UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 27, 1999
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: 333-53603-01
GPC CAPITAL CORP. II
(Exact name of registrant as specified in its charter)
Delaware 23-2952404
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
2401 Pleasant Valley Road
York, Pennsylvania
(Address of principal executive offices)
17402
(zip code)
(717) 849-8500
(Registrant's telephone number, including area code)
Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
As of the date hereof, 1,000 shares of the registrant's common stock, par
value $.01 per share, are outstanding.
<PAGE>
GPC CAPITAL CORP. II
INDEX
PART I. FINANCIAL INFORMATION
Page Number
ITEM 1: Condensed Financial Statements:
CONDENSED BALANCE SHEETS -
At June 27, 1990 and December 31, 1998 . . . . . 3
CONDENSED STATEMENTS OF OPERATIONS - For the Three
Months and Six Months Ended June 27, 1999 and
June 28, 1998 . . . . . . . . . . . . . . . . . . 4
CONDENSED STATEMENTS OF SHAREHOLDER'S EQUITY -
For the Year Ended December 31, 1998 and Six
Months Ended June 27, 1999 . . . . . . . . . . . 5
CONDENSED STATEMENT OF CASH FLOWS - For the
Six Months Ended June 27, 1999 and June
28, 1998 . . . . . . . . . . . . . . . . . . . . 6
NOTES TO CONDENSED FINANCIAL STATEMENTS . . . . . . . 7
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . 8
Item 3: Quantitative and Qualitative Disclosures About
Market Risk . . . . . . . . . . . . . . . . . . . . . . . 11
PART II. OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K . . . . . . . . . . . . . 12
Signature: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
GPC CAPITAL CORP. II
CONDENSED BALANCE SHEET
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 27, December 31,
1999 1998
----------- -------------
<S> <C> <C>
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
Commitments and contingencies . . . . . . . . . . . . . . . . . . . . . . . . -- --
Total shareholder's equity . . . . . . . . . . . . . . . . . . . . . . . . . -- --
</TABLE>
See accompanying notes.
-3-
<PAGE>
GPC CAPITAL CORP. II
CONDENSED STATEMENTS OF OPERATIONS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------- ---------------------------
June 27, June 28, June 27, June 28,
1999 1998 1999 1998
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales -- -- -- --
Operating income . . . . . . . . . . . . . . . . . . . -- -- -- --
Interest expense, net . . . . . . . . . . . . . . . . . -- -- -- --
Net income . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
</TABLE>
See accompanying notes.
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<PAGE>
GPC CAPITAL CORP. II
CONDENSED STATEMENTS OF SHAREHOLDER'S EQUITY
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Balance at February 2, 1998 --
Balance at December 31, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
Balance at June 27, 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --
</TABLE>
See accompanying notes.
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<PAGE>
GPC CAPITAL CORP. II
CONDENSED STATEMENT OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
------------------------------------
June 27, June 28,
1999 1998
---------- -----------
<S> <C> <C>
Operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
Investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
Financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
</TABLE>
See accompanying notes.
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<PAGE>
GPC CAPITAL CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)
June 27, 1999
1. Basis of Presentation
The accompanying unaudited condensed financial statements of GPC
Capital Corp. II have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X and therefore
do not include all of the information and footnotes required by generally
accepted accounting principles for complete annual financial statements.
In the opinion of management, all adjustments (consisting only of usual
recurring adjustments considered necessary for a fair presentation) are
reflected in the condensed financial statements.
GPC Capital Corp. II, a wholly owned subsidiary of Graham Packaging
Holdings Company, a Pennsylvania limited partnership formerly known as
Graham Packaging Company ("Holdings"), was incorporated in Delaware in
January 1998. The sole purpose of GPC Capital Corp. II is to act as co-
obligor with Holdings of the Senior Discount Notes and as a co-guarantor
with Holdings under the New Credit Agreement and Amendment (as defined
herein). GPC Capital Corp. II has only nominal assets and does not
conduct any independent operations. GPC Capital Corp. II has authorized
and issued 1,000 shares of common stock with a par value of $.01 per
share.
For additional information, see the related Quarterly Report on
Form 10-Q of Holdings for the quarter ended June 27, 1999.
2. Debt Arrangements
On February 2, 1998, Holdings and GPC Capital Corp. II, as co-
obligor, issued $100.6 million gross proceeds of Senior Discount Notes
Due 2009 ($169 million aggregate principal amount at maturity). The
Senior Discount Notes mature on January 15, 2009, with interest payable
at 10.75%. Cash interest on the Senior Discount Notes does not accrue
until January 15, 2003.
