1478085--3/5/2010--Graham_Packaging_Co

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Risks Related to Our Business Our industry is very competitive and increased competition could reduce prices and our profit margins. If we are unable to develop product innovations and improve our production technology and expertise, we could lose customers or market share. We may be unable to protect our proprietary technology from infringement. We would lose a significant source of revenues and profits if we lost any of our largest customers. 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. Increases in resin prices, relative to alternative packaging materials, and reductions in resin supplies could significantly slow our growth and disrupt our operations. Our international operations are subject to a variety of risks related to foreign currencies and local law in several countries. 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. 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. Our ability to operate effectively could be impaired if we lost key personnel. 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 operations and profitability could suffer if we experience labor relations problems. Our ability to expand our operations could be adversely affected if we lose access to additional blow molding equipment. Our operations could expose us to substantial environmental costs and liabilities. If we were deemed an investment company under the Investment Company Act of 1940 (the 1940 Act ) as a result of our ownership of Holdings, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business. We had net losses in recent years and may not generate net income in the future. We will be required to pay our pre-IPO stockholders and the Graham Family for certain tax benefits we may claim arising in connection with our IPO and related transactions, which amounts are expected to be material. Our only material asset is our interest in Holdings, and we are accordingly dependent upon distributions from Holdings to pay dividends and taxes and other expenses, including payments under the income tax receivable agreements. Blackstone controls us and may have conflicts of interest with us in the future. Risks Related to Our Indebtedness Our indebtedness could adversely affect our cash flow and our ability to operate and grow our business. 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. 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. We may obtain less favorable terms when we attempt to renew or replace our senior secured revolving credit facility and our senior secured term loan facility. In the event that a party acquires beneficial ownership representing voting power in Holdings greater than the voting power represented by the interests beneficially owned by Blackstone, it will trigger an event of default under our Credit Agreement. Risks Related to Our Common Stock The market price of our common stock may be volatile, which could cause the value of our common stock to decline. If we or our pre-IPO investors sell our common stock or exchange Holdings partnership units for additional shares of our common stock, the market price of our common stock could decline. 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 have anti-takeover provisions in our organizational documents that may discourage a change of control. We are a controlled company within the meaning of the New York Stock Exchange 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.

Full 10-K form ▸

1478085--3/5/2010--Graham_Packaging_Co_Inc.