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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _____
Commission File Number: 333-53603-01
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)
Securities Registered pursuant to Section 12(b) of the Act: None
Securities Registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), Yes [X] No [ ]; and (2) has been subject to
such filing requirements for the past 90 days, Yes [ ] No [X].
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of the date hereof, 1,000 shares of the registrant's common stock, par value
$.01 per share, are outstanding.
There is no established public trading market for the registrant's common stock,
par value $.01 per share. The aggregate market value of the voting securities
held by non-affiliates of the registrant as of February 28, 2003 was $-0-. As of
February 28, 2003, all of the outstanding common stock, par value $.01 per
share, of the registrant was owned by Graham Packaging Holdings Company, a
Pennsylvania limited partnership. See Item 12, "Security Ownership of Certain
Beneficial Owners and Management."
- ---------------
DOCUMENTS INCORPORATED BY REFERENCE
None.
GPC CAPITAL CORP. II
INDEX
Page
Number
PART I........................................................................3
Item 1. Business.....................................................3
Item 2. Properties...................................................4
Item 3. Legal Proceedings............................................4
Item 4. Submission of Matters to a Vote of Security Holders..........4
PART II.......................................................................5
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters..........................................5
Item 6. Selected Financial Data......................................5
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations..........................5
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk.........................................................6
Item 8. Financial Statements and Supplementary Data..................7
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.........................14
PART III.....................................................................15
Item 10. Directors and Executive Officers of the Registrant..........15
Item 11. Executive Compensation......................................16
Item 12. Security Ownership of Certain Beneficial Owners and
Management..................................................16
Item 13. Certain Relationships and Related Transactions..............16
PART IV......................................................................17
Item 14. Controls and Procedures.....................................17
Item 15. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K.................................................17
2
PART I
Item 1. Business
Unless the context otherwise requires, all references herein to the
"Company," with respect to periods prior to the recapitalization described below
(the "Recapitalization"), refer to the business historically conducted by Graham
Packaging Holdings Company ("Holdings") (which served as the operating entity
for the business prior to the Recapitalization) and one of its predecessors
(Graham Container Corporation), together with Holdings' subsidiaries and certain
affiliates, and, with respect to periods subsequent to the Recapitalization,
refer to Holdings and its subsidiaries. Since the Recapitalization, Graham
Packaging Company, L.P. (the "Operating Company") has been a wholly owned
subsidiary of Holdings. GPC Capital Corp. II is a wholly owned subsidiary of
Holdings. All references to the "Recapitalization" herein shall mean the
collective reference to the recapitalization of Holdings and related
transactions as described under "The Recapitalization" below, including the
initial borrowings under the Existing Senior Credit Agreement (as defined
below), the Senior Discount Offering (as defined below) and the related uses of
proceeds. References to "Continuing Graham Entities" herein refer to Graham
Packaging Corporation ("Graham GP Corp."), Graham Family Growth Partnership or
affiliates thereof or other entities controlled by Donald C. Graham and his
family, and references to "Graham Entities" refer to the Continuing Graham
Entities, Graham Engineering Corporation ("Graham Engineering") and Donald C.
Graham and/or certain entities controlled by Mr. Graham and his family. All
references to "Management" herein shall mean the management of the Company at
the time in question, unless the context indicates otherwise. In addition,
unless otherwise indicated, all sources for all industry data and statistics
contained herein are estimates contained in or derived from internal or industry
sources believed by the Company to be reliable.
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for certain "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities Act"), and
Section 21E of the Securities Exchange Act of 1934, as amended. All statements
other than statements of historical facts included in this Report on Form 10-K,
including, without limitation, statements regarding the Company's future
financial position, economic performance and results of operations, business
strategy, budgets, 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. Important
factors that could cause actual results to differ materially from the Company's
expectations ("cautionary statements") include, without limitation, those
discussed in "Business" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations." All subsequent written and oral
forward-looking statements attributable to the Company, or persons acting on its
behalf, are expressly qualified in their entirety by the cautionary statements.
