|
|
|
|
|
|

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C.
            20549-1004

FORM 10-Q

(Mark One)

[X]
                   
                   QUARTERLY REPORT PURSUANT TO SECTION 13
                        OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended March
                        30, 2003OR[ ]
                   
                   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(State or other
                        jurisdiction of incorporation or organization)
                   
                   
                   
                   23-2553000(I.R.S. Employer
                        Identification No.)2401 Pleasant Valley Road York,
                        Pennsylvania (Address of principal executive offices) 17402 (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), Yes
            [X] No
            [ ]; and (2) has been subject
            to such filing requirements for the past 90 days, Yes
            [ ] No
            [X].

Indicate by check mark whether the registrant is an accelerated filer (as
            defined in Exchange Act Rule 12b-2). Yes
            [ ] No
            [X].

|
|
|
|
|
|

GRAHAM PACKAGING HOLDINGS COMPANY

INDEX

PART
                        I.    FINANCIAL INFORMATIONPage NumberItem 1:
                   
                   Condensed Consolidated Financial
                        Statements:CONDENSED CONSOLIDATED BALANCE SHEETS
                        – At March 30, 2003 and December 31, 2002
                   
                   2CONDENSED CONSOLIDATED STATEMENTS OF
                        OPERATIONS – For the Three Months ended March 30, 2003 and March 31,
                        2002
                   
                   3CONDENSED CONSOLIDATED STATEMENTS OF
                        PARTNERS' CAPITAL (DEFICIT) – For the Year Ended December 31, 2002 and
                        Three Months ended March 30, 2003
                   
                   4CONDENSED CONSOLIDATED STATEMENTS OF
                        CASH FLOWS – For the Three Months ended March 30, 2003 and March 31,
                        2002
                   
                   5NOTES TO CONDENSED CONSOLIDATED
                        FINANCIAL STATEMENTS
                   
                   6Item 2:
                   
                   Management's Discussion and Analysis
                        of Financial Condition and Results of Operations
                   
                   13Item 3:
                   
                   Quantitative and Qualitative
                        Disclosures About Market Risk
                   
                   20Item 4:
                   
                   Controls and Procedures
                   
                   21PART II.    OTHER
                        INFORMATIONItem 6:
                   
                   Exhibits and Reports on Form 8-K
                   
                   22Signature:
                   
                   23


1

PART I.    FINANCIAL INFORMATION

Item 1.    Condensed Consolidated Financial
            Statements

GRAHAM PACKAGING HOLDINGS COMPANY CONDENSED CONSOLIDATED BALANCE
            SHEETS (Unaudited)

March 30,2003
                   
                   December 31,2002(In thousands)ASSETSCurrent assets:Cash and cash equivalents
                   
                   $
                   7,618
                   
                   
                   $
                   7,299Accounts receivable, net
                   
                   
                   114,920
                   
                   
                   
                   97,933Inventories
                   
                   
                   72,298
                   
                   
                   
                   62,660Prepaid expenses and other current
                        assets
                   
                   
                   19,846
                   
                   
                   
                   18,289Total current assets
                   
                   
                   214,682
                   
                   
                   
                   186,181Property, plant and equipment,
                        net
                   
                   
                   581,925
                   
                   
                   
                   577,962Goodwill
                   
                   
                   5,532
                   
                   
                   
                   5,566Other non-current assets
                   
                   
                   41,023
                   
                   
                   
                   28,602Total assets
                   
                   $
                   843,162
                   
                   
                   $
                   798,311LIABILITIES AND PARTNERS' CAPITAL
                        (DEFICIT)Current liabilities:Accounts payable and accrued
                        expenses
                   
                   $
                   160,003
                   
                   
                   $
                   169,232Current portion of long-term debt

                   
                   
                   10,352
                   
                   
                   
                   7,992Total current liabilities
                   
                   
                   170,355
                   
                   
                   
                   177,224Long-term debt
                   
                   
                   1,110,089
                   
                   
                   
                   1,062,635Other non-current liabilities
                   
                   
                   16,854
                   
                   
                   
                   14,655Minority interest
                   
                   
                   4,389
                   
                   
                   
                   4,104Commitments and contingent liabilities
                        (see Note 8)
                   
                   
                   —
                   
                   
                   
                   —Partners' capital (deficit)
                   
                   
                   (458,525
                   )
                   
                   
                   (460,307
                   )Total liabilities and partners'
                        capital (deficit)
                   
                   $
                   843,162
                   
                   
                   $
                   798,311


See accompanying notes to financial statements.

2

GRAHAM PACKAGING HOLDINGS COMPANY CONDENSED CONSOLIDATED STATEMENTS
            OF OPERATIONS (Unaudited)

Three Months EndedMarch 30,2003
                   
                   March 31,2002(In thousands)Net sales
                   
                   $
                   232,731
                   
                   
                   $
                   231,519Cost of goods sold
                   
                   
                   187,882
                   
                   
                   
                   191,467Gross profit
                   
                   
                   44,849
                   
                   
                   
                   40,052Selling, general, and administrative
                        expenses
                   
                   
                   15,888
                   
                   
                   
                   14,442Impairment charges
                   
                   
                   609
                   
                   
                   
                   —Operating income
                   
                   
                   28,352
                   
                   
                   
                   25,610Interest expense, net
                   
                   
                   30,921
                   
                   
                   
                   21,973Other income, net
                   
                   
                   (12
                   )
                   
                   
                   (102
                   )Minority interest
                   
                   
                   285
                   
                   
                   
                   273(Loss) income before income taxes

                   
                   
                   (2,842
                   )
                   
                   
                   3,466Income tax provision
                   
                   
                   1,708
                   
                   
                   
                   224Net (loss) income
                   
                   $
                   (4,550
                   )
                   
                   $
                   3,242


See accompanying notes to financial statements.

3

GRAHAM PACKAGING HOLDINGS COMPANY CONDENSED CONSOLIDATED STATEMENTS
            OF PARTNERS' CAPITAL (DEFICIT) (Unaudited)

Partners'Capital(Deficit)
                   
                   Notes and InterestReceivable
                        forOwnershipInterests
                   
                   AccumulatedOtherComprehensiveIncome (Loss)
                   
                   Total(In thousands)Consolidated balance at January 1,
                        2002
                   
                   $
                   (427,911
                   )
                   
                   $
                   (2,443
                   )
                   
                   $
                   (54,700
                   )
                   
                   $
                   (485,054
                   )Net income for the year
                   
                   
                   7,562
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   7,562Changes in fair value of
                        derivatives
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   6,909
                   
                   
                   
                   6,909Additional minimum pension
                        liability
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (2,051
                   )
                   
                   
                   (2,051
                   )Cumulative translation adjustment

                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   12,477
                   
                   
                   
                   12,477Comprehensive income
                   
                   
                   
                   
                   
                   
                   
                   
                   
                   
                   
                   
                   
                   
                   24,897Interest on notes receivable for
                        ownership interests
                   
                   
                   —
                   
                   
                   
                   (150
                   )
                   
                   
                   —
                   
                   
                   
                   (150
                   )Consolidated balance at December 31,
                        2002
                   
                   
                   (420,349
                   )
                   
                   
                   (2,593
                   )
                   
                   
                   (37,365
                   )
                   
                   
                   (460,307
                   )Net loss for the period
                   
                   
                   (4,550
                   )
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (4,550
                   )Changes in fair value of
                        derivatives
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (865
                   )
                   
                   
                   (865
                   )Elimination of cash flow hedge
                        accounting
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   4,783
                   
                   
                   
                   4,783Additional minimum pension
                        liability
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   (56
                   )
                   
                   
                   (56
                   )Cumulative translation adjustment

                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   2,505
                   
                   
                   
                   2,505Comprehensive income
                   
                   
                   
                   
                   
                   
                   
                   
                   
                   
                   
                   
                   
                   
                   1,817Interest on notes receivable for
                        ownership interests
                   
                   
                   —
                   
                   
                   
                   (35
                   )
                   
                   
                   —
                   
                   
                   
                   (35
                   )Consolidated balance at March 30,
                        2003
                   
                   $
                   (424,899
                   )
                   
                   $
                   (2,628
                   )
                   
                   $
                   (30,998
                   )
                   
                   $
                   (458,525
                   )


See accompanying notes to financial statements.

