As filed with the Securities and Exchange Commission on November 2, 2009

Registration No. 333-

UNITED STATES

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)

Delaware

3080

23-2952404

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial Classification Code Number)

(I.R.S. Employer

Identification Number)

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)

David W. Bullock

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)

With copies to:

Richard A. Fenyes, Esq.

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017-3954

(212) 455-2000

Phyllis G. Korff, Esq.

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, New York 10036-6522

(212) 735-3000

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is declared 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, please 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. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

CALCULATION OF REGISTRATION FEE



Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price (1)	Amount of Registration Fee
Common Stock, par value $0.01 per share	$350,000,000	$19,530

(1)	Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. Includes shares to be sold upon exercise of the underwriters’ option. See “Underwriting.”

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, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

EXPLANATORY NOTE

Immediately prior to the offering of common stock contemplated by the prospectus contained in this registration statement, Graham Packaging Holdings Company, which is the current parent company of the registrant, and GPC Capital Corp. II will undergo a reorganization. GPC Capital Corp. II 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 Graham Packaging Holdings Company. See the section entitled “The IPO Reorganization” in the prospectus.

The information in this preliminary prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell the securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion Dated , 2009.

Preliminary Prospectus

LOGO

Graham Packaging Company Inc.

Shares

Common Stock

$ per share

We are offering shares of our common stock and the selling stockholders named in this prospectus are offering shares. We will not receive any proceeds from the sale of the shares by the selling stockholders.

This is an initial public offering of our common stock. Prior to this offering, there has been no public market for our common stock. We currently expect the initial public offering price will be between $ and $ per share. We intend to apply to list the common stock on the under the symbol “ .”

Investing in our common stock involves risk. See “Risk Factors” beginning on page 12.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.


	Per Share	Total
Initial price to public	$	$
Underwriting discount	$	$
Proceeds, before expenses, to us	$	$
Proceeds, before expenses, to the selling stockholders	$	$

To the extent that the underwriters sell more than shares of common stock, the underwriters have the option to purchase up to an additional shares from the selling stockholders at the initial offering price, less the underwriting discount, within 30 days of the date of this prospectus.

The underwriters expect to deliver the shares against payment on or about .

Joint Book-Running Managers

Co-Managers

Prospectus dated .

You should rely only on the information contained in this prospectus or in any free writing prospectus that we authorize be delivered to you. We, the selling stockholders and the underwriters have not authorized anyone to provide you with additional or different information. If anyone provides you with additional, different or inconsistent information, you should not rely on it. We, the selling stockholders and the underwriters are not making an offer to sell these securities in any jurisdiction where an offer or sale is not permitted. You should assume that the information in this prospectus is accurate only as of the date on the front cover, regardless of the time of delivery of this prospectus or of any sale of our common stock. Our business, prospects, financial condition and results of operations may have changed since that date.

Table of Contents


		Page
Prospectus Summary		1
Risk Factors		12
Special Note Regarding Forward-Looking Statements		23
The IPO Reorganization		25
Use of Proceeds		27
Dividend Policy		28
Dilution		28
Capitalization		29
Unaudited Pro Forma Financial Information		30
Selected Financial Data		38
Management’s Discussion and Analysis of Financial Condition and Results of Operations		41
Business		64
Management		78
Principal and Selling Stockholders		103
Certain Relationships and Related Party Transactions		105
Description of Indebtedness		108
Description of Capital Stock		112
Shares Eligible for Future Sale		116
Material United States Federal Income and Estate Tax Consequences to Non-U.S. Holders		118
Underwriting		121
Legal Matters		124
Experts		124
Where You Can Find More Information		125
Index to Financial Statements		F-1

Market data and certain industry forecasts used herein were obtained from internal surveys, market research, publicly available information and industry publications that we believe to be reliable. Industry publications generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Similarly, industry forecasts and market research, while believed to be reliable, have not been independently verified, and we make no representations as to the accuracy of such information.

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

PROSPECTUS SUMMARY

This summary highlights certain significant aspects of our business and this offering, but it is not complete and does not contain all of the information that you should consider before making your investment decision. You should carefully read the entire prospectus, including the information presented under the section entitled “Risk Factors” and the historical and pro forma financial data and related notes, before making an investment decision. This summary contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from future results contemplated in the forward-looking statements as a result of factors such as those set forth in “Risk Factors” and “Special Note Regarding Forward-Looking Statements.”

Unless the context otherwise requires, all references herein to “we,” “our” or “us” refer to Graham Packaging Holdings Company and its subsidiaries prior to the IPO Reorganization (as described under the section “The IPO Reorganization”), and Graham Packaging Company Inc. and its subsidiaries, after giving effect to the IPO Reorganization. References to “on a pro forma basis” or “pro forma” mean after giving effect to the IPO Reorganization, this offering and the use of proceeds contemplated herein. See “Unaudited Pro Forma Financial Information” and “Use of Proceeds.”

Our Company

We are a worldwide leader in the design, manufacture and sale of value-added, custom blow molded plastic containers for branded consumer products. We operate in product categories where customers and end users value the technology and innovation that our custom plastic containers offer as an alternative to traditional packaging materials such as glass, metal and paperboard. We selectively pursue opportunities where we can leverage our technology portfolio to continue to drive the trend of conversion to plastic containers from other packaging materials. Our customers include leading multi-national and regional blue-chip consumer product companies that seek customized, sustainable plastic container solutions in diverse and stable end markets, such as the food and beverage and the household consumer products markets. We believe we are well-positioned to meet the evolving needs of our customers who often use our technology to differentiate their products with value-added design and performance characteristics such as smooth-wall panel-less bottles, unique pouring and dispensing features, multilayer bottles incorporating barrier technologies to extend shelf life, and ultra lightweight bottles with “hot-fill” capabilities that allow containers to be filled at high temperatures.

We believe we have number one market share positions in North America for hot-fill juices, sports drinks/isotonics, yogurt drinks, liquid fabric care, dish detergents, hair care, skin care, oral care and certain other products. For the year ended December 31, 2008, approximately 90% of our net sales from continuing operations were realized in these product categories. We do not participate in markets where technology is not a differentiating factor, such as the carbonated soft drink or bottled water markets.

Our value-added products are supported by more than 1,000 issued or pending patents. We strive to provide the highest quality products and services to our customers, while remaining focused on operational excellence and continuous improvement. These priorities help to reduce our customers’ costs, while also maximizing our financial performance and cash flow. We supply our customers through a network of 84 manufacturing facilities, approximately one-third of which are located on-site at our customers’ plants. The vast majority of our sales are made pursuant to long-term customer contracts that include the pass-through of the cost of plastic resin, as well as mechanisms for the pass-through of certain other manufacturing costs.

Collectively, our product portfolio, technologies, end markets and operations all contribute to our industry-leading margins and strong cash flow.

Our Markets

We supply plastic containers to a significant number of end markets and geographies. Our products provide differentiated packaging for consumer products that help address basic needs such as nutrition, hygiene and home care. The end markets we supply are generally characterized by stable, long-term demand trends that are relatively insulated from economic cycles.

In our food and beverage product category, which represented 61.0% of our net sales from continuing operations for the year ended December 31, 2008, we produce containers for a broad array of end markets that have accepted plastic as the preferred packaging material, such as the markets for juices and juice drinks, yogurt drinks, teas, sports drinks/isotonics and vitamin enhanced waters, as well as snacks, liquor, toppings, jellies and jams. Based on the technology and innovation we bring to our customers and our current market position, we believe we are strategically positioned to benefit from the considerable market opportunity that remains in categories yet to convert, or that are in the early stages of conversion, to plastic containers, including beer, sauces, salsas and nutritional products.

In addition, we supply the household, personal care/specialty and automotive lubricants product categories, which represented 19.2%, 7.3% and 12.5%, respectively, of our net sales from continuing operations for the year ended December 31, 2008. We produce containers for liquid fabric care, dish care, hard-surface cleaners, hair care, skin care and oral care products, as well as automotive lubricants.

For the year ended December 31, 2008, we generated approximately 86% of our net sales from continuing operations in North America. We have a meaningful international presence and we expect to continue to grow alongside our multi-national customers as they expand into new geographies. We are well-positioned through our existing international locations, customer partnerships and joint ventures to take advantage of emerging demand trends in markets such as Latin America, Eastern Europe, India and the rest of Asia. These markets offer compelling opportunities for our custom plastic containers due to changing consumption patterns, increasing penetration rates of packaged goods and emerging consumer bases.

Our Strengths

Global Leader in the Value-Added Plastic Packaging Market. We believe we are one of the few companies that can provide value-added custom plastic containers on a global scale, manufactured from a variety of resins. For the year ended December 31, 2008, approximately 90% of our net sales from continuing operations were realized in product categories in which we believe we have number one market share positions. We have deliberately focused our technologies and assets on key custom markets that tend to support higher global growth and margins. We believe we have the leading domestic market position for custom plastic containers for juice, beer, yogurt drinks, frozen concentrate and pasta sauce and the leading position in Europe for custom plastic containers for yogurt drinks. In addition, we have grown internationally alongside our multi-national consumer product customers. Our proven business model positions us to benefit from the continued growth of our existing consumer product customers in international markets where we anticipate significant demand for plastic containers.

Strategically Positioned to Benefit from Secular Trends in Packaging. We believe we are a leader in the conversion to plastic containers for many major product categories such as shelf-stable, chilled and frozen concentrate juices, beer, food products, energy drinks and ready-to-drink teas. The conversion to plastic containers from other packaging materials has been accelerated by technological advancements, changing consumer preferences and an increased focus on lightweight, sustainable packaging. The advantages of plastic containers, such as shatter resistance, reduced shipping weight, ease of opening and dispensing and resealability, have established plastic as the packaging material of choice on a global basis. We believe we are well positioned to use our technology to help drive the conversion in categories yet to convert, or that are in the early stages of conversion, to plastic containers.

Stable, Long-Term Customer Relationships. We have enjoyed long-standing relationships with our largest and most important customers due to our technology, innovation, product quality and our ability to reduce our customers’ packaging costs. The majority of these customers are under long-term contracts and have been doing business with us, on average, for over 20 years. We believe we have helped establish the brands for many of our top customers, and in some cases, we are the sole source provider in multiple geographies. These efforts have led to awards from several of our major customers, including Heinz Supplier of the Year (2006, 2007, 2008 and 2009), 2008 Anheuser Busch Select Supplier, 2008 Dannon Supplier of the Year, 2007 Miller Beer Supplier of the Year and 2008 Abbott Supplier Excellence Award.

Superior Technology with Long History of Innovation. We use technology and innovation to drive conversions, as well as to deliver solutions that meet our customers’ needs for new designs, product performance requirements, cost management and sustainability. We have demonstrated significant success in designing plastic containers that include customized features such as smooth-wall panel-less bottles, complex shapes, reduced weight, handles, grips, view stripes, pouring features and graphic-intensive customized labeling. Our products must often meet specialized performance and structural requirements, such as hot-fill capability, recycled material usage, oxygen and carbon dioxide barriers, flavor protection and multi-layering. Our strong design capabilities have been especially important to our customers, who generally use packaging to differentiate and add value to their brands, which enable them to spend less on promotion and advertising. We have filed for 925 patents over the past five years for our design and functional package innovations.

“On-Site” Model Provides Stability and Global Opportunities. Approximately one third of our 84 manufacturing facilities are located “on-site” at our customers’ plants. Our on-site plants enable us to work closely with our customers, reducing working capital needs through just-in-time inventory management, generating significant savings opportunities through process re-engineering and eliminating freight and warehouse expenses. In many cases, our on-site operations are integrated with our customers’ manufacturing operations, so our products are delivered by direct conveyance to the customers’ filling lines. As our customers expand globally, our on-site model offers us opportunities to expand alongside our customers in attractive, high-growth markets, while minimizing our investment risk.

Leader in Sustainability. We have emerged as a leader in sustainability initiatives within the packaging industry. We believe we are the only provider of 100% post-consumer resin (“PCR”) containers for food and beverage applications. Our product design capabilities capitalize on the inherent benefits of plastic to produce lightweight bottles that help our customers reduce material usage, lower container weight, save freight costs and improve product-to-package ratios. Our on-site business model also helps eliminate unnecessary freight costs by providing a product source close to our customers, as well as helping to synchronize demand planning with our customers’ plants to further reduce inefficiency. We also provide PCR as a resin source alternative for our customers and produce PCR ourselves at our Graham Recycling Plant in York, Pennsylvania.

Focus on Operational Excellence. We strive to provide the highest quality product to our customers, while continually eliminating inefficiency and reducing costs. We are committed to improve productivity and reduce non-value-added activities and costs in our production processes, purchasing activities, selling, general and administrative expenses, capital expenditures and working capital. For example, from January 1, 2006, through September 30, 2009, we closed or merged several plants that did not meet our internal performance criteria; we implemented information systems to analyze customer profitability and drove subsequent improvement actions and exited certain relationships; we centralized nearly all procurement activities; and we benchmarked and subsequently reduced selling, general and administrative expenses. We utilize our Graham Performance System, a bi-weekly performance management review of our continuous improvement process, where we measure performance and track progress on initiatives relating to safety, quality, productivity, capital expenditures, working capital and other actions leading to improved financial performance. Overall, we have a strong pipeline of specific cost reduction opportunities, which we intend to implement to optimize our cost structure.

Attractive, Stable Margins and Strong Cash Flow Generation. Our strong profit margins, combined with our disciplined approach to capital expenditures, focus on higher margin business opportunities and stringent working capital management, enable us to generate strong and recurring cash flow. The stability of our margins is enhanced by the pass-through of the cost of resin to customers by means of corresponding changes in product pricing. For the nine months ended September 30, 2009, we generated $308.2 million in cash flow from operations, which reduced our net debt (total outstanding indebtedness net of cash and cash equivalents) and enabled us to make strategic investments in our business. We also have a very strong liquidity position, as we had $196.8 million of cash and cash equivalents and $237.3 million of availability under our senior secured revolving credit facility, as of September 30, 2009, and the majority of our debt matures in 2012 and beyond. In addition, our cash taxes are minimized by net operating losses and other tax assets. Additional net deferred tax assets of $237.7 million, before valuation allowance, would have been recorded if the IPO Reorganization had occurred on September 30, 2009. We believe our strong financial position allows us to serve our customers effectively and pursue our strategic plan of stable and profitable growth while maximizing cash flow and reducing financial leverage.

Experienced Management Team with Meaningful Equity Incentives. We have recruited a world-class management team that has successfully executed on transformational company initiatives over the past three years. Their achievements include: increasing our gross margin; decreasing our selling, general and administrative expenses; reducing our annual capital expenditures; generating improved cash flow; reducing our financial leverage; improving our return on capital employed; executing our sustainability initiatives; and expanding our business in high-growth markets, including India. Our senior managers are meaningfully invested in our performance, which gives them an ongoing stake in the creation of stockholder value. After the IPO Reorganization and this offering, management will own approximately % of our common stock on a fully diluted basis.

Our Strategy

We intend to capitalize on our leadership positions in value-added custom plastic containers to increase our earnings before interest, taxes, depreciation and amortization (“EBITDA”) and cash flow in order to reduce our financial leverage and increase stockholder return. We seek to achieve this objective by pursuing the following strategies:

Manage our Business for Stable Growth and Strong Cash Flow Generation. We primarily serve the food and beverage and the household consumer products markets, which tend to be relatively stable due to the underlying demand characteristics of these markets. We will continue to manage our business for growth that meets our disciplined financial performance criteria. We plan to continue to generate cash flow through EBITDA growth and disciplined capital expenditure and working capital management. Our stable growth and strong cash flow will allow us to reduce our financial leverage and increase stockholder return.

Leverage Our Technology Portfolio to Meet the Needs of Our Customers. Most of our customers use packaging to differentiate their products in order to improve their profit margins and market share. We plan to build on our track record of delivering innovations that add value through differentiated shapes and features, and technologies that provide specialized performance and structural attributes. We will also continue to build on our long history of success in meeting the evolving sustainability needs of our customers including reduced raw material content (lightweighting) and increased use of recycled content.

markets such as Latin America, Eastern Europe, India and the rest of Asia. These markets offer compelling opportunities for our custom plastic containers due to changing consumption patterns, increasing penetration rates of packaged goods and emerging consumer bases.

Continue to Focus on Operational Excellence. Our goal is to be the highest quality, most cost-effective provider of value-added custom plastic containers in our markets. We believe we have established a track record of implementing operational improvements and building a lean operating and overhead structure. We intend to focus on further cost reductions through continuous improvement initiatives, leveraging our design and process technology and maintaining our rigorous operational management systems. We believe our focus on operational improvement will continue to drive customer quality, capital efficiency, cash flow and ultimately return on capital employed.

Supplement Organic Growth with Opportunistic and Accretive Strategic Investments. In addition to our primary organic growth strategy, we plan to consider selective investments, joint ventures and strategic acquisitions to supplement our growth objectives. We intend to focus on disciplined and accretive investments that leverage our core strengths in custom plastic containers and enhance our current product, market, geography and customer strategies.

Risks Related to Our Business and this Offering

Before you invest in our common stock, you should be aware that there are various risks related to, among other things: competition; development of product innovations; protection of proprietary technology; reliance on our largest customers; decreases in customer purchase amounts; increases in resin prices or decreases in resin supply; foreign currency fluctuations; local laws in several countries; asset impairment charges; goodwill impairment charges; our dependence on key personnel; new acquisitions; labor relations; our dependence on blow molding equipment; environmental costs and liabilities; difficulties in profit generation; our substantial leverage; the possibility that we may incur additional leverage; restrictive covenants in our debt agreements; inability to extend the maturity of, or renew, our debt; the possibility of default under our credit agreement if a change of control occurs; the control of our company by The Blackstone Group L.P. and its affiliates (collectively, “Blackstone”); and the securities markets. For more information about these and other risks, please read “Risk Factors.” You should carefully consider these risk factors together with all of the other information in this prospectus.

The IPO Reorganization

Immediately prior to, and in connection with, this 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 this offering, GPC Capital Corp. II has had no operations. Graham Packaging Holdings Company is currently owned, directly or indirectly, by Blackstone, management and other investors, who collectively own an 81.0% limited partnership interest and a 4.0% general partnership interest, and by Graham Capital Company, GPC Investments LLC and Graham Alternative Investment Partners I or their affiliates or other entities controlled by Donald C. Graham and his family (collectively, the “Graham Family”), who own a 14.3% limited partnership interest and a 0.7% general partnership interest. 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 Holdings Company options held by management will become options to purchase our common stock.

Corporate History and Information

The predecessor to Graham Packaging Holdings Company, controlled by the predecessors of the Graham Family, was formed in the mid-1970s as a regional domestic custom plastic container supplier. Graham Packaging Holdings Company was formed under the name “Sonoco Graham Company” on April 3, 1989, as a Pennsylvania limited partnership. It changed its name to “Graham Packaging Company” on March 28, 1991, and to “Graham Packaging Holdings Company” on February 2, 1998. The primary business activity of Graham Packaging Holdings Company is its direct and indirect ownership of 100% of the partnership interests in Graham Packaging Company, L.P. (the “Operating Company”). The Operating Company was formed under the name “Graham Packaging Holdings I, L.P.” on September 21, 1994, as a Delaware limited partnership and changed its name to “Graham Packaging Company, L.P.” on February 2, 1998, in connection with a recapitalization in which Blackstone, management and other investors acquired 85.0% of the partnership interests of Graham Packaging Holdings Company. On October 7, 2004, we acquired the blow molded plastic container business of Owens-Illinois, Inc. (“O-I Plastic”), which essentially doubled our size. Our operations have included the operations of O-I Plastic since the acquisition date.

Our principal executive offices are located at 2401 Pleasant Valley Road, York, Pennsylvania 17402, telephone (717) 849-8500. We maintain a website at www.grahampackaging.com. We make available on our website, free of charge, Graham Packaging Holdings Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K as soon as practical after we file these reports with the U.S. Securities and Exchange Commission (the “SEC”). The information contained on our website or that can be accessed through our website neither constitutes part of this prospectus nor is incorporated by reference herein.

The Offering

Common stock offered by us

Common stock offered by selling stockholders

Common stock to be outstanding immediately after this offering

Over-allotment option

The selling stockholders have granted the underwriters a 30-day option to purchase up to additional shares of our common stock at the initial public offering price.

Use of Proceeds

We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $ million, assuming the shares are offered at $ per share, which is the mid-point of the estimated initial public offering price range set forth on the cover page of this prospectus.

We intend to use the anticipated net proceeds of approximately $ million to repay a portion of our term loans.

We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders including upon the sale of shares if the underwriters exercise their option to purchase additional shares from the selling stockholders in this offering. See “Use of Proceeds.”

Dividend policy

We currently expect to retain future earnings, if any, for use in the operation and expansion of our business and in the repayment of our debt and do not anticipate paying any cash dividends in the foreseeable future. Our ability to pay dividends on our common stock is limited by the covenants of our senior secured credit agreement and indentures and may be further restricted by the terms of any future debt or preferred securities. See “Dividend Policy” and “Description of Indebtedness.”

Proposed ticker symbol

“ ”

Unless we indicate otherwise or the context requires, all information in this prospectus:

•

assumes consummation of the IPO Reorganization (see “The IPO Reorganization”);

•

assumes (1) no exercise of the underwriters’ option to purchase additional shares of our common stock; and (2) an initial public offering price of $ per share, the midpoint of the initial public offering price range set forth on the cover of this prospectus; and

•

does not reflect (1) shares of our common stock issuable upon the exercise of outstanding stock options held by our officers and employees at a weighted average exercise price of $ per share as of September 30, 2009, of which were then exercisable; and (2) shares of our common stock reserved for future grants under our 2009 Stock Plan (as defined herein).

Summary Historical and Pro Forma Financial and Other Data

The following table sets forth our summary historical and pro forma consolidated financial data, at the dates and for the periods indicated.

The historical financial data as of and for the years ended December 31, 2006, 2007 and 2008 have been derived from Graham Packaging Holding Company’s historical consolidated financial statements included elsewhere in this prospectus, which have been audited by Deloitte & Touche LLP. The historical financial data as of and for the nine months ended September 30, 2008 and 2009 have been derived from the unaudited historical condensed consolidated financial statements included elsewhere in this prospectus, which have been prepared on a basis consistent with our annual audited historical consolidated financial statements. In the opinion of management, such unaudited financial data include all adjustments, consisting only of usual recurring adjustments, necessary for fair presentation of such data. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year or any future period.

The summary unaudited pro forma condensed consolidated financial data have been derived by the application of pro forma adjustments to the historical consolidated financial statements of Graham Packaging Holdings Company, included elsewhere in this prospectus. The unaudited pro forma condensed consolidated statements of operations data for the year ended December 31, 2008 and for the nine months ended September 30, 2009 give effect to the IPO Reorganization and this offering as if those transactions had occurred on January 1, 2008. The unaudited pro forma condensed consolidated balance sheet data as of September 30, 2009 give effect to the IPO Reorganization and this offering as if those transactions had occurred on September 30, 2009.

The summary 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 this offering been consummated on the dates 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 summary 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.

We signed a letter of intent in the second quarter of 2009 to sell all of the shares of our wholly-owned subsidiary Graham Emballages Plastiques S.A.S., located in Meaux, France, to an independent third party for one euro. The agreement of sale has been signed by all parties and we expect that the transaction will be completed in the fourth quarter of 2009. Our exit from this location was due to its failure to meet internal financial performance criteria. During the third quarter of 2009, we determined that the results of operations for this location, which had previously been reported in the Europe segment, would be reported as discontinued operations, in accordance with the guidance under Accounting Standards Codification (“ASC”) 205-20, “Discontinued Operations.” Our consolidated statements of operations have been restated to reflect these discontinued operations. Accordingly, our summary financial data below, unless otherwise indicated, is based on results from continuing operations.

You should read this information together with the financial statements appearing elsewhere in this prospectus and the information under “The IPO Reorganization,” “Unaudited Pro Forma Financial Information,” “Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical financial statements and related notes included elsewhere in this prospectus.


	Year Ended December 31,									Nine Months Ended September 30,
	2006			2007			2008			2008			2009
										(Unaudited)
	(Dollars in millions, except per share data)
STATEMENT OF OPERATIONS DATA:
Net sales (1)	$	2,500.4		$	2,470.9		$	2,559.0		$	2,003.4		$	1,736.4
Cost of goods sold (1)		2,211.7			2,128.7			2,182.8			1,701.1			1,418.1

Gross profit (1)		288.7			342.2			376.2			302.3			318.3
Selling, general and administrative expenses		131.3			136.2			127.5			100.9			89.4
Asset impairment charges (2)		25.9			157.7			96.1			11.8			14.2
Net loss on disposal of property, plant and equipment		14.3			19.5			6.8			5.6			4.4

Operating income		117.2			28.8			145.8			184.0			210.3
Interest expense, net (3)		206.7			209.5			179.3			134.6			126.2
Gain on debt extinguishment		—			—			—			—			(0.8	)
Other expense (income), net		2.2			2.0			0.4			(0.8	)		(2.0	)
Income tax provision (4)		27.6			19.7			12.9			10.7			16.5

Income (loss) from continuing operations		(119.3	)		(202.4	)		(46.8	)		39.5			70.4
Loss from discontinued operations		(1.1	)		(3.7	)		(10.5	)		(1.7	)		(3.9	)

Net income (loss)	$	(120.4	)	$	(206.1	)	$	(57.3	)	$	37.8		$	66.5


OTHER DATA:
Net sales increase (decrease) (1)		2.1	%		(1.2	)%		3.6	%		6.7	%		(13.3	)%
Cash flows from (5):
Operating activities	$	263.0		$	174.2		$	211.2		$	216.7		$	308.2
Investing activities		(172.4	)		(149.1	)		(144.4	)		(96.0	)		(105.0	)
Financing activities		(104.6	)		(23.2	)		(33.6	)		(26.4	)		(53.1	)

Depreciation and amortization (6)		205.5			203.0			177.3			133.1			118.6
Capital expenditures (excluding acquisitions) (5)		190.5			153.4			148.6			99.3			104.5

Adjusted EBITDA (7)		398.8			432.0			452.8			356.4			362.6

Covenant compliance EBITDA (7)		417.8			441.6			462.8			363.6			371.8

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS DATA:
Pro forma net income (loss) from continuing operations								(27.6	)					82.1
Pro forma interest expense, net								159.6						114.6
Pro forma earnings (loss) from continuing operations per share:
Basic
Diluted
Weighted average number of shares used in computing pro forma earnings (loss) from continuing operations per share:
Basic
Diluted


	As of September 30, 2009
	Actual			Pro Forma
	(Unaudited)
	(In millions)
BALANCE SHEET DATA (5):
Cash and cash equivalents	$	196.8		$	196.8
Working capital (8)		79.9			61.9
Total assets (9)		2,067.6			2,080.1
Total debt (10)		2,442.5			2,121.3
Partners’ capital/stockholders’ equity (deficit)		(869.6	)		(548.4	)

(1)

Net sales increase or decrease based on fluctuations in resin prices. Consistent with industry practice and as permitted under agreements with our customers, resin price changes are passed through to customers by means of corresponding changes in product pricing. The decrease in net sales from the nine months ended September 30, 2008, to the nine months ended September 30, 2009, was primarily due to a decrease in resin costs. During this time period, the average market prices per pound of polyethylene terephthalate (“PET”), and high-density polyethylene (“HDPE”) in the U.S. decreased from $0.92 to $0.72 and from $0.92 to $0.65, respectively. Also contributing to the decline was the relatively stronger dollar and a 1.8% decline in units sold.

(2)

Includes impairment charges recorded on long-lived and other assets of $14.2 million, $156.6 million, $94.7 million, $11.8 million and $14.2 million for the years ended December 31, 2006, 2007 and 2008, and for the nine months ended September 30, 2008 and 2009, respectively, and goodwill of $11.7 million, $1.1 million and $1.4 million for the years ended December 31, 2006, 2007 and 2008, respectively.

(3)

Interest expense for the years ended December 31, 2006 and 2007, and the nine months ended September 30, 2009, included the effects of the refinancing of our prior and existing senior credit agreements, which resulted in the write-offs of debt issuance fees of $2.1 million, $4.5 million and $9.3 million, respectively.

(4)

As a limited partnership, Graham Packaging Holdings Company was not subject to U.S. federal income taxes or to most state income taxes. Instead, taxes were assessed to its partners based on their distributive share of its income. Certain U.S. subsidiaries are corporations subject to U.S. federal and state income taxes. Our foreign operations are subject to tax in their local jurisdictions.

(5)	Includes both continuing and discontinued operations.

(6)	Depreciation and amortization includes continuing and discontinued operations, and excludes asset impairment charges and amortization of debt issuance fees, which is included in interest expense, net.

(7)

We define adjusted EBITDA as earnings or loss from continuing operations before interest expense, net; income tax provision; depreciation and amortization expense; asset impairment charges; the ongoing $5.0 million per year fee paid pursuant to the Fifth Amended and Restated Limited Partnership Agreement (the “Holdings Partnership Agreement”) and the Amended and Restated Monitoring Agreement, dated as of September 30, 2004, among Graham Packaging Holdings Company, the Operating Company, Blackstone and the Graham Family (the “Monitoring Agreement”); other non-cash charges; gain on debt extinguishment; and certain non-recurring charges. We believe that the presentation of adjusted EBITDA provides investors with a useful analytical indicator of our performance. Additionally, we use adjusted EBITDA as one of several measures in determining incentive compensation. 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. Because not all companies use identical calculations, these presentations of adjusted EBITDA may not be comparable to other similarly titled measures of other companies. Adjusted EBITDA is calculated as follows:


	Year Ended December 31,									Nine Months Ended September 30,
	2006			2007			2008			2008		2009
	(In millions)
Income (loss) from continuing operations	$	(119.3	)	$	(202.4	)	$	(46.8	)	$	39.5	$	70.4
Interest expense, net		206.7			209.5			179.3			134.6		126.2
Income tax provision		27.6			19.7			12.9			10.7		16.5
Depreciation and amortization (a)		204.0			201.1			175.0			131.4		118.2
Asset impairment charges		25.9			157.7			96.1			11.8		14.2
Fees paid pursuant to monitoring agreements		5.0			5.0			5.0			3.7		3.7
Other non-cash charges (b)		14.3			19.4			9.3			7.8		5.1
Gain on debt extinguishment		—			—			—			—		(0.8	)
Reorganization and other costs (c)(d)		34.6			22.0			22.0			16.9		9.1

Adjusted EBITDA		398.8			432.0			452.8			356.4		362.6
Project startup costs (e)		19.0			9.6			10.0			7.2		9.2

Covenant compliance EBITDA (f)	$	417.8		$	441.6		$	462.8		$	363.6	$	371.8

(a)

Excludes depreciation and amortization from discontinued operations, and excludes asset impairment charges and amortization of debt issuance fees, which is included in interest expense, net.

(b)

Represents net loss on disposal of fixed assets and equity based compensation.

(c)

Represents non-recurring costs related to employee severance, plant closures, hurricanes, aborted acquisitions, integration of acquired entities, global reorganization and other costs.

(d)

Does not include project startup costs, which are treated as non-recurring in accordance with the definition of EBITDA under our debt agreements.