GPC Capital Corp. II ("CapCo II") was incorporated in Delaware in
January, 1998. CapCo II is a wholly owned subsidiary of Holdings, which was
formed in 1989. CapCo II's sole purpose is to act as co-obligor with Holdings of
the Senior Discount Notes (as defined below under "The Recapitalization"), and
as co-guarantor with Holdings under the Senior Credit Agreement (as defined
below under "Liquidity and Capital Resources"). CapCo II has only nominal
assets, does not conduct any operations and did not receive any of the proceeds
of the offering of the Senior Discount Notes. Accordingly, investors in the
Senior Discount Notes must look solely to the cash flow and assets of Holdings
for payment of the Senior Discount Notes.
The principal executive offices of CapCo II are located at 2401
Pleasant Valley Road, York, Pennsylvania 17402, Telephone (717) 849-8500.
The Recapitalization
The recapitalization (the "Recapitalization") of Holdings was
consummated on February 2, 1998 pursuant to an Agreement and Plan of
Recapitalization, Redemption and Purchase, dated as of December 18, 1997 (the
"Recapitalization Agreement"), by and among (i) Holdings, (ii) the Graham
Entities, and (iii) BMP/Graham Holdings Corporation, a Delaware corporation
3
("Investor LP") formed by Blackstone Capital Partners III Merchant Banking Fund
L.P., and BCP/Graham Holdings L.L.C., a Delaware limited liability company and a
wholly owned subsidiary of Investor LP ("Investor GP").
On February 2, 1998, as part of the Recapitalization, Holdings and
CapCo II (together with Holdings, the "Holdings Issuers"), consummated an
offering (the "Senior Discount Offering") pursuant to Rule 144A under the
Securities Act of $169,000,000 aggregate principal amount at maturity of their
10 3/4% Senior Discount Notes Due 2009, Series A (the "Senior Discount Old
Notes").
In connection with the Recapitalization, the Holdings Issuers entered
into a Registration Rights Agreement with the initial purchasers of the Senior
Discount Old Notes, pursuant to which the Holdings Issuers agreed to exchange
the Senior Discount Old Notes for Notes having the same terms but registered
under the Securities Act and not containing the restrictions on transfer that
are applicable to the Senior Discount Old Notes.
Pursuant to the related Registration Rights Agreement, on September 8,
1998, the Holdings Issuers consummated an exchange offer (the "Senior Discount
Exchange Offer"), pursuant to which the Holdings Issuers issued $169,000,000
aggregate principal amount at maturity of their 10 3/4% Senior Discount Notes
Due 2009, Series B (the "Senior Discount Exchange Notes"), which were registered
under the Securities Act, in exchange for an equal principal amount at maturity
of Senior Discount Old Notes (the Senior Discount Old Notes and the Senior
Discount Exchange Notes being herein called the "Senior Discount Notes").
The Recapitalization also included the initial borrowing by the
Operating Company of $403.5 million in connection with a senior credit facility
(the "Existing Senior Credit Agreement") by and among the Operating Company,
Holdings and a syndicate of lenders.
CapCo II is co-obligor with Holdings of the Senior Discount Notes and
co-guarantor with Holdings under the Senior Credit Agreement.
Employees
As of December 31, 2002, CapCo II had no employees.
Environmental Matters
There are no material environmental matters which relate to compliance
by CapCo II with Federal, State and local environmental provisions.
Intellectual Property
CapCo II does not own any property which is considered intellectual
property.
Item 2. Properties
CapCo II does not own or lease any properties.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of 2002.
4
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
All of CapCo II's common stock, par value $.01 per share ("common
stock"), is owned by Holdings, 2401 Pleasant Valley Road, York, Pennsylvania
17402. There is no established public trading market for CapCo II's common
stock.
In the first quarter of 1998, CapCo II issued 1,000 shares of common
stock to Holdings in a transaction exempt from registration under the Securities
Act pursuant to Section 4(2) of the Securities Act.
