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

                                   FORM 10-K/A
                                 Amendment No. 1
(Mark One)

          [X]       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                    SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2002

                                       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)

Securities Registered pursuant to Section 12(b) of the Act: None

Securities Registered pursuant to Section 12(g) of the Act: None

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

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

There is no established public trading market for any of the general or limited
partnership interests in the registrant. The aggregate market value of the
voting securities held by non-affiliates of the registrant as of February 28,
2003 was $-0-. As of February 28, 2003, the general partnership interests in the
registrant were owned by BCP /Graham Holdings L.L.C. and Graham Packaging
Corporation, and the limited partnership interests in the registrant were owned
by BMP/Graham Holdings Corporation and certain members of the family of Donald
C. Graham and entities controlled by them. See Item 12, "Security Ownership of
Certain Beneficial Owners and Management."

                                Explanatory Note

The purpose of this Amendment No. 1 to the Annual Report on Form 10-K of Graham
Packaging Holdings Company is to reflect a change to Note 14 of the "Notes to
Financial Statements" included in Item 8, to correct the pro forma amount for
the year 2000; to reflect a change to Note 21 of the "Notes to Financial
Statements" included in Item 8, to reflect a reclassification of current and
non-current liabilities after giving effect to the February 14, 2003 Senior
Credit Agreement; and to correct the signature pages included as part of Exhibit
10.1 to this filing.

--------------

                       DOCUMENTS INCORPORATED BY REFERENCE
None.


<PAGE>



                        GRAHAM PACKAGING HOLDINGS COMPANY

                                      INDEX

                                                                           Page
                                                                         Number
PART I

     Item 1.  Business........................................................1

     Item 2.  Properties.....................................................16

     Item 3.  Legal Proceedings..............................................18

     Item 4.  Submission of Matters to a Vote of Security Holders............18

PART II

     Item 5.  Market for Registrant's Common Equity and Related
              Stockholder Matters............................................19

     Item 6.  Selected Financial Data........................................19

     Item 7.  Management's Discussion and Analysis of Financial Condition
              and Results of Operations......................................22

     Item 7A. Quantitative and Qualitative Disclosures About Market Risk.....32

     Item 8.  Financial Statements and Supplementary Data....................34

     Item 9.  Changes in and Disagreements with Accountants on Accounting
              and Financial Disclosure.......................................61

PART III

     Item 10. Advisory Committee Members, Directors and Executive Officers
              of the Registrant..............................................62

     Item 11. Executive Compensation.........................................64

     Item 12. Security Ownership of Certain Beneficial Owners and
              Management.....................................................68

     Item 13. Certain Relationships and Related Transactions.................69

PART IV

     Item 14. Controls and Procedures........................................75

     Item 15. Exhibits, Financial Statement Schedules, and Reports on Form
              8-K............................................................75


                                       I
<PAGE>


                                     PART I


Item 1.  Business

         Unless the context otherwise requires, all references herein to the
"Company," with respect to periods prior to the recapitalization described below
(the "Recapitalization"), refer to the business historically conducted by Graham
Packaging Holdings Company ("Holdings") (which served as the operating entity
for the business prior to the Recapitalization) and one of its predecessors
(Graham Container Corporation), together with Holdings' subsidiaries and certain
affiliates, and, with respect to periods subsequent to the Recapitalization,
refer to Holdings and its subsidiaries. Since the Recapitalization, Graham
Packaging Company, L.P. (the "Operating Company") has been a wholly owned
subsidiary of Holdings. All references to the "Recapitalization" herein shall
mean the collective reference to the Recapitalization of Holdings and related
transactions as described under "The Recapitalization" below, including the
initial borrowings under the Existing Senior Credit Agreement (as defined
below), the Offerings (as defined below) and the related uses of proceeds.
References to "Continuing Graham Entities" herein refer to Graham Packaging
Corporation ("Graham GP Corp."), Graham Family Growth Partnership or affiliates
thereof or other entities controlled by Donald C. Graham and his family, and
references to "Graham Entities" refer to the Continuing Graham Entities, Graham
Engineering Corporation ("Graham Engineering") and Donald C. Graham and/or
certain entities controlled by Mr. Graham and his family. Since March 30, 2001
the Company's operations have included the operations of Masko Graham Spolka
Z.O.O. ("Masko Graham") as a result of acquiring an additional 1% interest, for
a total interest of 51%, in a joint venture. All references to "Management"
herein shall mean the management of the Company at the time in question, unless
the context indicates otherwise. In addition, unless otherwise indicated, all
sources for all industry data and statistics contained herein are estimates
contained in or derived from internal or industry sources believed by the
Company to be reliable.


            CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

         All statements other than statements of historical facts included in
this Annual Report on Form 10-K, including statements regarding the future
financial position, economic performance and results of operations of the
Company (as defined above), 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 II, Item 7A), 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 Company's 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 container 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 the Company's
hot-fill PET (as hereinafter defined) plastic container business. See "--Certain
Risks of the Business." 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.



                                       1
<PAGE>



General

         Holdings was formed under the name "Sonoco Graham Company" on April 3,
1989 as a Pennsylvania limited partnership and changed its name to "Graham
Packaging Company" on March 28, 1991. The Operating Company was formed under the
name "Graham Packaging Holdings I, L.P." on September 21, 1994 as a Delaware
limited partnership. The predecessor to Holdings, controlled by the Continuing
Graham Entities, was formed in the mid-1970's as a regional domestic custom
plastic container supplier, using the proprietary Graham Rotational Wheel.

         Upon the Recapitalization, substantially all of the assets and
liabilities of Holdings were contributed to the Operating Company, and
subsequent to the Recapitalization, the primary business activity of Holdings
has consisted of its direct and indirect ownership of 100% of the partnership
interests in the Operating Company. Upon the Recapitalization, the Operating
Company and Holdings changed their names to "Graham Packaging Company, L.P." and
"Graham Packaging Holdings Company," respectively.

         The principal executive offices of the Company are located at 2401
Pleasant Valley Road, York, Pennsylvania 17402, Telephone (717) 849-8500.

         The Company is managed in three operating segments: North America,
which includes the United States, Canada and Mexico; Europe; and South America.
Each operating segment includes three major service lines: Food and Beverage,
Household and Personal Care, and Automotive Lubricants.

         The Company is a worldwide leader in the design, manufacture and sale
of customized blow molded plastic containers for the branded food and beverage,
household and personal care, and automotive lubricants markets and currently
operates 57 plants throughout North America, Europe and South America. The
Company's primary strategy is to operate in select markets that will position it
to benefit from the growing conversion to high performance plastic packaging
from more commodity packaging. 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.

         From fiscal 1998 through fiscal 2002 the Company has grown its net
sales at a compounded annual growth rate of over 10% as a result of its
capital investment and focus on the high growth food and beverage conversions
from glass, paper and metal containers to plastic packaging. With leading
positions in each of its core businesses, the Company believes it is well
positioned to continue to benefit from the plastic conversion trend that is
still emerging on a global basis and offers the Company opportunities for
attractive margins and returns on investment.

         The Company has an extensive blue-chip customer base that includes many
of the world's largest branded consumer products companies. More than 40% of its
manufacturing plants are located on-site at its customers' manufacturing
facilities, which the Company believes provides a competitive advantage in
maintaining and growing customer relationships. The majority of the Company's
sales are made pursuant to long-term customer contracts, which include resin
pass-through provisions that substantially mitigate the effect of resin price
movements on the Company's profitability. The Company's containers are made from
various plastic resins, including polyethylene terephthalate, or PET,
high-density polyethylene, or HDPE, and polypropylene, or PP. In 2002, the
Company's top 20 customers comprised over 82% of its net sales and have been
its customers for an average of 15 years.

          The combination of leading technology, product innovation, efficient
manufacturing operations and strong customer relationships, including on-site
facilities, has enabled the Company to consistently generate strong volume
growth, margins and returns on invested capital.

         Food and Beverage. The Company produces containers for shelf-stable,
refrigerated and frozen juices, non-carbonated juice drinks, teas, isotonics,
yogurt and nutritional drinks, toppings, sauces, jellies and jams. The Company's
business focuses on major consumer products companies that emphasize
distinctive, high-performance packaging in their selected business lines that
are undergoing rapid conversion to plastic from other packaging materials.
Management believes, based on internal estimates, that the Company has the
leading domestic market position for plastic containers for juice, frozen
concentrate, pasta sauce and yogurt drinks and the leading position in Europe


                                       2
<PAGE>

for plastic containers for yogurt drinks. Management believes that this
leadership position creates significant opportunity for the Company to
participate in the anticipated conversion to plastic in the wider nutritional
drink market. The Company is also one of only three domestic market participants
that are leading large-scale product conversions to hot-fill PET containers.

         From fiscal 1998 through fiscal 2002, the Company's food and beverage
container sales have grown at a compound annual growth rate of over 22%,
benefiting primarily from the rapid market conversion to plastic containers. As
a result of technological innovations, PET containers can be used in "hot-fill"
food and beverage applications where the container must withstand filling
temperatures of over 180 degrees Fahrenheit in an efficient and cost-effective
manner. The Company has been a leader in the conversion of multi-serve juices
that has occurred during the last few years, and it helped initiate the
conversion of containers for single-serve juice drinks, frozen juice concentrate
and wide-mouth PET containers for sauces, jellies and jams. The highly
customized hot-fill PET containers allow for the shipment and display of food
and beverage products in a non-refrigerated state, in addition to possessing the
structural integrity to withstand extreme filling conditions. The Company's
oxygen barrier PET container coating and multi-layer barrier technologies also
extend the shelf life and protect the quality and flavor of its customers'
products.

         With over $270 million of capital invested in the hot-fill PET food
and beverage container business since the beginning of 1997, the Company has
been a major participant in this rapidly growing area. Given the strength of its
existing customer base, recent capital investments and technological and design
capabilities, the Company believes it is well positioned to benefit from the
estimated 60% of the domestic hot-fill food and beverage market that has yet to
convert to plastic. In addition, management believes that significant conversion
opportunities exist in hot-fill product lines that have just begun to convert to
plastic, and from international conversion opportunities.

         The Company's largest customers in the food and beverage business
include, in alphabetical order, Arizona Beverages Company, LLC ("Arizona"),
Clement-Pappas & Company, Inc. ("Clement-Pappas"), Group Danone ("Danone"),
Hershey Foods Corporation ("Hershey's"), Hi-Country Foods Corporation
("Hi-Country"), The Minute Maid Company ("Minute Maid"), Mrs. Clark's Foods,
L.C. ("Mrs. Clarks"), Ocean Spray Cranberries, Inc. ("Ocean Spray"), PepsiCo,
Inc. ("PepsiCo"), The Quaker Oats Company ("Quaker Oats"), Tree Top Inc. ("Tree
Top"), Tropicana Products, Inc. ("Tropicana") and Welch Foods, Inc. ("Welch's").
For the years ended December 31, 2002, 2001 and 2000 the Company generated
approximately 56.9%, 55.4% and 49.4%, respectively, of its net sales from the
food and beverage container business.

         Household and Personal Care. In the household and personal care
container business, the Company is a leading supplier of plastic containers for
products such as liquid fabric care, dish care, hard-surface cleaners, hair care
and body wash. The Company continues to benefit as liquid fabric care
detergents, which are packaged in plastic containers, capture an increasing
share from powdered detergents, which are predominantly packaged in paper-based
containers. The Company's largest customers in this sector include, in
alphabetical order, Colgate-Palmolive Company ("Colgate-Palmolive"), The Dial
Corp. ("Dial"), The Procter and Gamble Company ("Procter & Gamble") and Unilever
NV ("Unilever"). For the years ended December 31, 2002, 2001 and 2000, the
Company generated approximately 20.5%, 22.6% and 25.0%, respectively, of its net
sales from the household and personal care container business.

         Automotive Lubricants. Management believes, based on internal
estimates, that the Company is the number one supplier of one-quart/one liter
HDPE motor oil containers in the United States, Canada and Brazil, supplying
most of the motor oil producers in these countries, with an approximate 80%
market share in the United States, based on 2002 unit sales. The Company has
been producing automotive lubricants containers since the conversion to plastic
began over 20 years ago and over the years has expanded its market share and
maintained margins by partnering with its customers to improve product quality
and jointly reduce costs through design improvement, reduced container weight
and manufacturing efficiencies. The Company's joint product design and cost
efficiency initiatives with its customers have also strengthened its service and
customer relationships.

         The Company has expanded operations into portions of South America to
take advantage of the growth resulting from the ongoing conversion from
composite cans to plastic containers for motor oil as well as the increasing
number of motor vehicles per person in that region. Management anticipates
similar growth opportunities for the Company in other economically developing
markets where the use of motorized vehicles is rapidly growing. The Company also
manufactures containers for other automotive products, such as antifreeze and
automatic transmission fluids.

         The Company is a supplier of such containers to many of the top
domestic producers of motor oil, including, in alphabetical order, Ashland, Inc.
("Ashland," producer of Valvoline motor oil), Castrol North America ("Castrol,"


                                       3
<PAGE>

an affiliated company of BP plc), ChevronTexaco Corporation ("ChevronTexaco")
and Shell Oil Products US ("Shell," producer of Shell, Pennzoil and Quaker State
motor oils). For the years ended December 31, 2002, 2001, and 2000 the Company
generated approximately 22.6%, 22.0% and 25.6%, respectively, of its net sales
from the automotive lubricants container business.

         Additional information regarding business segments is provided in Note
20 of the Notes to Financial Statements.


Products and Raw Materials

         PET containers, which are generally transparent, are utilized for
products where glasslike clarity is valued and shelf stability is required, such
as carbonated soft drinks, juice, juice drinks and teas. HDPE containers, which
are nontransparent, are utilized to package products such as motor oil, fabric
care, dish care and personal care products, some food products, chilled juices
and frozen juice concentrates.

         PET and HDPE resins constitute the primary raw materials used to make
the Company's products. These materials are available from a number of
suppliers, and the Company is not dependent upon any single supplier. Management
believes that the Company maintains an adequate inventory to meet demands, but
there is no assurance that this will be true in the future. The Company's gross
profit has historically been substantially unaffected by fluctuations in resin
prices because industry practice permits substantially all changes in resin
prices to be passed through to customers through appropriate changes in product
pricing. However, 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.

         Through its wholly owned subsidiary, Graham Recycling Company, L.P.,
the Company operates one of the largest HDPE bottles-to-bottles recycling plants
in the world, and more than 73% of its North American HDPE units produced
contain recycled HDPE bottles. The recycling plant is located near the Company's
headquarters in York, Pennsylvania.


Customers

         Substantially all of the Company's sales are made to major branded
consumer products companies. The Company's customers demand a high degree of
packaging design and engineering to accommodate complex container shapes,
performance and material requirements and quick and reliable delivery. As a
result, many customers opt for long-term contracts, many of which have terms of
up to ten years. A majority of the Company's top 20 customers are under
long-term contracts. The Company's contracts typically contain provisions
allowing for price adjustments based on the market price of resins and colorants
and in some cases the cost of energy and labor, among other factors.

         In many cases, the Company is the sole supplier of its customers'
custom plastic container requirements nationally, regionally or for a specific
brand. For the year ended December 31, 2002 the Company's largest customer,
PepsiCo, accounted for 16.4% of the Company's total net sales and was the only
customer that accounted for over 10% of its net sales for the year. For the
year ended December 31, 2002 the Company's twenty largest customers, who
accounted for over 82% of net sales, were, in alphabetical order:


                                       4
<PAGE>


                                                                Company
Customer (1)                   Business                    Customer Since (1)
------------                   --------                    ------------------
Arizona                        Food and Beverage               Late 1990s
Ashland (2)                    Automotive                      Early 1970s
Castrol                        Automotive                      Late 1960s
ChevronTexaco                  Automotive                      Early 1970s
Clement-Pappas                 Food and Beverage               Mid 1990s
Colgate-Palmolive              Household and Personal Care     Mid 1980s
Danone                         Food and Beverage               Late 1970s
Dial                           Household and Personal Care     Early 1990s
Hershey's                      Food and Beverage               Mid 1980s
Hi-Country                     Food and Beverage               Late 1990s
Minute Maid                    Food and Beverage               Late 1990s
Mrs. Clark's Foods             Food and Beverage               Mid 1990s
Ocean Spray                    Food and Beverage               Early 1990s
PepsiCo (3)                    Food and Beverage               Early 2000s
  Quaker Oats                  Food and Beverage               Late 1990s
  Tropicana                    Food and Beverage               Mid 1980s
Petrobras Distribuidora S.A.   Automotive                      Early 1990s
Procter & Gamble               Household and Personal Care     Early 1980s
Shell (4)                      Automotive                      Early 1970s
  Pennzoil-Quaker State        Automotive                      Early 1970s
Tree Top                       Food and Beverage               Early 1990s
Unilever                       Household and Personal Care,    Early 1970s
                               Food and Beverage
Welch's                        Food and Beverage               Early 1990s


(1)  These companies include their predecessors, if applicable, and the dates
     may reflect customer relationships initiated by predecessors to the Company
     or entities acquired by the Company.

(2)  Ashland is the producer of Valvoline motor oil.

(3)  PepsiCo includes Quaker Oats and Tropicana

(4)  Shell includes Pennzoil-Quaker State


International Operations

         The Company has significant operations outside the United States in the
form of wholly owned subsidiaries, cooperative joint ventures and other
arrangements. The Company's 22 plants outside of the United States are located
in Argentina (2), Belgium (1), Brazil (4), Canada (2), France (4), Germany (2),
Hungary (1), Mexico (2), Poland (2), Spain (1) and Turkey (1).

          Argentina and Brazil. In Brazil, the Company has three on-site plants
for motor oil packaging, including one for Petrobras Distribuidora S.A., the
national oil company of Brazil. The Company also has an off-site plant in Brazil
for its motor oil and agricultural and chemical container businesses. In
Argentina, the Company purchased 100% of the capital stock of Dodisa, S.A.,
Amerpack, S.A., Lido Plast, S.A. and Lido Plast San Luis, S.A. in July 1999. In
April 2000, Dodisa, S.A., Amerpack, S.A., and Lido Plast, S.A. were dissolved
without liquidation and merged into Graham Packaging Argentina, S.A. In June
2000, in order to maximize efficiency, the Company shifted some of the volume
produced for Brazilian customers from its Argentine operations to the Company's
Brazilian facilities and consolidated business in Argentina, resulting in the
closure of one facility.

         Mexico. In December 1999, the Company entered into a joint venture
agreement with Industrias Innopack, S.A. de C.V. to manufacture, sell and
distribute custom plastic containers in Mexico, the Caribbean and Central
America.

         Europe. The Company has an on-site plant in each of Belgium, France,
Germany, Hungary, Poland and Spain and six off-site plants in France, Germany,


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<PAGE>



Poland and Turkey, for the production of plastic containers for liquid food,
household and personal care, automotive and agricultural chemical products.
Through Masko Graham Spolka Z.O.O., a 51% owned joint venture in Poland, the
Company manufactures HDPE containers for household and personal care and liquid
food products.

         Canada. The Company has one off-site facility and one on-site facility
in Canada to service Canadian and northern U.S. customers. Both facilities are
near Toronto. These facilities produce products for all three of the Company's
target end-use markets.


Competition

         The Company faces substantial regional and international competition
across its product lines from a number of well-established businesses. The
Company's primary competitors include Owens-Illinois, Inc., Ball Corporation,
Constar International Inc., Consolidated Container Company LLC, Plastipak, Inc.,
Silgan Holdings Inc., Amcor Limited, Pechiney Plastic Packaging, Inc. and Alpla
Werke Alwin Lehner GmbH. Several of these competitors are larger and have
greater financial and other resources than the Company. Management believes that
the Company's long-term success is dependent on its ability to provide superior
levels of service, its speed to market and its ability to develop product
innovations and improve its production technology and expertise. Other important
competitive factors include rapid delivery of products, production quality and
price.


Marketing and Distribution

         The Company's sales are made through its own direct sales force; agents
or brokers are not utilized to conduct sales activities with customers or
potential customers. Sales activities are conducted from the Company's corporate
headquarters in York, Pennsylvania and from field sales offices located in
Houston, Texas; Levittown, Pennsylvania; Maryland Heights, Missouri;
Mississauga, Ontario, Canada; Rancho Cucamonga, California; Paris, France;
Buenos Aires, Argentina; Sao Paulo, Brazil; and Sulejowek, Poland. The Company's
products are typically delivered by truck, on a daily basis, in order to meet
customers' just-in-time delivery requirements, except in the case of on-site
operations. In many cases, the Company's on-site operations are integrated with
its customers' manufacturing operations so that deliveries are made as needed,
by direct conveyance to the customers' filling lines.


Superior Product Design and Development Capabilities

         The Company's ability to develop new, innovative containers to meet the
design and performance requirements of its customers has established the Company
as a market leader. The Company has demonstrated significant success in
designing innovative plastic containers that require customized features such as
complex shapes, reduced weight, handles, grips, view stripes, pouring features
and graphic-intensive customized labeling, and often must meet specialized
performance and structural requirements such as hot-fill capability, recycled
material usage, oxygen barriers, flavor protection and multi-layering. In
addition to increasing demand for its customers' products, the Company believes
that its innovative packaging stimulates consumer demand and drives further
conversion to plastic packaging. Consequently, the Company's strong design
capabilities have been especially important to its food and beverage customers,
who generally use packaging to differentiate and add value to their brands while
spending less on promotion and advertising. The Company has been awarded
significant contracts based on these unique product design capabilities that
management believes sets it apart from its competition. Some of the Company's
design and conversion successes over the past few years include:

o    hot-fill PET 16 ounce containers with oxygen barrier coating for conversion
     from glass bottles of Tropicana Season's Best brand, Pepsi's Dole brand and
     Welch's brand juices;

o    hot-fill PET wide-mouth jars for Ragu pasta sauce, Seneca applesauce and
     Welch's jellies and jams;

o    HDPE frozen juice container for Welch's in the largely unconverted metal
     and paper-composite can markets; and

o    the debut of single and multi-serve, brand-distinctive, custom plastic
     beverages packages, such as: Gatorade 10 ounce, Danimals 100 milliliter and
     93 milliliter yogurt drinks, Snapple 20 ounce and Tropicana Twister 1.75
     liter containers;

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<PAGE>

o    the Stand-up, Pop-up extruded HDPE tube for Unilever's South American hair
     care products; and

o    blow molded polypropylene pots for Danone's spoonable yogurts in Europe.

         The Company's innovative designs have also been recognized, through
various awards, by a number of customers and industry organizations, including
the Company's Coca-Cola Quatro bottle (2002 Mexican Packaging Association) and
Sabritas (PepsiCo) Be-Light bottle (2002 Mexican Packaging Association).
Management believes the Company's design and development capabilities, coupled
with the support of Graham Engineering in the design of blow molding wheels and
recycling systems, has positioned the Company as the packaging design and
development leader in the industry. Pursuant to an agreement (the "Equipment
Sales Agreement"), Graham Engineering provides engineering, consulting and other
services and sells to the Company certain proprietary blow molding wheels. Over
the past several years the Company has received and has filed for numerous
patents. See "--The Recapitalization;" "--Intellectual Property;" and "Certain
Relationships and Related Transactions--Certain Business
Relationships--Equipment Sales Agreement" (Item 13).


Manufacturing

         A critical component of the Company's strategy is to locate
manufacturing plants on-site, reducing expensive shipping and handling charges
and increasing production and distribution efficiencies. The Company is a leader
in providing on-site manufacturing arrangements, with over 40% of its 57
facilities on-site at customer and vendor facilities. Within the 57 plants, the
Company operates over 375 production lines. The Company sometimes dedicates
particular production lines within a plant to better service customers. The
plants generally operate 24 hours a day, five to seven days a week, although not
every production line is run constantly. When customer demand requires, the
plants run seven days a week. The Company's manufacturing historically has not
been subject to large seasonal fluctuations.

         In the blow molding process used for HDPE applications, resin pellets
are blended with colorants or other necessary additives and fed into the
extrusion machine, which uses heat and pressure to form the resin into a round
hollow tube of molten plastic called a parison. Bottle molds mounted radially on
a wheel capture the parison as it leaves the extruder. Once inside the mold, air
pressure is used to blow the parison into the bottle shape of the mold. In the
1970s, the Company introduced the Graham Wheel. The Graham Wheel is an
electro-mechanical rotary blow molding technology designed for its speed,
reliability and ability to use virgin resins, high barrier resins and recycled
resins simultaneously without difficulty. The Company has achieved very low
production costs, particularly in plants housing Graham Wheels. While certain of
the Company's competitors also use wheel technology in their production lines,
the Company has developed a number of proprietary improvements which Management
believes permit the Company's wheels to operate at higher speeds and with
greater efficiency in the manufacture of containers with one or more special
features, such as multiple layers and in-mold labeling.

         In the stretch blow molding process used for hot-fill PET applications,
resin pellets are fed into an injection molding machine that uses heat and
pressure to mold a test tube shaped parison or "preform." The preform is then
fed into a blow molder where it is re-heated to allow it to be formed through a
stretch blow molding process into a final container. During this re-heat and
blow process, special steps are taken to induce the temperature resistance
needed to withstand high temperatures on customer filling lines. Management
believes that the injection molders and blow molders used by the Company are
widely recognized as the leading technologies for high speed production of
hot-fill PET containers and have replaced less competitive technologies used
initially in the manufacture of hot-fill PET containers. Management believes
that equipment for the production of cold-fill containers can be refitted to
accommodate the production of hot-fill containers. However, such refitting has
only been accomplished at a substantial cost and has proven to be substantially
less efficient than the Company's equipment for producing hot-fill PET
containers.

         The Company maintains a program of quality control with respect to
suppliers, line performance and packaging integrity for its containers. The
Company's production lines are equipped with various automatic inspection
machines that electronically inspect containers. Additionally, product samples
are inspected and tested by Company employees on the production line for proper
dimensions and performance and are also inspected and audited after packaging.
Containers that do not meet quality standards are crushed and recycled as raw
materials. The Company monitors and updates its inspection programs to keep pace
with modern technologies and customer demands. Quality control laboratories are
maintained at each manufacturing facility to test its products.

         The Company has highly modernized equipment in its plants, consisting
primarily of rotational wheel systems and shuttle systems, both of which are
used for HDPE and PP blow molding, and injection-stretch blow molding systems


                                       7
<PAGE>

for custom PET containers. The Company is also pursuing development initiatives
in barrier technologies to strengthen its position in the food and beverage
container business. In the past, the Company has achieved substantial cost
savings in its manufacturing process by productivity and process enhancements,
including increasing line speeds, utilizing recycled products, reducing scrap
and optimizing plastic volume requirements for each product's specifications.

         Total capital expenditures for 2000 were $163.4 million, for 2001 $74.3
million and for 2002 $92.4 million. Management believes that capital investment
to maintain and upgrade property, plant and equipment is important to remain
competitive. Management estimates that on average the annual capital
expenditures required to maintain the Company's facilities are approximately $30
million per year. For the fiscal year 2003, the Company expects to incur
approximately $130 million of capital expenditures.


The Recapitalization

         Pursuant to an Agreement and Plan of Recapitalization, Redemption and
Purchase, dated as of December 18, 1997 (the "Recapitalization Agreement"), (i)
Holdings, (ii) the Graham Entities, and (iii) BMP/Graham Holdings Corporation, a
Delaware corporation ("Investor LP") formed by Blackstone Capital Partners III
Merchant Banking Fund L.P. (together with its affiliates, "Blackstone"), and
BCP/Graham Holdings L.L.C., a Delaware limited liability company and a wholly
owned subsidiary of Investor LP ("Investor GP" and, together with Investor LP,
the "Equity Investors") agreed to a recapitalization of Holdings (the
"Recapitalization"). Closing under the Recapitalization Agreement occurred on
February 2, 1998.

         On February 2, 1998, as part of the Recapitalization, the Operating
Company and GPC Capital Corp. I ("CapCo I" and, together with the Operating
Company, the "Company Issuers") consummated an offering (the "Senior
Subordinated Offering") pursuant to Rule 144A under the Securities Act of 1933,
as amended (the "Securities Act"), of their Senior Subordinated Notes Due 2008,
consisting of $150.0 million aggregate principal amount of their 8 3/4% Senior
Subordinated Notes Due 2008, Series A (the "Fixed Rate Senior Subordinated Old
Notes"), and $75.0 million aggregate principal amount of their Floating Interest
Rate Subordinated Term Securities Due 2008, Series A ("FIRSTS"SM) (the "Floating
Rate Senior Subordinated Old Notes" and, together with the Fixed Rate Senior
Subordinated Old Notes, the "Senior Subordinated Old Notes"). ("FIRSTS" is a
service mark of DB Alex. Brown LLC (formerly BT Alex. Brown Incorporated)).

         On February 2, 1998, as part of the Recapitalization, Holdings and GPC
Capital Corp. II ("CapCo II" and, together with Holdings, the "Holdings
Issuers," which when referred to with the Company Issuers will collectively be
referred to as the "Issuers") consummated an offering (the "Senior Discount
Offering" and, together with the Senior Subordinated Offering, the "Offerings")
pursuant to Rule 144A under the Securities Act of $169.0 million aggregate
principal amount at maturity of their 10 3/4% Senior Discount Notes Due 2009,
Series A (the "Senior Discount Old Notes" and, together with the Senior
Subordinated Old Notes, the "Old Notes").

         In connection with the Recapitalization, the Issuers entered into
registration rights agreements with the initial purchasers of the Old Notes,
pursuant to which the Issuers agreed to exchange the respective issues of Old
Notes for notes having the same terms but registered under the Securities Act
and not containing the restrictions on transfer that are applicable to the Old
Notes ("Registration Rights Agreements").

         Pursuant to the related Registration Rights Agreement, on September 8,
1998, the Company Issuers consummated exchange offers (the "Senior Subordinated
Exchange Offers"), pursuant to which the Company Issuers issued $150.0 million
aggregate principal amount of their 8 3/4% Senior Subordinated Notes Due 2008,
Series B (the "Fixed Rate Senior Subordinated Exchange Notes"), and $75.0
million aggregate principal amount of their Floating Interest Rate Subordinated
Term Securities Due 2008, Series B (the "Floating Rate Senior Subordinated
Exchange Notes" and, together with the Fixed Rate Senior Subordinated Exchange
Notes, the "Senior Subordinated Exchange Notes"), which were registered under
the Securities Act, in exchange for equal principal amounts of Fixed Rate Senior
Subordinated Old Notes and Floating Rate Senior Subordinated Old Notes,
respectively. The Senior Subordinated Old Notes and the Senior Subordinated
Exchange Notes are herein collectively referred to as the "Senior Subordinated
Notes." Pursuant to the applicable Registration Rights Agreement, on September
8, 1998, the Holdings Issuers consummated an exchange offer (the "Senior
Discount Exchange Offer"), pursuant to which the Holdings Issuers issued $169.0
million aggregate principal amount at maturity of their 10 3/4% Senior Discount
Notes Due 2009, Series B (the "Senior Discount Exchange Notes" and, together


                                       8
<PAGE>

with the Senior Discount Old Notes, the "Senior Discount Notes"), which were
registered under the Securities Act, in exchange for an equal principal amount
at maturity of Senior Discount Old Notes.