(e)

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

(f)

Under our debt agreements, we are required to satisfy and maintain specified financial ratios that are calculated using covenant compliance EBITDA. Additionally, under our debt agreements, our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is also tied to ratios based on covenant compliance EBITDA. Our debt agreements define covenant compliance EBITDA as adjusted EBITDA plus project startup costs. We believe that the presentation of covenant compliance EBITDA is important to investors because covenants in our debt agreements are tied to ratios based on that measure. Covenant compliance EBITDA is not intended to represent cash flow from operations as defined by generally accepted accounting principles and should not be used as an alternative to net income as an indicator of operating performance or to cash flow as a measure of liquidity. Because not all companies use identical calculations, these presentations of covenant compliance EBITDA may not be comparable to other similarly titled measures of other companies.

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

(9)

The IPO Reorganization will result in us becoming a taxable entity for U.S. federal and state income tax purposes. We estimate, on a pro forma basis, at September 30, 2009, we would have recorded additional net deferred income tax assets of $237.7 million. We have determined that a valuation allowance of $236.8 million would have been necessary to reduce deferred income tax assets to an amount that is more likely than not to be realized. The actual amounts will be determined based on facts existing at the date of the IPO Reorganization and may differ materially from this amount. Should there be a change in circumstances that causes a change in our judgment about the realizability of the deferred tax asset in future years, a change in the valuation allowance will ordinarily be recorded in income from continuing operations.

(10)	Total debt includes capital lease obligations.

RISK FACTORS

An investment in our common stock involves risk. You should carefully consider the following risks as well as the other information included in this prospectus, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes, before investing in our common stock. Any of the following risks related to our business could materially and adversely affect our business, financial condition or results of operations. However, the selected risks described below are not the only risks facing us. Additional risks and uncertainties not currently known to us or those we currently view to be immaterial may also materially and adversely affect our business, financial condition or results of operations. In such a case, the trading price of the common stock could decline and you may lose all or part of your investment in our company.

Risks Related to Our Business

Our industry is very competitive and increased competition could reduce prices and our profit margins.

We operate in a competitive environment. In the past, we have encountered pricing pressures in our markets and could experience further declines in prices of plastic packaging as a result of competition. Although we have been able over time to partially offset pricing pressures by reducing our cost structure and making the manufacturing process more efficient by providing new and innovative technology, we may not be able to continue to do so in the future. Our business, results of operations and financial condition may be materially and adversely affected by further declines in prices of plastic packaging and such further declines could lead to a loss of business and a decline in our margins.

If we are unable to develop product innovations and improve our production technology and expertise, we could lose customers or market share.

Our success may depend on our ability to adapt to technological changes in the plastic packaging industry. If we are unable to timely develop and introduce new products, or enhance existing products, in response to changing market conditions or customer requirements or demands, our competitiveness could be materially and adversely affected.

We may be unable to protect our proprietary technology from infringement.

We rely on a combination of patents and trademarks, licensing agreements and unpatented proprietary know-how and trade secrets to establish and protect our intellectual property rights. We enter into confidentiality agreements with customers, vendors, employees, consultants and potential acquisition candidates as necessary to protect our know-how, trade secrets and other proprietary information. However, these measures and our patents and trademarks may not afford complete protection of our intellectual property, and it is possible that third parties may copy or otherwise obtain and use our proprietary information and technology without authorization or otherwise infringe on our intellectual property rights. We cannot assure that our competitors will not independently develop equivalent or superior know-how, trade secrets or production methods. Significant impairment of our intellectual property rights could harm our business or our ability to compete. For example, if we are unable to maintain the proprietary nature of our technologies, our profit margins could be reduced as competitors could more easily imitate our products, possibly resulting in lower prices or lost sales for certain products. In such a case, our business, results of operations and financial condition may be materially and adversely affected.

We are periodically involved in litigation in the course of our business to protect and enforce our intellectual property rights, and third parties from time to time initiate claims or litigation against us asserting infringement or violation of their intellectual property rights. We cannot assure that our products will not be found to infringe upon the intellectual property rights of others. Further, we cannot assure that we will prevail in any such

litigation, or that the results or costs of any such litigation will not have a material adverse effect on our business. Any litigation concerning intellectual property could be protracted and costly and is inherently unpredictable and could have a material adverse effect on our business, results of operations or financial condition regardless of its outcome.

We would lose a significant source of revenues and profits if we lost any of our largest customers.

The loss of one of our largest customers could result in: (i) our having excess capacity if we are unable to replace that customer; (ii) our having excess overhead and fixed costs and possible impairment of long-lived assets; and (iii) our selling, general and administrative expenses and capital expenditures representing increased portions of our revenues.

In 2008 and the first nine months of 2009, our top 20 customers comprised 71% and 70% of our net sales, respectively. PepsiCo (collectively, with its affiliates, such as Frito-Lay, Gatorade and Tropicana) is our largest customer, with all product lines we provide to PepsiCo collectively accounting for approximately 17.2%, 14.0%, 13.3% and 11.3% of our net sales for the years ended December 31, 2006, 2007 and 2008, and for the nine months ended September 30, 2009, respectively.

If any of our large customers terminated its relationship with us, we would lose a significant source of revenues and profits.

Contracts with customers generally do not require them to purchase any minimum amounts of products from us, and customers may not purchase amounts that meet our expectations.

The majority of our sales are made pursuant to long-term customer purchase orders and contracts. Customers’ purchase orders and contracts typically vary in length with terms up to ten years. The contracts, including those with PepsiCo, generally are requirements contracts which do not obligate the customer to purchase any given amount of product from us. Prices under these arrangements are tied to market standards and therefore vary with market conditions. Changes in the cost of resin, the largest component of our cost of goods sold, are passed through to customers by means of corresponding changes in product pricing in accordance with our agreements with these customers and industry practice. Increases in resin prices relative to alternative packaging materials, or other price increases, may cause customers to decrease their purchases from us. Additionally, if customers undertake transformational initiatives to their product lines, such as concentrate conversions or product obsolescence actions, we may lose a source of revenues and profits. As a result, despite the existence of supply contracts with our customers, we face the risk that in the future customers will not continue to purchase amounts that meet our expectations.

Increases in resin prices, relative to alternative packaging materials, and reductions in resin supplies could significantly slow our growth and disrupt our operations.

We depend on large quantities of PET, HDPE and other resins in manufacturing our products. One of our primary strategies is to grow the business by capitalizing on the conversion from glass, metal and paper containers to plastic containers. A sustained increase in resin prices, relative to alternative packaging materials, 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, or reductions in the use of, plastic containers. Changes in the cost of resin are passed through to customers by means of corresponding changes in product pricing, in accordance with our agreements with these customers and industry practice. However, if we are not able to do so in the future and there are sustained increases in resin prices, relative to alternative packaging materials, our operating margins could be affected adversely.

While there is currently an adequate supply of resin available from many sources, this may not be the case in the future. Several of our larger suppliers have either entered, or are emerging from, bankruptcy protection. If the number of suppliers is significantly reduced in the future, this could affect our ability to obtain resin timely, or obtain resin at favorable prices, and our operations and profitability may be impaired.

Our international operations are subject to a variety of risks related to foreign currencies and local law in several countries.

We have significant operations outside the United States, and therefore hold assets, incur liabilities, earn revenues and pay expenses in a variety of currencies other than the U.S. dollar. The financial statements of our foreign subsidiaries are translated into U.S. dollars. Our operations outside the United States accounted for approximately 17.7%, 19.9%, 20.9% and 20.7% of our net sales for the years ended December 31, 2006, 2007 and 2008, and for the nine months ended September 30, 2009, respectively. As a result, we are subject to risks associated with operating in foreign countries, including fluctuations in currency exchange and interest rates, imposition of limitations on conversion of foreign currencies into U.S. dollars or remittance of dividends and other payments by foreign subsidiaries, imposition or increase of withholding and other taxes on remittances and other payments by foreign subsidiaries, labor relations problems, hyperinflation in some foreign countries and imposition or increase of investment and other restrictions by foreign governments or the imposition of environmental or employment laws. Furthermore, we typically price our products in our foreign operations in local currencies. As a result, an increase in the value of the U.S. dollar relative to the local currencies of profitable foreign subsidiaries can have a negative effect on our profitability. In our consolidated financial statements, we translate our local currency financial results into U.S. dollars based on average exchange rates prevailing during a reporting period or the exchange rate at the end of that period. During times of a strengthening U.S. dollar, at a constant level of business, our reported international sales, earnings, assets and liabilities will be reduced because the local currency will translate into fewer U.S. dollars. Exchange rate fluctuations decreased comprehensive loss by $23.2 million and $36.3 million and increased comprehensive loss by $65.9 million for the years ended December 31, 2006, 2007 and 2008, respectively, and increased comprehensive income by $15.2 million for the nine months ended September 30, 2009. In addition to currency translation risks, we incur a currency transaction risk whenever one of our operating subsidiaries enters into either a purchase or a sale transaction using a currency different from the operating subsidiary’s functional currency. In several countries where we operate, resin purchases must be made in U.S. dollars. Furthermore, changes in local economic conditions can affect operations. Our international operations also expose us to different local political and business risks and challenges. For example, in certain countries, such as Venezuela and Argentina, we are faced with periodic political issues which could result in currency risks or the risk that we are required to include local ownership or management in our businesses. The above mentioned risks in North America, Europe and South America may hurt our ability to generate revenue in those regions in the future.

We may not be able to recover the carrying value of our long-lived assets, which could require us to record additional asset impairment charges and materially and adversely affect our results of operations.

We had net property, plant and equipment of $1,045.7 million at September 30, 2009, or 50.6% of our total assets. We recorded impairment charges to property, plant and equipment of $14.2 million, $135.5 million and $93.2 million for the years ended December 31, 2006, 2007 and 2008, respectively. We operate in a competitive industry with rapid technological innovation. In order to remain competitive, we develop and invest in new equipment which enhances productivity, often making older equipment obsolete. In addition, changing market conditions can also impact our ability to recover the carrying value of our long-lived assets. The continuing presence of these factors, as well as other factors, could require us to record additional asset impairment charges in future periods which could materially and adversely affect our results of operations.

Goodwill and other identifiable intangible assets represent a significant portion of our total assets, and we may never realize the full value of our intangible assets.

As of September 30, 2009, goodwill and other identifiable intangible assets were approximately $338.2 million, or 16.4% of our total assets. Goodwill and other identifiable intangible assets are recorded at fair value on the date of acquisition. In accordance with the guidance under ASC 350-20 “Intangibles—Goodwill and Other,” we review such assets at least annually for impairment. Impairment may result from, among other things, deterioration in performance, adverse market conditions, adverse changes in applicable laws or regulations, including changes that restrict the activities of or affect the products and services we sell, challenges to the

validity of certain registered intellectual property, reduced sales of certain products incorporating registered intellectual property, and a variety of other factors. The amount of any quantified impairment must be expensed immediately as a charge to results of operations. Depending on future circumstances, it is possible that we may never realize the full value of our intangible assets. Any future determination of impairment of goodwill or other identifiable intangible assets could have a material adverse effect on our financial position and results of operations.

Our ability to operate 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. The loss of members of our senior management team could have a material adverse effect on our operations. 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, including investments in geographic regions we are not familiar with. To the extent that we grow through acquisitions, we will face operational and financial risks, such as the risk of 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, we have incurred indebtedness to finance past acquisitions, and would likely incur additional indebtedness to finance future acquisitions, as permitted under our senior secured credit agreement and the indentures governing our senior notes and senior subordinated notes, in which case we would also face certain financial risks associated with the incurrence of additional indebtedness to make an acquisition, such as a reduction in our liquidity, access to capital markets and financial stability.

Additionally, the types of acquisitions we will be able to make are limited by our senior secured credit agreement, which limits the amount that we may pay for an acquisition to $120 million plus additional amounts based on an unused available capital expenditure limit, certain proceeds from new equity issuances and other amounts.

Our operations and profitability could suffer if we experience labor relations problems.

As of the end of the first nine months of 2009, approximately 3,200 of our approximately 7,400 employees were covered by collective bargaining agreements with various international and local labor unions. In addition, as of September 30, 2009, we operated 84 facilities, of which 41 were union facilities operated primarily by union employees. In the U.S. our union agreements typically have a term of three or four years and thus regularly expire and require negotiation in the course of our business. In 2010, collective bargaining agreements covering approximately 830 employees in the U.S. will expire. Upon the expiration of any of our collective bargaining agreements, we may be unable to negotiate new collective bargaining agreements on terms favorable to us, and our business operations at one or more of our facilities may be interrupted as a result of labor disputes or difficulties and delays in the process of renegotiating our collective bargaining agreements. A work stoppage at one or more of our facilities could have a material adverse effect on our business, results of operations and financial condition.

Our ability to expand our operations could be adversely affected if we lose access to additional blow molding equipment.

Access to blow molding technology is important to our ability to expand our operations. We have access to a broad array of blow molding equipment and suppliers. However, if we fail to continue to access this new blow molding equipment or these suppliers, our ability to expand our operations may be materially and adversely affected until alternative sources of technology can be arranged. Graham Engineering Corporation (“Graham Engineering”) provided our company with certain sizes of wheels used in extrusion blow molding on an exclusive basis in countries and regions in which we had material sales of plastic containers. However, the Equipment Sales, Services and License Agreement with Graham Engineering expired on December 31, 2007. We have obtained alternative sources for the equipment previously supplied by Graham Engineering globally.

Our operations could expose us to substantial environmental costs and liabilities.

We are subject to a variety of national, state, foreign, 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, regulated materials and waste, and that impose liability for the costs of investigating and cleaning up, and damages resulting from, present and past spills, disposals or other releases of hazardous substances or materials. 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 some cases 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, we may be liable for contamination at properties that we currently own or operate, as well as at our former properties or off-site properties where we may have sent hazardous substances. 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.

We cannot predict what environmental legislation or regulations will be enacted in the future, how existing or future laws or regulations will be administered or interpreted, or what environmental conditions may be found to exist at our facilities or at third party sites for which we are liable. Enactment of stricter laws or regulations, stricter interpretations of existing laws and regulations or the requirement to undertake the investigation or remediation of currently unknown environmental contamination at our own or third-party sites may require us to make additional expenditures, some of which could be material.

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, for example, 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 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. Future legislation and initiatives could adversely affect us in a manner that would be material.

We had net losses in recent years and may not generate net income in the future.

For the years ended December 31, 2006, 2007 and 2008, we incurred net losses of $120.4 million, $206.1 million and $57.3 million, respectively. Continuing net losses may limit our ability to execute our strategy and we may not generate net income from operations in the future. Factors contributing to losses in recent years included, but were not limited to:

•

interest on our debt;

•

impairment of our long-lived tangible and intangible assets;

•

the write-off of deferred financing fees related to our debt refinancings; and

•

severance and other payments associated with exiting unprofitable plants.

Risks Related to Our Indebtedness

Our indebtedness could adversely affect our cash flow and our ability to operate and grow our business.

At September 30, 2009, we had $2,442.5 million of total consolidated indebtedness. In addition, at September 30, 2009, after taking into account letters of credit of $10.7 million, we had $237.3 million of revolving loan capacity under our senior secured credit facilities. Under our senior secured credit agreement, we also have available to us an uncommitted incremental loan facility in an amount of up to an additional $300.0 million, and we may incur additional indebtedness as permitted under our senior secured credit agreement and other instruments governing our indebtedness.

A significant portion of our cash flow must be used to service our indebtedness and is therefore not available to be used in our business. Our ability to generate cash flow is subject to general economic, financial, competitive, legislative, regulatory and other factors that may be beyond our control. At September 30, 2009, our contractual commitments for repayment of long-term debt (reflecting our term loan C as maturing in 2014) were $14.4 million in the fourth quarter of 2009, $638.5 million in 2010-2011, $274.1 million in 2012-2013 and $1,518.0 million in 2014, and for interest (calculated based upon our September 30, 2009 actual interest rates, including the effect of our interest rate swaps and collars) were $44.7 million in the fourth quarter of 2009, $325.4 million in 2010-2011, $246.5 million in 2012-2013 and $48.8 million in 2014.

A substantial portion of our indebtedness bears interest at floating rates. At September 30, 2009, a one percentage point change in the interest rates for our variable-rate indebtedness would impact interest expense by an aggregate of approximately $6.2 million, excluding the impact of our interest rate collar and swap agreements. Our term loan C balance of $1,194.0 million at September 30, 2009, has a LIBOR floor of 2.5%. If LIBOR rates exceed that floor, a one percentage point change in the interest rates could impact interest expense by an additional amount of approximately $11.9 million.

Our obligations in connection with our indebtedness could have important consequences. For example, they could:

•

increase our vulnerability to general adverse economic and industry conditions;

•

require us to dedicate a significant portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, acquisitions, capital expenditures, and for other general corporate purposes;

•

limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

•

restrict us from making strategic acquisitions or exploiting business opportunities; and

•

limit our ability to borrow additional funds.

Despite our current level of indebtedness, we may incur additional debt in the future, which could increase the risks associated with our substantial outstanding indebtedness.

We continually pursue organic growth and selectively evaluate and pursue acquisition opportunities and may incur additional indebtedness, including indebtedness under our senior secured credit facilities, to finance any such growth and acquisitions and to fund any resulting increased operating needs. If new debt is added to our current debt levels, the risks we now face related to our indebtedness could increase.

The terms of our debt instruments restrict the manner in which we conduct our business and may limit our ability to implement elements of our business strategy.

The instruments and agreements governing our indebtedness contain numerous covenants including financial and operating covenants, some of which are quite restrictive. These covenants affect, and in many respects limit, among other things, our ability to:

•

incur additional debt;

•

create liens;

•

consolidate, merge or sell assets;

•

make certain capital expenditures;

•

make certain advances, investments and loans;

•

enter into certain transactions with affiliates;

•

engage in any business other than the packaging business;

•

pay dividends; and

•

repurchase stock.

These covenants could restrict us in the pursuit of our business strategy.

We may not be able to extend the maturity of our senior secured revolving credit facility and our senior secured term loan facility, and we may obtain less favorable terms when we attempt to renew or replace them.

On May 28, 2009, certain of our lenders to our senior secured term loan facility agreed to extend the maturity of 66% of our term loans’ balance, or $1,200.0 million, to July 8, 2012, unless we are able to refinance our 8.5% senior notes due 2012 by such date, in which case the maturity of our term loans’ balance will be extended to April 5, 2014. The remaining $611.6 million of term loans, for which the maturity was not extended, will mature on October 7, 2011. Similarly, on May 28, 2009, certain of our lenders to our senior secured revolving credit facility agreed to extend the commitments with respect to $112.8 million (or 45% of total commitments) of our senior secured revolving credit facility to July 8, 2012, unless we are able to refinance our senior notes by such date, in which case the commitments will be extended to October 1, 2013. The senior secured revolving credit facility will expire on October 7, 2010 with respect to the $135.2 million of commitments that were not extended.

We may not be able to renew or replace these facilities on favorable terms as they expire, or we may not be able to renew or replace them at all. Moreover, we may not be able to refinance or repay the senior notes by July 8, 2012, in which case our credit facility and senior secured term loans will expire 91 days before our senior notes. As a result, we may incur higher borrowing costs and could have more stringent debt covenants. If financial market conditions deteriorate, our business and financial results could be materially and adversely affected.

In the event that a party acquires beneficial ownership representing voting power in our company greater than the voting power represented by the equity interests beneficially owned by Blackstone, it will trigger an event of default under our senior secured credit agreement.

In the event that a party acquires beneficial ownership representing voting power in our company greater than the voting power represented by the equity interests beneficially owned by Blackstone, an event of default under our senior secured credit agreement will be triggered. Upon the occurrence of an event of default under our

senior secured credit agreement, the lenders will not be required to lend any additional amounts to us or could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be due and payable, which could result in an event of default under the notes. If we were unable to repay those amounts, the lenders under our senior secured credit agreement could proceed against the collateral granted to them to secure that indebtedness. We have pledged a significant portion of our assets as collateral under our senior secured credit facility. If the lenders under our senior secured credit agreement accelerate the repayment of borrowings, we may not have sufficient assets to repay our senior secured credit agreement and our other indebtedness, including the notes, or be able to borrow sufficient funds to refinance such indebtedness. Even if we are able to obtain new financing, it may not be on commercially reasonable terms, or terms that are acceptable to us.

Risks Related to this Offering and Ownership of Our Common Stock

An active, liquid trading market for our common stock may not develop.

Prior to this offering, there has not been a public market for our common stock. We cannot predict the extent to which investor interest in our company will lead to the development of a trading market on or otherwise or how active and liquid that market may become. If an active and liquid trading market does not develop, you may have difficulty selling any of our common stock that you purchase. The initial public offering price for the shares will be determined by negotiations between us, the selling stockholders and the underwriters and may not be indicative of prices that will prevail in the open market following this offering. The market price of our common stock may decline below the initial offering price, and you may not be able to sell your shares of our common stock at or above the price you paid in this offering, or at all.

You will incur immediate and substantial dilution in the net tangible book value of the shares you purchase in this offering.

Prior stockholders have paid substantially less per share of our common stock than the price in this offering. The initial public offering price of our common stock is substantially higher than the net tangible book deficit per share of outstanding common stock prior to completion of the offering. Based on our net tangible book deficit as of September 30, 2009 and upon the issuance and sale of shares of common stock by us at an assumed initial public offering price of $ per share (the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus), if you purchase our common stock in this offering, you will pay more for your shares than the amounts paid by our existing stockholders for their shares and you will suffer immediate dilution of approximately $ per share in net tangible book value. We also have a large number of outstanding stock options to purchase common stock with exercise prices that are below the estimated initial public offering price of our common stock. To the extent that these options are exercised, you will experience further dilution.

Our stock price may change significantly following the offering, and you could lose all or part of your investment as a result.

We, the selling stockholders and the underwriters will negotiate to determine the initial public offering price. You may not be able to resell your shares at or above the initial public offering price due to a number of factors such as those listed in “—Risks Related to Our Business” and the following, some of which are beyond our control:

•

quarterly variations in our results of operations;

•

results of operations that vary from those of our competitors;

•

changes in expectations as to our future financial performance, including financial estimates by securities analysts and investors;

•

announcements by us, our competitors or our vendors of significant contracts, acquisitions, joint marketing relationships, joint ventures or capital commitments;

•

announcements by third parties of significant claims or proceedings against us;

•

future sales of our common stock; and

•

changes in investor sentiment toward the stock of packaging companies in general and plastic packaging companies in particular.

Furthermore, the stock market recently has experienced extreme volatility that in some cases has been unrelated or disproportionate to the operating performance of particular companies. These broad market and industry fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance.

In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If we were involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation.

If we or our existing investors sell additional shares of our common stock after this offering, the market price of our common stock could decline.

The market price of our common stock could decline as a result of sales of a large number of shares of common stock in the market after this offering, or the perception that such sales could occur. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. After the completion of this offering, we will have million shares of common stock outstanding ( million shares if the underwriters exercise their option to purchase additional shares in full). This number includes million shares that are being sold in this offering, which may be resold immediately in the public market, and at least and shares of our common stock that will be held by Blackstone and the Graham Family, respectively.

In connection with this offering, we have agreed, except in limited circumstances, not to sell shares of common stock for 180 days after the date of this prospectus (or such longer period as described under “Shares Eligible for Future Sale—Lock-Up Agreements”). Additionally, certain stockholders 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 shares of common stock, or the common stock underlying those options, for 180 days after the date of this prospectus (or such longer period as described under “Shares Eligible for Future Sale—Lock-Up Agreements”) without the lead underwriters’ consent. In addition, pursuant to a registration rights agreement, we have granted certain stockholders the right to cause us, in certain instances, at our expense, to file registration statements under the Securities Act covering resales of our common stock held by them. These shares will represent approximately % of our outstanding common stock after this offering, or % if the underwriters exercise their option to purchase additional shares in full. These shares also may be sold pursuant to Rule 144 under the Securities Act, depending on their holding period and subject to restrictions in the case of shares held by persons deemed to be our affiliates. As restrictions on resale end or if these stockholders exercise their registration rights, the market price of our stock could decline if the holders of restricted shares sell them or are perceived by the market as intending to sell them. See “Certain Relationships and Related Party Transactions—Registration Rights Agreement” and “Shares Eligible for Future Sale.”

As of , 2009, after giving effect to the IPO Reorganization, shares of our common stock would have been outstanding, shares would have been issuable upon the exercise of outstanding vested stock options under our stock incentive plans, and shares would have been subject to outstanding unvested stock options and restricted stock grants under our stock incentive plans. Shares acquired upon the exercise of vested options under our stock incentive plan will first become eligible for resale days after the date of this prospectus. Sales of a substantial number of shares of our common stock following the vesting of outstanding stock options could cause the market price of our common stock to decline.

The interests of Blackstone may be in conflict with your interests.

Immediately following the completion of this offering, Blackstone will beneficially own % of our common stock and voting power or % if the underwriters exercise their option to purchase additional shares in full. As a result, Blackstone will have the ability to elect all of the members of our board of directors and thereby control our policies and operations, including the appointment of management, future issuances of our common stock or other securities, the payments of dividends, if any, on our common stock, the incurrence of debt by us, amendments to our certificate of incorporation and bylaws, and the entering into of extraordinary transactions, and their interests may not in all cases be aligned with your interests. In addition, Blackstone may have an interest in pursuing acquisitions, divestitures and other transactions that, in their judgment, could enhance their equity investment, even though such transactions might involve risks to you. For example, Blackstone could cause us to make acquisitions that increase our indebtedness or to sell revenue-generating assets.

Additionally, Blackstone is in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us. Blackstone may also pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us. So long as Blackstone continues to own, directly or indirectly, a significant amount of our common stock and voting power, even if such amount is less than 50%, Blackstone will be able to significantly influence the outcome of matters requiring stockholder approval and will be able to cause or prevent a change of control of our company or a change in the composition of our board of directors and could preclude any unsolicited acquisition of our company. The concentration of ownership could deprive you of an opportunity to receive a premium for our common stock as part of a sale of our company and might ultimately affect the market price of our common stock.

Because we may not pay cash dividends on our common stock for the foreseeable future, you may not receive any return on investment unless you sell our common stock for a price greater than that which you paid for it.

We currently intend to retain future earnings, if any, for future operation, debt reduction and expansion, and do not anticipate paying any cash dividends for the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, our results of operations, financial condition, level of indebtedness, cash requirements, contractual restrictions and other factors that our board of directors may deem relevant. In addition, our ability to pay dividends may be limited by covenants of any existing and future indebtedness we or our subsidiaries incur, including the senior secured credit agreement and the indentures. As a result, you may not receive any return on an investment in our common stock unless you sell our common stock for a price greater than that which you paid for it.

We will have anti-takeover provisions in our organizational documents that may discourage a change of control.

Certain provisions of our amended and restated certificate of incorporation and amended and restated bylaws may have an anti-takeover effect and may delay, defer or prevent a tender offer or takeover attempt that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by our stockholders.

These provisions provide for, among other things:

•

a classified board of directors with staggered three-year terms;

•

the removal of directors only for cause and only with the affirmative vote of holders of at least a majority of the shares of our common stock entitled to vote in the election of directors;

•

advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings; and

•

no ability for stockholders to call special stockholder meetings.

In addition, Section 203 of the DGCL may, under certain circumstances, make it more difficult for a person who would be an “interested stockholder” (defined generally as a person with 15% or more of a corporation’s outstanding voting stock) to effect a “business combination” (defined generally as mergers, consolidations and certain other transactions, including sales, leases or other dispositions of assets with an aggregate market value equal to 10% or more of the aggregate market value of the corporation) with our company for a three-year period.

These anti-takeover provisions could make it more difficult for a third party to acquire our company, even if the third party’s offer may be considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their shares.

We are a “controlled company” within the meaning of the rules and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.

After completion of this offering, Blackstone will continue to control a majority of the voting power of our outstanding common stock. As a result, we are a “controlled company” within the meaning of the corporate governance standards. Under these rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including:

•

the requirement that a majority of the board of directors consist of independent directors;

•

the requirement that we have a nominating/corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities;

•

the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and

•

the requirement for an annual performance evaluation of the nominating/corporate governance and compensation committees.

Following this offering, we intend to utilize these exemptions. As a result, we will not have a majority of independent directors, our nominating/corporate governance committee, if any, and compensation committee will not consist entirely of independent directors and such committees will not be subject to annual performance evaluations. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the .

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains “forward-looking statements” within the meaning of the federal securities laws. 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,” are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology, such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or similar terminology. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, you are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Although we believe that the expectations reflected in such forward-looking statements are reasonable as of the date made, expectations may prove to have been materially different from the results expressed or implied by such forward-looking statements. Unless otherwise required by law, we also disclaim any obligation to update our view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made in this prospectus. Important factors that could cause actual results to differ materially from our expectations include, without limitation:

•

increased competition in our industry which could lead to a decline in prices of plastic packaging;

•

our ability to develop product innovations and improve our production technology and expertise;

•

infringement of our proprietary technology;

•

our dependence on significant customers and the risk that customers will not purchase our products in the amounts expected by us under their requirements contracts;

•

that the majority of our sales are made pursuant to requirements contracts;

•

our exposure to fluctuations in resin prices and our dependence on resin supplies;

•

risks associated with our international operations;

•

our recovery of the carrying value of our long-lived assets;

•

our realization of the carrying value of our goodwill and other identifiable intangible assets;

•

risks associated with a significant portion of our employees being covered by collective bargaining agreements;

•

our ability to successfully integrate our business with those of other businesses that we may acquire;

•

our dependence on key management and the material adverse effect that could result from the loss of their services;

•

our dependence on additional blow molding equipment in order to be able to expand our operations;

•

risks associated with environmental regulation and liabilities;

•

our recent net losses;

•

our indebtedness, which could adversely affect our cash flow and our ability to operate and grow our business;

•

that despite our current levels of indebtedness, we may incur additional debt in the future, which could increase the risks associated with our leverage;

•

the terms of our debt instruments, which restrict the manner in which we conduct our business and may limit our ability to implement elements of our business strategy;

•

our inability to extend the maturity or renew our debt facilities; and

•

the acquisition of voting power in our company greater than the voting power owned by Blackstone may trigger an event of default under our credit agreement.

All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements as well as other cautionary statements that are made from time to time in our other SEC filings and public communications. You should evaluate all forward-looking statements made in this prospectus in the context of these risks and uncertainties.

We caution you that the important factors referenced above may not contain all of the factors that are important to you.

THE IPO REORGANIZATION

Graham Packaging Holdings Company is currently owned, directly or indirectly, by Blackstone, members of our management and other investors, who collectively own an 81.0% limited partnership interest and a 4.0% general partnership interest, and by the Graham Family, who owns a 14.3% limited partnership interest and a 0.7% 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. After the IPO Reorganization and this offering, Blackstone, the Graham Family and members of management will beneficially own %, % and % of our outstanding common stock, respectively, with market values of $ million, $ million and $ million, based on an assumed initial public offering price of $ (the mid-point of the estimated initial public offering price range set forth on the cover age of this prospectus).

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 Holdings Company options held by management will become options to purchase our common stock.

The IPO Reorganization will result in us becoming a taxable entity for U.S. federal and state income tax purposes. We estimate, on a pro forma basis, that we would have recorded an adjustment to net deferred tax balances of approximately $0.9 million as further described in note (a) to the unaudited pro forma condensed consolidated balance sheet.

