CONSOLIDATED CONTAINER CO LLC - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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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, 1999

OR

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

FOR THE TRANSITION PERIOD FROM TO

Commission File Number: 333-88157

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CONSOLIDATED CONTAINER COMPANY LLC
(Exact name of registrant as specified in its charter)

DELAWARE 75-2825338
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

5605 N. MACARTHUR BLVD., SUITE 360, IRVING, 75038
TEXAS (Zip Code)
(Address of principal executive offices)

(972) 518-9150
(Registrant's telephone number, including area code)

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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), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /

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 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. / /

None of the registrant's member units were held by nonaffiliates as of
March 27, 2000.

The number of member units outstanding as of March 27, 2000 is 1,000.

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TABLE OF CONTENTS

PAGE NO.
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PART I

ITEM 1. Business.................................................... 3

ITEM 2. Properties.................................................. 8

ITEM 3. Legal Proceedings........................................... 10

ITEM 4. Submission of Matters to a Vote of Security Holders......... 10

PART II

ITEM 5. Market for the Registrant's Common Equity and Related 11
Stockholder Matters.......................................

ITEM 6. Selected Financial Data..................................... 11

ITEM 7. Management's Discussion and Analysis of Financial Condition 13
and Results of Operations.................................

ITEM 8. Financial Statements and Supplementary Data................. 18

ITEM 9. Changes in and Disagreements with Accountants on Accounting 18
and Financial Disclosure..................................

PART III

ITEM 10. Management Committee and Executive Officers of the 19
Registrant................................................

ITEM 11. Executive Compensation...................................... 25

ITEM 12. Security Ownership of Certain Beneficial Owners and 26
Management................................................

ITEM 13. Certain Relationships and Related Transactions.............. 28

PART IV

ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 34
8-K.......................................................

35
Index to Exhibits...........................................

2

PART I

ITEM 1: BUSINESS

(A) GENERAL DEVELOPMENT OF BUSINESS

On July 2, 1999, the plastic packaging assets formerly held by Franklin
Plastics, Inc., a subsidiary of Suiza Foods Corporation ("Franklin Plastics"),
and the former plastic packaging companies, Reid Plastics, Inc. and its
subsidiaries ("Reid Plastics") and Plastics Containers, Inc. and its
subsidiaries ("Plastic Containers") were contributed and merged into
Consolidated Container Company LLC, a Delaware limited liability company (the
"Company"), and its subsidiaries. In connection with these and related
transactions (collectively, the "Transactions"), the Company and its wholly
owned subsidiary, Consolidated Container Capital, Inc., issued their $185.0
million aggregate principal amount of 10 1/8% Senior Subordinated Notes due 2009
(the "Notes") and the Company borrowed debt under its new Senior Credit Facility
(as defined below). Throughout this Annual Report on Form 10-K, references to
"pro forma" financial results give effect to the Transactions and certain
acquisitions by Franklin Plastics as if they had occurred as of the beginning of
the period presented.

The Company is wholly owned by Consolidated Container Holdings LLC, a
Delaware limited liability company ("Consolidated Container Holdings").
Consolidated Container Holdings is 30.4% owned by Reid Plastics Holdings, Inc.
and 20.4% owned by Vestar Packaging LLC, each of which are controlled by Vestar
Capital Partners III, L.P. and its affiliates, and 48.9% owned by a subsidiary
of Suiza Foods Corporation.

(B) NARRATIVE DESCRIPTION OF BUSINESS

We are a leading domestic developer, manufacturer and marketer of rigid
plastic containers for many of the world's largest branded consumer products and
beverage companies. In 1999, on a pro forma basis, we sold over 4 billion
containers to the dairy, water, other beverage, food, household chemical and
personal care, automotive and agricultural and industrial chemical sectors. Our
container product line ranges in size from two ounce to six-gallon containers
and consists of single and multi-layer plastic containers made from a variety of
plastic resins, including high-density polyethylene ("HDPE"), polycarbonate
("PC"), polypropylene ("PP"), polyethylene terephthalate ("PET") and polyvinyl
chloride ("PVC").

We serve our customers with a wide range of manufacturing capabilities and
services through a nationwide network of 70 strategically located manufacturing
facilities and through a nationally recognized research, development and
engineering center. In addition, we have five international manufacturing
facilities in Canada, Puerto Rico and Mexico. Twenty-seven of our manufacturing
facilities are located on-site at our customers' plants. On-site facilities
enable us to work more closely with these customers, to facilitate just-in-time
inventory management, to eliminate costly shipping and handling charges, to
reduce working capital needs and to foster the development of long-term
manufacturing and distribution relationships. Our nationally recognized
research, development and engineering center creates innovative product designs
for our customers and process improvements in the manufacture of our containers.
Our customers rely on our design and technical expertise because package design
is a critical component in many of their marketing programs.

PRINCIPAL PRODUCT CATEGORIES/MARKETS

We summarize below our seven principal product categories.

DAIRY. Our principal products in this sector include one gallon and half
gallon HDPE bottles, which we sell primarily to dairies for sale through retail
channels. We have worked with our customers to innovate several products in this
sector, including single-serve HDPE and PET milk containers and

3

"sleeved" milk bottles. On a pro forma basis, our dairy products generated
approximately 22.9% of our net sales for the year ended December 31, 1999.

WATER. Our principal products in this sector include one gallon and ten
quart HDPE bottles, which we sell primarily to water producers for sale through
retail channels, and three, five and six gallon PC bottles for the bulk
packaging of water for water coolers. On a pro forma basis, our water products
generated approximately 14.1% of our net sales for the year ended December 31,
1999.

OTHER BEVERAGE. We manufacture a wide variety of containers for other
beverage products using HDPE and PET, consisting of high value-added technically
advanced containers for products such as fruit juices and fruit drinks. We
manufacture a wide array of products in this sector, ranging from six to 96
ounce HDPE bottles for fruit drinks and multiple layer one-gallon HDPE
containers for fruit juice. On a pro forma basis, our other beverage products
generated approximately 15.6% of our net sales for the year ended December 31,
1999.

FOOD. We manufacture a wide range of food containers using HDPE, PP and PET
for a variety of food products, such as ketchup, maple syrup, edible oils and
salsa. We manufacture many innovative products, such as squeezable ketchup
bottles, high-gloss salsa containers and reformable containers, which permit
reheating after the filling process without distortion to the container and
which are used for infant formula. On a pro forma basis, our food products
generated approximately 10.5% of our net sales for the year ended December 31,
1999.

HOUSEHOLD CHEMICALS & PERSONAL CARE. Our containers for household chemical
products, made mainly from HDPE and also from PET, are used for laundry
detergents, hard surface cleaners, dishwashing liquids, bleaches and fabric
softeners. Our containers for personal care products, made from HDPE and PVC,
are used for shampoos, conditioners and other hair care products. On a pro forma
basis, our household chemicals and personal care products generated
approximately 14.2% of our net sales for the year ended December 31, 1999.

AUTOMOTIVE. We manufacture primarily one quart HDPE bottles for motor oil
and one gallon HDPE containers for anti-freeze and windshield wash solvent. On a
pro forma basis, our automotive products generated approximately 8.9% of our net
sales for the year ended December 31, 1999.

AGRICULTURAL, INDUSTRIAL & OTHER. We manufacture containers for use by
industrial and agricultural manufacturers for products such as insect
repellents, high strength cleaners packaged for commercial and industrial use
and fertilizers. Our Conolene(TM) process creates chemical-resistant containers,
which are leading products in this sector. Our other products in this category
include containers for medical supplies and pharmaceutical supplies, shipping
crates, water cooler valves and bottle caps. On a pro forma basis, our
agricultural, industrial and other products generated approximately 13.8% of our
net sales for the year ended December 31, 1999.

CUSTOMERS

Our customers include many of the major branded consumer products companies
and most bottled water companies, national juice producers, large food concerns,
regional dairies, and chemical and automotive product manufacturers in the
United States. For the period ended July 2, 1999 through December 31, 1999 sales
to Procter & Gamble, our largest customer, accounted for approximately 15% of
our net sales.

In many cases, we are the sole supplier of substantially all of our
customers' container requirements for specific products or particular container
sizes. In addition, we often have more than one contract with a particular
customer because we have individual contracts for specific products or container
sizes or, in some circumstances, separate contracts with one or more operating
divisions of a single customer.

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COMPETITION

We face substantial competition throughout our product lines from a number
of well-established businesses operating nationally and from firms operating
regionally. Our primary national competitors include American National Can,
Crown Cork & Seal, Graham Packaging, Liquid Container, Liqui-Box,
Owens-Illinois, Plastipak and Silgan. Several of these competitors are larger
and have greater financial and other resources than us. In addition, we face
substantial competition from a number of captive packaging operations with
significant in-house bottling and blow-molding capacity, such as those of
Perrier Group of America, Kroger and Dean Foods.

We believe that our long-term success is largely dependent on our ability to
continue to attract and maintain new customers, develop product innovations and
improve our production technology, offer our customers competitively priced
products that meet their design and performance criteria, provide superior
service to our customers and reduce our cost structure.

MARKETING

Substantially all of our sales are made through the direct efforts of our
sales personnel. We conduct sales activities from our corporate headquarters in
Irving, Texas and from various field sales offices located throughout the
geographic territories in which we operate. In addition to our other sales and
marketing efforts, we provide our customers with in-house support staff and
24-hour, seven days a week, year round customer service.

RESEARCH, DEVELOPMENT AND ENGINEERING

Research, development and engineering constitute an important part of our
business. We undertake these efforts through approximately 70 employees at our
research, development and engineering center in Elk Grove, Illinois. We believe
that the research, development and engineering center makes us a leader in the
innovation and design of new products, product enhancements and manufacturing
technologies and processes.

We spent approximately $8.0 million on research, development and engineering
on a pro forma basis in 1999. We believe that continuing product and
manufacturing innovations are important to meeting customers' needs and lowering
unit costs, thus permitting us to remain competitive in the plastic container
market. We expect to spend approximately $8.4 million on research, development
and engineering in 2000.

INTELLECTUAL PROPERTY

We have developed a number of trademarks and patents for use in our business
and are continually developing new trademarks and patents. In addition, we also
hold licenses for the use of several registered trademarks from third parties.
Because our trademarks, brand names and patented packaging designs create
goodwill and results in product differentiation, we believe that these assets
are important to our business. Although we hold various trademarks and patents,
we believe that our business is not dependent on any one of these patents or
trademarks. In addition, we rely on proprietary know-how, continuing
technological innovation and other trade secrets to develop products and
maintain our competitive position. We attempt to protect our proprietary
know-how and our other trade secrets by executing, when appropriate,
confidentiality agreements with our customers and employees. Although we cannot
assure you that our competitors will not discover comparable or the same
knowledge and techniques through independent development or by other legal
means, we believe that our business, as a whole, is not dependent on these
matters.

5

MANUFACTURING AND DISTRIBUTION

MANUFACTURING. At December 31, 1999, we operated over 600 blow-molding
production lines and six injection molding machines (which are used to produce
closures, water cooler parts, crates, overcaps, valves and collars).

Blow molding is the technique used to convert plastic into bottles and
containers by either extrusion or stretch blow molding, depending on the desired
container attributes. In the extrusion blow-molding production process, resin
pellets are blended with colorants or other necessary additives and fed into an
extrusion machine, which uses heat and pressure to form the resin into a round
hollow tube of molten plastic called a parison. Bottle molds are mounted to
capture the parisons as they leave the extruder. Once inside the mold, air
pressure is used to blow the parison into the bottle shape of the mold.
Extrusion blow molding can be used to process many different resin types. By
contrast, stretch blow molding is either a one-stage or a two-stage process by
which a test-tube shaped pre-form is made by injection molding and then heated,
stretched and filled with compressed air to fill the mold and form the bottle.
This process provides enhanced physical clarity and gas barrier properties and
is generally used for PET bottles but can also be used for PP bottles. This
technique can be adapted for either low volume production runs of specialty
applications, such as wide-mouthed jars, or high volume runs of commodity
applications.

Thirty of our production lines are set up so that multiple extruders deposit
a single parison into a single mold, thus producing a multiple layer bottle.
Most of these lines are also capable of applying an in-mold label. We were among
the first to develop and use a wheel manufacturing technology. Our wheels
operate at high speeds and efficiently manufacture containers with one or more
special features, such as multiple layers, in-mold labeling and fluorination. In
most cases, we are actively involved with our customers in the design and
manufacture of new packaging features, including special wheel molds.