4

GRAHAM PACKAGING HOLDINGS COMPANY CONDENSED CONSOLIDATED STATEMENTS
            OF CASH FLOWS (Unaudited)

Three Months EndedMarch 30,2003
                   
                   March 31,2002(In thousands)Operating activities:Net (loss) income
                   
                   $
                   (4,550
                   )
                   
                   $
                   3,242Adjustments to reconcile net (loss)
                        income to net cash (used in) provided by operating activities:Depreciation and amortization
                   
                   
                   17,565
                   
                   
                   
                   17,472Impairment charges
                   
                   
                   609
                   
                   
                   
                   —Amortization of debt issuance
                        fees
                   
                   
                   7,347
                   
                   
                   
                   1,143Accretion of Senior Discount
                        Notes
                   
                   
                   622
                   
                   
                   
                   4,015Elimination of cash flow hedge
                        accounting
                   
                   
                   4,783
                   
                   
                   
                   —Minority interest
                   
                   
                   285
                   
                   
                   
                   273Foreign currency transaction (gain)
                        loss
                   
                   
                   (331
                   )
                   
                   
                   15Interest receivable for ownership
                        interests
                   
                   
                   (35
                   )
                   
                   
                   (38
                   )Changes in operating assets and
                        liabilities, net of sale of business:Accounts receivable
                   
                   
                   (16,361
                   )
                   
                   
                   (26,510
                   )Inventories
                   
                   
                   (9,650
                   )
                   
                   
                   4,787Prepaid expenses and other current
                        assets
                   
                   
                   (1,475
                   )
                   
                   
                   1,530Other non-current assets and
                        liabilities
                   
                   
                   453
                   
                   
                   
                   (606
                   )Accounts payable and accrued
                        expenses
                   
                   
                   (9,256
                   )
                   
                   
                   (4,244
                   )Net cash (used in) provided by
                        operating activities
                   
                   
                   (9,994
                   )
                   
                   
                   1,079Investing activities:Net purchases of property, plant and
                        equipment
                   
                   
                   (18,864
                   )
                   
                   
                   (21,677
                   )Net (expenditures for)/proceeds from
                        sales of businesses
                   
                   
                   (21
                   )
                   
                   
                   307Net cash used in investing
                        activities
                   
                   
                   (18,885
                   )
                   
                   
                   (21,370
                   )Financing activities:Net proceeds from issuance of
                        long-term debt
                   
                   
                   49,134
                   
                   
                   
                   22,205Debt issuance fees
                   
                   
                   (20,250
                   )
                   
                   
                   —Net cash provided by financing
                        activities
                   
                   
                   28,884
                   
                   
                   
                   22,205Effect of exchange rate changes
                   
                   
                   314
                   
                   
                   
                   (253
                   )Increase in cash and cash
                        equivalents
                   
                   
                   319
                   
                   
                   
                   1,661Cash and cash equivalents at beginning
                        of period
                   
                   
                   7,299
                   
                   
                   
                   9,032Cash and cash equivalents at end of
                        period
                   
                   $
                   7,618
                   
                   
                   $
                   10,693


See accompanying notes to financial statements.

5

GRAHAM PACKAGING HOLDINGS COMPANYNOTES TO CONDENSED CONSOLIDATED
            FINANCIAL STATEMENTS (Unaudited)

1.    Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of
            Graham Packaging Holdings Company ("Holdings"), a Pennsylvania limited
            partnership, have been prepared in accordance with generally accepted
            accounting principles 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. In the opinion
            of management, all adjustments (consisting only of usual recurring adjustments
            considered necessary for a fair presentation) are reflected in the condensed
            consolidated financial statements. The condensed consolidated balance sheet as
            of December 31, 2002 is derived from audited financial statements. The
            condensed consolidated financial statements and notes hereto should be read in
            conjunction with the consolidated financial statements and notes thereto for
            the year ended December 31, 2002. The results of operations for the three
            months ended March 30, 2003 are not necessarily indicative of the results to be
            expected for the full year ending December 31, 2003.

All entities and assets owned by Holdings are referred to collectively as
            the "Company." Graham Packaging Company, L.P. is referred to as the "Operating
            Company."

Derivatives

On February 14, 2003 the Company entered into three new interest rate
            swap agreements beginning March 24, 2003 that effectively fix the interest rate
            on $300.0 million of the term loans through March 24, 2006 at a weighted
            average rate of 2.54%. The effective portion of the change in the fair value of
            the new interest rate swaps is recorded in other comprehensive income ("OCI")
            and was an unrealized loss of $2.3 million for the three months ended March 30,
            2003. Approximately one third of the amount recorded within OCI is expected to
            be recognized as interest expense in the next twelve months. Failure to
            properly document the Company's interest rate swaps as cash flow hedges would
            result in income statement recognition of all or part of the cumulative $2.3
            million unrealized loss recorded in OCI as of March 30, 2003.

The Company entered into interest rate swap agreements to hedge the
            exposure to increasing rates with respect to its prior senior credit agreement.
            These interest rate swaps were accounted for as cash flow hedges. In connection
            with the closing of the Senior Credit Agreement (as hereinafter defined) on
            February 14, 2003 these swaps no longer qualified for hedge accounting. As
            such, the Company recorded a non-cash charge of approximately $4.8 million
            within interest expense as a result of the reclassification into expense of the
            remaining unrealized loss on existing interest rate swap agreements applicable
            to indebtedness under its prior senior credit agreement. These interest rate
            swap agreements expire at various points through September 2003. The effective
            portion of the change in fair value of these swaps prior to February 14, 2003
            was recorded in OCI and was an unrealized gain of $1.5 million. The change in
            fair value of these swaps after February 14, 2003 was recognized in earnings
            and resulted in a reduction of interest expense of $1.3 million for the three
            months ended March 30, 2003.

Guarantees

In November 2002, the Financial Accounting Standards Board ("FASB")
            issued FASB Interpretation No. ("FIN") 45, "Guarantor's Accounting and
            Disclosure Requirements for Guarantees, Including Indirect Guarantees of
            Indebtedness of Others." FIN 45 establishes requirements for accounting and
            disclosure of guarantees issued to third parties for various transactions. The
            accounting requirements of FIN 45 are applicable to guarantees issued after
            December 31, 2002. The disclosure requirements of FIN 45 are applicable to
            financial statements issued for periods ending after December 15, 2002. The
            Company adopted FIN 45 on January 1, 2003 and the adoption of FIN 45 did not
            have a significant impact on its results of operations or financial position.

Option Plan

In December 2002, the FASB issued Statement of Financial Accounting
            Standards ("SFAS") 148, "Accounting For Stock-Based Compensation —
            Transition and Disclosure, An Amendment of FASB

6

GRAHAM PACKAGING HOLDINGS COMPANYNOTES TO CONDENSED CONSOLIDATED
            FINANCIAL STATEMENTS (Unaudited) —Continued

Statement No. 123." This Statement amends SFAS 123, "Accounting For
            Stock-Based Compensation," to provide alternative methods of transition for an
            entity that voluntarily changes to the fair value based method of accounting
            for stock-based employee compensation. It also amends the disclosure provisions
            of that Statement to require prominent disclosure about the effects on reported
            net income (loss) of an entity's accounting policy decisions with respect to
            stock-based employee compensation. Finally, this Statement amends Accounting
            Principles Board Opinion ("APB") 28, "Interim Financial Reporting," to require
            disclosure about those effects in interim financial information.

The Company applies APB 25 in accounting for its Option Plan. The
            exercise price per Unit was equal to or greater than the fair market value of
            each Unit on the dates of the grants and, accordingly, no compensation cost has
            been recognized under the provisions of APB 25 for Units granted. Under SFAS
            123, compensation cost is measured at the grant date based on the value of the
            award and is recognized over the service (or vesting) period. Had compensation
            cost for the option plan been determined under SFAS 123, based on the fair
            market value at the grant dates, the Company's pro forma net (loss) income for
            the three months ended March 30, 2003 and March 31, 2002 would have been
            reflected as follows:

Three Months EndedMarch 30, 2003
                   
                   March 31, 2002(In thousands)Net (loss) income, as reported
                   
                   $
                   (4,550
                   )
                   
                   $
                   3,242Deduct:    Total
                        stock-based employee compensation expense determined under fair value based
                        method for all awards
                   
                   
                   (44
                   )
                   
                   
                   (126
                   )Pro forma net (loss) income
                   
                   $
                   (4,594
                   )
                   
                   $
                   3,116


Reclassifications

Certain reclassifications have been made to the 2002 financial statements
            to conform to the 2003 presentation.

New Accounting Pronouncements Not Yet Adopted

In January 2003, the FASB issued FIN 46, "Consolidation of Variable
            Interest Entities." FIN 46 establishes accounting and disclosure requirements
            for ownership interests in entities that have certain financial or ownership
            characteristics (sometimes known as "Special Purpose Entities"). FIN 46 is
            applicable for variable interest entities created after January 31, 2003 and
            becomes effective in the first fiscal year or interim accounting period
            beginning after June 15, 2003 for variable interest entities created before
            February 1, 2003. Management does not believe that adoption of FIN 46 will have
            a significant impact on the Company's results of operations or financial
            position.

