | (24,464   | )
|                                                             |  |                   |           |   |                                                   |   |           |  
|Total partners capital (deficit)                            |  |                   | (553,012  | ) |                                                   |   | (754,638  | )
|                                                             |  |                   |           |   |                                                   |   |           |  
|Total liabilities and partners capital (deficit)            |  | $                 | 2,840,268 |   |                                                   | $ | 2,127,086 |  
|                                                             |  |                   |           |   |                                                   |   |           |  

See accompanying notes to condensed consolidated financial statements.



3



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



|                                                                                              |  |                                 |         |   |                                       |   |         |      |  |   |                                       |   |  |   |           |  
|--------------------------------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------------- | - | ------- | ---- |  | - | ------------------------------------- | - |  | - | --------- | -
|                                                                                              |  | Three Months EndedSeptember 30, |         |   | Nine Months EndedSeptember 30,        |  
|                                                                                              |  | 2010                            |         |   | 2009(Adjusted forpush-downaccounting) |   |         | 2010 |  |   | 2009(Adjusted forpush-downaccounting) |  
|                                                                                              |  | (In thousands)                  |        
|Net sales                                                                                     |  | $                               | 630,439 |   |                                       | $ | 588,803 |      |  | $ | 1,868,847                             |   |  | $ | 1,736,368 |  
|Cost of goods sold                                                                            |  |                                 | 518,396 |   |                                       |   | 477,005 |      |  |   | 1,533,888                             |   |  |   | 1,418,300 |  
|                                                                                              |  |                                 |         |   |                                       |   |         |      |  |   |                                       |   |  |   |           |  
|Gross profit                                                                                  |  |                                 | 112,043 |   |                                       |   | 111,798 |      |  |   | 334,959                               |   |  |   | 318,068   |  
|Selling, general and administrative expenses                                                  |  |                                 | 44,128  |   |                                       |   | 32,005  |      |  |   | 139,523                               |   |  |   | 89,410    |  
|Asset impairment charges                                                                      |  |                                 | 925     |   |                                       |   | 6,136   |      |  |   | 3,716                                 |   |  |   | 14,171    |  
|Net loss on disposal of property, plant and equipment                                         |  |                                 | 1,078   |   |                                       |   | 2,110   |      |  |   | 2,132                                 |   |  |   | 4,408     |  
|                                                                                              |  |                                 |         |   |                                       |   |         |      |  |   |                                       |   |  |   |           |  
|Operating income                                                                              |  |                                 | 65,912  |   |                                       |   | 71,547  |      |  |   | 189,588                               |   |  |   | 210,079   |  
|Interest expense                                                                              |  |                                 | 43,729  |   |                                       |   | 50,138  |      |  |   | 131,005                               |   |  |   | 127,019   |  
|Interest income                                                                               |  |                                 | (181    | ) |                                       |   | (360    | )    |  |   | (479                                  | ) |  |   | (832      | )
|Net loss (gain) on debt extinguishment                                                        |  |                                 | 28,468  |   |                                       |   |        |      |  |   | 31,132                                |   |  |   | (756      | )
|Write-off of amounts in accumulated other comprehensive income related to interest rate swaps |  |                                 | 6,988   |   |                                       |   |        |      |  |   | 6,988                                 |   |  |   |          |  
|Other (income) expense, net                                                                   |  |                                 | (644    | ) |                                       |   | (520    | )    |  |   | 2,567                                 |   |  |   | (2,065    | )
|                                                                                              |  |                                 |         |   |                                       |   |         |      |  |   |                                       |   |  |   |           |  
|(Loss) income before income taxes                                                             |  |                                 | (12,448 | ) |                                       |   | 22,289  |      |  |   | 18,375                                |   |  |   | 86,713    |  
|Income tax (benefit) provision                                                                |  |                                 | (10,065 | ) |                                       |   | 7,430   |      |  |   | (4,967                                | ) |  |   | 16,497    |  
|                                                                                              |  |                                 |         |   |                                       |   |         |      |  |   |                                       |   |  |   |           |  
|(Loss) income from continuing operations                                                      |  |                                 | (2,383  | ) |                                       |   | 14,859  |      |  |   | 23,342                                |   |  |   | 70,216    |  
|Loss from discontinued operations                                                             |  |                                 |        |   |                                       |   | (2,117  | )    |  |   |                                      |   |  |   | (3,924    | )
|                                                                                              |  |                                 |         |   |                                       |   |         |      |  |   |                                       |   |  |   |           |  
|Net (loss) income                                                                             |  | $                               | (2,383  | ) |                                       | $ | 12,742  |      |  | $ | 23,342                                |   |  | $ | 66,292    |  
|                                                                                              |  |                                 |         |   |                                       |   |         |      |  |   |                                       |   |  |   |           |  
|Net (loss) income allocated to general partners                                               |  | $                               | (72     | ) |                                       | $ | 637     |      |  | $ | 792                                   |   |  | $ | 3,315     |  
|Net (loss) income allocated to limited partners                                               |  | $                               | (2,311  | ) |                                       | $ | 12,105  |      |  | $ | 22,550                                |   |  | $ | 62,977    |  

See accompanying notes
to condensed consolidated financial statements.



4



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                                              |  |                                |          |   |                                       |   |          |  
|--------------------------------------------------------------------------------------------- |  | ------------------------------ | -------- | - | ------------------------------------- | - | -------- | -
|                                                                                              |  | Nine Months EndedSeptember 30, |         
|                                                                                              |  | 2010                           |          |   | 2009(Adjusted forpush-downaccounting) |  
|                                                                                              |  | (In thousands)                 |         
|Operating activities:                                                                         |  |                                |          |   |                                       |   |          |  
|Net income                                                                                    |  | $                              | 23,342   |   |                                       | $ | 66,292   |  
|Adjustments to reconcile net income to net cash provided by operating activities:             |  |                                |          |   |                                       |   |          |  
|Depreciation and amortization                                                                 |  |                                | 117,913  |   |                                       |   | 118,790  |  
|Amortization of debt issuance fees                                                            |  |                                | 4,771    |   |                                       |   | 6,392    |  
|Accretion of senior unsecured notes                                                           |  |                                | 356      |   |                                       |   |         |  
|Net loss (gain) on debt extinguishment                                                        |  |                                | 31,132   |   |                                       |   | (756     | )
|Write-off of amounts in accumulated other comprehensive income related to interest rate swaps |  |                                | 6,988    |   |                                       |   |         |  
|Net loss on disposal of property, plant and equipment                                         |  |                                | 2,132    |   |                                       |   | 4,408    |  
|Pension expense                                                                               |  |                                | 2,366    |   |                                       |   | 3,845    |  
|Asset impairment charges                                                                      |  |                                | 3,716    |   |                                       |   | 18,308   |  
|Unrealized loss on termination of cash flow hedge accounting                                  |  |                                | 242      |   |                                       |   | 4,896    |  
|Stock compensation expense                                                                    |  |                                | 937      |   |                                       |   | 658      |  
|Equity income from unconsolidated subsidiaries                                                |  |                                | (46      | ) |                                       |   |         |  
|Deferred tax (benefit) provision                                                              |  |                                | (15,979  | ) |                                       |   | 1,538    |  
|Foreign currency transaction gain                                                             |  |                                | (59      | ) |                                       |   | (143     | )
|Interest receivable on loans to owners                                                        |  |                                | (269     | ) |                                       |   | (94      | )
|Changes in operating assets and liabilities, net of acquisitions of businesses:               |  |                                |          |   |                                       |   |          |  
|Accounts receivable                                                                           |  |                                | (45,231  | ) |                                       |   | 12,967   |  
|Inventories                                                                                   |  |                                | 1,891    |   |                                       |   | 32,730   |  
|Prepaid expenses and other current assets                                                     |  |                                | 9,089    |   |                                       |   | 17,835   |  
|Other non-current assets                                                                      |  |                                | (5,391   | ) |                                       |   | (4,527   | )
|Accounts payable and accrued expenses                                                         |  |                                | 58,266   |   |                                       |   | 40,162   |  
|Pension contributions                                                                         |  |                                | (6,099   | ) |                                       |   | (15,288  | )
|Other non-current liabilities                                                                 |  |                                | (6,128   | ) |                                       |   | 233      |  
|                                                                                              |  |                                |          |   |                                       |   |          |  
|Net cash provided by operating activities                                                     |  |                                | 183,939  |   |                                       |   | 308,246  |  
|                                                                                              |  |                                |          |   |                                       |   |          |  
|Investing activities:                                                                         |  |                                |          |   |                                       |   |          |  
|Cash paid for property, plant and equipment                                                   |  |                                | (111,226 | ) |                                       |   | (104,497 | )
|Proceeds from sale of property, plant and equipment                                           |  |                                | 544      |   |                                       |   | 879      |  
|Acquisitions of/investments in businesses, net of cash acquired                               |  |                                | (578,900 | ) |                                       |   | (1,385   | )
|Increase in restricted cash                                                                   |  |                                | (7,300   | ) |                                       |   |         |  
|                                                                                              |  |                                |          |   |                                       |   |          |  
|Net cash used in investing activities                                                         |  |                                | (696,882 | ) |                                       |   | (105,003 | )
|                                                                                              |  |                                |          |   |                                       |   |          |  
|Financing activities:                                                                         |  |                                |          |   |                                       |   |          |  
|Proceeds from issuance of long-term debt                                                      |  |                                | 667,584  |   |                                       |   | 38,983   |  
|Payment of long-term debt                                                                     |  |                                | (264,690 | ) |                                       |   | (76,984  | )
|Debt issuance fees                                                                            |  |                                | (33,457  | ) |                                       |   | (14,977  | )
|Net proceeds from sale of additional units to GPC (as defined herein)                         |  |                                | 165,386  |   |                                       |   |         |  
|Fees paid on behalf of GPC                                                                    |  |                                | (1,225   | ) |                                       |   |         |  
|Repayment of notes and interest for ownership interests                                       |  |                                | 432      |   |                                       |   |         |  
|Proceeds from issuance of ownership interests                                                 |  |                                | 1,355    |   |                                       |   |         |  
|Purchase of ownership interests                                                               |  |                                |         |   |                                       |   | (89      | )
|                                                                                              |  |                                |          |   |                                       |   |          |  
|Net cash provided by (used in) financing activities                                           |  |                                | 535,385  |   |                                       |   | (53,067  | )
|                                                                                              |  |                                |          |   |                                       |   |          |  
|Effect of exchange rate changes on cash and cash equivalents                                  |  |                                | (295     | ) |                                       |   | 2,768    |  
|                                                                                              |  |                                |          |   |                                       |   |          |  
|Increase in cash and cash equivalents                                                         |  |                                | 22,147   |   |                                       |   | 152,944  |  
|Cash and cash equivalents at beginning of period                                              |  |                                | 147,808  |   |                                       |   | 43,879   |  
|                                                                                              |  |                                |          |   |                                       |   |          |  
|Cash and cash equivalents at end of period                                                    |  | $                              | 169,955  |   |                                       | $ | 196,823  |  
|                                                                                              |  |                                |          |   |                                       |   |          |  
|Supplemental disclosures:                                                                     |  |                                |          |   |                                       |   |          |  
|Cash paid for interest, net of amounts capitalized                                            |  | $                              | 104,701  |   |                                       | $ | 111,411  |  
|Cash paid for income taxes (net of refunds)                                                   |  |                                | 15,464   |   |                                       |   | 12,080   |  
|Non-cash investing and financing activities:                                                  |  |                                |          |   |                                       |   |          |  
|Capital leases                                                                                |  |                                |         |   |                                       |   | 1,551    |  
|Accruals for purchases of property, plant and equipment                                       |  |                                | 9,323    |   |                                       |   | 15,388   |  
|Accruals related to acquisitions                                                              |  |                                | 1,256    |   |                                       |   |         |  
|Accruals for debt issuance fees                                                               |  |                                | 1,618    |   |                                       |   | 153      |  

See accompanying notes
to condensed consolidated financial statements.



5



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)



|1. | Basis of Presentation
|-- | ---------------------

The accompanying Condensed Consolidated Financial Statements (Unaudited) of Graham Packaging Holdings Company (Holdings), a
Pennsylvania limited partnership, have been prepared in accordance with accounting principles generally accepted in the United States of America (generally accepted accounting principles or GAAP) for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and therefore do not include all of the information and footnotes required by generally accepted accounting principles for complete annual financial statements. All
entities and assets owned by Holdings are referred to collectively with Holdings as the Company. Graham Packaging Company, L.P., Holdings wholly-owned subsidiary, is referred to as the Operating Company. In the opinion
of the management of the Company, all adjustments (consisting only of usual recurring adjustments considered necessary for a fair presentation) are reflected in the Condensed Consolidated Financial Statements (Unaudited). The Condensed Consolidated
Balance Sheet (Unaudited) as of December 31, 2009, is derived from audited financial statements. The Condensed Consolidated Financial Statements (Unaudited) and notes included in this report should be read in conjunction with the audited
consolidated financial statements and notes for the year ended December 31, 2009. The results of operations for the nine months ended September 30, 2010, are not necessarily indicative of the results to be expected for the full year ending
December 31, 2010.

Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (FASB) issued guidance under FASB Accounting Standards Codification (ASC) 860, Transfers and Servicing (formerly
Statement of Financial Accounting Standards (SFAS) 166, Accounting for Transfers of Financial Assets, an amendment of SFAS 140). This guidance enhances the relevance, representational faithfulness and comparability of the
information that a reporting entity provides in its financial reports about a transfer of financial assets, the effects a transfer will have on its financial performance and cash flows and any transferors continuing involvement in transferred
financial assets. The Company adopted this guidance effective January 1, 2010, and the adoption had no impact on its financial statements.

In October 2009, the FASB issued Accounting Standards Update (ASU) 2009-13, Multiple Deliverable Revenue Arrangements, a consensus of the FASB Emerging Issues Task Force. This
update provides amendments to the guidance provided under ASC 605, Revenue Recognition, for separating consideration in multiple-deliverable arrangements and establishes a hierarchy for determining the selling price of a deliverable. ASU
2009-13 is effective prospectively for financial statements issued for years beginning on or after June 15, 2010. The Company is evaluating the impact that the adoption of ASU 2009-13 will have on its financial statements, but does not expect
that the adoption will have a material impact.

Management has determined that all other recently issued accounting
pronouncements will not have a material impact on the Companys financial statements, or do not apply to the Companys operations.

Push-Down Accounting

In
connection with the initial public offering of Graham Packaging Company Inc. (GPC), the Companys majority owner, (IPO) GPC entered into an Exchange Agreement with the Graham Family (defined as Graham Capital Company,
GPC Investments LLC and Graham Alternative Investment Partners I or affiliates thereof or other entities controlled by Donald C. Graham and his family) and certain permitted transferees allowing for the exchange of limited partnership units in
Holdings for shares of GPCs common stock. Under this exchange agreement all of the general partnership interests of the Graham Family have been converted into limited partnership interests on an equivalent basis. As a result of these
transactions, all general partnership interests of Holdings are now controlled by GPC, and Holdings is now considered substantially wholly-owned by GPC under the guidance provided by the Securities and Exchange Commission (SEC)
Regulation S-X, Rule 1-02(aa) as all voting interests are now controlled by GPC. Additionally, under the guidance provided by SEC Staff Accounting Bulletin Topic 5J, New Basis of Accounting Required in Certain Circumstances, push-down
accounting is required when such transactions result in an entity becoming substantially wholly-owned. Under the push-down basis of accounting certain transactions incurred by the parent company, which would otherwise be accounted for in the
accounts of the parent, are pushed down and recorded on the financial statements of the subsidiary.



6



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)





Accordingly, items
resulting from the accounting for GPCs purchase of Holdings, such as property, plant and equipment, goodwill and related partners capital (deficit), have been retrospectively reflected in the financial statements and accompanying notes
to the financial statements of Holdings for the prior periods presented. The accounts affected and related amounts are as follows:



|                                   |  |                  |                | 
|---------------------------------- |  | ---------------- | -------------- | 
|                                   |  | December 31,2009 |               
|Increase to:                       |  |                  | (In thousands) | 
|Property, plant and equipment, net |  | $                | 1,362          | 
|Goodwill                           |  | $                | 141,285        | 
|Partners capital (deficit)        |  | $                | 142,647        | 

In addition, depreciation expense was
increased by $0.1 million and $0.2 million for the three and nine months ended September 30, 2009, respectively.

Subsequent Events

The Company has evaluated subsequent events that have occurred after the balance sheet date but before the financial
statements were available to be issued, which the Company considers to be the date of filing with the Securities and Exchange Commission.

Reclassification

A
reclassification has been made to the 2009 Condensed Consolidated Statement of Cash Flows to reflect the deferred tax provision as a separate component of cash provided by operating activities. Amounts for this line item were previously included in
changes in prepaid expenses and other current assets, changes in other non-current assets, changes in accounts payable and accrued expenses and changes in other non-current liabilities.



|2. | Discontinued Operations
|-- | -----------------------

On November 12, 2009, the Company sold its wholly-owned subsidiary Graham Emballages Plastiques S.A.S., located in Meaux, France, to
an independent third party. The Company determined that the results of operations for this location, which had previously been reported in the Europe segment, would be reported as discontinued operations, in accordance with the guidance under ASC
205-20, Discontinued Operations. The following table summarizes the operating results for this location for the periods presented:



|                                             |  |                                      |        |   |                                     |   |        |  
|-------------------------------------------- |  | ------------------------------------ | ------ | - | ----------------------------------- | - | ------ | -
|                                             |  | Three Months EndedSeptember 30, 2009 |        |   | Nine Months EndedSeptember 30, 2009 |  
|                                             |  | (In thousands)                       |       
|Net sales                                    |  | $                                    | 5,988  |   |                                     | $ | 14,379 |  
|Cost of goods sold                           |  |                                      | 3,950  |   |                                     |   | 14,126 |  
|Selling, general and administrative expenses |  |                                      | 13     |   |                                     |   | 4      |  
|Asset impairment charges                     |  |                                      | 4,138  |   |                                     |   | 4,138  |  
|Interest expense                             |  |                                      | 4      |   |                                     |   | 35     |  
|                                             |  |                                      |        |   |                                     |   |        |  
|Loss from discontinued operations            |  | $                                    | (2,117 | ) |                                     | $ | (3,924 | )
|                                             |  |                                      |        |   |                                     |   |        |  



|3. | Acquisitions
|-- | ------------

Purchase of Liquid
Entities

On September 23, 2010, the Company acquired the Liquid Entities (as defined below) from each of the limited
partners (the Liquid Limited Partners) of Liquid Container L.P. (currently known as Graham Packaging LC, L.P.) (Liquid L.P.) and each of the stockholders (the Stockholders) of (i) Liquid Container
Inc. (Liquid), a Delaware corporation, (ii) CPG-L Holdings, Inc. (CPG), a Delaware corporation, and (iii) WCK-L Holdings, Inc. (WCK and, together with Liquid and CPG, the Liquid General
Partners), a Delaware corporation. Liquid L.P.



7



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)



and the Liquid General Partners are collectively referred to as the Liquid Entities. The Company purchased all the shares from the Stockholders and all of the limited partnership
units from the Liquid Limited Partners (collectively, the Liquid Acquisition) for approximately $564.3 million, subject to a potential working capital adjustment.

Under the acquisition method of accounting, the results of the acquired operation are included in the financial statements of the Company beginning on September 23, 2010. The Liquid Entities, which
employ approximately 1,000 employees, have operations in 14 plants located across the United States. Annual net sales totaled $356 million for 2009.

The Liquid Entities are a custom blow molded plastic container manufacturer based in West Chicago, Illinois, that primarily services food and household product categories. In the food product category,
the Liquid Entities produce packaging for peanut butter, mayonnaise, coffee, cooking oil, nuts, instant drink mixes and other food items. The household product category consists of containers for bleach, laundry detergent, spray cleaners, automotive
cleaning products, drain cleaners and other consumer-based household products. The Liquid Entities utilize high density polyethylene, polyethylene terephthalate and polypropylene resins to manufacture their containers.

The Liquid Acquisition represents a strategically important acquisition for the Company as it expands the Companys customer reach
within its existing food and consumer products end markets while providing it with additional technological capabilities and an expansion of its geographical reach. The Liquid Acquisition will significantly increase the size and scope of the
Companys operations, particularly in the food product category, and provide the Company with considerable opportunities to convert new products to plastic containers. The Liquid Entities have been a leader in custom blow molded plastic
containers used in cold-fill applications and have new hot-fill technologies, which complement the Companys technologies, and which management believes can help drive new conversions. The Liquid Entities have a similar financial profile to
that of the Company, as they use technology to serve their customer base with innovative and cost effective packaging solutions. Management believes the combined purchasing power can yield savings in freight, energy, outside services, leased
equipment and miscellaneous raw materials such as packaging, pallets, shrink wrap and spare parts. Additionally, management believes it can eliminate overlapping corporate functions and expenses.

The initial purchase price has been allocated to assets acquired and liabilities assumed based on estimated fair values. The purchase
price allocation is preliminary pending a final determination of the purchase price and a final valuation of the assets and liabilities, including a final valuation of property, plant and equipment, intangible assets and the impact on taxes of any
adjustments to such valuations, all necessary to account for the acquisition in accordance with ASC 805, Business Combinations. For purposes of allocating the total purchase price, assets acquired and liabilities assumed are recorded at
their estimated fair values. The initial allocated fair value of assets acquired and liabilities assumed is summarized as follows (in thousands):



|                                          |  |                   |         | 
|----------------------------------------- |  | ----------------- | ------- | 
|                                          |  | September 23,2010 |        
|Cash                                      |  | $                 | 1,184   | 
|Accounts receivable                       |  |                   | 36,858  | 
|Inventories                               |  |                   | 35,029  | 
|Prepaid expenses and other current assets |  |                   | 1,247   | 
|                                          |  |                   |         | 
|Total current assets                      |  |                   | 74,318  | 
|Property, plant and equipment             |  |                   | 193,186 | 
|Intangible assets                         |  |                   | 156,500 | 
|Goodwill                                  |  |                   | 201,437 | 
|                                          |  |                   |         | 
|Total                                     |  |                   | 625,441 | 
|Less liabilities assumed                  |  |                   | 61,140  | 
|                                          |  |                   |         | 
|Net cost of acquisition                   |  | $                 | 564,301 | 
|                                          |  |                   |         | 



8



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)





The allocation set
forth above is based on managements estimate of the fair values using valuation techniques including the income, cost and market approaches. The amount allocated to intangible assets represents the estimated fair values of technologies of
$58.3 million, customer relationships of $89.9 million, trade names of $5.3 million and non-compete agreement of $3.0 million. These intangible assets will be amortized on a straight-line basis over estimated remaining lives of ten years, 14 years,
three years and two years for technologies, customer relationships, trade names and non-compete agreement, respectively, reflecting the expected future values of these intangible assets. Goodwill of $230.8 million is expected to be deductible for
tax purposes. Acquired property, plant and equipment are being depreciated on a straight-line basis with estimated remaining lives up to 20 years. The initial purchase price allocations set forth above are based on all information available to the
Company at the present time and are subject to change, and such changes could be material.

The purchase agreement related to
the Liquid Entities contains a stated purchase price of $568.0 million, plus cash on hand, minus certain indebtedness and subject to a potential working capital adjustment, resulting in a payment by the Company of $564.3 million on
September 23, 2010. Included in this amount was a payment of $208.2 million to satisfy existing indebtedness of the Liquid Entities, including accrued interest, then outstanding. As of September 30, 2010, additional indebtedness of
approximately $7.1 million remains outstanding and will be repaid in the fourth quarter of 2010. The Company and the sellers are in the process of finalizing the working capital adjustment and this adjustment could be material.

During the nine months ended September 30, 2010, the Company incurred legal, professional and advisory costs directly related to the
acquisition totaling $7.8 million. All such costs are included in selling, general and administrative expenses on the Condensed Consolidated Statement of Operations (Unaudited) for the nine months ended September 30, 2010. Deferred financing
fees incurred in connection with issuing debt related to the acquisition totaled $12.4 million through September 30, 2010, and are reflected in other non-current assets on the Condensed Consolidated Balance Sheet (Unaudited) as of
September 30, 2010.

The results of operations for the nine months ended September 30, 2010, include the results for
the Liquid Entities since the acquisition date. Net sales and operating income of the Liquid Entities included in the Companys consolidated results of operations totaled $7.7 million and $(0.0) million, respectively, for each of the three and
nine months ended September 30, 2010, respectively.

Pro Forma Information

The following table sets forth unaudited pro forma results of operations, assuming that the above acquisition had taken place at the
beginning of each period presented:



|                  |  |                                 |     |   |                                |   |     |      |  |   |       |  |  |   |       | 
|----------------- |  | ------------------------------- | --- | - | ------------------------------ | - | --- | ---- |  | - | ----- |  |  | - | ----- | 
|                  |  | Three Months EndedSeptember 30, |     |   | Nine Months EndedSeptember 30, |  
|                  |  | 2010                            |     |   | 2009                           |   |     | 2010 |  |   | 2009  | 
|                  |  | (In millions)                   |    
|Net sales         |  | $                               | 730 |   |                                | $ | 681 |      |  | $ | 2,159 |  |  | $ | 2,004 | 
|Net (loss) income |  |                                 | (12 | ) |                                |   | 11  |      |  |   | 17    |  |  |   | 76    | 

These unaudited pro
forma results of operations have been prepared for comparative purposes only and include certain adjustments, such as additional depreciation and amortization expense as a result of a step-up in the basis of fixed assets and intangible assets,
increased interest expense on acquisition debt and related tax effects. They do not purport to be indicative of the results of operations which actually would have resulted had the combination been in effect at the beginning of each period
presented, or of future results of operations of the entities.

On July 1, 2010, the Company acquired China Roots
Packaging PTE Ltd. (China Roots), a plastic container manufacturing company located in Guangzhou, China, for approximately $15 million, subject to certain adjustments. China Roots manufactures plastic containers and closures for food,
health care, personal care and petrochemical products. Its customers include several global consumer product marketers. In 2009, China Roots net sales were approximately $16.3 million.



9



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)





|4. | Accounts Receivable, Net
|-- | ------------------------

Accounts receivable, net are presented net of an allowance for doubtful accounts of $2.0 million and $2.4 million at September 30,
2010, and December 31, 2009, respectively. Management performs ongoing credit evaluations of its customers and generally does not require collateral.



|5. | Concentration of Credit Risk
|-- | ----------------------------

For the nine months ended September 30, 2010 and 2009, 71.8% and 69.7% of the Companys net sales, respectively, were generated by its top twenty customers. The Companys sales to PepsiCo,
Inc., the Companys largest customer, were 10.4% and 11.3% of total sales for the nine months ended September 30, 2010 and 2009, respectively. All of these sales were made in North America.

The Company had $147.6 million and $113.7 million of accounts receivable from its top twenty customers as of September 30, 2010, and
December 31, 2009, respectively. The Company had $26.9 million and $17.5 million of accounts receivable from PepsiCo, Inc. as of September 30, 2010, and December 31, 2009, respectively.



|6. | Inventories
|-- | -----------

Inventories,
stated at the lower of cost or market, consisted of the following:



|               |  |                   |         |  |                  |   |         | 
|-------------- |  | ----------------- | ------- |  | ---------------- | - | ------- | 
|               |  | September 30,2010 |         |  | December 31,2009 |  
|               |  | (In thousands)    |        
|Finished goods |  | $                 | 153,615 |  |                  | $ | 130,989 | 
|Raw materials  |  |                   | 77,568  |  |                  |   | 63,713  | 
|               |  |                   |         |  |                  |   |         | 
|Total          |  | $                 | 231,183 |  |                  | $ | 194,702 | 
|               |  |                   |         |  |                  |   |         | 



|7. | Property, Plant and Equipment, Net
|-- | ----------------------------------

A summary of property, plant and equipment, net is presented in the following table:



|                                                |  |                     |        |  |                   |   |           |                  |  |   |           | 
|----------------------------------------------- |  | ------------------- | ------ |  | ----------------- | - | --------- | ---------------- |  | - | --------- | 
|                                                |  | ExpectedUsefulLives |        |  | September 30,2010 |   |           | December 31,2009 | 
|                                                |  | (in years)          |        |  | (In thousands)    |  
|Land                                            |  |                     |        |  |                   | $ | 45,388    |                  |  | $ | 39,063    | 
|Buildings and improvements                      |  |                     | 7-31.5 |  |                   |   | 277,487   |                  |  |   | 236,446   | 
|Machinery and equipment (1)                     |  |                     | 2-15   |  |                   |   | 1,466,627 |                  |  |   | 1,303,241 | 
|Molds and tooling                               |  |                     | 3-5    |  |                   |   | 306,932   |                  |  |   | 282,243   | 
|Furniture and fixtures                          |  |                     | 7      |  |                   |   | 7,005     |                  |  |   | 5,359     | 
|Computer hardware and software                  |  |                     | 3-7    |  |                   |   | 42,273    |                  |  |   | 40,930    | 
|Construction in progress                        |  |                     |        |  |                   |   | 80,362    |                  |  |   | 66,870    | 
|                                                |  |                     |        |  |                   |   |           |                  |  |   |           | 
|Property, plant and equipment                   |  |                     |        |  |                   |   | 2,226,074 |                  |  |   | 1,974,152 | 
|Less: accumulated depreciation and amortization |  |                     |        |  |                   |   | 1,008,304 |                  |  |   | 956,374   | 
|                                                |  |                     |        |  |                   |   |           |                  |  |   |           | 
|Property, plant and equipment, net              |  |                     |        |  |                   | $ | 1,217,770 |                  |  | $ | 1,017,778 | 
|                                                |  |                     |        |  |                   |   |           |                  |  |   |           | 



| | (1) | Includes longer-lived machinery and equipment of approximately $1,402.0 million and $1,230.5 million as of September 30, 2010, and December 31, 2009,
respectively, having estimated useful lives, when purchased new, ranging from 8 to 15 years; and shorter-lived machinery and equipment of approximately $64.6 million and $72.7 million as of September 30, 2010, and December 31, 2009,
respectively, having estimated useful lives, when purchased new, ranging from 2 to 8 years.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Depreciation
expense, including depreciation expense on assets recorded under capital leases, for the three months ended September 30, 2010 and 2009, was $38.2 million and $37.5 million, respectively, and for the nine months ended September 30, 2010
and 2009, was $112.0 million and $112.8 million, respectively.