Twenty-seven of our manufacturing facilities are located on-site at customer
plants. On-site plants enable us to work more closely with customers at these
plants, to facilitate just-in-time inventory management, to generate significant
savings opportunities through process re-engineering, to eliminate costly
packing, shipping and handling charges, to reduce working capital and to foster
the development of long-term customer relationships. Further, we generally
install additional capacity at our on-site facilities that permits us to service
additional local customers.

We believe that capital investment to maintain and upgrade property, plant
and equipment is important to remain competitive. We spent $46.1 million in 1999
on a pro forma basis on capital expenditures. We estimate that the annual
capital expenditure required to maintain our current facilities will be
approximately $15.5 million for each year, and additional capital expenditures
beyond this amount will be required to expand capacity.

DISTRIBUTION. At our 43 stand-alone domestic plants, we ship our products
by common carrier to our customers. In general, these plants are located within
a 250 to 300 mile radius of the customers for which we manufacture containers.
At each of our 27 on-site plants, our operations are usually integrated with the
customer's manufacturing operations so that we can make deliveries, as needed,
directly to the customer's conveyor lines.

RAW MATERIALS

Our principal raw materials include HDPE, PC, PP, PET and PVC resins, and we
use other materials in our manufacturing operations, such as ethyl vinyl
alcohol, resin colorant, corrugated boxes, shipping materials, pallets, labels
and inks. Generally, it is our practice to obtain raw materials from several
sources in order to ensure an economical, adequate and timely supply, and we are
not dependent on any single supplier for any of these materials. Although we
believe our access to raw materials is generally reliable, we cannot be assured
that we will have an uninterrupted supply of raw

6

materials at competitive prices. While our net sales are affected by
fluctuations in resin prices, our gross profit over time is substantially
unaffected by these changes because industry practice and our contractual
arrangements with certain of our customers generally permit or require us to
pass through these changes. We may not, however, always be able to pass through
these changes in a timely manner. Based on our experience, we believe that
adequate quantities of these materials will be available to supply our
customers' needs.

SEASONALITY

Our shipment volume of containers for bottled water, and our employment of
temporary/seasonal workers, is typically higher in the second and third quarters
principally due to the seasonal nature of the bottled water industry, in which
demand is stronger between May and September. Consequently, we normally build
inventory of products for our water products during the first quarter in
anticipation of seasonal demand during the second and third quarters. To a
lesser extent, our shipment volume of containers for milk and other beverage
products follow the same seasonal pattern.

EMPLOYEES

At December 31, 1999, we employed over 4,500 people. Approximately 1,100 of
these employees were hourly workers covered by collective bargaining agreements,
which expire between May 31, 2000 and 2002. We have renewed the six collective
bargaining agreements that had expirations in 1999. Given the seasonality of the
bottled water industry, we expect to continue to employ full time, temporary,
and seasonal workers during the peak production months of May through September.
Our predecessor companies had not had any material labor disputes in the past
five years. We consider our relations with employees to be good.

ENVIRONMENTAL MATTERS

In the United States and in the other countries in which we operate, we are
subject to national, state, provincial and/or local laws and regulations that
impose limitations and prohibitions on the discharge and emission of, and
establish standards for the use, disposal, and management of, some kinds of
materials and waste, and impose liability for the costs of investigating and
cleaning up, and damages resulting from, present and past spills, disposals, or
other releases of hazardous substances or materials. Environmental laws and
regulations can be complex and may change often. Compliance with these laws and
regulations can require significant capital expenditures, and violations may
result in substantial fines and penalties. In addition, environmental laws in
the United States, such as the Comprehensive Environmental Response,
Compensation and Liability Act, impose liability on several grounds for the
investigation and cleanup of contaminated soil, groundwater, and buildings, and
for damages to natural resources, at a wide range of properties. For example,
contamination at properties formerly owned or operated by us, as well as at
properties we currently own or operate, and properties to which hazardous
substances were sent by us, may result in liability for us under these
environmental laws and regulations. As a manufacturer, we also have an inherent
risk of liability under environmental laws and regulations regarding ongoing
operations.

In addition, a number of governmental authorities in the United States and
in other countries have considered or are expected to consider legislation aimed
at reducing the amount of disposed plastic wastes. These programs have included,
for example, mandating rates of recycling and/or the use of recycled materials,
imposing deposits or taxes on plastic packaging material, and/or requiring
retailers or manufacturers to take back packaging used for their products. This
legislation, as well as voluntary initiatives similarly aimed at reducing the
level of plastic wastes, could reduce the demand for some plastic packaging,
result in greater costs for plastic packaging manufacturers or otherwise impact
our business. Some consumer products companies (including some of our customers)
have responded to

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these governmental initiatives and to perceived environmental concerns of
consumers by, for example, using bottles made in whole or in part of recycled
plastic.

Although compliance with environmental laws and regulations requires ongoing
expenditures and remediation activities, our capital expenditures for property,
plant and equipment for environmental control activities and other expenditures
for compliance with environmental laws and regulations were not material in 1999
and are not expected to be material in 2000. We believe that we are in material
compliance with all federal, state and local environmental laws and regulations
and are currently not engaged in any remediation activities required by
governmental regulatory authorities.

ITEM 2: PROPERTIES

We use various owned and leased properties located throughout the United
States, Puerto Rico, Mexico and Canada for our manufacturing plants, corporate
headquarters, technical center and sales offices. At December 31, 1999, we had
75 manufacturing plants, 15 of which we owned and 60 of which we leased.

We list in the table below the location of our active manufacturing and
other facilities (by region in the United States and by country and, within
region and country, in alphabetical order) and some related information at
December 31, 1999.

SIZE IN OWNED OR
LOCATION OF FACILITIES SQUARE FEET LEASED PRINCIPAL USE ON-SITE
- - ---------------------- ----------- -------- ----------------- -------

NORTHEAST
Monroe, Connecticut......................... 1,000 Leased Sales Office
New Britain, Connecticut.................... 5,500 Leased Manufacturing X
Windsor, Connecticut........................ 58,000 Leased Manufacturing
Poland Springs, Maine....................... 13,000 Leased Manufacturing X
Franklin, Massachusetts..................... 55,000 Leased Manufacturing
Franklin, Massachusetts..................... 24,300 Leased Manufacturing X
Lynn, Massachusetts......................... 12,000 Leased Manufacturing X
Marlborough, Massachusetts.................. 4,600 Leased Manufacturing X
Hampstead, New Hampshire.................... 42,000 Owned Manufacturing
Burlington, New Jersey...................... 6,500 Leased Manufacturing X
Elizabeth, New Jersey....................... 40,000 Owned Manufacturing
Hillside, New Jersey........................ 34,200 Leased Manufacturing
Cranbury, New Jersey........................ 62,000 Owned Manufacturing
Batavia, New York........................... 21,700 Leased Manufacturing
Rensselaer, New York........................ 4,500 Leased Manufacturing X
Rochester, New York......................... 65,000 Owned Manufacturing
Allentown, Pennsylvania..................... 80,000 Leased Manufacturing X
Berwick, Pennsylvania....................... 197,000 Owned Manufacturing
Brenigsville, Pennsylvania.................. 8,500 Leased Manufacturing
Lancaster, Pennsylvania..................... 18,100 Leased Manufacturing X
Leetsdale, Pennsylvania..................... 42,000 Leased Manufacturing
New Castle, Pennsylvania.................... 92,000 Owned Manufacturing
Oil City, Pennsylvania...................... 96,000 Owned Manufacturing
Penn Township Kelton, Pennsylvania.......... 36,400 Leased Manufacturing
Verona, Pennsylvania........................ 90,200 Leased Manufacturing
York, Pennsylvania.......................... 30,900 Leased Manufacturing

MID-ATLANTIC
Baltimore, Maryland......................... 151,000 Owned Manufacturing
Newell, West Virginia....................... 50,000 Leased Manufacturing X

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SIZE IN OWNED OR
LOCATION OF FACILITIES SQUARE FEET LEASED PRINCIPAL USE ON-SITE
- - ---------------------- ----------- -------- ----------------- -------

SOUTHEAST
Lakeland, Florida........................... 218,000 Leased Manufacturing
Miami, Florida.............................. 4,800 Leased Manufacturing
St. Petersburg, Florida..................... 2,500 Leased Manufacturing X
Tampa, Florida.............................. 22,500 Leased Manufacturing
Zephyr Hills, Florida....................... 7,400 Leased Manufacturing X
Greensboro, North Carolina.................. 30,000 Leased Manufacturing
Mechanicsville, Virginia.................... 11,000 Leased Manufacturing X
Atlanta, Georgia............................ 85,000 Leased Manufacturing
McDonough, Georgia.......................... 4,000 Leased Manufacturing X

SOUTH
Demopolis, Alabama.......................... 4,000 Leased Warehouse
Demopolis, Alabama.......................... 98,000 Owned Manufacturing
Fort Smith, Arkansas........................ 150 Leased Sales Office
West Memphis, Arkansas...................... 67,000 Leased Manufacturing
Louisville, Kentucky........................ 4,000 Owned Manufacturing
Kentwood, Louisiana......................... 10,000 Leased Manufacturing X
Monroe, Louisiana........................... 3,300 Leased Manufacturing X
Conroe, Texas............................... 3,000 Leased Manufacturing X
Dallas, Texas (2 facilities)................ 31,000 Leased Manufacturing X
Irving, Texas............................... 12,000 Leased Corporate Office
Fort Worth, Texas........................... 8,000 Leased Manufacturing X
Houston, Texas.............................. 80,000 Leased Manufacturing
Katy, Texas................................. 10,000 Leased Manufacturing X
Sherman, Texas.............................. 110,000 Leased Manufacturing
The Woodlands, Texas........................ 1,000 Leased Sales Office

MID-WEST
Caseyville, Illinois........................ 11,700 Leased Manufacturing
Chicago, Illinois........................... 27,000 Leased Manufacturing X
DuPage, Illinois............................ 104,000 Leased Manufacturing
Elk Grove, Illinois......................... 183,000 Leased Manufacturing
Elk Grove, Illinois......................... 79,000 Leased RD&E Center
Harvard, Illinois........................... 126,300 Leased Manufacturing
Hutchinson, Kansas.......................... 2,000 Leased Manufacturing X
Lenexa, Kansas.............................. 173,000 Leased Manufacturing
Omaha, Nebraska............................. 11,500 Leased Accounting Center
Springdale (Cincinnati), Ohio............... 130,000 Leased Manufacturing
Cincinnati, Ohio............................ 1,000 Leased Sales Office
Columbus, Ohio.............................. 8,600 Leased Manufacturing X

WEST
Phoenix, Arizona............................ 59,760 Leased Manufacturing
Phoenix, Arizona............................ 44,000 Owned Warehouse
Anaheim, California......................... 59,000 Leased Manufacturing
City of Industry (Railroad), California..... 22,000 Leased Manufacturing X
City of Industry (Samuelson), California.... 135,100 Leased Manufacturing
City of Industry (Willow), California....... 56,000 Leased Manufacturing
Fairfield, California....................... 66,000 Owned Manufacturing
Ontario, California......................... 40,000 Leased Manufacturing X
Riverside, California....................... 17,000 Leased Manufacturing X
Santa Ana, California....................... 103,000 Owned Manufacturing

9

SIZE IN OWNED OR
LOCATION OF FACILITIES SQUARE FEET LEASED PRINCIPAL USE ON-SITE
- - ---------------------- ----------- -------- ----------------- -------

Tracy, California........................... 160,000 Owned Manufacturing
Union City, California...................... 15,000 Leased Manufacturing X
Westminister, California.................... 11,100 Leased Manufacturing
Tukwila, Washington......................... 50,700 Leased Manufacturing
Vancouver, Washington....................... 43,800 Owned Manufacturing
Vancouver, Washington....................... 35,000 Leased Warehouse

CANADA
Richmond, British Columbia.................. 35,203 Leased Manufacturing
Winnipeg, Manitoba.......................... 7,400 Leased Manufacturing
Mississauga, Ontario........................ 34,800 Leased Manufacturing

MEXICO
Mexico City................................. 24,300 Leased Manufacturing

PUERTO RICO
Caguas...................................... 47,000 Owned Manufacturing

ITEM 3: LEGAL PROCEEDINGS

We are party to various litigation matters arising in the ordinary course of
our business. We cannot estimate with certainty the ultimate legal and financial
liability with respect to this litigation but believe, based on our examination
of these matters, experience to date and discussions with counsel, that the
ultimate liability will not be material to our financial position, results of
operations or cash flows.

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 1999.

