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 July 1, 2001

                                       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          (I.R.S. Employer Identification No.)
incorporation or organization)

                           2401 Pleasant Valley Road
                              York, Pennsylvania
                   (Address of principal executive offices)
                                     17402
                                  (zip code)
                                (717) 849-8500
             (Registrant's telephone number, including area code)

Indicate by checkmark 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 [X] No [ ]


                                      1
<PAGE>


                       GRAHAM PACKAGING HOLDINGS COMPANY
                                     INDEX


                         PART I. FINANCIAL INFORMATION


                                                                   Page Number
                                                                   -----------
Item 1: Condensed Consolidated Financial Statements:

        CONDENSED CONSOLIDATED BALANCE SHEETS -
           At July 1, 2001 and December 31, 2000....................    3

        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS -
           For the Three Months and Six Months Ended
           July 1, 2001 and July 2, 2000...........................     4

        CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
           (DEFICIT) - For the Year Ended December 31, 2000 and
           Six Months Ended July 1, 2001...........................     5

        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - For the
            Six Months Ended July 1, 2001 and July 2, 2000.........     6

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.......     7

Item 2: Management's Discussion and Analysis of Financial
            Condition and Results of Operations....................     13

Item 3: Quantitative and Qualitative Disclosures
            About Market Risk.....................................      21

                          PART II. OTHER INFORMATION

Item 6: Exhibits and Reports on Form 8-K..........................      22

Signature:........................................................      23


                                      2
<PAGE>


PART I.  FINANCIAL INFORMATION

Item 1.   Condensed Consolidated Financial Statements


                       GRAHAM PACKAGING HOLDINGS COMPANY
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)

<TABLE>
<CAPTION>

                                                          July 1,       December 31,
                                                           2001            2000
                                                       ------------    ------------
                                                               (in thousands)
ASSETS
<S>                                                    <C>            <C>
Current assets:
   Cash and cash equivalents .......................   $     5,145    $     9,844
   Accounts receivable, net ........................       120,545        112,329
   Inventories .....................................        67,155         65,401
   Prepaid expenses and other current assets .......        11,790         12,572
                                                       -----------    -----------
Total current assets ...............................       204,635        200,146
Property, plant and equipment:
   Property, plant and equipment ...................     1,042,897      1,012,580
   Less accumulated depreciation ...................       461,411        440,787
                                                       -----------    -----------
Property, plant and equipment, net .................       581,486        571,793
Other assets .......................................        40,399         49,360
                                                       -----------    -----------
Total assets .......................................   $   826,520    $   821,299
                                                       ===========    ===========

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Current liabilities:
   Accounts payable and accrued expenses ...........   $   185,331    $   213,819
   Current portion of long-term debt ...............        27,522         27,359
                                                       -----------    -----------
Total current liabilities ..........................       212,853        241,178
Long-term debt .....................................     1,042,957      1,032,820
Other non-current liabilities ......................        10,951         11,618
Minority interest ..................................         2,052             62
Commitments and contingent liabilities (see Note 10)          --             --
Partners' capital (deficit):
   Partners' capital (deficit) .....................      (391,327)      (433,997)
   Notes receivable for ownership interests ........        (2,293)        (1,147)
   Accumulated other comprehensive income (loss) ...       (48,673)       (29,235)
                                                       -----------    -----------
Total partners' capital (deficit) ..................      (442,293)      (464,379)
                                                       -----------    -----------
Total liabilities and partners' capital (deficit) ..   $   826,520    $   821,299
                                                       ===========    ===========
</TABLE>

              See accompanying notes to the financial statements.


                                      3
<PAGE>

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

<TABLE>
<CAPTION>

                                                               Three Months Ended            Six Months Ended
                                                               ------------------            ----------------
                                                          July 1, 2001   July 2, 2000   July 1, 2001  July 2, 2000
                                                          ------------   ------------   ------------  ------------
                                                                               (in thousands)
<S>                                                       <C>            <C>            <C>           <C>
Net sales ..............................................   $ 241,438      $ 203,790      $ 471,621     $ 408,778
Cost of goods sold .....................................     198,988        166,799        394,533       336,845
                                                           ---------      ---------      ---------     ---------
Gross profit ...........................................      42,450         36,991         77,088        71,933
Selling, general, and administrative expenses ..........      14,823         12,367         28,954        25,785
Impairment charges .....................................       3,696           --            3,696          --
Special charges and unusual items ......................        --              232            147           652
                                                           ---------      ---------      ---------     ---------
Operating income .......................................      23,931         24,392         44,291        45,496
Interest expense, net ..................................      25,199         25,066         51,206        49,501
Other (income) expense .................................        (115)           133            436           196
Minority interest ......................................          57           (340)            57          (618)
                                                           ---------      ---------      ---------     ---------
Loss before income taxes ...............................      (1,210)          (467)        (7,408)       (3,583)
Income tax (benefit) provision .........................         (36)           266            (22)          414
                                                           ---------      ---------      ---------     ---------
Net loss ...............................................    $ (1,174)     $    (733)     $  (7,386)    $  (3,997)
                                                           =========      =========      =========     =========
</TABLE>
              See accompanying notes to the financial statements.


                                      4
<PAGE>


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

<TABLE>
<CAPTION>

                                                                                  Notes      Accumulated
                                                                   Partners'  Receivable for    Other
                                                                    Capital     Ownership    Comprehensive
                                                                   (Deficit)    Interests    Income (Loss)   Total
                                                                   ---------    ---------    ------------ ----------
                                                                                     (in thousands)
<S>                                                                <C>        <C>            <C>          <C>
Balance at January 1, 2000 ......................................  $(439,123)   $    --      $ (18,848)   $(457,971)
  Net loss for the year .........................................    (45,637)        --           --        (45,637)
  Cumulative translation adjustment .............................       --           --        (10,387)     (10,387)
                                                                                                          ---------
  Comprehensive income (loss) ...................................                                           (56,024)
  Capital contribution ..........................................     50,000       (1,147)        --         48,853
  Recapitalization ..............................................        763         --           --            763
                                                                   ---------    ---------    ---------    ---------
Balance at December 31, 2000 ....................................   (433,997)      (1,147)     (29,235)    (464,379)
  Net loss for the period .......................................     (7,386)        --           --         (7,386)
  Cumulative effect of change in accounting for derivatives .....       --           --            392          392
  Changes in fair value of derivatives ..........................       --           --         (6,420)      (6,420)
  Cumulative translation adjustment .............................       --           --        (13,410)     (13,410)
                                                                                                          ---------
  Comprehensive income (loss) ...................................                                           (26,824)
  Capital contribution ..........................................     50,000       (1,146)        --         48,854
  Recapitalization ..............................................         56         --           --             56
                                                                   ---------    ---------    ---------    ---------
Balance at July 1, 2001 .........................................  $(391,327)   $  (2,293)   $ (48,673)   $(442,293)
                                                                   =========    =========    =========    =========
</TABLE>

             See accompanying notes to the financial statements.