         The Senior Subordinated Notes were issued under an Indenture dated as
of February 2, 1998 (the "Senior Subordinated Indenture") between the Company
Issuers, Holdings, as guarantor, and United States Trust Company of New York, as
Trustee. The Senior Discount Notes (together with the Senior Subordinated Notes,
the "Notes") were issued under an Indenture dated as of February 2, 1998 (the
"Senior Discount Indenture" and together with the Senior Subordinated Indenture,
the "Indentures") between the Holdings Issuers and The Bank of New York, as
Trustee. The Senior Subordinated Old Notes were, and the Senior Subordinated
Exchange Notes are, fully and unconditionally guaranteed by Holdings on a senior
subordinated basis.

         The other principal components and consequences of the Recapitalization
included the following:

o    A change in the name of Holdings to Graham Packaging Holdings Company;
o    The contribution by Holdings of substantially all of its assets and
     liabilities to the Operating Company, which was renamed "Graham Packaging
     Company, L.P.";
o    The contribution by certain Graham Entities to the Operating Company of
     their ownership interests in certain partially-owned subsidiaries of
     Holdings and certain real estate used but not owned by Holdings and its
     subsidiaries (the "Graham Contribution");
o    The initial borrowing by the Operating Company of $403.5 million (the "Bank
     Borrowings") in connection with a new senior credit agreement (the
     "Existing Senior Credit Agreement") entered into by and among the Operating
     Company, Holdings and a syndicate of lenders (see "Management's Discussion
     and Analysis of Financial Condition and Results of Operations -- Liquidity
     and Capital Resources" (Item 7));
o    The repayment by the Operating Company of substantially all of the then
     existing indebtedness and accrued interest of Holdings and its subsidiaries
     (approximately $264.9 million);
o    The distribution by the Operating Company to Holdings of all of the
     remaining net proceeds of the Bank Borrowings and the Senior Subordinated
     Offering (other than amounts necessary to pay certain fees and expenses and
     payments to Management) which, in aggregate, were approximately $313.7
     million;
o    The redemption by Holdings of certain partnership interests in Holdings
     held by the Graham Entities for $429.6 million;
o    The purchase by the Equity Investors of certain partnership interests in
     Holdings held by the Graham Entities for $208.3 million;
o    The repayment by the Graham Entities of $21.2 million owed to Holdings
     under certain promissory notes;
o    The recognition of additional compensation expense under an equity
     appreciation plan;
o    The payment of certain bonuses and other cash payments and the granting of
     certain equity awards to senior and middle level Management;
o    The execution of various other agreements among the parties; and
o    The payment of a $6.2 million tax distribution by the Operating Company on
     November 2, 1998 to certain Graham Entities for tax periods prior to the
     Recapitalization.


         Upon the consummation of the Recapitalization, Investor LP owned an 81%
limited partnership interest in Holdings, Investor GP owned a 4% general
partnership interest in Holdings and the Continuing Graham Entities retained a
1% general partnership interest and a 14% limited partnership interest in
Holdings. Upon the consummation of the Recapitalization, Holdings owned a 99%
limited partnership interest in the Operating Company, and GPC Opco GP LLC
("Opco GP"), a wholly owned subsidiary of Holdings, owned a 1% general
partnership interest in the Operating Company. Following the consummation of the
Recapitalization, certain members of Management owned an aggregate of
approximately 3% of the outstanding common stock of Investor LP, which
constitutes approximately a 2.6% interest in Holdings. In addition, an affiliate
of DB Alex. Brown LLC and its affiliate (which acted as two of the initial
purchasers of the Old Notes in the Offerings) acquired approximately a 4.8%
equity interest in Investor LP. See "Security Ownership of Certain Beneficial
Owners and Management" (Item 12).

          CapCo I, a wholly owned subsidiary of the Operating Company, and CapCo
II, a wholly owned subsidiary of Holdings, were incorporated in Delaware in
January 1998. The sole purpose of CapCo I is to act as co-obligor of the Senior
Subordinated Notes and as co-borrower under the Senior Credit Agreement as
herein defined (see "Certain Risks of the Business"). The sole purpose of CapCo
II is to act as co-obligor of the Senior Discount Notes and as co-guarantor with
Holdings under


                                       9
<PAGE>

the Senior Credit Agreement. CapCo I and CapCo II have only nominal assets, do
not conduct any operations and did not receive any proceeds of the Offerings.
Accordingly, investors in the Notes must rely on the cash flow and assets of the
Operating Company or the cash flow and assets of Holdings, as the case may be,
for payment of the Notes.

         Pursuant to the Recapitalization Agreement, the Graham Entities have
agreed that neither they nor their affiliates will, subject to certain
exceptions, for a period of five years from and after the date of the
Recapitalization (the "Closing"), engage in the manufacture, assembly, design,
distribution or marketing for sale of rigid plastic containers for the packaging
of consumer products less than ten liters in volume.

         The Recapitalization Agreement contains various representations,
warranties, covenants and conditions. The representations and warranties
generally did not survive the Closing. The Graham Entities have agreed to
indemnify Holdings in respect of any claims by Management with respect to the
adequacy of the Management awards.

         Pursuant to the Recapitalization Agreement, upon the Closing, Holdings
entered into the Equipment Sales Agreement, the Consulting Agreement and
Partners Registration Rights Agreement (each as defined) described under
"Certain Relationships and Related Transactions" (Item 13).


                      SUMMARY OF SOURCES AND USES OF FUNDS

         The following table sets forth a summary of the sources and uses of the
funds associated with the Recapitalization.

                                                                        AMOUNT
                                                                        ------
                                                                  (In millions)
SOURCES OF FUNDS:
Bank Borrowings ..................................................    $  403.5
Senior Subordinated Notes (1) ....................................       225.0
Senior Discount Notes ............................................       100.6
Equity investments and retained equity (2) .......................       245.0
Repayment of Promissory notes ....................................        21.2
Available cash ...................................................         1.7
                                                                      --------
     Total .......................................................    $  997.0
                                                                      ========

USES OF FUNDS:
Repayment of existing indebtedness (3) ...........................    $  264.9
Redemption by Holdings of existing partnership interests .........       429.6
Purchase by Equity Investors of existing partnership interests ...       208.3
Partnership interests retained by Continuing Graham Entities .....        36.7
Payments to Management ...........................................        15.4
Transaction costs and expenses ...................................        42.1
                                                                      --------
     Total .......................................................    $  997.0
                                                                      ========

(1)  Included $150.0 million of Fixed Rate Senior Subordinated Old Notes and
     $75.0 million of Floating Rate Senior Subordinated Old Notes.
(2)  Included a $208.3 million equity investment made by Blackstone and
     Management in the Equity Investors and a $36.7 million retained partnership
     interest of the Continuing Graham Entities. In addition, an affiliate of DB
     Alex. Brown LLC and its affiliate, two of the Initial Purchasers, acquired
     approximately a 4.8% equity interest in Investor LP. See "Security
     Ownership of Certain Beneficial Owners and Management" (Item 12).
(3)  Included $264.5 million of existing indebtedness and $0.4 million of
     accrued interest.

                                       10
<PAGE>


Employees

         As of December 31, 2002, the Company had approximately 3,900 employees,
2,400 of whom were located in the United States. Approximately 80% of the
Company's employees are hourly wage employees, 52% of whom are represented by
various labor unions and are covered by various collective bargaining agreements
that expire between March 2003 and September 2006. Management believes that it
enjoys good relations with the Company's employees.


Environmental Matters

         The Company's operations, both in the U.S. and abroad, are subject to
national, state, provincial and/or local laws and regulations that impose
limitations and prohibitions on the discharge and emission of, and establish
standards for the use, disposal, and management of, certain materials and waste,
and impose liability for the costs of investigating and cleaning up, and damages
resulting from, present and past spills, disposals or other releases of
hazardous substances or materials. Environmental laws can be complex and may
change often, capital and operating expenses to comply can be significant and
violations may result in substantial fines and penalties. In addition,
environmental laws such as the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, also known as "Superfund" in
the United States, impose strict, and in some cases, joint and several,
liability on responsible parties for the investigation and cleanup of
contaminated soil, groundwater and buildings, and liability for damages to
natural resources, at a wide range of properties. Contamination at properties
formerly owned or operated by the Company as well as at properties the Company
currently owns or operates, and properties to which hazardous substances were
sent by the Company, may result in liability for the Company under environmental
laws. The Company is not aware of any material noncompliance with the
environmental laws currently applicable to it and is not the subject of any
material claim for liability with respect to contamination at any location.
Based on existing information Management believes that it is not reasonably
likely that losses related to known environmental liabilities, in aggregate,
will be material to the Company's financial position, results of operations and
liquidity. For its operations to comply with environmental laws, the Company has
incurred and will continue to incur costs, which were not material in fiscal
2002 and are not expected to be material in the future.

         A number of governmental authorities both in the U.S. and abroad have
considered, are expected to consider or have passed legislation aimed at
reducing the amount of disposed plastic wastes. Those programs have included,
for example, mandating rates of recycling and/or the use of recycled materials,
imposing deposits or taxes on plastic packaging material, and/or requiring
retailers or manufacturers to take back packaging used for their products. That
legislation, as well as voluntary initiatives similarly aimed at reducing the
level of plastic wastes, could reduce the demand for plastic packaging, result
in greater costs for plastic packaging manufacturers or otherwise impact the
Company's business. Some consumer products companies, including some of the
Company's customers, have responded to these governmental initiatives and to
perceived environmental concerns of consumers by using bottles made in whole or
in part of recycled plastic. The Company operates one of the largest HDPE
bottles-to-bottles recycling plants in the world and more than 73% of its HDPE
units produced in North America contain materials from recycled HDPE bottles.
The Company believes that to date these initiatives and developments have not
materially adversely affected the Company.


Intellectual Property

         The Company holds various patents and trademarks. While in the
aggregate the patents are of material importance to its business, the Company
believes that its business is not dependent upon any one patent or trademark.
The Company also relies on unpatented proprietary know-how and continuing
technological innovation and other trade secrets to develop and maintain its
competitive position. Others could, however, obtain knowledge of this
proprietary know-how through independent development or other access by legal
means. In addition to its own patents and proprietary know-how, the Company is a
party to licensing arrangements and other agreements authorizing it to use other
proprietary processes, know-how and related technology and/or to operate within
the scope of certain patents owned by other entities. The duration of the
Company's licenses generally ranges from 9 to 20 years. In some cases the
licenses granted to the Company are perpetual and in other cases the term of the
license is related to the life of the patent associated with the license. The
Company also has licensed or sublicensed some of its intellectual property
rights to third parties. See also "Certain Relationships and Related
Transactions" (Item 13).

                                       11
<PAGE>



Certain Risks of the Business

         Substantial Leverage. Upon the consummation of the Recapitalization,
the Issuers' became highly leveraged. All of the existing indebtedness under the
Existing Credit Agreement was refinanced on February 14, 2003 when the Operating
Company, Holdings, CapCo I and a syndicate of lenders entered into a new senior
credit agreement (the "Senior Credit Agreement"). The Senior Credit Agreement
includes two term loans to the Operating Company with initial term loan
commitments totaling up to $670.0 million (the "Term Loans" or "Term Loan
Facilities") and a $150.0 million revolving credit facility (the "Revolving
Credit Facility"). The Indentures (as defined) permit the Issuers to incur
additional indebtedness, subject to certain limitations. After giving effect to
the February 14, 2003 Senior Credit Agreement, the annual debt service
requirements for the Company are as follows: 2003--$8.0 million; 2004--$7.3
million; 2005--$28.0 million; 2006--$52.2 million; and 2007--$56.0 million. The
Company can incur $90.0 million in additional indebtedness beyond the amount of
the Senior Credit Agreement. The Company does not anticipate that this
additional indebtedness would be expressly subordinated to other indebtedness.
Accordingly, if incurred at the Operating Company level, such additional
indebtedness would be senior to the Operating Company's Senior Subordinated
Notes, and the Senior Discount Notes of Holdings would be structurally
subordinated to such additional indebtedness.

         The Issuers' high degree of leverage could have important consequences
to the holders of the Notes, including, but not limited to, the following: (i)
the Issuers' ability to refinance existing indebtedness or to obtain additional
financing for working capital, capital expenditures, acquisitions, general
corporate purposes or other purposes may be impaired in the future; (ii) a
substantial portion of the Issuers' cash flow from operations must be dedicated
to the payment of principal and interest on their indebtedness, thereby reducing
the funds available to the Issuers for other purposes, including capital
expenditures necessary for maintenance of the Company's facilities and for the
growth of its businesses; (iii) some of the Issuers' borrowings are and will
continue to be at variable rates of interest, which exposes the Issuers to the
risk of increased interest rates; (iv) the indebtedness outstanding under the
Senior Credit Agreement is secured and matures prior to the maturity of the
Notes; (v) the Issuers may be substantially more leveraged than some of their
competitors, which may place the Issuers at a competitive disadvantage; and (vi)
the Issuers' substantial degree of leverage, as well as the covenants contained
in the Indentures and the Senior Credit Agreement, may hinder their ability to
adjust rapidly to changing market conditions and could make them more vulnerable
in the event of a downturn in general economic conditions or in their business.

         Ability to Service Debt. The Issuers' ability to make scheduled
payments or to refinance their obligations with respect to their indebtedness
will depend on their financial and operating performance, which, in turn, is
subject to prevailing economic conditions and to certain financial, business and
other factors beyond their control. If the Issuers' cash flow and capital
resources are insufficient to fund their respective debt service obligations,
they may be forced to reduce or delay planned expansion and capital
expenditures, sell assets, obtain additional equity capital or restructure their
debt. There can be no assurance that the Issuers' operating results, cash flow
and capital resources will be sufficient for payment of their indebtedness. In
the absence of such operating results and resources, the Issuers could face
substantial liquidity problems and might be required to dispose of material
assets or operations to meet their respective debt service and other
obligations, and there can be no assurance as to the timing of such sales or the
proceeds, which the Issuers could realize therefrom. In addition, because the
Operating Company's obligations under the Senior Credit Agreement bear interest
at floating rates, an increase in interest rates could adversely affect, among
other things, the Operating Company's ability to meet its debt service
obligations. After giving effect to the February 14, 2003 Senior Credit
Agreement, the Operating Company will be required to make the following
scheduled principal payments on the Term Loans under the Senior Credit
Agreement: 2003--$2.5 million; 2004--$5.0 million; 2005--$25.0 million;
2006--$50.0 million; 2007--$50.0 million; 2008--$235.0 million; and 2009--$134.5
million. The Term Loan Facilities under the Senior Credit Agreement shall be
prepaid, subject to certain conditions and exceptions, with (i) 100% of the net
proceeds of any incurrence of indebtedness, subject to certain exceptions, by
Holdings or its subsidiaries, (ii) 50% of the net proceeds of issuances of
equity, subject to certain exceptions, after the closing by Holdings or any of
its subsidiaries, (iii) 100% of the net proceeds of certain asset dispositions,
(iv) 50% of the annual excess cash flow (as such term is defined in the Senior
Credit Agreement) of Holdings and its subsidiaries on a consolidated basis,
subject to reduction to 0% based on the leverage ratio of the Issuer and its
subsidiaries on a consolidated basis, and (v) 100% of the net proceeds from any
condemnation and insurance recovery events, subject to certain reinvestment
rights. Outstanding balances under the Revolving Credit Facility are payable on
the earlier of (i) February 14, 2008 and (ii) the Term Loan maturity date.

         Additionally, if the Issuers were to sustain a decline in their
operating results or available cash, they could experience difficulty in
complying with the covenants contained in the Senior Credit Agreement, the
Indentures or any other agreements governing future indebtedness. The failure to


                                       12
<PAGE>

comply with such covenants could result in an event of default under these
agreements, thereby permitting acceleration of such indebtedness as well as
indebtedness under other instruments that contain cross-acceleration and
cross-default provisions.

         Holding Company Structure; Structural Subordination of Senior Discount
Exchange Notes. Holdings is a holding company which has no significant assets
other than its direct and indirect partnership interests in the Operating
Company. CapCo II, a wholly owned subsidiary of Holdings, was formed for the
purpose of serving as a co-issuer of the Senior Discount Notes and has no
operations or assets from which it will be able to repay the Senior Discount
Notes. Accordingly, the Holdings Issuers must rely entirely upon distributions
from the Operating Company to generate the funds necessary to meet their
obligations, including the payment of accreted value or principal and interest
on the Senior Discount Notes. The Senior Subordinated Indenture and the Senior
Credit Agreement contain significant restrictions on the ability of the
Operating Company to distribute funds to Holdings. There can be no assurance
that the Senior Subordinated Indenture, the Senior Credit Agreement or any
agreement governing indebtedness that refinances such indebtedness or other
indebtedness of the Operating Company will permit the Operating Company to
distribute funds to Holdings in amounts sufficient to pay the accreted value or
principal or interest on the Senior Discount Notes when the same become due
(whether at maturity, upon acceleration or otherwise).

         The only significant assets of Holdings are its partnership interests
in the Operating Company. All such interests are pledged by Holdings as
collateral under the Senior Credit Agreement. Therefore, if Holdings were unable
to pay the accreted value or principal or interest on the Senior Discount Notes,
the ability of the holders of the Senior Discount Notes to proceed against the
partnership interests of the Operating Company to satisfy such amounts would be
subject to the prior satisfaction in full of all amounts owing under the Senior
Credit Agreement. Any action to proceed against such partnership interests by or
on behalf of the holders of Senior Discount Notes would constitute an event of
default under the Senior Credit Agreement entitling the lenders thereunder to
declare all amounts owing thereunder to be immediately due and payable, which
event would in turn constitute an event of default under the Senior Subordinated
Indenture, entitling the holders of the Senior Subordinated Notes to declare the
principal and accrued interest on the Senior Subordinated Notes to be
immediately due and payable. In addition, as secured creditors, the lenders
under the Senior Credit Agreement would control the disposition and sale of the
Operating Company partnership interests after an event of default under the
Senior Credit Agreement and would not be legally required to take into account
the interests of unsecured creditors of Holdings, such as the holders of the
Senior Discount Notes, with respect to any such disposition or sale. There can
be no assurance that the assets of Holdings after the satisfaction of claims of
its secured creditors would be sufficient to satisfy any amounts owing with
respect to the Senior Discount Notes.

         The Senior Discount Notes will be effectively subordinated to all
existing and future claims of creditors of Holdings' subsidiaries, including the
lenders under the Senior Credit Agreement, the holders of the Senior
Subordinated Notes and trade creditors. As described above, the rights of the
Holdings Issuers and their creditors, including the holders of the Senior
Discount Notes, to realize upon the assets of Holdings or any of its
subsidiaries upon any such subsidiary's liquidation (and the consequent rights
of the holders of the Senior Discount Notes to participate in the realization of
those assets) will be subject to the prior claims of the lenders under the
Senior Credit Agreement and the creditors of Holdings' subsidiaries including in
the case of the Operating Company, the lenders under the Senior Credit Agreement
and the holders of the Senior Subordinated Notes. In such event, there may not
be sufficient assets remaining to pay amounts due on any or all of the Senior
Discount Notes then outstanding. 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 (i)
in respect of overhead, tax liabilities, legal, accounting and other
professional fees and expenses, (ii) 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 (as defined)
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 (iii) to finance the payment of cash interest on
the Senior Discount Notes or any notes issued pursuant to the refinancing of the
Senior Discount Notes.

         The Senior Subordinated Notes and all amounts owing under the Senior
Credit Agreement will mature prior to the maturity of the Senior Discount Notes.
The Senior Discount Indenture requires that any agreements governing
indebtedness that refinances the Senior Subordinated Notes or the Senior Credit
Agreement not contain restrictions on the ability of the Operating Company to
make distributions to Holdings that are more restrictive than those contained in
the Senior Subordinated Indenture or the Senior Credit Agreement, respectively.
There can be no assurance that if the Operating Company is required to refinance
the Senior Subordinated Notes or any amounts under the Senior Credit Agreement,
it will be able to do so upon acceptable terms, if at all.

                                       13
<PAGE>

         Subordination of Senior Subordinated Notes and Holdings Guarantee. The
Senior Subordinated Notes are unsecured obligations of the Company Issuers that
are subordinated in right of payment to all Senior Indebtedness of the Company
Issuers, including all indebtedness under the Senior Credit Agreement. The
Indentures and the Senior Credit Agreement will permit the Operating Company to
incur additional Senior Indebtedness, provided that certain conditions are met,
and the Operating Company expects from time to time to incur additional Senior
Indebtedness. In the event of the insolvency, liquidation, reorganization,
dissolution or other winding up of the Company Issuers or upon a default in
payment with respect to, or the acceleration of, or if a judicial proceeding is
pending with respect to any default under, any Senior Indebtedness, the lenders
under the Senior Credit Agreement and any other creditors who are holders of
Senior Indebtedness must be paid in full before a holder of the Senior
Subordinated Notes may be paid. Accordingly, there may be insufficient assets
remaining after such payments to pay principal or interest on the Senior
Subordinated Notes. In addition, under certain circumstances, no payments may be
made with respect to the principal of or interest on the Senior Subordinated
Notes if a default exists with respect to certain Senior Indebtedness. CapCo I,
a wholly owned subsidiary of the Operating Company, was formed solely for the
purpose of serving as a co-issuer of the Senior Subordinated Notes and has no
operations or assets from which it will be able to repay the Senior Subordinated
Notes. Accordingly, the Company Issuers must rely entirely upon the cash flow
and assets of the Operating Company to generate the funds necessary to meet
their obligations, including the payment of principal and interest on the Senior
Subordinated Notes.

         The Senior Subordinated Notes are fully and unconditionally guaranteed
by Holdings on a senior subordinated basis (the "Holdings Guarantee"). The
Holdings Guarantee is subordinated to all senior indebtedness of Holdings and
effectively subordinated to all indebtedness and other liabilities (including
but not limited to trade payables) of Holdings' subsidiaries. Because the
Holdings Guarantee will be subordinated in right of payment to all senior
indebtedness of Holdings and effectively subordinated to all indebtedness and
other liabilities (including trade payables) of Holdings' subsidiaries
(including the Operating Company), investors should not rely on the Holdings
Guarantee in evaluating an investment in the Senior Subordinated Notes.

         Restrictive Debt Covenants. The Senior Credit Agreement and the
Indentures contain a number of significant covenants that, among other things,
restrict the ability of the Issuers to dispose of assets, repay other
indebtedness, incur additional indebtedness, pay dividends, prepay subordinated
indebtedness (including, in the case of the Senior Credit Agreement, the Notes),
incur liens, make capital expenditures, investments or acquisitions, engage in
mergers or consolidations, engage in transactions with affiliates and otherwise
restrict the activities of the Issuers. In addition, under the Senior Credit
Agreement, the Operating Company is required to satisfy specified financial
ratios and tests. The ability of the Operating Company to comply with those
provisions may be affected by events beyond the Operating Company's control, and
there can be no assurance that the Operating Company will meet those tests. The
breach of any of these covenants could result in a default under the Senior
Credit Agreement. In the event of any such default, depending upon the actions
taken by the lenders, the Issuers could be prohibited from making any payments
of principal or interest on the Notes. In addition, the lenders could elect to
declare all amounts borrowed under the Senior Credit Agreement, together with
accrued interest, to be due and payable and could proceed against the collateral
securing that indebtedness. If the Senior Indebtedness were to be accelerated,
there can be no assurance that the assets of the Operating Company would be
sufficient to repay in full that indebtedness and the other indebtedness of the
Operating Company.

         Risks Associated with International Operations. The Company has
significant operations outside the United States in the form of wholly-owned
subsidiaries, cooperative joint ventures and other arrangements. The Company's
22 plants outside of the United States are located in Argentina (2), Belgium
(1), Brazil (4), Canada (2), France (4), Germany (2), Hungary (1), Mexico (2),
Poland (2), Spain (1) and Turkey (1). As a result, the Company is subject to
risks associated with operating in foreign countries, including fluctuations in
currency exchange rates (recently in Argentina in particular), imposition of
limitations on conversion of foreign currencies into dollars or remittance of
dividends and other payments by foreign subsidiaries, imposition or increase of
withholding and other taxes on remittances and other payments by foreign
subsidiaries, labor relations problems, hyperinflation in some foreign countries
and imposition or increase of investment and other restrictions by foreign
governments or the imposition of environmental or employment laws. To date, the
above risks in Europe, North America and South America have not had a material
impact on the Company's operations, but no assurance can be given that such
risks will not have a material adverse effect on the Company in the future.

         Exposure to Fluctuations in Resin Prices and Dependence on Resin
Supplies. The Company depends on large quantities of PET, HDPE and other resins
in manufacturing its products. One of its primary strategies is to grow the
business by capitalizing on the conversion from glass, metal and paper


                                       14
<PAGE>

containers to plastic containers. 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. Historically, the Company
has passed through substantially all increases and decreases in the cost of
resins to its customers through contractual provisions and standard industry
practice; however, if the Company is not able to do so in the future and there
are sustained increases in resin prices, the Company's operating margins could
be affected adversely. Furthermore, if the Company cannot obtain sufficient
amounts of resin from any of its suppliers, or if a conflict with Iraq causes a
substantial increase in oil prices, and as a result an increase in resin prices,
the Company may have difficulty obtaining alternate sources quickly and
economically, and its operations and profitability may be impaired.

         Dependence on Significant Customer. All product lines the Company
provides to PepsiCo, the Company's largest customer, collectively accounted for
approximately 16.4% of the Company's net sales for the year ended December 31,
2002. PepsiCo's termination of its relationship with the Company could have a
material adverse effect upon the Company's business, financial position or
results of operations. The Company is not the sole supplier of plastic packaging
to PepsiCo. Additionally, in 2002 the Company's top 20 customers comprised over
82% of its net sales. The Company's existing customers' purchase orders and
contracts typically vary from two to ten years. Prices under these arrangements
are tied to market standards and therefore vary with market conditions. The
contracts, including those with PepsiCo, generally are requirements contracts
which do not obligate the customer to purchase any given amount of product from
the Company. Accordingly, despite the existence of supply contracts with its
customers, although in the past the Company's customers have not purchased
amounts under supply contracts that in the aggregate are materially lower than
what we have expected, the Company faces the risk that in the future customers
will not continue to purchase amounts that meet the Company's expectations. If
any of the Company's largest customers terminated its relationship with the
Company, the Company would lose a significant source of revenues and profits.
Additionally, the loss of one of its largest customers could result in the
Company having excess capacity if it is unable to replace that customer. This
could result in the Company having excess overhead and fixed costs. This could
also result in the Company's selling, general and administrative expenses and
capital expenditures representing increased portions of its revenues.

         Dependence on Key Personnel. The success of the Company depends to a
large extent on a number of key employees, and the loss of the services provided
by them could have a material adverse effect on the Company's ability to operate
its business and implement its strategies effectively. In particular, the loss
of the services provided by G. Robinson Beeson, Scott G. Booth, John A.
Buttermore, John E. Hamilton, Roger M. Prevot, Ashok Sudan and Philip R. Yates,
among others, could have a material adverse effect on the management of the
Company. The Company does not maintain "key" person insurance on any of its
executive officers.

         Relationship with Graham Affiliates. The relationship of the Company
with Graham Engineering and Graham Capital Corporation ("Graham Capital"), or
their successors or assigns, is significant to the business of the Company. To
date, certain affiliates of the Graham Entities have provided equipment,
technology and services to Holdings and its subsidiaries. Upon the
Recapitalization, Holdings entered into the Equipment Sales Agreement (as
defined) with Graham Engineering, pursuant to which Graham Engineering will
provide the Company with the Graham Wheel and related technical support. The
obligations of Holdings to make payments to the Graham affiliates under the
Equipment Sales Agreement would be unsubordinated obligations of Holdings.
Accordingly, such obligations would be pari passu with the Senior Discount Notes
and would be structurally subordinated to the Senior Subordinated Notes. If any
such agreements were terminated prior to their scheduled terms or if the
relevant Graham affiliate fails to comply with any such agreement, the business,
financial condition and results of operations of the Company could be materially
and adversely affected.

         Fraudulent Conveyance. In connection with the Recapitalization, the
Operating Company made a distribution to Holdings of $313.7 million of the net
proceeds of the Senior Subordinated Offering and the Bank Borrowings, and
Holdings redeemed certain partnership interests held by the Graham Entities for
$429.6 million (without giving effect to payment by the Graham Entities of $21.2
million owed to Holdings under certain promissory notes). If a court in a
lawsuit brought by an unpaid creditor of one of the Issuers or a representative
of such creditor, such as a trustee in bankruptcy, or one of the Issuers as a
debtor-in-possession, were to find under relevant federal and state fraudulent
conveyance statutes that such Issuer had (a) actual intent to defraud or (b) did
not receive fair consideration or reasonably equivalent value for the
distribution from the Operating Company to Holdings or for incurring the debt,
including the Notes, in connection with the financing of the Recapitalization,
and that, at the time of such incurrence, such Issuer (i) was insolvent, (ii)
was rendered insolvent by reason of such incurrence, (iii) was engaged in a
business or transaction for which the assets remaining with such Issuer
constituted unreasonably small capital or (iv) intended to incur, or believed
that it would incur, debts beyond its ability to pay such debts as they matured,


                                       15
<PAGE>

such court could void such Issuer's obligations under the Notes, subordinate the
Notes to other indebtedness of such Issuer or take other action detrimental to
the holders of the Notes.

         The measure of insolvency for these purposes varies depending upon the
law of the jurisdiction being applied. Generally, however, a company would be
considered insolvent for these purposes if the sum of the company's debts
(including contingent debts) were greater than the fair saleable value of all
the company's property, or if the present fair saleable value of the company's
assets were less than the amount that would be required to pay its probable
liability on its existing debts as they become absolute and matured. Moreover,
regardless of solvency or the adequacy of consideration, a court could void an
Issuer's obligations under the Notes, subordinate the Notes to other
indebtedness of such Issuer or take other action detrimental to the holders of
the Notes if such court determined that the incurrence of debt, including the
Notes, was made with the actual intent to hinder, delay or defraud creditors.

         The Issuers believe that the indebtedness represented by the Notes was
incurred for proper purposes and in good faith without any intent to hinder,
delay or defraud creditors, that the Issuers received reasonably equivalent
value or fair consideration for incurring such indebtedness, that the Issuers
were prior to the issuance of the Notes and, after giving effect to the issuance
of the Notes and the use of proceeds in connection with the Recapitalization,
continued to be, solvent under the applicable standards (notwithstanding the
negative net worth and insufficiency of earnings to cover fixed charges for
accounting purposes that have resulted from the Recapitalization) and that the
Issuers have and will have sufficient capital for carrying on their businesses
and are and will be able to pay their debts as they mature. There can be no
assurance, however, as to what standard a court would apply in order to evaluate
the parties' intent or to determine whether the Issuers were insolvent at the
time, or rendered insolvent upon consummation, of the Recapitalization or the
sale of the Notes or that, regardless of the method of valuation, a court would
not determine that an Issuer was insolvent at the time, or rendered insolvent
upon consummation, of the Recapitalization.

         In rendering their opinions in connection with the Offerings, counsel
for the Issuers and counsel for the Initial Purchasers did not express any
opinion as to the applicability of federal or state fraudulent conveyance laws.

         Control by Blackstone. Since the consummation of the Recapitalization,
Blackstone has indirectly controlled approximately 80% of the general
partnership interests in Holdings. Pursuant to the Holdings Partnership
Agreement (as defined), holders of a majority of the general partnership
interests generally have the sole power, subject to certain exceptions, to take
actions on behalf of Holdings, including the appointment of management and the
entering into of mergers, sales of substantially all assets and other
extraordinary transactions. There can be no assurance that the interests of
Blackstone will not conflict with the interests of holders of the Notes.