10

PART II

ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

There is no established public trading market for the Company's member
units, and as of March 27, 2000, there was one holder of record, Consolidated
Container Holdings. For a list of certain holders of the member units of
Consolidated Container Holdings, see Item 12 (Security Ownership of Certain
Beneficial Owners and Management) of this Annual Report on Form 10-K. The Senior
Subordinated Notes and the senior credit facility contain restrictions on the
Company's ability to pay dividends on its member units.

The Company is required to make tax distributions to holders of member units
for reimbursement of tax obligations. The Company has made no distributions to
its sole member, Consolidated Container Holdings, between July 2, 1999 and
December 31, 1999. The Indenture (as defined below) under which the Company and
Consolidated Container Capital issued their Notes and the Senior Credit Facility
(as defined below) contain restrictions on its ability to pay dividends to its
Consolidated Container Holdings.

ITEM 6: SELECTED HISTORICAL FINANCIAL DATA OF CONSOLIDATED CONTAINER COMPANY
LLC, SUCCESSOR TO REID PLASTICS, INC.

The following table presents selected historical financial data for the
period from July 2, 1999 through December 31, 1999 of Consolidated Container
Company, successor to Reid Plastics. The following table also presents selected
financial data of Reid Plastics for the years ended December 31, 1995 and 1996
and the period from January 1, 1997 to October 14, 1997 preceding the
acquisition of Reid Plastics Holdings, the parent of Reid Plastics, by
affiliates of Vestar Capital Partners III, L.P., on October 15, 1997. The table
also presents selected historical post-acquisition financial data for the period
from October 15, 1997 to December 31, 1997, the year ended December 31, 1998 and
the period from January 1, 1999 through July 1, 1999.

The selected historical consolidated financial data have been derived from
and should be read in conjunction with the audited consolidated financial
statements of Consolidated Container Company, successor to Reid Plastics and the
notes to them and "Management's Discussions and Analysis of Financial Condition
and Results of Operations of Consolidated Container Company, successor to Reid
Plastics, Inc.", included elsewhere in this report.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

PREDECESSOR SUCCESSOR
-------------------------------------------------------------------------------- -------------
PRE-ACQUISITION POST-ACQUISITION
----------------------------------- ------------------------------------------
PERIOD PERIOD
FROM FROM
JANUARY 1, PERIOD FROM JANUARY 1, PERIOD FROM
YEAR ENDED 1997 OCTOBER 15, 1999 JULY 2, 1999
DECEMBER 31, THROUGH 1997 THROUGH YEAR ENDED THROUGH THROUGH
-------------------- OCTOBER 14, DECEMBER 31, DECEMBER 31, JULY 1, DECEMBER 31,
1995 1996 1997 1997 1998 1999 1999
-------- -------- ------------ ------------- ------------- ---------- -------------

INCOME STATEMENT DATA:
Net sales................... $105.5 $136.6 $164.7 $ 33.2 $175.2 $ 85.4 $388.7
Cost of goods sold.......... 89.9 116.3 144.5 31.8 144.7 67.4 315.2
------ ------ ------ ------ ------ ------ ------
Gross profit................ 15.6 20.3 20.2 1.4 30.5 18.0 73.5
Selling, general and
administrative expenses... 10.3 13.3 14.1 3.4 18.1 9.0 37.2
Restructuring charges(a).... -- -- 9.1 -- -- -- 8.8
------ ------ ------ ------ ------ ------ ------
Operating income (loss)..... 5.3 7.0 (3.0) (2.0) 12.4 9.0 27.5
Other income (expense)...... 0.8 0.6 0.6 -- 1.3 0.5 0.2
Interest expense, net(b).... 4.0 4.8 6.3 1.9 10.5 4.5 27.0
------ ------ ------ ------ ------ ------ ------
Income (loss) before income
taxes..................... 2.1 2.8 (8.7) (3.9) 3.2 5.0 0.7
Income tax expense
(benefit)................. 1.3 2.2 (1.2) (0.1) 2.8 2.9 --
Minority interest in
subsidiaries.............. 0.2 0.2 0.3 0.1 0.1 (0.3) (0.2)
------ ------ ------ ------ ------ ------ ------
Income (loss) before
extraordinary item........ 0.6 0.4 (7.8) (3.9) 0.3 2.4 0.9
Extraordinary item.......... (0.1) -- -- -- -- (1.2) --
------ ------ ------ ------ ------ ------ ------
Net income (loss)........... $ 0.5 $ 0.4 $ (7.8) $ (3.9) $ 0.3 $ 1.2 $ 0.9
====== ====== ====== ====== ====== ====== ======
OTHER DATA:
Net cash provided by
operating activities...... 7.1 10.8 5.5 1.7 11.4 -- 27.4
Net cash used in investing
activities................ (33.9) (43.2) (8.5) (4.5) (11.1) (5.0) (15.5)
Net cash provided by (used
in) financing
activities................ 29.0 35.3 (2.9) 6.6 0.7 4.4 (15.8)
Depreciation and
amortization.............. 4.9 7.7 12.6 4.1 16.0 7.2 26.9
Capital expenditures........ 5.7 5.9 9.3 4.8 12.7 5.1 24.9
Cash interest expense,
net(c).................... 3.8 4.5 6.3 1.9 10.5 4.5 25.5
Ratio of earnings to fixed
charges(d)................ 1.5x 1.5x -- -- 1.3x 1.4x
BALANCE SHEET DATA (AT END
OF PERIOD):
Cash and cash equivalents... $ 3.7 $ 6.7 $ 0.7 $ 4.4 $ 5.4 $ 4.9 $ 1.1
Working capital............. 5.9 10.8 -- 20.6 14.0 24.0 12.4
Total assets................ 82.4 165.9 -- 235.4 219.9 984.0 990.1
Total debt.................. 37.7 98.0 -- 123.9 121.5 603.9 587.6
Total stockholders'/member's
equity.................... 19.9 19.8 -- 54.5 51.2 256.0 256.8

- - ------------------------------
(a) Restructuring charges were recognized in connection with plans to
consolidate certain manufacturing and administrative functions and
facilities. The charges consisted of severance and other personnel-related
costs, facility closing costs and remaining obligations under noncancellable
operating leases.

(b) Represents interest expense, net of interest income.

(c) Cash interest expense excludes amortization of deferred financing fees.

(d) For purposes of determining the ratio of earnings to fixed charges,
"earnings" is defined as income (loss) before income taxes and extraordinary
item plus fixed charges. "Fixed charges" consist of interest expense on all
debt, amortization of deferred financing costs and one-third of rental
expense on operating leases, representing that portion of rental expense
that is attributable to interest. Earnings were insufficient to cover fixed
charges for the year ended December 31, 1997 by $12.6 million.

12

ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS OF CONSOLIDATED CONTAINER COMPANY LLC, SUCCESSOR TO REID
PLASTICS, INC.

UNAUDITED PRO FORMA INFORMATION

In connection with its formation on July 2, 1999, Consolidated Container
Company was created as a limited liability company to own, directly or through
its subsidiaries, all of the plastic packaging assets of Reid Plastics, a
Delaware corporation indirectly controlled by Vestar Capital Partners III, L.P.,
and substantially all of the U.S. plastic packaging assets of Suiza Foods, which
consisted of Franklin Plastics and Plastic Containers. Throughout this Annual
Report on Form 10-K, the operations of Franklin Plastics and Plastic Containers
are referred to as "Suiza Packaging" for the periods prior to their contribution
to the Company and its subsidiaries.

The presentation of pro forma financial information is included because of
the significance of the Transactions. Pro forma adjustments include amortization
of goodwill, interest expense and the elimination of income taxes. The unaudited
pro forma statements of operations of the years ended December 31, 1998 and 1999
give effect to the Transactions as if they had occurred on January 1, 1998.

The pro forma financial information does not purport to represent what the
results of operations of Consolidated Container Company would actually have been
if the Transactions had, in fact, occurred on the date assumed and is not
necessarily representative of Consolidated Container Company's results of
operations for any future period. The unaudited pro forma information should be
read in conjunction with the other financial statements and notes to them
included elsewhere in this Annual Report on Form 10-K.

UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31,
--------------------------------------------
1998 1999
------------------- -------------------
(DOLLARS IN MILLIONS)

Net sales.............................................. $687.3 100.0% $737.4 100.0%
Cost of goods sold..................................... 548.1 79.7 596.4 80.9
------ ----- ------ -----
Gross profit........................................... $139.2 20.3 $141.0 19.1
Selling, general and administrative.................... 61.4 8.9 48.4 6.6
Amortization expense................................... 14.8 2.2 14.8 2.0
------ ----- ------ -----
Operating income....................................... 63.0 9.2 77.8 10.6
Other expense (income)................................. (1.4) (0.2) (0.3) (0.0)
Interest expense, net.................................. 51.6 7.5 52.3 7.1
------ ----- ------ -----
Income before minority interest........................ 12.8 1.9 25.8 3.5
Income tax expense (benefit)........................... -- -- -- 0.0
Minority interest (income) loss in subsidiary.......... 0.1 -- (0.4) (0.1)
------ ----- ------ -----
Income before extraordinary item....................... $ 12.7 1.8% $ 26.2 3.6%
====== ===== ====== =====
Other Data:
Depreciation and amortization.......................... $ 45.7 6.6% 49.9 6.8%

RESULTS OF OPERATIONS (PRO FORMA)

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

NET SALES. Net sales increased by 7.3% to $737.4 million for the period
from January 1, 1999 through December 31, 1999 from $687.3 million in the
comparable period for 1998. The increase was due to higher resin prices during
1999 as well as higher unit volume. Unit volume growth came primarily in the
water and dairy businesses.

13

GROSS PROFIT. Gross profit increased by 1.3% to $141.0 million for the
period from January 1, 1999 through December 31, 1999 from $139.2 million for
the comparable period in 1998. The increase was due to higher unit volume offset
in part by lower prices on some products due to increased competition.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense decreased by 21.2% to $48.4 million for the period from
January 1, 1999 through December 31, 1999 from $61.4 million for the comparable
period in 1998. The decrease resulted from overhead reductions in all areas of
the Company, as well as a reduction in outside consulting services.

OPERATING INCOME. Operating income increased by 23.5% to $77.8 million for
the period from January 1, 1999 through December 31, 1999 from $63.0 million for
the comparable period in 1998. The increase was a result of the factors
discussed above.

INTEREST EXPENSE, NET. Interest expense, net increased by 1.4% to $52.3
million for the period from January 1, 1999 through December 31, 1999 from $51.6
million for the comparable period in 1998. The increase was the result of higher
interest rates during the period.

NET INCOME. Net Income increased by 106.3% to $26.2 million for the period
January 1, 1999 through December 31, 1999 from $12.7 million for the comparable
period in 1998. The increase was the result of the factors discussed above.

RESULTS OF OPERATIONS (HISTORICAL)

PERIOD FROM JULY 2, 1999 THROUGH DECEMBER 31, 1999 COMPARED TO THE PERIOD
FROM JULY 2, 1998 THROUGH DECEMBER 31, 1998

NET SALES. Net sales increased by 367.2% to $388.7 million for the period
from July 2, 1999 through December 31, 1999 from $83.2 million in the comparable
period for 1998. The increase was due to the inclusion of $290.4 million
attributable to the contribution of Franklin Plastics and Plastic Containers as
part of the Transactions in 1999. Reid Plastics net sales increased $15.1
million due to stronger net sales in the water and dairy businesses and higher
resin prices.

GROSS PROFIT. Gross profit increased by 428.8% to $73.5 million for the
period from July 2, 1999 through December 31, 1999 from $13.9 million for the
comparable period in 1998. The increase was due to the contribution of Franklin
Plastics and Plastic Containers as part of the Transactions in 1999 as well as
higher unit volumes.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense increased by 318.0% to $37.2 million for the period from
July 2, 1999 through December 31, 1999 from $8.9 million for the comparable
period in 1998. The increase was due primarily to the contribution of Franklin
Plastics and Plastic Containers as part of the Transactions.

OPERATING INCOME. Operating income increased by 450.0% to $27.5 million for
the period from July 2, 1999 through December 31, 1999 from $5.0 million for the
comparable period in 1998. The increase was a result of the factors discussed
above.

INTEREST EXPENSE, NET. Interest expense, net increased by 409.4% to $27.0
million for the period from July 2, 1999 through December 31, 1999 from $5.3
million for the comparable period in 1998. The increase was due to the
contribution of Franklin Plastics and Plastic Containers as part of the
Transactions, together with the higher debt levels following the transactions.

NET INCOME. Net Income was $0.9 million for the period July 2, 1999 through
December 31, 1999, compared to a loss of $0.5 million for the comparable period
in 1998. The increase was primarily the result of the factors discussed above.