                                      5
<PAGE>



                       GRAHAM PACKAGING HOLDINGS COMPANY
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                     Six Months Ended
                                                                                     ----------------
                                                                                    July 1,     July 2,
                                                                                     2001        2000
                                                                                  ----------   ---------
                                                                                    (in thousands)
<S>                                                                               <C>         <C>
Operating activities:
  Net loss ....................................................................   $ (7,386)   $ (3,997)
  Adjustments to reconcile net loss to net cash (used in) provided by
    operating activities:
    Depreciation and amortization .............................................     35,985      32,363
    Impairment charges ........................................................      3,696        --
    Amortization of debt issuance fees ........................................      2,331       2,264
    Accretion of Senior Discount Notes ........................................      7,265       6,616
    Minority interest .........................................................         57        (618)
    Equity in earnings of joint venture .......................................        246         (39)
    Foreign currency transaction loss .........................................        110         269
    Other non-cash recapitalization expense ...................................         56         423
    Changes in operating assets and liabilities:
      Accounts receivable .....................................................    (10,847)    (19,956)
      Inventories .............................................................     (1,887)    (13,177)
      Prepaid expenses and other current assets ...............................        846        (695)
      Other non-current assets and liabilities ................................       (413)        956
      Accounts payable and accrued expenses ...................................    (34,248)     11,993
                                                                                  --------    --------
Net cash (used in) provided by operating activities ...........................     (4,189)     16,402

Investing activities:
      Net purchases of property, plant and equipment ..........................    (47,980)    (84,092)
      Loan to affiliate .......................................................     (2,606)     (1,136)
      Acquisition of/investment in a business, net of cash acquired............        453        --
      Other ...................................................................        (44)        (52)
                                                                                  --------    --------
Net cash used in investing activities .........................................    (50,177)    (85,280)


Financing activities:
      Net proceeds from issuance of long-term debt ............................      1,334      72,194
      Debt issuance fees ......................................................       --        (1,050)
      Notes for ownership interests ...........................................     (1,146)       --
      Capital contributions ...................................................     50,000        --
                                                                                  --------    --------
Net cash provided by financing activities .....................................     50,188      71,144
Effect of exchange rate changes ...............................................       (521)       (513)
                                                                                  --------    --------
(Decrease) increase in cash and cash equivalents ..............................     (4,699)      1,753
Cash and cash equivalents at beginning of period ..............................      9,844       5,983
                                                                                  --------    --------
Cash and cash equivalents at end of period ....................................   $  5,145    $  7,736
                                                                                  ========    ========
</TABLE>

              See accompanying notes to the financial statements.


                                      6
<PAGE>


                       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 generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X and therefore do
not include all of the information and footnotes required by generally
accepted accounting principles for complete annual financial statements. In
the opinion of management, all adjustments (consisting only of usual recurring
adjustments considered necessary for a fair presentation) are reflected in the
condensed consolidated financial statements. The condensed consolidated
balance sheet as of December 31, 2000 is derived from audited financial
statements. The condensed consolidated financial statements and notes thereto
should be read in conjunction with the consolidated financial statements and
notes thereto for the year ended December 31, 2000. The results of operations
for the three and six months ended July 1, 2001 are not necessarily indicative
of the results to be expected for the full year ending December 31, 2001.

     All entities and assets owned by Holdings are referred to collectively as
the "Company".

Derivatives

     On January 1, 2001 the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities", as amended by SFAS 138. In connection with the adoption of the
new Statement, the Company recorded $0.4 million in Other Comprehensive Income
("OCI") as a cumulative change in accounting for derivatives designated as
cash flow-type hedges prior to adopting SFAS 133.

     The Company enters into interest rate swap agreements to hedge the
exposure to increasing rates with respect to its Senior Credit Agreement. The
differential to be paid or received as a result of these swap agreements is
accrued as interest rates change and recognized as an adjustment to interest
expense related to the Senior Credit Agreement. These interest rate swaps are
accounted for as cash flow hedges. Therefore, the effective portion of the
change in the fair value of the interest rate swaps is recorded within OCI,
$6.4 million for the six months ended July 1, 2001. Hedge ineffectiveness, if
any, is recorded as a component of net income. These interest rate swap
agreements expire at various points through 2003. Treatment of these interest
rate swaps as cash flow hedges is based on Management's best interpretation of
SFAS 133. Certain issues currently under consideration by the Financial
Accounting Standards Board may make it more difficult for the Company's
interest rate swaps to qualify for hedge accounting. If the Company's swaps do
not qualify for hedge accounting, changes in the fair value of these interest
rate swaps will be recorded as a component of net income.

     The Company also enters into forward exchange contracts, when considered
appropriate, to hedge the exchange rate exposure on transactions that are
denominated in a foreign currency. These forward contracts are accounted for
as fair value hedges. During the six months ended July 1, 2001, there was no
net gain or loss recognized in earnings as a result of fair value hedges. The
Company has no outstanding forward exchange contracts as of July 1, 2001.


2.  Debt Arrangements

         Long-term debt consisted of the following:

                                                 July 1,     December 31,
                                                  2001          2000
                                               ---------     ---------
                                                    (in thousands)
         Term loans........................   $  536,925   $  546,900
         Revolving loans ..................      140,500      125,500
         Revolving credit facilities ......        4,563        5,805
         Senior Subordinated Notes ........      225,000      225,000
         Senior Discount Notes ............      143,944      136,680
         Other.............................       19,547       20,294
                                               ----------   ----------
                                               1,070,479    1,060,179
         Less amounts classified as current       27,522       27,359
                                               ---------    ---------
                                              $1,042,957   $1,032,820
                                              ==========   ==========

                                      7
<PAGE>

                      GRAHAM PACKAGING HOLDINGS COMPANY
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

     On February 2, 1998 the Company refinanced the majority of its existing
credit facilities in connection with the 1998 recapitalization and entered
into a senior Credit Agreement (the "Senior Credit Agreement") with a
consortium of banks. The Senior Credit Agreement was amended on August 13,
1998 to provide for an additional Term Loan Borrowing of an additional $175
million and on March 30, 2000 as described below (the "Amendments"). The
Senior Credit Agreement and the Amendments consist of four term loans to
Graham Packaging Company, L. P. (the "Operating Company") with initial term
loan commitments totaling $570 million and two revolving loan facilities to
the Operating Company totaling $255 million. The unused availability of the
revolving loan facilities at July 1, 2001 was $113.3 million. As part of the
Amendments to the Senior Credit Agreement, if certain events of default were
to occur, or if the Company's Net Leverage Ratio were above 5.15:1.0 at
September 30, 2000, Blackstone agreed to make an equity contribution to the
Company through the administrative agent of up to $50 million. An equity
contribution of $50 million was made by the Company's owners to the Company on
September 29, 2000, satisfying Blackstone's first obligation under the
Amendments. The Company's Net Leverage Ratio being above 5.15:1.0 at September
30, 2000 was not an event of default under the Senior Credit Agreement and
Amendments. The March 30, 2000 Amendment also changed the terms under which
the Company can access $100 million of Growth Capital Revolving Loans from a
dollar for dollar equity match to a capital call with various test dates based
on certain leverage tests for quarters ending on or after June 30, 2001. The
March 30, 2000 Amendment provided for up to an additional $50 million equity
contribution by Blackstone; allowed the proceeds of the equity contribution to
be applied to Revolving Credit Loans; and changed certain covenants,
principally to increase the amount of permitted capital expenditures in 2000
and subsequent years. Pursuant to the terms of the Capital Call Agreement, an
additional equity contribution of $50 million was made by the Company's owners
to the Company on March 29, 2001, satisfying Blackstone's final obligation
under the Capital Call Agreement dated as of August 13, 1998, as amended on
March 29, 2000. This equity contribution was made in advance and in
satisfaction of any capital call tests for quarters ending on or after June
30, 2001. The Company used the proceeds of the Capital Calls to reduce its
outstanding Revolving Credit Loans. In addition, the Senior Credit Agreement
and Amendments contain certain affirmative and negative covenants as to the
operations and financial condition of the Company, as well as certain
restrictions on the payment of dividends and other distributions to Holdings.
On July 1, 2001 the Company was in compliance with all covenants.