The following charts show our organizational structure both before and after the IPO Reorganization and this offering:

Before the IPO Reorganization and this Offering

LOGO

After the IPO Reorganization and this Offering

LOGO

Graham Packaging Holdings Company is currently owned by (i) BMP/Graham Holdings Corp. (93.7% owned by Blackstone, 6.0% owned by other investors and 0.3% owned by management), which owns an 80.9% limited partnership interest; (ii) BCP/Graham Holdings LLC (wholly-owned by BMP/Graham Holdings Corp.), which owns a 4.0% general partnership interest; (iii) the Graham Family, which owns a 14.3% limited partnership interest; (iv) Graham Packaging Corporation (indirectly owned by the Graham Family), which owns a 0.7% general partnership interest; and (v) other investors who own a 0.1% limited partnership interest. Prior to the IPO Reorganization, management owns, directly or indirectly, an 8.1% interest in Graham Packaging Holdings Company on a fully diluted basis.

Graham Packaging Holdings Company owns, and Graham Packaging Company Inc. will own, a 99% limited partnership interest in the Operating Company, and GPC Opco GP LLC, a wholly-owned subsidiary of Graham Packaging Holdings Company, owns a 1% general partnership interest in the Operating Company.

USE OF PROCEEDS

We estimate that we will receive net proceeds of approximately $ million from the sale of shares of our common stock in this offering, assuming an initial public offering price of $ per share, the mid-point of the estimated price range set forth on the cover page of this prospectus, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

We intend to use the net proceeds from this offering for repayment of a portion of our term loans. Our term loan B expires on October 7, 2011 and bears interest at LIBOR plus 2.25% (2.55% at September 30, 2009). Our term loan C expires on the earlier of April 5, 2014, or July 8, 2012, subject to the repayment of our senior notes, and carries an interest rate of LIBOR (subject to a floor of 2.5%) plus 4.25% (6.75% at September 30, 2009).

We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders.

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 on, among other things, our results of operations, financial condition, level of indebtedness, cash requirements, contractual restrictions and other factors that our board of directors may deem relevant. In addition, our ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness we or our subsidiaries incur, including our senior secured credit agreement and indentures.

DILUTION

As of September 30, 2009, we had a net tangible book deficit of $1,227.6 million, or $ per share, 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 September 30, 2009, after giving effect to the sale by us of shares in this offering at an assumed initial public offering price of $ , our adjusted net tangible book deficit as of September 30, 2009, after deduction of the underwriting discount and estimated offering expenses and the application of the estimated net proceeds 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. We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders.

The following table illustrates this per share dilution:


Assumed initial public offering price per share		$
Net tangible book deficit per share as of September 30, 2009 after giving effect to the IPO Reorganization	$
Increase per share attributable to new investors

Net tangible book deficit per share after this offering

Dilution per share to new investors		$

The computations made above do not give effect to shares of common stock issuable upon exercise of stock options outstanding as of September 30, 2009, which are currently exercisable at a weighted average exercise price of $ per share. To the extent that shares of common stock are issued in connection with the exercise of stock options, there will be less dilution to new investors. If all of these options had been exercised as of September 30, 2009, the dilution per share to new investors would have been $ .

The following table summarizes as of September 30, 2009 the relative investments of all existing stockholders and new investors, giving effect to our sale of shares in this offering at an assumed initial public offering price of $ per share after deduction of the underwriting discount and offering expenses payable by us:

Shares Purchased

Total Consideration

Average
Price Per
Share

Number

Percent

Amount

Percent

Existing stockholders

New investors

Total

CAPITALIZATION

The following table sets forth the capitalization on an unaudited, actual basis of Graham Packaging Holdings Company as of September 30, 2009 and the capitalization of Graham Packaging Company Inc. on an unaudited, pro forma basis, assuming an initial public offering price of $ per share (the mid-point of the price range set forth on the cover page of this prospectus). We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders. See “Use of Proceeds.”


	As of September 30, 2009
	Actual			Pro Forma
	(In millions)
Cash and cash equivalents	$	196.8		$	196.8

Long-term debt, including current portion:
Senior secured credit agreement (1):
Senior secured revolving credit facility	$	—		$	—
Senior secured term loans:
Term loan B		611.6			501.5
Term loan C (2)		1,172.9			961.8

		1,784.5			1,463.3
8.5% senior notes, due 2012		250.0			250.0
9.875% senior subordinated notes, due 2014		375.0			375.0
Other debt		33.0			33.0

Total debt		2,442.5			2,121.3
Partners’ capital/stockholders’ equity (deficit) (3):
Partners’ capital (deficit)		(825.6	)		—
Common stock, 1,000 shares authorized, 1,000 shares issued and outstanding, actual; shares authorized, shares issued and outstanding, pro forma		—			0.9
Additional paid-in capital		—			(473.6	)
Notes and interest receivable for ownership interests		(2.1	)		(6.5	)
Retained earnings (deficit)		—			(27.3	)
Accumulated other comprehensive loss		(41.9	)		(41.9	)

Total partners’ capital/stockholders’ equity (deficit)		(869.6	)		(548.4	)

Total capitalization	$	1,572.9		$	1,572.9

(1)

Represents debt of the Operating Company. A maximum of $237.3 million was available for borrowing under our senior secured revolving credit facility. As of September 30, 2009, $10.7 million of letters of credit were outstanding and we had no borrowings under our senior secured revolving credit facilities. See “Description of Indebtedness.”

(2)	Consists of $1,194.0 million principal amount net of $21.1 million unamortized discount (actual) and $979.1 million principal amount net of $17.3 million unamortized discount (on a pro forma basis).

(3)

Pro forma basis reflects (i) the reclassification of Partners’ capital (deficit) to Common stock, Additional paid-in capital and Notes and interest receivable for ownership interests; (ii) the recording of net deferred taxes through Additional paid-in capital and Retained earnings (deficit); (iii) the net proceeds from this offering and the application of such proceeds to repay debt; and (iv) the write-off of $4.7 million of deferred financing fees and unamortized discount on debt repaid.

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 Graham Packaging Holdings Company included elsewhere in this prospectus. The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2008 and for the nine months ended September 30, 2009 give effect to the IPO Reorganization described under “The IPO Reorganization” and this offering as if those transactions had occurred on January 1, 2008. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2009 gives effect to the IPO Reorganization and this offering as if those transactions had occurred on September 30, 2009. The pro forma adjustments are based upon available information and upon assumptions that our management believes are reasonable in order to reflect, on a pro forma basis, the impact of these transactions on the historical financial information of Graham Packaging Holdings Company. 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 this offering been consummated on the dates 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.

GRAHAM PACKAGING COMPANY INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

As of September 30, 2009

(In millions)


	Actual Graham Packaging Holdings Company			IPO Reorganization Adjustments			Offering Adjustments			Pro Forma Graham Packaging Company Inc.
ASSETS
Current assets:
Cash and cash equivalents	$	196.8								$	196.8
Accounts receivable, net		221.6									221.6
Inventories		189.9									189.9
Deferred income taxes		3.0									3.0
Prepaid expenses and other current assets		38.4									38.4

Total current assets		649.7									649.7
Property, plant and equipment, net		1,045.7									1,045.7
Intangible assets, net		43.8									43.8
Goodwill		294.4									294.4
Other non-current assets		34.0		$	13.4	(a)	$	(0.9	)(c)		46.5

Total assets	$	2,067.6		$	13.4		$	(0.9	)	$	2,080.1

LIABILITIES AND PARTNERS’ CAPITAL/ STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt	$	33.0					$	(2.4	)(d)	$	30.6
Accounts payable		131.0									131.0
Accrued expenses and other current liabilities		211.5		$	18.0	(a)					229.5
Deferred revenue		30.5									30.5

Total current liabilities		406.0			18.0			(2.4	)		421.6
Long-term debt		2,409.5						(318.8	)(d)		2,090.7
Deferred income taxes		19.1			(5.5	)(a)					13.6
Other non-current liabilities		102.6									102.6
Commitments and contingencies
Partners’ capital/stockholders’ equity (deficit):
Partners’ capital (deficit)		(825.6	)		825.6	(b)
Common stock 1,000 shares authorized, 1,000 shares issued and outstanding, actual; shares authorized, shares issued and outstanding, pro forma		—			0.7	(b)		0.2	(e)		0.9
Additional paid-in capital (deficit)					23.5	(a)		324.8	(e)		(473.6	)
					(821.9	)(b)
Notes and interest receivable for ownership interests		(2.1	)		(4.4	)(b)					(6.5	)
Retained earnings (deficit)		—			(22.6	)(a)		(4.7	)(f)		(27.3	)
Accumulated other comprehensive loss		(41.9	)								(41.9	)

Total partners’ capital/stockholders’ equity (deficit)		(869.6	)		0.9			320.3			(548.4	)

Total liabilities and partners’ capital/stockholders’ equity (deficit)	$	2,067.6		$	13.4		$	(0.9	)	$	2,080.1

See accompanying notes.

GRAHAM PACKAGING COMPANY INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

(a)

Reflects the estimated adjustment to net deferred income tax balances that would have been recorded on a pro forma basis as a result of the IPO Reorganization. These adjustments relate to differences between the financial reporting and tax bases of our assets and liabilities arising from (in millions):


Differences between the financial reporting and tax bases of Graham Packaging Company Inc.’s assets and liabilities arising from the 1998 recapitalization and the tax benefit of subsequent net operating losses (which will be recorded through additional paid-in capital). This adjustment consists of $260.3 million of net deferred tax assets, offset by a valuation allowance of $236.8 million	$	23.5
Impact of us becoming a taxable entity, for U.S. federal and state income tax purposes, offset by the impact of rate changes for withholding taxes on unremitted foreign earnings (which will be recorded through earnings)		(22.6	)

Total net adjustment to stockholders’ equity (deficit)	$	0.9


These adjustments are reflected in the following accounts:

Increase in non-current deferred tax assets	$	13.4
Increase in current deferred tax liabilities		18.0
(Decrease) in non-current deferred tax liabilities		(5.5	)

Total net adjustment to stockholders’ equity (deficit)	$	0.9

Actual deferred tax assets and liabilities will be determined at the closing of the IPO Reorganization and this offering based on facts existing on such date, and may differ materially from the amounts presented above depending on a number of factors, including Graham Packaging Company Inc.’s completion of final valuations by legal entity and assessment of the realizability of net operating loss carryforwards and other tax attributes, including an assessment of Section 382 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) limitations on the utilization of net operating loss carryforwards. In addition, management has not completed an assessment of uncertain tax positions in accordance with ASC 740-10 “Income Taxes;” management expects to complete this assessment in the period during which the IPO Reorganization occurs.

(b)	Prior to the closing of this offering, we will complete the IPO Reorganization in which we will:

•

change GPC Capital Corp. II’s name to Graham Packaging Company Inc.;

•

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

•

exchange options to purchase 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.

As a result of these transactions, we will become the parent company of the Operating Company and our Partners’ capital (deficit) will be reflected as Common stock and Additional paid-in capital (deficit) and Notes and interest receivable for ownership interests. The IPO Reorganization will be accounted for as a combination of entities under common control with no change in the historical accounting basis of Graham Packaging Holdings Company, other than as required by the change in tax status described in note (a) above. Subsequent to September 30, 2009, certain of our executive officers repaid loans made by us in an amount equal to $0.3 million. For further information related to Notes and interest receivable for ownership interests, see note 21, “Transactions with Related Parties,” of the notes to condensed consolidated financial statements (unaudited) for the nine months ended September 30, 2009 included elsewhere in this prospectus.

(c)	Reflects the write-off of debt issuance fees relating to debt repaid.

(d)	Reflects the repayment of $110.1 million of aggregate principal amount of term loan B and $214.9 million of aggregate principal amount of term loan C, net of $3.8 million of unamortized discount.

(e)	Reflects the assumed proceeds to our company from this offering of $350.0 million, after deducting underwriting discount and commissions and estimated offering expenses payable by us of $25.0 million.

(f)	Reflects non-recurring adjustments to retained earnings (deficit) resulting from the write-off of $0.9 million of debt issuance fees and $3.8 million of unamortized discount related to debt repaid.

GRAHAM PACKAGING COMPANY INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

For the Year Ended December 31, 2008

(In millions, except units/shares and per unit/share data)


	Actual Graham Packaging Holdings Company			IPO Reorganization Adjustments			Offering Adjustments			Pro Forma Graham Packaging Company Inc.
Net sales	$	2,559.0								$	2,559.0
Cost of goods sold		2,182.8									2,182.8

Gross profit		376.2									376.2
Selling, general and administrative expenses		127.5									127.5
Asset impairment charges		96.1									96.1
Net loss on disposal of property, plant and equipment		6.8									6.8

Operating income		145.8									145.8
Interest expense		180.1					$	(19.7	)(b)		160.4
Interest income		(0.8	)								(0.8	)
Other expense, net		0.4									0.4

Loss before income taxes		(33.9	)					19.7			(14.2	)
Income tax provision		12.9		$	0.5	(a)		—	(d)		13.4

Loss from continuing operations	$	(46.8	)	$	(0.5	)	$	19.7		$	(27.6	)

Loss from continuing operations per unit/share (e):
Basic	$	(3,496.17	)							$
Diluted	$	(3,496.17	)							$
Weighted average shares outstanding:
Basic		13,377.859
Diluted		13,377.859

See accompanying notes.

GRAHAM PACKAGING COMPANY INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

For the Nine Months Ended September 30, 2009

(In millions, except units/shares and per unit/share data)


	Actual Graham Packaging Holdings Company			IPO Reorganization Adjustments			Offering Adjustments			Pro Forma Graham Packaging Company Inc.
Net sales	$	1,736.4								$	1,736.4
Cost of goods sold		1,418.1									1,418.1

Gross profit		318.3									318.3
Selling, general and administrative expenses		89.4									89.4
Asset impairment charges		14.2									14.2
Net loss on disposal of property, plant and equipment		4.4									4.4

Operating income		210.3									210.3
Interest expense		127.0					$	(11.6	)(b)		115.4
Interest income		(0.8	)								(0.8	)
Gain on debt extinguishment		(0.8	)					0.1	(c)		(0.7	)
Other income, net		(2.0	)								(2.0	)

Income before income taxes		86.9						11.5			98.4
Income tax provision (benefit)		16.5		$	(0.2	)(a)		—	(d)		16.3

Income from continuing operations	$	70.4		$	0.2		$	11.5		$	82.1


Income from continuing operations per unit/share (e):
Basic	$	5,262.70								$
Diluted	$	5,246.56								$
Weighted average units/shares outstanding:
Basic		13,386.947
Diluted		13,428.124

See accompanying notes.

GRAHAM PACKAGING COMPANY INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

STATEMENTS OF OPERATIONS

(a)

Reflects the estimated tax provision that would have been recorded had Graham Packaging Holdings Company been subject to domestic federal and state income taxes as a result of being a taxable entity for all periods presented as a result of the IPO Reorganization using an assumed statutory tax rate of 39.3% for the year ended December 31, 2008 and 39.1% for the nine months ended September 30, 2009, offset by a valuation allowance for federal and state income taxes with the remaining expense (benefit) primarily relating to rate differences for withholding taxes on un-remitted foreign earnings.

(b)	Reflects the net adjustment to interest expense as a result of the repayment of a portion of our term loans with the net proceeds of this offering.

(c)	Reflects the reduction to the gain on debt extinguishment, assuming the repayment of our term loan B and term loan C had occurred on January 1, 2008.

(d)	Pro forma provision for income taxes for the tax effect of the pro forma adjustments to interest expense, at an assumed statutory tax rate of 39.3% for the year ended December 31, 2008 and 39.1% for the nine months ended September 30, 2009 that has been fully offset by a valuation allowance.

(e)

Pro forma basic and diluted earnings per share have been calculated in accordance with the SEC rules for initial public offerings. These rules require that the weighted average share calculation give retroactive effect to any changes in Graham Packaging Company Inc.’s capital structure as well as the number of shares the proceeds of which will be used to repay any debt as reflected in the pro forma adjustments:

•

Pro forma weighted average shares for purposes of the pro forma basic net income (loss) per share calculation reflects actual partnership units of Graham Packaging Holdings Company outstanding on December 31, 2008 and September 30, 2009, respectively, adjusted for the conversion of units to shares of Graham Packaging Company Inc. at an exchange ratio of approximately shares of Graham Packaging Company Inc. common stock for each partnership unit of Graham Packaging Holdings Company pursuant to the IPO Reorganization, plus the shares of Graham Packaging Company Inc. common stock issued for the proceeds described in note (e) to the pro forma balance sheet which will be used to pay down debt.

•

Pro forma weighted average shares for purposes of the pro forma diluted net income (loss) per share calculation has been further adjusted to reflect the conversion of options in Graham Packaging Holdings Company to options of Graham Packaging Company Inc. Since Graham Packaging Holdings Company had a pro forma net loss for the year ended December 31, 2008, shares issuable pursuant to the options that would have had an anti-dilutive effect have been excluded from the computation of pro forma diluted earnings (loss) per share for this period. For the nine months ended September 30, 2009, options have been excluded from the calculation of pro forma diluted earnings per share due primarily to related contingencies not being met as of September 30, 2009.

•

Using the assumptions outlined above, pro forma income (loss) per unit/share was calculated by dividing net income (loss) from continuing operations by the weighted average number of units/shares as follows assuming the transaction occurred on January 1, 2008:


	Actual Graham Packaging Holdings Company	Pro forma Graham Packaging Company Inc.
For the year ended December 31, 2008

Weighted average units/shares outstanding—basic	13,377.859
Incremental shares/units on exercise of options	—

Weighted average units/shares outstanding—diluted	13,377.859


For the nine months ended September 30, 2009

Weighted average units/shares outstanding—basic	13,386.947
Incremental shares/units on exercise of options	41.177

Weighted average units/shares outstanding—diluted	13,428.124

Pro forma income from continuing operations does not include the following non-recurring items which will be charged to earnings in the quarter in which the IPO Reorganization occurs and we repay a portion of our indebtedness. If these transactions had occurred in the quarter ended September 30, 2009, on a pro forma basis, after giving effect to those transactions, these charges would have been:

•

An expense of $4.7 million resulting from the write-off of debt issuance fees and unamortized discount related to the indebtedness repaid; and

•

A one-time charge to earnings to record a net deferred tax liability of $22.6 million that we will recognize as a result of becoming a taxable entity. See note (a) to the unaudited pro forma condensed consolidated balance sheet.

SELECTED FINANCIAL DATA

The following tables set forth our selected historical consolidated financial data for and at the end of each of the years in the five-year period ended December 31, 2008, and for the nine-month periods ended September 30, 2008 and 2009, respectively. The selected consolidated statement of operations data and the selected consolidated cash flow data for the years ended December 31, 2006, 2007 and 2008, and the selected consolidated balance sheet data as of December 31, 2008 and 2009, have been derived from Graham Packaging Holdings Company’s audited consolidated financial statements appearing elsewhere in this prospectus. The selected consolidated statement of operations data and the selected consolidated cash flow data for the years ended December 31, 2004 and 2005, and the selected consolidated balance sheet data as of December 31, 2004, 2005 and 2006, presented below, have been derived from audited consolidated financial statements not included in this prospectus. The selected consolidated financial data as of and for the nine-month periods ended September 30, 2008 and 2009 have been derived from unaudited consolidated financial statements, which, in the opinion of management, include all adjustments, consisting only of usual recurring adjustments, necessary for fair presentation of such data. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year or any future period.

We signed a letter of intent in the second quarter of 2009 to sell all of the shares of our wholly-owned subsidiary Graham Emballages Plastiques S.A.S., located in Meaux, France, to an independent third party for one euro. The agreement of sale has been signed by all parties and we expect that the transaction will be completed in the fourth quarter of 2009. Our exit from this location was due to its failure to meet internal financial performance criteria. During the third quarter of 2009, we determined that the results of operations for this location, which had previously been reported in the Europe segment, would be reported as discontinued operations, in accordance with the guidance under ASC 205-20, “Discontinued Operations.” Our consolidated statements of operations have been restated to reflect these discontinued operations. Accordingly, the selected financial data below, unless otherwise indicated, is based on results from continuing operations.

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 included elsewhere in this prospectus.


	Year Ended December 31,															Nine Months Ended September 30,
	2004 (1)			2005			2006			2007			2008			2008			2009
																(Unaudited)
	(In millions)
STATEMENT OF OPERATIONS DATA:
Net sales (2)	$	1,328.6		$	2,447.8		$	2,500.4		$	2,470.9		$	2,559.0		$	2,003.4		$	1,736.4
Cost of goods sold (2)		1,134.0			2,152.5			2,211.7			2,128.7			2,182.8			1,701.1			1,418.1

Gross profit (2)		194.6			295.3			288.7			342.2			376.2			302.3			318.3
Selling, general and administrative expenses		86.2			127.2			131.3			136.2			127.5			100.9			89.4
Asset impairment charges (3)		7.0			7.0			25.9			157.7			96.1			11.8			14.2
Net loss on disposal of fixed assets		1.2			13.7			14.3			19.5			6.8			5.6			4.4

Operating income		100.2			147.4			117.2			28.8			145.8			184.0			210.3
Interest expense (4)		140.5			184.7			207.3			210.4			180.1			135.1			127.0
Interest income		(0.3	)		(0.6	)		(0.6	)		(0.9	)		(0.8	)		(0.5	)		(0.8	)
Gain on debt extinguishment		—			—			—			—			—			—			(0.8	)
Other expense (income), net		0.3			0.9			2.2			2.0			0.4			(0.8	)		(2.0	)
Income tax (benefit) provision (5)		(2.1	)		14.4			27.6			19.7			12.9			10.7			16.5

Income (loss) from continuing operations		(38.2	)		(52.0	)		(119.3	)		(202.4	)		(46.8	)		39.5			70.4
Loss from discontinued operations		(2.4	)		(0.6	)		(1.1	)		(3.7	)		(10.5	)		(1.7	)		(3.9	)

Net income (loss)	$	(40.6	)	$	(52.6	)	$	(120.4	)	$	(206.1	)	$	(57.3	)	$	37.8		$	66.5


BALANCE SHEET DATA (at period end) (6):
Cash and cash equivalents	$	22.1		$	26.7		$	13.3		$	18.3		$	43.9		$	110.9		$	196.8
Working capital (7)		188.4			249.2			158.4			186.2			190.5			165.9			79.9
Total assets		2,505.0			2,562.4			2,441.9			2,233.8			2,006.9			2,251.4			2,067.6
Total debt (8)		2,465.2			2,638.3			2,546.9			2,534.3			2,499.2			2,509.9			2,442.5
Partners’ capital (deficit)		(434.1	)		(493.7	)		(597.8	)		(787.4	)		(959.3	)		(754.2	)		(869.6	)

OTHER DATA:
Cash flow provided by (used in) (6):
Operating activities	$	107.5		$	120.0		$	263.0		$	174.2		$	211.2		$	216.7		$	308.2
Investing activities		(1,382.5	)		(261.4	)		(172.4	)		(149.1	)		(144.4	)		(96.0	)		(105.0	)
Financing activities		1,288.4			147.9			(104.6	)		(23.2	)		(33.6	)		(26.4	)		(53.1	)
Depreciation and amortization (9)		112.1			201.1			205.5			203.0			177.3			133.1			118.6

(1)

On October 7, 2004, we acquired O-I Plastic for $1,191.8 million, including direct costs of the acquisition. Amounts shown under the caption “Investing activities” include cash paid, net of cash acquired, in the acquisition. This transaction was accounted for under the purchase method of accounting. Results of operations are included since the date of the acquisition.

(2)	Net sales increase or decrease based on fluctuations in resin prices. Consistent with industry practice and as permitted under agreements with our customers, resin price changes are passed through to customers by means of corresponding changes in product pricing.

(3)

We evaluated the recoverability of our long-lived tangible and intangible assets in selected locations, due to indicators of impairment, and recorded impairment charges of $7.0 million, $6.6 million, $14.2 million, $156.6 million, $94.7 million, $11.8 million and $14.2 million for the years ended December 31, 2004, 2005, 2006, 2007 and 2008 and for the nine months ended September 30, 2008 and 2009, respectively. Goodwill is reviewed for impairment on at least an annual basis. The resulting impairment charges recognized, based on a comparison of the related net book value of the location to projected discounted future cash flows of the reporting unit, were $0.4 million, $11.7 million, $1.1 million and $1.4 million for the years ended December 31, 2005, 2006, 2007 and 2008, respectively. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” for a further discussion.

(4)

The years ended December 31, 2004, 2006 and 2007 and the nine months ended September 30, 2009 included the effects of the refinancing of our prior and current senior credit agreements, which resulted in the write-offs of debt issuance fees of $20.9 million, $2.1 million, $4.5 million and $9.3 million, respectively, and the write-off of tender and call premiums of $15.2 million for the year ended December 31, 2004, associated with the redemption of our prior senior subordinated notes and senior discount notes.

(5)

As limited partnerships, Graham Packaging Holdings Company and the Operating Company are not subject to U.S. federal income taxes or most state income taxes. Instead, taxes are assessed to Graham Packaging Holdings Company’ partners based on their distributive share of the income of Graham Packaging Holdings Company. Certain U.S. subsidiaries acquired as part of O-I Plastic are corporations subject to U.S. federal and state income taxes. Our foreign operations are subject to tax in their local jurisdictions. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse.

(6)	Includes both continuing and discontinued operations.

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

(8)	Total debt includes capital lease obligations.

(9)	Depreciation and amortization includes continuing and discontinued operations, and excludes asset impairment charges and amortization of debt issuance fees, which is included in interest expense.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with “Selected Financial Data” and the financial statements and related notes included elsewhere in this prospectus. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including but not limited to those described in the “Risk Factors” section of this prospectus. Actual results may differ materially from those contained in any forward-looking statements. You should read “Special Note Regarding Forward-Looking Statements” and “Risk Factors.”

Overview

We are a worldwide leader in the design, manufacture and sale of value-added, custom blow molded plastic containers for branded consumer products. We operate in product categories where customers and end users value the technology and innovation that our custom plastic containers offer as an alternative to traditional packaging materials such as glass, metal and paperboard. We selectively pursue opportunities where we can leverage our technology portfolio to continue to drive the trend of conversion to plastic containers from other packaging materials. Our customers include leading multi-national and regional blue-chip consumer product companies that seek customized, sustainable plastic container solutions for diverse and stable end markets, such as the food and beverage and the household consumer products markets. We believe we are well-positioned to meet the evolving needs of our customers who often use our technology to differentiate their products with value-added design and performance characteristics such as smooth-wall panel-less bottles, unique pouring and dispensing features, multilayer bottles incorporating barrier technologies to extend shelf life, and ultra lightweight bottles with “hot-fill” capabilities that allow containers to be filled at high temperatures.

As of September 30, 2009, we operated a network of 84 manufacturing facilities throughout North America, Europe and South America. We are organized and managed on a geographical basis in three operating segments: North America, Europe and South America. Each operating segment includes four major categories: Food and Beverage, Household, Personal Care/Specialty and Automotive Lubricants. Our primary strategies are to manage our business for stable growth and strong cash flow from operations, leverage our technology portfolio to meet the needs of our customers, target organic growth in attractive markets utilizing our proven business model, continue to focus on operational excellence, and supplement our organic growth with opportunistic strategic investments.

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

•

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

•

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

•

develop proprietary technologies that provide a meaningful competitive advantage in product design, product performance, process technology and sustainability features;

•

focus on operational excellence, cost reductions and overall efficiencies;

•

make investments in plant and technology necessary to satisfy the factors mentioned above; and

•

reduce our financial leverage.

We intend to capitalize on our leadership positions in value-added custom plastic containers to increase our EBITDA and cash flow in order to reduce our financial leverage and increase stockholder return.

We believe that the area with the greatest opportunity for growth continues to be in producing containers for the food and beverage product category because of the industry’s continued conversion to plastic packaging,

including the demand for containers for juices and juice drinks, nutritional beverages, beer, yogurt drinks, liquor, teas, sports drinks/isotonics, vitamin enhanced waters, snacks, sauces, jellies and jams. Much of the growth in this area in recent years has been in the sale of smaller sized containers. We believe we are a leader in providing value-added hot-fill PET juice containers. We also believe we are a leading participant in the rapidly growing markets for yogurt drinks and nutritional beverages where we manufacture containers using polyolefin resins.

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

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

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

As of September 30, 2009, we operated 29 manufacturing facilities outside of the United States in Argentina, Belgium, Brazil, Canada, Finland, France, Mexico, the Netherlands, Poland, Spain, Turkey, the United Kingdom and Venezuela. Over the past few years, we have expanded our international operations with the addition of two new plants in Brazil.

For the year ended December 31, 2008, and for the nine months ended September 30, 2009, 71.1% and 69.7%, respectively, of our net sales were generated by our top twenty customers. All of the top twenty customers were under long-term contracts with terms up to ten years and have been doing business with us for over 20 years on average. Prices under these arrangements are typically tied to plastic resin market standards and, therefore, vary with market conditions. In general, the contracts have annually set minimum purchase requirements but do not obligate the customer to purchase any given amount of product from us beyond one year. Our sales to PepsiCo, our largest customer, were 17.2%, 14.0%, 13.3% and 11.3% of total sales for the years ended December 31, 2006, 2007 and 2008, and for the nine months ended September 30, 2009, respectively. All of these sales were made in North America.

The largest component of our cost of goods sold is resin costs. Based on certain resin industry indices, the following table summarizes average market prices per pound of PET and HDPE resins in the United States during the periods indicated:


	Year Ended December 31,						Nine Months Ended September 30,
	2006		2007		2008		2008		2009
PET	$	0.80	$	0.82	$	0.87	$	0.92	$	0.72
HDPE	$	0.71	$	0.73	$	0.86	$	0.92	$	0.65

Changes in the cost of resin are passed through to customers by means of corresponding changes in product pricing, in accordance with our agreements with these customers and industry practice. A sustained increase in

resin prices relative to other packaging materials, 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, or reductions in the use of, plastic containers.

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

We signed a letter of intent in the second quarter of 2009 to sell all of the shares of our wholly-owned subsidiary Graham Emballages Plastiques S.A.S., located in Meaux, France, to an independent third party for one euro. The agreement of sale has been signed by all parties and we expect that the transaction will be completed in the fourth quarter of 2009. Our exit from this location was due to its failure to meet internal financial performance criteria. During the third quarter of 2009, we had determined that the results of operations for this location, which had previously been reported in the Europe segment, would be reported as discontinued operations, in accordance with the guidance under ASC 205-20, “Discontinued Operations.” Our consolidated statements of operations have been restated to reflect these discontinued operations. Accordingly, our discussion on results of operations below and elsewhere in this prospectus, unless otherwise indicated, is based on results from continuing operations.

