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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 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2009

OR



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

For the transition period from                          to

Commission file number: 333-53603-03

GRAHAM PACKAGING HOLDINGS COMPANY

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Pennsylvania                                                   |  | 23-2553000                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                         |  |           
|---------------------------------------- |  | ----------
|2401 Pleasant Valley Road                |  |           
|York, Pennsylvania                       |  | 17402     
|(Address of principal executive offices) |  | (Zip Code)

|                                                    
|----------------------------------------------------
|(717) 849-8500                                      
|(Registrants telephone number, including area code)





Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.

Yes   ̈    No  x

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

Indicate by
check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes   ̈    No   ̈

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



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈ |  | Accelerated filer         |  |  ̈
|                        |  |   | 
|Non-accelerated filer   |  | x |  | Smaller reporting company |  |  ̈

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes   ̈    No  x









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GRAHAM PACKAGING HOLDINGS COMPANY

INDEX



|                              |  |                                                                                                                        |  |            
|----------------------------- |  | ---------------------------------------------------------------------------------------------------------------------- |  | -----------
|                              |  |                                                                                                                        |  | Page Number
|PART I. FINANCIAL INFORMATION |  |                                                                                                                       
|                              |  |                                                                                                                       
|Item 1:                       |  | Financial Statements:                                                                                                  |  |            
|                              |  |                                                                                                                       
|                              |  | CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)  At June 30, 2009 andDecember 31, 2008                              |  | 3          
|                              |  |                                                                                                                       
|                              |  | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)  For the threeand six months ended June 30, 2009 and 2008 |  | 4          
|                              |  |                                                                                                                       
|                              |  | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)  For the sixmonths ended June 30, 2009 and 2008           |  | 5          
|                              |  |                                                                                                                       
|                              |  | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)                                                       |  | 6          
|                              |  |                                                                                                                       
|Item 2:                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                  |  | 34         
|                              |  |                                                                                                                       
|Item 3:                       |  | Quantitative and Qualitative Disclosures About Market Risk                                                             |  | 48         
|                              |  |                                                                                                                       
|Item 4T:                      |  | Controls and Procedures                                                                                                |  | 50         
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                                                       
|                              |  |                                                                                                                       
|Item 1:                       |  | Legal Proceedings                                                                                                      |  | 51         
|                              |  |                                                                                                                       
|Item 1A:                      |  | Risk Factors                                                                                                           |  | 51         
|                              |  |                                                                                                                       
|Item 6:                       |  | Exhibits                                                                                                               |  | 51         
|                              |  |                                                                                                                       
|Signature                     |  |                                                                                                                        |  | 52         



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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GRAHAM PACKAGING HOLDINGS COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)



|                                                             |  |                |           |   |                  |   |           |  
|------------------------------------------------------------ |  | -------------- | --------- | - | ---------------- | - | --------- | -
|                                                             |  | June 30,2009   |           |   | December 31,2008 |  
|                                                             |  | (In thousands) |          
|ASSETS                                                       |  |                |           |   |                  |   |           |  
|Current assets:                                              |  |                |           |   |                  |   |           |  
|Cash and cash equivalents                                    |  | $              | 148,937   |   |                  | $ | 43,879    |  
|Accounts receivable, net                                     |  |                | 225,859   |   |                  |   | 233,734   |  
|Inventories                                                  |  |                | 206,357   |   |                  |   | 224,361   |  
|Deferred income taxes                                        |  |                | 2,941     |   |                  |   | 2,829     |  
|Prepaid expenses and other current assets                    |  |                | 44,079    |   |                  |   | 57,248    |  
|                                                             |  |                |           |   |                  |   |           |  
|Total current assets                                         |  |                | 628,173   |   |                  |   | 562,051   |  
|Property, plant and equipment, net                           |  |                | 1,049,386 |   |                  |   | 1,060,594 |  
|Intangible assets, net                                       |  |                | 44,443    |   |                  |   | 46,258    |  
|Goodwill                                                     |  |                | 293,916   |   |                  |   | 293,360   |  
|Other non-current assets                                     |  |                | 33,555    |   |                  |   | 44,587    |  
|                                                             |  |                |           |   |                  |   |           |  
|Total assets                                                 |  | $              | 2,049,473 |   |                  | $ | 2,006,850 |  
|                                                             |  |                |           |   |                  |   |           |  
|                                                             |  |               
|LIABILITIES AND PARTNERS CAPITAL (DEFICIT)                  |  |                |           |   |                  |   |           |  
|Current liabilities:                                         |  |                |           |   |                  |   |           |  
|Current portion of long-term debt                            |  | $              | 31,984    |   |                  | $ | 56,899    |  
|Accounts payable                                             |  |                | 157,033   |   |                  |   | 100,778   |  
|Accrued expenses and other current liabilities               |  |                | 188,098   |   |                  |   | 192,207   |  
|Deferred revenue                                             |  |                | 33,262    |   |                  |   | 34,646    |  
|                                                             |  |                |           |   |                  |   |           |  
|Total current liabilities                                    |  |                | 410,377   |   |                  |   | 384,530   |  
|Long-term debt                                               |  |                | 2,412,847 |   |                  |   | 2,442,339 |  
|Deferred income taxes                                        |  |                | 18,182    |   |                  |   | 19,669    |  
|Other non-current liabilities                                |  |                | 103,704   |   |                  |   | 119,637   |  
|Commitments and contingent liabilities (see Notes 14 and 15) |  |                |           |   |                  |   |           |  
|Partners capital (deficit):                                 |  |                |           |   |                  |   |           |  
|General partners                                             |  |                | (41,687   | ) |                  |   | (44,372   | )
|Limited partners                                             |  |                | (797,052  | ) |                  |   | (848,307  | )
|Notes and interest receivable for ownership interests        |  |                | (2,038    | ) |                  |   | (2,060    | )
|Accumulated other comprehensive income                       |  |                | (54,860   | ) |                  |   | (64,586   | )
|                                                             |  |                |           |   |                  |   |           |  
|Total partners capital (deficit)                            |  |                | (895,637  | ) |                  |   | (959,325  | )
|                                                             |  |                |           |   |                  |   |           |  
|Total liabilities and partners capital (deficit)            |  | $              | 2,049,473 |   |                  | $ | 2,006,850 |  
|                                                             |  |                |           |   |                  |   |           |  

See accompanying notes to condensed consolidated financial statements.



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GRAHAM PACKAGING HOLDINGS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



|                                                      |  |                            |         |   |                          |   |         |      |  |   |           |   |  |   |           |  
|----------------------------------------------------- |  | -------------------------- | ------- | - | ------------------------ | - | ------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                                      |  | Three Months EndedJune 30, |         |   | Six Months EndedJune 30, |  
|                                                      |  | 2009                       |         |   | 2008                     |   |         | 2009 |  |   | 2008      |  
|                                                      |  | (In thousands)             |        
|Net sales                                             |  | $                          | 589,554 |   |                          | $ | 688,244 |      |  | $ | 1,155,957 |   |  | $ | 1,357,647 |  
|Cost of goods sold                                    |  |                            | 478,238 |   |                          |   | 580,703 |      |  |   | 951,315   |   |  |   | 1,157,002 |  
|                                                      |  |                            |         |   |                          |   |         |      |  |   |           |   |  |   |           |  
|Gross profit                                          |  |                            | 111,316 |   |                          |   | 107,541 |      |  |   | 204,642   |   |  |   | 200,645   |  
|Selling, general and administrative expenses          |  |                            | 28,988  |   |                          |   | 36,213  |      |  |   | 57,395    |   |  |   | 69,150    |  
|Asset impairment charges                              |  |                            | 6,459   |   |                          |   |        |      |  |   | 8,035     |   |  |   | 15        |  
|Net loss on disposal of property, plant and equipment |  |                            | 803     |   |                          |   | 139     |      |  |   | 2,298     |   |  |   | 285       |  
|                                                      |  |                            |         |   |                          |   |         |      |  |   |           |   |  |   |           |  
|Operating income                                      |  |                            | 75,066  |   |                          |   | 71,189  |      |  |   | 136,914   |   |  |   | 131,195   |  
|Interest expense                                      |  |                            | 37,195  |   |                          |   | 42,181  |      |  |   | 76,912    |   |  |   | 93,015    |  
|Interest income                                       |  |                            | (247    | ) |                          |   | (178    | )    |  |   | (471      | ) |  |   | (327      | )
|Gain on debt extinguishment                           |  |                            | (756    | ) |                          |   |        |      |  |   | (756      | ) |  |   |          |  
|Other income, net                                     |  |                            | (977    | ) |                          |   | (514    | )    |  |   | (1,545    | ) |  |   | (1,335    | )
|                                                      |  |                            |         |   |                          |   |         |      |  |   |           |   |  |   |           |  
|Income before income taxes                            |  |                            | 39,851  |   |                          |   | 29,700  |      |  |   | 62,774    |   |  |   | 39,842    |  
|Income tax provision                                  |  |                            | 4,907   |   |                          |   | 1,392   |      |  |   | 9,066     |   |  |   | 7,776     |  
|                                                      |  |                            |         |   |                          |   |         |      |  |   |           |   |  |   |           |  
|Net income                                            |  | $                          | 34,944  |   |                          | $ | 28,308  |      |  | $ | 53,708    |   |  | $ | 32,066    |  
|                                                      |  |                            |         |   |                          |   |         |      |  |   |           |   |  |   |           |  
|                                                      |  |                            |         |  
|Net income allocated to general partners              |  | $                          | 1,747   |   |                          | $ | 1,415   |      |  | $ | 2,685     |   |  | $ | 1,603     |  
|Net income allocated to limited partners              |  | $                          | 33,197  |   |                          | $ | 26,893  |      |  | $ | 51,023    |   |  | $ | 30,463    |  

See accompanying notes to condensed consolidated financial statements.



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GRAHAM PACKAGING HOLDINGS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                                  |  |                          |         |   |      |   |          |  
|--------------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | -------- | -
|                                                                                  |  | Six Months EndedJune 30, |        
|                                                                                  |  | 2009                     |         |   | 2008 |  
|                                                                                  |  | (In thousands)           |        
|Operating activities:                                                             |  |                          |         |   |      |   |          |  
|Net income                                                                        |  | $                        | 53,708  |   |      | $ | 32,066   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                          |         |   |      |   |          |  
|Depreciation and amortization                                                     |  |                          | 79,854  |   |      |   | 87,756   |  
|Gain on debt extinguishment                                                       |  |                          | (756    | ) |      |   |         |  
|Amortization of debt issuance fees                                                |  |                          | 4,758   |   |      |   | 5,178    |  
|Net loss on disposal of property, plant and equipment                             |  |                          | 2,298   |   |      |   | 285      |  
|Pension expense                                                                   |  |                          | 2,520   |   |      |   | 1,253    |  
|Asset impairment charges                                                          |  |                          | 8,035   |   |      |   | 15       |  
|Unrealized loss on termination of cash flow hedge accounting                      |  |                          | 2,262   |   |      |   |         |  
|Stock compensation expense                                                        |  |                          | 407     |   |      |   | 1,933    |  
|Foreign currency transaction loss (gain)                                          |  |                          | 80      |   |      |   | (490     | )
|Interest on receivable for ownership interests                                    |  |                          | (63     | ) |      |   | (61      | )
|Changes in operating assets and liabilities:                                      |  |                          |         |   |      |   |          |  
|Accounts receivable                                                               |  |                          | 8,789   |   |      |   | (24,104  | )
|Inventories                                                                       |  |                          | 18,999  |   |      |   | (3,422   | )
|Prepaid expenses and other current assets                                         |  |                          | 18,285  |   |      |   | (4,948   | )
|Other non-current assets                                                          |  |                          | (2,032  | ) |      |   | (3,736   | )
|Accounts payable and accrued expenses                                             |  |                          | 36,334  |   |      |   | 24,193   |  
|Pension contributions                                                             |  |                          | (14,326 | ) |      |   | (924     | )
|Other non-current liabilities                                                     |  |                          | (1,024  | ) |      |   | 2,358    |  
|                                                                                  |  |                          |         |   |      |   |          |  
|Net cash provided by operating activities                                         |  |                          | 218,128 |   |      |   | 117,352  |  
|                                                                                  |  |                          |         |   |      |   |          |  
|Investing activities:                                                             |  |                          |         |   |      |   |          |  
|Cash paid for property, plant and equipment                                       |  |                          | (71,800 | ) |      |   | (68,186  | )
|Proceeds from sale of property, plant and equipment                               |  |                          | 580     |   |      |   | 692      |  
|                                                                                  |  |                          |         |   |      |   |          |  
|Net cash used in investing activities                                             |  |                          | (71,220 | ) |      |   | (67,494  | )
|                                                                                  |  |                          |         |   |      |   |          |  
|Financing activities:                                                             |  |                          |         |   |      |   |          |  
|Proceeds from issuance of long-term debt                                          |  |                          | 22,508  |   |      |   | 234,066  |  
|Payment of long-term debt                                                         |  |                          | (55,668 | ) |      |   | (249,692 | )
|Purchase of partnerships units                                                    |  |                          | (89     | ) |      |   |         |  
|Debt issuance fees                                                                |  |                          | (9,570  | ) |      |   |         |  
|                                                                                  |  |                          |         |   |      |   |          |  
|Net cash used in financing activities                                             |  |                          | (42,819 | ) |      |   | (15,626  | )
|                                                                                  |  |                          |         |   |      |   |          |  
|Effect of exchange rate changes on cash and cash equivalents                      |  |                          | 969     |   |      |   | 309      |  
|                                                                                  |  |                          |         |   |      |   |          |  
|Increase in cash and cash equivalents                                             |  |                          | 105,058 |   |      |   | 34,541   |  
|Cash and cash equivalents at beginning of period                                  |  |                          | 43,879  |   |      |   | 18,314   |  
|                                                                                  |  |                          |         |   |      |   |          |  
|Cash and cash equivalents at end of period                                        |  | $                        | 148,937 |   |      | $ | 52,855   |  
|                                                                                  |  |                          |         |   |      |   |          |  
|Supplemental disclosures                                                          |  |                          |         |   |      |   |          |  
|Cash paid for interest, net of amounts capitalized                                |  | $                        | 82,516  |   |      | $ | 92,710   |  
|Cash paid for income taxes (net of refunds)                                       |  |                          | 7,491   |   |      |   | 4,918    |  
|Non-cash investing and financing activities:                                      |  |                          |         |   |      |   |          |  
|Capital leases                                                                    |  |                          |        |   |      |   | 2,302    |  
|Accruals for purchases of property, plant and equipment                           |  |                          | 19,035  |   |      |   | 11,012   |  
|Accruals for debt issuance fees                                                   |  |                          | 5,443   |   |      |   |         |  

See accompanying notes to condensed consolidated financial statements.



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GRAHAM PACKAGING HOLDINGS COMPANY

NOTES 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 accounting principles generally accepted in the United States of America (generally accepted accounting
principles or GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and therefore do not include all of the information and footnotes required by generally accepted
accounting principles for complete annual financial statements. All entities and assets owned by Holdings are referred to collectively with Holdings as the Company. Graham Packaging Company, L.P., Holdings wholly-owned subsidiary,
is referred to as the Operating Company. In the opinion of the management of the Company, all adjustments (consisting only of usual recurring adjustments considered necessary for a fair presentation) are reflected in the condensed
consolidated financial statements. The condensed consolidated balance sheet as of December 31, 2008, is derived from audited financial statements. The condensed consolidated financial statements and notes included in this report should be read
in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2008. The results of operations for the six months ended June 30, 2009, are not necessarily indicative of the results to be
expected for the full year ending December 31, 2009.

Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) 157,
Fair Value Measurements. This statement establishes a single authoritative definition of fair value, sets out a framework to classify the source of information used in fair value measurements, identifies additional factors that must be
disclosed about assets and liabilities measured at fair value based on their placement in the new framework and modifies the long-standing accounting presumption that the transaction price of an asset or liability equals its initial fair value. In
February 2008, the FASB delayed the effective date for certain non-financial assets and liabilities until January 1, 2009. The Company adopted SFAS 157 effective January 1, 2008, for financial assets and liabilities (see Note 11). The
Company adopted SFAS 157 for certain non-financial assets and liabilities effective January 1, 2009, and the adoption had no impact on its financial statements as it relates to these assets and liabilities.

In March 2008, the FASB issued SFAS 161, Disclosures about Derivative Instruments and Hedging Activities. The new standard is intended to
improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entitys financial position, financial performance and cash flows. It
requires disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also requires more information about an entitys liquidity by requiring disclosure of derivative features that are credit
riskrelated, and requires cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments. The Company adopted SFAS 161 effective January 1, 2009 (see Note 12).

In December 2008, the FASB issued Staff Position FAS 132(R)-1 (FSP 132(R)-1), Employers Disclosures about
Postretirement Benefit Plan Assets, which requires enhanced disclosures of the plan assets of an employers defined benefit pension or other postretirement benefit plans. The disclosures required under FSP 132(R)-1 will include
information regarding the investment allocation decisions made for plan assets, the fair value of each major category of plan assets disclosed separately for pension plans and other postretirement benefit plans and the inputs and valuation
techniques used to measure the fair value of plan assets that would be similar to the disclosures about fair value measurements required by SFAS 157. The disclosures in FSP 132(R)-1 are effective for fiscal years ending after December 15, 2009.
The Company is currently evaluating the impact that the adoption of FSP 132(R)-1 may have on its financial statements.

In April 2009, the
FASB issued Staff Position FAS 107-1 and Accounting Principles Board Opinion (APB) 28-1, Interim Disclosures about Fair Value of Financial Instruments. This pronouncement requires disclosures about fair value of
financial instruments for interim reporting periods that were previously only required in annual financial statements. This pronouncement is effective for interim periods ending after June 15, 2009. The Company adopted this pronouncement
effective June 30, 2009 (see Note 11).

In May 2009, the FASB issued SFAS 165, Subsequent Events. SFAS 165
establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 is effective for interim and annual fiscal
periods ending after June 15, 2009. The Company adopted SFAS 165 effective June 30, 2009, and the adoption had no impact on its financial statements.



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GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



In June 2009, the FASB issued SFAS 166, Accounting for Transfers of Financial Assets, an
amendment of SFAS 140. SFAS 166 amends SFAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities  a replacement of FASB Statement 125, to improve the relevance, representational
faithfulness and comparability of the information that a reporting entity provides in its financial reports about a transfer of financial assets, the effects a transfer will have on its financial performance and cash flows and any transferors
continuing involvement in transferred financial assets. This statement is effective for interim and annual reporting periods that begin after November 15, 2009. The Company is currently evaluating the impact that the adoption of SFAS 166 may
have on its financial statements.

In June 2009, the FASB issued SFAS 168, FASB Accounting Standards Codification and the Hierarchy
of Generally Accepted Accounting Principles. This statement establishes the FASB Accounting Standards Codification (Codification) as the single source of authoritative nongovernmental GAAP, superseding existing pronouncements
published by the FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and other accounting bodies. This statement establishes only one level of authoritative GAAP. All other accounting literature will be considered
non-authoritative. The Codification reorganizes the GAAP pronouncements into accounting topics and displays them using a consistent structure. This statement is effective for financial statements issued for interim and annual periods ending after
September 15, 2009. The Company adopted SFAS 168 effective July 1, 2009, and will make the required disclosures beginning with the Companys Quarterly Report on Form 10-Q for the period ending September 30, 2009.

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

Derivatives

During 2007, the Company entered into two interest rate collar agreements, which became effective in January 2008, under which the Company purchased a cap at a Eurodollar rate of 4.70% and sold a floor at a weighted average Eurodollar rate
of 2.88%, on $385.0 million of term loans. During 2008, the Company entered into four interest rate swap agreements which become effective in August 2009, under which the Company will receive variable interest based on the Eurodollar rate and pay
fixed interest at a weighted average rate of 4.08%, on $350.0 million of term loans. The interest rate collar and swap agreements were accounted for as cash flow hedges and were highly effective, as defined in SFAS 133, Accounting for
Derivative Instruments and Hedging Activities, until January 2009 when the Company elected to roll over its senior secured term loan in one-month increments to reduce its cash interest, as opposed to continuing to roll over its senior secured
term loan in three-month increments to match the terms of its interest rate collar agreements. The Company has therefore discontinued hedge accounting for its interest rate collar and swap agreements. The amount recorded in accumulated other
comprehensive income (loss) as of the date the Company discontinued hedge accounting for its interest rate collar and swap agreements is being recognized as interest expense over the period in which the previously hedged activity continues to occur.
Changes in the fair value of the interest rate collar and swap agreements from that date are also being recognized as interest expense. (See Note 12 for further discussion).

The fair value of the derivatives is determined from sources independent of the Company, including the financial institutions which are party to the
derivative instruments. The fair value of derivatives also considers the credit default risk of the paying party. Since hedge accounting was discontinued in early 2009 for the Companys interest rate collar and swap agreements, no change in
fair value was recorded in other comprehensive income for the six months ended June 30, 2009. The change in fair value on the effective portion of the Companys interest rate cash flow hedges for the six months ended June 30, 2008,
was recorded in other comprehensive income and was an unrealized gain of $3.9 million and $0.1 million for the three and six months ended June 30, 2008, respectively. Of the amount recorded within accumulated other comprehensive income (loss)
as of June 30, 2009, 54% is expected to be recognized in interest expense in the next twelve months.

During 2009, the Company entered
into a $1.2 million foreign currency exchange contract to hedge the exchange rate exposure on a transaction that is denominated in pound sterling; the contract expires within the next three months. This foreign currency exchange contract is
accounted for as a cash flow hedge and is highly effective as defined in SFAS 133. During 2009, the Company



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GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



also entered into foreign currency exchange contracts totaling $1.8 million to hedge the exchange rate exposure on transactions denominated in euros; all of
these contracts will have expired within the next three months. These foreign currency exchange contracts were not designated as hedges under SFAS 133.