On February 2, 1998, Graham Packaging Company, a Delaware limited
partnership formerly known as Graham Packaging Holdings I, L.P. (the
"Operating Company"), refinanced the majority of Holdings' existing
credit facilities and entered into a new Credit Agreement (the "New
Credit Agreement") with a consortium of banks. The New Credit Agreement
was amended on August 13, 1998 (the "Amendment") to provide for an
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<PAGE>
additional Term Loan Borrowing of up to an additional $175 million which
can be drawn in two installments (of which $175 million was drawn and
outstanding as of June 27, 1999). A commitment fee of .75% is due on the
unused portion. The New Credit Agreement and the Amendment consist of
four term loans to the Operating Company totaling up to $570 million and
two revolving loan facilities to the Operating Company totaling $255
million. The obligations of the Operating Company under the New Credit
Agreement and Amendment are guaranteed by Holdings and certain other
subsidiaries of Holdings. The term loans are payable in quarterly
installments through January 31, 2007, required a payment of $3.2 million
in 1998, and require payments of $5.0 million in 1999, $15.0 million in
2000, $20.0 million in 2001, $25.0 million in 2002 and $27.5 million in
2003. The revolving loan facilities expire on January 31, 2004.
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 0% to 2.00%; or (b) the "Eurocurrency Rate" (the applicable interest
rate offered to banks in the London interbank eurocurrency market) plus a
margin ranging from 0.625% to 3.00%. A commitment fee ranging from
0.20% to 0.50% is due on the unused portion of the revolving loan
commitment. As part of the Amendment to the New Credit Agreement, if
certain events of default were to occur (including, without limitation,
if the Company's Net Leverage Ratio were above 5.15:1.0 at March 31,
2000), Blackstone Capital Partners III Merchant Banking Fund L.P.
("Blackstone") has agreed to make an equity contribution to the
Company through the administrative agent of up to $50 million. In
addition, the New Credit Agreement and Amendment contain certain
affirmative and negative covenants as to the operations and financial
condition of the Operating Company, as well as certain restrictions on
the payment of dividends and other distributions to Holdings.
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 "Old Notes"), and
issued in exchange therefor their Senior Discount Notes Due 2009, Series
B (the "Exchange Notes", and, together with the Old Notes, the "Senior
Discount Notes"), which have the same terms as the Old Notes, except that
the Exchange Notes are registered under the Securities Act of 1933 and do
not include the restrictions on transfer applicable to the Old Notes.
Item 2. Management's Discussion and Analysis of Financial Condition And
Results of Operations
Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform
Act of 1995
The Private Securities Litigation Reform Act of 1995
provides a "safe harbor" for certain "forward-looking
statements". This Form 10-Q includes forward-looking
statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). All
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<PAGE>
statements other than historical facts included in this
Report on Form 10-Q, including without limitation,
statements regarding the Company's future financial
position, business strategy, anticipated capital
expenditures, anticipated business acquisitions,
projected costs and plans and objectives of management
for future operations, 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.
Unless the context otherwise requires, all
references herein to the "Company", with respect to
periods prior to the Recapitalization, refer to the
business historically conducted by 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.
Results of Operations
None
Liquidity and Capital Resources
On February 2, 1998, Holdings and GPC Capital Corp.
II, as co-obligor, issued $100.6 million gross proceeds
of Senior Discount Notes Due 2009 ($169 million aggregate
principal amount at maturity). The Senior Discount Notes
mature on January 15, 2009, with interest payable at
10.75%. Cash interest on the Senior Discount Notes does
not accrue until January 15, 2003.
On February 2, 1998, Graham Packaging Company, a
Delaware limited partnership formerly known as Graham
Packaging Holdings I, L.P. (the "Operating Company"),
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<PAGE>
refinanced the majority of its existing credit facilities
and entered into a new Credit Agreement (the "New Credit
Agreement") with a consortium of banks. The New Credit
Agreement was amended on August 13, 1998 (the
"Amendment") to provide for an additional Term Loan
Borrowing of up to an additional $175 million which can
be drawn in two installments (of which $175 million was
drawn and outstanding as of June 27, 1999). A commitment
fee of.75% is due on the unused portion. The New Credit
Agreement and the Amendment consist of four term loans to
the Operating Company totaling up to $570 million and two
revolving loan facilities to the Operating Company
totaling $255 million. The obligations of the Operating
Company under the New Credit Agreement and Amendment are
guaranteed by Holdings and certain other subsidiaries of
Holdings. The term loans are payable in quarterly
installments through January 31, 2007, required a payment
of $3.2 million in 1998, and require payments of $5.0
million in 1999, $15.0 million in 2000, $20.0 million in
2001, $25.0 million in 2002 and $27.5 million in 2003.
The revolving loan facilities expire on January 31, 2004.
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 0% to 2.00%; or (b) the
"Eurocurrency Rate" (the applicable interest rate offered
to banks in the London interbank eurocurrency market)
plus a margin ranging from 0.625% to 3.00%. A
commitment fee ranging from 0.20% to 0.50% is due on the
unused portion of the revolving loan commitment. As part
of the Amendment to the New Credit Agreement, if certain
events of default were to occur (including, without
limitation, if the Company's Net Leverage Ratio were
above 5.15:1.0 at March 31, 2000), Blackstone has agreed
to make an equity contribution to the Company through the
administrative agent of up to $50 million. In addition,
the New Credit Agreement and Amendment contain certain
affirmative and negative covenants as to the operations
and financial condition of the Operating Company, as well
as certain restrictions on the payment of dividends and
other distributions to Holdings.
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 "Old Notes"), and issued
in exchange therefor their Senior Discount Notes Due
2009, Series B (the "Exchange Notes"), which have the
same terms as the Old Notes, except that the Exchange
-10-
<PAGE>
Notes are registered under the Securities Act of 1933 and
do not include the restrictions on transfer applicable to
the Old Notes.
Under the New Credit Agreement and Amendment, 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, starting on July
15, 2003, the payment of cash interest payments on the
Senior Discount Notes.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
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<PAGE>
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were required to be filed during
the quarter ended June 27, 1999.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Dated: August 10, 1999
GPC CAPITAL CORP. II
(Registrant)
BY: /S/ John E. Hamilton
--------------------------
John E. Hamilton
Vice President
(chief accounting officer and duly
authorized officer)
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<PERIOD-END> DEC-31-1998 JUN-27-1999
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0 0
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