In April 2002, the FASB issued SFAS 149 "Amendment of Statement 133 on
            Derivative Instruments and Hedging Activities." This Statement amends and
            clarifies accounting for derivative instruments, including certain derivative
            instruments embedded in other contracts, and for hedging activities under SFAS
            133. This Statement is effective for contracts entered into or modified, and
            for hedging relationships designated after June 30, 2003. Other provisions of
            this statement that related to SFAS 133 Implementation Issues should continue
            to be applied in accordance with their respective effective dates. Management
            has not yet determined the impact that SFAS 149 will have on the Company's
            results of operations or financial position.

7

GRAHAM PACKAGING HOLDINGS COMPANYNOTES TO CONDENSED CONSOLIDATED
            FINANCIAL STATEMENTS (Unaudited) —Continued

2.    Debt Arrangements

Long-term debt consisted of the following:

March 30, 2003
                   
                   December 31, 2002(In thousands)Term loans
                   
                   $
                   670,000
                   
                   
                   $
                   502,000Revolving Credit Facility
                   
                   
                   35,500
                   
                   
                   
                   155,500Foreign and other revolving credit
                        facilities
                   
                   
                   4,388
                   
                   
                   
                   3,483Senior Subordinated Notes
                   
                   
                   225,000
                   
                   
                   
                   225,000Senior Discount Notes
                   
                   
                   169,000
                   
                   
                   
                   168,377Capital leases
                   
                   
                   13,941
                   
                   
                   
                   14,400Other
                   
                   
                   2,612
                   
                   
                   
                   1,8671,120,441
                   
                   
                   
                   1,070,627Less amounts classified as
                        current
                   
                   
                   10,352
                   
                   
                   
                   7,992$
                   1,110,089
                   
                   
                   $
                   1,062,635


On February 14, 2003 the Company refinanced the majority of its prior
            credit facilities and entered into a senior credit agreement (the "Senior
            Credit Agreement") with a consortium of banks. The Senior Credit Agreement
            consists of two term loans to the Operating Company with initial term loan
            commitments totaling $670.0 million (the "Term Loans" or "Term Loan
            Facilities") and a $150.0 million revolving credit facility (the "Revolving
            Credit Facility"). The unused availability of the Revolving Credit Facility
            under the Senior Credit Agreement at March 30, 2003 was $110.4 million. The
            Senior 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 to Holdings.
            On March 30, 2003 the Company was in compliance with all covenants.

As a result of the refinancing on February 14, 2003 the Company incurred
            debt issuance fees and other related costs of approximately $20 million, of
            which $0.7 million were expensed immediately and the remaining amount will be
            recognized as interest expense over five to seven years based upon the terms of
            the related debt instruments. Additionally, $5.5 million of deferred debt
            issuance fees associated with the prior senior credit agreement were written
            off.

Interest paid during the three months ended March 30, 2003 and March 31,
            2002, net of amounts capitalized, totaled $20.2 million and $22.0 million,
            respectively.

3.    Inventories

Inventories consisted of the following:

March 30, 2003
                   
                   December 31, 2002(In thousands)Finished goods
                   
                   $
                   48,898
                   
                   
                   $
                   43,786Raw materials and parts
                   
                   
                   23,400
                   
                   
                   
                   18,874$
                   72,298
                   
                   
                   $
                   62,660


4.    Impairment Charges

Due to the Company's commitment to a plan to sell its operations in
            Germany, the Company evaluated the recoverability of its assets in Germany. For
            these assets to be disposed of, the Company adjusted the carrying values to the
            lower of their carrying values or their estimated fair values less costs to
            sell, resulting in an impairment charge of $0.4 million for the three months
            ended March 30, 2003.

8

GRAHAM PACKAGING HOLDINGS COMPANYNOTES TO CONDENSED CONSOLIDATED
            FINANCIAL STATEMENTS (Unaudited) —Continued

Due to a significant change in the ability to utilize certain assets in
            the U.S., the Company evaluated the recoverability of these assets. For these
            assets to be disposed of, the Company adjusted the carrying values to the lower
            of their carrying values or their estimated fair values less costs to sell,
            resulting in an impairment charge of $0.2 million for the three months ended
            March 30, 2003.

5.    Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses included the following:

March 30, 2003
                   
                   December 31, 2002(In thousands)Accounts payable
                   
                   $
                   80,727
                   
                   
                   $
                   77,022Accrued employee compensation and
                        benefits
                   
                   
                   30,276
                   
                   
                   
                   36,062Accrued interest
                   
                   
                   10,422
                   
                   
                   
                   11,120Accrued sales allowance
                   
                   
                   7,239
                   
                   
                   
                   9,919Other
                   
                   
                   31,339
                   
                   
                   
                   35,109$
                   160,003
                   
                   
                   $
                   169,232


For the year ended December 31, 2002, the Company incurred costs of
            employee termination benefits in Blyes and Noeux les Mines, France of $9.0
            million, which included the legal liability of severing 155 employees. For the
            three months ended March 30, 2003, the Company incurred additional costs of
            employee termination benefits in France of $1.0 million. The Company terminated
            25 of these employees as of March 30, 2003. Substantially all of the cash
            payments for these termination benefits are expected to be made by June 30,
            2004. The following table reflects a rollforward of the reorganization costs,
            primarily included in accrued employee compensation and benefits (in
            thousands):

FranceReductionin ForceReserves at December 31, 2002
                   
                   $
                   9,015Increase in reserves
                   
                   
                   995Cash payments
                   
                   
                   (198
                   )Reserves at March 30, 2003
                   
                   $
                   9,812


6.    Income Taxes

The Company does not pay United States 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. For the Company's foreign
            operations subject to tax in their local jurisdictions, deferred 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 expected to apply to taxable income in the years in
            which the temporary differences are expected to reverse. During 2003 and 2002,
            some of the Company's various taxable entities incurred additional net
            operating losses for which no carryforward benefit has been recognized.

7.    Rent Expense

The Company was a party to various leases involving real property and
            equipment during the three months ended March 30, 2003 and March 31, 2002.
            Total rent expense for operating leases amounted to $6.1 million and $5.6
            million for the three months ended March 30, 2003 and March 31, 2002,
            respectively.

8.    Contingencies

The Company is party to various 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

9

GRAHAM PACKAGING HOLDINGS COMPANYNOTES TO CONDENSED CONSOLIDATED
            FINANCIAL STATEMENTS (Unaudited) —Continued

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 or results of operations of the Company.

On July 9, 2002, the Company and Graham Engineering amended the equipment
            sales, service and licensing agreement to, among other things, (i) limit the
            Company's existing rights in exchange for a perpetual license in the event
            Graham Engineering proposes to sell its rotary extrusion blow molding equipment
            business or assets to certain of the Company's significant competitors; (ii)
            clarify that the Company's exclusivity rights under the equipment sales,
            service and licensing agreement do not apply to certain new generations of
            Graham Engineering equipment; (iii) provide Graham Engineering certain recourse
            in the event the Company decides to buy certain high output extrusion blow
            molding equipment from any supplier other than Graham Engineering; and (iv)
            obligate the Company, retroactive to January 1, 2002 and subject to certain
            credits and carry-forwards, to make payments for products and services to
            Graham Engineering in the amount of at least $12.0 million per calendar year,
            or else pay Graham Engineering a shortfall payment.

9.    Condensed Operating Company Data

Condensed financial data for the Operating Company as of March 30, 2003
            and December 31, 2002 was as follows:

March 30, 2003
                   
                   December 31, 2002(In thousands)Current assets
                   
                   $
                   221,676
                   
                   
                   $
                   193,174Non-current assets
                   
                   
                   625,013
                   
                   
                   
                   608,535Total assets
                   
                   
                   846,689
                   
                   
                   
                   801,709Current liabilities
                   
                   
                   166,570
                   
                   
                   
                   177,224Non-current liabilities
                   
                   
                   962,333
                   
                   
                   
                   913,016Partners' capital (deficit)
                   
                   
                   (282,214
                   )
                   
                   
                   (288,531
                   )


Condensed financial data for the Operating Company for the three months
            ended March 30, 2003 and March 31, 2002 was as follows:

Three Months EndedMarch 30, 2003
                   
                   March 31, 2002(In thousands)Net sales
                   
                   $
                   232,731
                   
                   
                   $
                   231,519Gross profit
                   
                   
                   44,849
                   
                   
                   
                   40,052Net (loss) income
                   
                   
                   (15
                   )
                   
                   
                   7,375


Full separate financial statements and other disclosures of the Operating
            Company have not been presented. Management has determined that such financial
            information is not material to investors.