With respect to the cash flow hedges, the Company routinely considers the possible impact of counterparty default when assessing whether a hedging relationship continues to be effective. The Company has considered the
recent market events in determining the impact, if any, of counterparty default on its cash flow hedges. The cash flow hedges that the Company currently has are with major banking institutions that have not, in managements opinion, been
significantly impacted by the current market conditions. Accordingly, the Company has concluded that the likelihood of counterparty default is remote.

Comprehensive Income

Included in other comprehensive income and added to net income to determine total comprehensive income
are the following:



| |  |  | changes in fair value of derivatives designated and accounted for as cash flow hedges;
| | - |  | --------------------------------------------------------------------------------------



| |  |  | amortization of amounts in accumulated other comprehensive income (loss) as of the date the Company discontinued hedge accounting for its interest rate collar and
swap agreements;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | amortization of prior service costs and unrealized actuarial losses included in net periodic benefit costs for pension and post-retirement plans; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | foreign currency translation adjustments.
| | - |  | -----------------------------------------

Option
Plans

The Company adopted SFAS 123(R), Share-Based Payment, on January 1, 2006, using the prospective method. In
accordance with SFAS 123(R), the Company applied this statement prospectively to awards issued, modified, repurchased or cancelled after January 1, 2006.

The Company continued to account for equity based compensation to employees for awards outstanding as of January 1, 2006, using the intrinsic value method prescribed in APB 25, Accounting For Stock Issued
To Employees. The exercise prices of all unit options were equal to or greater than the fair value of the units on the dates of the grants and, accordingly, no compensation cost has been recognized under the provisions of APB 25.

A summary of the changes in the unit options outstanding under the option plans for the six months ended June 30, 2009, is as follows:



|                               |  |         |   |  |                                     |        |                                                   |     |                                      |   |    
|------------------------------ |  | ------- | - |  | ----------------------------------- | ------ | ------------------------------------------------- | --- | ------------------------------------ | - | ---
|                               |  | Options |   |  | WeightedAverageExercisePrice/Option |        | WeightedAverageRemainingContractualTerm(in years) |     | AggregateIntrinsicValue(in millions)
|Outstanding at January 1, 2009 |  | 1,310.1 |   |  | $                                   | 31,976 |                                                   |     |                                      |   |    
|Granted (1)                    |  | 165.0   |   |  |                                     | 25,122 |                                                   |     |                                      |   |    
|Exercised                      |  |        |   |  |                                     |       |                                                   |     |                                      |   |    
|Forfeited (2)                  |  | (128.8  | ) |  |                                     | 26,798 |                                                   |     |                                      |   |    
|                               |  |         |   |  |                                     |        |                                                   |     |                                      |   |    
|Outstanding at June 30, 2009   |  | 1,346.3 |   |  | $                                   | 31,632 |                                                   | 7.7 |                                      | $ | 1.9
|                               |  |         |   |  |                                     |        |                                                   |     |                                      |   |    
|                               |  |         |   | 
|Vested or expected to vest     |  | 1,103.9 |   |  | $                                   | 32,557 |                                                   | 7.5 |                                      | $ | 1.3
|Exercisable at June 30, 2009   |  | 690.9   |   |  | $                                   | 32,275 |                                                   | 7.2 |                                      | $ | 0.8



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GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued





|(1) | In the first six months of 2009, the Company granted options to purchase 165.0 limited partnership units in Holdings. As a result, the Company will incur incremental compensation
expense of approximately $0.5 million over the four year vesting period of the options. The incremental expense recorded during the six months ended June 30, 2009, was $0.03 million.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Pursuant to the employment agreement effective December 4, 2006, for Warren D. Knowlton, the Companys former Chief Executive Officer and current Executive Chairman,
Mr. Knowlton received an option (the Performance Option) to purchase 147.9 limited partnership units in Holdings that vests upon (A) the Blackstone Investors (as defined herein) sale of their entire interest in the
Company and (B) the attainment of certain financial performance goals established by the Company. Seventy-five percent, or 110.9, of the limited partnership units in Holdings subject to Mr. Knowltons Performance Option were forfeited
automatically when Mr. Knowlton ceased to be Chief Executive Officer of the Company. These 110.9 options are reflected as forfeited in the table above.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Subsequent Events

The Company has evaluated subsequent events that have occurred after the balance
sheet date but before the financial statements were available to be issued, which the Company considers to be the date of filing with the Securities and Exchange Commission, and has concluded no events or transactions have occurred that would
require adjustment to, or disclosure in, its financial statements.

2. Accounts Receivable, Net

Accounts receivable, net are presented net of an allowance for doubtful accounts of $5.7 million and $6.5 million at June 30, 2009, and
December 31, 2008, respectively. Management performs ongoing credit evaluations of its customers and generally does not require collateral.

3.
Concentration of Credit Risk

For each of the six months ended June 30, 2009 and 2008, 71.2% of the Companys net sales were
generated by its top twenty customers. The Companys sales to PepsiCo, the Companys largest customer, were 11.9% and 14.9% of total sales for the six months ended June 30, 2009 and 2008, respectively. All of these sales were made in
North America.

The Company had $147.8 million and $141.8 million of accounts receivable from its top twenty customers as of June 30,
2009, and December 31, 2008, respectively. The Company had $26.9 million and $16.9 million of accounts receivable from PepsiCo as of June 30, 2009, and December 31, 2008, respectively.

4. Inventories

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



|               |  |                |         |                  |   |        
|-------------- |  | -------------- | ------- | ---------------- | - | -------
|               |  | June 30,2009   |         | December 31,2008
|               |  | (In thousands)
|Finished goods |  | $              | 131,971 |                  | $ | 144,394
|Raw materials  |  |                | 74,386  |                  |   | 79,967 
|               |  |                |         |                  |   |        
|Total          |  | $              | 206,357 |                  | $ | 224,361
|               |  |                |         |                  |   |        



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GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



5. Property, Plant and Equipment, Net

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



|                                                |  |                               |  |                |           |                  |   |          
|----------------------------------------------- |  | ----------------------------- |  | -------------- | --------- | ---------------- | - | ---------
|                                                |  | ExpectedUsefulLives(in years) |  | June 30,2009   |           | December 31,2008
|                                                |  |                               |  | (In thousands)
|Land                                            |  |                               |  | $              | 38,846    |                  | $ | 39,424   
|Buildings and improvements                      |  | 7-31.5                        |  |                | 227,939   |                  |   | 225,467  
|Machinery and equipment                         |  | 3-15                          |  |                | 1,331,956 |                  |   | 1,314,791
|Molds and tooling                               |  | 3-5                           |  |                | 276,262   |                  |   | 273,312  
|Construction in progress                        |  |                               |  |                | 82,934    |                  |   | 68,263   
|                                                |  |                               |  |                |           |                  |   |          
|Property, plant and equipment                   |  |                               |  |                | 1,957,937 |                  |   | 1,921,257
|Less: accumulated depreciation and amortization |  |                               |  |                | 908,551   |                  |   | 860,663  
|                                                |  |                               |  |                |           |                  |   |          
|Property, plant and equipment, net              |  |                               |  | $              | 1,049,386 |                  | $ | 1,060,594
|                                                |  |                               |  |                |           |                  |   |          

Depreciation expense, including depreciation expense on assets recorded under capital leases, for
the three months ended June 30, 2009 and 2008, was $39.2 million and $42.2 million, respectively, and for the six months ended June 30, 2009 and 2008, was $76.1 million and $84.3 million, respectively.

The Company capitalizes interest on borrowings during the active construction period of major capital projects. Capitalized interest is added to the cost
of the underlying assets and is amortized over the useful lives of these assets. Interest capitalized for the six months ended June 30, 2009 and 2008, was $1.7 million and $2.4 million, respectively.

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

In June 2009, the Company signed a Letter of Intent to sell its Meaux, France plant to a third party. Accordingly, the land and the building at this
location, having a carrying value of $5.5 million, are also deemed to be held for sale and are reflected in prepaid expenses and other current assets on the Condensed Consolidated Balance Sheet (Unaudited) as of June 30, 2009.

6. Intangible Assets, Net

The gross carrying amount
and accumulated amortization of the Companys intangible assets subject to amortization as of June 30, 2009, were as follows:



|                       |  |                     |        |                         |   |         |     |  |                                   |        |  |         
|---------------------- |  | ------------------- | ------ | ----------------------- | - | ------- | --- |  | --------------------------------- | ------ |  | --------
|                       |  | GrossCarryingAmount |        | AccumulatedAmortization |   |         | Net |  | WeightedAverageAmortizationPeriod
|                       |  |                     |        | (In thousands)          |   |         |     |  |                                  
|Patented technology    |  | $                   | 23,727 |                         | $ | (7,103  | )   |  | $                                 | 16,624 |  | 10 years
|Customer relationships |  |                     | 33,353 |                         |   | (5,609  | )   |  |                                   | 27,744 |  | 16 years
|Non-compete agreement  |  |                     | 1,500  |                         |   | (1,425  | )   |  |                                   | 75     |  | 5 years 
|                       |  |                     |        |                         |   |         |     |  |                                   |        |  |         
|Total                  |  | $                   | 58,580 |                         | $ | (14,137 | )   |  | $                                 | 44,443 |  |         
|                       |  |                     |        |                         |   |         |     |  |                                   |        |  |         



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GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



The gross carrying amount and accumulated amortization of the Companys intangible assets
subject to amortization as of December 31, 2008, were as follows:



|                       |  |                     |        |                         |   |         |     |  |                                   |        |  |         
|---------------------- |  | ------------------- | ------ | ----------------------- | - | ------- | --- |  | --------------------------------- | ------ |  | --------
|                       |  | GrossCarryingAmount |        | AccumulatedAmortization |   |         | Net |  | WeightedAverageAmortizationPeriod
|                       |  |                     |        | (In thousands)          |   |         |     |  |                                  
|Patented technology    |  | $                   | 23,018 |                         | $ | (5,869  | )   |  | $                                 | 17,149 |  | 10 years
|Customer relationships |  |                     | 33,340 |                         |   | (4,507  | )   |  |                                   | 28,833 |  | 16 years
|Licensing agreements   |  |                     | 601    |                         |   | (550    | )   |  |                                   | 51     |  | 1 year  
|Non-compete agreements |  |                     | 1,500  |                         |   | (1,275  | )   |  |                                   | 225    |  | 5 years 
|                       |  |                     |        |                         |   |         |     |  |                                   |        |  |         
|Total                  |  | $                   | 58,459 |                         | $ | (12,201 | )   |  | $                                 | 46,258 |  |         
|                       |  |                     |        |                         |   |         |     |  |                                   |        |  |         

Amortization expense for the three months ended June 30, 2009 and 2008, was $1.2 million and
$1.4 million, respectively, and for the six months ended June 30, 2009 and 2008, was $2.5 million and $2.8 million, respectively. Remaining estimated aggregate amortization expense for 2009 is $2.5 million. The estimated aggregate amortization
expense for each of the next five years ending December 31 is as follows (in thousands):



|     |  |       
|---- |  | ------
|2010 |  | $4,700
|2011 |  | 4,600 
|2012 |  | 4,600 
|2013 |  | 4,400 
|2014 |  | 4,000 

7. Goodwill

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



|                                         |  |                     |         |               |   |        |                     |  |   |       |   |  |   |        
|---------------------------------------- |  | ------------------- | ------- | ------------- | - | ------ | ------------------- |  | - | ----- | - |  | - | -------
|                                         |  | NorthAmericaSegment |         | EuropeSegment |   |        | SouthAmericaSegment |  |   | Total
|                                         |  | (In thousands)     
|Balance at December 31, 2008             |  | $                   | 277,499 |               | $ | 15,826 |                     |  | $ | 35    |   |  | $ | 293,360
|Foreign currency translation adjustments |  |                     | 1,487   |               |   | (928   | )                   |  |   | (3    | ) |  |   | 556    
|                                         |  |                     |         |               |   |        |                     |  |   |       |   |  |   |        
|Balance at June 30, 2009                 |  | $                   | 278,986 |               | $ | 14,898 |                     |  | $ | 32    |   |  | $ | 293,916
|                                         |  |                     |         |               |   |        |                     |  |   |       |   |  |   |        

8. Asset Impairment Charges

The Company identified an indicator of possible impairment of certain assets in the United States and Mexico for the six months ended June 30, 2009. As a result, the Company evaluated the recoverability of these
assets and determined that the undiscounted future cash flows were below the carrying value of these long-lived assets. Additionally, management had no plans to redeploy the majority of these assets. Accordingly, the Company adjusted the carrying
value of these long-lived assets to their estimated fair value in accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, resulting in impairment charges of $6.5 million and $8.0 million for the three
and six months ended June 30, 2009, respectively.



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GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



9. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:



|                                           |  |                |         |                  |   |        
|------------------------------------------ |  | -------------- | ------- | ---------------- | - | -------
|                                           |  | June 30,2009   |         | December 31,2008
|                                           |  | (In thousands)
|Accrued employee compensation and benefits |  | $              | 62,427  |                  | $ | 65,460 
|Accrued interest                           |  |                | 20,345  |                  |   | 32,969 
|Accrued sales allowance                    |  |                | 24,767  |                  |   | 27,425 
|Other                                      |  |                | 80,559  |                  |   | 66,353 
|                                           |  |                |         |                  |   |        
|                                           |  | $              | 188,098 |                  | $ | 192,207
|                                           |  |                |         |                  |   |        

In recent years, the Company has initiated a series of restructuring activities to reduce costs,
achieve synergies and streamline operations.

For the year ended December 31, 2008, the Company recognized severance expense in the
United States of $1.6 million (reflected in cost of goods sold) related to the closure of its plant in Edison, New Jersey and the related severing of 115 employees, 112 of whom were terminated by June 30, 2009. Substantially all of the cash
payments for these termination benefits are expected to be made by March 31, 2010. The Company also recognized severance expense of $1.8 million (reflected in selling, general and administrative expenses) related to the separation of its former
Chief Operating Officer on April 30, 2008. Substantially all of the cash payments for these termination benefits are expected to be made by June 30, 2010.

For the year ended December 31, 2007, the Company recognized severance expense in the United States of $2.1 million (reflected predominantly in selling, general and administrative expenses) related to the
severing of 59 employees. All of the cash payments for these termination benefits have been made as of March 31, 2009. The Company also recognized severance expense in France of $1.9 million (reflected in selling, general and administrative
expenses) in 2007, and reduced the accrual in 2008 and 2009 by $0.3 million and $0.2 million, respectively, related to the severing of 12 employees. All of the cash payments for these termination benefits have been made as of March 31, 2009.

For the year ended December 31, 2006, the Company recognized severance expense in the United States of $1.6 million (reflected
predominantly in selling, general and administrative expenses) related to the severing of 46 employees. All of the cash payments for these termination benefits have been made as of March 31, 2008. The Company also recognized severance expense
of $5.3 million (reflected in selling, general and administrative expenses) related to the separation of its former Chief Executive Officer and Chief Financial Officer on December 3, 2006. Substantially all of the cash payments for these
termination benefits are expected to be made by December 31, 2009.

For the year ended December 31, 2005, the Company recognized
severance expense in the United States of $2.3 million (reflected in selling, general and administrative expenses) related to the severing of 16 employees. All of the cash payments for these termination benefits have been made as of March 31,
2008. The Company also recognized severance expense in France of $3.8 million (reflected in cost of goods sold) related to the severing of 37 employees. All of the cash payments for these termination benefits have been made as of September 30,
2008.



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GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



The following table summarizes these severance accruals, and related expenses and payments, by
operating segment. The balance of the severance accrual at June 30, 2009, was included in accrued employee compensation and benefits.



|                                         |  |                |        |   |        |   |        |       |  |   |        |  
|---------------------------------------- |  | -------------- | ------ | - | ------ | - | ------ | ----- |  | - | ------ | -
|                                         |  | NorthAmerica   |        |   | Europe |   |        | Total | 
|                                         |  | (In thousands) |       
|Balance at January 1, 2008               |  | $              | 4,662  |   |        | $ | 2,126  |       |  | $ | 6,788  |  
|Charged to expense during the year       |  |                | 3,545  |   |        |   | 86     |       |  |   | 3,631  |  
|Payments during the year                 |  |                | (5,064 | ) |        |   | (1,498 | )     |  |   | (6,562 | )
|Foreign currency translation adjustments |  |                |       |   |        |   | 36     |       |  |   | 36     |  
|Other adjustments                        |  |                | (126   | ) |        |   | (589   | )     |  |   | (715   | )
|                                         |  |                |        |   |        |   |        |       |  |   |        |  
|Balance at December 31, 2008             |  |                | 3,017  |   |        |   | 161    |       |  |   | 3,178  |  
|Payments during the period               |  |                | (1,461 | ) |        |   |       |       |  |   | (1,461 | )
|Foreign currency translation adjustments |  |                |       |   |        |   | (12    | )     |  |   | (12    | )
|Other adjustments                        |  |                | (19    | ) |        |   | (149   | )     |  |   | (168   | )
|                                         |  |                |        |   |        |   |        |       |  |   |        |  
|Balance at June 30, 2009                 |  | $              | 1,537  |   |        | $ |       |       |  | $ | 1,537  |  
|                                         |  |                |        |   |        |   |        |       |  |   |        |  

10. Debt Arrangements

Long-term debt consisted of the following:



|                                                                                                                                                        |  |                |           |                  |   |          
|------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | --------- | ---------------- | - | ---------
|                                                                                                                                                        |  | June 30,2009   |           | December 31,2008
|                                                                                                                                                        |  | (In thousands)
|Term loans (net of $22.3 million and $0.0 million unamortized discount as of June 30, 2009, and December 31, 2008, respectively)                        |  | $              | 1,787,836 |                  | $ | 1,842,188
|Revolver                                                                                                                                                |  |                |          |                  |   |         
|Foreign and other revolving credit facilities                                                                                                           |  |                | 2,713     |                  |   | 2,455    
|Senior Notes                                                                                                                                            |  |                | 250,000   |                  |   | 250,000  
|Senior Subordinated Notes                                                                                                                               |  |                | 375,000   |                  |   | 375,000  
|Capital leases                                                                                                                                          |  |                | 18,469    |                  |   | 21,427   
|Other                                                                                                                                                   |  |                | 10,813    |                  |   | 8,168    
|                                                                                                                                                        |  |                |           |                  |   |          
|                                                                                                                                                        |  |                | 2,444,831 |                  |   | 2,499,238
|Less amounts classified as current (net of $4.8 million and $0.0 million unamortized discount as of June 30, 2009, and December 31,
2008, respectively) |  |                | 31,984    |                  |   | 56,899   
|                                                                                                                                                        |  |                |           |                  |   |          
|Total                                                                                                                                                   |  | $              | 2,412,847 |                  | $ | 2,442,339
|                                                                                                                                                        |  |                |           |                  |   |          

On May 28, 2009, the Company entered into the Fourth Amendment to the Credit Agreement (the
Amendment), amending the Companys credit agreement, dated as of October 7, 2004 (the Credit Agreement). Pursuant to the Amendment, certain term loan lenders have agreed to extend the maturity of $1,200.0 million of
such term loans, and the LIBOR margin with respect to such extended term loans has been increased, as further discussed below. The maturity date and interest margins with respect to those term loans held by lenders that did not consent to extend the
maturity of their term loans remain unchanged. In addition, pursuant to the Amendment, certain revolving credit lenders have agreed to extend the maturity of $112.8 million of revolving credit commitments, and the LIBOR margin with respect to
revolving credit loans made pursuant to such extended revolving credit commitments has been increased, as further discussed below. The maturity date, interest margins and commitment fee with respect to those revolving credit commitments held by
lenders that did not consent to extend the maturity of their revolving credit commitments remain unchanged. The Company also voluntarily reduced the amount of total revolving credit commitments available to it under the Credit Agreement from $250.0
million to $248.0 million.



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GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



After giving effect to the Amendment, the Credit Agreement consists of a non-extended senior secured
term loan (Term Loan B) and an extended senior secured term loan (Term Loan C and, together with the Term Loan B, the Term Loans or Term Loan Facility) to the Operating Company in aggregate principal
amounts of $613.1 million and $1,174.7 million ($1,197.0 million outstanding less $22.3 million unamortized discount) as of June 30, 2009, respectively. In addition, after giving effect to the Amendment, the Credit Agreement consists of a
non-extended senior secured revolving credit facility (Non-Extending Revolver) and an extended senior secured revolving credit facility (Extending Revolver and, together with the Non-Extending Revolver, the
Revolver) in aggregate principal amounts of $135.2 million and $112.8 million, respectively. The obligations of the Operating Company and GPC Capital Corp. I (CapCo I) under the Credit Agreement are guaranteed by Holdings and
certain domestic subsidiaries of the Operating Company.

The Term Loan B is payable in quarterly installments and requires payments of $3.1
million in the second half of 2009, $6.3 million in 2010 and $603.7 million in 2011 (disregarding any mandatory or voluntary prepayments that may reduce such scheduled amortization payments). The final maturity date of the Term Loan B is
October 7, 2011. The Term Loan C is payable in quarterly installments and requires payments of $6.0 million in the second half of 2009, $12.0 million in each of 2010, 2011, 2012 and 2013 and $1,143.0 million in 2014 (disregarding any mandatory
or voluntary prepayments that may reduce such scheduled amortization payments). The final maturity date of the Term Loan C is the earlier of April 5, 2014, and the date that is 91 days prior to the maturity of the Companys 8.50% senior
notes due October 2012 if such senior notes have not been repaid or refinanced in full by such date.

The Non-Extending Revolver expires on
October 7, 2010, and the Extending Revolver expires on the earlier of October 1, 2013, and the date that is 91 days prior to the maturity of the Companys 8.50% senior notes due October 2012 if such senior notes have not been repaid
or refinanced in full by such date. Availability under the Revolver as of June 30, 2009, was $237.1 million (as reduced by $10.9 million of outstanding letters of credit).

