GPC CAPITAL CORP II, S-1, 2000-07-12

GPC CAPITAL CORP II
S-1, 2000-07-12
MISCELLANEOUS PLASTICS PRODUCTS

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 12, 2000
REGISTRATION NO. 333-
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--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
GPC CAPITAL CORP. II
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 3085 23-2952404
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation) Classification Code Number) Identification Number)
</TABLE>

-----------------
2401 PLEASANT VALLEY ROAD
YORK, PENNSYLVANIA 17402
(717) 849-8500
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
-----------------
PHILIP R. YATES
JOHN E. HAMILTON
2401 PLEASANT VALLEY ROAD
YORK, PENNSYLVANIA 17402
(717) 849-8500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-----------------
COPIES TO:

<TABLE>
<S> <C>
EDWARD P. TOLLEY III, ESQ. RICHARD E. FARLEY, ESQ.
SIMPSON THACHER & BARTLETT CAHILL GORDON & REINDEL
425 LEXINGTON AVENUE 80 PINE STREET
NEW YORK, NY 10017 NEW YORK, NY 10005
(212) 455-2000 (212) 701-3000
</TABLE>

-----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
-----------------
CALCULATION OF REGISTRATION FEE
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES TO AGGREGATE OFFERING AMOUNT OF
BE REGISTERED PRICE (1) REGISTRATION FEE
<S> <C> <C>
Common stock, $.01 par value.......... $253,000,000 $66,792
</TABLE>

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(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(o).
-----------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
--------------------------------------------------------------------------------

<PAGE>

EXPLANATORY NOTE

Immediately prior to the offering of common stock contemplated by the
prospectus contained in this registration statement, the registrant, GPC
Capital Corp. II, a wholly-owned subsidiary of Graham Packaging Holdings
Company, will undergo a reorganization in which it changes its name to Graham
Packaging Company Inc. and exchanges newly issued shares of its common stock
for all of the partnership interests of Graham Packaging Holdings Company. See
"The IPO Reorganization" in the prospectus.
<PAGE>

SUBJECT TO COMPLETION, DATED JULY 12, 2000

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
CANNOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES, AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

PROSPECTUS

[LOGO]

GRAHAM PACKAGING COMPANY INC.

COMMON STOCK

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We are offering shares of our common stock. This is our initial public
offering, and no public market currently exists for our shares. All of the
shares are being sold by us. The initial public offering price of the common
stock is expected to be between $ and $ per share. We expect that the
shares will trade on the New York Stock Exchange under the symbol "GPA."

INVESTING IN OUR COMMON STOCK INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 9.

<TABLE>
<CAPTION>
PER SHARE TOTAL
-------------- --------------
<S> <C> <C>
Public offering price ............................................... $ $
Underwriting discounts and commissions .............................. $ $
Proceeds to Graham Packaging Company Inc., before expenses .......... $ $
</TABLE>

THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS
HAVE NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

We have granted the underwriters a 30-day option to purchase up to an
additional shares of our common stock to cover over-allotments. The
underwriters expect to deliver the shares of common stock to purchasers on or
about , 2000.

--------------------------------------------------------------------------------
JOINT BOOK-RUNNING LEAD MANAGERS

DEUTSCHE BANC ALEX. BROWN SALOMON SMITH BARNEY

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GOLDMAN, SACHS & CO. LEHMAN BROTHERS

, 2000
<PAGE>

[ARTWORK]
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary ........................... 1
Risk Factors ................................. 9
Cautionary Notice Regarding
Forward-Looking Statements ................ 14
The IPO Reorganization ....................... 15
Use of Proceeds .............................. 16
Dividend Policy .............................. 17
Dilution ..................................... 17
Capitalization ............................... 18
Unaudited Pro Forma Financial
Information ............................... 19
Selected Financial Data ...................... 25
Management's Discussion and Analysis
of Financial Condition and Results of
Operations ................................ 28
Business ..................................... 37
Management ................................... 48
Certain Transactions ......................... 55
Description of Certain Indebtedness .......... 58
Principal Stockholders ....................... 60
Description of Capital Stock ................. 61
Shares Eligible for Future Sale .............. 65
Certain U.S. Federal Tax Consequences
to Non-U.S. Holders of Common
Stock ..................................... 67
Underwriting ................................. 69
Legal Matters ................................ 71
Experts ...................................... 71
Additional Information ....................... 71
Financial Statements ......................... F-1
</TABLE>

You should rely only on information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or any sale of our common stock.

No action is being taken in any jurisdiction outside of the United States
to permit a public offering of the common stock or possession or distribution
of this prospectus in any other jurisdiction. Persons who come into possession
of this prospectus in jurisdictions outside the United States are required to
inform themselves about and to observe any restrictions as to this offering and
the distribution of this prospectus applicable to that jurisdiction.

All brand names and trademarks appearing in this prospectus are the
property of their respective holders.

This prospectus contains statistical data about our industry. Some of this
data was obtained from industry publications and reports which we believe to be
reliable sources. We have not independently verified this data.

Until , 2000, all dealers that buy, sell or trade the common stock may
be required to deliver a prospectus, regardless of whether they are
participating in the offering. This is in addition to the dealers' obligation
to deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.

i
<PAGE>

PROSPECTUS SUMMARY

This summary highlights selected information in this prospectus, but it
may not contain all of the information that is important to you. To better
understand the offering, and for a more complete description of the offering
and related transactions, you should read this entire prospectus carefully,
including the "Risk Factors" section and the financial statements and the notes
to those statements, which are included elsewhere in this prospectus. The
information in this prospectus assumes that the underwriters' over-allotment
option will not be exercised.

OUR COMPANY

We are a worldwide leader in the design, manufacture and sale of
customized blow molded plastic containers for the branded food and beverage,
household and personal care, and automotive lubricants markets with 57 plants
throughout North America, Europe and Latin America. Our primary strategy is to
operate in select markets in which we will benefit from the growing conversion
to high performance plastic packaging. We target branded consumer product
manufacturers for whom customized packaging design is a critical component in
their efforts to differentiate their products to consumers. We initially pursue
these conversion opportunities with one or two major consumer product companies
that we expect will lead the conversion to plastic packaging in a particular
category. We utilize our innovative design, engineering and technological
capabilities to deliver highly customized, high performance packaging to
distinguish our customers' branded products. Since the beginning of 1998, we
have grown net sales at a compounded annual growth rate of over 18% as a result
of our aggressive capital investment and focus on the rapidly converting food
and beverage market. With leading positions in each of our core businesses, we
believe we are well positioned to continue to benefit from the plastic
conversion trend that is still emerging on a global basis and offers us
opportunities for attractive margins and returns on investment.

We have an extensive blue-chip customer base that includes many of the
world's largest branded consumer products companies. Approximately one third of
our manufacturing plants are located on-site at our customers' manufacturing
facilities, which we believe provides a competitive advantage in maintaining
and expanding customer relationships. The majority of our sales are made
pursuant to long-term customer contracts, which include resin pass-through
provisions that mitigate the effect of resin price movements on our
profitability.

OUR MARKETS

We are a leading supplier of plastic packaging in the food and beverage,
household and personal care, and automotive lubricants markets which
represented 48%, 26% and 26% of our net sales for the quarter ended April 2,
2000.

Food and Beverage. We produce containers for shelf-stable, refrigerated and
frozen juices, non-carbonated juice drinks, teas, isotonics, yogurt and
nutritional drinks, soups, toppings, sauces, jellies and jams. We believe, based
on internal estimates, that we have the leading domestic market position in
plastic containers for juice, frozen concentrate, pasta sauce and yogurt drinks
and the leading position in Europe for plastic containers for yogurt drinks. We
are one of only three domestic market participants that are leading large-scale
product conversions to hot-fill polyethylene terephthalate, or PET, containers,
which can be used in applications where the container must withstand very high
filling temperatures, necessary to extend shelf-life. We have invested over $170
million in our hot-fill PET portion of our food and beverage business since the
beginning of 1997. Primarily as a result of this and other investments, our food
and beverage sales have grown at a compound annual growth rate of over 40% in
the last three fiscal years. We believe we are strategically positioned to
benefit from the estimated 65% of the domestic hot-fill food and beverage market
that has yet to convert to plastic and also to take advantage of international
conversion opportunities.

1
<PAGE>

Household and Personal Care. We are a leading supplier of plastic
containers for products such as liquid fabric care, dish care, hard-surface
cleaners, hair care and body wash. We continue to benefit as products such as
liquid fabric care detergents, hard-surface cleaners and liquid automatic
dishwashing detergents, which are packaged in plastic containers, capture an
increasing share of the market from powdered detergents and cleaners, which are
predominantly packaged in paper-based containers. We also expect rapid growth in
demand for household and personal care plastic containers internationally to be
a key contributor to our business.

Automotive Lubricants. We believe, based on internal estimates, that we
are the number one supplier of one quart plastic motor oil containers in the
United States, Canada and Brazil, supplying most of the motor oil producers in
these countries, with an approximate 73% U.S. market share, based on 1998 unit
sales. We have been producing motor oil containers since the conversion to
plastic began 22 years ago and have expanded our market share and maintained
margins by partnering with our customers to improve product quality and reduce
costs through design improvement, reduced container weight and manufacturing
efficiencies. We successfully expanded our operations into Brazil to take
advantage of the existing conversion opportunities in that country and
anticipate that other economically developing markets will provide similar
growth opportunities.

Our customers include a large number of major food and beverage, household
and personal care, and automotive lubricants customers, including:

<TABLE>
<CAPTION>
CUSTOMER SELECTED BRAND(S) / PRODUCT(S)
---------------------------------- ---------------------------------------------------------------------------------------------
<S> <C>
Food and Beverage
Arizona Arizona (Registered Trademark) / Beverages
Campbell Soup Liebig (Registered Trademark) / Ready-to-Serve Soups; V-8 (Registered Trademark) / Juice
Drinks
Danone Danimals (Registered Trademark) and Actimel (Registered Trademark) / Yogurt and
Nutritional Drinks
Heinz Heinz (Registered Trademark) / Ketchup
Hershey Hershey's (Registered Trademark) / Toppings
Minute Maid Hi-C (Registered Trademark) / Juice Drinks
Nestle Quik (Registered Trademark) / Toppings and Milk Mix; Nescafe (Registered Trademark) /
Instant Premium Coffee
Ocean Spray Cranberries Ocean Spray (Registered Trademark) / Beverages
Quaker Oats Gatorade (Registered Trademark) / Beverages
TreeTop TreeTop (Registered Trademark) / Beverages and Applesauce; Seneca (Registered Trademark) /
Applesauce
Triarc Snapple (Registered Trademark) / Beverages
Tropicana Tropicana (Registered Trademark) , Twister (Registered Trademark) and Dole (Registered
Trademark) / Beverages
Unilever Ragu (Registered Trademark) / Pasta Sauces; Amora (Registered Trademark) / Sauces and
Condiments
Welch's Welch's (Registered Trademark) / Beverages, Jams, Jellies and Frozen
Concentrate; Bama (Registered Trademark) / Jams and Jellies

Household and Personal Care
Colgate Palmolive Ajax (Registered Trademark) , Fab (Registered Trademark) , Dynamo (Registered Trademark) /
Fabric Care; Octagon (Registered Trademark) / Dish Care
The Dial Corporation Purex (Registered Trademark) / Fabric Care; Dial (Registered Trademark) / Personal Care
Henkel Dishcare, Hard-Surface Cleaners, Household Cleaners and
Personal Care
Johnson & Johnson Johnson & Johnson (Registered Trademark) / Hair Care
L'Oreal L'Oreal and Garnier Laboratories (Registered Trademark) / Hair Care
Procter & Gamble Mr. Clean (Registered Trademark) , Top Job (Registered Trademark) and Comet (Registered
Trademark) / Household Cleaners;
Cascade (Registered Trademark) / Dish Care; Febreeze (Registered Trademark) , Ariel
(Registered Trademark) , Tide (Registered Trademark) , Lenor (Registered Trademark) and
Downy (Registered Trademark) / Fabric Care
Reckitt Benckiser Woolite (Registered Trademark) / Fabric Care and Vanish (Registered Trademark) / Household
Cleaners
Unilever All (Registered Trademark) , Wisk (Registered Trademark) , Surf (Registered Trademark) ,
Snuggle (Registered Trademark) and Final Touch (Registered Trademark) / Fabric Care;
Dove (Registered Trademark) , Suave (Registered Trademark) and Lever 2000 (Registered
Trademark) / Personal Care; Elida Gibbs (Registered Trademark) and
Faberge (Registered Trademark) / Hair Care

Automotive Lubricants
Ashland Valvoline (Registered Trademark) , Napa (Registered Trademark) and CarQuest (Registered
Trademark) / Motor Oil; Zerex (Registered Trademark) /
Antifreeze
Castrol Castrol (Registered Trademark) , Syntec (Registered Trademark) / Motor Oil; Super Clean
(Registered Trademark) / Heavy Duty Cleaner
Chevron Products Company Chevron (Registered Trademark) and Amoco (Registered Trademark) / Motor Oil
Equilon Texaco (Registered Trademark) , Havoline (Registered Trademark) and Shell (Registered
Trademark) / Motor Oil and Antifreeze
ExxonMobil Mobil (Registered Trademark) / Motor Oil
Pennzoil - Quaker State Pennzoil (Registered Trademark) and Quaker State (Registered Trademark) / Motor Oil
Petrobras Petrobras (Registered Trademark) / Motor Oil
Petro - Canada Petro-Canada (Registered Trademark) / Motor Oil
Sun Refining Sun (Registered Trademark) and Kendall (Registered Trademark) / Motor Oil
</TABLE>

2
<PAGE>

OUR STRENGTHS

STRATEGIC FOCUS ON THE RAPIDLY GROWING CUSTOM PLASTIC CONTAINER
INDUSTRY. Changing consumer preferences and technological advancements have
accelerated the conversion to plastic containers from other materials. The
advantages of plastic containers, such as their lighter weight, shatter
resistance, resealability and ease of opening and dispensing, as well as the
improved economics and performance of plastics, have resulted from
technological enhancements. After the offering, we will be the only publicly
traded company in North America that is solely focused on the manufacture and
sale of customized plastic containers. We believe that the combination of our
leading technology, product innovation, efficient manufacturing operations and
strong customer relationships will enable us to capitalize on continuing global
conversion trends towards plastic containers.

LEADERSHIP POSITION IN CORE MARKETS. We enjoy leading positions in all of
our core markets. We believe, based on internal estimates, that we have the
leading domestic market position in plastic containers for juice, frozen
concentrate, pasta sauce and yogurt drinks and the leading position in Europe
for plastic containers for yogurt drinks. We are one of only three domestic
market participants that are leading large-scale product conversions to hot-fill
PET containers. We also believe, based on internal estimates, that we have the
number one market position in the one quart/one liter motor oil container
markets in the United States, Canada and Brazil. Our leadership positions in our
core markets have enabled us to utilize high-speed production systems and
achieve significant economies of scale, thereby making us a low-cost
manufacturer.

SUPERIOR PRODUCT DESIGN AND DEVELOPMENT CAPABILITIES. We have 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 our
customers' products, we believe that our innovative packaging stimulates
consumer demand and drives further conversion to plastic packaging. Our strong
design capabilities have been especially important to our food and beverage
customers, who use packaging to differentiate and enhance recognition of their
brands. We have recently received design awards for packages which we developed
for Welch's, Tropicana, Dannon and Seneca.

SUCCESSFUL BUSINESS MODEL UTILIZING ON-SITE FACILITIES. Approximately one
third of our 57 manufacturing facilities are located on-site at our customers'
plants. On-site facilities enable us to foster long-term customer
relationships, facilitate just-in-time inventory management and generate
significant savings opportunities through process re-engineering, thereby
eliminating costly shipping charges and reducing working capital needs. In many
cases, our on-site operations are integrated with our customers' manufacturing
operations so that deliveries are made, as needed, by direct conveyance to the
customers' filling lines.

DIVERSIFIED BLUE CHIP CUSTOMER BASE. We have an extensive blue-chip
customer base that includes many of the world's largest branded consumer
products companies. We are the leading custom plastic packaging supplier in
several geographic regions and/or for several brands of most of our top
customers and we are a sole source provider for many of these customers. We
have received awards for quality from several of our major customers, including
Chevron, Dial, Ocean Spray and Welch's.

EXPERIENCED MANAGEMENT TEAM WITH STRONG EQUITY INCENTIVES. We have a
talented senior management team, which has a track record of achieving
profitable growth, implementing new packaging technology, entering new markets,
maintaining our blue chip customer base and effectively integrating
complementary acquisitions. Our top twenty managers have an average of 19 years
work experience in the packaging industry and 15 years with us. Our senior
managers are meaningfully invested in our performance which gives them an
ongoing stake in the creation of shareholder value.

3
<PAGE>

OUR STRATEGY

We intend to expand our leadership position in select value-added plastic
packaging opportunities by maintaining our position at the forefront of the
plastic conversion trend. We seek to achieve this objective by pursuing the
following strategies:

LEVERAGE OUR DESIGN AND DEVELOPMENT CAPABILITIES TO CAPITALIZE ON
CONVERSIONS TO PLASTIC CONTAINERS.

o Focus on innovative design features, and specialized performance and
material requirements

o Target product categories that demand value-added packaging and that
will benefit from conversion to plastics

o Work with leading consumer product companies to initiate a conversion
that we expect will stimulate conversion throughout a product category

MAINTAIN AND EXPAND POSITION WITH KEY CUSTOMERS.

o Deliver superior customer service

o Develop innovative and distinctive packaging designs

o Open new on-site facilities

o Continue to improve our low-cost manufacturing operations

o Expand globally alongside key customers

TARGET CAPITAL INVESTMENT AND EXPAND OUR ON-SITE PLANT NETWORK.

o Focus investment in selected high growth product categories based upon
internal target return requirements

o Expand our on-site network globally with existing and new customers

o Consider select investments, joint ventures and strategic acquisitions
to complement growth objectives

Our principal executive offices are located at 2401 Pleasant Valley Road,
York, Pennsylvania 17402, telephone (717) 849-8500.

FINANCIAL SPONSOR

The Blackstone Group, through its affiliates, was the financial sponsor of
our 1998 recapitalization and will beneficially own % of our outstanding
common stock after the offering and the IPO reorganization described below.
Blackstone is not selling any shares in the offering.

The Blackstone Group is a private investment bank based in New York City.
It was founded in 1985 by its Chairman, Peter G. Peterson, and its President
and Chief Executive Officer, Stephen A. Schwarzman. Blackstone is a leader in
private equity investing, and is currently in the process of investing its
Blackstone Capital Partners III fund, which represents approximately $4 billion
of equity capital. Blackstone is also engaged in five other business areas
including mergers and acquisitions advisory, restructuring and reorganization
advisory, private equity real estate investing, private mezzanine investing,
and liquid alternative asset investing.

THE IPO REORGANIZATION

Immediately prior to the offering, we will effect an internal
reorganization in which GPC Capital Corp. II, a Delaware corporation and a
wholly-owned subsidiary of Graham Packaging Holdings Company, will change its
name to Graham Packaging Company Inc. and exchange newly issued shares

4
<PAGE>

of its common stock for all of the partnership interests of its existing parent,
Graham Packaging Holdings Company, a Pennsylvania limited partnership. Upon the
exchange, Graham Packaging Holdings Company will liquidate and all of its assets
will be transferred to Graham Packaging Company Inc. Simultaneous with the
exchange of stock for partnership interests, Graham Packaging Company Inc. will
issue options on its common stock to our management in exchange for their Graham
Packaging Holdings Company options.

As a result of the IPO reorganization, we will record a net deferred tax
asset of approximately $202.0 million. The net deferred tax asset is primarily
based on differences between the financial reporting and tax bases of our
assets and liabilities which arose in our 1998 recapitalization. As a result,
we will record an increase in additional paid-in capital, partially offset by a
deferred tax liability that we will record as a one-time charge to earnings.

THE OFFERING

<TABLE>
<S> <C>
Common stock offered by us ................................ shares
Common stock to be outstanding after the offering ......... shares
Use of proceeds ........................................... We intend to use the net proceeds from
the offering to permanently repay a
portion of the outstanding term loans and
temporarily reduce the amounts
outstanding under the revolving credit
facility under our senior credit agreement.
See "Use of Proceeds".
Proposed New York Stock Exchange symbol ................... "GPA"
</TABLE>

The outstanding share information and other information in this prospectus
relating to the number of shares of our common stock and options assumes
consummation of the IPO reorganization described under the section entitled
"The IPO Reorganization". The outstanding share information also excludes a
maximum of 1,633,333 shares of common stock expected to be issuable upon
exercise of stock options, at a weighted average price of $7.89 per share, upon
consummation of the offering and the IPO reorganization. For more information
regarding our capital stock and other related matters, please see
"Capitalization" and "Description of Capital Stock".

5
<PAGE>

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA

The following table sets forth summary financial data for our company. You
should read this information together with the financial statements and the
notes to those statements appearing elsewhere in this prospectus and the
information under "Unaudited Pro Forma Financial Information", "Selected
Financial Data" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations".

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, QUARTER ENDED
------------------------------------- -------------------------
MARCH 28, APRIL 2,
1997 1998 1999 1999 2000
----------- ----------- ------------- ----------- -------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales (1) ......................................... $ 521.7 $ 588.1 $ 716.1 $ 159.1 $ 205.0
Gross profit (1) ...................................... $ 84.7 $ 115.4 $ 142.7 $ 27.9 $ 34.9
Selling, general and administrative expenses .......... 34.9 37.8 48.0 10.5 13.4
Special charges and unusual items (2) ................. 24.4 24.2 4.6 1.2 0.4
------- ------- -------- ------- -------
Operating income ...................................... 25.4 53.4 90.1 16.2 21.1
Recapitalization expenses (3) ......................... -- 11.8 -- -- --
Interest expense, net ................................. 13.4 68.0 87.5 19.4 24.4
Other expense (income), net ........................... 0.7 ( 0.2) ( 0.7) ( 0.1) 0.1
Minority interest ..................................... 0.2 -- ( 0.5) -- ( 0.3)
Income tax provision (4) .............................. 0.6 1.1 2.5 0.3 0.2
-------- -------- -------- -------- --------
Income (loss) before extraordinary item ............... 10.5 ( 27.3) 1.3 ( 3.4) ( 3.3)
Extraordinary loss (5) ................................ -- 0.7 -- -- --
-------- -------- -------- -------- --------
Net income (loss) (6)(7) .............................. $ 10.5 $ (28.0) $ 1.3 $ (3.4) $ (3.3)
======== ======== ======== ======== ========
PRO FORMA STATEMENT OF OPERATIONS DATA, AS
ADJUSTED FOR THE IPO REORGANIZATION (8):
Pro forma net income (loss) ........................... $ (0.2) $ (1.9) $ (2.6)
Pro forma earnings (loss) per share:
Basic ................................................ $ (0.01) $ (0.06) $ (0.08)
Diluted .............................................. (0.01) (0.06) (0.08)
PRO FORMA STATEMENT OF OPERATIONS DATA, AS
FURTHER ADJUSTED FOR THE OFFERING (9):
Pro forma net income .................................. $ 10.8 $ 0.6
Pro forma interest expense, net ....................... 69.1 19.1
Pro forma earnings per share:
Basic ................................................ $ $
Diluted ..............................................
OTHER DATA:
Net sales growth ...................................... 13.5% 12.7% 21.8 % -- 28.8 %
Sales volume, in resin pounds ......................... 448.0 503.4 614.6 144.2 168.0
Sales volume growth ................................... 14.0% 12.4% 22.1 % -- 16.5 %
Cash flows from:
Operating activities ................................. $ 66.9 $ 41.8 $ 55.5 $ (7.2) $(1.5)
Investing activities ................................. ( 72.3) (181.2) (181.8) (33.7) (38.0)
Financing activities ................................. 9.5 139.7 126.2 40.6 38.9
Adjusted EBITDA (10) .................................. 90.1 117.8 149.1 29.4 37.2
Depreciation and amortization (11) .................... 41.0 39.3 53.2 11.8 15.2
Capital expenditures (excluding acquisitions) ......... 53.2 133.9 171.0 33.8 38.0
Investments (including acquisitions) (7) .............. 19.0 45.2 10.3 -- --
</TABLE>

6
<PAGE>

<TABLE>
<CAPTION>
AS OF APRIL 2, 2000
-------------------------------
AS ADJUSTED FOR
THE IPO
REORGANIZATION
AND THE
ACTUAL OFFERING (9)
------------ ----------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit) (12) ................................ $ 28.2 $ 28.2
Total assets .................................................. 780.4 980.8
Total debt .................................................... 1,060.0 854.8
Partners' capital/stockholders' equity (deficit) (13) ......... ( 465.2) (59.6)
</TABLE>

----------
(1) Net sales increase or decrease based on fluctuations in resin prices as
industry practice and our agreements with our customers permit
substantially all price changes to be passed through to customers by
means of corresponding changes in product pricing. Therefore, our dollar
gross profit is substantially unaffected by fluctuations in resin prices.

(2) Includes compensation costs related to our 1998 recapitalization,
restructuring, systems conversion, aborted acquisition and legal costs.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the financial statements, including the
related notes.

(3) See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the financial statements, including the
related notes.

(4) As a limited partnership, our predecessor, Graham Packaging Holdings
Company, was not subject to U.S. federal income taxes or most state
income taxes. Instead, taxes were assessed to its partners based on its
income. Graham Packaging Holdings Company made tax distributions to its
partners to reimburse them for tax liabilities. Our 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.

(5) Represents costs incurred, including the write-off of unamortized debt
issuance fees, in connection with the early extinguishment of debt.

(6) Effective June 28, 1999, we changed our method of valuing inventories for
our domestic operations from the LIFO method to the 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, we believe 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 income for the year ended December 31, 1997 by $0.3 million
and increased the net loss for the year ended December 31, 1998 by $2.0
million.

(7) In April 1997, we acquired 80% of certain assets and assumed 80% of
certain 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, we 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, we
acquired 51% of the operating assets of PlasPET Florida, Ltd., while
becoming the general partner on July 6, 1999, for $1.1 million, excluding
direct costs of the acquisition, net of liabilities assumed, subject to
certain contingent consideration. On July 1, 1999, we acquired selected
companies located in Argentina for $8.0 million, excluding direct costs of
the acquisition, net of liabilities assumed, subject to certain contingent
consideration. Amounts shown under the caption "Investments (including
acquisitions)" represent cash paid, net of cash acquired in the
acquisitions. We accounted for these transactions under the purchase
method of accounting. Results of operations are included since the dates
of acquisition.

(8) As a result of the IPO reorganization, our taxable income will become
subject to federal and state income taxes and we will not be required to
make tax distributions. The pro forma data assumes that we were subject
to federal and state income taxes at the effective tax rates that would
have applied for each period presented. Historical earnings (loss) per
share is not presented because it is not considered meaningful. Pro forma
basic earnings (loss) per share is calculated based on 32,666,667
weighted average common shares outstanding for all periods presented. Pro
forma diluted earnings (loss) per share is calculated based on the
dilutive effect of stock options.

(9) Pro forma statement of operations data, as further adjusted for the
offering, give effect to both the IPO reorganization and the offering as
if each had occurred on January 1, 1999. Pro forma balance sheet data, as
further adjusted for the offering, give effect to both the IPO
reorganization and the offering as if each had occurred on April 2, 2000.
See "Unaudited Pro Forma Financial Information".

7
<PAGE>

ongoing $1 million per year fee paid pursuant to the Blackstone monitoring
agreement, non-cash equity income in earnings of joint venture, other
non-cash charges, recapitalization expenses, special charges and unusual
items and non-recurring charges. See "Selected Financial Data",
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the financial statements, including the related notes,
included elsewhere in this prospectus. Adjusted EBITDA is included in this
prospectus to provide additional information with respect to our ability
to satisfy our debt service, capital expenditure and working capital
requirements and because certain covenants in our borrowing arrangements
are tied to similar measures. While Adjusted EBITDA and similar measures
are frequently used as a measure of operations and the ability to meet
debt service requirements, these terms are not necessarily comparable to
other similarly titled captions of other companies due to the potential
inconsistencies in the method of calculation.

(11) Depreciation and amortization excludes amortization of debt issuance
fees, which is included in interest expense, net.

(12) Working capital is defined as current assets, less cash and cash
equivalents, minus current liabilities, less current maturities of
long-term debt.

(13) As a result of our 1998 recapitalization, as of April 2, 2000, we had
negative net worth for accounting purposes. However, in our 1998
recapitalization, Blackstone and an institutional investor paid $208.3
million in cash for 85% of the partnership interests of Graham Packaging
Holdings Company and the Graham family retained a 15% interest which,
based on the amount paid by Blackstone and the institutional investor,
had an implied value of $36.8 million.

8
<PAGE>

RISK FACTORS

As a stockholder, you will be subject to all risks inherent in our
business. The market value of your shares will reflect the performance of our
business relative to, among other things, that of our competitors and general
economic, market and industry conditions. The value of your investment may
increase or may decline and could result in a loss. You should carefully
consider the following factors as well as the other information contained in
this prospectus before deciding to invest in our common stock.

Risks related to our business

INCREASES IN RESIN PRICES AND REDUCTIONS IN RESIN SUPPLIES COULD SIGNIFICANTLY
SLOW OUR GROWTH AND DISRUPT OUR OPERATIONS

We depend on large quantities of PET and HDPE resins in manufacturing our
products. One of our primary strategies is to grow our business by capitalizing
on the conversion from glass, metal and paper 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
our customers, and could result in a slower pace of conversions to plastic
containers. Historically, we have passed through substantially all increases in
the cost of resins to our customers through contractual provisions and standard
industry practice; however, if we are not able to do so in the future and there
are sustained increases in resin prices, our operating margins could be affected
adversely. Furthermore, if we cannot obtain resin from any of our suppliers, we
may have difficulty obtaining alternate sources quickly and economically, and
our operations and profitability may be impaired.

OUR COMPETITIVE POSITION COULD BE IMPAIRED IF OUR COMPETITORS DEVELOP MORE
EFFICIENT OR LESS EXPENSIVE MANUFACTURING TECHNIQUES

The manufacture and sale of plastic containers is highly competitive, and
several of our competitors are larger than we are and have substantially
greater financial resources than we do. In particular, price competition may
affect our results of operations. We cannot assure you that new technologies
will not be created to allow competitive products to be manufactured at lower
costs and greater efficiencies than those which exist today.

OUR DEBT AGREEMENTS CONTAIN RESTRICTIONS THAT MAY LIMIT OUR FLEXIBILITY IN
OPERATING OUR BUSINESS

Our senior credit agreement and our indentures contain a number of
significant covenants that, among other things, restrict our ability to dispose
of assets, repay other indebtedness, incur additional indebtedness, pay
dividends, prepay subordinated indebtedness, incur liens, make capital
expenditures, certain investments or acquisitions, engage in mergers or
consolidations, engage in certain transactions with affiliates and otherwise
restrict our activities. In addition, under our senior credit agreement, we are
required to satisfy specified financial ratios and tests. Our ability to comply
with those provisions may be affected by events beyond our control, and there
can be no assurance that we will meet those tests. The breach of any of these
covenants could result in a default under our senior credit agreement and the
lenders could elect to declare all amounts borrowed under our senior credit
agreement, together with accrued interest, to be due and payable and could
proceed against any collateral securing that indebtedness. If any of our
indebtedness were to be accelerated, our assets may not be sufficient to repay
in full that indebtedness and our other indebtedness.

OUR AVAILABLE CASH AND ACCESS TO ADDITIONAL CAPITAL MAY BE LIMITED BY OUR
SUBSTANTIAL LEVERAGE

We are highly leveraged. As of April 2, 2000, on a pro forma basis after
giving effect to the offering and the application of the net proceeds from the
offering, we would have had consolidated indebtedness of $854.8 million and
stockholders' deficit of $59.6 million. Availability under our two revolving
credit facilities as of April 2, 2000, on a pro forma basis after giving effect
to the IPO reorganization and the offering, would have been $170.2 million,
$70.2 million of which would have

9
<PAGE>

been under our revolving credit facility and $100.0 million of which would have
been under our growth capital revolving credit facility. Our senior credit
agreement and our indentures permit us to incur additional indebtedness,
subject to certain limitations. All loans outstanding under our revolving
credit facilities are scheduled to be repaid in 2004 and our scheduled annual
principal repayments for the term loans under our senior credit agreement, on
the same pro forma basis, would be as follows:

o 2000 -- $11.8 million (of which $3.7 million had been paid as of April
2, 2000)
o 2001 -- $14.5 million
o 2002 -- $18.1 million
o 2003 -- $19.9 million
o 2004 -- $67.3 million
o 2005 -- $47.0 million
o 2006 -- $175.8 million
o 2007 -- $53.6 million

In addition, $225 million of senior subordinated notes of our subsidiary,
Graham Packaging Company, matures in 2008 and $169 million of our senior
discount notes matures in 2009.

Our high degree of leverage could have important consequences to you,
including, but not limited to, the following:

o our 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;

o a substantial portion of our cash flow from operations must be dedicated
to the payment of principal and interest on our indebtedness, thereby
reducing the funds available to us for other purposes, including capital
expenditures necessary for maintenance of our facilities and for the
growth of our businesses;

o certain borrowings are and will continue to be at variable rates of
interest, which exposes us to the risk of increased interest rates;

o we may be substantially more leveraged than certain of our competitors,
which may place us at a competitive disadvantage; and

o our substantial degree of leverage may hinder our ability to adjust
rapidly to changing market conditions and could make us more vulnerable in
the event of a downturn in general economic conditions or in our business.

OUR INTERNATIONAL OPERATIONS SUBJECT US TO RISKS RELATED TO FOREIGN CURRENCIES
AND LOCAL LAWS IN SEVERAL COUNTRIES

We have significant operations outside the United States in the form of
wholly owned subsidiaries, cooperative joint ventures and other arrangements.
Our 24 plants outside of the United States are located in Argentina (2),
Belgium (1), Brazil (5), Canada (4), France (4), Germany (2), Hungary (1),
Italy (2), Poland (1), Turkey (1) and the United Kingdom (1). As a result, we
are subject to risks associated with operating in foreign countries, including
fluctuations in currency exchange rates (recently in Brazil 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 certain
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 Latin
America have not had a material impact on our operations, but those risks may
hurt our business in the future.

OUR FINANCIAL CONDITION COULD BE ADVERSELY AFFECTED IF WE LOST ANY OF OUR
LARGEST CUSTOMERS

All product lines we provide to Unilever, our largest customer,
collectively accounted for approximately 10% of our net sales for the year
ended December 31, 1999 and approximately 9% of

10
<PAGE>

our net sales for the quarter ended April 2, 2000. Unilever's termination of
its relationship with us could have a material adverse effect upon our
business, financial position or results of operations. Additionally, in 1999
our top 20 customers comprised over 76% of our net sales. Our existing
customers' purchase orders and contracts typically vary from one to ten years.
Prices under these arrangements are tied to market standards and therefore vary
with market conditions. The contracts generally are requirements contracts
which do not obligate the customer to purchase any given amount of product from
us. Accordingly, despite the existence of supply contracts with our customers,
we face the risk that customers will not purchase the amounts that we expect
pursuant to their supply contracts.

OUR PROFITABILITY COULD DECLINE IF WE FAIL TO INCREASE OUR EFFICIENCY IN THE
DECLINING DOMESTIC MOTOR OIL BUSINESS

We forecast that the domestic one quart motor oil business will decline
between 1% to 2% measured by unit volume per year for the next five years due to
several factors, including, but not limited to, the decreased need of motor oil
changes in new automobiles and the growth in retail automotive fast lubrication
and fluid maintenance service centers such as Jiffy Lube Service Centers. In the
past, we have encountered pricing pressures on several existing contracts that
came up for renewal. Our domestic automotive business generated net sales of
$171.4 million and $45.7 million for the year ended December 31, 1999 and the
quarter ended April 2, 2000, respectively, which accounted for 24% and 22% of
our total net sales for those periods. Although we have been able over time to
partially offset pricing pressures by reducing our cost structure and making the
manufacturing process associated with our domestic automotive business more
efficient, we cannot assure you that we will be able to continue to do so in the
future. Further declines in domestic demand for, and prices of, plastic
packaging for motor oil could have a material adverse effect on our results of
operations, financial condition and cash flow.