     Interest paid during the six months ended July 1, 2001 and July 2, 2000,
net of amounts capitalized, totaled $37.0 million and $39.7 million,
respectively.


3.  Inventories

         Inventories consisted of the following:

                                               July 1,           December 31,
                                                 2001                2000
                                           ---------------      ---------------
                                                      (in thousands)
         Finished goods.................    $     47,881         $     43,085
         Raw materials and parts........          19,274               22,316
                                           -------------        -------------

                                            $     67,155         $     65,401
                                            ============         ============


4.  Impairment Charges

     Due to operating losses and cash flow deficits experienced in the
Company's Argentine operations and the loss or reduction of business in
Argentina, the Company evaluated the recoverability of its long-lived assets
in this location. The Company determined that the expected future undiscounted
cash flows were below the carrying value of its long-lived assets. Accordingly,
the Company adjusted the carrying values of these long-lived assets to their
estimated fair values, resulting in an impairment charge of $3.7 million, which
includes $3.1 million of goodwill associated with these assets.


                                      8
<PAGE>


                      GRAHAM PACKAGING HOLDINGS COMPANY
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

5.  Accounts Payable and Accrued Expenses

     Accounts payable and accrued expenses included the following:

                                                  July 1,        December 31,
                                                   2001             2000
                                             --------------    --------------
                                                        (in thousands)
Accounts payable............................  $   111,780      $   146,659
Accrued employee compensation and benefits..       20,454           22,800
Accrued interest............................       19,896           14,962
Other.......................................       33,201           29,398
                                              ------------      -----------
                                              $    185,331      $   213,819
                                              ============      ===========

     For the year ended December 31, 2000, the Company incurred reorganization
costs in North America and Europe of $4.5 million, which included the legal
liability of severing 53 employees. For the six months ended July 1, 2001 the
Company incurred additional costs of $0.1 million. The amount of the
reorganization costs paid and the amount of the remaining accrual as of July
1, 2001 were $3.3 million and $1.3 million, respectively. The remaining
accrual as of July 1, 2001 is included within accrued employee compensation
and benefits, above.


6.  Income Taxes

     The Company does 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. For the Company's foreign operations subject
to tax in their local jurisdictions, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to temporary
differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases and are measured using
enacted tax rates expected to apply to taxable income in the years in which
the temporary differences are expected to reverse. During 2001 and 2000, some
of the Company's various taxable entities incurred additional net operating
losses for which no carryforward benefit has been recognized.


7.  Acquisitions

Purchase of additional 1% interest in Masko Graham Joint Venture

     On March 30, 2001 the Company acquired an additional 1% interest in Masko
Graham Joint Venture ("Masko Graham") for a total interest of 51%. The total
purchase price (including acquisition-related costs) for the entire 51%
interest in the operating assets was $1.4 million, net of liabilities assumed.
The investment was accounted for under the equity method of accounting prior
to March 30, 2001. The acquisition was recorded on March 30, 2001 under the
purchase method of accounting and accordingly, the results of operations of
Masko Graham are consolidated in the financial statements of the Company
beginning on March 30, 2001. The initial purchase price has been allocated to
assets acquired and liabilities assumed based on fair values. Goodwill is
being amortized over 20 years on the straight-line basis. The allocated fair
value of assets acquired and liabilities assumed is summarized as follows (in
thousands):


          Current assets...............................       $     3,743
          Property, plant and equipment................             8,210
          Goodwill.....................................               954
                                                              -----------

          Total........................................            12,907
          Less liabilities assumed.....................            11,474
                                                              -----------
          Net cost of acquisition......................       $     1,433
                                                              ===========


                                      9
<PAGE>

                      GRAHAM PACKAGING HOLDINGS COMPANY
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Pro Forma Information

     The following table sets forth unaudited pro forma results of operations
assuming that the acquisition had taken place on January 1, 2000.


                 Three Months Ended                  Six Months Ended
           --------------------------------   --------------------------------
            July 1, 2001    July 2, 2000       July 1, 2001    July 2, 2000
           --------------------------------   --------------- ----------------
                                      (in thousands)
Net sales   $ 241,438        $ 206,009          $ 474,335       $ 413,156
Net loss       (1,174)            (729)            (7,382)         (3,990)

     These unaudited pro forma results have been prepared for comparative
purposes only and include certain adjustments, such as additional depreciation
expense as a result of a step-up in the basis of fixed assets and increased
interest expense on acquisition debt. They do not purport to be indicative of
the results of operations which actually would have resulted had the
combination been in effect on January 1, 2000, or of future results of
operations of the entities.


8.  Special Charges and Unusual Items

     The special charges and unusual items recorded in the three and six
months ended July 1, 2001 and July 2, 2000 related to stay bonuses and the
granting of certain ownership interests to Management pursuant to the terms of
the 1998 recapitalization. These expenses have been fully recognized over the
three years from the date of the 1998 recapitalization.


9.  Rent Expense

     The Company was a party to various leases involving real property and
equipment during the six months ended July 1, 2001. Total rent expense for
operating leases amounted to $5.3 million and $10.7 million for the three and
six months ended July 1, 2001, respectively.