Interest under the Term Loan B and the Non-Extending Revolver is payable at (a) the Alternate Base Rate (ABR) (the higher of
the Prime Rate or the Federal Funds Rate plus 0.50%) plus a margin ranging from 1.00% to 1.75%; or (b) the Eurodollar Rate (the applicable interest rate offered to banks in the London interbank eurocurrency market) plus a margin
ranging from 2.00% to 2.75%. Interest under the Term Loan C and the Extending Revolver is payable at (a) the Adjusted Alternate Base Rate (the higher of (x) the Prime Rate plus a margin of 3.25%; (y) the Federal Funds Rate
plus a margin of 3.75%; or (z) the one-month Eurodollar Rate, subject to a floor of 2.50%, plus a margin of 4.25%); or (b) the Eurodollar Rate, subject to a floor of 2.50%, plus a margin of 4.25%. A commitment fee of 0.50% is due on the
unused portion of the Non-Extending Revolver. A commitment fee of 0.75% is due on the unused portion of the Extending Revolver.

The Credit
Agreement contains certain affirmative and negative covenants as to the operations and financial condition of the Company, as well as certain restrictions on the payment of dividends and other distributions to Holdings. As of June 30, 2009, the
Company was in compliance with all covenants.

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

In accordance with Emerging Issues Task Force (EITF) 96-19,
Accounting for a Modification or Exchange of Debt Instruments, the Company performed an analysis to determine whether the Amendment would be recorded as an extinguishment of debt or a modification of debt. Based on the Companys
analysis, it was determined that the Amendment qualified as a debt extinguishment under EITF 96-19 and, as a result, the Company recorded a gain on debt extinguishment of $0.8 million. The gain on debt extinguishment is comprised of the following
items (in millions):



|                                                                                 |  |   |          |  
|-------------------------------------------------------------------------------- |  | - | -------- | -
|Recorded value of debt subject to amendment, prior to amendment                  |  | $ | 1,200.0  |  
|Fair value of debt resulting from amendment (see Note 11 for further discussion) |  |   | (1,177.3 | )
|                                                                                 |  |   |          |  
|Gain on extinguished debt, before costs                                          |  |   | 22.7     |  
|Write-off of deferred financing fees on extinguished debt                        |  |   | (9.3     | )
|New issuance costs on extinguished debt                                          |  |   | (12.6    | )
|                                                                                 |  |   |          |  
|Total                                                                            |  | $ | 0.8      |  
|                                                                                 |  |   |          |  



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GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



In conjunction with the Amendment, the Company recorded $2.4 million in deferred financing fees,
which are included in other non-current assets on the Condensed Consolidated Balance Sheet (Unaudited) and are being amortized to interest expense over the terms of the respective debt using the effective interest method.

As of June 30, 2009, and December 31, 2008, the Company had outstanding $250.0 million in Senior Notes and $375.0 million in Senior
Subordinated Notes co-issued by the Operating Company and CapCo I (collectively, the Notes). The Notes are unconditionally guaranteed, jointly and severally, by Holdings and certain domestic subsidiaries of the Operating Company and
mature on October 7, 2012 (Senior Notes), and October 7, 2014 (Senior Subordinated Notes). Interest on the Senior Notes is payable semi-annually at 8.50% and interest on the Senior Subordinated Notes is payable semi-annually at 9.875%.

11. Fair Value Measurement

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

Cash and Cash Equivalents, Accounts
Receivable and Accounts Payable

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

Long-Term Debt

The Companys long-term debt
consists of both variable-rate and fixed-rate debt. The fair values of the Companys long-term debt were based on market price information. The Companys variable-rate debt, including the Companys Credit Agreement, totaled $1,792.0
million (net of $22.3 million unamortized discount) and $1,846.1 million at June 30, 2009, and December 31, 2008, respectively. The fair value of this long-term debt, including the current portion, was approximately $1,768.6 million and
$1,325.7 million at June 30, 2009, and December 31, 2008, respectively. The Companys fixed-rate debt, including $250.0 million of Senior Notes and $375.0 million of Senior Subordinated Notes, totaled $652.9 million and $653.1 million
at June 30, 2009, and December 31, 2008, respectively. The fair value of this long-term debt, including the current portion, was approximately $617.9 million and $436.9 million at June 30, 2009, and December 31, 2008,
respectively.

Derivatives

On
January 1, 2008, the Company adopted SFAS 157, which established the following fair value hierarchy that prioritizes the inputs used to measure fair value:



|         |  |                                                                                                                                                                                                                                                                                                                                                                                                              
|-------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Level 1: |  | Inputs are quoted prices in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur with
sufficient frequency and volume to provide pricing information on an ongoing basis.                                                                                                                            
|         | 
|Level 2: |  | Inputs include the following:  a) Quoted prices in active markets for similar assets or liabilities.  b) Quoted prices in markets that are not active for
identical or similar assets or liabilities.  c) Inputs other than quoted prices that are observable for the asset or liability.  d) Inputs that are derived primarily from or corroborated by observable market data by correlation or other
means.
|         | 
|Level 3: |  | Inputs are unobservable inputs for the asset or liability.                                                                                                                                                                                                                                                                                                                                                   

Recurring Fair Value Measurements

The following table presents the Companys financial assets and liabilities that were accounted for at fair value on a recurring basis as of
June 30, 2009, by level within the fair value hierarchy:



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GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



|                                    |  |                               |   |         |   |         |  |   |  
|----------------------------------- |  | ----------------------------- | - | ------- | - | ------- |  | - | -
|                                    |  | Fair Value Measurements Using
|                                    |  | Level 1                       |   | Level 2 |   | Level 3
|                                    |  | (In thousands)               
|Assets:                             |  |                               |   |         |   |         |  |   |  
|Foreign currency exchange contracts |  | $                             |  |         | $ | 208     |  | $ | 
|Liabilities:                        |  |                               |   |         |   |         |  |   |  
|Interest rate collar agreements     |  | $                             |  |         | $ | 4,411   |  | $ | 
|Interest rate swap agreements       |  |                               |  |         |   | 17,212  |  |   | 
|Natural gas swap agreements         |  |                               |  |         |   | 138     |  |   | 

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

Non-recurring Fair Value Measurements

The Company has long-lived assets held for sale that consist of real estate and machinery and equipment. These assets are located in Edison, NJ and Meaux,
France. The aggregate carrying value of these assets at June 30, 2009, was $12.1 million, which is less than the fair value of these assets and therefore resulted in no impairment charge for these assets. The determination of fair value
included certain unobservable inputs, which reflect the Companys assumptions regarding how market participants would price these assets in the marketplace, and therefore are considered level 3 inputs. Unobservable inputs were developed based
on the best information available in the circumstances. The fair value of machinery and equipment was based on projected future cash flows discounted at a risk-adjusted rate. The fair value of real estate was based on managements assumptions.

The Company also recorded impairment charges of $6.5 million and $8.0 million for the three and six months ended June 30, 2009,
respectively, for long-lived assets in the United States and Mexico whose carrying values exceeded fair values. Fair values for these assets were based on projected future cash flows, discounted using a risk-adjusted rate, which the Company
considers level 3 inputs.

As previously discussed, on May 28, 2009, the Company entered into the Fourth Amendment to the Credit
Agreement. In accordance with the requirements of EITF 96-19, this transaction was treated as a debt extinguishment and the new debt was initially recorded at its fair value of $1,177.3 million, which was based on the average trading price on the
first trade date and is considered a level 2 input. The initial fair value discount of $22.7 million is being amortized to interest expense over the term of the Term Loan C using the effective interest method.

12. Derivative Financial Instruments

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

Cash Flow Hedges

The Companys interest rate
risk management strategy is to use derivative instruments to minimize significant unanticipated earnings fluctuations that may arise from volatility in interest rates of the Companys borrowings and to manage the interest rate sensitivity of
its debt.

The Company uses foreign currency exchange contracts as hedges against payments of intercompany balances and anticipated
purchases denominated in foreign currencies. The Company enters into these contracts to protect itself against the risk that the eventual net cash flows will be adversely affected by changes in exchange rates.



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GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



The Companys energy risk management strategy is to use derivative instruments to minimize
significant unanticipated manufacturing cost fluctuations that may arise from volatility in natural gas prices.

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

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

Derivatives Not Designated as Hedging Instruments

During the first quarter of 2009, the Company elected to roll over its senior secured term loan in one-month increments to reduce its cash interest, as opposed to continuing to roll over its senior secured term loan in three-month
increments to match the terms of its interest rate collar agreements. The Company has therefore discontinued hedge accounting for its interest rate collar and swap agreements.

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

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

The notional amounts of the Companys derivative
instruments outstanding as of June 30, 2009, were as follows:



|                                           |  |                 |        
|------------------------------------------ |  | --------------- | -------
|                                           |  | Notional Amount
|                                           |  | (In thousands) 
|Derivatives designated as hedges:          |  |                 |        
|Foreign currency exchange contract         |  | $               | 1,195  
|Natural gas swap agreements                |  |                 | 268    
|                                           |  |                 |        
|Total derivatives designated as hedges     |  | $               | 1,463  
|                                           |  |                 |        
|Derivatives not designated as hedges:      |  |                 |        
|Interest rate collar agreements            |  | $               | 385,000
|Interest rate swap agreements              |  |                 | 350,000
|Foreign currency exchange contract         |  |                 | 558    
|                                           |  |                 |        
|Total derivatives not designated as hedges |  | $               | 735,558
|                                           |  |                 |        



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GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



The fair values of the Companys derivative instruments outstanding as of June 30, 2009,
were as follows:



|                                           |  |                                                |  |                |       
|------------------------------------------ |  | ---------------------------------------------- |  | -------------- | ------
|                                           |  | Balance Sheet Location                         |  | Fair Value    
|                                           |  |                                                |  | (In thousands)
|Asset derivatives:                         |  |                                                |  |                |       
|Derivatives designated as hedges:          |  |                                                |  |                |       
|Foreign currency exchange contract         |  | Prepaid expenses and other current assets      |  | $              | 158   
|                                           |  |                                                |  |                |       
|Total derivatives designated as hedges     |  |                                                |  |                | 158   
|                                           |  |                                                |  |                |       
|Derivatives not designated as hedges:      |  |                                                |  |                |       
|Foreign currency exchange contract         |  | Prepaid expenses and other current assets      |  |                | 50    
|                                           |  |                                                |  |                |       
|Total derivatives not designated as hedges |  |                                                |  |                | 50    
|                                           |  |                                                |  |                |       
|Total asset derivatives                    |  |                                                |  |                | $208  
|                                           |  |                                                |  |                |       
|                                           |  |                                               
|Liability derivatives:                     |  |                                                |  |                |       
|Derivatives designated as hedges:          |  |                                                |  |                |       
|Natural gas swap agreements                |  | Accrued expenses and other current liabilities |  | $              | 138   
|                                           |  |                                                |  |                |       
|Total derivatives designated as hedges     |  |                                                |  |                | 138   
|                                           |  |                                                |  |                |       
|Derivatives not designated as hedges:      |  |                                                |  |                |       
|Interest rate collar agreements            |  | Accrued expenses and other current liabilities |  |                | 4,411 
|Interest rate swap agreements              |  | Accrued expenses and other current liabilities |  |                | 7,770 
|Interest rate swap agreements              |  | Other non-current liabilities                  |  |                | 9,442 
|                                           |  |                                                |  |                |       
|Total derivatives not designated as hedges |  |                                                |  |                | 21,623
|                                           |  |                                                |  |                |       
|Total liability derivatives                |  |                                                |  | $              | 21,761
|                                           |  |                                                |  |                |       



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GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



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



|                                           |  |                                                                                                   |     |   |                                |   |                                                                                                               |   |              |                                                                               |  |            |            |   |  |   |        |  
|------------------------------------------ |  | ------------------------------------------------------------------------------------------------- | --- | - | ------------------------------ | - | ------------------------------------------------------------------------------------------------------------- | - | ------------ | ----------------------------------------------------------------------------- |  | ---------- | ---------- | - |  | - | ------ | -
|                                           |  | Amount of Gain or(Loss) Recognized inAOCI (a)(Effective Portion)for the Period EndedJune 30, 2009 |     |   | Income StatementClassification |   | Amount of Gain or(Loss) Reclassified fromAOCI into Income(Effective Portion)for the Period EndedJune 30, 2009 |  
|                                           |  | Three Months                                                                                      |     |   | Six Months                     |   |                                                                                                               |   | Three Months |                                                                               |  | Six Months |           
|                                           |  | (In thousands)                                                                                    |     |   |                                |   | (In thousands)                                                                                                |  
|Derivatives designated as hedges:          |  |                                                                                                   |     |   |                                |   |                                                                                                               |   |              |                                                                               |  |            |            |   |  |   |        |  
|Cash flow hedges:                          |  |                                                                                                   |     |   |                                |   |                                                                                                               |   |              |                                                                               |  |            |            |   |  |   |        |  
|Foreign currency exchange contract         |  | $                                                                                                 | 174 |   |                                | $ | 151                                                                                                           |   |              | Other income, net                                                             |  | $          | 174        |   |  | $ | 151    |  
|Natural gas swap agreements                |  |                                                                                                   | (11 | ) |                                |   | (161                                                                                                          | ) |              | Cost of goods sold                                                            |  |            | (108       | ) |  |   | (273   | )
|                                           |  |                                                                                                   |     |   |                                |   |                                                                                                               |   |              |                                                                               |  |            |            |   |  |   |        |  
|Total derivatives designated as hedges     |  | $                                                                                                 | 163 |   |                                | $ | (10                                                                                                           | ) |              |                                                                               |  | $          | 66         |   |  | $ | (122   | )
|                                           |  |                                                                                                   |     |   |                                |   |                                                                                                               |   |              |                                                                               |  |            |            |   |  |   |        |  
|                                           |  |                                                                                                   |     |  
|                                           |  |                                                                                                   |     |   |                                |   |                                                                                                               |   |              | Amount of Gain or(Loss) Recognized in Incomefor the Period EndedJune 30, 2009 | 
|                                           |  |                                                                                                   |     |   |                                |   |                                                                                                               |   |              | Three Months                                                                  |  |            | Six Months |  
|                                           |  |                                                                                                   |     |   |                                |   |                                                                                                               |   |              | (In thousands)                                                                | 
|Derivatives not designated as hedges:      |  |                                                                                                   |     |   |                                |   |                                                                                                               |   |              |                                                                               |  |            |            |   |  |   |        |  
|Interest rate collar agreements            |  |                                                                                                   |     |   |                                |   |                                                                                                               |   |              | Interest expense                                                              |  | $          | (2,554     | ) |  | $ | (4,203 | )
|Interest rate swap agreements              |  |                                                                                                   |     |   |                                |   |                                                                                                               |   |              | Interest expense                                                              |  |            | 666        |   |  |   | (1,069 | )
|Foreign currency exchange contracts        |  |                                                                                                   |     |   |                                |   |                                                                                                               |   |              | Other income, net                                                             |  |            | 27         |   |  |   | 84     |  
|                                           |  |                                                                                                   |     |   |                                |   |                                                                                                               |   |              |                                                                               |  |            |            |   |  |   |        |  
|Total derivatives not designated as hedges |  |                                                                                                   |     |   |                                |   |                                                                                                               |   |              |                                                                               |  | $          | (1,861     | ) |  | $ | (5,188 | )
|                                           |  |                                                                                                   |     |   |                                |   |                                                                                                               |   |              |                                                                               |  |            |            |   |  |   |        |  



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

13.
Income Taxes

Holdings and the Operating Company, as limited partnerships, do not pay U.S. federal income taxes under the provisions of
the Internal Revenue Code, as the applicable income or loss is included in the tax returns of the partners. However, certain U.S. subsidiaries are corporations and are subject to U.S. federal and state income taxes. The Companys foreign
operations are subject to tax in their local jurisdictions. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases and are measured using enacted tax rates. The Company previously established a valuation allowance with respect to certain deferred income tax assets. During the six months ended June 30,
2009, the valuation allowance decreased by $8.8 million, primarily as a result of changes in deferred income tax assets associated with current year utilization of net operating losses.

The Company had $9.4 million of Unrecognized Tax Benefits (UTB), exclusive of interest and penalties, as of June 30, 2009. For the six
months ended June 30, 2009, the Company recorded a net decrease in UTB of $1.0 million, exclusive of interest and penalties. Offsetting long-term deferred income tax assets at June 30, 2009, were $0.6 million. As of June 30, 2009, the
Company had recorded additional UTB of $5.0 million related to interest and penalties. The Company does not expect a significant change in the UTB balance in the next twelve months. Approximately $7.8 million of UTB at June 30, 2009, if
recognized, would impact the Companys effective tax rate.



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GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



14. Commitments

The Company is a party to various capital and operating leases involving real property and equipment. Total rent expense for operating leases was $12.7 million and $25.0 million for the three and six months ended
June 30, 2009, respectively, and $13.7 million and $27.5 million for the three and six months ended June 30, 2008, respectively.

Under monitoring agreements, the Company is obligated to make annual payments of $2.0 million and $3.0 million to the Graham Family Investors (defined as Graham Capital Company, GPC Investments LLC and Graham Alternative Investment
Partners I or affiliates thereof or other entities controlled by Donald C. Graham and his family) and Blackstone Management Partners III L.L.C., respectively. See Note 20 for further discussion of the Companys obligations under these
monitoring agreements.

15. Contingencies and Legal Proceedings

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

16. Condensed Guarantor Data

On October 7, 2004, the Operating Company and CapCo I co-issued $250.0 million aggregate principal amount of 8.50% Senior Notes due 2012 and $375.0
million aggregate principal amount of 9.875% Senior Subordinated Notes due 2014. Holdings and the domestic subsidiaries of the Operating Company have fully and unconditionally guaranteed these notes. These guarantees are both joint and several. Both
the Operating Company and CapCo I are 100%-owned subsidiaries of Holdings.

The following unaudited condensed consolidating information
presents, in separate columns, the condensed consolidating balance sheets as of June 30, 2009, and December 31, 2008, and the related condensed consolidating statements of operations for the three and six months ended June 30, 2009
and 2008, and condensed consolidating statements of cash flows for the six months ended June 30, 2009 and 2008, for (i) Holdings on a parent only basis, with its investments in the Operating Company and CapCo I recorded under the equity
method, (ii) the Operating Company on a parent only basis, with its investments in subsidiaries recorded under the equity method, (iii) the guarantor domestic subsidiaries of the Operating Company, (iv) the non-guarantor subsidiaries
of the Company, (v) CapCo I, and (vi) the Company on a consolidated basis.



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GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



GRAHAM PACKAGING HOLDINGS COMPANY

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF JUNE 30, 2009

(In thousands)



|                                                  |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              |  |   |            |   |  |   |           |  
|------------------------------------------------- |  | ------------------------------ | -------- | - | --------------------------- | - | --------- | ---------- |  | -------------- | --------- | ------- | - | ------------ |  | - | ------------ |  | - | ---------- | - |  | - | --------- | -
|                                                  |  | GrahamPackagingHoldingsCompany |          |   | GrahamPackagingCompany,L.P. |   |           | Guarantors |  | Non-Guarantors |           | CapCo I |   | Eliminations |  |   | Consolidated | 
|ASSETS                                            |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              |  |   |            |   |  |   |           |  
|Current assets:                                   |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              |  |   |            |   |  |   |           |  
|Cash and cash equivalents                         |  | $                              |         |   |                             | $ | 106,708   |            |  | $              | 1         |         | $ | 42,228       |  | $ |             |  | $ |           |   |  | $ | 148,937   |  
|Accounts receivable, net                          |  |                                |         |   |                             |   | 72,536    |            |  |                | 83,245    |         |   | 70,078       |  |   |             |  |   |           |   |  |   | 225,859   |  
|Inventories                                       |  |                                |         |   |                             |   | 75,492    |            |  |                | 80,769    |         |   | 50,096       |  |   |             |  |   |           |   |  |   | 206,357   |  
|Deferred income taxes                             |  |                                |         |   |                             |   |          |            |  |                |          |         |   | 2,941        |  |   |             |  |   |           |   |  |   | 2,941     |  
|Prepaid expenses and other current assets         |  |                                |         |   |                             |   | 8,524     |            |  |                | 16,689    |         |   | 18,866       |  |   |             |  |   |           |   |  |   | 44,079    |  
|                                                  |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              |  |   |            |   |  |   |           |  
|Total current assets                              |  |                                |         |   |                             |   | 263,260   |            |  |                | 180,704   |         |   | 184,209      |  |   |             |  |   |           |   |  |   | 628,173   |  
|Property, plant and equipment, net                |  |                                |         |   |                             |   | 432,498   |            |  |                | 375,111   |         |   | 241,777      |  |   |             |  |   |           |   |  |   | 1,049,386 |  
|Intangible assets, net                            |  |                                |         |   |                             |   | 7,033     |            |  |                | 32,843    |         |   | 4,567        |  |   |             |  |   |           |   |  |   | 44,443    |  
|Goodwill                                          |  |                                |         |   |                             |   | 8,821     |            |  |                | 235,924   |         |   | 49,171       |  |   |             |  |   |           |   |  |   | 293,916   |  
|Net intercompany                                  |  |                                |         |   |                             |   | 1,088,356 |            |  |                |          |         |   |             |  |   |             |  |   | (1,088,356 | ) |  |   |          |  
|Investment in subsidiaries                        |  |                                |         |   |                             |   | 135,968   |            |  |                | 244,068   |         |   |             |  |   |             |  |   | (380,036   | ) |  |   |          |  
|Other non-current assets                          |  |                                |         |   |                             |   | 27,711    |            |  |                | 191       |         |   | 5,653        |  |   |             |  |   |           |   |  |   | 33,555    |  
|                                                  |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              |  |   |            |   |  |   |           |  
|Total assets                                      |  | $                              |         |   |                             | $ | 1,963,647 |            |  | $              | 1,068,841 |         | $ | 485,377      |  | $ |             |  | $ | (1,468,392 | ) |  | $ | 2,049,473 |  
|                                                  |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              |  |   |            |   |  |   |           |  
|                                                  |  |                                |          |   |                            
|LIABILITIES AND PARTNERS CAPITAL (DEFICIT)       |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              | 
|Current liabilities:                              |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              |  |   |            |   |  |   |           |  
|Current portion of long-term debt                 |  | $                              |         |   |                             | $ | 19,063    |            |  | $              | 301       |         | $ | 12,620       |  | $ |             |  | $ |           |   |  | $ | 31,984    |  
|Accounts payable                                  |  |                                |         |   |                             |   | 73,023    |            |  |                | 49,657    |         |   | 34,353       |  |   |             |  |   |           |   |  |   | 157,033   |  
|Accrued expenses and other current liabilities    |  |                                |         |   |                             |   | 93,706    |            |  |                | 45,946    |         |   | 48,446       |  |   |             |  |   |           |   |  |   | 188,098   |  
|Deferred revenue                                  |  |                                |         |   |                             |   | 14,438    |            |  |                | 11,720    |         |   | 7,104        |  |   |             |  |   |           |   |  |   | 33,262    |  
|                                                  |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              |  |   |            |   |  |   |           |  
|Total current liabilities                         |  |                                |         |   |                             |   | 200,230   |            |  |                | 107,624   |         |   | 102,523      |  |   |             |  |   |           |   |  |   | 410,377   |  
|Long-term debt                                    |  |                                |         |   |                             |   | 2,411,502 |            |  |                | 429       |         |   | 916          |  |   |             |  |   |           |   |  |   | 2,412,847 |  
|Deferred income taxes                             |  |                                |         |   |                             |   | 168       |            |  |                | 5,569     |         |   | 12,445       |  |   |             |  |   |           |   |  |   | 18,182    |  
|Other non-current liabilities                     |  |                                |         |   |                             |   | 60,295    |            |  |                | 20,304    |         |   | 23,105       |  |   |             |  |   |           |   |  |   | 103,704   |  
|Investment in subsidiaries                        |  |                                | 708,548  |   |                             |   |          |            |  |                |          |         |   |             |  |   |             |  |   | (708,548   | ) |  |   |          |  
|Net intercompany                                  |  |                                | 187,089  |   |                             |   |          |            |  |                | 852,906   |         |   | 48,361       |  |   |             |  |   | (1,088,356 | ) |  |   |          |  
|Commitments and contingent liabilities            |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              |  |   |            |   |  |   |           |  
|Partners capital (deficit)                       |  |                                | (895,637 | ) |                             |   | (708,548  | )          |  |                | 82,009    |         |   | 298,027      |  |   |             |  |   | 328,512    |   |  |   | (895,637  | )
|                                                  |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              |  |   |            |   |  |   |           |  
|Total liabilities and partners capital (deficit) |  | $                              |         |   |                             | $ | 1,963,647 |            |  | $              | 1,068,841 |         | $ | 485,377      |  | $ |             |  | $ | (1,468,392 | ) |  | $ | 2,049,473 |  
|                                                  |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              |  |   |            |   |  |   |           |  