OUR OPERATIONS COULD EXPOSE US TO SUBSTANTIAL ENVIRONMENTAL COSTS AND
LIABILITIES

We must comply with a variety of 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 certain damages resulting from, present and
past spills, disposals, or other releases of hazardous substances or materials.
These domestic and international environmental laws can be complex and may
change often, the compliance expenses 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 certain circumstances, joint and several, liability on specified
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. As a result, contamination at properties that we
formerly owned or operated, as well as contamination at properties that we
currently own or operate, as well as contamination at properties to which we
sent hazardous substances, may result in our liability under environmental
laws. As a manufacturer, we have an inherent risk of liability under
environmental laws, both with respect to ongoing operations and with respect to
contamination that may have occurred in the past on our properties or as a
result of our operations. We could, in the future, incur a material liability
resulting from the costs of complying with environmental laws or any claims
concerning noncompliance, or liability from contamination.

In addition, a number of governmental authorities both in the United
States and abroad have considered or are expected to consider legislation aimed
at reducing the amount of plastic wastes disposed. Programs have included
mandating certain rates of recycling and/or the use of recycled materials,
imposing deposits or taxes on plastic packaging material, and requiring
retailers or manufacturers to take back packaging used for their products.
Legislation, as well as voluntary initiatives similarly aimed at reducing the
level of plastic wastes, could reduce the demand for certain plastic packaging,
result in greater costs for plastic packaging manufacturers, or otherwise
impact our

11
<PAGE>

business. Some consumer products companies, including some of our customers,
have responded to these governmental initiatives and to perceived environmental
concerns of consumers by using containers made in whole or in part of recycled
plastic. We cannot assure you that legislation and initiatives will not in the
future adversely affect us in a manner that would be material.

BLACKSTONE CONTROLS US AND MAY HAVE CONFLICTS OF INTEREST WITH US OR OTHER
STOCKHOLDERS IN THE FUTURE

After the IPO reorganization and the offering, Blackstone will control
approximately % of our common stock. Accordingly, Blackstone has the power to
elect a majority of our board of directors, appoint new management and approve
any action requiring the approval of our shareholders, including adopting
amendments to our certificate of incorporation and approving mergers or sales
of substantially all of our assets. We cannot assure you that the interests of
Blackstone will not conflict with the interests of holders of common stock.

OUR ABILITY TO OPERATE OUR COMPANY EFFECTIVELY COULD BE IMPAIRED IF WE LOST KEY
PERSONNEL

Our success 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 our ability to operate our business and implement our 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
and Philip R. Yates, among others, could have a material adverse effect on us.
We do not maintain "key" person insurance on any of our executive officers.

IF WE MAKE ACQUISITIONS IN THE FUTURE, WE MAY EXPERIENCE ASSIMILATION PROBLEMS
AND DISSIPATION OF MANAGEMENT RESOURCES AND WE MAY NEED TO INCUR ADDITIONAL
INDEBTEDNESS

Our future growth may be a function, in part, of acquisitions of other
consumer goods packaging businesses. To the extent that we grow through
acquisitions, we will face the operational and financial risks commonly
encountered with that type of a strategy. We would also face certain
operational risks, such as failing to assimilate the operations and personnel
of the acquired businesses, disrupting our ongoing business, dissipating our
limited management resources and impairing relationships with employees and
customers of the acquired business as a result of changes in ownership and
management. Additionally, in order to finance acquisitions, we would likely
incur additional indebtedness, as permitted under our senior credit agreement
and our indentures, in which case we would also face certain financial risks
associated with the incurring of additional indebtedness to make an
acquisition, such as reducing our liquidity, access to capital markets and
financial stability.

OUR OPERATIONS AND PROFITABILITY COULD SUFFER IF WE EXPERIENCE LABOR RELATIONS
PROBLEMS

Approximately 36% of our employees are covered by collective bargaining or
similar agreements which expire at various times in each of the next several
years. We believe that we have satisfactory relations with our unions and,
therefore, anticipate reaching new agreements on satisfactory terms as the
existing agreements expire. We cannot assure you however, that new agreements
will be reached without a work stoppage or strike or will be reached on terms
satisfactory to us. A prolonged work stoppage or strike at any one of our
manufacturing facilities could have a material adverse effect on our results of
operations.

Risks related to this offering

THERE IS NO PRIOR MARKET FOR OUR COMMON STOCK AND AN ACTIVE TRADING MARKET MAY
NOT DEVELOP

Prior to the offering, there has been no public market for our common
stock, and there can be no assurance that an active trading market will develop
or be sustained in the future. The initial public offering price of the common
stock has been determined solely by negotiations between us and the
underwriters and may not be indicative of the market price of the common stock
after completion of the offering or the price at which common stock may be sold
in the public market after the offering. See "Underwriting" for information
relating to the method of determining the initial public offering price of
common stock.

12
<PAGE>

YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION IF YOU PURCHASE COMMON
STOCK IN THE OFFERING

The initial public offering price is substantially higher than the book
value per share of our common stock. Accordingly, purchasers of our common
stock offered hereby will experience immediate and substantial dilution of $
in tangible book value per share of the common stock.

You will also experience dilution if we issue new shares of our common
stock as consideration for acquisitions. Furthermore, in the event that
Blackstone is required to make an equity contribution to us beginning in June
2001 under the terms of a capital call agreement entered into in connection
with our senior credit agreement, we will be required to issue up to $50
million of common stock to Blackstone. If Blackstone is required to make an
equity contribution to us pursuant to a capital call after the offering, we
expect that they will purchase shares of our common stock at a price per share
equal to the average trading price for the 20 trading days immediately prior to
the purchase. See "Dilution" and "Description of Certain Indebtedness".

THE SALE OR AVAILABILITY FOR SALE OF SUBSTANTIAL AMOUNTS OF OUR COMMON STOCK
COULD CAUSE OUR STOCK PRICE TO DECLINE

Sales of substantial amounts of our common stock in the public market
after the completion of the offering or the public perception that these sales
could occur could cause a decline in the market price of our common stock and
could impair our future ability to raise capital through offerings of our
common stock. There will be shares of common stock outstanding immediately
after the offering, or shares if the underwriters exercise their
over-allotment option in full, and a maximum of 1,633,333 shares underlying
outstanding options. The shares sold in the offering will be freely tradable
without restriction or further registration under the Securities Act, unless
held by our "affiliates," as that term is defined in Rule 144 under the
Securities Act. Shares that are "restricted securities," as that term is
defined under Rule 144 of the Securities Act, subject to the restrictions
described below, will become eligible for sale in the public market at various
times after 90 days after the date of this prospectus, subject to the
limitations and other conditions of Rule 144 under the Securities Act.

In connection with the offering, we, Blackstone and our executive officers
and directors have agreed, except in limited circumstances, not to sell an
aggregate of shares of common stock owned by them and options exercisable for
a maximum of an additional 1,633,333 shares of common stock, or the common stock
underlying those options, for 180 days after completion of the offering without
the lead underwriters' consent. We cannot predict what effect, if any, sales of
shares held by principal shareholders or any other shareholder or the
availability of these shares for future sale will have on the market price of
our common stock.

13
<PAGE>

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

All statements other than statements of historical facts included in this
prospectus, including statements regarding our future financial position,
economic performance and results of operations, as well as our business
strategy, budgets and projected costs and plans and objectives of management
for future operations, and the information referred to under "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Quantitative and Qualitative Disclosures About Market Risk", 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
we believe that the expectations reflected in such forward-looking statements
are reasonable, we can give no assurance that such expectations will prove to
have been correct. Important factors that could cause actual results to differ
materially from our expectations include, without limitation, our exposure to
fluctuations in resin prices and our dependence on resin supplies, competition
in our markets, including the impact of possible new technologies, our high
degree of leverage and substantial debt service obligations, the restrictive
covenants contained in instruments governing our indebtedness, a decline in the
domestic motor oil business, risks associated with our international
operations, our dependence on significant customers and the risk that customers
will not purchase our products in the amounts expected by us under our
requirements contracts, our dependence on our key management and our 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 we may not be able to
achieve success in developing and expanding our business, including our
hot-fill PET plastic container business. See "Risk Factors". All
forward-looking statements attributable to us, or persons acting on our behalf,
are expressly qualified in their entirety by the cautionary statements set
forth in this paragraph.

14
<PAGE>

THE IPO REORGANIZATION

Immediately prior to, and in connection with, the offering, we will
undergo a reorganization in which GPC Capital Corp. II, a Delaware corporation
and a wholly-owned subsidiary of Graham Packaging Holdings Company, will change
its name to Graham Packaging Company Inc. and exchange newly issued shares of
its common stock for all of the partnership interests of its existing parent
Graham Packaging Holdings Company, a Pennsylvania limited partnership. Prior to
the IPO reorganization, our sole purpose has been to act as co-obligor with
Graham Packaging Holdings Company on our senior discount notes and as
co-guarantor with Graham Packaging Holdings Company under our senior credit
agreement. We have had only nominal assets, do not conduct any operations and
did not receive any proceeds from co-issuing the senior discount notes.

Graham Packaging Holdings Company is currently owned by Blackstone,
certain members of our management and an institutional investor, who
collectively own an 81% limited partnership interest and a 4% general
partnership interest, and by members of the Graham family, who collectively own
a 14% limited partnership interest and a 1% general partnership interest. In
the IPO reorganization, Graham Packaging Company Inc. will exchange newly
issued shares of its common stock for all of these partnership interests.

Upon the exchange of our common stock for the partnership interests of
Graham Packaging Holdings Company, Graham Packaging Holdings Company will
liquidate and all of its assets will be transferred to Graham Packaging Company
Inc. Simultaneous with the exchange of stock for partnership interests, Graham
Packaging Company Inc. will issue options on its common stock to our management
in exchange for their Graham Packaging Holdings Company options.

15
<PAGE>

USE OF PROCEEDS

The net proceeds to us, after deducting the underwriting discount and
estimated offering expenses, from the sale of the common stock offered by us in
the offering at an assumed public offering price of $ are estimated to be
approximately $205.1 million, $ million if the underwriters exercise their
over-allotment option. We intend to use the net proceeds from the offering to
permanently repay an aggregate of approximately $153.9 million of term loans
under our senior credit agreement, consisting of $20.0 million of our tranche A
term loan, $47.2 million of our tranche B term loan, $39.1 million of our
tranche C term loan and $47.6 million of our tranche D term loan. We will use
the remaining $51.2 million to temporarily reduce the amounts outstanding under
our revolving credit facility. We may reborrow at any time prior to maturity
the amount repaid under our revolving credit facility. We will not use any of
the proceeds to repay any amounts outstanding under our growth capital
revolving credit facility.

As of June 30, 2000, the tranche A term loan, tranche B term loan, tranche
C term loan and tranche D term loans accrued interest at rates of 8.81%,
9.31%, 9.56% and 9.74%, respectively, and were due to mature on January 31,
2004, January 31, 2006, January 31, 2007 and January 31, 2007, respectively.
The revolving credit loans accrued interest as of June 30, 2000 at a weighted
average rate of 9.11% and were due to mature on January 31, 2004.

16
<PAGE>

DIVIDEND POLICY

We do not anticipate paying any cash dividends for the foreseeable future,
and instead intend to retain earnings, if any, for future operation and
expansion. Any decision to pay dividends in the future will be at the
discretion of our board of directors and will depend upon our operations, legal
restrictions and other factors deemed relevant by our board of directors. In
addition, our senior credit agreement and the indentures governing our senior
subordinated notes and senior discount notes restrict our ability to declare or
pay cash dividends.

DILUTION

As of April 2, 2000, we had a net tangible book deficit of approximately
$315.0 million, or $9.64 per share, on a pro forma basis after giving effect to
the IPO reorganization. Net tangible book value per share is equal to total
tangible assets (total assets less intangible assets) less total liabilities,
divided by the number of shares of common stock then outstanding. Without
taking into account any adjustment in net tangible book value attributable to
operations after April 2, 2000, after giving effect to the sale by us of
shares in the offering at an assumed initial public offering price of $ , our
adjusted net tangible book value as of April 2, 2000, after deduction of the
underwriting discount and estimated offering expenses and the application of
the estimated net proceeds therefrom as described under "Use of Proceeds",
would have been approximately $ million or $ per share. This represents an
immediate increase in net tangible book value of $ per share to existing
stockholders and an immediate dilution of $ per share to new investors. The
following table illustrates this per share dilution:

<TABLE>
<S> <C>
Assumed initial public offering price per share ................................ $
Net tangible book deficit per share as of April 2, 2000 pro forma for the IPO
reorganization ............................................................. (9.64)
Increase per share attributable to new investors .............................
-------
Net tangible book value per share after the offering ...........................
-------
Dilution per share to new investors ............................................ $
=======
</TABLE>

The following table summarizes as of April 2, 2000 the relative
investments of all existing stockholders and new investors, giving effect to
our sale of shares in the offering at an assumed initial public offering price
of $ per share (without giving effect to the underwriting discount and
offering expenses payable by us):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
-------------------- -------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
-------- --------- -------- --------- --------------
<S> <C> <C> <C> <C> <C>
Existing stockholders ......... % $ $
New investors ................. %
------- ------ ------ ------
Total ....................... % $ %
======= ====== ====== ======
</TABLE>

17
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization on an unaudited, actual
basis of Graham Packaging Holdings Company as of April 2, 2000 and the
capitalization on an unaudited, as adjusted basis after giving effect to the
IPO reorganization and application of the estimated net proceeds from our sale
of the shares of common stock in the offering at an assumed initial public
offering price of $ per share.

<TABLE>
<CAPTION>
APRIL 2, 2000
------------------------------------
AS ADJUSTED FOR THE
IPO REORGANIZATION
AND
ACTUAL THE OFFERING
------------- --------------------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt, including current portion:
Senior credit agreement (1)
Revolving credit facility (2) ............................... $ 134,000 $ 82,712
Term loans .................................................. 558,113 404,250
8 3/4% senior subordinated notes due 2008 (1) ................ 150,000 150,000
Floating rate senior subordinated notes due 2008 (1) ......... 75,000 75,000
10 3/4% senior discount notes due 2009 (3) ................... 126,354 126,354
Other debt ................................................... 16,503 16,503
---------- ---------
Total debt ...................................................... 1,059,970 854,819
---------- ---------
Partners' capital/stockholders' equity (deficit):
Partners' capital (deficit) .................................. (442,133) --
Common stock, shares authorized; no shares issued
and outstanding, actual; shares issued and
outstanding, as adjusted for the IPO reorganization and
the offering ................................................ -- 473
Additional paid in capital (deficit) ......................... -- (23,567)
Retained earnings (deficit) .................................. -- (13,468)
Accumulated other comprehensive loss ......................... (23,045) (23,045)
---------- ---------
Total partners' capital/stockholders' equity (deficit) .......... (465,178) (59,607)
---------- ---------
Total capitalization ......................................... $ 594,792 $ 795,212
========== =========
</TABLE>

----------
(1) Represents debt of our subsidiary, Graham Packaging Company.

(2) A maximum of $155.0 million is available for borrowing under the
revolving credit facility. We also have a growth capital revolver, which
has a maximum of $100.0 million available for borrowing. As of April 2,
2000, on an actual and as adjusted basis, we had no loans outstanding
under that facility. As of June 30, 2000, approximately $125 million of
loans were outstanding under our revolving credit facility, and
approximately $40 million of loans were outstanding under our growth
capital revolving credit facility. See "Description of Certain
Indebtedness".

(3) The senior discount notes accrete to $169 million aggregate principal
amount at maturity.

18
<PAGE>

UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following unaudited pro forma condensed consolidated financial
statements have been derived by the application of pro forma adjustments to the
historical consolidated financial statements of our parent, Graham Packaging
Holdings Company, included elsewhere in this prospectus. The unaudited pro
forma condensed consolidated statements of operations for the quarter ended
April 2, 2000 and the year ended December 31, 1999 give effect to the IPO
reorganization and the offering as if those transactions had occurred on
January 1, 1999. The unaudited pro forma condensed consolidated balance sheet
as of April 2, 2000 gives effect to the IPO reorganization and the offering as
if those transactions had occurred on April 2, 2000. The pro forma adjustments
are described in the accompanying notes.

The unaudited pro forma condensed consolidated financial statements should
not be considered indicative of actual results that would have been achieved
had the IPO reorganization and the offering been consummated on the dates or
for the periods indicated and do not purport to indicate balance sheet data or
results of operations as of any future date or for any future period. The
unaudited pro forma condensed consolidated financial statements should be read
in conjunction with the historical consolidated financial statements of Graham
Packaging Holdings Company and the related notes included elsewhere in this
prospectus.

19
<PAGE>

GRAHAM PACKAGING COMPANY INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
ACTUAL
GRAHAM PRO FORMA
PACKAGING IPO GRAHAM
HOLDINGS REORGANIZATION OFFERING PACKAGING
COMPANY ADJUSTMENTS ADJUSTMENTS COMPANY INC.
----------- ---------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Net sales ............................................ $ 716.1 $ 716.1
Cost of goods sold ................................... 573.4 573.4
-------- --------
Gross profit ......................................... 142.7 142.7
Selling, general and administrative expenses ......... 48.0 48.0
Special charges and unusual items .................... 4.6 4.6
-------- --------
Operating income ..................................... 90.1 90.1
Interest expense, net ................................ 87.5 $ (18.4)(b) 69.1
Other (income) expense ............................... ( 0.7) ( 0.7)
Minority interest .................................... ( 0.5) ( 0.5)
-------- -------- --------
Income before income taxes ........................... 3.8 18.4 22.2
Income tax provision ................................. 2.5 $ 1.5(a) 7.4 (c) 11.4
-------- ------- -------- --------
Net income (loss) .................................... $ 1.3 $ (1.5) $ 11.0 $ 10.8(d)
======== ======= ======== =========
Pro forma earnings per share:
Basic ............................................... $
Diluted .............................................
Weighted average shares outstanding (in
thousands):
Basic ...............................................
Diluted .............................................
</TABLE>

See accompanying notes.

20
<PAGE>

GRAHAM PACKAGING COMPANY INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED APRIL 2, 2000
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
ACTUAL
GRAHAM PRO FORMA
PACKAGING IPO GRAHAM
HOLDINGS REORGANIZATION OFFERING PACKAGING
COMPANY ADJUSTMENTS ADJUSTMENTS COMPANY INC.
----------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Net sales ............................................ $ 205.0 $ 205.0
Cost of goods sold ................................... 170.1 170.1
------- --------
Gross profit ......................................... 34.9 34.9
Selling, general and administrative expenses ......... 13.4 3.4
Special charges and unusual items .................... 0.4 0.4
------- --------
Operating income ..................................... 21.1 21.1
Interest expense, net ................................ 24.4 $ (5.3)(b) 19.1
Other (income) expense ............................... 0.1 0.1
Minority interest .................................... ( 0.3) ( 0.3)
------- ------- --------
Income (loss) before income taxes .................... ( 3.1) 5.3 2.2
Income tax provision (benefit) ....................... 0.2 $ (0.7)(a) 2.1 (c) 1.6
------- ------- ------- --------
Net income (loss) .................................... $ (3.3) $ 0.7 $ 3.2 $ 0.6(d)
======== ======= ======= =========
Pro forma earnings per share:
Basic ............................................... $
Diluted .............................................
Weighted average shares outstanding (in
thousands):
Basic ...............................................
Diluted .............................................
</TABLE>

See accompanying notes.

21
<PAGE>

GRAHAM PACKAGING COMPANY INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS

(a) To reflect federal and state income taxes that Graham Packaging
Holdings Company would have been subject to as a corporation had the
IPO reorganization occurred on January 1, 1999. These taxes have
been calculated at a 40.1% statutory tax rate.

(b) Represents the net adjustment to interest expense as a result of the
repayment of a portion of the term loans and the reduction of the
loans under our revolving credit facility using proceeds from the
offering, calculated as follows:

<TABLE>
<CAPTION>
YEAR ENDED QUARTER ENDED
DECEMBER 31, 1999 APRIL 2, 2000
------------------- --------------
<S> <C> <C>
Reduction of interest expense on the portion of the term
loans and the revolving credit loan being repaid at a
weighted average interest rate of 8.12% in 1999 and
9.05% in 2000 ........................................... $ 16.4 $ 4.6
Contractual reduction of 0.5% in the interest rate charged
on the remaining borrowing under our senior credit
agreement as a result of our decreased leverage
ratio (1) ............................................... 1.3 0.6
Reduction of amortization of debt issuance fees .......... 0.7 0.1
------- ------
Total adjustment ......................................... $ 18.4 $ 5.3
======= ======
</TABLE>

(1) The contractual 0.5% interest expense reduction was given effect as of May
15, 1999, in accordance with the terms of our senior credit agreement. The
full year effect in 1999 would have been a reduction in interest expense
of $2.0 million.

(c) To adjust the pro forma provision for income taxes for the tax effect of
the pro forma adjustments to interest expense, at the statutory tax rate
of 40.1%.

(d) Pro forma net income (loss) does not include an extraordinary loss of
approximately $1.6 million, consisting of a $2.7 million non-cash charge
less the associated income tax benefit of $1.1 million, resulting from the
write-off of debt issuance fees related to the term loans assumed to be
repaid with the proceeds of the offering, or a one-time charge to earnings
to record a deferred tax liability of approximately $11.9 million that we
will recognize upon the exchange of our common stock for all of the
general and limited partnership interests of Graham Packaging Holdings
Company in the IPO reorganization. These amounts will be charged to
earnings in the quarter in which the term loans are repaid and the IPO
reorganization occurs.

22
<PAGE>

GRAHAM PACKAGING COMPANY INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF APRIL 2, 2000
(IN MILLIONS)

<TABLE>
<CAPTION>
ACTUAL
GRAHAM PRO FORMA
PACKAGING IPO GRAHAM
HOLDINGS REORGANIZATION OFFERING PACKAGING
COMPANY ADJUSTMENTS (A) ADJUSTMENTS (C) COMPANY INC.
----------- ----------------- ----------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ........................... $ 5.2 $ 5.2
Accounts receivable, net ............................ 127.3 127.3
Inventories ......................................... 55.4 55.4
Prepaid expenses and other current assets ........... 17.5 17.5
--------- -------
Total current assets ................................. 205.4 205.4
Property, plant and equipment, net ................... 516.3 516.3
Other assets ......................................... 58.7 $ 202.0(b) $ (1.6)(d) 259.1
--------- --------- --------- -------
Total ................................................ $ 780.4 $ 202.0 $ (1.6) $ 980.8
========= ========= ========= =======
LIABILITIES AND PARTNERS'
CAPITAL/STOCKHOLDERS'
EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses ............... $ 172.0 $ 172.0
Current portion of long-term debt ................... 27.5 $ (4.5)(e) 23.0
--------- --------- --------- -------
Total current liabilities ............................ 199.5 ( 4.5) 195.0
Long-term debt ....................................... 1,032.4 (200.6)(e) 831.8
Other non-current liabilities ........................ 13.3 13.3
Minority interest .................................... 0.3 0.3
Partners' capital/stockholders' equity (deficit):
Partners' capital (deficit) ......................... ( 442.1) $ 442.1(a) --
Common stock ........................................ -- 0.3 (a) 0.1 (f) 0.4
Additional paid in capital (deficit) ................ -- (442.4)(a)
213.9 (b) 205.0 (f) ( 23.5)
Retained earnings (deficit) ......................... -- ( 11.9)(b) ( 1.6)(d) ( 13.5)
Accumulated other comprehensive loss ................ ( 23.0) ( 23.0)
--------- --------- --------- -------
Total partners' capital/stockholders' equity (deficit) ( 465.1) 202.0 203.5 ( 59.6)
--------- --------- --------- -------
Total ................................................ $ 780.4 $ 202.0 $ (1.6) $ 980.8
========= ========= ========= =======
</TABLE>

See accompanying notes.

23
<PAGE>

GRAHAM PACKAGING COMPANY INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

(a) Prior to the closing of the offering, we will complete the IPO
reorganization in which we will:

o exchange 32,666,667 shares of our newly issued common stock for all of the
general and limited partnership interests of our parent, Graham Packaging
Holdings Company;

o exchange options to purchase a maximum of 1,633,333 shares of our common
stock for all of the options of Graham Packaging Holdings Company, on the
same economic terms and conditions as the Graham Packaging Holdings
Company options; and

o change our name to Graham Packaging Company Inc.

As a result of these transactions, we will become the parent company of the
Graham Packaging Group.

(b) To reflect the net deferred tax asset to be recorded as a result of
the IPO reorganization. This net deferred tax asset includes
deferred tax assets of approximately $213.9 million applicable
primarily to differences between the financial reporting and tax
bases of our assets and liabilities which arose in our 1998
recapitalization that we will record as an increase in additional
paid-in capital, offset, in part, by a deferred tax liability of
approximately $11.9 million that we will record as a one-time charge
to earnings.

<TABLE>
<S> <C>
Sources of funds:
Offering ..................................... $ 220.0
========
Uses of funds:
Repayment of term loans ...................... $ 153.9
Reduction of revolver ........................ 51.2
Estimated offering fees and expenses ......... 14.9
--------
Total uses ................................ $ 220.0
========
</TABLE>

(d) To reflect the write-off of $2.7 million of debt issuance fees
associated with the repayment of a portion of the term loans, less
the $1.1 million associated tax benefit.

(e) To reflect the repayment of $153.9 million of the term loans and the
reduction of $51.2 million of the revolver with the proceeds from
the offering.

(f) To reflect the proceeds from the offering of $220.0 million, net of
estimated expenses of $14.9 million.

24
<PAGE>

SELECTED FINANCIAL DATA

The following table sets forth our selected historical financial data and
other operating data for and at the end of each of the years in the five-year
period ended December 31, 1999 and for the quarters ended March 28, 1999 and
April 2, 2000. The selected historical financial data for each of the three
years in the period ended December 31, 1997 have been derived from the Graham
Packaging Group's combined financial statements. The combined financial
statements of the Graham Packaging Group have been prepared for periods prior
to February 2, 1998 to include Graham Packaging Holdings Company and its
subsidiaries and the contributed ownership interests and real estate for all
periods that the operations were under common control. The selected historical
financial data for each of the two years in the period ended December 31, 1999
and for the quarters ended March 28, 1999 and April 2, 2000 have been derived
from the financial statements of Graham Packaging Holdings Company. The
combined financial statements, prior to restatement for the change in
accounting for inventory costs, as described in note (7) to the following
table, as of December 31, 1995, 1996 and 1997 and for each of the three years
in the period ended December 31, 1997 have been audited by Ernst & Young LLP,
independent auditors. The consolidated financial statements as of, and for the
years ended, December 31, 1998 and 1999 have been audited by Deloitte & Touche
LLP, independent auditors. The selected historical consolidated financial data
as of and for the quarters ended March 28, 1999 and April 2, 2000 were derived
from the unaudited consolidated financial statements of Graham Packaging
Holdings Company which, in the opinion of management, include all adjustments,
consisting only of usual recurring adjustments, necessary for fair presentation
of such data. The following table should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements, including the related notes, included
elsewhere in this prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1995 1996 1997 1998 1999
----------- ----------- ----------- ----------- -------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales (1) ........................................ $466.8 $ 459.7 $ 521.7 $ 588.1 $ 716.1
Gross profit (1) ..................................... 67.0 77.0 84.7 115.4 142.7
Selling, general and administrative expenses ......... 35.5 35.5 34.9 37.8 48.0
Special charges and unusual items (2) ................ 5.9 7.0 24.4 24.2 4.6
------- -------- ------- ------- -------
Operating income ..................................... 25.6 34.5 25.4 53.4 90.1
Recapitalization expenses (3) ........................ -- -- -- 11.8 --
Interest expense, net ................................ 16.2 14.5 13.4 68.0 87.5
Other expense (income), net (4) ...................... (11.0) (1.0) 0.7 (0.2) (0.7)
Minority interest .................................... -- -- 0.2 -- (0.5)
Income tax provision (benefit) (5) ................... (0.3) -- 0.6 1.1 2.5
------- -------- -------- ------- --------
Income (loss) before extraordinary item .............. 20.7 21.0 10.5 (27.3) 1.3
Extraordinary loss (6) ............................... 1.8 -- -- 0.7 --
------- -------- -------- ------- --------
Net income (loss) (7)(8) ............................. $ 18.9 $ 21.0 $ 10.5 $ (28.0) $ 1.3
======= ======== ======== ======== ========
PRO FORMA STATEMENT OF
OPERATIONS DATA, AS ADJUSTED
FOR THE IPO REORGANIZATION (9):
Pro forma net income (loss) .......................... $ (0.2)
Pro forma earnings (loss) per share:
Basic ............................................... $ (0.01)
Diluted ............................................. (0.01)
OTHER DATA:
Net sales growth ..................................... -- (1.5)% 13.5% 12.7% 21.8%
Sales volume, in resin pounds ........................ 379.8 393.0 448.0 503.4 614.6
Sales volume growth .................................. -- 3.5% 14.0% 12.4% 22.1%
Cash flows from:
Operating activities ................................ $ 60.5 $ 68.0 $ 66.9 $ 41.8 $ 55.5

<PAGE>
<CAPTION>
QUARTER ENDED
-------------------------
MARCH 28, APRIL 2,
1999 2000
----------- -------------
(IN MILLIONS, EXCEPT PER
SHARE DATA)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales (1) ........................................ $ 159.1 $ 205.0
Gross profit (1) ..................................... 27.9 34.9
Selling, general and administrative expenses ......... 10.5 13.4
Special charges and unusual items (2) ................ 1.2 0.4
------- -------
Operating income ..................................... 16.2 21.1
Recapitalization expenses (3) ........................ -- --
Interest expense, net ................................ 19.4 24.4
Other expense (income), net (4) ...................... (0.1) 0.1
Minority interest .................................... -- (0.3)
Income tax provision (benefit) (5) ................... 0.3 0.2
-------- --------
Income (loss) before extraordinary item .............. (3.4) (3.3)
Extraordinary loss (6) ............................... -- --
-------- --------
Net income (loss) (7)(8) ............................. $ (3.4) $ (3.3)
======== ========
PRO FORMA STATEMENT OF
OPERATIONS DATA, AS ADJUSTED
FOR THE IPO REORGANIZATION (9):
Pro forma net income (loss) .......................... $ (1.9) $ (2.6)
Pro forma earnings (loss) per share:
Basic ............................................... $ (0.06) $ (0.08)
Diluted ............................................. (0.06) (0.08)
OTHER DATA:
Net sales growth ..................................... -- 28.8%
Sales volume, in resin pounds ........................ 144.2 168.0
Sales volume growth .................................. -- 16.5%
Cash flows from:
Operating activities ................................ $ (7.2) $ (1.5)
</TABLE>

25
<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Investing activities .................................. (68.4) (32.8) (72.3)
Financing activities .................................. 9.2 (34.6) 9.5
Adjusted EBITDA (10) .................................. 77.3 90.4 90.1
Depreciation and amortization (11) .................... 45.7 48.2 41.0
Capital expenditures (excluding acquisitions) ......... 68.6 31.3 53.2
Investments (including acquisitions) (12) ............. 3.2 1.2 19.0

<CAPTION>
Investing activities .................................. (181.2) (181.8) (33.7) (38.0)
Financing activities .................................. 139.7 126.2 40.6 38.9
Adjusted EBITDA (10) .................................. 117.8 149.1 29.4 37.2
Depreciation and amortization (11) .................... 39.3 53.2 11.8 15.2
Capital expenditures (excluding acquisitions) ......... 133.9 171.0 33.8 38.0
Investments (including acquisitions) (12) ............. 45.2 10.3 -- --
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------------
1995 1996 1997
-------- ----- -----
BALANCE SHEET DATA:
<S> <C> <C> <C> <C>
Working capital (deficit) (13) ........................ $ 19.9 $ 18.7 $ 4.4
Total assets .......................................... 362.6 340.5 387.5
Total debt ............................................ 257.4 240.5 268.5
Partners' capital/owners' equity (deficit) (14) ....... 17.2 18.5 2.3

AS OF DECEMBER 31, AS OF
------------------ ---------------------
MARCH 28, APRIL 2,
1998 1999 1999 2000
------ ------- -------- ---------
BALANCE SHEET DATA:
Working capital (deficit) (13) ........................ $ (5.5) $ 10.6 $ 12.6 $ 28.2
Total assets .......................................... 596.7 741.2 607.3 780.4
Total debt ............................................ 875.4 1,017.1 918.3 1,060.0
Partners' capital/owners' equity (deficit) (14) ....... (438.8) (458.0) (458.3) (465.2)
</TABLE>

(3) See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the financial statements, including the
related notes.

(4) In July 1995, we acquired an additional interest in our U.K. operations
and subsequently sold our interests for $5.6 million, recognizing a gain
of $4.4 million. In addition, we entered into an agreement with the
purchaser of our U.K. operations and recorded $6.4 million of
non-recurring technical support services income. Both the gain and the
technical support services income are included in other expense (income),
net.

(5) As a limited partnership, our predecessor, Graham Packaging Holdings
Company, was not subject to U.S. federal income taxes or most state
income taxes. Instead, taxes were assessed to its partners based on its
income. Graham Packaging Holdings Company made tax distributions to its
partners to reimburse them for tax liabilities. Our 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.

(6) Represents costs incurred, including the write-off of unamortized debt
issuance fees, in connection with the early extinguishment of debt.

(7) Effective June 28, 1999, we changed our method of valuing inventories for
our domestic operations from the LIFO method to the 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, we believe 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 income for the year ended December 31, 1995 by $0.2
million, decreased net income for the year ended December 31, 1996 by
$0.2 million, increased net income for the year ended December 31, 1997
by $0.3 million and increased net loss for the year ended December 31,
1998 by $2.0 million.

(8) In April 1997, we acquired 80% of certain assets and assumed 80% of
certain 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, we 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, we acquired 51% of the operating assets of PlasPET
Florida, Ltd., while becoming the general partner on July 6, 1999, for
$1.1 million (excluding direct costs of the acquisition), net of
liabilities assumed, subject to certain contingent consideration. On July
1, 1999, we acquired selected companies located in Argentina for $8.0
million (excluding direct costs of the acquisition), net of liabilities
assumed, subject to certain contingent consideration. We accounted for
these transactions under the purchase method of accounting. Results of
operations are included since the dates of acquisition.

(9) As a result of the IPO reorganization, our taxable income will become
subject to federal and state income taxes and we will not be required to
make tax distributions. The pro forma data assumes that we were subject
to federal and state income taxes at the effective tax rates that would
have applied for each period presented. Historical earnings (loss) per
share is not presented because it is not considered meaningful. Pro forma
basic earnings (loss) per share is calculated based on 32,666,667
weighted average common shares outstanding for all periods presented. Pro
forma diluted earnings (loss) per share is calculated based on the
dilutive effect of stock options.

26
<PAGE>

(10) 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
our two existing indentures as earnings before minority interest,
extraordinary items, interest expense, interest income, income taxes,
depreciation and amortization expense, the ongoing $1 million per year fee
paid pursuant to the Blackstone monitoring agreement, non-cash equity
income in earnings of joint ventures, other non-cash charges,
recapitalization expenses, special charges and unusual items and
non-recurring charges. Also in 1995, Adjusted EBITDA excludes the $4.4
million gain on the sale of the U.K. operations and the related $6.4
million technical support services income as described in note (4) above.
Adjusted EBITDA is included in this prospectus to provide additional
information with respect to our ability to satisfy our debt service,
capital expenditure and working capital requirements and because certain
covenants in our borrowing arrangements are tied to similar measures.
While Adjusted EBITDA and similar measures are frequently used as a
measure of operations and the ability to meet debt service requirements,
these terms are not necessarily comparable to other similarly titled
captions of other companies due to the potential inconsistencies in the
method of calculation. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the financial
statements, including the related notes. Adjusted EBITDA is calculated as
follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1995 1996 1997 1998 1999
----------- ---------- ---------- ------------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Income (loss) before extraordinary item ............ $ 20.7 $ 21.0 $ 10.5 $(27.3) $ 1.3
Interest expense, net .............................. 16.2 14.5 13.4 68.0 87.5
Income tax (benefit) expense ....................... (0.3) -- 0.6 1.1 2.5
Depreciation and amortization ...................... 45.7 48.2 41.0 39.3 53.2
Fees paid pursuant to the Blackstone monitoring
agreement ........................................ -- -- -- 1.0 1.0
Equity income in earnings of joint venture ......... (0.1) (0.3) (0.2) (0.3) (0.3)
Non-cash compensation .............................. -- 0.2 -- --
Special charges and unusual items .................. 5.9 7.0 24.4 24.2 4.6
Recapitalization expenses .......................... -- -- -- 11.8 (0.2)
Minority interest .................................. -- -- 0.2 -- (0.5)
Non-recurring charges .............................. (10.8) -- -- -- --
--------- ------ ------ ------ -------
Adjusted EBITDA .................................... $ 77.3 $ 90.4 $ 90.1 $117.8 $ 149.1
====== ====== ====== ======= =======

<CAPTION>
QUARTER ENDED
------------------------
MARCH 28, APRIL 2,
1999 2000
----------- ------------
(IN MILLIONS)
<S> <C> <C>
Income (loss) before extraordinary item ............ $(3.4) $(3.3)
Interest expense, net .............................. 19.4 24.4
Income tax expense (benefit) ....................... 0.3 0.2
Depreciation and amortization ...................... 11.8 15.2
Fees paid pursuant to the Blackstone monitoring
agreement ........................................ 0.2 0.3
Equity income in earnings of joint venture ......... (0.1) --
Non-cash compensation .............................. -- --
Special charges and unusual items .................. 1.2 0.4
Recapitalization expenses .......................... -- --
Minority interest .................................. -- (0.3)
Non-recurring charges .............................. -- 0.3
----- -----
Adjusted EBITDA .................................... $29.4 $ 37.2
===== ======
</TABLE>

(11) Depreciation and amortization excludes amortization of debt issuance
fees, which is included in interest expense, net.