10



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)





The Company
capitalizes interest on borrowings during the active construction period of major capital projects. Capitalized interest is added to the cost of the underlying assets and is amortized over the useful lives of these assets. Interest capitalized for
the nine months ended September 30, 2010 and 2009, was $3.2 million and $2.5 million, respectively.

The Company closed
its plant located in Edison, New Jersey in 2008. The land and building at this location, having a carrying value of $6.6 million, are deemed to be held for sale, and as such are reflected in prepaid expenses and other current assets on the Condensed
Consolidated Balance Sheets (Unaudited) as of September 30, 2010, and December 31, 2009.



|8. | Intangible Assets, Net
|-- | ----------------------

The gross carrying amount and accumulated amortization of the Companys intangible assets subject to amortization as of
September 30, 2010, were as follows:



|                       |  |                     |         |  |                         |   |         |     |  |   |                                   |  |  |  |          | 
|---------------------- |  | ------------------- | ------- |  | ----------------------- | - | ------- | --- |  | - | --------------------------------- |  |  |  | -------- | 
|                       |  | GrossCarryingAmount |         |  | AccumulatedAmortization |   |         | Net |  |   | WeightedAverageAmortizationPeriod | 
|                       |  | (In thousands)      |        
|Patented technology    |  | $                   | 86,374  |  |                         | $ | (10,418 | )   |  | $ | 75,956                            |  |  |  | 10 years | 
|Customer relationships |  |                     | 125,174 |  |                         |   | (8,761  | )   |  |   | 116,413                           |  |  |  | 14 years | 
|Trade names            |  |                     | 5,300   |  |                         |   |        |     |  |   | 5,300                             |  |  |  | 3 years  | 
|Non-compete agreements |  |                     | 3,511   |  |                         |   | (17     | )   |  |   | 3,494                             |  |  |  | 2 years  | 
|                       |  |                     |         |  |                         |   |         |     |  |   |                                   |  |  |  |          | 
|Total                  |  | $                   | 220,359 |  |                         | $ | (19,196 | )   |  | $ | 201,163                           |  |  |  |          | 
|                       |  |                     |         |  |                         |   |         |     |  |   |                                   |  |  |  |          | 

The gross carrying amount and accumulated amortization of the Companys intangible assets
subject to amortization as of December 31, 2009, were as follows:



|                       |  |                     |        |  |                         |   |         |     |  |   |                                   |  |  |  |          | 
|---------------------- |  | ------------------- | ------ |  | ----------------------- | - | ------- | --- |  | - | --------------------------------- |  |  |  | -------- | 
|                       |  | GrossCarryingAmount |        |  | AccumulatedAmortization |   |         | Net |  |   | WeightedAverageAmortizationPeriod | 
|                       |  | (In thousands)      |       
|Patented technology    |  | $                   | 24,545 |  |                         | $ | (8,399  | )   |  | $ | 16,146                            |  |  |  | 10 years | 
|Customer relationships |  |                     | 33,863 |  |                         |   | (6,997  | )   |  |   | 26,866                            |  |  |  | 16 years | 
|                       |  |                     |        |  |                         |   |         |     |  |   |                                   |  |  |  |          | 
|Total                  |  | $                   | 58,408 |  |                         | $ | (15,396 | )   |  | $ | 43,012                            |  |  |  |          | 
|                       |  |                     |        |  |                         |   |         |     |  |   |                                   |  |  |  |          | 

Amortization expense for each of the three months ended September 30, 2010 and 2009, was $1.3
million, and for the nine months ended September 30, 2010 and 2009, was $3.7 million and $3.8 million, respectively. Remaining estimated aggregate amortization expense for 2010 is $5.2 million. The estimated aggregate amortization expense for
each of the next five years ending December 31 is as follows (in thousands):



|     |  |   |        | 
|---- |  | - | ------ | 
|2011 |  | $ | 20,900 | 
|2012 |  |   | 20,500 | 
|2013 |  |   | 18,800 | 
|2014 |  |   | 17,100 | 
|2015 |  |   | 16,800 | 



|9. | Goodwill
|-- | --------

The changes in
the carrying amount of goodwill were as follows:



|                                                 |  |                     |         |  |               |   |        |                     |  |   |             |  |  |       |       |  |  |   |         | 
|------------------------------------------------ |  | ------------------- | ------- |  | ------------- | - | ------ | ------------------- |  | - | ----------- |  |  | ----- | ----- |  |  | - | ------- | 
|                                                 |  | NorthAmericaSegment |         |  | EuropeSegment |   |        | SouthAmericaSegment |  |   | AsiaSegment |  |  | Total |      
|                                                 |  | (In thousands)      |        
|Balance at January 1, 2010                       |  | $                   | 420,765 |  |               | $ | 16,286 |                     |  | $ | 7           |  |  | $     |      |  |  | $ | 437,058 | 
|Goodwill acquired during the period (see Note 3) |  |                     | 201,437 |  |               |   |       |                     |  |   |            |  |  |       | 1,395 |  |  |   | 202,832 | 
|Foreign currency translation adjustments         |  |                     | 1,545   |  |               |   | (428   | )                   |  |   |            |  |  |       | 23    |  |  |   | 1,140   | 
|                                                 |  |                     |         |  |               |   |        |                     |  |   |             |  |  |       |       |  |  |   |         | 
|Balance at September 30, 2010                    |  | $                   | 623,747 |  |               | $ | 15,858 |                     |  | $ | 7           |  |  | $     | 1,418 |  |  | $ | 641,030 | 
|                                                 |  |                     |         |  |               |   |        |                     |  |   |             |  |  |       |       |  |  |   |         | 



11



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)





|10. | Asset Impairment Charges
|--- | ------------------------

The Company identified an indicator of possible impairment of certain assets in Argentina, Brazil, France, Mexico, the United Kingdom and
the United States for the nine months ended September 30, 2010, and in Argentina, Brazil, Mexico, Poland and the United States for the nine months ended September 30, 2009. As a result, the Company evaluated the recoverability of these
assets and determined that the undiscounted future cash flows were below the carrying value of these long-lived assets. Additionally, management had no plans to redeploy the majority of these assets. Accordingly, the Company adjusted the carrying
value of these long-lived assets to their estimated fair value in accordance with the guidance under ASC 360-10-35-15, Subsequent MeasurementImpairment or Disposal of Long-lived Assets, resulting in impairment charges being
recorded in continuing operations of $0.9 million and $3.7 million for the three and nine months ended September 30, 2010, respectively, and $6.1 million and $14.2 million for the three and nine months ended September 30, 2009,
respectively.



|11. | Accrued Expenses and Other Current Liabilities
|--- | ----------------------------------------------

Accrued expenses and other current liabilities consisted of the following:



|                                           |  |                   |         |  |                  |   |         | 
|------------------------------------------ |  | ----------------- | ------- |  | ---------------- | - | ------- | 
|                                           |  | September 30,2010 |         |  | December 31,2009 |  
|                                           |  | (In thousands)    |        
|Accrued employee compensation and benefits |  | $                 | 72,426  |  |                  | $ | 64,536  | 
|Accrued interest                           |  |                   | 41,329  |  |                  |   | 20,395  | 
|Accrued sales allowance                    |  |                   | 24,534  |  |                  |   | 22,917  | 
|Other                                      |  |                   | 82,147  |  |                  |   | 78,255  | 
|                                           |  |                   |         |  |                  |   |         | 
|                                           |  | $                 | 220,436 |  |                  | $ | 186,103 | 
|                                           |  |                   |         |  |                  |   |         | 



|12. | Debt Arrangements
|--- | -----------------

Long-term debt consisted of the following:



|                                                                                                                                                                 |  |                   |           |  |                  |   |           | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | --------- |  | ---------------- | - | --------- | 
|                                                                                                                                                                 |  | September 30,2010 |           |  | December 31,2009 |  
|                                                                                                                                                                 |  | (In thousands)    |          
|Term loans (net of $9.7 million and $19.9 million unamortized net discount as of September 30, 2010, and December 31,
2009, respectively)                        |  | $                 | 1,938,772 |  |                  | $ | 1,781,108 | 
|Revolver                                                                                                                                                         |  |                   |          |  |                  |   |          | 
|Foreign and other revolving credit facilities                                                                                                                    |  |                   | 6,126     |  |                  |   | 3,381     | 
|Senior notes due 2017 (net of $3.0 million and $3.3 million unamortized discount as of September 30, 2010, and
December 31, 2009, respectively)                  |  |                   | 250,402   |  |                  |   | 250,047   | 
|Senior notes due 2018                                                                                                                                            |  |                   | 250,000   |  |                  |   |          | 
|Senior subordinated notes                                                                                                                                        |  |                   | 375,000   |  |                  |   | 375,000   | 
|Capital leases                                                                                                                                                   |  |                   | 12,468    |  |                  |   | 17,039    | 
|Other                                                                                                                                                            |  |                   | 27,157    |  |                  |   | 10,288    | 
|                                                                                                                                                                 |  |                   |           |  |                  |   |           | 
|                                                                                                                                                                 |  |                   | 2,859,925 |  |                  |   | 2,436,863 | 
|Less amounts classified as current (net of $3.8 million and $5.8 million unamortized net discount as of September 30, 2010,
and December 31, 2009, respectively) |  |                   | 46,282    |  |                  |   | 100,657   | 
|                                                                                                                                                                 |  |                   |           |  |                  |   |           | 
|Total                                                                                                                                                            |  | $                 | 2,813,643 |  |                  | $ | 2,336,206 | 
|                                                                                                                                                                 |  |                   |           |  |                  |   |           | 



12



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)





On
September 23, 2010, the Company entered into the Sixth Amendment to the Credit Agreement (the Amendment), amending the Companys credit agreement dated as of October 7, 2004. Pursuant to the Amendment, and in connection
with the acquisition of the Liquid Entities, the Company entered into a new senior secured term loan facility in an aggregate principal amount of $913.0 million (Term Loan D) and extinguished the amount outstanding under the existing
senior secured term loan due October 7, 2011 (Term Loan B) in the amount of $563.7 million, including accrued interest. The remaining proceeds were used to finance the Liquid Acquisition and pay related costs and expenses. The Term
Loan D will mature on the earliest of (i) September 23, 2016, (ii) the date that is 91 days prior to the maturity of the Companys 8.25% senior notes due January 2017 if such senior notes have not been repaid or refinanced in
full by such date or (iii) the date that is 91 days prior to the maturity of the Companys 9.875% senior subordinated notes due October 2014 if such senior notes have not been repaid or refinanced in full by such date.

After giving effect to the Amendment, as of September 30, 2010, the credit agreement, as amended, consisted of a senior secured term
loan of $1,021.2 million ($1,035.5 million aggregate outstanding principal amount less $14.3 million unamortized discount) due April 5, 2014 (Term Loan C) and Term Loan D in the amount of $917.6 million ($913.0 million aggregate
outstanding principal amount plus $4.6 million unamortized premium) (collectively, the Term Loans), to the Operating Company and a $260.0 million senior secured revolving credit facility (the Revolver and, together with the
Term Loans, the Credit Agreement) with availability of $246.7 million (as reduced by $13.3 million of outstanding letters of credit.) The obligations of the Operating Company and GPC Capital Corp. I (CapCo I) under the Credit
Agreement are guaranteed by Holdings and certain domestic subsidiaries of the Operating Company. The Term Loans are payable in quarterly installments and require payments of $4.9 million in the remainder of 2010, $19.6 million in 2011, $19.6 million
in 2012, $19.7 million in 2013, $1,010.5 million in 2014 and $874.2 million thereafter (disregarding any further mandatory or voluntary prepayments that may reduce such scheduled amortization payments). The payments of $4.9 million in the remainder
of 2010 exclude the paydowns of debt in the first three quarters of 2010 of $114.2 million with the contributions received from GPC in exchange for limited partnership units in connection with the IPO and of $14.7 million with the contributions
received from GPC in exchange for limited partnership units in connection with the sale of additional shares following the IPO and from an excess cash flow payment of $62.5 million due for the year ended December 31, 2009, paid in March 2010.

On May 28, 2009, certain of the Revolver lenders agreed to extend their commitments, with respect to $112.8 million of
the total commitment (Extending Revolver), conditioned on the refinancing in full of the senior notes due 2012, which occurred in November 2009. In conjunction with the extension of these revolving commitments, the Company also
voluntarily reduced the amount of total revolving commitments available to it under the Credit Agreement from $250.0 million to $248.0 million. Subsequent to the IPO, the Company received a $12.0 million increase to its Extending Revolver. As of
September 30, 2010, the Company had $124.8 million of commitments that will expire on October 1, 2013, and $135.2 million of commitments that expired on October 7, 2010 (Non-Extending Revolver).

Interest under the Term Loan B and the Non-Extending Revolver was payable at (a) the Alternate Base Rate
(ABR) (the higher of the Prime Rate or the Federal Funds Rate plus 0.50%) plus a margin ranging from 1.00% to 1.75%; or (b) the Eurodollar Rate (the applicable interest rate offered to banks in the London interbank
eurocurrency market) plus a margin ranging from 2.00% to 2.75%. Interest under the Term Loan C, Term Loan D and the Extending Revolver is payable at (a) the Adjusted Alternate Base Rate (the higher of (x) the Prime Rate plus a
margin of 3.25%; (y) the Federal Funds Rate plus a margin of 3.75%; or (z) the one-month Eurodollar Rate, subject to a floor of 2.50% for the Term Loan C and Extending Revolver and 1.75% for the Term Loan D, plus a margin of 4.25%); or
(b) the Eurodollar Rate, subject to a floor of 2.50% for the Term Loan C and Extending Revolver and 1.75% for the Term Loan D, plus a margin of 4.25%. A commitment fee of 0.50% was due on the



13



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)



unused portion of the Non-Extending Revolver. A commitment fee of 0.75% is due on the unused portion of the Extending Revolver.

The Credit Agreement contains certain affirmative and negative covenants as to the operations and financial condition of the Company, as
well as certain restrictions on the payment of dividends and other distributions by the Operating Company to Holdings. As of September 30, 2010, the Company was in compliance with all covenants.

Substantially all domestic tangible and intangible assets of the Company are pledged as collateral pursuant to the terms of the Credit
Agreement.

As required by the guidance under ASC 470-50-40, Modifications and Extinguishments, the Company
performed an analysis to determine whether the Amendment would be recorded as an extinguishment of debt or a modification of debt. Based on the Companys analysis, it was determined that the Amendment qualified as a debt extinguishment under
this guidance and, as a result, the Company recorded a loss of $28.5 million. The loss is comprised of the following items (in millions):



|                                                                                                              |  |   |       |  
|------------------------------------------------------------------------------------------------------------- |  | - | ----- | -
|Principal amount of Term Loan D                                                                               |  | $ | 913.0 |  
|Fair value (see Note 13 for further discussion)                                                               |  |   | 917.6 |  
|                                                                                                              |  |   |       |  
|Subtotal                                                                                                      |  |   | (4.6  | )
|Write-off of deferred financing fees on extinguished debt                                                     |  |   | (2.4  | )
|Issuance costs and amendment fees                                                                             |  |   | (21.5 | )
|                                                                                                              |  |   |       |  
|Loss on debt extinguishment                                                                                   |  | $ | (28.5 | )
|                                                                                                              |  |   |       |  
|Write-off of remaining amount in accumulated other comprehensive income (loss) related to interest rate swaps |  | $ | (7.0  | )
|                                                                                                              |  |   |       |  

In conjunction with the Amendment, the Company recorded $0.4 million in deferred financing fees, which are
included in other non-current assets on the Condensed Consolidated Balance Sheet (Unaudited) and are being amortized to interest expense over the term of the respective debt using the effective interest method.

On September 23, 2010, in conjunction with the Liquid Acquisition, the Operating Company and CapCo I co-issued $250.0 million
aggregate principal amount of 8.25% senior unsecured notes due 2018 (Senior Notes due 2018). In conjunction with the issuance of the Senior Notes due 2018, the Company recorded $12.0 million in deferred financing fees, which are included
in other non-current assets on the Condensed Consolidated Balance Sheet (Unaudited) and are being amortized on a straight-line basis over the term of the notes. Besides these notes, as of September 30, 2010, the Company also had outstanding
$253.4 million aggregate principal amount of 8.25% senior unsecured notes due 2017 (Senior Notes due 2017) and $375.0 million in senior subordinated notes due 2014 (Senior Subordinated Notes) co-issued by the Operating
Company and CapCo I (collectively with the Senior Notes due 2018 and the Senior Notes due 2017, the Notes). The Notes are unconditionally guaranteed, jointly and severally, by Holdings and certain domestic subsidiaries of the Operating
Company and mature on October 7, 2014 (Senior Subordinated Notes), January 1, 2017 (Senior Notes due 2017) and October 1, 2018 (Senior Notes due 2018). Interest on the Senior Subordinated Notes is payable semi-annually at
9.875% per annum and interest on the Senior Notes due 2017 and the Senior Notes due 2018 is payable semi-annually at 8.25% per annum.

As part of the Liquid Acquisition, the Company acquired debt consisting of industrial revenue bonds in an aggregate principal amount of $7.1 million. To collateralize this debt, the Company purchased
certificates of deposit in the amount of $7.3 million. This investment is considered restricted cash and is reflected in non-current assets on the Condensed Consolidated Balance Sheet (Unaudited) as of September 30, 2010, and is reflected
within investing activities on the Condensed Consolidated Statement of Cash Flows (Unaudited) for the nine months ended September 30, 2010.



|13. | Fair Value Measurement
|--- | ----------------------



14



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)





The following
methods and assumptions were used to estimate the fair values of each class of financial instruments:

Cash and Cash Equivalents, Accounts
Receivable and Accounts Payable

The fair values of these financial instruments approximate their carrying amounts.

Long-Term Debt

The Companys long-term debt consists of both variable-rate and fixed-rate debt. The fair values of the Companys long-term debt were based on market price information. The Companys
variable-rate debt, including the Companys Credit Agreement, totaled $1,966.0 million (net of $9.7 million unamortized net discount) and $1,790.1 million (net of $19.9 million unamortized discount) at September 30, 2010, and
December 31, 2009, respectively. The fair value of this long-term debt, including the current portion, was approximately $1,993.8 million and $1,809.8 million at September 30, 2010, and December 31, 2009, respectively. The
Companys fixed-rate debt, including $253.4 million of Senior Notes due 2017, $250.0 million of Senior Notes due 2018 and $375.0 million of Senior Subordinated Notes, totaled $893.9 million (net of $3.0 million unamortized discount) and $646.8
million (net of $3.3 million unamortized discount) at September 30, 2010, and December 31, 2009, respectively. The fair value of this long-term debt, including the current portion, was approximately $913.8 million and $652.8 million at
September 30, 2010, and December 31, 2009, respectively.

Derivatives

The Company established the following fair value hierarchy that prioritizes the inputs used to measure fair value, in accordance with the
guidance under ASC 820-10, Fair Value Measurements and Disclosures:



| | Level 1: | Inputs are quoted prices in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or
liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
| | -------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Level 2: | Inputs include the following:
| | -------- | -----------------------------

| | a) | Quoted prices in active markets for similar assets or liabilities.
| | -- | ------------------------------------------------------------------

| | b) | Quoted prices in markets that are not active for identical or similar assets or liabilities.
| | -- | --------------------------------------------------------------------------------------------

| | c) | Inputs other than quoted prices that are observable for the asset or liability.
| | -- | -------------------------------------------------------------------------------

| | d) | Inputs that are derived primarily from or corroborated by observable market data by correlation or other means.
| | -- | ---------------------------------------------------------------------------------------------------------------



| | Level 3: | Inputs are unobservable inputs for the asset or liability.
| | -------- | ----------------------------------------------------------

Recurring Fair Value Measurements

The following table presents the
Companys financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2010, by level within the fair value hierarchy:



|                                   |  |                               |   |  |         |   |        |         |  |   |   | 
|---------------------------------- |  | ----------------------------- | - |  | ------- | - | ------ | ------- |  | - | - | 
|                                   |  | Fair Value Measurements Using |  
|                                   |  | Level 1                       |   |  | Level 2 |   |        | Level 3 | 
|                                   |  | (In thousands)                |  
|Assets:                            |  |                               |   |  |         |   |        |         |  |   |   | 
|Foreign currency exchange contract |  | $                             |  |  |         | $ | 5      |         |  | $ |  | 
|Liabilities:                       |  |                               |   |  |         |   |        |         |  |   |   | 
|Interest rate swap agreements      |  | $                             |  |  |         | $ | 11,028 |         |  | $ |  | 



15



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)





The following
table presents the Companys financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2009, by level within the fair value hierarchy:



|                                   |  |                               |   |  |         |   |        |         |  |   |   | 
|---------------------------------- |  | ----------------------------- | - |  | ------- | - | ------ | ------- |  | - | - | 
|                                   |  | Fair Value Measurements Using |  
|                                   |  | Level 1                       |   |  | Level 2 |   |        | Level 3 | 
|                                   |  | (In thousands)                |  
|Liabilities:                       |  |                               |   |  |         |   |        |         |  |   |   | 
|Interest rate collar agreements    |  | $                             |  |  |         | $ | 68     |         |  | $ |  | 
|Interest rate swap agreements      |  |                               |  |  |         |   | 16,688 |         |  |   |  | 
|Foreign currency exchange contract |  |                               |  |  |         |   | 27     |         |  |   |  | 

The fair values of
the Companys derivative financial instruments are observable at commonly quoted intervals for the full term of the derivatives and therefore considered level 2 inputs.

Non-recurring Fair Value Measurements

The Company has real estate located
in Edison, New Jersey that is held for sale. The aggregate carrying value of these assets at September 30, 2010, was $6.6 million, which is less than the fair value of these assets and therefore resulted in no impairment charge for these
assets. The determination of fair value included certain unobservable inputs, which reflect the Companys assumptions regarding how market participants would price these assets in the marketplace, and therefore are considered level 3 inputs.
The fair value of this real estate was based on offers received from potential buyers.

The Company recorded impairment
charges of $0.9 million and $3.7 million for the three and nine months ended September 30, 2010, respectively, for long-lived assets in Argentina, Brazil, France, Mexico, the United Kingdom and the United States whose carrying values exceeded
fair values. The Company recorded impairment charges in continuing operations of $6.1 million and $14.2 million for the three and nine months ended September 30, 2009, respectively, for long-lived assets in Argentina, Brazil, Mexico, Poland and
the United States whose carrying values exceeded fair values. Fair values for these assets were based on projected future cash flows, discounted using either a risk-free rate or a risk-adjusted rate, which the Company considers level 3 inputs.

As previously discussed, on September 23, 2010, the Company entered into the Sixth Amendment to the Credit Agreement. In
accordance with the guidance under ASC 470-50-40, Modifications and Extinguishments, this transaction was treated as a debt extinguishment and the new debt was initially recorded at its fair value of $917.6 million, which was based on
the average trading price on the first trade date and is considered a level 2 input. The initial fair value premium of $4.6 million is being amortized as a reduction to interest expense over the term of the Term Loan D using the effective interest
method.



|14. | Derivative Financial Instruments
|--- | --------------------------------

The Companys business and activities expose it to a variety of market risks, including risks related to changes in interest rates, foreign currency exchange rates and commodity prices. These
financial exposures are monitored and managed by the Company as an integral part of its market risk management program. This program recognizes the unpredictability of financial markets and seeks to reduce the potentially adverse effects that market
volatility could have on operating results. As part of its market risk management strategy, the Company uses derivative instruments to protect cash flows from fluctuations caused by volatility in interest rates, foreign currency exchange rates and
commodity prices.

Cash Flow Hedges

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and
reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on derivatives representing hedge ineffectiveness, if any, are recognized in current earnings.

During 2009, the Company entered into a $1.2 million foreign currency exchange contract to hedge the exchange rate exposure on a
transaction that is denominated in pound sterling. The contract has been renewed several times, most recently in the third quarter of 2010 for another six months for a contract value of $1.5 million. This foreign currency exchange contract is
accounted for as a cash flow hedge and is highly effective as defined by ASC 815, Derivatives and Hedging.



16



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)





The maximum term
over which the Company is hedging exposures to the variability of cash flows (for all forecasted transactions, excluding interest payments on variable-rate debt) is 12 months.

Derivatives Not Designated as Hedging Instruments

During the first quarter
of 2009, the Company elected to roll over its senior secured term loan in one-month increments to reduce its cash interest, as opposed to continuing to roll over its senior secured term loan in three-month increments to match the terms of its
interest rate collar agreements. The Company had therefore discontinued hedge accounting for its interest rate collar and swap agreements. As a result, no change in fair value was recorded in other comprehensive income for the nine months ended
September 30, 2010 and 2009. As a result of the extinguishment of the Term Loan B in conjunction with the refinancing of the Credit Agreement that enabled the Company to purchase the Liquid Entities on September 23, 2010, the Company wrote
off the remaining unamortized amount in accumulated other comprehensive income (loss).

In 2009, the Company entered into
foreign currency exchange contracts to hedge the effects of fluctuations in exchange rates on an anticipated euro-denominated purchase of equipment. The gains or losses on the derivatives were recognized in current earnings.

Financial instruments are not held by the Company for trading purposes.