         Risks Associated with Possible Future Acquisitions. The Company's
future growth may be a function, in part, of acquisitions of other consumer
goods packaging businesses. To the extent that it grows through acquisition, the
Company will face the operational and financial risks commonly encountered with
that type of a strategy. The Company would also face operational risks, such as
failing to assimilate the operations and personnel of the acquired businesses,
disrupting the Company's ongoing business, dissipating the Company's limited
management resources and impairing relationships with employees and customers of
the acquired business as a result of changes in ownership and management.
Additionally, the Company has incurred indebtedness to finance past
acquisitions, and would likely incur additional indebtedness to finance future
acquisitions, as permitted under the Senior Credit Agreement and the Indentures,
in which case it would also face certain financial risks associated with the
incurring of additional indebtedness to make an acquisition, such as reducing
its liquidity, access to capital markets and financial stability.


Item 2.  Properties

         The Company currently owns or leases 57 plants located in Argentina,
Belgium, Brazil, Canada, France, Germany, Hungary, Mexico, Poland, Spain, Turkey
and the United States. Twenty-four of the Company's plants are located on-site
at customer and vendor facilities. The Company's operations in Poland and Mexico
are pursuant to joint venture arrangements in which the Company owns slightly
more than a 50% interest. The Company believes that its plants, which are of
varying ages and types of construction, are in good condition, are suitable for
the Company's operations and generally are expected to provide sufficient
capacity to meet the Company's requirements for the foreseeable future.

         The following table sets forth the location of the Company's plants and
administrative facilities, whether on-site or off-site, whether leased or owned,
and their approximate current square footage.

                                       16
<PAGE>


                                       On-site                          Size
Location                             Or Off-site    Leased/Owned      (Sq. ft.)
--------                             -----------    ------------      ---------
U.S. Packaging Facilities (a)
-----------------------------
 1.  York, Pennsylvania                Off-site         Owned          395,554
 2.  Maryland Heights, Missouri        Off-site         Owned          308,961
 3.  Holland, Michigan                 Off-site        Leased          218,128
 4.  York, Pennsylvania                Off-site        Leased          210,370
 5.  Selah, Washington                  On-site         Owned          170,553
 6.  Atlanta, Georgia                   On-site        Leased          165,000
 7.  Montgomery, Alabama               Off-site        Leased          150,143
 8.  Emigsville, Pennsylvania          Off-site        Leased          148,300
 9.  Levittown, Pennsylvania           Off-site        Leased          148,000
10.  Evansville, Indiana               Off-site        Leased          146,720
11.  Rancho Cucamonga, California      Off-site        Leased          143,063
12.  Santa Ana, California             Off-site         Owned          127,680
13.  Muskogee, Oklahoma                Off-site        Leased          125,000
14.  Woodridge, Illinois               Off-site        Leased          124,137
15.  Atlanta, Georgia                  Off-site        Leased          112,400
16.  Cincinnati, Ohio                  Off-site        Leased          111,669
17.  Bradford, Pennsylvania            Off-site        Leased           90,350
18.  Berkeley, Missouri                Off-site         Owned           75,000
19.  Jefferson, Louisiana              Off-site        Leased           72,407
20.  Cambridge, Ohio                    On-site        Leased           57,000
21.  Port Allen, Louisiana              On-site        Leased           56,721
22.  Shreveport, Louisiana              On-site        Leased           56,400
23.  Richmond, California              Off-site        Leased           54,985
24.  Houston, Texas                    Off-site         Owned           52,500
25.  Newell, West Virginia              On-site        Leased           50,000
26.  Lakeland, Florida                 Off-site        Leased           49,000
27.  New Kensington, Pennsylvania       On-site        Leased           48,000
28.  N. Charleston, South Carolina      On-site        Leased           45,000
29.  Darlington, South Carolina         On-site        Leased           43,200
30.  Bradenton, Florida                 On-site        Leased           33,605
31.  Vicksburg, Mississippi             On-site        Leased           31,200
32.  Bordentown, New Jersey             On-site        Leased           30,000
33.  West Jordan, Utah                  On-site        Leased           25,573
34.  Wapato, Washington                Off-site        Leased           20,300

Canadian Packaging Facilities (f)
---------------------------------
35.  Mississauga, Ontario              Off-site         Owned           78,416
36.  Toronto, Ontario                   On-site          (c)             5,000

Mexican Packaging Facilities
----------------------------
37.  Mexicali (d)                      Off-site        Leased           59,700
38.  Irapuato (d)                       On-site        Leased           58,130

European Packaging Facilities (f)
---------------------------------
39.  Assevent, France                  Off-site         Owned          186,000
40.  Noeux les Mines, France           Off-site         Owned          120,000
41.  Sulejowek, Poland (b)             Off-site         Owned           83,700
42.  Bad Bevensen, Germany             Off-site     Owned/Leased (e)    80,000
43.  Meaux, France                     Off-site         Owned           80,000
44.  Aldaia, Spain                      On-site        Leased           75,350


                                       17
<PAGE>

45.  Istanbul, Turkey                  Off-site         Owned           50,000
46.  Villecomtal, France                On-site        Leased           22,790
47.  Rotselaar, Belgium                 On-site        Leased           15,070
48.  Bierun, Poland (b)                 On-site        Leased           10,652
49.  Genthin, Germany                   On-site        Leased            6,738
50.  Nyirbator, Hungary                 On-site        Leased            5,000

South American Packaging Facilities
-----------------------------------
51.  Sao Paulo, Brazil                 Off-site        Leased           70,290
52.  Buenos Aires, Argentina           Off-site         Owned           33,524
53.  Rio de Janeiro, Brazil             On-site   Owned/Leased (e)      25,840
54.  Rio de Janeiro, Brazil             On-site        Leased           16,685
55.  Rio de Janeiro, Brazil             On-site          (c)            11,000
56.  San Luis, Argentina               Off-site         Owned            8,070

Graham Recycling
----------------
57.  York, Pennsylvania                Off-site         Owned           44,416

Administrative Facilities
-------------------------
o    York, Pennsylvania                   N/A          Leased           83,373
o    Blyes, France                        N/A          Leased            9,741
o    Rueil, Paris, France                 N/A          Leased            4,300
o    Mexico City, Mexico                  N/A          Leased              360

(a)  Substantially all of the Company's domestic tangible and intangible assets
     are pledged as collateral pursuant to the terms of the Senior Credit
     Agreement.
(b)  This facility is owned by Masko Graham, in which the Company holds a 51%
     interest through Graham Packaging Poland L.P.
(c)  The Company operates these on-site facilities without leasing the space we
     occupy.
(d)  This facility is leased by Industrias Graham Innopack S.de.R.L.de C.V., in
     which Graham Packaging Latin America, LLC holds a 50% interest.
(e)  The building is owned and the land is leased.
(f)  The Company currently has on the market for sale its vacant facilities
     located in Burlington, Ontario, Canada and Wrexham, United Kingdom.


Item 3.  Legal Proceedings

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


Item 4.  Submission of Matters to a Vote of Security Holders

         No matters were submitted to a vote of security holders during the
fourth quarter of 2002.


                                       18
<PAGE>



                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

         Because Holdings is a limited partnership, equity interests in Holdings
take the form of general and limited partnership interests. There is no
established public trading market for any of the general or limited partnership
interests in Holdings.

         There are two owners of general partner interests in Holdings: Investor
GP and Graham Packaging Corporation. The limited partnership interests in
Holdings are owned by Investor LP and a Graham family entity. See Item 12,
"Security Ownership of Certain Beneficial Owners and Management."

         Opco GP is the sole owner of a general partnership interest in the
Operating Company, and Holdings is the sole owner of a limited partnership
interest in the Operating Company.

         The Operating Company owns all of the outstanding capital stock of
CapCo I. Holdings owns all of the outstanding capital stock of CapCo II.

         Under the Senior Credit Agreement, the Operating Company is subject to
restrictions on the payment of dividends and other distributions to Holdings, as
described in Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources."

         As indicated under Item 1, "Business - The Recapitalization," upon the
Closing of the Recapitalization, (i) certain limited and general partnership
interests in Holdings held by the Graham Entities were redeemed by Holdings for
$429.6 million, and (ii) certain limited and general partnership interests in
Holdings held by the Graham Entities were purchased by the Equity Investors for
$208.3 million.

         As indicated under Item 1, "Business - The Recapitalization," upon the
Closing of the Recapitalization on February 2, 1998, the Company Issuers
consummated an offering pursuant to Rule 144A under the Securities Act of their
Senior Subordinated Notes Due 2008, consisting of $150.0 million aggregate
principal amount of their Fixed Rate Senior Subordinated Old Notes and $75.0
million aggregate principal amount of their Floating Rate Senior Subordinated
Old Notes. On February 2, 1998, as part of the Recapitalization, the Holdings
Issuers also consummated an offering pursuant to Rule 144A under the Securities
Act of $169.0 million aggregate principal amount at maturity of their Senior
Discount Old Notes. Pursuant to the Purchase Agreement dated January 23, 1998
(the "Purchase Agreement"), the initial purchasers, DB Alex. Brown LLC and an
affiliate, Lazard Freres & Co. LLC and Salomon Brothers Inc, purchased the
Senior Subordinated Old Notes at a price of 97.0% of the principal amount, for a
discount of 3% from the initial offering price of 100% or a total discount of
$6.75 million. Pursuant to the Purchase Agreement, the initial purchasers
purchased the Senior Discount Old Notes at a price of 57.173% of the principal
amount for a discount of 2.361% from the initial offering price of 59.534% or a
total discount of $3.99 million. Pursuant to the Purchase Agreement, the Issuers
also reimbursed the initial purchasers for certain expenses. Pursuant to the
Senior Subordinated Exchange Offers, on September 8, 1998, the Company Issuers
exchanged $150.0 million aggregate principal amount of their Fixed Rate Senior
Subordinated Exchange Notes and $75.0 million aggregate principal amount of
their Floating Rate Senior Subordinated Exchange Notes for equal principal
amounts of Fixed Rate Senior Subordinated Old Notes and Floating Rate Senior
Subordinated Old Notes, respectively. Pursuant to the Senior Discount Exchange
Offer, on September 8, 1998, the Holdings Issuers exchanged $169.0 million
aggregate principal amount at maturity of their Senior Discount Exchange Notes
for an equal principal amount of Senior Discount Old Notes. The Senior
Subordinated Old Notes were, and the Senior Subordinated Exchange Notes are,
fully and unconditionally guaranteed by Holdings on a senior subordinated basis.


Item 6.  Selected Financial Data

         The following table sets forth certain selected historical consolidated
financial data for the Company for and at the end of each of the years in the
five-year period ended December 31, 2002, which are derived from the Company's
audited financial statements. The combined financial statements of the Company
have been prepared for periods prior to the Recapitalization to include Holdings
and its subsidiaries on a combined basis and for periods subsequent to the
Recapitalization, on a consolidated basis. The following table should be read in


                                       19
<PAGE>

conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" (Item 7) and the consolidated financial statements of
the Company, including the related notes thereto, included under Item 8.

<TABLE>
<CAPTION>

                                                                             Year Ended December 31,
                                                                             -----------------------
                                                            2002        2001        2000         1999        1998
                                                            ----        ----        ----         ----        ----
                                                                                   (In millions)
<S>                                                       <C>         <C>         <C>          <C>         <C>
STATEMENT OF OPERATIONS DATA:
Net sales (1)                                             $ 906.7     $ 923.1     $ 842.6      $ 731.6     $ 602.4
Gross profit (1)                                            164.1       151.9       134.5        142.7       115.4
Selling, general and administrative expenses                 63.8        58.2        56.2         48.0        37.8
Impairment charges (2)                                        5.1        38.0        21.1           --          --
Special charges and unusual items (3)                          --         0.2         1.1          4.6        24.2
                                                          -------     -------     -------       ------      ------
Operating income                                             95.2        55.5        56.1         90.1        53.4
Recapitalization expenses (4)                                  --          --          --           --        11.8
Interest expense, net                                        81.8        98.5       101.7         87.5        68.0
Other expense (income)                                        0.1         0.2         0.2         (0.7)       (0.2)
Minority interest                                             1.7         0.5        (0.6)        (0.5)         --
Income tax provision  (5)                                     4.0         0.3         0.4          2.5         1.1
Extraordinary loss (6)                                         --          --          --           --         0.7
                                                          -------     -------     -------       ------      ------
Net income (loss) (7)                                     $   7.6     $ (44.0)    $ (45.6)      $  1.3      $(28.0)
                                                          =======     =======     =======       ======      ======

OTHER DATA:
Cash flows from:
  Operating activities                                     $ 92.4      $ 52.5      $ 90.9        $55.5     $  41.8
  Investing activities                                      (96.6)      (77.2)     (164.7)      (181.8)     (181.2)
  Financing activities                                        1.3        24.3        78.4        126.2       139.7
Adjusted EBITDA (8)                                         198.2       171.5       153.7        149.1       117.8
Capital expenditures (excluding acquisitions)                92.4        74.3       163.4        171.0       133.9
Investments (including acquisitions) (9)                       --         0.2         0.1         10.3        45.2
Depreciation and amortization (10)                           75.8        71.7        66.2         53.2        39.3
Ratio of earnings to fixed charges (11)                      1.1x          --          --         1.0x          --

BALANCE SHEET DATA:
Working capital (deficit) (12)                             $  9.6     $ (10.4)     $(23.5)      $ 10.6     $  (5.5)
Total assets                                                798.3       758.6       821.3        741.2       596.7
Total debt                                                1,070.6     1,052.4     1,060.2      1,017.1       875.4
Partners' capital (deficit)                                (460.3)     (485.1)     (464.4)      (458.0)     (438.8)
</TABLE>

(1)   Net sales increase or decrease based on fluctuations in resin prices.
      Consistent with industry practice and/or as permitted under the Company's
      agreements with its customers, substantially all resin price changes are
      passed through to customers by means of corresponding changes in product
      pricing. Therefore, the Company's dollar gross profit has been
      substantially unaffected by fluctuations in resin prices. However, 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.
(2)   Includes impairment charges recorded on long-lived assets of $5.1 million,
      $28.9 million and $16.3 million for the years ended December 31, 2002,
      2001 and 2000, respectively, and goodwill of $9.1 million and $4.8 million
      for the years ended December 31, 2001 and 2000, respectively. See
      "Management's Discussion and Analysis of Financial Condition and Results
      of Operations--Results of Operations" (Item 7) for a further discussion.
(3)   Includes compensation costs related to the Recapitalization, global
      restructuring, systems conversion, aborted acquisition and legal costs.
      See "Management's Discussion and Analysis of Financial Condition and
      Results of Operations" (Item 7) and "Financial Statements and
      Supplementary Data" (Item 8), including the related notes thereto.
(4)   Includes transaction fees, expenses and costs associated with the
      termination of the interest rate collar and swap agreements as a result of
      the Recapitalization.
(5)   As a limited partnership, Holdings is not subject to U.S. federal income
      taxes or most state income taxes. Instead, such taxes are assessed to
      Holdings' partners based on their distributive share of the income of
      Holdings. The Company's foreign operations are subject to tax in their
      local jurisdictions. Most of these entities have historically had net
      operating losses and recognized minimal tax expense.


                                       20
<PAGE>

(6)  Represents cost incurred, including the write-off of unamortized debt
     issuance fees, in connection with the early extinguishment of debt.
(7)  Effective June 28, 1999, the Company changed its method of valuing
     inventories for its domestic operations from the last-in, first-out
     ("LIFO") method to the first-in, first-out ("FIFO") method as over time it
     more closely matches revenues with costs. The FIFO method more accurately
     reflects the costs related to the actual physical flow of raw materials and
     finished goods inventory. Accordingly, the Company believes the FIFO method
     of valuing inventory will result in a better measurement of operating
     results. All previously reported results have been restated to reflect the
     retroactive application of the accounting change as required by generally
     accepted accounting principles. The accounting change increased net loss
     for the year ended December 31, 1998 by $2.0 million.

(8)  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 defined in the
     Company's Senior Credit Agreement and Indentures as earnings before
     minority interest, extraordinary items, interest expense, interest income,
     income taxes, depreciation and amortization expense, impairment charges,
     the ongoing $1.0 million per year fee paid pursuant to the Blackstone
     monitoring agreement, non-cash equity income in earnings of joint ventures,
     other non-cash charges, Recapitalization expenses, special charges and
     unusual items and certain non-recurring charges. Adjusted EBITDA is
     included in this Annual Report on Form 10-K because covenants in Holdings'
     and the Operating Company's debt agreements are tied to ratios based on
     that measure. While Adjusted EBITDA and similar measures are frequently
     used as measures of operations and the ability to meet debt service
     requirements, these terms are not necessarily comparable to other similarly
     titled captions of other companies due to the potential inconsistencies in
     the method of calculation. See "Management's Discussion and Analysis of
     Financial Condition and Results of Operations" (Item 7) and "Financial
     Statements and Supplementary Data" (Item 8), including the related notes
     thereto.

Adjusted EBITDA is calculated as follows:
<TABLE>
<CAPTION>

                                                                                 Year Ended December 31,
                                                                                 -----------------------
                                                                         2002      2001      2000      1999      1998
                                                                         ----      ----      ----      ----      ----
                                                                                        (In millions)
<S>                                                                    <C>      <C>       <C>       <C>       <C>
Income (loss) before extraordinary item                                $  7.6  $  (44.0)  $ (45.6)  $   1.3   $ (27.3)
Interest expense, net                                                    81.8      98.5     101.7      87.5      68.0
Income tax expense                                                        4.0       0.3       0.4       2.5       1.1
Depreciation and amortization                                            75.8      71.7      66.2      53.2      39.3
Impairment charges                                                        5.1      38.0      21.1        --        --
Fees paid pursuant to the Blackstone monitoring agreement                 1.0       1.0       1.0       1.0       1.0
Equity in loss (earnings) of joint venture                                 --       0.2      (0.1)     (0.3)     (0.3)
Special charges and unusual items/certain non-recurring charges (a)(b)   21.2       5.3       9.6       4.6      24.2
Recapitalization (income) expenses                                         --        --        --      (0.2)     11.8
Minority interest                                                         1.7       0.5      (0.6)     (0.5)       --
                                                                      -------   -------   -------   -------   -------

Adjusted EBITDA                                                       $ 198.2   $ 171.5   $ 153.7   $ 149.1   $ 117.8
                                                                      =======   =======   =======   =======   =======
</TABLE>


     (a)  The year ended December 31, 2002 includes certain non-recurring
          charges including global reorganization costs ($18.2 million) and
          costs related to the postponement of the equity offering and
          concurrent transactions ($3.0 million). See "Management's Discussion
          and Analysis of Financial Condition and Results of Operations" (Item
          7) and "Financial Statements and Supplementary Data" (Item 8),
          including the related notes thereto.
     (b)  Does not include project startup costs, which are treated as
          non-recurring in accordance with the definition of EBITDA under the
          Senior Credit Agreement and Indentures. These startup costs were $4.7
          million, $4.2 million, $8.4 million, $4.4 million and $2.6 million for
          the years ended December 31, 2002, 2001, 2000, 1999 and 1998,
          respectively.

(9)  In April 1997, the Company acquired 80% of the operating assets and
     liabilities of Rheem-Graham Embalagens Ltda. for $20.3 million, excluding
     direct costs of the acquisition. The remaining 20% was purchased in
     February 1998. In July 1998, the Company acquired selected plastic
     container manufacturing operations of Crown Cork & Seal located in France,
     Germany, the United Kingdom and Turkey for $38.9 million, excluding direct
     costs of the acquisition, net of liabilities assumed. On April 26, 1999,


                                       21
<PAGE>

     the Company acquired 51% of the operating assets of PlasPET Florida, Ltd.
     The Company became the general partner on July 6, 1999, and on October 9,
     2001 acquired the remaining 49%. The total purchase price for the 100%
     interest, excluding direct costs of the acquisition, net of liabilities
     assumed, was $3.1 million. On July 1, 1999, the Company acquired selected
     companies located in Argentina for $8.1 million, excluding direct costs of
     the acquisition, net of liabilities assumed. On March 30, 2001, the Company
     acquired an additional 1% interest in Masko Graham, bringing the Company's
     total interest to 51%. The total purchase price for the 51% interest,
     excluding direct costs of the acquisition, net of liabilities assumed, was
     $1.3 million. Amounts shown under the caption "Investments (including
     acquisitions)" represent cash paid, net of cash acquired in the
     acquisitions. These transactions were accounted for under the purchase
     method of accounting. Results of operations are included since the
     respective dates of the acquisitions.
(10) Depreciation and amortization excludes amortization of debt issuance fees,
     which is included in interest expense, net, and impairment charges.
(11) For purposes of determining the ratio of earnings to fixed charges,
     earnings are defined as earnings before income taxes, minority interest,
     income from equity investees and extraordinary items, plus fixed charges
     and amortization of capitalized interest less interest capitalized. Fixed
     charges include interest expense on all indebtedness, interest capitalized,
     amortization of debt issuance fees and one third of rental expense on
     operating leases representing that portion of rental expense deemed to be
     attributable to interest. Earnings were insufficient to cover fixed charges
     by $44.2 million, $49.1 million and $28.7 million for the years ended
     December 31, 2001, 2000 and 1998, respectively.
(12) Working capital is defined as current assets, less cash and cash
     equivalents, minus current liabilities, less current maturities of
     long-term debt.


Item 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

Overview

         The Company is a worldwide leader in the design, manufacture and sale
of customized blow molded plastic containers for the branded food and beverage,
household and personal care, and automotive lubricants markets and currently
operates 57 plants throughout North America, Europe and South America. The
Company's primary strategy is to operate in select markets that will position it
to benefit from the growing conversion to high performance plastic packaging
from more commodity-type 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 plastic packaging, including the demand
for containers for juices, juice drinks, nutritional beverages, sports drinks,
teas, yogurt drinks, snacks and other food products. Since the beginning of
1997, the Company has invested over $270 million in capital expenditures to
expand its technology, machinery and plant structure to prepare for what it
believed would be the growth in the hot-fill PET area. For the year ended
December 31, 2002, the Company's sales of hot-fill PET containers grew to $323.9
million from $70.2 million in 1996. More recently, the Company has been a


                                       22
<PAGE>

leading participant in the rapid growth of the yogurt drinks market where the
Company manufactures containers using polyolefin resins. Since the beginning of
1999, the Company has invested over $140 million in capital expenditures in
the polyolefin area of the food and beverage market. For the year ended December
31, 2002, the Company's sales of polyolefin containers grew to $171.8 million
from $117.7 million in 1999.

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

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

         The Company currently operates 22 facilities, either on its own or
through joint ventures, in Argentina, Belgium, Brazil, Canada, France, Germany,
Hungary, Mexico, Poland, Spain and Turkey. Over the past few years, the Company
has expanded its international operations with the addition of new plants in
France, Belgium, Spain, Poland and Mexico. On March 30, 2001 the Company
increased its interest in Masko Graham, the Company's Polish operation, from 50%
to 51%.

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

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

o    In its European operations, the Company committed to restructuring changes
     in the United Kingdom, France, Italy and Germany as follows. In 2000, the
     Company experienced a decline in its operations in the United Kingdom and
     France. In the United Kingdom, this reduction in business was the result of
     the loss of a key customer due to a consolidation of its filling
     requirements to a smaller number of locations, several of which were not
     within an economical shipping distance from the Company's U.K. facilities.
     As a result, during the latter portion of 2001, the Company committed to
     plans to close its plant in the United Kingdom. This plant was closed
     during 2002. During the latter portion of 2001, the Company also committed
     to plans to sell or close certain plants in France. During 2002, one
     facility in France was sold. Another facility in France is expected to be
     closed during 2003. In the third quarter of 2001, the Company experienced a
     loss or reduction of business at its plant in Sovico, Italy. During the
     latter portion of 2001, the Company committed to plans to sell or close its
     plants in Italy. In 2002, the Company sold both of its plants in Italy.
     During the latter portion of 2001, as a part of its European restructuring
     plans, the Company committed to sell or close certain plants in Germany.
     These plans are still in process and are expected to be completed during
     2003.

o    In its South American operations in the first half of 2001, the Company
     experienced a downturn in financial performance in its operations in
     Argentina and, later in 2001, the Company's operations in Argentina were
     subjected to the severe downturn in the Argentine economy.

(See "--Results of Operations" for a discussion of impairment charges.)

         For the year ended December 31, 2002, 82.5% of the Company's net sales
were generated by the top twenty customers, the majority of which are under
long-term contracts with terms up to ten years; the remainder of which were
generated by customers with whom the Company has been doing business for over 14
years on average. Prices under these arrangements are typically tied to market
standards and, therefore, vary with market conditions. In general, the contracts
are requirements contracts that do not obligate the customer to purchase any
given amount of product from the Company. The Company had sales to one customer
which exceeded 10.0% of total sales in each of the years ended December 31,
2002, 2001 and 2000. The Company's sales to this customer were 16.4%, 17.4% and
11.7% for the years ended December 31, 2002, 2001 and 2000, respectively. For
the year ended December 31, 2002, nearly all sales to this customer were made in
North America.

                                       23
<PAGE>

         Based on industry data, the following table summarizes average market
prices per pound of PET and HDPE resins in North America over the years ended
December 31, 2002, 2001 and 2000:

                                             Year Ended December 31,
                                             -----------------------
                                        2002          2001         2000
                                        ----          ----         ----
PET                                    $0.58         $0.65        $0.62
HDPE                                   $0.41         $0.43        $0.44

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

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


Results of Operations

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

                                        Year Ended December 31,
                                        -----------------------
                              2002                2001               2000
                              ----                ----               ----
North America (1)       $745.0    82.2%     $742.5    80.4%    $667.2    79.2%
Europe                   138.5    15.3%      154.3    16.7%     146.2    17.3%
South America (1)         23.2     2.5%       26.3     2.9%      29.2     3.5%
                        ------   ------     ------   ------    ------   ------

Total Net Sales         $906.7   100.0%     $923.1   100.0%    $842.6   100.0%
                        ======   ======     ======   ======    ======   ======

(1) Beginning in January 1, 2002, the North America segment has included Mexico
and the Latin America segment became the South America segment. 2001 net sales
in Mexico, which are included in South America, are insignificant. There were no
operations in Mexico prior to 2001.

                                           Year Ended December 31,
                                           -----------------------
                                   2002              2001              2000
                                   ----              ----              ----
Food and Beverage            $515.4   56.9%    $511.6   55.4%    $416.2   49.4%
Household and Personal Care   186.0   20.5%     208.5   22.6%     210.6   25.0%
Automotive Lubricants         205.3   22.6%     203.0   22.0%     215.8   25.6%
                             ------  ------    ------  ------    ------  ------

Total Net Sales              $906.7  100.0%    $923.1  100.0%    $842.6  100.0%
                             ======  ======    ======  ======    ======  ======


2002 Compared to 2001

         Net Sales. Net sales for the year ended December 31, 2002 decreased
$16.4 million or 1.8% to $906.7 million from $923.1 million for the year ended
December 31, 2001. The decrease in sales was primarily due to a decrease in
resin pricing combined with the Company's restructuring process in Europe, which
includes the sale or closing of six non-strategic locations of which four
locations have already been sold or closed, partially offset by a 7.5% increase
in units sold, principally due to additional food and beverage container
business where units increased by 11.7%. Excluding business impacted by the


                                       24
<PAGE>

European restructuring, sales for the year ended December 31, 2002 would have
increased approximately 3% compared to the sales for the year ended December 31,
2001 and unit volume would have increased approximately 14%. On a geographic
basis, sales for the year ended December 31, 2002 in North America increased
$2.5 million or 0.3% from the year ended December 31, 2001 and included higher
units sold of 8.9%. North American sales in the food and beverage business and
the automotive business contributed $3.2 million and $4.0 million, respectively,
to the increase, while sales in the household and personal care business were
$4.7 million lower. Units sold in North America increased by 12.0% in the food
and beverage business, 1.8% in the household and personal care business and 7.6%
in the automotive lubricants business. Sales for the year ended December 31,
2002 in Europe decreased $15.8 million or 10.2% from the year ended December 31,
2001. The decrease in sales is primarily due to the European restructuring.
Overall, the European sales reflected a 5.3% increase in units sold. Exchange
rate changes increased sales by approximately $5.5 million. Excluding business
impacted by the European restructuring, sales in Europe for the year ended
December 31, 2002 would have increased approximately $23.2 million compared to
sales for the year ended December 31, 2001 and unit volume in Europe would have
increased approximately 25% compared to the same period last year. Sales in
South America for the year ended December 31, 2002 decreased $3.1 million or
11.8% for the year ended December 31, 2001, primarily due to unfavorable
exchange rate changes of approximately $11.0 million, partially offset by a 3.1%
increase in units sold and increased pricing principally due to a pass through
of increased costs.

          Gross Profit. Gross profit for the year ended December 31, 2002
increased $12.2 million to $164.1 million from $151.9 million for the year ended
December 31, 2001. Gross profit for the year ended December 31, 2002 increased
$15.5 million in North America, decreased $4.1 million in Europe and increased
$0.8 million in South America when compared to the year ended December 31, 2001.
The increase in gross profit resulted primarily from the higher sales volume and
strong operating performance in all three of the Company's geographic segments
being partially offset by restructuring and customer consolidation expenses in
Europe of approximately $15.8 million and exchange rate losses in South America
of approximately $2.3 million.

         Selling, General & Administrative Expenses. Selling, general and
administrative expenses for the year ended December 31, 2002 increased $5.5
million to $63.8 million from $58.3 million for the year ended December 31,
2001. The increase in 2002 selling, general and administrative expenses was
primarily due to an increase in certain non-recurring charges, which were $5.6
million and $1.0 million for the years ended December 31, 2002 and December 31,
2001, respectively, comprised primarily of costs related to the postponed equity
offering and concurrent transactions ($3.0 million) and global reorganizations
costs ($2.6 million) for the year ended December 31, 2002 and global
reorganization costs ($0.8 million) for the year ended December 31, 2001. As a
percent of sales, selling, general and administrative expenses increased to 7.0%
of sales in 2002 from 6.3% of sales in 2001. Excluding non-recurring charges, as
a percent of sales, selling, general and administrative expenses increased to
6.4% of sales in 2002 from 6.2% of sales in 2001.

         Impairment Charges. During 2002, the Company evaluated the
recoverability of its long-lived assets in the following locations (with the
operating segment under which it reports in parenthesis) due to indicators of
impairment as follows:

o    Germany (Europe) - the Company's commitment to a plan to sell this
     location, and
o    Certain plant in Louisiana (North America) - the Company's commitment to a
     plan to close this location.

         During 2001, the Company evaluated the recoverability of its long-lived
assets in the following locations (with the operating segment under which it
reports in parenthesis) due to indicators of impairment as follows:

o    Argentina (South America) - operating losses and cash flow deficits
     experienced, the loss or reduction of business and the severe downturn in
     the Argentine economy;
o    Italy (Europe) - operating losses and reduction of business, as well as the
     Company's commitment to a plan to sell these locations;
o    Certain plants in France (Europe) - the Company's commitment to a plan to
     sell or close these locations;
o    Bad Bevensen, Germany (Europe) - the Company's commitment to a plan to sell
     or close this location;
o    United Kingdom (Europe) - the Company's commitment to a plan to close this
     location;
o    Burlington, Canada (North America) - the Company's commitment to a plan to
     close this location; and
o    Turkey (Europe) - a significant change in the ability to utilize certain
     assets.

