10-Q 1 capco10q2002-2ndq.txt 2ND QTR 2002 - GPC CAPITAL CORP. II UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549-1004 FORM 10-Q (Mark One) [ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2002 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________ to ____________________ Commission file number: 333-53603-01 GPC CAPITAL CORP. II ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 23-2952404 ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 2401 Pleasant Valley Road York, Pennsylvania ---------------------------------------- (Address of principal executive offices) 17402 ---------- (zip code) (717) 849-8500 ---------------------------------------------------- (Registrant's telephone number, including area code) Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), Yes [X] No [ ]; and (2) has been subject to such filing requirements for the past 90 days, Yes [ ] No [X]. As of the date hereof, 1,000 shares of the registrant's common stock, par value $.01 per share, are outstanding. 1 GPC CAPITAL CORP. II INDEX PART I. FINANCIAL INFORMATION Page Number Item 1: Condensed Financial Statements: CONDENSED BALANCE SHEETS - At June 30, 2002 and December 31, 2001...................... 3 CONDENSED STATEMENTS OF OPERATIONS - For the Three and Six Months Ended June 30, 2002 and July 1, 2001......... 4 CONDENSED STATEMENTS OF SHAREHOLDER'S EQUITY - For the Year Ended December 31, 2001 and Six Months Ended June 30, 2002.. 5 CONDENSED STATEMENTS OF CASH FLOWS - For the Six Months Ended June 30, 2002 and July 1, 2001........................ 6 NOTES TO CONDENSED FINANCIAL STATEMENTS........................ 7 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations.......................................... 8 Item 3: Quantitative and Qualitative Disclosures About Market Risk..... 9 PART II. OTHER INFORMATION Item 6: Exhibits and Reports on Form 8-K............................... 10 Signature:............................................................. 11 2 PART I. FINANCIAL INFORMATION Item 1. Condensed Financial Statements GPC CAPITAL CORP. II CONDENSED BALANCE SHEETS (in thousands) (Unaudited) June 30, December 31, 2002 2001 -------- ------------ Total assets............................. -- -- Commitments and contingent liabilities... -- -- Total liabilities........................ -- -- Total shareholder's equity............... -- -- See accompanying notes to the financial statements. 3 GPC CAPITAL CORP. II CONDENSED STATEMENTS OF OPERATIONS (in thousands) (Unaudited) Three Months Ended Six Months Ended ------------------ ------------------ June 30, July 1, June 30, July 1, 2002 2001 2002 2001 -------- ------- -------- ------- Net Sales................. -- -- -- -- Operating Income.......... -- -- -- -- Interest Expense, Net..... -- -- -- -- Net Income................ -- -- -- -- See accompanying notes to the financial statements. 4 GPC CAPITAL CORP. II CONDENSED STATEMENTS OF SHAREHOLDER'S EQUITY (in thousands) (Unaudited) Balance at January 1, 2001.............. -- Balance at December 31, 2001............ -- Balance at June 30, 2002................ -- See accompanying notes to the financial statements. 5 GPC CAPITAL CORP. II CONDENSED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Six Months Ended ------------------ June 30, July 1, 2002 2001 -------- ------- Operating activities......... -- -- Investing activities......... -- -- Financing activities......... -- -- See accompanying notes to the financial statements. 6 GPC CAPITAL CORP. II NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The accompanying unaudited condensed financial statements of GPC Capital Corp. II have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and therefore do not include all of the information and footnotes required by generally accepted accounting principles for complete annual financial statements. In the opinion of management, all adjustments (consisting only of usual recurring adjustments considered necessary for a fair presentation) are reflected in the condensed financial statements. GPC Capital Corp. II, a wholly owned subsidiary of Graham Packaging Holdings Company, a Pennsylvania limited partnership ("Holdings"), was incorporated in Delaware in January 1998. All entities and assets owned by Holdings are referred to collectively as the "Company." The sole purpose of GPC Capital Corp. II is to act as co-obligor with Holdings of the Senior Discount Notes and as co-guarantor with Holdings under the Senior Credit Agreement and Amendments (as defined herein). GPC Capital Corp. II has only nominal assets, does not conduct any independent operations and during the six months ended June 30, 2002, did not execute any transactions. GPC Capital Corp. II has authorized and issued 1,000 shares of common stock with a par value of $.01 per share. For additional information, see the related Quarterly Report on Form 10-Q of Holdings for the quarter ended June 30, 2002. 