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##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



GRAHAM PACKAGING HOLDINGS COMPANY

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2008

(In thousands)



|                                                  |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              |  |   |            |   |  |   |           |  
|------------------------------------------------- |  | ------------------------------ | -------- | - | --------------------------- | - | --------- | ---------- |  | -------------- | --------- | ------- | - | ------------ |  | - | ------------ |  | - | ---------- | - |  | - | --------- | -
|                                                  |  | GrahamPackagingHoldingsCompany |          |   | GrahamPackagingCompany,L.P. |   |           | Guarantors |  | Non-Guarantors |           | CapCo I |   | Eliminations |  |   | Consolidated | 
|ASSETS                                            |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              |  |   |            |   |  |   |           |  
|Current assets:                                   |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              |  |   |            |   |  |   |           |  
|Cash and cash equivalents                         |  | $                              |         |   |                             | $ | 35,297    |            |  | $              | 1         |         | $ | 8,581        |  | $ |             |  | $ |           |   |  | $ | 43,879    |  
|Accounts receivable, net                          |  |                                |         |   |                             |   | 76,329    |            |  |                | 80,465    |         |   | 76,940       |  |   |             |  |   |           |   |  |   | 233,734   |  
|Inventories                                       |  |                                |         |   |                             |   | 85,062    |            |  |                | 90,649    |         |   | 48,650       |  |   |             |  |   |           |   |  |   | 224,361   |  
|Deferred income taxes                             |  |                                |         |   |                             |   |          |            |  |                |          |         |   | 2,829        |  |   |             |  |   |           |   |  |   | 2,829     |  
|Prepaid expenses and other current assets         |  |                                |         |   |                             |   | 8,603     |            |  |                | 25,469    |         |   | 23,176       |  |   |             |  |   |           |   |  |   | 57,248    |  
|                                                  |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              |  |   |            |   |  |   |           |  
|Total current assets                              |  |                                |         |   |                             |   | 205,291   |            |  |                | 196,584   |         |   | 160,176      |  |   |             |  |   |           |   |  |   | 562,051   |  
|Property, plant and equipment, net                |  |                                |         |   |                             |   | 441,140   |            |  |                | 375,364   |         |   | 244,090      |  |   |             |  |   |           |   |  |   | 1,060,594 |  
|Intangible assets, net                            |  |                                |         |   |                             |   | 6,794     |            |  |                | 34,614    |         |   | 4,850        |  |   |             |  |   |           |   |  |   | 46,258    |  
|Goodwill                                          |  |                                |         |   |                             |   | 8,821     |            |  |                | 235,924   |         |   | 48,615       |  |   |             |  |   |           |   |  |   | 293,360   |  
|Net intercompany                                  |  |                                |         |   |                             |   | 1,167,268 |            |  |                |          |         |   |             |  |   |             |  |   | (1,167,268 | ) |  |   |          |  
|Investment in subsidiaries                        |  |                                |         |   |                             |   | 91,733    |            |  |                | 232,679   |         |   |             |  |   |             |  |   | (324,412   | ) |  |   |          |  
|Other non-current assets                          |  |                                |         |   |                             |   | 39,196    |            |  |                | 240       |         |   | 5,151        |  |   |             |  |   |           |   |  |   | 44,587    |  
|                                                  |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              |  |   |            |   |  |   |           |  
|Total assets                                      |  | $                              |         |   |                             | $ | 1,960,243 |            |  | $              | 1,075,405 |         | $ | 462,882      |  | $ |             |  | $ | (1,491,680 | ) |  | $ | 2,006,850 |  
|                                                  |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              |  |   |            |   |  |   |           |  
|                                                  |  |                                |          |   |                            
|LIABILITIES AND PARTNERS CAPITAL (DEFICIT)       |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              | 
|Current liabilities:                              |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              |  |   |            |   |  |   |           |  
|Current portion of long-term debt                 |  | $                              |         |   |                             | $ | 47,278    |            |  | $              | 292       |         | $ | 9,329        |  | $ |             |  | $ |           |   |  | $ | 56,899    |  
|Accounts payable                                  |  |                                |         |   |                             |   | 43,416    |            |  |                | 20,038    |         |   | 37,324       |  |   |             |  |   |           |   |  |   | 100,778   |  
|Accrued expenses and other current liabilities    |  |                                |         |   |                             |   | 108,549   |            |  |                | 33,470    |         |   | 50,188       |  |   |             |  |   |           |   |  |   | 192,207   |  
|Deferred revenue                                  |  |                                |         |   |                             |   | 19,623    |            |  |                | 9,878     |         |   | 5,145        |  |   |             |  |   |           |   |  |   | 34,646    |  
|                                                  |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              |  |   |            |   |  |   |           |  
|Total current liabilities                         |  |                                |         |   |                             |   | 218,866   |            |  |                | 63,678    |         |   | 101,986      |  |   |             |  |   |           |   |  |   | 384,530   |  
|Long-term debt                                    |  |                                |         |   |                             |   | 2,440,521 |            |  |                | 582       |         |   | 1,236        |  |   |             |  |   |           |   |  |   | 2,442,339 |  
|Deferred income taxes                             |  |                                |         |   |                             |   | 258       |            |  |                | 7,015     |         |   | 12,396       |  |   |             |  |   |           |   |  |   | 19,669    |  
|Other non-current liabilities                     |  |                                |         |   |                             |   | 72,834    |            |  |                | 21,049    |         |   | 25,754       |  |   |             |  |   |           |   |  |   | 119,637   |  
|Investment in subsidiaries                        |  |                                | 772,236  |   |                             |   |          |            |  |                |          |         |   |             |  |   |             |  |   | (772,236   | ) |  |   |          |  
|Net intercompany                                  |  |                                | 187,089  |   |                             |   |          |            |  |                | 947,879   |         |   | 32,300       |  |   |             |  |   | (1,167,268 | ) |  |   |          |  
|Commitments and contingent liabilities            |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              |  |   |            |   |  |   |           |  
|Partners capital (deficit)                       |  |                                | (959,325 | ) |                             |   | (772,236  | )          |  |                | 35,202    |         |   | 289,210      |  |   |             |  |   | 447,824    |   |  |   | (959,325  | )
|                                                  |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              |  |   |            |   |  |   |           |  
|Total liabilities and partners capital (deficit) |  | $                              |         |   |                             | $ | 1,960,243 |            |  | $              | 1,075,405 |         | $ | 462,882      |  | $ |             |  | $ | (1,491,680 | ) |  | $ | 2,006,850 |  
|                                                  |  |                                |          |   |                             |   |           |            |  |                |           |         |   |              |  |   |              |  |   |            |   |  |   |           |  



22



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##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



GRAHAM PACKAGING HOLDINGS COMPANY

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED
JUNE 30, 2009

(In thousands)



|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |         |   |              |  |   |              |  |   |         |   |  |   |         |  
|------------------------------------------------------------ |  | ------------------------------ | ------- | - | --------------------------- | - | ------- | ---------- |  | - | -------------- | - | ------- | - | ------------ |  | - | ------------ |  | - | ------- | - |  | - | ------- | -
|                                                             |  | GrahamPackagingHoldingsCompany |         |   | GrahamPackagingCompany,L.P. |   |         | Guarantors |  |   | Non-Guarantors |   | CapCo I |   | Eliminations |  |   | Consolidated | 
|Net sales                                                    |  | $                              |        |   |                             | $ | 262,043 |            |  | $ | 223,933        |   |         | $ | 123,158      |  | $ |             |  | $ | (19,580 | ) |  | $ | 589,554 |  
|Cost of goods sold                                           |  |                                |        |   |                             |   | 212,197 |            |  |   | 181,593        |   |         |   | 104,028      |  |   |             |  |   | (19,580 | ) |  |   | 478,238 |  
|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |         |   |              |  |   |              |  |   |         |   |  |   |         |  
|Gross profit                                                 |  |                                |        |   |                             |   | 49,846  |            |  |   | 42,340         |   |         |   | 19,130       |  |   |             |  |   |        |   |  |   | 111,316 |  
|Selling, general and administrative expenses                 |  |                                |        |   |                             |   | 11,856  |            |  |   | 10,817         |   |         |   | 6,315        |  |   |             |  |   |        |   |  |   | 28,988  |  
|Asset impairment charges                                     |  |                                |        |   |                             |   | 5,423   |            |  |   | 946            |   |         |   | 90           |  |   |             |  |   |        |   |  |   | 6,459   |  
|Net loss (gain) on disposal of property, plant and equipment |  |                                |        |   |                             |   | 419     |            |  |   | (193           | ) |         |   | 577          |  |   |             |  |   |        |   |  |   | 803     |  
|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |         |   |              |  |   |              |  |   |         |   |  |   |         |  
|Operating income                                             |  |                                |        |   |                             |   | 32,148  |            |  |   | 30,770         |   |         |   | 12,148       |  |   |             |  |   |        |   |  |   | 75,066  |  
|Interest expense, net                                        |  |                                |        |   |                             |   | 28,924  |            |  |   | 6,958          |   |         |   | 1,066        |  |   |             |  |   |        |   |  |   | 36,948  |  
|Gain on debt extinguishment                                  |  |                                |        |   |                             |   | (756    | )          |  |   |               |   |         |   |             |  |   |             |  |   |        |   |  |   | (756    | )
|Other (income) expense, net                                  |  |                                |        |   |                             |   | (1,150  | )          |  |   | (3,021         | ) |         |   | 194          |  |   |             |  |   | 3,000   |   |  |   | (977    | )
|Equity in earnings of subsidiaries                           |  |                                | (34,944 | ) |                             |   | (30,165 | )          |  |   | (5,533         | ) |         |   |             |  |   |             |  |   | 70,642  |   |  |   |        |  
|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |         |   |              |  |   |              |  |   |         |   |  |   |         |  
|Income (loss) before income taxes                            |  |                                | 34,944  |   |                             |   | 35,295  |            |  |   | 32,366         |   |         |   | 10,888       |  |   |             |  |   | (73,642 | ) |  |   | 39,851  |  
|Income tax provision                                         |  |                                |        |   |                             |   | 351     |            |  |   | 1,230          |   |         |   | 3,326        |  |   |             |  |   |        |   |  |   | 4,907   |  
|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |         |   |              |  |   |              |  |   |         |   |  |   |         |  
|Net income (loss)                                            |  | $                              | 34,944  |   |                             | $ | 34,944  |            |  | $ | 31,136         |   |         | $ | 7,562        |  | $ |             |  | $ | (73,642 | ) |  | $ | 34,944  |  
|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |         |   |              |  |   |              |  |   |         |   |  |   |         |  



23



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##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



GRAHAM PACKAGING HOLDINGS COMPANY

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE
30, 2009

(In thousands)



|                                                      |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |          |   |  |   |           |  
|----------------------------------------------------- |  | ------------------------------ | ------- | - | --------------------------- | - | ------- | ---------- |  | - | -------------- | - |  | ------- | ------- | ------------ |  | - | ------------ |  | - | -------- | - |  | - | --------- | -
|                                                      |  | GrahamPackagingHoldingsCompany |         |   | GrahamPackagingCompany,L.P. |   |         | Guarantors |  |   | Non-Guarantors |   |  | CapCo I |         | Eliminations |  |   | Consolidated | 
|Net sales                                             |  | $                              |        |   |                             | $ | 505,995 |            |  | $ | 452,031        |   |  | $       | 234,919 |              |  | $ |             |  | $ | (36,988  | ) |  | $ | 1,155,957 |  
|Cost of goods sold                                    |  |                                |        |   |                             |   | 419,813 |            |  |   | 373,336        |   |  |         | 195,154 |              |  |   |             |  |   | (36,988  | ) |  |   | 951,315   |  
|                                                      |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |          |   |  |   |           |  
|Gross profit                                          |  |                                |        |   |                             |   | 86,182  |            |  |   | 78,695         |   |  |         | 39,765  |              |  |   |             |  |   |         |   |  |   | 204,642   |  
|Selling, general and administrative expenses          |  |                                |        |   |                             |   | 23,692  |            |  |   | 21,316         |   |  |         | 12,387  |              |  |   |             |  |   |         |   |  |   | 57,395    |  
|Asset impairment charges                              |  |                                |        |   |                             |   | 6,276   |            |  |   | 1,669          |   |  |         | 90      |              |  |   |             |  |   |         |   |  |   | 8,035     |  
|Net loss on disposal of property, plant and equipment |  |                                |        |   |                             |   | 1,051   |            |  |   | 650            |   |  |         | 597     |              |  |   |             |  |   |         |   |  |   | 2,298     |  
|                                                      |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |          |   |  |   |           |  
|Operating income                                      |  |                                |        |   |                             |   | 55,163  |            |  |   | 55,060         |   |  |         | 26,691  |              |  |   |             |  |   |         |   |  |   | 136,914   |  
|Interest expense, net                                 |  |                                |        |   |                             |   | 51,941  |            |  |   | 22,522         |   |  |         | 1,978   |              |  |   |             |  |   |         |   |  |   | 76,441    |  
|Gain on debt extinguishment                           |  |                                |        |   |                             |   | (756    | )          |  |   |               |   |  |         |        |              |  |   |             |  |   |         |   |  |   | (756      | )
|Other (income) expense, net                           |  |                                |        |   |                             |   | (13,037 | )          |  |   | (5,946         | ) |  |         | (416    | )            |  |   |             |  |   | 17,854   |   |  |   | (1,545    | )
|Equity in earnings of subsidiaries                    |  |                                | (53,708 | ) |                             |   | (37,613 | )          |  |   | (10,481        | ) |  |         |        |              |  |   |             |  |   | 101,802  |   |  |   |          |  
|                                                      |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |          |   |  |   |           |  
|Income (loss) before income taxes                     |  |                                | 53,708  |   |                             |   | 54,628  |            |  |   | 48,965         |   |  |         | 25,129  |              |  |   |             |  |   | (119,656 | ) |  |   | 62,774    |  
|Income tax provision                                  |  |                                |        |   |                             |   | 920     |            |  |   | 1,408          |   |  |         | 6,738   |              |  |   |             |  |   |         |   |  |   | 9,066     |  
|                                                      |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |          |   |  |   |           |  
|Net income (loss)                                     |  | $                              | 53,708  |   |                             | $ | 53,708  |            |  | $ | 47,557         |   |  | $       | 18,391  |              |  | $ |             |  | $ | (119,656 | ) |  | $ | 53,708    |  
|                                                      |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |          |   |  |   |           |  



24



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##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



GRAHAM PACKAGING HOLDINGS COMPANY

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED
JUNE 30, 2008

(In thousands)



|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |         |   |  |   |         |  
|------------------------------------------------------------ |  | ------------------------------ | ------- | - | --------------------------- | - | ------- | ---------- |  | - | -------------- | - |  | ------- | ------- | ------------ |  | - | ------------ |  | - | ------- | - |  | - | ------- | -
|                                                             |  | GrahamPackagingHoldingsCompany |         |   | GrahamPackagingCompany,L.P. |   |         | Guarantors |  |   | Non-Guarantors |   |  | CapCo I |         | Eliminations |  |   | Consolidated | 
|Net sales                                                    |  | $                              |        |   |                             | $ | 290,680 |            |  | $ | 270,607        |   |  | $       | 151,111 |              |  | $ |             |  | $ | (24,154 | ) |  | $ | 688,244 |  
|Cost of goods sold                                           |  |                                |        |   |                             |   | 238,203 |            |  |   | 239,473        |   |  |         | 127,181 |              |  |   |             |  |   | (24,154 | ) |  |   | 580,703 |  
|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |         |   |  |   |         |  
|Gross profit                                                 |  |                                |        |   |                             |   | 52,477  |            |  |   | 31,134         |   |  |         | 23,930  |              |  |   |             |  |   |        |   |  |   | 107,541 |  
|Selling, general and administrative expenses                 |  |                                |        |   |                             |   | 15,320  |            |  |   | 13,299         |   |  |         | 7,594   |              |  |   |             |  |   |        |   |  |   | 36,213  |  
|Net loss (gain) on disposal of property, plant and equipment |  |                                |        |   |                             |   | 87      |            |  |   | 92             |   |  |         | (40     | )            |  |   |             |  |   |        |   |  |   | 139     |  
|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |         |   |  |   |         |  
|Operating income                                             |  |                                |        |   |                             |   | 37,070  |            |  |   | 17,743         |   |  |         | 16,376  |              |  |   |             |  |   |        |   |  |   | 71,189  |  
|Interest expense, net                                        |  |                                |        |   |                             |   | 25,281  |            |  |   | 15,280         |   |  |         | 1,442   |              |  |   |             |  |   |        |   |  |   | 42,003  |  
|Other expense (income), net                                  |  |                                |        |   |                             |   | 85      |            |  |   | (163           | ) |  |         | (436    | )            |  |   |             |  |   |        |   |  |   | (514    | )
|Equity in earnings of subsidiaries                           |  |                                | (28,308 | ) |                             |   | (17,145 | )          |  |   | (9,751         | ) |  |         |        |              |  |   |             |  |   | 55,204  |   |  |   |        |  
|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |         |   |  |   |         |  
|Income (loss) before income taxes                            |  |                                | 28,308  |   |                             |   | 28,849  |            |  |   | 12,377         |   |  |         | 15,370  |              |  |   |             |  |   | (55,204 | ) |  |   | 29,700  |  
|Income tax provision                                         |  |                                |        |   |                             |   | 541     |            |  |   | 103            |   |  |         | 748     |              |  |   |             |  |   |        |   |  |   | 1,392   |  
|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |         |   |  |   |         |  
|Net income (loss)                                            |  | $                              | 28,308  |   |                             | $ | 28,308  |            |  | $ | 12,274         |   |  | $       | 14,622  |              |  | $ |             |  | $ | (55,204 | ) |  | $ | 28,308  |  
|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |         |   |  |   |         |  



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##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