Results of Operations

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


	Year Ended December 31,												Nine Months Ended September 30,
	2006				2007				2008				2008				2009
	(Dollars in millions, except for percentages)
North America	$	2,220.5	88.8	%	$	2,140.1	86.6	%	$	2,195.0	85.8	%	$	1,718.2	85.8	%	$	1,497.6	86.2	%
Europe		215.3	8.6			255.3	10.3			274.2	10.7			214.3	10.7			171.6	9.9
South America		64.6	2.6			75.5	3.1			89.8	3.5			70.9	3.5			67.2	3.9

Total Net Sales	$	2,500.4	100.0	%	$	2,470.9	100.0	%		2,559.0	100.0	%	$	2,003.4	100.0	%	$	1,736.4	100.0	%


	Year Ended December 31,												Nine Months Ended September 30,
	2006				2007				2008				2008				2009
	(Dollars in millions, except for percentages)
Food & Beverage	$	1,465.3	58.6	%	$	1,488.7	60.3	%	$	1,561.3	61.0	%	$	1,231.9	61.5	%	$	1,067.7	61.5	%
Household		505.2	20.2			499.1	20.2			491.6	19.2			371.7	18.5			319.5	18.4
Personal Care/Specialty		245.2	9.8			205.2	8.3			186.8	7.3			141.3	7.1			129.6	7.5
Automotive Lubricants		284.7	11.4			277.9	11.2			319.3	12.5			258.5	12.9			219.6	12.6

Total Net Sales	$	2,500.4	100.0	%	$	2,470.9	100.0	%	$	2,559.0	100.0	%	$	2,003.4	100.0	%	$	1,736.4	100.0	%

Nine Months Ended September 30, 2009, Compared to Nine Months Ended September 30, 2008

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


	Nine Months Ended September 30,						% Increase (Decrease)
	2008			2009			% Increase (Decrease)
	(Dollars in millions)
Net sales	$	2,003.4		$	1,736.4		(13.3	)%
Cost of goods sold		1,701.1			1,418.1		(16.6	)

Gross profit		302.3			318.3		5.3
% of net sales (1)		15.1	%		18.3	%
Selling, general and administrative expenses		100.9			89.4		(11.4	)
% of net sales (1)		5.0	%		5.1	%
Asset impairment charges		11.8			14.2		20.3
Net loss on disposal of property, plant and equipment		5.6			4.4		(21.4	)

Operating income		184.0			210.3		14.3
% of net sales (1)		9.2	%		12.1	%
Interest expense		135.1			127.0		(6.0	)
Interest income		(0.5	)		(0.8	)	60.0
Gain on debt extinguishment		—			(0.8	)	>100.0
Other income, net		(0.8	)		(2.0	)	>100.0
Income tax provision		10.7			16.5		54.2

Income from continuing operations		39.5			70.4		78.2
Loss from discontinued operations		(1.7	)		(3.9	)	>100.0

Net income	$	37.8		$	66.5		75.9	%

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

Net Sales. Net sales for the nine months ended September 30, 2009, decreased $267.0 million, or 13.3%, from the nine months ended September 30, 2008. A large part of the decrease in net sales was due to a decrease in resin costs, which are passed through to customers, where the average market price per pound of PET in the U.S. decreased from $0.92 to $0.72 and the average market price per pound of HDPE in the U.S. decreased from $0.92 to $0.65. Additional contributing factors to the decrease in net sales were the negative impact of changes in exchange rates of $81.0 million, lower unit volume and price reductions both from operational cost savings shared with our customers and in response to competitive pressure. Container units sold decreased 1.8%.

On an operating segment basis, sales for the nine months ended September 30, 2009, in North America decreased $220.6 million, or 12.8%, from the nine months ended September 30, 2008, primarily due to a decrease in resin costs, the negative impact of changes in exchange rates, lower unit volume and price reductions. North American sales in the food and beverage, household, personal care/specialty and automotive lubricants product categories contributed $132.0 million, $43.5 million, $8.7 million and $36.4 million, respectively, to the decrease. Container units sold in North America decreased in the food and beverage, personal care/specialty and automotive lubricants product categories by 2.7%, 4.4% and 13.1%, respectively, and increased in the household product category by 0.6%.

Sales for the nine months ended September 30, 2009, in Europe decreased $42.7 million, or 19.9%, from the nine months ended September 30, 2008. The decrease in sales was primarily due to the negative impact of changes in exchange rates of $33.6 million and a decrease in resin costs.

Sales for the nine months ended September 30, 2009, in South America decreased $3.7 million, or 5.2%, from the nine months ended September 30, 2008. The decrease in sales was primarily due to the negative impact of changes in exchange rates of $12.9 million, partially offset by an increase in unit volume and certain price increases.

Gross Profit. Gross profit for the nine months ended September 30, 2009, increased $16.0 million, or 5.3%, from the nine months ended September 30, 2008. Gross profit for the nine months ended September 30, 2009, increased in North America by $21.2 million, decreased in Europe by $2.0 million and decreased in South America by $3.2 million, when compared to the nine months ended September 30, 2008. The increase in gross profit was primarily due to ongoing productivity initiatives and lower depreciation and amortization expense of $12.4 million, partially offset by a reduction in volume, a strengthening of the U.S. dollar against the euro and other currencies of $21.3 million and price reductions referred to above. Although there was a net reduction in volume, a significant portion of the volume decrease was in lower margin containers and was partially offset by volume gains in higher margin containers.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the nine months ended September 30, 2009, decreased $11.5 million, or 11.4%, from the nine months ended September 30, 2008. The decrease was primarily due to a decrease in consulting and other professional fees of $4.1 million, a decrease in professional fees related to an aborted 2008 transaction of $3.6 million, a strengthening of the U.S. dollar against the euro and other currencies of $3.6 million and ongoing expense reduction efforts.

Asset Impairment Charges. We identified an indicator of possible impairment of certain assets in Argentina, Brazil, Mexico, Poland and the United States for the nine months ended September 30, 2009, and in Brazil, Canada, Mexico and the United States for the nine months ended September 30, 2008. As a result, we evaluated the recoverability of these assets and determined that the undiscounted future cash flows were below the carrying value of these long-lived assets. Additionally, management had no plans to redeploy the majority of these assets. Accordingly, we adjusted the carrying value of these long-lived assets to their estimated fair value in accordance with the guidance under ASC 360-10-35-15, “Subsequent Measurement—Impairment or Disposal of Long-Lived Assets,” resulting in impairment charges of $14.2 million and $11.8 million for the nine months ended September 30, 2009, and 2008, respectively.

Interest Expense. Interest expense for the nine months ended September 30, 2009, decreased $8.1 million from the nine months ended September 30, 2008. The decrease was primarily due to a decrease in interest rates (average 90-day LIBOR decreased from 3.0% for the nine months ended September 30, 2008 to 0.8% for the nine months ended September 30, 2009) and lower debt levels in 2009, partially offset by the extension, in May 2009, of $1,200.0 million of our term loan at a minimum LIBOR and increased LIBOR margin and an increase to interest expense resulting from the discontinuance of hedge accounting for our interest rate collar and swap agreements of $4.9 million. See “—Liquidity and Capital Resources” for a more detailed description of our term loan extension.

Other Income, Net. Other income, net predominantly included net foreign exchange gains for the nine months ended September 30, 2009 and 2008. Other income, net for the nine months ended September 30, 2009, increased $1.2 million from the nine months ended September 30, 2008.

Income Tax Provision. Income tax provision for the nine months ended September 30, 2009, increased $5.8 million from the nine months ended September 30, 2008. The increase primarily resulted from a benefit recognized during the third quarter of 2008 associated with Mexican asset tax credit carryforwards, increased profitability of our Spanish and Mexican subsidiaries, and valuation allowance adjustments in our Mexican and Brazilian subsidiaries. The increase in income tax expense was partially offset by a reduction in unrecognized tax benefits of foreign subsidiaries.

Net Income. Primarily as a result of the factors discussed above, net income was $66.5 million for the nine months ended September 30, 2009, compared to net income of $37.8 million for the nine months ended September 30, 2008.

2008 Compared to 2007

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


	Year ended December 31,						%Increase/ (Decrease)
	2007			2008			%Increase/ (Decrease)
	(Dollars in millions)
Net sales	$	2,470.9		$	2,559.0		3.6	%
Cost of goods sold		2,128.7			2,182.8		2.5


Gross profit		342.2			376.2		9.9
% of net sales (1)		13.8	%		14.7	%
Selling, general and administrative expenses		136.2			127.5		(6.4	)
% of net sales (1)		5.5	%		5.0	%
Asset impairment charges		157.7			96.1		(39.1	)
Net loss on disposal of property, plant and equipment		19.5			6.8		(65.1	)


Operating income		28.8			145.8		>100.0
% of net sales (1)		1.2	%		5.7	%

Interest expense		210.4			180.1		(14.4	)
Interest income		(0.9	)		(0.8	)	(11.1	)
Other expense, net		2.0			0.4		(80.0	)
Income tax provision		19.7			12.9		(34.5	)

Loss from continuing operations		(202.4	)		(46.8	)	(76.9	)
Loss from discontinued operations		(3.7	)		(10.5	)	>100.0

Net loss	$	(206.1	)	$	(57.3	)	(72.2	)%

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

Net Sales. Net sales for the year ended December 31, 2008, increased $88.1 million, or 3.6%, from the year ended December 31, 2007. The increase in sales was primarily due to an increase in resin costs, which are passed through to customers, and the positive impact of changes in exchange rates, offset by lower unit volume and price reductions both from operational cost savings shared with our customers and in response to competitive pressure. In addition, the percentage of our sales from lightweighted products has increased. While we believe lightweighting offers us a competitive advantage, our unit cost is less because of a lower resin content. Container units sold decreased 4.3%.

On an operating segment basis, sales for the year ended December 31, 2008, in North America increased $54.9 million, or 2.6%, from the year ended December 31, 2007, primarily due to an increase in resin costs, offset by lower unit volume and price reductions. North American sales in the food and beverage and automotive lubricants product categories contributed $53.5 million and $34.0 million, respectively, to the increase, while North American sales in the household and personal care/specialty product categories decreased $16.6 million and $16.0 million, respectively. Container units sold in North America decreased in the food and beverage, household, personal care/specialty and automotive lubricants product categories by 3.2%, 3.1%, 13.7% and 7.6%, respectively.

Sales for the year ended December 31, 2008, in Europe increased $18.9 million, or 7.4%, from the year ended December 31, 2007. The increase in sales was primarily due to the positive impact of changes in exchange rates of $19.7 million.

Sales for the year ended December 31, 2008, in South America increased $14.3 million, or 18.9%, from the year ended December 31, 2007. The increase in sales was primarily due to increased unit volume and the positive impact of changes in exchange rates of $4.8 million.

Gross Profit. Gross profit for the year ended December 31, 2008, increased $34.0 million, or 9.9%, from the year ended December 31, 2007. Gross profit for the year ended December 31, 2008, increased in North America and Europe by $28.0 million and $6.9 million, respectively, while South America decreased by $0.9 million, when compared to the year ended December 31, 2007. The overall increase in gross profit was driven by several factors, including ongoing productivity initiatives, a mix shift to higher margin containers, lower depreciation and amortization expense of $25.5 million and a weakening of the U.S. dollar against the euro and other currencies of $6.9 million, partially offset by price reductions referred to above.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the year ended December 31, 2008, decreased $8.7 million, or 6.4%, from the year ended December 31, 2007. The decrease was primarily due to decreases in consulting expenses of $9.4 million and employee severance of $2.4 million and ongoing expense reduction efforts, partially offset by a $4.1 million increase in professional fees related to an aborted 2008 transaction.

Asset Impairment Charges. Asset impairment charges were $96.1 million for the year ended December 31, 2008, as compared to $157.7 million for the year ended December 31, 2007. We operate in a competitive industry with rapid technological innovation. In order to remain competitive, we develop and invest in new equipment which enhances productivity, often making older equipment obsolete. In addition, changing market conditions can also impact our ability to recover the carrying value of our long-lived assets. During 2008, we noted several factors indicating that there may be impairment in some of our asset groups. These included:

•

the deteriorating economic conditions in general;

•

the expected decrease in volume of a major food and beverage customer;

•

a continuing reduction in the automotive quart/liter container business as our customers convert to multi-quart/liter containers;

•

the introduction by us, and our competitors, of newer production technology in the food and beverage sector which is improving productivity, causing certain of our older machinery and equipment to become obsolete; and

•

the loss of business of a large automotive lubricants customer.

•

a steady conversion to concentrate containers in the liquid laundry detergent market which has decreased sales;

•

an ongoing reduction in the automotive quart/liter container business as our customers convert to multi-quart/liter containers;

•

introduction by us, and our competitors, of newer production technology in the food and beverage sector which has improved productivity, causing certain of our older machinery and equipment to become obsolete; and

•

the loss of the European portion of a customer’s business.

Of the 2008 impairment charges related to property, plant and equipment, $85.4 million, $3.5 million and $4.3 million were recorded in North America, Europe and South America, respectively.

We also evaluated the recoverability of our intangible assets, and consequently recorded impairment charges related to intangible assets other than goodwill in the United States of $1.5 million for the year ended December 31, 2008, as compared to $21.1 million for the year ended December 31, 2007. During 2008, we recorded impairment charges to our patented technologies and customer relationships of $1.0 million and $0.5 million, respectively, all in our North American operating segment. These intangible assets were recorded in conjunction with the acquisitions of O-I Plastic in 2004 and certain operations from Tetra-Pak Inc. in 2005. The patented technologies were impaired primarily as a result of not realizing the growth in revenues for this technology that was anticipated at the time of the acquisition of O-I Plastic. The customer relationships were impaired primarily as a result of reduced revenues for the plant acquired from Tetra-Pak Inc. During 2007, we recorded impairment charges to our licensing agreements, customer relationships and patented technologies of $19.1 million, $1.7 million and $0.3 million, respectively.

We conducted our annual test for goodwill impairment as of December 31, 2008, and recorded impairment charges of $1.4 million, as compared to $1.1 million for the year ended December 31, 2007. The 2008 impairment charges were in connection with our plants in Brazil and Argentina, while the 2007 impairment charges were in connection with our plant in Venezuela. The plants in Brazil and Argentina have not performed at the levels expected and our projected discounted cash flows for these reporting units resulted in fair values that were not sufficient to support the goodwill recorded at the time of the respective acquisitions of these plants. The Venezuela plant had suffered several years of losses and our projected discounted cash flows for this reporting unit had resulted in a fair value that was not sufficient to support the goodwill recorded at the time of the O-I Plastic acquisition.

Interest Expense. Interest expense for the year ended December 31, 2008, decreased $30.3 million from the year ended December 31, 2007. The decrease was primarily related to the write-off in 2007 of $4.5 million of deferred financing fees in connection with the March 30, 2007, amendment to our senior secured credit agreement and a decrease in interest rates (average 90-day LIBOR decreased from 5.3% for the year ended December 31, 2007, to 2.9% for the year ended December 31, 2008).

Other Expense, Net. Other expense, net predominantly included net foreign exchange losses for the years ended December 31, 2008 and 2007. Other expense, net for the year ended December 31, 2008, decreased $1.6 million from the year ended December 31, 2007.

Income Tax Provision. Income tax provision for the year ended December 31, 2008, decreased $6.8 million from the year ended December 31, 2007. The decrease primarily resulted from a reduction in unrecognized tax benefits of foreign subsidiaries and an increase in a deferred tax benefit associated with Mexican asset tax credit carryforwards. These decreases were partially offset by increased profitability in our Canadian and Mexican subsidiaries.

Net Loss. Primarily as a result of factors discussed above, net loss was $57.3 million for the year ended December 31, 2008, compared to net loss of $206.1 million for the year ended December 31, 2007.

2007 Compared to 2006

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


	Year ended December 31,						%Increase/ (Decrease)
	2006			2007			%Increase/ (Decrease)
	(Dollars in millions)
Net sales	$	2,500.4		$	2,470.9		(1.2	)%
Cost of goods sold		2,211.7			2,128.7		(3.8	)


Gross profit		288.7			342.2		18.5
% of net sales (1)		11.5	%		13.8	%
Selling, general and administrative expenses		131.3			136.2		3.7
% of net sales (1)		5.3	%		5.5	%
Asset impairment charges		25.9			157.7		>100.0
Net loss on disposal of property, plant and equipment		14.3			19.5		36.4

Operating income		117.2			28.8		(75.4	)
% of net sales (1)		4.7	%		1.2	%
Interest expense		207.3			210.4		1.5
Interest income		(0.6	)		(0.9	)	50.0
Other expense, net		2.2			2.0		(9.1	)
Income tax provision		27.6			19.7		(28.6	)

Loss from continuing operations		(119.3	)		(202.4	)	(69.7	)
Loss from discontinued operations		(1.1	)		(3.7	)	>100.0

Net loss	$	(120.4	)	$	(206.1	)	(71.2	)%

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

Net Sales. Net sales for the year ended December 31, 2007, decreased $29.5 million, or 1.2%, from the year ended December 31, 2006. The decrease in sales was primarily due to higher sales of lower priced products and price reductions in response to competitive pressure, offset by an increase in resin costs, which are passed through to customers, and the positive impact of changes in exchange rates. Container units sold increased 0.4%.

On an operating segment basis, sales for the year ended December 31, 2007, in North America decreased $80.4 million, or 3.6%, from the year ended December 31, 2006, primarily due to higher sales of lower priced products, price reductions and lower container units sold of 2.8%, offset by an increase in resin costs. North American sales in the food and beverage, household, personal care/specialty and automotive lubricants product categories contributed $14.7 million, $15.7 million, $41.0 million and $9.0 million, respectively, to the decrease. Container units sold in North America increased in the household product category by 0.5% and decreased in the food and beverage, personal care/specialty and automotive lubricants product categories by 0.6%, 14.8% and 6.8%, respectively.

Sales for the year ended December 31, 2007, in Europe increased $40.0 million, or 18.6%, from the year ended December 31, 2006. The increase in sales was primarily due to the positive impact of changes in exchange rates of $22.9 million and higher container units sold of 7.2% compared to the same period last year.

Sales for the year ended December 31, 2007, in South America increased $10.9 million, or 16.9%, from the year ended December 31, 2006. The increase in sales was primarily due to increased unit volume and the positive impact of changes in exchange rates of $5.9 million.

Gross Profit. Gross profit for the year ended December 31, 2007, increased $53.5 million, or 18.5%, from the year ended December 31, 2006. Gross profit for the year ended December 31, 2007, increased in North America, Europe and South America by $39.7 million, $12.7 million and $1.1 million, respectively, when compared to the year ended December 31, 2006. The overall increase in gross profit was driven by several factors including ongoing productivity initiatives, the absence in 2007 of $13.6 million of expenses incurred in 2006 related to the hurricanes in the United States in the second half of 2005, lower project startup costs of $9.4 million (primarily costs associated with startups of manufacturing lines to produce new products), lower integration expenses of $5.2 million for the O-I Plastic acquisition and a weakening of the U.S. dollar against the euro and other currencies of $5.5 million.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the year ended December 31, 2007, increased $4.9 million, or 3.7%, from the year ended December 31, 2006. The increase was primarily due to increases in consulting expenses associated with restructuring of the business of $8.9 million and employee bonus expenses of $10.3 million, partially offset by decreases in costs associated with aborted acquisitions of $4.7 million, costs related to employee severance of $4.8 million and development costs of $4.9 million.

Asset Impairment Charges. Asset impairment charges were $157.7 million for the year ended December 31, 2007, as compared to $25.9 million for the year ended December 31, 2006. We operate in a competitive industry with rapid technological innovation. In order to remain competitive, we develop and invest in new equipment which enhances productivity, often making older equipment obsolete. In addition, changing market conditions can also impact our ability to recover the carrying value of our long-lived assets. During 2007, we noted several factors indicating that there may be impairment in some of our asset groups. These included:

•

a steady conversion to concentrate containers in the liquid laundry detergent market which has decreased sales;

•

an ongoing reduction in the automotive quart/liter container business as our customers convert to multi-quart/liter containers;

•

the loss of the European portion of a customer’s business.

We conducted impairment tests in accordance with ASC 360-10-35-15, “Subsequent Measurement—Impairment or Disposal of Long-Lived Assets,” and recorded impairment charges of $135.5 million for property, plant and equipment for the year ended December 31, 2007, compared to $14.2 million for the year ended December 31, 2006. The impairment of property, plant and equipment in 2006 was primarily a result of a significant decrease in revenue in several European plants, the discontinuation of preform manufacturing in Europe and the loss of a major customer in South America. Of the 2007 impairment charges related to property, plant and equipment, $116.8 million, $18.1 million and $0.6 million were recorded in North America, Europe and South America, respectively.

We also evaluated the recoverability of our intangible assets, and consequently recorded impairment charges related to intangible assets other than goodwill in the United States of $21.1 million for the year ended December 31, 2007. We recorded impairment charges to our licensing agreements, customer relationships and patented technologies of $19.1 million, $1.7 million and $0.3 million, respectively, all in our North American operating segment. These intangible assets were recorded in conjunction with the acquisition of O-I Plastic in 2004. The licensing agreements were impaired due to lower projected royalty revenues associated with licensing agreements acquired in the acquisition of O-I Plastic as compared to royalty revenues projected at the time of the acquisition. The customer relationships were impaired primarily as a result of reduced revenues with a major customer resulting from that customer’s policy regarding allocation of its business among several vendors. The patented technologies were impaired primarily as a result of the conversion of a significant portion of our continuous extrusion manufacturing to Graham Wheel technology.

We conducted our annual test for goodwill impairment as of December 31, 2007, and recorded impairment charges of $1.1 million, as compared to $11.7 million for the year ended December 31, 2006. The 2007 impairment charges were all in connection with our Venezuelan plant while the 2006 impairment charges were in connection with our operations in Ecuador, Finland, the United Kingdom and Venezuela. In 2006, we were notified that we would lose the business of a major customer of the Ecuador plant. We closed our Ecuador plant in 2007. The Finland and the United Kingdom plants had not performed at the levels expected and our projected discounted cash flows for these reporting units had resulted in fair values that were not sufficient to support the goodwill recorded at the time of the O-I Plastic acquisition. The Venezuela plant had suffered several years of losses and our projected discounted cash flows for this reporting unit had resulted in a fair value that was not sufficient to support the goodwill recorded at the time of the O-I Plastic acquisition.

Interest Expense. Interest expense for the year ended December 31, 2007, increased $3.1 million from the year ended December 31, 2006. The increase was primarily related to the write-off in 2007 of $4.5 million of deferred financing fees in connection with the March 30, 2007, amendment to our senior secured credit agreement (as compared to the write-off in 2006 of $2.1 million of deferred financing fees in connection with a 2006 amendment to our senior secured credit agreement) and an increase in interest rates (average 90-day LIBOR increased from 5.19% for the year ended December 31, 2006 to 5.30% for the year ended December 31, 2007), partially offset by lower debt levels in the year ended December 31, 2007.

Other Expense, Net. Other expense, net predominantly included net foreign exchange losses for the years ended December 31, 2007 and 2006. Other expense, net for the year ended December 31, 2007, decreased $0.2 million from the year ended December 31, 2006.

Income Tax Provision. Income tax provision for the year ended December 31, 2007, decreased $7.9 million from the year ended December 31, 2006. Improved profitability in jurisdictions where we have income tax liabilities, principally Europe and Mexico, and valuation allowances placed on domestic and international deferred tax assets were more than offset by decreases in tax expense in the United States. These decreases in the U.S. were attributable to several factors. Both a restructuring of the ownership of our Poland operations and a new protocol to the U.S./Belgium Income Tax Treaty resulted in lower tax on repatriation of unremitted earnings to the U.S. In addition, income tax expense decreased due to reductions in deemed investments in U.S. property of our foreign subsidiaries.

Net Loss. Primarily as a result of factors discussed above, net loss was $206.1 million for the year ended December 31, 2007, compared to net loss of $120.4 million for the year ended December 31, 2006.

Effect of Changes in Exchange Rates

We generally conduct business in our foreign operations in local currencies. Accordingly, in general, our results of operations are affected by changes in foreign exchange rates. Income and expense accounts and cash flow items are translated at average monthly exchange rates during the period. As a result, a decline in the value of the U.S. dollar relative to the local currencies of profitable foreign subsidiaries can have a favorable effect on our profitability, and an increase in the value of the U.S. dollar relative to the local currencies of profitable foreign subsidiaries can have a negative effect on our profitability. Market conditions for the first half of 2009 have resulted in a rise of the U.S. dollar relative to these other local currencies. Market conditions have begun to stabilize in the third quarter of 2009 resulting in a decline in the U.S. dollar relative to these other local currencies.

We manage foreign currency exposures (primarily to the euro, Canadian dollar, Polish zloty, Brazilian real, pound sterling and certain non-U.S. subsidiaries’ purchases of raw materials and sales in U.S. dollars) at the operating unit level. Exposures that cannot be naturally offset within an operating unit are hedged with derivative financial instruments where possible and cost effective in our judgment. Foreign currency exchange contracts which hedge defined exposures generally mature within twelve months. We do not generally hedge our exposure to translation gains or losses on our non-U.S. net assets. There were foreign currency exchange contracts of

$10.2 million and $1.5 million outstanding as of December 31, 2008, and September 30, 2009, respectively. Included in other (income) expense, net were foreign exchange losses of $1.9 million, $1.9 million and $0.2 million for the years ended December 31, 2006, 2007 and 2008, respectively, and foreign exchange gains of $2.3 million for the nine months ended September 30, 2009.

Assets and liabilities are translated at exchange rates in effect at the balance sheet date. Net exchange gains or losses resulting from the translation of foreign financial statements are recorded as a separate component of partners’ capital (deficit) under the caption “accumulated other comprehensive income.” Exchange rate fluctuations decreased comprehensive loss by $23.2 million and $36.3 million and increased comprehensive loss by $65.9 million for the years ended December 31, 2006, 2007 and 2008, respectively, and increased comprehensive income by $15.2 million for the nine months ended September 30, 2009.

Liquidity and Capital Resources

In 2006, 2007 and 2008 and in the first nine months of 2009, we generated $263.0 million, $174.2 million, $211.2 million and $308.2 million of cash flow from operations, respectively. In addition, for 2006, 2007 and 2008, and the nine months ended September 30, 2008 and 2009, we had cash and cash equivalents of $13.3 million, $18.3 million, $43.9 million, $110.9 million and $196.8 million, respectively. These funds were primarily used to fund $170.9 million, $149.1 million, $144.4 million and $103.6 million of net cash paid for property, plant and equipment for the years ended December 31, 2006, 2007 and 2008 and for the first nine months of 2009, respectively, $1.4 million of acquisitions for each of the year ended December 31, 2006 and the nine months ended September 30, 2009, and $1.0 million, $4.5 million and $15.0 million of debt issuance fee payments for the years ended December 31, 2006 and 2007 and for the nine months ended September 30, 2009, respectively.

Our senior secured credit agreement consists of senior secured term loans of $1,784.5 million ($1,805.6 million aggregate outstanding principal amount less $21.1 million unamortized discount) as of September 30, 2009, and a $248.0 million senior secured revolving credit facility. Availability under the secured revolving credit facility as of September 30, 2009, was $237.3 million (as reduced by $10.7 million of outstanding letters of credit). The obligations of the Operating Company and GPC Capital Corp. I under the senior secured credit agreement are guaranteed by Graham Packaging Holdings Company and certain domestic subsidiaries of the Operating Company. The term loans are payable in quarterly installments and require payments of $4.6 million in the fourth quarter of 2009, $18.3 million in 2010, $615.7 million in 2011, $12.0 million in 2012, $12.0 million in 2013 and $1,143.0 million in 2014 (disregarding any further mandatory or voluntary prepayments that may reduce such scheduled amortization payments).

On May 28, 2009, certain of the lenders under our term loans agreed to extend the final maturity of $1,200 million of the term loans to the earlier of April 5, 2014, and the date that is 91 days prior to the maturity of our senior notes if such senior notes have not been repaid or refinanced in full by such date. As a result, $611.6 million of the term loans will mature on October 7, 2011, and the remaining $1,194.0 million will mature on either July 8, 2012, if we do not refinance or repay the senior notes, or April 5, 2014, if we do refinance or repay the senior notes.

On May 28, 2009, certain of our secured revolving credit facility lenders agreed to extend their commitments, with respect to $112.8 million of the total commitment, to the earlier of October 1, 2013, and the date that is 91 days prior to the maturity of our senior notes if such senior notes have not been repaid or refinanced in full by such date. As a result, $135.2 million of commitments under the secured revolving credit facility will expire on October 7, 2010, and the remainder of the commitments will expire either on July 8, 2012, if we do not refinance or repay the senior notes, or October 1, 2013 if we do refinance or repay the senior notes.

As of September 30, 2009, we were in compliance with all covenants in the senior secured credit agreement.

As of September 30, 2009, we had outstanding $250.0 million in senior notes and $375.0 million in senior subordinated notes co-issued by the Operating Company and GPC Capital Corp. I. The notes are unconditionally guaranteed, jointly and severally, by Graham Packaging Holdings Company and certain domestic subsidiaries of the Operating Company and mature on October 7, 2012 (senior notes), and October 7, 2014 (senior subordinated notes). Interest on the senior notes is payable semi-annually at 8.50% and interest on the senior subordinated notes is payable semi-annually at 9.875%.

At September 30, 2009, our total indebtedness was $2,442.5 million.

Unused lines of credit, including the secured revolving credit facility, at December 31, 2007 and 2008 and at September 30, 2009, were $249.7 million, $246.1 million and $244.4 million, respectively. Substantially all unused lines of credit have no major restrictions and are provided under notes between us and the respective lending institutions.

We expect to fund scheduled debt repayments in the fourth quarter of 2009 and in 2010 from cash flow from operations. While we do not expect to draw on our secured revolving credit facility in the fourth quarter of 2009 and in 2010, we continually review the condition of banks and institutions providing commitments and believe they would be able to meet their commitments should we have the need to draw on this facility. We believe our ability to generate cash flow from operations will be adequate to meet anticipated cash requirements to fund working capital, capital spending and other cash needs for the next twelve months.

The senior secured credit agreement and the indentures governing the notes contain a number of significant covenants. We believe that these covenants are material terms of these agreements and that information about the covenants is material to an investor’s understanding of our financial condition and liquidity. Covenant compliance EBITDA (as defined below) is used to determine our compliance with certain of these covenants. Any breach of covenants in the senior secured credit agreement (including those that are tied to financial ratios based on covenant compliance EBITDA) could result in a default under the senior secured credit agreement and the lenders could elect to declare all amounts borrowed to be immediately due and payable. Any such acceleration would also result in a default under the indentures. Additionally, these covenants restrict our and our subsidiaries’ ability to dispose of assets, repay other indebtedness, incur additional indebtedness, pay dividends, prepay subordinated indebtedness, incur liens, make capital expenditures, investments or acquisitions, engage in mergers or consolidations, engage in transactions with affiliates and otherwise restrict our activities. Under the senior secured credit agreement, we are required to satisfy specified financial ratios and tests. The senior secured credit agreement also requires that up to 50% of excess cash flow (as defined in the senior secured credit agreement) is applied on an annual basis to pay down the senior secured term loans. As of September 30, 2009, we were in compliance with the financial ratios and tests specified in the senior secured credit agreement and we currently anticipate being able to comply with such financial ratios and tests for the next fiscal year, however, we cannot give any assurance this will occur.

