Graham Packaging Reports Gain in Sales and Operating Income for 3rd Quarter

YORK, Pa., Nov. 12, 2003 -- Graham Packaging Holdings Company, parent company of Graham Packaging Company, L.P., today reported in its Form 10-Q filed with the U.S. Securities and Exchange Commission a 19.8 percent gain in operating income for the third quarter of 2003, compared to the third quarter of 2002.

Chief Financial Officer John E. Hamilton said operating income was $25.4 million for the quarter ended September 28, 2003, compared to $21.2 million for the quarter ended September 29, 2002. The prior year included impairment charges of $4.3 million.

Hamilton said operating income for the nine-month period ended September 28, 2003, was $89.6 million, compared to $81.6 million for the previous nine-month period, or a gain of 9.8 percent. These figures include impairment charges of $0.6 million and $4.3 million respectively.

Net sales for the third quarter were $243.9 million, an increase of $16.8 million, or 7.4 percent, on an 11.6 percent gain in units sold, compared to the third quarter of last year.

Net sales totaled $737.7 million for the first nine months of 2003, an increase of $42.7 million, or 6.1 percent, on a 6.9 percent increase in units sold, compared to the first nine months of 2002.

"The turnaround and strengthening in our customers' order patterns that we have been anticipating have not fully arrived, but despite being well short of our internal goals this year, we have continued to make progress," CEO Philip R. Yates said. "We have stayed on course by remaining committed to our strategy of establishing and deepening relationships with major consumer- products companies, focusing on improving operating efficiencies, and facilitating the ongoing market conversion of glass, metal, and paper packaging to plastic packaging."

As part of this continuing conversion process, Yates noted, the company recently announced two new locations: one in Mexicali, Mexico, to serve Frito- Lay, and the other in Casa Grande, Arizona, to serve Abbott Laboratories.

During this year, Graham completed a European restructuring that included the closing or sale of seven non-strategic locations. Excluding business impacted by this restructuring, sales for the third quarter of 2003 would have increased approximately 9 percent compared to the same period in 2002 and unit volume would have increased approximately 14 percent. For the nine-month period, sales and unit volume would have increased 10 percent compared to 2002.

According to Hamilton, the company's net income was $1.2 million for the third quarter of this year, compared to a loss of $1.1 million for the same period in 2002. For the first nine months, net income was $9.7 million compared to $16.1 million for the same period in 2002. Hamilton added that net interest expense increased by $12.5 million during the first nine months of 2003, in part due to the $6.2 million write-off of debt issuance fees and the related refinancing of the company's senior credit agreement during the first quarter. This refinancing increased liquidity and extended the maturity dates of the company's revolving credit facility and term loans.

Graham Packaging, based in York, Pennsylvania, USA, is a worldwide leader in the design, manufacture and sale of customized blow-molded plastic containers for the branded food and beverage, household and personal care, and automotive lubricants markets. The company employs approximately 3,900 people at 56 plants throughout North America, Europe and South America. It produced more than nine billion units and had total worldwide net sales of $906.7 million in 2002. The Blackstone Group of New York is the majority owner of Graham Packaging.

This news release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. The company's future operating results will be affected by various uncertainties and risk factors, many of which are beyond the company's control. For a description of these uncertainties and risk factors, and for a more complete description of the company's results of operations, see the company's Annual Report on Form 10-K for the year ended December 31, 2002, filed with the Securities and Exchange Commission.