GRAHAM PACKAGING HOLDINGS COMPANY

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE
30, 2008

(In thousands)



|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |         |   |  |   |           |  
|------------------------------------------------------------ |  | ------------------------------ | ------- | - | --------------------------- | - | ------- | ---------- |  | - | -------------- | - |  | ------- | ------- | ------------ |  | - | ------------ |  | - | ------- | - |  | - | --------- | -
|                                                             |  | GrahamPackagingHoldingsCompany |         |   | GrahamPackagingCompany,L.P. |   |         | Guarantors |  |   | Non-Guarantors |   |  | CapCo I |         | Eliminations |  |   | Consolidated | 
|Net sales                                                    |  | $                              |        |   |                             | $ | 585,092 |            |  | $ | 534,333        |   |  | $       | 288,102 |              |  | $ |             |  | $ | (49,880 | ) |  | $ | 1,357,647 |  
|Cost of goods sold                                           |  |                                |        |   |                             |   | 486,817 |            |  |   | 475,777        |   |  |         | 244,288 |              |  |   |             |  |   | (49,880 | ) |  |   | 1,157,002 |  
|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |         |   |  |   |           |  
|Gross profit                                                 |  |                                |        |   |                             |   | 98,275  |            |  |   | 58,556         |   |  |         | 43,814  |              |  |   |             |  |   |        |   |  |   | 200,645   |  
|Selling, general and administrative expenses                 |  |                                |        |   |                             |   | 28,588  |            |  |   | 25,240         |   |  |         | 15,322  |              |  |   |             |  |   |        |   |  |   | 69,150    |  
|Asset impairment charges                                     |  |                                |        |   |                             |   | 3,262   |            |  |   | (3,507         | ) |  |         | 260     |              |  |   |             |  |   |        |   |  |   | 15        |  
|Net (gain) loss on disposal of property, plant and equipment |  |                                |        |   |                             |   | (727    | )          |  |   | 1,077          |   |  |         | (65     | )            |  |   |             |  |   |        |   |  |   | 285       |  
|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |         |   |  |   |           |  
|Operating income                                             |  |                                |        |   |                             |   | 67,152  |            |  |   | 35,746         |   |  |         | 28,297  |              |  |   |             |  |   |        |   |  |   | 131,195   |  
|Interest expense, net                                        |  |                                |        |   |                             |   | 55,571  |            |  |   | 34,124         |   |  |         | 2,993   |              |  |   |             |  |   |        |   |  |   | 92,688    |  
|Other expense (income), net                                  |  |                                |        |   |                             |   | 192     |            |  |   | (820           | ) |  |         | (707    | )            |  |   |             |  |   |        |   |  |   | (1,335    | )
|Equity in earnings of subsidiaries                           |  |                                | (32,066 | ) |                             |   | (21,577 | )          |  |   | (11,102        | ) |  |         |        |              |  |   |             |  |   | 64,745  |   |  |   |          |  
|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |         |   |  |   |           |  
|Income (loss) before income taxes                            |  |                                | 32,066  |   |                             |   | 32,966  |            |  |   | 13,544         |   |  |         | 26,011  |              |  |   |             |  |   | (64,745 | ) |  |   | 39,842    |  
|Income tax provision                                         |  |                                |        |   |                             |   | 900     |            |  |   | 298            |   |  |         | 6,578   |              |  |   |             |  |   |        |   |  |   | 7,776     |  
|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |         |   |  |   |           |  
|Net income (loss)                                            |  | $                              | 32,066  |   |                             | $ | 32,066  |            |  | $ | 13,246         |   |  | $       | 19,433  |              |  | $ |             |  | $ | (64,745 | ) |  | $ | 32,066    |  
|                                                             |  |                                |         |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |         |   |  |   |           |  



26



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##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



GRAHAM PACKAGING HOLDINGS COMPANY

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE
30, 2009

(In thousands)



|                                                              |  |                                |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |          |   |  |   |         |  
|------------------------------------------------------------- |  | ------------------------------ | - | --------------------------- | - | ------- | ---------- |  | - | -------------- | - |  | ------- | ------- | ------------ |  | - | ------------ |  | - | -------- | - |  | - | ------- | -
|                                                              |  | GrahamPackagingHoldingsCompany |   | GrahamPackagingCompany,L.P. |   |         | Guarantors |  |   | Non-Guarantors |   |  | CapCo I |         | Eliminations |  |   | Consolidated | 
|Operating activities:                                         |  |                                |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |          |   |  |   |         |  
|Net cash provided by (used in) operating activities           |  | $                              |  |                             | $ | 57,926  |            |  | $ | 121,606        |   |  | $       | 56,450  |              |  | $ |             |  | $ | (17,854  | ) |  | $ | 218,128 |  
|                                                              |  |                                |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |          |   |  |   |         |  
|Investing activities:                                         |  |                                |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |          |   |  |   |         |  
|Net cash paid for property, plant and equipment               |  |                                |  |                             |   | (29,910 | )          |  |   | (25,347        | ) |  |         | (15,963 | )            |  |   |             |  |   |         |   |  |   | (71,220 | )
|Acquisition of/investment in a business, net of cash acquired |  |                                |  |                             |   | (365    | )          |  |   | (1,925         | ) |  |         | (15,194 | )            |  |   |             |  |   | 17,484   |   |  |   |        |  
|Intercompany investing activities                             |  |                                |  |                             |   | (28,278 | )          |  |   | (122,469       | ) |  |         |        |              |  |   |             |  |   | 150,747  |   |  |   |        |  
|                                                              |  |                                |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |          |   |  |   |         |  
|Net cash (used in) provided by investing activities           |  |                                |  |                             |   | (58,553 | )          |  |   | (149,741       | ) |  |         | (31,157 | )            |  |   |             |  |   | 168,231  |   |  |   | (71,220 | )
|                                                              |  |                                |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |          |   |  |   |         |  
|Financing activities:                                         |  |                                |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |          |   |  |   |         |  
|Proceeds from issuance of long-term debt                      |  |                                |  |                             |   | 6,092   |            |  |   |               |   |  |         | 16,416  |              |  |   |             |  |   |         |   |  |   | 22,508  |  
|Payment of long-term debt                                     |  |                                |  |                             |   | (40,610 | )          |  |   | (143           | ) |  |         | (14,915 | )            |  |   |             |  |   |         |   |  |   | (55,668 | )
|Intercompany financing activities                             |  |                                |  |                             |   | 116,215 |            |  |   | 28,278         |   |  |         | 6,254   |              |  |   |             |  |   | (150,747 | ) |  |   |        |  
|Purchase of partnership units                                 |  |                                |  |                             |   | (89     | )          |  |   |               |   |  |         |        |              |  |   |             |  |   |         |   |  |   | (89     | )
|Debt issuance fees                                            |  |                                |  |                             |   | (9,570  | )          |  |   |               |   |  |         |        |              |  |   |             |  |   |         |   |  |   | (9,570  | )
|                                                              |  |                                |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |          |   |  |   |         |  
|Net cash provided by (used in) financing activities           |  |                                |  |                             |   | 72,038  |            |  |   | 28,135         |   |  |         | 7,755   |              |  |   |             |  |   | (150,747 | ) |  |   | (42,819 | )
|                                                              |  |                                |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |          |   |  |   |         |  
|Effect of exchange rate changes on cash and cash equivalents  |  |                                |  |                             |   |        |            |  |   |               |   |  |         | 599     |              |  |   |             |  |   | 370      |   |  |   | 969     |  
|                                                              |  |                                |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |          |   |  |   |         |  
|Increase in cash and cash equivalents                         |  |                                |  |                             |   | 71,411  |            |  |   |               |   |  |         | 33,647  |              |  |   |             |  |   |         |   |  |   | 105,058 |  
|Cash and cash equivalents at beginning of period              |  |                                |  |                             |   | 35,297  |            |  |   | 1              |   |  |         | 8,581   |              |  |   |             |  |   |         |   |  |   | 43,879  |  
|                                                              |  |                                |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |          |   |  |   |         |  
|Cash and cash equivalents at end of period                    |  | $                              |  |                             | $ | 106,708 |            |  | $ | 1              |   |  | $       | 42,228  |              |  | $ |             |  | $ |         |   |  | $ | 148,937 |  
|                                                              |  |                                |   |                             |   |         |            |  |   |                |   |  |         |         |              |  |   |              |  |   |          |   |  |   |         |  



27



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##### Table of Contents

GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



GRAHAM PACKAGING HOLDINGS COMPANY

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE
30, 2008

(In thousands)



|                                                              |  |                                |   |                             |   |          |            |  |   |                |   |  |         |         |              |  |              |   |  |   |   |  |   |          |  
|------------------------------------------------------------- |  | ------------------------------ | - | --------------------------- | - | -------- | ---------- |  | - | -------------- | - |  | ------- | ------- | ------------ |  | ------------ | - |  | - | - |  | - | -------- | -
|                                                              |  | GrahamPackagingHoldingsCompany |   | GrahamPackagingCompany,L.P. |   |          | Guarantors |  |   | Non-Guarantors |   |  | CapCo I |         | Eliminations |  | Consolidated |  
|Operating activities:                                         |  |                                |   |                             |   |          |            |  |   |                |   |  |         |         |              |  |              |   |  |   |   |  |   |          |  
|Net cash provided by operating activities                     |  | $                              |  |                             | $ | 61,577   |            |  | $ | 23,426         |   |  | $       | 32,349  |              |  | $            |  |  | $ |  |  | $ | 117,352  |  
|                                                              |  |                                |   |                             |   |          |            |  |   |                |   |  |         |         |              |  |              |   |  |   |   |  |   |          |  
|Investing activities:                                         |  |                                |   |                             |   |          |            |  |   |                |   |  |         |         |              |  |              |   |  |   |   |  |   |          |  
|Net cash paid for property, plant and equipment               |  |                                |  |                             |   | (24,667  | )          |  |   | (19,262        | ) |  |         | (23,565 | )            |  |              |  |  |   |  |  |   | (67,494  | )
|Acquisition of/investment in a business, net of cash acquired |  |                                |  |                             |   |         |            |  |   | (4,025         | ) |  |         | 4,025   |              |  |              |  |  |   |  |  |   |         |  
|                                                              |  |                                |   |                             |   |          |            |  |   |                |   |  |         |         |              |  |              |   |  |   |   |  |   |          |  
|Net cash used in investing activities                         |  |                                |  |                             |   | (24,667  | )          |  |   | (23,287        | ) |  |         | (19,540 | )            |  |              |  |  |   |  |  |   | (67,494  | )
|                                                              |  |                                |   |                             |   |          |            |  |   |                |   |  |         |         |              |  |              |   |  |   |   |  |   |          |  
|Financing activities:                                         |  |                                |   |                             |   |          |            |  |   |                |   |  |         |         |              |  |              |   |  |   |   |  |   |          |  
|Proceeds from issuance of long-term debt                      |  |                                |  |                             |   | 182,815  |            |  |   |               |   |  |         | 51,251  |              |  |              |  |  |   |  |  |   | 234,066  |  
|Payment of long-term debt                                     |  |                                |  |                             |   | (196,268 | )          |  |   | (139           | ) |  |         | (53,285 | )            |  |              |  |  |   |  |  |   | (249,692 | )
|                                                              |  |                                |   |                             |   |          |            |  |   |                |   |  |         |         |              |  |              |   |  |   |   |  |   |          |  
|Net cash used in financing activities                         |  |                                |  |                             |   | (13,453  | )          |  |   | (139           | ) |  |         | (2,034  | )            |  |              |  |  |   |  |  |   | (15,626  | )
|                                                              |  |                                |   |                             |   |          |            |  |   |                |   |  |         |         |              |  |              |   |  |   |   |  |   |          |  
|Effect of exchange rate changes on cash and cash equivalents  |  |                                |  |                             |   |         |            |  |   |               |   |  |         | 309     |              |  |              |  |  |   |  |  |   | 309      |  
|                                                              |  |                                |   |                             |   |          |            |  |   |                |   |  |         |         |              |  |              |   |  |   |   |  |   |          |  
|Increase in cash and cash equivalents                         |  |                                |  |                             |   | 23,457   |            |  |   |               |   |  |         | 11,084  |              |  |              |  |  |   |  |  |   | 34,541   |  
|Cash and cash equivalents at beginning of period              |  |                                |  |                             |   | 3,815    |            |  |   | 2              |   |  |         | 14,497  |              |  |              |  |  |   |  |  |   | 18,314   |  
|                                                              |  |                                |   |                             |   |          |            |  |   |                |   |  |         |         |              |  |              |   |  |   |   |  |   |          |  
|Cash and cash equivalents at end of period                    |  | $                              |  |                             | $ | 27,272   |            |  | $ | 2              |   |  | $       | 25,581  |              |  | $            |  |  | $ |  |  | $ | 52,855   |  
|                                                              |  |                                |   |                             |   |          |            |  |   |                |   |  |         |         |              |  |              |   |  |   |   |  |   |          |  



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GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



17. Comprehensive Income

Comprehensive income for the three and six months ended June 30, 2009 and 2008, was as follows:



|                                                                                                                                                                                                                                                                                                   |  |                            |        |                          |   |        |  |      |        |  |   |        |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ------ | ------------------------ | - | ------ |  | ---- | ------ |  | - | ------ | -
|                                                                                                                                                                                                                                                                                                   |  | Three Months EndedJune 30, |        | Six Months EndedJune 30, |  
|                                                                                                                                                                                                                                                                                                   |  | 2009                       |        | 2008                     |   | 2009   |  | 2008 |       
|                                                                                                                                                                                                                                                                                                   |  | (In thousands)             |       
|Net income                                                                                                                                                                                                                                                                                         |  | $                          | 34,944 |                          | $ | 28,308 |  | $    | 53,708 |  | $ | 32,066 |  
|Changes in fair value of derivatives designated and accounted for as cash flow hedges, net of tax of $0 for all periods presented in 2009 and
2008                                                                                                                                                 |  |                            | 81     |                          |   | 2,906  |  |      | 347    |  |   | (404   | )
|Amortization of amounts in accumulated other comprehensive income (loss) as of the date the Company discontinued hedge accounting for its
interest rate collar and swap agreements, net of tax of $0 for all periods presented in 2009 and 2008                                                    |  |                            | 1,609  |                          |   |       |  |      | 3,217  |  |   |       |  
|Amortization of prior service costs and unrealized actuarial losses included in net periodic benefit costs for pension and post-retirement
plans, net of a tax provision of $10 and $20 for the three and six months ended June 30, 2009, respectively, and $19 for both periods presented in 2008 |  |                            | 671    |                          |   | 191    |  |      | 1,302  |  |   | 474    |  
|Currency translation adjustments, net of a tax provision of $370 and a tax benefit of $6 for the three and six months ended June 30,
2009, respectively, and a tax provision of $159 and $349 for the three and six months ended June 30, 2008, respectively                                       |  |                            | 28,062 |                          |   | 12,677 |  |      | 4,860  |  |   | 26,557 |  
|                                                                                                                                                                                                                                                                                                   |  |                            |        |                          |   |        |  |      |        |  |   |        |  
|Comprehensive income                                                                                                                                                                                                                                                                               |  | $                          | 65,367 |                          | $ | 44,082 |  | $    | 63,434 |  | $ | 58,693 |  
|                                                                                                                                                                                                                                                                                                   |  |                            |        |                          |   |        |  |      |        |  |   |        |  



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GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



18. Segment Information

The Company is organized and managed on a geographical basis in three operating segments: North America, Europe and South America. Segment information for the three and six months ended June 30, 2009 and 2008,
and as of June 30, 2009, and December 31, 2008, representing the reportable segments currently utilized by the chief operating decision makers, was as follows:



|                                |  |                                  |  |                |           |   |        |   |         |              |  |   |              |   |  |       |       |   |  |   |           |  
|------------------------------- |  | -------------------------------- |  | -------------- | --------- | - | ------ | - | ------- | ------------ |  | - | ------------ | - |  | ----- | ----- | - |  | - | --------- | -
|                                |  |                                  |  | NorthAmerica   |           |   | Europe |   |         | SouthAmerica |  |   | Eliminations |   |  | Total |      
|                                |  |                                  |  |                |           |   |        |   |         |              |  |   | (a)          |   |  |       |      
|                                |  |                                  |  | (In thousands) |          
|Net sales (b) (c)               |  | Three months ended June 30, 2009 |  | $              | 509,263   |   |        | $ | 57,824  |              |  | $ | 22,484       |   |  | $     | (17   | ) |  | $ | 589,554   |  
|                                |  | Three months ended June 30, 2008 |  |                | 584,111   |   |        |   | 80,412  |              |  |   | 24,101       |   |  |       | (380  | ) |  |   | 688,244   |  
|                                |  | Six months ended June 30, 2009   |  |                | 997,760   |   |        |   | 118,755 |              |  |   | 39,633       |   |  |       | (191  | ) |  |   | 1,155,957 |  
|                                |  | Six months ended June 30, 2008   |  |                | 1,157,234 |   |        |   | 157,022 |              |  |   | 44,206       |   |  |       | (815  | ) |  |   | 1,357,647 |  
|                                |  |                                  |  |                |           |  
|Operating income (loss)         |  | Three months ended June 30, 2009 |  | $              | 71,839    |   |        | $ | 4,281   |              |  | $ | (1,054       | ) |  | $     |      |   |  | $ | 75,066    |  
|                                |  | Three months ended June 30, 2008 |  |                | 63,194    |   |        |   | 8,800   |              |  |   | (805         | ) |  |       |      |   |  |   | 71,189    |  
|                                |  | Six months ended June 30, 2009   |  |                | 125,803   |   |        |   | 13,940  |              |  |   | (2,829       | ) |  |       |      |   |  |   | 136,914   |  
|                                |  | Six months ended June 30, 2008   |  |                | 116,702   |   |        |   | 14,781  |              |  |   | (288         | ) |  |       |      |   |  |   | 131,195   |  
|                                |  |                                  |  |                |           |  
|Depreciation and                |  | Three months ended June 30, 2009 |  | $              | 34,582    |   |        | $ | 5,473   |              |  | $ | 1,007        |   |  | $     |      |   |  | $ | 41,062    |  
|amortization                    |  | Three months ended June 30, 2008 |  |                | 37,045    |   |        |   | 5,608   |              |  |   | 1,323        |   |  |       |      |   |  |   | 43,976    |  
|                                |  | Six months ended June 30, 2009   |  |                | 67,324    |   |        |   | 10,396  |              |  |   | 2,134        |   |  |       |      |   |  |   | 79,854    |  
|                                |  | Six months ended June 30, 2008   |  |                | 73,944    |   |        |   | 11,253  |              |  |   | 2,559        |   |  |       |      |   |  |   | 87,756    |  
|                                |  |                                  |  |                |           |  
|Asset impairment charges        |  | Three months ended June 30, 2009 |  | $              | 6,459     |   |        | $ |        |              |  | $ |             |   |  | $     |      |   |  | $ | 6,459     |  
|                                |  | Three months ended June 30, 2008 |  |                |          |   |        |   |        |              |  |   |             |   |  |       |      |   |  |   |          |  
|                                |  | Six months ended June 30, 2009   |  |                | 8,035     |   |        |   |        |              |  |   |             |   |  |       |      |   |  |   | 8,035     |  
|                                |  | Six months ended June 30, 2008   |  |                | 15        |   |        |   |        |              |  |   |             |   |  |       |      |   |  |   | 15        |  
|                                |  |                                  |  |                |           |  
|Interest expense, net           |  | Three months ended June 30, 2009 |  | $              | 35,989    |   |        | $ | 199     |              |  | $ | 760          |   |  | $     |      |   |  | $ | 36,948    |  
|                                |  | Three months ended June 30, 2008 |  |                | 40,661    |   |        |   | 826     |              |  |   | 516          |   |  |       |      |   |  |   | 42,003    |  
|                                |  | Six months ended June 30, 2009   |  |                | 74,578    |   |        |   | 588     |              |  |   | 1,275        |   |  |       |      |   |  |   | 76,441    |  
|                                |  | Six months ended June 30, 2008   |  |                | 89,985    |   |        |   | 1,488   |              |  |   | 1,215        |   |  |       |      |   |  |   | 92,688    |  
|                                |  |                                  |  |                |           |  
|Other (income) expense, net     |  | Three months ended June 30, 2009 |  | $              | (3,181    | ) |        | $ | 960     |              |  | $ | (1,636       | ) |  | $     | 2,880 |   |  | $ | (977      | )
|                                |  | Three months ended June 30, 2008 |  |                | (271      | ) |        |   | (16     | )            |  |   | (227         | ) |  |       |      |   |  |   | (514      | )
|                                |  | Six months ended June 30, 2009   |  |                | (1,951    | ) |        |   | 785     |              |  |   | (3,259       | ) |  |       | 2,880 |   |  |   | (1,545    | )
|                                |  | Six months ended June 30, 2008   |  |                | (578      | ) |        |   | (204    | )            |  |   | (553         | ) |  |       |      |   |  |   | (1,335    | )
|                                |  |                                  |  |                |           |  
|Income tax provision (benefit)  |  | Three months ended June 30, 2009 |  | $              | 1,947     |   |        | $ | 1,264   |              |  | $ | 1,696        |   |  | $     |      |   |  | $ | 4,907     |  
|                                |  | Three months ended June 30, 2008 |  |                | (810      | ) |        |   | 2,226   |              |  |   | (24          | ) |  |       |      |   |  |   | 1,392     |  
|                                |  | Six months ended June 30, 2009   |  |                | 3,542     |   |        |   | 4,399   |              |  |   | 1,125        |   |  |       |      |   |  |   | 9,066     |  
|                                |  | Six months ended June 30, 2008   |  |                | 3,055     |   |        |   | 4,539   |              |  |   | 182          |   |  |       |      |   |  |   | 7,776     |  
|                                |  |                                  |  |                |           |  
|Identifiable assets (b) (c) (d) |  | As of June 30, 2009              |  | $              | 863,416   |   |        | $ | 137,553 |              |  | $ | 48,417       |   |  | $     |      |   |  | $ | 1,049,386 |  
|                                |  | As of December 31, 2008          |  |                | 870,493   |   |        |   | 151,436 |              |  |   | 38,665       |   |  |       |      |   |  |   | 1,060,594 |  
|                                |  |                                  |  |                |           |  
|Goodwill                        |  | As of June 30, 2009              |  | $              | 278,986   |   |        | $ | 14,898  |              |  | $ | 32           |   |  | $     |      |   |  | $ | 293,916   |  
|                                |  | As of December 31, 2008          |  |                | 277,499   |   |        |   | 15,826  |              |  |   | 35           |   |  |       |      |   |  |   | 293,360   |  
|                                |  |                                  |  |                |           |  
|Cash paid for property,         |  | Six months ended June 30, 2009   |  | $              | 58,335    |   |        | $ | 5,688   |              |  |   | 7,777        |   |  | $     |      |   |  | $ | 71,800    |  
|plant and equipment             |  | Six months ended June 30, 2008   |  |                | 51,099    |   |        |   | 11,478  |              |  |   | 5,609        |   |  |       |      |   |  |   | 68,186    |  



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

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



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GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



|                    |  |                            |      |                          |   |      |  |      |      |  |   |     
|------------------- |  | -------------------------- | ---- | ------------------------ | - | ---- |  | ---- | ---- |  | - | ----
|                    |  | Three Months EndedJune 30, |      | Six Months EndedJune 30,
|                    |  | 2009                       |      | 2008                     |   | 2009 |  | 2008
|                    |  | (In millions)             
|                    |  |                            |      |                         
|Poland              |  | $                          | 10.5 |                          | $ | 17.1 |  | $    | 22.7 |  | $ | 33.2
|France              |  |                            | 9.3  |                          |   | 15.8 |  |      | 19.4 |  |   | 31.5
|Belgium (Rotselaar) |  |                            | 11.7 |                          |   | 13.8 |  |      | 24.8 |  |   | 27.3
|Spain               |  |                            | 8.3  |                          |   | 10.5 |  |      | 17.5 |  |   | 20.2