We define covenant compliance EBITDA as EBITDA further adjusted to exclude non-recurring items, non-cash items and other adjustments required in calculating covenant compliance under the senior secured credit agreement and the indentures, as shown in the table below. Adjusted EBITDA is defined as covenant compliance EBITDA, less project startup costs. Further, adjusted EBITDA is one of several measures we use to determine management incentive compensation. Covenant compliance EBITDA and adjusted EBITDA are not intended to represent cash flow from operations as defined by generally accepted accounting principles and should not be used as an alternative to net income as an indicator of operating performance or to cash flow as a measure of liquidity. We believe that the inclusion of covenant compliance EBITDA and adjusted EBITDA amounts in this prospectus are appropriate to provide additional information to investors about the calculation of certain financial covenants in the senior secured credit agreement and the indentures, as well as information as to how management is compensated. Because not all companies use identical calculations, these presentations of covenant compliance EBITDA and adjusted EBITDA may not be comparable to other similarly titled measures

of other companies. A reconciliation of loss from continuing operations to covenant compliance EBITDA and adjusted EBITDA is as follows:

Reconciliation of loss from continuing operations to EBITDA


	Four Quarters Ended
	December 31, 2008			September 30, 2009
	(In millions)
Loss from continuing operations	$	(46.8	)	$	(15.8	)
Interest income		(0.8	)		(1.1	)
Interest expense		180.1			172.0
Income tax provision		12.9			18.7
Depreciation and amortization		175.0			161.9

EBITDA	$	320.4		$	335.7

Reconciliation of EBITDA to covenant compliance EBITDA


	Four Quarters Ended
	December 31, 2008		September 30, 2009
	(In millions)
EBITDA	$	320.4	$	335.7
Asset impairment charges		96.1		98.4
Other non-cash charges (a)		9.3		6.6
Fees related to monitoring agreements (b)		5.0		5.0
Gain on debt extinguishment		—		(0.8	)
Reorganization and other costs (c)		22.0		14.0

Adjusted EBITDA (d)		452.8		458.9
Project startup costs (e)		10.0		12.1

Covenant compliance EBITDA	$	462.8	$	471.0

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

(b)	Represents annual fees paid to Blackstone Management Partners III L.L.C. and a limited partner of Graham Packaging Holdings Company pursuant to the Holdings Partnership Agreement and the Monitoring Agreement.

(c)	Represents non-recurring costs related to employee severance, professional fees associated with an aborted 2008 transaction, plant closures, consulting expenses associated with restructuring of the business, hurricanes Gustav and Ike and other costs defined in the senior secured credit agreement.

(d)	We use adjusted EBITDA as one factor in the setting of incentive compensation.

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

Under applicable debt agreements, our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is also tied to ratios based on covenant compliance EBITDA. The senior secured credit agreement requires that we maintain a senior secured debt to covenant compliance EBITDA ratio at a maximum of 5.50x for the most recent four-quarter period. For the four quarters ended September 30, 2009, the Operating Company’s covenant compliance EBITDA was $471.0 million and the senior secured debt to covenant compliance EBITDA ratio was 3.5x. Given the level of senior secured debt as of September 30, 2009, the Operating Company’s covenant compliance EBITDA could have fallen by $172.5 million to $298.5 million for the four quarters ended September 30, 2009, and we still would have been in compliance with the covenants in the senior secured credit agreement. The ability of the Operating Company to incur additional debt and make certain restricted payments under its notes is tied to a minimum covenant

compliance EBITDA to fixed charges (primarily cash interest expense) ratio of 2.0x, except that the Operating Company may incur certain debt and make certain restricted payments without regard to the ratio, including up to $2.2 billion under the senior secured credit agreement and investments equal to 7.5% of the Operating Company’s total assets. The covenant compliance EBITDA to fixed charges ratio was 2.9x for the four quarters ended September 30, 2009.

Substantially all of the tangible and intangible assets of our domestic subsidiaries that are guarantors under the senior secured credit agreement are pledged as collateral pursuant to the terms of the senior secured credit agreement.

Under the senior secured credit agreement, the Operating Company is subject to restrictions on the payment of dividends or other distributions to Graham Packaging Holdings Company; provided that, subject to certain limitations, the Operating Company may pay dividends or other distributions to Graham Packaging Holdings Company:

•

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

•

to fund purchases and redemptions of equity interests of Graham Packaging Holdings Company or Investor LP held by then present or former officers or employees of Graham Packaging Holdings Company, the Operating Company or their Subsidiaries (as defined therein) or by any employee stock ownership plan upon that person’s death, disability, retirement or termination of employment or other circumstances with annual dollar limitations.

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

Cash paid for property, plant and equipment, excluding acquisitions, for the years ended December 31, 2006, 2007 and 2008 and for the nine months ended September 30, 2009, was $190.5 million, $153.4 million, $148.6 million and $104.5 million, respectively. We believe that capital expenditures to maintain and upgrade property, plant and equipment are important to remain competitive. We estimate that on average the maintenance capital expenditures are approximately $30 million to $40 million per year. Additional capital expenditures beyond this amount will be required to expand capacity or improve our cost structure.

For the year ending December 31, 2009, we expect to incur capital expenditures ranging from $140 million to $160 million, and for the year ending December 31, 2010, we expect to incur capital expenditures ranging from $140 million to $160 million. However, total capital expenditures will depend on the size and timing of growth related opportunities. Our principal source of cash to fund ongoing operations and capital requirements has been and is expected to continue to be cash flow from operations. We believe that cash flow from operations will be sufficient to fund our ongoing operations and foreseeable capital requirements.

We have entered into agreements with an unrelated third-party for the financing of specific accounts receivable of certain foreign subsidiaries. For a further description of these agreements see “—Off-Balance Sheet Arrangements.”

Fourth Quarter of 2009 and Year 2010 Outlook

Based on discussions with our customers and our own internal estimates, we are planning for near term volumes to continue at a pace similar to that experienced in the first three quarters of 2009. However, this could be affected in the fourth quarter of 2009 by customers taking unforeseen plant shutdowns to manage their operations, or by individual product demand fluctuations.

For 2010, we believe we will have opportunities for further product packaging conversions to plastic. These opportunities could be balanced or offset by continued economic uncertainty, which may affect sales of certain products. In response to fluctuating conditions, we plan to aggressively control expenses, increase productivity and maintain discipline on working capital and capital expenditures.

The global economic climate has also resulted in increased foreign exchange rate volatility. We derive a significant percentage of our revenues from our non-U.S subsidiaries operating in their local currencies and those results are affected by changes in the values of non-U.S. currencies to the U.S. dollar. If the dollar remains at its current level relative to the local currencies of the countries in which we operate, or further strengthens, our sales and net income will be affected and the impact could be material. We employ a number of strategies to manage these risks, including the use of derivative financial instruments. However, there can be no assurance that our efforts to manage our currency risks will be successful.

Pro Forma Income Tax Status

Contractual Obligations and Commitments

The following table sets forth our significant contractual obligations and commitments as of December 31, 2008, without giving consideration to the effects of our debt refinancing under the Fourth Amendment to the Credit Agreement (as discussed below):


	Payments Due by Period
Contractual Obligations	Total		2009		2010 and 2011		2012 and 2013		2014 and beyond
	(In thousands)
Long-term debt obligations	$	2,477,811	$	50,970	$	1,801,757	$	250,084	$	375,000
Capital lease obligations		21,427		5,929		15,338		160		—
Interest payments (a)		581,296		162,299		299,762		90,536		28,699
Operating lease obligations		179,565		32,922		51,493		36,250		58,900
Capital expenditures		50,155		50,155		—		—		—
Fees related to monitoring agreements (b)		25,000		5,000		10,000		10,000		—

Total	$	3,335,254	$	307,275	$	2,178,350	$	387,030	$	462,599

(a)	Interest payments are calculated based upon our 2008 year-end actual interest rates.

(b)

Represents annual fees paid to Blackstone Management Partners III L.L.C. and a limited partner of Graham Packaging Holdings Company under monitoring agreements. Such agreements have no contractual term and for purposes of this schedule are presumed to be outstanding for a period of five years. For further information, see note 21 of the notes to condensed consolidated financial statements (unaudited) for the nine months ended September 31, 2009, included elsewhere in this prospectus.

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


	Payments Due by Period
Contractual Obligations	Total		2009		2010 and 2011		2012 and 2013		2014 and beyond
	(In thousands)
Long-term debt excluding capital leases (a)	$	2,445,024	$	14,448	$	638,492	$	274,084	$	1,518,000
Interest payments (b)		665,325		44,727		325,373		246,471		48,754

(a)	Reflects our term loan C as maturing in 2014. See further description in “—Liquidity and Capital Resources.”

(b)	Interest payments are calculated based upon our 2009 amended senior secured credit agreement and based upon our September 30, 2009 actual interest rates.


	Payments Due by Period
Contractual Obligations	Total		2009		2010 and 2011		2012 and 2013		2014 and beyond
	(In thousands)
Long-term debt excluding capital leases (a)	$	2,120,024	$	13,626	$	524,374	$	269,764	$	1,312,260
Interest payments (b)		595,742		40,403		291,791		218,404		45,144

(a)	Reflects our term loan C as maturing in 2014. See further description in “—Liquidity and Capital Resources.”

(b)	Interest payments are calculated based upon our 2009 amended senior secured credit agreement and based upon our September 30, 2009, actual interest rates.

In accordance with the terms of our agreement to sell the Meaux, France facility, we will be required to pay up to 3.5 million euros (approximately $5.1 million) in the fourth quarter of 2009.

In addition to the amounts included above, in 2009 we expect to make cash contributions to our pension plans of approximately $4.0 million ($2.6 million of which has already been paid as of September 30, 2009). Cash contributions in subsequent years will depend on a number of factors including the performance of plan assets.

Due to recent market volatility, our defined benefit plans have experienced significant market declines in plan assets. As a result, our projected 2009 actuarially determined adjusted funding target attainment percentages (“AFTAP”) have declined proportionately. In order to avoid benefit restrictions and other notification requirements for not maintaining an AFTAP level of 80%, we made a contribution of $12.7 million to the plan on April 1, 2009. Our AFTAP levels for 2008 were between 80% and 90%. For further information on our pension plans, see note 13, “Pension Plans,” of the notes to consolidated financial statements and note 20, “Pension Plans,” of the notes to the unaudited condensed consolidated financial statements included in this prospectus.

Uncertain tax contingencies are positions taken or expected to be taken on an income tax return that may result in additional payments to tax authorities. However, due to the uncertainty of the timing of future cash flows associated with our unrecognized tax benefits, we are unable to make reasonably reliable estimates of the period of cash settlement, if any, with the respective taxing authorities. Accordingly, unrecognized tax benefits of $16.3 million as of December 31, 2008, have been excluded from the contractual obligations table above. For further information related to unrecognized tax benefits, see note 18, “Income Taxes,” of the notes to consolidated financial statements included elsewhere in this prospectus.

Other contractual obligations include certain derivatives with a net liability of $22.8 million and $21.5 million as of December 31, 2008, and September 30, 2009, respectively. We would have been required to pay these amounts to the counterparties to settle these derivatives at December 31, 2008, and September 30, 2009, respectively. As required under ASC 815-30, “Derivative Instruments and Hedging Activities,” these derivatives will be revalued at each balance sheet date, potentially resulting in a different asset or liability position. Based on the uncertainty of timing and amounts of payments in the future, these derivative contracts are excluded from the contractual obligations table above.

Off-Balance Sheet Arrangements

Other than letter of credit agreements and operating leases, as of September 30, 2009, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of SEC Regulation S-K. We had letter of credit agreements outstanding in the amount of $12.4 million and $10.7 million as of December 31, 2008, and September 30, 2009, respectively.

We have entered into agreements with an unrelated third-party for the financing of specific accounts receivable of certain foreign subsidiaries. The financing of accounts receivable under these agreements is accounted for as a sale of receivables in accordance with the guidance under ASC 860-20, “Sale of Financial Assets.” Under the terms of the financing agreements, we transfer ownership of eligible accounts receivable without recourse to the third-party purchaser in exchange for cash. Proceeds on the transfer reflect the face value of the accounts receivable less a discount. The discount is recorded against net sales on the consolidated statement of operations in the period of the sale. The eligible receivables financed pursuant to this factoring agreement are excluded from accounts receivable on the consolidated balance sheet and are reflected as cash provided by operating activities on the consolidated statement of cash flows, while non-eligible receivables remain on the balance sheet with a corresponding liability established when those receivables are financed. We do not continue to service, administer and collect the eligible receivables under this program. The third-party purchaser has no recourse to us for failure of debtors constituting eligible receivables to pay when due. We maintain insurance on behalf of the third-party purchaser to cover any losses due to the failure of debtors constituting eligible receivables to pay when due. At December 31, 2008, and September 30, 2009, we had sold $29.9 million and $3.1 million of eligible accounts receivable, respectively, which represent the face amounts of total outstanding receivables at those dates.

Critical Accounting Policies and Estimates

Long-Lived Assets

The plastic container business is capital intensive and highly competitive. Technology and market conditions can change rapidly, possibly impacting the fair value of our 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. We generally use a probability-weighted estimate of the future undiscounted net cash flows of the related asset or asset grouping over the remaining life in measuring whether the assets are recoverable. Any impairment loss, if indicated, is measured on the amount by which the carrying amount of the asset exceeds the estimated fair value of the asset. When fair values are not available, we generally estimate fair value using the probability-weighted expected future cash flows discounted at a risk-adjusted rate. Management believes that this policy is critical to the financial statements, particularly when evaluating long-lived assets for impairment. Varying results of this analysis are possible due to the significant estimates involved in our evaluations.

Impairment of Goodwill

Goodwill is not amortized, but instead is subject to impairment testing. We perform an evaluation to determine whether goodwill is impaired annually, or when events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Events or circumstances

that might indicate an interim evaluation is warranted include unexpected adverse business conditions, economic factors, unanticipated technological changes or competitive activities, loss of key personnel and acts by governments and courts. The identification and measurement of goodwill impairment involves the estimation of the fair value of reporting units. We consider a number of factors, including the input of an independent appraisal firm, in conducting the impairment testing of our reporting units. We perform our impairment testing by comparing the estimated fair value of the reporting unit to the carrying value of the reported net assets, with such testing occurring as of the end of each year. Fair value is generally based on the income approach using a calculation of discounted cash flows, based on the most recent financial projections for the reporting units, and is reconciled to our determination of total enterprise fair value. The financial projections are management’s best estimates based on current and forecasted market conditions. The calculation of fair value for our reporting units incorporates many assumptions including future growth rates, profit margins and discount factors; such assumptions are consistent with our annual budgeting and forecasting process. Changes in economic and operating conditions impacting these assumptions could result in additional impairment charges in future periods. Our evaluation as of December 31, 2008, resulted in no impairment charge being identified for our North American and European operating segments and an impairment charge of $1.4 million for our South American operating segment. A 1% increase in the discount rates used in our evaluation would have resulted in a reduction of enterprise fair value of reporting units tested of approximately $256 million and no additional impairment charge for the year ended December 31, 2008.

Derivatives

We account for derivatives under ASC 815, “Derivatives and Hedging.” This guidance establishes accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. All derivatives, whether designated in hedging relationships or not, are required to be recorded on the balance sheet at fair value. The fair value of the derivatives is determined from sources independent of us, including the financial institutions which are party to the derivative instruments. The fair value of derivatives also considers the credit default risk of the paying party. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and the hedged item will be recognized in earnings. If the derivative is designated as a cash flow hedge, the effective portion of the change in the fair value of the derivative will be recorded in other comprehensive income (loss) and will be recognized in the income statement when the hedged item affects earnings.

In the past, we have entered into interest rate swap and collar agreements, foreign currency exchange contracts and natural gas swap agreements. These derivative contracts are accounted for as cash flow hedges.

ASC 815 defines requirements for designation and documentation of hedging relationships as well as ongoing effectiveness assessments in order to use hedge accounting. For a derivative that does not qualify as a hedge, changes in fair value will be recognized in earnings. Continued use of hedge accounting is dependent on management’s adherence to this accounting policy. Failure to properly document our interest rate swap and collar agreements, foreign currency exchange contracts and natural gas swap agreements as cash flow hedges would result in income statement recognition of all or part of any future unrealized gain or loss recorded in other comprehensive income (loss). The potential income statement impact resulting from a failure to adhere to this policy makes this policy critical to the financial statements.

Benefit Plans

We have several defined benefit plans, under which participants earn a retirement benefit based upon a formula set forth in the plan. Key assumptions used in the actuarial valuations include the discount rate and the anticipated rate of return on plan assets, as determined by management. These rates are based on market interest rates, and therefore, fluctuations in market interest rates could impact the amount of pension expense recorded for these plans. Our primary U.S. defined benefit plan for hourly and salaried employees was frozen to future salary and service accruals in the fourth quarter of 2006.

These assumptions change based on changes in rates derived from high-quality long-term bond indices, the terms of which approximate the term of the cash flows to pay the accumulated benefit obligations when due. A decrease of 50 basis points in the discount rate and the long-term rate of return on plan assets, assuming no other changes in estimates, would have increased the amount of the required annual expense by approximately $0.5 million for the year ended December 31, 2008, and increased the pension liability by $0.3 million as of December 31, 2008.

Income Taxes

We account for income taxes in accordance with ASC 740-10, “Income Taxes,” which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the financial reporting and tax bases of recorded assets and liabilities. ASC 740-10 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. We have recorded a valuation allowance to reduce our deferred tax assets to the amount that we believe is more likely than not to be realized. Our assumptions regarding future realization may change due to future operating performance and other factors.

Inherent in determining our effective tax rate are judgments regarding business plans and expectations about future operations. These judgments include the amount and geographic mix of future taxable income, limitations on usage of net operating loss carry-forwards, potential tax law changes, the impact of ongoing or potential tax audits, earnings repatriation plans and other future tax consequences.

In 2007, we implemented Financial Accounting Standards Board (“FASB”) Interpretation No. (“FIN”) 48, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on accounting for derecognition, interest, penalties, accounting in interim periods, disclosure and classification of matters related to uncertainty in income taxes and transitional requirements upon adoption of FIN 48. Due to the significant amounts involved and judgment required, we deem this policy to be critical to our financial statements.

For disclosure of all of our significant accounting policies see note 1 of the notes to consolidated financial statements included elsewhere in this prospectus.

Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projection of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2008. Management’s assessment of internal control over financial reporting was conducted using the criteria in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

A material weakness is a control deficiency, or combination of control deficiencies, that results in the reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected in a timely manner. In connection with management’s assessment of our internal control over financial reporting, management has concluded that our internal control over financial reporting was effective at December 31, 2008, and that there were no material weaknesses in our internal control over financial reporting as of that date.

Deloitte & Touche LLP, an independent registered public accounting firm, which has audited and reported on the consolidated financial statements as of December 31, 2008, included elsewhere in this prospectus, has issued its report on the effectiveness of our internal control over financial reporting, which is included elsewhere in this prospectus.

Recently Issued Accounting Pronouncements

In September 2006, the FASB issued guidance under ASC 820-10, “Fair Value Measurements and Disclosures” (formerly SFAS 157, “Fair Value Measurements”). This guidance establishes a single authoritative definition of fair value, sets out a framework to classify the source of information used in fair value measurements, identifies additional factors that must be disclosed about assets and liabilities measured at fair value based on their placement in the new framework and modifies the long-standing accounting presumption that the transaction price of an asset or liability equals its initial fair value. In February 2008, the FASB delayed the effective date for certain non-financial assets and liabilities until January 1, 2009. We adopted this guidance effective January 1, 2008, for financial assets and liabilities (see note 11 of the notes to consolidated financial statements for the year ended December 31, 2008 and note 12 of the notes to condensed consolidated financial statements (unaudited) for the nine months ended September 30, 2009 in this prospectus for further discussion). We adopted this guidance for certain non-financial assets and liabilities effective January 1, 2009, and the adoption had no impact on our financial statements as it relates to these assets and liabilities.

In March 2008, the FASB issued guidance under ASC 815-30, “Derivatives and Hedging” (formerly SFAS 161, “Disclosures about Derivative Instruments and Hedging Activities”). This guidance is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance and cash flows. It requires disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also requires more information about an entity’s liquidity by requiring disclosure of derivative features that are credit risk-related, and requires cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments. We adopted this guidance effective January 1, 2009 (see note 13 of the notes to condensed consolidated financial statements (unaudited) for the nine months ended September 30, 2009 in this prospectus for further discussion).

In December 2008, the FASB issued guidance under ASC 715, “Defined Benefit Plans” (formerly Staff Position FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets”), which requires enhanced disclosures of the plan assets of an employer’s defined benefit pension or other postretirement benefit plans. The disclosures required under this guidance will include information regarding the investment allocation decisions made for plan assets, the fair value of each major category of plan assets disclosed separately for pension plans and other postretirement benefit plans and the inputs and valuation techniques used to measure the fair value of plan assets that would be similar to the disclosures about fair value measurements required by ASC 820-10. The disclosures in this guidance are effective for fiscal years ending after December 15, 2009.

In April 2009, the FASB issued guidance under ASC 825-10-65-1, “Financial Instruments—Overall—Transition and Open Effective Date Information” (formerly Staff Position FAS 107-1 and Accounting Principles Board Opinion 28-1, “Interim Disclosures about Fair Value of Financial Instruments”). This guidance requires disclosures about fair value of financial instruments for interim reporting periods that were previously only required in annual financial statements. This guidance is effective for interim periods ending after June 15, 2009. We adopted this guidance effective June 30, 2009 (see note 12 of the notes to condensed consolidated financial statements (unaudited) for the nine months ended September 30, 2009 in this prospectus for further discussion).

In May 2009, the FASB issued guidance under ASC 855, “Subsequent Events” (formerly SFAS 165, “Subsequent Events”). This guidance establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. This guidance is effective for interim and annual fiscal periods ending after June 15, 2009. We adopted this guidance effective June 30, 2009, and the adoption had no impact on our financial statements.

In June 2009, the FASB issued guidance under SFAS 166, “Accounting for Transfers of Financial Assets, an amendment of SFAS 140,” which has not been codified in the ASC. SFAS 166 amends SFAS 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities—a replacement of FASB Statement 125,” to improve the relevance, representational faithfulness and comparability of the information that a reporting entity provides in its financial reports about a transfer of financial assets, the effects a transfer will have on its financial performance and cash flows and any transferor’s continuing involvement in transferred financial assets. This statement is effective for interim and annual reporting periods that begin after November 15, 2009. We are currently evaluating the impact that the adoption of SFAS 166 may have on our financial statements.

In June 2009, the FASB issued guidance under ASC 105-10, “Generally Accepted Accounting Principles” (formerly SFAS 168, “FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles”). This guidance establishes the ASC as the single source of authoritative nongovernmental GAAP, superseding existing pronouncements published by the FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and other accounting bodies. This guidance establishes only one level of authoritative GAAP. All other accounting literature will be considered non-authoritative. The ASC reorganizes the GAAP pronouncements into accounting topics and displays them using a consistent structure. This guidance is effective for financial statements issued for interim and annual periods ending after September 15, 2009. We adopted this guidance effective July 1, 2009.

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

Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business we are subject to risk from adverse fluctuations in interest and foreign exchange rates and commodity prices. We manage these risks through a program that includes the use of derivative financial instruments, primarily interest rate swap and collar agreements, foreign currency exchange contracts and natural gas swap agreements. Counterparties to these contracts are major financial institutions. These instruments are not used for trading or speculative purposes. The extent to which we use such instruments is dependent upon our access to them in the financial markets and our use of other methods, such as netting exposures for foreign exchange risk and establishing sales arrangements that permit the pass-through to customers of changes in commodity prices and foreign exchange rates, to effectively achieve our goal of risk reduction. Our objective in managing our exposure to market risk is to limit the impact on earnings and cash flow.

Interest Rate Risk

We had significant long and short-term debt commitments outstanding as of September 30, 2009. 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 and collar agreements. Based on the outstanding amount of our variable-rate indebtedness at September 30, 2009, a one percentage point change in the interest rates for our variable-rate indebtedness would impact interest expense by an aggregate of approximately $6.2 million, excluding the impact of our interest rate collar and swap agreements at September 30, 2009. All of our derivative financial instrument transactions are entered into for non-trading purposes.

Our financial instruments at September 30, 2009, including derivative instruments, which expose us to interest rate risk and market risk 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 September 30, 2009. For fixed-rate debt obligations, the table presents principal cash flows and related weighted average interest rates by maturity dates. For interest rate swap and collar agreements, the table presents notional amounts and interest rates, by expected (contractual) maturity date, including the pay rates and the receive rates (actual interest rates at

September 30, 2009). The interest rate swap and collar agreements are accounted for as cash flow hedges. Note 11 of the notes to consolidated financial statements included in this prospectus should be read in conjunction with the table below.


	Expected Maturity Date of Long-Term Debt (Including Current Portion) and Interest Rate Swap Agreements at September 30, 2009																					Fair Value at September 30, 2009
	2009			2010			2011			2012			2013			Thereafter			Total			Fair Value at September 30, 2009
	(Dollars in thousands)
Interest rate sensitive liabilities:
Variable rate borrowings, including short-term amounts	$	9,324		$	21,408		$	616,317		$	12,000		$	12,000		$	1,143,000		$	1,814,049		$	1,797,304
Average interest rate		10.33	%		7.30	%		2.66	%		7.15	%		7.15	%		7.15	%		5.64	%
Fixed rate borrowings	$	8,158		$	10,383		$	5,732		$	250,233		$	9		$	375,000		$	649,515		$	658,265
Average interest rate		14.80	%		8.63	%		7.72	%		8.50	%		3.96	%		9.88	%		9.37	%
Total interest rate sensitive liabilities	$	17,482		$	31,791		$	622,049		$	262,233		$	12,009		$	1,518,000		$	2,463,564		$	2,455,569
Derivatives matched against liabilities:
Pay fixed swaps							$	350,000											$	350,000		$	(18,766	)
Pay rate								4.08	%											4.08	%
Receive rate								0.47	%											0.47	%
Interest rate collars				$	385,000														$	385,000		$	(2,643	)
Cap rate					4.70	%														4.70	%
Floor rate					2.88	%														2.88	%

Foreign Currency Exchange Rate Risk

We manage foreign currency exposures (primarily to the euro, Canadian dollar, Polish zloty, Brazilian real, pound sterling and certain non-U.S. subsidiaries’ purchases of raw materials and/or sales of products in U.S. dollars) at the operating unit level. Exposures that cannot be naturally offset within an operating unit are hedged with derivative financial instruments where possible and cost effective in our judgment. Foreign currency exchange contracts which hedge defined exposures generally mature within twelve months. We do not generally hedge our exposure to translation gains or losses on our non-U.S. net assets. Foreign currency exchange contracts are accounted for as cash flow hedges. At September 30, 2009, we had foreign currency exchange contracts outstanding for the purchase of pound sterling in an aggregate amount of $1.5 million.

Commodity Pricing Risk

We purchase commodities for our products such as HDPE and PET resins. These commodities are generally purchased pursuant to contracts or at market prices established with the vendor. In general, we do not engage in hedging activities for these commodities due to our ability to pass on price changes to our customers.

We also purchase other commodities, such as natural gas and electricity, and are subject to risks on the pricing of these commodities. In general, we purchase these commodities pursuant to contracts or at market prices. We manage a portion of our exposure to natural gas price fluctuations through natural gas swap agreements. We entered into natural gas swap agreements to hedge approximately 22% and 63% of our domestic exposure to fluctuations in natural gas prices for the year ended December 31, 2008 and for the nine months ended September 30, 2009, respectively. At September 30, 2009, we had natural gas swap agreements outstanding in an aggregate amount of $0.1 million that expire in December 2009.

BUSINESS

Collectively, our product portfolio, technologies, end markets and operations all contribute to our industry-leading margins and strong cash flow.

Our Markets

We supply plastic containers to a significant number of end markets. Our products provide differentiated packaging for consumer products that help address basic needs such as food and beverage, hygiene and home care. The end markets we supply are generally characterized by stable long-term demand trends which are relatively insulated from economic cycles.

Food and Beverage. In the food and beverage product category, we produce containers for shelf-stable, refrigerated and frozen juices, non-carbonated juice drinks, nutritional beverages, beer, yogurt drinks, teas, sports drinks/isotonics, vitamin enhanced waters, snacks, liquor, toppings, sauces, jellies and jams. We believe, based on internal estimates, that we have one of the leading domestic positions in plastic containers for hot-fill juice and juice drinks, sports drinks/isotonics, drinkable yogurt and smoothies, nutritional supplements, wide-mouth food, dressings and condiments, and the leading global position in plastic containers for yogurt drinks. Based on our knowledge and experience in the industry, our focus on markets which are likely to convert to plastic, our proprietary technologies and our current market position, we believe we are strategically positioned to benefit from the food and beverage markets that have yet to convert, or that are in the early stages of conversion, to plastic and also to take advantage of evolving domestic and international conversion opportunities like beer, sauces, salsas and nutritional products.

Our largest customers in the food and beverage product category include, in alphabetical order: Abbott Laboratories (“Abbott”), Arizona Beverages Company, LLC (“Arizona”), Barton Brands (“Barton”), Clement

Pappas & Co., Inc. (“Clement Pappas”), Clorox Products Manufacturing Company (“Clorox”), Coca-Cola North America (“Coca-Cola”), Conopco Inc. (“Unilever”), Group Danone (“Danone”), H.J. Heinz Company (“Heinz”), Ocean Spray Cranberries, Inc. (“Ocean Spray”), PepsiCo, Inc. (“PepsiCo”), The Quaker Oats Company (“Gatorade”), Tropicana Products, Inc. (“Tropicana”) and Welch Foods, Inc. (“Welch’s”). For the years ended December 31, 2006, 2007 and 2008 and for the nine months ended September 30, 2009, we generated approximately 58.6%, 60.3%, 61.0% and 61.5%, respectively, of our net sales from food and beverage containers.

Household. In the household product category, we are a leading supplier of plastic containers for products such as liquid fabric care, dish care and hard-surface cleaners. The growth in prior years was fueled by conversions from powders to liquids for such products as detergents, household cleaners and automatic dishwashing detergent. The growth of this product category now follows gross domestic product (“GDP”) growth as liquids have gained a predominant share of these products. The fabric care industry now offers most of its brands in a concentrated formula which has reduced sales in this product category.

Our largest customers in the household product category include, in alphabetical order: Church & Dwight Co., Inc. (“Church & Dwight”), Clorox, Colgate-Palmolive Company (“Colgate-Palmolive”), Dial Corporation (“Dial,” a division of Henkel), The Procter & Gamble Company (“Procter & Gamble”) and Unilever. For the years ended December 31, 2006, 2007 and 2008 and for the nine months ended September 30, 2009, we generated approximately 20.2%, 20.2%, 19.2% and 18.4%, respectively, of our net sales from household containers.

Personal Care/Specialty. In the personal care/specialty product category, we are a supplier of plastic containers for products such as hair care, skin care and oral care. Our product design, technology development and decorating capabilities help our customers build brand awareness for their products through unique, and frequently changing, packaging design.

Our largest customers in the personal care/specialty product category include, Johnson & Johnson Consumer Companies, Inc. and Procter & Gamble. For the years ended December 31, 2006, 2007 and 2008 and for the nine months ended September 30, 2009, we generated approximately 9.8%, 8.3%, 7.3% and 7.5%, respectively, of our net sales from personal care/specialty containers.

Automotive Lubricants. We believe, based on internal estimates, that we are the leading supplier of plastic motor oil containers in the United States, Canada and Brazil, supplying most of the motor oil producers in these countries.

Our largest customers in the automotive lubricants product category include, in alphabetical order: Ashland, Inc. (“Ashland,” producer of Valvoline motor oil), BP Lubricants USA, Inc. (“BP Lubricants,” an affiliated company of BP PLC, producer of Castrol motor oil), ExxonMobil Corporation (“ExxonMobil”) and Shell Oil Products US (“Shell,” producer of Shell, Pennzoil and Quaker State motor oils). For the years ended December 31, 2006, 2007 and 2008 and for the nine months ended September 30, 2009, we generated approximately 11.4%, 11.2%, 12.5% and 12.6%, respectively, of our net sales from automotive lubricants containers.

Additional information regarding operating segments and product categories is provided in note 21 of the notes to consolidated financial statements in this prospectus.