The notional amounts of the Companys derivative instruments outstanding were as follows:



|                                           |  |                   |         |  |                  |   |         | 
|------------------------------------------ |  | ----------------- | ------- |  | ---------------- | - | ------- | 
|                                           |  | September 30,2010 |         |  | December 31,2009 |  
|                                           |  | (In thousands)    |        
|Derivatives designated as hedges:          |  |                   |         |  |                  |   |         | 
|Foreign currency exchange contract         |  | $                 | 1,472   |  |                  | $ | 1,544   | 
|Total derivatives designated as hedges     |  | $                 | 1,472   |  |                  | $ | 1,544   | 
|                                           |  |                   |         |  |                  |   |         | 
|Derivatives not designated as hedges:      |  |                   |         |  |                  |   |         | 
|Interest rate collar agreements            |  | $                 |        |  |                  | $ | 385,000 | 
|Interest rate swap agreements              |  |                   | 350,000 |  |                  |   | 350,000 | 
|                                           |  |                   |         |  |                  |   |         | 
|Total derivatives not designated as hedges |  | $                 | 350,000 |  |                  | $ | 735,000 | 
|                                           |  |                   |         |  |                  |   |         | 

The fair values of the Companys derivative instruments outstanding were as follows:



|                                           |  |                                                |  |                   |        |  |                  |   |        | 
|------------------------------------------ |  | ---------------------------------------------- |  | ----------------- | ------ |  | ---------------- | - | ------ | 
|                                           |  | Balance Sheet Location                         |  | September 30,2010 |        |  | December 31,2009 |  
|                                           |  |                                                |  | (In thousands)    |       
|Asset derivatives:                         |  |                                                |  |                   |        |  |                  |   |        | 
|Derivatives designated as hedges:          |  |                                                |  |                   |        |  |                  |   |        | 
|Foreign currency exchange contract         |  | Prepaid expenses and other current assets      |  | $                 | 5      |  |                  | $ |       | 
|                                           |  |                                                |  |                   |        |  |                  |   |        | 
|Total derivatives designated as hedges     |  |                                                |  |                   | 5      |  |                  |   |       | 
|                                           |  |                                                |  |                   |        |  |                  |   |        | 
|Total asset derivatives                    |  |                                                |  | $                 | 5      |  |                  | $ |       | 
|                                           |  |                                                |  |                   |        |  |                  |   |        | 
|Liability derivatives:                     |  |                                                |  |                   |        |  |                  |   |        | 
|Derivatives designated as hedges:          |  |                                                |  |                   |        |  |                  |   |        | 
|Foreign currency exchange contract         |  | Accrued expenses and other current liabilities |  | $                 |       |  |                  | $ | 27     | 
|                                           |  |                                                |  |                   |        |  |                  |   |        | 
|Total derivatives designated as hedges     |  |                                                |  |                   |       |  |                  |   | 27     | 
|                                           |  |                                                |  |                   |        |  |                  |   |        | 
|Derivatives not designated as hedges:      |  |                                                |  |                   |        |  |                  |   |        | 
|Interest rate collar agreements            |  | Accrued expenses and other current liabilities |  |                   |       |  |                  |   | 68     | 
|Interest rate swap agreements              |  | Accrued expenses and other current liabilities |  |                   | 11,028 |  |                  |   | 10,466 | 
|Interest rate swap agreements              |  | Other non-current liabilities                  |  |                   |       |  |                  |   | 6,222  | 
|                                           |  |                                                |  |                   |        |  |                  |   |        | 
|Total derivatives not designated as hedges |  |                                                |  |                   | 11,028 |  |                  |   | 16,756 | 
|                                           |  |                                                |  |                   |        |  |                  |   |        | 
|Total liability derivatives                |  |                                                |  | $                 | 11,028 |  |                  | $ | 16,783 | 
|                                           |  |                                                |  |                   |        |  |                  |   |        | 



17



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)





The gains and
losses on the Companys derivative instruments during the three and nine months ended September 30, 2010, were as follows:



|                                           |  |                                                                                                      |    |  |                                 |   |                                                                                                                   |   |  |                                                                                               |  |   |            |   |  |   |         |  
|------------------------------------------ |  | ---------------------------------------------------------------------------------------------------- | -- |  | ------------------------------- | - | ----------------------------------------------------------------------------------------------------------------- | - |  | --------------------------------------------------------------------------------------------- |  | - | ---------- | - |  | - | ------- | -
|                                           |  | Amount of Gain or(Loss) Recognizedin AOCI (a)(Effective Portion)for thePeriod
EndedSeptember 30,2010 |    |  | Income Statement Classification |   | Amount of Gain or(Loss) Reclassified fromAOCI into Income(Effective Portion)for
thePeriod EndedSeptember 30, 2010 |  
|                                           |  | ThreeMonths                                                                                          |    |  | NineMonths                      |   |                                                                                                                   |   |  | ThreeMonths                                                                                   |  |   | NineMonths |  
|                                           |  | (In thousands)                                                                                       |    |  |                                 |   | (In thousands)                                                                                                    |  
|Derivatives designated as hedges:          |  |                                                                                                      |    |  |                                 |   |                                                                                                                   |   |  |                                                                                               |  |   |            |   |  |   |         |  
|Cash flow hedges:                          |  |                                                                                                      |    |  |                                 |   |                                                                                                                   |   |  |                                                                                               |  |   |            |   |  |   |         |  
|Foreign currency exchange contract         |  | $                                                                                                    | 71 |  |                                 | $ | (39                                                                                                               | ) |  | Other (income) expense, net                                                                   |  | $ | 71         |   |  | $ | (39     | )
|                                           |  |                                                                                                      |    |  |                                 |   |                                                                                                                   |   |  |                                                                                               |  |   |            |   |  |   |         |  
|Total derivatives designated as hedges     |  | $                                                                                                    | 71 |  |                                 | $ | (39                                                                                                               | ) |  |                                                                                               |  | $ | 71         |   |  | $ | (39     | )
|                                           |  |                                                                                                      |    |  |                                 |   |                                                                                                                   |   |  |                                                                                               |  |   |            |   |  |   |         |  
|                                           |  |                                                                                                      |    | 
|                                           |  |                                                                                                      |    |  |                                 |   |                                                                                                                   |   |  | Amount of Gain or(Loss) Recognized inIncome for thePeriod EndedSeptember 30,
2010             | 
|                                           |  |                                                                                                      |    |  |                                 |   |                                                                                                                   |   |  | ThreeMonths                                                                                   |  |   | NineMonths |  
|                                           |  |                                                                                                      |    |  |                                 |   |                                                                                                                   |   |  | (In thousands)                                                                                | 
|Derivatives not designated as hedges:      |  |                                                                                                      |    |  |                                 |   |                                                                                                                   |   |  |                                                                                               |  |   |            |   |  |   |         |  
|Interest rate collar agreements            |  |                                                                                                      |    |  |                                 |   |                                                                                                                   |   |  | Interest expense                                                                              |  | $ |           |   |  | $ | (86     | )
|Interest rate swap agreements              |  |                                                                                                      |    |  |                                 |   |                                                                                                                   |   |  | Interest expense                                                                              |  |   | (3,170     | ) |  |   | (10,197 | )
|Interest rate swap agreements              |  |                                                                                                      |    |  |                                 |   |                                                                                                                   |   |  | Write-off of amounts in accumulated other comprehensive income related to interest rate swaps |  |   | (6,988     | ) |  |   | (6,988  | )
|                                           |  |                                                                                                      |    |  |                                 |   |                                                                                                                   |   |  |                                                                                               |  |   |            |   |  |   |         |  
|Total derivatives not designated as hedges |  |                                                                                                      |    |  |                                 |   |                                                                                                                   |   |  |                                                                                               |  | $ | (10,158    | ) |  | $ | (17,271 | )
|                                           |  |                                                                                                      |    |  |                                 |   |                                                                                                                   |   |  |                                                                                               |  |   |            |   |  |   |         |  



|(a) | Accumulated other comprehensive income (loss) (AOCI).
|--- | -------------------------------------------------------

The gains and losses on the Companys derivative instruments during the three and nine months ended September 30, 2009, were as follows:



|                                       |  |                                                                                                   |     |   |                                |   |                                                                                                                   |   |  |                             |  |   |            |   |  |   |      |  
|-------------------------------------- |  | ------------------------------------------------------------------------------------------------- | --- | - | ------------------------------ | - | ----------------------------------------------------------------------------------------------------------------- | - |  | --------------------------- |  | - | ---------- | - |  | - | ---- | -
|                                       |  | Amount of Gain or(Loss) Recognizedin AOCI(Effective Portion)for
thePeriod EndedSeptember 30, 2009 |     |   | Income StatementClassification |   | Amount of Gain or(Loss) Reclassified fromAOCI into Income(Effective Portion)for
thePeriod EndedSeptember 30, 2009 |  
|                                       |  | ThreeMonths                                                                                       |     |   | NineMonths                     |   |                                                                                                                   |   |  | ThreeMonths                 |  |   | NineMonths |  
|                                       |  | (In thousands)                                                                                    |     |   |                                |   | (In thousands)                                                                                                    |  
|Derivatives designated as hedges:      |  |                                                                                                   |     |   |                                |   |                                                                                                                   |   |  |                             |  |   |            |   |  |   |      |  
|Cash flow hedges:                      |  |                                                                                                   |     |   |                                |   |                                                                                                                   |   |  |                             |  |   |            |   |  |   |      |  
|Foreign currency exchange contract     |  | $                                                                                                 | (44 | ) |                                | $ | 107                                                                                                               |   |  | Other (income) expense, net |  | $ | (44        | ) |  | $ | 107  |  
|Natural gas swap agreements            |  |                                                                                                   | (12 | ) |                                |   | (173                                                                                                              | ) |  | Cost of goods sold          |  |   | (94        | ) |  |   | (367 | )
|                                       |  |                                                                                                   |     |   |                                |   |                                                                                                                   |   |  |                             |  |   |            |   |  |   |      |  
|Total derivatives designated as hedges |  | $                                                                                                 | (56 | ) |                                | $ | (66                                                                                                               | ) |  |                             |  | $ | (138       | ) |  | $ | (260 | )
|                                       |  |                                                                                                   |     |   |                                |   |                                                                                                                   |   |  |                             |  |   |            |   |  |   |      |  



18



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)



|                                           |  |                             |  |                                                                                   |        |   |            |   |         |  
|------------------------------------------ |  | --------------------------- |  | --------------------------------------------------------------------------------- | ------ | - | ---------- | - | ------- | -
|                                           |  |                             |  | Amount of Gain or(Loss) Recognized inIncome for thePeriod EndedSeptember 30,
2009 |       
|                                           |  |                             |  | ThreeMonths                                                                       |        |   | NineMonths |  
|                                           |  |                             |  | (In thousands)                                                                    |       
|Derivatives not designated as hedges:      |  |                             |  |                                                                                   |        |   |            |   |         |  
|Interest rate collar agreements            |  | Interest expense            |  | $                                                                                 | (2,079 | ) |            | $ | (6,282  | )
|Interest rate swap agreements              |  | Interest expense            |  |                                                                                   | (4,791 | ) |            |   | (5,860  | )
|Foreign currency exchange contracts        |  | Other (income) expense, net |  |                                                                                   | 11     |   |            |   | 95      |  
|                                           |  |                             |  |                                                                                   |        |   |            |   |         |  
|Total derivatives not designated as hedges |  |                             |  | $                                                                                 | (6,859 | ) |            | $ | (12,047 | )
|                                           |  |                             |  |                                                                                   |        |   |            |   |         |  



|15. | Income Taxes
|--- | ------------

The Company
accounts for income taxes in accordance with ASC 740, Accounting for Income Taxes. Holdings and the Operating Company, as limited partnerships, do not pay U.S. federal income taxes under the provisions of the Internal Revenue Code as the
applicable income or loss is included in the tax returns of the partners. However, certain U.S. subsidiaries are corporations and are subject to U.S. federal and state income taxes. The Companys foreign operations are subject to tax in their
local jurisdictions. In recording the income tax provision for the nine months ended September 30, 2010, the Company separately considered one-time contract termination fees paid to affiliates, bonuses paid and other costs incurred in
connection with the IPO, acquisition costs associated with the Liquid Acquisition, and a foreign exchange loss related to the application of hyper-inflationary accounting for the Companys Venezuelan subsidiary and the devaluation of the
Venezuelan bolivar.

Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to
temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates. The Company previously established a valuation allowance with respect
to certain deferred income tax assets. During the nine months ended September 30, 2010, the valuation allowance decreased by $38.5 million, primarily as a result of changes in deferred income tax assets associated with current year utilization
of net operating losses and realization of additional income tax benefits as a result of the recognition of additional deferred tax liabilities related to the Liquid Acquisition. Pursuant to the requirements of ASC 740-10-30, Establishment of
a Valuation Allowance for Deferred Tax Assets, the Company assesses the realizability of deferred tax assets based on an evaluation of positive and negative evidence of future taxable income. In making this determination, the Company considers
all available positive and negative evidence and makes certain assumptions. The Company considers, among other things, the nature and amount of deferred tax liabilities, historical earnings and losses, expected taxable income and current and future
tax planning strategies. It is reasonably possible that future assessments will result in a release of the valuation allowance against net deferred tax assets within certain of Holdings subsidiaries.

The Company had $21.0 million of Unrecognized Tax Benefits (UTB), exclusive of interest and penalties, as of
September 30, 2010. For the nine months ended September 30, 2010, the Company recorded a net increase in UTB of $2.6 million, exclusive of interest and penalties. At September 30, 2010, the Company had long-term deferred income tax
assets of $9.9 million which offset the UTB. As of September 30, 2010, the Company had recorded additional UTB of $5.0 million related to interest and penalties. The Company does not expect a significant change in the UTB balance in the next
twelve months. Approximately $7.2 million of UTB at September 30, 2010, if recognized, would impact the Companys effective tax rate.



|16. | Commitments
|--- | -----------

The Company
is a party to various capital and operating leases involving real property and equipment. Total rent expense for operating leases was $11.8 million and $36.7 million for the three and nine months ended September 30, 2010, respectively, and
$12.8 million and $37.8 million for the three and nine months ended September 30, 2009, respectively.



19



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)





Under the Fifth
Amended and Restated Limited Partnership Agreement and the Amended and Restated Monitoring Agreement (the Monitoring Agreement), the Company was obligated to make annual payments of $2.0 million and $3.0 million to affiliates of the
Graham Family and Blackstone (defined as Blackstone Capital Partners III Merchant Banking Fund L.P., Blackstone Offshore Capital Partners III L.P. and Blackstone Family Investment Partnership III L.P. or affiliates thereof), respectively. The
Company has terminated the Monitoring Agreement and is no longer obligated to make payments under the Monitoring Agreement. As a result, as of February 10, 2010, the Company is only obligated to make annual payments of $1.0 million to
affiliates of the Graham Family for ongoing management and advisory services under the Sixth Amended and Restated Limited Partnership Agreement. See Note 22 for further discussion of the Companys obligations under these agreements.



|17. | Contingencies and Legal Proceedings
|--- | -----------------------------------

On November 3, 2006, the Company filed a complaint with the Supreme Court of the State of New York, New York County, against Owens-Illinois, Inc. and OI Plastic Products FTS, Inc. (collectively,
OI). The complaint alleges certain misrepresentations by OI in connection with the Companys 2004 purchase of the blow molded plastic container business of Owens-Illinois, Inc. and seeks damages in excess of $30 million. In December
2006, OI filed an Answer and Counterclaim, seeking to rescind a Settlement Agreement entered into between OI and the Company in April 2005, and disgorgement of more than $39 million paid by OI to the Company in compliance with that Settlement
Agreement. The Company filed a Motion to Dismiss the Counterclaim in July 2007, which was granted by the Court in October 2007. On August 1, 2007, the Company filed an Amended Complaint to add additional claims seeking indemnification from OI
for claims made against the Company by former OI employees pertaining to their pension benefits. These claims arise from an arbitration between the Company and Glass, Molders, Pottery, Plastic & Allied Workers, Local #171 (the
Union) that resulted in an award on April 23, 2007, in favor of the Union. The Arbitrator ruled that the Company had failed to honor certain pension obligations for past years of service to former employees of OI, whose
seven Union-represented plants were acquired by the Company in October 2004. In the Amended Complaint, the Company maintains that under Section 8.2 of the Stock Purchase Agreement between the Company and OI, OI is obligated to
indemnify the Company for any losses associated with differences in the two companies pension plans including any losses incurred in connection with the Arbitration award. The litigation is proceeding.

On April 10, 2009, OnTech Operations, Inc. (OnTech) initiated an arbitration proceeding against the Company, in which
OnTech alleged that the Company breached a bottle purchase agreement dated April 28, 2008, and an equipment lease dated June 1, 2008. In its statement of claims, OnTech alleged, among other things, that the Companys failure to
produce bottles as required by the bottle purchase agreement resulted in the failure of OnTechs business. As a result, OnTech sought to recover the value of its business, which it alleged was between $80 million and $150 million. The
arbitration was heard by a three arbitrator panel from August 2, 2010, to August 16, 2010. On October 5, 2010, the Company received the decision from the arbitrators awarding OnTech $8.1 million which was accrued in the third quarter
of 2010. The Company is currently considering its response to the decision.

The Company is a party to various other
litigation matters arising in the ordinary course of business. The ultimate legal and financial liability of the Company with respect to such litigation cannot be estimated with certainty, but management believes, based on its examination of these
matters, experience to date and discussions with counsel, that ultimate liability from the Companys various litigation matters will not be material to the business, financial condition, results of operations or cash flows of the Company.



|18. | Condensed Guarantor Data
|--- | ------------------------

As of September 30, 2010, the Operating Company and CapCo I had outstanding $253.4 million aggregate principal amount of 8.25% Senior
Notes due 2017, $250.0 million aggregate principal amount of 8.25% Senior Notes due 2018 and $375.0 million aggregate principal amount of 9.875% Senior Subordinated Notes due 2014. Holdings and the domestic subsidiaries of the Operating Company have
fully and unconditionally guaranteed these notes. These guarantees are both joint and several. The Operating Company, the guarantor subsidiaries and CapCo I are 100%-owned subsidiaries of Holdings.



20



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)





The following
unaudited condensed consolidating information presents, in separate columns, the condensed consolidating balance sheets as of September 30, 2010, and December 31, 2009, and the related condensed consolidating statements of operations for
the three and nine months ended September 30, 2010 and 2009, and condensed consolidating statements of cash flows for the nine months ended September 30, 2010 and 2009, for (i) Holdings on a parent only basis with its investments in
the Operating Company and CapCo I recorded under the equity method, (ii) the Operating Company, a wholly-owned subsidiary of Holdings, on a parent only basis with its investments in subsidiaries recorded under the equity method, (iii) the
guarantor domestic subsidiaries of the Operating Company, (iv) the non-guarantor subsidiaries of the Company, (v) CapCo I, a co-issuer of the Notes, and (vi) the Company on a consolidated basis.



21



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)



GRAHAM PACKAGING HOLDINGS COMPANY

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF SEPTEMBER 30, 2010

(In thousands)



|                                                  |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  
|------------------------------------------------- |  | ------------------------------ | -------- | - | --------------------------- | - | --------- | ---------- |  | - | -------------- |  |  | ------- | ------- |  | ------------ | - | - | ------------ |  | - | ---------- | - |  | - | --------- | -
|                                                  |  | GrahamPackagingHoldingsCompany |          |   | GrahamPackagingCompany,L.P. |   |           | Guarantors |  |   | Non-Guarantors |  |  | CapCo I |         |  | Eliminations |   |   | Consolidated | 
|ASSETS                                            |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  
|Current assets:                                   |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  
|Cash and cash equivalents                         |  | $                              |         |   |                             | $ | 129,906   |            |  | $ | 702            |  |  | $       | 39,347  |  |              | $ |  |              |  | $ |           |   |  | $ | 169,955   |  
|Accounts receivable, net                          |  |                                |         |   |                             |   | 79,738    |            |  |   | 113,707        |  |  |         | 82,701  |  |              |   |  |              |  |   |           |   |  |   | 276,146   |  
|Inventories                                       |  |                                |         |   |                             |   | 74,153    |            |  |   | 112,332        |  |  |         | 44,698  |  |              |   |  |              |  |   |           |   |  |   | 231,183   |  
|Deferred income taxes                             |  |                                |         |   |                             |   |          |            |  |   |               |  |  |         | 4,402   |  |              |   |  |              |  |   |           |   |  |   | 4,402     |  
|Prepaid expenses and other current assets         |  |                                |         |   |                             |   | 7,104     |            |  |   | 24,703         |  |  |         | 16,215  |  |              |   |  |              |  |   |           |   |  |   | 48,022    |  
|                                                  |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  
|Total current assets                              |  |                                |         |   |                             |   | 290,901   |            |  |   | 251,444        |  |  |         | 187,363 |  |              |   |  |              |  |   |           |   |  |   | 729,708   |  
|Property, plant and equipment, net                |  |                                |         |   |                             |   | 397,421   |            |  |   | 531,740        |  |  |         | 288,609 |  |              |   |  |              |  |   |           |   |  |   | 1,217,770 |  
|Intangible assets, net                            |  |                                |         |   |                             |   | 7,843     |            |  |   | 186,330        |  |  |         | 6,990   |  |              |   |  |              |  |   |           |   |  |   | 201,163   |  
|Goodwill                                          |  |                                |         |   |                             |   | 150,106   |            |  |   | 437,361        |  |  |         | 53,563  |  |              |   |  |              |  |   |           |   |  |   | 641,030   |  
|Net intercompany                                  |  |                                |         |   |                             |   | 1,584,521 |            |  |   |               |  |  |         |        |  |              |   |  |              |  |   | (1,584,521 | ) |  |   |          |  
|Investment in subsidiaries                        |  |                                |         |   |                             |   | 226,948   |            |  |   | 237,869        |  |  |         |        |  |              |   |  |              |  |   | (464,817   | ) |  |   |          |  
|Other non-current assets                          |  |                                |         |   |                             |   | 40,857    |            |  |   | 576            |  |  |         | 9,164   |  |              |   |  |              |  |   |           |   |  |   | 50,597    |  
|                                                  |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  
|Total assets                                      |  | $                              |         |   |                             | $ | 2,698,597 |            |  | $ | 1,645,320      |  |  | $       | 545,689 |  |              | $ |  |              |  | $ | (2,049,338 | ) |  | $ | 2,840,268 |  
|                                                  |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  
|                                                  |  |                                |          |   |                             |   |          
|LIABILITIES AND PARTNERS CAPITAL (DEFICIT)       |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  
|Current liabilities:                              |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  
|Current portion of long-term debt                 |  | $                              |         |   |                             | $ | 24,273    |            |  | $ | 660            |  |  | $       | 21,349  |  |              | $ |  |              |  | $ |           |   |  | $ | 46,282    |  
|Accounts payable                                  |  |                                |         |   |                             |   | 65,334    |            |  |   | 70,004         |  |  |         | 39,954  |  |              |   |  |              |  |   |           |   |  |   | 175,292   |  
|Accrued expenses and other current liabilities    |  |                                |         |   |                             |   | 119,816   |            |  |   | 47,810         |  |  |         | 52,810  |  |              |   |  |              |  |   |           |   |  |   | 220,436   |  
|Deferred revenue                                  |  |                                |         |   |                             |   | 12,360    |            |  |   | 9,317          |  |  |         | 5,596   |  |              |   |  |              |  |   |           |   |  |   | 27,273    |  
|                                                  |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  
|Total current liabilities                         |  |                                |         |   |                             |   | 221,783   |            |  |   | 127,791        |  |  |         | 119,709 |  |              |   |  |              |  |   |           |   |  |   | 469,283   |  
|Long-term debt                                    |  |                                |         |   |                             |   | 2,801,007 |            |  |   | 7,710          |  |  |         | 4,926   |  |              |   |  |              |  |   |           |   |  |   | 2,813,643 |  
|Deferred income taxes                             |  |                                |         |   |                             |   | 436       |            |  |   | 13,215         |  |  |         | 13,369  |  |              |   |  |              |  |   |           |   |  |   | 27,020    |  
|Other non-current liabilities                     |  |                                |         |   |                             |   | 41,294    |            |  |   | 19,253         |  |  |         | 22,787  |  |              |   |  |              |  |   |           |   |  |   | 83,334    |  
|Investment in subsidiaries                        |  |                                | 365,923  |   |                             |   |          |            |  |   |               |  |  |         |        |  |              |   |  |              |  |   | (365,923   | ) |  |   |          |  
|Net intercompany                                  |  |                                | 187,089  |   |                             |   |          |            |  |   | 1,319,730      |  |  |         | 77,702  |  |              |   |  |              |  |   | (1,584,521 | ) |  |   |          |  
|Commitments and contingent liabilities            |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  
|Partners capital (deficit)                       |  |                                | (553,012 | ) |                             |   | (365,923  | )          |  |   | 157,621        |  |  |         | 307,196 |  |              |   |  |              |  |   | (98,894    | ) |  |   | (553,012  | )
|                                                  |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  
|Total liabilities and partners capital (deficit) |  | $                              |         |   |                             | $ | 2,698,597 |            |  | $ | 1,645,320      |  |  | $       | 545,689 |  |              | $ |  |              |  | $ | (2,049,338 | ) |  | $ | 2,840,268 |  
|                                                  |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  



22



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)



GRAHAM PACKAGING HOLDINGS COMPANY

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2009

(In thousands)



|                                                  |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  
|------------------------------------------------- |  | ------------------------------ | -------- | - | --------------------------- | - | --------- | ---------- |  | - | -------------- |  |  | ------- | ------- |  | ------------ | - | - | ------------ |  | - | ---------- | - |  | - | --------- | -
|                                                  |  | GrahamPackagingHoldingsCompany |          |   | GrahamPackagingCompany,L.P. |   |           | Guarantors |  |   | Non-Guarantors |  |  | CapCo I |         |  | Eliminations |   |   | Consolidated | 
|ASSETS                                            |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  
|Current assets:                                   |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  
|Cash and cash equivalents                         |  | $                              |         |   |                             | $ | 124,262   |            |  | $ | 3              |  |  | $       | 23,543  |  |              | $ |  |              |  | $ |           |   |  | $ | 147,808   |  
|Accounts receivable, net                          |  |                                |         |   |                             |   | 58,877    |            |  |   | 66,929         |  |  |         | 65,879  |  |              |   |  |              |  |   |           |   |  |   | 191,685   |  
|Inventories                                       |  |                                |         |   |                             |   | 72,257    |            |  |   | 76,017         |  |  |         | 46,428  |  |              |   |  |              |  |   |           |   |  |   | 194,702   |  
|Deferred income taxes                             |  |                                |         |   |                             |   |          |            |  |   |               |  |  |         | 3,446   |  |              |   |  |              |  |   |           |   |  |   | 3,446     |  
|Prepaid expenses and other current assets         |  |                                |         |   |                             |   | 12,105    |            |  |   | 28,772         |  |  |         | 18,214  |  |              |   |  |              |  |   |           |   |  |   | 59,091    |  
|                                                  |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  
|Total current assets                              |  |                                |         |   |                             |   | 267,501   |            |  |   | 171,721        |  |  |         | 157,510 |  |              |   |  |              |  |   |           |   |  |   | 596,732   |  
|Property, plant and equipment, net                |  |                                |         |   |                             |   | 416,471   |            |  |   | 353,011        |  |  |         | 248,296 |  |              |   |  |              |  |   |           |   |  |   | 1,017,778 |  
|Intangible assets, net                            |  |                                |         |   |                             |   | 7,298     |            |  |   | 31,198         |  |  |         | 4,516   |  |              |   |  |              |  |   |           |   |  |   | 43,012    |  
|Goodwill                                          |  |                                |         |   |                             |   | 150,106   |            |  |   | 235,924        |  |  |         | 51,028  |  |              |   |  |              |  |   |           |   |  |   | 437,058   |  
|Net intercompany                                  |  |                                |         |   |                             |   | 1,050,696 |            |  |   |               |  |  |         |        |  |              |   |  |              |  |   | (1,050,696 | ) |  |   |          |  
|Investment in subsidiaries                        |  |                                |         |   |                             |   | 149,868   |            |  |   | 221,054        |  |  |         |        |  |              |   |  |              |  |   | (370,922   | ) |  |   |          |  
|Other non-current assets                          |  |                                |         |   |                             |   | 28,291    |            |  |   | 142            |  |  |         | 4,073   |  |              |   |  |              |  |   |           |   |  |   | 32,506    |  
|                                                  |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  
|Total assets                                      |  | $                              |         |   |                             | $ | 2,070,231 |            |  | $ | 1,013,050      |  |  | $       | 465,423 |  |              | $ |  |              |  | $ | (1,421,618 | ) |  | $ | 2,127,086 |  
|                                                  |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  
|                                                  |  |                                |          |   |                             |   |          
|LIABILITIES AND PARTNERS CAPITAL (DEFICIT)       |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  
|Current liabilities:                              |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  
|Current portion of long-term debt                 |  | $                              |         |   |                             | $ | 87,142    |            |  | $ | 728            |  |  | $       | 12,787  |  |              | $ |  |              |  | $ |           |   |  | $ | 100,657   |  
|Accounts payable                                  |  |                                |         |   |                             |   | 47,281    |            |  |   | 31,454         |  |  |         | 32,278  |  |              |   |  |              |  |   |           |   |  |   | 111,013   |  
|Accrued expenses and other current liabilities    |  |                                |         |   |                             |   | 97,411    |            |  |   | 41,543         |  |  |         | 47,149  |  |              |   |  |              |  |   |           |   |  |   | 186,103   |  
|Deferred revenue                                  |  |                                |         |   |                             |   | 16,558    |            |  |   | 8,877          |  |  |         | 4,810   |  |              |   |  |              |  |   |           |   |  |   | 30,245    |  
|                                                  |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  
|Total current liabilities                         |  |                                |         |   |                             |   | 248,392   |            |  |   | 82,602         |  |  |         | 97,024  |  |              |   |  |              |  |   |           |   |  |   | 428,018   |  
|Long-term debt                                    |  |                                |         |   |                             |   | 2,334,119 |            |  |   | 1,129          |  |  |         | 958     |  |              |   |  |              |  |   |           |   |  |   | 2,336,206 |  
|Deferred income taxes                             |  |                                |         |   |                             |   | 168       |            |  |   | 5,284          |  |  |         | 12,194  |  |              |   |  |              |  |   |           |   |  |   | 17,646    |  
|Other non-current liabilities                     |  |                                |         |   |                             |   | 55,101    |            |  |   | 18,542         |  |  |         | 26,211  |  |              |   |  |              |  |   |           |   |  |   | 99,854    |  
|Investment in subsidiaries                        |  |                                | 567,549  |   |                             |   |          |            |  |   |               |  |  |         |        |  |              |   |  |              |  |   | (567,549   | ) |  |   |          |  
|Net intercompany                                  |  |                                | 187,089  |   |                             |   |          |            |  |   | 809,933        |  |  |         | 53,674  |  |              |   |  |              |  |   | (1,050,696 | ) |  |   |          |  
|Commitments and contingent liabilities            |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  
|Partners capital (deficit)                       |  |                                | (754,638 | ) |                             |   | (567,549  | )          |  |   | 95,560         |  |  |         | 275,362 |  |              |   |  |              |  |   | 196,627    |   |  |   | (754,638  | )
|                                                  |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  
|Total liabilities and partners capital (deficit) |  | $                              |         |   |                             | $ | 2,070,231 |            |  | $ | 1,013,050      |  |  | $       | 465,423 |  |              | $ |  |              |  | $ | (1,421,618 | ) |  | $ | 2,127,086 |  
|                                                  |  |                                |          |   |                             |   |           |            |  |   |                |  |  |         |         |  |              |   |   |              |  |   |            |   |  |   |           |  