10

GRAHAM PACKAGING HOLDINGS COMPANYNOTES TO CONDENSED CONSOLIDATED
            FINANCIAL STATEMENTS (Unaudited) —Continued

10.    Comprehensive Income

Comprehensive income for the three months ended March 30, 2003 and March
            31, 2002 was as follows:

Three Months EndedMarch 30, 2003
                   
                   March 31, 2002(In thousands)Net (loss) income
                   
                   $
                   (4,550
                   )
                   
                   $
                   3,242Changes in fair value of
                        derivatives
                   
                   
                   (865
                   )
                   
                   
                   6,138Elimination of cash flow hedge
                        accounting
                   
                   
                   4,783
                   
                   
                   
                   —Additional minimum pension
                        liability
                   
                   
                   (56
                   )
                   
                   
                   1Cumulative translation adjustment

                   
                   
                   2,505
                   
                   
                   
                   (257
                   )Comprehensive income
                   
                   $
                   1,817
                   
                   
                   $
                   9,124


11.    Segment Information

The Company is organized and managed on a geographical basis in three
            operating segments: North America, which includes the United States, Canada and
            Mexico, Europe and South America. Segment information for the three months
            ended March 30, 2003 and March 31, 2002, representing the reportable segments
            currently utilized by the chief operating decision maker, was as follows:

North America
                   
                   Europe
                   
                   South America
                   
                   Eliminations
                   
                   Total(a)
                   
                   
                   
                   (b)(In thousands)Net sales (c)
                   
                   Three months ended March 30, 2003

                   
                   $
                   192,062
                   
                   
                   $
                   35,287
                   
                   
                   $
                   5,382
                   
                   
                   $
                   —
                   
                   
                   $
                   232,731Three months ended March 31, 2002
                   
                   
                   184,956
                   
                   
                   
                   39,041
                   
                   
                   
                   7,522
                   
                   
                   
                   —
                   
                   
                   
                   231,519Operating income
                   
                   Three months ended March 30, 2003
                   
                   
                   26,661
                   
                   
                   
                   1,255
                   
                   
                   
                   436
                   
                   
                   
                   —
                   
                   
                   
                   28,352(loss)
                        (d)
                   
                   Three months ended March 31, 2002
                   
                   
                   25,499
                   
                   
                   
                   (325
                   )
                   
                   
                   436
                   
                   
                   
                   —
                   
                   
                   
                   25,610Depreciation and
                   
                   Three months ended March 30, 2003
                   
                   
                   22,070
                   
                   
                   
                   2,513
                   
                   
                   
                   329
                   
                   
                   
                   —
                   
                   
                   
                   24,912amortization
                   
                   Three months ended March 31, 2002
                   
                   
                   17,108
                   
                   
                   
                   855
                   
                   
                   
                   652
                   
                   
                   
                   —
                   
                   
                   
                   18,615Impairment charges
                   
                   Three months ended March 30, 2003
                   
                   
                   245
                   
                   
                   
                   364
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   609Three months ended March 31, 2002

                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   —& nbsp;Interest expense, net
                   
                   Three months ended March 30, 2003

                   
                   
                   30,663
                   
                   
                   
                   177
                   
                   
                   
                   81
                   
                   
                   
                   —
                   
                   
                   
                   30,921Three months ended March 31, 2002
                   
                   
                   21,265
                   
                   
                   
                   663
                   
                   
                   
                   45
                   
                   
                   
                   —
                   
                   
                   
                   21,973Income tax provision
                   
                   Three months ended March 30, 2003

                   
                   
                   177
                   
                   
                   
                   1,373
                   
                   
                   
                   158
                   
                   
                   
                   —
                   
                   
                   
                   1,708(benefit)
                   
                   Three months ended March 31, 2002
                   
                   
                   (243
                   )
                   
                   
                   251
                   
                   
                   
                   216
                   
                   
                   
                   —
                   
                   
                   
                   224Identifiable assets (c)
                   
                   As of March 30, 2003
                   
                   
                   949,909
                   
                   
                   
                   158,762
                   
                   
                   
                   20,051
                   
                   
                   
                   (285,560
                   )
                   
                   
                   843,162As of December 31, 2002
                   
                   
                   910,731
                   
                   
                   
                   153,834
                   
                   
                   
                   18,463
                   
                   
                   
                   (284,717
                   )
                   
                   
                   798,311& nbsp;Goodwill
                   
                   As of March 30, 2003
                   
                   
                   3,515
                   
                   
                   
                   1,260
                   
                   
                   
                   757
                   
                   
                   
                   —
                   
                   
                   
                   5,532As of December 31, 2002
                   
                   
                   3,515
                   
                   
                   
                   1,333
                   
                   
                   
                   718
                   
                   
                   
                   —
                   
                   
                   
                   5,566Capital expenditures,
                   
                   Three months ended March 30, 2003

                   
                   
                   16,069
                   
                   
                   
                   2,194
                   
                   
                   
                   623
                   
                   
                   
                   (22
                   )
                   
                   
                   18,864excluding
                        acquisitions
                   
                   Three months ended March 31, 2002
                   
                   
                   18,427
                   
                   
                   
                   2,649
                   
                   
                   
                   601
                   
                   
                   
                   —
                   
                   
                   
                   21,677


11

GRAHAM PACKAGING HOLDINGS COMPANYNOTES TO CONDENSED CONSOLIDATED
            FINANCIAL STATEMENTS (Unaudited) —Continued

|
|
|
|

|(a) | On
                   March 28, 2002, the Company completed the sale of certain assets and
                   liabilities of its Italian operations. During the 2nd quarter of
                   2002, the Company closed its plant in the United Kingdom. On July 31, 2002, the
                   Company disposed of its operation in Blyes, France.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | To
                   eliminate intercompany balances, which include investments in the operating
                   segments and inter-segment receivables and payables.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | The
                   Company's net sales for Europe include sales in France which totaled
                   approximately $18.6 million and $20.5 million for the three months ended March
                   30, 2003 and March 31, 2002, respectively. Identifiable assets in France
                   totaled approximately $92.2 million and $93.6 million as of March 30, 2003 and
                   December 31, 2002, respectively.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) | In
                   the fourth quarter of 2002 the Company changed its measurement method used to
                   determine reported segment profit or loss by allocating certain selling,
                   general and administrative costs incurred in North America to Europe and South
                   America. The effect in the three months ended March 30, 2003 was an increase in
                   operating income for North America of $0.6 million and decreases of $0.5
                   million and $0.1 million for Europe and South America, respectively.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Product Net Sales Information

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

Three Months EndedMarch 30, 2003
                   
                   March 31, 2002(In thousands)Food and Beverage
                   
                   $
                   133,239
                   
                   
                   $
                   132,482Household and Personal Care
                   
                   
                   47,913
                   
                   
                   
                   51,063Automotive Lubricants
                   
                   
                   51,579
                   
                   
                   
                   47,974Total Net Sales
                   
                   $
                   232,731
                   
                   
                   $
                   231,519


12.    Subsequent Events

On March 31, 2003 the Company completed the sale of certain assets and
            liabilities of its German subsidiary, Graham Packaging Deutschland GmbH. The
            resulting losses were not significant.

12

Item 2.    Management's Discussion and Analysis of
            Financial Condition and Results of Operation

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 the Company's future
            financial position, economic performance and results of operations, as well as
            the Company's 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. Although the
            Company believes that the expectations reflected in such forward-looking
            statements are reasonable, such expectations may prove to have been incorrect.
            Important factors that could cause actual results to differ materially from the
            Company's expectations include, without limitation:

| | • | the
                   restrictive covenants contained in instruments governing indebtedness of the
                   Company;
| | - | -------------------------------------------------------------------------------------------------------------------------------

| | • | the
                   high degree of leverage and substantial debt service obligations of the
                   Operating Company and Holdings;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------

| | • | the
                   Company's exposure to fluctuations in resin prices and its dependence on resin
                   supplies;
| | - | ----------------------------------------------------------------------------------------------------------------------------------

| | • | risks
                   associated with the Company's international operations;
| | - | --------------------------------------------------------------------------------

| | • | the
                   Company's dependence on significant customers and the risk that customers will
                   not purchase the Company's products in the amounts expected by the Company
                   under their requirements contracts;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | a
                   decline in the domestic motor oil business;
| | - | ----------------------------------------------------------------

| | • | risks
                   associated with environmental regulation;
| | - | ------------------------------------------------------------------

| | • | the
                   possibility that Blackstone's interests will conflict with the Company's
                   interests;
| | - | -----------------------------------------------------------------------------------------------------------------------------

| | • | the
                   Company's dependence on key management and its labor force and the material
                   adverse effect that could result from the loss of their services;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | risks
                   associated with possible future acquisitions; and
| | - | --------------------------------------------------------------------------

| | • | the
                   Company's dependence on blow molding equipment providers.
| | - | --------------------------------------------------------------------------------

See "Business — Certain Risks of the Business" in Holdings' Annual
            Report on Form 10-K for the fiscal year ended December 31, 2002. All
            forward-looking statements attributable to the Company, or persons acting on
            its behalf, are expressly qualified in their entirety by the cautionary
            statements set forth in this paragraph.