14

PERIOD FROM JANUARY 1, 1999 THROUGH JULY 1, 1999 COMPARED TO THE PERIOD FROM
JANUARY 1, 1998 THROUGH JULY 1, 1998

NET SALES. Net sales decreased by 7.1% to $85.4 million for the period from
January 1, 1999 through July 1, 1999 from $91.9 million in the comparable period
for 1998. The decrease was due to (1) lower HDPE prices, which were passed on to
Reid Plastics' customers in the form of lower selling prices, and (2) lower unit
volume at plants in Albuquerque, New Mexico, Calgary, Alberta and Riverside,
California.

GROSS PROFIT. Gross profit increased by 9.1% to $18.0 million for the
period from January 1, 1999 through July 1, 1999 from $16.5 million for the
comparable period in 1998. The increase was due to plant rationalizations and
operating efficiency improvements.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense decreased by 2.2% to $9.0 million for the period from
January 1, 1999 through July 1, 1999 from $9.2 million for the comparable period
in 1998. The decrease was due to the renegotiation of a non-compete agreement
with a senior manager of Reid Plastics and the amortization of payments under
that agreement.

OPERATING INCOME. Operating income increased by 23.3% to $9.0 million for
the period from January 1, 1999 through July 1, 1999 from $7.3 million for the
comparable period in 1998. The increase was a result of the factors discussed
above.

OTHER INCOME. Other income decreased by 16.7% to $0.5 million for the
period from January 1, 1999 through July 1, 1999 from $0.6 million for the
comparable period in 1998. The decrease was due to a decrease in the
profitability of Reid Plastics' joint ventures in Colombia and the Dominican
Republic.

INTEREST EXPENSE, NET. Interest expense, net decreased by 13.5% to $4.5
million for the period from January 1, 1999 through July 1, 1999 from $5.2
million for the comparable period in 1998. The decrease was due to lower
interest rates and lower borrowings under Reid Plastics' credit agreement.

EXTRAORDINARY ITEM. In connection with the repayment of its bank loans,
Reid Plastics wrote-off unamortized debt issuance costs of $2.0 million. This
loss was reduced by $0.8 million representing the tax benefit associated with
this write-off.

NET INCOME. Net Income increased by 33.3% to $1.2 million for the period
January 1, 1999 through July 1, 1999 from $0.9 million for the comparable period
in 1998. The decrease was primarily the result of the factors discussed above.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

NET SALES. Net sales decreased by 11.5% to $175.2 million in 1998 from
$197.9 million in 1997. The decrease was partially due to a reduction in the
price of HDPE resin in 1998, which was passed on over time to customers in the
form of lower selling prices, lower unit volume in connection with the closure
of plants in Calgary, Alberta and Riverside, California and a reduction in
business at the Albuquerque, New Mexico facility.

GROSS PROFIT. Gross profit increased by 41.2% to $30.5 million in 1998 from
$21.6 million in 1997. The increase was primarily attributable to improved
management of operating expenses following the acquisition of a controlling
interest in Reid Plastics Holdings by an affiliate of Vestar Capital
Partners III, L.P., including a reduction of $2.5 million in labor and overhead
expenses associated with the consolidation of several manufacturing facilities.
In particular, Reid Plastics consolidated its Monrovia, California facility into
its Samuelson, California facility, closed its Calgary, Alberta facility (moving
its equipment into the City of Industry (Willow), California facility), closed
its Sacramento, California facility (moving its business into its Tracy,
California facility) and reduced activity at its Albuquerque, New Mexico and
Riverside, California facilities. In connection with the 1997 acquisition

15

of a controlling interest in Reid Plastics Holdings by an affiliate of Vestar
Capital Partners III, L.P., Reid Plastics established a reserve to account for
some leases and plants which it expected to eliminate, close or consolidate with
others, which had the effect of reducing cost of sales by $1.1 million. The
lease and other expenses associated with these facilities had been expensed in
the prior period.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense increased by 3.4% to $18.1 million in 1998 from $17.5
million in 1997. The increase resulted primarily from increased costs of hiring
additional management, the relocation of corporate offices to Diamond Bar,
California and the cost of hiring outside consulting services in 1998.

RESTRUCTURING CHARGE. In October 1997, Reid Plastics recorded $9.1 million
of restructuring charges related to the consolidation and closure of some
warehousing, manufacturing and administrative facilities.

OPERATING INCOME (LOSS). Operating income (loss) increased to $12.4 million
in 1998 from ($5.0) million in 1997. The increase was the result of the factors
discussed above.

OTHER INCOME. Other income increased by 116.7% to $1.3 million in 1998 from
$0.6 million in 1997. The increase was primarily attributable to an increase in
profitability of Reid Plastics' joint ventures in Colombia and the Dominican
Republic.

INTEREST EXPENSE, NET. Interest expense, net increased by 28.0% to $10.5
million in 1998 from $8.2 million in 1997. The increase was due to higher
average outstanding borrowings.

NET INCOME (LOSS). In 1998, Reid Plastics recorded net income of $0.3
million compared to a net loss of ($11.7) million in 1997. The increase was
primarily the result of the factors discussed above.

SEASONALITY

Due to the large portion of our business that is derived from the sale of
water, dairy and other beverage products, our financial results are typically
stronger in the second and third quarters of the year during the spring and
summer months when there is higher consumption of the end products related to
these sectors.

LIQUIDITY AND CAPITAL RESOURCES

Our principal uses of cash are for capital expenditures, working capital,
debt service and acquisitions. Funds for these purposes are primarily generated
from operations and borrowings under the Senior Credit Facilities.

We made pro forma capital expenditures of approximately $46.1 million in
1999. We estimate that our capital expenditures will be approximately $38.1
million, of which approximately $15.5 million will be for ongoing maintenance,
in 2000.

As a limited liability company, we are not liable for U.S. federal income
taxes under the Internal Revenue Code of 1986, as amended (the "Internal Revenue
Code"). Similarly, as a limited liability company, our parent, Consolidated
Container Holdings, is not liable for U.S. federal income taxes under the
Internal Revenue Code. The applicable income or loss will be included in the tax
returns of the members of Consolidated Container Holdings. We are required to
make tax distributions to Consolidated Container Holdings to enable it to
reimburse its members for their tax obligations. No distributions were made
during the period from July 2, 1999 through December 31, 1999.

In connection with the Transactions, entered into the Credit Agreement (the
"Senior Credit Facility") dated as of July 1, 1999 among Consolidated Container
Holdings, the Company, Bankers Trust Company, as Administrative Agent, Morgan
Guaranty Trust Company of New York, as documentation agent, and Donaldson,
Lufkin & Jenrette Securities Corporation, as Syndication Agent, and the other
Banks a party thereto and certain related security agreements, borrowed under
the

16

Senior Credit Facility and issued $185.0 million aggregate principal amount of
Notes under an Indenture (the "Indenture") dated as of July 1, 1999 among the
Company, Consolidated Container Capital, Inc., as co-issuer of the Notes, the
Subsidiary Guarantors named therein and The Bank of New York, as Trustee. At
December 31, 1999, we had total debt of $587.6 million. and member's equity of
$256.8 million. Subject to restrictions in the Senior Credit Facility and the
Indenture, we may incur more debt for working capital, capital expenditures,
acquisitions and for other purposes.

The Senior Credit Facility consists of a committed tranche A term loan
totaling $150.0 million, a committed tranche B term loan totaling $235.0
million, an uncommitted tranche C term loan totaling $100.0 million, which will
only be available to the Company under some circumstances, and a committed $90.0
million revolving credit facility. At December 31, 1999, we had $72.5 million
available for borrowings under the revolving credit facility, subject to
customary borrowing conditions. The revolving credit facility will expire on
July 2, 2005. The amortization schedule of the tranche A term loan will require
us to repay $11.25 million in 2000, $18.75 million in 2001, $26.25 million in
2002, $33.75 million in 2003, $37.5 million in 2004 and $18.75 million in 2005.
The tranche B term loan requires amortization payments in equal annual
installments of 1% of its initial principal amount for each of the first six
years after July 2, 1999 and the amortization of the remaining amount in eight
quarterly payments in the seventh and eighth years after the closing of the
senior credit facility.

Borrowings under the Senior Credit Facility bear interest, at our option, at
either:

- a base rate, which will be the higher of 1/2 of 1% in excess of the
overnight federal funds rate and the prime lending rate of Deutsche Bank,
plus a margin; or

- a Eurodollar rate on deposits for one, two, three or six month periods or,
if and when available to all of the relevant lenders, nine or twelve month
periods, which are offered to Deutsche Bank in the interbank eurodollar
market, plus the applicable interest margin.

The margin on base rate and eurodollar loans is based on a schedule that
corresponds to the leverage ratio of Consolidated Container Holdings and its
subsidiaries on a consolidated basis. Currently, we are paying the following
margins on amounts that we have borrowed:

- 0.75% for base rate loans and 1.75% for eurodollar rate loans for tranche
A term loans and revolving credit loans;

- 1.25% for base rate loans and 2.25% for eurodollar rate loans for tranche
B term loans; and

- a rate to be determined for tranche C terms loans, based on the agreement
between Consolidated Container Company and the lender or lenders providing
that loan.

In addition, Consolidated Container Company:

- pays a commitment fee on the unused commitments under the revolving credit
facility, ranging from 0.25% to 0.50% on an annual basis depending on the
same schedule of leverage ratios, payable quarterly in arrears;

- pays an annual administration fee to Deutsche Bank, as administrative
agent; and

- paid, on the closing date of the senior credit facility, a commitment fee
equal to 3/8 of 1%, each year of the total committed amount of the Senior
Credit Facility from April 29, 1999 to and including that closing date.

Effective October 4, 1999, the Company entered into an interest rate cap
agreement. The interest rate cap was for a notional amount of $75 million and
effectively caps the eurodollar rate at 7%. The agreement terminates on
October 9, 2001.

The Senior Credit Facility and the Indenture contain covenants that
restrict, among other things, the Company's ability to do the following: to make
certain capital expenditures; to make certain restricted payments; to incur debt
in addition to the Company's outstanding debt; to incur certain liens;

17

to make certain investments; to enter into certain sale and leaseback
transactions; and to merge, consolidate or sell all or substantially all of the
Company's and its subsidiaries' assets, subject to certain conditions; and to
enter into transactions with affiliates. The Senior Credit Facility also
requires the Company to maintain financial ratios relating to the maximum level
of earnings before interest and taxes plus depreciation and amortization and
minimum interest coverage. In addition, the Senior Credit Facility and the
Indenture restrict the Company's ability to pay dividends.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivatives and Hedging
Activities ("SFAS No. 133"). SFAS No. 133 is effective for all fiscal quarters
of all fiscal years beginning after June 15, 2000. SFAS No. 133 requires
companies to recognize all derivative instruments on their balance sheet as
either assets or liabilities measured at fair value. SFAS No. 133 also specifies
a new method of accounting for hedging transactions, prescribes the type of
items and transactions that may be hedged, and specifies detailed criteria to be
met to qualify for hedge accounting. We have not completed our evaluation of the
impact that the adoption of SFAS No. 133 will have on our financial statements.

ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our primary exposure to market risk is changing interest rates due to some
of our debt bearing a floating rate of interest.Our policy is to manage interest
rate risk by using a combination of fixed and floating rate debt. A 10% increase
in interest rates at December 31, 1999 would increase interest expense by
approximately $2.0 million.

Effective October 4, 1999, the Company entered into an interest rate cap
agreement. The interest rate cap was for a notional amount of $75 million and
effectively caps the eurodollar rate at 7%. The agreement terminates on
October 9, 2001.

ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary data are listed on the index at
Item 14 and included herein beginning on page F-1.

ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

There were no changes in accountants or disagreements with accountants on
matters related to accounting or financial disclosure during the period from the
formation of the Company, on July 2, 1999 through December 31, 1999.

18

PART III

ITEM 10: MEMBERS OF THE MANAGEMENT COMMITTEE AND EXECUTIVE OFFICERS

Consolidated Container Company is managed by its sole member, Consolidated
Container Holdings. Consolidated Container Holdings is managed by a management
committee consisting of nine members. Two of the members were appointed by
Vestar Packaging LLC, and two of the members were appointed by Reid Plastics
Holdings. Vestar Packaging LLC and Reid Plastics Holdings mutually appointed a
fifth member, one of the members was appointed by Franklin Plastics, one member
is Peter M. Bernon, one member is the chief executive officer of Consolidated
Container Holdings, who currently is William L. Estes, and one member is B.
Joseph Rokus. In addition, Franklin Plastics has the right to designate one
additional member of the management committee under the limited liability
company agreement of Consolidated Container Holdings.