23



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)



GRAHAM PACKAGING HOLDINGS COMPANY

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010

(In thousands)



|                                                                                              |  |                                |        |   |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |         |   |  |   |         |  
|--------------------------------------------------------------------------------------------- |  | ------------------------------ | ------ | - | --------------------------- | - | ------- | ---------- |  | - | -------------- | - |  | ------- | ------- | - | ------------ | - | - | ------------ |  | - | ------- | - |  | - | ------- | -
|                                                                                              |  | GrahamPackagingHoldingsCompany |        |   | GrahamPackagingCompany,L.P. |   |         | Guarantors |  |   | Non-Guarantors |   |  | CapCo I |         |   | Eliminations |   |   | Consolidated | 
|Net sales                                                                                     |  | $                              |       |   |                             | $ | 276,027 |            |  | $ | 244,568        |   |  | $       | 135,516 |   |              | $ |  |              |  | $ | (25,672 | ) |  | $ | 630,439 |  
|Cost of goods sold                                                                            |  |                                |       |   |                             |   | 223,457 |            |  |   | 205,319        |   |  |         | 115,292 |   |              |   |  |              |  |   | (25,672 | ) |  |   | 518,396 |  
|                                                                                              |  |                                |        |   |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |         |   |  |   |         |  
|Gross profit                                                                                  |  |                                |       |   |                             |   | 52,570  |            |  |   | 39,249         |   |  |         | 20,224  |   |              |   |  |              |  |   |        |   |  |   | 112,043 |  
|Selling, general and administrative expenses                                                  |  |                                |       |   |                             |   | 18,657  |            |  |   | 18,005         |   |  |         | 7,466   |   |              |   |  |              |  |   |        |   |  |   | 44,128  |  
|Asset impairment charges                                                                      |  |                                |       |   |                             |   | 314     |            |  |   | 135            |   |  |         | 476     |   |              |   |  |              |  |   |        |   |  |   | 925     |  
|Net loss (gain) on disposal of property, plant and equipment                                  |  |                                |       |   |                             |   | 716     |            |  |   | 522            |   |  |         | (160    | ) |              |   |  |              |  |   |        |   |  |   | 1,078   |  
|                                                                                              |  |                                |        |   |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |         |   |  |   |         |  
|Operating income                                                                              |  |                                |       |   |                             |   | 32,883  |            |  |   | 20,587         |   |  |         | 12,442  |   |              |   |  |              |  |   |        |   |  |   | 65,912  |  
|Interest expense, net                                                                         |  |                                |       |   |                             |   | 31,038  |            |  |   | 10,751         |   |  |         | 1,759   |   |              |   |  |              |  |   |        |   |  |   | 43,548  |  
|Net loss on debt extinguishment                                                               |  |                                |       |   |                             |   | 28,468  |            |  |   |               |   |  |         |        |   |              |   |  |              |  |   |        |   |  |   | 28,468  |  
|Write-off of amounts in accumulated other comprehensive income related to interest rate swaps |  |                                |       |   |                             |   | 6,988   |            |  |   |               |   |  |         |        |   |              |   |  |              |  |   |        |   |  |   | 6,988   |  
|Other (income) expense, net                                                                   |  |                                |       |   |                             |   | (3,081  | )          |  |   | (7             | ) |  |         | 2,444   |   |              |   |  |              |  |   |        |   |  |   | (644    | )
|Equity in loss (earnings) of subsidiaries                                                     |  |                                | 2,383  |   |                             |   | (28,375 | )          |  |   | (4,153         | ) |  |         |        |   |              |   |  |              |  |   | 30,145  |   |  |   |        |  
|                                                                                              |  |                                |        |   |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |         |   |  |   |         |  
|(Loss) income before income taxes                                                             |  |                                | (2,383 | ) |                             |   | (2,155  | )          |  |   | 13,996         |   |  |         | 8,239   |   |              |   |  |              |  |   | (30,145 | ) |  |   | (12,448 | )
|Income tax provision (benefit)                                                                |  |                                |       |   |                             |   | 228     |            |  |   | (15,090        | ) |  |         | 4,797   |   |              |   |  |              |  |   |        |   |  |   | (10,065 | )
|                                                                                              |  |                                |        |   |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |         |   |  |   |         |  
|Net (loss) income                                                                             |  | $                              | (2,383 | ) |                             | $ | (2,383  | )          |  | $ | 29,086         |   |  | $       | 3,442   |   |              | $ |  |              |  | $ | (30,145 | ) |  | $ | (2,383  | )
|                                                                                              |  |                                |        |   |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |         |   |  |   |         |  



24



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)



GRAHAM PACKAGING HOLDINGS COMPANY

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010

(In thousands)



|                                                                                              |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |  |              |   |   |              |  |   |         |   |  |   |           |  
|--------------------------------------------------------------------------------------------- |  | ------------------------------ | ------- | - | --------------------------- | - | ------- | ---------- |  | - | -------------- | - |  | ------- | ------- |  | ------------ | - | - | ------------ |  | - | ------- | - |  | - | --------- | -
|                                                                                              |  | GrahamPackagingHoldingsCompany |         |   | GrahamPackagingCompany,L.P. |   |         | Guarantors |  |   | Non-Guarantors |   |  | CapCo I |         |  | Eliminations |   |   | Consolidated | 
|Net sales                                                                                     |  | $                              |        |   |                             | $ | 840,429 |            |  | $ | 714,975        |   |  | $       | 393,711 |  |              | $ |  |              |  | $ | (80,268 | ) |  | $ | 1,868,847 |  
|Cost of goods sold                                                                            |  |                                |        |   |                             |   | 680,988 |            |  |   | 599,167        |   |  |         | 334,001 |  |              |   |  |              |  |   | (80,268 | ) |  |   | 1,533,888 |  
|                                                                                              |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |  |              |   |   |              |  |   |         |   |  |   |           |  
|Gross profit                                                                                  |  |                                |        |   |                             |   | 159,441 |            |  |   | 115,808        |   |  |         | 59,710  |  |              |   |  |              |  |   |        |   |  |   | 334,959   |  
|Selling, general and administrative expenses                                                  |  |                                |        |   |                             |   | 63,964  |            |  |   | 54,857         |   |  |         | 20,702  |  |              |   |  |              |  |   |        |   |  |   | 139,523   |  
|Asset impairment charges                                                                      |  |                                |        |   |                             |   | 2,000   |            |  |   | 566            |   |  |         | 1,150   |  |              |   |  |              |  |   |        |   |  |   | 3,716     |  
|Net loss on disposal of property, plant and equipment                                         |  |                                |        |   |                             |   | 1,321   |            |  |   | 621            |   |  |         | 190     |  |              |   |  |              |  |   |        |   |  |   | 2,132     |  
|                                                                                              |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |  |              |   |   |              |  |   |         |   |  |   |           |  
|Operating income                                                                              |  |                                |        |   |                             |   | 92,156  |            |  |   | 59,764         |   |  |         | 37,668  |  |              |   |  |              |  |   |        |   |  |   | 189,588   |  
|Interest expense, net                                                                         |  |                                |        |   |                             |   | 97,442  |            |  |   | 28,717         |   |  |         | 4,367   |  |              |   |  |              |  |   |        |   |  |   | 130,526   |  
|Net loss on debt extinguishment                                                               |  |                                |        |   |                             |   | 31,132  |            |  |   |               |   |  |         |        |  |              |   |  |              |  |   |        |   |  |   | 31,132    |  
|Write-off of amounts in accumulated other comprehensive income related to interest rate swaps |  |                                |        |   |                             |   | 6,988   |            |  |   |               |   |  |         |        |  |              |   |  |              |  |   |        |   |  |   | 6,988     |  
|Other (income) expense, net                                                                   |  |                                |        |   |                             |   | (6,787  | )          |  |   | (292           | ) |  |         | 9,646   |  |              |   |  |              |  |   |        |   |  |   | 2,567     |  
|Equity in earnings of subsidiaries                                                            |  |                                | (23,342 | ) |                             |   | (59,647 | )          |  |   | (13,302        | ) |  |         |        |  |              |   |  |              |  |   | 96,291  |   |  |   |          |  
|                                                                                              |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |  |              |   |   |              |  |   |         |   |  |   |           |  
|Income (loss) before income taxes                                                             |  |                                | 23,342  |   |                             |   | 23,028  |            |  |   | 44,641         |   |  |         | 23,655  |  |              |   |  |              |  |   | (96,291 | ) |  |   | 18,375    |  
|Income tax (benefit) provision                                                                |  |                                |        |   |                             |   | (314    | )          |  |   | (14,551        | ) |  |         | 9,898   |  |              |   |  |              |  |   |        |   |  |   | (4,967    | )
|                                                                                              |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |  |              |   |   |              |  |   |         |   |  |   |           |  
|Net income (loss)                                                                             |  | $                              | 23,342  |   |                             | $ | 23,342  |            |  | $ | 59,192         |   |  | $       | 13,757  |  |              | $ |  |              |  | $ | (96,291 | ) |  | $ | 23,342    |  
|                                                                                              |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |  |              |   |   |              |  |   |         |   |  |   |           |  



25



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)



GRAHAM PACKAGING HOLDINGS COMPANY

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009

(In thousands)



|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |         |   |  |   |         |  
|------------------------------------------------------------ |  | ------------------------------ | ------- | - | --------------------------- | - | ------- | ---------- |  | - | -------------- | - |  | ------- | ------- | - | ------------ | - | - | ------------ |  | - | ------- | - |  | - | ------- | -
|                                                             |  | GrahamPackagingHoldingsCompany |         |   | GrahamPackagingCompany,L.P. |   |         | Guarantors |  |   | Non-Guarantors |   |  | CapCo I |         |   | Eliminations |   |   | Consolidated | 
|Net sales                                                    |  | $                              |        |   |                             | $ | 256,535 |            |  | $ | 220,463        |   |  | $       | 134,206 |   |              | $ |  |              |  | $ | (22,401 | ) |  | $ | 588,803 |  
|Cost of goods sold                                           |  |                                |        |   |                             |   | 208,044 |            |  |   | 185,599        |   |  |         | 105,763 |   |              |   |  |              |  |   | (22,401 | ) |  |   | 477,005 |  
|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |         |   |  |   |         |  
|Gross profit                                                 |  |                                |        |   |                             |   | 48,491  |            |  |   | 34,864         |   |  |         | 28,443  |   |              |   |  |              |  |   |        |   |  |   | 111,798 |  
|Selling, general and administrative expenses                 |  |                                |        |   |                             |   | 13,075  |            |  |   | 12,066         |   |  |         | 6,864   |   |              |   |  |              |  |   |        |   |  |   | 32,005  |  
|Asset impairment charges                                     |  |                                |        |   |                             |   | 1,484   |            |  |   | 541            |   |  |         | 4,111   |   |              |   |  |              |  |   |        |   |  |   | 6,136   |  
|Net loss (gain) on disposal of property, plant and equipment |  |                                |        |   |                             |   | 1,482   |            |  |   | 743            |   |  |         | (115    | ) |              |   |  |              |  |   |        |   |  |   | 2,110   |  
|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |         |   |  |   |         |  
|Operating income                                             |  |                                |        |   |                             |   | 32,450  |            |  |   | 21,514         |   |  |         | 17,583  |   |              |   |  |              |  |   |        |   |  |   | 71,547  |  
|Interest expense, net                                        |  |                                |        |   |                             |   | 36,649  |            |  |   | 11,808         |   |  |         | 1,321   |   |              |   |  |              |  |   |        |   |  |   | 49,778  |  
|Other expense (income), net                                  |  |                                |        |   |                             |   | 83      |            |  |   | (9,130         | ) |  |         | (433    | ) |              |   |  |              |  |   | 8,960   |   |  |   | (520    | )
|Equity in earnings of subsidiaries                           |  |                                | (12,742 | ) |                             |   | (17,416 | )          |  |   | (3,856         | ) |  |         |        |   |              |   |  |              |  |   | 34,014  |   |  |   |        |  
|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |         |   |  |   |         |  
|Income (loss) before income taxes                            |  |                                | 12,742  |   |                             |   | 13,134  |            |  |   | 22,692         |   |  |         | 16,695  |   |              |   |  |              |  |   | (42,974 | ) |  |   | 22,289  |  
|Income tax provision (benefit)                               |  |                                |        |   |                             |   | 392     |            |  |   | (846           | ) |  |         | 7,884   |   |              |   |  |              |  |   |        |   |  |   | 7,430   |  
|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |         |   |  |   |         |  
|Income (loss) from continuing operations                     |  |                                | 12,742  |   |                             |   | 12,742  |            |  |   | 23,538         |   |  |         | 8,811   |   |              |   |  |              |  |   | (42,974 | ) |  |   | 14,859  |  
|Loss from discontinued operations                            |  |                                |        |   |                             |   |        |            |  |   |               |   |  |         | (2,117  | ) |              |   |  |              |  |   |        |   |  |   | (2,117  | )
|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |         |   |  |   |         |  
|Net income (loss)                                            |  | $                              | 12,742  |   |                             | $ | 12,742  |            |  | $ | 23,538         |   |  | $       | 6,694   |   |              | $ |  |              |  | $ | (42,974 | ) |  | $ | 12,742  |  
|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |         |   |  |   |         |  



26



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)



GRAHAM PACKAGING HOLDINGS COMPANY

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009

(In thousands)



|                                                      |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |           |  
|----------------------------------------------------- |  | ------------------------------ | ------- | - | --------------------------- | - | ------- | ---------- |  | - | -------------- | - |  | ------- | ------- | - | ------------ | - | - | ------------ |  | - | -------- | - |  | - | --------- | -
|                                                      |  | GrahamPackagingHoldingsCompany |         |   | GrahamPackagingCompany,L.P. |   |         | Guarantors |  |   | Non-Guarantors |   |  | CapCo I |         |   | Eliminations |   |   | Consolidated | 
|Net sales                                             |  | $                              |        |   |                             | $ | 762,529 |            |  | $ | 672,494        |   |  | $       | 360,734 |   |              | $ |  |              |  | $ | (59,389  | ) |  | $ | 1,736,368 |  
|Cost of goods sold                                    |  |                                |        |   |                             |   | 628,004 |            |  |   | 558,947        |   |  |         | 290,738 |   |              |   |  |              |  |   | (59,389  | ) |  |   | 1,418,300 |  
|                                                      |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |           |  
|Gross profit                                          |  |                                |        |   |                             |   | 134,525 |            |  |   | 113,547        |   |  |         | 69,996  |   |              |   |  |              |  |   |         |   |  |   | 318,068   |  
|Selling, general and administrative expenses          |  |                                |        |   |                             |   | 36,766  |            |  |   | 33,381         |   |  |         | 19,263  |   |              |   |  |              |  |   |         |   |  |   | 89,410    |  
|Asset impairment charges                              |  |                                |        |   |                             |   | 7,760   |            |  |   | 2,210          |   |  |         | 4,201   |   |              |   |  |              |  |   |         |   |  |   | 14,171    |  
|Net loss on disposal of property, plant and equipment |  |                                |        |   |                             |   | 2,533   |            |  |   | 1,393          |   |  |         | 482     |   |              |   |  |              |  |   |         |   |  |   | 4,408     |  
|                                                      |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |           |  
|Operating income                                      |  |                                |        |   |                             |   | 87,466  |            |  |   | 76,563         |   |  |         | 46,050  |   |              |   |  |              |  |   |         |   |  |   | 210,079   |  
|Interest expense, net                                 |  |                                |        |   |                             |   | 88,590  |            |  |   | 34,331         |   |  |         | 3,266   |   |              |   |  |              |  |   |         |   |  |   | 126,187   |  
|Net gain on debt extinguishment                       |  |                                |        |   |                             |   | (756    | )          |  |   |               |   |  |         |        |   |              |   |  |              |  |   |         |   |  |   | (756      | )
|Other (income) expense, net                           |  |                                |        |   |                             |   | (12,954 | )          |  |   | (15,075        | ) |  |         | (850    | ) |              |   |  |              |  |   | 26,814   |   |  |   | (2,065    | )
|Equity in earnings of subsidiaries                    |  |                                | (66,292 | ) |                             |   | (55,018 | )          |  |   | (14,355        | ) |  |         |        |   |              |   |  |              |  |   | 135,665  |   |  |   |          |  
|                                                      |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |           |  
|Income (loss) before income taxes                     |  |                                | 66,292  |   |                             |   | 67,604  |            |  |   | 71,662         |   |  |         | 43,634  |   |              |   |  |              |  |   | (162,479 | ) |  |   | 86,713    |  
|Income tax provision                                  |  |                                |        |   |                             |   | 1,312   |            |  |   | 561            |   |  |         | 14,624  |   |              |   |  |              |  |   |         |   |  |   | 16,497    |  
|                                                      |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |           |  
|Income (loss) from continuing operations              |  |                                | 66,292  |   |                             |   | 66,292  |            |  |   | 71,101         |   |  |         | 29,010  |   |              |   |  |              |  |   | (162,479 | ) |  |   | 70,216    |  
|Loss from discontinued operations                     |  |                                |        |   |                             |   |        |            |  |   |               |   |  |         | (3,924  | ) |              |   |  |              |  |   |         |   |  |   | (3,924    | )
|                                                      |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |           |  
|Net income (loss)                                     |  | $                              | 66,292  |   |                             | $ | 66,292  |            |  | $ | 71,101         |   |  | $       | 25,086  |   |              | $ |  |              |  | $ | (162,479 | ) |  | $ | 66,292    |  
|                                                      |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |           |  



27



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)



GRAHAM PACKAGING HOLDINGS COMPANY

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010

(In thousands)



|                                                                |  |                                |   |  |                             |   |          |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  
|--------------------------------------------------------------- |  | ------------------------------ | - |  | --------------------------- | - | -------- | ---------- |  | - | -------------- | - |  | ------- | ------- | - | ------------ | - | - | ------------ |  | - | -------- | - |  | - | -------- | -
|                                                                |  | GrahamPackagingHoldingsCompany |   |  | GrahamPackagingCompany,L.P. |   |          | Guarantors |  |   | Non-Guarantors |   |  | CapCo I |         |   | Eliminations |   |   | Consolidated | 
|Operating activities:                                           |  |                                |   |  |                             |   |          |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  
|Net cash provided by operating activities                       |  | $                              |  |  |                             | $ | 55,434   |            |  | $ | 82,134         |   |  | $       | 46,371  |   |              | $ |  |              |  | $ |         |   |  | $ | 183,939  |  
|                                                                |  |                                |   |  |                             |   |          |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  
|Investing activities:                                           |  |                                |   |  |                             |   |          |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  
|Net cash paid for property, plant and equipment                 |  |                                |  |  |                             |   | (34,696  | )          |  |   | (25,660        | ) |  |         | (50,326 | ) |              |   |  |              |  |   |         |   |  |   | (110,682 | )
|Acquisitions of/investments in businesses, net of cash acquired |  |                                |  |  |                             |   | (15,427  | )          |  |   | (564,516       | ) |  |         | 1,043   |   |              |   |  |              |  |   |         |   |  |   | (578,900 | )
|Intercompany investing activities                               |  |                                |  |  |                             |   | (534,319 | )          |  |   | (25,011        | ) |  |         |        |   |              |   |  |              |  |   | 559,330  |   |  |   |         |  
|Increase in restricted cash                                     |  |                                |  |  |                             |   | (7,300   | )          |  |   |               |   |  |         |        |   |              |   |  |              |  |   |         |   |  |   | (7,300   | )
|                                                                |  |                                |   |  |                             |   |          |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  
|Net cash (used in) provided by investing activities             |  |                                |  |  |                             |   | (591,742 | )          |  |   | (615,187       | ) |  |         | (49,283 | ) |              |   |  |              |  |   | 559,330  |   |  |   | (696,882 | )
|                                                                |  |                                |   |  |                             |   |          |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  
|Financing activities:                                           |  |                                |   |  |                             |   |          |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  
|Proceeds from issuance of long-term debt                        |  |                                |  |  |                             |   | 600,118  |            |  |   |               |   |  |         | 67,466  |   |              |   |  |              |  |   |         |   |  |   | 667,584  |  
|Payment of long-term debt                                       |  |                                |  |  |                             |   | (203,384 | )          |  |   | (567           | ) |  |         | (60,739 | ) |              |   |  |              |  |   |         |   |  |   | (264,690 | )
|Intercompany financing activities                               |  |                                |  |  |                             |   | 12,727   |            |  |   | 534,319        |   |  |         | 12,284  |   |              |   |  |              |  |   | (559,330 | ) |  |   |         |  
|Debt issuance fees                                              |  |                                |  |  |                             |   | (33,457  | )          |  |   |               |   |  |         |        |   |              |   |  |              |  |   |         |   |  |   | (33,457  | )
|Net proceeds from sale of additional units to GPC               |  |                                |  |  |                             |   | 165,386  |            |  |   |               |   |  |         |        |   |              |   |  |              |  |   |         |   |  |   | 165,386  |  
|Fees paid on behalf of GPC                                      |  |                                |  |  |                             |   | (1,225   | )          |  |   |               |   |  |         |        |   |              |   |  |              |  |   |         |   |  |   | (1,225   | )
|Repayment of notes and interest for ownership interests         |  |                                |  |  |                             |   | 432      |            |  |   |               |   |  |         |        |   |              |   |  |              |  |   |         |   |  |   | 432      |  
|Proceeds from issuance of ownership interests                   |  |                                |  |  |                             |   | 1,355    |            |  |   |               |   |  |         |        |   |              |   |  |              |  |   |         |   |  |   | 1,355    |  
|                                                                |  |                                |   |  |                             |   |          |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  
|Net cash provided by (used in) financing activities             |  |                                |  |  |                             |   | 541,952  |            |  |   | 533,752        |   |  |         | 19,011  |   |              |   |  |              |  |   | (559,330 | ) |  |   | 535,385  |  
|                                                                |  |                                |   |  |                             |   |          |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  
|Effect of exchange rate changes on cash and cash equivalents    |  |                                |  |  |                             |   |         |            |  |   |               |   |  |         | (295    | ) |              |   |  |              |  |   |         |   |  |   | (295     | )
|                                                                |  |                                |   |  |                             |   |          |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  
|Increase in cash and cash equivalents                           |  |                                |  |  |                             |   | 5,644    |            |  |   | 699            |   |  |         | 15,804  |   |              |   |  |              |  |   |         |   |  |   | 22,147   |  
|Cash and cash equivalents at beginning of period                |  |                                |  |  |                             |   | 124,262  |            |  |   | 3              |   |  |         | 23,543  |   |              |   |  |              |  |   |         |   |  |   | 147,808  |  
|                                                                |  |                                |   |  |                             |   |          |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  
|Cash and cash equivalents at end of period                      |  | $                              |  |  |                             | $ | 129,906  |            |  | $ | 702            |   |  | $       | 39,347  |   |              | $ |  |              |  | $ |         |   |  | $ | 169,955  |  
|                                                                |  |                                |   |  |                             |   |          |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  



28



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)



GRAHAM PACKAGING HOLDINGS COMPANY

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009

(In thousands)



|                                                             |  |                                |   |  |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  
|------------------------------------------------------------ |  | ------------------------------ | - |  | --------------------------- | - | ------- | ---------- |  | - | -------------- | - |  | ------- | ------- | - | ------------ | - | - | ------------ |  | - | -------- | - |  | - | -------- | -
|                                                             |  | GrahamPackagingHoldingsCompany |   |  | GrahamPackagingCompany,L.P. |   |         | Guarantors |  |   | Non-Guarantors |   |  | CapCo I |         |   | Eliminations |   |   | Consolidated | 
|Operating activities:                                        |  |                                |   |  |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  
|Net cash provided by (used in) operating activities          |  | $                              |  |  |                             | $ | 94,058  |            |  | $ | 161,867        |   |  | $       | 80,605  |   |              | $ |  |              |  | $ | (28,284  | ) |  | $ | 308,246  |  
|                                                             |  |                                |   |  |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  
|Investing activities:                                        |  |                                |   |  |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  
|Net cash paid for property, plant and equipment              |  |                                |  |  |                             |   | (48,470 | )          |  |   | (33,746        | ) |  |         | (21,402 | ) |              |   |  |              |  |   |         |   |  |   | (103,618 | )
|Acquisition of/investment in a business                      |  |                                |  |  |                             |   | (1,750  | )          |  |   | (345           | ) |  |         | (27,117 | ) |              |   |  |              |  |   | 27,827   |   |  |   | (1,385   | )
|Intercompany investing activities                            |  |                                |  |  |                             |   | (34,852 | )          |  |   | (162,376       | ) |  |         |        |   |              |   |  |              |  |   | 197,228  |   |  |   |         |  
|                                                             |  |                                |   |  |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  
|Net cash (used in) provided by investing activities          |  |                                |  |  |                             |   | (85,072 | )          |  |   | (196,467       | ) |  |         | (48,519 | ) |              |   |  |              |  |   | 225,055  |   |  |   | (105,003 | )
|                                                             |  |                                |   |  |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  
|Financing activities:                                        |  |                                |   |  |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  
|Proceeds from issuance of long-term debt                     |  |                                |  |  |                             |   | 7,397   |            |  |   |               |   |  |         | 31,586  |   |              |   |  |              |  |   |         |   |  |   | 38,983   |  
|Payment of long-term debt                                    |  |                                |  |  |                             |   | (46,693 | )          |  |   | (252           | ) |  |         | (30,039 | ) |              |   |  |              |  |   |         |   |  |   | (76,984  | )
|Intercompany financing activities                            |  |                                |  |  |                             |   | 154,927 |            |  |   | 34,852         |   |  |         | 7,449   |   |              |   |  |              |  |   | (197,228 | ) |  |   |         |  
|Debt issuance fees                                           |  |                                |  |  |                             |   | (14,977 | )          |  |   |               |   |  |         |        |   |              |   |  |              |  |   |         |   |  |   | (14,977  | )
|Purchase of ownership interests                              |  |                                |  |  |                             |   | (89     | )          |  |   |               |   |  |         |        |   |              |   |  |              |  |   |         |   |  |   | (89      | )
|                                                             |  |                                |   |  |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  
|Net cash provided by (used in) financing activities          |  |                                |  |  |                             |   | 100,565 |            |  |   | 34,600         |   |  |         | 8,996   |   |              |   |  |              |  |   | (197,228 | ) |  |   | (53,067  | )
|                                                             |  |                                |   |  |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  
|Effect of exchange rate changes on cash and cash equivalents |  |                                |  |  |                             |   |        |            |  |   |               |   |  |         | 2,311   |   |              |   |  |              |  |   | 457      |   |  |   | 2,768    |  
|                                                             |  |                                |   |  |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  
|Increase in cash and cash equivalents                        |  |                                |  |  |                             |   | 109,551 |            |  |   |               |   |  |         | 43,393  |   |              |   |  |              |  |   |         |   |  |   | 152,944  |  
|Cash and cash equivalents at beginning of period             |  |                                |  |  |                             |   | 35,297  |            |  |   | 1              |   |  |         | 8,581   |   |              |   |  |              |  |   |         |   |  |   | 43,879   |  
|                                                             |  |                                |   |  |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  
|Cash and cash equivalents at end of period                   |  | $                              |  |  |                             | $ | 144,848 |            |  | $ | 1              |   |  | $       | 51,974  |   |              | $ |  |              |  | $ |         |   |  | $ | 196,823  |  
|                                                             |  |                                |   |  |                             |   |         |            |  |   |                |   |  |         |         |   |              |   |   |              |  |   |          |   |  |   |          |  