10.  Contingencies

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


11.  Condensed Operating Company Data

     Condensed financial data for the Operating Company as of July 1, 2001 and
December 31, 2000 was as follows:

                                   July 1,     December 31,
                                    2001          2000
                                 ----------    ----------
                                        (in thousands)

Current assets ............      $ 211,629    $ 207,139
Noncurrent assets .........        617,604      616,659
Total assets ..............        829,233      823,798
Current liabilities .......        212,853      241,178
Noncurrent liabilities ....        912,016      907,820
Partners' capital (deficit)       (295,636)    (325,200)


                                      10
<PAGE>

                      GRAHAM PACKAGING HOLDINGS COMPANY
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

     Condensed financial data for the Operating Company for the three and six
months ended July 1, 2001 and July 2, 2000 was as follows:

                 Three Months Ended                 Six Months Ended
           --------------------------------  --------------------------------
            July 1, 2001    July 2, 2000      July 1, 2001     July 2, 2000
           --------------------------------  ---------------- ---------------
                                       (in thousands)
Net sales ..   $241,438         $203,790           $471,621        $408,778
Gross profit     42,450           36,991             77,088          71,933
Net income..      2,657            2,685                 93           2,801


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


12.  Comprehensive Income (Loss)

     Comprehensive income (loss) for the three and six months ended July 1,
2001 and July 2, 2000 was as follows:

<TABLE>
<CAPTION>

                                                   Three Months Ended                 Six Months Ended
                                             --------------------------------  --------------------------------
                                              July 1, 2001    July 2, 2000      July 1, 2001     July 2, 2000
                                             --------------------------------  ---------------- ---------------
                                                                       (in thousands)
<S>                                           <C>             <C>               <C>              <C>
Net loss.....................................   $ (1,174)       $   (733)         $ (7,386)        $ (3,997)
Cumulative effect of change in accounting
for derivatives..............................       --              --                 392             --
Changes in fair value of derivatives.........       (599)           --              (6,420)            --
Foreign currency.............................     (3,462)         (2,211)          (13,410)          (6,408)
                                                 --------        --------          --------         --------
Comprehensive income (loss)..................   $ (5,235)       $ (2,944)         $(26,824)       $ (10,405)
                                                ========         ========          ========         ========
</TABLE>

13.  Segment Information

     The Company is organized and managed on a geographical basis in three
operating segments: North America, which includes the United States and
Canada, Europe and Latin America. Segment information for the three and six
months ended July 1, 2001 and July 2, 2000 was as follows (in thousands):

<TABLE>
<CAPTION>

                                                                           North                         Latin
                                                                          America        Europe         America         Total
                                                                         ---------      --------       ---------       ------
<S>                    <C>                                             <C>              <C>            <C>          <C>
Net sales              Three Months Ended July 1, 2001                 $  196,499       $ 38,739       $ 6,200      $  241,438
                       Three Months Ended July 2, 2000                    160,554         36,493         6,743         203,790


                       Six Months Ended July 1, 2001                      381,552         77,033        13,036         471,621
                       Six Months Ended July 2, 2000                      321,604         73,055        14,119         408,778


Net income (loss)      Three Months Ended July 1, 2001                      5,944         (3,291)       (3,827)         (1,174)
                       Three Months Ended July 2, 2000                      1,038         (1,506)         (265)           (733)


                       Six Months Ended July 1, 2001                        1,982         (5,467)       (3,901)         (7,386)
                       Six Months Ended July 2, 2000                         (329)        (3,268)         (400)         (3,997)
</TABLE>

                                      11
<PAGE>


                      GRAHAM PACKAGING HOLDINGS COMPANY
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

14.  New Accounting Pronouncements

     On June 29, 2001, Statement of Financial Accounting Standards ("SFAS")
No. 141, "Business Combinations", was approved by the Financial Accounting
Standards Board ("FASB"). SFAS 141 requires that the purchase method of
accounting be used for all business combinations initiated after June 30,
2001. Goodwill and certain intangible assets will remain on the balance sheet
and not be amortized. On an annual basis, and when there is reason to suspect
that their values have been diminished or impaired, these assets must be
tested for impairment, and write-downs may be necessary. The Company is
required to implement SFAS No. 141 on July 1, 2001 and it has not determined
the impact, if any, that this statement will have on its consolidated
financial position or results of operations.

     On June 29, 2001, SFAS No. 142, "Goodwill and Other Intangible Assets",
was approved by the FASB. SFAS No. 142 changes the accounting for goodwill
from an amortization method to an impairment-only approach. Amortization of
goodwill, including goodwill recorded in past business combinations, will
cease upon adoption of this statement. The Company is required to implement
SFAS No. 142 on January 1, 2002 and it has not determined the impact, if any,
that this statement will have on its consolidated financial position or
results of operations.


                                      12
<PAGE>

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 the Company's future
financial position, economic performance and results of operations, as well as
the Company's business strategy, budgets and projected costs and plans and
objectives of management for future operations, and the information referred
to under "Quantitative and Qualitative Disclosures About Market Risk" (Part I,
Item 3), are forward-looking statements. In addition, forward-looking
statements generally can be identified by the use of forward-looking
terminology such as "may", "will", "expect", "intend", "estimate",
"anticipate", "believe", or "continue" or the negative thereof or variations
thereon or similar terminology. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, the
Company can give no assurance that such expectations will prove to have been
correct. Important factors that could cause actual results to differ
materially from the issuers' expectations include, without limitation, the
Company's exposure to fluctuations in resin prices and its dependence on resin
supplies, competition in the Company's markets, including the impact of
possible new technologies, the high degree of leverage and substantial debt
service obligations of the Operating Company and Holdings, the restrictive
covenants contained in instruments governing indebtedness of the Company, a
decline in the domestic motor oil business, risks associated with the
Company's international operations, the Company's dependence on significant
customers and the risk that customers will not purchase the Company's products
in the amounts expected by the Company under their requirements contracts, the
Company's dependence on key management and its labor force and the material
adverse effect that could result from the loss of their services, risks
associated with environmental regulation, risks associated with possible
future acquisitions, and the possibility that the Company may not be able to
achieve success in developing and expanding its business, including its
hot-fill PET plastic container business. See "Business - Certain Risks of the
Business" in Holdings' Annual Report on Form 10-K for the fiscal year ended
December 31, 2000. All forward-looking statements attributable to the Company,
or persons acting on its behalf, are expressly qualified in their entirety by
the cautionary statements set forth in this paragraph.


Overview

     The Company is a worldwide leader in the design, manufacture and sale of
customized blow molded plastic containers for the branded food and beverage,
household and personal care, and automotive lubricants markets with 61 plants
throughout North America, Europe and Latin America. The Company's primary
focus is to operate in select markets that will position it to benefit from
the growing conversion to high performance plastic packaging from more
commodity packaging. The Company targets branded consumer product
manufacturers for whom customized packaging design is a critical component in
their efforts to differentiate their products to consumers. The Company
initially pursues these attractive product areas with one or two major
consumer products companies in each category that it expects will lead the
conversion to plastic packaging for that category. The Company utilizes its
innovative design, engineering and technological capabilities to deliver
highly customized, high performance products to its customers in these areas
in order to distinguish and increase sales of their branded products. The
Company collaborates with its customers through joint initiatives in product
design and cost reduction, and innovative operational arrangements, which
include on-site manufacturing facilities.

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

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

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

     o    make the correct investments in plant and technology necessary to
          satisfy the two 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
market because of the continued conversion to and growing consumer demand for
plastic packaging. This has included a significant growth in demand for
hot-fill PET containers for juices, juice

                                      13
<PAGE>

drinks, sport drinks, teas and other food products. Since the beginning of
1997, the Company has invested over $250 million in capital expenditures to
expand its technology, machinery and plant structure to prepare for what it
believed would be the growth in the hot-fill PET area. For the year ended
December 31, 2000, the Company's sales of hot-fill PET containers had grown to
$246.6 million from $68.2 million in 1996. The Company has also experienced
significant growth in containers for drinkable yogurts as these single-serve
products increase in popularity globally, particularly due to the market
leadership of Graham's key customer Danone.