The executive officers and members of the management committee of
Consolidated Container Holdings and their ages and positions are as follows:

NAME AGE POSITION
- - ---- -------- -----------------------------------------------------

Ronald V. Davis............ 53 Chairman of the Management Committee
Peter M. Bernon............ 48 Executive Vice President and Vice Chairman of the
Management Committee
B. Joseph Rokus............ 46 Vice Chairman of the Management Committee
William L. Estes........... 53 President and Chief Executive Officer and a Member of
the Management Committee
Ronald E. Justice.......... 55 Executive Vice President of Operations
Henry Carter............... 50 Executive Vice President of Sales and Marketing
Timothy W. Brasher......... 41 Senior Vice President, Chief Financial Officer and
Secretary
David M. Stulman........... 53 Vice President of Human Resources
William G. Bell............ 52 Member of the Management Committee
James P. Kelley............ 45 Member of the Management Committee
Leonard Lieberman.......... 71 Member of the Management Committee
Richard L. Robinson........ 70 Member of the Management Committee
John R. Woodard............ 36 Member of the Management Committee

RONALD V. DAVIS has served as Chairman of the management committee since the
closing of the transactions. Prior to the transactions and since December 1998,
Mr. Davis served as President and Chief Executive Officer of Reid Plastics
Holdings. Currently, Mr. Davis is Chairman of Davis Capital LLC, a private
equity investment company, which he founded in 1994. Mr. Davis founded The
Perrier Group of America and, between 1979 and 1992, he served as its President
and Chief Executive Officer. From 1992 to 1994, he served as Chairman of the
Board of Directors for Perrier Group of America, Inc. He currently serves on the
Boards of Directors of Celestial Seasonings and FMAC. Mr. Davis received a B.A.
from California State University and an M.B.A. from the University of Southern
California.

PETER M. BERNON has served as Executive Vice President and a Vice Chairman
of the management committee since the closing of the transactions. Prior to the
transactions and since 1997, Mr. Bernon served as Vice Chairman of Suiza
Packaging. Mr. Bernon is the founder of Franklin Plastics and has been its
President since 1997. From 1986 to 1997, Mr. Bernon served as Chairman of
Garelick Farms. Mr. Bernon received a B.A. from Babson College.

B. JOSEPH ROKUS has served as a Vice Chairman of the management committee
since the closing of the transactions. Prior to the transactions and since
December 1998, Mr. Rokus served as Chairman of

19

the Boards of Directors of Reid Plastics Holdings and Reid Plastics. Between
1993 and December 1998, Mr. Rokus served as President and Chief Executive
Officer of Reid Plastics Holdings and Reid Plastics. He serves on the Boards of
Trustees of the International Bottled Water Association and Pepperdine
University. Mr. Rokus received a B.S. from Pepperdine University and an M.B.A.
from the University of Southern California.

WILLIAM L. ESTES has served as President and Chief Executive Officer of
Consolidated Container Holdings and as a member of the management committee
since the closing of the transactions. Prior to the transactions and since 1998,
Mr. Estes served as President and Chief Executive Officer of Suiza Packaging.
Between November 1996 and February 1998, Mr. Estes served as President and Chief
Operating Officer of McKesson Corporation's McKesson-Carrollton operations.
Between January 1994 and November 1996, Mr. Estes served in various capacities
with Foxmeyer Health Corporation, most recently as President and Chief Operating
Officer. Between October 1991 and December 1993, Mr. Estes served as Vice
President and Chief Operating Officer of The Body Shop, Inc. Between 1983 and
1991, Mr. Estes served in various capacities with Pepsico, Inc., primarily with
its Frito-Lay, Inc. subsidiary. Mr. Estes is also a director of Kevco Inc.
Mr. Estes received a B.A. in mechanical engineering from the University of
Illinois and an M.B.A. from the Wharton School of Business.

RONALD E. JUSTICE has served as Executive Vice President of Operations of
Consolidated Container Holdings since the closing of the transactions. Prior to
the transactions and since 1998, Mr. Justice served as Executive Vice President
of Suiza Packaging. Between July 1995 and September 1998, Mr. Justice served as
Senior Vice President of Operations of The Scotts Company. Between 1992 and
1995, Mr. Justice served as Corporate Vice President of Operations of
Continental Baking. Prior to joining Continental Baking, Mr. Justice served in
various operations positions with Frito-Lay, Inc. and Procter & Gamble.
Mr. Justice is also a director of Premium Standard Farms, a division of
Continental Grain. Mr. Justice received a B.S. from the University of Oklahoma
and a M.S. from the University of Texas at Dallas. The Company expects that
Mr. Justice will retire on April 21, 2000. The Company expects to appoint a
successor, however no successor has been appointed as of the date of the filing
of this Annual Report on Form 10-K.

HENRY CARTER has served as Executive Vice President of Sales and Marketing
of Consolidated Container Holdings since the closing of the transactions. Prior
to the transactions and since 1998, Mr. Carter served as Executive Vice
President of Suiza Packaging. Mr. Carter served as President of Lawson Mardon
Wheaton Inc. between 1997 and 1998, Executive Vice President of Dorsey Trailers
Company between 1996 and 1997 and President and various other positions of
Constar International between 1977 and 1996. Mr. Carter received a B.S. from the
University of Illinois.

TIMOTHY W. BRASHER has served as Senior Vice President, Chief Financial
Officer and Secretary of Consolidated Container Holdings since the closing of
the transactions. Prior to the transactions and since February 1999,
Mr. Brasher served as Chief Financial Officer of Suiza Packaging. From
February 1998 to February 1999, Mr. Brasher served as Chief Financial Officer
and Chief Operating Officer of Virtual Village Holdings, Inc. Between 1993 and
1998, Mr. Brasher served as Vice President and Chief Financial Officer of Buena
Vista Home Entertainment, a division of The Walt Disney Company. Prior to 1993,
Mr. Brasher served as Executive Vice President and Chief Financial Officer of
Hinderliter Industries, Inc. Mr. Brasher received a B.B.A. from the University
of North Texas.

DAVID M. STULMAN has served as Vice President of Human Resources of
Consolidated Container Holdings since the closing of the transactions. Prior to
the transactions and since 1996, Mr. Stulman served as Vice President-Human
Resources of Continental Plastic Containers and Continental Caribbean
Containers. Between 1973 and 1987, he worked for Continental Can in various
human resources positions. Between 1988 and June 1993, Mr. Stulman served as
Corporate Director of Human Resources of Amphenol Corporation. Between
June 1993 and November 1995, he served as Vice President-Human Resources of
Pirelli Armstrong Tire Corporation. Mr. Stulman received a B.S. from Towson
State University.

20

WILLIAM G. BELL has served as a member of the management committee since the
closing of the transactions. Mr. Bell has been the owner and President of Aqua
Filter Fresh, Inc. since 1980, President of Bell Sales, Inc. since 1980 and the
Executive Vice President of Tyler Mountain Water Co. Inc. since 1985. Mr. Bell
is a director of Reid Plastics Holdings, Aqua Filter Fresh, Alpine Spring Water,
Inc., Wissahickon Spring Water Company and Bell Sales, Inc. Mr. Bell currently
serves as Vice Chairman of the International Bottled Water Association, an
organization he has been affiliated with since 1989.

JAMES P. KELLEY has served as a member of the management committee since the
closing of the transactions. Mr. Kelley is a Managing Director of Vestar Capital
Partners (an affiliate of Vestar Capital Partners III, L.P.) and was a founding
partner of Vestar Capital Partners at its inception in 1988. Mr. Kelley is a
director of Reid Plastics Holdings, Wabtec Corporation, St. John Knits,
International and Celestial Seasonings, companies in which Vestar Capital
Partners III, L.P., or an affiliate has or had a significant equity interest.
Mr. Kelley received a B.S. from the University of Northern Colorado, a J.D. from
the University of Notre Dame and an M.B.A. from Yale University.

LEONARD LIEBERMAN has served as a member of the management committee since
the closing of the transactions. Mr. Lieberman was the Chief Executive Officer
of Supermarkets General Corporation between 1983 and 1987 and of Outlet
Communications Inc. in 1991. Since before 1995, Mr. Lieberman has served as a
consultant to Vestar Capital Partners III, L.P., and its affiliates. Currently,
Mr. Lieberman is a director of Reid Plastics Holdings, Advanced Organics,
Celestial Seasonings, Russell-Stanley Holdings, Celestial Seasonings, Sonic
Corp. and Nice Pak Products, Inc. Vestar Capital Partners III, L.P., or an
affiliate has or had a significant equity interest in Reid Plastics Holdings,
Advanced Organics, Celestial Seasonings and Russell-Stanley Holdings.
Mr. Lieberman received a B.A. from Yale University, a J.D. from Columbia
University and participated in the Advanced Management Program at Harvard
Business School.

RICHARD L. ROBINSON has served as a member of the management committee since
January 2000. Mr. Robinson has been Co-Chairman of Robinson Dairy, Inc., a
wholly owned subsidiary of Suiza Foods Corporation, since August of 1999. From
June 1975 until August 1999, Mr. Robinson was the Chairman and Chief Executive
Officer of Robinson Dairy, Inc. Currently, Mr. Robinson is a director of Master
Dairies, Inc., Asset Investors, Inc., Columbia/HealthOne, and Horizon Organic
Dairy. Mr. Robinson received a B.S. from Colorado State University.

JOHN R. WOODARD has served as a member of the management committee since the
closing of the transactions. Mr. Woodard is a Managing Director of Vestar
Capital Partners and joined Vestar Capital Partners in 1998. Between March 1996
and February 1998, he served as a Managing Director of The Blackstone Group.
From 1990 to March 1996, Mr. Woodard was a Vice President of Vestar Capital
Partners. Mr. Woodard is also a director of Reid Plastics Holdings, a company in
which Vestar Capital Partners III, L.P., has a significant equity interest.
Mr. Woodard received a B.A. from Williams College.

Except as described in this section, there are no arrangements or
understandings between any member of the management committee or executive
officer and any other person under which that person was elected or appointed to
his position.

MANAGEMENT COMMITTEE COMPENSATION

All members of the management committee are reimbursed for their usual and
customary expenses incurred in attending all management committee and committee
meetings. Members of the management committee who are also employees of
Consolidated Container Holdings, Vestar Capital Partners or Suiza Foods do not
receive remuneration for serving as members of the management committee. Each
other member of the management committee will receive customary compensation of
$2,500 for each meeting of the management committee attended in person, and
$3,750 for each calendar quarter of service as a member of the management
committee.

21

Following the closing of the transactions, the management committee
established a compensation committee, comprised of Messrs. Davis, as chairman,
Bell, Kelley and the additional member of the management committee that Franklin
Plastics will designate in the future. In addition, the management committee
established an audit committee, comprised of Messrs. Lieberman, as chairman,
Bernon, Rokus and Woodard.

OPTION PLAN

Following the closing of the transactions, Consolidated Container Holdings
adopted a 1999 Unit Option Plan to provide some of its senior managers and other
key employees with options to acquire up to 596,206, or 5.5% on a fully diluted
basis, of the member units of Consolidated Container Holdings. Under the option
plan, Consolidated Container Holdings granted options to some of these senior
managers that represent the right to acquire, in total, 558,953 member units of
Consolidated Container Holdings. The exact pricing, performance criteria,
vesting terms and redemption of options granted under this plan are governed by
individual unit option agreements between the employee and Consolidated
Container Holdings and, if the options are exercised, the terms of the options
will be governed by special unit acquisition, ownership and redemption
agreements. In addition to the options to purchase member units in Consolidated
Container Holdings that were granted to some of our senior managers under the
option plan, these senior managers also hold options to purchase, in total,
344,166 member units of Consolidated Container Holdings that were exchanged for
their Franklin Plastics options. The compensation committee will administer the
option plan.

LONG-TERM INCENTIVE PLAN

Following the closing of the transactions, the management committee of
Consolidated Container Holdings adopted a bonus plan for some of its officers,
other key employees and outside consultants. If a liquidity event, as defined in
the bonus plan, were to occur, then the management committee of Consolidated
Container Holdings will establish a bonus pool of cash equal to a formula based
on the appreciation in value of the member units of Consolidated Container
Holdings. As defined in the bonus plan, a liquidity event includes:

- the sale of substantially all of the member units of Consolidated
Container Holdings held by Vestar Packaging and its affiliates;

- the sale of substantially all of the assets of Consolidated Container
Holdings; or

- an initial public offering of 50% or more of the member units of
Consolidated Container Holdings.