                                       25
<PAGE>

         For assets to be held and used, the Company determined that the
undiscounted cash flows were below the carrying value of certain long-lived
assets in these locations. Accordingly, the Company adjusted the carrying values
of these long-lived assets in these locations to their estimated fair values,
resulting in impairment charges of $4.1 million for the year ended December 31,
2001. For assets to be disposed of, the Company adjusted the carrying values of
these long-lived assets in these locations to the lower of their carrying values
or their estimated fair values less costs to sell, resulting in impairment
charges of $5.1 million and $24.8 million for the years ended December 31, 2002
and 2001, respectively. These assets have a remaining carrying amount as of
December 31, 2002 of $0.4 million. Similarly, the Company evaluated the
recoverability of its enterprise goodwill applicable to these locations, and
consequently recorded impairment charges of $9.1 million for the year ended
December 31, 2001. Goodwill was evaluated for impairment and the resulting
impairment charge recognized based on a comparison of the related net book value
of the location to projected discounted future cash flows of the location.

         As of December 31, 2002, certain assets in Germany, the United Kingdom
and the United States were held for disposal. Operating loss for Germany for
each of the three years ended December 31, 2002, 2001 and 2000 was $4.3 million,
$12.5 million and $1.7 million, respectively. Discrete financial information is
not available for the other location whose assets are held for disposal.

         Special Charges and Unusual Items. There are no special charges and
unusual items in 2002. In 2001 special charges and unusual items related to
compensation costs related to the Recapitalization (see "Business - The
Recapitalization" (Item 1) for a further discussion of the recapitalization
compensation).

         Interest Expense, Net. Interest expense, net decreased $16.7 million to
$81.8 million for the year ended December 31, 2002 from $98.5 million for the
year ended December 31, 2001. The decrease was primarily related to lower
interest rates in 2002 compared to 2001. Interest expense, net includes $16.7
million and $15.0 million of interest on the Senior Discount Notes for the years
ended December 31, 2002 and 2001, respectively.

         Other Expense (Income). Other expense (income) was $0.1 million for the
year ended December 31, 2002 as compared to $0.2 million for the year ended
December 31, 2001.

         Minority Interest. Minority interest increased $1.2 million to $1.7
million for the year ended December 31, 2002 from $0.5 million for the year
ended December 31, 2001, primarily related to additional earnings of Masko
Graham.

         Income Tax Provision. Income tax provision increased $3.7 million to
$4.0 million for the year ended December 31, 2002 from $0.3 million for the year
ended December 31, 2001. The increase was primarily related to increased taxable
earnings in certain of the Company's European subsidiaries for the year ended
December 31, 2002 as compared to the year ended December 31, 2001.

         Net Income (Loss). Primarily as a result of factors discussed above,
net income for the year ended December 31, 2002 was $7.6 million compared to net
loss of $44.0 million for the year ended December 31, 2001.

         Adjusted EBITDA. Primarily as a result of factors discussed above,
Adjusted EBITDA (as defined in Item 6 "Selected Financial Data") in 2002
increased 15.6% to $198.2 million from $171.5 million in 2001.


2001 Compared to 2000

         Net Sales. Net sales for the year ended December 31, 2001 increased
$80.5 million to $923.1 million from $842.6 million for the year ended December
31, 2000. The increase in sales was primarily due to an increase in units sold.
Units sold increased by 18.7% for the year ended December 31, 2001 as compared
to the year ended December 31, 2000, primarily due to additional North American
food and beverage business, where units sold increased by 38.0%. On a geographic
basis, sales for the year ended December 31, 2001 in North America were up $75.3
million or 11.3% from the year ended December 31, 2000. The North American sales
increase included higher units sold of 15.6%. North American sales in the food
and beverage business and the household and personal care business contributed
$83.2 million and $0.9 million, respectively, to the increase, while sales in
the automotive business were $8.8 million lower. Units sold in North America
increased by 38.0% in the food and beverage business, but decreased by 0.8% in
the household and personal care business and by 3.8% in the automotive business.
Sales for the year ended December 31, 2001 in Europe were up $8.1 million or
5.5% from the year ended December 31, 2000, principally in the food and beverage


                                       26
<PAGE>

business. Overall, European sales reflected a 25.6% increase in units sold. The
growth in sales due to capital investments made in recent periods was primarily
offset by exchange rate changes of approximately $5.0 million for the year ended
December 31, 2001 compared to the year ended December 31, 2000. Sales in Latin
America for the year ended December 31, 2001 were down $2.9 million or 9.9% from
the year ended December 31, 2000, primarily due to exchange rate changes of
approximately $5.9 million, offset by a 3.1% increase in units sold.

         Gross Profit. Gross profit for the year ended December 31, 2001
increased $17.4 million to $151.9 million from $134.5 million for the year ended
December 31, 2000. Gross profit for the year ended December 31, 2001 increased
$9.5 million in North America, increased $8.7 million in Europe and decreased
$0.8 million in Latin America when compared to the year ended December 31, 2000.
The increase in gross profit resulted primarily from higher sales volume in
North America and Europe, along with restructuring and customer consolidation in
Europe. The continued economic uncertainties in Argentina and exchange rate
changes in Brazil of approximately $1.1 million were contributing factors to the
decrease in the Latin American gross profit.

         Selling, General & Administrative Expenses. Selling, general and
administrative expenses for the year ended December 31, 2001 increased $2.0
million to $58.2 million from $56.2 million for the year ended December 31,
2000. The increase in selling, general and administrative expenses is due
primarily to overall growth in the business, offset by lower non-recurring
charges for the year ended December 31, 2001 compared to the year ended December
31, 2000. As a percent of sales, selling, general and administrative expenses
increased to 6.2% of sales in 2001 from 5.9% of sales in 2000, excluding
non-recurring charges, and decreased to 6.3% of sales in 2001 from 6.7% of sales
in 2000, including non-recurring charges.

         Impairment Charges. During 2001, the Company evaluated the
recoverability of its long-lived assets in the following locations (with the
operating segment under which it reports in parenthesis) due to indicators of
impairment as follows:

o    Argentina (Latin America) - operating losses and cash flow deficits
     experienced, the loss or reduction of business and the severe downturn in
     the Argentine economy;
o    Italy (Europe) - operating losses and reduction of business, as well as the
     Company's commitment to a plan to sell these locations;
o    Certain plants in France (Europe) - the Company's commitment to a plan to
     sell or close these locations;
o    Bad Bevensen, Germany (Europe) - the Company's commitment to a plan to sell
     or close this location;
o    United Kingdom (Europe) - the Company's commitment to a plan to close this
     location;
o    Burlington, Canada (North America) - the Company's commitment to a plan to
     close this location; and
o    Turkey (Europe) - a significant change in the ability to utilize certain
     assets.

         During 2000, the Company evaluated the recoverability of its long-lived
assets in the following locations (with the operating segment under which it
reports in parenthesis) due to indicators of impairment as follows:

o    United Kingdom (Europe) - operating losses experienced and projected;
o    Certain plants in France (Europe) - operating losses experienced and
     projected;
o    Anjou, Canada (North America) - operating losses experienced and projected;
     and
o    Brazil (Latin America) - a significant change in the ability to utilize
     certain assets.

         For assets to be held and used, the Company determined that the
undiscounted cash flows were below the carrying value of certain long-lived
assets in these locations. Accordingly, the Company adjusted the carrying values
of these long-lived assets to their estimated fair values, resulting in
impairment charges of $4.1 million and $15.8 million for the years ended
December 31, 2001 and 2000, respectively. For assets to be disposed of, the
Company adjusted the carrying values of these long-lived assets to the lower of
their carrying values or their estimated fair values less costs to sell,
resulting in impairment charges of $24.8 million and $0.5 million for the years
ended December 31, 2001 and 2000, respectively. These assets have a remaining
carrying amount as of December 31, 2001 of $0.1 million. Similarly, the Company
evaluated the recoverability of its enterprise goodwill, and consequently
recorded impairment charges of $9.1 million and $4.8 million for the years ended
December 31, 2001 and 2000, respectively. Goodwill was evaluated for impairment
and the resulting impairment charge recognized based on a comparison of the
related net book value of the enterprise to projected discounted future cash
flows of the enterprise.

                                       27
<PAGE>

         As of December 31, 2001, all of the assets in Italy and certain assets
in France, Germany, the United Kingdom and Canada were held for disposal.
Operating (loss) income for the United Kingdom for each of the three years ended
December 31, 2001, 2000 and 1999 was $(3.7) million, $(9.1) million and $1.7
million, respectively. Operating loss for Italy for each of the three years
ended December 31, 2001, 2000 and 1999 was $7.8 million, $1.5 million and $1.8
million, respectively. Discrete financial information is not available for the
other locations whose assets are held for disposal.

         Special Charges and Unusual Items. In 2001 and 2000, special charges
and unusual items of $0.2 million and $1.1 million, respectively, related to
compensation costs related to the Recapitalization (see "Business -- The
Recapitalization" (Item 1) for a further discussion of the recapitalization
compensation).

         Interest Expense, Net. Interest expense, net decreased $3.2 million to
$98.5 million for the year ended December 31, 2001 from $101.7 million for the
year ended December 31, 2000. The decrease was primarily related to lower
interest rates in 2001 compared to 2000. Interest expense, net includes $15.0
million and $13.6 million of interest on the Senior Discount Notes for the years
ended December 31, 2001 and 2000, respectively.

         Other Expense (Income). Other expense (income) was $0.2 million for the
year ended December 31, 2001 as compared to $0.3 million for the year ended
December 31, 2000. The lower loss was due primarily to a higher foreign exchange
gain in the year ended December 31, 2001 as compared to the year ended December
31, 2000.

         Minority Interest. Minority interest increased $1.1 million to $0.5
million for the year ended December 31, 2001 from $(0.6) million for the year
ended December 31, 2000, primarily related to additional earnings of Masko
Graham and reduced losses of PlasPET Florida, Ltd.

         Net Loss. Primarily as a result of factors discussed above, net loss
was $44.0 million for the year ended December 31, 2001 compared to net loss of
$45.6 million for the year ended December 31, 2000.

         Adjusted EBITDA. Primarily as a result of factors discussed above,
Adjusted EBITDA (as defined in Item 6 "Selected Financial Data") for the year
ended December 31, 2001 increased 11.6% to $171.5 million from $153.7 million
for the year ended December 31, 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, for
profitable entities, 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 U.S. dollar relative to these other
currencies can have a negative effect on the profitability of the Company.
Exchange rate fluctuations increased comprehensive income by $12.5 million for
the year ended December 31, 2002 and decreased comprehensive income by $10.4
million for each of the years ended December 31, 2001 and 2000.


Liquidity and Capital Resources

         In 2002, 2001 and 2000, the Company generated a total of $235.7 million
of cash from operations, $7.2 million from increased indebtedness and $97.7
million from capital contributions. This $340.6 million was primarily used to
fund $330.2 million of capital expenditures, $0.3 million of investments, $4.2
million of expenditures for the sales of businesses, $0.9 million of debt
issuance fee payments and $5.0 million of other net uses.

         The Company's Senior Credit Agreement currently consists of two term
loans to the Operating Company with initial term loan commitments totaling
$670.0 million and a revolving loan facility to the Operating Company totaling
$150.0 million. The obligations of the Operating Company under the Senior Credit
Agreement are guaranteed by Holdings and certain other subsidiaries of Holdings.
After giving effect to the February 14, 2003 Senior Credit Agreement, the term
loans are payable in quarterly installments and require payments of $2.5 million
in 2003, $5.0 million in 2004, $25.0 million in 2005, $50.0 million in 2006,
$50.0 million in 2007, $235.0 million in 2008 and $134.5 million in 2009. The
Company expects to fund scheduled debt repayments from cash from operations and
unused lines of credit. The revolving loan facilities expire on the earlier of
February 14, 2008 and the Term Loan maturity date.

                                       28
<PAGE>

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

         The Recapitalization included the issuance of $225.0 million of senior
subordinated notes due 2008 and the issuance of $169.0 million aggregate
principal amount at maturity of Senior Discount Notes due 2009 which yielded
gross proceeds of $100.6 million. At December 31, 2002, the aggregate accreted
value of the Senior Discount Notes was $168.4 million. The Senior Subordinated
Notes are unconditionally guaranteed on a senior subordinated basis by Holdings
and mature on January 15, 2008, with interest payable on $150.0 million at a
fixed rate of 8.75% and with interest payable on $75.0 million at LIBOR plus
3.625%. The Senior Discount Notes mature on January 15, 2009, with cash interest
payable semi-annually beginning July 15, 2003 at 10.75%. The effective interest
rate to maturity on the Senior Discount Notes is 10.75%. At December 31, 2002,
the Company's total indebtedness was $1,070.6 million.

         Unused lines of credit at December 31, 2002 and 2001 were $97.9 million
and $132.9 million, respectively. Substantially all unused lines of credit have
no major restrictions, except as described in Item 13 ("Certain Relationships
and Related Transactions"), and are provided under notes between the Company and
the lending institution.

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

         Total capital expenditures, excluding acquisitions, for 2002, 2001 and
2000 were $92.4 million, $74.3 million and $163.4 million, respectively.
Management believes that capital investment to maintain and upgrade property,
plant and equipment is important to remain competitive. Management estimates
that on average the annual capital expenditures required to maintain the
Company's facilities are approximately $30 million per year. Additional capital
expenditures beyond this amount will be required to expand capacity.

         For the fiscal year 2003, the Company expects to incur approximately
$130.0 million of capital expenditures. However, total capital expenditures for
2003 will depend on the size and timing of growth related opportunities. The
Company's principal sources of cash to fund ongoing operations and capital
requirements have been and are expected to continue to be net cash provided by
operating activities and borrowings under the Senior Credit Agreement.
Management believes that these sources will be sufficient to fund the Company's
ongoing operations and its foreseeable capital requirements. In connection with
plant expansion and improvement programs, the Company had commitments for
capital expenditures of approximately $28.7 million at December 31, 2002.

         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 (as defined) or by
     any employee stock ownership plan upon that person's death, disability,
     retirement or termination of employment or other circumstances with annual
     dollar limitations; and
o    to finance the payment of cash interest on the Senior Discount Notes or any
     notes issued pursuant to a refinancing of the Senior Discount Notes.


                                       29
<PAGE>


Contractual Obligations and Commitments

         The following table sets forth the Company's contractual obligations
and commitments as of December 31, 2002:
<TABLE>
<CAPTION>

                                                           Payments Due by Period
                                                           ----------------------
                                                              2004 and   2006 and   2008 and
Contractual Obligations                   Total       2003      2005       2007      beyond
-----------------------                   -----       ----      ----       ----      ------
                                                          (In millions)
<S>                                     <C>          <C>       <C>        <C>        <C>
Long-term debt                          $1,056.2     $30.5     $314.7     $317.4     $393.6
Capital lease obligations                   14.4       2.4        3.9        7.6         .5
Operating leases                            71.3      15.9       24.3       13.3       17.8
Capital expenditures                        28.7      28.7         --         --         --
                                        --------     -----     ------     ------     ------
Total contractual cash obligations      $1,170.6     $77.5     $343.0     $338.2     $411.9
                                        ========     =====     ======     ======     ======
</TABLE>

         Long-term debt amounts above have not been adjusted to reflect the
February 14, 2003 Senior Credit Agreement.


Transactions with Affiliates

         The Company's relationship with Graham Engineering is significant to
the business of the Company. To date, Graham Engineering has provided equipment,
technology and services to Holdings and its subsidiaries. Holdings is a party to
an equipment sales, service and licensing agreement with Graham Engineering,
pursuant to which Graham Engineering will provide the Company with the Graham
Wheel, which is an extrusion blow molding machine, and related technical
support. The Company paid Graham Engineering approximately $20.2 million, $23.8
million and $25.1 million for such services and equipment for the years ended
December 31, 2002, 2001 and 2000, respectively.

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

         Innopack, S.A., minority shareholder of Graham Innopack de Mexico S. de
R.L. de C.V., has supplied goods and related services to the Company, for which
the Company paid approximately $5.4 million and $1.1 million for the years ended
December 31, 2002 and 2001, respectively.

         Graham Family Growth Partnership has supplied management services to
the Company since 1998. The Company paid Graham Family Growth Partnership
approximately $1.1 million for its services for the year ended December 31,
2002, including the $1.0 million per year fee paid pursuant to the Holdings
Partnership Agreement, and $1.0 million for each of the years ended December 31,
2001 and 2000.

         Blackstone has supplied management services to the Company since 1998.
The Company paid Blackstone approximately $1.1 million for its services for the
year ended December 31, 2002, including the $1.0 million per year fee paid
pursuant to the Blackstone monitoring agreement, and $1.0 million for each of
the years ended December 31, 2001 and 2000.


                                       30
<PAGE>


Critical Accounting Policies and Estimates

Long-Lived Assets

         Long-lived assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable in accordance with Statement of Financial Accounting Standards
("SFAS") 144, "Accounting for the Impairment or Disposal of Long-Lived Assets."
The Company uses a probability-weighted estimate of the future undiscounted net
cash flows of the related asset or asset grouping over the remaining life in
measuring whether the assets are recoverable. Any impairment loss, if indicated,
is measured on the amount by which the carrying amount of the asset exceeds the
estimated fair value of the asset. When fair values are not available, the
Company estimates fair value using the probability-weighted expected future cash
flows discounted at a risk-free rate. Management believes that this policy is
critical to the financial statements, particularly when evaluating long-lived
assets for impairment. Varying results of this analysis are possible due to the
significant estimates involved in the Company's evaluations.

Derivatives

         On January 1, 2001 the Company adopted SFAS 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended by SFAS 138. These
standards establish accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. All derivatives, whether designated in hedging relationships
or not, are required to be recorded on the balance sheet at fair value. If the
derivative is designated as a fair value hedge, the changes in the fair value of
the derivative and the hedged item will be recognized in earnings. If the
derivative is designated as a cash flow hedge, the effective portion of the
change in the fair value of the derivative will be recorded in other
comprehensive income ("OCI") and will be recognized in the income statement when
the hedged item affects earnings. On January 1, 2001, in connection with the
adoption of SFAS 133, the Company recorded $0.4 million in OCI as a cumulative
transition adjustment for derivatives designated as cash flow hedges prior to
adopting SFAS 133. The Company entered into interest rate swap agreements to
hedge the exposure to increasing rates with respect to its Existing Senior
Credit Agreement. These interest rate swaps were accounted for as cash flow
hedges. The effective portion of the change in the fair value of the interest
rate swaps is recorded in OCI and was an unrealized gain of $6.9 million for the
year ended December 31, 2002, with a cumulative $6.2 million unrealized loss
recorded within OCI as of December 31, 2002. In connection with the closing of
the Senior Credit Agreement on February 14, 2003 the Company expects to record a
non-cash charge of approximately $4.8 million as a result of the
reclassification into earnings of the remaining unrealized loss on interest rate
swap agreements applicable to indebtedness under the Existing Senior Credit
Agreement.

         On February 14, 2003 the Company entered into three new interest rate
swap agreements beginning March 24, 2003 that effectively fix the interest rate
on $300 million of the term loans through March 24, 2006 at a weighted average
rate of 2.54%. SFAS 133 defines new requirements for designation and
documentation of hedging relationships as well as ongoing effectiveness
assessments in order to use hedge accounting. For a derivative that does not
qualify as a hedge, changes in fair value will be recognized in earnings.
Continued use of hedge accounting is dependent on Management's adherence to this
accounting policy. Failure to properly document the Company's interest rate
swaps as cash flow hedges would result in income statement recognition of all or
part of any future unrealized gain or loss recorded in OCI. The potential income
statement impact resulting from a failure to adhere to this policy makes this
policy critical to the financial statements.

         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 years ended December 31, 2002 and 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 December 31,
2002.

Benefit Plan Accruals

         The Company has several defined benefit plans, under which participants
earn a retirement benefit based upon a formula set forth in the plan. The
Company records expense related to these plans using actuarially determined
amounts that are calculated under the provisions of SFAS 87, "Employer's
Accounting for Pensions." Key assumptions used in the actuarial valuations
include the discount rate and the anticipated rate of return on plan assets.


                                       31
<PAGE>

These rates are based on market interest rates, and therefore, fluctuations in
market interest rates could impact the amount of pension expense recorded for
these plans. See Note 12 to Financial Statements.

         For disclosure of all of the Company's significant accounting policies
see Note 1 to Financial Statements.


New Accounting Pronouncements Not Yet Adopted

         On April 30, 2002, SFAS 145, "Rescission of FASB Statements No. 4, 44
and 64, Amendment of FASB Statement No. 13, and Technical Corrections" was
approved by the Financial Accounting Standards Board ("FASB"). As a result,
gains and losses from extinguishment of debt are classified as extraordinary
items only if they meet the criteria in Accounting Principles Board Opinion 30.
The Company adopted SFAS 145 on January 1, 2003 and the adoption of SFAS 145 did
not have a significant impact on its results of operations or financial
position.

         On July 30, 2002, SFAS 146, "Accounting for Costs Associated with Exit
or Disposal Activities" was issued by the FASB. This standard requires companies
to recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
Examples of costs covered by the standard include lease termination costs and
certain employee severance costs that are associated with a restructuring,
discontinued operation, plant closing or other exit or disposal activity. SFAS
146 is to be applied prospectively to exit or disposal activities initiated
after December 31, 2002. The Company adopted SFAS 146 on January 1, 2003 and the
adoption of SFAS 146 did not have a significant impact on its results of
operations or financial position.

         In December 2002, SFAS 148, "Accounting for Stock-Based Compensation -
Transition and Disclosure" was issued by the FASB. This standard amends SFAS 123
to provide alternative methods of transition for a voluntary change to the fair
value method of accounting for stock-based employee compensation. In addition,
this standard amends the disclosure requirements of SFAS 123 to require
prominent disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported results. Management does not believe that adoption of
SFAS 148 will have a significant impact on the Company's results of operations
or financial position.



Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

         As a result of the Recapitalization, the Company has significant long
and short-term debt commitments outstanding as of December 31, 2002. These
on-balance sheet financial instruments, to the extent they provide for variable
rates of interest, expose the Company to interest rate risk. The Company manages
its interest rate risk by entering into interest rate swap agreements. All of
the Company's derivative financial instrument transactions are entered into for
non-trading purposes.

         To the extent that the Company's financial instruments, including
derivative instruments, expose the Company to interest rate risk and market
risk, they are presented in the table below. For variable rate debt obligations,
the tables present principal cash flows and related actual weighted average
interest rates as of December 31, 2002 and 2001. For fixed rate debt
obligations, the following tables present principal cash flows and related
weighted average interest rates by maturity dates. For interest rate swap
agreements, the table presents notional amounts and the interest rates by
expected (contractual) maturity dates for the pay rate and actual interest rates
at December 31, 2002 and 2001 for the receive rate. Note 9 of the Notes to
Financial Statements should be read in conjunction with the tables below.


                                       32
<PAGE>






<TABLE>
<CAPTION>

                         Expected Maturity Date of Long-Term Debt (Including Current Portion) and Interest    Fair Value
                                            Rate Swap Agreements at December 31, 2002                           December
                         ------------------------------------------------------------------------------------
                              2003      2004        2005         2006       2007     Thereafter    Total        31, 2002
                              ----      ----        ----         ----       ----     ----------    -----        --------
                                                             (Dollars in thousands)
<S>                          <C>       <C>          <C>         <C>          <C>       <C>       <C>         <C>
Interest rate sensitive
liabilities:
Variable rate borrowings,
    including short term
    amounts                 $ 32,942   $250,732     $67,914     $244,896     $80,046   $ 75,720  $  752,250  $  752,250
  Average interest rate        4.31%      3.62%       3.92%        4.05%       4.38%      5.56%       4.09%
Fixed rate borrowings             --         --          --           --          --   $318,377  $  318,377  $  318,345
  Average interest rate           --         --          --           --          --      9.81%       9.81%
Total interest rate
sensitive liabilities       $ 32,942   $250,732     $67,914     $244,896     $80,046   $394,097  $1,070,627  $1,070,595
                            ========   ========     =======     ========     =======   ========  ==========  ==========
Derivatives matched
  against liabilities:
  Pay fixed swaps           $300,000         --                       --          --         --  $  300,000  $   (6,237)
  Pay rate                   5.25%           --          --           --          --         --       5.25%
  Receive rate               1.33%           --          --           --          --         --       1.33%
</TABLE>



<TABLE>
<CAPTION>

                         Expected Maturity Date of Long-Term Debt (Including Current Portion) and Interest   Fair Value
                                           Rate Swap Agreements at December 31, 2001                          December
                         ------------------------------------------------------------------------------------
                               2002      2003        2004        2005       2006    Thereafter     Total      31, 2001
                               ----      ----        ----        ----       ----    ----------     -----      --------
                                                             (Dollars in thousands)
<S>                          <C>        <C>        <C>         <C>        <C>        <C>       <C>             <C>
Interest rate sensitive
liabilities:
Variable rate borrowings,
  including short-term
  amounts                   $ 30,585   $ 31,610    $220,147    $67,476    $245,041   $155,894   $  750,753     $750,753
  Average interest rate        5.65%      4.74%       4.65%      4.78%       4.87%      6.26%        5.11%
Fixed rate borrowings             --         --          --         --          --   $301,638   $  301,638     $247,490
  Average interest rate           --         --          --         --          --      9.76%        9.76%
Total interest rate
  sensitive liabilities     $ 30,585   $ 31,610    $220,147    $67,476    $245,041   $457,532   $1,052,391     $998,243
                            ========   ========    ========    =======    ========   ========   ==========     ========
Derivatives matched
  against liabilities:
  Pay fixed swaps           $200,000   $300,000          --         --          --         --     $500,000     $(13,145)
  Pay rate                     5.81%      5.25%          --         --          --         --        5.47%
  Receive rate                 1.94%      2.99%          --         --          --         --        2.57%
</TABLE>


Long-term debt amounts above have not been adjusted to reflect the February 14,
2003 Senior Credit Agreement.

There were no forward exchange contracts outstanding as of December 31, 2002 or
December 31, 2001.


                                       33
<PAGE>




Item 8.  Financial Statements and Supplementary Data

                          INDEX TO FINANCIAL STATEMENTS

                                                                           Page
                                                                         Number
                                                                         ------

Independent Auditors' Report                                                 35

Audited Financial Statements                                                 36

  Consolidated Balance Sheets at December 31, 2002 and 2001                  36

  Consolidated Statements of Operations for the years ended December 31,
  2002, 2001 and 2000                                                        37

  Consolidated Statements of Partners' Capital (Deficit) for the years
  ended December 31, 2002, 2001 and 2000                                     38

  Consolidated Statements of Cash Flows for the years ended December 31,
  2002, 2001 and 2000                                                        39

  Notes to Consolidated Financial Statements                                 40




                                       34
<PAGE>



INDEPENDENT AUDITORS' REPORT



To the Partners
Graham Packaging Holdings Company

We have audited the accompanying consolidated balance sheets of Graham Packaging
Holdings Company and subsidiaries (the "Company") as of December 31, 2002 and
2001, and the related consolidated statements of operations, partners' capital
(deficit), and cash flows for each of the three years in the period ended
December 31, 2002. Our audits also included financial statement schedules I and
II listed in the index at Item 15(a). These financial statements and financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedules based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 2002
and 2001, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2002 in conformity with accounting
principles generally accepted in the United States of America. Also, in our
opinion, such financial statement schedules, when considered in relation to the
basic consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.



DELOITTE & TOUCHE LLP

Philadelphia, Pennsylvania
February 14, 2003



                                       35
<PAGE>



                        GRAHAM PACKAGING HOLDINGS COMPANY
                           CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
<TABLE>
<CAPTION>

                                                                          December 31,
                                                                          ------------
                                                                      2002           2001
                                                                      ----           ----
         ASSETS
<S>                                                               <C>            <C>
Current assets:
  Cash and cash equivalents                                       $    7,299     $    9,032
  Accounts receivable, net                                            97,933         90,182
  Inventories                                                         62,660         60,476
  Prepaid expenses and other current assets                           18,289         14,054
                                                                  ----------     ----------
Total current assets                                                 186,181        173,744
Property, plant and equipment:
  Machinery and equipment                                            954,088        883,692
  Land, buildings and leasehold improvements                         102,211         97,578
  Construction in progress                                            22,043         39,689
                                                                  ----------     ----------
                                                                   1,078,342      1,020,959
  Less accumulated depreciation and amortization                     500,380        471,374
                                                                  ----------     ----------
Property, plant and equipment, net                                   577,962        549,585
Goodwill                                                               5,566          6,400
Other non-current assets                                              28,602         28,832
                                                                  ----------     ----------
Total assets                                                      $  798,311     $  758,561
                                                                  ==========     ==========

         LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Current liabilities:
  Accounts payable                                                $   77,022     $   95,749
  Accrued expenses                                                    92,210         79,381
  Current portion of long-term debt                                    7,992         30,585
                                                                  ----------     ----------
Total current liabilities                                            177,224        205,715
Long-term debt                                                     1,062,635      1,021,806
Other non-current liabilities                                         14,655         13,582
Minority interest                                                      4,104          2,512
Commitments and contingent liabilities (see Notes 18 and 19)              --             --
Partners' capital (deficit):
  Partners' capital (deficit)                                       (420,349)      (427,911)
  Notes and interest receivable for ownership interests               (2,593)        (2,443)
  Accumulated other comprehensive income (loss)                      (37,365)       (54,700)
                                                                  ----------     ----------
Total partners' capital (deficit)                                   (460,307)      (485,054)
                                                                  ----------     ----------
Total liabilities and partners' capital (deficit)                 $  798,311     $  758,561
                                                                  ==========     ==========
</TABLE>


                 See accompanying notes to financial statements.


                                       36
<PAGE>



                        GRAHAM PACKAGING HOLDINGS COMPANY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (In thousands)

<TABLE>
<CAPTION>

                                                         Year Ended December 31,
                                                         -----------------------
                                                     2002         2001         2000
                                                     ----         ----         ----

<S>                                               <C>          <C>          <C>
Net sales                                         $906,705     $923,068     $842,551
Cost of goods sold                                 742,604      771,201      708,037
                                                  --------     --------     --------

Gross profit                                       164,101      151,867      134,514
Selling, general, and administrative expenses       63,732       58,230       56,200
Impairment charges                                   5,129       37,988       21,056
Special charges and unusual items                       --          147        1,118
                                                  --------     --------     --------

Operating income                                    95,240       55,502       56,140
Interest expense                                    82,080       99,052      102,202
Interest income                                       (296)        (612)        (509)
Other expense                                          179          199          265
Minority interest                                    1,713          530         (623)
                                                  --------     --------     --------

Income (loss) before income taxes                   11,564      (43,667)     (45,195)
Income tax provision                                 4,002          303          442
                                                  --------     --------     --------

Net income (loss)                                 $  7,562     $(43,970)    $(45,637)
                                                  ========     ========     ========
</TABLE>



                 See accompanying notes to financial statements.