29



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)





|19. | Comprehensive Income
|--- | --------------------

Comprehensive income for the three and nine months ended September 30, 2010 and 2009, was as follows:



|                                                                                                                                                                                                                                                                                                                                                                      |  |                                 |        |   |                                |   |        |      |  |   |        |  |  |   |        | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | - | ------ |  |  | - | ------ | 
|                                                                                                                                                                                                                                                                                                                                                                      |  | Three Months EndedSeptember 30, |        |   | Nine Months EndedSeptember 30, |  
|                                                                                                                                                                                                                                                                                                                                                                      |  | 2010                            |        |   | 2009                           |   |        | 2010 |  |   | 2009   | 
|                                                                                                                                                                                                                                                                                                                                                                      |  | (In thousands)                  |       
|Net (loss) income                                                                                                                                                                                                                                                                                                                                                     |  | $                               | (2,383 | ) |                                | $ | 12,742 |      |  | $ | 23,342 |  |  | $ | 66,292 | 
|Changes in fair value of derivatives designated and accounted for as cash flow hedges (net of tax of $0 for all periods
presented)                                                                                                                                                                                                                                    |  |                                 |       |   |                                |   | 87     |      |  |   |       |  |  |   | 434    | 
|Amortization of amounts in accumulated other comprehensive income (loss) as of the date the Company discontinued hedge accounting
for its interest rate collar and swap agreements (net of tax of $0 for all periods presented) (1)                                                                                                                                   |  |                                 | 8,851  |   |                                |   | 2,848  |      |  |   | 12,958 |  |  |   | 6,065  | 
|Amortization of prior service costs and unrealized actuarial losses included in net periodic benefit costs for pension and
post-retirement plans (net of a tax provision of $9 and $28 for the three and nine months ended September 30, 2010, respectively, and a tax benefit of $230 and $210 for the three and nine months ended September 30, 2009,
respectively) |  |                                 | 287    |   |                                |   | (230   | )    |  |   | 1,146  |  |  |   | 1,071  | 
|Foreign currency translation adjustments (net of a tax benefit of $109 and $32 for the three and nine months ended
September 30, 2010, respectively, and $23 and $29 for the three and nine months ended September 30, 2009, respectively)                                                                                                                            |  |                                 | 25,242 |   |                                |   | 10,291 |      |  |   | 704    |  |  |   | 15,151 | 
|                                                                                                                                                                                                                                                                                                                                                                      |  |                                 |        |   |                                |   |        |      |  |   |        |  |  |   |        | 
|Comprehensive income                                                                                                                                                                                                                                                                                                                                                  |  | $                               | 31,997 |   |                                | $ | 25,738 |      |  | $ | 38,150 |  |  | $ | 89,013 | 
|                                                                                                                                                                                                                                                                                                                                                                      |  |                                 |        |   |                                |   |        |      |  |   |        |  |  |   |        | 



| | (1) | Amounts for the three and nine months ended September 30, 2010, include the write-off of the remaining amount of $7.0 million as a result of the extinguishment of
the Term Loan B on September 23, 2010.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



30



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)





|20. | Segment Information
|--- | -------------------

The
Company is organized and managed on a geographical basis in four operating segments: North America, Europe, South America and Asia. The Company began accounting for its Asian operations as a new operating segment as of July 1, 2010, with the
acquisition of China Roots. Segment information for the three and nine months ended September 30, 2010 and 2009, and as of September 30, 2010, and December 31, 2009, representing the reportable segments currently utilized by the chief
operating decision makers, was as follows:



|                                |  |                                       |  |                |           |   |        |   |         |              |  |   |        |      |  |                 |        |   |       |   |        |   |  |   |           |  
|------------------------------- |  | ------------------------------------- |  | -------------- | --------- | - | ------ | - | ------- | ------------ |  | - | ------ | ---- |  | --------------- | ------ | - | ----- | - | ------ | - |  | - | --------- | -
|                                |  |                                       |  | NorthAmerica   |           |   | Europe |   |         | SouthAmerica |  |   | Asia   |      |  | Eliminations(a) |        |   | Total |  
|                                |  |                                       |  | (In thousands) |          
|Net sales (b) (c)               |  | Three months ended September 30, 2010 |  | $              | 542,706   |   |        | $ | 55,690  |              |  | $ | 27,773 |      |  | $               | 4,543  |   |       | $ | (273   | ) |  | $ | 630,439   |  
|                                |  | Three months ended September 30, 2009 |  |                | 500,074   |   |        |   | 61,257  |              |  |   | 27,530 |      |  |                 |       |   |       |   | (58    | ) |  |   | 588,803   |  
|                                |  | Nine months ended September 30, 2010  |  |                | 1,621,996 |   |        |   | 168,481 |              |  |   | 74,634 |      |  |                 | 4,543  |   |       |   | (807   | ) |  |   | 1,868,847 |  
|                                |  | Nine months ended September 30, 2009  |  |                | 1,497,834 |   |        |   | 171,622 |              |  |   | 67,162 |      |  |                 |       |   |       |   | (250   | ) |  |   | 1,736,368 |  
|                                |  |                                       |  |                |           |   |       
|Operating income (loss)         |  | Three months ended September 30, 2010 |  | $              | 62,109    |   |        | $ | 3,701   |              |  | $ | 254    |      |  | $               | (152   | ) |       | $ |       |   |  | $ | 65,912    |  
|                                |  | Three months ended September 30, 2009 |  |                | 62,485    |   |        |   | 9,201   |              |  |   | (139   | )    |  |                 |       |   |       |   |       |   |  |   | 71,547    |  
|                                |  | Nine months ended September 30, 2010  |  |                | 169,162   |   |        |   | 16,744  |              |  |   | 3,834  |      |  |                 | (152   | ) |       |   |       |   |  |   | 189,588   |  
|                                |  | Nine months ended September 30, 2009  |  |                | 188,101   |   |        |   | 24,947  |              |  |   | (2,969 | )    |  |                 |       |   |       |   |       |   |  |   | 210,079   |  
|                                |  |                                       |  |                |           |   |       
|Depreciation and                |  | Three months ended September 30, 2010 |  | $              | 31,552    |   |        | $ | 6,256   |              |  | $ | 2,124  |      |  | $               | 336    |   |       | $ |       |   |  | $ | 40,268    |  
|amortization                    |  | Three months ended September 30, 2009 |  |                | 34,508    |   |        |   | 3,722   |              |  |   | 1,142  |      |  |                 |       |   |       |   |       |   |  |   | 39,372    |  
|                                |  | Nine months ended September 30, 2010  |  |                | 98,221    |   |        |   | 14,696  |              |  |   | 4,660  |      |  |                 | 336    |   |       |   |       |   |  |   | 117,913   |  
|                                |  | Nine months ended September 30, 2009  |  |                | 102,020   |   |        |   | 13,163  |              |  |   | 3,275  |      |  |                 |       |   |       |   |       |   |  |   | 118,458   |  
|                                |  |                                       |  |                |           |   |       
|Asset impairment charges        |  | Three months ended September 30, 2010 |  | $              | 475       |   |        | $ | 228     |              |  | $ | 222    |      |  | $               |       |   |       | $ |       |   |  | $ | 925       |  
|                                |  | Three months ended September 30, 2009 |  |                | 3,414     |   |        |   | 1,428   |              |  |   | 1,294  |      |  |                 |       |   |       |   |       |   |  |   | 6,136     |  
|                                |  | Nine months ended September 30, 2010  |  |                | 2,888     |   |        |   | 549     |              |  |   | 279    |      |  |                 |       |   |       |   |       |   |  |   | 3,716     |  
|                                |  | Nine months ended September 30, 2009  |  |                | 11,449    |   |        |   | 1,428   |              |  |   | 1,294  |      |  |                 |       |   |       |   |       |   |  |   | 14,171    |  
|                                |  |                                       |  |                |           |   |       
|Interest expense, net           |  | Three months ended September 30, 2010 |  | $              | 42,371    |   |        | $ | 271     |              |  | $ | 860    |      |  | $               | 46     |   |       | $ |       |   |  | $ | 43,548    |  
|                                |  | Three months ended September 30, 2009 |  |                | 48,542    |   |        |   | 322     |              |  |   | 914    |      |  |                 |       |   |       |   |       |   |  |   | 49,778    |  
|                                |  | Nine months ended September 30, 2010  |  |                | 127,494   |   |        |   | 910     |              |  |   | 2,076  |      |  |                 | 46     |   |       |   |       |   |  |   | 130,526   |  
|                                |  | Nine months ended September 30, 2009  |  |                | 123,119   |   |        |   | 879     |              |  |   | 2,189  |      |  |                 |       |   |       |   |       |   |  |   | 126,187   |  
|Other (income) expense, net     |  | Three months ended September 30, 2010 |  | $              | (2,159    | ) |        | $ | 1,801   |              |  | $ | (286   | )(d) |  | $               |       |   |       | $ |       |   |  | $ | (644      | )
|                                |  | Three months ended September 30, 2009 |  |                | 1,085     |   |        |   | (33     | )            |  |   | (102   | )    |  |                 |       |   |       |   | (1,470 | ) |  |   | (520      | )
|                                |  | Nine months ended September 30, 2010  |  |                | (4,811    | ) |        |   | 5,153   |              |  |   | 2,225  | (d)  |  |                 |       |   |       |   |       |   |  |   | 2,567     |  
|                                |  | Nine months ended September 30, 2009  |  |                | (867      | ) |        |   | 753     |              |  |   | (3,361 | )    |  |                 |       |   |       |   | 1,410  |   |  |   | (2,065    | )
|                                |  |                                       |  |                |           |   |       
|Income tax (benefit) provision  |  | Three months ended September 30, 2010 |  | $              | (11,848   | ) |        | $ | 1,673   |              |  | $ | 156    |      |  | $               | (46    | ) |       | $ |       |   |  | $ | (10,065   | )
|                                |  | Three months ended September 30, 2009 |  |                | 3,135     |   |        |   | 4,273   |              |  |   | 22     |      |  |                 |       |   |       |   |       |   |  |   | 7,430     |  
|                                |  | Nine months ended September 30, 2010  |  |                | (10,054   | ) |        |   | 4,771   |              |  |   | 362    |      |  |                 | (46    | ) |       |   |       |   |  |   | (4,967    | )
|                                |  | Nine months ended September 30, 2009  |  |                | 6,677     |   |        |   | 8,673   |              |  |   | 1,147  |      |  |                 |       |   |       |   |       |   |  |   | 16,497    |  
|                                |  |                                       |  |                |           |   |       
|Identifiable assets (b) (c) (e) |  | As of September 30, 2010              |  | $              | 1,001,265 |   |        | $ | 131,907 |              |  | $ | 70,117 |      |  | $               | 14,481 |   |       | $ |       |   |  | $ | 1,217,770 |  
|                                |  | As of December 31, 2009               |  |                | 830,897   |   |        |   | 138,053 |              |  |   | 48,828 |      |  |                 |       |   |       |   |       |   |  |   | 1,017,778 |  
|                                |  |                                       |  |                |           |   |       
|Goodwill                        |  | As of September 30, 2010              |  | $              | 623,747   |   |        | $ | 15,858  |              |  | $ | 7      |      |  | $               | 1,418  |   |       | $ |       |   |  | $ | 641,030   |  
|                                |  | As of December 31, 2009               |  |                | 420,765   |   |        |   | 16,286  |              |  |   | 7      |      |  |                 |       |   |       |   |       |   |  |   | 437,058   |  
|                                |  |                                       |  |                |           |   |       
|Cash paid for property,         |  | Nine months ended September 30, 2010  |  | $              | 73,134    |   |        | $ | 14,467  |              |  | $ | 23,511 |      |  | $               | 114    |   |       | $ |       |   |  | $ | 111,226   |  
|plant and equipment             |  | Nine months ended September 30, 2009  |  |                | 86,629    |   |        |   | 8,192   |              |  |   | 9,676  |      |  |                 |       |   |       |   |       |   |  |   | 104,497   |  



|(a) | To eliminate intercompany transactions.
|--- | ---------------------------------------

|(b) | The Companys net sales for Europe include countries having significant sales as follows:
|--- | -----------------------------------------------------------------------------------------



31



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)





|        |  |                                |      |  |                               |   |      |      |  |   |      |  |  |   |      | 
|------- |  | ------------------------------ | ---- |  | ----------------------------- | - | ---- | ---- |  | - | ---- |  |  | - | ---- | 
|        |  | Three MonthsEndedSeptember 30, |      |  | Nine MonthsEndedSeptember 30, |  
|        |  | 2010                           |      |  | 2009                          |   |      | 2010 |  |   | 2009 | 
|        |  | (In millions)                  |     
|Poland  |  | $                              | 13.9 |  |                               | $ | 12.8 |      |  | $ | 40.4 |  |  | $ | 35.5 | 
|Belgium |  |                                | 11.4 |  |                               |   | 13.2 |      |  |   | 38.2 |  |  |   | 39.8 | 
|Spain   |  |                                | 7.6  |  |                               |   | 12.3 |      |  |   | 21.8 |  |  |   | 29.8 | 
|France  |  |                                | 7.3  |  |                               |   | 6.0  |      |  |   | 22.0 |  |  |   | 17.0 | 

The Companys
identifiable assets for Europe include countries having significant identifiable assets as follows:



|        |  |                   |      |  |                  |   |      | 
|------- |  | ----------------- | ---- |  | ---------------- | - | ---- | 
|        |  | September 30,2010 |      |  | December 31,2009 |  
|        |  | (In millions)     |     
|Poland  |  | $                 | 35.3 |  |                  | $ | 36.6 | 
|Belgium |  |                   | 28.6 |  |                  |   | 31.9 | 
|Spain   |  |                   | 21.4 |  |                  |   | 23.6 | 
|France  |  |                   | 19.9 |  |                  |   | 15.1 | 



|(c) | The Companys net sales for North America include sales in Mexico which totaled $44.0 million and $41.4 million for the three months ended September 30, 2010
and 2009, respectively, and $130.6 million and $110.9 million for the nine months ended September 30, 2010 and 2009, respectively. Identifiable assets in Mexico totaled $65.5 million and $58.8 million as of September 30, 2010, and
December 31, 2009, respectively. Substantially all of the North America reportable segments remaining net sales and identifiable assets are in the United States.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) | Beginning January 1, 2010, Venezuelas economy is considered to be highly inflationary for accounting purposes. Accordingly, the Company has adopted the U.S.
dollar as the functional currency for its Venezuelan operations. All bolivar-denominated transactions, as well as monetary assets and liabilities, are remeasured into U.S. dollars. As a result of the application of hyper-inflationary accounting
requiring the revaluation of monetary assets and liabilities, the Company recorded a $0.2 million gain and a $2.3 million loss in other expense for the three and nine months ended September 30, 2010, respectively. Net sales for Venezuela were
$1.5 million and $4.5 million for the three and nine months ended September 30, 2010, respectively, and net assets for Venezuela were less than 1.0% of the Companys total net assets as of September 30, 2010, and December 31,
2009. As the Venezuelan operations are not significant to the overall operations of the Company, future rate changes in the bolivar would not have a significant impact on the Companys financial statements.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(e) | Represents property, plant and equipment, net.
|--- | ----------------------------------------------

Product Net Sales Information

The following is supplemental information on net sales by product category:



|                        |  |                                 |         |  |                                |   |         |      |  |   |           |  |  |   |           | 
|----------------------- |  | ------------------------------- | ------- |  | ------------------------------ | - | ------- | ---- |  | - | --------- |  |  | - | --------- | 
|                        |  | Three Months EndedSeptember 30, |         |  | Nine Months EndedSeptember 30, |  
|                        |  | 2010                            |         |  | 2009                           |   |         | 2010 |  |   | 2009      | 
|                        |  | (In thousands)                  |        
|Food and Beverage       |  | $                               | 394,608 |  |                                | $ | 354,053 |      |  | $ | 1,164,360 |  |  | $ | 1,067,635 | 
|Household               |  |                                 | 114,418 |  |                                |   | 112,335 |      |  |   | 332,426   |  |  |   | 319,488   | 
|Personal Care/Specialty |  |                                 | 42,648  |  |                                |   | 43,804  |      |  |   | 125,153   |  |  |   | 129,622   | 
|Automotive Lubricants   |  |                                 | 78,765  |  |                                |   | 78,611  |      |  |   | 246,908   |  |  |   | 219,623   | 
|                        |  |                                 |         |  |                                |   |         |      |  |   |           |  |  |   |           | 
|Total Net Sales         |  | $                               | 630,439 |  |                                | $ | 588,803 |      |  | $ | 1,868,847 |  |  | $ | 1,736,368 | 
|                        |  |                                 |         |  |                                |   |         |      |  |   |           |  |  |   |           | 



32



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)





|21. | Pension Plans
|--- | -------------

The
components of net periodic pension cost for the Companys defined benefit pension plans consisted of the following:



|                                                     |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|---------------------------------------------------- |  | ------------------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                     |  | Three Months EndedSeptember 30, |        |   | Nine Months EndedSeptember 30, |  
|                                                     |  | 2010                            |        |   | 2009                           |   |        | 2010 |  |   | 2009   |  
|                                                     |  | (In thousands)                  |       
|Components of net periodic pension cost:             |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Service cost                                         |  | $                               | 548    |   |                                | $ | 579    |      |  | $ | 1,642  |   |  | $ | 1,715  |  
|Interest cost                                        |  |                                 | 1,589  |   |                                |   | 1,520  |      |  |   | 4,767  |   |  |   | 4,516  |  
|Expected return on plan assets                       |  |                                 | (1,743 | ) |                                |   | (1,444 | )    |  |   | (5,227 | ) |  |   | (4,296 | )
|Net amortization and deferral of prior service costs |  |                                 | 396    |   |                                |   | 588    |      |  |   | 1,184  |   |  |   | 1,761  |  
|Curtailment/special charges                          |  |                                 |       |   |                                |   | 103    |      |  |   |       |   |  |   | 207    |  
|Employee contributions                               |  |                                 |       |   |                                |   | (21    | )    |  |   |       |   |  |   | (58    | )
|                                                     |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Net periodic pension cost                            |  | $                               | 790    |   |                                | $ | 1,325  |      |  | $ | 2,366  |   |  | $ | 3,845  |  
|                                                     |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  

The Company previously disclosed in its financial statements for the year ended December 31, 2009, that
it expected to contribute $7.3 million to its pension plans in 2010. As of September 30, 2010, $6.1 million of required contributions to its pension plans has been made and the Company expects to make an additional $1.2 million of contributions
in the remainder of 2010.

The Company closed its plants located in Bristol, PA and Vicksburg, MS during the fourth quarter of
2009. As a result of these closings, in January 2010, the Company made an additional $0.5 million contribution to the Bristol, PA plan, and in June 2010, an additional $0.1 million contribution to the Vicksburg, MS plan, to fully fund both plans.

The Company recognized $1.9 million of expense for its 401(k) plans in each of the third quarters of 2010 and 2009, and $5.6
million and $5.5 million of expense for its 401(k) plans in the first nine months of 2010 and 2009, respectively.



|22. | Transactions with Related Parties
|--- | ---------------------------------

The Company had transactions with entities affiliated through common ownership. The Company made payments to Graham Engineering Company for equipment and related services of $0.4 million and $0.5 million
for the three months ended September 30, 2010 and 2009, respectively, and $1.9 million and $1.3 million for the nine months ended September 30, 2010 and 2009, respectively.

Affiliates of both of the Graham Family and Blackstone have supplied management and advisory services to the Company since 1998. The
Company has recorded $0.2 million and $1.3 million of expense for these services for the three months ended September 30, 2010 and 2009, respectively, and $1.2 million and $3.8 million for the nine months ended September 30, 2010 and 2009,
respectively. Under the Fifth Amended and Restated Limited Partnership Agreement and the Monitoring Agreement, the Company was obligated to make annual payments of $2.0 million and $3.0 million to affiliates of the Graham Family and Blackstone,
respectively. In exchange for a one-time payment of $26.3 million to Blackstone Management Partners III L.L.C. and $8.8 million to Graham Alternative Investment Partners I, the parties of the Monitoring Agreement agreed to terminate such agreement.
These amounts paid to terminate the Monitoring Agreement are reflected in selling, general and administrative expenses on the Condensed Consolidated Statement of Operations (Unaudited) for the nine months ended September 30, 2010. As a result
of the termination, Blackstone, the Graham Family and their affiliates have no further obligation to provide monitoring services to the Company, and the Company has no further obligation to make annual payments of $4.0 million, under the Monitoring
Agreement. As a result, as of February 10, 2010, the Company is only obligated to make annual payments of $1.0 million to affiliates of the Graham Family for ongoing management and advisory services under the Sixth Amended and Restated Limited
Partnership Agreement, until such time that the Graham Family sells more than two thirds of its original investment, and such services would then cease.



33



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)





The Company paid
Blackstone Advisory Partners L.P. a $4.5 million fee in September 2010 for advisory and other services rendered in connection with the Liquid Acquisition. This fee was negotiated on an arms-length basis for services performed and the
prevailing fees being charged by third parties for comparable services. The Company paid Blackstone Management Partners III L.L.C. a $5.0 million fee in July 2009 in connection with the Fourth Amendment to the Credit Agreement.

At September 30, 2010, the Company had loans outstanding to certain former management employees of the Company for the purchase of
shares of GPC, which owns, directly and indirectly, approximately 91% of the Company as of September 30, 2010. These loans were made in connection with the capital call payments made on September 29, 2000, and March 29, 2001, pursuant
to a capital call agreement dated as of August 13, 1998. The proceeds from the loans were used to fund managements share of the capital call payments. The loans mature on September 28, 2012, and March 30, 2013, respectively, and
accrue interest at a rate of 6.22%. The loans are secured by a pledge of the stock purchased by the loans. The loans and related interest, totaling $1.4 million and $1.8 million as of September 30, 2010, and December 31, 2009,
respectively, are reflected in partners capital (deficit) on the Condensed Consolidated Balance Sheets (Unaudited).

On
behalf of Blackstone, the Company made payments to a former Chief Executive Officer and Chief Financial Officer of the Operating Company on January 5, 2007, for its repurchase of all of their outstanding shares of GPC, pursuant to separation
agreements dated as of December 3, 2006. Additionally, on behalf of Blackstone, the Company made a payment to a former Senior Vice President of the Operating Company on April 10, 2009, for its repurchase of all of his outstanding shares of
GPC. As a result of these payments, Blackstone became the owner of these shares and owes the Company $4.7 million and $4.6 million as of September 30, 2010, and December 31, 2009, respectively, including accrued interest. This receivable
is reflected in partners capital (deficit) on the Condensed Consolidated Balance Sheets (Unaudited).

The Company has
provided funding to GPC to cover its expenses, primarily in connection with the IPO, resulting in a receivable from GPC of $2.1 million, which is reflected in partners capital (deficit) on the Condensed Consolidated Balance Sheet (Unaudited) as of
September 30, 2010.

In connection with the IPO, on February 10, 2010, GPC entered into separate Income Tax
Receivable Agreements (ITRs) with its pre-IPO stockholders (e.g. Blackstone, management and other stockholders) and with GPC Holdings, L.P., an affiliate of the Graham Family. The agreements provide for the payment by GPC of 85% of the
amount of cash savings, if any, in U.S. federal, state and local income tax that GPC actually realizes (or is deemed to realize in the case of an early termination or change in control as further described in the ITRs) as a result of the utilization
of net operating losses attributable to periods prior to the IPO, and any increase to the tax basis of the assets of the Company related to (1) GPCs 1998 acquisition of the Company and (2) current and future exchanges by the Graham
Family of their limited partnership units for common stock of GPC pursuant to the Exchange Agreement, and of certain tax benefits related to GPCs entering into the ITRs, including tax benefits attributable to payments under the ITRs. Payments
under the ITRs are not conditioned upon these parties continued ownership of the Company or GPC.

GPC expects that
future payments under the ITRs will aggregate to between $200.0 million and $235.0 million with potential additional payments for tax basis step-ups relating to future exchanges by the Graham Family of their limited partnership units in the Company
for GPC common stock depending on the timing and value of such exchanges. This range is based on GPCs assumptions using various items, including valuation analysis and historical tax basis amounts. This range also includes step-ups related to
the Graham Familys exchange of 1,324,900 limited partnership units through September 30, 2010. GPC will recognize obligations based on the amount of recorded net deferred income tax assets recognized, and subject to the ITRs. Changes in
the recorded net deferred income tax assets that are subject to the ITRs obligations will result in changes in the ITRs obligations, and such changes will be recorded as other income or expense. As of September 30, 2010, the value of the ITRs
obligations was $8.2 million. Because GPC is a holding company with no operations of its own, its ability to make payments under the ITRs is dependent on the Companys ability to make distributions. Upon the effective date of the respective
ITRs, GPC recorded an initial obligation of $6.5 million, which was recognized as a reduction of additional paid-in capital. Additionally, GPC recorded $3.2 million in income and $1.7 million in expense related to the change in the ITRs obligations
for the three and nine months ended September 30, 2010, respectively. For the nine months ended September 30, 2010, no payments have been made under the ITRs.



34



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)





|23. | Environmental Matters
|--- | ---------------------

As
a result of the Company closing its plant located in Edison, New Jersey, the Company is subject to New Jerseys Industrial Site Recovery Act (ISRA). The Company acquired this facility from Owens-Illinois, Inc. in 2004. ISRA is an
environmental law that specifies a process of reporting to the New Jersey Department of Environmental Protection (NJDEP) and, in some situations, investigating, cleaning up and/or taking other measures with respect to environmental
conditions that may exist at an industrial establishment that has been shut down or is being transferred. The Company is in the process of evaluating and implementing its obligations under ISRA regarding this facility. The Company has recorded a
preliminary reserve of $0.4 million for this obligation. This amount may change based on results of additional investigation expected to be undertaken for NJDEP.



|24. | Partners Capital (Deficit)
|--- | ---------------------------

On February 10, 2010, the Companys majority owner, GPC, completed its IPO. In connection with the IPO, the Company effected a 3,781.4427-for-one unit split and its limited partnership agreement
has been amended and restated as the Sixth Amended and Restated Limited Partnership Agreement (the Partnership Agreement). Accordingly, any unit/share information reflects such splits. Pursuant to the Partnership Agreement, the
Companys partnership interests have been denominated as limited partnership units and general partnership units with no change in relative economic ownership percentages prior to the IPO. Additionally, general partnership interests of the
Graham Family have been converted into limited partnership interests on an equivalent basis.

On February 17, 2010, and
in connection with the IPO, GPC purchased 16,666,667 newly-issued, unregistered limited partnership units of the Company for net proceeds of $165.4 million. On February 17, 2010, $114.2 million of these net proceeds were used to pay a portion
of the Term Loan B and Term Loan C. Additionally, as part of the IPO, the Graham Family entered into an Exchange Agreement. Under the Exchange Agreement, the Graham Family and certain permitted transferees may, subject to specific terms, exchange
their limited partnership units in the Company for shares of GPCs common stock at any time and from time to time on a one-for-one basis, subject to customary conversion rate adjustments for splits, stock dividends and reclassifications. Under
this Exchange Agreement, entities controlled by the Graham Family and certain of their permitted transferees exercised their rights to exchange 1,324,900 limited partnership units of the Company for 1,324,900 shares of GPCs common stock. In
addition, a member of former management exchanged nine partnership units of the Company for nine shares of GPCs common stock. The Company has also entered into Management Exchange Agreements which provide for similar rights to management to
exchange limited partnership units of the Company obtained on exercise of outstanding options for shares of GPCs common stock.

On March 11, 2010, the underwriters of the IPO partially exercised their option to purchase additional shares of GPCs common stock, par value $0.01, from GPC and purchased 1,565,600 additional
shares at the initial public offering price of $10.00 per share (the Underwriters Allotment). The Underwriters Allotment closed on March 16, 2010. GPC received net proceeds of $14.7 million (after underwriting discount
and before expenses) (the Net Proceeds) and contributed the Net Proceeds to the Company in exchange for 1,565,600 newly-issued limited partnership units of the Company. The Company used the Net Proceeds and cash on hand to repay a
portion of the Term Loans under the Credit Agreement.