     The Company's household and personal care net sales continue to grow, as
package conversion trends continue from other packaging forms in some of its
product lines. The Company continues to benefit as liquid fabric care
detergents, hard-surface cleaners and liquid automatic dishwashing detergents,
which are packaged in plastic containers, capture an increased share from
powdered detergents and cleaners, which are predominantly packaged in
paper-based containers. The Company has upgraded its proprietary machinery in
the United States to new larger blow molders to standardize production lines,
improve flexibility and reduce manufacturing costs.

     The Company's North American one-quart motor oil container product line
is in a mature industry. The Company has been able to partially offset pricing
pressures by renewing or extending contracts, improving manufacturing
efficiencies, line speeds, labor efficiency and inventory management and
reducing container weight and material spoilage. Unit volume in the domestic
one-quart motor oil industry has continued to decline at an average annual
rate of 1% to 2% for the past several years. Management believes this decline
will continue for the next several years but believes there are significant
volume opportunities for automotive product business in foreign countries,
particularly those in Latin America.

     Consistent with its strategy to expand in selected international areas,
the Company currently operates 26 facilities, either on its own or through
joint ventures, in Argentina, Belgium, Brazil, Canada, France, Germany,
Hungary, Italy, Mexico, Poland, Spain, Turkey and the United Kingdom. During
the latter portion of 2000, the Company experienced a decline in its
operations in the United Kingdom. This reduction in business was the result of
the loss of a key customer in that location. Also in 2000, the Company
experienced a downturn in financial performance in certain plants in France
and in 2001, in Argentina. Although Management is addressing these issues,
some of these performance declines are considered to be other than temporary.
Given the recent troubled economy in Latin America, Management closely
monitors its operations and investment there.

     For the six months ended July 1, 2001, 82% of the Company's net sales
were generated by the top twenty customers, the majority of which are under
long-term contracts with terms ranging from three to twelve years; the
remainder of which were generated by customers with whom the Company has been
doing business for over 16 years on average. Prices under these arrangements
are typically tied to market standards and, therefore, vary with market
conditions. In general, the contracts are requirements contracts that do not
obligate the customer to purchase any given amount of product from the
Company.

     Based on industry data, the following table summarizes average market
prices per pound of polyethylene terephthalate, or PET, and high-density
polyethylene, or HDPE, resins in North America over the following three and
six month periods:

<TABLE>
<CAPTION>
                                               Three Months Ended                  Six Months Ended
                                         --------------------------------   --------------------------------
                                          July 1, 2001     July 2, 2000      July 1, 2001    July 2, 2000
                                         ---------------- ---------------   --------------- ----------------
<S>                                         <C>              <C>                   <C>             <C>

PET..................................       $  0.70          $ 0.62                $  0.67         $  0.59
HDPE.................................          0.47            0.47                   0.47            0.45

</TABLE>

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

     The Company does not pay U.S. federal income taxes under the provisions
of the Internal Revenue Code, as the applicable income or loss is included in
the tax returns of its partners. The Company may make tax

                                      14
<PAGE>

distributions to its partners to reimburse them for such tax obligations, if
any. The Company's foreign operations are subject to tax in their local
jurisdictions. Most of these entities have historically incurred net operating
losses.

Results of Operations

     The following tables set forth the operating segments and product
categories for the Company's net sales (in millions) and such net sales
expressed as a percentage of total revenues:

<TABLE>
<CAPTION>

                                                Three Months Ended                         Six Months Ended
                                     ----------------------------------------- ------------------------------------------
                                        July 1, 2001         July 2, 2000         July 1, 2001          July 2, 2000

                                     -------------------- -------------------- -------------------- ---------------------
<S>                                  <C>          <C>     <C>          <C>     <C>          <C>     <C>          <C>

North America....................    $   196.5     81.4%  $   160.6     78.8%  $   381.6     80.9%  $   321.6     78.7%
Europe...........................         38.7     16.0        36.5     17.9        77.0     16.3        73.1     17.9
Latin America....................          6.2      2.6         6.7      3.3        13.0      2.8        14.1      3.4
                                      --------    -----    --------    -----    --------    -----    --------    -----
Total Net Sales..................    $   241.4    100.0%  $   203.8    100.0%  $   471.6    100.0%  $   408.8    100.0%
                                     =========    =====   =========    =====   =========    =====   =========    =====

</TABLE>

<TABLE>
<CAPTION>

                                                Three Months Ended                         Six Months Ended
                                     ----------------------------------------- ------------------------------------------
                                        July 1, 2001         July 2, 2000         July 1, 2001          July 2, 2000

                                     -------------------- -------------------- -------------------- ---------------------
<S>                                  <C>          <C>     <C>          <C>     <C>          <C>     <C>          <C>

Food & Beverage..................    $   135.8     56.2%  $  97.7       47.9%  $   260.9     55.3%  $   196.7     48.1%
Household and Personal Care......         52.3     21.7      51.1       25.1       105.8     22.5       103.6     25.3
Automotive.......................         53.3     22.1      55.0       27.0       104.9     22.2       108.5     26.6
                                       -------    ------  -------      -----     -------    -----    --------    -----
Total Net Sales..................    $   241.4    100.0%  $ 203.8      100.0%  $   471.6    100.0%  $   408.8    100.0%
                                     =========    =====   =========    =====   =========    =====   =========    =====

</TABLE>


Three Months Ended July 1, 2001 Compared to Three Months Ended July 2, 2000

Net Sales. Net sales for the three months ended July 1, 2001 increased $37.6
million or 18.4% to $241.4 million from $203.8 million for the three months
ended July 2, 2000. The increase in sales was primarily due to a 26.8%
increase in units sold, principally due to additional food and beverage
business where units increased by 52.2%, and an increase in resin prices. On a
geographic basis, sales for the three months ended July 1, 2001 in North
America were up $35.9 million or 22.4% from the three months ended July 2,
2000. The North American sales increase included higher units sold of 26.9%.
North American sales in the food and beverage business and the household and
personal care business contributed $34.6 million and $1.9 million,
respectively, to the increase, while sales in the automotive business were
$0.6 million lower. Units sold in North America increased by 64.0% in food and
beverage, but decreased by 0.4% in household and personal care and 1.8% in
automotive. Sales for the three months ended July 1, 2001 in Europe were up
$2.2 million or 6.0% from the three months ended July 2, 2000. The European
sales increase included higher units sold of 28.6%. The growth in sales due to
capital investments made in recent periods was offset by exchange rate changes
of approximately $2.4 million for the three months ended July 1, 2001 compared
to the three months ended July 2, 2000. Sales for the three months ended July
1, 2001 in Latin America were down $0.5 million or 7.5% from the three months
ended July 2, 2000. The decrease in the Latin American sales was primarily due
to exchange rate changes of approximately $1.4 million, offset by a 2.0%
increase in units sold.