(12) Investments include the acquisitions made by us in the United States,
France, the United Kingdom, Brazil, Argentina, Germany and Turkey
described in note (8) above. In addition, in 1995, we paid $1.9 million
for a 50% interest in Masko-Graham Joint Venture in Poland and committed
to make loans to the joint venture of up to $1.9 million. In 1996, we
loaned $1.0 million to the joint venture. The joint venture is accounted
for under the equity method of accounting, and its earnings are included
in other expense (income), net. Amounts shown under this caption
represent cash paid, net of cash acquired in the acquisitions.

(13) Working capital is defined as current assets, less cash and cash
equivalents, minus current liabilities, less current maturities of
long-term debt.

(14) As a result of our 1998 recapitalization, as of April 2, 2000 we had
negative net worth for accounting purposes. However, in our 1998
recapitalization, Blackstone and an institutional investor paid $208.3
million in cash for 85% of the partnership interests of Graham Packaging
Holdings Company and the Graham family retained a 15% interest which,
based on the amount paid by Blackstone and the institutional investor,
had an implied value of $36.8 million.

27
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our results of operations
includes a discussion of periods before the consummation of our 1998
recapitalization. The following discussion should be read in conjunction with
"Selected Financial Data" and the financial statements, including the related
notes, appearing elsewhere in this prospectus.

OVERVIEW

We are a worldwide leader in the design, manufacture and sale of
customized blow molded plastic containers for the branded food and beverage,
household and personal care, and automotive lubricants markets with 57 plants
throughout North America, Europe and Latin America. Our primary focus is to
operate in select markets that will position us to benefit from the growing
conversion to high performance plastic packaging from more commodity packaging.
We target branded consumer product manufacturers for whom customized packaging
design is a critical component in their efforts to differentiate their products
to consumers. We initially pursue these attractive product areas with one or
two major consumer products companies in each category that we expect will lead
the conversion to plastic packaging for that category. We utilize our
innovative design, engineering and technological capabilities to deliver highly
customized, high performance products to our customers in these areas in order
to distinguish and increase sales of their branded products. We collaborate
with our customers through joint initiatives in product design and cost
reduction, and innovative operational arrangements, which include on-site
manufacturing facilities.

We believe that critical success factors to our business are our ability
to:

o serve the complex packaging demands of our 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.

We believe that the area with the greatest opportunity for growth
continues to be in producing containers for the North American food and
beverage market because of the continued conversion to plastic packaging,
including the demand for hot-fill PET containers for juices, juice drinks,
sport drinks, teas and other food products. Since the beginning of 1997, we
have invested over $170 million in capital expenditures to expand our
technology, machinery and plant structure to prepare for what we believed would
be the growth in the hot-fill PET area. For the year ended December 31, 1999,
our sales of hot-fill PET containers had grown to $198.9 million from $68.2
million in 1996. In this business, we continue to benefit from more experienced
plant staff, improved line speeds, higher absorption of selling, general and
administrative expenses and fixed overhead costs, and improved resin pricing
and material usage.

Our household and personal care business continues to grow, as package
conversion trends continue from other packaging forms in some of our product
lines. We continue to benefit as liquid fabric care detergents, hard-surface
cleaners and liquid automatic dishwashing detergents, which are packaged in
plastic containers, capture an increased share from powdered detergents and
cleaners, which are predominantly packaged in paper-based containers. We have
upgraded our machinery to new larger blow molders to standardize production
lines, improve flexibility and reduce manufacturing costs.

Our North American one-quart motor oil container business is in a mature
industry. We have 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 increased in

28
<PAGE>

1999 as compared to 1998, despite an average annual volume decline of 1% to 2%
in prior years. We believe that the decline in the domestic one-quart motor oil
business will continue for the next several years but believe that there are
significant volume opportunities for automotive product business in foreign
countries, particularly those in Latin America. On April 30, 1997, we acquired
80% of certain assets and 80% of certain liabilities of Rheem-Graham Embalagens
Ltda., a leading supplier of containers to the motor oil industry in Brazil,
and on February 17, 1998, we purchased the residual 20% ownership interest.
Since that acquisition, we have signed agreements to operate two additional
plants in Brazil, both of which are now in production.

Consistent with our strategy to expand in selected international areas, we
currently have 24 facilities, either on our own or through joint ventures, in
Argentina, Belgium, Brazil, Canada, France, Germany, Hungary, Italy, Poland,
Turkey and the United Kingdom. We believe that the acquisition of manufacturing
plants in Europe from Crown Cork & Seal has provided additional competitive
scale to our global sales efforts. In addition, given the recent troubled
economy in Latin America, and more specifically Brazil, we closely monitor our
operations and investment there.

For the quarter ended April 2, 2000, 77% of our net sales were generated
by our top twenty customers, the majority of which are under long-term
contracts with terms ranging from two to ten years; the remainder of our net
sales were generated by customers with which we have been doing business for
over 20 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 us.

Based on industry data, the following table summarizes average market
prices per pound of PET and HDPE resins in North America over the years ending
December 31, 1997, 1998 and 1999 and over the quarters ending March 31, 1999
and 2000:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, QUARTER ENDED
------------------------------------ ------------------------
MARCH 31, MARCH 31,
1997 1998 1999 1999 2000
---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
PET .......... $ 0.50 $ 0.53 $ 0.54 $ 0.50 $ 0.56
HDPE ......... 0.46 0.37 0.41 0.34 0.42
</TABLE>

In general, our dollar gross profit is substantially unaffected by
fluctuations in the prices of PET and HDPE resins, the primary raw materials
for our products, because industry practice and our agreements with customers
permit substantially all price changes to be passed through to customers by
means of corresponding changes in product pricing. Consequently, we believe
that our cost of goods sold, as well as certain other expense items, should not
be analyzed solely on a percentage of net sales basis.

Graham Packaging Holdings Company, our predecessor, did not pay U.S.
federal income taxes under the provisions of the Internal Revenue Code, as the
applicable income or loss was included in the tax returns of the partners.
Graham Packaging Holdings Company has made tax distributions to its partners
and expects to make one additional tax distribution in connection with the IPO
reorganization. After the IPO reorganization, we will not be required to make
tax distributions. Our foreign operations are subject to tax in their local
jurisdictions. Most of these entities have historically incurred net operating
losses.

As a result of the IPO reorganization that will occur prior to the
offering, our income will become subject to federal and state income taxes and
we will record a net deferred tax asset of $202.0 million as of April 2, 2000,
on a pro forma basis after giving effect to the IPO reorganization, which will
reduce future cash taxes payable.

29
<PAGE>

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1997 1998 1999
---------------------- ---------------------- ----------------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Food and Beverage ......... $ 150.6 28.9% $ 221.1 37.6% $ 323.1 45.1%
Household and Personal
Care ..................... 174.7 33.5% 178.3 30.3% 185.3 25.9%
Automotive ................ 196.4 37.6% 188.7 32.1% 207.7 29.0%
-------- ----- -------- ----- -------- -----
Total Net Sales ........... $ 521.7 100.0% $ 588.1 100.0% $ 716.1 100.0%
======== ===== ======== ===== ======== =====

<CAPTION>
QUARTER ENDED
-------------------------------------------
MARCH 28, 1999 APRIL 2, 2000
--------------------- ---------------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Food and Beverage ......... $ 69.5 43.7% $ 99.0 48.3%
Household and Personal
Care ..................... 44.1 27.7% 52.5 25.6%
Automotive ................ 45.5 28.6% 53.5 26.1%
------- ----- ------- -----
Total Net Sales ........... $ 159.1 100.0% $ 205.0 100.0%
======= ===== ======= =====
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1997 1998 1999
---------------------- ---------------------- ----------------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
North America ........... $ 440.0 84.3% $ 465.3 79.1% $ 555.0 77.5%
Europe .................. 67.4 12.9% 100.8 17.2% 136.7 19.1%
Latin America ........... 14.3 2.8% 22.0 3.7% 24.4 3.4%
-------- ----- -------- ----- -------- -----
Total Net Sales ......... $ 521.7 100.0% $ 588.1 100.0% $ 716.1 100.0%
======== ===== ======== ===== ======== =====

<CAPTION>
QUARTER ENDED
---------------------------------------------
MARCH 28, 1999 APRIL 2, 2000
---------------------- ----------------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
North America ........... $ 119.8 75.3% $ 161.0 78.5%
Europe .................. 34.7 21.8% 36.6 17.9%
Latin America ........... 4.6 2.9% 7.4 3.6%
-------- ----- -------- -----
Total Net Sales ......... $ 159.1 100.0% $ 205.0 100.0%
======== ===== ======== =====
</TABLE>

QUARTER ENDED APRIL 2, 2000 COMPARED TO QUARTER ENDED MARCH 28, 1999

Net Sales. Net sales for the quarter ended April 2, 2000 increased $45.9
million to $205.0 million from $159.1 million for the quarter ended March 28,
1999. The increase in sales was primarily due to a 16.5% increase in resin
pounds sold and an increase in resin prices. On a geographic basis, sales for
the quarter ended April 2, 2000 in North America were up $41.2 million or 34.4%
from the quarter ended March 28, 1999. The North American sales increase
included higher resin pounds sold of 19.3%. North American sales in the food
and beverage business, the household and personal care business and the
automotive business contributed $25.4 million, $6.0 million and $9.8 million,
respectively, to the increase. Sales for the quarter ended April 2, 2000 in
Europe were up $1.9 million or 5.5% from the quarter ended March 28, 1999,
primarily in the food and beverage business. Overall, European sales reflected
a 5.4% increase in resin pounds sold. Sales for the quarter ended April 2, 2000
in Latin America were up $2.8 million from the quarter ended March 28, 1999.

Gross Profit. Gross profit for the quarter ended April 2, 2000 increased
$7.0 million to $34.9 million from $27.9 million for the quarter ended March
28, 1999. The increase in gross profit resulted primarily from the higher sales
volume as compared to the prior year and continued operational improvements.
Gross profit for the quarter ended April 2, 2000 increased $7.7 million in
North America, decreased $1.0 million in Europe and increased $0.3 million in
Latin America when compared to the quarter ended March 28, 1999.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the quarter ended April 2, 2000 increased $2.9
million to $13.4 million from $10.5 million for the quarter ended March 28,
1999. The increase in 2000 selling, general and administrative expenses is due
primarily to overall growth of the business, principally in North America. As a
percent of sales, selling, general and administrative expenses decreased to
6.5% of sales for the quarter ended April 2, 2000 from 6.6% for the quarter
ended March 28, 1999.

Special Charges and Unusual Items. Special charges and unusual items
decreased $0.8 million to $0.4 million for the quarter ended April 2, 2000 from
$1.2 million for the quarter ended March 28, 1999. Special charges and unusual
items in the quarter ended April 2, 2000 included compensation related to our
1998 recapitalization of $0.4 million. Special charges and unusual items in the
quarter ended March 28, 1999 included costs related to year 2000 system
conversion of $0.2 million and compensation related to our 1998
recapitalization of $1.0 million.

30
<PAGE>

Interest Expense, Net. Interest expense, net increased $5.0 million to
$24.4 million, including $3.3 million of non-cash interest on our senior
discount notes, for the quarter ended April 2, 2000 from $19.4 million for the
quarter ended March 28, 1999. The increase was primarily related to increased
debt levels in 2000 compared to 1999.

Other (Income) Expense. Other (income) expense was $0.1 million for the
quarter ended April 2, 2000, as compared to $(0.1) million for the quarter
ended March 28, 1999. The lower income was due primarily to lower equity income
in the quarter ended April 2, 2000 as compared to the quarter ended March 28,
1999.

Net Loss. Primarily as a result of factors discussed above, net loss for
the quarter ended April 2, 2000 was $3.3 million compared to net loss of $3.4
million for the quarter ended March 28, 1999.

Adjusted EBITDA. Primarily as a result of factors discussed above,
Adjusted EBITDA increased by 26.5% in the quarter ended April 2, 2000 to $37.2
million from $29.4 million in the quarter ended March 28, 1999.

1999 COMPARED TO 1998

Net Sales. Net sales for the year ended December 31, 1999 increased $128.0
million to $716.1 million from $588.1 million for the year ended December 31,
1998. The increase in sales was primarily due to a 22.1% increase in resin
pounds sold. On a geographic basis, sales for the year ended December 31, 1999
in North America were up $89.7 million or 19.3% from the year ended December
31, 1998. The North American sales increase included higher resin pounds sold
of 16.0%. North American sales in the food and beverage, household and personal
care and automotive businesses contributed $76.0 million, $4.2 million and $9.5
million, respectively, to the increase. Sales for the year ended December 31,
1999 in Europe were up $35.9 million or 35.6% from the year ended December 31,
1998, principally in the food and beverage business, primarily due to a full
year of our new European subsidiaries which were acquired in July 1998.
Overall, European sales reflected a 53.4% increase in resin pounds sold.
Additionally, sales in Latin America for the year ended December 31, 1999 were
up $2.4 million.

Gross Profit. Gross profit for the year ended December 31, 1999 increased
$27.3 million to $142.7 million from $115.4 million for the year ended December
31, 1998. The increase in gross profit resulted primarily from the higher sales
volume as compared to the prior year. Gross profit in North America was up
$23.2 million or 21.6%. Additionally, gross profit increased $3.2 million in
Europe and $0.9 million in Latin America.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the year ended December 31, 1999 increased $10.2
million to $48.0 million from $37.8 million for the year ended December 31,
1998. The dollar increase in 1999 selling, general and administrative expenses
was due to a full year of our new European subsidiaries which were acquired in
July 1998, and the inclusion of our newly acquired North American and Latin
American subsidiaries and overall growth of the business, primarily in North
America. As a percent of sales, selling, general and administrative expenses
increased to 6.7% of sales in 1999 from 6.4% in 1998.

Special Charges and Unusual Items. In 1999, special charges and unusual
items included $2.7 million related to compensation costs related to our 1998
recapitalization, $0.6 million of restructuring charges relating to operations
in Europe, and $1.3 million in costs related to year 2000 system conversion. In
1998, special charges and unusual items included $20.6 million related to
compensation costs related to our 1998 recapitalization, $1.9 million of
restructuring charges relating to the operations in Europe ($1.2 million) and
in North America ($0.7 million), $1.0 million in costs related to year 2000
system conversion, $0.4 million of aborted acquisition costs, and $0.3 million
of legal fees.

Recapitalization Expenses. Recapitalization expenses in the year ended
December 31, 1998 of $11.8 million related to our 1998 recapitalization and
also included transaction fees and costs associated with the termination of
interest rate collar and swap agreements.

31
<PAGE>

Interest Expense, Net. Interest expense, net increased $19.5 million to
$87.5 million, including $12.4 million of non-cash interest on our senior
discount notes, for the year ended December 31, 1999 from $68.0 million for the
year ended December 31, 1998. The increase was primarily related to increased
debt levels in 1999 compared to 1998.

Other (Income) Expense. Other (income) expense was $(0.7) million for the
year ended December 31, 1999 as compared to $(0.2) million for the year ended
December 31, 1998. The higher income was due primarily to higher foreign
exchange gain in the year ended December 31, 1999 as compared to the year ended
December 31, 1998.

Net Income (Loss). Primarily as a result of factors discussed above, net
income for the year ended December 31, 1999 was $1.3 million compared to net
loss of $28.0 million for the year ended December 31, 1998.

Adjusted EBITDA. Primarily as a result of factors discussed above,
Adjusted EBITDA increased by 26.6% in 1999 to $149.1 million from $117.8
million in 1998.

1998 COMPARED TO 1997

Net Sales. Net sales for the year ended December 31, 1998 increased $66.4
million to $588.1 million from $521.7 million for the year ended December 31,
1997. The increase in sales was primarily due to a 12.4% increase in resin
pounds sold and changes in product mix. These increases were partially offset
by a net decrease in average resin prices. On a geographic basis, sales for the
year ended December 31, 1998 in North America were up $25.3 million or 5.8%
from the year ended December 31, 1997. The North American sales increase
included higher pounds sold of 8.4%. North American sales in the food and
beverage business contributed $48.5 million to the increase, while North
American sales in the automotive business and household and personal care
business were $14.4 million and $8.8 million lower, respectively. Approximately
76% of the decrease in North American sales in the automotive business and
approximately all of the decrease in North American sales in the household and
personal care business were attributable to declining resin pricing. Sales for
the year ended December 31, 1998 in Europe were up $33.4 million or 49.6% from
the year ended December 31, 1997, principally in the food and beverage and
household and personal care businesses, primarily due to the inclusion of our
newly-acquired European subsidiaries. Overall, European sales reflected a 40.2%
increase in resin pounds sold. Additionally, sales in Latin America for the
year ended December 31, 1998 were up $7.7 million, primarily as a result of our
investment in our Latin American subsidiary in the second quarter of 1997.

Gross Profit. Gross profit for the year ended December 31, 1998 increased
$30.7 million to $115.4 million from $84.7 million for the year ended December
31, 1997. The increase in gross profit resulted primarily from the higher sales
volume as compared to the prior year, continued operational improvements and
the favorable impact of lower depreciation. Gross profit in North America was
up $25.1 million or 30.7%. Additionally, gross profit increased $3.9 million in
Europe and $1.7 million in Latin America.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the year ended December 31, 1998 increased $2.9
million to $37.8 million from $34.9 million for the year ended December 31,
1997. As a percent of sales, selling, general and administrative expenses
declined to 6.4% of sales in 1998 from 6.7% in 1997 generally due to the
leveraging of costs that are fixed in nature on higher sales. The dollar
increase in 1998 selling, general and administrative expenses was due primarily
to the inclusion of our Latin American subsidiary and the newly-acquired
European subsidiaries which were acquired in the second quarter of 1997 and the
third quarter of 1998, respectively.

Special Charges and Unusual Items. In 1998, special charges and unusual
items included $20.6 million related to compensation costs related to our 1998
recapitalization, $1.9 million of restructuring charges relating to the
operations in Europe ($1.2 million) and in North America ($0.7 million), $1.0
million in costs related to year 2000 system conversion, $0.4 million of
aborted acquisition costs, and $0.3 million of legal fees. In 1997, special
charges and unusual items included

32
<PAGE>

$22.7 million of legal fees and amounts expected to be paid in settlement
related to the JCI-Schmalbach-Lubeca litigation, $1.2 million of restructuring
charges relating to operations in Europe ($0.7 million) and in North America
($0.5 million), and $0.5 million in costs related to year 2000 system
conversion.

Recapitalization Expenses. Recapitalization expenses of $11.8 million
related to our 1998 recapitalization and also included transaction fees and
costs associated with the termination of interest rate collar and swap
agreements.

Interest Expense, Net. Interest expense, net increased $54.6 million to
$68.0 million, including $10.1 million of non-cash interest on our senior
discount notes, for the year ended December 31, 1998 from $13.4 million for the
year ended December 31, 1997. The increase was primarily related to the
increase in debt resulting from our 1998 recapitalization and higher average
interest rates associated with the new debt.

Other (Income) Expense. Other (income) expense was $(0.2) million for the
year ended December 31, 1998 as compared to $0.7 million for the year ended
December 31, 1997. The higher income was due primarily to lower foreign
exchange loss in the year ended December 31, 1998 as compared to the year ended
December 31, 1997.

Net Income (Loss). Primarily as a result of factors discussed above, net
loss for the year ended December 31, 1998 was $28.0 million compared to net
income of $10.5 million for the year ended December 31, 1997.

Adjusted EBITDA. Primarily as a result of factors discussed above,
Adjusted EBITDA increased by 30.7% in 1998 to $117.8 million from $90.1 million
in 1997.

EFFECT OF CHANGES IN EXCHANGE RATES

In general, our results of operations are affected by changes in foreign
exchange rates. Subject to market conditions, we price our products in our
foreign operations in local currencies. As a result, a decline in the value of
the U.S. dollar relative to these other currencies can have a favorable effect
on our profitability, and an increase in the value of the dollar relative to
these other currencies can have a negative effect on our profitability.
Exchange rate fluctuations increased/(decreased) comprehensive income by $1.9
million, $3.3 million and $(22.3) million for the years ended December 31,
1997, 1998 and 1999, respectively.

EURO CONVERSION

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

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

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

33
<PAGE>

DERIVATIVES

We enter into interest rate swap agreements to hedge the exposure to
increasing rates with respect to our senior credit agreement. The differential
to be paid or received as a result of these swap agreements is accrued as
interest rates change and recognized as an adjustment to interest expense
related to the senior credit agreement. We also enter into forward exchange
contracts, when appropriate, to hedge the exchange rate exposure on
transactions that are denominated in a foreign currency.

LIQUIDITY AND CAPITAL RESOURCES

In 1997, 1998 and 1999, we generated $164.2 million of cash from
operations and $758.9 million from increased indebtedness. This $923.1 million
was primarily used to fund $358.1 million of capital expenditures, $74.5
million of investments, make distributions of $34.9 million to our
predecessor's partners, make a $409.3 million recapitalization cash
distribution to our predecessor's previous owners, net of owner note
repayments, make $39.2 million of debt issuance fee payments and for $7.1
million of other net uses. In the quarter ended April 2, 2000, we funded
through our various borrowing arrangements $1.5 million of operating activities
and $38.0 million of capital expenditures.

Our senior credit agreement currently consists of four term loans to our
subsidiary, Graham Packaging Company, totaling $570 million and two revolving
loan facilities to Graham Packaging Company totaling $255 million. Unused
availability under our revolving credit facilities at April 2, 2000, on a pro
forma basis after giving effect to the offering and application of the proceeds
therefrom, would have been $170.2 million, $70.2 million of which would have
been under our revolving credit facility and $100.0 million of which would have
been under our growth capital revolving credit facility. As of June 30, 2000,
approximately $125 million of loans were outstanding under our revolving credit
facility and approximately $40 million of loans were outstanding under our
growth capital revolving credit facility. The obligations of Graham Packaging
Company under our senior credit agreement are guaranteed by us and by our U.S.
subsidiaries. The term loans are payable in quarterly installments through
January 31, 2007, and, on a pro forma basis after giving effect to the offering
and the application of estimated proceeds therefrom, would require payments of
$11.8 million in 2000 (of which $3.7 million had been paid as of April 2,
2000), $14.5 million in 2001, $18.1 million in 2002, $19.9 million in 2003,
$67.3 million in 2004 and a total of $276.4 million from 2005 through 2007. We
expect to fund scheduled debt repayments from cash from operations and unused
lines of credit. The revolving loan facilities expire on January 31, 2004.

Our senior credit agreement contains certain affirmative and negative
covenants as to our operations and financial condition, as well as certain
restrictions on the payment of dividends and other distributions to us.
Substantially all of our domestic tangible and intangible assets are pledged as
collateral pursuant to the terms of our senior credit agreement. See
"Description of Certain Indebtedness".

Our 1998 recapitalization also included the issuance by our subsidiaries,
Graham Packaging Company and GPC Capital Corp. I, of $225 million of senior
subordinated notes due 2008 and the issuance by us of $169 million aggregate
principal amount at maturity of senior discount notes due 2009 which yielded
gross proceeds of $100.6 million. At April 2, 2000, the aggregate accreted
value of the senior discount notes was $126.4 million. The senior subordinated
notes are unconditionally guaranteed on a senior subordinated basis by us and
mature on January 15, 2008, with interest payable on $150 million at a fixed
rate of 8.75% and with interest payable on $75 million at LIBOR plus 3.625%.
The senior discount notes mature on January 15, 2009, with cash interest
payable semi-annually beginning July 15, 2003 at 10.75%. The effective interest
rate to maturity on the senior discount notes is 10.75%. At April 2, 2000, our
outstanding indebtedness was $1,060 million and, on a pro forma basis after
giving effect to the offering and the applications of the proceeds, would have
been $854.8 million.

34
<PAGE>

Total capital expenditures for 1997, 1998, and 1999 were $53.2 million,
$133.9 million and $171.0 million, respectively. We believe that capital
investment to maintain and upgrade property, plant and equipment is important
to remain competitive. We estimate that the annual capital expenditures
required to maintain our current facilities are currently approximately $30
million per year. Additional capital expenditures beyond this amount will be
required to expand capacity.

Capital expenditures for the quarter ended April 2, 2000 were $38.0
million. For the fiscal year 2000, we expect to incur approximately $200 million
of capital expenditures. However, total capital expenditures for 2000 will
depend on the size and timing of growth related opportunities. Our principal
sources of cash to fund capital requirements will be net cash provided by
operating activities and borrowings under our senior credit agreement.

Under our senior credit agreement, we are subject to restrictions on the
payment of dividends or other distributions to us, except that our subsidiary,
Graham Packaging Company, may pay dividends or other distributions to us:

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 our company held
by then present or former officers or employees of our company, Graham
Packaging Company or its subsidiaries or by any employee stock ownership
plan upon that person's death, disability, retirement or termination of
employment or other circumstances with certain annual dollar limitations;
and

o to finance, starting on July 15, 2003, the payment of cash interest
payments by us on our senior discount notes.

In June 1998, we finalized the settlement of the JCI-Schmalbach-Lubeca
litigation. The amounts paid in settlement, as well as estimated litigation
expenses and professional fees, did not differ materially from the amounts
accrued in special charges and unusual items in respect thereof for the year
ended December 31, 1997. The cash paid in settlement was funded by drawdowns
under our senior credit agreement.

NEW ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED

In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities". This
standard establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts which are collectively referred to as derivatives, and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value.

In June 1999, the Financial Accounting Standards Board issued SFAS No.
137, "Accounting for Derivative Instruments and Hedging Activities -- Deferral
of Effective Date of FASB Statement No. 133". This standard defers the
effective date of FASB Statement No. 133, or "SFAS No. 133", to all fiscal
quarters of all fiscal years beginning after June 15, 2000. Management has not
completed its review of SFAS No. 133 and has not determined the impact adoption
will have on our results of operations or financial position.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We had significant long and short-term debt commitments outstanding as of
December 31, 1999. These on-balance sheet financial instruments, to the extent
they provide for variable rates of interest, expose us to interest rate risk.
We manage our interest rate risk by entering into interest rate swap
agreements. All of our derivative financial instrument transactions are entered
into for non-trading purposes.

35
<PAGE>

To the extent that our financial instruments, including off-balance sheet
derivative instruments, expose us to interest rate risk and market risk, they
are presented in the table below. For variable rate debt obligations, the table
presents principal cash flows and related actual weighted average interest
rates as of December 31, 1999. For fixed rate debt obligations, the table
presents 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, 1999 for the receive rate.

<TABLE>
<CAPTION>
EXPECTED MATURITY DATE OF LONG-TERM DEBT (INCLUDING CURRENT PORTION) AND INTEREST RATE
SWAP AGREEMENTS AT DECEMBER 31, 1999
--------------------------------------------------------------------------------------------
2000 2001 2002 2003 2004 THEREAFTER TOTAL
------------ ------------ ------------ ------------ ------------- ------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest rate sensitive
liabilities:
Variable rate borrowings,
including short-term
amounts ...................... $ 24,369 $ 21,133 $ 25,729 $ 28,149 $ 186,101 $ 458,524 $ 744,005
Average interest rate ........ 7.18% 9.38% 7.88% 7.84% 8.28% 8.67%
Fixed rate borrowings ......... -- -- -- -- -- 273,092 273,092
Average interest rate ........ -- -- -- -- -- 9.60%
Total interest rate
sensitive liabilities: ..... $ 24,369 $ 21,133 $ 25,729 $ 28,149 $ 186,101 $ 731,616 $1,017,097
======== ======== ======== ======== ========= ========= ==========
Derivatives matched
against liabilities: -- $150,000 $200,000 $100,000 -- -- $ 450,000
Pay fixed swaps
Pay rate ..................... -- 5.51% 5.81% 5.77% -- -- --
Receive rate ................. -- 6.47% 6.47% 6.47% -- -- --

<CAPTION>
FAIR VALUE
DECEMBER
31, 1999
-------------
(IN THOUSANDS)
<S> <C>
Interest rate sensitive
liabilities:
Variable rate borrowings,
including short-term
amounts ...................... $ 744,005
Average interest rate ........
Fixed rate borrowings ......... 256,670
Average interest rate ........
Total interest rate
sensitive liabilities: ..... $1,000,675
==========
Derivatives matched
against liabilities: $ 9,283
Pay fixed swaps
Pay rate ..................... --
Receive rate ................. --
</TABLE>

<TABLE>
<CAPTION>
EXPECTED MATURITY DATE OF LONG-TERM DEBT (INCLUDING CURRENT PORTION) AND INTEREST RATE
SWAP AGREEMENTS AT DECEMBER 31, 1998
-----------------------------------------------------------------------------------------
1999 2000 2001 2002 2003 THEREAFTER TOTAL
------------ ------------ ------------ ------------ ------------ ------------ -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest rate sensitive
liabilities:
Variable rate borrowings,
including short-term
amounts ...................... $ 11,929 $ 15,192 $ 20,208 $ 25,771 $ 28,905 $ 512,695 $614,700
Average interest rate ........ 6.39% 7.46% 7.41% 7.36% 7.28% 8.02%
Fixed rate borrowings ......... -- -- -- -- -- 260,697 260,697
Average interest rate ........ -- -- -- -- -- 9.60%
Total interest rate
sensitive liabilities: ..... $ 11,929 $ 15,192 $ 20,208 $ 25,771 $ 28,905 $ 773,392 $875,397
======== ======== ======== ======== ======== ========= ========
Derivatives matched
against liabilities: -- -- $150,000 $200,000 $100,000 -- $450,000
Pay fixed swaps
Pay rate ..................... -- -- 5.51% 5.81% 5.77% -- --
Receive rate ................. -- -- 5.56% 5.56% 5.56% -- --

<PAGE>
<CAPTION>
FAIR VALUE
DECEMBER
31, 1998
-----------
(IN
THOUSANDS)
<S> <C>
Interest rate sensitive
liabilities:
Variable rate borrowings,
including short-term
amounts ...................... $614,700
Average interest rate ........
Fixed rate borrowings ......... 271,400
Average interest rate ........
Total interest rate
sensitive liabilities: ..... $886,100
========
Derivatives matched
against liabilities: $ (8,784)
Pay fixed swaps
Pay rate ..................... --
Receive rate ................. --
</TABLE>

We also enter into forward exchange contracts, when considered
appropriate, to hedge foreign exchange rate exposure on transactions that are
denominated in a foreign currency.

36
<PAGE>

BUSINESS

We are a worldwide leader in the design, manufacture and sale of customized
blow molded plastic containers for the branded food and beverage, household and
personal care, and automotive lubricants markets with 57 plants throughout North
America, Europe and Latin America. Our primary focus is to operate in select
markets that will position us to benefit from the growing conversion to high
performance plastic packaging from more commodity packaging. We target branded
consumer product manufacturers for whom customized packaging design is a
critical component in their efforts to differentiate their products to
consumers. We initially pursue these attractive product areas with one or two
major consumer products companies that we expect will lead the conversion to
plastic packaging in a given category. We utilize our innovative design,
engineering and technological capabilities to deliver highly customized, high
performance products to our customers in these areas in order to distinguish and
increase sales of their branded products. We collaborate with our customers
through joint initiatives in product design and cost reduction, and innovative
operational arrangements, which include on-site manufacturing facilities.

Since the beginning of 1998, we have grown net sales at a compounded
annual growth rate of over 18% as a result of our aggressive capital investment
and focus on the high growth food and beverage market which is growing rapidly
due to the accelerating conversion trend from glass, paper and metal containers
to plastic packaging. With leading positions in each of our core businesses, we
believe we are well positioned to continue to benefit from the plastic
conversion trend that is still emerging on a global basis and offers us
opportunities for attractive returns on investment.

We have an extensive blue-chip customer base that includes many of the
world's largest branded consumer products companies such as Castrol, Danone,
Dial, Pennzoil-Quaker State, Procter & Gamble, Quaker Oats, Tropicana,
Unilever, Valvoline and Welch's. Approximately one third of our manufacturing
plants are located on-site at our customers' manufacturing facilities, which we
believe provides a competitive advantage in maintaining and growing customer
relationships. The majority of our sales are made pursuant to long-term
customer contracts, which include resin pass-through provisions that mitigate
the effect of resin price movements on our profitability. Our containers are
made from various plastic resins, including polyethylene terephthalate, or PET,
high density polyethylene, or HDPE, and polypropylene, or PP. In 1999, our top
20 customers comprised over 76% of our net sales and have been customers of
ours for an average of 16 years. During the first quarter of 2000, we generated
79%, 18% and 3% of our net sales in North America, Europe and Latin America,
respectively.

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

OUR MARKETS

We are a leading supplier of plastic packaging in each of our three
primary end-use markets: food and beverage, household and personal care, and
automotive lubricants.

Food and Beverage -- 48% of our net sales for the quarter ended April 2, 2000

We produce containers for shelf-stable, refrigerated and frozen juices,
non-carbonated juice drinks, teas, isotonics, yogurt and nutritional drinks,
soups, toppings, sauces, jellies and jams. Our 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. We believe, based on internal
estimates, that we have the leading domestic market position for plastic
containers for juice, frozen concentrate, pasta sauce and yogurt drinks and the
leading position in Europe for plastic containers for yogurt drinks. We believe
that this leadership position creates significant opportunity for us to
participate in the anticipated conversion to plastic in the wider nutritional
drink market. We are also one of only three domestic market participants that
are leading large-scale product conversions to hot-fill PET containers.

37
<PAGE>

Our customers include a large number of major food and beverage companies,
which produce a variety of brand name products. Select customers include:

<TABLE>
<CAPTION>
CUSTOMER SELECTED BRAND(S) / PRODUCT(S)
------------------------- ------------------------------------------------------------------------------------------------------
<S> <C>
Arizona Arizona (Registered Trademark) / Beverages
Campbell Soup Liebig (Registered Trademark) / Ready-to-Serve Soups; V-8 (Registered Trademark) / Juice Drinks
Danone Danimals (Registered Trademark) and Actimel (Registered Trademark) / Yogurt and Nutritional Drinks
Heinz Heinz (Registered Trademark) / Ketchup
Hershey Hershey's (Registered Trademark) / Toppings
Minute Maid Hi-C (Registered Trademark) / Juice Drinks
Nestle Quik (Registered Trademark) / Toppings and Milk Mix; Nescafe (Registered Trademark) / Instant
Premium Coffee
Ocean Spray Cranberries Ocean Spray (Registered Trademark) / Beverages
Quaker Oats Gatorade (Registered Trademark) / Beverages
TreeTop TreeTop (Registered Trademark) / Beverages and Applesauce; Seneca (Registered Trademark) /
Applesauce
Triarc Snapple (Registered Trademark) / Beverages
Tropicana Tropicana (Registered Trademark) , Twister (Registered Trademark) and Dole (Registered Trademark) /
Beverages
Unilever Ragu (Registered Trademark) / Pasta Sauces; Amora (Registered Trademark) / Sauces and Condiments
Welch's Welch's (Registered Trademark) / Beverages, Jams, Jellies and Frozen
Concentrate; Bama (Registered Trademark) / Jams and Jellies

<CAPTION>
CUSTOMER MATERIAL TYPE
------------------------- --------------------
<S> <C>
Arizona Hot-fill PET / PP
Campbell Soup Hot-fill PET / HDPE
Danone HDPE
Heinz PP
Hershey HDPE
Minute Maid HDPE
Nestle HDPE
Ocean Spray Cranberries Hot-fill PET
Quaker Oats Hot-fill PET
TreeTop Hot-fill PET
Triarc Hot-fill PET
Tropicana Hot-fill PET / HDPE
Unilever Hot-fill PET / PP
Welch's Hot-fill PET / HDPE
</TABLE>

Over the last three fiscal years, our food and beverage sales have grown
at a compound annual growth rate of over 40%, benefitting 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. We have been
a leader in the conversion of multi-serve juices that has occurred during the
last few years, and we helped initiate the conversion of containers for
single-serve juice drinks, frozen juice concentrate and wide-mouth PET
containers for sauces, jellies and jams. Our 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. Our oxygen barrier PET container coating
and our multi-layer barrier technologies also extend the shelf life and protect
the quality and flavor of our customers' products.