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



|                                                                                                             |  |               |      |                  |   |     
|------------------------------------------------------------------------------------------------------------ |  | ------------- | ---- | ---------------- | - | ----
|                                                                                                             |  | June 30,2009  |      | December 31,2008
|                                                                                                             |  | (In millions)
|Poland                                                                                                       |  | $             | 32.8 |                  | $ | 37.7
|France (1)                                                                                                   |  |               | 14.1 |                  |   | 20.1
|Belgium (Rotselaar)                                                                                          |  |               | 30.8 |                  |   | 31.1
|Spain                                                                                                        |  |               | 25.2 |                  |   | 27.6
|(1)    Amount as of June 30, 2009, excludes assets held for sale at the Meaux, France plant of $5.5 million.



|(c) | The Companys net sales for North America include sales in Mexico which totaled $39.3 million and $40.4 million for the three months ended June 30, 2009 and 2008,
respectively, and $69.5 million and $74.5 million for the six months ended June 30, 2009 and 2008, respectively. Identifiable assets in Mexico totaled $53.9 million and $51.6 million as of June 30, 2009, and December 31, 2008,
respectively. Substantially all of the North America reportable segments remaining net sales and identifiable assets are in the United States.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

Product Net Sales
Information

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



|                        |  |                            |         |                          |   |         |  |      |           |  |   |          
|----------------------- |  | -------------------------- | ------- | ------------------------ | - | ------- |  | ---- | --------- |  | - | ---------
|                        |  | Three Months EndedJune 30, |         | Six Months EndedJune 30,
|                        |  | 2009                       |         | 2008                     |   | 2009    |  | 2008
|                        |  | (In thousands)            
|                        |  |                            |         |                         
|Food and Beverage       |  | $                          | 362,765 |                          | $ | 425,786 |  | $    | 718,136   |  | $ | 842,486  
|Household               |  |                            | 107,545 |                          |   | 124,446 |  |      | 210,991   |  |   | 248,763  
|Automotive Lubricants   |  |                            | 77,178  |                          |   | 89,668  |  |      | 141,012   |  |   | 171,775  
|Personal Care/Specialty |  |                            | 42,066  |                          |   | 48,344  |  |      | 85,818    |  |   | 94,623   
|                        |  |                            |         |                          |   |         |  |      |           |  |   |          
|Total Net Sales         |  | $                          | 589,554 |                          | $ | 688,244 |  | $    | 1,155,957 |  | $ | 1,357,647
|                        |  |                            |         |                          |   |         |  |      |           |  |   |          



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GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



19. Pension Plans

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



|                                                     |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|---------------------------------------------------- |  | -------------------------- | ------ | - | ------------------------ | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                     |  | Three Months EndedJune 30, |        |   | Six Months EndedJune 30, |  
|                                                     |  | 2009                       |        |   | 2008                     |   |        | 2009 |  |   | 2008   |  
|                                                     |  | (In thousands)             |       
|Components of net periodic pension cost:             |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Service cost                                         |  | $                          | 564    |   |                          | $ | 703    |      |  | $ | 1,136  |   |  | $ | 1,407  |  
|Interest cost                                        |  |                            | 1,505  |   |                          |   | 1,414  |      |  |   | 2,996  |   |  |   | 2,829  |  
|Expected return on plan assets                       |  |                            | (1,433 | ) |                          |   | (1,682 | )    |  |   | (2,852 | ) |  |   | (3,365 | )
|Net amortization and deferral of prior service costs |  |                            | 582    |   |                          |   | 218    |      |  |   | 1,173  |   |  |   | 436    |  
|Curtailment/special charges                          |  |                            | 104    |   |                          |   |       |      |  |   | 104    |   |  |   |       |  
|Employee contributions                               |  |                            | (19    | ) |                          |   | (27    | )    |  |   | (37    | ) |  |   | (54    | )
|                                                     |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Net periodic pension cost                            |  | $                          | 1,303  |   |                          | $ | 626    |      |  | $ | 2,520  |   |  | $ | 1,253  |  
|                                                     |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  

The Company previously disclosed in its financial statements for the year ended December 31,
2008, that it expected to contribute $6.7 million to its pension plans in 2009. This amount has been adjusted to $4.0 million as a result of the recently passed Workers, Retiree and Employer Recovery Act of 2008. In addition, on April 1, 2009,
the Company made a voluntary contribution of $12.7 million to its U.S. defined benefit plans to maintain specific funding target percentages. As of June 30, 2009, $1.6 million of required contributions to its pension plans has been made and the
Company expects to make an additional $2.4 million of contributions in the remainder of 2009.

In June 2009, the Company announced that it
was closing its Bristol, PA plant. The closing is expected to occur during the second half of 2009. As a result of this closing, the Company recorded a preliminary curtailment charge in the second quarter of $0.1 million for the vesting of all
non-vested pension plan participants. This amount will be finalized at the time of the actual plant closing.

The Company recognized $1.9
million and $2.1 million of expense for its 401(k) plans in the second quarter of 2009 and 2008, respectively, and $3.7 million and $4.2 million of expense for its 401(k) plans in the first half of 2009 and 2008, respectively.

20. Transactions with Related Parties

The Company
had transactions with entities affiliated through common ownership. The Company made payments to Graham Engineering Company for equipment and related services of $0.5 million and $0.3 million for the three months ended June 30, 2009 and 2008,
respectively, and $0.8 million and $0.9 million for the six months ended June 30, 2009 and 2008, respectively. The Graham Family Investors and Blackstone Management Partners III L.L.C. have supplied management services to the Company since
1998. The Company has recorded $1.2 million of expense for these services for each of the three months ended June 30, 2009 and 2008, and $2.5 million of expense for these services for each of the six months ended June 30, 2009 and 2008.
Under monitoring agreements, the Company is obligated to make annual payments of $2.0 million and $3.0 million to the Graham Family Investors and Blackstone Management Partners III L.L.C., respectively.

At June 30, 2009, the Company had loans outstanding to certain current and former management employees of the Company for the purchase of shares of
BMP/Graham Holdings Corporation, which owns, directly and indirectly, 85% of the Company. These loans were made in connection with the capital call payments made on September 29, 2000, and March 29, 2001, pursuant to a capital call
agreement dated as of August 13, 1998. The proceeds from the loans were used to fund managements share of the capital call payments. The loans mature on September 28, 2012, and March 30, 2013, respectively, and accrue interest
at a rate of 6.22%. The loans are secured by a pledge of the stock purchased by the loans and by a security interest in any bonus due and payable to the respective borrowers on or after the maturity date of the loans. The loans and related interest,
totaling $2.0 million as of June 30,



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GRAHAM PACKAGING HOLDINGS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued



2009, and $2.1 million as of December 31, 2008, are reflected in Partners Capital (Deficit) on the Condensed Consolidated Balance Sheets
(Unaudited).

On behalf of Blackstone Capital Partners III Merchant Banking Fund L.P., Blackstone Offshore Capital Partners III L.P. and
Blackstone Family Investment Partnership III L.P. (the Blackstone Investors), the Company made payments to a former Chief Executive Officer and Chief Financial Officer of the Company on January 5, 2007, for its repurchase of all of
their outstanding partnership units, pursuant to separation agreements dated as of December 3, 2006. Additionally, the Company made a payment to a former Senior Vice President on April 10, 2009, for its repurchase of all of his outstanding
partnership units. As a result of these payments, the Blackstone Investors became the owners of the partnership units and owe the Company $4.4 million. This receivable is reflected in Partners Capital (Deficit) on the Condensed Consolidated
Balance Sheets (Unaudited).

The Company incurred a $5.0 million fee from Blackstone Management Partners III L.L.C. in connection with the
Fourth Amendment to the Credit Agreement. This amount was charged against the gain on debt extinguishment (see Note 10).

21. Environmental Matters

As a result of the Company closing its Edison, New Jersey plant, the Company is subject to New Jerseys Industrial Site Recovery Act
(ISRA). The Company acquired this facility from Owens-Illinois, Inc. in 2004. ISRA is an environmental law that specifies a process of reporting to the New Jersey Department of Environmental Protection and, in some situations,
investigating, cleaning up and/or taking other measures with respect to environmental conditions that may exist at an industrial establishment that has been shut down or is being transferred. The Company is in the process of evaluating and
implementing its obligations under ISRA regarding the Edison facility. Currently, the Company cannot reliably determine the extent of any obligations it may have with respect to this site under ISRA, or the impact that any ISRA obligations may have
on its selling the property.

22. Termination of Pending Transaction

On July 31, 2009, Hicks Acquisition Company I, Inc. (HACI) exercised its right under the First Amendment to the Equity Purchase Agreement between HACI and the Companys partners and the Company,
including GPC Capital Corp. II, to terminate the Equity Purchase Agreement.



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##### Table of Contents

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

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

All statements other than statements of historical facts included in this Report on Form 10-Q, including statements regarding our future financial
position, economic performance and results of operations, as well as our business strategy, budgets and projected costs and plans and objectives of management for future operations, and the information referred to under Quantitative and
Qualitative Disclosures About Market Risk (Part I, Item 3), are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as may,
will, expect, intend, estimate, anticipate, believe or continue or similar terminology. These forward-looking statements are not historical facts, and are based on
current expectations, estimates and projections about our industry, managements beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, readers are
cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Although we believe that the expectations reflected in such
forward-looking statements are reasonable as of the date made, expectations may prove to have been materially different from the results expressed or implied by such forward-looking statements. Unless otherwise required by law, we also disclaim any
obligation to update our view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made in this report. Readers should carefully review the risks and uncertainties under Risk
Factors (Part I, Item 1A) in the Annual Report on Form 10-K of Graham Packaging Holdings Company (Holdings) for the fiscal year ended December 31, 2008. All forward-looking statements attributable to us, or persons acting
on our behalf, are expressly qualified in their entirety by the cautionary statements set forth in this paragraph.

Overview

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

We are a worldwide leader in the design, manufacture and sale of customized blow molded plastic
containers for the branded food and beverage, household, automotive lubricants and personal care/specialty product categories. As of the end of June 2009, we operated 82 manufacturing facilities throughout North America, Europe and South America.
Our primary strategy is to operate in select markets that will position us to benefit from the growing conversion to value-added plastic packaging.

Management believes that critical success factors to our business are our ability to:



| |  |  | develop proprietary technologies that provide a meaningful competitive advantage in the marketplace;
| | - |  | ----------------------------------------------------------------------------------------------------



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



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



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

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



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

Our
North American one-quart/liter motor oil container product category is in a mature industry. Unit volume in the one-quart/liter motor oil industry decreased approximately 10% per year from 2005 through 2008 as the product category migrated
towards the quick-lube market and larger multi-quart/liter packages. Even though we believe we have the largest market share of multi-quart/liter containers, these sales only partially offset the loss in sales of one-quart/liter containers.

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

As of June 30, 2009, we operated 28 manufacturing facilities outside of the United States in Argentina, Belgium, Brazil, Canada, Finland, France, Mexico, the Netherlands, Poland, Spain, Turkey, the United Kingdom
and Venezuela. Over the past few years, we have expanded our international operations with the addition of a new plant in each of Brazil and the Netherlands.

For the six months ended June 30, 2009, 71.2% of our net sales were generated by our top twenty customers. All of the top twenty customers were under long-term contracts with terms up to ten years and have been
doing business with us for over 20 years on average. Prices under these arrangements are typically tied to plastic resin market standards and, therefore, vary with market conditions. In general, the contracts have annually set minimum purchase
requirements but do not obligate the customer to purchase any given amount of product from us beyond one year. Our sales to PepsiCo, our largest customer, were 11.9% and 14.9% of total sales for the six months ended June 30, 2009 and 2008,
respectively. All of these sales were made in North America.

The largest component of our cost of goods sold is resin costs. Based on
certain resin industry indices, the following table summarizes average market prices per pound of PET and high-density polyethylene (HDPE) resins in the United States during the three and six months ended June 30, 2009 and 2008:



|     |  |                            |      |                          |   |      |  |      |      |  |   |     
|---- |  | -------------------------- | ---- | ------------------------ | - | ---- |  | ---- | ---- |  | - | ----
|     |  | Three Months EndedJune 30, |      | Six Months EndedJune 30,
|     |  | 2009                       |      | 2008                     |   | 2009 |  | 2008
|PET  |  | $                          | 0.73 |                          | $ | 0.93 |  | $    | 0.70 |  | $ | 0.91
|HDPE |  | $                          | 0.65 |                          | $ | 0.91 |  | $    | 0.62 |  | $ | 0.88

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

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

Results of Operations

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



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|                |  |                             |       |  |                           |   |  |      |       |  |       |   |  |   |         |  |       |   |  |   |         |  |       |  
|--------------- |  | --------------------------- | ----- |  | ------------------------- | - |  | ---- | ----- |  | ----- | - |  | - | ------- |  | ----- | - |  | - | ------- |  | ----- | -
|                |  | Three Months Ended June 30, |       |  | Six Months Ended June 30, |  
|                |  | 2009                        |       |  | 2008                      |   |  | 2009 |       |  | 2008  |  
|                |  | (Dollars in millions)       |      
|North America   |  | $                           | 509.3 |  | 86.4                      | % |  | $    | 583.8 |  | 84.8  | % |  | $ | 997.6   |  | 86.3  | % |  | $ | 1,156.5 |  | 85.2  | %
|Europe          |  |                             | 57.8  |  | 9.8                       |   |  |      | 80.3  |  | 11.7  |   |  |   | 118.8   |  | 10.3  |   |  |   | 156.9   |  | 11.6  |  
|South America   |  |                             | 22.5  |  | 3.8                       |   |  |      | 24.1  |  | 3.5   |   |  |   | 39.6    |  | 3.4   |   |  |   | 44.2    |  | 3.2   |  
|                |  |                             |       |  |                           |   |  |      |       |  |       |   |  |   |         |  |       |   |  |   |         |  |       |  
|Total Net Sales |  | $                           | 589.6 |  | 100.0                     | % |  | $    | 688.2 |  | 100.0 | % |  | $ | 1,156.0 |  | 100.0 | % |  | $ | 1,357.6 |  | 100.0 | %
|                |  |                             |       |  |                           |   |  |      |       |  |       |   |  |   |         |  |       |   |  |   |         |  |       |  



|                        |  |                             |       |  |                           |   |  |      |       |  |       |   |  |   |         |  |       |   |  |   |         |  |       |  
|----------------------- |  | --------------------------- | ----- |  | ------------------------- | - |  | ---- | ----- |  | ----- | - |  | - | ------- |  | ----- | - |  | - | ------- |  | ----- | -
|                        |  | Three Months Ended June 30, |       |  | Six Months Ended June 30, |  
|                        |  | 2009                        |       |  | 2008                      |   |  | 2009 |       |  | 2008  |  
|                        |  | (Dollars in millions)       |      
|Food and Beverage       |  | $                           | 362.8 |  | 61.5                      | % |  | $    | 425.8 |  | 61.9  | % |  | $ | 718.2   |  | 62.1  | % |  | $ | 842.4   |  | 62.1  | %
|Household               |  |                             | 107.5 |  | 18.2                      |   |  |      | 124.4 |  | 18.1  |   |  |   | 211.0   |  | 18.3  |   |  |   | 248.8   |  | 18.3  |  
|Automotive Lubricants   |  |                             | 77.2  |  | 13.1                      |   |  |      | 89.7  |  | 13.0  |   |  |   | 141.0   |  | 12.2  |   |  |   | 171.8   |  | 12.7  |  
|Personal Care/Specialty |  |                             | 42.1  |  | 7.2                       |   |  |      | 48.3  |  | 7.0   |   |  |   | 85.8    |  | 7.4   |   |  |   | 94.6    |  | 6.9   |  
|                        |  |                             |       |  |                           |   |  |      |       |  |       |   |  |   |         |  |       |   |  |   |         |  |       |  
|Total Net Sales         |  | $                           | 589.6 |  | 100.0                     | % |  | $    | 688.2 |  | 100.0 | % |  | $ | 1,156.0 |  | 100.0 | % |  | $ | 1,357.6 |  | 100.0 | %
|                        |  |                             |       |  |                           |   |  |      |       |  |       |   |  |   |         |  |       |   |  |   |         |  |       |  

Three Months Ended June 30, 2009, Compared to Three Months Ended June 30, 2008

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



|                                                      |  |                            |       |   |                      |   |       |   |  |        |   
|----------------------------------------------------- |  | -------------------------- | ----- | - | -------------------- | - | ----- | - |  | ------ | --
|                                                      |  | Three MonthsEnded June 30, |       |   | %Increase/(Decrease) |  
|                                                      |  | 2009                       |       |   | 2008                 |   |      
|                                                      |  | (Dollars in millions)      |       |   |                      |  
|Net sales                                             |  | $                          | 589.6 |   |                      | $ | 688.2 |   |  | (14.3  | )%
|Cost of goods sold                                    |  |                            | 478.3 |   |                      |   | 580.7 |   |  | (17.6  | ) 
|                                                      |  |                            |       |   |                      |   |       |   |  |        |   
|Gross profit                                          |  |                            | 111.3 |   |                      |   | 107.5 |   |  | 3.5    |   
|% of net sales (1)                                    |  |                            | 18.9  | % |                      |   | 15.6  | % |  |        |   
|Selling, general and administrative expenses          |  |                            | 29.0  |   |                      |   | 36.2  |   |  | (19.9  | ) 
|% of net sales (1)                                    |  |                            | 4.9   | % |                      |   | 5.3   | % |  |        |   
|Asset impairment charges                              |  |                            | 6.5   |   |                      |   |      |   |  | >100.0 |   
|Net loss on disposal of property, plant and equipment |  |                            | 0.8   |   |                      |   | 0.1   |   |  | >100.0 |   
|                                                      |  |                            |       |   |                      |   |       |   |  |        |   
|Operating income                                      |  |                            | 75.0  |   |                      |   | 71.2  |   |  | 5.3    |   
|% of net sales (1)                                    |  |                            | 12.7  | % |                      |   | 10.3  | % |  |        |   
|Interest expense                                      |  |                            | 37.2  |   |                      |   | 42.2  |   |  | (11.8  | ) 
|Interest income                                       |  |                            | (0.2  | ) |                      |   | (0.2  | ) |  |       |   
|Gain on debt extinguishment                           |  |                            | (0.8  | ) |                      |   |      |   |  | >100.0 |   
|Other income, net                                     |  |                            | (1.0  | ) |                      |   | (0.5  | ) |  | 100.0  |   
|Income tax provision                                  |  |                            | 4.9   |   |                      |   | 1.4   |   |  | >100.0 |   
|                                                      |  |                            |       |   |                      |   |       |   |  |        |   
|Net income                                            |  | $                          | 34.9  |   |                      | $ | 28.3  |   |  | 23.3   | % 
|                                                      |  |                            |       |   |                      |   |       |   |  |        |   



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|(1) | As resin prices can fluctuate significantly, we believe that our gross profit, as well as certain expense items, should not be analyzed solely on a percentage of net sales basis.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Net Sales.Net sales for the three months ended June 30, 2009, decreased $98.6 million, or 14.3%, from the three
months ended June 30, 2008. A large part of the decrease in net sales was due to a decrease in resin costs which are passed through to customers, where the average market price per pound of PET in the U.S. decreased from $0.93 to $0.73 and the
average market price per pound of HDPE in the U.S. decreased from $0.91 to $0.65. Additional contributing factors to the decrease in net sales were the negative impact of changes in exchange rates of $29.6 million, lower unit volume and price
reductions both from operational cost savings shared with our customers and in response to competitive pressure. Container units sold decreased 4.7%.

On an operating segment basis, sales for the three months ended June 30, 2009, in North America decreased $74.5 million, or 12.8%, from the three months ended June 30, 2008, primarily due to a decrease in
resin costs, the negative impact of changes in exchange rates, lower unit volume and price reductions. North American sales in the food and beverage, household, automotive lubricants and personal care/specialty product categories contributed $47.8
million, $10.4 million, $11.7 million and $4.6 million, respectively, to the decrease. Container units sold in North America decreased in the food and beverage, household, automotive lubricants and personal care/specialty product categories by 5.8%,
1.3%, 15.0% and 8.9%, respectively.

Sales for the three months ended June 30, 2009, in Europe decreased $22.5 million, or 28.0%, from
the three months ended June 30, 2008. The decrease in sales was primarily due to the negative impact of changes in exchange rates of $13.1 million and a decrease in resin costs.

Sales for the three months ended June 30, 2009, in South America decreased $1.6 million, or 6.6%, from the three months ended June 30, 2008.
The decrease in sales was primarily due to the negative impact of changes in exchange rates of $5.0 million, partially offset by an increase in volume and certain price increases.

Gross Profit.Gross profit for the three months ended June 30, 2009, increased $3.8 million, or 3.5%, from the three months ended
June 30, 2008. Gross profit for the three months ended June 30, 2009, increased in North America by $9.7 million, decreased in Europe by $5.7 million and decreased in South America by $0.2 million, when compared to the three months ended
June 30, 2008. The increase in gross profit was primarily due to ongoing productivity initiatives and lower depreciation and amortization expense of $2.6 million, partially offset by a reduction in volume, a strengthening of the U.S. dollar
against the euro and other currencies of $7.5 million and price reductions referred to above. Although there was a net reduction in volume, a significant portion of the volume decrease was in lower margin containers and was partially offset by
volume gains in higher margin containers.

Selling, General and Administrative Expenses. Selling, general and administrative
expenses for the three months ended June 30, 2009, decreased $7.2 million, or 19.9%, from the three months ended June 30, 2008. The decrease was primarily due to decreases in consulting and other professional fees of $2.5 million and
employee severance of $1.7 million, a strengthening of the U.S. dollar against the euro and other currencies of $1.3 million, a decrease in professional fees related to an aborted transaction (as further described in Termination of
Pending Transaction) of $1.2 million and ongoing expense reduction efforts.