As indicated under Item 1, "Business -- The Recapitalization," upon
the Closing of the Recapitalization on February 2, 1998, the Holdings Issuers
consummated an offering pursuant to Rule 144A under the Securities Act of
$169,000,000 aggregate principal amount at maturity of their Senior Discount Old
Notes. Pursuant to the Purchase Agreement dated January 23, 1998 (the "Purchase
Agreement"), the Initial Purchasers, DB Alex. Brown LLC (formerly BT Alex. Brown
Incorporated) and an affiliate, Lazard Freres & Co. LLC and Salomon Brothers
Inc, purchased the Senior Discount Old Notes at a price of 57.173% of the
principal amount, for a discount of 2.361% from the initial offering price of
59.534% or a total discount of $3,990,090. Pursuant to the Purchase Agreement,
the Holdings Issuers also reimbursed the Initial Purchasers for certain
expenses. Pursuant to the Senior Discount Exchange Offer, on September 8, 1998,
the Holdings Issuers issued $169,000,000 aggregate principal amount at maturity
of their Senior Discount Exchange Notes in exchange for an equal principal
amount of Senior Discount Old Notes.
No dividends were paid to the holder of CapCo II's common stock in
2002.
Under the Senior Credit Agreement, the Operating Company is subject to
restrictions on the payment of dividends and other distributions to Holdings, as
described in Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."
Item 6. Selected Financial Data
None.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
None.
Liquidity and Capital Resources
On February 2, 1998, Holdings and CapCo II, as co-obligor, issued
$100.6 million of Senior Discount Old Notes ($169 million aggregate principal
amount at maturity).
On September 8, 1998, Holdings and Capco II consummated the Senior
Discount Exchange Offer for all of their outstanding Senior Discount Old Notes,
and issued in exchange therefor their Senior Discount Exchange Notes, which have
the same terms as the Senior Discount Old Notes, except that the Senior Discount
Exchange Notes are registered under the Securities Act and do not include the
restrictions on transfer applicable to the Senior Discount Old Notes.
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.
All of the existing indebtedness under the Existing Senior Credit
Agreement was refinanced on February 14, 2003 when the Operating Company,
Holdings, CapCo I and a syndicate of lenders entered into a new senior credit
agreement (the "Senior Credit Agreement").
5
The Operating Company's Senior Credit Agreement currently consists of
two term loans to the Operating Company with initial term loan commitments
totaling $670.0 million and a revolving loan facility to the Operating Company
totaling $150.0 million. The obligations of the Operating Company under the
Senior Credit Agreement are guaranteed by Holdings and certain other
subsidiaries of Holdings. After giving effect to the February 14, 2003 Senior
Credit Agreement, the term loans are payable in quarterly installments and
require payments of $2.5 million in 2003, $5.0 million in 2004, $25.0 million in
2005, $50.0 million in 2006, $50.0 million in 2007, $235.0 million in 2008 and
$134.5 million in 2009. The Operating Company expects to fund scheduled debt
repayments from cash from operations and unused lines of credit. The revolving
loan facilities expire on the earlier of February 14, 2008 and the Term Loan
maturity date.
The Senior Credit Agreement contains certain affirmative and negative
covenants as to the operations and financial condition of the Operating Company,
as well as certain restrictions on the payment of dividends and other
distributions to Holdings. Substantially all domestic tangible and intangible
assets of the Operating Company are pledged as collateral pursuant to the terms
of the Senior Credit Agreement.
Under the Senior Credit Agreement, the Operating Company is subject to
restrictions on the payment of dividends or other distributions to Holdings;
provided that, subject to certain limitations, the Operating Company may pay
dividends or other distributions to Holdings:
o in respect of overhead, tax liabilities, legal, accounting and
other professional fees and expenses;
o to fund purchases and redemptions of equity interests of Holdings
or Investor LP held by then present or former officers or
employees of Holdings, the Operating Company or their
Subsidiaries (as defined) or by any employee stock ownership plan
upon such person's death, disability, retirement or termination
of employment or other circumstances with certain annual dollar
limitations; and
o to finance the payment of cash interest payments on the Senior
Discount Notes or any notes issued pursuant to a refinancing of
the Senior Discount Notes.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
6
Item 8. Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
Page
Number
Statement re omission of independent auditors' report . . . . . . . . . . . . 8
Financial Statements . . . . . . . . . . . . . . . . . . .. . . . . . . .. 9
Balance Sheets at December 31, 2002 and 2001. . . . . . . . . . . . . 9
Statements of Operations for the years ended December 31, 2002, 2001
and 2000 . .......................... . . . . . . . . . . . .......... 10
Statements of Shareholder's Equity for the years ended December 31,
2002, 2001 and 2000. ............................. . . . . ............ 11
Statements of Cash Flows for the years ended December 31, 2002, 2001
and 2000 . . . . . . . . . . . . . .................................... 12
Notes to Financial Statements . . . .... . . . . . . . . . . . . . .. 13
7
Report of independent auditors omitted pursuant to Rule 3-11 of Regulation S-X.