Those awarded grants under the bonus plan will share the bonus pool.
Consolidated Container Holdings will make bonus payments, however, only if
(1) a liquidity event occurs and (2) specified rates of return are realized by
Vestar Packaging LLC and its affiliates on their investment in Consolidated
Container Holdings. The management committee or the compensation committee of
Consolidated Container Holdings will administer the bonus plan. To date,
Consolidated Container Holdings has not made any awards under the bonus plan.

EMPLOYMENT AGREEMENTS

As of July 5, 1999, Consolidated Container Company entered into an
employment agreement with Peter M. Bernon. The employment agreement provides
that Mr. Bernon will be employed as an Executive Vice President of Consolidated
Container Company at an annual base salary of $325,000 for a term of two years,
subject to his earlier termination with or without "cause", which includes
willful misconduct, refusal to perform his duties and his conviction of a
felony, or his resignation with or without "good reason," which includes a
reduction in his salary, annual bonus opportunity or other benefits, a
relocation of his principal place of employment and his removal from his
position with

22

Consolidated Container Company. Mr. Bernon is entitled to a bonus of up to 80%
of his base salary at the discretion of the management committee of Consolidated
Container Holdings and to participate in any executive bonus plan and all
employee benefit plans maintained by Consolidated Container Company. In the
event that Consolidated Container Company terminates Mr. Bernon without cause or
he resigns for "good reason" before the employment agreement expires,
Mr. Bernon will be entitled to receive:

- any payments and benefits provided under any loans or programs in which he
participated before the termination;

- the salary and bonus he would otherwise have received through the end of
his term of employment;

- a cash lump sum payment for unused vacation and unpaid other compensation;
and

- continued employee medical and life insurance plans for the remainder of
the term of the employment agreement.

In the event of his death or permanent disability, Mr. Bernon will be
entitled to a reduced compensation package. In addition, Mr. Bernon has agreed
not to disclose any confidential information regarding Consolidated Container
Company and its affiliates.

As of July 2, 1999, Consolidated Container Company entered into an
employment agreement with William L. Estes. The employment agreement provides
that Mr. Estes will be employed as the Chief Executive Officer of Consolidated
Container Company at an annual base salary of $400,000 for a term of five years,
subject to his earlier termination with or without "cause", which includes
willful misconduct and his conviction of a felony, or his resignation with or
without "good reason," which includes a reduction in his salary or other
benefits and his removal from his position with Consolidated Container Company.
Mr. Estes is entitled to a bonus of up to 100% of his base salary at the
discretion of the management committee of Consolidated Container Holdings, to
participate in any executive bonus plan and all employee benefit plans
maintained by Consolidated Container Company and, under some circumstances, an
additional payment to offset negative tax effects on his benefits. In the event
that Consolidated Container Company terminates Mr. Estes without cause or he
resigns for good reason before the employment agreement expires, Mr. Estes will
be entitled to receive:

- any payments and benefits provided under any plans or programs in which he
participated before the termination;

- the salary and bonus he would otherwise have received;

- a cash lump sum payment for unused vacation and unpaid other compensation;
and

- continued employee medical and life insurance plans for the remainder of
the term of the employment agreement.

In the event of his death or permanent disability, Mr. Estes will be
entitled to a reduced compensation package. In addition, Mr. Estes agreed not to
disclose any confidential information regarding Consolidated Container Company
and its affiliates and not to be engaged in, in any capacity, in any business
that competes with Consolidated Container Company or solicit any person who was
employed by Consolidated Container Company and its affiliates during the twelve
months preceding that solicitation for a period of eighteen months after the
date of his termination of employment. In exchange for agreeing to be bound by
these covenants, Mr. Estes will receive payments during the eighteen month
period equal to one and one-half times the executive's base salary and an annual
target bonus.

As of July 5, 1999, Consolidated Container Company entered into an
employment agreement with Ronald E. Justice. The employment agreement provides
that Mr. Justice will be employed as an Executive Vice President of Consolidated
Container Company at an annual base salary of $230,000 for

23

a term of two years, subject to his earlier termination with or without "cause",
which includes willful misconduct, failure to perform his duties and his
conviction of a felony, or his resignation with or without "good reason," which
includes a reduction in his salary, annual bonus opportunity or other benefits,
a relocation of his principal place of employment and his removal from his
position with Consolidated Container Company. Mr. Justice is entitled to a bonus
of up to 80% of his base salary at the discretion of the management committee of
Consolidated Container Holdings, to participate in any executive bonus plan and
all employee benefit plans maintained by Consolidated Container Company and,
under some circumstances, an additional payment to offset negative tax effects
on his benefits. In the event that Consolidated Container Company terminates
Mr. Justice without cause or he resigns for good reason before the employment
agreement expires, Mr. Justice will be entitled to receive:

- any payments and benefits provided under any plans or programs in which he
participated before the termination;

- the salary and bonus he would otherwise have received over a twelve month
period;

- a cash lump sum payment for unused vacation and unpaid other compensation;
and

- continued employee medical and life insurance plans for the remainder of
term of the employment agreement.

In the event of his death or permanent disability, Mr. Justice will be
entitled to a reduced compensation package. In addition, Mr. Justice agreed not
to disclose any confidential information regarding Consolidated Container
Company and its affiliates and not to be engaged in, in any capacity, in any
business that competes with Consolidated Container Company or solicit any person
who was employed by Consolidated Container Company and its affiliates during the
twelve months preceding that solicitation for a period of twenty four months
after the date of his termination of employment. In exchange for agreeing to be
bound by these covenants, Mr. Justice will receive payments during the two year
period equal to one times the executive's base salary and an annual target
bonus.

As of July 5, 1999, Consolidated Container Holdings entered into an
employment agreement with Henry Carter. The employment agreement provides that
Mr. Carter will be employed as an Executive Vice President of Consolidated
Container Company at an annual base salary of $230,000 for a term of two years,
subject to his earlier termination with or without "cause", which includes
willful misconduct, failure to perform his duties and his conviction of a
felony, or his resignation with or without "good reason," which includes a
reduction in his salary, annual bonus opportunity or other benefits, a
relocation from his principal place of employment and his removal from his
position with Consolidated Container Company. Mr. Carter is entitled to a bonus
of up to 80% of his base salary at the discretion of the management committee of
Consolidated Container Holdings, to participate in any executive bonus plan and
all employee benefit plans maintained by Consolidated Container Company and,
under some circumstances, an additional payment to offset negative tax effects
on his benefits. In the event that Consolidated Container Company terminates
Mr. Carter without cause or he resigns for good reason before the employment
agreement expires, Mr. Carter will be entitled to receive:

- any payments and benefits provided under any plans or programs in which he
participated before the termination;

- the salary and bonus he would otherwise have received over a twelve month
period;

- a cash lump sum payment for unused vacation and unpaid other compensation;
and

- continued employee medical and life insurance plans for the remainder of
the term of the employment agreement.

In the event of his death or permanent disability, Mr. Carter will be
entitled to a reduced compensation package. In addition, Mr. Carter agreed not
to disclose any confidential information

24

regarding Consolidated Container Company and its affiliates and not to be
engaged in, in any capacity, any business that competes with Consolidated
Container Company or solicit any person who was employed by Consolidated
Container Company and its affiliates during the twelve months preceding that
solicitation for a period of twenty four months after the date of his
termination of employment. In exchange for agreeing to be bound by these
covenants, Mr. Carter will receive payments during the two year period equal to
one times the executive's base salary and an annual target bonus.

ITEM 11: EXECUTIVE COMPENSATION

The table below shows the compensation paid or credited by the Company
during the period from the formation of the Company, on July 2, 1999, through
December 31, 1999, to the Chief Executive Officer and the four other most highly
paid executive officers of the Company (the "named executive officers"):

SUMMARY COMPENSATION TABLE(1)

ALL OTHER
COMPENSATION
NAME AND PRINCIPAL POSITION SALARY ($) BONUS ($) ($)(2)
- - --------------------------- ---------- --------- ------------

William L. Estes............................................ $200,000 $200,000 $3,311
President and Chief Executive Officer

Peter M. Bernon............................................. $162,500 $130,000 --
Executive Vice President

Ronald E. Justice........................................... $115,000 $ 87,500 --
Executive Vice President of Operations

Henry Carter................................................ $115,000 $ 92,000 $3,450
Executive Vice President of
Sales and Marketing

Timothy W. Brasher.......................................... $ 90,000 $ 72,000 $2,700
Senior Vice President, Chief
Financial Officer and Secretary

- - ------------------------

(1) All of the compensation paid to or earned by the named executive officers
relates to performance during the period from July 2, 1999 through
December 31, 1999. No long term compensation was paid to any of the named
executive officers.

(2) Comprised of matching contributions by the Company to the accounts of the
named executive officers under a defined contribution benefit plan.

COMPENSATION OF DIRECTORS

See "Members of the Management Committee and Executive Officers" under
Item 10 of this report.

MANAGEMENT INCENTIVE COMPENSATION PLAN

The Consolidated Container Company Management Incentive Compensation Plan
(the "Incentive Plan") is a nonqualified bonus plan in which certain management
level employees are eligible to participate. At the beginning of each calendar
year, certain performance level targets are set for that year and at the end of
that year, the Management Committee determines whether or not the targets have
been met. If the targets have been met, participants will be paid such portion
of their salary as determined by their compensation class. Bonuses are paid in
the year following the year to which the bonus applies.

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ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Consolidated Container Company is the beneficial owner of all of the shares
of common stock of Consolidated Container Capital, and its address is 5602 N.
MacArthur Blvd., Suite 360, Irving, Texas 75038.

We provide below information concerning the beneficial ownership of the
member units and the economic interest in Consolidated Container Holdings at
December 31, 1999 by:

- each person known by us to be the beneficial owner of more than 5% of the
member units of Consolidated Container Holdings;

- each member of the management committee who is a holder of member units in
Consolidated Container Holdings; and

- the officers and members of the management committee of Consolidated
Container Holdings as a group.

NUMBER OF MEMBER UNITS
BENEFICIALLY OWNED(A) PERCENTAGE OF MEMBER
NAME AND ADDRESS OF BENEFICIAL OWNER (UNITS IN THOUSANDS) UNITS OUTSTANDING(A)
- - ------------------------------------ ---------------------- --------------------

5% EQUITY HOLDERS:
Vestar Packaging LLC(b).............................. 2,050 20.4%
Seventeenth Street Plaza
1225 17th Street, Suite 1660
Denver, Colorado 80202

Reid Plastics Holdings, Inc.(c)...................... 3,050 30.4%
Seventeenth Street Plaza
1225 17th Street, Suite 1660
Denver, Colorado 80202

Franklin Plastics, Inc.(d)........................... 4,900 48.9%
1199 West Central Street
Franklin, Massachusetts 02038

OFFICERS AND MANAGEMENT COMMITTEE MEMBERS:
Ronald V. Davis(b)(c)................................ -- --
Peter M. Bernon(d)(e)................................ -- --
B. Joseph Rokus(c)................................... -- --
William L. Estes(e)(f)............................... -- --
Ronald E. Justice(e)................................. -- --
Henry Carter(e)...................................... -- --
Timothy W. Brasher(e)................................ -- --
David M. Stulman(g).................................. -- --
William G. Bell...................................... -- --
James P. Kelley(b)................................... -- --
Leonard Lieberman(b)................................. -- --
Richard L. Robinson.................................. -- --
John R. Woodard(b)................................... -- --

ALL OFFICERS AND MEMBERS OF THE MANAGEMENT COMMITTEE
AS A GROUP (12 persons)(h):........................ -- --

- - ------------------------

(a) The amounts and percentage of member units beneficially owned are reported
on the basis of regulations of the Securities and Exchange Commission
governing the determination of beneficial ownership of securities. Under the
regulations, a person is deemed to be a "beneficial owner" of a security if
that person has or shares "voting power," which includes the power to vote
or to direct the voting of that security, or "investment power," which
includes the power to dispose of or to

26

direct the disposition of that security. A person is also deemed to be a
beneficial owner of any securities of which that person has a right to
acquire beneficial ownership within 60 days. Under these rules, more than
one person may be deemed a beneficial owner of the same securities and a
person may be deemed to be a beneficial owner of securities as to which he
has no economic interest.