                                       37
<PAGE>


                        GRAHAM PACKAGING HOLDINGS COMPANY
             CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
                                 (In thousands)
<TABLE>
<CAPTION>

                                                                          Notes and
                                                                          Interest       Accumulated
                                                          Partners'    Receivable for       Other
                                                           Capital        Ownership     Comprehensive
                                                          (Deficit)       Interests     Income (Loss)       Total
                                                          ---------       ---------     -------------       -----
<S>                                                       <C>              <C>             <C>           <C>
Consolidated 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 (unearned compensation expense)             763             --               --            763
                                                          ---------        -------         --------      ---------

Consolidated balance at December 31, 2000                  (433,997)        (1,147)         (29,235)      (464,379)

   Net loss for the year                                    (43,970)            --               --        (43,970)
   Cumulative effect of change in accounting for
   derivatives                                                    --            --              392            392
   Changes in fair value of derivatives                          --             --          (13,537)       (13,537)
   Additional minimum pension liability                          --             --           (1,937)        (1,937)
   Cumulative translation adjustment                             --             --          (10,383)       (10,383)
                                                                                                         ---------
   Comprehensive income (loss)                                                                             (69,435)

   Capital contribution                                      50,000         (1,146)              --         48,854
   Interest on notes receivable for ownership
   interests                                                     --           (150)              --           (150)
   Recapitalization (unearned compensation expense)              56                              --             56
                                                          ---------        -------         --------      ---------

Consolidated balance at December 31, 2001                  (427,911)        (2,443)         (54,700)      (485,054)

   Net income for the year                                    7,562             --               --          7,562
   Changes in fair value of derivatives                          --             --            6,909          6,909
   Additional minimum pension liability                          --             --           (2,051)        (2,051)
   Cumulative translation adjustment                             --             --           12,477         12,477
                                                                                                         ---------
   Comprehensive income                                                                                     24,897

   Interest on notes receivable for ownership
   interests                                                     --           (150)              --           (150)
                                                          ---------        -------         --------      ---------

Consolidated balance at December 31, 2002                 $(420,349)       $(2,593)        $(37,365)     $(460,307)
                                                          =========        =======         ========      =========
</TABLE>


                 See accompanying notes to financial statements.



                                       38
<PAGE>



                        GRAHAM PACKAGING HOLDINGS COMPANY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>

                                                                                     Year Ended December 31,
                                                                                     -----------------------
                                                                            2002            2001             2000
                                                                            ----            ----             ----
<S>                                                                    <C>             <C>               <C>
Operating activities:
  Net income (loss)                                                    $   7,562       $ (43,970)        $(45,637)
    Adjustments to reconcile net income (loss) to net cash
      provided by operating activities:
      Depreciation and amortization                                       75,840          71,707           66,200
      Impairment charges                                                   5,129          37,988           21,056
      Amortization of debt issuance fees                                   4,572           4,637            4,658
      Accretion of Senior Discount Notes                                  16,739          14,959           13,588
      Minority interest                                                    1,713             530             (623)
      Equity in loss (earnings) of joint venture                              --             246              (63)
      Foreign currency transaction loss                                       27             219              292
      Interest receivable for ownership interests                           (150)           (150)              --
      Other non-cash Recapitalization expense                                 --              56              763
    Changes in operating assets and liabilities, net of acquisitions/sales of
      businesses:
      Accounts receivable                                                 (6,265)         21,029           (6,898)
      Inventories                                                         (4,017)          4,020          (13,753)
      Prepaid expenses and other current assets                           (3,879)         (2,151)           4,191
      Other non-current assets and liabilities                              (414)         (7,180)          (1,406)
      Accounts payable and accrued expenses                               (4,488)        (49,453)          48,523
                                                                       ---------       ---------         --------
Net cash provided by operating activities                                 92,369          52,487           90,891

Investing activities:
    Net purchases of property, plant and equipment                       (92,437)        (74,315)        (163,429)
    Acquisitions of/investments in businesses, net of cash
    acquired                                                                  --            (163)            (109)
    Net expenditures for sales of businesses                              (4,193)             --               --
    Other                                                                     --          (2,680)          (1,145)
                                                                       ---------       ---------         --------
Net cash used in investing activities                                    (96,630)        (77,158)        (164,683)

Financing activities:
    Proceeds from issuance of long-term debt                             496,227         708,542          443,496
    Payment of long-term debt                                           (494,880)       (733,202)        (412,986)
    Notes receivable for ownership interests                                  --          (1,146)          (1,147)
    Capital contributions                                                     --          50,000           50,000
    Contributions (to) from minority shareholders                             --             (15)              68
    Debt issuance fees and other                                              --             106           (1,038)
                                                                       ---------       ---------         --------
Net cash provided by financing activities                                  1,347          24,285           78,393

Effect of exchange rate changes                                            1,181            (426)            (740)
                                                                       ---------       ---------         --------
(Decrease) increase in cash and cash equivalents                          (1,733)           (812)           3,861
Cash and cash equivalents at beginning of year                             9,032           9,844            5,983
                                                                       ---------       ---------         --------
Cash and cash equivalents at end of year                               $   7,299       $   9,032         $  9,844
                                                                       =========       =========         ========
</TABLE>


                 See accompanying notes to financial statements.


                                       39
<PAGE>

                        GRAHAM PACKAGING HOLDINGS COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2002


1.       Summary of Significant Accounting Policies

Principles of Consolidation

         The consolidated financial statements include the operations of Graham
Packaging Holdings Company, a Pennsylvania limited partnership formerly known as
Graham Packaging Company ("Holdings"); Graham Packaging Company, L.P., a
Delaware limited partnership formerly known as Graham Packaging Holdings I, L.P.
(the "Operating Company"); Graham Packaging Italy, S.r.L.; Graham Packaging
France Partners; Graham Packaging Poland, L.P.; Graham Packaging do Brasil
Industria e Comercio S.A.; Graham Packaging Canada Limited; Graham Recycling
Company, L.P.; Graham Packaging U.K. Ltd.; Graham Plastik Ambalaj A.S.; Graham
Packaging Deutschland GmbH; Graham Packaging Argentina S.A.; Graham Innopack de
Mexico S. de R.L. de C.V.; Graham Packaging Belgium S.A.; Graham Packaging
Iberica S.L.; subsidiaries thereof; and land and buildings that were used in the
operations, owned by the control group of owners and contributed to the Company
(as defined below). In addition, the consolidated financial statements of the
Company include GPC Capital Corp. I, a wholly owned subsidiary of the Operating
Company and GPC Capital Corp. II, a wholly owned subsidiary of Holdings. The
purpose of GPC Capital Corp. I is solely to act as co-obligor with the Operating
Company under the Senior Subordinated Notes (as herein defined) and as
co-borrower with the Operating Company under the Senior Credit Agreement (as
herein defined), and the purpose of GPC Capital Corp. II is solely to act as
co-obligor with Holdings under the Senior Discount Notes and as co-guarantor
with Holdings of the Senior Credit Agreement. GPC Capital Corp. I and GPC
Capital Corp. II have only nominal assets and do not conduct any independent
operations. Since March 30, 2001 the consolidated financial statements of the
Company include the operations of Masko Graham Spolka Z.O.O. ("Masko Graham") as
a result of acquiring an additional 1% interest, for a total of 51% interest, in
a joint venture. (Refer to Note 3 for a discussion of this investment). These
entities and assets are referred to collectively as Graham Packaging Holdings
Company (the "Company"). All significant intercompany accounts and transactions
have been eliminated in the consolidated financial statements.

         Since the Recapitalization (as herein defined - see Note 2), Holdings
has had no assets, liabilities or operations other than its direct and indirect
investments in the Operating Company, its ownership of GPC Capital Corp. II,
having only nominal assets and not conducting any independent operations, and
the Senior Discount Notes and related unamortized issuance costs. Holdings has
fully and unconditionally guaranteed the Senior Subordinated Notes of the
Operating Company and GPC Capital Corp. I on a senior subordinated basis.
Holdings is jointly and severally liable with GPC Capital Corp. II with respect
to all obligations on the Senior Discount Notes (as herein defined) and GPC
Capital Corp. II.

Description of Business

         The Company sells plastic packaging products principally to large,
multinational companies in the food and beverage, household and personal care
and automotive lubricants industries. The Company has manufacturing facilities
in Argentina, Belgium, Brazil, Canada, France, Germany, Hungary, Mexico, Poland,
Spain, Turkey and the United States.

Revenue Recognition

         Sales are recognized as products are shipped and upon passage of title
to the customer.

Cash and Cash Equivalents

         The Company considers cash and investments with an initial maturity of
three months or less when purchased to be cash and cash equivalents.

Inventories

         Inventories include material, labor and overhead and are stated at the
lower of cost or market with cost determined by the first-in, first-out ("FIFO")
method (see Note 5).


                                       40
<PAGE>


                        GRAHAM PACKAGING HOLDINGS COMPANY
                   NOTES TO FINANCIAL STATEMENTS - (continued)
                                DECEMBER 31, 2002


Property, Plant and Equipment

         Property, plant and equipment are stated at cost. Depreciation and
amortization are computed by the straight-line method over the estimated useful
lives of the various assets ranging from 3 to 31.5 years. Interest costs are
capitalized during the period of construction of capital assets as a component
of the cost of acquiring these assets.

Goodwill

         Prior to January 1, 2002, the Company amortized goodwill under the
straight-line method over 20 years. On January 1, 2002, the Company adopted
Statement of Financial Accounting Standards ("SFAS") 142, "Goodwill and Other
Intangible Assets." SFAS 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, ceased upon adoption
of this statement. The Company has completed the transitional goodwill
impairment test as of January 1, 2002 and determined that there was no
impairment loss to be recognized upon adoption of SFAS 142. Goodwill is reviewed
for impairment on an annual basis and whenever events or changes in
circumstances indicate that the carrying amount of the goodwill may not be
recoverable. See Notes 6, 20 and 22.

Other Non-current Assets

         Other non-current assets primarily include debt issuance fees, notes
receivable and prepaid pension assets. Debt issuance fees totaled $14.7 million
and $19.3 million as of December 31, 2002 and 2001, respectively. These amounts
are net of accumulated amortization of $22.4 million and $17.8 million as of
December 31, 2002 and 2001, respectively. Amortization is computed by the
effective interest method over the term of the related debt.

Long-Lived Assets

         Long-lived assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable in accordance with SFAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." The Company uses a probability-weighted estimate
of the future undiscounted net cash flows of the related asset or asset grouping
over the remaining life in measuring whether the assets are recoverable. Any
impairment loss, if indicated, is measured on the amount by which the carrying
amount of the asset exceeds the estimated fair value of the asset. When fair
values are not available, the Company estimates fair value using the
probability-weighted expected future cash flows discounted at a risk-free rate.

Derivatives

         On January 1, 2001 the Company adopted SFAS 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended by SFAS 138. These
standards establish accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. All derivatives, whether designated in hedging relationships
or not, are required to be recorded on the balance sheet at fair value. If the
derivative is designated as a fair value hedge, the changes in the fair value of
the derivative and the hedged item will be recognized in earnings. If the
derivative is designated as a cash flow hedge, the effective portion of the
change in the fair value of the derivative will be recorded in other
comprehensive income ("OCI") and will be recognized in the income statement when
the hedged item affects earnings. On January 1, 2001, in connection with the
adoption of SFAS 133, the Company recorded $0.4 million in OCI as a cumulative
transition adjustment for derivatives designated as cash flow hedges prior to
adopting SFAS 133. The Company entered into interest rate swap agreements to
hedge the exposure to increasing rates with respect to its Existing Senior
Credit Agreement. These interest rate swaps were accounted for as cash flow
hedges. The effective portion of the change in the fair value of the interest
rate swaps is recorded in OCI and was an unrealized gain of $6.9 million for the
year ended December 31, 2002, with a cumulative $6.2 million unrealized loss
recorded within OCI as of December 31, 2002. In connection with the closing of
the Senior Credit Agreement on February 14, 2003 the Company expects to record a
non-cash charge of approximately $4.8 million as a result of the
reclassification into earnings of the remaining unrealized loss on interest rate
swap agreements applicable to indebtedness under the Existing Senior Credit
Agreement.


                                       41
<PAGE>

                       GRAHAM PACKAGING HOLDINGS COMPANY
                   NOTES TO FINANCIAL STATEMENTS - (continued)
                                DECEMBER 31, 2002


         On February 14, 2003 the Company entered into three new interest rate
swap agreements beginning March 24, 2003 that effectively fix the interest rate
on $300 million of the term loans through March 24, 2006 at a weighted average
rate of 2.54%. SFAS 133 defines new requirements for designation and
documentation of hedging relationships as well as ongoing effectiveness
assessments in order to use hedge accounting. For a derivative that does not
qualify as a hedge, changes in fair value will be recognized in earnings.
Continued use of hedge accounting is dependent on Management's adherence to this
accounting policy. Failure to properly document the Company's interest rate
swaps as cash flow hedges would result in income statement recognition of all or
part of any future unrealized gain or loss recorded in OCI. The potential income
statement impact resulting from a failure to adhere to this policy makes this
policy critical to the financial statements.

         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 years ended December 31, 2002 and 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 December 31,
2002.

Benefit Plan Accruals

         The Company has several defined benefit plans, under which participants
earn a retirement benefit based upon a formula set forth in the plan. The
Company records expense related to these plans using actuarially determined
amounts that are calculated under the provisions of SFAS 87, "Employer's
Accounting for Pensions."

Foreign Currency Translation

         The Company uses the local currency as the functional currency for
principally all foreign operations. All assets and liabilities of foreign
operations are translated into U.S. dollars at year-end exchange rates. Income
statement items are translated at average exchange rates prevailing during the
year. The resulting translation adjustments are included in accumulated other
comprehensive income as a component of partners' capital (deficit). Exchange
gains and losses arising from transactions denominated in foreign currencies
other than the functional currency of the entity entering into the transactions
are included in current operations.

Comprehensive Income

         Foreign currency translation adjustments, changes in fair value of
derivatives designated and accounted for as cash flow hedges and additional
minimum pension liability are included in OCI and added with net income to
determine total comprehensive income, which is displayed in the Consolidated
Statements of Partners' Capital (Deficit).

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.

Management Option Plan

         The Company accounts for equity based compensation to employees using
the intrinsic value method prescribed in Accounting Principles Board Opinion
("APB") 25, "Accounting for Stock Issued to Employees." SFAS 123, "Accounting
For Stock Based Compensation," established accounting and disclosure
requirements using a fair-value based method of accounting for equity based
employee compensation plans. As of December 31, 2002, the Company has elected to
remain on its current method of accounting as described above and has adopted
the disclosure requirements of SFAS 123.

                                       42
<PAGE>

                       GRAHAM PACKAGING HOLDINGS COMPANY
                   NOTES TO FINANCIAL STATEMENTS - (continued)
                                DECEMBER 31, 2002


Postemployment Benefits

         The Company maintains a supplemental income plan, which provides
postemployment benefits to a certain employee of the Company. Accrued
postemployment benefits of approximately $1.2 million and $1.1 million as of
December 31, 2002 and 2001, respectively, were included in other non-current
liabilities.

Use of Estimates

         The preparation of financial statements in conformity with accounting
principles generally accepted in the U.S. requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Reclassifications

         Certain reclassifications have been made to the 2001 and 2000 financial
statements to conform to the 2002 presentation.

New Accounting Pronouncements Not Yet Adopted

         On April 30, 2002, SFAS 145, "Rescission of FASB Statements No. 4, 44
and 64, Amendment of FASB Statement No. 13, and Technical Corrections" was
approved by the Financial Accounting Standards Board ("FASB"). As a result,
gains and losses from extinguishment of debt are classified as extraordinary
items only if they meet the criteria in Accounting Principles Board Opinion 30.
The Company adopted SFAS 145 on January 1, 2003 and the adoption of SFAS 145 did
not have a significant impact on its results of operations or financial
position.

         On July 30, 2002, SFAS 146, "Accounting for Costs Associated with Exit
or Disposal Activities" was issued by the FASB. This standard requires companies
to recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
Examples of costs covered by the standard include lease termination costs and
certain employee severance costs that are associated with a restructuring,
discontinued operation, plant closing or other exit or disposal activity. SFAS
146 is to be applied prospectively to exit or disposal activities initiated
after December 31, 2002. The Company adopted SFAS 146 on January 1, 2003 and the
adoption of SFAS 146 did not have a significant impact on its results of
operations or financial position.

         In December 2002, SFAS 148, "Accounting for Stock-Based Compensation -
Transition and Disclosure" was issued by the FASB. This standard amends SFAS 123
to provide alternative methods of transition for a voluntary change to the fair
value method of accounting for stock-based employee compensation. In addition,
this standard amends the disclosure requirements of SFAS 123 to require
prominent disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported results. Management does not believe that adoption of
SFAS 148 will have a significant impact on the Company's results of operations
or financial position.


2.       Recapitalization

         Pursuant to an Agreement and Plan of Recapitalization, Redemption and
Purchase, dated as of December 18, 1997 (the "Recapitalization Agreement"), (i)
Holdings, (ii) the then owners of the Company (the "Graham Entities") and (iii)
BMP/Graham Holdings Corporation, a Delaware corporation ("Investor LP") formed
by Blackstone Capital Partners III Merchant Banking Fund L.P., and BCP/Graham
Holdings L.L.C., a Delaware limited liability company and a wholly owned
subsidiary of Investor LP ("Investor GP" and together with Investor LP, the
"Equity Investors") agreed to a recapitalization of Holdings (the
"Recapitalization"). Closing under the Recapitalization Agreement occurred on
February 2, 1998 ("Closing").

         The principal components and consequences of the Recapitalization
included the following:

     o    A change in the name of Holdings to Graham Packaging Holdings Company;


                                       43
<PAGE>

                       GRAHAM PACKAGING HOLDINGS COMPANY
                   NOTES TO FINANCIAL STATEMENTS - (continued)
                                DECEMBER 31, 2002


     o    The contribution by Holdings of substantially all of its assets and
          liabilities to the Operating Company, which was renamed "Graham
          Packaging Company, L.P.";
     o    The contribution by certain Graham Entities to the Company of their
          ownership interests in certain partially-owned subsidiaries of
          Holdings and certain real estate used but not owned by Holdings and
          its subsidiaries;
     o    The initial borrowing by the Operating Company of $403.5 million (the
          "Bank Borrowings") in connection with the Existing Senior Credit
          Agreement entered into by and among the Operating Company, Holdings
          and a syndicate of lenders;
     o    The issuance of $225.0 million Senior Subordinated Notes by the
          Operating Company and $100.6 million gross proceeds ($169.0 million
          aggregate principal amount at maturity) Senior Discount Notes by
          Holdings. A wholly owned subsidiary of each of the Operating Company
          and Holdings serves as co-issuer with its parent for its respective
          issue of notes;
     o    The repayment by the Operating Company of substantially all of the
          existing indebtedness and accrued interest of Holdings and its
          subsidiaries;
     o    The distribution by the Operating Company to Holdings of all of the
          remaining net proceeds of the Bank Borrowings and the Senior
          Subordinated Notes (other than amounts necessary to pay certain fees
          and expenses and payments to Management);
     o    The redemption by Holdings of certain partnership interests in
          Holdings held by the Graham Entities for $429.6 million;
     o    The purchase by the Equity Investors of certain partnership interests
          in Holdings held by the Graham Entities for $208.3 million;
     o    The repayment by the Graham Entities of amounts owed to Holdings under
          the $20.2 million promissory notes;
     o    The recognition of additional compensation expense under an equity
          appreciation plan;
     o    The payment of certain bonuses and other cash payments and the
          granting of certain equity awards to senior and middle level
          management;
     o    The execution of various other agreements among the parties; and
     o    The payment of a $6.2 million tax distribution by the Operating
          Company on November 2, 1998 to certain Graham Entities for tax periods
          prior to the Recapitalization.

         As a result of the consummation of the Recapitalization, Investor LP
owns an 81% limited partnership interest in Holdings and Investor GP owns a 4%
general partnership interest in Holdings. Certain Graham Entities or affiliates
thereof or other entities controlled by Donald C. Graham and his family, have
retained a 1% general partnership interest and a 14% limited partnership
interest in Holdings. Additionally, Holdings owns a 99% limited partnership
interest in the Operating Company, and GPC Opco GP L.L.C., a wholly owned
subsidiary of Holdings, owns a 1% general partnership interest in the Operating
Company.


3.       Acquisitions

Investment in Limited Partnership of PlasPET Florida, Ltd.

         On April 26, 1999 the company acquired 51% of the operating assets of
PlasPET Florida, Ltd., while becoming the general partner on July 6, 1999, and
on October 9, 2001 acquired the remaining 49%, for a total purchase price
(including acquisition-related costs) of $3.3 million, net of liabilities
assumed. The investment was accounted for under the equity method of accounting
prior to July 6, 1999. The original acquisition was recorded on July 6, 1999
under the purchase method of accounting and, accordingly, the results of
operations of the acquired operations are consolidated in the financial
statements of the Company for all periods presented. The purchase price has been
allocated to assets acquired and liabilities assumed based on fair values. The
allocated fair value of assets acquired and liabilities assumed is summarized as
follows (in thousands):


                                       44
<PAGE>

                       GRAHAM PACKAGING HOLDINGS COMPANY
                   NOTES TO FINANCIAL STATEMENTS - (continued)
                                DECEMBER 31, 2002


Current assets ........................      $   479
Property, plant and equipment .........        4,689
Other assets ..........................        1,052
Goodwill ..............................        4,032
                                             -------

Total .................................       10,252
Less liabilities assumed ..............        6,906
                                             -------

Net cost of acquisition ...............      $ 3,346
                                             =======


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 purchase price has been allocated to assets
acquired and liabilities assumed based on fair values. 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
                                        =======


Pro Forma Information

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

                              Year Ended December 31,
                              -----------------------
                                2001           2000
                                ----           ----
                                   (In thousands)
Net sales                     $925,782      $851,946
Net (loss)                     (44,102)      (46,415)

         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
combinations been in effect at the beginning of each period presented, or of
future results of operations of the entities.


4.       Accounts Receivable

         Accounts receivable are presented net of an allowance for doubtful
accounts of $4.3 million and $2.4 million at December 31, 2002 and 2001,
respectively. Management performs ongoing credit evaluations of its customers
and generally does not require collateral.

                                       45
<PAGE>

                       GRAHAM PACKAGING HOLDINGS COMPANY
                   NOTES TO FINANCIAL STATEMENTS - (continued)
                                DECEMBER 31, 2002


         The Company had sales to two customers which exceeded 10.0% of total
sales in any of the past three years. The Company's sales to one customer were
16.4%, 17.4% and 11.7% of total net sales for the years ended December 31, 2002,
2001 and 2000, respectively. For the year ended December 31, 2002, nearly all
sales to this customer were made in North America. The Company's sales to
another customer were 7.8%, 9.4% and 11.4% of total net sales for the years
ended December 31, 2002, 2001 and 2000, respectively. For the year ended
December 31, 2002, approximately 73%, 25% and 2% of the sales to this customer
were made in North America, Europe and South America, respectively.


5.       Inventories

         Inventories consisted of the following:

                                                   December 31,
                                                   ------------
                                                2002         2001
                                                ----         ----
                                                  (In thousands)
Finished goods                                $43,786      $43,403
Raw materials and parts                        18,874       17,073
                                              -------      -------
                                              $62,660      $60,476
                                              =======      =======


6.       Impairment Charges

         During 2002, the Company evaluated the recoverability of its long-lived
assets in the following locations (with the operating segment under which it
reports in parenthesis) due to indicators of impairment as follows:

o    Germany (Europe) - the Company's commitment to a plan to sell this
     location; and
o    Certain plant in Louisiana (North America) - the Company's commitment to a
     plan to close this location.

         During 2001, the Company evaluated the recoverability of its long-lived
assets in the following locations (with the operating segment under which it
reports in parenthesis) due to indicators of impairment as follows:

o    Argentina (Latin America) - operating losses and cash flow deficits
     experienced, the loss or reduction of business and the severe downturn in
     the Argentine economy;
o    Italy (Europe) - operating losses and reduction of business, as well as the
     Company's commitment to a plan to sell these locations;
o    Certain plants in France (Europe) - the Company's commitment to a plan to
     sell or close these locations;
o    Bad Bevensen, Germany (Europe) - the Company's commitment to a plan to sell
     or close this location;
o    United Kingdom (Europe) - the Company's commitment to a plan to close this
     location;
o    Burlington, Canada (North America) - the Company's commitment to a plan to
     close this location; and
o    Turkey (Europe) - a significant change in the ability to utilize certain
     assets.

         For assets to be held and used, the Company determined that the
undiscounted cash flows were below the carrying value of certain long-lived
assets in these locations. Accordingly, the Company adjusted the carrying values
of these long-lived assets in these locations to their estimated fair values,
resulting in impairment charges of $4.1 million for the year ended December 31,
2001. For assets to be disposed of, the Company adjusted the carrying values of
these long-lived assets in these locations to the lower of their carrying values
or their estimated fair values less costs to sell, resulting in impairment
charges of $5.1 million and $24.8 million for the years ended December 31, 2002
and 2001, respectively. These assets have a remaining carrying amount as of
December 31, 2002 of $0.4 million. Similarly, the Company evaluated the
recoverability of its enterprise goodwill applicable to these locations, and
consequently recorded impairment charges of $9.1 million for the year ended
December 31, 2001. Goodwill was evaluated for impairment and the resulting
impairment charge recognized based on a comparison of the related net book value
of the location to projected discounted future cash flows of the location.

         As of December 31, 2002, certain assets in Germany, the United Kingdom
and the United States were held for disposal. Operating loss for Germany for
each of the three years ended December 31, 2002, 2001 and 2000 was $4.3 million,


                                       46
<PAGE>

                       GRAHAM PACKAGING HOLDINGS COMPANY
                   NOTES TO FINANCIAL STATEMENTS - (continued)
                                DECEMBER 31, 2002


$12.5 million and $1.7 million, respectively. Discrete financial information is
not available for the other location whose assets are held for disposal.


7.       Accrued Expenses

         Accrued expenses consisted of the following:

                                                         December 31,
                                                         ------------
                                                      2002         2001
                                                      ----         ----
                                                        (In thousands)

Accrued employee compensation and benefits           $36,062      $23,930
Accrued interest                                      11,120       12,361
Accrued sales allowance                                9,919        8,612
Other                                                 35,109       34,478
                                                     -------      -------
                                                     $92,210      $79,381
                                                     =======      =======

         For the year ended December 31, 2001, the Company incurred costs of
employee termination benefits in Burlington, Canada of $0.9 million, which
included the legal liability of severing 139 employees, in the United Kingdom of
$0.6 million, which included the legal liability of severing 26 employees and in
Bad Bevensen, Germany of $0.6 million, which included the legal liability of
severing 22 employees. The Company terminated 35 of these employees as of
December 31, 2001. The remaining 152 employees were terminated during the year
ended December 31, 2002. For the year ended December 31, 2002, the Company
incurred costs of employee termination benefits in the United Kingdom of $1.7
million, which included the legal liability of severing 67 employees, all of
which were terminated as of December 31, 2002. In addition, for the year ended
December 31, 2002, the Company incurred costs of employee termination benefits
in Blyes and Noeux les Mines, France of $9.0 million, which included the legal
liability of severing 155 employees. The Company terminated 25 of these
employees as of December 31, 2002. Substantially all of the cash payments for
these termination benefits are expected to be made by June 30, 2004. The
following table reflects a rollforward of the reorganization costs, primarily
included in accrued employee compensation and benefits (in thousands):


<TABLE>
<CAPTION>

                                        Europe &
                                         North                       United
                                        America     Burlington,      Kingdom       Germany      France
                                       Reduction       Canada       Reduction     Reduction    Reduction
                                        in Force      Shutdown      in Force      in Force      in Force        Total
                                        --------      --------      --------      --------      --------        -----
<S>                                      <C>            <C>         <C>           <C>           <C>          <C>
Reserves at December 31, 2000            $ 3,605        $  --       $   --        $  --         $   --       $ 3,605
(Decrease) increase in reserves             (442)         895          595          564             --         1,612
Cash payments                             (2,756)          --         (595)          --             --        (3,351)
                                         -------        -----       ------        -----         ------       -------
Reserves at December 31, 2001            $   407        $ 895       $   --        $ 564         $   --       $ 1,866
(Decrease) increase in reserves             (185)          29        1,706          (47)         9,015        10,518
Cash payments                               (149)        (888)      (1,706)        (517)            --        (3,260)
                                         -------        -----       ------        -----         ------       -------
Reserves at December 31, 2002            $    73        $  36       $   --        $  --         $9,015        $9,124
                                         =======        =====       ======        =====         ======        ======
</TABLE>





                                       47
<PAGE>

                       GRAHAM PACKAGING HOLDINGS COMPANY
                   NOTES TO FINANCIAL STATEMENTS - (continued)
                                DECEMBER 31, 2002


8.       Debt Arrangements

         Long-term debt consisted of the following:

                                                       December 31,
                                                       ------------
                                                   2002           2001
                                                   ----           ----
                                                     (In thousands)
Term loan                                       $  502,000    $  526,950
Revolving loan                                     155,500       125,000
Revolving credit facilities                          3,483         5,111
Senior Subordinated Notes                          225,000       225,000
Senior Discount Notes                              168,377       151,638
Capital leases                                      14,400        16,041
Other                                                1,867         2,651
                                                ----------    ----------
                                                 1,070,627     1,052,391
Less amounts classified as current                   7,992        30,585
                                                ----------    ----------
                                                $1,062,635    $1,021,806
                                                ==========    ==========


         On February 2, 1998, as discussed in Note 2, the Company refinanced the
majority of its existing credit facilities in connection with the
Recapitalization and entered into a senior credit agreement (the "Existing
Senior Credit Agreement") with a consortium of banks. All of the existing
indebtedness under the Existing Senior Credit Agreement was refinanced on
February 14, 2003 when the Operating Company, Holdings, CapCo I and a syndicate
of lenders entered into a new senior credit agreement (the "Senior Credit
Agreement"). The Senior Credit Agreement consists of two term loans to the
Operating Company with initial term loan commitments totaling $670.0 million
(the "Term Loans" or "Term Loan Facilities") and a $150.0 million revolving
credit facility (the "Revolving Credit Loans"). The obligations of the Operating
Company under the Senior Credit Agreement are guaranteed by Holdings and certain
other subsidiaries of Holdings. After giving effect to the February 14, 2003
Senior Credit Agreement, the Term Loans are payable in quarterly installments
and require payments of $2.5 million in 2003, $5.0 million in 2004, $25.0
million in 2005, $50.0 million in 2006, $50.0 million in 2007, $235.0 million in
2008 and $134.5 million in 2009. The Revolving Credit Loan facilities expire on
the earlier of February 14, 2008 and the Term Loan maturity date. Interest is
payable at (a) the "Alternate Base Rate" (the higher of the Prime Rate or the
Federal Funds Rate plus 0.50%) plus a margin ranging from 1.75% to 3.25%; or (b)
the "Eurodollar Rate" (the applicable interest rate offered to banks in the
London interbank eurocurrency market) plus a margin ranging from 2.75% to 4.25%.
A commitment fee of 0.50% is due on the unused portion of the revolving loan
commitment. In addition, 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. As of December 31, 2002 and the closing of the
Senior Credit Agreement on February 14, 2003, 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 Senior Credit
Agreement.

         The Recapitalization also included the issuance of $225.0 million in
Senior Subordinated Notes of the Operating Company and $100.6 million gross
proceeds in Senior Discount Notes ($169.0 million aggregate principal amount at
maturity) of Holdings. The Senior Subordinated Notes are unconditionally
guaranteed on a senior subordinated basis by Holdings and mature on January 15,
2008, with interest payable on $150.0 million at a fixed rate of 8.75% and with
interest payable on $75.0 million at LIBOR plus 3.625%. The Senior Discount
Notes mature on January 15, 2009, with cash interest payable beginning to accrue
on January 15, 2003 at 10.75%. The effective interest rate to maturity on the
Senior Discount Notes is 10.75%.