With over $170 million of capital invested in our hot-fill PET food and
beverage business since the beginning of 1997, we have been a major participant
in this rapidly growing area. Given the strength of our existing customer base,
our recent capital investments and our technological and design capabilities, we
believe that we are well positioned to benefit from the estimated 65% of the
domestic hot-fill food and beverage market that has yet to convert to plastic.
In addition, we believe that significant conversion opportunities exist in
hot-fill product lines that have just begun to convert to plastic, and from
international conversion opportunities.

Household and Personal Care -- 26% of our net sales for the quarter ended
April 2, 2000

In our household and personal care business, we are a leading supplier of
plastic containers for products such as liquid fabric care, dish care,
hard-surface cleaners, hair care and body wash. We continue to benefit as
products such as liquid fabric care detergents, hard-surface cleaners and
liquid automatic dishwashing detergents, which are packaged in plastic
containers, capture an increasing share from powdered detergents and cleaners,
which are predominantly packaged in paper-based containers. We also expect
rapid growth in demand for household and personal care plastic containers
internationally to be a key contributor to our business.

38
<PAGE>

Select household and personal care customers include:

<TABLE>
<CAPTION>
CUSTOMER SELECTED BRAND(S) / PRODUCT(S)
---------------------- ---------------------------------------------------------------------------------------------------------
<S> <C>
Colgate Palmolive Ajax (Registered Trademark) , Fab (Registered Trademark) , Dynamo (Registered Trademark) / Fabric Care;
Octagon (Registered Trademark) / Dish Care
The Dial Corporation Purex (Registered Trademark) / Fabric Care; Dial (Registered Trademark) / Personal Care
Henkel Dishcare, Hard-Surface Cleaners, Household Cleaners and Personal Care
Johnson & Johnson Johnson & Johnson (Registered Trademark) / Hair Care
L'Oreal L'Oreal (Registered Trademark) and Garnier Laboratories (Registered Trademark) / Hair Care
Procter & Gamble Mr. Clean (Registered Trademark) , Top Job (Registered Trademark) and Comet (Registered Trademark) /
Household Cleaners; Cascade (Registered Trademark) / Dish Care; Febreeze (Registered Trademark) , Ariel
(Registered Trademark) , Tide (Registered Trademark) , Lenor (Registered Trademark) and Downy (Registered
Trademark) / Fabric Care
Reckitt Benckiser Woolite (Registered Trademark) / Fabric Care and Vanish (Registered Trademark) / Household
Cleaners
Unilever All (Registered Trademark) , Wisk (Registered Trademark) , Surf (Registered Trademark) , Snuggle
(Registered Trademark) and Final Touch (Registered Trademark) /
Fabric Care; Dove (Registered Trademark) , Suave (Registered Trademark) and Lever 2000 (Registered
Trademark) / Personal Care; Elida Gibbs (Registered Trademark) and Faberge (Registered Trademark) / Hair
Care

<CAPTION>
CUSTOMER MATERIAL TYPE
---------------------- ----------------
<S> <C>
Colgate Palmolive HDPE
The Dial Corporation PET / HDPE / PP
Henkel PET / HDPE / PP
Johnson & Johnson HDPE
L'Oreal HDPE
Procter & Gamble PET / HDPE / PP
Reckitt Benckiser PET / HDPE
Unilever PET / HDPE / PP
</TABLE>

Automotive Lubricants -- 26% of our net sales for the quarter ended April 2,
2000

We believe, based on internal estimates, that we are 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 73% market share in the United States, based on 1998 unit
sales. We have been producing motor oil containers since the conversion to
plastic began 22 years ago and have expanded our market share and maintained
margins by partnering with our customers to improve product quality and reduce
costs through design improvement, reduced container weight and manufacturing
efficiencies. Our joint product design and cost efficiency initiatives with our
customers have also strengthened our service and customer relationships.

We expanded our operations into portions of Latin 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. We anticipate similar growth
opportunities for us in other economically developing markets where the use of
motorized vehicles is rapidly growing, including Asia and other regions in
Latin America. We also manufacture containers for other automotive products,
such as antifreeze and automatic transmission fluids.

Our major automotive lubricants customers include:

<TABLE>
<CAPTION>
CUSTOMER SELECTED BRAND(S) / PRODUCT(S)
-------------------------- -----------------------------------------------------------------------------------------------------
<S> <C>
Ashland Valvoline (Registered Trademark) , Napa (Registered Trademark) and CarQuest (Registered Trademark)
/ Motor Oil; Zerex (Registered Trademark) / Antifreeze
Castrol Castrol (Registered Trademark) and Syntec (Registered Trademark) / Motor Oil; Super Clean
(Registered Trademark) / Heavy Duty Cleaner
Chevron Products Company Chevron (Registered Trademark) and Amoco (Registered Trademark) / Motor Oil
Equilon Texaco (Registered Trademark) , Havoline (Registered Trademark) and Shell (Registered Trademark) /
Motor Oil and Antifreeze
ExxonMobil Mobil (Registered Trademark) / Motor Oil
Pennzoil - Quaker State Pennzoil (Registered Trademark) and Quaker State (Registered Trademark) / Motor Oil
Petrobras Petrobras (Registered Trademark) / Motor Oil
Petro - Canada Petro-Canada (Registered Trademark) / Motor Oil
Sun Refining Sun (Registered Trademark) and Kendall (Registered Trademark) / Motor Oil

<CAPTION>
CUSTOMER MATERIAL TYPE
-------------------------- --------------
<S> <C>
Ashland HDPE
Castrol HDPE
Chevron Products Company HDPE
Equilon HDPE
ExxonMobil HDPE
Pennzoil - Quaker State HDPE
Petrobras HDPE
Petro - Canada HDPE
Sun Refining HDPE
</TABLE>

39
<PAGE>

OUR STRENGTHS

STRATEGIC FOCUS ON RAPIDLY GROWING CUSTOM PLASTIC CONTAINER
INDUSTRY. Changing consumer preferences and technological advancements have
accelerated the conversion to plastic containers from other materials. The
advantages of plastic containers, such as their lighter weight, shatter
resistance, resealability and ease of opening and dispensing, as well as the
improved economics and performance of plastics, have resulted from
technological enhancements. We have been a leader domestically in the
conversion to plastic packaging for many major product categories such as
shelf-stable, chilled and frozen concentrate juices, food products, liquid
laundry detergent, household cleaners and motor oil, and believe we are well
positioned to benefit from the large number of containers which have yet to be
converted to plastic. Our growing international presence positions us well to
capitalize on growth in plastic packaging overseas which we expect, in many
markets, to be driven by conversions similar to those experienced in the United
States.

After the offering, we will be the only publicly traded company in North
America that is solely focused on the manufacture and sale of customized
plastic containers. While some of our competitors have significant plastic
container operations, they also tend to have large concentrations of sales and
capital invested in lower growth and declining packaging materials such as
glass, metal and paper, or tend to produce more commodity-like plastic
packaging with low value-added design and performance characteristics.

LEADERSHIP POSITION IN CORE MARKETS. We enjoy leading positions in all of
our core markets. We believe, based on internal estimates, that we have the
leading domestic market position for plastic containers for juice, frozen
concentrate, pasta sauce and yogurt drinks and the leading position in Europe
for plastic containers for yogurt drinks. We are one of only three domestic
market participants that are leading large-scale product conversions to hot-fill
PET containers. We also believe, based on internal estimates, that we have the
number one market position in the one quart/one liter motor oil container
markets in the United States, Canada and Brazil. Our leadership positions in our
core markets have enabled us to utilize high-speed production systems and
achieve significant economies of scale, thereby making us a low cost
manufacturer.

SUPERIOR PRODUCT DESIGN AND DEVELOPMENT CAPABILITIES. Our ability to
develop new, innovative containers to meet the design and performance
requirements of our customers has established us as a market leader. We have
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 our customers' products, we believe that our innovative packaging
stimulates consumer demand and drives further conversion to plastic packaging.
Consequently, our strong design capabilities have been especially important to
our food and beverage customers, who generally use packaging to differentiate
and add value to their brands while spending less on promotion and advertising.
We have been awarded significant contracts based on these unique product design
capabilities that we believe set us apart from our competition. Some of our
recent design and conversion successes include:

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
beverage packages, such as: Gatorade 10 ounce, Danimals 100 milliliter and
93 milliliter yogurt drinks, Snapple 20 ounce and Tropicana Twister 1.75
liter containers.

40
<PAGE>

Our innovative designs have also been recognized by a number of customers
and industry organizations, including our Welch's frozen juice can (1999
AmeriStar and WorldStar design awards, 1998 Refrigerated & Frozen Foods Package
of the Year), Tropicana Twister container (1999 AmeriStar and WorldStar design
awards), Dannon Danimals yogurt drink container (2000 Packaging World Magazine
Dupont Food Award) and Seneca applesauce jar (1998 DuPont Diamond Award, 1998
Food and Drug Package of the Year).

SUCCESSFUL BUSINESS MODEL UTILIZING ON-SITE FACILITIES. Approximately one
third of our 57 manufacturing facilities are located on-site at our customers'
plants, creating innovative operational arrangements. On-site plants enable us
to work more closely with our customers, facilitating just-in-time inventory
management, generating significant savings opportunities through process
re-engineering, eliminating costly shipping and handling charges, reducing
working capital needs and fostering long-term customer relationships. In many
cases, our on-site operations are integrated with our customers' manufacturing
operations so that deliveries are made, as needed, by direct conveyance to the
customers' filling lines. Since the beginning of 1998, we have established two
new on-site facilities at customers' facilities, including the first on-site
plant for Gatorade, which we believe is one of the largest hot-fill customers
in the world, and are currently building two additional on-site facilities. We
have also established an on-site pre-form plant at one of our resin supplier's
facilities, which is unique in our industry and further demonstrates our
innovative operational strategies. This plant supplies container pre-forms that
are blown into containers at our blow molding facilities, enabling us to
improve the quality and cost of our end products.

DIVERSIFIED BLUE CHIP CUSTOMER BASE. We have enjoyed long-standing
relationships with most of our larger customers, with 76% of our net sales
generated by our top 20 customers in 1999. The majority of these customers are
under long-term contracts, with whom we have been doing business for an average
of over 16 years. We are the leading custom plastic packaging supplier in
several geographic regions and/or for several brands of most of our top
customers. In addition, we are a sole source provider for many of our top
customers. We have strengthened our customer relationships by forming joint
initiatives with our customers relating to product design, cost-savings and
production quality efforts. These efforts have led to awards by several of our
major customers, including the Chevron Quality Achievement Award and the Dial
Corporation Select Supplier Award for Quality and being named Ocean Spray
Supplier of the Year and Welch's Supplier of the Year.

EXPERIENCED MANAGEMENT TEAM WITH STRONG EQUITY INCENTIVES. We have a
talented senior management team, which has a track record of achieving
profitable growth, implementing new packaging technology, entering new markets,
maintaining our blue chip customer base and effectively integrating
complementary acquisitions. Our top twenty managers have an average of 19 years
work experience in the packaging industry and 15 years with us. Our senior
managers are meaningfully invested in our performance, which gives them an
ongoing stake in the creation of shareholder value.

OUR STRATEGY

LEVERAGE OUR DESIGN AND ENGINEERING EXPERTISE TO CAPITALIZE ON CONVERSIONS
TO PLASTIC CONTAINERS. We have demonstrated significant success in designing
innovative plastic containers that add value through innovative design shapes
and features, such as reduced weight, handles, grips, view stripes, pouring
features, graphic-intensive customized labeling and customized blow molding and
specialized performance and structural requirements, such as hot-fill
capability, oxygen barriers, flavor protection, recycled material usage and
multi-layering. We seek to compete in select plastic packaging areas which
provide us with profitable, high-growth opportunities to supply our customers
with customized value-added packaging that can increase demand for their
products and help to accelerate the general plastic conversion trend.
Significant opportunities exist in the United States and abroad to capture an
even greater share of anticipated large scale plastic conversions in areas such
as chilled, frozen and hot-fill beverages and hot-fill PET for shelf-stable
food products including pickles, sauces,

41
<PAGE>

jellies and jams. In addition, we believe that significant conversion
opportunities exist in hot-fill product lines that have not yet begun to convert
to plastic, but would benefit from distinctive product design and improved
performance.

MAINTAIN AND EXPAND POSITION WITH KEY CUSTOMERS. We plan to maintain and
expand our position with global branded consumer companies that require highly
customized features to differentiate their products on store shelves. Central
to this strategy are the continued:

o delivery of superior customer service;

o development of innovative and distinctive packaging designs;

o opening of new on-site facilities;

o ongoing improvement of our low-cost manufacturing operations; and

o global expansion alongside key customers.

TARGETED CAPITAL INVESTMENT AND EXPANSION OF OUR ON-SITE PLANT NETWORK. We
expect to continue our disciplined approach to capital investments, whereby we
carefully evaluate new business initiatives and our ability to generate
targeted returns on new capital invested. As part of this strategy, we intend
to expand our on-site network of manufacturing facilities with both existing
and new customers. We will continue to focus on identifying opportunities both
domestically and internationally where on-site relationships would provide a
strategic benefit for both us and our customers and further strengthen our
relationship. Five out of nine domestic and international facilities that we
have established since the beginning of 1998 have been located on site at
customer and vendor facilities, including two on-site facilities that are
currently under construction, and we are currently evaluating additional
on-site facilities with several of our customers. We believe that our on-site
strategy will be particularly effective in Europe as many of our large
customers continue to consolidate their filling facilities. In addition to our
primary strategy of organic growth, we plan to consider select investments,
joint ventures and strategic acquisitions to complement our growth objectives
as opportunities arise.

CUSTOMERS

Substantially all of our sales are made to major branded consumer products
companies located in the United States and abroad. Our customers demand a high
degree of packaging design and engineering to accommodate complex container
shapes, performance and material requirements and quick and reliable delivery.
Our contracts typically contain provisions allowing for price adjustments based
on the market price of resins and colorants and the cost of energy and labor,
among other factors.

In many cases, we are the sole supplier of our customers' custom plastic
container requirements nationally, regionally or for a specific brand. For the
year ended December 31, 1999, Unilever accounted for 10.4% of our total net
sales and was the only customer that accounted for over 10% of our net sales
for the year.

INTERNATIONAL OPERATIONS

We have significant operations outside the United States in the form of
wholly owned subsidiaries, cooperative joint ventures and other arrangements.
We have 24 plants located in countries outside of the United States, including
Argentina (2), Belgium (1), Brazil (5), Canada (4), France (4), Germany (2),
Hungary (1), Italy (2), Poland (1), Turkey (1), and the United Kingdom (1).

Argentina, Brazil and Mexico. In Brazil, we have four on-site plants for
motor oil packaging, including one for Petrobras Distribuidora S.A., the
national oil company of Brazil. We also have an off-site plant in Brazil for
our motor oil and agricultural and chemical businesses. On April 30, 1997, we
acquired 80% of certain assets and assumed 80% of certain liabilities of
Rheem-Graham Embalagens Ltda. in Brazil, which is now known as "Graham
Packaging do Brasil". In February 1998, we acquired the residual 20% ownership
interest in Graham Packaging do Brasil. In Argentina, we

42
<PAGE>

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 June 2000, in order to maximize
efficiency, we shifted some of the volume from our Argentine operations produced
for Brazilian customers to our Brazilian facilities and closed one of our
facilities in Argentina. In Mexico, we 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. We have an on-site plant in each of Belgium, Germany and Hungary
and nine off-site plants in France, Germany, Italy, Turkey and the United
Kingdom, 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 50% owned joint venture in Poland, we manufacture HDPE
containers for household and personal care and liquid food products.

Canada. We have three off-site facilities and one on-site facility in
Canada to service Canadian and northern U.S. customers. One of the off-site
facilities is located near Montreal and the other three facilities are near
Toronto. These facilities produce products for all three of our target end-use
markets.

Additional geographical operating segment information is provided in the
financial statements included in the prospectus.

COMPETITION

We face substantial regional and international competition across our
product lines from a number of well established businesses. Several of our
competitors are larger and have greater financial and other resources than we
do. We believe long-term success is dependent on our ability to provide
superior levels of service, our speed to market and our ability to develop
product innovations and improve our production technology and expertise. Other
important competitive factors include rapid delivery of products, production
quality and price.

MARKETING AND DISTRIBUTION

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

MANUFACTURING

A critical component of our strategy is to locate manufacturing plants on
site, reducing expensive shipping and handling charges and increasing
production and distribution efficiencies. We are a leader in providing on-site
manufacturing arrangements, with over one third of our 57 facilities on site at
customer and vendor facilities. Within our 57 plants, we run over 400
production lines. We sometimes dedicate particular production lines within a
plant to better service customers. Our 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, we run our plants seven days a week.

We maintain a program of quality control with respect to suppliers, line
performance and packaging integrity for our containers. Our production lines
are equipped with various automatic inspection machines that electronically
inspect containers. Additionally, we inspect and test our product samples on
the production line for proper dimensions and performance. We also inspect our
products after packaging. We crush and recycle containers not meeting our
standards. We monitor and update our inspection programs to keep pace with
modern technologies and customer demands. Quality control laboratories are
maintained at each manufacturing facility to test our products.

43
<PAGE>

We have highly modernized equipment in our 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 for custom PET
containers. We are also pursuing development initiatives in barrier
technologies to strengthen our position in the food and beverage business. In
the past, we have achieved substantial cost savings in our 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 1997 were approximately $53.2 million, for
1998 approximately $133.9 million and for 1999 approximately $171.0 million. We
believe that capital investment to maintain and upgrade property, plant and
equipment is important to remain competitive. We estimate that the annual
capital expenditures required to maintain our current facilities are currently
approximately $30 million per year. Additional capital expenditures beyond this
amount will be required to expand capacity.

PRODUCTS AND RAW MATERIALS

PET containers, which are 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, certain food products, chilled
juices and frozen juice concentrates.

PET and HDPE resins constitute the primary raw materials used to make our
products. These materials are available from a number of suppliers, and we are
not dependent upon any single supplier. We maintain what we believe is an
adequate inventory to meet demands, but there is no assurance this will be true
in the future. Our 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.

Through our wholly owned subsidiary, Graham Recycling Company, L.P., we
operate one of the largest HDPE bottles-to-bottles recycling plants in the
world, and more than 70% of our North American HDPE units produced contain
recycled HDPE bottles. The recycling plant is located near our headquarters in
York, Pennsylvania.

EMPLOYEES

As of June 30, 2000, we had approximately 4,000 employees, 2,500 of which
were located in the United States. Approximately 78% of our employees are
hourly wage employees, 46% of whom are represented by various labor unions and
are covered by various collective bargaining agreements that expire between
February 2001 and April 2004. During the past three years, our subsidiary in
France, Graham Packaging France, S.A.S., has experienced labor stoppages on
several occasions, none of which exceeded one day in duration. We believe that
we enjoy good relations with our employees.

ENVIRONMENTAL MATTERS

Our 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 certain 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 certain circumstances, 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

44
<PAGE>

properties. Contamination at properties that we formerly owned or operated as
well as at properties that we currently own or operate, and properties to which
we sent hazardous substances, may result in our liability under environmental
laws. We are not aware of any material noncompliance with the environmental
laws currently applicable to us and we are not the subject of any material
claim for liability with respect to contamination at any location. For our
operations to comply with environmental laws, we have incurred and will
continue to incur costs, which were not material in fiscal 1999 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 certain 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 certain
plastic packaging, result in greater costs for plastic packaging manufacturers,
or otherwise impact our business. Some consumer products companies (including
some of our 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. We operate one of the largest HDPE
bottles-to-bottles recycling plants in the world and more than 70% of our HDPE
units produced in North America contain materials from recycled HDPE bottles.
We believe that to date these initiatives and developments have not materially
adversely affected us.

INTELLECTUAL PROPERTY

We hold various patents and trademarks. While in the aggregate our patents
are of material importance to our business, we believe that our business is not
dependent upon any one patent or trademark. We also rely on unpatented
proprietary knowhow and continuing technological innovation and other trade
secrets to develop and maintain our competitive position. There can be no
assurance, however, that others will not obtain knowledge of this proprietary
knowhow through independent development or other access by legal means. In
addition to our own patents and proprietary knowhow, we are a party to certain
licensing arrangements and other agreements authorizing us to use certain other
proprietary processes, knowhow and related technology and/or to operate within
the scope of certain patents owned by other entities. We also have licensed or
sublicensed certain intellectual property rights to third parties.

PROPERTIES

We currently own or lease 57 plants located in the United States, Canada,
Argentina, Brazil, Belgium, France, Germany, Hungary, Italy, Poland, Turkey and
the United Kingdom. Twenty of our plants are located on site at customer and
vendor facilities. Our operation in Poland is pursuant to a joint venture
arrangement where we own a 50% interest. In 1999, we consolidated and relocated
our headquarters to a facility located in York, Pennsylvania. We believe that
our plants, which are of varying ages and types of construction, are in good
condition, are suitable for our operations and generally are expected to provide
sufficient capacity to meet our requirements for the foreseeable future.

45
<PAGE>

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

<TABLE>
<CAPTION>
ON SITE
LOCATION OR OFF SITE LEASED/OWNED SIZE (SQ. FT.)
----------------------------------- ------------- -------------- ---------------
<S> <C> <C> <C>
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 (b) Off Site Leased 150,143
8. Emigsville, Pennsylvania Off Site Leased 148,300
9. Levittown, Pennsylvania Off Site Leased 148,000
10. Rancho Cucamonga, California Off Site Leased 143,063
11. Santa Ana, California Off Site Owned 127,680
12. Muskogee, Oklahoma Off Site Leased 125,000
13. Woodridge, Illinois Off Site Leased 124,137
14. Atlanta, Georgia Off Site Leased 112,400
15. Cincinnati, Ohio Off Site Leased 111,669
16. Bradford, Pennsylvania Off Site Leased 90,350
17. Berkeley, Missouri Off Site Owned 75,000
18. Jefferson, Louisiana Off Site Leased 58,799
19. Cambridge, Ohio On Site Leased 57,000
20. Port Allen, Louisiana On Site Leased 56,721
21. Shreveport, Louisiana On Site Leased 56,400
22. Bordentown, New Jersey On Site Leased 55,000
23. Richmond, California Off Site Leased 54,985
24. Houston, Texas Off Site Owned 52,500
25. New Kensington, Pennsylvania On Site Leased 48,000
26. Darlington, South Carolina On Site Leased 43,200
27. N. Charleston, South Carolina On Site Leased 40,000
28. Bradenton, Florida On Site Leased 35,000
29. Lakeland, Florida (c) Off Site Leased 33,360
30. Vicksburg, Mississippi On Site Leased 31,200
31. Tulsa, Oklahoma On Site Leased 28,500
32. Wapato, Washington Off Site Leased 20,300

Canadian Packaging Facilities
-----------------------------------
33. Burlington, Ontario, Canada Off Site Owned 145,200
34. Mississauga, Ontario, Canada Off Site Owned 78,416
35. Anjou, Quebec, Canada Off Site Owned 44,875
36. Toronto, Ontario, Canada On Site (e) 5,000

European Packaging Facilities
-----------------------------------
37. Assevent, France Off Site Owned 186,470
38. Noeux les Mines, France Off Site Owned 120,000
39. Wrexham, United Kingdom Off Site Owned 120,000
40. Campochiaro, Italy Off Site Owned 93,200
41. Blyes, France Off Site Owned 89,000
</TABLE>

46
<PAGE>

<TABLE>
<CAPTION>
ON SITE
LOCATION OR OFF SITE LEASED/OWNED SIZE (SQ. FT.)
------------------------------------ ------------- --------------------- ---------------
<S> <C> <C> <C>
42. Sulejowek, Poland (d) Off Site Owned 83,700
43. Bad Bevensen, Germany Off Site Owned/Leased (f) 80,000
44. Meaux, France Off Site Owned 80,000
45. Sovico (Milan), Italy Off Site Leased 74,500
46. Istanbul, Turkey Off Site Owned 50,000
47. Rotselaar, Belgium (b) On Site Leased 21,520
48. Genthin, Germany (b) On Site Leased 7,400
49. Nyirbator, Hungary On Site Leased 5,000

Latin American Packaging Facilities
------------------------------------
50. Sao Paulo, Brazil Off Site Leased 66,092
51. Buenos Aires, Argentina Off Site Owned 33,524
52. Rio de Janeiro, Brazil On Site Owned/Leased (f) 22,604
53. Rio de Janeiro, Brazil On Site Leased 16,685
54. Rio de Janeiro, Brazil On Site (e) 11,000
55. San Luis, Argentina Off Site Owned 8,070
56. Santos, Brazil On Site Leased 5,800

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

Administrative Facilities
------------------------------------
o York, Pennsylvania N/A Leased 70,071
o Burlington, Ontario, Canada N/A Owned 4,800
o Rueil, Paris, France N/A Leased 4,300
o Sao Paulo, Brazil N/A Leased 3,800
</TABLE>

(a) Substantially all of our domestic tangible and intangible assets are
pledged as collateral pursuant to the terms of our senior credit agreement

(b) Currently under construction

(d) This facility is owned by the MaskoGraham Joint Venture, in which we hold
a 50% interest

(e) We operate these on-site facilities without leasing the space we occupy

(f) The building is owned; land is leased

LEGAL PROCEEDINGS

We are party to various litigation matters arising in the ordinary course
of business. We cannot estimate with certainty our ultimate legal and financial
liability with respect to litigation, but we believe, based on our examination
of these matters, our experience to date and our discussions with counsel, that
ultimate liability from our various litigation matters will not be material to
our business, financial condition or results of operations.

47
<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Our directors and executive officers prior to the IPO reorganization have
been Philip R. Yates, John E. Hamilton, Chinh E. Chu and Simon P. Lonergan. Set
forth below are the names, ages as of June 30, 2000 and positions with our
company of the persons who we currently expect to serve as our directors and
executive officers upon the consummation of our IPO reorganization.

<TABLE>
<CAPTION>
NAME AGE POSITION
------------------------ ----- ---------------------------------------------------------------
<S> <C> <C>
Philip R. Yates 52 Chief Executive Officer and Chairman of our Board of Directors
Roger M. Prevot 41 President and Chief Operating Officer
John E. Hamilton 41 Chief Financial Officer
G. Robinson Beeson 52 Senior Vice President and General Manager, Automotive
Scott G. Booth 43 Senior Vice President and General Manager, Household and
Personal Care
John A. Buttermore 53 Vice President and General Manager, Food & Beverage
Chinh E. Chu 33 Director
Donald C. Graham 67 Director
William H. Kerlin, Jr. 49 Director
Howard A. Lipson 36 Director
David A. Stonehill 31 Director
</TABLE>

Philip R. Yates will serve as our Chief Executive Officer and Chairman of
our Board of Directors after the IPO reorganization. From February 2000 until
the IPO reorganization, Mr. Yates served as Chief Executive Officer of Graham
Packaging Company. From February 1998 until February 2000 Mr. Yates also served
as the Chief Executive Officer and President of Graham Packaging Company. Prior
to February 1998, Mr. Yates served as our President and Chief Operating Officer.

Roger M. Prevot will serve as our President and Chief Operating Officer
after the IPO reorganization. From February 2000 until the IPO reorganization,
Mr. Prevot served as President and Chief Operating Officer of Graham Packaging
Company. From February 1998 to February 2000 Mr. Prevot served as Senior Vice
President or Vice President and General Manager, Food and Beverage of Graham
Packaging Company. Prior to February 1998, Mr. Prevot served as our Vice
President and General Manager, U.S. Food and Beverage.

John E. Hamilton will serve as our Chief Financial Officer after the IPO
reorganization. From January 1999 until the IPO reorganization, Mr. Hamilton
served as Chief Financial Officer of Graham Packaging Company. From February
1998 to January 1999, Mr. Hamilton served as our Senior Vice President or Vice
President, Finance and Administration. Prior to February 1998, Mr. Hamilton
served as our Vice President, Finance and Administration, North America.

G. Robinson Beeson will serve as our Senior Vice President and General
Manager, Automotive after the IPO reorganization. From February 1998 until the
IPO reorganization, Mr. Beeson served as Senior Vice President or Vice
President and General Manager, Automotive of Graham Packaging Company. Prior to
February 1998, Mr. Beeson served as our Vice President and General Manager,
U.S. Automotive.

Scott G. Booth will serve as our Senior Vice President and General
Manager, Household and Personal Care after the IPO reorganization. From
February 1998 until the IPO reorganization, Mr. Booth served as Senior Vice
President or Vice President and General Manager, Household and Personal Care of
Graham Packaging Company. Prior to February 1998, Mr. Booth served as our Vice
President and General Manager, U.S. Household and Personal Care.

John A. Buttermore will serve as our Vice President and General Manager,
Food & Beverage after the IPO reorganization. From February 2000 until the IPO
reorganization, Mr. Buttermore

48
<PAGE>

served as Vice President and General Manager, Food & Beverage of Graham
Packaging Company. From November 1998 until February 2000, Mr. Buttermore
served as Vice President, Market Development of Graham Packaging Company. Prior
to joining us in November 1998, Mr. Buttermore served as Category Manager, Food
Products at Plastipak Packaging Co.

Chinh E. Chu is a Senior Managing Director of The Blackstone Group, L.P.,
which he joined in 1990. Mr. Chu will serve as a Director after the IPO
reorganization. From February 1998 until the IPO reorganization, Mr. Chu served
as a member of the Advisory Committee of our predecessor. Prior to joining
Blackstone, Mr. Chu was a member of the Mergers and Acquisitions Group of
Salomon Brothers Inc. from 1988 to 1990. He currently serves on the Boards of
Directors of Prime Succession Inc., Rose Hills Co. and Haynes International,
Inc.

Donald C. Graham will serve as a Director after the IPO reorganization.
From February 1998 until the IPO reorganization, Mr. Graham served as Chairman
of the Advisory Committee of our predecessor. Prior to February 1998, Mr.
Graham served as our Chairman.

William H. Kerlin, Jr. will serve as a Director after the IPO
reorganization. From February 1998 until the IPO reorganization, Mr. Kerlin
served as Vice Chairman of the Advisory Committee of our predecessor. From 1996
until February 1998, Mr. Kerlin served as our Vice Chairman and our Chief
Executive Officer. Prior to 1996, Mr. Kerlin served as our Vice President and
our Vice Chairman.

Howard A. Lipson is a Senior Managing Director of The Blackstone Group
L.P., which he joined in 1988. Mr. Lipson will serve as a Director after the
IPO reorganization. From February 1998 until the IPO reorganization, Mr. Lipson
served as a member of the Advisory Committee of our predecessor. Prior to
joining Blackstone, Mr. Lipson was a member of the Mergers and Acquisitions
Group of Salomon Brothers Inc. He currently serves on the Boards of Directors
of Allied Waste Industries, Inc., Volume Services, Inc., AMF Group Inc., Ritvik
Holdings Inc., Prime Succession Inc. and Rose Hills Co.

David A. Stonehill is an Associate of The Blackstone Group L.P., which he
joined in May 2000. Prior to joining Blackstone, Mr. Stonehill was a Senior
Vice President at Chartwell Investments Inc., where he had worked since
September 1996.

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.

49
<PAGE>

EXECUTIVE COMPENSATION

The following table sets forth all cash compensation paid to our chief
executive officer and our four other most highly compensated executive
officers, or our named executive officers, for the years ended December 31,
1997, 1998 and 1999, and their respective titles at December 31, 1999.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------------- ------------------------------------------------
AWARDS PAYOUTS
------------------------- ----------------------
OTHER RESTRICTED SECURITIES ALL
ANNUAL STOCK UNDERLYING LTIP OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) COMP. AWARDS OPTIONS PAYOUTS(3) COMP.(4)
--------------------------------- ------ ----------- ---------- -------- ------------ ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Philip R. Yates ................. 1999 $310,978 $300,000 $0 $ 0 44,427 $ 0 $4,417
Chief Executive Officer (1) 1998 300,019 100,474 0 3,866,000 208,413 2,225,000 4,800
1997 250,016 120,000 0 0 0 0 5,053
Roger M. Prevot ................. 1999 202,999 196,500 0 0 30,380 0 3,606
President and Chief Operating 1998 194,404 164,169 0 1,933,000 141,773 750,000 3,554
Officer(1) 1997 164,180 72,000 0 0 0 0 3,544
John E. Hamilton ................ 1999 171,098 160,500 0 0 61,087 0 3,553
Chief Financial Officer 1998 158,520 132,864 0 688,000 97,347 400,000 3,586
1997 133,207 60,000 0 0 0 0 3,503
G. Robinson Beeson .............. 1999 173,214 125,066 0 0 20,907 0 3,879
Senior Vice President and General 1998 164,719 138,273 0 1,074,000 97,347 500,000 4,194
Manager, Automotive 1997 138,677 52,000 0 0 0 0 3,812
Scott G. Booth .................. 1999 171,518 120,089 0 0 20,907 0 3,557
Senior Vice President and General 1998 158,104 132,489 0 1,074,000 97,347 500,000 3,625
Manager, Household 1997 132,463 52,000 0 0 0 0 3,600
and Personal Care

</TABLE>

----------
(1) Roger M. Prevot has served as President and Chief Operating Officer of
Graham Packaging Company since February 8, 2000. Prior to February 8,
2000 Mr. Prevot served as Senior Vice President and General Manager, Food
& Beverage and Mr. Yates served as Chief Executive Officer and President.

(2) Represents bonus paid in the current year, but accrued in the prior year
under our annual discretionary bonus plan.

(3) Represents cash payments to the named executive officers which were used
by the recipients to purchase shares of restricted common stock of
BMP/Graham Holdings Corp., a limited partner of our predecessor, the
value of a grant of the same number of additional restricted shares as
the shares purchased and taxes payable in respect of these awards (see
"--Management Awards").

(4) Represents contributions to our 401(k) plan and amounts attributable to
group term life insurance.

MANAGEMENT AWARDS

In February 1998, we made cash payments to approximately 20 senior level
managers equal to approximately $7.0 million, which represented the aggregate
value payable under our former equity appreciation plan and additional cash
bonuses.

In February 1998, we granted to approximately 100 middle level managers
stay bonuses aggregating approximately $4.6 million, which are payable over a
period of up to three years.

50
<PAGE>

In February 1998, we 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) we 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
BMP/Graham Holdings Corp., a limited partner of our predecessor 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.

As a result of those equity awards, management will own an aggregate of
approximately % of our outstanding common stock after the IPO reorganization
and the offering.

SEVERANCE AGREEMENTS

In February 1998, we entered into severance agreements with Messrs. Yates,
Prevot, Hamilton, Beeson and Booth. Those severance agreements provided that in
the event a termination event, as defined in the agreement occurs, the
executive shall receive:

o a severance allowance equal to one year of salary (two years for Mr.
Yates) payable in equal monthly installments over a one year period (two
years for Mr. Yates);

o continued group health and life insurance coverage for one year (the
executive's contribution for which would be the same contribution as
similarly situated executives and would be deducted from the severance
allowance payments); and

o a lump sum amount payable when we pay our executives bonuses, equal to
the executive's target bonus, pro-rated to reflect the portion of the
relevant year occurring prior to the executive's termination of
employment.

SUPPLEMENTAL INCOME PLAN

Mr. Yates is the sole participant in the Graham Engineering Corporation
Amended Supplemental Income Plan, or SIP. Graham Packaging 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. 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 that Mr. Yates were to retire
prior to attaining age 55 (the benefit would still commence at age 65), then
the annuity payments would be reduced. In the event that we terminate 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.

MANAGEMENT OPTION PLAN

The management option plan provides for the grant to our management
employees of options to purchase shares of our common stock, prior to any
dilution resulting from any interests granted pursuant to the management option
plan. The aggregate number of shares of common stock with respect to which
options may be granted under the management option plan shall not exceed
1,633,333, representing a total of up to 5% of the equity of Graham Packaging
Company Inc. after the IPO reorganization, but before the offering. The
management option plan is intended to advance our best interests by allowing
employees to acquire an ownership interest in us, thereby motivating them to
contribute to our success and to remain employed by us.

The exercise price per share for those shares granted is $7.89. In
general, 50% of the options vest and become exercisable in 20% increments
annually over five years so long as the holder of the option is still an
employee, which options are referred to as "time options", and 50% of the
options vest and become exercisable in 20% increments annually over five years
so long as we achieve certain earnings

51
<PAGE>

targets for each year, although these options do become exercisable in full
without regard to our achievement of these targets on the ninth anniversary of
the date of grant, so long as the holder of the option is still an employee on
that date, which options are referred to as "performance options". The number
and type of securities covered by outstanding options and exercise prices may
be adjusted to reflect certain events such as recapitalizations, mergers or
reorganizations of or by us.