As of September 30, 2010:



| |  |  | GPC owns 60,855,664 limited partnership units, representing an 88.0% limited partnership interest, and its wholly-owned subsidiary, BCP/Graham Holdings
L.L.C., is the sole general partner and owns 2,023,472 general partnership units, representing a 2.9% ownership in the Company;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the Graham Family owns an aggregate of 6,263,121 limited partnership units, representing a 9.1% ownership in the Company; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------



| |  |  | a former employee owns 35,158 limited partnership units.
| | - |  | --------------------------------------------------------



35



---

##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(continued)





The Partnership
Agreement also provides that for so long as the Graham Family retains at least one-third of their partnership interests held as of February 2, 1998 (or equivalent common stock of GPC for which such partnership interests have been or are
eligible to be exchanged), they are entitled to an advisory fee of $1.0 million annually for ongoing management and advisory services.



|25. | Stock-based Compensation
|--- | ------------------------

The Company, from time to time, has granted options to purchase partnership units of Holdings, which may be exchanged for shares of
GPCs common stock, and options to purchase shares of GPCs common stock. On February 4, 2010, GPC effected a 1,465.4874-for-one stock split and Holdings effected a 3,781.4427-for-one unit split. Accordingly, any unit/share
information reflects such splits. As a result of these splits, each share of GPCs common stock corresponds to one unit of Holdings partnership interest.

A summary of the changes in the unit options outstanding under the option plans for the nine months ended September 30, 2010, is as follows:



|                                  |  |                    |            |   |                                     |   |      |                                         |  |  |                         |  |  |   |      | 
|--------------------------------- |  | ------------------ | ---------- | - | ----------------------------------- | - | ---- | --------------------------------------- |  |  | ----------------------- |  |  | - | ---- | 
|                                  |  | Units UnderOptions |            |   | WeightedAverageExercisePrice/Option |   |      | WeightedAverageRemainingContractualTerm |  |  | AggregateIntrinsicValue | 
|                                  |  |                    |            |   |                                     |   |      | (in years)                              |  |  | (in millions)           | 
|Outstanding at January 1, 2010    |  |                    | 4,813,115  |   |                                     | $ | 8.35 |                                         |  |  |                         |  |  |   |      | 
|Granted                           |  |                    |           |   |                                     |   |     |                                         |  |  |                         |  |  |   |      | 
|Exercised (1)                     |  |                    | (1,053,530 | ) |                                     |   | 9.88 |                                         |  |  |                         |  |  |   |      | 
|Forfeited                         |  |                    | (224,534   | ) |                                     |   | 7.67 |                                         |  |  |                         |  |  |   |      | 
|                                  |  |                    |            |   |                                     |   |      |                                         |  |  |                         |  |  |   |      | 
|Outstanding at September 30, 2010 |  |                    | 3,535,051  |   |                                     | $ | 7.94 |                                         |  |  | 6.5                     |  |  | $ | 13.0 | 
|                                  |  |                    |            |   |                                     |   |      |                                         |  |  |                         |  |  |   |      | 
|Vested or expected to vest        |  |                    | 2,758,111  |   |                                     | $ | 8.12 |                                         |  |  | 6.3                     |  |  | $ | 9.7  | 
|Exercisable at September 30, 2010 |  |                    | 2,198,069  |   |                                     | $ | 8.07 |                                         |  |  | 6.1                     |  |  | $ | 7.8  | 

A summary of the
changes in the stock options outstanding under the option plans for the nine months ended September 30, 2010, is as follows:



|                                  |  |                         |         |   |                                     |   |       |                                         |  |  |                         |  |  |   |     | 
|--------------------------------- |  | ----------------------- | ------- | - | ----------------------------------- | - | ----- | --------------------------------------- |  |  | ----------------------- |  |  | - | --- | 
|                                  |  | CommonStockUnderOptions |         |   | WeightedAverageExercisePrice/Option |   |       | WeightedAverageRemainingContractualTerm |  |  | AggregateIntrinsicValue | 
|                                  |  |                         |         |   |                                     |   |       | (in years)                              |  |  | (in millions)           | 
|Outstanding at January 1, 2010    |  |                         |        |   |                                     | $ |      |                                         |  |  |                         |  |  |   |     | 
|Granted (2)                       |  |                         | 913,797 |   |                                     |   | 10.17 |                                         |  |  |                         |  |  |   |     | 
|Exercised                         |  |                         |        |   |                                     |   |      |                                         |  |  |                         |  |  |   |     | 
|Forfeited                         |  |                         | (78,275 | ) |                                     |   | 10.00 |                                         |  |  |                         |  |  |   |     | 
|                                  |  |                         |         |   |                                     |   |       |                                         |  |  |                         |  |  |   |     | 
|Outstanding at September 30, 2010 |  |                         | 835,522 |   |                                     | $ | 10.18 |                                         |  |  | 9.4                     |  |  | $ | 1.2 | 
|                                  |  |                         |         |   |                                     |   |       |                                         |  |  |                         |  |  |   |     | 
|Vested or expected to vest        |  |                         | 835,522 |   |                                     | $ | 10.18 |                                         |  |  | 9.4                     |  |  | $ | 1.2 | 
|Exercisable at September 30, 2010 |  |                         |        |   |                                     | $ |      |                                         |  |  |                        |  |  | $ |    | 



|(1) | Under the terms of the option plans, the Compensation Committee granted Warren Knowlton, the Operating Companys former Chief Executive Officer, the right to net
settle his 894,538 options in exchange for 164,182 units of Holdings, which were then exchanged for shares of GPCs common stock. The 894,538 options are included in the Exercised line in the table above.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | In conjunction with the IPO, the Company granted options to certain management members to purchase 841,363 shares of GPCs common stock. Subsequently, the Company
granted additional options to purchase 72,434 shares of GPCs common stock. As a result, the Company will incur incremental compensation expense of approximately $2.3 million over the four-year vesting period of the options. The incremental
expense recorded during the nine months ended September 30, 2010, was $0.3 million.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



36



---

##### Table of Contents



CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

All statements other than statements of historical facts included in
this Report on Form 10-Q, including statements regarding our future financial position, economic performance and results of operations, as well as our business strategy, budgets and projected costs and plans and objectives of management for future
operations, and the information referred to under Quantitative and Qualitative Disclosures About Market Risk (Part I, Item 3), are forward-looking statements. In addition, forward-looking statements generally can be identified by
the use of forward-looking terminology, such as may, will, expect, intend, estimate, anticipate, believe or continue or similar terminology. These
forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, managements beliefs and certain assumptions made by management, many of which, by their nature, are
inherently uncertain and beyond our control. Accordingly, readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to
predict. Although we believe that the expectations reflected in such forward-looking statements are reasonable as of the date made, expectations may prove to have been materially different from the results expressed or implied by such
forward-looking statements. Unless otherwise required by law, we also disclaim any obligation to update our view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made in this
report. Readers should carefully review the risks and uncertainties under Risk Factors (Part I, Item 1A) in the Annual Report on Form 10-K of Graham Packaging Holdings Company (Holdings) for the fiscal year ended
December 31, 2009. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements
made in this Report on Form 10-Q in the context of these risks and uncertainties.



|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

Overview

Unless the context otherwise requires, all references herein
to the Company, we, our or us refer to Holdings and its subsidiaries.

We
are a worldwide leader in the design, manufacture and sale of value-added, custom blow molded plastic containers for branded consumer products. We operate in product categories where customers and end users value the technology and innovation that
our custom plastic containers offer as an alternative to traditional packaging materials such as glass, metal and paperboard. We selectively pursue opportunities where we can leverage our technology portfolio to continue to drive the trend of
conversion to plastic containers from other packaging materials. Our customers include leading multi-national and regional blue-chip consumer product companies that seek customized, sustainable plastic container solutions in diverse and stable end
markets, such as the food and beverage and the household consumer products markets. We believe we are well-positioned to meet the evolving needs of our customers who often use our technology to differentiate their products with value-added design
and performance characteristics such as smooth-wall panel-less bottles, unique pouring and dispensing features, multilayer bottles incorporating barrier technologies to extend shelf life, and ultra lightweight bottles with hot-fill
capabilities that allow containers to be filled at high temperatures.

As of September 30, 2010, we operated a network of
97 manufacturing facilities throughout North America, Europe, South America and Asia. We are organized and managed on a geographical basis in four operating segments: North America, Europe, South America and Asia. Each operating segment includes
four major categories: Food and Beverage, Household, Personal Care/Specialty and Automotive Lubricants. Our primary strategies are to manage our business for stable growth and strong cash flow from operations, leverage our technology portfolio to
meet the needs of our customers, target organic growth in attractive markets utilizing our proven business model, continue to focus on operational excellence, and supplement our organic growth with opportunistic strategic investments.

We believe that the critical success factors to our business are our ability to:



| |  |  | maintain relationships with, and serve the complex packaging demands of, our customers, which include some of the worlds largest branded consumer
products companies;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



37



---

##### Table of Contents



| |  |  | participate in growth opportunities associated with the conversion of packaging products from glass, metal and paper to plastic;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | develop proprietary technologies that provide a meaningful competitive advantage in product design, product performance, process technology and
sustainability features;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | focus on operational excellence, cost reductions and overall efficiencies;
| | - |  | --------------------------------------------------------------------------



| |  |  | make investments in plant and technology necessary to satisfy the factors mentioned above; and
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | reduce our financial leverage.
| | - |  | ------------------------------

We intend to capitalize on our leadership positions in value-added custom plastic containers to increase our EBITDA (as defined herein) and cash flow in order to reduce our financial leverage and increase
stockholder return.

We believe that the area with the greatest opportunity for growth continues to be in producing containers
for the food and beverage product category because of the industrys continued conversion to plastic packaging, including the demand for containers for juices and juice drinks, nutritional beverages, beer, yogurt drinks, liquor, teas, sports
drinks/isotonics, vitamin enhanced waters, snacks, sauces, jellies and jams. Much of the growth in this area in recent years has been in the sale of smaller sized containers. We believe we are a leader in providing value-added hot-fill polyethylene
terephthalate (PET) juice containers. We also believe we are a leading participant in the growing markets for yogurt drinks and nutritional beverages where we manufacture containers using polyolefin resins.

Growth in our household container product category was fueled in prior years by conversions from powders to liquids for such products as
detergents, household cleaners and automatic dishwashing detergent. Our strongest position is in fabric care, where management believes we are a leader in plastic container design and manufacture. It should be noted the fabric care industry now
offers most of its brands in a concentrated formula which has reduced sales in this product category.

Our personal
care/specialty product category is driven by new product launch and re-launch cycles of our customers. Based on the volume of our sales to many major suppliers of personal care/specialty products, management believes we are among the leading
suppliers in this product category, which includes products for the hair care, skin care, oral care and specialty markets. Management believes that our supply position results from our commitment to, and reputation in, new product development and
flexible manufacturing processes and operations.

Our North American one-quart/liter motor oil container product category is
in a mature industry. Unit volume in the one-quart/liter motor oil industry decreased approximately 10% per year from 2006 through 2009 as the product category migrated towards the quick-lube market and larger multi-quart/liter packages. Even
though we believe we have the largest market share of multi-quart/liter containers, these sales only partially offset the loss in sales of one-quart/liter containers.

As of September 30, 2010, we operated 30 manufacturing facilities outside of the United States in Argentina, Belgium, Brazil, Canada, China, Finland, France, Mexico, the Netherlands, Poland, Spain,
Turkey, the United Kingdom and Venezuela. Over the past few years, we have expanded our international operations with the addition of three new plants in Brazil, one new plant in Mexico and one new plant in China.

For the nine months ended September 30, 2010 and 2009, 71.8% and 69.7% of our net sales, respectively, were generated by our top
twenty customers. All of the top twenty customers were under long-term contracts with terms up to ten years and have been doing business with us for over 20 years on average. Prices under these arrangements are typically tied to plastic resin market
standards and, therefore, vary with market conditions. In general, the contracts have annually set minimum purchase requirements but do not obligate the customer to purchase any given amount of product from us beyond one year. Our sales to PepsiCo,
Inc., our largest customer, were 10.4% and 11.3% of total sales for the nine months ended September 30, 2010 and 2009, respectively. All of these sales were made in North America.

The largest component of our cost of goods sold is resin costs. Based on certain resin industry indices, the following table summarizes
average market prices per pound of PET and high-density polyethylene (HDPE) resins in the United States during the periods indicated:



38



---

##### Table of Contents



|     |  |                                 |      |  |                                |   |      |      |  |   |      |  |  |   |      | 
|---- |  | ------------------------------- | ---- |  | ------------------------------ | - | ---- | ---- |  | - | ---- |  |  | - | ---- | 
|     |  | Three Months EndedSeptember 30, |      |  | Nine Months EndedSeptember 30, |  
|     |  | 2010                            |      |  | 2009                           |   |      | 2010 |  |   | 2009 | 
|PET  |  | $                               | 0.77 |  |                                | $ | 0.77 |      |  | $ | 0.79 |  |  | $ | 0.72 | 
|HDPE |  | $                               | 0.78 |  |                                | $ | 0.69 |      |  | $ | 0.82 |  |  | $ | 0.65 | 

Resin and colorants
make up a significant part of our cost of goods sold. Colorants are pigments added to the resin to formulate different colors of blow molded plastic bottles. Changes in the cost of colorants are typically passed through to customers, similarly to
resin. On a percentage basis, resin and colorant costs generally make up between 40% and 50% of cost of goods sold, depending on the price of resin and colorants and bottle features. As a percentage of net sales, resin and colorant costs make up
between 35% and 40%, in general. The percentage depends not only on the price of the resin and colorants, but also the physical characteristics of the bottle, such as size, weight, design features, labels and decorations, color and the technology
platform and equipment used to make the bottle.

Changes in the cost of resin are passed through to customers by means of
corresponding changes in product pricing, in accordance with our agreements with these customers and industry practice. A sustained increase in resin prices relative to other packaging materials, to the extent that those costs are not passed on to
the end-consumer, would make plastic containers less economical for our customers and could result in a slower pace of conversions to, or reductions in the use of, plastic containers.

Holdings and Graham Packaging Company, L.P., Holdings wholly-owned subsidiary (the Operating Company), as limited
partnerships, do not pay U.S. federal income taxes under the provisions of the Internal Revenue Code, as the applicable income or loss is included in the tax returns of the partners. However, certain U.S. subsidiaries are corporations and are
subject to U.S. federal and state income taxes. Our foreign operations are subject to tax in their local jurisdictions.

Acquisitions

On September 23, 2010, we acquired the Liquid Entities (as defined below) from each of the limited partners (the
Liquid Limited Partners) of Liquid Container L.P. (currently known as Graham Packaging LC, L.P.) (Liquid L.P.) and each of the stockholders (the Stockholders) of (i) Liquid Container Inc.
(Liquid), a Delaware corporation, (ii) CPG-L Holdings, Inc. (CPG), a Delaware corporation, and (iii) WCK-L Holdings, Inc. (WCK and, together with Liquid and CPG, the Liquid General Partners),
a Delaware corporation. Liquid L.P. and the Liquid General Partners are collectively referred to as the Liquid Entities. We purchased all the shares from the Stockholders and all of the limited partnership units from the Liquid Limited
Partners (collectively, the Liquid Acquisition) for approximately $564.3 million, subject to a potential working capital adjustment.

In connection with the Liquid Acquisition, we paid existing indebtedness of the Liquid Entities, including accrued interest, then outstanding, in the amount of approximately $208.2 million. As of
September 30, 2010, additional indebtedness of approximately $7.1 million remains outstanding and will be repaid in the fourth quarter of 2010.

The Liquid Acquisition represents a strategically important acquisition for us as it expands our customer reach within our existing food and consumer products end markets while providing us with
additional technological capabilities and an expansion of our geographical reach. The Liquid Acquisition will significantly increase the size and scope of our operations, particularly in the food product category, and provide us with considerable
opportunities to convert new products to plastic containers. The Liquid Entities have been a leader in custom blow molded plastic containers used in cold-fill applications and have new hot-fill technologies, which complement our technologies, and
which we believe can help drive new conversions. The Liquid Entities have a similar financial profile to ours, as they use technology to serve their customer base with innovative and cost effective packaging solutions. We believe the combined
purchasing power can yield savings in freight, energy, outside services, leased equipment and miscellaneous raw materials such as packaging, pallets, shrink wrap and spare parts. Additionally, we believe we can eliminate overlapping corporate
functions and expenses.

On July 1, 2010, we acquired China Roots Packaging PTE Ltd. (China Roots), a plastic
container manufacturing company located in Guangzhou, China, for approximately $15 million, subject to certain



39



---

##### Table of Contents

adjustments. China Roots manufactures plastic containers and closures for food, health care, personal care and petrochemical products. Its customers include several global consumer product
marketers. In 2009, China Roots net sales were approximately $16.3 million.

The results of operations for the three and
nine months ended September 30, 2010, include the results of operations of the Liquid Entities since September 23, 2010, and China Roots since July 1, 2010. As a result, the results of operations for the three and nine months ended
September 30, 2010, are not fully comparable to the results of operations for the three and nine months ended September 30, 2009.

Results of Operations

The following tables set forth the major components of our net sales and such net sales expressed as a percentage of total net sales:



|                |  |                                 |       |  |                                |  |       |      |  |   |       |  |  |  |       |   |  |   |         |  |  |  |       |   |  |   |         |  |  |  |       |  
|--------------- |  | ------------------------------- | ----- |  | ------------------------------ |  | ----- | ---- |  | - | ----- |  |  |  | ----- | - |  | - | ------- |  |  |  | ----- | - |  | - | ------- |  |  |  | ----- | -
|                |  | Three Months EndedSeptember 30, |       |  | Nine Months EndedSeptember 30, | 
|                |  | 2010                            |       |  | 2009                           |  |       | 2010 |  |   | 2009  | 
|                |  | (Dollars in millions)           |      
|North America   |  | $                               | 542.7 |  |                                |  | 86.1  | %    |  | $ | 500.0 |  |  |  | 84.9  | % |  | $ | 1,621.5 |  |  |  | 86.8  | % |  | $ | 1,497.6 |  |  |  | 86.2  | %
|Europe          |  |                                 | 55.4  |  |                                |  | 8.8   |      |  |   | 61.3  |  |  |  | 10.4  |   |  |   | 168.2   |  |  |  | 9.0   |   |  |   | 171.6   |  |  |  | 9.9   |  
|South America   |  |                                 | 27.8  |  |                                |  | 4.4   |      |  |   | 27.5  |  |  |  | 4.7   |   |  |   | 74.6    |  |  |  | 4.0   |   |  |   | 67.2    |  |  |  | 3.9   |  
|Asia            |  |                                 | 4.5   |  |                                |  | 0.7   |      |  |   |      |  |  |  |      |   |  |   | 4.5     |  |  |  | 0.2   |   |  |   |        |  |  |  |      |  
|                |  |                                 |       |  |                                |  |       |      |  |   |       |  |  |  |       |   |  |   |         |  |  |  |       |   |  |   |         |  |  |  |       |  
|Total Net Sales |  | $                               | 630.4 |  |                                |  | 100.0 | %    |  | $ | 588.8 |  |  |  | 100.0 | % |  | $ | 1,868.8 |  |  |  | 100.0 | % |  | $ | 1,736.4 |  |  |  | 100.0 | %
|                |  |                                 |       |  |                                |  |       |      |  |   |       |  |  |  |       |   |  |   |         |  |  |  |       |   |  |   |         |  |  |  |       |  



|                        |  |                                 |       |  |                                |  |       |      |  |   |       |  |  |  |       |   |  |   |         |  |  |  |       |   |  |   |         |  |  |  |       |  
|----------------------- |  | ------------------------------- | ----- |  | ------------------------------ |  | ----- | ---- |  | - | ----- |  |  |  | ----- | - |  | - | ------- |  |  |  | ----- | - |  | - | ------- |  |  |  | ----- | -
|                        |  | Three Months EndedSeptember 30, |       |  | Nine Months EndedSeptember 30, | 
|                        |  | 2010                            |       |  | 2009                           |  |       | 2010 |  |   | 2009  | 
|                        |  | (Dollars in millions)           |      
|Food and Beverage       |  | $                               | 394.6 |  |                                |  | 62.6  | %    |  | $ | 354.1 |  |  |  | 60.1  | % |  | $ | 1,164.4 |  |  |  | 62.3  | % |  | $ | 1,067.7 |  |  |  | 61.5  | %
|Household               |  |                                 | 114.4 |  |                                |  | 18.1  |      |  |   | 112.3 |  |  |  | 19.1  |   |  |   | 332.4   |  |  |  | 17.8  |   |  |   | 319.5   |  |  |  | 18.4  |  
|Personal Care/Specialty |  |                                 | 42.6  |  |                                |  | 6.8   |      |  |   | 43.8  |  |  |  | 7.4   |   |  |   | 125.1   |  |  |  | 6.7   |   |  |   | 129.6   |  |  |  | 7.5   |  
|Automotive Lubricants   |  |                                 | 78.8  |  |                                |  | 12.5  |      |  |   | 78.6  |  |  |  | 13.4  |   |  |   | 246.9   |  |  |  | 13.2  |   |  |   | 219.6   |  |  |  | 12.6  |  
|                        |  |                                 |       |  |                                |  |       |      |  |   |       |  |  |  |       |   |  |   |         |  |  |  |       |   |  |   |         |  |  |  |       |  
|Total Net Sales         |  | $                               | 630.4 |  |                                |  | 100.0 | %    |  | $ | 588.8 |  |  |  | 100.0 | % |  | $ | 1,868.8 |  |  |  | 100.0 | % |  | $ | 1,736.4 |  |  |  | 100.0 | %
|                        |  |                                 |       |  |                                |  |       |      |  |   |       |  |  |  |       |   |  |   |         |  |  |  |       |   |  |   |         |  |  |  |       |  

Three Months Ended September 30, 2010, Compared to Three Months Ended September 30, 2009

The following table sets forth the summary of the condensed consolidated statements of income and related percentage changes for the
periods indicated:



|                                                                                              |  |                                |       |   |                     |   |       |                      |  |   |       |   |  |  |         |   
|--------------------------------------------------------------------------------------------- |  | ------------------------------ | ----- | - | ------------------- | - | ----- | -------------------- |  | - | ----- | - |  |  | ------- | --
|                                                                                              |  | Three MonthsEndedSeptember 30, |       |   | Increase/(Decrease) |   |       | %Increase/(Decrease) | 
|                                                                                              |  | 2010                           |       |   | 2009                |   |       |                     
|                                                                                              |  | (Dollars in millions)          |      
|Net sales                                                                                     |  | $                              | 630.4 |   |                     | $ | 588.8 |                      |  | $ | 41.6  |   |  |  | 7.1     | % 
|Cost of goods sold                                                                            |  |                                | 518.4 |   |                     |   | 477.0 |                      |  |   | 41.4  |   |  |  | 8.7     |   
|                                                                                              |  |                                |       |   |                     |   |       |                      |  |   |       |   |  |  |         |   
|Gross profit (1)                                                                              |  |                                | 112.0 |   |                     |   | 111.8 |                      |  |   | 0.2   |   |  |  | 0.2     |   
|% of net sales (2)                                                                            |  |                                | 17.8  | % |                     |   | 19.0  | %                    |  |   |       |   |  |  |         |   
|Selling, general and administrative expenses (1)                                              |  |                                | 44.1  |   |                     |   | 32.0  |                      |  |   | 12.1  |   |  |  | 37.8    |   
|% of net sales (2)                                                                            |  |                                | 7.0   | % |                     |   | 5.4   | %                    |  |   |       |   |  |  |         |   
|Asset impairment charges                                                                      |  |                                | 0.9   |   |                     |   | 6.1   |                      |  |   | (5.2  | ) |  |  | (85.2   | ) 
|Net loss on disposal of property, plant and equipment                                         |  |                                | 1.1   |   |                     |   | 2.2   |                      |  |   | (1.1  | ) |  |  | (50.0   | ) 
|                                                                                              |  |                                |       |   |                     |   |       |                      |  |   |       |   |  |  |         |   
|Operating income                                                                              |  |                                | 65.9  |   |                     |   | 71.5  |                      |  |   | (5.6  | ) |  |  | (7.8    | ) 
|% of net sales (2)                                                                            |  |                                | 10.5  | % |                     |   | 12.1  | %                    |  |   |       |   |  |  |         |   
|Interest expense                                                                              |  |                                | 43.7  |   |                     |   | 50.2  |                      |  |   | (6.5  | ) |  |  | (12.9   | ) 
|Interest income                                                                               |  |                                | (0.2  | ) |                     |   | (0.4  | )                    |  |   | 0.2   |   |  |  | 50.0    |   
|Net loss on debt extinguishment                                                               |  |                                | 28.5  |   |                     |   |      |                      |  |   | 28.5  |   |  |  | >100.0  |   
|Write-off of amounts in accumulated other comprehensive income related to interest rate swaps |  |                                | 7.0   |   |                     |   |      |                      |  |   | 7.0   |   |  |  | >100.0  |   
|Other income, net                                                                             |  |                                | (0.7  | ) |                     |   | (0.5  | )                    |  |   | (0.2  | ) |  |  | (40.0   | ) 
|Income tax (benefit) provision                                                                |  |                                | (10.0 | ) |                     |   | 7.4   |                      |  |   | (17.4 | ) |  |  | >(100.0 | ) 
|                                                                                              |  |                                |       |   |                     |   |       |                      |  |   |       |   |  |  |         |   
|(Loss) income from continuing operations                                                      |  |                                | (2.4  | ) |                     |   | 14.8  |                      |  |   | (17.2 | ) |  |  | >(100.0 | ) 
|Loss from discontinued operations                                                             |  |                                |      |   |                     |   | (2.1  | )                    |  |   | 2.1   |   |  |  | 100.0   |   
|                                                                                              |  |                                |       |   |                     |   |       |                      |  |   |       |   |  |  |         |   
|Net (loss) income                                                                             |  | $                              | (2.4  | ) |                     | $ | 12.7  |                      |  | $ | (15.1 | ) |  |  | >(100.0 | )%
|                                                                                              |  |                                |       |   |                     |   |       |                      |  |   |       |   |  |  |         |   



40



---

##### Table of Contents



|(1) | Amounts for gross profit and selling, general and administrative expenses may not be comparable to those of other companies, as the costs that we include in
these line items may differ from the costs that other companies include. For a discussion of the types of costs included in each line item, see Note 1, Significant Accounting Policies, of the Notes to Consolidated Financial Statements in
the Annual Report on Form 10-K for the year ended December 31, 2009.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | As resin prices can fluctuate significantly, we believe that our gross profit, as well as certain expense items, should not be analyzed solely on a percentage of net
sales basis. Fluctuations in crude oil and natural gas prices can cause significant fluctuations in resin prices, as can refining capacity and the demand for other petroleum-based products.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Net Sales.The increase in net sales was partially due to an increase in resin costs, which are passed through to customers. The
average market price per pound of PET in the U.S. remained constant at $0.77 and the average market price per pound of HDPE in the U.S. increased from $0.69 to $0.78.

Higher unit volume increased net sales by approximately $6.7 million and the unfavorable impact of exchange rates decreased net sales by $5.3 million. The remaining $40.2 million increase was driven
primarily by higher resin costs as described above, partially offset by net price reductions both from operational cost savings shared with our customers and in response to competitive pressure. Net sales from the Liquid Entities and China Roots
acquisitions also contributed to the increase. Container units sold increased 3.0%.

On an operating segment basis, net sales
for the three months ended September 30, 2010, in North America increased $42.7 million, or 8.5%, from the three months ended September 30, 2009. Higher unit volume increased net sales by approximately $7.6 million and the favorable impact
of exchange rates increased net sales by $1.7 million. The remaining $33.4 million increase was largely driven by higher resin costs along with the net sales for the Liquid Entities, partially offset by net price reductions. North American net sales
in the food and beverage product category contributed $44.4 million to the increase, while the household, personal care/specialty and automotive lubricants product categories decreased net sales by $0.2 million, $0.4 million and $1.1 million,
respectively. Container units sold in North America increased in the food and beverage and household product categories by 7.4% and 2.1%, respectively, and decreased in the personal care/specialty and automotive lubricants product categories by 2.3%
and 7.5%, respectively.

Net sales for the three months ended September 30, 2010, in Europe decreased $5.9 million, or
9.6%, from the three months ended September 30, 2009. The decrease in net sales was primarily due to the unfavorable impact of exchange rates of $5.0 million.

Net sales for the three months ended September 30, 2010, in South America increased $0.3 million, or 1.1%, from the three months ended September 30, 2009. The increase in net sales was primarily
due to price increases, partially offset by the unfavorable impact of exchange rates of $2.0 million.

Net sales for the three
months ended September 30, 2010, in our Asian operations were $4.5 million. We began accounting for our Asian operations as a new operating segment as of July 1, 2010.



41



---

##### Table of Contents



Gross Profit.
Gross profit for the three months ended September 30, 2010, increased in North America by $7.0 million, decreased in Europe by $6.6 million, decreased in South America by $0.5 million and increased in Asia by $0.3 million, when compared to the
three months ended September 30, 2009. The increase was primarily due to productivity initiatives, partially offset by the unfavorable impact of exchange rates of $2.0 million and net price reductions referred to above. Inventory step-up
resulting from the purchase price allocation of the Liquid Entities and China Roots acquisitions decreased gross profit by $2.1 million.