         At December 31, 2002, the Operating Company had entered into three
interest rate swap agreements that effectively fix the interest rate on $300.0
million of the Term Loans, on $100.0 million through April 9, 2003 at 5.77% and
on $200.0 million through September 10, 2003 at 4.99%. On February 14, 2003 the
Operating Company entered into three new interest rate swap agreements beginning
March 24, 2003 that effectively fix the interest rate on $300 million of the
Term Loans through March 24, 2006 at a weighted average rate of 2.54%.

                                       48
<PAGE>

                       GRAHAM PACKAGING HOLDINGS COMPANY
                   NOTES TO FINANCIAL STATEMENTS - (continued)
                                DECEMBER 31, 2002


         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 (as defined) or
          by any employee stock ownership plan upon that person's death,
          disability, retirement or termination of employment or other
          circumstances with annual dollar limitations; and

     o    to finance the payment of cash interest on the Senior Discount Notes
          or any notes issued pursuant to the refinancing of the Senior Discount
          Notes.

         On September 8, 1998, Holdings and GPC Capital Corp. II consummated an
exchange offer for all of their outstanding Senior Discount Notes Due 2009 which
had been issued on February 2, 1998 (the "Senior Discount Old Notes") and issued
in exchange therefor their Senior Discount Notes Due 2009, Series B (the "Senior
Discount Exchange Notes"), and the Operating Company and GPC Capital Corp. I
consummated exchange offers for all of their outstanding Senior Subordinated
Notes Due 2008 which had been issued on February 2, 1998 (the "Senior
Subordinated Old Notes" and, together with the Senior Discount Old Notes, the
"Old Notes") and issued in exchange therefor their Senior Subordinated Notes Due
2008, Series B (the "Senior Subordinated Exchange Notes" and, together with the
Senior Discount Exchange Notes, the "Exchange Notes"). Each issue of Exchange
Notes has the same terms as the corresponding issue of Old Notes, except that
the Exchange Notes are registered under the Securities Act of 1933, as amended,
and do not include the restrictions on transfer applicable to the Old Notes. The
Senior Subordinated Old Notes were, and the Senior Subordinated Exchange Notes
are, fully and unconditionally guaranteed by Holdings on a senior subordinated
basis.

          The Company's weighted average effective rate on the outstanding
borrowings under the Term Loans and Revolving Credit Loans was 3.80% and 4.70%
at December 31, 2002 and 2001, respectively, excluding the effect of interest
rate swaps.

         The Company had several variable-rate revolving credit facilities
denominated in U.S. Dollars, French Francs and Polish Zloty, with aggregate
available borrowings at December 31, 2002 equivalent to $2.5 million. The
Company's average effective rate on borrowings of $3.5 million on these credit
facilities at December 31, 2002 was 15.8%. The Company's average effective rate
on borrowings of $5.1 million on these credit facilities at December 31, 2001
was 11.64%.

         Interest paid during 2002, 2001 and 2000, net of amounts capitalized of
$1.5 million, $2.6 million and $4.2 million, respectively, totaled $62.0
million, $81.9 million and $90.6 million, respectively.

         After giving effect to the February 14, 2003 Senior Credit Agreement,
the annual debt service requirements of the Company for the succeeding five
years are as follows: 2003--$8.0 million; 2004--$7.3 million; 2005--$28.0
million; 2006--$52.2 million; and 2007--$56.0.



9.       Fair Value of Financial Instruments and Derivatives

         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.

                                       49
<PAGE>

                       GRAHAM PACKAGING HOLDINGS COMPANY
                   NOTES TO FINANCIAL STATEMENTS - (continued)
                                DECEMBER 31, 2002


Long-Term Debt

         The fair values of the variable-rate, long-term debt instruments
approximate their carrying amounts. The fair value of other long-term debt was
based on market price information. Other long-term debt includes the Senior
Discount Notes and $150.0 million of Senior Subordinated Notes and totaled
approximately $318.4 million and $301.6 million at December 31, 2002 and 2001,
respectively. The fair value of this long-term debt, including the current
portion, was approximately $318.3 million and $247.5 million at December 31,
2002 and 2001, respectively.

Derivatives

         The Company is exposed to market risk from changes in interest rates
and currency exchange rates. The Company manages these exposures on a
consolidated basis and enters into various derivative transactions for selected
exposure areas. The financial impacts of these hedging instruments are offset by
corresponding changes in the underlying exposures being hedged. The Company does
not hold or issue derivative financial instruments for trading purposes.

          Interest rate swap agreements are used to hedge exposure to interest
rates associated with the Company's Senior Credit Agreement. Under these
agreements, the Company agrees to exchange with a third party at specified
intervals the difference between fixed and variable interest amounts calculated
by reference to an agreed-upon notional principal amount. Interest rate swaps
are recorded on the balance sheet in accrued expenses and other non-current
liabilities at fair value. The effective portion of cash flow hedges are
recorded in OCI.

         The following table presents information for all interest rate swaps.
The notional amount does not necessarily represent amounts exchanged by the
parties and, therefore is not a direct measure of the Company's exposure to
credit risk. The fair value approximates the cost to settle the outstanding
contracts.

                                                      December 31,
                                                      ------------
                                                    2002       2001
                                                    ----       ----
                                                    (in thousands)
Notional amount                                   $300,000   $500,000
Fair value - liability                              (6,237)   (13,145)

         Derivatives are an important component of the Company's interest rate
management program, leading to acceptable levels of variable interest rate risk.
Due to sharply declining interest rates in 2002 and 2001, the effect of
derivatives was to increase interest expense by $12.5 million and $7.0 million
for 2002 and 2001, respectively, compared to an entirely unhedged variable rate
debt portfolio. The incremental effect on interest expense for 2000 was not
significant.

         The Company manufactures and sells its products in a number of
countries throughout the world and, as a result, is exposed to movements in
foreign currency exchange rates. The Company utilizes foreign currency hedging
activities to protect against volatility associated with purchase commitments
that are denominated in foreign currencies for machinery, equipment and other
items created in the normal course of business. The terms of these contracts are
generally less than one year.

         Gains and losses related to qualifying hedges of foreign currency firm
commitments or anticipated transactions are accounted for in accordance with
SFAS 133. There were no currency forward contracts outstanding at December 31,
2002 or December 31, 2001.

         Credit risk arising from the inability of a counterparty to meet the
terms of the Company's financial instrument contracts is generally limited to
the amounts, if any, by which the counterparty's obligations exceed the
obligations of the Company. It is the Company's policy to enter into financial
instruments with a diversity of creditworthy counterparties. Therefore, the
Company does not expect to incur material credit losses on its risk management
or other financial instruments.


                                       50
<PAGE>
                       GRAHAM PACKAGING HOLDINGS COMPANY
                   NOTES TO FINANCIAL STATEMENTS - (continued)
                                DECEMBER 31, 2002

10.      Lease Commitments

         The Company was a party to various leases involving real property and
equipment during 2002, 2001 and 2000. Total rent expense for operating leases
amounted to $22.9 million in 2002, $22.2 million in 2001 and $19.9 million in
2000. Minimum future lease obligations on long-term noncancelable operating
leases in effect at December 31, 2002 are as follows: 2003--$15.9 million;
2004--$13.7 million; 2005--$10.6 million; 2006--$6.9 million; 2007--$6.4
million; and thereafter--$17.8 million. Minimum future lease obligations on
capital leases in effect at December 31, 2002 are as follows: 2003--$2.4
million; 2004--$1.8 million; 2005--$2.1 million; 2006--$1.9 million; 2007--$5.7
million; and thereafter--$0.5 million. The gross amount of assets under capital
leases was $20.8 million and $20.3 million as of December 31, 2002 and 2001,
respectively.


11.      Transactions with Affiliates

         Transactions with entities affiliated through common ownership
included the following:
<TABLE>
<CAPTION>

                                                                     Year Ended December 31,
                                                                     -----------------------
                                                                  2002         2001         2000
                                                                  ----         ----         ----
                                                                          (In thousands)
<S>                                                               <C>         <C>          <C>
Equipment and related services purchased from affiliates          $20,220     $23,838      $25,103

Goods and related services purchased from affiliates              $ 5,380     $ 1,066      $    --

Management services provided by affiliates, including
  management, legal, tax, accounting, insurance, treasury
  and employee benefits administration services                   $ 2,250     $ 2,034      $ 2,020

Services provided and sales to affiliates, including
  administrative services, engineering services and raw
  materials                                                       $   759     $     2      $    51

Loans to Management for equity contribution                            --     $ 1,146      $ 1,147

Interest income on notes receivable from owners                   $   150     $   150      $    --
</TABLE>



         Account balances with affiliates include the following:

                                                  Year Ended December 31,
                                                  -----------------------
                                                    2002           2001
                                                    ----           ----
                                                      (In thousands)
     Accounts receivable                         $ 1,425          $   --
     Accounts payable                            $14,469          $1,964
     Notes and interest receivable for
     ownership interests                         $ 2,593          $2,443


12.      Pension Plans

         Substantially all employees of the Company participate in
noncontributory, defined benefit or defined contribution pension plans.

         The U.S. defined benefit plan covering salaried employees provides
retirement benefits based on the final five years average compensation, while
plans covering hourly employees provide benefits based on years of service. The
Company's policy is to fund the normal cost plus amounts required to amortize
actuarial gains and losses and prior service costs over a period of ten years.
U.S. plan assets consist of a diversified portfolio including U.S. Government
securities, certificates of deposit issued by commercial banks and domestic
common stocks and bonds.

                                       51
<PAGE>

                       GRAHAM PACKAGING HOLDINGS COMPANY
                   NOTES TO FINANCIAL STATEMENTS - (continued)
                                DECEMBER 31, 2002


         The following table sets forth the change in the Company's benefit
obligation and pension plan assets at market value for the years ended December
31, 2002 and 2001:

<TABLE>
<CAPTION>
                                                                           2002          2001
                                                                           ----          ----
                                                                             (In thousands)
<S>                                                                      <C>           <C>
Change in benefit obligations:
------------------------------
Benefit obligation at beginning of year                                  $(43,768)     $(37,606)
Service cost                                                               (2,786)       (2,804)
Interest cost                                                              (3,023)       (2,668)
Benefits paid                                                                 857           812
Employee contribution                                                         (54)         (167)
Change in benefit payments due to experience                                   90          (414)
Effect of exchange rate changes                                              (910)          497
Curtailments                                                                1,365           123
Settlements                                                                  (320)           --
Increase in benefit obligation due to change in discount rate              (2,721)       (2,668)
Decrease in benefit obligation due to plan experience                         790         1,365
Increase in benefit obligation due to plan change                          (1,720)         (238)
                                                                         --------      --------
Benefit obligation at end of year                                        $(52,200)     $(43,768)
                                                                         ========      ========

Change in plan assets:
----------------------
Plan assets at market value at beginning of year                         $ 33,616      $ 33,498
Actual return on plan assets                                               (1,961)       (2,599)
Foreign currency exchange rate changes                                        748          (426)
Employer contribution                                                       3,346         3,783
Employee contribution                                                          54           167
Benefits paid                                                                (852)         (807)
                                                                         --------      --------
Plan assets at market value at end of year                               $ 34,951      $ 33,616
                                                                         ========      ========

Funded status                                                            $(17,249)     $(10,152)
Unrecognized net actuarial gain                                            11,692         6,571
Unrecognized prior service cost                                             3,237         1,701
                                                                         --------      --------
Net amount recognized                                                    $ (2,320)     $ (1,880)
                                                                         ========      ========

Amounts recognized in the statement of financial position consist of:
---------------------------------------------------------------------
Prepaid benefit cost                                                     $    164      $     --
Accrued benefit liability                                                  (9,782)       (4,888)
Intangible asset                                                            3,310         1,071
Accumulated other comprehensive income                                      3,988         1,937
                                                                         --------      --------
Net amount recognized                                                    $ (2,320)     $ (1,880)
                                                                         ========      ========
</TABLE>



         The net amount recognized of $2.3 million at December 31, 2002 consists
of $8.0 million accrued pension expense, $3.2 million intangible asset, and $3.2
million accumulated other comprehensive income for the U.S. plan, $0.2 million
prepaid pension asset for the United Kingdom plan, $1.0 million accrued pension
expense for the German plan and $0.8 million accrued pension expense, $0.1
million intangible asset, and $0.8 million accumulated other comprehensive
income for the Canadian plan. The net amount recognized of $1.9 million at
December 31, 2001 consists of $3.4 million accrued pension expense, $1.0 million
intangible asset, and $1.2 million accumulated other comprehensive income for
the United States plan, $0.6 million accrued pension expense, $0.1 million
intangible assets and $0.7 million accumulated other comprehensive income for
the Canadian plan, $0.1 million accrued pension expense for the United Kingdom
plan, and $0.8 million accrued pension expense for the German plan.


                                       52
<PAGE>

                       GRAHAM PACKAGING HOLDINGS COMPANY
                   NOTES TO FINANCIAL STATEMENTS - (continued)
                                DECEMBER 31, 2002

<TABLE>
<CAPTION>

                                                                      Actuarial Assumptions
                                                                      ---------------------
                                                                                     United
                                                       U.S.           Canada         Kingdom       Germany
                                                       ----           ------         -------       -------
<S>                                                    <C>            <C>             <C>           <C>
Discount rate  - 2002                                  6.75%          6.50%           5.50%         5.25%
               - 2001                                  7.25%          6.50%           5.50%         6.00%
               - 2000                                  7.75%          7.00%           5.50%         6.00%

Long-term rate of return on plan assets - 2002         9.00%          8.00%           4.50%          N/A
                                        - 2001         9.00%          8.00%           7.75%          N/A
                                        - 2000         9.00%          8.00%           7.75%          N/A

Weighted average rate of increase for future
  compensation levels  - 2002                          4.50%          5.00%            N/A          2.00%
                       - 2001                          4.75%          5.00%           4.00%         3.00%
                       - 2000                          5.00%          5.00%           4.00%         3.00%
</TABLE>


         The Company's net pension cost for its defined benefit pension plans
includes the following components:

                                              Year Ended December 31,
                                              -----------------------
                                           2002        2001        2000
                                           ----        ----        ----
                                                  (In thousands)
Service cost                              $ 2,786     $ 2,804     $ 2,731
Interest cost                               3,023       2,668       2,319
Net investment return on plan assets        1,574         318        (153)
Curtailment (gain) loss                       (66)        310          --
Net amortization and deferral              (3,930)     (3,054)     (2,497)
Settlement Loss                               320          --          --
                                          -------     -------     -------
Net periodic pension costs                $ 3,707     $ 3,046     $ 2,400
                                          =======     =======     =======

         The assumed return on plan assets noted above represents a forward
projection of the average rate of earnings expected on the pension assets. This
rate is used in the calculation of assumed rate of return on plan assets, a
component of the net periodic pension expense. As of December 31, 2002, the
Company has lowered the assumed rate of return on plan assets in the United
States to 8.75 percent. This revised assumed rate of return will be used for
fiscal 2003 net periodic pension expense.

         The Company also participated in a defined contribution plan under
Internal Revenue Code Section 401(k), which covered all U.S. employees of the
Company except those represented by a collective bargaining unit. The Company
also sponsored other noncontributory defined contribution plans under collective
bargaining agreements. The Company's contributions were determined as a
specified percentage of employee contributions, subject to certain maximum
limitations. The Company's costs for the salaried and non-collective bargaining
hourly plan for 2002, 2001 and 2000 were $1.2 million, $1.1 million and $1.0
million, respectively.


13.      Partners' Capital

         Holdings was formed under the name "Sonoco Graham Company" on April 3,
1989 as a limited partnership in accordance with the provisions of the
Pennsylvania Uniform Limited Partnership Act, and on March 28, 1991, Holdings
changed its name to "Graham Packaging Company." Upon the Closing of the
Recapitalization, the name of Holdings was changed to "Graham Packaging Holdings
Company." Holdings will continue until its dissolution and winding up in
accordance with the terms of the Holdings Partnership Agreement (as defined
below).

         As contemplated by the Recapitalization Agreement, upon the Closing,
Graham Capital and its successors or assigns, Graham Family Growth Partnership,
Graham Packaging Corporation ("Graham GP Corp"), Investor LP and Investor GP
entered into a Fifth Amended and Restated Agreement of Limited Partnership (the
"Holdings Partnership Agreement"). The general partners of the partnership are
Investor GP and Graham GP Corp. The limited partners of the partnership are GPC


                                       53
<PAGE>

                       GRAHAM PACKAGING HOLDINGS COMPANY
                   NOTES TO FINANCIAL STATEMENTS - (continued)
                                DECEMBER 31, 2002


Holdings, L.P. ("Graham LP") and Investor LP.

         Capital Accounts. A capital account is maintained for each partner on
the books of the Company. The Holdings Partnership Agreement provides that at no
time during the term of the partnership or upon dissolution and liquidation
thereof shall a limited partner with a negative balance in its capital account
have any obligation to Holdings or the other partners to restore such negative
balance. Items of partnership income or loss are allocated to the partners'
capital accounts in accordance with their percentage interests except as
provided in Section 704(c) of the Internal Revenue Code with respect to
contributed property where the allocations are made in accordance with the U.S.
Treasury regulations thereunder.

         Distributions. The Holdings Partnership Agreement requires certain tax
distributions to be made if and when the Company has taxable income. Other
distributions shall be made in proportion to the partners' respective percentage
interests.

         Transfers of Partnership Interests. The Holdings Partnership Agreement
provides that, subject to certain exceptions including, without limitation, in
connection with an IPO Reorganization (as defined below) and the transfer rights
described below, general partners shall not withdraw from Holdings, resign as a
general partner nor transfer their general partnership interests without the
consent of all general partners, and limited partners shall not transfer their
limited partnership interests.

         If either Graham GP Corp. and/or Graham LP (individually "Continuing
Graham Partner" and collectively the "Continuing Graham Partners") wishes to
sell or otherwise transfer its partnership interests pursuant to a bona fide
offer from a third party, Holdings and the Equity Investors must be given a
prior opportunity to purchase such interests at the same purchase price set
forth in such offer. If Holdings and the Equity Investors do not elect to make
such purchase, then such Continuing Graham Partner may sell or transfer such
partnership interests to such third party upon the terms set forth in such
offer. If the Equity Investors wish to sell or otherwise transfer their
partnership interests pursuant to a bona fide offer from a third party, the
Continuing Graham Partners shall have a right to include in such sale or
transfer a proportionate percentage of their partnership interests. If the
Equity Investors (so long as they hold 51% or more of the partnership interests)
wish to sell or otherwise transfer their partnership interests pursuant to a
bona fide offer from a third party, the Equity Investors shall have the right to
compel the Continuing Graham Partners to include in such sale or transfer a
proportionate percentage of their partnership interests.

         Dissolution. The Holdings Partnership Agreement provides that Holdings
shall be dissolved upon the earliest of (i) the sale, exchange or other
disposition of all or substantially all of Holdings' assets (including pursuant
to an IPO Reorganization), (ii) the withdrawal, resignation, filing of a
certificate of dissolution or revocation of the charter or bankruptcy of a
general partner, or the occurrence of any other event which causes a general
partner to cease to be a general partner unless (a) the remaining general
partner elects to continue the business or (b) if there is no remaining general
partner, a majority-in-interest of the limited partners elect to continue the
partnership, or (iii) such date as the partners shall unanimously elect.

         IPO Reorganization. "IPO Reorganization" means the transfer of all or
substantially all of Holdings' assets and liabilities to GPC Capital Corporation
II ("CapCo II") in contemplation of an initial public offering of the shares of
common stock of CapCo II. The Holdings Partnership Agreement provides that,
without the approval of each general partner, the IPO Reorganization may not be
effected through any entity other than CapCo II.


14.      Option Plan

         Pursuant to the Recapitalization Agreement, the Company has adopted the
Graham Packaging Holdings Company Management Option Plan (the "Option Plan").

         The Option Plan provides for the grant to management employees of
Holdings and its subsidiaries and non-employee directors, advisors, consultants
and other individuals providing services to Holdings of options ("Options") to
purchase limited partnership interests in Holdings equal to 0.01% of Holdings at
the date of the Recaptialization (prior to any dilution resulting from any
interests granted pursuant to the Option Plan) (each 0.01% interest being
referred to as a "Unit"). The aggregate number of Units with respect to which
Options may be granted under the Option Plan shall not exceed 531.0 Units,
representing a total of up to 5% of the equity of Holdings.

                                       54
<PAGE>

                       GRAHAM PACKAGING HOLDINGS COMPANY
                   NOTES TO FINANCIAL STATEMENTS - (continued)
                                DECEMBER 31, 2002


         The exercise price per Unit shall be at or above the fair market value
of a Unit on the date of grant. The number and type of Units covered by
outstanding Options and exercise prices may be adjusted to reflect certain
events such as recapitalizations, mergers or reorganizations of or by Holdings.
The Option Plan is intended to advance the best interests of the Company by
allowing such employees to acquire an ownership interest in the Company, thereby
motivating them to contribute to the success of the Company and to remain in the
employ of the Company.

         A committee has been appointed to administer the Option Plan,
including, without limitation, the determination of the employees to whom grants
will be made, the number of Units subject to each grant, and the various terms
of such grants. During 2000, 13.8 Unit Options were forfeited and none were
granted. During 2001, 51.1 Unit Options were forfeited and Options to purchase
46.0 Units were granted. During 2002, no Unit Options were forfeited and Options
to purchase 49.9 Units were granted. As of December 31, 2002, 531.0 Unit Options
were outstanding, 500.0 at an exercise price of $25,789 per Unit and 31.0 at an
exercise price of $29,013, and 341.9 Unit Options outstanding were vested, all
at an exercise price of $25,789.

         A summary of the changes in the Unit Options outstanding under the
Option Plan as of December 31, 2002, 2001 and 2000 is as follows:
<TABLE>
<CAPTION>

                                          2002                    2001                     2000
                                          ----                    ----                     ----
                                   Units     Weighted       Units     Weighted       Units     Weighted
                                   Under      Average       Under      Average       Under      Average
                                   Option  Exercise Price   Option  Exercise Price   Option  Exercise Price
                                   ------  --------------   ------  --------------   ------  --------------
<S>                                <C>        <C>            <C>       <C>           <C>         <C>
Outstanding at beginning of year   481.1      $25,789        486.2     $25,789       500.0       $25,789
Granted                             49.9       27,792         46.0      25,789         0.0        25,789
Exercised                            0.0       25,789          0.0      25,789         0.0        25,789
Forfeitures                          0.0       25,789        (51.1)     25,789       (13.8)       25,789
                                   -----                     -----                   -----
Outstanding at end of year         531.0       25,977        481.1      25,789       486.2        25,789
                                   =====                     =====                   =====
</TABLE>



         The following table summarizes information relating to Unit Options
outstanding under the Option Plan at December 31, 2002:

<TABLE>
<CAPTION>

                                    Options Outstanding                          Options Exercisable
                    ---------------------------------------------------    ------------------------------
                      Options         Weighted Average      Weighted         Options         Weighted
    Exercise        Outstanding           Remaining         Average        Exercisable       Average
     Prices         at 12/31/02       Contractual Life   Exercise Price    at 12/31/02     Exercise Price
     ------         -----------       ----------------   --------------    -----------     --------------
<S><C>                <C>               <C>                 <C>              <C>            <C>
   $25,789 to         531.0             5.9 Years           $25,977          341.9          $25,789
     $29,013
</TABLE>



         The Company applies APB 25 in accounting for the Option Plan. The
exercise price of the Unit was equal to or greater than the fair market value of
a Unit on the dates of the grants and, accordingly, no compensation cost has
been recognized under the provisions of APB 25 for Units granted. Under SFAS
123, compensation cost is measured at the grant date based on the value of the
award and is recognized over the service (or vesting) period. Had compensation
cost for the option plan been determined under SFAS 123, based on the fair
market value at the grant dates, the Company's pro forma net income (loss) for
2002, 2001 and 2000 would have been reflected as follows (in thousands):

                                       Year Ended December 31,
                                       -----------------------
                               2002            2001             2000
                               ----            ----             ----
     As reported              $7,562        $(43,970)         $(45,637)
     Pro forma                 7,057         (44,223)          (46,150)


                                       55
<PAGE>

                       GRAHAM PACKAGING HOLDINGS COMPANY
                   NOTES TO FINANCIAL STATEMENTS - (continued)
                                DECEMBER 31, 2002


The weighted average fair value at date of grant for options granted in
2002 and 2001 was $2,799 and $4,418 per Option, respectively. The fair value of
each Option is estimated on the date of the grant using the Minimum Value option
pricing model with the following weighted-average assumptions used for Units
granted in 2002: pay out yield 0%, expected volatility of 0%, risk free interest
rate of 2.55% and expected life of 4.5 years; and in 2001: pay out yield 0%,
expected volatility of 0%, risk free interest rate of 4.22% and expected life of
4.5 years.


15.      Special Charges and Unusual Items

         The special charges and unusual items were as follows:

                                            Year Ended December 31,
                                            -----------------------
                                          2002       2001      2000
                                          ----       ----      ----
                                                (In thousands)

Recapitalization compensation             $ --       $147     $1,118

          Recapitalization expenses relate to stay bonuses and the granting of
certain ownership interests to Management pursuant to the terms of the
Recapitalization (see Note 2). These expenses have been fully recognized over
the three years from the date of the Recapitalization.


16.      Other Expense

         Other expense consisted of the following:

                                                    Year Ended December 31,
                                                    -----------------------
                                                 2002       2001      2000
                                                 ----       ----      ----
                                                       (In thousands)
Foreign exchange loss (gain)                     $265      $(176)     $240
Equity in loss (earnings) of joint ventures        --        246       (63)
Other                                             (86)       129        88
                                                 ----      -----      ----
                                                 $179      $ 199      $265
                                                 ====      =====      ====


17.      Income Taxes

         Certain legal entities in the Company do not pay income taxes because
their income is taxed to the owners. For those entities, the reported amount of
their assets net of the reported amount of their liabilities are exceeded by the
related tax bases of their assets net of liabilities by $250.0 million at
December 31, 2002 and $271.7 million at December 31, 2001.

         Income of certain legal entities related principally to the foreign
operations of the Company is taxable to the legal entities. The following table
sets forth the deferred tax assets and liabilities that result from temporary
differences between the reported amounts and the tax bases of the assets and
liabilities of such entities:


                                       56
<PAGE>

                       GRAHAM PACKAGING HOLDINGS COMPANY
                   NOTES TO FINANCIAL STATEMENTS - (continued)
                                DECEMBER 31, 2002


<TABLE>
<CAPTION>

                                                                                               December 31,
                                                                                               ------------
                                                                                          2002             2001
                                                                                          ----             ----
                                                                                            (In thousands)
<S>                                                                                    <C>             <C>
Deferred tax assets:
  Net operating loss carryforwards                                                    $ 42,080         $ 31,867
  Fixed assets, principally due to differences in depreciation and assigned              7,012            7,703
  values
  Accrued retirement indemnities                                                           972            1,069
  Inventories                                                                               48              434
  Accruals and reserves                                                                  3,548              383
  Capital leases                                                                           426              431
  Other items                                                                              569              300
                                                                                      --------         --------
Gross deferred tax assets                                                               54,655           42,187
Valuation allowance                                                                    (45,880)         (34,565)
                                                                                      --------         --------
Net deferred tax assets                                                                  8,775            7,622

Deferred tax liabilities:
  Fixed assets, principally due to differences in depreciation and assigned values      10,442            8,025
  Goodwill                                                                                  --               --
  Other items                                                                               77              143
                                                                                      --------         --------

Gross deferred tax liabilities                                                          10,519            8,168
                                                                                      --------         --------

Net deferred tax liabilities                                                          $  1,744         $    546
                                                                                      ========         ========
</TABLE>


         Current deferred tax assets of $0.3 million in 2002 and $0.3 million in
2001 are included in prepaid expenses and other current assets. Non-current
deferred tax assets of none in 2002 and $0.2 in 2001 are included in
other assets. Current deferred tax liabilities of none in 2002 and $0.1
million in 2001 are included in accrued expenses. Non-current deferred tax
liabilities of $2.0 million in 2002 and $1.0 million in 2001 are included in
other non-current liabilities.

         The valuation allowance reduces the Company's deferred tax assets to an
amount that Management believes is more likely than not to be realized.

         The 2002 provision for income taxes is comprised of $2.6 million of
current provision and $1.4 million of deferred provision. The amounts relate
entirely to the Company's foreign legal entities.

         The difference between the 2002 actual income tax provision and an
amount computed by applying the U.S. federal statutory rate for corporations to
earnings before income taxes is attributable to the following:

<TABLE>
<CAPTION>

                                                        Year Ended December 31,
                                                        -----------------------
                                                     2002         2001        2000
                                                     ----         ----        ----
                                                             (In thousands)
<S>                                                <C>         <C>          <C>
Taxes at U.S. federal statutory rate               $  4,048    $(15,284)    $(15,818)
Partnership income not subject to federal income
taxes                                               (10,246)        281        4,146
Foreign loss without current tax benefit             10,037      15,260       11,926
Other                                                   163          46          188
                                                   --------    --------     --------
                                                   $  4,002    $    303     $    442
                                                   ========    ========     ========
</TABLE>


         At December 31, 2002, the Company's various taxable entities had net
operating loss carryforwards for purposes of reducing future taxable income by
approximately $122.9 million, for which no benefit has been recognized. Of this
amount, $147.7 million related to carryforwards that will expire, if unused, at
various dates ranging from 2003 to 2012 and the remaining carryforwards have no
expiration date.

                                       57
<PAGE>

                       GRAHAM PACKAGING HOLDINGS COMPANY
                   NOTES TO FINANCIAL STATEMENTS - (continued)
                                DECEMBER 31, 2002


         At December 31, 2002, the unremitted earnings of non-U.S. subsidiaries
totaling $7.8 million were deemed to be permanently invested. No deferred tax
liability has been recognized with regard to the remittance of such earnings. If
such earnings were remitted to the United States, approximately $1.2 million of
withholding taxes would apply.


18.      Commitments

         In connection with plant expansion and improvement programs, the
Company had commitments for capital expenditures of approximately $28.7 million
at December 31, 2002.