Overview

The Company is a worldwide leader in the design, manufacture and sale of
            customized blow molded plastic containers for the branded food and beverage,
            household and personal care and automotive lubricants markets and currently
            operates 55 plants throughout North America, Europe and South America. The
            Company's primary strategy is to operate in select markets that will position
            it to benefit from the growing conversion to high performance plastic packaging
            from more commodity packaging.

Management believes that critical success factors to the Company's
            business are its ability to:

| | • | serve
                   the complex packaging demands of its customers which include some of the
                   world's largest branded consumer products companies;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | forecast
                   trends in the packaging industry across product lines and geographic
                   territories (including those specific to the rapid conversion of packaging
                   products from glass, metal and paper to plastic); and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | make
                   the correct investments in plant and technology necessary to satisfy the two
                   factors mentioned above.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------

13

Management believes that the area with the greatest opportunity for
            growth continues to be in producing containers for the food and beverage market
            because of the continued conversion to plastic packaging, including the demand
            for containers for juices, juice drinks, nutritional beverages, sport drinks,
            teas, yogurt drinks, snacks and other food products. Since the beginning of
            1997, the Company has invested over $270.0 million in capital expenditures to
            expand its technology, machinery and plant structure to prepare for what it
            believed would be the growth in the hot-fill PET area. For the year ended
            December 31, 2002 the Company's sales of hot-fill PET containers grew to $323.9
            million from $70.2 million in 1996. More recently, the Company has been a
            leading participant in the rapid growth of the yogurt drinks market where the
            Company manufactures containers using polyolefin resins. Since the beginning of
            1999, the Company has invested over $145.0 million in capital expenditures in
            the polyolefin area of the food and beverage market. For the year ended
            December 31, 2002, the Company's sales of polyolefin containers grew to $171.8
            million from $117.7 million in 1999.

Excluding business impacted by the European restructuring, the Company's
            household and personal care container business continues to grow, as package
            conversion trends continue from other packaging forms in some of its product
            lines. The Company continues to benefit as liquid fabric care detergents, which
            are packaged in plastic containers, capture an increased share from powdered
            detergents, which are predominantly packaged in paper-based containers. The
            Company has upgraded its machinery to new larger, more productive blow molders
            to standardize production lines, improve flexibility and reduce manufacturing
            costs.

The Company's North American one quart motor oil container business is in
            a mature industry. The Company has been able to partially offset pricing
            pressures by renewing or extending contracts, improving manufacturing
            efficiencies, line speeds, labor efficiency and inventory management and
            reducing container weight and material spoilage. Unit volume in the one quart
            motor oil industry decreased approximately 1% in 2002 as compared to 2001;
            annual volumes declined an average of approximately 1% to 2% in prior years.
            Management believes that the domestic one quart motor oil container business
            will continue to decline approximately 1% to 2% annually for the next several
            years but believes there are significant volume opportunities for automotive
            business in foreign countries, particularly in South America. In 2002, the
            Company was awarded 100% of Shell's (Shell, Pennzoil and Quaker State branded
            motor oils) U.S. one quart volume requirements. This award includes supplying
            from a facility on-site with Pennzoil-Quaker State in Newell, West Virginia.
            ExxonMobil also awarded the Company in 2002 100% of its one quart volume
            requirements for one of its U.S. filling plants, located in Port Allen,
            Louisiana. ExxonMobil was not a U.S. customer prior to this award.

The Company currently operates 20 facilities outside of the U.S., either
            on its own or through joint ventures, in Argentina, Belgium, Brazil, Canada,
            France, Hungary, Mexico, Poland, Spain and Turkey. Over the past few years, the
            Company has expanded its international operations with the addition of new
            plants in France, Belgium, Spain, Poland and Mexico.

Changes in international economic conditions require that the Company
            continually review its operations and make restructuring changes when it is
            deemed appropriate. In the past few years, the Company restructured its
            operations as follows.

| | • | In
                   its North American operations in 2001, the Company closed its facility in
                   Anjou, Quebec, Canada and in 2002 closed another plant in Burlington, Ontario,
                   Canada. Business from these facilities was consolidated into other North
                   American facilities as a result of these closures.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | In
                   its European operations, the Company committed to restructuring changes in the
                   United Kingdom, France, Italy and Germany as follows. During the latter portion
                   of 2001, the Company committed to a plan to close its plant in the United
                   Kingdom. This plant was closed during 2002. During the latter portion of 2001,
                   the Company also committed to a plan to sell or close certain plants in France.
                   During 2002, one facility in France was sold. Another facility in France is
                   expected to be closed later in 2003. During the latter portion of 2001, the
                   Company committed to a plan to sell or close its plants in Italy. In 2002, the
                   Company sold both of its plants in Italy. During the latter portion of 2001, as
                   a part of its European restructuring plans, the Company committed to a plan to
                   sell or close certain plants in Germany. On March 31, 2003 the Company sold
                   both of its plants in Germany.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

14

For the three months ended March 30, 2003, approximately 85% of the
            Company's net sales were generated by the top twenty customers, the majority of
            which were under long-term contracts with terms up to ten years; the remainder
            of which were customers with whom the Company has been doing business for over
            12 years on average. Prices under these arrangements are typically tied to
            market standards and, therefore, vary with market conditions. In general, the
            contracts are requirements contracts that do not obligate the customer to
            purchase any given amount of product from the Company. The Company had sales to
            one customer which exceeded 10% of total sales in each of the three months
            ended March 30, 2003 and March 31, 2002. The Company's sales to this customer
            were 14.8% and 18.7% of total sales for the three months ended March 30, 2003
            and March 31, 2002, respectively. The Company also had sales to two other
            customers which exceeded 10% of total sales for the three months ended March
            30, 2003. The Company's sales to these customers were 10.5% and 10.4% of total
            sales for the three months ended March 30, 2003. For the three months ended
            March 30, 2003, approximately 77% of the sales to these three customers were
            made in North America.

Based on industry data, the following table summarizes average market
            prices per pound of polyethylene terephthalate, or PET, and high-density
            polyethylene, or HDPE, resins in the U.S. during the first three months of 2003
            and 2002:

First Three Months2003
                   
                   2002PET
                   
                   
                   0.63
                   
                   
                   
                   0.56HDPE
                   
                   
                   0.47
                   
                   
                   
                   0.36


In general, the Company's dollar gross profit is substantially unaffected
            by fluctuations in the prices of PET and HDPE resins, the primary raw materials
            for the Company's products, because industry practice and the Company's
            agreements with its customers permit substantially all resin price changes to
            be passed through to customers by means of corresponding changes in product
            pricing. Consequently, the Company believes that cost of goods sold, as well as
            certain other expense items, should not be analyzed solely on a percentage of
            net sales basis. A sustained increase in resin prices, to the extent that those
            costs are not passed on to the end-consumer, would make plastic containers less
            economical for the Company's customers and could result in a slower pace of
            conversions to plastic containers.

The Company does not pay U.S. federal income taxes under the provisions
            of the Internal Revenue Code, as the distributive share of the applicable
            income or loss is included in the tax returns of its partners. The Company may
            make tax distributions to its partners to reimburse them for such tax
            obligations, if any. The Company's foreign operations are subject to tax in
            their local jurisdictions. Most of these entities have historically incurred
            net operating losses.

Results of Operations

The following tables set forth the major components of the Company's net
            sales (in millions) and such net sales expressed as a percentage of total net
            sales:

Three Months EndedMarch 30,2003
                   
                   March 31,2002North America
                   
                   $
                   192.0
                   
                   
                   
                   82.5
                   %
                   
                   $
                   185.0
                   
                   
                   
                   79.9
                   %Europe
                   
                   
                   35.3
                   
                   
                   
                   15.2
                   
                   
                   
                   39.0
                   
                   
                   
                   16.9South America
                   
                   
                   5.4
                   
                   
                   
                   2.3
                   
                   
                   
                   7.5
                   
                   
                   
                   3.2Total Net Sales
                   
                   $
                   232.7
                   
                   
                   
                   100.0
                   %
                   
                   $
                   231.5
                   
                   
                   
                   100.0
                   %


15

Three Months EndedMarch 30,2003
                   
                   March 31,2002Food and Beverage
                   
                   $
                   133.2
                   
                   
                   
                   57.2
                   %
                   
                   $
                   132.5
                   
                   
                   
                   57.3
                   %Household and Personal Care
                   
                   
                   47.9
                   
                   
                   
                   20.6
                   
                   
                   
                   51.0
                   
                   
                   
                   22.0Automotive Lubricants
                   
                   
                   51.6
                   
                   
                   
                   22.2
                   
                   
                   
                   48.0
                   
                   
                   
                   20.7Total Net Sales
                   
                   $
                   232.7
                   
                   
                   
                   100.0
                   %
                   
                   $
                   231.5
                   
                   
                   
                   100.0
                   %


Three Months Ended March 30, 2003 Compared to Three Months Ended March
            31, 2002