8
GPC CAPITAL CORP. II
BALANCE SHEETS
December 31,
------------
2002 2001
---- ----
(In thousands)
Total assets ........................................... -- --
Commitments and contingent liabilities ................. -- --
Total liabilities ...................................... -- --
Total shareholder's equity ............................. -- --
See accompanying notes to financial statements.
9
GPC CAPITAL CORP. II
STATEMENTS OF OPERATIONS
Year Ended December 31,
-----------------------
2002 2001 2000
---- ---- ----
(In thousands)
Net sales .............................................. -- -- --
Operating income ....................................... -- -- --
Interest expense, net .................................. -- -- --
Net income ............................................. -- -- --
See accompanying notes to financial statements.
10
GPC CAPITAL CORP. II
STATEMENTS OF SHAREHOLDER'S EQUITY
(In thousands)
Balance at January 1, 2000 ---
Balance at December 31, 2000 ---
Balance at December 31, 2001 ---
Balance at December 31, 2002 ---
See accompanying notes to financial statements.
11
GPC CAPITAL CORP. II
STATEMENTS OF CASH FLOWS
Year Ended December 31,
-----------------------
2002 2001 2000
---- ---- ----
(In thousands)
Operating activities ............................... -- -- --
Investing activities ............................... -- -- --
Financing activities ............................... -- -- --
See accompanying notes to financial statements.
12
GPC CAPITAL CORP. II
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
1. Basis of Presentation
GPC Capital Corp. II, is a wholly owned subsidiary of Graham Packaging
Holdings Company, a Pennsylvania limited partnership formerly known as Graham
Packaging Company ("Holdings"). 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 (as defined herein). GPC Capital
Corp. II has only nominal assets and does not conduct any independent
operations.
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 cash interest payable beginning January 15,
2003 at 10.75%.
On February 2, 1998, Graham Packaging Company, L.P., a Delaware
limited partnership formerly known as Graham Packaging Holdings I, L.P. (the
"Operating Company") refinanced the majority of its existing credit facilities
in connection with the Recapitalization and entered into a senior credit
agreement (the "Existing Senior Credit Agreement") with a consortium of banks.
All of the existing indebtedness under the Existing Senior Credit Agreement was
refinanced on February 14, 2003 when the Operating Company, Holdings, CapCo I
and a syndicate of lenders entered into a new Senior Credit Agreement (the
"Senior Credit Agreement"). The Senior Credit Agreement consists of two term
loans to the Operating Company with initial term loan commitments totaling
$670.0 million (the "Term Loans" or "Term Loan Facilities") and a $150.0 million
revolving credit facility (the "Revolving Credit Loans"). The obligations of the
Operating Company under the Senior Credit Agreement are guaranteed by Holdings
and certain other subsidiaries of Holdings. After giving effect to the February
14, 2003 Senior Credit Agreement, the Term Loans are payable in quarterly
installments and require payments of $2.5 million in 2003, $5.0 million in 2004,
$25.0 million in 2005, $50.0 million in 2006, $50.0 million in 2007, $235.0
million in 2008 and $134.5 million in 2009. The Revolving Credit Loan facilities
expire on the earlier of February 14, 2008 and the Term Loan maturity date.
Interest is payable at (a) the "Alternate Base Rate" (the higher of the Prime
Rate or the Federal Funds Rate plus 0.50%) plus a margin ranging from 1.75% to
3.25%; or (b) the "Eurodollar Rate" (the applicable interest rate offered to
banks in the London interbank eurocurrency market) plus a margin ranging from
2.75% to 4.25%. A commitment fee of 0.50% is due on the unused portion of the
revolving loan commitment. In addition, the Senior Credit Agreement contains
certain affirmative and negative covenants as to the operations and financial
condition of the Company, as well as certain restrictions on the payment of
dividends and other distributions to Holdings. As of December 31, 2002 and the
closing of the Senior Credit Agreement on February 14, 2003, the Company was in
compliance with all covenants.