A committee administers the management option plan, including the
determination of the employees to whom grants will be made, the number of
shares subject to each grant, and the various terms of the grants. The
committee may provide that an option cannot be exercised after the merger or
consolidation of our company into another company or corporation, the exchange
of all or substantially all of our assets for the securities of another
corporation, the acquisition by a corporation of 80% or more of our common
stock or the liquidation or dissolution of our company, and if the committee so
provides, it will also provide either by the terms of the option or by a
resolution adopted prior to the occurrence of a merger, consolidation,
exchange, acquisition, liquidation or dissolution, that, for ten business days
prior to that event, the option shall be exercisable as to all shares subject
thereto, notwithstanding anything to the contrary in any provisions of that
option and that, upon the occurrence of an event, the 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 event, from and after the
event, any of the options 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 that event by the holder of a number of shares of
common stock for which that option could have been exercised immediately prior
to that event. In addition, all time options become fully vested and
exercisable upon the occurrence of a change of control of our company, as such
term is defined in the management option plan. No suspension, termination or
amendment of or to the management option plan shall materially and adversely
affect the rights of any participant with respect to options issued hereunder
prior to the date of suspension, termination or amendment without the consent
of the holder.

The following table sets forth certain information with respect to options
granted to the named executive officers for the year ended December 31, 1999,
assuming an exchange ratio of 3,266.67 of our options for each option of Graham
Packaging Holdings Company to be exchanged in the IPO reorganization.

52
<PAGE>

OPTION GRANTS IN LAST FISCAL YEAR

INDIVIDUAL GRANTS

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS STOCK
UNDERLYING GRANTED TO EXERCISE OR PRICE APPRECIATION FOR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION OPTION TERM
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
--------------------------------- ------------- -------------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Philip R. Yates ................. 44,427 11.0% $ 7.89 1/1/09 $221,000 $559,000
Chief Executive Officer
Roger M. Prevot ................. 30,380 7.5% 7.89 " 151,000 382,000
President and Chief Operating
Officer
John E. Hamilton ................ 61,087 15.1% 7.89 " 303,000 769,000
Chief Financial Officer
G. Robinson Beeson .............. 20,907 5.2% 7.89 " 104,000 263,000
Senior Vice President and General
Manager, Automotive
Scott G. Booth .................. 20,907 5.2% 7.89 " 104,000 263,000
Senior Vice President and General
Manager, Household and
Personal Care

</TABLE>

The following table sets forth certain information with respect to the
total options granted to the named executive officers at December 31, 1999,
assuming an exchange ratio of 3,266.67 of our options for each option of Graham
Packaging Holdings Company to be exchanged in the IPO reorganization.

TOTAL OPTION GRANTS AT DECEMBER 31, 1999

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED VALUE OF OPTIONS AT END OF
OPTIONS AT END OF UNEXERCISED IN THE FISCAL YEAR
NAME FISCAL YEAR MONEY OPTIONS EXERCISABLE
------------------------------------------------ ------------------- -------------------- ------------------
<S> <C> <C> <C>
Philip R. Yates
Chief Executive Officer ....................... 252,840 $0 66,967
Roger M. Prevot
President and Chief Operating Officer ......... 172,153 0 45,570
John E. Hamilton
Chief Financial Officer ....................... 158,433 0 35,313
G. Robinson Beeson
Senior Vice President and General Manager,
Automotive .................................... 118,253 0 31,295
Scott G. Booth
Senior Vice President and General Manager,
Household and Personal Care ................... 118,253 0 31,295
</TABLE>

PENSION PLANS

In the year ended December 31, 1999, we participated in a noncontributory,
defined benefit pension plan for salaried and hourly employees other than
employees covered by collectively bargained plans. We also sponsored other
noncontributory defined benefit plans under collective

53
<PAGE>

bargaining agreements. These plans covered substantially all of our 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 11 to the financial statements for each of the three years
in the period ended December 31, 1999 included elsewhere in this prospectus.

The following table shows estimated annual benefits upon retirement 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

<TABLE>
<CAPTION>
YEARS OF SERVICE
REMUNERATION 15 20 25 30 35
-------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 125,000 $ 27,025 $ 36,033 $ 45,041 $ 54,049 $ 55,612
150,000 33,025 44,033 55,041 66,049 67,924
175,000 39,025 52,033 66,041 78,049 80,237
200,000 45,025 60,033 75,041 90,049 92,549
225,000 51,025 68,033 85,041 102,049 104,862
250,000 57,025 76,033 95,041 114,049 117,174
300,000 69,025 92,033 115,041 138,049 141,799
400,000 93,025 124,033 155,041 186,049 191,049
450,000 105,025 140,033 175,041 210,049 215,674
500,000 117,025 156,033 195,041 234,049 240,299
</TABLE>

Note: The amounts shown are based on 1999 covered compensation of $33,060 for
an individual born in 1934. In addition, these figures do not reflect the
salary limit of $160,000 and benefit limit under the plan's normal form
of $130,000 in 1999.

The compensation covered by the defined benefit plan for salaried
employees is an amount equal to "total wages". 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, 1999 for each of the
five named executive officers participating in the plan was as follows: Philip
R. Yates, 27 years; John E. Hamilton, 15 years; G. Robinson Beeson, 24 years;
Scott G. Booth, 11 years; and Roger M. Prevot, 11 years. Benefits under the
plan are computed on the basis of straight-life annuity amounts. Amounts set
forth in the pension plan table are not subject to deduction for Social
Security or other offset amounts.

Under the terms of our 1998 recapitalization, the assets of the Graham
Engineering defined benefit plan related to employees not covered by collective
bargaining agreements were transferred to a new non-contributory defined
benefit plan sponsored by us for such employees in 1998.

401(K) PLAN

During 1999, we also participated in a defined contribution plan under
Internal Revenue Code Section 401(k), which covered all of our U.S. employees
except those represented by a collective bargaining unit. We also sponsored
other noncontributory defined contribution plans under collective bargaining
agreements. Our contributions were determined as a specified percentage of
employee contributions, subject to certain maximum limitations. Our costs for
the salaried and non-collective bargaining hourly plan for 1997, 1998, and 1999
were $742,000, $804,000, and $875,000, respectively. See Note 11 to our
financial statements for each of the three years in the period ended December
31, 1999.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the fiscal year ended December 31, 1999, the members of the
compensation committee of the advisory board of our predecessor, Graham
Packaging Holding Company, were William H. Kerlin, Jr. and Howard A. Lipson.
Mr. Kerlin previously served as our Chief Executive Officer and Vice Chairman
of the advisory committee of our predecessor, Graham Packaging Holdings
Company, and prior to that, a Vice President. See "-- Directors and Executive
Officers".

54
<PAGE>

CERTAIN TRANSACTIONS

TRANSACTIONS WITH THE GRAHAM FAMILY AND AFFILIATES

We have engaged in a number of transactions with entities controlled by or
affiliated with Donald C. Graham, a director and previous chairman of the
advisory committee of our predecessor, Graham Packaging Holdings Company, and/or
members of his immediate family. These entities controlled by Mr. Graham and/or
members of his immediate family include Graham Architectural Products
Corporation, Graham Capital Company, Graham Engineering Corporation, Graham
Europe Limited, Graham Family Growth Partnership, Graham Packaging Corp., Graham
Partners, Inc. and York Transportation and Leasing, Inc.

Prior to our 1998 recapitalization, Mr. Graham, as lessor, and we, as
lessee, were parties to four lease agreements relating to two properties in
Berkeley, Missouri and two properties in York, Pennsylvania. For the year ended
December 31, 1997, we paid Mr. Graham $2.0 million in the aggregate pursuant to
such lease agreements. Upon the consummation of our 1998 recapitalization, the
real property subject to each such lease agreement was contributed to us.

Prior to our 1998 recapitalization, York Transportation and Leasing, Inc.,
as lessor, and our subsidiary, Graham Packaging Canada, Ltd., as lessee, were
parties to three lease agreements relating to properties located in
Mississauga, Ontario, Burlington, Ontario and Anjou, Quebec. For the year ended
December 31, 1997, we paid York Transportation and Leasing $0.6 million in the
aggregate pursuant to such lease agreements. Upon our 1998 recapitalization,
the real property subject to each such lease agreement was contributed to us.

Prior to our 1998 recapitalization, Graham Packaging Corp., Graham Capital
Company and Graham Europe Limited were parties to management agreements,
pursuant to which Donald C. Graham, William H. Kerlin, Jr. and others provided
management services to us and served as our executive officers. We paid $1.7
million for the year ended December 31, 1997 for such services.

Prior to our 1998 recapitalization, we, Graham Capital, Graham Packaging
Corp. and York Transportation and Leasing were all parties to an Airplane Lease
Agreement/Aircraft Sharing Agreement. We paid $0.3 million for the year ended
December 31, 1997 pursuant to such agreement.

All of the agreements described above were terminated in connection with
our 1998 recapitalization.

At the time of our 1998 recapitalization, Donald C. Graham and Jean Rubie
were each one-third owners of Techne Technipack Engineering Italia S.p.A. Techne
supplies shuttle blow molders to many of our non-U.S. facilities. We paid
Techne approximately $5.2 million and $3.5 million for such equipment for the
years ended December 31, 1998 and 1997, respectively. Prior to our 1998
recapitalization, Mr. Rubie served as our General Manager, Europe. After our
1998 recapitalization, Mr. Graham sold his ownership interest in Techne.

From 1994 through our 1998 recapitalization, there was outstanding $20.2
million principal amount of promissory notes owed by the Graham Family Growth
Partnership and its affiliates to us, which had been contributed by the Graham
Partners as capital in us. Those promissory notes, including accrued interest,
were repaid in full in connection with our 1998 recapitalization. For the year
ended December 31, 1997, accrued interest income on the promissory notes was
approximately $1.0 million.

Graham Engineering has supplied both services and equipment to us. We paid
Graham Engineering approximately $9.2 million, $20.4 million, $16.8 million and
$11.3 million for services and equipment for the quarter ended April 2, 2000
and the years ended December 31, 1999, 1998 and 1997, respectively. We have
provided certain services to Graham Engineering. Graham Engineering paid us
approximately $0.1 million, $2.5 million, $1.4 million and $1.0 million for
services for the quarter ended April 2, 2000 and the years ended December 31,
1999, 1998 and 1997, respectively.

55
<PAGE>

We and Graham Engineering entered into a Equipment Sales, Service and
Licensing Agreement in 1998, which provides that, with certain exceptions:

o Graham Engineering will sell to us and our affiliates some of Graham
Engineering's larger-sized proprietary extrusion blow molding wheel
systems, or 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 us as the percentage mark-up historically offered by Graham
Engineering to us and is as favorable as the mark-up on comparable
equipment offered to other parties;

o each party will provide consulting services to the other party at hourly
rates ranging from $60 to $200 (adjusted annually for inflation) and

o Graham Engineering will grant to us a nontransferable, nonexclusive,
perpetual, royalty-free right and license to use certain technology.

Subject to certain exceptions set forth in the equipment sales agreement, we
and our 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
February 2, 1998 and any other country in or to which we have produced or
shipped extrusion blow molded plastic containers 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. Since
December 31, 1998, both parties have had the right to terminate the other
party's right to receive consulting services. Effective January 21, 2000 we
terminated Graham Engineering's rights to receive consulting services from us.

Graham Family Growth Partnership and Graham Partners, Inc. have supplied
advisory services to us since February 1998, and will continue to provide
advisory services to us for approximately $1.0 million per annum until the
Graham family's holdings in our common stock are reduced to a specified level.
We paid Graham Family Growth Partnership and Graham Partners, Inc. approximately
$0.3 million, $1.0 million and $1.1 million for services for the quarter ended
April 2, 2000 and the years ended December 31, 1999 and 1998, respectively.

We entered into an Airplane Time-Sharing Agreement with Graham Capital
Company in February 1998. We entered into a new Airplane Time-Sharing Agreement
with Graham Capital Company in March 2000. Other parties to the new agreement
are Graham Architectural Products Corporation, Graham Partners, Inc., Western
Industries, Inc. and Graham Engineering Corporation. We paid approximately
$5,500, $18,000 and $3,500 for the quarter ended April 2, 2000 and the years
ended December 31, 1999 and 1998, respectively, pursuant to these agreements.

For the year ended December 31, 1997, we also paid Graham Partners, Inc.
$0.6 million for certain consulting services.

REGISTRATION RIGHTS AGREEMENT

We entered into a Registration Rights Agreement with Blackstone and the
Graham family on February 2, 1998. Under the terms of this agreement, we agreed
to provide Blackstone and the Graham family with certain registration rights
for their shares of our common stock.

Demand Registration. Blackstone has an unlimited number of demand
registration rights that it may exercise at any time after this offering and
the Graham family has two demand registration rights that may be exercised at
any time after this offering.

Incidental Registration. Until all of the securities subject to the
registration rights agreement have been registered, if we propose to register
any of our equity securities for public sale, we must, subject to certain
exceptions, use reasonable efforts to also register any shares of our common
stock held by Blackstone, the Graham family, DB Capital Partners or a
management investor, at that holder's request.

Rule 144. Under the agreement, we have agreed to use reasonable efforts to
comply with the filing requirements of Rule 144(c)(1) to enable Blackstone and
the Graham family to sell their shares without registration.

56
<PAGE>

Expenses and Indemnification. We agreed to pay all expenses incurred in
connection with the registration of shares under the registration rights
agreement. We also agreed to indemnify all holders whose shares are registered
from liability arising under the Securities Act.

MANAGEMENT STOCKHOLDERS AGREEMENT

Blackstone, our company and members of our management are party to a
Management Stockholders' Agreement, dated as of February 3, 1998. Under the
terms of that agreement, members of management acquired shares of BMP/Graham
Holdings Corporation, a limited partner in our predecessor, in connection with
our 1998 recapitalization. After the offering, management investors will have
the same incidental registration rights as other holders under the registration
rights agreement described above.

OTHER TRANSACTIONS WITH BLACKSTONE

If certain events of default occur under our senior credit agreement, or
if our net leverage ratio is above specified levels beginning June 30, 2001,
Blackstone may be required to make an equity contribution to us, as described
in "Description of Certain Indebtedness -- Senior Credit Agreement".

Under the terms of a monitoring agreement entered into among Blackstone,
us and Graham Packaging Company, Blackstone receives a monitoring fee of $1.0
million per annum, and will be reimbursed for certain out-of-pocket expenses.
We paid Blackstone approximately $0.3 million for the quarter ended April 2,
2000 and approximately $1.0 million for each of the two years ended December
31, 1999 and 1998. In connection with our 1998 recapitalization, Blackstone
received a fee of approximately $9.3 million, and we also reimbursed Blackstone
for all its out-of-pocket expenses. In the future, an affiliate or affiliates
of Blackstone may receive customary fees for advisory and other services
rendered to us. If those 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.

57
<PAGE>

DESCRIPTION OF CERTAIN INDEBTEDNESS

SENIOR CREDIT AGREEMENT

Our senior credit agreement currently consists of four term loans to our
subsidiary, Graham Packaging Company, totaling $570 million and two revolving
loan facilities to Graham Packaging Company totaling $255 million. Unused
availability under our revolving credit facilities at April 2, 2000, on a pro
forma basis, after giving effect to the offering and the application of
estimated proceeds therefrom, would have been $170.2 million, $70.2 million of
which would have been under our revolving credit facility and $100.0 million of
which would have been under our growth capital revolving credit facility. As of
June 30, 2000, approximately $125 million of loans were outstanding under our
revolving credit facility and approximately $40 million of loans were
outstanding under our growth capital revolving credit facility. The obligations
of Graham Packaging Company under our senior credit agreement are guaranteed by
us and our U.S. subsidiaries. The term loans are payable in quarterly
installments through January 31, 2007, and, on the same pro forma basis, will
require payments of $11.8 million in 2000 (of which $3.7 had been paid as of
April 2, 2000), $14.5 million in 2001, $18.1 million in 2002, $19.9 million in
2003, $67.3 million in 2004 and a total of $276.4 million from 2005 through
2007. Both revolving loan facilities expire on January 31, 2004. Interest is
payable at (a) the "Alternate Base Rate", which is the higher of the Prime Rate
or the Federal Funds Rate plus 0.50%, plus a margin ranging from 0% to 2.25%;
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 3.25%. An annual commitment fee ranging from 0.20% to 0.50% is due on the
unused portion of the revolving loan commitment.

If an event of default were to occur, or if our net leverage ratio were
above 5.15:1.0 at September 30, 2000, Blackstone has agreed to make an equity
contribution to us of up to $50 million. Our net leverage ratio being above
5.15:1.0 at September 30, 2000 is not an event of default under our senior
credit agreement. Our senior credit agreement also allows a pro forma
adjustment to the net leverage ratio to include the receipt of net cash
proceeds from any registered public offering occurring after September 30, 2000
but before October 31, 2000, for purposes of determining whether Blackstone is
required to make the above-mentioned equity contribution. Blackstone may also
be required to make equity contributions to us based on leverage tests for
quarters ending on or after June 30, 2001, which would provide for up to an
additional $50 million equity contribution by Blackstone. If Blackstone is
required to make an equity contribution to us pursuant to a capital call after
the offering, we expect that they will purchase shares of our common stock at a
price per share equal to the average trading price for the 20 trading days
immediately prior to the purchase. Assuming that the offering is completed, we
do not expect that Blackstone will be required to make any such capital
contributions.

In addition, our senior credit agreement contains certain affirmative and
negative covenants relating to our operations and financial condition, as well
as certain restrictions on the payment of dividends and other distributions to
us. Substantially all of our domestic tangible and intangible assets are
pledged as collateral pursuant to the terms of our senior credit agreement.

At April 2, 2000, our subsidiary, Graham Packaging Company, had entered
into three U.S. dollar interest rate swap agreements that effectively fix the
eurocurrency rate on $450 million of the term loans, on $200 million through
April 9, 2002 at 5.8075%, on $100 million through April 9, 2003 at 5.77% and on
$150 million through September 10, 2001 at 5.5075%.

Under the senior credit agreement, our subsidiary, Graham Packaging
Company, is subject to restrictions on the payment of dividends or other
distributions to us; provided that, subject to certain limitations, Graham
Packaging Company may pay dividends or other distributions to us in respect of
overhead, tax liabilities, legal, accounting and other professional fees and
expenses, to fund purchases and redemptions of our equity interests held by
their present or former officers or our employees, Graham Packaging Company or
their subsidiaries or by any employee stock ownership plan upon that person's
death, disability, retirement or termination of employment or other
circumstances with certain annual dollar limitations and to finance starting on
July 15, 2003, the payment of cash interest due semi-annually on the senior
discount notes.

58
<PAGE>

SENIOR DISCOUNT NOTES AND SENIOR SUBORDINATED NOTES

In February 1998, our subsidiary, Graham Packaging Company, issued $225
million of senior subordinated notes and we issued $169 million aggregate
principal amount at maturity of senior discount notes, with gross proceeds of
$100.6 million. The senior subordinated notes are unconditionally guaranteed on
a senior subordinated basis by us and mature on January 15, 2008, with interest
payable on $150 million at a fixed rate of 8.75% and with interest payable on
$75 million at LIBOR plus 3.625%. The senior discount notes mature on January
15, 2009, with cash interest payable semi-annually beginning January 15, 2003
at 10.75%. The effective interest rate to maturity on the senior discount notes
is 10.75%.

The fixed rate senior subordinated notes may be redeemed at any time, in
whole or in part, on or after January 15, 2003 at a redemption price equal to
104.375% of the principal amount of the notes in the first year and declining
yearly to par at January 15, 2006, plus accrued and unpaid interest and
liquidated damages, if any, to the date of redemption. The floating rate senior
subordinated notes may be redeemed at any time, in whole or in part, from the
date of issue at a redemption price equal to 105% of the principal amount of
the notes in the first year and declining yearly to par at January 15, 2003,
plus accrued and unpaid interest and liquidated damages, if any, to the date of
redemption. The senior discount notes may be redeemed at any time, in whole or
in part, on or after January 15, 2003 at a redemption price equal to 105.375%
of the principal amount of the notes in the first year and declining yearly to
par at January 15, 2006, plus accrued and unpaid interest and liquidated
damages, if any, to the date of redemption. Additionally, on or prior to
January 15, 2001, we may also redeem up to 40% of the originally issued
aggregate principal amount of our fixed rate senior subordinated notes and up
to 40% of the aggregate principal amount at maturity of our senior discount
notes, at redemption prices of 108.75% of the aggregate principal amount of the
senior subordinated notes and 110.75% of the accreted value of the senior
discount notes, plus accrued and unpaid interest and liquidated damages, if
any, to the date of redemption, with the proceeds of one or more equity
offerings.

Upon the occurrence of a change of control, each holder of senior
subordinated notes, or senior discount notes, as appropriate, will have the
right to require us or Graham Packaging Company, as applicable, to repurchase
that holder's notes at a price equal to 101% of their principal amount, or
accreted value, as applicable, plus accrued and unpaid interest to the
repurchase date.

The indentures governing the senior subordinated notes and the senior
discount notes contain covenants that, among other things, limit our ability
to:

o incur additional indebtedness or issue specified types of capital stock;

o repay other indebtedness;

o pay dividends or make other distributions;

o repurchase equity interests;

o consummate asset sales;

o incur liens;

o allow our subsidiaries to make dividend payments;

o merge or consolidate with any other person or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of our
assets or those of subsidiaries;

o enter into transactions with affiliates; and

o enter into guarantees of indebtedness.

59
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table and accompanying footnotes show information regarding
the beneficial ownership, after giving effect to the IPO reorganization and the
offering, of our common stock, par value $.01 per share by:

o each person who is known by us to own beneficially more than 5% of our
common stock,

o each member of our board of directors and each of our named executive
officers and

o all members of our board of directors and our executive officers as a
group.

NAME OF BENEFICIAL OWNER NUMBER PERCENT
------------------------ ------ -------
<S> <C> <C>
Blackstone (1) 25,623,507
The Graham Family (2) 4,900,000
Philip R. Yates (3) 375,757
John E. Hamilton (3) 101,609
G. Robinson Beeson (3) 121,880
Scott G. Booth (3) 121,880
Roger M. Prevot (3) 204,532
Chinh E. Chu (1) --
Donald C. Graham (2)(4) --
William H. Kerlin --
Howard A. Lipson (1) --
David A. Stonehill --
All directors and executive officers as a
group (11 persons)(4) 953,425
</TABLE>

----------
(1) Of the 25,623,507 shares, 20,444,574 are held by Blackstone Capital
Partners III Merchant Banking Fund L.P., 3,641,760 are held by Blackstone
Offshore Capital Partners III L.P. and 1,537,173 are held by Blackstone
Family Investment Partnership III L.P. Blackstone Management Associates
III L.L.C. is the general partner of each of such entities. Messrs. Howard
A. Lipson and Chinh E. Chu are members of Blackstone Management Associates
III L.L.C., which has investment and voting control over the shares held
or controlled by each of these entities. Messrs. Lipson & Chu disclaim
beneficial ownership of their shares. Messrs. Peter G. Peterson and
Stephen A. Schwarzman are the founding members of Blackstone and, as such
may also be deemed to share beneficial ownership of the shares held or
controlled by each of these entities. The address of each of the
Blackstone entities is c/o The Blackstone Group L.P., 345 Park Avenue, New
York, New York 10154.

(2) Of the 4,900,000 shares, 4,236,867 shares are held by GPC Holdings, L.P.,
398,533 shares are held by Graham Capital Company and 264,600 shares are
held by Graham Engineering Corporation. GPC Holdings, L.P. is controlled
by its general partner GPC Investments, LLC. Graham Capital Company is
controlled by its general partner Graham Capital, LLC. Donald C. Graham, a
member of our board of directors, is the controlling shareholder/member of
Graham Engineering Corporation, GPC Investments, LLC and Graham Capital,
LLC. The address for each of the Graham Family Entities is c/o Graham
Capital Company, 1420 Sixth Avenue, York, PA 17403.

(3) Includes options to purchase shares of common stock expected to be
exercisable within 60 days from the date of the consummation of the IPO
reorganization and the offering.

(4) Excludes shares owned by GPC Holdings, L.P., Graham Capital Company and
Graham Engineering Corporation that are beneficially owned by Donald C.
Graham.

60
<PAGE>

DESCRIPTION OF CAPITAL STOCK

OVERVIEW

After the IPO reorganization, our authorized capital stock will consist of
shares of common stock, par value $.01 per share, of which 32,666,667
shares will be issued and outstanding; shares of preferred stock, par
value $.01 per share of which no shares are issued and outstanding and
shares of series common stock, par value $.01 per share of which no shares will
be issued and outstanding. Immediately following completion of the offering,
shares of common stock, or shares of common stock if the
underwriters' over-allotment options are exercised in full, and no shares of
preferred stock or series common stock will be outstanding. The following
description of our capital stock and related matters is qualified in its
entirety by reference to our certificate of incorporation and bylaws, copies of
which will be filed as exhibits to the registration statement of which this
prospectus forms a part.

The following summary describes elements of our certificate of
incorporation and bylaws after giving effect to the IPO reorganization and the
offering.

COMMON STOCK

Holders of common stock are entitled to one vote per share on all matters
to be voted upon by the stockholders. The holders of common stock do not have
cumulative voting rights in the election of directors. Holders of common stock
are entitled to receive dividends if, as and when dividends are declared from
time to time by our board of directors out of funds legally available therefor,
after payment of dividends required to be paid on outstanding preferred stock
or series common stock, if any. In the event of liquidation, dissolution or
winding up of our company, the holders of common stock are entitled to share
ratably in all assets remaining after payment of liabilities and accrued but
unpaid dividends and liquidation preferences on any outstanding preferred stock
or series common stock. The common stock has no preemptive or conversion rights
and is not subject to further calls or assessment by us. There are no
redemption or sinking fund provisions applicable to the common stock.

PREFERRED STOCK AND SERIES COMMON STOCK

Our certificate of incorporation authorizes our board of directors to
establish one or more series of preferred stock and series common stock and to
determine, with respect to any series of preferred stock or series of common
stock, the terms and rights of such series, including:

o the designation of the series;

o the number of shares of the series, which number our board may thereafter,
except where otherwise provided in the preferred stock or series common
stock designation, increase or decrease, but not below the number of
shares thereof then outstanding;

o whether dividends, if any, will be cumulative or non-cumulative and the
dividend rate of the series;

o the dates at which dividends, if any, will be payable;

o the redemption rights and price or prices, if any, for shares of the
series;

o the terms and amounts of any sinking fund provided for the purchase or
redemption of shares of the series;

o the amounts payable on shares of the series in the event of any voluntary
or involuntary liquidation, dissolution or winding-up of the affairs of
our company;

o whether the shares of the series will be convertible into shares of any
other class or series, or any other security, of our company or any other
corporation, and, if so, the specification of such

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<PAGE>

other class or series or such other security, the conversion price or
prices or rate or rates, any adjustments thereof, the date or dates as of
which such shares shall be convertible and all other terms and conditions
upon which such conversion may be made;

o restrictions on the issuance of shares of the same series or of any other
class or series, and

o the voting rights, if any, of the holders of such series.

The authorized shares of preferred stock and series common stock, as well
as shares of common stock, will be available for issuance without further
action by our stockholders, unless such action is required by applicable law or
the rules of any stock exchange or automated quotation system on which our
securities may be listed or traded.

Although the board of directors has no intention at the present time of
doing so, it could issue a series of preferred stock or series common stock that
could, depending on the terms of such series, impede the completion of a merger,
tender offer or other takeover attempt. The board of directors will make any
determination to issue such shares based on its judgment as to our best
interests and those of our stockholders. The board of directors, in so acting,
could issue preferred stock or series common stock having terms that could
discourage an acquisition attempt or other transaction that some, or a majority,
of our stockholders might believe to be in their best interests or in which
stockholders might receive a premium for their stock over the then-current
market price of such stock.

AUTHORIZED BUT UNISSUED CAPITAL STOCK

Delaware law does not require stockholder approval for any issuance of
authorized shares. However, the listing requirements of the New York Stock
Exchange, which would apply so long as the common stock remains listed on the
New York Stock Exchange, require stockholder approval of certain issuances
equal to or exceeding 20% of the then outstanding voting power or then
outstanding number of shares of common stock. These additional shares may be
used for a variety of corporate purposes, including future public offerings to
raise additional capital or to facilitate acquisitions.

One of the effects of the existence of unissued and unreserved common
stock, preferred stock and series common stock may be to enable our board of
directors to issue shares to persons friendly to current management, which
issuance could render more difficult or discourage an attempt to obtain control
of our company by means of a merger, tender offer, proxy contest or otherwise,
and thereby protect the continuity of our management and possibly deprive the
stockholders of opportunities to sell their shares of common stock at prices
higher than prevailing market prices.

THE DELAWARE GENERAL CORPORATION LAW

Our company is a Delaware corporation subject to Section 203 of the
Delaware General Corporation Law. Section 203 provides that, subject to certain
exceptions specified in the law, a Delaware corporation shall not engage in
certain "business combinations" with any "interested stockholder" for a
three-year period following the time that the stockholder became an interested
stockholder unless:

o the corporation has elected in its certificate of incorporation not to be
governed by Section 203, which we have not done,

o prior to such time, our board of directors of the corporation approved
either the business combination or the transaction which resulted in the
stockholder becoming an interested stockholder;

o upon consummation of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced, excluding certain shares; or

o at or subsequent to that time, the business combination is approved by the
board of directors of the corporation and by the affirmative vote of at
least 66 2/3% of the outstanding voting stock which is not owned by the
interested stockholder.

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<PAGE>

The three-year prohibition also does not apply to certain business
combinations proposed by an interested stockholder following the announcement
or notification of certain extraordinary transactions involving the corporation
and a person who had not been an interested stockholder during the previous
three years or who became an interested stockholder with the approval of a
majority of the corporation's directors. The term "business combination" is
defined generally to include mergers or consolidations between a Delaware
corporation and an "interested stockholder," transactions with an "interested
stockholder" involving the assets or stock of the corporation or its
majority-owned subsidiaries and transactions which increase an interested
stockholder's percentage ownership of stock. Except as specified in Section
203, an "interested stockholder" is defined to include any person, other than
the corporation and any direct or indirect majority-owned subsidiary, that is
the owner of 15% or more of the outstanding voting stock of the corporation, or
is an affiliate or associate of the corporation and was the owner of 15% or
more of the outstanding voting stock of the corporation, at any time within
three years immediately prior to the relevant date or the affiliates and
associates of any such person.

Under certain circumstances, Section 203 makes it more difficult for a
person who would be an "interested stockholder" to effect various business
combinations with a corporation for a three-year period. The provisions of
Section 203 may encourage companies interested in acquiring our company to
negotiate in advance with our board of directors, because the stockholder
approval requirement would be avoided if our board of directors approves either
the business combination or the transaction which results in the stockholder
becoming an interested stockholder. These provisions also may have the effect
of preventing changes in our board of directors and may make it more difficult
to accomplish transactions which stockholders may otherwise deem to be in their
best interests.

CERTIFICATE OF INCORPORATION; BYLAWS

Our certificate of incorporation and bylaws contain certain provisions
that could make more difficult the acquisition of our company by means of a
tender offer, a proxy contest or otherwise.

Stockholder Action. Our certificate of incorporation and bylaws provide
that special meetings of stockholders can be called only by our chief executive
officer or pursuant to a resolution adopted by the board. Stockholders are not
permitted to call a special meeting or to require that the board call a special
meeting of stockholders. Moreover, the business permitted to be conducted at
any special meeting of stockholders is limited to the business brought before
the meeting pursuant to the notice of meeting given by us.

Advance Notice Procedures. Our bylaws establish an advance notice
procedure for stockholders to make nominations of candidates for election as
directors, or bring other business before an annual or special meeting of
stockholders of the company. The stockholders notice procedure provides that
only persons who are nominated by, or at the direction of our board of
directors, the chairman of our board, or by a stockholder who has given timely
written notice to the secretary of our company prior to the meeting at which
directors are to be elected, will be eligible for election as directors of our
company. The stockholders notice procedure also provides that at an annual
meeting only that business may be conducted as has been brought before the
meeting pursuant to the notice of meeting delivered by us or by, or at the
direction of, the chairman of the board or by a stockholder who is entitled to
vote at the meeting and who has given timely written notice to the secretary of
our company of a stockholder's intention to bring such business before that
meeting.

Under the stockholders notice procedure, for notice of stockholder
nominations to be made at an annual meeting to be timely, notice must be
received by us not less than 70 days nor more than 90 days prior to the first
anniversary of the previous year's annual meeting (or, if the date of the
annual meeting is advanced by more than 20 days or delayed by more than 70 days
from that anniversary date, not earlier than the 90th day prior to the meeting
and not later than the later of the 70th day prior to such meeting and the 10th
day after public announcement of the date of the meeting is first made).
Despite the foregoing, in the event that the number of directors to be elected
is increased and there is no public announcement naming all of the nominees for
director or specifying the size of the increased board of directors made by us
at least 80 days prior to the first anniversary of the preceding

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<PAGE>

year's annual meeting, a stockholder's notice will be timely, but only with
respect to nominees for any new positions created by such increase, if we
receive it not later than the 10th day after the public announcement is first
made by us.

Under the stockholders notice procedure, for notice of a stockholder
nomination to be made at a special meeting at which directors are to be elected
to be timely, notice must be received by us not earlier than the 90th day
before such meeting and not later than the later of the 70th day prior to the
meeting and the 10th day after the public announcement of the date of the
meeting is first made. In addition, under the stockholders notice procedure, a
stockholder's notice to us proposing to nominate a person for election as a
director or relating to the conduct of business other than the nomination of
directors must contain certain specified information. If the chairman of the
board or other officer presiding at a meeting determines that a person was not
nominated, or other business was not brought before the meeting, in accordance
with the stockholders notice procedure, that person will not be eligible for
election as a director, or business will not be conducted at such meeting, as
the case may be.

Liability of Directors; Indemnification. Our certificate of incorporation
provides that a director will not be personally liable for monetary damages to
us or our stockholders for breach of fiduciary duty as a director, except to
the extent that exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Law. The certificate of incorporation
also provides that each current or former director, officer, employee or agent
of our company, or each such person who is or was serving or who had agreed to
serve at our request as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, including
the heirs, executors, administrators or estate of such person, will be
indemnified by us to the full extent permitted by the Delaware General
Corporation Law, as it exists or may in the future be amended, but, in the case
of any amendment, only to the extent that the amendment permits us to provide
broader indemnification rights than the law permitted us to provide prior to
the amendment. Our certificate of incorporation also specifically authorizes us
to enter into agreements with any person providing for indemnification greater
or different than that provided by the certificate of incorporation.

REGISTRATION RIGHTS

For a description of rights some holders of common stock have to require
us to register the shares of common stock they own, see "Certain Transactions
-- Registration Rights Agreement".

REGISTRAR AND TRANSFER AGENT

The registrar and transfer agent for the common stock is .

LISTING

Our common stock has been approved for listing on the New York Stock
Exchange, subject to official notice of issuance, under the symbol "GPA."

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<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the offering, we will have shares of common stock
outstanding, assuming no exercise of the underwriters' over-allotment option
and no exercise of outstanding options. Of these shares, the shares sold in
the offering will be freely transferable without restriction or further
registration under the Securities Act, except for any shares held by any of our
"affiliates," as that term is defined in Rule 144 under the Securities Act. For
purposes of Rule 144, an affiliate of ours is a person that, directly or
indirectly through one or more intermediaries, controls, or is controlled by or
is under common control with us. Any shares held by one of our affiliates will
be subject to the resale limitations described below on "restricted
securities," as that term is defined in Rule 144.

RULE 144

In general, under Rule 144 as currently in effect, a person who has
beneficially owned restricted shares of our common stock for at least one year
is entitled to sell, within any three-month period, a number of shares that is
not more than the greater of:

o 1% of the number of shares of common stock then outstanding, which will
equal approximately shares immediately after this offering; or

o the average weekly trading volume of the common stock on the New York
Stock Exchange during the four calendar weeks before a notice the sale on
Form 144 is filed.

Sales under Rule 144 must also comply with manner of sale provisions and notice
requirements and to the availability of current public information about us.