Our Strengths

deliberately focused our technologies and assets on key custom markets that tend to support higher global growth and margins. We believe we have the leading domestic market position for custom plastic containers for juice, beer, yogurt drinks, frozen concentrate and pasta sauce and the leading position in Europe for custom plastic containers for yogurt drinks. In addition, we have grown internationally alongside our multi-national consumer product customers. Our proven business model positions us to benefit from the continued growth of our existing consumer product customers in international markets where we anticipate significant demand for plastic containers.

customers’ plants to further reduce inefficiency. We also provide PCR as a resin source alternative for our customers and produce PCR ourselves at our Graham Recycling Plant in York, Pennsylvania.

Focus on Operational Excellence. We strive to provide the highest quality product to our customers, while continually eliminating inefficiency and reducing costs. We are committed to improve productivity and reduce non-value-added activities and costs in our production processes, purchasing activities, selling, general and administrative expenses, capital expenditures and working capital. For example, from January 1, 2006, through September 30, 2009, we closed or merged several plants that did not meet our internal performance criteria; we implemented information systems to analyze customer profitability and drove subsequent improvement actions and exited certain relationships; we centralized nearly all procurement activities; we benchmarked and subsequently reduced selling, general and administrative expenses. We utilize our Graham Performance System, a bi-weekly performance management review of our continuous improvement process, where we measure performance and track progress on initiatives relating to safety, quality, productivity, capital expenditures, working capital and other actions leading to improved financial performance. Overall, we have a strong pipeline of specific cost reduction opportunities, which we intend to implement to optimize our cost structure.

Our Strategy

Targeted Organic Growth in Attractive Markets Utilizing Our Proven Business Model. We intend to drive conversions to plastic packaging in markets such as beer, sauces, salsas and nutritional products. These markets allow us to grow through the deployment of our proven technologies to new applications which can often result in new on-site opportunities. We will also seek opportunities in new markets, including high-growth emerging markets such as Latin America, Eastern Europe, India and the rest of Asia. These markets offer compelling opportunities for our custom plastic containers due to changing consumption patterns, increasing penetration rates of packaged goods and emerging consumer bases.

Raw Materials

PET, HDPE and PP resins constitute the primary raw materials used to make our products. These materials are available from a number of domestic and international suppliers and we are not dependent upon any single supplier. We consider the supply and availability of raw materials to be adequate to meet our needs. We believe that we maintain an adequate inventory to meet demands, but there is no assurance this will be true in the future. Changes in the cost of resin are passed through to customers by means of corresponding changes in product pricing in accordance with our agreements with these customers and industry practice. We operate a large HDPE bottles-to-bottles recycling plant in York, Pennsylvania, and use the recycled materials from this plant and other recycled materials in a majority of our products.

Customers

Substantially all of our sales are made to major branded consumer products companies. The products we manufacture for our customers require innovative packaging design and engineering to accommodate complex container shapes, specific material requirements and functionality. Customers also require quick and reliable delivery. As a result, many customers opt for long-term contracts, some of which have terms up to ten years. A majority of our top twenty customers are under long-term contracts. Our contracts typically contain provisions allowing for price adjustments based on changes in raw materials and in a majority of cases 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, 2008 and for the nine months ended September 30, 2009, we had sales to one customer, PepsiCo, which exceeded 10% of net sales. Our sales to PepsiCo were 13.3% and 11.3% of net sales for the year ended December 31, 2008 and for the nine months ended September 30, 2009, respectively. For the nine months ended September 30, 2009, our twenty largest customers, who accounted for over 69% of net sales, were, in alphabetical order:


Customer (1)	Category	Company Customer Since (1)
Abbott	Food and Beverage	Mid 2000s
Arizona	Food and Beverage	Late 1990s
Ashland (2)	Automotive Lubricants	Early 1970s
BP Lubricants (3)	Automotive Lubricants	Late 1960s
Church & Dwight	Household	Late 1980s
Clement Pappas	Food and Beverage	Mid 1990s
Clorox	Food and Beverage and Household	Late 1960s
Coca-Cola	Food and Beverage	Late 1990s
Danone	Food and Beverage	Late 1970s
Dial	Household and Personal Care/Specialty	Early 1990s
ExxonMobil	Automotive Lubricants	Early 2000s
Heinz	Food and Beverage	Early 1990s
Knouse	Food and Beverage	Early 1990s
Ocean Spray	Food and Beverage	Early 1990s
PepsiCo (4)	Food and Beverage	Early 2000s
Frito-Lay	Food and Beverage	Early 2000s
Gatorade	Food and Beverage	Late 1990s
Tropicana	Food and Beverage	Mid 1980s
Procter & Gamble	Household and Personal Care/Specialty	Late 1950s
Shell (5)	Automotive Lubricants	Early 1970s
Pennzoil-Quaker State	Automotive Lubricants	Early 1970s
Sun Products	Household	Late 2000s
Unilever	Household, Personal Care/Specialty and Food and Beverage	Early 1970s
Welch’s	Food and Beverage	Early 1990s

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

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

(3)	BP Lubricants is the producer of Castrol motor oil.

(4)	PepsiCo includes Frito-Lay, Gatorade and Tropicana.

(5)	Shell includes Pennzoil-Quaker State.

International Operations

We have significant operations outside the United States. As of the end of the first nine months of 2009, we had 29 manufacturing facilities located in countries outside of the United States. Each of our operating segments produces plastic containers for all four of our core product categories.

South America. We have one on-site plant in Argentina, five on-site plants in Brazil and one off-site plant in each of Argentina, Brazil and Venezuela.

Mexico. In Mexico, we have three off-site plants and two on-site plants.

Europe. We have on-site plants in Belgium (2), France, the Netherlands, Poland, Spain and Turkey and off-site plants in Finland, France (2), the Netherlands, Poland, Turkey and the United Kingdom.

Canada. We have one off-site plant located near Toronto, Canada to service Canadian and northern U.S. customers.

See “Risk Factors—Risks Related to our Business—Our international operations are subject to a variety of risks related to foreign currencies and local law in several countries” for risks related to our foreign operations.

Competition

We face substantial regional and international competition across our product lines from a number of well-established businesses. Our primary competitors include Alpla Werke Alwin Lehner GmbH, Amcor Limited, Ball Corporation, Consolidated Container Company LLC, Constar International Inc., Liquid Container L.P., Logoplaste, Plastipak, Inc. and Silgan Holdings Inc. Several of these competitors are larger and have greater financial and other resources than us. We believe that we compete effectively because of our superior levels of service, speed to market and product design and development capabilities.

Marketing and Distribution

Our sales are made primarily through our own direct sales force, as well as selected brokers. Sales activities are conducted from our corporate headquarters in York, Pennsylvania and from field sales offices located in North America, Europe and South America. Our products are typically delivered by truck, on a daily basis, in order to meet customers’ just-in-time delivery requirements, except in the case of on-site operations. In many cases, 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. We utilize a number of outside warehouses to store our finished goods prior to delivery to the customer.

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 plastic containers that require customized features such as complex shapes, reduced weight, handles, grips, view stripes and pouring features. These packages often must meet specialized performance and structural requirements such as hot-fill capability, recycled material usage, oxygen barriers, flavor protection and multi-layering. Hot-fill technology allows customers’ products to be heated to temperatures high enough as to sterilize the inside of the container. In addition to increasing global 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 design and conversion successes over the past few years include:

•

retortable PP container for Boost and Ensure adult nutritional beverages;

•

aseptic HDPE container for 8th Continent soy-based beverages;

•

hot-fill PET containers with Monosorb^® oxygen scavenger for juices;

•

hot-fill PET and PP wide-mouth jar for Ragu pasta sauce, Seneca applesauce, Welch’s jellies and jams and Del Monte fruit slices;

•

lightweight 64 oz. rectangular container for hot-fill juice;

•

panel-free lightweight 16.9 oz. container for juices and teas; and

•

panel-free 20 oz. container for vitamin enhanced water.

Our innovative designs have also been recognized, through various awards, by a number of customers and industry organizations, including our:

•

International Delight Bottle (2009 Ameristar)

•

GIBCO^® Cell Culture Bottle for Invitrogen Medical (2009 Ameristar)

•

multi-layer PP wide-mouth jar for Del Monte (2008 Ameristar Award);

•

PET “Apple” container for Martinelli’s (2007 WorldStar Award, 2006 DuPont Award and 2006 Ameristar Award);

•

PET rectangular juice bottle for Tree Top (2007 WorldStar Award and 2006 Ameristar Award);

•

PET “Fridge Fit” bottle for Heinz (2006 Ameristar Award and 2006 DuPont Award);

•

dual-chamber bottle for Procter & Gamble Cosmetics (2005 Food & Drug Personal Care package of the year);

•

ATP panel-free single-serve bottle and 64 oz. rectangular hot-fill bottle (2004 Ameristar Award); and

•

Ensure reclosable bottle (2004 Ameristar Award and 2004 DuPont Award).

We have an advanced multi-layer injection technology, trade named SurShot^®. We believe that SurShot^® is among the best multi-layer PET technologies available and billions of plastic containers are produced and sold each year using SurShot^® technology. This multi-layer technology allows our customers to package oxygen and flavor-sensitive products, such as fruit juices, beer and teas, for extended shelf-life. In addition, the SurShot^® technology can accommodate up to 40% post-consumer recycled resin. This is an important component of packaging sustainability. There has been increasing demand by customers for our innovative packages that meet new sustainability requirements for reduced weight. Recent introductions of Escape^®, G-Lite™ and SlingShot™ technologies for PET bottles provide customers with improved features such as reduced container weight, smooth sides for a premium look or improved stacking ability for shipping and storage.

We believe these new products, along with our design and development capabilities, have positioned us as the packaging design, development and technology leader in the industry. Over the past several years we have received and have filed for numerous patents and design patents. See “—Intellectual Property.”

In 2005, we enhanced our technical capability with the opening of the Global Innovation & Design Center in York, Pennsylvania. We also have two major Technology Centers in York, Pennsylvania and Warsaw, Poland capable of producing limited quantities of new products and refurbishing equipment. Our Warsaw facility also manufactures and assembles a proprietary line of extrusion blow molding machines. This proprietary technology has enabled us to develop a leaner, more efficient manufacturing process.

We incur costs to research, design and develop new packaging products and technologies as incurred. Such costs, net of any reimbursement from customers, were $16.5 million, $11.6 million, $9.6 million and $7.5 million for the years ended December 31, 2006, 2007 and 2008 and for the nine month ended September 30, 2009, respectively.

Manufacturing

A critical component of our strategy is to locate manufacturing facilities on-site, reducing expensive shipping and handling charges and increasing production and distribution efficiencies. We are a leader in providing on-site manufacturing arrangements. As of the end of the first nine months of 2009, approximately

one-third of our 84 manufacturing facilities were on-site at customer facilities. We operate over 900 production lines. We sometimes dedicate particular production lines within a plant to better service customers. The plants generally operate 24 hours a day, five to seven days a week, although not every production line is run constantly. When customer demand requires, the plants run seven days a week. Historically, demand for our products has not been subject to large seasonal fluctuations.

In the blow molding process used for HDPE applications, resin pellets are blended with colorants or other necessary additives and fed into the extrusion machine, which uses heat and pressure to form the resin into a round hollow tube of molten plastic called a parison. In a wheel blow molding process, bottle molds mounted radially on a wheel capture the parison as it leaves the extruder. Once inside the mold, air pressure is used to blow the parison into the bottle shape of the mold. While certain of our competitors also use wheel technology in their production lines, we have developed a number of proprietary improvements which we believe permit our wheels to operate at higher speeds and with greater efficiency in the manufacture of containers with one or more special features, such as multiple layers and in-mold labeling.

In the stretch blow molding process used for hot-fill PET applications, resin pellets are fed into an injection molding machine that uses heat and pressure to mold a test tube shaped parison or “preform.” The preform is then fed into a blow molder where it is re-heated to allow it to be formed through a stretch blow molding process into a final container. During this re-heat and blow process, special steps are taken to induce the temperature resistance needed to withstand high temperatures on customer filling lines. We believe that the injection molders and blow molders used by us are widely recognized as the leading technologies for high speed production of hot-fill PET containers.

Other blow molding processes include: various types of extrusion blow molding for medium- and large-sized HDPE and PP containers; stretch blow molding for medium-sized PET containers; injection blow molding for personal care containers in various materials; two-stage PET blow molding for high-volume, high-performance mono-layer, multi-layer and heat set PET containers; and proprietary blow molding for drain-back systems and other specialized applications.

We also operate a variety of bottle decorating platforms. Labeling and decorating is accomplished through in-mold techniques or one of many post-molding methods. Post-molding methods include pressure sensitive labelers, rotary full-wrap labelers, silk-screen decoration, heat transfer and hot stamp. These post-molding methods of decoration or labeling can be in-line or off-line with the molding machine. Typically, these decoration methods are used for bottles in the personal care/specialty product category.

We have implemented various process improvements to minimize labor costs, automate assembly tasks, increase throughput and improve quality. Types of automation range from case and tray packers to laser guided vehicles. Other automation equipment includes box and bulk bottle palletizers, pick and place robots, automatic in-line leak detection and vision inspection systems. Assembly automation includes bottle trimming, spout spinwelding or insertion, cap insertion and tube cutting/welding. We believe that there are additional automation opportunities which could further minimize labor costs and improve plant efficiency.

We maintain quality assurance and control programs with respect to the performance of the products we manufacture, the performance of our suppliers and the compliance of our operations to our quality management system and sound manufacturing practices. Our production lines are equipped with specific quality control inspection equipment and our employees continuously monitor product attributes and performance through a comprehensive Statistical Process Control system. Quality control laboratories are maintained at each manufacturing facility to test our products and validate their compliance to customer requirements. We continuously monitor and enhance our quality assurance and control programs to keep pace with the most current technologies and to meet and exceed customer expectations.

We have highly modernized equipment in the majority of 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 value-added PET containers. We are also pursuing development initiatives in barrier technologies to strengthen our position in the food and beverage product category. In the past, we have achieved substantial cost savings in our manufacturing process through productivity and process enhancements, including increasing line speeds, utilizing recycled products, reducing scrap and optimizing plastic weight requirements for each product’s specifications.

Cash paid for property, plant and equipment, excluding acquisitions, for 2006, 2007 and 2008 and for the first nine months of 2009 was $190.5 million, $153.4 million, $148.6 million and $104.5 million, respectively. We believe that capital expenditures to maintain and upgrade property, plant and equipment are important to remain competitive. We estimate that on average the annual maintenance capital expenditures are approximately $30 million to $40 million per year. For the fourth quarter of 2009 and for 2010, we expect to make capital expenditures, excluding acquisitions, ranging from $40 million to $50 million and from $140 million to $160 million, respectively.

Most customer orders are manufactured with a lead time of three weeks or less. Therefore, the amount of backlog orders at September 30, 2009 was not material. We expect all backlog orders at September 30, 2009 to be shipped during the fourth quarter of 2009.

Employees

As of September 30, 2009, we had approximately 7,400 employees, 5,900 of whom were located in North America, 1,000 of whom were located in Europe and 500 of whom were located in South America. Approximately 80% of our employees are hourly wage employees, 54% of whom are represented by various labor unions and are covered by various collective bargaining agreements that expire between now and June 2013. In North America, 81% of our employees are hourly employees, 44% of whom are represented by various labor unions. In Europe, 80% of our employees are hourly employees, 92% of whom are represented by various labor unions. In South America, 76% of our employees are hourly employees, 94% of whom are represented by various labor unions. We believe that we enjoy good relations with our employees and there have been no significant work stoppages in the past three years.

Environmental Matters

Our operations, both in the United States and abroad, are subject to national, state, foreign, 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, regulated materials and waste, and that impose liability for the costs of investigating and cleaning up, and damages resulting from, present and past spills, disposals or other releases of hazardous substances or materials. These domestic and international environmental laws can be complex and may change often. 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 some cases 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, we may be liable for contamination at properties that we currently own or operate, as well as at our former properties or off-site properties where we may have sent hazardous substances. We are not aware of any material noncompliance with the environmental laws currently applicable to us and are not the subject of any material environmental claims for liability with respect to contamination at any location. Based on existing information, management believes that it is not reasonably likely that losses related to known environmental liabilities, in aggregate, will be material to our financial position, results of operations, liquidity or cash flows. For our operations to comply with environmental laws, we have incurred and will continue to incur costs, which were not material in fiscal 2008 and the first nine months of 2009, and are not expected to be material in the future.

As a result of the closing of our plant located in Edison, New Jersey in 2008, we are subject to New Jersey’s Industrial Site Recovery Act (“ISRA”). We acquired this facility from Owens-Illinois, Inc. in 2004. ISRA is an environmental law that specifies a process of reporting to the New Jersey Department of Environmental Protection (“NJDEP”) and, in some situations, investigating, cleaning up and/or taking other measures with respect to environmental conditions that may exist at an industrial establishment that has been shut down or is being transferred. We are in the process of evaluating and implementing our obligations under ISRA regarding this facility. We have recorded a preliminary reserve of $0.4 million for this obligation as of September 30, 2009. This amount may change based on results of additional investigation expected to be undertaken for NJDEP.

A number of governmental authorities, both in the United States 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 containers made in whole or in part of recycled plastic. To date, we have not been materially adversely affected by these initiatives and developments. We operate a large HDPE bottles-to-bottles recycling plant in York, Pennsylvania.

Intellectual Property

We hold various patents and trademarks. While in the aggregate the patents are of material importance to our business, we believe that our business is not dependent upon any one single patent, group of patents or trademark. We also rely on unpatented proprietary know-how and continuing technological innovation and other trade secrets to develop and maintain our competitive position. Third parties could, however, obtain knowledge of our proprietary know-how through independent development or other unauthorized access. In addition to our own patents and proprietary know-how, we are party to licensing arrangements and other agreements authorizing us to use other proprietary processes, know-how and related technology and/or to operate within the scope of certain patents owned by other entities. The duration of our licenses generally ranges from 5 to 17 years. In some cases the licenses granted to us are perpetual and in other cases the term of the license is related to the life of the patent associated with the license. We also have licensed some of our intellectual property rights to third parties.

Properties

The following table sets forth the location of our manufacturing and administrative facilities, their approximate current square footage, whether on-site or off-site and whether leased or owned as of September 30, 2009. In addition to the facilities listed below, we lease other warehousing space.


	Location	Size (Square Feet)	On-Site or Off-Site	Leased/ Owned
	U.S. Packaging Facilities (1)
1.	Findlay, Ohio	406,800	Off-Site	Owned
2.	York (Household), Pennsylvania	395,554	Off-Site	Owned
3.	Maryland Heights, Missouri	308,961	Off-Site	Owned
4.	Henderson, Nevada	298,407	Off-Site	Owned
5.	Vandalia, Illinois	277,500	Off-Site	Owned
6.	Evansville, Indiana	266,720	Off-Site	Leased
7.	Woodridge, Illinois	265,062	Off-Site	Leased
8.	Rockwall, Texas	241,000	Off-Site	Owned
9.	Modesto, California	238,000	Off-Site	Owned
10.	Hazleton (Household), Pennsylvania	218,384	On-Site	Leased
11.	Holland, Michigan	218,168	Off-Site	Leased
12.	Fremont, Ohio	210,883	Off-Site	Owned
13.	Bedford, New Hampshire	210,510	Off-Site	Owned
14.	York (Food & Beverage), Pennsylvania	210,370	Off-Site	Leased
15.	Tolleson, Arizona	209,468	Off-Site	Owned
16.	Cartersville, Georgia	208,000	Off-Site	Owned
17.	Florence (Food and Beverage), Kentucky	203,000	Off-Site	Owned
18.	Edison, New Jersey (2)	194,000	Off-Site	Owned
19.	Hazleton (Food and Beverage), Pennsylvania	185,080	Off-Site	Owned
20.	Newell, West Virginia	183,388	On-Site	Leased
21.	Harrisonburg, Virginia	180,000	Off-Site	Owned
22.	Selah, Washington	170,553	Off-Site	Owned
23.	Atlanta, Georgia	165,000	On-Site	Leased
24.	Jefferson, Louisiana	162,047	Off-Site	Leased
25.	Kansas City, Missouri	162,000	Off-Site	Leased
26.	Belvidere, New Jersey	160,000	Off-Site	Owned
27.	Florence (Personal Care/Specialty), Kentucky	153,600	Off-Site	Owned
28.	Cincinnati, Ohio	153,301	Off-Site	Leased
29.	Montgomery, Alabama (2)	150,143	Off-Site	Leased
30.	Emigsville, Pennsylvania	148,300	Off-Site	Leased
31.	Levittown, Pennsylvania	148,000	Off-Site	Leased
32.	Iowa City, Iowa	140,896	Off-Site	Owned
33.	Baltimore, Maryland	128,500	Off-Site	Owned
34.	Santa Ana, California	127,680	Off-Site	Owned
35.	Chicago, Illinois	125,500	Off-Site	Owned
36.	Muskogee, Oklahoma	125,000	Off-Site	Leased
37.	Alta Vista, Virginia	122,680	Off-Site	Leased
38.	Kansas City, Kansas	111,000	On-Site	Leased
39.	Ogden, Utah	105,000	On-Site	Leased
40.	Casa Grande, Arizona	100,000	Off-Site	Leased
41.	Bradford, Pennsylvania	90,350	Off-Site	Leased
42.	Atlanta, Georgia	81,600	Off-Site	Leased
43.	Lakeland, Florida	80,000	Off-Site	Leased


	Location	Size (Square Feet)		On-Site or Off-Site	Leased/ Owned
44.	Berkeley, Missouri	75,000		Off-Site	Owned
45.	Cambridge, Ohio	57,000		On-Site	Leased
46.	Port Allen, Louisiana	56,721		On-Site	Leased
47.	Richmond, California	55,256		Off-Site	Leased
48.	Houston, Texas	52,500		Off-Site	Owned
49.	St. Louis, Missouri	48,150		On-Site	Leased
50.	Darlington, South Carolina	43,200		Off-Site	Leased
51.	Vicksburg, Mississippi	31,200		On-Site	Leased
52.	Bordentown, New Jersey	30,000		On-Site	Leased
53.	Joplin, Missouri	29,200		On-Site	Leased
54.	Minster, Ohio	27,674		On-Site	Leased
55.	West Jordan, Utah	25,760		On-Site	Leased
56.	Bradenton, Florida	21,500		On-Site	Leased

	Canadian Packaging Facilities
57.	Mississauga, Ontario	78,416		Off-Site	Owned

	Mexican Packaging Facilities
58.	Tlalnepantla	214,349		Off-Site	Owned
59.	Pachuca	152,286		Off-Site	Owned
60.	Mexicali	59,700		Off-Site	Leased
61.	Irapuato	54,000		On-Site	Leased
62.	Tlaxcala	9,792		On-Site	Leased

	European Packaging Facilities
63.	Assevent, France	186,000		Off-Site	Owned
64.	Rotselaar, Belgium	162,212		On-Site	Leased
65.	Etten-Leur, Netherlands	124,450		Off-Site	Leased
66.	Ryttyla, Finland	121,079		Off-Site	Owned
67.	Chalgrove, the United Kingdom	104,200		Off-Site	Leased
68.	Meaux, France (3)	80,000		Off-Site	Owned
69.	Aldaia, Spain	75,350		On-Site	Leased
70.	Istanbul, Turkey	45,000		Off-Site	Leased
71.	Lummen, Belgium	42,840		On-Site	Leased
72.	Sulejowek, Poland	32,732		Off-Site	Owned
73.	Villecomtal, France	31,300		On-Site	Leased
74.	Zoetermeer, Netherlands	22,702		On-Site	Leased
75.	Bierun, Poland	10,652		On-Site	Leased
76.	Eskisehir, Turkey	9,461		On-Site	Leased

	South American Packaging Facilities
77.	Valencia, Venezuela	93,757		Off-Site	Leased
78.	Sao Paulo, Brazil	71,300		Off-Site	Leased
79.	Buenos Aires, Argentina (San Martin)	40,501		Off-Site	Owned
80.	Longchamps, Argentina	30,100	**	On-Site	Owned/Leased
81.	Caxias, Brazil	29,493	**	On-Site	Owned/Leased
82.	Rio de Janeiro, Brazil	22,220		On-Site	Leased
83.	Inhauma, Brazil	14,208		On-Site	*
84.	Curitiba, Brazil	12,293		On-Site	*
85.	Carambei, Brazil	7,621		On-Site	*

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


	Location	Size (Square Feet)	On-Site or Off-Site	Leased/ Owned
	Administrative Facilities
•	York, Pennsylvania—Technology Center	159,000	N/A	Leased
•	York, Pennsylvania—Corporate Office	116,400	N/A	Leased
•	Warsaw, Poland—Technology Center	32,636	N/A	Leased
•	Rueil, Paris, France	4,300	N/A	Leased

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

(2)	We have closed these facilities.

(3)	We signed an agreement to sell this property in the fourth quarter of 2009.

*	We operate these on-site facilities without leasing the space it occupies.

**	The building is owned and the land is leased.

Legal Proceedings

On November 3, 2006, we filed a complaint with the Supreme Court of the State of New York against Owens-Illinois, Inc. and OI Plastic Products FTS, Inc. (collectively, “OI”). The complaint alleges certain misrepresentations by OI in connection with our 2004 purchase of O-I Plastic and seeks damages in excess of $30 million. In December 2006, OI filed an Answer and Counterclaim, seeking to rescind a Settlement Agreement entered into between OI and us in April 2005, and disgorgement of more than $39 million paid by OI to us in compliance with that Settlement Agreement. We filed a Motion to Dismiss the Counterclaim in July 2007, which was granted by the Court in October 2007. On August 1, 2007, we filed an Amended Complaint to add additional claims seeking indemnification from OI for claims made against us by former OI employees pertaining to their pension benefits. These claims arise from an arbitration between us and Glass, Molders, Pottery, Plastic & Allied Workers, Local #171 (the “Union”) that resulted in an award on April 23, 2007, in favor of the Union. The Arbitrator ruled that we had failed to honor certain pension obligations for past years of service to former employees of OI, whose seven Union-represented plants were acquired by us in October 2004. In the Amended Complaint, we maintain that under Section 8.2 of the Stock Purchase Agreement between us and OI, OI is obligated to indemnify us for any losses associated with differences in our two companies’ pension plans including any losses incurred in connection with the Arbitration award. The litigation is proceeding.

On April 10, 2009, OnTech Operations, Inc. (“OnTech”) initiated an arbitration proceeding against us, in which OnTech alleges that the Company breached a Bottle Purchase Agreement dated April 28, 2008, and an Equipment Lease dated June 1, 2008. We believe that OnTech’s claims are without legal, contractual or factual merit. In its Statement of Claims, OnTech alleges, among other things, that our failure to produce bottles as required by the Bottle Purchase Agreement resulted in the failure of its business. As a result, OnTech is seeking to recover the value of its business, which it alleges is between $80 million and $150 million, which is in excess of 10% of our current assets. We are vigorously defending against these claims and do not expect them to materially adversely affect our business. The arbitration is currently scheduled to be heard by a three arbitrator panel between March 15, 2010 and March 23, 2010.

MANAGEMENT

Directors and Executive Officers

Prior to the IPO Reorganization, GPC Capital Corp. II’s directors have been Mark S. Burgess, Chinh E. Chu, David W. Bullock and James A. Quella and its executive officers have been Mark S. Burgess, Chinh E. Chu, David W. Bullock, James A. Quella, William E. Hennessey and Michael L. Korniczky. Also, prior to the IPO Reorganization, Graham Packaging Holdings Company and its general partners have been advised by an advisory committee (the “Advisory Committee”), each member of which was appointed by BCP/Graham Holdings L.L.C. This committee serves solely in an advisory role and does not possess any power to act for or bind the partnership.

Set forth below are the names, ages as of September 30, 2009 and positions with our company of the persons who serve as our executive officers and members of the Advisory Committee.


Name	Age	Position
Mark S. Burgess	50	Chief Executive Officer
David W. Bullock	45	Chief Financial Officer
Ashok Sudan	56	Executive Vice President and General Manager, Global Food and Beverage
Peter T. Lennox	47	Senior Vice President, General Manager of Household Chemical and Automotive, Personal Care/Specialty and South America
David R. Nachbar	47	Chief Human Resources Officer
David W. Cargile	49	Senior Vice President, Global Technology and General Manager of the Proprietary Machinery Business Unit
Warren D. Knowlton	63	Chairman of the Advisory Committee
Chinh E. Chu	42	Member of the Advisory Committee
James A. Quella	59	Member of the Advisory Committee
Charles E. Kiernan	64	Member of the Advisory Committee
Gary G. Michael	68	Member of the Advisory Committee
Gregory S. Beutler	49	Member of the Advisory Committee
Angelo G. Acconcia	30	Member of the Advisory Committee

Mark S. Burgess has been our Chief Executive Officer since January 1, 2009. Prior to that, Mr. Burgess previously served as Chief Financial Officer from December 2006 until May 2009, and Chief Operating Officer since April 2008. Mr. Burgess served as President and Chief Executive Officer, as well as Chief Financial Officer, of Anchor Glass Container Corporation from May 2005 until September 2006. He previously served as Executive Vice President and Chief Financial Officer of Clean Harbors Environmental Services, Inc. from April 2003 to April 2005. Between 1990 and 2003, he held senior financial and operational management roles at JL French Automotive Castings and Trailmobile Corporation, and prior to that, he served as a Vice President at Chase Manhattan Bank.

David W. Bullock has been our Chief Financial Officer since May 5, 2009. Prior to that, Mr. Bullock served as Chief Operating Officer, as well as Executive Vice President and Chief Financial Officer, of UAP Holding Corporation, a distributor of agricultural-related products, from 2002 until 2008. Prior to this, Mr. Bullock was employed by FMC Corporation from 1995 until 2002.

Ashok Sudan has been our Executive Vice President and General Manager, Global Food and Beverage since November 2004. Prior to that, Mr. Sudan served as Senior Vice President and General Manager, Global Food and Beverage; Senior Vice President and General Manager, Europe and North America Food and Beverage Polyolefins; or Vice President and General Manager, Europe since September 2000. Prior to September 2000, Mr. Sudan served as Vice President Operations, Food and Beverage/PET, a position he entered in 1998. Prior to that, Mr. Sudan held various management positions in manufacturing.

Peter T. Lennox has been our Senior Vice President, General Manager of Household Chemical and Automotive, Personal Care/Specialty and South America since April 2008. Prior to that, Mr. Lennox served as Senior Vice President and General Manager of Household Chemical and Automotive, and Personal Care/Specialty since January 2006. Prior to that, Mr. Lennox served as Vice President and General Manager for Household; Vice President and General Manager for the Personal Care/Specialty Business; Vice President and Business Manager for Food and Beverage PET Business; and Vice President and General Manager in the company’s European Business. Prior to September 2000, Mr. Lennox served as Vice President of Sales, Marketing and Business Development, Food and Beverage, at the Kerr Group.

David R. Nachbar has been our Chief Human Resources Officer since April 2009. Prior to that, Mr. Nachbar was the top human resources executive at Bausch & Lomb Inc. and the St. Paul Companies (now Travelers) and was the Senior Human Resources Officer and Chief of Staff for Citibank in Asia. Earlier in his career, Mr. Nachbar held human resources positions at companies including PepsiCo, Time-Warner and American Broadcasting Companies.

David W. Cargile has been our Senior Vice President, Global Technology and General Manager of the Proprietary Machinery Business Unit since July 2006. Prior to that, Mr. Cargile served as Vice President of Global Technology since 2003. Prior to that, Mr. Cargile served as Vice President, Commercial and Technical Development Europe Business Unit since September 2000. Prior to September 2000, Mr. Cargile was Director of Product Development and Research and Development.