Selling, General and Administrative Expenses.The increase was primarily due to charges recorded in response to an arbitrators decision to award OnTech Operations, Inc. approximately $8.1
million for claims made against the Company (see Note 17 of the Notes to Condensed Consolidated Financial Statements (Unaudited) for further discussion of this lawsuit) and expenses related to the acquisition and integration of the Liquid Entities
and China Roots of $8.3 million, partially offset by a decrease in advisory service fees of $1.0 million and ongoing expense reduction efforts.

Asset Impairment Charges. We identified an indicator of possible impairment of certain assets in Argentina, Brazil, France, Mexico and the United States for the three months ended
September 30, 2010, and in Argentina, Brazil, Mexico, Poland and the United States for the three months ended September 30, 2009. As a result, we evaluated the recoverability of these assets and determined that the undiscounted future cash
flows were below the carrying value of these long-lived assets. Additionally, management had no plans to redeploy the majority of these assets. Accordingly, we adjusted the carrying value of these long-lived assets to their estimated fair value in
accordance with the guidance under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 360-10-35-15, Subsequent MeasurementImpairment or Disposal of Long-Lived Assets,
resulting in impairment charges of $0.9 million and $6.1 million for the three months ended September 30, 2010 and 2009, respectively.

Interest Expense. The decrease was primarily due to lower average debt levels in 2010 and the discontinuance of hedge accounting for our interest rate collar and swap agreements of $2.8 million.
This was partially offset by incremental interest expense from the Liquid Entities financings and the rollover of Term Loan B (as herein defined) to Term Loan D (as herein defined) at higher interest rates.

Net Loss on Debt Extinguishment.On September 23, 2010, we amended our senior secured credit agreement (the Credit
Agreement) and determined the amendment should be recorded as an extinguishment of debt in accordance with ASC 470-50-40, Modifications and Extinguishments. As a result, we recorded a net loss on debt extinguishment of $28.5
million for the three months ended September 30, 2010.

Other Income, Net.Other income, net predominantly
included net foreign exchange gains and losses for the three months ended September 30, 2010 and 2009.

Income Tax
(Benefit) Provision.The change primarily resulted from decreased profitability in several of our foreign taxpaying subsidiaries and realization of additional income tax benefits as a result of our recognition of additional deferred tax
liabilities related to the Liquid Acquisition, partially offset by changes in unrecognized tax benefits of foreign subsidiaries.



42



---

##### Table of Contents



Nine Months Ended
September 30, 2010, Compared to Nine Months Ended September 30, 2009

The following table sets forth the summary
of the condensed consolidated statements of income and related percentage changes for the periods indicated:



|                                                                                              |  |                                |         |   |                     |   |         |                      |  |   |       |   |  |  |          |   
|--------------------------------------------------------------------------------------------- |  | ------------------------------ | ------- | - | ------------------- | - | ------- | -------------------- |  | - | ----- | - |  |  | -------- | --
|                                                                                              |  | Nine Months EndedSeptember 30, |         |   | Increase/(Decrease) |   |         | %Increase/(Decrease) | 
|                                                                                              |  | 2010                           |         |   | 2009                |   |         |                     
|                                                                                              |  | (Dollars in millions)          |        
|Net sales                                                                                     |  | $                              | 1,868.8 |   |                     | $ | 1,736.4 |                      |  | $ | 132.4 |   |  |  | 7.6      | % 
|Cost of goods sold                                                                            |  |                                | 1,533.8 |   |                     |   | 1,418.3 |                      |  |   | 115.5 |   |  |  | 8.1      |   
|                                                                                              |  |                                |         |   |                     |   |         |                      |  |   |       |   |  |  |          |   
|Gross profit (1)                                                                              |  |                                | 335.0   |   |                     |   | 318.1   |                      |  |   | 16.9  |   |  |  | 5.3      |   
|% of net sales (2)                                                                            |  |                                | 17.9    | % |                     |   | 18.3    | %                    |  |   |       |   |  |  |          |   
|Selling, general and administrative expenses (1)                                              |  |                                | 139.5   |   |                     |   | 89.4    |                      |  |   | 50.1  |   |  |  | 56.0     |   
|% of net sales (2)                                                                            |  |                                | 7.5     | % |                     |   | 5.1     | %                    |  |   |       |   |  |  |          |   
|Asset impairment charges                                                                      |  |                                | 3.7     |   |                     |   | 14.2    |                      |  |   | (10.5 | ) |  |  | (73.9    | ) 
|Net loss on disposal of property, plant and equipment                                         |  |                                | 2.2     |   |                     |   | 4.4     |                      |  |   | (2.2  | ) |  |  | (50.0    | ) 
|                                                                                              |  |                                |         |   |                     |   |         |                      |  |   |       |   |  |  |          |   
|Operating income                                                                              |  |                                | 189.6   |   |                     |   | 210.1   |                      |  |   | (20.5 | ) |  |  | (9.8     | ) 
|% of net sales (2)                                                                            |  |                                | 10.1    | % |                     |   | 12.1    | %                    |  |   |       |   |  |  |          |   
|Interest expense                                                                              |  |                                | 131.0   |   |                     |   | 127.0   |                      |  |   | 4.0   |   |  |  | 3.1      |   
|Interest income                                                                               |  |                                | (0.5    | ) |                     |   | (0.8    | )                    |  |   | 0.3   |   |  |  | 37.5     |   
|Net loss (gain) on debt extinguishment                                                        |  |                                | 31.1    |   |                     |   | (0.8    | )                    |  |   | 31.9  |   |  |  | >100.0   |   
|Write-off of amounts in accumulated other comprehensive income related to interest rate swaps |  |                                | 7.0     |   |                     |   |        |                      |  |   | 7.0   |   |  |  | >100.0   |   
|Other expense (income), net                                                                   |  |                                | 2.6     |   |                     |   | (2.0    | )                    |  |   | 4.6   |   |  |  | >100.0   |   
|Income tax (benefit) provision                                                                |  |                                | (4.9    | ) |                     |   | 16.5    |                      |  |   | (21.4 | ) |  |  | >(100.0) |   
|                                                                                              |  |                                |         |   |                     |   |         |                      |  |   |       |   |  |  |          |   
|Income from continuing operations                                                             |  |                                | 23.3    |   |                     |   | 70.2    |                      |  |   | (46.9 | ) |  |  | (66.8    | ) 
|Loss from discontinued operations                                                             |  |                                |        |   |                     |   | (3.9    | )                    |  |   | 3.9   |   |  |  | 100.0    |   
|                                                                                              |  |                                |         |   |                     |   |         |                      |  |   |       |   |  |  |          |   
|Net income                                                                                    |  | $                              | 23.3    |   |                     | $ | 66.3    |                      |  | $ | (43.0 | ) |  |  | (64.9    | )%
|                                                                                              |  |                                |         |   |                     |   |         |                      |  |   |       |   |  |  |          |   



|(1) | Amounts for gross profit and selling, general and administrative expenses may not be comparable to those of other companies, as the costs that we include in
these line items may differ from the costs that other companies include. For a discussion of the types of costs included in each line item, see Note 1, Significant Accounting Policies, of the Notes to Consolidated Financial Statements in
the Annual Report on Form 10-K for the year ended December 31, 2009.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | As resin prices can fluctuate significantly, we believe that our gross profit, as well as certain expense items, should not be analyzed solely on a percentage of net
sales basis. Fluctuations in crude oil and natural gas prices can cause significant fluctuations in resin prices, as can refining capacity and the demand for other petroleum-based products.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Net Sales.The increase in net sales was partially due to an increase in resin costs, which are passed through to customers. The
average market price per pound of PET in the U.S. increased from $0.72 to $0.79 and the average market price per pound of HDPE in the U.S. increased from $0.65 to $0.82.

Higher unit volume increased net sales by approximately $50.6 million and the favorable impact of exchange rates increased net sales by $5.5 million. The remaining $76.3 million increase was driven
primarily by higher resin costs as described above, partially offset by net price reductions both from operational cost savings shared with our customers and in response to competitive pressure. Net sales from the Liquid Entities and China Roots
acquisitions also contributed to a minor extent. Container units sold increased 4.9%.

On an operating segment basis, net
sales for the nine months ended September 30, 2010, in North America increased $123.9 million, or 8.3%, from the nine months ended September 30, 2009. Higher unit volume increased net sales by approximately $46.2 million and the favorable
impact of exchange rates increased net sales by $10.0 million. The remaining $67.7 million increase was largely driven by higher resin costs along with the net sales for the Liquid Entities, partially offset by net price reductions. North American
net sales in the food and beverage, household and automotive lubricants product categories contributed $96.7 million, $8.5 million and $20.3 million, respectively, to the increase, while the personal care/specialty product category decreased by $1.6
million. Container units sold in North America increased in the food and beverage, household and personal care/specialty product categories by 9.6%, 3.7% and 0.1%, respectively, and decreased in the automotive lubricants product category by
4.3%.

Net sales for the nine months ended September 30, 2010, in Europe decreased $3.4 million, or 2.0%, from the nine
months ended September 30, 2009. The decrease in net sales was primarily due to the unfavorable impact of exchange rates of $2.1 million and net price reductions, partially offset by higher resin costs.

Net sales for the nine months ended September 30, 2010, in South America increased $7.4 million, or 11.0%, from the nine months
ended September 30, 2009. The increase in net sales was primarily due to an increase in unit volume of approximately $3.7 million and price increases, partially offset by the unfavorable impact of exchange rates of $2.4 million.



43



---

##### Table of Contents



Net sales for the nine
months ended September 30, 2010, in our Asian operations were $4.5 million. We began accounting for our Asian operations as a new operating segment as of July 1, 2010.

Gross Profit.Gross profit for the nine months ended September 30, 2010, increased in North America by $19.2 million,
decreased in Europe by $9.3 million, increased in South America by $6.7 million and increased in Asia by $0.3 million, when compared to the nine months ended September 30, 2009. An increase in unit volume in the legacy business contributed
$13.1 million to the increase. The remaining increase of $3.8 million resulted from ongoing productivity initiatives, slightly offset by net price reductions referred to above. Inventory step-up resulting from the purchase price allocation of the
Liquid Entities and China Roots decreased gross profit by $2.1 million.

Selling, General and Administrative
Expenses.The increase was primarily due to a one-time fee of $35.0 million to affiliates of the Graham Family (defined as Graham Capital Company, GPC Investments LLC and Graham Alternative Investment Partners I or affiliates thereof or
other entities controlled by Donald C. Graham and his family) and Blackstone (defined as Blackstone Capital Partners III Merchant Banking Fund L.P., Blackstone Offshore Capital Partners III L.P. and Blackstone Family Investment Partnership III L.P.
or affiliates thereof) to terminate the Amended and Restated Monitoring Agreement (the Monitoring Agreement), charges recorded in response to an arbitrators decision to award OnTech Operations, Inc. approximately $8.1 million for
claims made against the Company (see Note 17 of the Notes to Condensed Consolidated Financial Statements (Unaudited) for further discussion of this lawsuit), expenses related to the acquisition and integration of the Liquid Entities and China Roots
of $9.2 million, bonuses paid in connection with the initial public offering of Graham Packaging Company Inc. (GPC), the Companys majority owner, (IPO) of $3.5 million and other costs incurred in connection with the IPO
of $1.0 million, partially offset by a decrease in advisory service fees of $2.6 million, a decrease in compensation-related expenses of $2.2 million and ongoing expense reduction efforts.

Asset Impairment Charges. We identified an indicator of possible impairment of certain assets in Argentina, Brazil, France,
Mexico, the United Kingdom and the United States for the nine months ended September 30, 2010, and in Argentina, Brazil, Mexico, Poland and the United States for the nine months ended September 30, 2009. As a result, we evaluated the
recoverability of these assets and determined that the undiscounted future cash flows were below the carrying value of these long-lived assets. Additionally, management had no plans to redeploy the majority of these assets. Accordingly, we adjusted
the carrying value of these long-lived assets to their estimated fair value in accordance with the guidance under ASC 360-10-35-15, Subsequent MeasurementImpairment or Disposal of Long-Lived Assets, resulting in impairment charges
of $3.7 million and $14.2 million for the nine months ended September 30, 2010 and 2009, respectively.

Interest
Expense. The increase was primarily due to the extension, in May 2009, of $1,200.0 million of our term loan at a minimum LIBOR and increased LIBOR margin, partially offset by lower average debt levels in 2010 and the discontinuance of hedge
accounting for our interest rate collar and swap agreements of $4.7 million. See Liquidity and Capital Resources for a more detailed description of our term loan extension.

Net Loss (Gain) on Debt Extinguishment.We made principal payments against the Credit Agreement of $114.2 million in February 2010
using the contributions we received from GPC in exchange for limited partnership units in connection with the IPO and of $14.7 million in March 2010 using the contributions we received from GPC in exchange for limited partnership units in connection
with the sale of additional shares following the IPO and for an excess cash flow payment of $62.5 million due for the year ended December 31, 2009, paid in March 2010. These principal payments resulted in a write-off of unamortized debt
issuance fees and unamortized discount in the amount of $2.6 million. Additionally, on September 23, 2010, we amended our Credit Agreement and determined the amendment should be recorded as an extinguishment of debt in accordance with ASC
470-50-40, Modifications and Extinguishments, resulting in a loss on debt extinguishment of $28.5 million. The total loss on debt extinguishment for the nine months ended September 30, 2010, was $31.1 million. On May 28, 2009,
we amended the Credit Agreement and determined the amendment should be recorded as an extinguishment of debt in accordance with ASC 470-50-40. As a result, we recorded a net gain on debt extinguishment of $0.8 million for the nine months ended
September 30, 2009.

Other Expense (Income), Net. Other expense (income), net predominantly included net foreign
exchange gains and losses for the nine months ended September 30, 2010 and 2009. Other expense, net for the nine months ended September 30, 2010, included a loss of $2.3 million related to the application of hyper-inflationary accounting
for our Venezuelan subsidiary and the devaluation of the Venezuelan bolivar.



44



---

##### Table of Contents



Income Tax
(Benefit) Provision.The change primarily resulted from decreased profitability in several of our foreign taxpaying subsidiaries, establishing a valuation allowance in our Brazilian subsidiary in fiscal year 2009, changes in income taxes withheld
on foreign dividends, and realization of additional income tax benefits as a result of our recognition of additional deferred tax liabilities related to the Liquid Acquisition, partially offset by changes in unrecognized tax benefits of foreign
subsidiaries.

Effect of Changes in Exchange Rates

We generally conduct business in our foreign operations in local currencies. Accordingly, our results of operations are affected by changes in foreign exchange rates. Income and expense accounts and cash
flow items are translated at average monthly exchange rates during the period. As a result, a decline in the value of the U.S. dollar relative to the local currencies of profitable foreign subsidiaries can have a favorable effect on our
profitability, and an increase in the value of the U.S. dollar relative to the local currencies of profitable foreign subsidiaries can have a negative effect on our profitability.

We manage foreign currency exposures (primarily to the euro, Canadian dollar, Polish zloty, Brazilian real, pound sterling and certain
non-U.S. subsidiaries purchases of raw materials and/or sales of products in U.S. dollars) at the operating unit level. Exposures that cannot be naturally offset within an operating unit are hedged with derivative financial instruments where
possible and cost effective in our judgment. Foreign currency exchange contracts which hedge defined exposures generally mature within twelve months. We do not generally hedge our exposure to translation gains or losses on our non-U.S. net assets.
There were foreign currency exchange contracts of $1.5 million outstanding as of each of September 30, 2010, and December 31, 2009. Included in other (income) expense, net were foreign exchange gains of $0.2 million and $0.5 million for
the three months ended September 30, 2010 and 2009, respectively, and foreign exchange losses of $3.0 million, including a loss of $2.3 million related to the application of hyper-inflationary accounting for our Venezuelan subsidiary and the
devaluation of the Venezuelan bolivar, and foreign exchange gains of $2.3 million for the nine months ended September 30, 2010 and 2009, respectively. Net sales for our Venezuelan subsidiary were $4.5 million for the nine months ended
September 30, 2010.

Assets and liabilities are translated at exchange rates in effect at the balance sheet date. Net
exchange gains or losses resulting from the translation of foreign financial statements are recorded as a separate component of partners capital (deficit) under the caption accumulated other comprehensive income. Exchange rate
fluctuations increased comprehensive income by $25.2 million and $10.3 million for the three months ended September 30, 2010 and 2009, respectively, and increased comprehensive income by $0.7 million and $15.2 million for the nine months ended
September 30, 2010 and 2009, respectively.

Derivatives

During the first quarter of 2009, we elected to roll over our senior secured term loan in one-month increments to reduce our cash interest, as opposed to continuing to roll over our senior secured term
loan in three-month increments to match the terms of our interest rate collar agreements. We had therefore discontinued hedge accounting for our interest rate collar and swap agreements. As a result, no change in fair value was recorded in other
comprehensive income for the nine months ended September 30, 2010 and 2009. As a result of the extinguishment of the senior secured term loan due October 7, 2011 (Term Loan B), in conjunction with the refinancing of the Credit
Agreement that enabled us to purchase the Liquid Entities on September 23, 2010, we wrote off the remaining unamortized amount in accumulated other comprehensive income (loss).

During 2009, we entered into a $1.2 million foreign currency exchange contract to hedge the exchange rate exposure on a transaction that
is denominated in pound sterling. The contract has been renewed several times, most recently in the third quarter of 2010 for another six months for a contract value of $1.5 million. This foreign currency exchange contract is accounted for as a cash
flow hedge and is highly effective as defined by ASC 815, Derivatives and Hedging.

Liquidity and Capital Resources

In the nine months ended September 30, 2010, we generated $183.9 million of cash flow from operations, $165.4 million
of net proceeds from the IPO and $370.0 million of other financing activities, and funded $696.9



45



---

##### Table of Contents

million of investing activities, resulting in a net source of cash of $22.1 million. The cash generated from operating activities came primarily from our net income adjusted for non-cash items
and a decrease in working capital.

The decrease in working capital, which excludes the acquired assets and assumed
liabilities of the acquired companies, was primarily due to an increase in accounts payable resulting from higher resin costs and an increase in accrued interest, partially offset by an increase in accounts receivable resulting from higher resin
costs and higher sales in September 2010 compared to December 2009.

Cash paid for property, plant and equipment for the nine
months ended September 30, 2010, was $111.2 million. Our largest capital spending in the first nine months of 2010 included machinery and tooling equipment purchases to supply a large beverage customer in South America, the installation of a
new bottle line for a large beverage customer at our new on-site facility in Mexico, and increasing production capacity through plant infrastructure improvements and machine upgrades in South America to better service a large automotive
customer.

During the nine months ended September 30, 2010, we acquired the following: the Liquid Entities for a net cost of
approximately $563.1 million, net of cash acquired of $1.2 million; China Roots for a net cost of approximately $14.4 million, net of cash acquired of $1.0 million; and certain miscellaneous blow molding fixed assets for approximately $1.4 million.

Financing activities included the paydown of the Term Loans (as defined herein) using the net proceeds from the sale of
additional units to GPC of $165.4 million. In addition, $62.5 million was repaid on the Term Loans as an excess cash flow payment required by the Credit Agreement and $11.0 million was repaid on the Term Loans for regular amortization. Additionally,
we refinanced the Credit Agreement and issued additional senior notes on September 23, 2010, that enabled us to purchase the Liquid Entities, as more fully discussed below.

As of September 30, 2010, our Credit Agreement, as amended, consisted of a senior secured term loan of $1,021.2 million ($1,035.5
million aggregate outstanding principal amount less $14.3 million unamortized discount) due April 5, 2014 (Term Loan C) and a senior secured term loan of $917.6 million ($913.0 million aggregate outstanding principal amount plus
$4.6 million unamortized premium) (Term Loan D and, together with the Term Loan C, the Term Loans), to the Operating Company, and a $260.0 million senior secured revolving credit facility (the Revolver) with
availability of $246.7 million (as reduced by $13.3 million of outstanding letters of credit). The Term Loan D will mature on the earliest of (i) September 23, 2016, (ii) the date that is 91 days prior to the maturity of our 8.25%
senior notes due January 2017 if such senior notes have not been repaid or refinanced in full by such date or (iii) the date that is 91 days prior to the maturity of our 9.875% senior subordinated notes due October 2014 if such senior notes
have not been repaid or refinanced in full by such date. The obligations of the Operating Company and GPC Capital Corp. I (CapCo I) under the Credit Agreement are guaranteed by Holdings and certain domestic subsidiaries of the Operating
Company. The Term Loans are payable in quarterly installments and require payments of $4.9 million in the remainder of 2010, $19.6 million in 2011, $19.6 million in 2012, $19.7 million in 2013, $1,010.5 million in 2014 and $874.2 million thereafter
(disregarding any further mandatory or voluntary prepayments that may reduce such scheduled amortization payments). The payments of $4.9 million in the remainder of 2010 exclude the paydowns of debt in the first three quarters of 2010 of $114.2
million with the contributions received from GPC in exchange for limited partnership units in connection with the IPO and of $14.7 million with the contributions received from GPC in exchange for limited partnership units in connection with the sale
of additional shares following the IPO and from an excess cash flow payment of $62.5 million due for the year ended December 31, 2009, paid in March 2010.

On May 28, 2009, certain of our Revolver lenders agreed to extend their commitments, with respect to $112.8 million of the total commitment, conditioned on the refinancing in full of our senior notes
due 2012, which occurred in November 2009. In conjunction with the extension of these revolving commitments, we also voluntarily reduced the amount of total revolving commitments available to us under the Credit Agreement from $250.0 million to
$248.0 million. Subsequent to the IPO, we received a $12.0 million increase to our revolving commitments. As of September 30, 2010, we had $124.8 million of commitments that will expire on October 1, 2013, and $135.2 million of commitments
that expired on October 7, 2010.

On May 28, 2009, the Credit Agreement was also amended such that we may not permit
our senior secured net debt to covenant compliance EBITDA (as defined below) ratio to exceed (a) 5.50x on the last day of any fiscal quarter ending on or before December 31, 2011; (b) 5.25x on the last day of any fiscal quarter ending
on or after



46



---

##### Table of Contents

January 1, 2012, and ending on or before December 31, 2012; and (c) 5.00x on the last day of any fiscal quarter thereafter. As of September 30, 2010, we were in compliance
with all covenants in the Credit Agreement.

We expect to fund scheduled debt repayments in 2010 with cash flow from
operations. Substantially all unused lines of credit have no major restrictions and are provided under notes between us and the respective lending institutions.

On September 23, 2010, in conjunction with the Liquid Acquisition, the Operating Company and CapCo I co-issued $250.0 million aggregate principal amount of 8.25% senior unsecured notes due 2018
(Senior Notes due 2018). Besides these notes, as of September 30, 2010, we also had outstanding $253.4 million aggregate principal amount of 8.25% senior unsecured notes due 2017 (Senior Notes due 2017) and $375.0
million in senior subordinated notes due 2014 (Senior Subordinated Notes) co-issued by the Operating Company and CapCo I (collectively with the Senior Notes due 2018 and the Senior Notes due 2017, the Notes). The Notes are
unconditionally guaranteed, jointly and severally, by Holdings and certain domestic subsidiaries of the Operating Company and mature on October 7, 2014 (Senior Subordinated Notes), January 1, 2017 (Senior Notes due 2017) and
October 1, 2018 (Senior Notes due 2018). Interest on the Senior Subordinated Notes is payable semi-annually at 9.875% per annum and interest on the Senior Notes due 2017 and the Senior Notes due 2018 is payable semi-annually at
8.25% per annum. On November 1, 2010, the Operating Company and CapCo I completed an Exchange Offer whereby the Senior Notes due 2017 and Senior Notes due 2018 were exchanged for Notes registered under the Securities Act of 1933, as
amended.

As of September 30, 2010, our total indebtedness was $2,859.9 million, net of $12.7 million unamortized net
discount, and our indebtedness net of cash was $2,690.0 million.

The Credit Agreement and the indentures governing the Notes
contain a number of significant covenants. We believe that these covenants are material terms of these agreements and that information about the covenants is material to an investors understanding of our financial condition and liquidity.
Covenant compliance EBITDA (as defined below) is used to determine our compliance with certain of these covenants. Any breach of covenants in the Credit Agreement (including those that are tied to financial ratios based on covenant compliance
EBITDA) could result in a default under the Credit Agreement and the lenders could elect to declare all amounts borrowed to be immediately due and payable. Any such acceleration would also result in a default under the indentures. Additionally,
these covenants restrict our and our subsidiaries ability to dispose of assets, repay other indebtedness, incur additional indebtedness, pay dividends, prepay subordinated indebtedness, incur liens, make capital expenditures, investments or
acquisitions, engage in mergers or consolidations, engage in transactions with affiliates and otherwise restrict our activities. Under the Credit Agreement, we are required to satisfy specified financial ratios and tests. The Credit Agreement also
requires that up to 50% of excess cash flow (as defined in the Credit Agreement) be applied on an annual basis to pay down the Term Loans. As of September 30, 2010, we were in compliance with the financial ratios and tests specified in the
Credit Agreement.