RULE 701

Subject to limitations on the aggregate offering price of a transaction and
other conditions, Rule 701 under the Securities Act may be relied upon regarding
the resale of securities originally purchased from us by our employees,
directors, officers, consultants or advisors before the date we became subject
to the reporting requirements of the Exchange Act, under written compensatory
benefit plans or written contracts relating to compensation of those persons. We
became subject to those reporting requirements in July 1998. In addition, the
SEC has indicated that Rule 701 will apply to the typical stock options granted
by an issuer before it became subject to the reporting requirements of the
Exchange Act, along with the shares acquired upon exercise of these options,
including exercises after the date of this prospectus. Securities issued in
reliance on Rule 701 are "restricted securities" and, subject to the 180 day
contractual restrictions described below, may be sold by persons other than
affiliates, subject only to the manner of sale provisions of Rule 144, and by
affiliates under Rule 144 without compliance with its one-year holding period
requirement.

RULE 144(k)

Under Rule 144(k), a person who has not been one of our affiliates at any
time during the 90 days before a sale, and who has beneficially owned the
restricted shares for at least two years, is entitled to sell the shares
without complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144. Upon consummation of the offering,
shares of our common stock will be eligible for immediate sale in the
public market without restriction pursuant to Rule 144(k).

LOCK-UPS

All of our executive officers, directors and Blackstone will agree not to
sell any shares of common stock for 180 days after the date of this prospectus,
subject to certain customary exceptions, without the prior written consent of
the lead underwriters. As a result of these contractual restrictions and subject
to the provisions to Rules 144 and 701, as applicable, shares subject to
restriction will be eligible for sale upon expiration of these agreements.

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<PAGE>

We have agreed not to offer, sell or dispose of any shares of common stock
or any securities convertible into or exercisable or exchangeable for common
stock or any rights to acquire common stock for a period of 180 days after the
date of this prospectus without the prior written consent of the lead
underwriters except for grants of options and other awards pursuant to benefit
plans, the issuance of shares upon the exercise of options under benefit plans,
the issuance of shares pursuant to the underwriters over-allotment option and
the issuance of shares, options, rights or warrants to purchase securities
convertible into or exercisable or exchangeable for shares of common stock in
connection with acquisitions of assets, businesses or other entities so long as
the recipients of any such shares, options, rights or warrants become subject to
similar restrictions until the expiration of such 180 day period.

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<PAGE>

CERTAIN U.S. FEDERAL TAX CONSEQUENCES TO
NON-U.S. HOLDERS OF COMMON STOCK

The following summary describes the material United States federal income
and estate tax consequences of the ownership of common stock by a Non-U.S.
Holder (as defined below) as of the date of this prospectus. This discussion
does not address all aspects of U.S. federal income and estate taxes and does
not deal with foreign, state and local consequences that may be relevant to
such Non-U.S. Holder in light of its personal circumstances. Furthermore, the
discussion below is based upon the provisions of the Internal Revenue Code of
1986, as amended (the "Code"), and regulations, rulings and judicial decisions
thereunder as of the date hereof, and such authorities may be repealed, revoked
or modified so as to result in U.S. federal income tax consequences different
from those discussed below. PERSONS CONSIDERING THE PURCHASE, OWNERSHIP OR
DISPOSITION OF COMMON STOCK SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING
THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR
SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER
TAXING JURISDICTION.

As used herein, a "U.S. Holder" of common stock means a holder that is (i)
a citizen or resident of the United States, (ii) a corporation or partnership
created or organized in or under the laws of the United States or any political
subdivision thereof, (iii) an estate the income of which is subject to United
States federal income taxation regardless of its source and (iv) a trust (X)
that is subject to the supervision of a court within the United States and the
control of one or more U.S. persons as described in section 7701(a)(30) of the
Code or (Y) that has a valid election in effect under applicable U.S. Treasury
regulations to be treated as a United States person. A "Non-U.S. Holder" is a
holder that is not a U.S. Holder.

DIVIDENDS

Dividends paid to a Non-U.S. Holder of common stock generally will be
subject to withholding of U.S. federal income tax at a 30% rate or such lower
rate as may be specified by an applicable income tax treaty. However, dividends
that are effectively connected with the conduct of a trade or business by the
Non-U.S. Holder within the United States and, where a tax treaty applies, are
attributable to a U.S. permanent establishment of the Non-U.S. Holder, are not
subject to the withholding tax, but instead are subject to U.S. federal income
tax on a net income basis at applicable graduated individual or corporate
rates. Certain certification and disclosure requirements must be complied with
in order for effectively connected income to be exempt from withholding. Any
such effectively connected dividends received by a foreign corporation may,
under certain circumstances, be subject to an additional "branch profits tax"
at a 30% rate or such lower rate as may be specified by an applicable income
tax treaty.

Until January 1, 2001, dividends paid to an address outside the United
States are presumed to be paid to a resident of such country (unless the payer
has knowledge to the contrary) for purposes of the withholding tax discussed
above and, under the current interpretation of U.S. Treasury regulations, for
purposes of determining the applicability of a tax treaty rate. However, under
U.S. Treasury regulations (the "Final Regulations"), a Non-U.S. Holder of
common stock who wishes to claim the benefit of an applicable treaty rate (and
avoid back-up withholding as discussed below) for dividends paid after December
31, 2000, will be required to satisfy applicable certification and other
requirements.

A Non-U.S. Holder of common stock eligible for a reduced rate of U.S.
withholding tax pursuant to an income tax treaty may obtain a refund of any
excess amounts withheld by filing an appropriate claim for refund with the
Internal Revenue Service.

GAIN ON DISPOSITION OF COMMON STOCK

A Non-U.S. Holder generally will not be subject to U.S. federal income tax
with respect to gain recognized on a sale or other disposition of common stock
unless (i) the gain is effectively connected with a trade or business of the
Non-U.S. Holder in the United States, and, where a tax treaty applies,

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is attributable to a U.S. permanent establishment of the Non-U.S. Holder, (ii)
in the case of a Non-U.S. Holder who is an individual and holds the common
stock as a capital asset, such holder is present in the United States for 183
or more days in the taxable year of the sale or other disposition and certain
other conditions are met, or (iii) we are or have been a "U.S. real property
holding corporation" for U.S. federal income tax purposes.

An individual Non-U.S. Holder gain described in clause (i) above will be
subject to tax on the net gain derived from the sale under regular graduated
U.S. federal income tax rates. An individual Non-U.S. Holder described in
clause (ii) above will be subject to a flat 30% tax on the gain derived from
the sale, which may be offset by U.S. source capital losses (even though the
individual is not considered a resident of the United States). If a Non-U.S.
Holder that is a foreign corporation falls under clause (i) above, it will be
subject to tax on its gain under regular graduated United States federal income
tax rates and, in addition, may be subject to the branch profits tax equal to
30% of its effectively connected earnings and profits within the meaning of the
Code for the taxable year, as adjusted for certain items, unless it qualifies
for a lower rate under an applicable income tax treaty.

We believe we are not, and do not anticipate becoming, a "U.S. real
property holding corporation" for United States federal income tax purposes.

Special rules may apply to certain Non-U.S. Holders, such as "controlled
foreign corporations," "passive foreign investment companies," "foreign
personal holding companies" and corporations that accumulate earnings to avoid
U.S. federal income tax, that are subject to special treatment under the Code.
Such entities should consult their own tax advisors to determine the U.S.
federal, state, local and other tax consequences that may be relevant to them.

FEDERAL ESTATE TAX

Common stock held by an individual Non-U.S. Holder at the time of death
will be included in such holder's gross estate for U.S. federal estate tax
purposes, unless an applicable estate tax treaty provides otherwise.

INFORMATION REPORTING AND BACKUP WITHHOLDING

We must report annually to the IRS and to each Non-U.S. Holder the amount
of dividends paid to such holder and the tax withheld with respect to such
dividends, regardless of whether withholding was required. Copies of the
information returns reporting such dividends and withholding may also be made
available to the tax authorities in the country in which the Non-U.S. Holder
resides under the provisions of an applicable income tax treaty.

Under current law, backup withholding at the rate of 31% generally will
not apply to dividends paid to a Non-U.S. Holder at an address outside the
United States (unless the payer has knowledge that the payee is a U.S. person).
Under the Final Regulations, however, a Non-U.S. Holder will be subject to
back-up withholding unless applicable certification requirements are met.

Payment of the proceeds of a sale of common stock within the United States
or conducted through certain U.S. related financial intermediaries is subject
to both backup withholding and information reporting unless the beneficial
owner certifies under penalties of perjury that it is a Non-U.S. Holder (and
the payor does not have actual knowledge that the beneficial owner is a U.S.
person) or the holder otherwise establishes an exemption.

Any amounts withheld under the backup withholding rules may be allowed as
a refund or a credit against such holder's U.S. federal income tax liability
provided the required information is furnished to the IRS.

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<PAGE>

UNDERWRITING

Subject to the terms and conditions stated in the underwriting agreement
dated , 2000, each underwriter named below has severally agreed to
purchase, and we have agreed to sell to the underwriter, the number of shares
set forth opposite the name of such underwriter.

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
------------------------------------------ ------------
<S> <C>
Deutsche Bank Securities Inc. .........
Salomon Smith Barney Inc. .............
Goldman, Sachs & Co. ..................
Lehman Brothers Inc. ..................
Total .............................. ----------

==========
</TABLE>

The underwriting agreement provides that the obligations of the several
underwriters to purchase the shares included in this offering are subject to
approval of various legal matters by counsel and to other conditions. The
underwriters are obligated to purchase all the shares, other than those covered
by the over-allotment option described below, if they purchase any of the
shares.

The underwriters propose to offer some of the shares directly to the
public at the public offering price set forth on the cover page of this
prospectus and some of the shares to selected dealers at the public offering
price less a concession not in excess of $ per share. The underwriters may
allow, and such dealers may re-allow, a concession not in excess of $ per
share on sales to other dealers. If all of the shares are not sold at the
initial offering price, the underwriters may change the public offering price
and the other selling terms. The underwriters have advised us that they do not
intend to confirm any sales to any accounts over which they exercise
discretionary authority.

We have granted to the underwriters an option, exercisable for 30 days
from the date of this prospectus, to purchase up to additional shares of
common stock at the public offering price less the underwriting discount. The
underwriters may exercise this option solely for the purpose of covering
over-allotments, if any, in connection with this offering. To the extent the
option is exercised, each underwriter will be obligated, subject to specified
conditions, to purchase a number of additional shares approximately
proportionate to that underwriter's initial purchase commitment.

We, our executive officers, directors and Blackstone have agreed that,
subject to certain customary exceptions, for a period of 180 days from the date
of this prospectus, we and they will not, without the prior written consent of
the lead underwriters, offer, sell, contract to sell, pledge, assign or
otherwise dispose of or hedge any shares of our common stock or any securities
convertible into or exchangeable for common stock. The lead underwriters in
their discretion may release any of the securities subject to these lock-up
agreements at any time without notice.

At our request, the underwriters reserved up to approximately 5% of the
shares being offered as directed shares for sale at the initial public offering
price to persons who are directors, officers or our employees, or who are
otherwise associated with us and our affiliates or employees and who have
advised us of their desire to purchase these shares. The number of shares of
common stock available for sale to the general public will be reduced to the
extent of sales of directed shares to any of the persons for whom they have
been reserved. Any shares not so purchased will be offered by the underwriters
on the same basis as all other shares of common stock offered hereby. We have
agreed to indemnify the underwriters against specified liabilities and
expenses, including liabilities under the Securities Act, in connection with
the sales of the directed shares.

Prior to this offering, there has been no public market for our common
stock. Consequently, the initial public offering price for the shares was
determined by negotiations among us and the underwriters. Among the factors
considered in determining the initial public offering price were our record of
operations, our current financial condition, our future prospects, our markets,
the economic conditions in and future prospects for the industry in which we
compete, our management, and

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currently prevailing general conditions in the equity securities markets,
including current market valuations of publicly traded companies considered
comparable to us. There can be no assurance, however, that the prices at which
the shares will sell in the public market after this offering will not be lower
than the price at which they are sold by the underwriters or that an active
trading market in the common stock will develop and continue after this
offering.

We have applied to have the common stock listed on the New York Stock
Exchange under the symbol "GPA."

The following table shows the underwriting discounts and commission to be
paid to the underwriters by us in connection with this offering. These amounts
are shown assuming both no exercise and full exercise of the underwriters'
option to purchase additional shares of common stock.

<TABLE>
<CAPTION>
PAID BY GRAHAM PACKAGING
COMPANY INC.
-----------------------------
NO EXERCISE FULL EXERCISE
------------- --------------
<S> <C> <C>
Per share .............. $ $
Total .................. $ $
</TABLE>

In connection with the offering, the underwriters may purchase and sell
shares of common stock in the open market. These transaction may include
over-allotment, syndicate covering transaction and stabilizing transactions.
Over-allotment involves syndicate sales of common stock in excess of the number
of shares to be purchased by the underwriters in the offering, which creates a
syndicate short position. Syndicate covering transactions involve purchases of
common stock in the open market after the distribution has been completed in
order to cover syndicate short positions. Stabilizing transactions consist of
certain bids or purchases of common stock made for the purpose of preventing or
retarding a decline in the market price of the common stock while the offering
is in progress.

The underwriters also may impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when the
lead underwriters, in covering syndicate short positions or making stabilizing
purchases, repurchases shares originally sold by that syndicate member.

Any of these activities may cause the price of the common stock to be
higher than the price that otherwise would exist in the open market in the
absence of such transactions. These transactions may be effected on the New
York Stock Exchange or in the over-the-counter market, or otherwise and, if
commenced, may be discontinued at any time.

We estimate that the total expenses of this offering, excluding
underwriting discounts and commissions, will be $ .

Deutsche Bank Securities Inc. and its affiliates have performed certain
investment banking and advisory services for us from time to time, for which
they have received customary fees and expenses. Deutsche Bank Securities Inc.
and its affiliate served as an initial purchaser of our senior subordinated
notes and our senior discount notes in 1998. An affiliate of Deutsche Bank
Securities Inc. acquired approximately 4.8% of the equity interests in
BMP/Graham Holdings Corporation in connection with our 1998 recapitalization
and, after giving effect to the IPO reorganization and this offering, such
affiliate will own approximately % of our common stock. In addition, an
affiliate of Deutsche Bank Securities Inc. is the administrative agent,
collateral agent and a lender under our senior credit agreement.

Salomon Smith Barney Inc. and its affiliates have performed certain
investment banking services and advisory services for us from time to time, for
which they have received customary fees and expenses. Salomon Smith Barney Inc.
served as an initial purchaser of our senior subordinated notes and our senior
discount notes in 1998.

The underwriters may in the future, from time to time, engage in
transactions with and perform services for us and our affiliates in the
ordinary course of their business.

We have agreed to indemnify the underwriters against specified
liabilities, including liabilities under the Securities Act, or to contribute
to payments the underwriters may be required to make in respect of any of those
liabilities.

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LEGAL MATTERS

Certain legal matters relating to the offering will be passed upon for us
by Simpson Thacher & Bartlett, New York, New York, and certain legal matters
relating to Pennsylvania law will be passed upon for us by Morgan, Lewis &
Bockius LLP, Philadelphia, Pennsylvania. Certain legal matters relating to the
offering will be passed upon for the underwriters by Cahill Gordon & Reindel,
New York, New York.

EXPERTS

The consolidated financial statements of Graham Packaging Holdings Company
as of and for the years ended December 31, 1999 and 1998, included in this
prospectus and the related financial statement schedules included elsewhere in
the registration statement have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing in this prospectus
and elsewhere in the registration statement (which report expresses an
unqualified opinion and includes an explanatory paragraph referring to the
change in method of accounting for inventory from the LIFO method to the FIFO
method), and have been so included in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.

The combined financial statements and the related financial statement
schedule for the year ended December 31, 1997, included in this prospectus and
registration statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon appearing elsewhere in this
prospectus and are included in reliance upon that report given on the authority
of that firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

We file annual, quarterly and special reports and other information with
the Securities and Exchange Commission. You may read our Commission filings
over the Internet at the Commission's website at http://www.sec.gov. You may
also read and copy documents at the Commission's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Full addresses of
the Commission's reference rooms are: Judiciary Plaza, 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549; 7 World Trade Center, New York, New York
10048; Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Please call the Commission at 1-800-SEC-0330 for further
information on the public reference rooms.

We have filed with the Commission a registration statement on Form S-1
under the Securities Act of 1933, as amended, with respect to the shares of
common stock offered by this prospectus. This prospectus, which is a part of
the registration statement, does not contain all of the information set forth
in the registration statement. For further information about us and our common
stock, you should refer to the registration statement. This prospectus
summarizes material provisions of contracts and other documents to which we
refer you. Since the prospectus may not contain all of the information that you
may find important, you should review the full text of these documents. We have
included copies of these documents as exhibits to our registration statement.

71
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
Reports of Independent Auditors ........................................................ F-2
Audited Financial Statements
Balance Sheets at December 31, 1998 and 1999 .......................................... F-4
Statements of Operations for the years ended December 31, 1997, 1998 and 1999 ......... F-5
Statements of Partners' Capital/Owners' Equity (Deficit) for the years ended
December 31, 1997, 1998 and 1999 .................................................... F-6
Statements of Cash Flows for the years ended December 31, 1997, 1998 and 1999 ......... F-7
Notes to Financial Statements ......................................................... F-8
Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets at December 31, 1999 and April 2, 2000 .......... F-31
Condensed Consolidated Statements of Operations for the quarters ended March 28, 1999
and April 2, 2000 ................................................................... F-32
Condensed Consolidated Statements of Partners' Capital (Deficit) for the year ended
December 31, 1999 and quarter ended April 2, 2000 ................................... F-33
Condensed Consolidated Statements of Cash Flows for the quarters ended March 28, 1999
and April 2, 2000 ................................................................... F-34
Notes to Condensed Consolidated Financial Statements .................................. F-35
</TABLE>

Note: Upon completion of the IPO reorganization, in which we will issue our
common stock in exchange for all of the general and limited partnership
interests of Graham Packaging Holdings Company, we will become the ultimate
parent of the Graham Packaging Group. Prior to the IPO reorganization, our sole
purpose has been to act as co-obligor with Graham Packaging Holdings Company on
our senior discount notes and as co-guarantor with Graham Packaging Holdings
Company under the credit agreement. We have had only nominal assets, do not
conduct any operations and did not receive any proceeds from co-issuing the
senior discount notes.

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Owners
Graham Packaging Holdings Company

We have audited the accompanying consolidated balance sheets of Graham
Packaging Holdings Company as of December 31, 1998 and 1999, and the related
consolidated statements of operations, partners' capital/owners' equity
(deficit), and cash flows for the years then ended. Our audit also included
financial statement schedules I and II (as they pertain to 1998 and 1999)
listed in the index at Item 16(a). These financial statements and schedules are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and 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 1998 and 1999 consolidated financial statements
present fairly, in all material respects, the financial position of the Company
as of December 31, 1998 and 1999, and the results of its operations and its
cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America. Also in our opinion, the
related financial statement schedules (as they pertain to 1998 and 1999), when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.

As discussed in Note 5 to the consolidated financial statements, in 1999
the Company changed its method of accounting for inventory from the LIFO method
to the FIFO method and, retroactively, restated the 1997 and 1998 consolidated
financial statements for the change.

We also audited the adjustment described in Note 5 that was applied to
restate the 1997 combined financial statements to give retroactive effect to
the change in method of accounting for inventory from the LIFO method to the
FIFO method. In our opinion, such adjustment is appropriate and has been
properly applied.

/s/ DELOITTE & TOUCHE LLP

Philadelphia, Pennsylvania
March 22, 2000

F-2
<PAGE>

REPORT OF INDEPENDENT AUDITORS

The Owners
Graham Packaging Group

We have audited the accompanying combined statements of operations,
partners' capital/owners' equity (deficit), and cash flows (prior to
restatement for the change in accounting for inventory costs, as described in
Note 5) of the entities and operations listed in Note 1, collectively referred
to as the Graham Packaging Group, for the year ended December 31, 1997. Our
audit also included financial statement Schedule II (as it pertains to 1997) as
listed in the Index at Item 16(a). These financial statements and schedule are
the responsibility of the Group's management. Our responsibility is to express
an opinion on these financial statements and schedule based on our audit.

We conducted our audit in accordance with auditing standards generally
accepted in the United States. 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 audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements (prior to restatement for the
change in accounting for inventory costs, as described in Note 5) referred to
above present fairly, in all material respects, the combined results of
operations and cash flows of the entities and operations listed in Note 1, for
the year ended December 31, 1997, in conformity with accounting principles
generally accepted in the United States. Also, in our opinion, the related
financial statement Schedule II, when considered in relation to the basic 1997
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.

/s/ Ernst & Young LLP

Harrisburg, Pennsylvania
March 23, 1998,
except for the matters discussed in the last paragraph
of Note 14 and the next to last paragraph of Note 18,
as to which the date is April 24, 1998

F-3
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
BALANCE SHEETS
(IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1998 1999
CONSOLIDATED CONSOLIDATED
-------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............................................... $ 7,476 $ 5,983
Accounts receivable, net ................................................ 87,618 108,766
Inventories ............................................................. 41,247 52,847
Prepaid expenses and other current assets ............................... 14,587 17,138
---------- ----------
Total current assets ..................................................... 150,928 184,734
Property, plant and equipment:
Machinery and equipment ................................................. 560,585 663,001
Land, buildings and leasehold improvements .............................. 85,462 95,636
Construction in progress ................................................ 105,541 129,421
---------- ----------
751,588 888,058
Less accumulated depreciation and amortization .......................... 364,896 391,312
---------- ----------
386,692 496,746
Other assets ............................................................. 59,127 59,769
---------- ----------
Total assets ............................................................. $ 596,747 $ 741,249
========== ==========
LIABILITIES AND PARTNERS' CAPITAL/OWNERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable ........................................................ $ 77,485 $ 94,906
Accrued expenses ........................................................ 71,431 73,269
Current portion of long-term debt ....................................... 11,929 24,370
---------- ----------
Total current liabilities ................................................ 160,845 192,545
Long-term debt ........................................................... 863,468 992,730
Other non-current liabilities ............................................ 11,228 13,327
Minority interest ........................................................ -- 618
Commitments and contingent liabilities (see Notes 17 and 18) ............. -- --
Partners' capital/owners' equity (deficit):
Partners'/owners' capital ............................................... (442,271) (439,123)
Accumulated other comprehensive income .................................. 3,477 (18,848)
---------- ----------
Total partners' capital/owners' equity (deficit) ......................... (438,794) (457,971)
---------- ----------
Total liabilities and partners' capital/owners' equity (deficit) ......... $ 596,747 $ 741,249
========== ==========
</TABLE>

See accompanying notes to financial statements.

F-4
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
STATEMENTS OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1997 1998
COMBINED CONSOLIDATED 1999
(AS ADJUSTED, NOTE 5) (AS ADJUSTED, NOTE 5) CONSOLIDATED
----------------------- ----------------------- -------------
<S> <C> <C> <C>
Net sales ............................................. $521,707 $ 588,131 $716,084
Cost of goods sold .................................... 437,001 472,731 573,431
-------- --------- --------
Gross profit .......................................... 84,706 115,400 142,653
Selling, general, and administrative expenses ......... 34,882 37,765 48,016
Special charges and unusual items ..................... 24,361 24,244 4,553
-------- --------- --------
Operating income ...................................... 25,463 53,391 90,084
Recapitalization expenses ............................. -- 11,769 --
Interest expense ...................................... 14,940 68,379 88,260
Interest income ....................................... (1,510) (371) (786)
Other (income) expense ................................ 755 (122) (729)
Minority interest ..................................... 165 -- (442)
-------- --------- --------
Income (loss) before income taxes and extraordinary
item ................................................. 11,113 (26,264) 3,781
Income tax provision .................................. 600 1,092 2,526
-------- --------- --------
Income (loss) before extraordinary item ............... 10,513 (27,356) 1,255
Extraordinary loss from early extinguishment of debt -- 675 --
-------- --------- --------
Net income (loss) ..................................... $ 10,513 $ (28,031) $ 1,255
======== ========= ========
</TABLE>

See accompanying notes to financial statements.

F-5
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
STATEMENTS OF PARTNERS' CAPITAL/OWNERS' EQUITY (DEFICIT)
(IN THOUSANDS)

<TABLE>
<CAPTION>
NOTES ACCUMULATED
PARTNERS'/ RECEIVABLE FOR OTHER
OWNERS' OWNERSHIP COMPREHENSIVE
CAPITAL INTERESTS INCOME TOTAL
-------------- ---------------- -------------- -------------
<S> <C> <C> <C> <C>
Combined balance at January 1, 1997, as
previously reported .............................. $ 38,715 $ (20,240) $ (1,670) $ 16,805
Add adjustment for the cumulative effect of
applying retroactively the change in the
accounting method for valuing inventory from
LIFO to FIFO (Note 5) ............................ 1,669 -- -- 1,669
---------- ---------- --------- ----------
Combined balance at January 1, 1997, as
adjusted ......................................... 40,384 (20,240) (1,670) 18,474
Net income for the year, as adjusted ............. 10,513 -- -- 10,513
Cumulative translation adjustment ................ -- -- 1,864 1,864
----------
Comprehensive income, as adjusted ................ 12,377
Cash distributions to owners ..................... (28,737) -- -- (28,737)
Other ............................................ 192 -- -- 192
---------- ---------- --------- ----------
Combined balance at December 31, 1997, as
adjusted ......................................... 22,352 (20,240) 194 2,306
Net loss for the year, as adjusted ............... (28,031) -- -- (28,031)
Cumulative translation adjustment ................ -- -- 3,283 3,283
----------
Comprehensive income, as adjusted ................ (24,748)
Cash distributions to owners ..................... (6,852) -- -- (6,852)
Recapitalization ................................. (429,740) 20,240 -- (409,500)
---------- ---------- --------- ----------
Consolidated balance at December 31, 1998 ......... (442,271) -- 3,477 (438,794)
Net income for the year .......................... 1,255 -- -- 1,255
Cumulative translation adjustment ................ -- -- (22,325) (22,325)
----------
Comprehensive income ............................. (21,070)
Recapitalization ................................. 1,893 -- -- 1,893
---------- ---------- --------- ----------
Consolidated balance at December 31, 1999 ......... $ (439,123) -- $ (18,848) $ (457,971)
========== ========== ========= ==========
</TABLE>

See accompanying notes to financial statements.

F-6
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1997 1998
COMBINED CONSOLIDATED
(AS ADJUSTED (AS ADJUSTED, 1999
NOTE 5) NOTE 5) CONSOLIDATED
-------------- --------------- -------------
<S> <C> <C> <C>
Operating activities:
Net income (loss) ........................................... $ 10,513 $ (28,031) $ 1,255
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization ............................ 41,039 39,281 53,247
Amortization of debt issuance fees ....................... 320 3,823 4,749
Accretion of senior discount notes ....................... -- 10,085 12,395
Extraordinary loss ....................................... -- 675 --
Write-off of license fees ................................ -- 1,436 --
Minority interest ........................................ 165 -- (442)
Equity in earnings of joint venture ...................... (200) (274) (231)
Foreign currency transaction (gain) loss ................. 1,124 43 (11)
Other non-cash recapitalization expense .................. -- 3,419 1,865
Changes in operating assets and liabilities, net of
acquisitions of businesses:
Accounts receivable ...................................... (10,918) (1,565) (25,262)
Inventories .............................................. (3,905) (801) (12,315)
Prepaid expenses and other current assets ................ (3,935) (4,025) (2,955)
Other non-current assets and liabilities ................. 565 450 1,099
Accounts payable and accrued expenses .................... 32,137 17,291 22,131
---------- ---------- ----------
Net cash provided by operating activities ................. 66,905 41,807 55,525
Investing activities:
Net purchases of property, plant and equipment ........... (53,173) (133,912) (170,972)
Acquisitions of/investments in businesses, net of cash
acquired ............................................... (19,016) (45,152) (10,284)
Other .................................................... (88) (2,130) (500)
---------- ---------- ----------
Net cash used in investing activities ..................... (72,277) (181,194) (181,756)
Financing activities:
Proceeds from issuance of long-term debt ................. 174,049 1,130,411 480,462
Payment of long-term debt ................................ (136,430) (271,068) (354,152)
Recapitalization debt repayments ......................... -- (264,410) --
Recapitalization owner note repayments ................... -- 20,240 --
Recapitalization cash distributions to owners ............ -- (429,566) --
Other cash distributions to owners ....................... (28,073) (6,852) --
Debt issuance fees ....................................... -- (39,100) (123)
---------- ---------- ----------
Net cash provided by financing activities ................. 9,546 139,655 126,187
Effect of exchange rate changes ........................... (387) (10) (1,449)
---------- ---------- ----------
Increase (decrease) in cash and cash equivalents .......... 3,787 258 (1,493)
Cash and cash equivalents at beginning of year ............ 3,431 7,218 7,476
---------- ---------- ----------
Cash and cash equivalents at end of year .................. $ 7,218 $ 7,476 $ 5,983
========== ========== ==========
</TABLE>

See accompanying notes to financial statements.

F-7
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Combination

The consolidated and combined 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.; subsidiaries thereof; and land and buildings
that were used in the operations, owned by the control group of owners and
contributed to the Graham Packaging Group (as defined). Prior to February 2,
1998, these operations of the Graham Packaging Group were under common control
by virtue of ownership by the Donald C. Graham family. In addition, the 1998
and 1999 consolidated financial statements of the Group include GPC Capital
Corp. I, a wholly owned subsidiary of Graham Packaging 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 Graham Packaging Company under the
Senior Subordinated Notes (as herein defined) and as co-borrower with Graham
Packaging Company under the New 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 under the New
Credit Agreement. GPC Capital Corp. I and GPC Capital Corp. II have only
nominal assets and do not conduct any independent operations. Furthermore,
since July 27, 1998 the consolidated financial statements of the Group include
the operations of Graham Emballages Plastiques S.A.; Graham Packaging U.K.
Ltd.; Graham Plastpak Plastik Ambalaj A.S.; and Graham Packaging Deutschland
GmbH as a result of the acquisition of selected plants of Crown Cork & Seal.
Since July 1, 1999 the consolidated financial statements of the Group include
the operations of Graham Packaging Argentina S.A. as a result of the
acquisition of companies in Argentina. Since July 6, 1999 the consolidated
financial statements of the Group include the operations of PlasPET Florida,
Ltd. as a result of an investment made in a limited partnership. (Refer to Note
3 for a discussion of each of these investments). These entities and assets are
referred to collectively as Graham Packaging Group (the "Group"). With respect
to the periods subsequent to the Recapitalization that occurred on February 2,
1998 (see Note 2), the financial statements and references to the "Group"
relate to Holdings and its subsidiaries on a consolidated basis and for the
period prior to the Recapitalization to the "Group" on a combined basis. The
combined financial statements include the accounts and results of operations of
the Group for all periods that the operations were under common control. All
amounts in the financial statements are those reported in the historic
financial statements of the individual operations. All significant intercompany
accounts and transactions have been eliminated in the consolidated and combined
financial statements.

Since the Recapitalization, Holdings has had no assets, liabilities or
operations other than its direct and indirect investments in Graham Packaging
Company, its ownership of GPC Capital Corp. II and the Senior Discount Notes
and related unamortized issuance costs. Holdings has fully and unconditionally
guaranteed the Senior Subordinated Notes of Graham Packaging 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 of Holdings and GPC Capital Corp. II.

Description of Business

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

F-8
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999

Investment in Joint Venture

The Group accounts for its investment in a joint venture in Poland under
the equity method of accounting.

Revenue Recognition

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

Cash and Cash Equivalents

The Group considers cash and investments with a maturity of three months
or less when purchased to be cash and cash equivalents.

Inventories

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

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. Lease amortization is
included in depreciation expense. Interest costs are capitalized during the
period of construction of capital assets as a component of the cost of
acquiring these assets.

Other Assets

Other assets include debt issuance fees, goodwill, license fees and other
intangible assets. Debt issuance fees totaled $32.3 million and $27.6 million
as of December 31, 1998 and 1999, respectively. These amounts are net of
accumulated amortization of $3.8 million and $8.5 million as of December 31,
1998 and 1999, respectively. Amortization is computed by the effective interest
method over the term of the related debt for debt issuance fees and by the
straight-line method for goodwill, license fees and other intangible assets.
The term used in computing amortization for goodwill is twenty years, and for
license fees and other intangible assets, from three to ten years. Accumulated
amortization of goodwill was $342,000 and $1,885,000 as of December 31, 1998
and 1999, respectively. Goodwill is reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of the goodwill may
not be recoverable.

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. 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.

Derivatives

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

F-9
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999

related to the Credit Agreement. The Group also enters into forward exchange
contracts, when considered appropriate, to hedge the exchange rate exposure on
transactions that are denominated in a foreign currency. During 1997, the Group
used a combination of interest rate collar and swap agreements to hedge
interest rate risk.

Foreign Currency Translation

The Group uses the local currency as the functional currency for 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/owners' equity
(deficit).

Comprehensive Income

Foreign currency translation adjustments are included in other
comprehensive income and added with net income to determine total comprehensive
income which is displayed in the Statements of Partners' Capital/Owners' Equity
(Deficit).

Income Taxes

The Group 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/owners. For the Group'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 Group accounts for equity based compensation using the intrinsic value
method prescribed in Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees". SFAS No. 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. The Group has elected to remain on its current method of accounting as
described above and has adopted the disclosure requirements of SFAS No. 123.

Postemployment Benefits

The Group maintains a Supplemental Income Plan, which provides
postemployment benefits to a certain employee of the Group. Accrued
postemployment benefits of approximately $713,000 and $697,000 as of December
31, 1998 and 1999, respectively, were included in other non-current
liabilities.

Computer Software Developed for Internal-Use

As of January 1, 1999, the Group adopted Statement of Position ("SOP")
98-1, "Accounting For the Costs of Computer Software Developed For or Obtained
For Internal-Use". This SOP requires the capitalization of certain costs
incurred in connection with developing or obtaining software for internal use.
The adoption of this SOP did not have a significant impact on the financial
results of the Group for the year ended December 31, 1999.

F-10
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999

Start-Up Activities

As of January 1, 1999, the Group adopted SOP 98-5, "Reporting on the Costs
of Start-Up Activities". This SOP requires costs of start-up activities and
organization costs to be expensed as incurred. The adoption of this SOP did not
have a significant impact on the results of the Group for the year ended
December 31, 1999.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles 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 1998 financial statements
to conform to the 1999 presentation. These reclassifications had no impact on
the 1997 financial statement presentation.

New Accounting Pronouncements Not Yet Adopted

In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities". This
standard establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts (collectively referred to as derivatives) and for hedging activities.
It requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those
instruments at fair value.

In June 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 137, "Accounting for Derivative Instruments
and Hedging Activities -- Deferral of Effective Date of FASB Statement No.
133". This Standard defers the effective date of FASB Statement No. 133 ("SFAS
No. 133") to all fiscal quarters of all fiscal years beginning after June 15,
2000. Management has not completed its review of SFAS No. 133 and has not
determined the impact adoption will have on the Group'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 owners of the Group (the "Graham Partners") and (iii)
BMP/Graham Holdings Corporation, a Delaware corporation formed by Blackstone
Capital Partners III Merchant Banking Fund L.P. ("Investor LP"), 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.

The 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 Graham Packaging Company, which was renamed "Graham
Packaging Company, L.P.";

o The contribution by certain Graham Partners to the Group of their
ownership interests in certain partially owned subsidiaries of Holdings
and certain real estate used but not owned by Holdings and its
subsidiaries;

F-11
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999

o The initial borrowing by Graham Packaging Company of $403.5 million (the
"Bank Borrowings") in connection with the New Credit Agreement entered
into by and among Graham Packaging Company, Holdings and a syndicate of
lenders;

o The issuance of $225 million Senior Subordinated Notes by Graham Packaging
Company and $100.6 million gross proceeds ($169 million aggregate
Principal amount at maturity) Senior Discount Notes by Holdings. A wholly
owned subsidiary of each of Graham Packaging Company and Holdings serves
as co-issuer with its parent for its respective issue of Notes;

o The repayment by Graham Packaging Company of substantially all of the
existing indebtedness and accrued interest of Holdings and its
subsidiaries;

o The distribution by Graham Packaging 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 Partners for $429.6 million;

o The purchase by the Equity Investors of certain partnership interests in
Holdings held by the Graham Partners for $208.3 million;

o The repayment by the Graham Partners of amounts owed to Holdings under the
$20.2 million promissory notes;

o The recognition of additional compensation expense under the 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 Graham Packaging Company
on November 2, 1998 to certain Graham Partners 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 Partners 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 Graham Packaging Company, and GPC Opco GP L.L.C., a wholly owned
subsidiary of Holdings, owns a 1% general partnership interest in Graham
Packaging Company.