Gross Profit. Gross profit for the three months ended July 1, 2001 increased
$5.5 million to $42.5 million from $37.0 million for the three months ended
July 2, 2000. The increase in gross profit resulted primarily from the higher
sales volume as compared to the prior year. Gross profit for the three months
ended July 1, 2001 increased $5.0 million in North America, $0.4 million in
Europe and $0.1 million in Latin America when compared to the three months
ended July 2, 2000.

Selling, General & Administrative Expenses. Selling, general and
administrative expenses for the three months ended July 1, 2001 increased $2.4
million to $14.8 million from $12.4 million for the three months ended July 2,
2000. The increase in 2001 selling, general and administrative expenses is due
primarily to global reorganization charges and overall growth of the business.
As a percent of sales, selling, general and administrative expenses remained
at 6.1% of sales for each of the three months ended July 1, 2001 and the three
months ended July 2, 2000.

                                      15
<PAGE>

Impairment Charges. Due to operating losses and cash flow deficits experienced
in the Company's Argentine operations and the loss or reduction of business
in Argentina, the Company evaluated the recoverability of its long-lived
assets in this location. The Company determined that the expected future
undiscounted cash flows were below the carrying value of its long-lived assets.
Accordingly, the Company adjusted the carrying values of these long-lived
assets to their estimated fair values, resulting in an impairment charge of
$3.7 million for the three months ended July 1, 2001, which includes $3.1
million of goodwill associated with these assets.

Special Charges and Unusual Items. No special charges and unusual items were
incurred during the three months ended July 1, 2001. Special charges and
unusual items of $0.2 million in the three months ended July 2, 2000 related
to compensation costs incurred in connection with the 1998 recapitalization.

Interest Expense, Net. Interest expense, net increased $0.1 million to $25.2
million, including $3.7 million of non-cash interest on the Company's Senior
Discount Notes, for the three months ended July 1, 2001 from $25.1 million,
including $3.4 million of non-cash interest on the Company's Senior Discount
Notes, for the three months ended July 2, 2000.

Other (Income) Expense. Other (income) expense was $(0.1) million for the
three months ended July 1, 2001 as compared to $0.1 million for the three
months ended July 2, 2000. The higher income was due primarily to higher
foreign exchange gains in the three months ended July 1, 2001 as compared to
the three months ended July 2, 2000.

Net Loss. Primarily as a result of factors discussed above, net loss was $1.2
million for the three months ended July 1, 2001 compared to net loss of $0.7
million for the three months ended July 2, 2000.


Six Months Ended July 1, 2001 Compared to Six Months Ended July 2, 2000

Net Sales. Net sales for the six months ended July 1, 2001 increased $62.8
million or 15.4% to $471.6 million from $408.8 million for the six months
ended July 2, 2000. The increase in sales was primarily due to a 24.1%
increase in units sold, principally due to additional food and beverage
business where units increased by 47.7%, and an increase in resin prices. On a
geographic basis, sales for the six months ended July 1, 2001 in North America
were up $60.0 million or 18.7% from the six months ended July 2, 2000. The
North American sales increase included higher units sold of 23.4%. North
American sales in the food and beverage business and the household and
personal care business contributed $57.7 million and $4.3 million,
respectively, to the increase, while sales in the automotive business were
$2.0 million lower. Units sold in North America increased by 56.9% in food and
beverage and 1.5% in household and personal care, but decreased by 4.0% in
automotive. Sales for the six months ended July 1, 2001 in Europe were up $3.9
million or 5.3% from the six months ended July 2, 2000. The European sales
increase included higher units sold of 27.0%. The growth in sales due to
capital investments made in recent periods was offset by exchange rate changes
of approximately $5.2 million for the six months ended July 1, 2001 compared
to the six months ended July 2, 2000. Sales for the six months ended July 1,
2001 in Latin America were down $1.1 million or 7.8% from the six months ended
July 2, 2000. The decrease in the Latin American sales was primarily due to
exchange rate changes of approximately $2.2 million, offset by a 3.1% increase
in units sold.

Gross Profit. Gross profit for the six months ended July 1, 2001 increased
$5.2 million to $77.1 million from $71.9 million for the six months ended July
2, 2000. The increase in gross profit resulted primarily from the higher sales
volume as compared to the prior year. Gross profit for the six months ended
July 1, 2001 increased by $5.0 million in North America, $0.2 million in
Europe and remained the same in Latin America when compared to the six months
ended July 2, 2000.

Selling, General & Administrative Expenses. Selling, general and
administrative expenses for the six months ended July 1, 2001 increased $3.2
million to $29.0 million from $25.8 million for the six months ended July 2,
2000. The increase in 2001 selling, general and administrative expenses is due
primarily to global reorganization charges and overall growth of the business.
As a percent of sales, selling, general and administrative expenses decreased
to 6.1% of sales for the six months ended July 1, 2001 from 6.3% for the six
months ended July 2, 2000.

Impairment Charges. Due to operating losses and cash flow deficits experienced
in the Company's Argentine operations and the loss or reduction of business
in Argentina, the Company evaluated the recoverability of its long-lived
assets in this location. The Company determined that the expected future
undiscounted cash flows were below the carrying value of its long-lived assets.
Accordingly, the Company adjusted the carrying values of these long-lived
assets to their estimated fair values, resulting in an impairment charge of
$3.7 million for the six months ended July 1, 2001, which includes $3.1
million of goodwill associated with these assets.

                                      16
<PAGE>

Special Charges and Unusual Items. Special charges and unusual items decreased
$0.6 million to $0.1 million for the six months ended July 1, 2001 from $0.7
million for the six months ended July 2, 2000. Special charges and unusual
items in the six months ended July 1, 2001 and in the six months ended July 2,
2000 related to compensation costs incurred in connection with the 1998
recapitalization.

Interest Expense, Net. Interest expense, net increased $1.7 million to $51.2
million, including $7.3 million of non-cash interest on the Company's Senior
Discount Notes, for the six months ended July 1, 2001 from $49.5 million,
including $6.6 million of non-cash interest on the Company's Senior Discount
Notes, for the six months ended July 2, 2000. The increase was primarily
related to increased debt levels in 2001 compared to 2000.

Other (Income) Expense. Other (income) expense was $0.4 million for the six
months ended July 1, 2001 as compared to $0.2 million for the six months ended
July 2, 2000. The higher expense was due primarily to a higher equity loss in
the six months ended July 1, 2001 as compared to the six months ended July 2,
2000.

Net Loss. Primarily as a result of factors discussed above, net loss was $7.4
million for the six months ended July 1, 2001 compared to net loss of $4.0
million for the six months ended July 2, 2000.