On September 8, 1998, Holdings and GPC Capital Corp. II consummated an
exchange offer for all of their outstanding Senior Discount Notes Due 2009 which
had been issued on February 2, 1998 (the "Old Notes"), and issued in exchange
therefor their Senior Discount Notes Due 2009, Series B (the "Exchange Notes"),
which have the same terms as the Old Notes, except that the Exchange Notes are
registered under the Securities Act of 1933 and do not include the restrictions
on transfer applicable to the Old Notes.
13
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
14
PART III
Item 10. Directors and Executive Officers of the Registrant
The directors and executive officers of CapCo II are as follows:
Name Age Position
- ---- --- --------
Philip R. Yates 55 President, Treasurer and Assistant Secretary
and a Director
John E. Hamilton 44 Vice President, Secretary and Assistant
Treasurer and a Director
Chinh E. Chu 36 Vice President and a Director
David A. Stonehill 34 Vice President and a Director
Philip R. Yates has served as Chief Executive Officer of the Operating
Company and GPC Opco GP LLC ("Opco GP"), the general partner of the Operating
Company, since February 8, 2000. From the Recapitalization until February 8,
2000, Mr. Yates served as President and Chief Executive Officer of the Operating
Company and Opco GP. Since the Recapitalization, Mr. Yates has also served as
President and Chief Executive Officer of various subsidiaries of the Operating
Company or their general partner, as President, Treasurer and Assistant
Secretary of CapCo II and GPC Capital Corp I ("CapCo I"), and as a member of the
Boards of Directors of CapCo I and CapCo II. From April 1995 to the
Recapitalization, Mr. Yates served as President and Chief Operating Officer of
the Company. From 1994 to 1995, Mr. Yates served as President of the Company.
Prior to 1994, Mr. Yates served in various management positions with the
Company.
John E. Hamilton has served as Chief Financial Officer or Senior Vice
President, Finance and Administration or Vice President, Finance and
Administration of the Operating Company since the Recapitalization. From the
Recapitalization until January 21, 1999, Mr. Hamilton also served as Chief
Financial Officer of Opco GP and Holdings, and served as Treasurer and Secretary
of Opco GP and of various subsidiaries of the Operating Company or their general
partner. Since the Recapitalization, Mr. Hamilton has served as Vice President,
Secretary and Assistant Treasurer of CapCo I and CapCo II, and as a member of
the Boards of Directors of CapCo I and CapCo II. Subsequent to the
Recapitalization and until January 21, 1999, Mr. Hamilton served as Vice
President, Finance and Administration of Opco GP and Holdings. From November
1992 to the Recapitalization, Mr. Hamilton served as Vice President, Finance and
Administration, North America of the Company. Prior to 1992, Mr. Hamilton served
in various management positions with the Company.
Chinh E. Chu is a Senior Managing Director of Blackstone, which he
joined in 1990. Since the Recapitalization, Mr. Chu has served as Vice
President, Secretary and Assistant Treasurer of Investor LP and Investor GP, as
a Vice President of CapCo I and CapCo II and as a member of the Boards of
Directors of Investor LP, CapCo I and CapCo II. Prior to joining Blackstone, Mr.
Chu was a member of the Mergers and Acquisitions Group of Salomon Brothers Inc
from 1988 to 1990. Mr. Chu currently serves on the Boards of Directors of Haynes
International, Inc. and Nycomed Holdings.
David A. Stonehill is a principal of Blackstone, which he joined in
2000. Prior to joining Blackstone, Mr. Stonehill was a Senior Vice President at
Chartwell Investments Inc where he had been employed since 1996. Mr. Stonehill
has served as Vice President, Assistant Secretary and Assistant Treasurer of
Investor LP and Investor GP, as a Vice President of CapCo I and CapCo II and as
a member of the Boards of Directors of Investor LP, CapCo I and CapCo II since
July 2000. Mr. Stonehill currently serves as a Director of Columbia House
Holdings Inc.