We define covenant compliance EBITDA as EBITDA (i.e., earnings before interest, taxes, depreciation and
amortization) further adjusted to exclude non-recurring items, non-cash items and other adjustments required in calculating covenant compliance under the Credit Agreement and the indentures, as shown in the table below. Covenant compliance EBITDA is
not intended to represent cash flow from operations as defined by generally accepted accounting principles and should not be used as an alternative to net income as an indicator of operating performance or to cash flow as a measure of liquidity. We
believe that the inclusion of covenant compliance EBITDA in this quarterly report on Form 10-Q is appropriate to provide additional information to investors about the calculation of certain financial covenants in the Credit Agreement and the
indentures. Because not all companies use identical calculations, these presentations of covenant compliance EBITDA may not be comparable to other similarly titled measures of other companies. A reconciliation of (loss) income from continuing
operations to covenant compliance EBITDA is as follows:

Reconciliation of (loss) income from continuing operations to EBITDA



|                                         |  |                                 |       |   |                                |   |       |                                    |  |   |       |   |  |   |       |   |  |   |       |  
|---------------------------------------- |  | ------------------------------- | ----- | - | ------------------------------ | - | ----- | ---------------------------------- |  | - | ----- | - |  | - | ----- | - |  | - | ----- | -
|                                         |  | Three Months EndedSeptember 30, |       |   | Nine Months EndedSeptember 30, |   |       | FourQuartersEndedSeptember 30,2010 | 
|                                         |  | 2010                            |       |   | 2009                           |   |       | 2010                               |  |   | 2009  |   | 
|                                         |  | (In millions)                   |      
|(Loss) income from continuing operations |  | $                               | (2.4  | ) |                                | $ | 14.9  |                                    |  | $ | 23.3  |   |  | $ | 70.2  |   |  | $ | (16.6 | )
|Interest income                          |  |                                 | (0.2  | ) |                                |   | (0.4  | )                                  |  |   | (0.5  | ) |  |   | (0.8  | ) |  |   | (0.8  | )
|Interest expense                         |  |                                 | 43.7  |   |                                |   | 50.1  |                                    |  |   | 131.0 |   |  |   | 127.0 |   |  |   | 180.8 |  
|Income tax (benefit) provision           |  |                                 | (10.0 | ) |                                |   | 7.4   |                                    |  |   | (4.9  | ) |  |   | 16.5  |   |  |   | (0.1  | )
|Depreciation and amortization            |  |                                 | 40.3  |   |                                |   | 39.4  |                                    |  |   | 117.9 |   |  |   | 118.5 |   |  |   | 158.1 |  
|                                         |  |                                 |       |   |                                |   |       |                                    |  |   |       |   |  |   |       |   |  |   |       |  
|EBITDA                                   |  | $                               | 71.4  |   |                                | $ | 111.4 |                                    |  | $ | 266.8 |   |  | $ | 331.4 |   |  | $ | 321.4 |  
|                                         |  |                                 |       |   |                                |   |       |                                    |  |   |       |   |  |   |       |   |  |   |       |  



47



---

##### Table of Contents



Reconciliation of EBITDA to
covenant compliance EBITDA



|                                                                                              |  |                                 |       |   |                                |   |       |                                    |  |   |       |  |  |   |       |   |  |   |       | 
|--------------------------------------------------------------------------------------------- |  | ------------------------------- | ----- | - | ------------------------------ | - | ----- | ---------------------------------- |  | - | ----- |  |  | - | ----- | - |  | - | ----- | 
|                                                                                              |  | Three Months EndedSeptember 30, |       |   | Nine Months EndedSeptember 30, |   |       | FourQuartersEndedSeptember 30,2010 | 
|                                                                                              |  | 2010                            |       |   | 2009                           |   |       | 2010                               |  |   | 2009  |  | 
|                                                                                              |  | (In millions)                   |      
|EBITDA                                                                                        |  | $                               | 71.4  |   |                                | $ | 111.4 |                                    |  | $ | 266.8 |  |  | $ | 331.4 |   |  | $ | 321.4 | 
|Asset impairment charges                                                                      |  |                                 | 0.9   |   |                                |   | 6.1   |                                    |  |   | 3.7   |  |  |   | 14.2  |   |  |   | 31.4  | 
|Other non-cash charges (a)                                                                    |  |                                 | 1.3   |   |                                |   | 2.4   |                                    |  |   | 3.0   |  |  |   | 5.1   |   |  |   | 5.3   | 
|Fees related to monitoring agreements (b)                                                     |  |                                 | 0.2   |   |                                |   | 1.3   |                                    |  |   | 1.2   |  |  |   | 3.7   |   |  |   | 2.4   | 
|Net loss (gain) on debt extinguishment                                                        |  |                                 | 28.5  |   |                                |   |      |                                    |  |   | 31.1  |  |  |   | (0.8  | ) |  |   | 40.6  | 
|Write-off of amounts in accumulated other comprehensive income related to interest rate swaps |  |                                 | 7.0   |   |                                |   |      |                                    |  |   | 7.0   |  |  |   |      |   |  |   | 7.0   | 
|Contract termination fee and IPO-related expenses (c)                                         |  |                                 | 0.2   |   |                                |   |      |                                    |  |   | 39.6  |  |  |   |      |   |  |   | 39.8  | 
|Acquisition and integration expenses (d)                                                      |  |                                 | 10.4  |   |                                |   |      |                                    |  |   | 11.2  |  |  |   |      |   |  |   | 11.2  | 
|Venezuelan hyper-inflationary accounting                                                      |  |                                 | (0.2  | ) |                                |   |      |                                    |  |   | 2.3   |  |  |   |      |   |  |   | 2.3   | 
|Reorganization and other costs (e)                                                            |  |                                 | 10.6  |   |                                |   | 3.6   |                                    |  |   | 13.9  |  |  |   | 9.0   |   |  |   | 19.1  | 
|Project startup costs (f)                                                                     |  |                                 | 2.7   |   |                                |   | 2.3   |                                    |  |   | 8.5   |  |  |   | 9.2   |   |  |   | 11.3  | 
|                                                                                              |  |                                 |       |   |                                |   |       |                                    |  |   |       |  |  |   |       |   |  |   |       | 
|Covenant compliance EBITDA                                                                    |  | $                               | 133.0 |   |                                | $ | 127.1 |                                    |  | $ | 388.3 |  |  | $ | 371.8 |   |  | $ | 491.8 | 
|                                                                                              |  |                                 |       |   |                                |   |       |                                    |  |   |       |  |  |   |       |   |  |   |       | 



|(a) | Represents the net loss on disposal of fixed assets, stock-based compensation expense and equity income from unconsolidated subsidiaries.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------

|(b) | Represents annual fees paid to Blackstone Management Partners III L.L.C. and a limited partner of Holdings pursuant to the Fifth Amended and Restated Limited
Partnership Agreement, the Monitoring Agreement and the Sixth Amended and Restated Limited Partnership Agreement.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | Represents costs related to the termination of the Monitoring Agreement, IPO bonus payments and other IPO-related costs.
|--- | ------------------------------------------------------------------------------------------------------------------------

|(d) | Represents costs related to the acquisition and integration of the Liquid Entities and China Roots.
|--- | ---------------------------------------------------------------------------------------------------

|(e) | Represents costs related to an arbitrators decision to award OnTech Operations, Inc. a settlement for its claims against us (see Note 17 of the Notes to Condensed
Consolidated Financial Statements (Unaudited) for further discussion of this lawsuit), plant closures, employee severance and other costs defined in the Credit Agreement.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(f) | Represents costs associated with startups of manufacturing lines to produce new products.
|--- | -----------------------------------------------------------------------------------------

Under applicable debt agreements, our ability to engage in activities such as incurring additional indebtedness, making investments and
paying dividends is also tied to ratios based on covenant compliance EBITDA. The Credit Agreement requires that we maintain a senior secured net debt to covenant compliance EBITDA ratio at a maximum of 5.5x for the most recent four-quarter period.
For the four quarters ended September 30, 2010, the Operating Companys covenant compliance EBITDA was $491.8 million and the senior secured net debt to covenant compliance EBITDA ratio was 3.7x, excluding any adjustment to include pro
forma EBITDA of the acquired companies as permitted by the Credit Agreement. Given the level of senior secured debt as of September 30, 2010, the Operating Companys covenant compliance EBITDA could have fallen by $160.1 million to $331.7
million for the four quarters ended September 30, 2010, and we still would have been in compliance with the covenants in the Credit



48



---

##### Table of Contents

Agreement. The ability of the Operating Company to incur additional debt and make certain restricted payments under its Notes is tied to a minimum covenant compliance EBITDA to fixed charges
(primarily cash interest expense) ratio of 2.0x, except that the Operating Company may incur certain debt and make certain restricted payments without regard to the ratio, including, but not limited to, exceptions permitting $2.2 billion under the
Credit Agreement and investments equal to 7.5% of the Operating Companys total assets. The covenant compliance EBITDA to fixed charges ratio was 2.8x for the four quarters ended September 30, 2010.

Substantially all of the tangible and intangible assets of our domestic subsidiaries that are guarantors under the Credit Agreement are
pledged as collateral pursuant to the terms of the Credit Agreement.

Under the Credit Agreement, as amended, the Operating
Company is subject to restrictions on the payment of dividends or other distributions to Holdings; provided that, subject to certain limitations, the Operating Company may pay dividends or other distributions to Holdings:



| |  |  | with respect to overhead, tax and tax-related liabilities, legal, accounting and other professional fees and expenses; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------



| |  |  | to fund purchases and redemptions of equity interests of Holdings or GPC held by then present or former officers or employees of Holdings, the
Operating Company or their Subsidiaries (as defined therein) or by any employee stock ownership plan upon that persons death, disability, retirement or termination of employment or other circumstances with annual dollar limitations.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We and our subsidiaries, affiliates or significant stockholders (including Blackstone) may, from time to
time, subject to limitations in our debt agreements and in our or their sole discretion, purchase, repay, redeem or retire any of our outstanding debt or equity securities (including any publicly issued debt or equity securities), in privately
negotiated or open market transactions, by tender offer or otherwise.

We believe that capital expenditures to maintain and
upgrade property, plant and equipment are important to remain competitive. We estimate that on average the maintenance capital expenditures are approximately $30 million to $40 million per year. Additional capital expenditures beyond this amount
will be required to expand capacity or improve our cost structure.

For the year 2010, we expect to incur capital expenditures
ranging from $140 million to $160 million, and for the year 2011, we expect to incur capital expenditures ranging from $160 million to $180 million. We also expect to incur some capital expenditures associated with the integration of the Liquid
Entities into our operating network. We expect this number to be between $10 million and $20 million over the next two years. However, total capital expenditures will depend on the size and timing of growth related opportunities. Our principal
source of cash to fund ongoing operations and capital requirements has been and is expected to continue to be cash flow from operations. We believe that cash flow from operations will be sufficient to fund our ongoing operations and foreseeable
capital requirements.

Contractual Obligations and Commitments

The following table sets forth, as of September 30, 2010, our significant contractual obligations and commitments which have experienced significant changes since December 31, 2009. This table
reflects changes directly related to the refinancing of the Credit Agreement and issuance of new senior notes on September 23, 2010, that enabled us to purchase the Liquid Entities.



|                                             |  |                        |           |  |      |   |        |              |  |   |              |  |  |                |           |  |  |   |           | 
|-------------------------------------------- |  | ---------------------- | --------- |  | ---- | - | ------ | ------------ |  | - | ------------ |  |  | -------------- | --------- |  |  | - | --------- | 
|                                             |  | Payments Due by Period |          
|Contractual Obligations                      |  | Total                  |           |  | 2010 |   |        | 2011 and2012 |  |   | 2013 and2014 |  |  | 2015 andbeyond |          
|                                             |  | (In thousands)         |          
|Long-term debt, excluding capital leases (a) |  | $                      | 2,860,184 |  |      | $ | 15,951 |              |  | $ | 54,128       |  |  | $              | 1,405,450 |  |  | $ | 1,384,655 | 
|Interest payments (b)                        |  |                        | 1,019,722 |  |      |   | 55,117 |              |  |   | 413,517      |  |  |                | 340,861   |  |  |   | 210,227   | 



|(a) | Amounts exclude the unamortized net discounts related to the Credit Agreement and the Senior Notes due 2017 of $12.7 million as of September 30, 2010.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Interest payments are calculated based upon our actual interest rates as of September 30, 2010.
|--- | -----------------------------------------------------------------------------------------------



49



---

##### Table of Contents



Income Tax Receivable Agreements

In connection with the IPO, GPC entered into Income Tax Receivable Agreements (ITRs) which will obligate it to
make payments to its pre-IPO stockholders (including Blackstone) and the Graham Family in an amount equal to 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that GPC actually realizes (or is deemed to realize
in the case of an early termination or change in control as further described in the ITRs) as a result of (i) the utilization of GPCs net operating losses attributable to periods prior to the IPO, (ii) any increase to the tax basis
of the assets of Holdings relating to GPCs 1998 acquisition of 85% of Holdings and current and future exchanges of limited partnership units by the Graham Family pursuant to the Exchange Agreement, and (iii) other tax benefits related to
GPCs entering into the ITRs, including tax benefits attributable to payments under the ITRs. As of September 30, 2010, the value of the ITRs obligations was $8.2 million. Because GPC is a holding company with no operations of its own, its
ability to make payments under the ITRs is dependent on our ability to make future distributions. For the nine months ended September 30, 2010, no payments have been made under these ITRs.

Off-Balance Sheet Arrangements

As of September 30, 2010, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

We have entered into agreements with an unrelated third-party for the financing of specific accounts receivable of certain foreign
subsidiaries. The financing of accounts receivable under these agreements is accounted for as a sale of receivables in accordance with the guidance under ASC 860-20, Sale of Financial Assets. Under the terms of the financing agreements,
we transfer ownership of eligible accounts receivable without recourse to the third-party purchaser in exchange for cash. Proceeds on the transfer reflect the face value of the accounts receivable less a discount. The discount is recorded against
net sales on the consolidated statement of operations in the period of the sale. The eligible receivables financed pursuant to this factoring agreement are excluded from accounts receivable on the consolidated balance sheet and are reflected as cash
provided by operating activities on the consolidated statement of cash flows, while non-eligible receivables remain on the balance sheet with a corresponding liability established when those receivables are financed. We do not continue to service,
administer and collect the eligible receivables under this program. The third-party purchaser has no recourse to us for failure of debtors constituting eligible receivables to pay when due. We maintain insurance on behalf of the third-party
purchaser to cover any losses due to the failure of debtors constituting eligible receivables to pay when due. At September 30, 2010, and December 31, 2009, we had sold $9.9 million and $15.7 million of eligible accounts receivable,
respectively, which represent the face amounts of total outstanding receivables at those dates.

Environmental Matters

We are subject to potential loss contingencies resulting from regulation by various federal, state, local and foreign governmental
authorities with respect to the environmental impact of our operating facilities. In the event a known environmental issue is identified, we may incur substantial costs to comply with environmental laws and regulations. See Note 23 of the Notes to
Condensed Consolidated Financial Statements (Unaudited) for further discussion.

Recent Accounting Pronouncements

See Note 1 of the Notes to Condensed Consolidated Financial Statements (Unaudited) for information regarding new accounting
pronouncements.



50



---

##### Table of Contents



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

The quantitative and qualitative disclosures about market risk are discussed in Part II, Item 7A in the Annual Report on Form 10-K for the fiscal year ended December 31, 2009. Other than as set
forth below, there have been no material changes in information reported since the year ended December 31, 2009.

Interest Rate Risk

The following table sets forth our long- and short-term debt commitments outstanding as of September 30, 2010. For
variable-rate debt obligations, the table presents principal cash flows and related actual weighted average interest rates as of September 30, 2010. For fixed-rate debt obligations, the table presents principal cash flows and related weighted
average interest rates by maturity dates. This table has been updated to reflect changes directly related to the refinancing of the Credit Agreement and issuance of new senior notes on September 23, 2010, that enabled us to purchase the Liquid
Entities.



|                                                       |  |                                                                                           |        |   |                                |   |        |      |  |   |        |   |  |      |        |   |            |   |           |       |  |   |           |   |  |   |           |     |  |   |           | 
|------------------------------------------------------ |  | ----------------------------------------------------------------------------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | - | ------ | - |  | ---- | ------ | - | ---------- | - | --------- | ----- |  | - | --------- | - |  | - | --------- | --- |  | - | --------- | 
|                                                       |  | Expected Maturity Date of Long-Term Debt (Including Current Portion)at September 30, 2010 |        |   | Fair Value atSeptember 30,2010 |  
|                                                       |  | 2010                                                                                      |        |   | 2011                           |   |        | 2012 |  |   | 2013   |   |  | 2014 |        |   | Thereafter |   |           | Total |  |  
|                                                       |  | (Dollars in thousands)                                                                    |       
|Interest rate sensitive liabilities:                   |  |                                                                                           |        |   |                                |   |        |      |  |   |        |   |  |      |        |   |            |   |           |       |  |   |           |   |  |   |           |     |  |   |           | 
|Variable-rate borrowings, including short-term amounts |  | $                                                                                         | 13,895 |   |                                | $ | 28,803 |      |  | $ | 21,329 |   |  | $    | 19,956 |   |            | $ | 1,010,487 |       |  | $ | 881,278   |   |  | $ | 1,975,748 | (a) |  | $ | 1,993,786 | 
|Average interest rate                                  |  |                                                                                           | 8.54   | % |                                |   | 9.49   | %    |  |   | 7.05   | % |  |      | 6.59   | % |            |   | 6.74      | %     |  |   | 5.95      | % |  |   | 6.45      | %   |  |   |           | 
|Fixed-rate borrowings                                  |  | $                                                                                         | 7,907  |   |                                | $ | 9,148  |      |  | $ | 1,463  |   |  | $    | 9      |   |            | $ | 375,000   |       |  | $ | 503,377   |   |  | $ | 896,904   | (b) |  | $ | 913,804   | 
|Average interest rate                                  |  |                                                                                           | 9.58   | % |                                |   | 10.06  | %    |  |   | 11.32  | % |  |      | 3.99   | % |            |   | 9.88      | %     |  |   | 8.25      | % |  |   | 8.96      | %   |  |   |           | 
|Total interest rate sensitive liabilities              |  | $                                                                                         | 21,802 |   |                                | $ | 37,951 |      |  | $ | 22,792 |   |  | $    | 19,965 |   |            | $ | 1,385,487 |       |  | $ | 1,384,655 |   |  | $ | 2,872,652 |     |  | $ | 2,907,590 | 
|                                                       |  |                                                                                           |        |   |                                |   |        |      |  |   |        |   |  |      |        |   |            |   |           |       |  |   |           |   |  |   |           |     |  |   |           | 



|(a) | Excludes $9.7 million of unamortized net discount.
|--- | --------------------------------------------------

|(b) | Excludes $3.0 million of unamortized discount.
|--- | ----------------------------------------------

Based on the outstanding amount of our variable-rate indebtedness at September 30, 2010, a one percentage point change in the interest rates for our variable-rate indebtedness would impact interest
expense by an aggregate of approximately $0.3 million, excluding the impact of our interest rate swap agreements at September 30, 2010.

Derivatives

The
following table presents information for our interest rate collar agreements, interest rate swap agreements and foreign currency exchange contract. The notional amounts do not necessarily represent amounts exchanged by the parties, and therefore are
not direct measures of our exposure to credit risk. The fair values approximate the costs to settle the outstanding contracts.



|                                    |  |                   |         |   |                  |   |         |  
|----------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                    |  | September 30,2010 |         |   | December 31,2009 |  
|                                    |  | (In thousands)    |        
|Interest rate collar agreements:    |  |                   |         |   |                  |   |         |  
|Notional amount                     |  | $                 |        |   |                  | $ | 385,000 |  
|Fair value  liability              |  |                   |        |   |                  |   | (68     | )
|Interest rate swap agreements:      |  |                   |         |   |                  |   |         |  
|Notional amount                     |  |                   | 350,000 |   |                  |   | 350,000 |  
|Fair value  liability              |  |                   | (11,028 | ) |                  |   | (16,688 | )
|Foreign currency exchange contract: |  |                   |         |   |                  |   |         |  
|Notional amount                     |  |                   | 1,472   |   |                  |   | 1,544   |  
|Fair value  asset (liability)      |  |                   | 5       |   |                  |   | (27     | )



51



---

##### Table of Contents



See
Managements Discussion and Analysis of Financial Condition and Results of Operations  Liquidity and Capital Resources (Part I, Item 2) for further discussion of our debt commitments.



52



---

##### Table of Contents



|Item 4. | Controls and Procedures
|------- | -----------------------



|(a) | Evaluation of Disclosure Controls and Procedures
|--- | ------------------------------------------------

As of the end of the period covered by this Quarterly Report on Form 10-Q, management, with the participation of the Companys Chief Executive Officer and Chief Financial Officer, performed an
evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Our disclosure controls and procedures are designed to ensure that
information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms, and that
such information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Based on this evaluation and subject to the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that, as of
September 30, 2010, the design and operation of our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.



|(b) | Changes in Internal Control over Financial Reporting
|--- | ----------------------------------------------------

On September 23, 2010, we completed the acquisition of the Liquid Entities. We are in the process of incorporating the Liquid Entities internal controls into our control structure. We consider
the ongoing integration of the Liquid Entities a material change in our internal control over financial reporting. There were no other changes in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act) that occurred during the quarter ended September 30, 2010, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



53



---

##### Table of Contents



PART II.
OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

For a
description of our legal proceedings, see Note 17 of the Notes to Condensed Consolidated Financial Statements (Unaudited) which is incorporated by reference in response to this item.



|Item 1A. | Risk Factors
|-------- | ------------

In addition
to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2009 (the Form
10-K), which could materially affect our business, financial condition or future results. The risk factors in our Form 10-K have not materially changed, except as set forth below.

The following supplements the risk factors related to our business set forth in our Form 10-K:

We may not be able to successfully integrate the Liquid Entities, or other businesses we may acquire in the future, and we may not
be able to realize anticipated cost savings, revenue enhancements or other synergies from such acquisitions.

Our
ability to successfully implement our business plan and achieve targeted financial results depends on our ability to successfully integrate the Liquid Entities or other businesses we may acquire in the future. The process of integrating the Liquid
Entities, or any other acquired businesses, involves risks. These risks include, but are not limited to:



| |  |  | demands on management related to the significant increase in the size of our business;
| | - |  | --------------------------------------------------------------------------------------



| |  |  | diversion of managements attention from the management of daily operations;
| | - |  | ----------------------------------------------------------------------------



| |  |  | difficulties in conforming the acquired business accounting principles to ours;
| | - |  | --------------------------------------------------------------------------------



| |  |  | retaining the loyalty and business of the customers of the acquired businesses;
| | - |  | -------------------------------------------------------------------------------



| |  |  | retaining employees that may be vital to the integration of departments, information technology systems, including accounting systems, technologies,
books and records, and procedures, and maintaining uniform standards, such as internal accounting controls and procedures, and policies; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | costs and expenses associated with any undisclosed or potential liabilities.
| | - |  | ----------------------------------------------------------------------------

Failure to successfully integrate the Liquid Entities, or any other acquired businesses, may result in reduced levels of revenue,
earnings or operating efficiency that might have been achieved if we had not acquired such businesses.

In addition, the
Liquid Acquisition has resulted, and any future acquisitions could result, in the incurrence of additional debt and related interest expense and amortization expenses related to intangible assets, which could have a material adverse effect on our
financial condition, operating results and cash flows.

We may not be able to achieve the estimated future cost savings
expected to be realized as a result of the Liquid Acquisition or other future acquisitions. Failure to achieve such estimated future cost savings could have an adverse effect on our financial condition and results of operations.



54



---

##### Table of Contents



We may not be
able to realize anticipated cost savings, revenue enhancements or other synergies from the Liquid Acquisition or other future acquisitions, either in the amount or within the time frame that we expect. In addition, the costs of achieving these
benefits may be higher than, and the timing may differ from, what we expect. Our ability to realize anticipated cost savings, synergies and revenue enhancements may be affected by a number of factors, including, but not limited to, the following:



| |  |  | the use of more cash or other financial resources on integration and implementation activities than we expect;
| | - |  | --------------------------------------------------------------------------------------------------------------



| |  |  | increases in other expenses unrelated to the acquisition, which may offset the cost savings and other synergies from the acquisition;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to eliminate duplicative back office overhead and redundant selling, general and administrative functions, obtain procurement related
savings, rationalize our distribution and warehousing networks, rationalize manufacturing capacity and shift production to more economical facilities; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to avoid labor disruptions in connection with any integration, particularly in connection with any headcount reduction.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------

Specifically, the significant anticipated cost savings and operating cost reductions in respect of the
Liquid Acquisition reflect estimates and assumptions made by our management as to the benefits and associated expenses and capital spending with respect to our cost savings initiatives, and it is possible that these estimates and assumptions may not
reflect actual results. In addition, these estimated cost savings may not actually be achieved in the timeframe anticipated or at all.

If we fail to realize anticipated cost savings, synergies or revenue enhancements, our financial results may be adversely affected, and we may not generate the cash flow from operations that we
anticipate.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

Our ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness we or our
subsidiaries incur, including our senior secured credit agreement and indentures.



|Item 6. | Exhibits
|------- | --------

The exhibit
index attached hereto is incorporated herein by reference.



55



---

##### Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Dated: November 9, 2010



|                                               |  |                                                                        
|---------------------------------------------- |  | -----------------------------------------------------------------------
|GRAHAM PACKAGING HOLDINGS COMPANY
(Registrant)
|                                               | 
|By:                                            |  | /S/  DAVID W.
BULLOCK                                                  
|                                               |  | David W. Bullock Chief Financial Officer                               
|                                               | 
|By:                                            |  | /S/  WILLIAM E.
HENNESSEY                                              
|                                               |  | William E. Hennessey Vice President, Corporate Controller and
Treasurer



56



---

##### Table of Contents



EXHIBIT INDEX

The agreements and other documents filed as exhibits to this quarterly report on Form 10-Q are not intended to provide
factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by the registrant
in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.



|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
Number |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|               | 
|2.1**          |  | Stock and Unit Purchase Agreement, dated as of August 9, 2010, by and among (i) Liquid Container L.P., (ii) each of the stockholders of (w) Liquid Container Inc., (x) CPG-L Holdings
Inc., and (y) WCK-L Holdings Inc., (iii) each of the limited partners of Liquid Container L.P., (iv) Graham Packaging Acquisition Corp. and (v) Graham Packaging Acquisition Corp. (incorporated herein by reference to Exhibit 2.1 to the Current Report
on Form 8-K filed by Graham Packaging Holdings Company on August 13, 2010 (File No. 333-53603-03)).                                                                                                                                                               
|               | 
|3.1            |  | Certificate of Limited Partnership of Graham Packaging Holdings Company (incorporated herein by reference to Exhibit 3.5 to the Registration Statement on Form S-4/A filed by the
Company on July 13, 1998 (File No. 333-53603-03)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|               | 
|3.2            |  | Sixth Amended and Restated Agreement of Limited Partnership of Graham Packaging Holdings Company dated as of February 4, 2010 (incorporated herein by reference to Exhibit 10.36 to
Amendment No. 5 to the Registration Statement of Graham Packaging Company Inc. on Form S-1/A filed by Graham Packaging Company Inc. on February 5, 2010 (File No. 333-163956)).                                                                                                                                                                                                                                                                                                                                               
|               | 
|4.1            |  | Indenture, dated as of September 23, 2010, among Graham Packaging Company, L.P., GPC Capital Corp. I, the Guarantors named therein and the Bank of New York Mellon, as Trustee
(incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed by Graham Packaging Holdings Company on September 29, 2010 (File No. 333-53603-03)).                                                                                                                                                                                                                                                                                                                                                      
|               | 
|4.2            |  | Form of 8.25% Senior Notes due 2018 (incorporated herein by reference to Exhibit 4.2 to the Current Report on Form 8-K filed by Graham Packaging Holdings Company on September 29,
2010 (File No. 333-53603-03)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|               | 
|4.3            |  | Registration Rights Agreement among Graham Packaging Company, L.P. and GPC Capital Corp. I, as issuers, and Graham Packaging Holdings Company and the guarantors listed on the
signature pages thereto, as guarantors, dated as of September 23, 2010 (incorporated herein by reference to Exhibit 4.10 to the Registration Statement on Form S-4/A filed by Graham Packaging Holdings Company on October 5, 2010 (File
No. 333-167976-18)).                                                                                                                                                                                                                                                                      
|               | 
|4.4            |  | Supplemental Indenture, dated as of July 30, 2010, among GPACSUB LLC, Graham Packaging Minster LLC, Graham Packaging Company, L.P., GPC Capital Corp. I, the guarantors party
thereto, and The Bank of New York Mellon, as Trustee, relating to the 97/8% Senior Subordinated Notes due 2014 (incorporated herein by reference to Exhibit 4.11 to the Registration Statement on Form S-4/A filed by Graham Packaging Holdings Company on October 5,
2010 (File No. 333-167976-18)).                                                                                                                                                                                                                               
|               | 
|4.5            |  | Supplemental Indenture, dated as of July 30, 2010, among GPACSUB LLC, Graham Packaging Minster LLC, Graham Packaging Company, L.P., GPC Capital Corp. I, the guarantors party
thereto, and The Bank of New York Mellon, as Trustee, relating to the 81/4% Senior Notes due 2017 (incorporated herein by reference to Exhibit 4.12 to the Registration Statement on Form S-4/A filed by Graham Packaging Holdings Company on October 5, 2010 (File
No. 333-167976-18)).                                                                                                                                                                                                                                            
|               | 
|4.6            |  | Supplemental Indenture, dated as of October 4, 2010, among Graham Packaging GP Acquisition LLC, Graham Packaging LP Acquisition LLC, CPG-L Holdings, Inc., Liquid Container Inc.,
Graham Packaging LC, L.P., Graham Packaging PX Holding Corporation, Graham Packaging PX, LLC, Graham Packaging PX Company, WCK-L Holdings, Inc., Graham Packaging Company, L.P., GPC Capital Corp. I, the guarantors party thereto, and The Bank of New
York Mellon, as Trustee, relating to the 97/8%
Senior Subordinated Notes due 2014 (incorporated herein by reference to Exhibit 4.13 to the Registration Statement on Form S-4/A filed by Graham Packaging Holdings Company on October 5, 2010 (File No.
333-167976-18)).



57



---

##### Table of Contents



|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|4.7   |  | Supplemental Indenture, dated as of October 4, 2010, among Graham Packaging GP Acquisition LLC, Graham Packaging LP Acquisition LLC, CPG-L Holdings, Inc., Liquid Container
Inc., Graham Packaging LC, L.P., Graham Packaging PX Holding Corporation, Graham Packaging PX, LLC, Graham Packaging PX Company, WCK-L Holdings, Inc., Graham Packaging Company, L.P., GPC Capital Corp. I, the guarantors party thereto, and The Bank of
New York Mellon, as Trustee, relating to the 81/4%
Senior Notes due 2018 (incorporated herein by reference to Exhibit 4.14 to the Registration Statement on Form S-4/A filed by Graham Packaging Holdings Company on October 5, 2010 (File No. 333-167976-18)).
|      | 
|10.1  |  | Sixth Amendment to Credit Agreement, dated as of September 23, 2010, among Graham Packaging Holdings Company, Graham Packaging Company, L.P., as the borrower, GPC Capital Corp. I,
as the co-borrower, the lenders named therein and Deutsche Bank AG Cayman Islands Branch, as administrative agent for the lenders (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Graham Packaging Holdings
Company on September 29, 2010 (File No. 333-53603-03)).                                                                                                                                                                                                 
|      | 
|31.1* |  | Certification required by Rule 15d-14(a).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|      | 
|31.2* |  | Certification required by Rule 15d-14(a).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|      | 
|32.1* |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|      | 
|32.2* |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              



|* |  Filed herewith.
|- | -----------------

|** | Schedules and similar attachments to the Stock and Unit Purchase Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The registrant
will furnish supplementally a copy of any committed schedules or similar attachment to the SEC upon request.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



58