As a result of the Recapitalization, the Group incurred charges of
approximately $32 million related to the issuance of debt which will be
recognized as interest expense over 6 to 11 years based upon the terms of the
related debt instruments. In addition, Recapitalization expenses of
approximately $25 million, which related to transaction fees, expenses,
compensation, unamortized licensing fees and costs associated with the
termination of the interest rate collar and swap agreements were incurred. The
Recapitalization also resulted in the write-off of unamortized debt issuance
fees, which is reflected as an extraordinary loss in the financial statements.
Compensation expense totaling $10.7 million, of which $9.6 million had been
expensed as of December 31, 1999, related to stay bonuses and the granting of
certain ownership interests to management which will be recognized over a
period up to three years from the date of the Recapitalization. See Note 14.

3. ACQUISITIONS

Purchase of Certain Plants of Crown, Cork & Seal:

On July 27, 1998 the Company acquired selected plastic bottle
manufacturing operations of Crown, Cork & Seal located in France, Germany, the
United Kingdom and Turkey for a total

F-12
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999

purchase price (including acquisition-related costs) of $41.4 million, net of
liabilities assumed. The acquisition was recorded under the purchase method of
accounting and accordingly, the results of operations of the acquired
operations are included in the financial statements of the Group beginning on
July 27, 1998. The purchase price has been allocated to assets acquired and
liabilities assumed based on fair values. Goodwill is being amortized over 20
years on the straight-line basis. The allocated fair value of assets acquired
and liabilities assumed is summarized as follows (in thousands):

<TABLE>
<S> <C>
Current assets ........................ $21,965
Property, plant and equipment ......... 29,845
Other assets .......................... 2,274
Goodwill .............................. 14,725
-------
Total ................................. 68,809
Less liabilities assumed .............. 27,381
-------
Net cost of acquisition ............... $41,428
=======
</TABLE>

Purchase of Rheem-Graham Embalagens, Ltda:

On April 30, 1997, Graham Packaging do Brasil Industria e Comercio S.A.,
then a wholly owned subsidiary of Holdings with no operations, and owners of
Holdings, acquired 80% of the operating assets of Rheem-Graham Embalagens
Ltda., which manufactures and sells plastic packaging products, from Rheem
Empreendimentos Industrialis e Comerciais. Rheem Empreendimentos Industrialis e
Comerciais contributed the remaining 20% of the operating assets of
Rheem-Graham Embalagens Ltda. in exchange for a 20% minority interest in Graham
Packaging do Brasil Industria e Comercio S.A. The purchase price related to the
80% of the operating assets of Rheem-Graham Embalagens Ltda. was approximately
$21.1 million, which was funded through borrowings under the Group's bank
facilities. The acquisition was recorded under the purchase method of
accounting and accordingly, the results of operations of the business acquired
by Graham Packaging do Brasil Industria e Comercio S.A. are included in the
financial statements of the Group beginning on April 30, 1997, less a minority
interest amount equal to 20% of Graham Packaging do Brasil Industria e Comercio
S.A. owned by the unaffiliated entity. The purchase price has been allocated to
assets acquired and liabilities assumed based upon fair values on the date of
acquisition. The fair value of assets and liabilities acquired and contributed
to Graham Packaging do Brasil Industria e Comercio S.A. is summarized as
follows (in thousands):

<TABLE>
<S> <C>
Net working capital ................... $ 2,451
Property, plant and equipment ......... 23,679
-------
$26,130
=======
</TABLE>

In February 1998, the Group acquired the remaining 20% minority interest
of $4,983,000 in Graham Packaging do Brasil Industria e Comercio S.A. from
Rheem Empreendimentos Industrialis e Comerciais for $2,995,000. The difference
of $1,988,000 has been recorded as a reduction of the carrying amount of
property, plant & equipment.

Purchase of Graham Packaging Argentina S.A.

F-13
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999

December 31, 2000. If and when such contingency is satisfied, additional
goodwill will be recorded. The acquisition was recorded under the purchase
method of accounting and accordingly, the results of operations of the acquired
operations are included in the financial statements of the Group beginning on
July 1, 1999. The initial purchase price has been allocated to assets acquired
and liabilities assumed based on fair values. Goodwill is being amortized over
20 years on the straight-line basis. The initial allocated fair value of assets
acquired and liabilities assumed is summarized as follows (in thousands):

<TABLE>
<S> <C>
Current Assets ........................ $ 2,831
Property, plant and equipment ......... 4,840
Goodwill .............................. 9,044
-------
Total ................................. 16,715
Less liabilities assumed .............. 8,244
-------
Net cost of acquisition ............... $ 8,471
=======
</TABLE>

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, for
a total purchase price (including acquisition-related costs) of $1.2 million,
net of liabilities assumed. The investment was accounted for under the equity
method of accounting prior to July 6, 1999. The acquisition was recorded on
July 6, 1999 under the purchase method of accounting and accordingly, the
results of operations of the acquired operations are included in the financial
statements of the Group beginning on July 6, 1999. The initial purchase price
has been allocated to assets acquired and liabilities assumed based on fair
values. Goodwill is being amortized over 20 years on the straight-line basis.
The allocated fair value of assets acquired and liabilities assumed is
summarized as follows (in thousands):

<TABLE>
<S> <C>
Current Assets ........................ $ 443
Property, plant and equipment ......... 4,689
Other Assets .......................... 132
Goodwill .............................. 2,841
------
Total ................................. 8,105
Less liabilities assumed .............. 6,907
------
Net cost of acquisition ............... $1,198
======
</TABLE>

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:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1998 1999
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Net sales ......... $ 645,578 $721,756
Net loss .......... (29,334) (142)
</TABLE>

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.

F-14
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999

4. ACCOUNTS RECEIVABLE

Accounts receivable are presented net of an allowance for doubtful
accounts of $1,435,000 and $1,791,000 at December 31, 1998 and 1999,
respectively. Management performs ongoing credit evaluations of its customers
and generally does not require collateral.

The Group's sales to one customer, which exceeded 10% of total sales in
each of the past three years, were 14%, 12% and 10% for the years ended
December 31, 1997, 1998 and 1999, respectively. For the year ended December 31,
1999, approximately 60%, 34% and 6% of the sales to this customer were made in
the United States, Europe and Canada, respectively.

5. INVENTORIES

Inventories consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1998 1999
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Finished goods .................. $23,497 $32,551
Raw materials and parts ......... 17,750 20,296
------- -------
$41,247 $52,847
======= =======
</TABLE>

Effective June 28, 1999, the Company changed its method of valuing
inventories for its domestic operations from the LIFO method to the FIFO method
as over time it more closely matches revenues with costs. The FIFO method more
accurately reflects the cost 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 the
net income for the year ended December 31, 1997 by approximately $0.3 million
and increased the net loss for the year ended December 31, 1998 by
approximately $2.0 million. Prior to restatement, the LIFO reserve was $0.0
million at December 31, 1998.

6. ACCRUED EXPENSES

Accrued expenses consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1998 1999
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Accrued employee compensation and benefits ......... $19,983 $21,116
Special charges and unusual items .................. 7,744 1,798
Accrued interest ................................... 16,736 21,432
Other .............................................. 26,968 28,923
------- -------
$71,431 $73,269
======= =======
</TABLE>

F-15
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999

7. DEBT ARRANGEMENTS

Long-term debt consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1998 1999
----------- ------------
(IN THOUSANDS)
<S> <C> <C>

Term loan .................................. $466,800 $ 561,850
Revolving loan ............................. 61,000 92,500
Revolving credit facilities ................ 7,055 8,709
Senior Subordinated Notes .................. 225,000 225,000
Senior Discount Notes ...................... 110,697 123,092
Other ...................................... 4,845 5,949
-------- ---------
875,397 1,017,100
Less amounts classified as current ......... 11,929 24,370
-------- ---------
$863,468 $ 992,730
======== =========
</TABLE>

On February 2, 1998, as discussed in Note 2 to the Financial Statements,
the Group refinanced the majority of its existing credit facilities in
connection with the Recapitalization 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 an additional $175 million. The New Credit
Agreement and the Amendment consist of four term loans to Graham Packaging
Company totaling $570 million and two revolving loan facilities to Graham
Packaging Company totaling $255 million. The unused portion of the revolving
loan facilities at December 31, 1998 and 1999 was $194.0 million and $162.5
million, respectively. The obligations of Graham Packaging 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, and require payments of $15.0 million in 2000, $20.0
million in 2001, $25.0 million in 2002, $27.5 million in 2003 and $93.0 million
in 2004. 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, or if the Group's
Net Leverage Ratio were above 5.15:1.0 at March 31, 2000, Blackstone has agreed
to make an equity contribution to the Group through the administrative agent of
up to $50 million. The Group's Net Leverage Ratio being above 5.15:1.0 at March
31, 2000 is not an event of default under the New Credit Agreement. In
addition, the New Credit Agreement and Amendment contain certain affirmative
and negative covenants as to the operations and financial condition of the
Group, as well as certain restrictions on the payment of dividends and other
distributions to Holdings.

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

The Recapitalization also included the issuance of $225 million in Senior
Subordinated Notes of Graham Packaging Company and $100.6 million gross
proceeds in Senior Discount Notes ($169 million aggregate principal amount at
maturity) of Holdings. The Senior Subordinated Notes are

F-16
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999

unconditionally guaranteed on a senior subordinated basis by Holdings and
mature on January 15, 2008, with interest payable on $150 million at a fixed
rate of 8.75% and with interest payable on $75 million at LIBOR plus 3.625%.
The Senior Discount Notes mature on January 15, 2009, with cash interest
payable beginning January 15, 2003 at 10.75%. The effective interest rate to
maturity on the Senior Discount Notes is 10.75%.

At December 31, 1999, Graham Packaging Company had entered into three U.S.
Dollar interest rate swap agreements that effectively fix the Eurocurrency Rate
on $450 million of the term loans, on $200 million through April 9, 2002 at
5.8075%, on $100 million through April 9, 2003 at 5.77% and on $150 million
through September 10, 2001 at 5.5075%.

Under the New Credit Agreement and Amendment, Graham Packaging Company is
subject to restrictions on the payment of dividends or other distributions to
Holdings; provided that, subject to certain limitations, Graham Packaging
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 their present or former officers or employees
of Holdings, Graham Packaging 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.

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 Graham Packaging 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 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 Group's effective rate on the outstanding borrowings under the term
loan and revolving loan was 7.73% and 8.40% at December 31, 1998 and 1999,
respectively.

The Group had several variable-rate revolving credit facilities
denominated in U.S. Dollars, French Francs and Italian Lire, with aggregate
available borrowings at December 31, 1999 equivalent to $14.5 million. The
Group's average effective rate on borrowings of $7.1 million on these credit
facilities at December 31, 1998 was 4.95%. The Group's average effective rate
on borrowings of $8.7 million on these credit facilities at December 31, 1999
was 8.53%.

Interest paid during 1997, 1998 and 1999, net of amounts capitalized of
$615,000, $2,639,000 and $3,727,000, respectively, totaled $14,900,000,
$41,985,000 and $66,166,000, respectively.

The annual debt service requirements of the Group for the succeeding five
years are as follows: 2000 -- $24.4 million; 2001 -- $21.1 million; 2002 --
$25.7 million; 2003 -- $28.1 million and 2004 -- $186.1 million.

F-17
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999

8. 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.

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 and was estimated using discounted cash flow
analyses based on current incremental borrowing rates for similar types of
borrowing arrangements. Other long-term debt includes the Senior Discount Notes
and $150 million of Senior Subordinated Notes and totaled approximately $260.7
million and $273.1 million at December 31, 1998 and 1999, respectively. The
fair value of this long-term debt, including the current portion, was
approximately $271.4 million and $256.7 million at December 31, 1998 and 1999,
respectively.

Derivatives

The Group is exposed to market risk from changes in interest rates and
currency exchange rates. The Group 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 Group 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 Group's Credit Agreement. Under these agreements, the Group
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. The interest rate differential is
reflected as an adjustment to interest expense over the life of the interest
rate swap agreements.

The following table presents information for all interest rate
instruments. The notional amount does not necessarily represent amounts
exchanged by the parties and, therefore is not a direct measure of the Group's
exposure to credit risk. The fair value approximates the cost to settle the
outstanding contracts. The carrying value, which represents accrued interest
due to counterparties under swap agreements, was not significant.

<TABLE>
<CAPTION>
1998 1999
(IN THOUSANDS) ----------- -----------
<S> <C> <C>
Notional amount .......... $450,000 $450,000
Fair value ............... (8,784) 9,283
</TABLE>

Although derivatives are an important component of the Group's interest
rate management program, their incremental effect on interest expense for 1997,
1998 and 1999 was not significant.

The Group 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 Group 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 deferred in other current assets
and are included in the basis of the underlying

F-18
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999

transactions. To the extent that a qualifying hedge is terminated or ceases to
be effective as a hedge, any deferred gains and losses up to that point
continue to be deferred and are included in the basis of the underlying
transaction. At December 31, 1998 the Group had foreign currency forward
exchange contracts totaling $5,793,000 with a fair value of $5,936,000. The
deferred gains and losses on these instruments were not significant. There were
no currency forward contracts outstanding at December 31, 1999.

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

9. LEASE COMMITMENTS

The Group was a party to various leases involving real property and
equipment during 1997, 1998 and 1999. Total rent expense for operating leases
amounted to $9,599,000 in 1997, $10,627,000 in 1998 and $13,505,000 in 1999.
Minimum future lease obligations on long-term noncancellable operating leases
in effect at December 31, 1999, are as follows: 2000 -- $8,516,000; 2001 --
$7,909,000; 2002 -- $6,993,000; 2003 -- $5,887,000; 2004 -- $4,636,000; and
thereafter -- $8,619,000.

10. TRANSACTIONS WITH AFFILIATES

Transactions with entities affiliated through common ownership included
the following:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1997 1998 1999
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Equipment purchases from affiliates ..................... $11,104 $22,045 $20,367

Management services provided by affiliates, including
management, legal, tax, accounting, insurance, treasury,
and employee benefits administration services .......... $ 2,820 $ 2,071 $ 2,028

Management services provided and sales to Graham
Engineering Corporation, including engineering services
and raw materials ...................................... $ 945 $ 1,414 $ 2,453

Interest income on notes receivable from owners ......... $ 1,026 $ 103 --
</TABLE>

Account balances with affiliates include the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1999
--------- -------
(IN THOUSANDS)
<S> <C> <C>
Accounts receivable ......... $1,116 $529
Accounts payable ............ $2,804 $513
</TABLE>

F-19
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999

Certain land and buildings included in the accompanying financial
statements were leased by the Group from the control group of owners under
operating leases until the assets were contributed to the Group. The lease
payments totaling approximately $2.6 million in 1997 and zero in 1998 and 1999
are classified as distributions to owners in the accompanying financial
statements. The depreciation and operating expenses related to the land and
buildings are included in the operations of the Group. Certain of the real
property leased from the control group was contributed to the Group as part of
the Recapitalization and the related leases were terminated.

11. PENSION PLANS

Substantially all employees of the Group 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
Group'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.

Prior to the Recapitalization, the Group participated in a plan sponsored
by an affiliated company. As part of the Recapitalization, the Group's portion
of pension obligations and related plan assets were spun off into a newly
established plan. The transactions resulted in a one-time allocation of
additional plan assets.

F-20
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999

The following table sets forth the change in the Group's benefit
obligation and pension plan assets at market value for the years ended December
31, 1998 and 1999:

<TABLE>
<CAPTION>
1998 1999
------------- -------------
(IN THOUSANDS)
<S> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year ....................... $ (17,690) $ (23,568)
Service cost .................................................. (1,738) (2,034)
Interest cost ................................................. (1,356) (1,640)
Benefits paid ................................................. 437 436
Change in benefit payments due to experience .................. (903) (10)
Effect of exchange rate changes ............................... 210 (207)
Decrease (increase) in benefit obligation due to change in
discount rate ................................................ (1,863) 2,149
Increase in benefit obligation due to plan experience ......... (112) (221)
Increase in benefit obligation due to plan change ............. (553) (347)
--------- ---------
Benefit obligation at end of year ............................. $ (23,568) $ (25,442)
========= =========
Change in plan assets:
Plan assets at market value at beginning of year .............. $ 14,871 $ 20,263
Actual return on plan assets .................................. 2,299 2,832
Foreign currency exchange rate changes ........................ (198) 196
Employer contribution ......................................... 2,304 1,882
Benefits paid ................................................. (437) (436)
Acquisitions (spin off from affiliated company) ............... 1,424 (84)
--------- ---------
Plan assets at market value at end of year .................... $ 20,263 $ 24,653
========= =========
Funded status ................................................. (3,305) (789)
Unrecognized net actuarial loss ............................... 135 (2,948)
Unrecognized prior service cost ............................... 981 1,244
--------- ---------
Accrued pension expense ....................................... $ (2,189) $ (2,493)
========= =========
</TABLE>

The accrued pension expense of $2,189,000 at December 31, 1998 consists of
$2,362,000 accrued pension expense for the U.S. Plan and $173,000 prepaid
pension asset for the Canadian Plan. The accrued pension expense of $2,493,000
at December 31, 1999 consists of $2,806,000 accrued pension expense for the
U.S. Plan and $313,000 prepaid pension asset for the Canadian Plan.

The projected benefit obligations for these plans were determined using
discount rates of 7.0 percent as of December 31, 1998 and 7.5 percent as of
December 31, 1999 in the United States and 7.0 percent as of December 31, 1998
and 1999 in Canada. The assumed long-term rate of return on United States plan
assets for 1998 and 1999 was 8.0 percent and for Canadian plan assets was 8.75
percent for 1998 and 8.0 percent for 1999. The weighted average rate of
increase used for future compensation levels was 5.0 percent for 1997, 1998 and
1999 in the United States and 6.5 percent for 1997 and 1998 and 5.0 percent for
1999 in Canada. The Group's net pension cost for its defined benefit pension
plans includes the following components:

F-21
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1997 1998 1999
----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost ................................. $ 1,415 $ 1,738 $ 2,033
Interest cost ................................ 1,176 1,356 1,640
Net investment return on plan assets ......... (1,082) (2,167) (2,839)
Net amortization and deferral ................ 121 1,032 1,366
-------- -------- --------
Net periodic pension costs ................... $ 1,630 $ 1,959 $ 2,200
======== ======== ========
</TABLE>

The Group sponsors a defined contribution plan under Internal Revenue Code
Section 401(k) which covers all hourly and salaried employees other than
employees represented by a collective bargaining unit. The Group also sponsored
other defined contribution plans under collective bargaining agreements. The
Group's contributions are determined as a specified percentage of employee
contributions, subject to certain maximum limitations. The Group's costs for
these plans for 1997, 1998, and 1999 were $742,000, $804,000 and $875,000,
respectively.

12. PARTNERS' CAPITAL/OWNERS' EQUITY

Owners' equity included the partners' capital and shareholders' equity of
the various entities and operations included in the financial statements, as
described in Note 1. Prior to the Recapitalization, as described in Note 2,
owners' equity included the partners' capital and shareholders' equity of those
entities and operations included in the combined financial statements.
Effective January 1, 1994, pursuant to an ownership structure reorganization of
Holdings and several affiliated entities, Holdings obtained 60% of the
outstanding voting interests of members of the Group operating in France,
Italy, and the United Kingdom. The remaining 40% of the outstanding voting
interests was obtained directly by owners of Holdings. Also, Holdings obtained
99% of the voting interest in Graham Recycling Company, L.P. During 1995, the
members operating in France and Italy issued 100% of their nonvoting preferred
interests to Holdings.

At December 31, 1997, Holdings owned 100% of the outstanding stock of
Graham Packaging Canada, Ltd., a Canadian corporation, 15.8% of the outstanding
stock of Graham Packaging do Brasil Industria e Comercio S.A. and a 99% limited
partnership interest in Graham Packaging Company. The remaining 1% interest in
Graham Recycling Company, L.P. and Graham Packaging Company were owned directly
by owners of Holdings. In addition, 64.2% of Graham Packaging do Brasil
Industria e Comercio S.A. was owned directly by owners of Holdings and the
remaining 20% was owned by an unrelated entity. As noted in Note 3, in February
1998, the Group acquired the remaining 20% interest in Graham Packaging do
Brasil Industria e Comercio S.A.

At December 31, 1997, Holdings held notes receivable from limited partners
of $20,240,000, bearing interest at 5.07% for partnership interests in it. The
notes were classified as a reduction of owners' equity in the balance sheets.
As a result of the Recapitalization (see note 2), this obligation was repaid by
the limited partners in 1998.

At December 31, 1998, Holdings owned a 99% direct limited partnership
interest in Graham Packaging Company. The remaining 1% interest in Graham
Packaging Company is owned as a general partnership interest by GPC Opco GP
LLC, which is 100% owned by Holdings. Graham Packaging Company in turn owns a
99% interest and, through its 100% owned subsidiary GP Sub GP, LLC, a 1%
general partnership interest in the various entities and operations included in
the financial statements, as described in Note 1, except for Graham Packaging
Canada, Ltd., GPC Capital Corp. I, Graham Plastpak Plastik Ambalaj A.S., where
Graham Packaging Company owns 100% of the capital stock of

F-22
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999

these subsidiaries. In addition, Holdings owns 100% of the capital stock of GPC
Capital Corp. II. As a result of the Recapitalization, any interests in these
entities formerly held by owners of Holdings were contributed to Holdings,
which in turn contributed these interests to Graham Packaging Company.

At December 31, 1999, Holdings owned a 99% direct limited partnership
interest in Graham Packaging Company. The remaining 1% interest in Graham
Packaging Company is owned as a general partnership interest by GPC Opco GP
LLC, which is 100% owned by Holdings. Graham Packaging Company in turn owns a
99% interest and, through its 100% owned subsidiary GP Sub GP, LLC, a 1%
general partnership interest in the various entities and operations included in
the financial statements, as described in Note 1, except for Graham Packaging
Argentina S.A., Graham Packaging Canada, Ltd., GPC Capital Corp. I, and Graham
Plastpak Plastik Ambalaj A.S., where Graham Packaging Company owns 100% of the
capital stock of these subsidiaries and PlasPET Florida, Ltd. where Graham
Packaging Company owns a 51% general partnership interest. In addition,
Holdings owns 100% of the capital stock of GPC Capital Corp. II.

13. MANAGEMENT OPTION PLAN

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

The Option Plan provides for the grant to certain management employees of
Holdings and its subsidiaries of options ("Options") to purchase limited
partnership interests in Holdings equal to 0.01% of Holdings (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 500 Units, representing a total of up to 5% of the equity of
Holdings.

The exercise price per Unit shall be at or above the fair market value of
the 0.01% interest on the date of the 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
Group by allowing such employees to acquire an ownership interest in the Group,
thereby motivating them to contribute to the success of the Group and to remain
in the employ of the Group.

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. As of December 31, 1998, 399.1 Unit Options were granted at an exercise
price of $25,789 per unit. No options were vested, forfeited, canceled or
exercised as of December 31, 1998. During 1999, 22.8 Unit Options were
forfeited and 123.7 were granted. As of December 31, 1999, 500 Unit Options
were granted at an exercise price of $25,789 per unit and 131.7 of the 500 were
vested.

The Group applies APB 25 in accounting for the Option Plan. The exercise
price of the Unit equals the fair market value of the 0.01% interest on the
date of the grant 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 Group's pro forma net income (loss) for 1998 and 1999
would have been reflected as follows (in thousands):

<TABLE>
<CAPTION>
1998 1999
------------- ---------
<S> <C> <C>
As reported .......... $ (28,031) $1,255
Pro forma ............ (28,452) 727
</TABLE>

F-23
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999

The fair value of each option Unit is estimated on the date of the grant
using the Black-Scholes option pricing model with the following
weighted-average assumptions used for Units granted in 1998: pay out yield 0%,
expected volatility of 0%, risk free interest rate of 5.558%, and expected life
of 4.6 years; and for Units granted in 1999: pay out yield 0%, expected
volatility of 0%, risk free interest rate of 4.57%, and expected life of 3.6
years.

14. SPECIAL CHARGES AND UNUSUAL ITEMS

The special charges and unusual items were as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1997 1998 1999
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Restructuring of facilities ........... $ 1,222 $ 1,960 $ 552
Systems conversion .................... 515 963 1,304
Litigation ............................ 22,624 285 --
Recapitalization compensation ......... -- 20,609 2,669
Aborted acquisition costs ............. -- 427 28
------- ------- ------
$24,361 $24,244 $4,553
======= ======= ======
</TABLE>

In 1997, the Group incurred $746,000 related to the restructuring of the
facilities in France and $476,000 in restructuring costs at its corporate
offices. In 1998, the Group incurred restructuring charges of $1,960,000
related to the decision to close a plant in Whiting, Indiana and to restructure
a plant in Blyes, France. Included in the $1,960,000 is $1,200,000 related to
the legal liability of severing 51 employees at the Blyes plant in France and
$350,000 related to the severing of 26 employees at the Whiting, Indiana plant.
In 1999, the Group incurred an additional $552,000 related to the plant closure
in Whiting, Indiana and the facility restructuring in Blyes, France. The amount
of the charges paid as of December 31, 1999 related to the restructuring of the
facility in Blyes, France that began in 1998 was $1,480,000. The remaining
accrual for this restructuring as of December 31, 1999 is $385,000.

The systems conversion expenses relate to costs incurred by the Group as
part of a multi-year project to ensure that its information systems and related
hardware would be year 2000 compliant. The Group engaged outside consultants
beginning in 1997 to assist with the evaluation and assessment of its
information systems requirements and the selection and implementation of
enterprise resource planning software.

Recapitalization expenses included in special charges and unusual items
relate to compensation and to write-off of unamortized licensing fees.
Additionally, 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), which are being recognized over a period of up
to three years.

The litigation costs in 1997 are primarily costs incurred and accrued by
the Group for legal fees in connection with the claims against the Group for
alleged patent infringements and the counterclaims brought by the Group
alleging violations of federal antitrust law by the plaintiffs and amounts
expected to be paid in settlement of the claims in the JCI-Schmalbach-Lubeca
matter. See Note 18 to the Financial Statements.

F-24
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999

15. OTHER (INCOME) EXPENSE

Other (income) expense consisted of the following:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1997 1998 1999
--------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Foreign exchange (gain) loss ........................ $ 955 $ 196 $ (333)
Equity income in earnings of joint ventures ......... (200) (274) (231)
Other ............................................... -- (44) (165)
------ ------ ------
$ 755 $ (122) $ (729)
====== ====== ======
</TABLE>

16. INCOME TAXES

Certain legal entities in the Group 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 $482.6 million at
December 31, 1998 and $426.4 million at December 31, 1999.

Income of certain legal entities related principally to the foreign
operations of the Group 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:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1998 1999
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards ............................... $ 24,654 $ 24,672
Fixed assets, principally due to differences in depreciation and
assigned values .............................................. 2,063 1,165
Accrued retirement indemnities ................................. 1,614 1,184
Inventories .................................................... 582 670
Accruals and reserves .......................................... 1,149 223
Capital leases ................................................. 829 638
Other items .................................................... 24 80
--------- ---------
Gross deferred tax assets ....................................... 30,915 28,632
Valuation allowance ............................................. (13,903) (14,545)
--------- ---------
Net deferred tax assets ......................................... 17,012 14,087

Deferred tax liabilities:
Fixed assets, principally due to differences in depreciation and
assigned values .............................................. 10,778 11,966
Goodwill ....................................................... 4,462 2,807
Other items .................................................... 41 57
--------- ---------

Gross deferred tax liabilities .................................. 15,281 14,830
--------- ---------
Net deferred tax (assets) liabilities ........................... $ (1,731) $ 743
========= =========
</TABLE>

F-25
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999

Deferred tax assets of $2.1 million in 1998 and $1.2 million in 1999 are
included in other assets. Deferred tax liabilities of $0.3 million in 1998 and
$1.9 million in 1999 are included in accrued expenses.

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

The 1999 provision for income taxes is comprised of $0.5 million of
current provision and $2.0 million of deferred. The amounts relate entirely to
the Group's foreign legal entities.

The difference between the 1998 and 1999 actual income tax provision and
an amount computed by applying the U.S. federal statutory rate to earnings
before income taxes is attributable to the following:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1998 1999
------------ -----------
(IN THOUSANDS)
<S> <C> <C>
Taxes at U.S. federal statutory rate ........................... $ (9,504) $ 1,323
Partnership income not subject to federal income taxes ......... 7,531 (1,178)
Foreign loss without current tax benefit ....................... 2,617 2,050
Other .......................................................... 448 331
-------- --------
$ 1,092 $ 2,526
======== ========
</TABLE>

At December 31, 1999, the Group's various taxable entities had net
operating loss carryforwards for purposes of reducing future taxable income by
approximately $24.7 million, for which no benefit has been recognized. Of this
amount, $4.7 million related to carryforwards that will expire, if unused, at
various dates ranging from 2000 to 2004 and the remaining carryforwards have no
expiration date.

At December 31, 1999, the unremitted earnings of non-U.S. subsidiaries
totaling $11.1 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 $325,000 of
withholding taxes would apply.

17. COMMITMENTS

In connection with plant expansion and improvement programs, the Group had
commitments for capital expenditures of approximately $34.5 million at December
31, 1999.

18. CONTINGENCIES AND LEGAL PROCEEDINGS

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

Holdings was sued in May, 1995, for alleged patent infringement, trade
secret misappropriation and other related state law claims by Hoover Universal,
Inc., a subsidiary of Johnson Controls, Inc. ("JCI"), in the U.S. District
Court for the Central District of California (the "JCI Litigation"). JCI
alleged that Holdings was misappropriating or threatened to misappropriate
trade secrets allegedly owned by JCI relating to the manufacture of hot-fill
PET plastic containers through the hiring of JCI employees and alleged that
Holdings infringed two patents owned by JCI by manufacturing hot-fill

F-26
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999

PET plastic containers for several of its largest customers using a certain
"pinch grip" structural design. In December 1995, JCI filed a second lawsuit
alleging infringement of two additional patents, which relate to a ring and
base structure for hot-fill PET plastic containers. The two suits were
consolidated for all purposes. Holdings has answered the complaints, denying
infringement and misappropriation in all respects and asserting various
defenses, including invalidity and unenforceability of the patents at issue
based upon inequitable conduct on the part of JCI in prosecuting the relevant
patent applications before the U.S. Patent Office and anticompetitive patent
misuse by JCI.

Holdings has also asserted counterclaims against JCI alleging violations
of federal antitrust law, based upon certain agreements regarding market
division allegedly entered into by JCI with another competitor and other
alleged conduct engaged in by JCI allegedly intended to raise prices and limit
competition in the market for hot-fill PET plastic containers. In March 1997,
JCI's plastic container business was acquired by Schmalbach-Lubeca Plastic
Containers USA Inc. ("Schmalbach-Lubeca"). Schmalbach-Lubeca and certain
affiliates were joined as successors to JCI and as counter-claim defendants.

On March 10, 1998, the U.S. District Court in California entered summary
judgment in favor of JCI and against the Group regarding infringement of two
patents, but did not resolve certain issues related to the patents including
certain of the Group's defenses. On March 6, 1998, the Group also filed suit
against Schmalbach-Lubeca in Federal Court in Delaware for infringement of the
Group's patent concerning pinch grip bottle design. On April 24, 1998, the
parties to the litigation reached an understanding on the terms of a settlement
of all claims in all of the litigation with JCI and Schmalbach-Lubeca, subject
to agreement upon and execution of a formal settlement agreement. Management
believed that the amounts that would ultimately be paid in settlement, as well
as estimated litigation expenses and professional fees, would not differ
materially from the amounts accrued in Special Charges and Unusual Items in
respect thereof for the year ended December 31, 1997. See Note 14 to the
Financial Statements.

In June 1998, the Group finalized the settlement of the
JCI-Schmalbach-Lubeca litigation. The amounts paid in settlement as well as
estimated litigation expenses and professional fees did not differ materially
from the amounts accrued in special charges and unusual items in respect
thereof in 1997. See Note 14 to the Financial Statements.

19. SEGMENT INFORMATION

The Group has adopted SFAS No. 131, "Disclosures about Segments of a
Business Enterprise and Related Information". The Group is organized and
managed on a geographical basis in three operating segments: North America,
which includes the United States and Canada, Europe and Latin America. The
accounting policies of the segments are consistent with those described in
Note 1.

F-27
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999

<TABLE>
<CAPTION>
NORTH LATIN
YEAR AMERICA EUROPE AMERICA ELIMINATIONS TOTAL
------ ----------- ------------ ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net sales 1997 $439,977 $ 67,408 $14,322 $521,707
1998 465,317 100,835 21,979 588,131
1999 554,967 136,748 24,369 716,084
Special charges and unusual items 1997 $ 23,615 $ 746 $ -- $ 24,361
1998 22,245 1,572 427 24,244
1999 3,750 848 (45) 4,553
Operating income (loss) 1997 $ 34,693 $ (8,841) $ (389) $ 25,463
1998 59,922 (7,010) 479 53,391
1999 92,962 (4,250) 1,372 90,084
Depreciation and amortization 1997 $ 33,065 $ 6,436 $ 1,858 $ 41,359
1998 31,384 9,405 2,315 43,104
1999 44,023 11,294 2,679 57,996
Interest expense (income), net 1997 $ 11,191 $ 1,517 $ 722 $ 13,430
1998 68,331 (496) 173 68,008
1999 88,142 (629) (39) 87,474
Income tax expense (benefit) 1997 $ -- $ 28 $ 572 $ 600
1998 -- 311 781 1,092
1999 521 859 1,146 2,526
Identifiable assets 1997 $321,729 $ 80,896 $36,555 $ (51,720) $387,460
1998 569,521 172,553 38,783 (184,110) 596,747
1999 724,985 169,028 43,545 (196,309) 741,249
Capital expenditures 1997 $ 33,471 $ 11,018 $ 8,684 $ 53,173
1998 114,048 13,243 6,621 133,912
1999 137,825 31,381 1,766 170,972
Extraordinary loss from early
extinguishment of debt 1997 $ -- $ -- $ -- $ --
1998 675 -- -- 675
1999 -- -- -- --
</TABLE>

Product Net Sales Information

The following is supplemental information on net sales by product category
(in millions):

<TABLE>
<CAPTION>
HOUSEHOLD
FOOD & & PERSONAL
AUTOMOTIVE BEVERAGE CARE TOTAL
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
1997 ......... $ 196.4 $ 150.6 $ 174.7 $ 521.7
1998 ......... 188.7 221.1 178.3 588.1
1999 ......... 207.7 323.1 185.3 716.1
</TABLE>

F-28
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999

20. SUBSEQUENT EVENTS (UNAUDITED)

The company currently is pursuing an initial public offering, which is
expected to be completed during the second half of 2000. In connection with
this contemplated public offering, the Company will effect a reorganization in
which our wholly owned subsidiary, GPC Capital Corp. II, will:

o exchange 32,666,667 shares of its newly issued common stock for all of the
general and limited partnership interests of Holdings,

o exchange options to purchase a maximum of 1,633,333 shares of its common
stock for all of the options of Holdings, and on the same economic terms
and conditions as the Holdings options,

o change its name to Graham Packaging Company Inc.

As a result of these transactions, Graham Packaging Company Inc. will be
the parent company of the Graham Packaging Group.

All share and per share amounts give effect to these transactions assuming
an exchange ratio of 3,266.67 shares of Graham Packaging Company Inc. common
stock for each partnership unit of Holdings.

As a result of the reorganization, the Company will recognize a net
deferred tax asset for the difference between the financial reporting and tax
bases of the Company's assets and liabilities. This difference will be
accounted for by recording a deferred tax asset of approximately $213.9
million, primarily resulting from the 1998 Recapitalization, with a
corresponding credit to additional paid in capital and a deferred tax liability
of approximately $11.9 million with a corresponding one-time charge to
earnings.

Also, as a result of the reorganization, the Group's taxable income will
be subject to federal and state income taxes. The objective of the pro forma
financial information is to show what the significant effects on the historical
results of operations might have been had the Group been subject to federal and
state income taxes at the effective tax rates that would have applied for all
periods. The pro forma effect of the reorganization on income tax provision and
net income for the year ended December 31, 1999 (in thousands) is as follows.

<TABLE>
<S> <C>
Pro forma income tax provision ......... $3,977
Pro forma net income (loss) ............ (196)
</TABLE>

21. EARNINGS (LOSS) PER SHARE (UNAUDITED)

The partnership is in the process of completing a reorganization and an
initial public offering. The anticipated exchange of common stock for general
and limited partnership units is included at an assumed exchange ratio of
3,266.67 shares per partnership unit. Each partnership unit is defined as 0.01%
of Holdings.

Upon completion of the reorganization, 32,666,667 shares of common stock
will be outstanding; a maximum of 1,633,333 shares of common stock will be
subject to options; and no shares of preferred stock will be outstanding.