Except as described above, there are no arrangements or understandings
between any director or executive officer and any other person pursuant to which
such person was elected or appointed as a director or executive officer of CapCo
II.
15
Item 11. Executive Compensation
Compensation of Directors
The members of the Board of Directors of CapCo II are not compensated
for their services except that each is reimbursed for his reasonable expenses in
performing his duties as such.
Item 12. Security Ownership of Certain Beneficial Owners and Management
CapCo II has outstanding 1,000 shares of common stock, all of which
are owned by Holdings, 2401 Pleasant Valley Road, York, Pennsylvania 17402.
Item 13. Certain Relationships and Related Transactions
An affiliate of DB Alex. Brown LLC and its affiliate, two of the
initial purchasers of the Old Notes, acquired approximately a 4.8% equity
interest in Investor LP. Bankers Trust Company, an affiliate of DB Alex. Brown
LLC and its affiliate, acted as administrative agent and provided a portion of
the financing under the Senior Credit Agreement entered into in connection with
the Recapitalization, for which it received customary commitment and other fees
and compensation.
The Operating Company's Senior Credit Agreement currently consists of
two term loans to the Operating Company with initial term loan commitments
totaling $670.0 million and a revolving loan facility to the Operating Company
totaling $150.0 million. The obligations of the Operating Company under the
Senior Credit Agreement are guaranteed by Holdings and certain other
subsidiaries of Holdings. After giving effect to the February 14, 2003 Senior
Credit Agreement, the term loans are payable in quarterly installments and
require payments of $2.5 million in 2003, $5.0 million in 2004, $25.0 million in
2005, $50.0 million in 2006, $50.0 million in 2007, $235.0 million in 2008 and
$134.5 million in 2009. The Operating Company expects to fund scheduled debt
repayments from cash from operations and unused lines of credit. The revolving
loan facilities expire on the earlier of February 14, 2008 and the Term Loan
maturity date.
The Senior Credit Agreement contains certain affirmative and negative
covenants as to the operations and financial condition of the Operating Company,
as well as certain restrictions on the payment of dividends and other
distributions to Holdings. Substantially all domestic tangible and intangible
assets of the Operating Company are pledged as collateral pursuant to the terms
of the Senior Credit Agreement.
Pursuant to the Purchase Agreement dated January 23, 1998, the initial
purchasers, DB Alex. Brown LLC and an affiliate, Lazard Freres & Co. LLC and
Salomon Brothers Inc, purchased the Senior Discount Old Notes at a price of
57.173% of the principal amount, for a discount of 2.361% from the initial
offering price of 59.534% or a total discount of $3,990,090. Pursuant to the
Purchase Agreement, the Holdings Issuers also reimbursed the initial purchasers
for certain expenses.
16
PART IV
Item 14. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
The Company's principal executive officer and principal
financial officer, after evaluating the effectiveness of the
Company's disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14(c) and 15d-14(c)) as of a date
within ninety days before the filing date of this report,
have concluded that as of such date the Company's disclosure
controls and procedures were adequate and effective to
ensure that material information relating to GPC Capital
Corp. II would be made known to them by others within the
company.
(b) Changes in Internal Controls
There were no significant changes in the Company's internal
controls or in other factors that could significantly affect
GPC Capital Corp. II's disclosure controls and procedures
subsequent to the date of their evaluation, nor were there
any significant deficiencies or material weaknesses in GPC
Capital Corp. II's internal controls. As a result, no
corrective actions were required or undertaken.
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The following Financial Statement Schedules and Reports are
included herein:
None.
All other schedules are not submitted because they are not applicable
or not required or because the required information is included in the financial
statements or the notes thereto.
(b) The following exhibits are filed herewith or incorporated
herein by reference:
Exhibit
Number Description of Exhibit
- ------ ----------------------
2.1 -- Agreement and Plan of Recapitalization, Redemption and Purchase
dated as of December 18, 1997, as amended as of January 29, 1998, by
and among Graham Packaging Holdings Company, BCP/Graham Holdings
L.L.C., BMP/Graham Holdings Corporation and the other parties named
therein (incorporated herein by reference to Exhibit 2.1 to the
Registration Statement on Form S-4 (File No. 333-53603-01)).