19.      Contingencies and Legal Proceedings

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

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


20.      Segment Information

         The Company is organized and managed on a geographical basis in three
operating segments: North America, which includes the United States, Canada and
Mexico, Europe and South America. The accounting policies of the segments are
consistent with those described in Note 1. The Company's measure of profit or
loss is operating income (loss). Segment information for the three years ended
December 31, 2002, representing the reportable segments currently utilized by
the chief decision maker, was as follows:


                                       58
<PAGE>

                       GRAHAM PACKAGING HOLDINGS COMPANY
                   NOTES TO FINANCIAL STATEMENTS - (continued)
                                DECEMBER 31, 2002


<TABLE>
<CAPTION>

                                                         North                     South
                                               Year     America      Europe       America    Eliminations     Total
                                               ----     -------      ------       -------    ------------     -----
                                                                      (d)                        (b)
                                                                           (In thousands)
<S>                                            <C>      <C>          <C>           <C>        <C>            <C>
Net sales (a)                                  2002     $744,967     $138,498      $23,240                   $906,705
                                               2001      742,450      154,268       26,350                    923,068
                                               2000      667,301      146,189       29,192         (131)      842,551

Special charges and unusual items              2002     $     --     $     --      $    --                   $     --
                                               2001          147           --           --                        147
                                               2000        1,118           --           --                      1,118

Operating income (loss) (c)                    2002     $109,363     $(16,159)     $ 2,036                   $ 95,240
                                               2001       98,756      (37,707)      (5,547)                    55,502
                                               2000       90,296      (32,009)      (2,147)                    56,140

Depreciation and amortization                  2002     $ 68,066     $ 10,760      $ 1,586                   $ 80,412
                                               2001       62,584       10,800        2,960                     76,344
                                               2000       56,518       10,959        3,381                     70,858

Impairment charges                             2002       $1,088     $  4,041      $    --                   $  5,129
                                               2001        1,135       31,274        5,579                     37,988
                                               2000          461       18,539        2,056                     21,056

Interest expense (income), net                 2002     $ 80,389     $  1,439      $   (44)                  $ 81,784
                                               2001       96,639        1,326          475                     98,440
                                               2000      100,667          878          148                    101,693

Income tax expense (benefit)                   2002         $631     $  2,529      $   842                   $  4,002
                                               2001         (998)         586          715                        303
                                               2000           53          542         (153)                       442

Identifiable assets (a)                        2002     $910,731     $153,834      $18,463    $(284,717)     $798,311
                                               2001      842,888      144,106       27,935     (256,368)      758,561
                                               2000      843,908      170,939       39,763     (233,311)      821,299

Goodwill                                       2002     $  3,515     $  1,333      $   718                     $5,566
                                               2001        3,515        1,203        1,682                      6,400
                                               2000        2,784        6,891        7,881                     17,556

Capital expenditures, excluding acquisitions   2002     $ 83,913     $  7,137      $ 1,417    $     (30)      $92,437
                                               2001       46,242       23,683        4,390                     74,315
                                               2000      128,370       32,729        2,330                    163,429
</TABLE>


(a)  The Company's net sales for Europe include sales in France which totaled
     approximately $74.8 million, $93.1 million and $106.5 million for 2002,
     2001 and 2000, respectively. Identifiable assets in France totaled
     approximately $93.6 million, $82.8 million and $114.6 million as of
     December 31, 2002, 2001 and 2000, respectively.
(b)  To eliminate intercompany balances, which include investments in the
     operating segments and inter-segment receivables and payables.
(c)  In 2002 the Company changed its measurement method used to determine
     reported segment profit or loss by allocating certain selling, general and
     administrative costs incurred in North America to Europe and South America.
     The effect in 2002 was an increase in operating income for North America of
     $4.3 million and decreases of $3.7 million and $0.6 million for Europe and
     South America, respectively.


                                       59
<PAGE>

                       GRAHAM PACKAGING HOLDINGS COMPANY
                   NOTES TO FINANCIAL STATEMENTS - (continued)
                                DECEMBER 31, 2002


(d)  On March 28, 2002, the Company completed the sale of certain assets and
     liabilities of its Italian operations for approximately $0.3 million. On
     July 31, 2002, the Company disposed of its operation in Blyes, France,
     resulting in expenditures to the buyer of approximately $4.5 million.

Product Net Sales Information

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

               Food and       Household and
               Beverage       Personal Care      Automotive          Total
               --------       -------------      ----------          -----
                                     (In thousands)
  2002         $515,375          $185,975         $205,355          $906,705
  2001          511,542           208,514          203,012           923,068
  2000          416,178           210,569          215,804           842,551

21.      Condensed Operating Company Data

         Condensed financial data for the Operating Company as of December 31,
2002, after giving effect to the February 14, 2003 Senior Credit Agreement, and
2001 was as follows:

                                          December 31,
                                          ------------
                                    2002                2001
                                    ----                ----
                                         (In thousands)
Current assets                  $ 193,174            $ 180,737
Non-current assets                608,535              580,749
Total assets                      801,709              761,486
Current liabilities               177,224              205,715
Non-current liabilities           913,016              886,261
Partners' capital (deficit)      (288,531)            (330,490)

         Condensed financial data for the Operating Company for the years ended
December 31, 2002, 2001 and 2000 was as follows:

                                     Year Ended December 31,
                                     -----------------------
                             2002             2001              2000
                             ----             ----              ----
                                         (In thousands)
  Net sales                 $906,705         $923,068          $842,551
  Gross profit               164,101          151,867           134,514
  Net income (loss)           24,774          (28,585)          (31,650)

         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.

22.      Goodwill

         Effective January 1, 2002 the Company adopted SFAS 142. Therefore, the
Company has ceased to amortize goodwill beginning January 1, 2002.

         SFAS 142 provides that prior year's results should not be restated. The
following table presents the Company's operating results for each of the two
years in the period ended December 31, 2001 reflecting the exclusion of goodwill
amortization expense:
                                               Year Ended December 31,
                                               -----------------------
                                               2001              2000
                                               ----              ----
                                                   (In thousands)
Net (loss) as reported                      $(43,970)         $(45,637)
Goodwill amortization                          1,031             1,445
                                            --------          --------
As adjusted                                 $(42,939)         $(44,192)
                                            =========         =========


                                       60
<PAGE>




Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

         Not applicable.





                                       61
<PAGE>



                                    PART III

Item 10. Advisory Committee Members, Directors and Executive Officers of the
         Registrant

         The members of the Advisory Committee of Holdings and the executive
officers of the Operating Company and Holdings and their respective ages and
positions at December 31, 2002 are set forth in the table below. Unless
otherwise indicated, all references to positions in this Item 10 are positions
with the Operating Company. For a description of the Advisory Committee, see
"The Partnership Agreements--Holdings Partnership Agreement."


Name                   Age             Position
----                   ---             --------
Philip R. Yates         55    Chief Executive Officer
Roger M. Prevot         43    President and Chief Operating Officer
John E. Hamilton        44    Chief Financial Officer of the Operating Company;
                              Chief Financial Officer, Assistant Treasurer and
                              Assistant Secretary of Holdings
G. Robinson Beeson      54    Senior Vice President and General Manager, North
                              America Automotive and South America
Scott G. Booth          46    Senior Vice President and General Manager, North
                              America Household and Personal Care
John A. Buttermore      56    Senior Vice President and General Manager, North
                              America Food and Beverage PET
Ashok Sudan             49    Senior Vice President and General Manager, Europe
                              and North America Food and Beverage Polyolefins
Jay W. Hereford         52    Vice President, Finance and Administration of the
                              Operating Company; Assistant Treasurer and
                              Assistant Secretary of Holdings
Chinh E. Chu            36    Member, Advisory Committee of Holdings; Vice
                              President, Secretary and Assistant Treasurer of
                              Holdings
Howard A. Lipson        39    Member, Advisory Committee of Holdings;
                              President, Treasurer and Assistant Secretary
                              of Holdings
David A. Stonehill      34    Member, Advisory Committee of Holdings; Vice
                              President, Assistant Treasurer and Assistant
                              Secretary of Holdings
Charles E. Kiernan      57    Member, Advisory Committee of Holdings
Gary G. Michael         62    Member, Advisory Committee of Holdings


         Philip R. Yates has served as Chief Executive Officer since February
2000. From February 1998 until February 2000 Mr. Yates served as the Chief
Executive Officer and President. Prior to February 1998, Mr. Yates served as
President and Chief Operating Officer.

         Roger M. Prevot has served as President and Chief Operating Officer
since February 2000. From February 1998 to February 2000 Mr. Prevot served as
Senior Vice President or Vice President and General Manager, Food and Beverage.
Prior to February 1998, Mr. Prevot served as Vice President and General Manager,
U.S. Food and Beverage.

         John E. Hamilton has served as Chief Financial Officer since January
1999. From February 1998 to January 1999, Mr. Hamilton served as Senior Vice
President or Vice President, Finance and Administration. Prior to February 1998,
Mr. Hamilton served as Vice President, Finance and Administration, North
America. Since the Recapitalization, Mr. Hamilton has served as Chief Financial
Officer, Assistant Treasurer and Assistant Secretary of Holdings.

         G. Robinson Beeson has served as Senior Vice President or Senior Vice
President and General Manager, North America Automotive and South America,
Senior Vice President and General Manager, Automotive or Vice President and
General Manager, Automotive since February 1998. Prior to February 1998, Mr.
Beeson served as Vice President and General Manager, U.S. Automotive.

         Scott G. Booth has served as Senior Vice President and General Manager,
Household and Personal Care since February 1998. Prior to February 1998, Mr.
Booth served as Vice President and General Manager, U.S. Household and Personal
Care.

                                       62
<PAGE>

         John A. Buttermore has served as Senior Vice President and General
Manager, North America Food and Beverage PET and Vice President and General
Manager, Food and Beverage since February 2000. From November 1998 until
February 2000, Mr. Buttermore served as Vice President, Market Development.
Prior to joining the Company in November 1998, Mr. Buttermore served as Category
Manager, Food Products at Plastipak Packaging Co.

         Ashok Sudan has served as Senior Vice President and General Manager,
Europe and North America Food and Beverage Polyolefins and Vice President and
General Manager, Europe since September 1, 2000. Prior to September 1, 2000, Mr.
Sudan served as Vice President Operations, Food and Beverage/PET; a position he
entered in 1998. Prior to that Mr. Sudan held various management positions in
manufacturing.

         Jay W. Hereford has served as Vice President, Finance and Information
Technology since June 2002. From November 1998 until June 2002, Mr. Hereford
served as Vice President, Finance and Administration. Prior to joining the
Company in November 1998, Mr. Hereford served as Vice President, Treasurer and
Chief Financial Officer of Continental Plastic Containers, Inc. from 1992 to
November 1998. Since November 1998, Mr. Hereford has served as Assistant
Treasurer and Assistant Secretary of Holdings.

         Chinh E. Chu is a Senior Managing Director of Blackstone, which he
joined in 1990. Mr. Chu has served as a Member of the Advisory Committee since
the Recapitalization. Mr. Chu currently serves on the Boards of Directors of
Haynes International, Inc. and Nycomed Holdings. Since the Recapitalization, Mr.
Chu has served as Vice President, Secretary and Assistant Treasurer of Holdings.

         Howard A. Lipson is a Senior Managing Director of Blackstone. Mr.
Lipson has served as a Member of the Advisory Committee since the
Recapitalization. Since joining Blackstone in 1988, Mr. Lipson has been
responsible for and involved in the execution of Blackstone's purchase of Six
Flags (a joint venture with TimeWarner), the acquisition of Graham Packaging
Company, and Blackstone's investments in Universal Orlando, Allied Waste
Industries, Volume Services America, Mega Bloks, UCAR, US Radio, Transtar and
Columbia House Holdings Inc. among others. He currently serves as Director of
Allied Waste Industries, Volume Services America, Mega Bloks, Universal Orlando
and Columbia House Holdings Inc. Prior to joining Blackstone, Mr. Lipson was a
member of the Mergers and Acquisitions Group of Salomon Brothers Inc. Mr. Lipson
graduated with honors from the Wharton School of the University of Pennsylvania.
Since the Recapitalization, Mr. Lipson has served as President, Treasurer and
Assistant Secretary of Holdings.

         David A. Stonehill is a principal of Blackstone, which he joined in
2000. Mr. Stonehill has served as a Member of the Advisory Committee since July
2000. Prior to joining Blackstone, Mr. Stonehill was a Senior Vice President at
Chartwell Investments Inc., where he had been employed since 1996. Mr. Stonehill
currently serves as a Director of Columbia House Holdings Inc. Since July 2000,
Mr. Stonehill has served as Vice President, Assistant Treasurer and Assistant
Secretary of Holdings.

         Charles E. Kiernan has been a Member of the Advisory Committee of
Holdings since July 1, 2002. Mr. Kiernan was the Executive Vice President and a
Member of the Executive Council for Aramark Corporation from 1998 to 2000, where
he served as President of the Food and Support Services unit. Prior to 1998, Mr.
Kiernan was employed by Duracell from 1986 to 1997. He served as the President
and Chief Operating Officer of Duracell International Inc. from 1994 to 1997,
during which time he also served as a Director of the company, and President of
Duracell North America from 1992 to 1994. Mr. Kiernan served as a member of the
Board of Trustees of the National Urban League.

         Gary Michael has been a Member of the Advisory Committee of Holdings
since October 1, 2002. Mr. Michael served as Chairman of the Board and Chief
Executive Officer of Albertson's, Inc., a national food and drug retailer from
February 1991 until his retirement on April 23, 2001. Prior to that he served as
Vice Chairman, Executive Vice President and Senior Vice President of Finance of
Albertson's and served on the Board of Directors from 1979 until his retirement.
Mr. Michael served as Chairman of the Federal Reserve Bank of San Francisco and
as a member of the Financial Executives Institute. He currently serves as a
Director of Questar, Inc., Boise Cascade Corp., IdaCorp, Harrah's Entertainment,
Inc. and The Clorox Company.

         The Boards of Directors of CapCo I and CapCo II are comprised of Philip
R. Yates, John E. Hamilton, Chinh E. Chu and David A. Stonehill. The Board of
Directors of Investor LP is comprised of Howard A. Lipson, Chinh E. Chu and
David A. Stonehill.

                                       63
<PAGE>

         Except as described above, there are no arrangements or understandings
between any director or executive officer and any other person pursuant to which
that person was elected or appointed as a director or executive officer.


Item 11. Executive Compensation

         The following table sets forth all cash compensation paid to the Chief
Executive Officer and four other most highly compensated executive officers of
the Company (the "Named Executive Officers") for the years ended December 31,
2002, 2001 and 2000, and their respective titles at December 31, 2002. The
philosophy of the Company is to compensate all employees at levels competitive
with the market to enable the Company to attract, retain and motivate all
employees. From time to time, the compensation committee will review the
Company's compensation structure through an examination of compensation
information for comparable companies and certain broader based data, compiled by
the Company and by compensation and other consulting firms. In 2000, the
compensation committee utilized William M. Mercer Incorporated to conduct a full
review of the Company's compensation structure.

                           Summary Compensation Table
<TABLE>
<CAPTION>

                                                    Annual Compensation                        Long-Term Compensation
                                                    -------------------                        ----------------------
                                                                                           Awards                  Payouts
                                                                                           ------                  -------
                                                                        Other     Restricted    Securities               All
                                                            Bonus       Annual    Stock Awards   Underlying    LTIP     Other
  Name and Principal Position         Year      Salary     Earned (1)    Comp.       Awards       Options     Payouts  Comp.(2)
  ---------------------------         ----      ------     ----------    -----       ------       -------     -------  --------
                                                $           $             $         $             #           $        $
<S>                                   <C>       <C>         <C>           <C>       <C>           <C>         <C>      <C>
Philip R. Yates                       2002      465,492     786,905         --         --           --          --     5,140
Chief Executive Officer               2001      435,011     630,766         --         --           --          --     4,260
                                      2000      397,070          --         --         --           --          --     4,258

Roger M. Prevot                       2002      325,894     487,326         --         --           --          --     4,150
President and Chief Operating         2001      315,672     400,380         --         --         14.0          --     3,600
  Officer (3)                         2000      285,427          --         --         --           --          --     3,843

John E. Hamilton                      2002      226,244     281,937         --         --           --          --     4,062
Chief Financial Officer               2001      219,154     231,635         --         --           --          --     3,774
                                      2000      201,966          --         --         --           --          --     3,752

G. Robinson Beeson                    2002      210,518     286,956         --         --           --          --     4,305
Senior Vice President and             2001      204,390     200,000         --         --           --          --     3,999
  General  Manager, North             2000      192,176          --         --         --           --          --     3,964
  America Automotive and South
  America

Scott G. Booth                        2002      202,786     275,706         --         --           --          --     4,125
Senior Vice President and             2001      198,557     150,000         --         --           --          --     3,837
  General Manager, North              2000      188,866          --         --         --           --          --     3,737
  America Household and
  Personal Care
</TABLE>


     1)   Represents bonus earned in the current year and paid in March of the
          following year under the Company's annual discretionary bonus plan.
          Bonus amounts in 2002 are estimates.
     2)   Represents contributions to the Company's 401(k) plan, amounts
          attributable to group term life insurance and payment of relocation
          costs.
     3)   Roger M. Prevot has served as President and Chief Operating Officer
          since February 8, 2000. Prior to February 8, 2000 Mr. Prevot served as
          Senior Vice President or Vice President and General Manager, Food and
          Beverage.


                                       64
<PAGE>




Management Awards

         Pursuant to the Recapitalization Agreement, immediately prior to the
Closing, Holdings made cash payments to approximately 20 senior level managers
equal to approximately $7.0 million, which represented the aggregate value
payable under Holdings' former equity appreciation plan (which was cancelled
upon the Closing) and additional cash bonuses.

         Pursuant to the Recapitalization Agreement, immediately after the
Closing, Holdings granted to approximately 100 middle level managers stay
bonuses aggregating approximately $4.6 million, which were paid over a period of
three years.

         Pursuant to the Recapitalization Agreement, immediately after the
Closing, Holdings made additional cash payments to approximately 15 senior level
managers equal to approximately $5.0 million, which represented additional cash
bonuses and the taxes payable by those managers in respect of the awards
described in this paragraph. In addition, (a) Holdings made additional cash
payments to those managers equal to approximately $3.1 million, which were used
by the recipients to purchase shares of restricted common stock of Investor LP
and (b) each recipient was granted the same number of additional restricted
shares as the shares purchased pursuant to clause (a). Those restricted shares
vest over a period of three years, and one-third of any forfeited shares will
increase the Graham Entities' ownership interests in Holdings.

         As a result of such equity awards and other adjustments, Management
owns an aggregate of approximately 2.7% of the outstanding common stock of
Investor LP, which constitutes approximately a 2.3% interest in Holdings.


Supplemental Income Plan

         Mr. Yates is the sole participant in the Graham Engineering Corporation
Amended Supplemental Income Plan (the "SIP"). Upon the Closing, the Operating
Company assumed Graham Engineering's obligations under the SIP. The SIP provides
that upon attaining age 65, Mr. Yates shall receive a fifteen-year annuity
providing annual payments equal to 25% of his Final Salary (as defined therein).
The SIP also provides that the annuity payments shall be increased annually by a
4% cost of living adjustment. The SIP permits Mr. Yates to retire at or after
attaining age 55 without any reduction in the benefit, although that benefit
would not begin until Mr. Yates attained age 65. In the event the Company
terminates Mr. Yates' employment without "just cause," as defined in the SIP,
then upon attaining age 65, he would receive the entire annuity. The SIP
provides for similar benefits in the event of a termination of employment on
account of death or disability.


Option Plan

         Pursuant to the Recapitalization Agreement, the Company has adopted the
Graham Packaging Holdings Company Management Option Plan (the "Option Plan").

          The Option Plan provides for the grant to management employees of
Holdings and its subsidiaries and non-employee directors, advisors, consultants
and other individuals providing services to Holdings of options ("Options") to
purchase limited partnership interests in Holdings equal to 0.01% of Holdings at
the date of the Recaptialization (prior to any dilution resulting from any
interests granted pursuant to the Option Plan) (each 0.01% interest being
referred to as a "Unit"). The aggregate number of Units with respect to which
Options may be granted under the Option Plan shall not exceed 531.0 Units,
representing a total of up to 5% of the equity of Holdings.

         The exercise price per Unit for 500.0 of the Units granted is $25,789
and $29,013 for the remaining 31.0. The number and type of Units covered by
outstanding Options and exercise prices may be adjusted to reflect certain
events such as recapitalizations, mergers or reorganizations of or by Holdings.
The Option Plan is intended to advance the best interests of the Company by
allowing such individuals to acquire an ownership interest in the Company,
thereby motivating them to contribute to the success of the Company and to
remain in the employ of the Company.

                                       65
<PAGE>

         A committee (the "Committee") has been appointed to administer the
Option Plan, including, without limitation, the determination of the employees
to whom grants will be made, the number of Units subject to each grant and the
various terms of such grants. The Committee may provide that an Option cannot be
exercised after the merger or consolidation of Holdings into another company or
corporation, the exchange of all or substantially all of the assets of Holdings
for the securities of another corporation, the acquisition by a corporation of
80% or more of Holdings' partnership interest or the liquidation or dissolution
of Holdings, and if the Committee so provides, it will also provide either by
the terms of such Option or by a resolution adopted prior to the occurrence of
such merger, consolidation, exchange, acquisition, liquidation or dissolution,
that, for ten business days prior to such event, such Option shall be
exercisable as to all Units subject thereto, notwithstanding anything to the
contrary in any provisions of such Option and that, upon the occurrence of such
event, such Option shall terminate and be of no further force or effect. The
Committee may also provide that even if the Option shall remain exercisable
after any such event, from and after such event, any such Option shall be
exercisable only for the kind and amount of securities and other property
(including cash), or the cash equivalent thereof, receivable as a result of such
event by the holder of a number of partnership interests for which such Option
could have been exercised immediately prior to such event. No suspension,
termination or amendment of or to the Option Plan shall materially and adversely
affect the rights of any participant with respect to Options issued hereunder
prior to the date of such suspension, termination or amendment without the
consent of such holder.

         None of the Options were granted to the Named Executive Officers for
the year ended December 31, 2002. On October 1, 2002, an aggregate of 31.0
options were granted to Charles E. Kiernan and Gary G. Michael who joined the
Advisory Committee of Holdings in 2002.

         The following table sets forth certain information with respect to the
total Options granted to the Named Executive Officers at December 31, 2002.

                    TOTAL OPTION GRANTS AT DECEMBER 31, 2002

<TABLE>
<CAPTION>

                                                 Number of
                                                 Securities
                                                 Underlying         Value of
                                                Unexercised      Unexercised In   Options at End
                                               Options at End      the Money      of Fiscal Year
       Name                                    of Fiscal Year       Options         Exercisable
       ----                                    --------------       -------         -----------
<S>                                                 <C>               <C>              <C>
Philip R. Yates                                     77.4              $ 0              59.2
Chief Executive Officer


Roger M. Prevot                                     66.7              $ 0              43.1
President and Chief Operating Officer

John E. Hamilton                                    48.5              $ 0              35.1
Chief Financial Officer

G. Robinson Beeson                                  36.2              $ 0              27.7
Senior Vice President and General
Manager, North America Automotive
and South America

Scott G. Booth                                      36.2              $ 0              27.7
Senior Vice President and General
Manager, North America Household
and Personal Care
</TABLE>


                                       66
<PAGE>


         The following table sets forth equity compensation plan information at
December 31, 2002.

                      EQUITY COMPENSATION PLAN INFORMATION
<TABLE>
<CAPTION>

                                      (a)                       (b)                           (c)
                                                                                Number of securities remaining
                              Number of securities                               available for future issuance
                                to be issued upon        Weighted-average       under equity compensation plans
                                   exercise of           exercise price of      (excluding securities reflected
Plan category                  outstanding options      outstanding options             in column (a))
-------------                  -------------------      -------------------             --------------

<S>                                  <C>                     <C>                              <C>
Equity compensation plans
approved by security
holders                              531.0                   $25,977                          0.0

Equity compensation plans
not approved by security
holders                                N/A                       N/A                          N/A
                                       ---                       ---                          ---

Total                                531.0                   $25,977                          0.0
                                     =====                   =======                          ===
</TABLE>



  Pension Plans

         In the year ended December 31, 2002, the Company participated in a
noncontributory, defined benefit pension plan for salaried and hourly employees
other than employees covered by collectively bargained plans. The Company also
sponsored other noncontributory defined benefit plans under collective
bargaining agreements. These plans covered substantially all of the Company's
U.S. employees. The defined benefit plan for salaried employees provides
retirement benefits based on the final five years average compensation and years
of service, while plans covering hourly employees provide benefits based on
years of service. See Note 12 of the Notes to Financial Statements for
information regarding the pension plans for each of the three years in the
period ended December 31, 2002.

         The following table shows estimated annual benefits upon retirement at
age 65 under the defined benefit plan for salaried employees, based on the final
five years average compensation and years of service, as specified therein:

                               Pension Plan Table
                               ------------------

                                       Years of Service
                                       ----------------
Remuneration         15           20          25           30           35
------------         --           --          --           --           --
$ 125,000         $ 26,449     $ 35,266    $ 44,082     $ 52,899     $ 54,461
  150,000           32,449       43,266      54,082       64,899       66,774
  175,000           38,449       51,266      64,082       76,899       79,086
  200,000           44,449       59,266      74,082       88,899       91,399
  225,000           50,449       67,266      84,082      100,899      103,711
  250,000           56,449       75,266      94,082      112,899      116,024
  300,000           68,449       91,266     114,082      136,899      140,649
  400,000           92,449      123,266     154,082      184,899      189,899
  450,000          104,449      139,266     174,082      208,899      214,524
  500,000          116,449      155,266     194,082      232,899      239,149


                                       67
<PAGE>

          Note: The amounts shown are based on 2002 covered compensation of
               $39,451 for an individual born in 1937. In addition, these
               figures do not reflect the salary limit of $200,000 and benefit
               limit under the plan's normal form of $160,000 in 2002.

         The compensation covered by the defined benefit plan for salaried
employees is an amount equal to "Total Wages" (as defined). This amount includes
the annual Salary and Bonus amounts shown in the Summary Compensation Table
above for the five Named Executive Officers who participated in the plan. The
estimated credited years of service for the year ended December 31, 2002 for
each of the five Named Executive Officers participating in the plan was as
follows: Philip R. Yates, 31 years; Roger M. Prevot, 15 years; John E. Hamilton,
19 years; G. Robinson Beeson, 27 years; and Scott G. Booth, 14 years. Benefits
under the plan are computed on the basis of straight-life annuity amounts.
Amounts set forth in the above table are not subject to deduction for Social
Security or other offset amounts.


401(k) Plan

         During 2002, the Company also participated in a defined contribution
plan under Internal Revenue Code Section 401(k), which covered all U.S.
employees of the Company except those represented by a collective bargaining
unit. The Company also sponsored other noncontributory defined contribution
plans under collective bargaining agreements. The Company's contributions were
determined as a specified percentage of employee contributions, subject to
certain maximum limitations. The Company's costs for the salaried and
non-collective bargaining hourly plan for 2002, 2001 and 2000 were $1.2 million,
$1.1 million and $1.0 million, respectively.


Employment Agreements

         On June 27, 2002, the Company entered into employment agreements with
Messrs. Yates, Prevot, Hamilton, Beeson and Booth. The term of each agreement is
for one year but automatically extends for an additional year unless either
party gives 90 days written notice prior to the end of the term. Under each
agreement, the executive is entitled to a base salary and an annual bonus based
on the achievement of performance criteria established by the Company's board.
In the event that an executive is terminated by the Company without cause (as
defined in each agreement), (including the Company's election not to renew the
term so that the term ends prior to the fifth anniversary of the agreement), or
the executive resigns with good reason (as defined in the agreement), the
executive will be entitled to (1) full vesting of all equity awards granted to
the executive, (2) a pro rata bonus for the year of termination, (3) monthly
payments for a period of 24 months (36 months with respect to Mr. Yates
following a change of control (as defined in the agreement)) of the executive's
base salary and average annual bonus, (4) continued health and dental benefits
for a period of 24 months and (5) outplacement services for a period of 12
months. If the Company elects not to extend the term so that the term ends
following the fifth anniversary of the agreement, upon executive's termination
of employment, executive will be entitled to the same benefits described above
except that the executive will only be entitled to continued monthly payments
and health and dental benefits for a period of 12 months, rather than 24 months.
During the term and for a period of 18 months following the term (12 months if
the executive's employment is terminated due to the Company's election not to
renew the term so that the term ends following the fifth anniversary of the
agreement), each executive is subject to a covenant not to compete with the
Company or solicit the Company's clients or employees. Each executive has also
covenanted not to reveal the Company's confidential information during the term
of employment or thereafter and to assign to the Company any inventions created
by the executive while employed by the Company. With respect to the employment
agreements of Messrs. Yates, Prevot and Hamilton, if any payments by the Company
to the executive would result in an excise tax under Section 280G of the
Internal Revenue Code, the executive will be entitled to an additional payment
so that the executive will receive an amount equal to the payments the executive
would be entitled to receive without the imposition of the excise tax.


Item 12.  Security Ownership of Certain Beneficial Owners and Management

         The following table and accompanying footnotes set forth certain
information regarding beneficial ownership of the limited partnership and
general partnership interests in the Issuers, as of the date hereof, by (i) each
person who is known by the Issuers to own beneficially more than 5% of such
interests, (ii) each member of the Advisory Committee of Holdings and each of


                                       68
<PAGE>

the executive officers of the Operating Company and (iii) all members of the
Advisory Committee of Holdings and the executive officers of the Operating
Company as a group. For a more detailed discussion of certain ownership
interests following the Recapitalization, see "Business-- The Recapitalization"
(Item 1) and "Certain Relationships and Related Party Transactions" (Item 13).

<TABLE>
<CAPTION>

                                     Name and Address                                           Percentage
Issuer                               of Beneficial Owner               Type of Interest          Interest
------                               -------------------               ----------------          --------

<S>                                  <C>                               <C>                         <C>
Graham Packaging Company, L.P.       Holdings                          Limited Partnership          99%
                                     Opco GP (1)                       General Partnership           1%

GPC Capital Corp. I                  Operating Company                 Common Stock                100%

Graham Packaging Holdings Company    Investor LP (2)                   Limited Partnership          81%
                                     Investor GP (2)                   General Partnership           4%
                                     GPC Holdings, L.P. (3)            Limited Partnership          14%
                                     Graham Packaging Corporation (3)  General Partnership           1%

GPC Capital Corp. II                 Holdings                          Common Stock                100%
</TABLE>


(1)  Opco GP is a wholly owned subsidiary of Holdings.

(2)  Investor GP is a wholly owned subsidiary of Investor LP. Upon the
     consummation of the Recapitalization, Blackstone became, collectively, the
     beneficial owner of 100.0% of the common stock of Investor LP. Blackstone
     Management Associates III L.L.C. ("BMA") is the general partner of each of
     such entities. Messrs. Peter G. Peterson, Stephen A. Schwarzman and Howard
     A. Lipson are members of BMA, which has investment and voting control over
     the shares held or controlled by Blackstone. Each of such persons disclaims
     beneficial ownership of such shares. The address of each of the Equity
     Investors is c/o The Blackstone Group L.P., 345 Park Avenue, New York, New
     York 10154. Following the consummation of the Recapitalization, Blackstone
     transferred to Management approximately 3.0% of the common stock of
     Investor LP. See "Executive Compensation-Management Awards." In addition,
     an affiliate of DB Alex. Brown LLC and its affiliate, two of the Initial
     Purchasers of the Old Notes, acquired approximately 4.8% of the common
     stock of Investor LP. After giving effect to these transactions,
     Blackstone's beneficial ownership of the common stock of Investor LP
     declined by a corresponding 3.0% and 4.8%, respectively, to approximately
     92.2%.

(3)  GPC Holdings, L.P. and Graham Packaging Corporation are wholly owned,
     directly or indirectly, by the Graham family. The address of both is c/o
     Graham Capital Company, 1420 Sixth Avenue, York, Pennsylvania 17403.


Item 13. Certain Relationships and Related Transactions

         The summaries of agreements set forth below do not purport to be
complete and are qualified in their entirety by reference to all the provisions
of such agreements. Copies of the Recapitalization Agreement, the Consulting
Agreement, the Equipment Sales, Service and License Agreement and the Partners
Registration Rights Agreement are exhibits to this Annual Report on Form 10-K.