F-29
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999

Earnings Per Share is calculated in accordance with FASB Statement No. 128
and requires two presentations of earnings per share -- "basic" and "diluted."
Basic earnings per share is computed by dividing income available to common
stockholders (the numerator) by the weighted-average number of common shares
(the denominator) for the period. The computation of diluted earnings per share
is similar to basic earnings per share, except that the denominator is
increased to include the number of additional common shares that would have
been outstanding if the potentially dilutive common shares had been issued.
Shares issuable pursuant to option awards which were deemed common stock
equivalents were excluded from the computation of diluted earnings per share
because their effect is antidilutive. The following table sets forth the
computation of pro forma basic and diluted earnings (loss) per share for the
year ended December 31, 1999 (in thousands, except per share data):

<TABLE>
<S> <C>
Numerator
Numerator for pro forma basic and diluted earnings (loss) per share ... $ (196)

Denominator
Pro forma denominator for basic earnings (loss) per share ............. 32,667
Potential dilutive stock options ...................................... --
-------
Pro forma denominator for diluted earnings (loss) per share ........... 32,667
=======
Pro forma earnings (loss) per share:
Basic ................................................................ $ (0.01)
Diluted .............................................................. (0.01)
</TABLE>

F-30
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31, APRIL 2,
1999 2000
-------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ................................... $ 5,983 $ 5,244
Accounts receivable, net .................................... 108,766 127,318
Inventories ................................................. 52,847 55,422
Prepaid expenses and other current assets ................... 17,138 17,459
---------- ----------
Total current assets ......................................... 184,734 205,443
Property, plant and equipment, net ........................... 496,746 516,254
Other assets ................................................. 59,769 58,691
---------- ----------
Total assets ................................................. $ 741,249 $ 780,388
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses ....................... $ 168,175 $ 171,977
Current portion of long-term debt ........................... 24,370 27,545
---------- ----------
Total current liabilities .................................... 192,545 199,522
Long-term debt ............................................... 992,730 1,032,425
Other non-current liabilities ................................ 13,327 13,279
Minority interest ............................................ 618 340
Commitments and contingent liabilities (see Note 10) ......... -- --
Partners' capital (deficit):
Partners' capital (deficit) ................................. (439,123) (442,133)
Accumulated other comprehensive income ...................... (18,848) (23,045)
---------- ----------
Total partners' capital (deficit) ............................ (457,971) (465,178)
---------- ----------
Total liabilities and partners' capital (deficit) ............ $ 741,249 $ 780,388
========== ==========
</TABLE>

See accompanying notes.

F-31
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------
MARCH 28, APRIL 2,
1999 2000
----------- -----------
<S> <C> <C>
Net sales ............................................. $159,085 $204,988
Cost of goods sold .................................... 131,205 170,046
-------- --------
27,880 34,942
Selling, general, and administrative expenses ......... 10,445 13,418
Special charges and unusual items ..................... 1,217 420
-------- --------
Operating income ...................................... 16,218 21,104
Interest expense, net ................................. 19,446 24,435
Other expense (income) ................................ (62) 63
Minority interest ..................................... -- (278)
-------- --------
Loss before income taxes .............................. (3,166) (3,116)
Income tax provision .................................. 238 148
-------- --------
Net loss .............................................. $ (3,404) $ (3,264)
======== ========
</TABLE>

See accompanying notes.

F-32
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
(UNAUDITED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
ACCUMULATED
PARTNERS' OTHER
CAPITAL COMPREHENSIVE
(DEFICIT) INCOME TOTAL
-------------- -------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at January 1, 1999 ................. $ (442,271) $ 3,477 $ (438,794)
Net income for the year ................... 1,255 -- 1,255
Cumulative translation adjustment ......... -- (22,325) (22,325)
----------
Comprehensive income ...................... (21,070)
----------
Recapitalization .......................... 1,893 -- 1,893
---------- --------- ----------
Balance at December 31, 1999 ............... (439,123) (18,848) (457,971)
Net loss for the period ................... (3,264) -- (3,264)
Cumulative translation adjustment ......... -- (4,197) (4,197)
----------
Comprehensive income ...................... (7,461)
----------
Recapitalization .......................... 254 -- 254
---------- --------- ----------
Balance at April 2, 2000 ................... $ (442,133) $ (23,045) $ (465,178)
========== ========= ==========
</TABLE>

See accompanying notes.

F-33
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------
MARCH 28, APRIL 2,
1999 2000
-------------- --------------
<S> <C> <C>
Operating activities:
Net loss .................................................................. $ (3,404) $ (3,264)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization ........................................... 11,792 15,206
Amortization of debt issuance fees ...................................... 1,010 1,112
Accretion of Senior Discount Notes ...................................... 2,896 3,262
Minority interest ....................................................... -- (278)
Equity in earnings of joint venture ..................................... (75) (5)
Foreign currency transaction loss ....................................... 22 97
Other non-cash recapitalization expense ................................. 594 254
Changes in operating assets and liabilities:
Accounts receivable .................................................... (15,773) (20,316)
Inventories ............................................................ 1,409 (3,108)
Prepaid expenses and other current assets .............................. 2,510 (458)
Other non-current assets and liabilities ............................... -- 162
Accounts payable and accrued expenses .................................. (8,150) 5,835
-------- ----------
Net cash used by operating activities ................................... (7,169) (1,501)
Investing activities:
Net purchases of property, plant and equipment ............................ (33,825) (37,971)
Other ..................................................................... 122 (48)
-------- ----------
Net cash used in investing activities ...................................... (33,703) (38,019)
Financing activities:
Net proceeds from issuance of long-term debt .............................. 40,555 39,928
Debt issuance fees ........................................................ (3) (1,050)
----------- ----------
Net cash provided by financing activities .................................. 40,552 38,878
Effect of exchange rate changes ............................................ (883) (97)
---------- ----------
Decrease in cash and cash equivalents ...................................... (1,203) (739)
Cash and cash equivalents at beginning of period ........................... 7,476 5,983
---------- ----------
Cash and cash equivalents at end of period ................................. $ 6,273 $ 5,244
========== ==========
</TABLE>

See accompanying notes.

F-34
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
APRIL 2, 2000

1. BASIS OF PRESENTATION

The accompanying unaudited condensed financial statements of Graham
Packaging Holdings Company 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. The condensed consolidated balance sheet as of December
31, 1999 is derived from audited financial statements. The condensed financial
statements and notes thereto should be read in conjunction with the
consolidated financial statements and notes thereto for the year ended December
31, 1999. The results of operations for the quarter ended April 2, 2000 are not
necessarily indicative of the results to be expected for the full year ending
December 31, 2000.

The financial statements include the operations of Graham Packaging
Holdings Company, a Pennsylvania limited partnership; Graham Packaging Company,
L.P., a Delaware limited partnership (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.; subsidiaries thereof;
and land and buildings that were used in the operations, owned by the control
group of owners and contributed to the Graham Packaging Group (as defined).
Prior to February 2, 1998, these operations of the Graham Packaging Group were
under common control by virtue of ownership by the Donald C. Graham family. In
addition, the consolidated financial statements of the Group include GPC
Capital Corp. I, a wholly owned subsidiary of Graham Packaging 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 Graham Packaging Company
under the Senior Subordinated Notes (as herein defined) and as co-borrower with
Graham Packaging Company under the New 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 New Credit Agreement. GPC Capital Corp. I and GPC Capital Corp. II have
only nominal assets and do not conduct any independent operations. Furthermore,
since July 27, 1998 the consolidated financial statements of the Group include
the operations of Graham Emballages Plastiques S.A.; Graham Packaging U.K.
Ltd.; Graham Plastpak Plastik Ambalaj A.S.; and Graham Packaging Deutschland
GmbH as a result of the acquisition of selected plants of Crown Cork & Seal.
Since July 1, 1999 the consolidated financial statements of the Group include
the operations of Graham Packaging Argentina S.A. as a result of the
acquisition of companies in Argentina. Since July 6, 1999 the consolidated
financial statements of the Group include the operations of PlasPET Florida,
Ltd. as a result of an investment made in a limited partnership. (Refer to Note
8 for a discussion of each of these investments). These entities and assets are
referred to collectively as Graham Packaging Group (the "Group"). With respect
to the periods subsequent to the Recapitalization that occurred on February 2,
1998 (see note 2), the financial statements and references to the "Group"
relate to Holdings and its subsidiaries on a consolidated basis. All amounts in
the financial statements are those reported in the historic financial
statements of the individual operations. All significant intercompany accounts
and transactions have been eliminated in the consolidated financial statements.

F-35
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
APRIL 2, 2000

Capital Corp. II with respect to all obligations on the Senior Discount Notes
of Holdings and GPC Capital Corp. II. Condensed financial data for Graham
Packaging Company is presented in Note 11. No separate financial statements are
presented for GPC Capital Corp. I and GPC Capital Corp. II. As indicated above,
GPC Capital Corp. I and GPC Capital Corp. II have no independent operations,
and Management has determined that separate financial statements for GPC
Capital Corp. I and GPC Capital Corp. II would not be material to investors.

2. RECAPITALIZATION

The 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 Graham Packaging Company, which was renamed "Graham
Packaging Company, L.P.";

o The contribution by certain Graham Partners to the Group 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 issuance of $225 million of Senior Subordinated Notes by Graham
Packaging Company and $100.6 million gross proceeds ($169 million
aggregate principal amount at maturity) Senior Discount Notes by Holdings.
A wholly owned subsidiary of each of Graham Packaging Company and Holdings
serves as co-issuer with its parent for its respective issue of Notes;

o The repayment by Graham Packaging Company of substantially all of the
existing indebtedness and accrued interest of Holdings and its
subsidiaries;

o The redemption by Holdings of certain partnership interests in Holdings
held by the Graham Partners for $429.6 million;

o The purchase by the Equity Investors of certain partnership interests in
Holdings held by the Graham Partners for $208.3 million;

o The repayment by the Graham Partners of amounts owed to Holdings under the
$20.2 million promissory notes;

o The recognition of additional compensation expense under the Equity
Appreciation Plan;

F-36
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
APRIL 2, 2000

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 Graham Packaging Company
on November 2, 1998 to certain Graham Partners for tax periods prior to
the Recapitalization.

As a result of the Recapitalization, the Group incurred charges of
approximately $32 million related to the issuance of debt which will be
recognized as interest expense over 6 to 11 years based upon the terms of the
related debt instruments. In addition, Recapitalization expenses of
approximately $25 million, which related to transaction fees, expenses,
compensation, unamortized licensing fees and costs associated with the
termination of the interest rate collar and swap agreements were incurred.
Compensation expense totaling $10.7 million, of which $9.9 million had been
expensed as of April 2, 2000, related to stay bonuses and the granting of
certain ownership interests to management which will be recognized over a
period up to three years from the date of the Recapitalization. See Note 9.

3. DEBT ARRANGEMENTS

On February 2, 1998, as discussed in Note 2 to the Financial Statements,
the Group refinanced the majority of its existing credit facilities in
connection with the Recapitalization 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 to provide for an additional Term Loan
Borrowing of an additional $175 million and on March 30, 2000 as described
below (the "Amendments"). The New Credit Agreement and the Amendments consist
of four term loans to Graham Packaging Company totaling $570 million and two
revolving loan facilities to Graham Packaging Company totaling $255 million.
The unused portion of the revolving loan facilities at April 2, 2000 was $119
million. The obligations of Graham Packaging Company under the New Credit
Agreement and Amendments are guaranteed by Holdings and certain other
subsidiaries of Holdings. The term loans are payable in quarterly installments
through January 31, 2007, and require payments of $15.0 million in 2000, $20.0
million in 2001, $25.0 million in 2002, $27.5 million in 2003 and $93.0 million
in 2004. 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 2.25%; 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
3.25%. 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 Amendments to the New
Credit Agreement, if certain events of default were to occur, or if the Group's
Net Leverage Ratio were above 5.15:1.0 at September 30, 2000, Blackstone has
agreed to make an equity contribution to the Group through the administrative
agent of up to $50 million. The Group's Net Leverage Ratio being above 5.15:1.0
at September 30, 2000 is not an event of default under the New Credit Agreement
and Amendments. The March 30, 2000 Amendment also allows a pro forma adjustment
to the Net Leverage Ratio to include the receipt of net cash proceeds from any
registered public offering occurring after September 30, 2000 but before

F-37
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
APRIL 2, 2000

October 31, 2000 for purposes of determining whether Blackstone is required to
make the above-mentioned equity contribution; changes the terms under which the
Company can access $100 million of Growth Capital Revolving Loans from a dollar
for dollar equity match to a capital call with various test dates based on
certain leverage tests for quarters ending on or after June 30, 2001, which
would provide for up to an additional $50 million equity contribution by
Blackstone; allows the proceeds of the equity contribution (if required) to be
applied to Revolving Credit Loans; and changes certain covenants, principally
to increase the amount of permitted capital expenditures in 2000 and subsequent
years. In addition, the New Credit Agreement and Amendments contain certain
affirmative and negative covenants as to the operations and financial condition
of the Group, as well as certain restrictions on the payment of dividends and
other distributions to Holdings.

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

The Recapitalization also included the issuance of $225 million of Senior
Subordinated Notes of Graham Packaging Company and $100.6 million gross
proceeds of Senior Discount Notes ($169 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 million at a fixed rate of 8.75% and with
interest payable on $75 million at LIBOR plus 3.625%. The Senior Discount Notes
mature on January 15, 2009, with cash interest payable semi-annually beginning
January 15, 2003 at 10.75%. The effective interest rate to maturity on the
Senior Discount Notes is 10.75%.

At April 2, 2000 Graham Packaging Company had entered into three U.S.
Dollar interest rate swap agreements that effectively fix the Eurocurrency Rate
on $450 million of the term loans, on $200 million through April 9, 2002 at
5.8075%, on $100 million through April 9, 2003 at 5.77% and on $150 million
through September 10, 2001 at 5.5075%.

Under the New Credit Agreement and Amendments, Graham Packaging Company is
subject to restrictions on the payment of dividends or other distributions to
Holdings; provided that, subject to certain limitations, Graham Packaging
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 their present or former officers or employees
of Holdings, Graham Packaging 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 due semi-annually on the Senior Discount Notes.

F-38
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
APRIL 2, 2000

Interest paid during the quarters ended March 28, 1999 and April 2, 2000,
net of amounts capitalized, totaled $18.3 million and $24.0 million,
respectively.

4. RELATED PARTY TRANSACTIONS

Pursuant to the Recapitalization Agreement, the Graham Partners have
agreed that neither they nor their affiliates will, subject to certain
exceptions, for a period of five years from and after the Closing of the
Recapitalization, 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.

Also pursuant to the Recapitalization Agreement, Holdings entered into an
Equipment Sales, Service and Licensing Agreement and a Consulting Agreement
with certain entities controlled by Donald C. Graham and members of his family
and a Partners Registration Rights Agreement with partners of Holdings and
certain other entities. Additionally, Holdings has entered into a Monitoring
Agreement with Blackstone Management Partners III L.L.C. for advisory and
consulting services.

5. INVENTORIES

<TABLE>
<CAPTION>
DECEMBER 31, APRIL 2,
1999 2000
Inventories consisted of the following: -------------- ---------
(IN THOUSANDS)
<S> <C> <C>
Finished goods ....................... $32,551 $35,830
Raw materials and parts .............. 20,296 19,592
------- -------
$52,847 $55,422
======= =======
</TABLE>

6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

<TABLE>
<CAPTION>
DECEMBER 31, APRIL 2,
1999 2000
Accounts payable and accrued expenses included the following: -------------- -----------
(IN THOUSANDS)
<S> <C> <C>
Accounts payable ........................................... $ 94,906 $107,467
Accrued employee compensation and benefits ................. 21,116 18,460
Accrued interest ........................................... 21,432 17,497
Other ...................................................... 30,721 28,553
-------- --------
$168,175 $171,977
======== ========
</TABLE>

7. INCOME TAXES

F-39
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
APRIL 2, 2000

8. ACQUISITIONS

Purchase of Graham Packaging Argentina S.A.

On July 1, 1999 the Company acquired selected companies located in
Argentina for a total purchase price (including acquisition-related costs) of
$8.5 million, net of liabilities assumed, subject to certain contingent
consideration. The contingent consideration will be calculated utilizing a
predetermined formula based on the entities' performance during a multi-year
period ending December 31, 2000. If and when such contingency is satisfied,
additional goodwill will be recorded. The acquisition was recorded under the
purchase method of accounting and accordingly, the results of operations of the
acquired operations are included in the financial statements of the Group
beginning on July 1, 1999. The initial purchase price has been allocated to
assets acquired and liabilities assumed based on fair values. Goodwill is being
amortized over 20 years on the straight-line basis. The initial allocated fair
value of assets acquired and liabilities assumed is summarized as follows (in
thousands):

<TABLE>
<S> <C>
Current assets ........................ $ 2,831
Property, plant and equipment ......... 4,840
Goodwill .............................. 9,044
-------
Total ................................. 16,715
Less liabilities assumed .............. 8,244
-------
Net cost of acquisition ............... $ 8,471
=======
</TABLE>

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, for
a total purchase price (including acquisition-related costs) of $1.2 million,
net of liabilities assumed. The investment was recorded under the equity method
of accounting prior to July 6, 1999. The acquisition was recorded on July 6,
1999 under the purchase method of accounting and accordingly, the results of
operations of the acquired operations are included in the financial statements
of the Group beginning on July 6, 1999. The initial purchase price has been
allocated to assets acquired and liabilities assumed based on fair values.
Goodwill is being amortized over 20 years on the straight-line basis. The
allocated fair value of assets acquired and liabilities assumed is summarized
as follows (in thousands):

<TABLE>
<S> <C>
Current assets ........................ $ 443
Property, plant and equipment ......... 4,689
Other asset ........................... 132
Goodwill .............................. 2,841
------
Total ................................. 8,105
Less liabilities assumed .............. 6,907
------
Net cost of acquisition ............... $1,198
======
</TABLE>

F-40
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
APRIL 2, 2000

The following table sets forth unaudited pro forma results of operations,
assuming that all of the above acquisitions had taken place on January 1, 1999.

<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 28, 1999
---------------
(IN THOUSANDS)
<S> <C>
Net sales ......... $161,760
Net loss .......... (3,734)
</TABLE>

These unaudited pro forma results have been prepared for comparative
purposes only and include certain adjustments, such as additional depreciation
expense as a result of a step-up in the basis of fixed assets and increased
interest expense on acquisition debt. They do not purport to be indicative of
the results of operations which actually would have resulted had the
combination been in effect on January 1, 1999, or of future results of
operations of the entities.

9. SPECIAL CHARGES AND UNUSUAL ITEMS

The special charges and unusual items recorded in the quarters ended March
28, 1999 and April 2, 2000 were as follows:

<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------
MARCH 28, APRIL 2,
1999 2000
----------- ---------
(IN THOUSANDS)
<S> <C> <C>
Systems conversion .................... $ 253 $ --
Recapitalization compensation ......... 1,010 420
Aborted acquisition costs ............. (46) --
------ ----
$1,217 $420
====== ====
</TABLE>

Recapitalization compensation expenses relate to stay bonuses and the
granting of certain ownership interests to Management pursuant to the terms of
the Recapitalization (see Note 2), which are being recognized over a period of
up to three years.

Beginning in 1998 the Group incurred restructuring charges at the Blyes
plant in France, including the legal liability of severing 51 employees. No
restructuring charges were incurred during either of the quarters ended March
28, 1999 or April 2, 2000. The amount of the restructuring charges paid and the
amount of the remaining accrual as of April 2, 2000 was $1,664,000 and
$201,000, respectively.

10. CONTINGENCIES

F-41
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
APRIL 2, 2000

11. CONDENSED OPERATING COMPANY DATA

Condensed financial data for Graham Packaging Company as of December 31,
1999 and April 2, 2000 was as follows:

<TABLE>
<CAPTION>
DECEMBER 31, APRIL 2,
1999 2000
-------------- -------------
(IN THOUSANDS)
<S> <C> <C>
Current assets ...................... $ 191,711 $ 212,434
Noncurrent assets ................... 551,638 570,172
Total assets ........................ 743,349 782,606
Current liabilities ................. 192,545 199,522
Noncurrent liabilities .............. 883,583 919,690
Partners' capital (deficit) ......... (332,779) (336,606)
</TABLE>

Condensed financial data for Graham Packaging Company for the quarters
ended March 28, 1999 and April 2, 2000 was as follows:

<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------
MARCH 28, APRIL 2,
1999 2000
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Sales ..................... $159,085 $204,988
Gross profit .............. 27,880 34,942
Net income/(loss) ......... (392) 116
</TABLE>

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

12. COMPREHENSIVE INCOME

Comprehensive income (loss) for the quarters ended March 28, 1999 and
April 2, 2000 was as follows:

<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------
MARCH 28, APRIL 2,
1999 2000
------------- ------------
(IN THOUSANDS)
<S> <C> <C>
Net loss ............................ $ (3,404) $ (3,264)
Foreign currency .................... (16,683) (4,197)
--------- --------
Comprehensive income (loss) ......... $ (20,087) $ (7,461)
========= ========
</TABLE>

13. SEGMENT INFORMATION

The Group has adopted SFAS No. 131, "Disclosures about Segments of a
Business Enterprise and Related Information". The Group is organized and
managed on a geographical basis in three operating segments: North America,
which includes the United States and Canada, Europe and Latin America. Segment
information for the quarters ended March 28, 1999 and April 2, 2000 was as
follows (in thousands):

F-42
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
APRIL 2, 2000

<TABLE>
<CAPTION>
QUARTERS ENDED NORTH AMERICA EUROPE LATIN AMERICA TOTAL
---------------- --------------- ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Net sales .................. March 28, 1999 $119,828 $ 34,673 $4,584 $159,085
April 2, 2000 161,050 36,563 7,375 204,988
Net income (loss) .......... March 28, 1999 (2,570) (854) 20 (3,404)
April 2, 2000 (1,367) (1,761) (136) (3,264)
</TABLE>

14. NEW ACCOUNTING PRONOUNCEMENTS

Effective January 1, 1999, the Group adopted Statement of Position ("SOP")
98-1, "Accounting for the Cost of Computer Software Developed For or Obtained
For Internal Use". The adoption of this SOP had no significant impact on the
Group's earnings or financial position.

On January 1, 1999 the Group adopted SOP 98-5, "Reporting on the Cost of
Start-Up Activities". The adoption of this SOP had no significant impact on the
Group's earnings or financial position.

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS No. 133"). This Standard establishes accounting
and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively referred to as
derivatives) and for hedging activities. It requires that an entity recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value.

In June 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 137, "Accounting for Derivative Instruments
and Hedging Activities -- Deferral of Effective Date of FASB Statement No.
133". This Standard defers the effective date of SFAS No. 133 to all fiscal
quarters of all fiscal years beginning after June 15, 2000. Management has not
completed its review of SFAS No. 133 and has not determined the impact adoption
will have on the Group's results of operations or financial position.

15. SUBSEQUENT EVENTS

o exchange 32,666,667 shares of its newly issued common stock for all of the
general and limited partnership interests of Holdings,

o exchange options to purchase a maximum of 1,633,333 shares of its common
stock for all of the options of Holdings, and on the same economic terms
and conditions as the Holdings options,

o change its name to Graham Packaging Company Inc.

As a result of these transactions, Graham Packaging Company Inc. will be
the parent company of the Graham Packaging Group.

All share and per share amounts give effect to these transactions assuming
an exchange ratio of 3,266.67 shares of Graham Packaging Company Inc. common
stock for each partnership unit of Holdings.

F-43
<PAGE>

GRAHAM PACKAGING HOLDINGS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
APRIL 2, 2000

primarily resulting from the 1998 Recapitalization, with a corresponding credit
to additional paid in capital and a deferred tax liability of approximately
$11.9 million with a corresponding one-time charge to earnings.

As a result of the anticipated reorganization, the Group's taxable income
will be subject to federal and state income taxes. The objective of the pro
forma financial information is to show what the significant effects on the
historical results of operations might have been had the Group been subject to
federal and state income taxes at the effective tax rates that would have
applied for all periods. The pro forma effect of the reorganization on income
tax provision (benefit) and net income is as follows:

<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------
MARCH 28, 1999 APRIL 2, 2000
---------------- --------------
(IN THOUSANDS)
<S> <C> <C>
Pro forma income tax provision (benefit) ......... $ (1,268) $ (544)
Pro form net income (loss) ....................... (1,898) (2,562)
</TABLE>

16. EARNINGS (LOSS) PER SHARE

Upon completion of the reorganization 32,666,667 shares of common stock
will be outstanding; a maximum of 1,633,333 shares of common stock will be
subject to options; and no shares of preferred stock will be outstanding.

Earnings Per share is calculated in accordance with FASB Statement No. 128
and requires two presentations of earnings per share--"basic" and "diluted."
Basic earnings per share is computed by dividing income available to common
stockholders (the numerator) by the weighted-average number of common shares
(the denominator) for the period. The computation of diluted earnings per share
is similar to basic earnings per share, except that the denominator is
increased to include the number of additional common shares that would have
been outstanding if the potentially dilutive common shares had been issued.
Shares issuable pursuant to option awards which were deemed common stock
equivalents were excluded from the computation of diluted earnings per share
because their effect is antidilutive. The following table sets forth the
computation of pro forma basic and diluted earnings (loss) per share.

<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------
MARCH 28, 1999 APRIL 2, 2000
---------------- --------------
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
Numerator
<S> <C> <C>
Numerator for pro forma basic and diluted earnings (loss) per
share .............................................................. $ (1,898) $ (2,562)

Denominator
Pro forma denominator for basic earnings (loss) per share ........... 32,667 32,667
Potential dilutive stock options .................................... -- --
-------- --------
Pro forma denominator for diluted earnings (loss) per share ......... 32,667 32,667
Pro forma earnings (loss) per share:
Basic .............................................................. $ (0.06) $ (0.08)
Diluted ............................................................ (0.06) (0.08)
</TABLE>

F-44
<PAGE>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SHARES

GRAHAM PACKAGING COMPANY INC.

COMMON STOCK

[LOGO]

----------------
PROSPECTUS

, 2000
----------------
JOINT BOOK-RUNNING LEAD MANAGERS

DEUTSCHE BANC ALEX. BROWN SALOMON SMITH BARNEY

--------------------------------------------------------------------------------
GOLDMAN, SACHS & CO. LEHMAN BROTHERS

--------------------------------------------------------------------------------
<PAGE>

PART II. INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The expenses in connection with the registration of the shares of common
stock are estimated as follows:

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee ................. $
NASD filing fee .....................................................
New York Stock Exchange listing fee .................................
Printing and engraving costs ........................................
Legal fees and expenses .............................................
Accounting fees and expenses ........................................
Blue sky qualifications and related legal fees and expenses .........
Miscellaneous .......................................................
$
============
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Under Section 145 of the Delaware General Corporation Law (the "Delaware
Law"), a corporation may indemnify its directors, officers, employees and
agents and its former directors, officers, employees and agents and those who
serve, at the corporation's request, in such capacity with another enterprise,
against expenses (including attorney's fees), as well as judgments, fines and
settlements in nonderivative lawsuits, actually and reasonably incurred in
connection with the defense of any action, suit or proceeding in which they or
any of them were or are made parties or are threatened to be made parties by
reason of their serving or having served in such capacity. The Delaware General
Corporation Law provides, however, that such person must have acted in good
faith and in a manner such person reasonably believed to be in (or not opposed
to) the best interests of the corporation and, in the right of the corporation,
where such person has been adjudged liable to the corporation, unless, and only
to the extent that a court determines that such person fairly and reasonably is
entitled to indemnity for costs the court deems proper in light of liability
adjudication. Indemnity is mandatory to the extent a claim, issue or matter has
been successfully defended.

The Certificate of Incorporation and By-Laws of the Registrant provide for
mandatory indemnification of directors and officers on generally the same terms
as permitted by the Delaware General Corporation Law.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Not applicable.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(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.

II-1
<PAGE>

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

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
---------- -------------------------------------------------------------------------------------------
<S> <C>
1.1* Form of Underwriting Agreement
3.1* Form of Amended and Restated Certificate of Incorporation of Graham Packaging
Company Inc.
3.2* Form of Amended and Restated By-Laws of Graham Packaging Company Inc.
4.1* Specimen of stock certificate representing Graham Packaging Company Inc.'s Common
Stock, $.01 par value
4.2 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)).
4.3 Form of 8 3/4% Senior Subordinated Note Due 2008, Series B (included in Exhibit 4.2).
4.4 Form of Floating Interest Rate Term Security Due 2008, Series B (included in Exhibit 4.2).
4.5 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)).
4.6 Form of 10 3/4% Senior Discount Note Due 2009, Series B (included in Exhibit 4.5).
5.1* Opinion of Simpson Thacher & Bartlett
10.1 Credit Agreement dated as of February 2, 1998 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
(incorporated herein by reference to Exhibit 10.1 to the Registration Statement on Form
S-4 (File No. 333-53603-03)).
10.2 First Amendment to Credit Agreement dated as of August 13, 1998 (incorporated herein
by reference to Exhibit 10.12 to the Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 (File No. 333-53603-03)).
10.3 Second Amendment to Credit Agreement dated as of March 30, 2000 (incorporated by
reference to Exhibit 10.13 to Current Report on Form 8-K, filed April 28, 2000)
10.4 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)).
10.5 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)).
10.6 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)).
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
-------- ------------------------------------------------------------------------------------------
<S> <C>
10.7 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)).
10.8 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)).
10.9 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)).
10.10 Management Stockholders Agreement (incorporated herein by reference to Exhibit 10.8 to
the Registration Statement on Form S-4 (File No. 333-53603-03)).
10.11 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)).
10.12 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)).
10.13 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)).
21.1 Subsidiaries of Graham Packaging Company Inc.
23.1 Consent of Simpson Thacher & Bartlett (included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP, Independent Auditors.
23.3 Consent of Deloitte & Touche LLP, Independent Auditors.
24 Power of Attorney (included on signature page)
</TABLE>

----------
* To be filed by amendment.

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

II-3
<PAGE>

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the Offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

II-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1933, the
registrant has duly caused this registration statement to be signed by the
undersigned, thereunto duly authorized, in York, Pennsylvania, on July 12,
2000.

GPC Capital Corp. II

By: /s/ John E. Hamilton
-----------------------------------
Name: John E. Hamilton
Title: Vice President

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Roger M. Prevot, John E. Hamilton and Jay
W. Hereford, or any one of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place, and stead, in any and all capacities, to sign any and all
amendments to the Registration Statement, including post-effective amendments,
and registration statements filed pursuant to Rule 462 under the Securities Act
of 1933, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, and does
hereby grant unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and thing requisite
and necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, or their or his
substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities on the 12th day of July, 2000.

<TABLE>
<CAPTION>
SIGNATURE TITLE
------------------------------------- --------------------------------------------------
<S> <C>
/s/ Philip R. Yates President, Treasurer and Assistant Secretary and
---------------------------------- Director (Principal Executive Officer)
Philip R. Yates

/s/ John E. Hamilton Vice President, Secretary and Assistant Treasurer
---------------------------------- and Director (Principal Financial Officer and
John E. Hamilton Principal Accounting Officer)

/s/ Chinh E. Chu Director
----------------------------------
Chinh E. Chu

/s/ Simon P. Lonergan Director
----------------------------------
Simon P. Lonergan
</TABLE>

II-5
<PAGE>

SCHEDULE I

GRAHAM PACKAGING HOLDINGS COMPANY
REGISTRANT'S CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS)

<TABLE>
<CAPTION>
BALANCE SHEETS DECEMBER 31, 1999 DECEMBER 31, 1998
----------------------------------------------------------- ----------------------- -------------------------
<S> <C> <C>
Assets .................................................... $ -- $ --
Current assets ............................................ 4,877 5,047
-------- --------
Intangible assets, net
Total assets ............................................ $ 4,877 $ 5,047
======== ========
Liabilities and partners' capital:
Current liabilities ....................................... $ 6,977 $ 6,972
Long-term debt ............................................ 123,092 110,697
Investment in subsidiary .................................. 332,779 326,172
-------- --------
Total liabilities ....................................... 462,848 443,841
Partners' capital ......................................... (457,971) (438,794)
------------ --------
Total liabilities and partners' capital ................. $ 4,877 $ 5,047
============ ========
YEAR ENDED
YEAR ENDED DECEMBER 31, 1998
DECEMBER 31, 1999 (AS ADJUSTED, NOTE 5)
----------------------- -----------------------
STATEMENTS OF OPERATIONS
------------------------------------------------------------
Equity in earnings of subsidiaries ........................ $ 13,825 $(16,485)
Recapitalization expenses ................................. -- (1,000)
Interest expense .......................................... (12,565) (10,546)
Other ..................................................... (5) --
------------ --------
Net income (loss) ....................................... $ 1,255 $(28,031)
============ ========
YEAR ENDED
YEAR ENDED DECEMBER 31, 1998
DECEMBER 31, 1999 (AS ADJUSTED, NOTE 5)
----------------------- -----------------------
STATEMENTS OF CASH FLOWS
------------------------------------------------------------
Operating activities:
Net income (loss) ......................................... $ 1,255 $(28,031)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Amortization of debt issuance costs ...................... 170 462
Accretion of senior discount notes ....................... 12,395 10,085
Changes in current liabilities ........................... 5 6,972
Equity income in subsidiaries ............................ (13,825 16,485
--------- --------
Net cash provided by operating activities ................ -- 5,973
Investing activities:
Investments in a Business ................................ -- 314,477
--------- --------
Net cash provided by investing activities ................ -- 314,477
Financing activities:
Borrowings on long-term debt ............................. -- 100,612
Cash distributions to Partners ........................... -- (415,554)
Debt issuance fees ....................................... -- (5,508)
--------- --------
Net cash used in financing activities .................... -- (320,450)
--------- --------
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.

S-1
<PAGE>

SCHEDULE II

GRAHAM PACKAGING HOLDINGS COMPANY
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)

<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING OF YEAR ADDITIONS DEDUCTIONS OTHER (1) END OF YEAR
------------------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1999
Allowance for Doubtful Accounts ......... $1,435 $420 $ 97 $ 33 $1,791
Allowance for Inventory Losses .......... 1,447 297 461 -- 1,283

YEAR ENDED DECEMBER 31, 1998
Allowance for Doubtful Accounts ......... $1,635 $ 32 $395 $163 $1,435
Allowance for Inventory Losses .......... 566 514 220 587 1,447

YEAR ENDED DECEMBER 31, 1997
Allowance for Doubtful Accounts ......... $1,202 $512 $ 79 $ -- $1,635
Allowance for Inventory Losses .......... 901 75 410 -- 566
</TABLE>

----------
(1) Represents allowance attributable to entities acquired during 1999 and
1998.

S-2
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
<S> <C>
1.1* Form of Underwriting Agreement
3.1* Form of Amended and Restated Certificate of Incorporation of Graham Packaging
Company Inc.
3.2* Form of Amended and Restated By-Laws of Graham Packaging Company Inc.
4.1* Specimen of stock certificate representing Graham Packaging Company Inc.'s Common
Stock, $.01 par value
4.2 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)).
4.3 Form of 8 3/4% Senior Subordinated Note Due 2008, Series B (included in Exhibit 4.2).
4.4 Form of Floating Interest Rate Term Security Due 2008, Series B (included in Exhibit 4.2).
4.5 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)).
4.6 Form of 10 3/4% Senior Discount Note Due 2009, Series B (included in Exhibit 4.5).
5.1* Opinion of Simpson Thacher & Bartlett
10.1 Credit Agreement dated as of February 2, 1998 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
(incorporated herein by reference to Exhibit 10.1 to the Registration Statement on Form
S-4 (File No. 333-53603-03)).
10.2 First Amendment to Credit Agreement dated as of August 13, 1998 (incorporated herein
by reference to Exhibit 10.12 to the Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 (File No. 333-53603-03)).
10.3 Second Amendment to Credit Agreement dated as of March 30, 2000 (incorporated by
reference to Exhibit 10.13 to Current Report on Form 8-K, filed April 28, 2000)
10.4 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)).
10.5 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)).
10.6 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)).
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S> <C>
10.7 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)).
10.8 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)).
10.9 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)).
10.10 Management Stockholders Agreement (incorporated herein by reference to Exhibit 10.8 to
the Registration Statement on Form S-4 (File No. 333-53603-03)).
10.11 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)).
10.12 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)).
10.13 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)).
21.1 Subsidiaries of Graham Packaging Company Inc.
23.1 Consent of Simpson Thacher & Bartlett (included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP, Independent Auditors.
23.3 Consent of Deloitte & Touche LLP, Independent Auditors.
24 Power of Attorney (included on signature page)
</TABLE>

----------
* To be filed by amendment.