Net
            Sales.    Net sales for the three months ended
            March 30, 2003 increased $1.2 million or 0.5% to $232.7 million from $231.5
            million for the three months ended March 31, 2002. The increase in sales was
            primarily due to an increase in resin pricing combined with a 1.1% increase in
            units sold, principally due to additional food and beverage container business
            where units increased by 7.2%, partially offset by the Company's restructuring
            process in Europe. The restructuring process in Europe includes the sale or
            closing of seven non-strategic locations of which four locations were sold or
            closed in 2002, another two were sold on March 31, 2003, subsequent to the end
            of the fiscal quarter (see " — Subsequent Events"), and the last plant is
            expected to be closed later in 2003. Excluding business impacted by the
            European restructuring, sales and unit volume for the three months ended March
            30, 2003 would have increased approximately 6% as compared to the sales for the
            three months ended March 31, 2002. On a geographic basis, sales for the three
            months ended March 30, 2003 in North America increased $7.0 million or 3.8%
            from the three months ended March 31, 2002 and included higher units sold of
            2.9%. North American sales in the household and personal care business and the
            automotive lubricants business contributed $2.8 million and $5.0 million,
            respectively, to the increase, while sales in the food and beverage business
            decreased $0.8 million. Units sold in North America increased by 7.7% in the
            food and beverage business, decreased by 12.7% in the household and personal
            care business and increased by 3.3% in the automotive lubricants business.
            Sales for the three months ended March 30, 2003 in Europe decreased $3.7
            million or 9.5% from the three months ended March 31, 2002. The decrease in
            sales was primarily due to the European restructuring. Overall, the European
            sales reflected a 0.1% decrease in units sold. Exchange rate changes increased
            sales by approximately $6.1 million. Excluding business impacted by the
            European restructuring, sales in Europe for the three months ended March 30,
            2003 would have increased $7.3 million, or approximately 29%, compared to sales
            for the three months ended March 31, 2002 and unit volume in Europe would have
            increased approximately 14% compared to the same period last year. Sales in
            South America for the three months ended March 30, 2003 decreased $2.1 million
            or 28.0% from the three months ended March 31, 2002, primarily due to exchange
            rate changes of approximately $2.6 million.

Gross
            Profit.    Gross profit for the three months
            ended March 30, 2003 increased $4.7 million to $44.8 million from $40.1 million
            for the three months ended March 31, 2002. Gross profit for the three months
            ended March 30, 2003 increased $2.5 million in North America and $2.4 million
            in Europe, while South America reflected a decrease of $0.2 million, when
            compared to the three months ended March 31, 2002. The increase in gross profit
            resulted primarily from an increase in unit volume and strong operating
            performance related to ongoing business in Europe of $1.6 million, a net
            reduction of restructuring and customer consolidation expenses in North America
            and Europe of $2.6 million and net exchange rate gains in Europe and South
            America of approximately $0.4 million.

Selling, General &
            Administrative Expenses.    Selling, general and
            administrative expenses for the three months ended March 30, 2003 increased
            $1.5 million to $15.9 million from $14.4 million for the three months ended
            March 31, 2002. The increase in 2003 selling, general and administrative
            expenses was primarily due to growth in Mexico of $0.5 million, an increase in
            product development expenses in North America of $0.4 million, inflationary
            growth in salaries, fringes and certain other costs in North America of
            approximately $0.4 million, an increase in the allowance for doubtful accounts
            in Europe of $0.5 million and an increase in certain non-recurring charges of
            $0.2 million, partially offset by reduced expatriate-related costs in Europe of
            $0.4 million and the reduction of costs related to locations in Europe that
            were sold during 2002 of $0.3 million. The non-recurring charges were $0.4
            million and $0.2 million for the three months ended March 30, 2003 and March
            31, 2002, respectively, comprised primarily in both periods of

16

global reorganization costs. As a percent of sales, selling, general and
            administrative expenses increased to 6.8% of sales for the three months ended
            March 30, 2003 from 6.2% of sales for the three months ended March 31, 2002.
            Excluding non-recurring charges, as a percent of sales, selling, general and
            administrative expenses increased to 6.7% of sales for the three months ended
            March 30, 2003 from 6.1% of sales for the three months ended March 31, 2002.

Impairment
            Charges.    Due to the Company's commitment to a
            plan to sell its operations in Germany, the Company evaluated the
            recoverability of its assets in Germany. For these assets to be disposed of,
            the Company adjusted the carrying values to the lower of their carrying values
            or their estimated fair values less costs to sell, resulting in an impairment
            charge of $0.4 million for the three months ended March 30, 2003.

Due to a significant change in the ability to utilize certain assets in
            the U.S., the Company evaluated the recoverability of these assets. For these
            assets to be disposed of, the Company adjusted the carrying values to the lower
            of their carrying values or their estimated fair values less costs to sell,
            resulting in an impairment charge of $0.2 million for the three months ended
            March 30, 2003.

Interest Expense,
            Net.    Interest expense, net increased $8.9
            million to $30.9 million for the three months ended March 30, 2003 from $22.0
            million for the three months ended March 31, 2002. The increase was primarily
            related to the refinancing of the Company's prior Senior Credit Agreement,
            which resulted in the write-off of debt issuance fees of $6.2 million and the
            reclassification into expense of the remaining unrealized loss on existing
            interest rate swap agreements applicable to indebtedness under that credit
            agreement of $4.8 million, partially offset by a change in fair value of
            existing interest rate swap agreements applicable to indebtedness under that
            credit agreement of $1.3 million and a decline in interest rates.

Minority
            Interest.    Minority interest remained
            unchanged at $0.3 million for both the three months ended March 30, 2003 and
            March 31, 2002.

Income Tax
            Provision.    Income tax provision increased
            $1.5 million to $1.7 million for the three months ended March 30, 2003 from
            $0.2 million for the three months ended March 31, 2002. The increase was
            primarily related to increased taxable earnings in certain of the Company's
            European subsidiaries for the three months ended March 30, 2003 as compared to
            the three months ended March 31, 2002.

Net (Loss)
            Income.    Primarily as a result of factors
            discussed above, net loss was $4.6 million for the three months ended March 30,
            2003 compared to net income of $3.2 million for the three months ended March
            31, 2002.

Covenant Compliance
            EBITDA.    Primarily as a result of factors
            discussed above, Covenant Compliance EBITDA (as hereinafter defined) increased
            $2.2 million or 4.7% to $48.9 million for the three months ended March 30, 2003
            from $46.7 million for the three months ended March 31, 2002.

Effect of Changes in Exchange Rates

In general, the Company's results of operations are affected by changes
            in foreign exchange rates. Subject to market conditions, the Company prices its
            products in its foreign operations in local currencies. 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 the profitability of the
            Company, 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 the
            profitability of the Company. Exchange rate fluctuations increased
            comprehensive income by $2.5 million and decreased comprehensive income by $0.3
            million for the three months ended March 30, 2003 and March 31, 2002,
            respectively.

Derivatives

On February 14, 2003 the Company entered into three new interest rate
            swap agreements beginning March 24, 2003 that effectively fix the interest rate
            on $300.0 million of the term loans through March 24, 2006 at a weighted
            average rate of 2.54%. The effective portion of the change in the fair value of
            the new interest rate swaps is recorded in other comprehensive income ("OCI")
            and was an unrealized loss of $2.3

17

million for the three months ended March 30, 2003. Approximately one
            third of the amount recorded within OCI is expected to be recognized as
            interest expense in the next twelve months. Failure to properly document the
            Company's interest rate swaps as cash flow hedges would result in income
            statement recognition of all or part of the cumulative $2.3 million unrealized
            loss recorded in OCI as of March 30, 2003.

The Company entered into interest rate swap agreements to hedge the
            exposure to increasing rates with respect to its prior senior credit agreement.
            These interest rate swaps were accounted for as cash flow hedges. In connection
            with the closing of the Senior Credit Agreement (as hereinafter defined) on
            February 14, 2003 these swaps no longer qualified for hedge accounting. As
            such, the Company recorded a non-cash charge of approximately $4.8 million
            within interest expense as a result of the reclassification into expense of the
            remaining unrealized loss on existing interest rate swap agreements applicable
            to indebtedness under its prior senior credit agreement. These interest rate
            swap agreements expire at various points through September 2003. The effective
            portion of the change in fair value of these swaps prior to February 14, 2003
            was recorded in OCI and was an unrealized gain of $1.5 million. The change in
            fair value of these swaps after February 14, 2003 was recognized in earnings
            and resulted in a reduction of interest expense of $1.3 million for the three
            months ended March 30, 2003.

Liquidity and Capital Resources

In the three months ended March 30, 2003, the Company funded, through its
            various borrowing arrangements, $10.0 million of operating activities and $18.9
            million of investing activities.