Asset Impairment Charges. We identified an
indicator of possible impairment of certain assets in the United States and Mexico for the three months ended June 30, 2009. As a result, we evaluated the recoverability of these assets and determined that the undiscounted future cash flows
were below the carrying value of these long-lived assets. Additionally, management had no plans to redeploy the majority of these assets. Accordingly, we adjusted the carrying value of these long-lived assets to their estimated fair value in
accordance with Statement of Financial Accounting Standards (SFAS) 144, Accounting for the Impairment or Disposal of Long-Lived Assets, resulting in impairment charges of $6.5 million for the three months ended June 30,
2009.

Interest Expense. Interest expense for the three months ended June 30, 2009, decreased $5.0 million from the three
months ended June 30, 2008. The decrease was primarily due to a decrease in interest rates (average 90-day LIBOR decreased from 2.8% for the three months ended June 30, 2008, to 0.8% for the three months ended June 30, 2009). In May
2009, we extended $1,200.0 million of our term loan at a minimum LIBOR and increased LIBOR margin. As a result, we expect interest expense to increase in future periods. See Liquidity and Capital Resources for a more detailed
description of our term loan extension.



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Income Tax Provision.Income tax provision for the three months ended June 30, 2009,
increased $3.5 million from the three months ended June 30, 2008. The increase primarily resulted from changes in unrecognized tax benefits of foreign subsidiaries, an increase in unremitted earnings of our Polish subsidiary and valuation
allowance adjustments in our Mexican and Brazilian subsidiaries.

Net Income.Primarily as a result of the factors discussed above,
net income was $34.9 million for the three months ended June 30, 2009, compared to net income of $28.3 million for the three months ended June 30, 2008.

Six Months Ended June 30, 2009, Compared to Six Months Ended June 30, 2008

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



|                                                      |  |                          |         |   |                      |   |         |   |  |        |   
|----------------------------------------------------- |  | ------------------------ | ------- | - | -------------------- | - | ------- | - |  | ------ | --
|                                                      |  | Six Months EndedJune 30, |         |   | %Increase/(Decrease) |  
|                                                      |  | 2009                     |         |   | 2008                 |   |        
|                                                      |  | (Dollars in millions)    |         |   |                      |  
|Net sales                                             |  | $                        | 1,156.0 |   |                      | $ | 1,357.6 |   |  | (14.8  | )%
|Cost of goods sold                                    |  |                          | 951.4   |   |                      |   | 1,157.0 |   |  | (17.8  | ) 
|                                                      |  |                          |         |   |                      |   |         |   |  |        |   
|Gross profit                                          |  |                          | 204.6   |   |                      |   | 200.6   |   |  | 2.0    |   
|% of net sales (1)                                    |  |                          | 17.7    | % |                      |   | 14.8    | % |  |        |   
|Selling, general and administrative expenses          |  |                          | 57.4    |   |                      |   | 69.1    |   |  | (16.9  | ) 
|% of net sales (1)                                    |  |                          | 5.0     | % |                      |   | 5.1     | % |  |        |   
|Asset impairment charges                              |  |                          | 8.0     |   |                      |   |        |   |  | >100.0 |   
|Net loss on disposal of property, plant and equipment |  |                          | 2.3     |   |                      |   | 0.3     |   |  | >100.0 |   
|                                                      |  |                          |         |   |                      |   |         |   |  |        |   
|Operating income                                      |  |                          | 136.9   |   |                      |   | 131.2   |   |  | 4.3    |   
|% of net sales (1)                                    |  |                          | 11.8    | % |                      |   | 9.7     | % |  |        |   
|Interest expense                                      |  |                          | 76.9    |   |                      |   | 93.0    |   |  | (17.3  | ) 
|Interest income                                       |  |                          | (0.5    | ) |                      |   | (0.3    | ) |  | 66.7   |   
|Gain on debt extinguishment                           |  |                          | (0.8    | ) |                      |   |        |   |  | >100.0 |   
|Other income, net                                     |  |                          | (1.5    | ) |                      |   | (1.4    | ) |  | 7.1    |   
|Income tax provision                                  |  |                          | 9.1     |   |                      |   | 7.8     |   |  | 16.7   |   
|                                                      |  |                          |         |   |                      |   |         |   |  |        |   
|Net income                                            |  | $                        | 53.7    |   |                      | $ | 32.1    |   |  | 67.3   | % 
|                                                      |  |                          |         |   |                      |   |         |   |  |        |   



|(1) | As resin prices can fluctuate significantly, we believe that our gross profit, as well as certain expense items, should not be analyzed solely on a percentage of net sales basis.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Net Sales.Net sales for the six months ended June 30, 2009, decreased $201.6 million, or 14.8%, from the six
months ended June 30, 2008. A large part of the decrease in net sales was due to a decrease in resin costs which are passed through to customers, where the average market price per pound of PET in the U.S. decreased from $0.91 to $0.70 and the
average market price per pound of HDPE in the U.S. decreased from $0.88 to $0.62. Additional contributing factors to the decrease in net sales were the negative impact of changes in exchange rates of $58.6 million, lower unit volume and price
reductions both from operational cost savings shared with our customers and in response to competitive pressure. Container units sold decreased 5.2%.

On an operating segment basis, sales for the six months ended June 30, 2009, in North America decreased $158.9 million, or 13.7%, from the six months ended June 30, 2008, primarily due to a decrease in resin
costs, the negative impact of changes in exchange rates, lower unit volume and price reductions. North American sales in the food and beverage, household, automotive lubricants and personal care/specialty product categories contributed $96.2
million, $29.0 million, $27.5 million and $6.2 million, respectively, to the decrease. Container units sold in North America decreased in the food and beverage, automotive lubricants and personal care/specialty product categories by 7.8%, 17.0% and
5.9%, respectively, and increased in the household product category by 0.5%.



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Sales for the six months ended June 30, 2009, in Europe decreased $38.1 million, or 24.3%, from the
six months ended June 30, 2008. The decrease in sales was primarily due to the negative impact of changes in exchange rates of $27.0 million and a decrease in resin costs.

Sales for the six months ended June 30, 2009, in South America decreased $4.6 million, or 10.4%, from the six months ended June 30, 2008. The
decrease in sales was primarily due to the negative impact of changes in exchange rates of $9.1 million, partially offset by an increase in volume and certain price increases.

Gross Profit. Gross profit for the six months ended June 30, 2009, increased $4.0 million, or 2.0%, from the six months ended June 30,
2008. Gross profit for the six months ended June 30, 2009, increased in North America by $9.7 million, decreased in Europe by $3.5 million and decreased in South America by $2.2 million, when compared to the six months ended June 30, 2008.
The increase in gross profit was primarily due to ongoing productivity initiatives and lower depreciation and amortization expense of $7.3 million, partially offset by a reduction in volume, a strengthening of the U.S. dollar against the euro and
other currencies of $15.0 million and price reductions referred to above. Although there was a net reduction in volume, a significant portion of the volume decrease was in lower margin containers and was partially offset by volume gains in higher
margin containers.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the six months
ended June 30, 2009, decreased $11.7 million, or 16.9%, from the six months ended June 30, 2008. The decrease was primarily due to a decrease in consulting and other professional fees of $3.6 million, a strengthening of the U.S. dollar
against the euro and other currencies of $2.7 million, decreases in equity based compensation expense of $1.5 million, employee severance of $1.4 million, professional fees related to an aborted transaction (as further described in
Termination of Pending Transaction) of $1.2 million and development expenses of $1.0 million and ongoing expense reduction efforts. The decrease in equity based compensation expense was primarily due to charges in the first half of
2008 to extend the term for certain options, for the granting of new options and for the acceleration of vesting of certain options.

Asset Impairment Charges. We identified an indicator of possible impairment of certain assets in the United States and Mexico for the six months ended June 30, 2009. As a result, we evaluated the recoverability of these assets
and determined that the undiscounted future cash flows were below the carrying value of these long-lived assets. Additionally, management had no plans to redeploy the majority of these assets. Accordingly, we adjusted the carrying value of these
long-lived assets to their estimated fair value in accordance with SFAS 144, resulting in impairment charges of $8.0 million for the six months ended June 30, 2009.

Interest Expense. Interest expense for the six months ended June 30, 2009, decreased $16.1 million from the six months ended June 30, 2008. The decrease was primarily due to a decrease in interest
rates (average 90-day LIBOR decreased from 3.0% for the six months ended June 30, 2008, to 1.0% for the six months ended June 30, 2009), partially offset by an increase to interest expense resulting from the discontinuance of hedge
accounting for our interest rate collar and swap agreements of $2.3 million.

Income Tax Provision.Income tax provision for the six
months ended June 30, 2009, increased $1.3 million from the six months ended June 30, 2008. The increase primarily resulted from an increase in unremitted earnings of our Polish subsidiary and valuation allowance adjustments in our Mexican
and Brazilian subsidiaries, partially offset by a reduction in unrecognized tax benefits of foreign subsidiaries.

Net Income.Primarily as a result of the factors discussed above, net income was $53.7 million for the six months ended June 30, 2009, compared to net income of $32.1 million for the six months ended June 30, 2008.

Effect of Changes in Exchange Rates

We generally
conduct business in our foreign operations in local currencies. Accordingly, in general, our results of operations are affected by changes in foreign exchange rates. Income and expense accounts and cash flow items are translated at average monthly
exchange rates during the period. As a result, a decline in the value of the U.S. dollar relative to the local currencies of profitable foreign subsidiaries can have a favorable effect on our profitability, and an increase in the value of the U.S.
dollar relative to the local currencies of profitable foreign subsidiaries can have a negative effect on our profitability. Market conditions for 2009 have resulted in a rise of the U.S. dollar relative to these other local currencies. The strength
of the U.S. dollar relative to other currencies, if not reversed, could negatively impact our profitability, and the impact could be significant.



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We manage foreign currency exposures (primarily to the euro, Canadian dollar, Polish zloty, Brazilian
real, pound sterling and certain non-U.S. subsidiaries purchases of raw materials in U.S. dollars) at the operating unit level. Exposures that cannot be naturally offset within an operating unit are hedged with derivative financial instruments
where possible and cost effective in our judgment. Foreign currency exchange contracts which hedge defined exposures generally mature within twelve months. We do not generally hedge our exposure to translation gains or losses on our non-U.S. net
assets. There were foreign currency exchange contracts of $1.8 million and $10.2 million outstanding as of June 30, 2009, and December 31, 2008, respectively. Included in other income were foreign exchange gains of $1.1 million and $0.5
million for the three months ended June 30, 2009 and 2008, respectively, and foreign exchange gains of $1.7 million and $1.4 million for the six months ended June 30, 2009 and 2008, respectively.

Assets and liabilities are translated at exchange rates in effect at the balance sheet date. Net exchange gains or losses resulting from the translation
of foreign financial statements are recorded as a separate component of Partners Capital (Deficit) under the caption accumulated other comprehensive income. Exchange rate fluctuations increased comprehensive income by $28.1 million
and $12.7 million for the three months ended June 30, 2009 and 2008, respectively, and increased comprehensive income by $4.9 million and $26.6 million for the six months ended June 30, 2009 and 2008, respectively.

Derivatives

During 2007, we entered into two
interest rate collar agreements, which became effective in January 2008, under which we purchased a cap at a Eurodollar rate of 4.70% and sold a floor at a weighted average Eurodollar rate of 2.88%, on $385.0 million of term loans. During 2008, we
entered into four interest rate swap agreements which become effective in August 2009, under which we will receive variable interest based on the Eurodollar rate and pay fixed interest at a weighted average rate of 4.08%, on $350.0 million of term
loans. The interest rate collar and swap agreements were accounted for as cash flow hedges and were highly effective, as defined in SFAS 133, Accounting for Derivative Instruments and Hedging Activities, until January 2009 when we
elected to roll over our senior secured term loan in one-month increments to reduce our cash interest, as opposed to continuing to roll over our senior secured term loan in three-month increments to match the terms of the interest rate collar
agreements. We have therefore discontinued hedge accounting for our interest rate collar and swap agreements. The amount recorded in accumulated other comprehensive income (loss) as of the date we discontinued hedge accounting for our interest rate
collar and swap agreements is being recognized as interest expense over the period in which the previously hedged activity continues to occur. Changes in the fair value of the interest rate collar and swap agreements from that date are also being
recognized as interest expense.

The fair value of the derivatives is determined from sources independent of us, including the financial
institutions which are party to the derivative instruments. The fair value of derivatives also considers the credit default risk of the paying party. Since hedge accounting was discontinued in early 2009 for our interest rate collar and swap
agreements, no change in fair value was recorded in other comprehensive income for the six months ended June 30, 2009. The change in fair value on the effective portion of our interest rate cash flow hedges for the six months ended
June 30, 2008, was recorded in other comprehensive income and was an unrealized gain of $3.9 million and $0.1 million for the three and six months ended June 30, 2008, respectively. Of the amount recorded within accumulated other
comprehensive income (loss) as of June 30, 2009, 54% is expected to be recognized in interest expense in the next twelve months.

During 2009, we entered into a $1.2 million foreign currency exchange contract to hedge the exchange rate exposure on a transaction that is denominated in pound sterling; the contract expires within the next three months. This foreign
currency exchange contract is accounted for as a cash flow hedge and is highly effective as defined in SFAS 133. During 2009, we also entered into foreign currency exchange contracts totaling $1.8 million to hedge the exchange rate exposure on
transactions denominated in euros; all of these contracts will have expired within the next three months. These foreign currency exchange contracts were not designated as hedges under SFAS 133.

With respect to our cash flow hedges, we routinely consider the possible impact of counterparty default when assessing whether a hedging relationship
continues to be effective. We have considered the recent market events in determining the impact, if any, of counterparty default on our cash flow hedges. The cash flow hedges that we currently have are with major banking institutions that have not,
in managements opinion, been significantly impacted by the current market conditions. Accordingly, we have concluded that the likelihood of counterparty default is remote.



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Liquidity and Capital Resources

In the six months ended June 30, 2009, we generated $218.1 million from operating activities and funded $71.2 million of investing activities and $42.8 million of financing activities. The cash generated from
operating activities came primarily from our net income and reduction in working capital.

The decrease in working capital, excluding cash,
came from a reduction in inventory due to lower resin costs and changes in the timing of payments for various raw materials at the end of 2008.

Cash paid for property, plant and equipment for the six months ended June 30, 2009, was $71.8 million. Our largest capital spending in the first six months of 2009 included the installation of two new lines to service the east coast
business of a food and beverage customer, the construction of an on-site plant at a large food and beverage customer in Brazil and the construction of an on-site plant for a large household customer in Missouri. All of these projects are expected to
be on line in the second half of 2009.

Cash used for debt repayment was for regular amortization on our term loans and an excess cash flow
payment of $22.8 million as was required by our Credit Agreement (as herein defined) based on our cash generated in 2008.

On May 28,
2009, we entered into the Fourth Amendment to the Credit Agreement (the Amendment), amending our credit agreement, dated as of October 7, 2004 (the Credit Agreement). Pursuant to the Amendment, certain term loan lenders
have agreed to extend the maturity of $1,200.0 million of such term loans, and the LIBOR margin with respect to such extended term loans has been increased. The maturity date and interest margins with respect to those term loans held by lenders that
did not consent to extend the maturity of their term loans remain unchanged. In addition, pursuant to the Amendment, certain revolving credit lenders have agreed to extend the maturity of $112.8 million of revolving credit commitments, and the LIBOR
margin with respect to revolving credit loans made pursuant to such extended revolving credit commitments has been increased. The maturity date, interest margins and commitment fee with respect to those revolving credit commitments held by lenders
that did not consent to extend the maturity of their revolving credit commitments remain unchanged. We also voluntarily reduced the amount of total revolving credit commitments available to us under the Credit Agreement from $250.0 million to $248.0
million.

After giving effect to the Amendment, our Credit Agreement consists of a non-extended senior secured term loan (Term Loan
B) and an extended senior secured term loan (Term Loan C and, together with the Term Loan B, the Term Loans or Term Loan Facility) to the Operating Company in aggregate principal amounts of $613.1 million
and $1,174.7 million ($1,197.0 million outstanding less $22.3 million unamortized discount) as of June 30, 2009, respectively. In addition, after giving effect to the Amendment, our Credit Agreement consists of a non-extended senior secured
revolving credit facility (Non-Extending Revolver) and an extended senior secured revolving credit facility (Extending Revolver and, together with the Non-Extending Revolver, the Revolver) in aggregate principal
amounts of $135.2 million and $112.8 million, respectively. The obligations of the Operating Company and GPC Capital Corp. I (CapCo I) under the Credit Agreement are guaranteed by Holdings and certain domestic subsidiaries of the
Operating Company.

The Term Loan B is payable in quarterly installments and requires payments of $3.1 million in the second half of 2009,
$6.3 million in 2010 and $603.7 million in 2011 (disregarding any mandatory or voluntary prepayments that may reduce such scheduled amortization payments). The final maturity date of the Term Loan B is October 7, 2011. The Term Loan C is
payable in quarterly installments and requires payments of $6.0 million in the second half of 2009, $12.0 million in each of 2010, 2011, 2012 and 2013 and $1,143.0 million in 2014 (disregarding any mandatory or voluntary prepayments that may reduce
such scheduled amortization payments). The final maturity date of the Term Loan C is the earlier of April 5, 2014, and the date that is 91 days prior to the maturity of our 8.50% senior notes due October 2012 if such senior notes have not been
repaid or refinanced in full by such date.



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The Non-Extending Revolver expires on October 7, 2010, and the Extending Revolver expires on the
earlier of October 1, 2013, and the date that is 91 days prior to the maturity of our 8.50% senior notes due October 2012 if such senior notes have not been repaid or refinanced in full by such date. Availability under the Revolver as of
June 30, 2009, was $237.1 million (as reduced by $10.9 million of outstanding letters of credit).

We expect to fund scheduled debt
repayments in 2009 and 2010 from cash flow from operations. Substantially all unused lines of credit have no major restrictions and are provided under notes between us and the respective lending institutions. As of June 30, 2009, we were in
compliance with all covenants in the Credit Agreement.

The Credit Agreement was also amended such that we may not permit our senior
secured debt to covenant compliance EBITDA (as defined below) ratio to exceed (a) 5.50x on the last day of any fiscal quarter ending on or before December 31, 2011; (b) 5.25x on the last day of any fiscal quarter ending on or after
January 1, 2012, and ending on or before December 31, 2012; and (c) 5.00x on the last day of any fiscal quarter thereafter.

As of June 30, 2009, we had outstanding $250.0 million in Senior Notes and $375.0 million in Senior Subordinated Notes co-issued by the Operating Company and CapCo I (collectively, the Notes). The Notes are unconditionally
guaranteed, jointly and severally, by Holdings and certain domestic subsidiaries of the Operating Company and mature on October 7, 2012 (Senior Notes), and October 7, 2014 (Senior Subordinated Notes). Interest on the Senior Notes is
payable semi-annually at 8.50% and interest on the Senior Subordinated Notes is payable semi-annually at 9.875%.

As of June 30, 2009,
our total indebtedness was $2,444.8 million, net of $22.3 million unamortized discount, and our indebtedness net of cash was $2,295.9 million.

The global capital markets continue to experience unprecedented adverse conditions. While we do not expect to draw on our Revolver in 2009, we continually review the condition of banks and institutions providing commitments. One of the
participating institutions in our Revolver, which comprises 5.3% of our available commitments as of June 30, 2009, has recently experienced financial troubles. We do believe the remainder of the banks and institutions would be able to meet
their commitments should we have the need to do so. Management believes our ability to generate cash flow from operations will be adequate to meet anticipated cash requirements to fund working capital, capital spending and other cash needs. We are
closely monitoring our liquidity, as well as the condition of the capital markets, and cannot predict with any certainty the impact on us of further disruptions in these markets.

The Credit Agreement and the indentures governing the Notes contain a number of significant covenants. We believe that these covenants are material terms
of these agreements and that information about the covenants is material to an investors understanding of our financial condition and liquidity. Covenant compliance EBITDA (as defined below) is used to determine our compliance with certain of
these covenants. Any breach of covenants in the Credit Agreement (including those that are tied to financial ratios based on covenant compliance EBITDA) could result in a default under the Credit Agreement and the lenders could elect to declare all
amounts borrowed to be immediately due and payable. Any such acceleration would also result in a default under the indentures. Additionally, these covenants restrict our and our subsidiaries ability to dispose of assets, repay other
indebtedness, incur additional indebtedness, pay dividends, prepay subordinated indebtedness, incur liens, make capital expenditures, investments or acquisitions, engage in mergers or consolidations, engage in transactions with affiliates and
otherwise restrict our activities. Under the Credit Agreement, we are required to satisfy specified financial ratios and tests. The Credit Agreement also requires that up to 50% of excess cash flow (as defined in the Credit Agreement) is applied on
an annual basis to pay down the Term Loans. As of June 30, 2009, we were in compliance with the financial ratios and tests specified in the Credit Agreement.