Transactions with Graham Entities and Others

         Pursuant to the Recapitalization Agreement, upon the Closing, Holdings
and Graham Engineering entered into the Equipment Sales, Service and Licensing
Agreement ("Equipment Sales Agreement"), which provides that, with certain
exceptions, (i) Graham Engineering will sell to Holdings and its affiliates
certain of Graham Engineering's larger-sized proprietary extrusion blow molding
wheel systems ("Graham Wheel Systems"), at a price to be determined on the basis
of a percentage mark-up of material, labor and overhead costs that is as
favorable to Holdings as the percentage mark-up historically offered by Graham
Engineering to Holdings and is as favorable as the mark-up on comparable


                                       69
<PAGE>

equipment offered to other parties, (ii) each party will provide consulting
services to the other party at hourly rates ranging from $60 to $200 (adjusted
annually for inflation) and (iii) Graham Engineering will grant to Holdings a
nontransferable, nonexclusive, perpetual, royalty-free right and license to use
certain technology. Subject to certain exceptions set forth in the Equipment
Sales Agreement, Holdings and its affiliates will have the exclusive right to
purchase, lease or otherwise acquire the applicable Graham Wheel Systems in
North America and South America, the countries comprising the European Economic
Community as of the Closing and any other country in or to which Holdings has
produced or shipped extrusion blow molded plastic bottles representing sales in
excess of $1.0 million in the most recent calendar year. The Equipment Sales
Agreement terminates on December 31, 2007, unless mutually extended by the
parties. After December 31, 1998, either party to this agreement may terminate
the other party's right to receive consulting services. Effective January 21,
2000 Holdings terminated Graham Engineering's rights to receive consulting
services from Holdings.

         Graham Engineering has supplied both services and equipment to the
Company. The Company paid Graham Engineering approximately $20.2 million, $23.8
million and $25.1 million for services and equipment for the years ended
December 31, 2002, 2001 and 2000, respectively.

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

         Innopack, S.A., minority shareholder of Graham Innopack de Mexico S. de
R.L. de C.V., has supplied goods and related services to the Company, for which
the Company paid approximately $5.4 million and $1.1 million for the years ended
December 31, 2002 and 2001, respectively.

         Graham Family Growth Partnership has supplied management services to
the Company since 1998. The Company paid Graham Family Growth Partnership
approximately $1.1 million for its services for the year ended December 31,
2002, including the $1.0 million per year fee paid pursuant to the Holdings
Partnership Agreement, and $1.0 million for each of the years ended December 31,
2001 and 2000.

         Blackstone has supplied management services to the Company since 1998.
The Company paid Blackstone approximately $1.1 million for its services for the
year ended December 31, 2002, including the $1.0 million per year fee paid
pursuant to the Blackstone monitoring agreement, and $1.0 million for each of
the years ended December 31, 2001 and 2000.

         An affiliate of DB Alex. Brown LLC and its affiliate, two of the
Initial Purchasers of the Old Notes, acquired approximately a 4.8% equity
interest in Investor LP. See "Security Ownership of Certain Beneficial Owners
and Management" (Item 12). Deutsche Bank Trust Company Americas (formerly
Bankers Trust Company), an affiliate of DB Alex. Brown LLC and its affiliate,
acted as administrative agent and provided a portion of the financing under the
Existing Senior Credit Agreement entered into in connection with the
Recapitalization, as well as the Senior Credit Agreement, for which it received
customary commitment and other fees and compensation.

         An equity contribution of $50.0 million was made by the Company's
owners to the Company on September 29, 2000, satisfying Blackstone's first
capital call obligation under the Existing Senior Credit Agreement and Capital
Call Agreement. As part of the Second Amendment to the Existing 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 $50.0 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 Existing Senior Credit Agreement. An


                                       70
<PAGE>

additional equity contribution of $50.0 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.

         Ownership percentage interests in Holdings as set forth in Item 12 were
unchanged following the equity increases. The Company loaned Management the
funds required (approximately $1.1 million for each equity increase) to cover
Management's portion of the equity contribution.

         Pursuant to the Purchase Agreement dated January 23, 1998, the Initial
Purchasers, DB Alex. Brown LLC and an affiliate, Lazard Freres & Co. LLC and
Salomon Brothers Inc, purchased the Senior Subordinated Old Notes at a price of
97.0% of the principal amount, for a discount of 3% from the initial offering
price of 100% or a total discount of $6.75 million. Pursuant to the Purchase
Agreement, the Initial Purchasers purchased the Senior Discount Old Notes at a
price of 57.173% of the principal amount, for a discount of 2.361% from the
initial offering price of 59.534% or a total discount of $3.99 million. Pursuant
to the Purchase Agreement, the Issuers also reimbursed the Initial Purchasers
for certain expenses.


The Partnership Agreements

The Operating Company Partnership Agreement

         The Operating Company was formed under the name "Graham Packaging
Holdings I, L.P." on September 21, 1994 as a limited partnership in accordance
with the provisions of the Delaware Revised Uniform Limited Partnership Act.
Upon the Closing of the Recapitalization, the name of the Operating Company was
changed to "Graham Packaging Company, L.P." The Operating Company will continue
until its dissolution and winding up in accordance with the terms of the
Operating Company Partnership Agreement (as defined).

         Prior to the Recapitalization, Graham Recycling Corporation
("Recycling") was the sole general partner of the Operating Company and Holdings
was the sole limited partner of the Operating Company. As provided in the
Recapitalization Agreement, immediately prior to the Closing, Recycling
contributed to Opco GP its general partnership interest in the Operating
Company, and the partnership agreement of the Operating Company was amended and
restated to reflect such substitution of sole general partner and certain other
amendments (the "Operating Company Partnership Agreement"). Following the
Closing, Holdings has remained the sole limited partner of the Operating
Company.

         The purpose of the Operating Company is the sale and manufacturing of
rigid plastic containers and any business necessary or incidental thereto.

         Management. The Operating Company Partnership Agreement provides that
the general partner shall be entitled in its sole discretion and without the
approval of the other partners to perform or cause to be performed all
management and operational functions relating to the Operating Company and shall
have the sole power to bind the Operating Company. The limited partner shall not
participate in the management or control of the business.

         Exculpation and Indemnification. The Operating Company Partnership
Agreement provides that neither the general partner nor any of its affiliates,
nor any of its partners, shareholders, officers, directors, employees or agents,
shall be liable to the Operating Company or any partner for any breach of the
duty of loyalty or any act or omission not in good faith or which involves
intentional misconduct or a knowing violation of law or the Operating Company
Partnership Agreement. The Operating Company shall indemnify the general partner
and its affiliates, and its partners, shareholders, officers, directors,
employees and agents, from and against any claim or liability of any nature
arising out of the assets or business of the Operating Company.

         Affiliate Transactions. The Operating Company may enter into
transactions with any partner or any of its affiliates which is not prohibited
by applicable law; provided that, any material transaction with any partner or
any of its affiliates shall be on terms reasonably determined by the general
partner to be comparable to the terms which can be obtained from third parties.

         Transfers of Partnership Interests. The Operating Company Partnership
Agreement provides that the limited partner shall not transfer its limited
partnership interests.

                                       71
<PAGE>

         Dissolution. The Operating Company Partnership Agreement provides that
the Operating Company shall be dissolved upon the earliest of (i) December 31,
2044, (ii) the sale, exchange or other disposition of all or substantially all
of the Operating Company's assets, (iii) the withdrawal, resignation, filing of
a certificate of dissolution or revocation of the charter or bankruptcy of a
general partner, or the occurrence of any other event which causes a general
partner to cease to be a general partner unless there shall be another general
partner, (iv) the withdrawal, resignation, filing of a certificate of
dissolution or revocation of the charter or bankruptcy of a limited partner, or
the occurrence of any other event which causes a limited partner to cease to be
a limited partner unless there shall be another limited partner, (v) the
acquisition by a single person of all of the partnership interests in the
Operating Company, (vi) the issuance of a decree of dissolution by a court of
competent jurisdiction, or (vii) otherwise as required by applicable law.

The Holdings Partnership Agreement

         Holdings was formed under the name "Sonoco Graham Company" on April 3,
1989 as a limited partnership in accordance with the provisions of the
Pennsylvania Uniform Limited Partnership Act, and on March 28, 1991, Holdings
changed its name to "Graham Packaging Company." Upon the Closing of the
Recapitalization, the name of Holdings was changed to "Graham Packaging Holdings
Company." Holdings will continue until its dissolution and winding up in
accordance with the terms of the Holdings Partnership Agreement (as defined).

         As contemplated by the Recapitalization Agreement, upon the Closing,
Graham Capital and its successors or assigns, Graham Family Growth Partnership,
Graham GP Corp., Investor LP and Investor GP entered into a Fifth Amended and
Restated Agreement of Limited Partnership (the "Holdings Partnership
Agreement"). The general partners of the partnership are Investor GP and Graham
GP Corp. The limited partners of the partnership are GPC Holdings, L.P. and
Investor LP.

         The purpose of Holdings is the sale and manufacturing of rigid plastic
containers and any business necessary or incidental thereto.

         Management; Advisory Committee. The Holdings Partnership Agreement
provides that the general partner elected by the general partner(s) holding a
majority of the general partnership interests in Holdings (the "Managing General
Partner") shall be entitled in its sole discretion and without the approval of
the other partners to perform or cause to be performed all management and
operational functions relating to Holdings and shall have the sole power to bind
Holdings, except for certain actions in which the Managing General Partner shall
need the approval of the other general partners. The limited partners shall not
participate in the management or control of the business.

         The partnership and the general partners shall be advised by a
committee (the "Advisory Committee") comprised of five individuals, each of whom
shall be appointed from time to time by Investor GP. Such committee shall serve
solely in an advisory role and shall not have any power to act for or bind
Holdings.

         Annual Fee. The Holdings Partnership Agreement provides that, so long
as the Continuing Graham Entities and their affiliates do not sell more than
two-thirds of their partnership interests owned at the Closing, Holdings will
pay to Graham Family Growth Partnership an annual fee of $1.0 million.

         Exculpation and Indemnification. The Holdings Partnership Agreement
provides that no general partner nor any of its affiliates, nor any of its
respective partners, shareholders, officers, directors, employees or agents,
shall be liable to Holdings or any of the limited partners for any act or
omission, except resulting from its own willful misconduct or bad faith, any
breach of its duty of loyalty or willful breach of its obligations as a
fiduciary or any breach of certain terms of the Holdings Partnership Agreement.
Holdings shall indemnify the general partners and their affiliates, and their
respective partners, shareholders, officers, directors, employees and agents,
from and against any claim or liability of any nature arising out of the assets
or business of Holdings.

         Affiliate Transactions. Holdings may not enter into any transaction
with any partner or any of its affiliates unless the terms thereof are believed
by the general partners to be in the best interests of Holdings and are
intrinsically fair to Holdings and equally fair to each of the partners;
provided that, Holdings may perform and comply with the Recapitalization
Agreement, the Equipment Sales Agreement, the Consulting Agreement and the
Monitoring Agreement (as defined).

                                       72
<PAGE>

         Transfers of Partnership Interests. The Holdings Partnership Agreement
provides that, subject to certain exceptions including, without limitation, in
connection with an IPO Reorganization (as defined) and the transfer rights
described below, general partners shall not withdraw from Holdings, resign as a
general partner, nor transfer their general partnership interests without the
consent of all general partners, and limited partners shall not transfer their
limited partnership interests.

         If any Continuing Graham Partner wishes to sell or otherwise transfer
its partnership interests pursuant to a bona fide offer from a third party,
Holdings and the Equity Investors must be given a prior opportunity to purchase
such interests at the same purchase price set forth in such offer. If Holdings
and the Equity Investors do not elect to make such purchase, then such
Continuing Graham Partner may sell or transfer such partnership interests to
such third party upon the terms set forth in such offer. If the Equity Investors
wish to sell or otherwise transfer their partnership interests pursuant to a
bona fide offer from a third party, the Continuing Graham Entities shall have a
right to include in such sale or transfer a proportionate percentage of their
partnership interests. If the Equity Investors (so long as they hold 51% or more
of the partnership interests) wish to sell or otherwise transfer their
partnership interests pursuant to a bona fide offer from a third party, the
Equity Investors shall have the right to compel the Continuing Graham Entities
to include in such sale or transfer a proportionate percentage of their
partnership interests.

         Dissolution. The Holdings Partnership Agreement provides that Holdings
shall be dissolved upon the earliest of (i) the sale, exchange or other
disposition of all or substantially all of Holdings' assets (including pursuant
to an IPO Reorganization), (ii) the withdrawal, resignation, filing of a
certificate of dissolution or revocation of the charter or bankruptcy of a
general partner, or the occurrence of any other event which causes a general
partner to cease to be a general partner unless (a) the remaining general
partner elects to continue the business or (b) if there is no remaining general
partner, a majority-in-interest of the limited partners elect to continue the
partnership, or (iii) such date as the partners shall unanimously elect.

         IPO Reorganization. "IPO Reorganization" means the transfer of all or
substantially all of Holdings' assets and liabilities to CapCo II in
contemplation of an initial public offering of the shares of common stock of
CapCo II. The Holdings Partnership Agreement provides that, without the approval
of each general partner, the IPO Reorganization may not be effected through any
entity other than CapCo II.

         Tax Distributions. The Holdings Partnership Agreement requires
certain tax distributions to be made.


Partners Registration Rights Agreement

         Pursuant to the Recapitalization Agreement, upon the Closing, Holdings,
CapCo II, the Continuing Graham Entities, the Equity Investors and Blackstone
entered into a registration rights agreement (the "Partners Registration Rights
Agreement"). Under the Partners Registration Rights Agreement, CapCo II will
grant, with respect to the shares of its common stock to be distributed pursuant
to an IPO Reorganization, (i) to the Continuing Graham Entities and their
affiliates (and their permitted transferees of partnership interests in
Holdings) two "demand" registrations after an initial public offering of the
shares of common stock of CapCo II has been consummated and customary
"piggyback" registration rights (except with respect to such initial public
offering, unless Blackstone and its affiliates are selling their shares in such
offering) and (ii) to the Equity Investors, Blackstone and their affiliates an
unlimited number of "demand" registrations and customary "piggyback"
registration rights. The Partners Registration Rights Agreement also provides
that CapCo II will pay certain expenses of the Continuing Graham Entities, the
Equity Investors, Blackstone and their respective affiliates relating to such
registrations and indemnify them against certain liabilities, which may arise
under the Securities Act. See "The Partnership Agreements-The Holdings
Partnership Agreement."


Payment of Certain Fees and Expenses

         In connection with the Recapitalization, Blackstone received a fee of
approximately $9.3 million, and the Operating Company has reimbursed or will
reimburse Blackstone for all out-of-pocket expenses incurred in connection with
the Recapitalization. In addition, pursuant to a monitoring agreement (the
"Monitoring Agreement") entered into among Blackstone, Holdings and the
Operating Company, Blackstone will receive a monitoring fee equal to $1.0


                                       73
<PAGE>

million per annum, and will be reimbursed for certain out-of-pocket expenses. In
the future, an affiliate or affiliates of Blackstone may receive customary fees
for advisory and other services rendered to Holdings and its subsidiaries. If
such services are rendered in the future, the fees will be negotiated from time
to time on an arm's length basis and will be based on the services performed and
the prevailing fees then charged by third parties for comparable services.


Loans to Management

         At December 31, 2002, the Company had loans outstanding to certain
management employees of $2.6 million, including loans to Philip R. Yates $1.0
million, Roger M. Prevot $0.5 million, John E. Hamilton $0.2 million, G.
Robinson Beeson $0.3 million, Scott G. Booth $0.3 million, Ashok Sudan $0.1
million and other individuals totaling $0.2 million. These loans were made in
connection with the capital call payments made on September 29, 2000 and March
29, 2001 pursuant to the Capital Call Agreement dated as of August 13, 1998. The
proceeds from the loans were used to buy stock in BMP/Graham Holdings Corp. to
avoid any management ownership dilution at the time of the capital call
payments. The loans mature on September 29, 2007 and March 29, 2008,
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. See "--Certain Relationships and Related Transactions -
Transactions with Graham Entities and Others."


                                       74
<PAGE>



         PART IV

Item 14. Controls and Procedures

     (a)  Evaluation of Disclosure Controls and Procedures

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

     (b)  Changes In Internal Controls

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


Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

     (a)  The following Financial Statement Schedules are included herein:

          Schedule I - Registrant's Condensed Financial Statements

          Schedule II - Valuation and Qualifying Accounts

          All other schedules are not submitted because they are not applicable
          or not required or because the required information is included in the
          financial statements or the notes thereto.

     (b)  The following exhibits are filed herewith or incorporated herein by
          reference:


Exhibit
Number      Description of Exhibit
------      ----------------------

2.1      -  Agreement and Plan of Recapitalization,  Redemption and Purchase
            dated as of December 18, 1997, as amended as of January  29,
            1998,  by and among  Graham  Packaging  Holdings  Company,
            BCP/Graham Holdings   L.L.C.,   BMP/Graham   Holdings
            Corporation  and  the  other  parties  named  therein
            (incorporated  herein by reference to Exhibit 2.1 to the
            Registration  Statement on Form S-4 (File No. 333-53603-03)).

3.1      -  Certificate of Limited  Partnership of Graham  Packaging
            Company,  L.P.  (incorporated  herein by reference to Exhibit
            3.1 to the Registration Statement on Form S-4 (File No.
            333-53603-03)).

3.2      -  Amended and Restated Agreement of Limited  Partnership of Graham
            Packaging Company,  L.P. dated as of  February  2, 1998
            (incorporated  herein  by  reference  to  Exhibit  3.2 to the
            Registration Statement on Form S-4 (File No. 333-53603-03)).

3.3      -  Certificate of Incorporation  of GPC Capital Corp. I
            (incorporated  herein by reference to Exhibit 3.3 to the
            Registration Statement on Form S-4 (File No. 333-53603-03)).

3.4      -  By-Laws  of  GPC  Capital  Corp.  I  (incorporated  herein  by
            reference  to  Exhibit  3.4 to the Registration Statement on
            Form S-4 (File No. 333-53603-03)).

3.5      -  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 (File No. 333-53603-03)).

                                       75
<PAGE>

3.6      -  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 (File No. 333-53603-03)).

3.7      -  Certificate of Incorporation of GPC Capital Corp. II
            (incorporated  herein by reference to Exhibit 3.7 to the
            Registration Statement on Form S-4 (File No. 333-53603-03)).

3.8      -  By-Laws  of GPC  Capital  Corp.  II  (incorporated  herein  by
            reference  to  Exhibit  3.8 to the Registration Statement on
            Form S-4 (File No. 333-53603-03)).

10.1     -  Credit Agreement dated as of February 14, 2003 among Graham
            Packaging  Holdings  Company,  Graham Packaging Company,  L.P.,
            GPC Capital Corp. I, the lending  institutions  identified in the
            Credit Agreement and the agents identified in the Credit
            Agreement.

10.2     -  Consulting  Agreement dated as of February 2, 1998 between Graham
            Packaging  Holdings Company and Graham Capital Corporation
            (incorporated  herein by reference to Exhibit 10.2 to the
            Registration Statement on Form S-4 (File No. 333-53603-03)).

10.3     -  Equipment Sales,  Service and License Agreement dated February
            2, 1998 between Graham  Engineering Corporation and Graham
            Packaging  Holdings Company  (incorporated  herein by reference
            to Exhibit 10.3 to the Registration Statement on Form S-4 (File
            No. 333-53603-03)).

10.4     -  Forms of Retention  Incentive Agreement  (incorporated  herein
            by reference to Exhibit 10.4 to the Registration Statement on
            Form S-4 (File No. 333-53603-03)).

10.5     -  Forms  of  Severance  Agreement   (incorporated  herein  by
            reference  to  Exhibit  10.5  to  the Registration Statement on
            Form S-4 (File No. 333-53603-03)).

10.6     -  Registration  Rights Agreement by and among Graham Packaging
            Company,  L.P., GPC Capital Corp. II, Graham  Capital
            Corporation,  Graham  Family Growth  Partnership,  BCP /Graham
            Holdings  L.L.C., BMP/Graham  Holdings  Corporation  and the
            other  parties named  therein  (incorporated  herein by
            reference to Exhibit 10.6 to the Registration Statement on Form
            S-4 (File No. 333-53603-03)).

10.7     -  Monitoring Agreement dated as of February 2, 1998 among Graham
            Packaging Holdings Company,  Graham Packaging Company,  L.P. and
            Blackstone  (incorporated  herein by reference to Exhibit 10.7
            to the Registration Statement on Form S-4 (File No.
            333-53603-03)).

10.8     -  Management  Stockholders  Agreement  (incorporated  herein by
            reference  to  Exhibit  10.8 to the Registration Statement on
            Form S-4 (File No. 333-53603-03)).

10.9     -  Form of Equity  Incentive  Agreement  (incorporated  herein by
            reference  to Exhibit  10.9 to the Registration Statement on
            Form S-4 (File No. 333-53603-03)).

10.10    -  Stockholders'  Agreement  dated as of  February  2, 1998 among
            Blackstone  Capital  Partners  III Merchant  Banking Fund L.P.,
            Blackstone  Offshore Capital  Partners III L.P.,  Blackstone
            Family Investment  Partnership III, L.P.,  BMP/Graham  Holdings
            Corporation,  Graham Packaging  Holdings Company, GPC Capital
            Corp. II and BT Investment Partners,  Inc.  (incorporated herein
            by reference to Exhibit 10.10 to the Registration Statement on
            Form S-4 (File No. 333-53603-03)).

10.11    -  Graham Packaging  Holdings Company  Management  Option Plan
            (incorporated  herein by reference to Exhibit 10.11 to the
            Registration Statement on Form S-4 (File No. 333-53603-03)).

                                       76
<PAGE>

10.12      -  Indenture dated as of February 2, 1998 among Graham Packaging
              Company,  L.P. and GPC Capital Corp. I and Graham  Packaging
              Holdings  Company,  as guarantor,  and United States Trust
              Company of New York, as Trustee,  relating to the Senior
              Subordinated Notes Due 2008 of Graham Packaging Company, L.P.
              and GPC Capital Corp. I,  unconditionally  guaranteed by Graham
              Packaging  Holdings  Company (incorporated  herein by reference
              to Exhibit 4.1 to the Registration  Statement on Form S-4 (File
              No. 333-53603-03)).

10.13      -  Indenture  dated as of February 2, 1998 among Graham  Packaging
              Holdings  Company and GPC Capital Corp. II and The Bank of New
              York, as Trustee,  relating to the Senior  Discount Notes Due
              2009 of Graham Packaging  Holdings  Company and GPC Capital Corp.
              II (incorporated  herein by reference to Exhibit 4.7 to the
              Registration Statement on Form S-4 (File No. 333-53603-03)).

10.14      -  Form of Employment  Agreement dated as of June 27, 2002, between
              Graham Packaging Holdings Company and Philip R. Yates
              (incorporated  herein by reference to Exhibit 10.16 to Amendment
              No. 3 to the Registration Statement on Form S-1 filed by GPC
              Capital Corp. II (File No. 333-89022)).

10.15      -  Form of Employment  Agreement dated as of June 27, 2002, between
              Graham Packaging Holdings Company and Roger M. Prevot
              (incorporated  herein by reference to Exhibit 10.17 to Amendment
              No. 3 to the Registration Statement on Form S-1 filed by GPC
              Capital Corp. II (File No. 333-89022)).

10.16      -  Form of Employment  Agreement dated as of June 27, 2002, between
              Graham Packaging Holdings Company and John E. Hamilton
              (incorporated herein by reference to Exhibit 10.18 to Amendment
              No. 3 to the Registration Statement on Form S-1 filed by GPC
              Capital Corp. II (File No. 333-89022)).

10.17      -  Form of Employment  Agreement dated as of June 27, 2002, between
              Graham Packaging Holdings Company and G. Robinson  Beeson
              (incorporated  herein by reference to Exhibit 10.19 to Amendment
              No. 3 to the Registration Statement on Form S-1 filed by GPC
              Capital Corp. II (File No. 333-89022)).

10.18      -  Form of Employment  Agreement dated as of June 27, 2002, between
              Graham Packaging Holdings Company and Scott G. Booth
              (incorporated  herein by reference to Exhibit  10.20 to
              Amendment No. 3 to the Registration Statement on Form S-1 filed
              by GPC Capital Corp. II (File No. 333-89022)).

12.1       -  Statement of Ratio of Earnings to Fixed Charges.

18         -  Letter re Change in Accounting  Principles  (incorporated herein
              by reference to Exhibit 18 to the Quarterly  Report on Form
              10-Q for the  quarterly  period  ended  September  26,  1999
              (File No. 333-53603-03)).

21.1       -  Subsidiaries of Graham Packaging Holdings Company.

24         -  Power of Attorney--see page 81 of Form 10-K.

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

          (c) Reports on Form 8-K

         No Reports on Form 8-K were required to be filed during the quarter
ended December 31, 2002.



                                       77
<PAGE>




                                   SIGNATURES



         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed by
the undersigned, thereunto duly authorized, in York, Pennsylvania, on February
24, 2003.




                        GRAHAM PACKAGING HOLDINGS COMPANY
                                    (Registrant)

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

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





                                       78
<PAGE>


                                  CERTIFICATION


I, Philip R. Yates, certify that:

1)   I have reviewed this Annual Report on Form 10-K of Graham Packaging
     Holdings Company;

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

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

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

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

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

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

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

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

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

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


     Date:    February 24, 2003


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


                                       79
<PAGE>



                                  CERTIFICATION


I, John E. Hamilton, certify that:

1)   I have reviewed this Annual Report on Form 10-K of Graham Packaging
     Holdings Company;

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

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

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

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

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

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

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

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

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

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


     Date:    February 24, 2003


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



                                       80
<PAGE>



                                POWER OF ATTORNEY

         We, the undersigned officers of BCP/Graham Holdings L.L.C., as general
partner of Graham Packaging Holdings Company, and directors of BMP/Graham
Holdings Corporation, as sole member of BCP/Graham Holdings L.L.C., as the
general partner of Graham Packaging Holdings Company, do hereby constitute and
appoint Philip R. Yates and John E. Hamilton, or either of them, our true and
lawful attorneys and agents, to sign for us, or any of us, in our names in the
capacities indicated below, any and all amendments to this report, and to cause
the same to be filed with the Securities and Exchange Commission, granting to
said attorneys, and each of them, full power and authority to do and perform any
act and thing necessary or appropriate to be done in the premises, as fully to
all intents and purposes as the undersigned could do if personally present, and
we do hereby ratify and confirm all that said attorneys and agents, or either of
them, shall do or cause to be done by virtue hereof.

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed on the 24th day of February, 2003 by the following
persons on behalf of the registrant and in the capacities indicated, with
respect to BCP/Graham Holdings L.L.C., as general partner of Graham Packaging
Holdings Company, or BMP/Graham Holdings Corporation, as sole member of
BCP/Graham Holdings L.L.C., as indicated below:


     Signature                           Title
     ---------                           -----

/s/ Howard A. Lipson       President, Treasurer and Assistant Secretary
Howard A. Lipson           (Principal Executive Officer) of BCP /Graham
                           Holdings L.L.C.

/s/ John E. Hamilton       Vice President, Finance and Administration
John E. Hamilton           (Principal Financial Officer and Principal
                           Accounting Officer) of BCP / Graham Holdings L.L.C.

/s/ Howard A. Lipson       Director of BMP/Graham Holdings Corporation
Howard A. Lipson

/s/ Chinh E. Chu           Director of BMP/Graham Holdings Corporation
Chinh E. Chu

/s/ David A. Stonehill     Director of BMP/Graham Holdings Corporation
David A. Stonehill




SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.

No annual report to security holders covering the registrant's last fiscal year
has been sent to security holders. No proxy statement, form of proxy or other
proxy soliciting material has been sent to more than 10 of the registrant's
security holders with respect to any annual or other meeting of security
holders.



                                       81
<PAGE>


                                                                     SCHEDULE I
                        GRAHAM PACKAGING HOLDINGS COMPANY
                   REGISTRANT'S CONDENSED FINANCIAL STATEMENTS
                                 (In thousands)
<TABLE>
<CAPTION>

                                                                               December 31,
                                                                               ------------
BALANCE SHEETS                                                               2002        2001
--------------                                                               ----        ----
<S>                                                                       <C>         <C>           <C>
Assets:
  Current assets                                                          $      --   $     --
  Intangible assets, net                                                      3,595       4,068
                                                                          ---------   ---------
    Total assets                                                          $   3,595   $   4,068
                                                                          =========   =========
Liabilities and partners' capital:
  Current liabilities                                                        $6,993   $   6,993
  Long-term debt                                                            168,378     151,639
  Investment in subsidiary                                                  288,531     330,490
                                                                          ---------   ---------
    Total liabilities                                                       463,902     489,122
Partners' capital                                                          (460,307)   (485,054)
                                                                          ---------   ---------
    Total liabilities and partners' capital                               $   3,595   $   4,068
                                                                          =========   =========

                                                                                Year Ended December 31,
                                                                                -----------------------
STATEMENTS OF OPERATIONS                                                     2002        2001         2000
------------------------                                                     ----        ----         ----
Equity in earnings (loss) of subsidiaries                                 $  24,774   $(28,585)    $(31,650)
Interest expense                                                            (17,212)   (15,385)     (13,971)
Other                                                                            --         --          (16)
                                                                          ---------   --------     --------
    Net income (loss)                                                     $   7,562   $(43,970)    $(45,637)
                                                                          =========   ========     ========

                                                                                Year Ended December 31,
                                                                                -----------------------
STATEMENTS OF CASH FLOWS                                                     2002        2001         2000
------------------------                                                     ----        ----         ----
Operating activities:
    Net income (loss)                                                     $   7,562   $(43,970)    $(45,637)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
  Amortization of debt issuance costs                                           473        426          383
  Accretion of Senior Discount Notes                                         16,739     14,959       13,588
  Changes in current liabilities                                                 --         --           16
  Equity in (earnings) loss of subsidiaries                                 (24,774)    28,585       31,650
                                                                          ---------   --------     --------
    Net cash provided by operating activities                                    --         --           --
Investing activities:
  Investments in a business                                                      --    (50,000)     (50,000)
                                                                          ---------   --------     --------
    Net cash used in investing activities                                        --    (50,000)     (50,000)
Financing activities:
  Capital contributions                                                          --     50,000       50,000
                                                                          ---------   --------     --------
    Net cash provided by financing activities                                    --     50,000       50,000
                                                                          ---------   --------     --------
Increase in cash and cash equivalents                                            --         --           --
Cash and cash equivalents at beginning of period                                 --         --           --
                                                                          ---------   --------     --------
Cash and cash equivalents at end of period                                $      --   $     --     $     --
                                                                          =========   ========     ========
Supplemental cash flow information:
  Cash paid for interest                                                  $      --   $     --     $     --
</TABLE>


        See footnotes to consolidated financial statements of Graham Packaging
Holdings Company.


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<PAGE>




                                                                    SCHEDULE II

                        GRAHAM PACKAGING HOLDINGS COMPANY
                        VALUATION AND QUALIFYING ACCOUNTS
                                 (In thousands)

<TABLE>
<CAPTION>

                                                 Balance at
                                                Beginning of                                               Balance at
                                                   Year        Additions     Deductions     Other (1)     End of Year
                                                   ----        ---------     ----------     ---------     -----------
<S>                                               <C>             <C>             <C>           <C>           <C>
Year ended December 31, 2002
----------------------------
Allowance for doubtful accounts                   $2,403          $2,566          $689                        $4,280
Allowance for inventory losses                     2,585             787           772                         2,600


Year ended December 31, 2001
----------------------------
Allowance for doubtful accounts                   $1,168          $2,128          $916          $23           $2,403
Allowance for inventory losses                     1,286           2,507         1,208           --            2,585


Year ended December 31, 2000
----------------------------
Allowance for doubtful accounts                   $1,791            $319          $942          $--           $1,168
Allowance for inventory losses                     1,283           1,127         1,124           --            1,286
</TABLE>



     (1)  Represents allowance attributable to entities acquired during 2001.



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<PAGE>