The Company's Senior Credit Agreement currently consists of two term
            loans to the Operating Company with initial term loan commitments totaling
            $670.0 million and a revolving loan facility to the Operating Company totaling
            $150.0 million. The unused availability of the revolving credit facility under
            the Senior Credit Agreement at March 30, 2003 was $110.4 million. The
            obligations of the Operating Company under the Senior Credit Agreement are
            guaranteed by Holdings and certain other subsidiaries of Holdings. The term
            loans are payable in quarterly installments and require payments of $2.5
            million in 2003, $5.0 million in 2004, $25.0 million in 2005, $50.0 million in
            2006, $50.0 million in 2007, $235.0 million in 2008, $235.0 million in 2009 and
            $67.5 million in 2010. The Company expects to fund scheduled debt repayments
            from cash from operations and unused lines of credit. The revolving loan
            facility expires on the earlier of February 14, 2008 and the Term Loan maturity
            date.

The Senior Credit Agreement contains certain affirmative and negative
            covenants as to the operations and financial condition of the Company, as well
            as restrictions on the payment of dividends and other distributions to
            Holdings. Substantially all domestic tangible and intangible assets of the
            Company are pledged as collateral pursuant to the terms of the Senior Credit
            Agreement.

The Company's other indebtedness included the issuance of $225.0 million
            of senior subordinated notes due 2008 and the issuance of $169.0 million
            aggregate principal amount at maturity of Senior Discount Notes due 2009 which
            yielded gross proceeds of $100.6 million. At March 30, 2003, the aggregate
            accreted value of the Senior Discount Notes was $169.0 million. The Senior
            Subordinated Notes are unconditionally guaranteed on a senior subordinated
            basis by Holdings and mature on January 15, 2008, with interest payable on
            $150.0 million at a fixed rate of 8.75% and with interest payable on $75.0
            million at LIBOR plus 3.625%. The Senior Discount Notes mature on January 15,
            2009, with cash interest payable semi-annually beginning July 15, 2003 at
            10.75%. The effective interest rate to maturity on the Senior Discount Notes is
            10.75%. At March 30, 2003, the Company's total indebtedness was $1,120.4
            million.

As market conditions warrant, the Company and its major equityholders,
            including Blackstone Capital Partners III Merchant Bank Fund L.P. and its
            affiliates, may from time to time repurchase debt securities issued by the
            Company, in privately negotiated or open market transactions, by tender offer
            or otherwise.

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. Covenant compliance
            EBITDA is calculated in the Senior Credit Agreement and Indentures by adding
            minority interest,

18

extraordinary items, interest expense, interest income, income taxes,
            depreciation and amortization expense, impairment charges, the ongoing $1.0
            million per year fee paid pursuant to the Blackstone monitoring agreement,
            non-cash equity income in earnings of joint ventures, other non-cash charges,
            Recapitalization expenses, special charges and unusual items and certain other
            charges to net (loss) income. Covenant compliance EBITDA is included because
            covenants in the Company's debt agreements are tied to ratios based on that
            measure. For example, the Senior Credit Agreement requires that the Operating
            Company maintain a ratio of covenant compliance EBITDA to interest starting at
            a minimum of 2.25x and a ratio of net debt to covenant compliance EBITDA
            starting at a maximum of 5.50x, in each case for the most recent four quarter
            period. The ability of the Operating Company to incur additional debt and make
            certain restricted payments under the Indentures is tied to a ratio of covenant
            compliance EBITDA to interest expense of 1.75 to 1, except that the Operating
            Company may incur certain debt and make certain restricted payments without
            regard to the ratio, such as up to $650 million under the Senior Credit
            Agreement and investments equal to 10% of the Operating Company's total assets.
            While covenant compliance EBITDA and similar measures are frequently used as
            measures of operations and the ability to meet debt service requirements, these
            terms are not necessarily comparable to other similarly titled captions of
            other companies due to the potential inconsistencies in the method of
            calculation. Covenant compliance EBITDA is calculated as follows:

Three Months EndedMarch 30,2003
                   
                   March 31,2002(In millions)Net (loss) income
                   
                   $
                   (4.6
                   )
                   
                   $
                   3.2Interest expense, net
                   
                   
                   30.9
                   
                   
                   
                   22.0Income tax expense
                   
                   
                   1.7
                   
                   
                   
                   0.2Depreciation and amortization
                   
                   
                   17.6
                   
                   
                   
                   17.5Impairment charges
                   
                   
                   0.6
                   
                   
                   
                   —Fees paid pursuant to the Blackstone
                        monitoring agreement
                   
                   
                   0.3
                   
                   
                   
                   0.3Minority interest
                   
                   
                   0.3
                   
                   
                   
                   0.3Certain other charges (1)(2)
                   
                   
                   2.1
                   
                   
                   
                   3.2Covenant compliance EBITDA
                   
                   $
                   48.9
                   
                   
                   $
                   46.7


|
|
|
|

| | (1) | The
                   three months ended March 30, 2003 include costs related to global
                   reorganization of $2.1 million. The three months ended March 31, 2002 include
                   costs related to global reorganization of $3.1 million and other costs of $0.1
                   million.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Does
                   not include project startup costs, which are included in the calculation of
                   covenant compliance EBITDA under the Senior Credit Agreement and Indentures.
                   These startup costs were $0.5 million and $1.1 million for the three months
                   ended March 30, 2003 and March 31, 2002, respectively.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Management believes that capital investment to maintain and upgrade
            property, plant and equipment is important to remain competitive. Management
            estimates that on average the annual capital expenditures required to maintain
            the Company's facilities are approximately $30 million per year. Additional
            capital expenditures beyond this amount will be required to expand capacity.
            Capital expenditures for the three months ended March 30, 2003 were $18.9
            million. For the fiscal year 2003, the Company expects to incur approximately
            $135.0 million of capital expenditures. However, total capital expenditures for
            2003 will depend on the size and timing of growth related opportunities. The
            Company's principal sources of cash to fund ongoing operations and capital
            requirements have been and are expected to continue to be net cash provided by
            operating activities and borrowings under the Senior Credit Agreement.
            Management believes that these sources will be sufficient to fund the Company's
            ongoing operations and its foreseeable capital requirements.

On July 9, 2002, the Company and Graham Engineering amended the equipment
            sales, service and licensing agreement to, among other things, (i) limit the
            Company's existing rights in exchange for a perpetual license in the event
            Graham Engineering proposes to sell its rotary extrusion blow molding equipment
            business or assets to certain of the Company's significant competitors; (ii)
            clarify that the

19

Company's exclusivity rights under the equipment sales, service and
            licensing agreement do not apply to certain new generations of Graham
            Engineering equipment; (iii) provide Graham Engineering certain recourse in the
            event the Company decides to buy certain high output extrusion blow molding
            equipment from any supplier other than Graham Engineering; and (iv) obligate
            the Company, retroactive to January 1, 2002 and subject to certain credits and
            carry-forwards, to make payments for products and services to Graham
            Engineering in the amount of at least $12.0 million per calendar year, or else
            pay Graham Engineering a shortfall payment.

Under the Senior Credit Agreement, 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:

| | • | in
                   respect of overhead, tax liabilities, legal, accounting and other professional
                   fees and expenses;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------

| | • | to
                   fund purchases and redemptions of equity interests of Holdings or BMP/Graham
                   Holdings Corporation held by then present or former officers or employees of
                   Holdings, the Operating Company or their subsidiaries 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; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | to
                   finance the payment of cash interest on the Senior Discount Notes or any notes
                   issued pursuant to a refinancing of the Senior Discount Notes.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

New Accounting Pronouncements Not Yet Adopted

In January 2003, the Financial Accounting Standards Board ("FASB") issued
            FASB Interpretation No. ("FIN") 46, "Consolidation of Variable Interest
            Entities." FIN 46 establishes accounting and disclosure requirements for
            ownership interests in entities that have certain financial or ownership
            characteristics (sometimes known as "Special Purpose Entities"). FIN 46 is
            applicable for variable interest entities created after January 31, 2003 and
            becomes effective in the first fiscal year or interim accounting period
            beginning after June 15, 2003 for variable interest entities created before
            February 1, 2003. Management does not believe that adoption of FIN 46 will have
            a significant impact on the Company's results of operations or financial
            position.

In April 2002, the FASB issued Statement of Financial Accounting
            Standards ("SFAS") 149 "Amendment of Statement 133 on Derivative Instruments
            and Hedging Activities." This Statement amends and clarifies accounting for
            derivative instruments, including certain derivative instruments embedded in
            other contracts, and for hedging activities under SFAS 133. This Statement is
            effective for contracts entered into or modified, and for hedging relationships
            designated after June 30, 2003. Other provisions of this statement that related
            to SFAS 133 Implementation Issues should continue to be applied in accordance
            with their respective effective dates. Management has not yet determined the
            impact that SFAS 149 will have on the Company's results of operations or
            financial position.