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



42



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identical calculations, these presentations of covenant compliance EBITDA may not be comparable to other similarly titled measures of other companies. A
reconciliation of net loss to covenant compliance EBITDA is as follows:

Reconciliation of net loss to EBITDA



|                              |  |                                 |       |  
|----------------------------- |  | ------------------------------- | ----- | -
|                              |  | Four QuartersEndedJune 30, 2009 |      
|                              |  | (In millions)                   |      
|Net loss                      |  | $                               | (35.6 | )
|Interest income               |  |                                 | (0.9  | )
|Interest expense              |  |                                 | 164.2 |  
|Income tax provision          |  |                                 | 14.2  |  
|Depreciation and amortization |  |                                 | 169.3 |  
|                              |  |                                 |       |  
|                              | 
|EBITDA                        |  | $                               | 311.2 |  
|                              |  |                                 |       |  

Reconciliation of EBITDA to covenant compliance EBITDA



|                                          |  |                                 |       |  
|----------------------------------------- |  | ------------------------------- | ----- | -
|                                          |  | Four QuartersEndedJune 30, 2009 |      
|                                          |  | (In millions)                   |      
|EBITDA                                    |  | $                               | 311.2 |  
|Asset impairment charges                  |  |                                 | 111.9 |  
|Other non-cash charges (a)                |  |                                 | 9.9   |  
|Fees related to monitoring agreements (b) |  |                                 | 5.0   |  
|Gain on debt extinguishment               |  |                                 | (0.8  | )
|Non-recurring items (c)                   |  |                                 | 28.5  |  
|                                          |  |                                 |       |  
|                                          | 
|Covenant compliance EBITDA                |  | $                               | 465.7 |  
|                                          |  |                                 |       |  



|(a) | Represents the net loss on disposal of fixed assets and stock-based compensation expense.
|--- | -----------------------------------------------------------------------------------------

|(b) | Represents annual fees paid to Blackstone Management Partners III L.L.C. and a limited partner of Holdings under monitoring agreements.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------

|(c) | We are required to adjust EBITDA, as defined above, for the following non-recurring items as defined in the Credit Agreement:
|--- | -----------------------------------------------------------------------------------------------------------------------------



|                                   |  |                                 |     
|---------------------------------- |  | ------------------------------- | ----
|                                   |  | Four QuartersEndedJune 30, 2009
|                                   |  | (In millions)                  
|Reorganization and other costs (i) |  | $                               | 17.3
|Project startup costs (ii)         |  |                                 | 11.2
|                                   |  |                                 |     
|                                   |  | $                               | 28.5
|                                   |  |                                 |     



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|(i) | Represents non-recurring costs related to employee severance, plant closures, professional fees associated with an aborted transaction (as further described in
Termination of Pending Transaction), the hurricanes of Gustav and Ike and other costs defined in the Credit Agreement.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(ii)
Represents costs associated with startups of manufacturing lines to produce new products.

Under applicable debt agreements, our ability to
engage in activities such as incurring additional indebtedness, making investments and paying dividends is also tied to ratios based on covenant compliance EBITDA. The Credit Agreement, as amended, requires that we maintain a senior secured debt to
covenant compliance EBITDA ratio at a maximum of 5.5x for the most recent four-quarter period. For the four quarters ended June 30, 2009, the Operating Companys covenant compliance EBITDA was $465.7 million and the senior secured debt to
covenant compliance EBITDA ratio was 3.6x. Given the level of senior secured debt as of June 30, 2009, the Operating Companys covenant compliance EBITDA could have fallen by $157.9 million to $307.8 million for the four quarters ended
June 30, 2009, and we still would have been in compliance with the covenants in the Credit Agreement. The ability of the Operating Company to incur additional debt and make certain restricted payments under its Notes is tied to a minimum
covenant compliance EBITDA to fixed charges (primarily cash interest expense) ratio of 2.0x, except that the Operating Company may incur certain debt and make certain restricted payments without regard to the ratio, including up to $2.2 billion
under the Credit Agreement and investments equal to 7.5% of the Operating Companys total assets. The covenant compliance EBITDA to fixed charges ratio was 3.0x for the four quarters ended June 30, 2009.

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

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



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



| |  |  | 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 (as defined therein) or by any employee stock ownership plan upon that persons death, disability, retirement or termination of employment or other circumstances with annual dollar
limitations.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

For the fiscal year 2009, we expect to incur capital
expenditures ranging from $140 million to $160 million. However, total capital expenditures will depend on the size and timing of growth related opportunities. Our principal source of cash to fund ongoing operations and capital requirements has been
and is expected to continue to be cash flow from operations. Management believes that cash flow from operations will be sufficient to fund our ongoing operations and foreseeable capital requirements.

Contractual Obligations and Commitments

The
following table sets forth, as of June 30, 2009, our significant contractual obligations and commitments which have experienced significant changes since December 31, 2008. This table reflects changes directly related to the debt
refinancing under the Fourth Amendment to the Credit Agreement which extended debt maturities.



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|                                         |  |                        |           |      |   |              |  |              |         |                |   |         |  |   |          
|---------------------------------------- |  | ---------------------- | --------- | ---- | - | ------------ |  | ------------ | ------- | -------------- | - | ------- |  | - | ---------
|                                         |  | Payments Due by Period
|                                         |  | Total                  |           | 2009 |   | 2010 and2011 |  | 2012 and2013 |         | 2014 andbeyond
|                                         |  | (In thousands)        
|Contractual Obligations                  |  |                        |           |      |   |              |  |              |         |                |   |         |  |   |          
|Long-term debt, excluding capital leases |  | $                      | 2,426,362 |      | $ | 17,251       |  | $            | 627,469 |                | $ | 264,830 |  | $ | 1,516,812
|Interest payments (a)                    |  |                        | 729,439   |      |   | 89,441       |  |              | 334,342 |                |   | 255,714 |  |   | 49,942   
|                                         |  |                        |           |      |   |              |  |              |         |                |   |         |  |   |          
|                                         |  | $                      | 3,155,801 |      | $ | 106,692      |  | $            | 961,811 |                | $ | 520,544 |  | $ | 1,566,754
|                                         |  |                        |           |      |   |              |  |              |         |                |   |         |  |   |          



|(a) | Interest payments are calculated based upon our amended Credit Agreement.
|--- | -------------------------------------------------------------------------

Off-Balance Sheet Arrangements

Other than letter of credit agreements and operating leases, as of June 30, 2009, we
did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of SEC Regulation S-K. We had letter of credit agreements outstanding in the amount of $10.9 million and $12.4 million as of June 30, 2009, and
December 31, 2008, respectively.

We have entered into agreements with an unrelated third-party for the financing of specific accounts
receivable of certain foreign subsidiaries. The financing of accounts receivable under these agreements is accounted for as a sale of receivables in accordance with SFAS 140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities. Under the terms of the financing agreements, we transfer ownership of eligible accounts receivable without recourse to the third-party purchaser in exchange for cash. Proceeds on the transfer reflect the face
value of the accounts receivable less a discount. The discount is recorded against net sales on the Consolidated Statement of Operations in the period of the sale. The eligible receivables financed pursuant to this factoring agreement are excluded
from accounts receivable on the Consolidated Balance Sheet and are reflected as cash provided by operating activities on the Consolidated Statement of Cash Flows, while non-eligible receivables remain on the balance sheet with a corresponding
liability established when those receivables are financed. We do not continue to service, administer and collect the eligible receivables under this program. The third-party purchaser has no recourse to us for failure of debtors constituting
eligible receivables to pay when due. We maintain insurance on behalf of the third-party purchaser to cover any losses due to the failure of debtors constituting eligible receivables to pay when due. At June 30, 2009, and December 31,
2008, we had sold $24.1 million and $29.9 million of eligible accounts receivable, respectively, which represent the face amounts of total outstanding receivables at those dates.

Environmental Matters

We are subject to potential loss contingencies resulting from regulation by
various federal, state, local and foreign governmental authorities with respect to the environmental impact of our operating facilities. In the event a known environmental issue is identified, we may incur substantial costs to comply with
environmental laws and regulations. See Note 21 of the Notes to Condensed Consolidated Financial Statements (Unaudited) for further discussion.

Recent
Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS 157, Fair
Value Measurements. This statement establishes a single authoritative definition of fair value, sets out a framework to classify the source of information used in fair value measurements, identifies additional factors that must be disclosed
about assets and liabilities measured at fair value based on their placement in the new framework and modifies the long-standing accounting presumption that the transaction price of an asset or liability equals its initial fair value. In February
2008, the FASB delayed the effective date for certain non-financial assets and liabilities until January 1, 2009. We adopted SFAS 157 effective January 1, 2008, for financial assets and liabilities (see Note 11 of the Notes to Condensed
Consolidated Financial Statements (Unaudited) for further discussion). We adopted SFAS 157 for certain



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non-financial assets and liabilities effective January 1, 2009, and the adoption had no impact on our financial statements as it relates to these assets
and liabilities.

In March 2008, the FASB issued SFAS 161, Disclosures about Derivative Instruments and Hedging Activities. The
new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entitys financial position, financial
performance and cash flows. It requires disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also requires more information about an entitys liquidity by requiring disclosure of derivative
features that are credit riskrelated, and requires cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments. We adopted SFAS 161 effective January 1, 2009 (see
Note 12 of the Notes to Condensed Consolidated Financial Statements (Unaudited) for further discussion).

In December 2008, the FASB issued
Staff Position FAS 132(R)-1 (FSP 132(R)-1), Employers Disclosures about Postretirement Benefit Plan Assets, which requires enhanced disclosures of the plan assets of an employers defined benefit pension or other
postretirement benefit plans. The disclosures required under FSP 132(R)-1 will include information regarding the investment allocation decisions made for plan assets, the fair value of each major category of plan assets disclosed separately for
pension plans and other postretirement benefit plans and the inputs and valuation techniques used to measure the fair value of plan assets that would be similar to the disclosures about fair value measurements required by SFAS 157. The disclosures
in FSP 132(R)-1 are effective for fiscal years ending after December 15, 2009. We are currently evaluating the impact that the adoption of FSP 132(R)-1 may have on our financial statements.

In April 2009, the FASB issued Staff Position FAS 107-1 and Accounting Principles Board Opinion 28-1, Interim Disclosures about Fair Value of
Financial Instruments. This pronouncement requires disclosures about fair value of financial instruments for interim reporting periods that were previously only required in annual financial statements. This pronouncement is effective for
interim periods ending after June 15, 2009. We adopted this pronouncement effective June 30, 2009 (see Note 11 of the Notes to Condensed Consolidated Financial Statements (Unaudited) for further discussion).

In May 2009, the FASB issued SFAS 165, Subsequent Events. SFAS 165 establishes general standards of accounting for and disclosure of events
that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 is effective for interim and annual fiscal periods ending after June 15, 2009. We adopted SFAS 165 effective
June 30, 2009, and the adoption had no impact on our financial statements.

In June 2009, the FASB issued SFAS 166, Accounting
for Transfers of Financial Assets, an amendment of SFAS 140. SFAS 166 amends SFAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities  a replacement of FASB Statement 125, to
improve the relevance, representational faithfulness and comparability of the information that a reporting entity provides in its financial reports about a transfer of financial assets, the effects a transfer will have on its financial performance
and cash flows and any transferors continuing involvement in transferred financial assets. This statement is effective for interim and annual reporting periods that begin after November 15, 2009. We are currently evaluating the impact
that the adoption of SFAS 166 may have on our financial statements.

In June 2009, the FASB issued SFAS 168, FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. This statement establishes the FASB Accounting Standards Codification (Codification) as the single source of authoritative nongovernmental GAAP,
superseding existing pronouncements published by the FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and other accounting bodies. This statement establishes only one level of authoritative GAAP. All other
accounting literature will be considered non-authoritative. The Codification reorganizes the GAAP pronouncements into accounting topics and displays them using a consistent structure. This statement is effective for financial statements issued for
interim and annual periods ending after September 15, 2009. We adopted SFAS 168 effective July 1, 2009, and will make the required disclosures beginning with our Quarterly Report on Form 10-Q for the period ending September 30, 2009.

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



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Termination of Pending Transaction

On July 31, 2009, Hicks Acquisition Company I, Inc. (HACI) exercised its right under the First Amendment to the Equity Purchase Agreement between HACI and the Companys partners and the Company,
including GPC Capital Corp. II, to terminate the Equity Purchase Agreement.



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

The quantitative and qualitative disclosures about market risk are discussed in Part II, Item 7A in the Annual Report on Form 10-K of Holdings for the fiscal year ended December 31, 2008. Other than as set forth below, there have
been no material changes in information reported since the year ended December 31, 2008.

Interest Rate Risk

The following table sets forth our long- and short-term debt commitments outstanding as of June 30, 2009. For variable rate debt obligations, the
table presents principal cash flows and related actual weighted average interest rates as of June 30, 2009. For fixed rate debt obligations, the table presents principal cash flows and related weighted average interest rates by maturity dates.
This table has been updated to reflect changes directly related to the debt refinancing under the Fourth Amendment to the Credit Agreement which extended debt maturities.



|                                                       |  |                                                                                       |        |   |                        |   |        |      |  |   |         |   |  |      |         |   |            |   |       |       |  |   |           |   |  |   |           |     |  |   |          
|------------------------------------------------------ |  | ------------------------------------------------------------------------------------- | ------ | - | ---------------------- | - | ------ | ---- |  | - | ------- | - |  | ---- | ------- | - | ---------- | - | ----- | ----- |  | - | --------- | - |  | - | --------- | --- |  | - | ---------
|                                                       |  | Expected Maturity Date of Long-Term Debt (Including Current Portion) at June 30, 2009 |        |   | Fair ValueJune 30,2009
|                                                       |  | 2009                                                                                  |        |   | 2010                   |   |        | 2011 |  |   | 2012    |   |  | 2013 |         |   | Thereafter |   |       | Total |  |  
|                                                       |  | (Dollars in thousands)                                                               
|Interest rate sensitive liabilities:                   |  |                                                                                       |        |   |                        |   |        |      |  |   |         |   |  |      |         |   |            |   |       |       |  |   |           |   |  |   |           |     |  |   |          
|Variable rate borrowings, including short-term amounts |  | $                                                                                     | 9,419  |   |                        | $ | 14,713 |      |  | $ | 611,276 |   |  | $    | 7,343   |   |            | $ | 7,403 |       |  | $ | 1,141,812 |   |  | $ | 1,791,966 | (a) |  | $ | 1,768,630
|Average interest rate                                  |  |                                                                                       | 8.25   | % |                        |   | 5.94   | %    |  |   | 2.68    | % |  |      | 7.15    | % |            |   | 7.15  | %     |  |   | 7.15      | % |  |   | 5.62      | %   |  |   |          
|Fixed rate borrowings                                  |  | $                                                                                     | 10,806 |   |                        | $ | 11,091 |      |  | $ | 5,727   |   |  | $    | 250,232 |   |            | $ | 9     |       |  | $ | 375,000   |   |  | $ | 652,865   |     |  | $ | 617,865  
|Average interest rate                                  |  |                                                                                       | 16.13  | % |                        |   | 9.23   | %    |  |   | 7.73    | % |  |      | 8.50    | % |            |   | 3.96  | %     |  |   | 9.88      | % |  |   | 9.42      | %   |  |   |          
|Total                                                  |  | $                                                                                     | 20,225 |   |                        | $ | 25,804 |      |  | $ | 617,003 |   |  | $    | 257,575 |   |            | $ | 7,412 |       |  | $ | 1,516,812 |   |  | $ | 2,444,831 |     |  | $ | 2,386,495
|                                                       |  |                                                                                       |        |   |                        |   |        |      |  |   |         |   |  |      |         |   |            |   |       |       |  |   |           |   |  |   |           |     |  |   |          



|(a) | Net of $22.3 million unamortized discount.
|--- | ------------------------------------------

Based on the
outstanding amount of our variable-rate indebtedness at June 30, 2009, a one percentage point change in the interest rates for our variable-rate indebtedness would impact annual interest expense by an aggregate of approximately $2.1 million,
after taking into account the outstanding notional amount of our interest rate collar agreements at June 30, 2009.



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Derivatives

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



|                                     |  |                |         |   |                  |   |         |  
|------------------------------------ |  | -------------- | ------- | - | ---------------- | - | ------- | -
|                                     |  | June 30,2009   |         |   | December 31,2008 |  
|                                     |  | (In thousands) |        
|Interest rate collar agreements:     |  |                |         |   |                  |   |         |  
|Notional amount                      |  | $              | 385,000 |   |                  | $ | 385,000 |  
|Fair value  liability               |  |                | (4,411  | ) |                  |   | (6,436  | )
|Interest rate swap agreements:       |  |                |         |   |                  |   |         |  
|Notional amount                      |  |                | 350,000 |   |                  |   | 350,000 |  
|Fair value  liability               |  |                | (17,212 | ) |                  |   | (16,142 | )
|Foreign currency exchange contracts: |  |                |         |   |                  |   |         |  
|Notional amount                      |  |                | 1,753   |   |                  |   | 10,208  |  
|Fair value  asset (liability)       |  |                | 208     |   |                  |   | (240    | )
|Natural gas swap agreements:         |  |                |         |   |                  |   |         |  
|Notional amount                      |  |                | 268     |   |                  |   | 876     |  
|Fair value  liability               |  |                | (138    | ) |                  |   | (250    | )



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



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

As of the end of the period covered by this Quarterly Report on Form 10-Q, management, with the participation of the Companys Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of
the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the
reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms, and that such information is accumulated and
communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objective. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2009, the design and operation of our disclosure controls and
procedures were effective at the reasonable assurance level.



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

There was no change in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2009, that
has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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PART II. OTHER INFORMATION



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

For a
description of our legal proceedings, see Note 15 of the Notes to the Condensed Consolidated Financial Statements (Unaudited) which is incorporated by reference in response to this item.



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

In addition to the
other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. Risk Factors in Holdings Annual Report on Form 10-K for the year ended December 31, 2008, which could
materially affect our business, financial condition or future results. The risk factors in Holdings Annual Report on Form 10-K have not materially changed.



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



| |  |                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | -------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |               
| |  | Exhibit 2.1    |  | First Amendment to the Equity Purchase Agreement by and between GrahamPackaging Holdings Company and Hicks Acquisition Company I, Inc.(incorporated herein by reference to
Exhibit 2.1 to Form 8-K filed by theCompany on January 28, 2009 (File No. 333-53603-03)).                                                                                                                                                                                          
| |  |               
| |  | Exhibit 3.1    |  | Certificate of Limited Partnership of Graham Packaging Holdings Company(incorporated herein by reference to Exhibit 3.5 to the Registration Statementon Form S-4 filed by the
Company on July 13, 1998 (File No. 333-53603-03)).                                                                                                                                                                                                                              
| |  |               
| |  | Exhibit 3.2    |  | Fifth Amended and Restated Agreement of Limited Partnership of GrahamPackaging Holdings Company dated as of February 2, 1998 (incorporatedherein by reference to Exhibit 3.6 to
the Registration Statement on Form S-4filed by the Company on May 26, 1998 (File No. 333-53603-03)).                                                                                                                                                                          
| |  |               
| |  | Exhibit 10.1   |  | Fourth Amendment to Credit Agreement, dated as of May 28, 2009, among GrahamPackaging Holdings Company, Graham Packaging Company, L.P., as the borrower,GPC Capital Corp. I, as
the co-borrower, the lenders named therein andDeutsche Bank AG Cayman Islands Branch, as administrative agent for the lenders(incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-Kfiled by the Company on May
29, 2009 (File No. 333-53603-03)).
| |  |               
| |  | Exhibit 10.2** |  | Option Agreement, dated as of June 17, 2009, between Graham Packaging HoldingsCompany and Mark S. Burgess (incorporated herein by reference to Exhibit 10.1 to theCurrent Report
on Form 8-K filed by the Company on June 19, 2009 (File No. 333-53603-03)).                                                                                                                                                                                                  
| |  |               
| |  | Exhibit 31.1*  |  | Certification required by Rule 15d-14(a).                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  |               
| |  | Exhibit 31.2*  |  | Certification required by Rule 15d-14(a).                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  |               
| |  | Exhibit 32.1*  |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                        
| |  |               
| |  | Exhibit 32.2*  |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                        



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

|** |  Indicates a management contract or compensatory plan arrangement.
|-- | -------------------------------------------------------------------



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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: August 3, 2009



|                                  |  | 
|--------------------------------- |  | 
|GRAHAM PACKAGING HOLDINGS COMPANY
|(Registrant)                      |  | 



|    |  |                        
|--- |  | -----------------------
|By: |  | /s/ David W. Bullock   
|    |  | David W. Bullock       
|    |  | Chief Financial Officer



|    |  |                                        
|--- |  | ---------------------------------------
|By: |  | /s/ William E. Hennessey               
|    |  | William E. Hennessey                   
|    |  | Vice President and Corporate Controller



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EXHIBIT LIST



|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                                                                                                                                             
|2.1            |  | First Amendment to the Equity Purchase Agreement by and between Graham Packaging Holdings Company and Hicks Acquisition Company I, Inc. (incorporated herein by reference to Exhibit 2.1 to Form
8-K filed by the Company on January 28, 2009 (File No. 333-53603-03)).                                                                                                                                                                                            
|               | 
|3.1            |  | Certificate of Limited Partnership of Graham Packaging Holdings Company (incorporated herein by reference to Exhibit 3.5 to the Registration Statement on Form S-4 filed by the Company on
July 13, 1998 (File No. 333-53603-03)).                                                                                                                                                                                                                                 
|               | 
|3.2            |  | Fifth Amended and Restated Agreement of Limited Partnership of Graham Packaging Holdings Company dated as of February 2, 1998 (incorporated herein by reference to Exhibit 3.6 to the
Registration Statement on Form S-4 filed by the Company on May 26, 1998 (File No. 333-53603-03)).                                                                                                                                                                            
|               | 
|10.1           |  | Fourth Amendment to Credit Agreement, dated as of May 28, 2009, among Graham Packaging Holdings Company, Graham Packaging Company, L.P., as the borrower, GPC Capital Corp. I, as the co-borrower,
the lenders named therein and Deutsche Bank AG Cayman Islands Branch, as administrative agent for the lenders (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Company on May 29, 2009 (File No.
333-53603-03)).
|               | 
|10.2**         |  | Option Agreement, dated as of June 17, 2009, between Graham Packaging Holdings Company and Mark S. Burgess (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K
filed by the Company on June 19, 2009 (File No. 333-53603-03)).                                                                                                                                                                                                     
|               | 
|31.1*          |  | Certification required by Rule 15d-14(a).                                                                                                                                                                                                                                                                                                                                                                                                                          
|               | 
|31.2*          |  | Certification required by Rule 15d-14(a).                                                                                                                                                                                                                                                                                                                                                                                                                          
|               | 
|32.1*          |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                            
|               | 
|32.2*          |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                            



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

|** |  Indicates a management contract or compensatory plan arrangement.
|-- | -------------------------------------------------------------------



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