(b) Vestar Packaging LLC, a Delaware limited liability company, is 69.4% owned
by Vestar Capital Partners III, L.P., 4.9% owned by Vestar Reid LLC, 1.1%
owned by Davis Capital LLC, 8.0% owned by BT Capital Investors, L.P., an
affiliate of Deutsche Bank Securities Inc., 8.0% by DLJ Private Equity
Partners Fund, L.P., DLJ Fund Investment Partners II, L.P., DLJ Private
Equity Employees Fund, L.P. and DLJ Capital Partners I, LLC, each an
affiliate of Donaldson, Lufkin & Jenrette Securities Corporation, and some
employees of Donaldson, Lufkin & Jenrette Securities Corporation, 0.16%
owned by Leonard Lieberman, 0.05% owned by John R. Woodard and 8.4% owned by
other persons. Vestar Reid LLC, a Delaware limited liability company, is
94.2% owned by Vestar Capital Partners III, L.P., 3.3% owned by Davis
Capital LLC and 2.5% owned by other persons. Davis Capital LLC, a Delaware
limited liability company, is 100% owned by Ronald V. Davis and his
affiliates. In addition, each of James P. Kelley and John R. Woodard is a
Vice President of Vestar Associates Corporation III. Vestar Associates
Corporation III is the sole general partner of Vestar Associates III, L.P.,
Vestar Associates III, L.P., is the sole general partner of Vestar Capital
Partners III, L.P., and Vestar Capital Partners III, L.P. controls Vestar
Packaging LLC, which owns 20.4% of the member units in Consolidated
Container Holdings, and is the 94.2% owner of Vestar Reid LLC, which owns
82.6% of Reid Plastics Holdings, Inc., which, in turn, owns 30.4% of the
member units in Consolidated Container Holdings. Mr. Lieberman owns 0.03% of
Vestar Capital Partners III, L.P., in addition to his ownership of 0.16% of
Vestar Packaging LLC. Mr. Davis, as an owner of Vestar Packaging LLC,
Mr. Lieberman, as an owner of Vestar Capital Partners III, L.P., and an
owner of Vestar Packaging LLC, Mr. Kelley, as an executive officer of Vestar
Associates Corporation III, and Mr. Woodard, as an executive officer of
Vestar Associates Corporation III and as an owner of Vestar Packaging LLC,
may be deemed to share beneficial ownership of Vestar Packaging LLC's member
units of Consolidated Container Holdings LLC. Each of these individuals
disclaims this beneficial ownership.

(c) Reid Plastics Holdings, Inc., a Delaware corporation, is 82.6% owned by
Vestar Reid LLC, 13.8% owned by B. Joseph Rokus, with options to purchase an
additional 2.4% on a fully diluted basis, 2.8% owned by Davis Capital LLC,
with options to purchase an additional 2.6% on a fully diluted basis, and
3.6% owned by others. Vestar Reid LLC, a Delaware limited liability company,
is 94.2% owned by Vestar Capital Partners III, L.P., 3.3% owned by Davis
Capital LLC and 2.5% owned by other persons. Davis Capital LLC, a Delaware
limited liability company, is 100% owned by Ronald V. Davis and his
affiliates. Mr. Rokus, as a direct owner of Reid Plastics Holdings, Inc.,
and Mr. Davis, as a direct and as an indirect owner of Reid Plastics
Holdings, Inc., may be deemed to share beneficial ownership of Reid Plastic
Holdings, Inc.'s member units of Consolidated Container Holdings LLC.
Messrs. Rokus and Davis disclaim this beneficial ownership.

(d) Franklin Plastics, Inc., a Delaware corporation, is 88% owned by Suiza Foods
Corporation, 6% owned by Peter M. Bernon and 6% owned by Alan J. Bernon, the
brother of Peter M. Bernon. In addition, Messrs. Bernon each own warrants to
purchase 45,940 shares representing approximately 3% of the outstanding
common stock of Franklin Plastics, Inc. on a fully diluted basis. In
addition, Mr. Peter Bernon owns less than 1.0% of the common stock of Suiza
Foods Corporation at December 31, 1999. Peter M. Bernon, as an owner of
Franklin Plastics, Inc., may be deemed to share beneficial ownership of
Franklin Plastics, Inc.'s member units of Consolidated Container Holdings
LLC. Mr. Bernon disclaims this beneficial ownership.

(e) Peter M. Bernon, William L. Estes, Ronald E. Justice, Henry Carter, Timothy
W. Brasher and David M. Stulman were among a group of former employees of
Suiza Packaging who were granted options to purchase the member units of
Consolidated Container Holdings LLC as a replacement for options of an
equivalent economic value in common stock of Franklin Plastics, Inc. as
described under "The Transactions - Contribution and Merger Agreement -
Franklin Replacement

27

Options." Mr. Bernon holds presently exercisable options to purchase 18,334
member units of Consolidated Container Holdings LLC. Mr. Estes holds
presently exercisable options to purchase 55,018 member units of
Consolidated Container Holdings LLC. Mr. Justice holds presently exercisable
options to purchase 9,802 member units of Consolidated Container Holdings
LLC. Mr. Carter holds presently exercisable options to purchase 4,901 member
units of Consolidated Container Holdings LLC.

(f) William L. Estes owns less than 0.01% of the common stock of Suiza Foods
Corporation at December 31, 1999. Suiza Foods Corporation owns 88% of the
common stock of Franklin Plastics, Inc. As an indirect owner of Franklin
Plastics, Inc., Mr. Estes may be deemed to share beneficial ownership of
Franklin Plastics, Inc.'s member units of Consolidated Container Holdings
LLC. Mr. Estes disclaims this beneficial ownership.

(g) David M. Stulman owns presently exercisable options to purchase 4,572 shares
of common stock of Suiza Foods Corporation, or less than 0.01% of the common
stock of Suiza Foods Corporation at December 31, 1999. Suiza Foods
Corporation owns 88% of the common stock of Franklin Plastics, Inc. As an
indirect owner of Franklin Plastics, Inc., Mr. Stulman may be deemed to
share beneficial ownership of Franklin Plastics, Inc.'s member units of
Consolidated Container Holdings LLC. Mr. Stulman disclaims this beneficial
ownership.

(h) The officers and members of the management committee of Consolidated
Container Holdings LLC as a group own, in total, presently exercisable
options to purchase 88,055 member units of Consolidated Container Holdings
LLC.

ITEM 13: CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

We summarize below the material terms and provisions of the material
agreements and arrangements of Consolidated Container Company as well as those
in existence prior to the closing of the transactions that relate to the
businesses which were contributed to Consolidated Container Company in
connection with the Transactions.

LIMITED LIABILITY COMPANY AGREEMENT OF CONSOLIDATED CONTAINER HOLDINGS

Simultaneously with the closing of the Transactions, Vestar Packaging, Reid
Plastics Holdings and Franklin Plastics entered into a limited liability
agreement of Consolidated Container Holdings, the sole member of Consolidated
Container Company. The limited liability company agreement of Consolidated
Container Holdings provides for its management, non-compete arrangements,
transfer restrictions and related matters. We summarize its material provisions
below.

MANAGEMENT

The management committee of Consolidated Container Holdings has general
powers of supervision, direction and control over the business of Consolidated
Container Holdings and, through Consolidated Container Holdings, Consolidated
Container Company and its subsidiaries. The management committee consists of
nine members, two of whom were appointed by Vestar Packaging LLC, two of whom
were appointed by Reid Plastics Holdings, one of whom was appointed mutually by
Vestar Packaging LLC and Reid Plastics Holdings, one of whom was appointed by
Franklin Plastics, one member is Peter M. Bernon, one of whom is the chief
executive officer of Consolidated Container Holdings, who currently is William
Estes, and one of whom is B. Joseph Rokus. The management committee may be
expanded to appoint independent members, so long as Vestar Packaging and Reid
Plastics Holdings continue to designate a majority of the members of the
management committee.

28

A majority of the members of the management committee and the affirmative
vote of at least one Suiza Foods-appointed member of the management committee
and one Vestar Packaging-appointed member of the management committee is
required for some decisions by the management committee. These decisions
include:

- issuing any equity securities, other than private offerings for less than
$50 million and issuances under Consolidated Container Holdings' option
plan;

- accepting or requiring additional capital contributions;

- incurring debt, other than amounts permitted as of the closing date of the
transactions, in excess of $80 million;

- selling or pledging all or substantially all of Consolidated Container
Company's assets;

- acquiring any business or assets in excess of $80 million;

- selling any operations or assets in excess of $80 million;

- entering into or amending any agreement with a member or its affiliate;
and

- expanding the scope of business beyond the plastic packaging business.

NON-COMPETITION ARRANGEMENTS

Each of the members of Consolidated Container Holdings is subject to a
non-competition arrangement limiting its ability to compete in the business for
plastic packaging products and plastic bottles for dairy, water or juice in the
same geographical area served by Consolidated Container Holdings and its
subsidiaries. In general, these geographic areas are in the United States and
Canada. The non-competition arrangements will terminate after five years or, if
earlier, upon either of Vestar Packaging LLC (together with Reid Plastics
Holdings) or Franklin Plastics owning less than 10% of the member units of
Consolidated Container Holdings. The following exceptions apply to these non-
competition arrangements:

- Suiza Foods may continue to operate its Puerto Rico plastic operations,
which it currently owns and which are not being contributed to
Consolidated Container Company.

- Certain affiliates of Suiza Foods may manufacture plastic packaging
products solely for their own use.

- In connection with future acquisitions, Suiza Foods may operate any
plastic packaging operations that it acquires and that constitute 50% or
less of the revenue of that acquired business, provided that Suiza Foods:

- offers to sell the competing plastic packaging operations to
Consolidated Container Company within six months of that acquisition;
and

- sells the competing plastic packaging operations to an unaffiliated
third party within twelve months of that acquisition, if an agreement
with Consolidated Container Company cannot be reached.

- Affiliates of Vestar Packaging LLC may continue to own and operate
Russell-Stanley Holdings. Russell-Stanley Holdings is a manufacturer and
marketer of plastic and steel industrial containers and a provider of
related container services in the United States and Canada. It is
controlled by Vestar Capital Partners III, L.P., and its affiliates.

- Vestar Packaging and its affiliates may make (a) a non-controlling equity
investment in a competing business if that equity investment is for less
than $75 million and (b) a non-controlling, non-equity investment in a
competing business.

29

- Vestar Packaging and its affiliates, excluding Reid Plastics Holdings, may
operate any plastic packaging operations that either:

- constitute 50% or less of the revenue of that acquired business and
generate less than $25 million in revenue for the twelve month period
prior to that acquisition;

- constitute 50% or less of the revenue of that acquired business,
provided that Vestar Packaging or its appropriate affiliate (a) offers
to sell the competing plastic packaging operations to Consolidated
Container Company within six months of that acquisition and (b) sells
the competing plastic packaging operations to an unaffiliated
third-party within twelve months of that acquisition, if an agreement
with Consolidated Container Company cannot be reached; or

- is in a product category for which Consolidated Container Company and
its subsidiaries have less than $25 million in revenues.

PREFERRED UNITS

Consolidated Container Holdings may issue preferred units to its members to
compensate them for the payment of some tax distributions to other members, to
satisfy some indemnification claims, as described under "The
Transactions--Contribution and Merger Agreement," and in other circumstances. If
issued, the preferred units will be issued at a liquidation value determined by
reference to the value of the event causing the issuance of the preferred units
and will accrue distribution rights at an annual rate of 12.5% (7.5% for
preferred units issued with respect to income tax matters). Upon the issuance of
the preferred units, the capital contributions of all of the holders of member
units of Consolidated Container Holdings will be reduced retroactively and
proportionally by the amount of the total liquidation value of the preferred
units which are issued.

Consolidated Container Holdings may optionally redeem any preferred units
which are issued at a redemption price equal to the liquidation value plus any
accrued but unpaid distribution rights of these preferred units, subject to the
restrictions contained in the agreements governing our debt. Consolidated
Container Holdings is required to redeem all issued preferred units prior to any
redemption of other units upon:

- a sale of all or substantially all of the assets of Consolidated Container
Holdings;

- an initial public offering of Consolidated Container Holdings; or

- the merger of Consolidated Container Holdings into Reid Plastics Holdings
in anticipation of an initial public offering of Reid Plastics Holdings as
described below, causing the issuance of the preferred units.

Subject to some limitations, Reid Plastics Holdings, Vestar Packaging or
Franklin Plastics may choose to convert any preferred units that they hold into
member units upon the exercise of Reid Plastics Holdings' or Vestar Packaging's
right of first offer or Franklin Plastics' tag-along rights discussed below
under "Transfer Restrictions--Right of First Offer/Tag-Along Rights."

Any amendment of the limited liability company agreement of Consolidated
Container Holdings which would adversely affect the rights of holders of
preferred units requires the approval of a majority of the holders of any
outstanding preferred units. Holders of preferred units, if any, will have no
other voting rights.