Effect of Changes in Exchange Rates

     In general, the Company's results of operations are affected by changes
in foreign exchange rates. Subject to market conditions, the Company prices
its products in its foreign operations in local currencies. As a result, a
decline in the value of the U.S. dollar relative to these other currencies can
have a favorable effect on the profitability of the Company, and an increase
in the value of the dollar relative to these other currencies can have a
negative effect on the profitability of the Company. Exchange rate
fluctuations decreased other comprehensive income (loss) by $3.5 million and
$2.2 million for the three months ended July 1, 2001 and July 2, 2000,
respectively, and decreased other comprehensive income (loss) by $13.4 million
and $6.4 million for the six months ended July 1, 2001 and July 2, 2000,
respectively.


Euro Conversion

     On January 1, 1999, eleven of fifteen member countries of the European
Economic Union fixed conversion rates between their existing currencies,
legacy currencies, and one common currency, the euro. The euro trades on
currency exchanges and may be used in business transactions. Conversion to the
euro eliminated currency exchange rate risk between the member countries.
Beginning in January 2002, new euro-denominated bills and coins will be issued
and the legacy currencies will be withdrawn from circulation.

     The Company is actively addressing the many areas involved with the
introduction of the euro, including information management, finance, legal and
tax. This review includes the conversion of information technology, and
business and financial systems, and evaluation of currency risk, as well as
the impact on the pricing and distribution of the Company's products.

     One outcome of the introduction of the euro is the trend toward more
uniform pricing in all European markets, including those that have not adopted
the euro as their common currency. The Company believes the effect of the
introduction of the euro, as well as any related cost of conversion, will not
have a material adverse impact on its financial condition and results of
operations.


Derivatives

     On January 1, 2001 the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities", as amended by SFAS 138. In connection with the adoption of the
new Statement, the Company recorded $0.4 million in Other Comprehensive Income
("OCI") as a cumulative change in accounting for derivatives designated as
cash flow-type hedges prior to adopting SFAS 133.

     The Company enters into interest rate swap agreements to hedge the
exposure to increasing rates with respect to its Senior Credit Agreement. The
differential to be paid or received as a result of these swap agreements is
accrued as interest rates change and recognized as an adjustment to interest
expense related to the Senior Credit

                                      17
<PAGE>

Agreement. These interest rate swaps are accounted for as cash flow hedges.
Therefore, the effective portion of the change in the fair value of the
interest rate swaps is recorded within OCI, $6.4 million for the six months
ended July 1, 2001. Hedge ineffectiveness, if any, is recorded as a component
of net income. These interest rate swap agreements expire at various points
through 2003. Treatment of these interest rate swaps as cash flow hedges is
based on Management's best interpretation of SFAS 133. Certain issues
currently under consideration by the Financial Accounting Standards Board may
make it more difficult for the Company's interest rate swaps to qualify for
hedge accounting. If the Company's swaps do not qualify for hedge accounting,
changes in the fair value of these interest rate swaps will be recorded as a
component of net income.

     The Company also enters into forward exchange contracts, when considered
appropriate, to hedge the exchange rate exposure on transactions that are
denominated in a foreign currency. These forward contracts are accounted for
as fair value hedges. During the six months ended July 1, 2001, there was no
net gain or loss recognized in earnings as a result of fair value hedges. The
Company has no outstanding forward exchange contracts as of July 1, 2001.


Liquidity and Capital Resources

     In the six months ended July 1, 2001, the Company funded, through its
various borrowing arrangements and a $50.0 million capital contribution from
the Company's owners, $4.2 million of operating activities and $50.2 million
of investing activities, including $48.0 million of capital expenditures.

     The Company's Senior Credit Agreement currently consists of four term
loans to the Operating Company with initial term loan commitments totaling
$570 million and two revolving loan facilities to the Operating Company
totaling $255 million. Unused availability under the revolving credit
facilities at July 1, 2001 is $113.3 million. The obligations of the Operating
Company under the Senior Credit Agreement are guaranteed by Holdings and
certain other subsidiaries of Holdings. The term loans are payable in
quarterly installments through January 31, 2007, and require payments of $20.0
million in 2001, $25.0 million in 2002, $27.5 million in 2003, $93.0 million
in 2004 and $64.9 million in 2005. The Company expects to fund scheduled debt
repayments from cash from operations and unused lines of credit. The revolving
loan facilities expire on January 31, 2004.

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

     The Company's 1998 recapitalization included the issuance of $225 million
of Senior Subordinated Notes due 2008 and the issuance of $169 million
aggregate principal amount at maturity of Senior Discount Notes due 2009 which
yielded gross proceeds of $100.6 million. At July 1, 2001, the aggregate
accreted value of the Senior Discount Notes was $143.9 million. The Senior
Subordinated Notes are unconditionally guaranteed on a senior subordinated
basis by Holdings and mature on January 15, 2008, with interest payable on
$150 million at a fixed rate of 8.75% and with interest payable on $75 million
at LIBOR plus 3.625%. The Senior Discount Notes mature on January 15, 2009,
with cash interest payable semi-annually beginning July 15, 2003 at 10.75%.
The effective interest rate to maturity on the Senior Discount Notes is
10.75%. At July 1, 2001, the Company's outstanding indebtedness was $1,070.5
million.

     An equity contribution of $50 million was made by the Company's owners to
the Company on September 29, 2000, satisfying Blackstone's first capital call
obligation under the Senior Credit Agreement and Capital Call Agreement. As
part of the Second Amendment to the Senior Credit Agreement, if certain events
of default were to occur, or if the Company's Net Leverage Ratio were above
certain levels for test periods beginning June 30, 2001, Blackstone agreed to
make an additional equity contribution to the Company through the
administrative agent of up to $50 million. The Company's Net Leverage Ratio
being above the specified levels at June 30, 2001 or thereafter is not an
event of default under the Senior Credit Agreement. An additional equity
contribution of $50 million was made by the Company's owners on March 29,
2001, satisfying Blackstone's final obligation under the Capital Call
Agreement dated as of August 13, 1998, as amended on March 29, 2000, for all
future test periods. The Company used the proceeds of the Capital Calls to
reduce its outstanding Revolving Credit Loans.

     Earnings before minority interest, extraordinary items, interest, income
taxes, depreciation and amortization expense, the ongoing $1 million per year
fee paid pursuant to the Blackstone monitoring agreement, non-cash equity
income in earnings of joint ventures, other non-cash charges, recapitalization
expenses, special charges and unusual

                                      18
<PAGE>

items and certain non-recurring charges ("Adjusted EBITDA") increased $4.4
million or 10.3% to $47.1 million for the three months ended July 1, 2001 from
$42.7 million for the three months ended July 2, 2000. Adjusted EBITDA
increased $6.5 million or 8.1% to $86.4 million for the six months ended July
1, 2001 from $79.9 million for the six months ended July 2, 2000. Adjusted
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. Adjusted EBITDA is included in this Form 10-Q
to provide additional information with respect to the ability of Holdings and
the Operating Company to satisfy their debt service, capital expenditure and
working capital requirements and because certain covenants in Holdings' and
the Operating Company's borrowing arrangements are tied to similar measures.
While Adjusted EBITDA and similar measures are frequently used as a measure of
operations and the ability to meet debt service requirements, these terms are
not necessarily comparable to other similarly titled captions of other
companies due to the potential inconsistencies in the method of calculation.
Adjusted EBITDA is calculated as follows:

<TABLE>
<CAPTION>

                                                                         Three Months Ended                Six Months Ended

                                                                   -------------------------------- --------------------------------
                                                                    July 1, 2001    July 2, 2000     July 1, 2001    July 2, 2000
                                                                   --------------- ---------------- --------------- ----------------
                                                                                            (in millions)
<S>                                                                 <C>            <C>              <C>            <C>    <C>    <C>

Net loss.........................................................   $     (1.2)    $      (0.7)     $      (7.4)    $      (4.0)
Interest expense, net............................................         25.2            25.1             51.2            49.5
Income tax expense...............................................          0.0             0.3              0.0             0.4
Depreciation and amortization....................................         17.6            17.1             36.0            32.4
Impairment charges...............................................          3.7             0.0              3.7             0.0
Fees paid pursuant to the Blackstone monitoring agreement........          0.2             0.2              0.5             0.5
Equity income in earnings of joint venture.......................          0.0             0.0              0.2             0.0
Minority interest................................................          0.1            (0.3)             0.1            (0.6)
Special charges and unusual items/certain non-recurring
  charges (1)(2).................................................          1.5             1.0              2.1             1.7
                                                                     ---------      ----------       ----------      ----------
Adjusted EBITDA .................................................   $     47.1     $      42.7      $      86.4     $      79.9
                                                                     =========      ==========       ==========      ==========
</TABLE>


(1)      For the three and six months ended July 1, 2001 includes special
         charges and unusual items related to compensation costs incurred in
         connection with the 1998 recapitalization ($0.0 million and $0.1
         million, respectively), global reorganization costs ($1.4 million and
         $1.8 million, respectively) and other costs ($0.1 million and $0.2
         million, respectively). For the three and six months ended July 2,
         2000 includes special charges and unusual items related to
         compensation costs incurred in connection with the 1998
         recapitalization ($0.2 million and $0.7 million, respectively) and
         global reorganization costs ($0.8 million and $1.0 million,
         respectively).
(2)      Does not include project startup costs, which are treated as
         non-recurring in accordance with the definition of EBITDA under the
         Company's Senior Credit Agreement. These startup costs were $0.1
         million and $1.5 million for the three months ended July 1, 2001 and
         July 2, 2000, respectively, and $2.9 million and $2.8 million for the
         six months ended July 1, 2001 and July 2, 2000, respectively.

     Management believes that capital investment to maintain and upgrade
property, plant and equipment is important to remain competitive. Management
estimates that the annual capital expenditures required to maintain the
Company's current facilities are currently approximately $30 million per year.
Additional capital expenditures beyond this amount will be required to expand
capacity. Capital expenditures for the six months ended July 1, 2001 were
$48.0 million. For the fiscal year 2001, the Company expects to incur
approximately $110 million of capital expenditures. However, total capital
expenditures for 2001 will depend on the size and timing of growth related
opportunities. The Company's principal sources of cash to fund capital
requirements will be net cash provided by operating activities and borrowings
under its Senior Credit Agreement.

     Under the Senior Credit Agreement, the Operating Company is subject to
restrictions on the payment of dividends or other distributions to Holdings;
provided that, subject to certain limitations, the Operating Company may pay
dividends or other distributions to Holdings:
o    in respect of overhead, tax liabilities, legal, accounting and other
     professional fees and expenses;
o    to fund purchases and redemptions of equity interests of Holdings or
     Investor LP held by then present or former officers or employees of
     Holdings, the Operating Company or their subsidiaries or by any employee
     stock ownership plan upon such person's death, disability, retirement or
     termination of employment or other circumstances with certain annual
     dollar limitations; and
o    to finance, starting on July 15, 2003, the payment of cash interest
     payments on the Senior Discount Notes.

                                      19
<PAGE>

New Accounting Pronouncements

     On June 29, 2001, Statement of Financial Accounting Standards ("SFAS")
No. 141, "Business Combinations", was approved by the Financial Accounting
Standards Board ("FASB"). SFAS 141 requires that the purchase method of
accounting be used for all business combinations initiated after June 30,
2001. Goodwill and certain intangible assets will remain on the balance sheet
and not be amortized. On an annual basis, and when there is reason to suspect
that their values have been diminished or impaired, these assets must be
tested for impairment, and write-downs may be necessary. The Company is
required to implement SFAS No. 141 on July 1, 2001 and it has not determined
the impact, if any, that this statement will have on its consolidated
financial position or results of operations.

     On June 29, 2001, SFAS No. 142, "Goodwill and Other Intangible Assets",
was approved by the FASB. SFAS No. 142 changes the accounting for goodwill
from an amortization method to an impairment-only approach. Amortization of
goodwill, including goodwill recorded in past business combinations, will
cease upon adoption of this statement. The Company is required to implement
SFAS No. 142 on January 1, 2002 and it has not determined the impact, if any,
that this statement will have on its consolidated financial position or
results of operations.

                                      20
<PAGE>


Item 3.  Quantitative and Qualitative Disclosures About Market Risk

     See the information set forth in Item 7A of Holdings' Annual Report on
Form 10-K for the fiscal year ended December 31, 2000 for complete
quantitative and qualitative disclosures about market risk. The following
table provides disclosure as of July 1, 2001 for financial instruments that
have experienced material changes in fair value since December 31, 2000.

<TABLE>
<CAPTION>

                              Expected Maturity Date of Interest Rate Swap Agreements at July 1, 2001
                                                          (In thousands)
                         ---------------------------------------------------------------------------------   Fair Value
                                2001      2002        2003         2004         2005   Thereafter   Total   July 1, 2001
<S>                           <C>        <C>         <C>            <C>          <C>     <C>       <C>         <C>

Derivatives matched
  against liabilities:        150,000    200,000     300,000        --           --       --        650,000    (6,028)
Pay fixed swaps
  Pay rate                      5.51%      5.81%       5.25%        --           --       --             --        --
  Receive rate                  3.82%      4.04%       4.86%        --           --       --             --        --

</TABLE>

     On March 29, 2001 the Company entered into two new pay fixed swaps
totaling $200 million with an effective date of September 10, 2001 and a
two-year term. The effective date of the new swaps coincides with the
expiration of an existing $150 million swap, thereby increasing total pay
fixed swaps in effect to $500 million.

                                      21
<PAGE>


PART II   OTHER INFORMATION


Item 6.   Exhibits and Reports on Form 8-K

(a)       Exhibits

          None

(b)       Reports on Form 8-K

          No reports on Form 8-K were required to be filed during the quarter
          ended July 1, 2001.

                                      22
<PAGE>


                                   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 14, 2001


                          GRAHAM PACKAGING HOLDINGS COMPANY
                          (Registrant)

                          By: BCP/Graham Holdings L.L.C.,
                                  its General Partner



                      By: /s/ John E. Hamilton
                          -----------------------------------
                          John E. Hamilton
                          Vice President, Finance and Administration
                          (chief accounting officer and duly authorized officer)

                                      23