3.1 -- Certificate of Incorporation of GPC Capital Corp. II (incorporated
herein by reference to Exhibit 3.7 to the Registration Statement on
Form S-4 (File No. 333-53603-01)).
3.2 -- By-Laws of GPC Capital Corp. II (incorporated herein by reference
to Exhibit 3.8 to the Registration Statement on Form S-4 (File No.
333-53603-01)).
10.1 -- Credit Agreement dated as of February 14, 2003 among Graham
Packaging Holdings Company, Graham Packaging Company, GPC Capital
Corp. I, the lending institutions identified in the Credit Agreement
and the agents identified in the Credit Agreement (incorporated herein
by reference to Exhibit 10.1 to the Annual Report on Form 10-K filed
by Graham Packaging Holdings Company for the fiscal year ended
December 31, 2002 (File No. 333-53603-03)).
10.2 -- Indenture dated as of February 2, 1998 among Graham Packaging
Holdings Company and GPC Capital Corp. II and The Bank of New York, as
Trustee, relating to the Senior Discount Notes Due 2009 of Graham
Packaging Holdings Company and GPC Capital Corp. II (incorporated
17
herein by reference to Exhibit 4.7 to the Registration Statement on
Form S-4 (File No. 333-53603-01)).
24 -- Power of Attorney-- see page 22 of Form 10-K.
99.1 -- Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(c) Reports on Form 8-K
No Reports on Form 8-K were required to be filed during the quarter
ended December 31, 2002.
18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Dated: February 24, 2003
GPC CAPITAL CORP. II
(Registrant)
By: /s/ John E. Hamilton
Name: John E. Hamilton
Title: Vice President
(chief accounting officer and duly
authorized officer)
19
CERTIFICATION
I, Philip R. Yates, certify that:
1) I have reviewed this Annual Report on Form 10-K of GPC Capital Corp.
II;
2) Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;
3) Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;
4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which the
annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures on our
evaluation as of the Evaluation Date;
5) The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6) The registrant's other certifying officers and I have indicated in
this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: February 24, 2003
By: /s/ Philip R. Yates
-----------------------------------
Philip R. Yates
President, Treasurer and Assistant
Secretary and Director
(chief executive officer)
20
CERTIFICATION
I, John E. Hamilton, certify that:
1) I have reviewed this Annual Report on Form 10-K of GPC Capital Corp.
II;
2) Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;
3) Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;
4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which the
annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures on our
evaluation as of the Evaluation Date;
5) The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6) The registrant's other certifying officers and I have indicated in
this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: February 24, 2003
By: /s/ John E. Hamilton
------------------------------
John E. Hamilton
Vice President, Secretary and Assistant
Treasurer and Director
(chief financial officer)
21
POWER OF ATTORNEY
We, the undersigned officers and directors of GPC Capital Corp. II, do
hereby constitute and appoint Philip R. Yates and John E. Hamilton, or either of
them, our true and lawful attorneys and agents, to sign for us, or any of us, in
our names in the capacities indicated below, any and all amendments to this
report, and to cause the same to be filed with the Securities and Exchange
Commission, granting to said attorneys, and each of them, full power and
authority to do and perform any act and thing necessary or appropriate to be
done in the premises, as fully to all intents and purposes as the undersigned
could do if personally present, and we do hereby ratify and confirm all that
said attorneys and agents, or either of them, shall do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed on the 24th day of February, 2003 by the following
persons on behalf of the registrant and in the capacities indicated, with
respect to GPC Capital Corp. II:
Signature Title
--------- -----
/s/ Philip R. Yates President, Treasurer and Assistant Secretary
Philip R. Yates And Director (Principal Executive Officer)
/s/ John E. Hamilton Vice President, Secretary and Assistant
John E. Hamilton Treasurer and Director (Principal Financial
Officer and Principal Accounting Officer)
/s/ Chinh E. Chu Vice President and Director
Chinh E. Chu
/s/ David A. Stonehill Vice President and Director
David A. Stonehill
22
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.
No annual report to security holders covering the registrant's last
fiscal year has been sent to security holders. No proxy statement, form of proxy
or other proxy soliciting material has been sent to more than 10 of the
registrant's security holders with respect to any annual or other meeting of
security holders.
23