Warren D. Knowlton has served as the Executive Chairman of the Advisory Committee since December 31, 2008. Prior to that, Mr. Knowlton served as Chief Executive Officer since December 2006. He previously served as Chief Executive Officer of Morgan Crucible PLC, a specialty carbon and ceramic products producer, from December 2002 to August 2006. Prior to joining Morgan Crucible, Mr. Knowlton was an Executive Director of Pilkington PLC, a global glass manufacturer, from May 1997 to July 2002. Mr. Knowlton joined Pilkington from Owens-Corning, where he spent 20 years in a variety of positions. Mr. Knowlton is currently a director of Ameriprise Financial and Smith & Nephew PLC.

Chinh E. Chu has served as a member of the Advisory Committee since May 2005. Mr. Chu is a Senior Managing Director in the Blackstone Private Equity Group. Since joining Blackstone in 1990, Mr. Chu has led Blackstone’s investments in Stiefel Laboratories, ReAble Therapeutics’ acquisition of DJ Orthopedics, Biomet, Catalent Pharma Solutions, Alliant, ReAble Therapeutics, Celanese, Nalco, SunGard Data Systems, Nycomed and LIFFE. He has also been involved in Blackstone’s investments in FGIC, Sirius Satellite Radio, StorageApps, Haynes International, Prime Succession/Rose Hills, Interstate Hotels, HFS and Alco Holdings. Mr. Chu is currently a director of Alliant, Healthmarkets, DJO Incorporated, Catalent Pharma Solutions, FGIC, SunGard Data Systems, Stiefel Laboratories, Allied Barton, Biomet and Bayview. Before joining Blackstone, Mr. Chu worked at Salomon Brothers in the Mergers and Acquisitions Department.

James A. Quella has served as a member of the Advisory Committee and as Vice President, Assistant Treasurer and Assistant Secretary of Holdings, since October 2005. Mr. Quella is a Senior Managing Director and Senior Operating Partner in the Blackstone Private Equity Group. He is also a member of the firm’s Private Equity Investment Committee. Prior to joining Blackstone in 2004, Mr. Quella was a Managing Director and Senior Operating Partner with DLJ Merchant Banking Partners (“DLJMB”)-CSFB Private Equity. Prior to that, Mr. Quella worked at Mercer Management Consulting and Strategic Planning Associates, its predecessor firm, where he served as a senior consultant to CEOs and senior management teams, and was Co-Vice Chairman with shared responsibility for overall management of the firm. In addition to Graham Packaging, Mr. Quella currently serves on the Boards of Freescale Semiconductor, Michaels Stores, The Nielsen Group and Vanguard Health Systems.

Charles E. Kiernan has served as a member of the Advisory Committee since July 2002. Prior to this appointment, Mr. Kiernan was the Executive Vice President and a member of the Executive Council for Aramark Corporation from 1998 to 2000, where he served as President of the Food and Support Services unit. Mr. Kiernan

was employed by Duracell from 1986 to 1997. He served as the President and Chief Operating Officer of Duracell International Inc. from 1994 to 1997, during which time he also served as a Director of our company, and President of Duracell North America from 1992 to 1994. Mr. Kiernan served as a member of the Board of Trustees of the National Urban League.

Gary G. Michael has served as a member of the Advisory Committee since October 2002. Mr. Michael served as Interim President of the University of Idaho from June 2003 to July 2004. Prior to this position, he served as Chairman of the Board and Chief Executive Officer of Albertson’s, Inc., a national food and drug retailer, from February 1991 until his retirement in April 2001. Prior to that, he served as Vice Chairman, Executive Vice President and Senior Vice President of Finance of Albertson’s and served on the Board of Directors from 1979 until his retirement. Mr. Michael is a past Chairman of the Federal Reserve Bank of San Francisco and is a long-time member of the Financial Executives Institute. He currently serves as a Director of Questar, Inc., IdaCorp and The Clorox Company.

Gregory S. Beutler has served as a member of the Advisory Committee since March 2, 2009. Mr. Beutler is an Executive Director in the Blackstone Private Equity Group as a member of the Portfolio Operations Team. Since joining Blackstone in 2005, Mr. Beutler has led Blackstone’s group purchasing program globally and other supply chain operational improvement initiatives across the Blackstone portfolio. Before joining Blackstone, Mr. Beutler worked at General Electric in general management and other leadership roles both in Europe and the United States.

Angelo G. Acconcia has served as a member of the Advisory Committee since March 2, 2009. Mr. Acconcia is an Associate in the Blackstone Private Equity Group. Since joining Blackstone in 2004, Mr. Acconcia has been involved in the execution of Blackstone’s investments in Allied Barton, Graham Packaging, Kosmos Energy, Nalco, OSUM, TRW Automotive, and Texas Genco. Before joining Blackstone, Mr. Acconcia worked at Morgan Stanley in their Global Energy and Mergers and Acquisitions departments.

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

Committees of the Board

After the IPO Reorganization and the completion of this offering, we will have a board of directors. The standing committees of our board of directors will consist of an audit committee, a compensation committee and a committee on corporate governance.

Audit Committee

The principal duties of our audit committee will be as follows:

•

to recommend the firm of independent outside auditors for appointment by the board of directors;

•

to meet with our financial management, internal audit management and independent outside auditors to review matters relating to our internal accounting and financial controls, internal audit program, accounting practices and procedures, the scope and procedures of the outside audit, the independence of the outside auditors and other matters relating to our financial condition;

•

to review our annual report to stockholders, proxy materials and annual report on Form 10-K for filing with the SEC;

•

to review our quarterly financial statements with financial management and independent outside auditors prior to filing of Form 10-Qs or release of quarterly earnings; and

•

to report to the board of directors periodically any recommendations the audit committee may have with respect to the foregoing matters.

The audit committee will have the power to investigate any matter brought to its attention within the scope of its duties and to retain counsel for this purpose where appropriate.

The members of the audit committee will meet the independence standards for service on an audit committee of a board of directors pursuant to federal and rules relating to corporate governance matters.

Compensation Committee

The principal duties of the compensation committee will be as follows:

•

to review key employee compensation policies, plans and programs;

•

to review and approve the compensation of our chief executive officer and the other executive officers of our company and our subsidiaries;

•

to review and approve any employment contracts or similar arrangements between our company and any of our executive officers;

•

to review and consult with our chief executive officer concerning selection of officers, management succession planning, performance of individual executives and related matters; and

•

to administer our stock plans, incentive compensation plan programs and any such plans that the board may from time to time adopt and to exercise all the powers, duties and responsibilities of the board of directors with respect to such plans.

The members of the compensation committee will be selected within three months after this offering.

Corporate Governance Committee

The principal duties of the corporate governance committee will be as follows:

•

to recommend to the board of directors proposed nominees for election to the board of directors by the stockholders at annual meetings, including an annual review as to the renominations of incumbents and proposed nominees for election by the board of directors to fill vacancies which occur between stockholder meetings; and

•

to make recommendations to the board of directors regarding corporate governance matters and practices.

The members of the corporate governance committee will be selected within three months after this offering.

Director Compensation

Following the IPO Reorganization, we do not expect to pay our employee and affiliated directors any compensation for their services as directors. We expect to pay non-employee and non-affiliated directors compensation for each regularly scheduled meeting attended and possibly additional compensation for serving as chair of a board committee. Directors may also receive incentive awards under our corporate incentive plans.

Compensation Discussion and Analysis

Overview

Our compensation philosophy for our former chief executive officer, our former chief financial officer (Mr. Burgess, our current chief executive officer), our three other most highly compensated executive officers who were serving as of December 31, 2008 and our former president and chief operating officer (individually,

the “Named Executive Officer” and, collectively, the “Named Executive Officers”) has been driven by the need to recruit, develop, motivate and retain top talent both in the short-term and long-term and to support our values in the areas of people, technology and customer satisfaction. Promotion from within is a key principle for us and several of the Named Executive Officers have reached their current positions through career development within our company. The same compensation philosophy has been applied to all levels of managerial employees from mid-level managers or professionals and above. Exceptions to this principle are generally due to local requirements. Other factors affecting compensation are:

•

annual company performance;

•

impact of the employee’s performance on our results;

•

our objective to provide total compensation that is higher than competitive levels when aggressive company goals are exceeded; and

•

internal equity and external market competitiveness.

Purpose and Philosophy

We follow several principles in the development and administration of the three main elements of our executive compensation program: base salary, annual incentive awards and long-term incentive awards. In establishing executive compensation, we believe that:

•

Our executive compensation programs are aligned with and support the strategic direction of our business;

•

Our compensation programs encourage behavior consistent with our values and reinforce ethical business practices;

•

Our “pay for performance” philosophy provides that compensation will be at market levels for achievement of on-target performance, higher rewards for above-target level performance, and below-target performance provides below market level rewards, if any;

•

As an executive’s level of responsibility increases, the proportion of compensation “at risk” increases; however, executive compensation programs should not encourage excessive or unnecessary risks;

•

Executive ownership in our company is essential to maintaining alignment of the executive’s interests to those of the stockholders, and we plan to set stock ownership guidelines which call for higher levels of ownership as responsibility increases; and

•

The design and administration of our compensation programs will reflect best practices to be financially efficient, affordable and legally compliant.

Administration and Role of Executives in Establishing Compensation

Our managing general partner has delegated administration of our executive compensation program to the Compensation Committee of the Advisory Committee (the “Compensation Committee”). Our chief executive officer and chief human resources officer provide recommendations regarding the design of our compensation programs to the Compensation Committee. Upon the Compensation Committee’s approval, the execution of the elements of the executive compensation programs is the responsibility of the chief human resources officer. The Compensation Committee has utilized an independent consulting firm with respect to executive compensation matters in the past. Upon consummation of the IPO Reorganization and the offering contemplated by this prospectus, we expect to appoint a compensation committee of the board of directors and that our board of directors will delegate the administration of our executive compensation program to such newly appointed committee.

Compensation Consultants and Benchmarking Data

We and the Compensation Committee do not currently have any contractual relationships with any compensation consultants. From time to time, we, through our Human Resources function, have worked with an

independent compensation consultant to ascertain best practices and market trends in the design of executive compensation programs. To ensure the objectivity of the advice obtained, our independent compensation consultant does not provide any other services to us that are not directly related to executive compensation. The Compensation Committee did not use a compensation consultant in connection with setting 2009 executive compensation. However, the Compensation Committee has considered general comparative marketplace compensation data (which includes data from the 250 largest U.S. companies in the Standard & Poor’s 500 Index) obtained from our past compensation consultant, as one among many factors in setting compensation levels for executives. Comparative data is only used as a reference point after determining the type and amount of compensation to be delivered.

Elements of Our Executive Compensation and Benefits Programs

The primary elements of the executive compensation program consist of:

•

base salary;

•

annual cash incentives; and

•

long-term equity incentives (equity option awards).

The selection of these three main compensation elements allows us to remain competitive in attracting and retaining executive talent and to motivate executives with current and potential financial rewards.

Relative Size of Major Compensation Elements

The combination of base salary, annual cash incentives and equity options comprises total direct compensation. In setting executive compensation, the Compensation Committee considers the aggregate compensation payable to a Named Executive Officer and the form of that compensation. The Compensation Committee seeks to achieve the appropriate balance between immediate cash rewards and long-term financial incentives for the achievement of both annual and long-term financial and non-financial objectives.

The Compensation Committee believes that making a significant portion of an executive officer’s compensation contingent on annual results more closely aligns the executive officer’s interests with those of the owners. For superior performance, short and long-term incentive awards pay out at above targeted levels and for below-target performance, awards pay out at below target levels or not at all. At the beginning of each year, as part of our normal performance review, the chief executive officer recommends to the Compensation Committee adjustments to base salary and annual incentive awards for executive officers. The Compensation Committee approves all compensation adjustments and incentive awards for executive officers.

Named Executive Officers have a substantial portion of compensation that is variable and “at risk.” The portion of variable, performance-based compensation increases directly with the executive’s level of responsibility to ensure that the most senior executives are held most accountable for operating performance and changes in owner value. Performance-based pay programs comprise the majority of the total direct compensation packages for the Named Executive Officers.

The Compensation Committee may decide, as appropriate, to modify the mix of base salary, annual cash incentives and long-term equity incentives to best fit a Named Executive Officer’s specific circumstances. For example, the Compensation Committee may make the decision to award more cash and not award an equity grant. This provides more flexibility to the Compensation Committee to reward executive officers appropriately as they near retirement, when they may only be able to partially fulfill the vesting required for equity options. The Compensation Committee may also increase the size of equity option grants to an executive officer if the total number of career equity option grants does not adequately reflect the executive’s current position with us or if an above-market compensation package is necessary to attract and retain critical talent.

Timing of Compensation Decisions

All elements of the Named Executive Officers’ compensation are reviewed each February, after a review of financial, operating and personal objectives with respect to the prior year’s results. At that time, the financial, operating and personal objectives are determined for the current year. The Compensation Committee may, however, review salaries or grant equity options at other times as the result of new appointments or promotions during the year.

The following table summarizes the approximate timing of significant compensation events:


Event		Timing
Base salary review and recommendation.		First quarter of the fiscal year for base salary for the current year.

Executive performance evaluation and corresponding compensation recommendations.		Results approved in February of each fiscal year for annual cash incentive with respect to prior year. Earned incentive paid in March.

Merit increases for executives.		Effective first pay period in June.

Granting of equity options to executives.		No set period.

Advisory Committee meetings.		Advisory Committee typically meets quarterly.

Establish executive officer financial objectives.		February of each year for the current year.

Establish executive officer personal objectives.		First quarter of each year for the current year.

Base Salary

Base salaries for Named Executive Officers are generally fixed for several years, except for annual merit increases. Base salary adjustments to ensure market competitiveness for Messrs. Sudan, Lennox, Lane and Prevot (other than in connection with annual merit increases) were last reviewed in 2004, in connection with a market survey of comparable companies completed by Mercer Human Resource Consulting for us (the “2004 Survey”). Messrs. Knowlton and Burgess were not employed by us at the time of the 2004 Survey, but upon their employment with us in late 2006, their salaries were negotiated to be comparable to the former executive officers of the same positions at the Company. Mr. Burgess received an adjustment to his base salary upon assuming the position of chief executive officer on January 1, 2009.

The Compensation Committee has determined in the past that Named Executive Officers should generally receive only annual merit increases to their salaries that are equal to those increases that are implemented on a company-wide basis. The Compensation Committee annually reviews base salary for executive officers and makes adjustments only when necessary based on executive and company’s performance.

There are occasions when a base salary can be reduced, such as when a Named Executive Officer moves to a position of lesser responsibility in the organization. Alternatively, base salary can be frozen for a number of years until it falls in line with comparable positions. This type of adjustment will depend on individual situations.

Annual Incentive Compensation - Corporate Incentive Plan

For 2008, cash incentive awards were earned under our Corporate Incentive Plan (“CIP”) and were paid to participants in March 2009. For 2009, awards earned under the CIP, if any, will be paid in March 2010.

The CIP’s design objectives are:

•

to reinforce among all participants the importance of their individual and collective contributions to our continued success;

•

to encourage initiative and sound judgment among participants in all business decisions and in the day-to-day execution of their jobs;

•

to provide total compensation that is higher than competitive levels when aggressive goals are exceeded; and

•

to encourage teamwork and improve our overall return on investment.

The CIP provides cash incentive awards to Named Executive Officers and other executive and management employees for achieving and exceeding annual, company-wide financial goals, business unit specific financial goals and individual performance goals. In cases of exceptional and/or extraordinary performance, the Compensation Committee, based on the recommendations of the chief executive officer, has the ability to modify CIP awards upwards or downwards to provide bonuses higher or lower than those that would otherwise be payable under the CIP.

Each participant in the CIP has a bonus potential, computed as a percentage of salary, based on job level. Such bonus potential ranges between 5% and 183% of an individual’s salary as of the end of each fiscal year, and bonus potential for Named Executive Officers ranges between 60% and 183% of their respective salaries. The CIP also provides for maximum bonuses equivalent to 110% in 2008, and 120% in 2009, of each participant’s bonus potential based on exceeding the CIP targets. Such maximum bonuses range between 5% and 201% in 2008, and between 5% and 216% in 2009, of an individual’s salary as of the end of each fiscal year, and maximum bonuses for Named Executive Officers range between 66% and 201% in 2008, and between 66% and 216% in 2009, of their respective salaries. Mr. Burgess received an adjustment to his bonus target upon assuming the position of chief operating officer on April 30, 2008.

In 2008, the award targets for Messrs. Knowlton, Burgess, Lane and Prevot were based entirely on our total performance, and the award targets for Messrs. Sudan and Lennox were based 15% on our total performance and 85% on their respective business unit’s performance. The 2008 CIP targets were adjusted EBITDA, which was weighted at 75%, capital spending, which was weighted at 10%, and quarterly working capital targets, which were weighted at 15%. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” for more information on adjusted EBITDA.

In 2008, the CIP target for adjusted EBITDA was $436 million. A Named Executive Officer would receive 75% of his bonus potential for achieving 100% of the CIP target for adjusted EBITDA and up to 110% of his bonus potential for exceeding it. Our capital spending target in 2008 was $162 million. A Named Executive Officer would receive 100% of his bonus potential if our capital expenditures were equal to the capital spending target and up to 110% if they were less than the target. The working capital targets were based on accounts receivable and inventory levels at the consolidated and business unit levels.

An Incentive Plan Committee, comprised of the chief executive officer, president and chief operating officer, chief financial officer and senior vice president, global human resources of the Operating Company, reviewed our goals and designated position eligibility and relative target awards under the 2008 Corporate Incentive Plan. The senior vice president, global human resources of the Operating Company was responsible for administering and maintaining the 2008 Corporate Incentive Plan and the Incentive Plan Committee reviewed documentation justifying discretionary awards. The Incentive Plan Committee has reviewed and approved all terms and conditions of the 2008 Corporate Incentive Plan.

The Incentive Plan Committee had the sole discretion to include or exclude certain financial costs or benefits in the calculation of financial targets used in the 2008 Corporate Incentive Plan. In cases of exceptional and/or extraordinary performance based on the sole discretion of our chief executive officer, the Incentive Plan Committee reserves the right to award bonuses greater than those that would otherwise be payable under the

Corporate Incentive Plan. Additionally, the Corporate Incentive Plan provides for a discretionary incentive pool for rewarding selected participants for exemplary performance. The Incentive Plan Committee also reserves the right to award bonuses that are less than those defined by this program, including the right not to award a bonus in a given year to any individuals.

For 2009, CIP goals and targets for Messrs. Bullock, Burgess and Knowlton and their respective weightings are as follows:


Covenant Compliance EBITDA	60.0	%
Cash Flow	40.0	%

	100.0	%

To ensure focus on specific business unit results, the targets for Messrs. Lennox and Sudan and their respective weightings are as follows:


Adjusted EBITDA	15.0	%
Business Unit Adjusted EBITDA	40.0	%
Business Unit Sales	25.0	%
Other Business Goals	20.0	%

	100.0	%

Participation in the CIP does not give any employee the right to be retained in the service of our company, or our subsidiaries, or any right to claim any benefit under the program unless such right had specifically accrued under the terms of the program.

In connection with the IPO Reorganization and this offering, we will amend and structure the CIP to set the maximum bonus amount that may be payable to any participant in a manner intended to comply with the transition period exception under Section 162(m) of the Internal Revenue Code. The exemption applies to compensation plans or agreements that existed prior to the initial public offering where the terms of such plans are disclosed in the initial public offering prospectus. For our 2010 fiscal year and for each fiscal year thereafter, we expect that the CIP will be structured so that payments thereunder will qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code and that the plan will be administered by the compensation committee of the board of directors.

Equity Options

Equity options are a vital piece of our total compensation package and are designed to support our long-term strategy, provide a mechanism to attract and retain talent and to create a commonality of interest between management and our owners. Our managing general partner has delegated responsibility for option grants under our equity option and incentive plans to the Compensation Committee. Upon consummation of the IPO Reorganization and the offering contemplated by this prospectus, we expect to delegate responsibility for option grants under our equity option and incentive plans to the compensation committee of the board of directors. The Compensation Committee has made grants of equity options as a reward for demonstrated performance and leadership, in connection with the appointment of executive officers (including Named Executive Officers) and to provide incentives for future exceptional performance. The size of equity option grants increases with the level of responsibility of the executive position.

With respect to our Named Executive Officers, the most recent equity grants for Messrs. Sudan, Lennox, Lane and Prevot were made in connection with the 2004 acquisition of O-I Plastic and were made in connection with grants on a company-wide basis. With respect to Messrs. Knowlton and Burgess, equity grants were made in connection with their appointment to our company and were a result of negotiations of their respective

employment arrangements. Participating in that negotiation were members of the Compensation Committee who on a regular basis participate in negotiations with executives at other private equity portfolio companies and are experienced and knowledgeable in the levels of equity grants required to retain executives. As a privately held company, equity grants were not part of the annual compensation package of any of the Named Executive Officers.

Options have been granted under the terms of the Graham Packaging Holdings Company Management Option Plan (the “1998 Option Plan”), the 2004 Graham Packaging Holdings Company Management Option Plan (the “2004 Option Plan”) and the 2008 Graham Packaging Holdings Company Management Option Plan (the “2008 Option Plan” and, collectively with the 1998 Option Plan and the 2004 Option Plan, the “Option Plans”).

In general, options awarded under the 1998 Option Plan vest according to either a time-based component or time-based and performance-based components as follows: 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 on the vesting date, and 50% of the options vest and become exercisable in 20% increments annually over five years, so long as we achieve specified EBITDA 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.

In general, options awarded under the 2004 Option Plan and the 2008 Option Plan vest and become exercisable in 25% increments annually over four years, so long as the holder of the option is still an employee on the vesting date. See “—Option Awards” below.

Options awarded under the Option Plans have a term of ten years. On January 22, 2008, we extended the term for certain options granted on February 2, 1998, for which any unexercised options would have expired on February 2, 2008. Such options now will expire in 2018, or earlier upon a termination of the holder’s service. No change was made to the number of options, nor the exercise price, and the options remained fully vested.

On December 22, 2008, we extended the term for certain options granted on January 1, 1999, for which any unexercised options would have expired on December 31, 2008. Such options now will expire in 2018, or earlier upon a termination of the holder’s service. No change was made to the number of options, nor the exercise price, and the options remained fully vested.

On April 4, 2008, we concluded a program designed to permit employees and members of management, including Messrs. Sudan, Lennox, Lane, and Prevot, to exchange options to purchase limited partnership units of our company granted pursuant to the 2004 Option Plan for options to purchase an equivalent number of limited partnership units of our company pursuant to the 2008 Option Plan. Messrs. Sudan, Lennox, Lane and Prevot each participated in the option exchange program, and in exchange for their options under the 2004 Option Plan, Messrs. Sudan, Lennox, Lane and Prevot were granted options to purchase 29.0, 11.1, 9.1 and 68.0 limited partnership units, respectively, pursuant to the 2008 Option Plan. Although Messrs. Sudan, Lennox, Lane and Prevot were approximately 75% vested in their 2004 options at the date of the exchange, none of them were vested in any portion of their new options under the 2008 Option Plan on the date of grant. Instead, each option granted pursuant to the 2008 Option Plan is subject to a four-year time-based vesting schedule, with each officer becoming 25% vested in their options on March 7, 2009, and 25% on each of the following three anniversaries of such date. In addition, the 2008 options were granted with an exercise price equal to $36,746.60 per limited partnership unit, which was the fair value of such a unit on March 7, 2008, instead of the previous exercise price of $51,579.00, which was the fair value of such a unit when the officers were granted their 2004 options.

For further information on grants of equity options in 2008, see “—2008 Grants of Plan-Based Awards” and “—Option Awards.”

On June 17, 2009, we entered into an option agreement with Mr. Burgess providing him with performance-based options to purchase 50 limited partnership units at an exercise price of $25,122, which was not less than the fair value per partnership unit on the effective date. The term of the options commenced on June 17, 2009, and, unless terminated early in accordance with the terms of the option agreement, will expire ten years from such date. Mr. Burgess shall earn the right to exercise these options, provided that (i) he shall have remained in the continuous employ of our company through the date of a liquidity event, as defined in the option agreement, and (ii) we shall have achieved specified performance targets with respect to the multiple of invested capital (“MOIC”) for such a liquidity event as provided in the option agreement. The vesting of the options will accelerate in the event Mr. Burgess’s employment is terminated without cause or Mr. Burgess resigns for good reason as outlined in the option agreement and a liquidity event occurs within one year of such termination of employment. Any options which Mr. Burgess does not earn the right to exercise prior to the expiration date will generally expire and terminate.

2009 Stock Plan

We expect that the Graham Packaging Company Inc. 2009 Stock Incentive Plan (the “2009 Stock Plan”) will be adopted and approved prior to the completion of this offering. We intend awards under the 2009 Stock Plan to qualify as performance based compensation under Section 162(m) of the Internal Revenue Code and thereby be fully tax deductible. The purpose of the 2009 Stock Plan will be to aid us in recruiting, retaining and motivating key employees and directors, and to align their interests to the interests of our shareholders by providing long-term incentives through the granting of options, stock appreciation rights and other stock-based awards.

Benefits

Retirement Benefits

In line with our aim to encourage long-term service and promote retention, a 401(k) plan is made available to all U.S. employees, including Named Executive Officers. We believe that both current compensation and longer-term benefit plans are important elements of the compensation package. Through December 31, 2007, the 401(k) plan provided a non-elective cash contribution of 3% of total compensation (base salary plus incentive compensation) and a 50% company match up to 6% of total compensation, up to the statutory maximum. Effective January 1, 2008, through December 31, 2008, the 401(k) plan provided a non-elective cash contribution of 3% of base salary and a 50% company match up to 6% of base salary, up to the statutory maximum. Effective January 1, 2009, the 401(k) plan provides a non-elective cash contribution of 3% of base salary and a 50% company match up to 4% of base salary, up to the statutory maximum.

Effective December 31, 2006, we froze our defined benefit pension plans for salaried and hourly employees other than employees covered by collectively bargained plans and implemented the non-elective 401(k) benefit described above.

Pursuant to Mr. Knowlton’s employment agreement, as amended on December 18, 2008, Mr. Knowlton will be eligible, upon vesting, for an annual pension payment of $640,000 for 10 years following his separation of employment. Mr. Knowlton will vest in this benefit contingent upon his continued employment as Executive Chairman through December 31, 2009, or on an earlier date whereon (i) Mr. Knowlton’s employment is terminated by us without cause or by Mr. Knowlton for good reason or (ii) a change in control of our company occurs while Mr. Knowlton remains employed by us. The pension payment will be paid on January 31 of each of the ten years following Mr. Knowlton’s separation from us.

Pension Plans

In the year ended December 31, 2008, 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 bargaining agreements. These plans covered

substantially all of our U.S. employees. The defined benefit plan for salaried employees and hourly employees provides retirement benefits based on the final five years average compensation and years of service for salaried employees, while providing benefits based on years of service for hourly employees. Employees are eligible for early retirement benefits at age 55, provided that they have provided 10 years of eligible service. This plan was frozen as of December 31, 2006. As a result, the maximum years of service a participant can earn for benefit accrual is 18 years under the current plan benefit formula, excluding any employees who carried over accrued benefits from a predecessor plan. See note 13 of the notes to consolidated financial statements for information regarding our pension plans for each of the three years in the period ended December 31, 2008.

The compensation covered by the defined benefit plan is an amount equal to “Total Wages” (as defined therein) for salaried employees. This amount includes the annual Salary and Bonus amounts shown in the Summary Compensation Table for the Named Executive Officers who participated in the plan. Messrs. Knowlton and Burgess accrued no years of service at the time the plan was frozen. Currently, of the Named Executive Officers, only Mr. Sudan is eligible for early retirement benefits. Benefits under the plan are computed on the basis of straight-life annuity amounts.

Other Benefits

We also provide other benefits, such as medical coverage and life and disability insurance. Named Executive Officers are eligible for the same benefits provided to other employees, including medical coverage and life and disability insurance, as well as supplemental plans chosen and paid for by employees who wish additional coverage. There are no special insurance plans for Named Executive Officers. We also provide limited perquisites to executive officers, such as relocation assistance and an executive automobile allowance. In accordance with his employment agreement, Mr. Knowlton is also provided the use of a private plane until December 31, 2009.

Severance and Change of Control Benefits

Named Executive Officers may receive payments under severance and change of control provisions of their employment agreements designed to offer incentives and retain executive officers during a potential, or following an actual, change of control of our company, including a change in management, ownership, structure or other material change that could potentially affect us. Each employment agreement with our Named Executive Officers contains a non-competition and non-solicitation provision that is effective during employment and for a specified time after the executive’s employment is terminated. Our change of control and severance benefits are designed to be competitive with those available to similarly situated executives at comparable companies.

Generally, if an executive’s employment terminates due to disability or death, or if the executive is terminated for cause or resigns without good reason, then the executive or the executive’s beneficiary is entitled to accrued and unpaid base salary, vacation and business expenses and a pro-rated annual bonus (upon a termination due to death or disability only). If an executive is terminated without cause, resigns with good reason or in contemplation or as a result of a change of control, the executive may be entitled to additional benefits. See “—Potential Payments Upon Termination or Change of Control” below.

In connection with Mr. Lane’s retirement on April 24, 2009, and in consideration of his long standing service to our company, we agreed to pay Mr. Lane approximately one year’s worth of salary. Mr. Lane is also eligible for a pro-rated bonus payment, subject to achievement of performance criteria under the CIP. For 2009, CIP goals and targets for Mr. Lane and their respective weightings are: Covenant Compliance EBITDA (25.0%), Cash Flow (10.0%), Net Sales (5.0%) and Business Unit Performance (60.0%). In addition, Mr. Lane’s options to purchase limited partnership units in Graham Packaging Holdings Company vested on his retirement and will expire on the earlier of a change in control of our company or the original option term.

Employment Agreements

We entered into employment agreements with certain Named Executive Officers. Employment agreements are reviewed by the Compensation Committee and approved by the Advisory Committee. See “—Employment Agreements” below.

In 2009, we hired Mr. Bullock as our chief financial officer and entered into an employment agreement with Mr. Bullock on May 4, 2009, effective May 5, 2009, providing for Mr. Bullock’s employment as our chief financial officer. Mr. Bullock’s agreement is for a three-year term which is renewed automatically for additional one-year periods unless terminated earlier by either party. Mr. Bullock’s compensation package includes an initial annual base salary of $420,000. Mr. Bullock is also eligible for an annual target bonus equal to his base salary based upon the achievement of the financial budget or other performance criteria established by the general partner or the board of directors in its sole discretion. Mr. Bullock also received a relocation package pursuant to our relocation program. In the event Mr. Bullock’s employment is terminated by us without cause or by Mr. Bullock for good reason before June 30, 2010 or June 30, 2011, Mr. Bullock will reimburse us for 100% or 50%, respectively, of the relocation costs. If Mr. Bullock is terminated by us without cause, or Mr. Bullock resigns for good reason, Mr. Bullock, subject to compliance with a standard non-competition and release agreement, will receive an amount equal to the sum of his base salary and annual target bonus, payable over a period of 12 months, and the continuation of customary health and other benefits under our programs for a period of up to 12 months. Mr. Bullock also participates in certain of our other customary programs and policies.