Subsequent Events

On March 31, 2003 the Company completed the sale of certain assets and
            liabilities of its German subsidiary, Graham Packaging Deutschland GmbH. The
            resulting losses were not significant.

Item 3.    Quantitative and Qualitative Disclosures
            About Market Risk

See the information set forth in Item 7A of Holdings' Annual Report on
            Form 10-K for the fiscal year ended December 31, 2002 for complete quantitative
            and qualitative disclosures about market risk. The following table provides
            disclosure as of March 30, 2003 for financial instruments that have experienced
            material changes in fair value since December 31, 2002.

20

Expected Maturity Date of Interest
                        Rate Swap Agreements at March 30, 2003
                   
                   Fair Value March
                        30,20032003
                   
                   2004
                   
                   2005
                   
                   2006
                   
                   2007
                   
                   Thereafter
                   
                   Total(Dollars in thousands)Derivatives matched against
                        liabilities:Pay fixed swaps
                   
                   $
                   300,000
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   $
                   300,000
                   
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   $
                   600,000
                   
                   
                   $
                   (5,818
                   )Pay rate
                   
                   
                   5.25
                   %
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   2.54
                   %
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   3.89
                   %Receive rate
                   
                   
                   1.22
                   %
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   2.23
                   %
                   
                   
                   —
                   
                   
                   
                   —
                   
                   
                   
                   1.72
                   %


Item 4.    Controls and Procedures

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

The Company's principal executive officer and principal financial
            officer, after evaluating the effectiveness of the Company's disclosure
            controls and procedures (as defined in Exchange Act Rules 13a-14(c) and
            15d-14(c)) as of a date within ninety days before the filing date of this
            report, have concluded that as of such date the Company's disclosure controls
            and procedures were adequate and effective to ensure that material information
            relating to Holdings would be made known to them by others within the company.

|    |                                                
|--- | -----------------------------------------------
|(b) | Changes
                   in Internal Controls

There were no significant changes in the Company's internal controls or
            in other factors that could significantly affect Holdings' disclosure controls
            and procedures subsequent to the date of their evaluation, nor were there any
            significant deficiencies or material weaknesses in Holdings' internal controls.
            As a result, no corrective actions were required or undertaken.

21

PART II.    OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K

|    |         
|--- | --------
|(a) | Exhibits

| |                                 |                                                                                                                                                              
| | ------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Exhibit
                   99.1 | Certification
                   pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
                   Sarbanes-Oxley Act of 2002.

|    |                                       
|--- | --------------------------------------
|(b) | Reports
                   on Form 8-K

| |                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During
                   the quarter ended March 30, 2003 the Company filed a Report on Form 8-K dated
                   February 10, 2003 to report the Company's preliminary results for the quarter
                   and the year ended December 31, 2002.

22

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:    May 13, 2003

GRAHAM PACKAGING HOLDINGS COMPANY
                        (Registrant)By: BCP/Graham Holdings
                        L.L.C.,            its
                        General PartnerBy:
                   
                   /s/ John E. HamiltonJohn E. Hamilton Chief
                        Financial Officer(chief accounting officer and duly authorized
                        officer)


23

CERTIFICATION

I, Philip R. Yates, certify that:

|   |                                                                                                                               
|-- | ------------------------------------------------------------------------------------------------------------------------------
|1) | I
                   have reviewed this quarterly report on Form 10-Q of Graham Packaging Holdings
                   Company;

|   |                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2) | Based
                   on my knowledge, this quarterly report does not contain any untrue statement of
                   a material fact or omit to state a material fact necessary to make the
                   statements made, in light of the circumstances under which such statements were
                   made, not misleading with respect to the period covered by this quarterly
                   report;

|   |                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3) | Based
                   on my knowledge, the financial statements, and other financial information
                   included in this quarterly report, fairly present in all material respects the
                   financial condition, results of operations and cash flows of the registrant as
                   of, and for, the periods presented in this quarterly report;

|   |                                                                                                                                                                                                                                                                                   
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4) | The
                   registrant's other certifying officers and I are responsible for establishing
                   and maintaining disclosure controls and procedures (as defined in Exchange Act
                   Rules 13a-14 and 15d-14) for the registrant and we have:

| |    |                                                                                                                                                                                                                                                                                                                                                                           
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | designed
                   such disclosure controls and procedures to ensure that material information
                   relating to the registrant, including its consolidated subsidiaries, is made
                   known to us by others within those entities, particularly during the period in
                   which the quarterly report is being prepared;

| |    |                                                                                                                                                                                                                                                       
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | evaluated
                   the effectiveness of the registrant's disclosure controls and procedures as of
                   a date within 90 days prior to the filing date of this quarterly report (the
                   "Evaluation Date"); and

| |    |                                                                                                                                                                                                        
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | c) | presented
                   in this quarterly report our conclusions about the effectiveness of the
                   disclosure controls and procedures on our evaluation as of the Evaluation Date;

|   |                                                                                                                                                                                                                                                                                                                           
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5) | The
                   registrant's other certifying officers and I have disclosed, based on our most
                   recent evaluation, to the registrant's auditors and the audit committee of
                   registrant's board of directors (or persons performing the equivalent
                   function):

| |    |                                                                                                                                                                                                                                                                                                                                                                           
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | all
                   significant deficiencies in the design or operation of internal controls which
                   could adversely affect the registrant's ability to record, process, summarize
                   and report financial data and have identified for the registrant's auditors any
                   material weaknesses in internal controls; and

| |    |                                                                                                                                                                                             
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | any
                   fraud, whether or not material, that involves management or other employees who
                   have a significant role in the registrant's internal controls; and

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|6) | The
                   registrant's other certifying officers and I have indicated in this quarterly
                   report whether or not there were significant changes in internal controls or in
                   other factors that could significantly affect internal controls subsequent to
                   the date of our most recent evaluation, including any corrective actions with
                   regard to significant deficiencies and material weaknesses.

Date:    May 13, 2003

By:
                   
                   /s/ Philip R. YatesPhilip R. Yates Chief Executive
                        Officer


24

CERTIFICATION

I, John E. Hamilton, certify that:

|   |                                                                                                                               
|-- | ------------------------------------------------------------------------------------------------------------------------------
|1) | I
                   have reviewed this quarterly report on Form 10-Q of Graham Packaging Holdings
                   Company;

|   |                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2) | Based
                   on my knowledge, this quarterly report does not contain any untrue statement of
                   a material fact or omit to state a material fact necessary to make the
                   statements made, in light of the circumstances under which such statements were
                   made, not misleading with respect to the period covered by this quarterly
                   report;

|   |                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3) | Based
                   on my knowledge, the financial statements, and other financial information
                   included in this quarterly report, fairly present in all material respects the
                   financial condition, results of operations and cash flows of the registrant as
                   of, and for, the periods presented in this quarterly report;

|   |                                                                                                                                                                                                                                                                                   
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4) | The
                   registrant's other certifying officers and I are responsible for establishing
                   and maintaining disclosure controls and procedures (as defined in Exchange Act
                   Rules 13a-14 and 15d-14) for the registrant and we have:

| |    |                                                                                                                                                                                                                                                                                                                                                                           
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | designed
                   such disclosure controls and procedures to ensure that material information
                   relating to the registrant, including its consolidated subsidiaries, is made
                   known to us by others within those entities, particularly during the period in
                   which the quarterly report is being prepared;

| |    |                                                                                                                                                                                                                                                       
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | evaluated
                   the effectiveness of the registrant's disclosure controls and procedures as of
                   a date within 90 days prior to the filing date of this quarterly report (the
                   "Evaluation Date"); and

| |    |                                                                                                                                                                                                                           
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | c) | presented
                   in this quarterly report our conclusions about the effectiveness of the
                   disclosure controls and procedures on our evaluation as of the Evaluation
                   Date;

|   |                                                                                                                                                                                                                                                                                                                           
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5) | The
                   registrant's other certifying officers and I have disclosed, based on our most
                   recent evaluation, to the registrant's auditors and the audit committee of
                   registrant's board of directors (or persons performing the equivalent
                   function):

| |    |                                                                                                                                                                                                                                                                                                                                                                           
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | all
                   significant deficiencies in the design or operation of internal controls which
                   could adversely affect the registrant's ability to record, process, summarize
                   and report financial data and have identified for the registrant's auditors any
                   material weaknesses in internal controls; and

| |    |                                                                                                                                                                                             
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | any
                   fraud, whether or not material, that involves management or other employees who
                   have a significant role in the registrant's internal controls; and

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|6) | The
                   registrant's other certifying officers and I have indicated in this quarterly
                   report whether or not there were significant changes in internal controls or in
                   other factors that could significantly affect internal controls subsequent to
                   the date of our most recent evaluation, including any corrective actions with
                   regard to significant deficiencies and material weaknesses.

Date:    May 13, 2003

By:
                   
                   /s/ John E. HamiltonJohn E. Hamilton Chief Financial
                        Officer


25