2. Debt Arrangements On February 2, 1998, Holdings and GPC Capital Corp. II, as co-obligor, issued $100.6 million gross proceeds of Senior Discount Notes Due 2009 ($169 million aggregate principal amount at maturity). The Senior Discount Notes mature on January 15, 2009, with interest payable at 10.75%. Cash interest on the Senior Discount Notes does not accrue until January 15, 2003. The Operating Company's Senior Credit Agreement currently consists of four term loans to the Operating Company with initial term loan commitments totaling $570 million and two revolving loan facilities to the Operating Company totaling $255 million. The obligations of the Operating Company under the Senior Credit Agreement are guaranteed by Holdings and certain other subsidiaries of Holdings. The term loans are payable in quarterly installments through January 31, 2007, and require payments of $25.0 million in 2002, $27.5 million in 2003, $93.0 million in 2004, $64.9 million in 2005 and $242.7 million in 2006. The Operating Company expects to fund scheduled dept repayments from cash from operations and unused lines of credit. The revolving loan facilities expire on January 31, 2004. 3. Subsequent Event - Equity Offering and Concurrent Transactions During the three months ended June 30, 2002, Holdings announced that it was pursuing an initial public offering. In connection with the offering, Holdings planned to effect an internal reorganization in which GPC Capital Corp. II, a wholly-owned subsidiary of Holdings, would change its name to Graham Packaging Company Inc., exchange shares of newly-issued common stock for all of the partnership interests of Holdings and exchange options to purchase partnership interests in Holdings for options to purchase shares of Graham Packaging Company, Inc. In connection with the proposed offering, Graham Packaging Company, L.P. and GPC Capital Corp. I, subsidiaries of Holdings, announced their proposed offering of $100 million aggregate principal amount of 8 3/4% senior subordinated notes due 2008, and GPC Capital Corp. II commenced a tender offer and consent solicitation for all $169 million aggregate principal amount of Senior Discount Notes due 2009 co-issued by it and Holdings. On July 23, 2002 Holdings announced that it had postponed its plans for the initial public offering due to the recent adverse conditions in the stock market. In connection with the postponement of the initial public offering, Holdings also postponed the proposed senior subordinated notes offering and GPC Capital Corp. II terminated its tender offer and consent solicitation. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995 The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain "forward-looking statements." This Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended ("the Exchange Act"). All statements other than historical facts included in this Report on Form 10-Q, including without limitation, statements regarding the Company's future financial position, business strategy, anticipated capital expenditures, anticipated business acquisitions, projected costs and plans and objectives of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe," or "continue" or the negative thereof or variations thereon or similar terminology. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, the Company can give no assurance that such expectations will prove to have been correct. All entities and assets owned by Holdings are referred to collectively as the "Company." Results of Operations None Liquidity and Capital Resources On February 2, 1998, Holdings and GPC Capital Corp. II, as co-obligor, issued $100.6 million gross proceeds of Senior Discount Notes Due 2009 ($169 million aggregate principal amount at maturity). The Senior Discount Notes mature on January 15, 2009, with interest payable at 10.75%. Cash interest on the Senior Discount Notes does not accrue until January 15, 2003. The Operating Company's Senior Credit Agreement currently consists of four term loans to the Operating Company with initial term loan commitments totaling $570 million and two revolving loan facilities to the Operating Company totaling $255 million. The obligations of the Operating Company under the Senior Credit Agreement are guaranteed by Holdings and certain other subsidiaries of Holdings. The term loans are payable in quarterly installments through January 31, 2007, and require payments of $25.0 million in 2002, $27.5 million in 2003, $93.0 million in 2004, $64.9 million in 2005 and $242.7 million in 2006. The Operating Company expects to fund scheduled dept repayments from cash from operations and unused lines of credit. The revolving loan facilities expire on January 31, 2004. 8 Item 3. Quantitative and Qualitative Disclosures About Market Risk Not applicable. 9 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits None (b) Reports on Form 8-K No reports on Form 8-K were required to be filed during the quarter ended June 30, 2002. 10 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: August 13, 2002 GPC CAPITAL CORP. II (Registrant) By: /s/ John E. Hamilton ----------------------------------- John E. Hamilton Vice President (chief accounting officer and duly authorized officer) 11 CERTIFICATION Each of the undersigned hereby certifies in his capacity as an officer of GPC Capital Corp. II that the Quarterly Report of the Company on Form 10-Q for the quarterly period ended June 30, 2002 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition of the Company at the end of such period and the results of operations of the Company for such period. Dated: August 13, 2002 By: /s/ Philip R. Yates ----------------------------------- Philip R. Yates President, Treasurer and Assistant Secretary and Director (chief executive officer) By: /s/ John E. Hamilton ----------------------------------- John E. Hamilton Vice President, Secretary and Assistant Treasurer and Director (chief financial officer) 12