On May 4, 2009, we entered into an option agreement with Mr. Bullock, effective May 5, 2009, providing him with time-based options to purchase 40 limited partnership units in Graham Packaging Holdings Company at an exercise price of $25,122, which was not less than the fair value per limited partnership unit on the effective date. The term of the options commenced at the effective date and, unless terminated early in accordance with the terms of the option agreement, will expire ten years from the effective date. The options vest annually in four equal increments, provided Mr. Bullock is employed by our company on such dates, which may be accelerated in the event of a change in control as defined by our Credit Agreement, or in the event Mr. Bullock’s employment is terminated without cause or Mr. Bullock resigns for good reason as outlined in his Employment Agreement.

Also on May 4, 2009, we entered into an option agreement with Mr. Bullock, effective May 5, 2009, providing him with performance-based options to purchase 40 limited partnership units in Graham Packaging Holdings Company at an exercise price of $25,122, which was not less than the fair value per partnership unit on the effective date. The term of the options commenced at the effective date and, unless terminated early in accordance with the terms of the option agreement, will expire ten years from the effective date. Mr. Bullock will earn the right to exercise these options, provided that (i) he shall have remained in the continuous employ of our company through the date of a liquidity event, as defined in the option agreement, and (ii) we shall have achieved specified performance targets with respect to the multiple of invested capital (“MOIC”) for such a liquidity event as provided in the option agreement. The vesting of the options will accelerate in the event Mr. Bullock’s employment is terminated without cause or Mr. Bullock resigns for good reason as outlined in the Employment Agreement and a liquidity event occurs within one year of such termination of employment. Any options which Mr. Bullock does not earn the right to exercise prior to the expiration date will generally expire and terminate.

Summary Compensation Table

The following table sets forth all compensation paid to our former chief executive officer, our former chief financial officer (Mr. Burgess, our current chief executive officer), our three other most highly compensated executive officers who were serving as of December 31, 2008 and our former president and chief operating officer, for the years ended December 31, 2006, 2007 and 2008, and their respective titles at December 31, 2008. These individuals are referred to as the “Named Executive Officers.”


Name and Principal Position	Year	Salary ($)		Bonus ($)		Option Awards ($) (1)		Non-Equity Incentive Plan Compensation ($) (2)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (3)	All Other Compensation ($)		Total ($)
Warren D. Knowlton	2008	803,380		—		445,677		1,530,330		—	770,714	(5)	3,550,101
Former Chief Executive Officer and Current Executive Chairman of the Advisory Committee (4)	2007	770,921		3,000,000	(6)	259,868		1,360,815		—	854,975		6,246,579
	2006	43,270	(7)	—		18,515		—		—	24,000		85,785

Mark S. Burgess	2008	549,393		—		218,488		1,110,432		—	133,658	(8)	2,011,971
Chief Executive Officer	2007	475,110		—		330,110		855,393		—	319,847		1,980,460
Chief Executive Officer	2006	25,962	(7)	75,000	(9)	16,392		—		—	13,000		130,354

Ashok Sudan	2008	345,836		—		93,183		420,106		43,003	32,613	(10)	934,741
Executive Vice President and General Manager, Global Food and Beverage	2007	336,004		—		—		411,184		15,437	28,696		791,320
	2006	327,463		—		—		—		33,813	23,150		384,426

Peter T. Lennox	2008	260,310		—		10,288		327,956		9,254	22,225	(11)	630,033
Senior Vice President, General Manager of Household Chemical and Automotive, Personal Care/ Specialty and South America	2007	252,567		—		—		271,703		1,791	17,501		543,562
	2006	243,657		—		—		174,161	(12)	11,410	5,245		434,473

George M. Lane	2008	257,070		—		114,123		161,877		65,791	16,988	(13)	615,849
Former Senior Vice President, Global Human Resources

Roger M. Prevot	2008	206,343		—		579,385	(15)	313,604		32,458	598,108	(16)	1,729,898
Former President and Chief Operating Officer (14)	2007	498,561		—		—		887,299		7,908	45,346		1,439,114
Former President and Chief Operating Officer (14)	2006	485,897		—		—		—		12,943	24,524		523,364

(1)

Amounts represent the compensation that was earned by the Named Executive Officer and the cost recognized during 2008, 2007 or 2006, as the case may be, related to equity option awards. Compensation cost is initially measured based on the grant date fair value of an award, determined pursuant to ASC 718 -20 “Stock Based Compensation” (excluding estimate of forfeitures) utilizing assumptions discussed in note 16 of the notes to consolidated financial statements in this prospectus. Compensation cost is recognized for financial reporting purposes over the period in which the employee is required to provide service in exchange for the award (generally the vesting period). Amounts for Messrs. Sudan, Lennox, Lane and Prevot include compensation cost related to the extension of options granted under the 1998 Option Plan for an additional ten years, pursuant to Amended and Restated Option Unit Agreements, such that the options expire in 2018. Amounts for Messrs. Sudan, Lennox, Lane and Prevot also include compensation cost related to the exchange of options granted pursuant to the 2004 Option Plan for options pursuant to the 2008 Option Plan, as further described under “—Equity Options” above.

(2)	Amounts reflected for the year 2008 represent incentive compensation under the 2008 Corporate Incentive Plan earned in 2008 and payable in 2009. Amounts reflected for the year 2007 represent incentive compensation under the 2007 Corporate Incentive Plan earned in 2007 and paid in 2008.

(3)	Represents the aggregate change in actuarial present value of accumulated pension benefits over the specified years, using the same pension plan measurement data used for financial statement reporting purposes.

(4)	Warren D. Knowlton served as our Chief Executive Officer until December 31, 2008, and now serves as our Executive Chairman of the Advisory Committee effective December 31, 2008.

(5)

Includes relocation costs reimbursed in the amount of $74,430, transportation costs reimbursed per Mr. Knowlton’s employment agreement in the amount of $678,428, contributions to our 401(k) plan in the amount of $10,060, amounts attributable to group term life insurance and personal use of a company vehicle.

(6)	Represents a $3,000,000 signing bonus awarded under Mr. Knowlton’s employment agreement.

(7)	Represents salaries from December 4, 2006, the beginning date of employment with our company, through December 31, 2006.

(8)	Includes relocation costs reimbursed in the amount of $100,874, contributions to our 401(k) plan in the amount of $13,800, reimbursement of country club dues in the amount of $10,475, car allowance and amounts attributable to group term life insurance.

(9)	Represents a $75,000 signing bonus awarded under Mr. Burgess’ employment agreement.

(10)	Includes contributions to our 401(k) plan in the amount of $13,800, amounts attributable to group term life insurance, car allowance, personal use of a company vehicle and reimbursement of country club dues.

(11)	Includes contributions to our 401(k) plan in the amount of $13,333, amounts attributable to group term life insurance, car allowance and personal use of a company vehicle.

(12)	Represents a bonus earned and paid in 2006 under a special O-I Plastic integration incentive plan.

(13)	Includes contributions to our 401(k) plan in the amount of $13,800, amounts attributable to group term life insurance and personal use of a company vehicle. Mr. Lane retired from the company in April, 2009. See “—Severance and Change of Control Benefits.”

(14)	Roger M. Prevot served as our President and Chief Operating Officer until April 30, 2008.

(15)

Amount includes compensation expense attributable to options that were not previously vested on the date of Mr. Prevot’s separation from our company that, pursuant to his separation agreement, became fully vested and exercisable on April 30, 2008. See “—Potential Payments Upon Termination or Change of Control—Potential Payments” for a description of Mr. Prevot’s separation agreement.

(16)	Includes costs for severance in the amount of $582,078, contributions to our 401(k) plan in the amount of $12,301, personal use of a company vehicle, amounts attributable to group term life insurance and reimbursement of country club dues.

2008 Grants of Plan-Based Awards

The following table provides information on grants of plan-based awards in 2008 to the Named Executive Officers.


Name	Grant Date	Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1)					Estimated Future Payouts Under Equity Incentive Plan Awards				All Other Option Awards: Number of Securities Underlying Options (#)		Exercise or Base Price of Option Awards ($/Sh)	Grant Date Fair Value of Option Awards ($)
Name	Grant Date	Threshold ($)	Target ($)		Maximum ($)		Threshold (#)	Target (#)		Maximum (#)			Exercise or Base Price of Option Awards ($/Sh)	Grant Date Fair Value of Option Awards ($)
Warren D. Knowlton			1,488,391		1,637,230
Mark S. Burgess			1,080,000		1,188,000
Ashok Sudan			471,962		519,159
	3/17/08							29.0	(2)				36,747	129,021
	1/22/08										12.8	(3)	25,789	66,304
Peter T. Lennox			302,134		332,347
	3/13/08							11.1	(2)				36,747	49,384
George M. Lane			157,441		173,185
	3/10/08							9.1	(2)				36,747	40,486
	1/22/08										12.8	(3)	25,789	66,304
	12/22/08										5.2	(3)	25,789	39,384
Roger M. Prevot			308,090	(4)	338,899	(4)
	3/20/08							68.0	(2)				36,747	302,532
	1/22/08										43.4	(3)	25,789	224,812

(1)

The Named Executive Officers were eligible for the following target annual bonuses in 2008 under our 2008 Corporate Incentive Plan: Messrs. Knowlton and Burgess, 180% of their respective base salaries; Mr. Sudan, 133% of base salary; Mr. Lennox, 113% of base salary; Mr. Lane, 60% of base salary; and Mr. Prevot, 183% of base salary.

(2)

Options originally granted on November 17, 2004, under the 2004 Option Plan. In March 2008, Messrs. Sudan, Lennox, Lane and Prevot exchanged these options granted pursuant to the 2004 Option Plan for options to purchase an equivalent number of limited partnership units of our company pursuant to the 2008 Option Plan. Although Messrs. Sudan, Lennox, Lane and Prevot were approximately 75% vested in their 2004 options at the date of the exchange, none of them were vested in any portion of their new options under the 2008 Option Plan on the date of grant. The 2008 options vest and become exercisable in 25% increments annually over four years (25% on March 7, 2009, 25% on March 7, 2010, 25% on March 7, 2011, and 25% on March 7, 2012), so long as the holder of the option is still an employee on the vesting date. In addition, the 2008 options were granted with an exercise price equal to $36,746.60 per limited partnership unit, which was the fair value of such a unit on the grant date, instead of the previous exercise price of $51,579.00, which was the fair value of such a unit when the officers were granted their 2004 options. The options granted under the 2008 Option Plan were granted with a ten-year option term and expire in 2018.

(3)

On January 22, 2008, we extended the term for options granted on February 2, 1998, for which any unexercised options would have expired on February 2, 2008. Such options now will expire in 2018, or earlier upon a termination of the holder’s service. No change was made to the number of options, nor the exercise price, and the options remained fully vested. On December 22, 2008, we extended the term for certain options granted on January 1, 1999, for which any unexercised options would have expired on December 31, 2008. Such options now will expire in 2018, or earlier upon a termination of the holder’s service. No change was made to the number of options, nor the exercise price, and the options remained fully vested.

(4)	The target and maximum annual bonus amounts for Mr. Prevot were calculated using one-third of his annual base salary, as his employment with us ended on April 30, 2008.

Employment Agreements

We entered into employment agreements on March 28, 2007, effective December 4, 2006, with Mr. Knowlton and Mr. Burgess. Mr. Knowlton’s agreement, as amended on December 18, 2008, provides for his employment as Executive Chairman of the Advisory Committee, effective December 31, 2008, through December 31, 2009. Mr. Burgess’ agreement, as amended on December 18, 2008, provides for his employment as our Chief Executive Officer, effective January 1, 2009, through December 4, 2009. Mr. Burgess’ term of employment automatically extends for additional successive one-year periods, unless our company or Mr. Burgess elects to terminate the agreement at least 90 days prior to the end of any of these employment periods. Mr. Knowlton’s employment will be extended if both he and our company mutually agree to extend his employment.

Under their agreements, Mr. Knowlton will receive an annual base salary of at least $750,000 and Mr. Burgess will receive an annual base salary of at least $450,000. Each executive will be eligible to receive annual cash incentive awards in accordance with our cash bonus plans. The agreements provide that Mr. Knowlton is eligible for a target annual cash incentive award equal to 180% of his base salary and Mr. Burgess is eligible for a target annual cash incentive award equal to 150% of his base salary, subject to achievement of performance criteria. Pursuant to his agreement, Mr. Burgess received a one-time cash bonus of $75,000 in December 2006. Upon joining us, Mr. Knowlton became eligible to receive a deferred signing bonus of $3,000,000 contingent upon his continued employment and payable in four equal quarterly installments of $750,000 on the three-, six-, nine- and twelve-month anniversaries of his hire date. Upon starting employment, Mr. Knowlton and Mr. Burgess each received options to purchase limited partnership interests in Graham Packaging Holdings Company. Specifically, Mr. Knowlton received (i) a time-vesting option to purchase 295.7 limited partnership interests in Graham Packaging Holdings Company that vests over a four-year period based upon Mr. Knowlton’s continued employment and (ii) “exit-vesting” option to purchase 147.9 limited partnership interests in Graham Packaging Holdings Company that vests upon (A) Blackstone’s sale of their entire equity interest in our company; (B) the attainment of certain financial performance goals established by our company; and (C) the executive’s continued employment with us through the sale. Mr. Burgess received (i) a time-vesting option to purchase 110.9 limited partnership interests in Graham Packaging Holdings Company one-half of which vests over a four-year period based upon Mr. Burgess’ continued employment and the other half of which vests over the four-year period based upon his continued employment and the attainment of certain performance goals established by our company and (ii) an “exit-vesting” option to purchase 73.9 limited partnership interests in Graham Packaging Holdings Company that vests upon (A) Blackstone’s sale of their entire equity interest in our company; (B) the attainment of certain financial performance goals established by our company; and (C) the executive’s continued employment with us through the sale. The vesting of Mr. Knowlton’s and Mr. Burgess’ time-vesting options shall accelerate upon a change of control if the executive is employed by us on such date or if the executive’s employment is terminated by us without cause or by the executive for good reason in contemplation of a change of control and such change of control occurred within one year after the termination of employment, however, the vesting of Mr. Burgess’ time-vesting options that are only subject to his continued employment (i.e., contain no performance-vesting condition) will immediately accelerate upon his termination of employment by us without cause or by Mr. Burgess with good reason (whether or not a change of control is contemplated). In addition, Mr. Knowlton’s and Mr. Burgess’ exit-vesting options will become vested if the vesting conditions are satisfied within one year following the executive’s termination of employment by us without cause or by the executive with good reason. Both executives may also receive future equity grants under our equity incentive program consistent with other senior executives and competitive pay practices generally.

Pursuant to Mr. Knowlton’s employment agreement, as amended on December 18, 2008, Mr. Knowlton will be eligible for an annual payment of $640,000 for 10 years following his separation of employment. Mr. Knowlton will vest in this benefit contingent upon his continued employment as Executive Chairman through December 31, 2009, or on an earlier date whereon (i) Mr. Knowlton’s employment is terminated by us without cause or by Mr. Knowlton for good reason or (ii) a change in control of our company occurs while Mr. Knowlton remains employed by us. The pension payment will be paid on January 31 of each of the ten years following Mr. Knowlton’s separation from us. Mr. Knowlton is also eligible to receive a transaction bonus in connection with Blackstone’s sale of their entire equity interest in our company, a portion of which he may also be eligible to receive upon a change of control or initial public offering of our company. Except upon a change of control or our initial public offering, any transaction bonus shall be payable upon the one-year anniversary of his termination of employment.

The agreements of Mr. Knowlton and Mr. Burgess also provide for their participation in all employee compensation plans and welfare benefit plans generally available to our other senior executives. Each executive will receive reimbursement of all reasonable business expenses, fringe benefits, office and support staff and vacation benefits in accordance with our plans, policies and practices and in a manner comparable to other senior executives. During his employment, Mr. Knowlton will be entitled on an after-tax basis of (i) up to fifty round-trip flights from our headquarters to Maine and (ii) accommodation and automobile benefits. In 2007,

Mr. Burgess received six months of temporary living expenses. In 2007 and 2008, Mr. Knowlton and Mr. Burgess received reimbursement for relocation expenses, certain of which extend into 2009 for Mr. Burgess, including a monthly automobile benefit of $600 and a housing adjustment of $5,000 grossed up for taxes. Under their agreements, Mr. Knowlton and Mr. Burgess are also entitled to tax gross-ups for “golden parachute” excise taxes incurred by them under the Internal Revenue Code Sections 280G and 4999 and the applicable regulations thereunder with respect to payments and benefits received by them pursuant to the agreements. These tax gross-ups are subject to certain limitations (including a cutback of payments or benefits) if the amount of the payments and benefits subject to the excise tax exceeds the applicable safe harbor by less than 10% (within the meaning of Internal Revenue Code Section 4999 and the applicable regulations thereunder). Additionally, under each employment agreement, the executive is entitled to potential payments upon termination of employment, as further described in “—Potential Payments Upon Termination or Change of Control.”

On June 27, 2002, we entered into an employment agreement with Mr. Sudan and, on April 15, 2005, we entered into an employment agreement with Mr. Lennox. The term of each agreement is for one year but automatically extends for an additional year unless either party gives 90 days written notice prior to the end of the term. Mr. Sudan’s contract was most recently automatically extended for another year on June 27, 2009, and Mr. Lennox’s contract was automatically extended for another year on April 15, 2009. Under the agreements, Mr. Sudan is entitled to an initial base salary of $202,370 and is eligible for a target annual bonus of 115% of his base salary, while Mr. Lennox is entitled to an initial base salary of $210,000 and is eligible for a target annual bonus of 110% of his base salary. Annual bonus amounts are subject to achievement of performance criteria established by the Advisory Committee. Additionally, under each employment agreement, the executive is entitled to potential payments upon termination of employment or change in control, as further described in “—Potential Payments Upon Termination or Change of Control.”

Mr. Lane retired from our company in April, 2009. While employed by us, Mr. Lane did not have an employment agreement.

Option Awards

The Option Plans provide for the grant to management employees of Graham Packaging Holdings Company and its subsidiaries and non-employee members of the Advisory Committee, advisors, consultants and other individuals providing services to Graham Packaging Holdings Company or its subsidiaries or affiliates of options to purchase limited partnership interests in Graham Packaging Holdings Company equal to 0.0075% of Graham Packaging Holdings Company (prior to any dilution resulting from any interests granted pursuant to the Option Plans) (each 0.0075% interest being referred to as a “Unit”). The aggregate number of Units with respect to which options may be granted under the 1998 Option Plan may not exceed 631.0 Units and the aggregate number of Units with respect to which options may be granted at any given time under the 2008 Option Plan, together with the 2004 Option Plan, may not exceed 1,278.4 Units, representing a total of up to 12.5% of the equity of Graham Packaging Holdings Company. A committee has been appointed to administer the Option Plans, including, without limitation, the determination of the individuals to whom grants will be made, the number of Units subject to each grant and the various terms of such grants.

Under the Option Plans, employees with vested options who are terminated by us are generally allowed to exercise their vested options within 90 days from the date of their termination from our company. Any options not exercised within 90 days from their termination date generally become forfeited and are no longer exercisable. In connection with Mr. Prevot’s separation from our company, all of Mr. Prevot’s unvested options became fully vested and exercisable on April 30, 2008, and will be exercisable until the earlier of a change in control (as defined in his employment agreement) or the original expiration date of the respective option grants.

Under the 1998 Option Plan and the 2004 Option Plan, the exercise price per Unit is or will be equal to or greater than the fair value of a Unit on the date of grant. Under the 2008 Option Plan, the exercise price per Unit is or will be less than, equal to, or greater than the fair value of a Unit on the date of grant, provided that there are limitations on exercise of any option granted at less than fair value on the grant date. We determine the fair value of a Unit by considering market multiples of comparable public companies and recent transactions involving comparable public and private companies, and by performing discounted cash flow analyses on our projected cash flows. We utilize the services of an appraisal firm to assist in these analyses. 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 Graham Packaging Holdings Company. The Option Plans are intended to advance the best interests of our company by allowing such employees to acquire an ownership interest in us, thereby motivating them to contribute to the success of our company and to remain in the employ of our company.

Outstanding Equity Awards at 2008 Fiscal Year End

A summary of the outstanding equity awards for each Named Executive Officer as of December 31, 2008, is as follows:


	Option Awards (1)
Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)	Option Expiration Date
Warren D. Knowlton	177.4	(2)	118.3	(2)	—		38,684	12/3/2016
	—		—		147.9	(3)	25,789	12/3/2016

Mark S. Burgess	55.5	(4)	55.4	(4)	—		25,789	12/3/2016
	—		—		73.9	(3)	25,789	12/3/2016

Ashok Sudan	12.8	(5)	—		—		25,789	1/21/2018
	3.6	(6)	1.6	(6)	—		25,789	3/31/2012
	7.0	(7)	3.0	(7)	—		29,606	3/30/2013
	—		29.0	(8)	—		36,747	3/6/2018

Peter T. Lennox	4.6	(6)	1.9	(6)	—		25,789	3/31/2012
	2.8	(7)	1.2	(7)	—		29,606	3/30/2013
	—		11.1	(8)	—		36,747	3/6/2018

George M. Lane	12.8	(5)	—		—		25,789	1/21/2018
	5.2	(9)	—		—		25,789	12/21/2018
	—		9.1	(8)	—		36,747	3/6/2018

Roger M. Prevot	43.4	(5)	—		—		25,789	1/21/2018
	14.0	(10)(11)	—		—		25,789	3/31/2011
	68.0	(8)(11)	—		—		36,747	3/6/2018

(1)	All options listed above were granted with an initial ten-year option term. See “—Elements of Our Executive Compensation and Benefit Programs—Equity Options” for further information on the terms of these option awards.

(2)

Options granted on December 4, 2006, which vest and become exercisable with respect to 20% of the options on December 4, 2007, an additional 40% of the options on December 31, 2008, an additional 20% of the options on December 4, 2009, and an additional 20% of the options on December 4, 2010, so long as the holder of the option is still an employee on the vesting date.

(3)	Options granted on December 4, 2006, which vest and become exercisable upon (A) Blackstone’s sale of their interest in us and (B) the attainment of certain financial performance goals.

(4)

Options granted on December 4, 2006. 50% of the options vest and become exercisable in 25% increments annually, 25% on December 4, 2007, and 25% on each the second, third and fourth anniversaries of the grant date, over four years so long as the holder of the option is still an employee on the vesting date. 50% of the options vest and become exercisable in 25% increments annually, on the anniversaries of the grant date, over four years so long as we achieve specified earnings targets each year and so long as the holder of the option is still an employee on the vesting date.

(5)	Options granted on February 2, 1998, under the 1998 Option Plan. Under an Amended and Restated Option Unit Agreement dated January 22, 2008, the expiration date of options granted under the 1998 Option Plan was extended for ten additional years such that they expire on January 21, 2018.

(6)	Options granted on April 1, 2002, under the 1998 Option Plan.

(7)	Options granted on March 31, 2003, under the 1998 Option Plan.

(8)

was the fair value of such a unit on March 7, 2008, instead of the previous exercise price of $51,579.00, which was the fair value of such a unit when the officers were granted their 2004 options. The options granted under the 2008 Option Plan were granted with a ten-year option term and expire in 2018. In connection with his retirement in April 2009, Mr. Lane’s options became fully vested. See “—Compensation Discussion and Analysis—Benefits—Severance and Change of Control Benefits” for more information on Mr. Lane’s retirement.

(9)	Options granted on January 1, 1999, under the 1998 Option Plan. Under an Amended and Restated Option Unit Agreement dated December 22, 2008, the expiration date of options granted under the 1998 Option Plan was extended for ten additional years such that they expire on December 21, 2018.

(10)	Options granted on April 1, 2001, under the 1998 Option Plan.

(11)

Mr. Prevot was our President and Chief Operating Officer until April 30, 2008, the date of his separation from us. Pursuant to his separation agreement, all of Mr. Prevot’s unvested options became fully vested and exercisable on April 30, 2008, and will be exercisable until the earlier of a change in control (as defined in his employment agreement) or the original expiration date of the respective option grants.

Option Exercises and Interests Vested

The following table provides information with respect to the exercise of option awards during the year ended December 31, 2008.


	Option awards
Name	Number of units acquired on exercise (#)	Value realized on exercise ($)
Warren D. Knowlton	—	—
Mark S. Burgess	—	—
Ashok Sudan	—	—
Peter T. Lennox	—	—
George M. Lane	—	—
Roger M. Prevot	9.3	—	(1)

(1)	The exercise price exceeded the fair value of the underlying unit on the exercise date.

2008 Pension Benefits

The table below shows the present value of accumulated benefits payable to each of the Named Executive Officers, including the number of years of service credited to each such Named Executive Officer under our pension plan, determined using interest rate and mortality rate assumptions consistent with those used in our financial statements. Information regarding our pension plan can be found under the heading “—Compensation Discussion and Analysis—Benefits—Pension Plans” above.


Name	Plan Name	Number of Years Credited Service (#)	Present Value of Accumulated Benefit ($)
Warren D. Knowlton	Pension Plan	—	—
Mark S. Burgess	Pension Plan	—	—
Ashok Sudan (1)	Pension Plan	18	284,113
Peter T. Lennox	Pension Plan	6	52,568
George M. Lane (2)	Pension Plan	20	517,212
Roger M. Prevot	Pension Plan	18	193,493

(1)	Mr. Sudan is currently eligible for early retirement.

(2)	Mr. Lane retired from our company in April 2009.

Nonqualified Deferred Compensation

In the year ended December 31, 2008, other than with respect to Mr. Knowlton’s pension arrangements described above, we had no nonqualified deferred compensation plans.

Potential Payments Upon Termination or Change of Control

Termination

If we terminate Mr. Knowlton’s employment without cause or Mr. Knowlton terminates his employment for good reason (as those terms are defined in the agreement), Mr. Knowlton will be entitled to receive:

•

any accrued but unpaid base salary, vacation and business expenses;

•

any earned but unpaid bonus for the year prior to his termination of employment;

•

any earned transaction bonus in connection with Blackstone’s sale of their entire interest in our company;

•

a pro rata bonus for the year of his termination, subject to achievement of the relevant performance goals; and

•

retirement payments of $640,000 paid annually on January 31 of each of the ten years following his termination of employment.

If we terminate Mr. Burgess’ employment without cause (including our election not to renew the term) or Mr. Burgess terminates his employment for good reason (as those terms are defined in the agreement) and Mr. Burgess executes a general release of claims, Mr. Burgess will be entitled to receive:

•

a severance payment equal to twice the sum of Mr. Burgess’ base salary and annual bonus (generally determined to be the average annual bonus received over the preceding three fiscal years), paid in monthly installments for a period of 24 months;

•

a pro rata bonus for the year of his termination, subject to achievement of the relevant performance goals;

•

continued health and dental benefits for a period of up to 12 months;

•

outplacement services for up to 12 months not to exceed $25,000; and

•

full vesting of his initial grant of time-based options to purchase limited partnership interests in Graham Packaging Holdings Company.

During the term and for a period of 24 months following the term, Messrs. Knowlton and Burgess are subject to a covenant not to compete with us or solicit our clients or employees.

In the event that Messrs. Sudan or Lennox is terminated by us without cause (as defined in each agreement) (including our election not to renew the term so that the term ends prior to the fifth anniversary of the agreement) or the executive resigns with good reason (as defined in each executive’s agreement), the executive will be entitled to:

•

any accrued but unpaid base salary, earned bonus, vacation and business expenses;

•

a severance payment equal to twice the sum of the executive’s base salary and annual bonus (generally determined to be the average annual bonus received over the preceding three fiscal years), paid in monthly installments for a period of 24 months;

•

a pro rata bonus for the year of termination, subject to achievement of the relevant performance goals;

•

continued health and dental benefits for a period of up to 24 months;

•

continued automobile expense program benefits for up to 12 months;

•

outplacement services for a period of up to 12 months not to exceed $30,000; and

•

full vesting of all equity awards granted to the executive.

If we elect not to extend the term so that the term ends following the fifth anniversary of the agreement, upon the executive’s termination of employment, the executive will be entitled to the same benefits described

above except that the executive will only be entitled to continued monthly payments of one times the sum of the executive’s base salary and bonus for a period of twelve months and health and dental benefits for a period of 12 months, rather than 24 months. During the term and for a period of 18 months following the term (12 months if the executive’s employment is terminated due to our election not to renew the term) Messrs. Sudan and Lennox are subject to a covenant not to compete with us or solicit our clients or employees.

Each Named Executive Officer has also agreed not to reveal our confidential information during the term of employment or thereafter and to assign to us any inventions created by the executive while employed by us. With respect to the employment agreements of Messrs. Knowlton and Burgess, if any payments by us to the executive would result in an excise tax under Section 4999 of the Internal Revenue Code, the executive will be entitled to an additional payment so that the executive will receive a total amount equal to the payments the executive would be entitled to receive without the imposition of the excise tax. These tax gross-ups are subject to certain limitations (including a cutback (i.e., no gross-up payment)) if the amount of the payments subject to the excise tax exceeds the applicable safe harbor by less than 10% (within the meaning of Internal Revenue Code Sections 280G and 4999 and the applicable regulations thereunder).

Change of Control

Upon a change of control that occurs while Mr. Knowlton is employed with us, Mr. Knowlton will vest in his right to receive retirement benefit payments of $640,000 paid annually for ten years following his termination of employment with us. In the event that Blackstone sells its entire interest in us while Mr. Knowlton and Mr. Burgess are employed with us, all of the equity options granted to Mr. Knowlton and Mr. Burgess will vest fully and immediately and Mr. Knowlton will be eligible to receive a transaction bonus. But upon any change of control other than a sale by Blackstone of its entire interest in us while Mr. Knowlton and Mr. Burgess are employed with us, only the time-based equity options granted to Mr. Knowlton and Mr. Burgess will vest fully and immediately and Mr. Knowlton may become eligible to receive a portion of the transaction bonus. Upon a change of control, the vesting of Mr. Knowlton’s and Mr. Burgess’ time-vesting options will accelerate if the executive’s employment was terminated by us without cause or by the executive with good reason in contemplation of such change of control, and the change of control occurred within one year following the termination of employment. However, the vesting of Mr. Burgess’ time-vesting options that are only subject to his continued employment (i.e., contain no performance-vesting condition) will immediately accelerate if his employment is terminated by us without cause or by Mr. Burgess with good reason whether or not a change of control is contemplated. In addition, Mr. Knowlton’s and Mr. Burgess’ exit-vesting options will become vested if Blackstone sells its entire interest in us and achieves certain financial performance goals in a sale that occurs within one year following the executive’s termination of employment by us without cause or by the executive with good reason. In the event that Mr. Knowlton or Mr. Burgess is subject to a tax under Section 4999 of the Internal Revenue Code as a result of a change of control as defined in Section 280G of the Internal Revenue Code, then the executive will receive a gross-up payment so that he will receive a payment equal to the payment that he would have been entitled to receive without the imposition of the excise tax and any additional taxes on the additional payment. These tax gross-ups are subject to certain limitations (including a cutback (i.e., no gross-up payment)) if the amount of the payment subject to the excise tax exceeds the applicable safe harbor by less than 10% (within the meaning of Internal Revenue Code Sections 280G and 4999 and the applicable regulations thereunder).

Under Messrs. Sudan’s and Lennox’s employment agreements, if (A) there is a material reduction in the Named Executive Officer’s target annual bonus after a change of control (as defined in each of their respective employment agreements),

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