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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 29, 2003
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].
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). 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 29, 2003 and December 31, 2002.......................... 3
CONDENSED STATEMENTS OF OPERATIONS - For the Three and Six Months
Ended June 29, 2003 and June 30, 2002........................... 4
CONDENSED STATEMENTS OF SHAREHOLDER'S EQUITY - For the Year
Ended December 31, 2002 and Six Months ended June 29, 2003...... 5
CONDENSED STATEMENTS OF CASH FLOWS - For the Six Months
Ended June 29, 2003 and June 30, 2002........................... 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
Item 4: Controls and Procedures......................................... 10
PART II. OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K................................ 11
Signature: .............................................................. 12
2
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
GPC CAPITAL CORP. II
CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
June 29, December 31,
2003 2002
---- ----
Total assets ................................. -- --
Commitments and contingent liabilities ....... -- --
Total liabilities ............................ -- --
Total shareholder's equity ................... -- --
See accompanying notes to the condensed financial statements.
3
GPC CAPITAL CORP. II
CONDENSED STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
------------------ ----------------
June 29, June 30, June 29, June 30,
2003 2002 2003 2002
---- ---- ---- ----
Net sales ...................... -- -- -- --
Operating income ............... -- -- -- --
Interest expense, net .......... -- -- -- --
Net income ..................... -- -- -- --
See accompanying notes to the condensed financial statements.
4
GPC CAPITAL CORP. II
CONDENSED STATEMENTS OF SHAREHOLDER'S EQUITY
(In thousands)
(Unaudited)
Balance at January 1, 2002.............................. --
Balance at December 31, 2002............................ --
Balance at June 29, 2003................................ --
See accompanying notes to the condensed financial statements.
5
GPC CAPITAL CORP. II
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
----------------
June 29, June 30,
2003 2002
---- ----
Operating activities........................ -- --
Investing activities........................ -- --
Financing activities........................ -- --
See accompanying notes to the condensed 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 (as
defined herein). GPC Capital Corp. II has only nominal assets, does not conduct
any independent operations and during the six months ended June 29, 2003 and
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 29, 2003 and the related Annual
Report on Form 10-K of GPC Capital Corp. II.
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%.
On February 14, 2003 the Operating Company refinanced the majority of
its prior credit facilities and entered into a senior credit agreement (the
"Senior Credit Agreement") with a consortium of banks. The Senior Credit
Agreement consisted of two term loans to the Operating Company with initial term
loan commitments totaling $670.0 million and a $150.0 million revolving credit
facility. The unused availability of the revolving credit facility under the
Senior Credit Agreement at June 29, 2003 was $122.2 million. 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. On
June 29, 2003 the Company was in compliance with all covenants.
On May 28, 2003 the Operating Company and GPC Capital Corp I issued
$100.0 million aggregate principal amount of 8 3/4% Senior Subordinated Notes
due 2008 pursuant to Rule 144A under the Securities Act of 1933, as amended. The
notes were issued under the February 2, 1998 Senior Subordinated Indenture. The
notes were issued in exchange for, and in full satisfaction of, the $100.0
million aggregate principal amount of the Tranche II term loan then outstanding
under the Operating Company's Senior Credit Agreement.
As a result of the refinancing on February 14, 2003 the Operating
Company incurred debt issuance fees and other related costs of approximately $20
million, of which $0.7 million were expensed and the remaining amount will be
recognized as interest expense over five to seven years based upon the terms of
the related debt instruments. Additionally, $5.5 million of deferred debt
issuance fees associated with the prior senior credit agreement were written
off.
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%.
On February 14, 2003 the Operating Company refinanced the majority of
its prior credit facilities and entered into a senior credit agreement (the
"Senior Credit Agreement") with a consortium of banks. The Senior Credit
Agreement consisted of two term loans to the Operating Company with initial term
loan commitments totaling $670.0 million and a $150.0 million revolving credit
facility. The unused availability of the revolving credit facility under the
Senior Credit Agreement at June 29, 2003 was $122.2 million. 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. On
June 29, 2003 the Company was in compliance with all covenants.
On May 28, 2003 the Operating Company and GPC Capital Corp I issued
$100.0 million aggregate principal amount of 8 3/4% Senior Subordinated Notes
due 2008 pursuant to Rule 144A under the Securities Act of 1933, as amended. The
notes were issued under the February 2, 1998 Senior Subordinated Indenture. The
notes were issued in exchange for, and in full satisfaction of, the $100.0
million aggregate principal amount of the Tranche II term loan then outstanding
under the Operating Company's Senior Credit Agreement.
As a result of the refinancing on February 14, 2003 the Operating
Company incurred debt issuance fees and other related costs of approximately $20
million, of which $0.7 million were expensed and the remaining amount will be
recognized as interest expense over five to seven years based upon the terms of
the related debt instruments. Additionally, $5.5 million of deferred debt
issuance fees associated with the prior senior credit agreement were written
off.
8
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
9
Item 4. 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 the end of the period covered by 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.
10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 31.1 Certification required by Rule 15d-14(a).
Exhibit 31.2 Certification required by Rule 15d-14(a).
(b) Reports on Form 8-K
No reports on Form 8-K were required to be filed during the quarter
ended June 29, 2003.
11
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, 2003
GPC CAPITAL CORP. II
(Registrant)
By: /s/ John E. Hamilton
------------------------------------------
John E. Hamilton
Vice President, Secretary and Assistant
Treasurer and Director
(chief accounting officer and duly authorized
officer)
12
Exhibit 31.1
CERTIFICATION
I, Philip R. Yates, certify that:
1) I have reviewed this quarterly report on Form 10-Q of GPC Capital Corp. II;
2) Based on my knowledge, this 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
report;
3) Based on my knowledge, the financial statements, and other financial
information included in this 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 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-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, 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 this report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5) The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: August 13, 2003
By: /s/ Philip R. Yates
----------------------------------
Philip R. Yates
President, Treasurer and Assistant Secretary
and Director
(chief executive officer)
13
Exhibit 31.2
CERTIFICATION
I, John E. Hamilton, certify that:
1) I have reviewed this quarterly report on Form 10-Q of GPC Capital Corp. II;
2) Based on my knowledge, this 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
report;
3) Based on my knowledge, the financial statements, and other financial
information included in this 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 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-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, 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 this report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5) The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: August 13, 2003
By: /s/ John E. Hamilton
-----------------------------------
John E. Hamilton
Vice President, Secretary and Assistant
Treasurer and Director
(chief financial officer)
14