PREEMPTIVE AND ANTI-DILUTION RIGHTS

Each of Franklin Plastics, Reid Plastics Holdings and Vestar Packaging has
preemptive rights, subject to some exceptions, to allow it to maintain its
percentage ownership in the event Consolidated

30

Container Holdings issues additional equity interests. Franklin Plastics, Reid
Plastics Holdings and Vestar Packaging also have anti-dilution rights, subject
to some exceptions, in the event Consolidated Container Holdings issues any
equity interests for less than fair market value. The preemptive and anti-
dilution rights will terminate upon an initial public offering of Consolidated
Container Holdings or any successor to it.

TRANSFER RESTRICTIONS

The members of Consolidated Container Holdings are restricted in
transferring their interests in Consolidated Container Holdings prior to four
years after the execution of the limited liability company agreement, except for
some limited exceptions which permit transfers to affiliates and pledges to some
lenders. After the fourth anniversary of the execution of the limited liability
company agreement, these parties will have the following rights:

RIGHT OF FIRST OFFER/TAG-ALONG RIGHTS. If either Reid Plastics Holdings
or Vestar Packaging desires to sell any of its member units and preferred
units, it will be required to offer the member units and the preferred
units first to Franklin Plastics. If Franklin Plastics declines to
purchase these units, Reid Plastics Holdings or Vestar Packaging can sell
these units to a third party on substantially similar terms. Franklin
Plastics will then have tag-along rights in connection with that sale for
a proportionate number of these units.

DRAG-ALONG RIGHTS. If either Reid Plastics Holdings or Vestar Packaging
proposes to sell all of its member units and Franklin Plastics declines
to exercise first offer rights, Reid Plastics Holdings or Vestar
Packaging can compel Franklin Plastics to sell all of its member units to
the proposed purchaser.

PUT RIGHTS. If an initial public offering of Consolidated Container
Holdings has not occurred within four years after the closing of the
transactions, then Franklin Plastics will have the right to offer to sell
all of its member units and preferred units, if any, to Reid Plastics
Holdings or Vestar Packaging at fair market value. If Reid Plastics
Holdings or Vestar Packaging declines to purchase these member units,
Franklin Plastics will have the right to offer to sell all of its member
units and preferred units, if any, to Consolidated Container Holdings. If
Consolidated Container Holdings declines to purchase the units,
Consolidated Container Holdings will be obligated to cause a sale of the
business or initiate an initial public offering of Consolidated Container
Holdings as soon as practicable. If Consolidated Container Holdings is
unable to sell the business or consummate an initial public offering of
Consolidated Container Holdings within 180 days, Franklin Plastics will
be free to sell its member units without restriction. Each of Reid
Plastics Holdings and Vestar Packaging will have comparable put rights
but only in circumstances where it has been proposed that Consolidated
Container Holdings initiate an initial public offering and that offering
was vetoed by Franklin Plastics.

In connection with an initial public offering, Consolidated Container
Holdings and Franklin will be merged into Reid Plastics Holdings and each
membership interest in Consolidated Container Holdings and Franklin will be
converted into common stock of Reid Plastics Holdings.

MANAGEMENT AGREEMENT

Consolidated Container Holdings, Consolidated Container Company and Vestar
Capital Partners entered into a management agreement on April 29, 1999 relating
to the management of Consolidated Container Company and Consolidated Container
Holdings. Under this agreement, Consolidated Container Holdings or Consolidated
Container Company has paid Vestar Capital Partners a fee of $5 million and has
reimbursed Vestar Capital Partners for all out-of-pocket expenses incurred by it
in connection with the closing of the transactions. In addition, Vestar Capital
Partners has been providing on-going management services to Consolidated
Container Holdings and Consolidated Container

31

Company since the closing of the transactions, including strategic, financial
planning and advisory services. For these services, Consolidated Container
Holdings or Consolidated Container Company pays Vestar Capital Partners an
annual fee of the greater of $500,000 or 0.42% of the earnings before interest
and taxes plus depreciation and amortization, as defined in the management
agreement, of the prior year of Consolidated Container Holdings, Consolidated
Container Company and their subsidiaries on a consolidated basis and reimburses
Vestar Capital Partners for all out-of-pocket expenses incurred by it in
connection with these services. The management agreement will terminate when
Vestar Packaging, its members, Vestar Capital Partners III, L.P., its partners
and their affiliates collectively own less than 25% of the member units of
Consolidated Container Holdings or, if earlier, following the closing of an
initial public offering of Consolidated Container Holdings. Consolidated
Container Holdings and Consolidated Container Company have also agreed to
indemnify Vestar Capital Partners against some of the liabilities and costs
incurred in connection with its engagement.

REGISTRATION RIGHTS AGREEMENT OF REID PLASTICS HOLDINGS

In connection with a possible future initial public offering of equity
interests in Consolidated Container Holdings, Reid Plastics Holdings and the
holders of member units in Consolidated Container Holdings will enter into a
registration rights agreement. In connection with that initial public offering,
Consolidated Container Holdings and Franklin Plastics will be merged into Reid
Plastics Holdings as described under the section "Limited Liability Company
Agreement of Consolidated Container Holdings" above. If executed, the
registration rights agreement will provide that Reid Plastics Holdings will
grant rights to holders of its common stock to have that common stock registered
under the Securities Act of 1933 following the mergers described above. To the
extent that owners of options to purchase common stock of Franklin Plastics
replace these options with options to purchase member units in Consolidated
Container Holdings held by Suiza Foods, these parties will also be entitled to
the registration rights described here. Stockholders will have the right,
subject to some limitations, to one demand registration for every 10% of Reid
Plastics Holdings owned by them following the initial public offering, rounded
to the nearest 10%, provided that none of them shall have any registration
rights if their ownership is below 5%. Reid Plastics Holdings will not be
required to effect any registration demanded unless the stockholders request it
to register common stock with a fair market value of at least $20 million.
Stockholders will also have piggyback registration rights, subject to some
limitations.

LIMITED LIABILITY COMPANY AGREEMENT OF CONSOLIDATED CONTAINER COMPANY

Simultaneously with the closing of the transactions, Consolidated Container
Holdings, as the sole member of Consolidated Container Company, entered into a
limited liability company agreement for Consolidated Container Company. As its
sole member, Consolidated Container Holdings manages Consolidated Container
Company under this agreement.

SUPPLY AGREEMENTS

The Company entered into agreements to supply Suiza Foods Corporation with
bottles and bottle components. The prices for bottles are based on the prices
that were in effect in July 1999 between Suiza Foods Corporation and Suiza
Packaging prior to the transactions are subject to adjustments based on changes
in raw material, manufacturing and delivery costs.

TRADEMARK LICENSE AGREEMENT

Simultaneously with the closing of the transactions, Consolidated Container
Holdings and Consolidated Container Company entered into a trademark license
agreement with Continental Can Company, Inc. ("Continental Can"), a wholly owned
subsidiary of Suiza Foods Corporation. Continental Can granted Consolidated
Container Holdings and Consolidated Container Company a non-exclusive license to
use some of its trademarks in the United States. The trademark license will be

32

royalty free as long as Suiza Foods directly or indirectly owns 10% or more of
Consolidated Container Holdings. Consolidated Container Holdings and
Consolidated Container Company will be required to pay Continental Can an annual
trademark licensing fee of $100,000 if Suiza Foods directly or indirectly owns
less than 10% of Consolidated Container Holdings.

ASSUMPTION AGREEMENT

Simultaneously with the closing of the transactions, Consolidated Container
Holdings and Consolidated Container Company entered into an assumption agreement
with Reid Plastics Holdings to assume all of the obligations of Reid Plastics
Holdings to B. Joseph Rokus. Currently, Reid Plastics Holdings is obligated to
make some payments to Mr. Rokus which relate to the 1997 acquisition of a
controlling interest in Reid Plastics Holdings by Vestar Reid. These payments
include $400,000 each year, additional amounts up to $3.4 million if specified
investment returns of Reid Plastics are achieved and up to $4.8 million upon an
initial public offering of Reid Plastics Holdings, if specified investment
returns are achieved, or specified qualified sales of Reid Plastics Holdings by
Vestar Reid, the parent of Reid Plastics Holdings and a controlled affiliate of
Vestar Capital Partners III, L.P. Consolidated Container Holdings has agreed to
indemnify Suiza Foods Corporation against some of these payments.

TRANSITION SERVICES AGREEMENT

Simultaneously with the closing of the transactions, Suiza Foods Corporation
entered into a transition services agreement with Consolidated Container
Holdings and Consolidated Container Company. Under the agreement, Suiza Foods
and its affiliates agreed to continue to supply office and other services to
Consolidated Container Holdings and Consolidated Container Company in the manner
which and to the extent that they had historically provided these services to
Suiza Packaging prior to the closing of the transactions. These services include
the lease of office space at Suiza Foods' actual allocable cost of rent;
telephone services at Suiza Foods' actual allocable cost; computer services at
$50,000 per month; electricity services at $285,000 per month for all leased
facilities; medical insurance policies and employee benefits for some of our
senior officers at Suiza Foods' actual allocable costs; and payments under
insurance policies, letters of credit and related performance or payment
guarantees regarding equipment leases, workers' compensation claims and related
matters at Suiza Foods' actual allocable share of payments. The transition
services agreement terminated at December 31, 1999.

ADDITIONAL MATTERS

Aqua Filter Fresh, of which William G. Bell is the 75% owner, President and
a director, has purchased containers from Reid Plastics at market terms. In
1999, these purchases amounted to over $3.0 million.

An affiliate of B. Joseph Rokus received payments of approximately $85,000
in connection with the termination of a real estate lease from Reid Plastics in
1999 for its Monrovia, California facility, which was previously consolidated
with another one of our facilities.

In addition, Peter M. Bernon and some of his family members are
beneficiaries of a family trust which leases property to a subsidiary of Suiza
Foods which subleases a portion of this property to Franklin Plastics. In 1999,
sublease payments on this portion of the property totaled approximately $75,000.

33

PART IV

ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND CURRENT REPORTS ON
FORM 8-K

(a)(1) FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS

PAGE
--------

CONSOLIDATED CONTAINER COMPANY LLC
Independent Auditors' Report.............................. F-1
Consolidated Balance Sheets as of December 31, 1998 and
1999.................................................... F-2
Consolidated Statements of Operations and Comprehensive
Income (Loss) for the period from January 1, 1997
through October 14, 1997, the period from October 15,
1997 through December 31, 1997, for the year ended
December 31, 1998, for the period from January 1, 1999
through July 1, 1999, and for the period from July 2,
1999 through December 31, 1999.......................... F-3
Consolidated Statements of Shareholders'/Member's Equity
for the period from January 1, 1997 through
October 14, 1997, the period from October 15, 1997
through December 31, 1997, for the year ended
December 31, 1998, for the period from January 1, 1999
through July 1, 1999, and for the period from July 2,
1999 through December 31, 1999.......................... F-4
Consolidated Statements of Cash Flows for the period from
January 1, 1997 through October 14, 1997, the period
from October 15, 1997 through December 31, 1997, for the
year ended December 31, 1998, for the period from
January 1, 1999 through July 1, 1999, and for the period
from July 2, 1999 through December 31, 1999............. F-5
Notes to Consolidated Financial Statements................ F-6

SUIZA PACKAGING
Independent Auditors' Reports............................. F-31
Combined Balance Sheet as of December 31, 1998............ F-33
Combined Statements of Operations for the six-month period
ended March 31, 1997, the four-month period ended
July 31, 1997, the five-month period ended December 31,
1997 and the year ended December 31, 1998............... F-34
Combined Statements of Stockholders' Equity for the
six-month period ended March 31, 1997, the four-month
period ended July 31, 1997, the five-month period ended
December 31, 1997 and the year ended December 31,
1998.................................................... F-35
Combined Statements of Cash Flows for the six-month period
ended March 31, 1997, the four-month period ended
July 31, 1997, the five-month period ended December 31,
1997 and the year ended December 31, 1998............... F-36
Notes to Combined Financial Statements.................... F-37

PLASTIC CONTAINERS, INC.
Independent Auditors' Reports............................. F-51
Consolidated Statements of Operations for the year ended
December 31, 1997 and the period from January 1, 1998
through May 29, 1998.................................... F-53
Consolidated Statements of Stockholders' Equity for the
year ended December 31, 1997 and the period from
January 1, 1998 through May 28, 1998.................... F-54
Consolidated Statements of Cash Flows for the year ended
December 31, 1997 and the period from January 1, 1998
through May 28, 1998.................................... F-55
Notes to Consolidated Financial Statements................ F-56

34

(a)(2) FINANCIAL STATEMENT SCHEDULES

All schedules are inapplicable or have been disclosed in the Notes to
Consolidated Financial Statements, and, therefore, have been omitted.

(a)(3) EXHIBITS

EXHIBIT NO. DESCRIPTION OF EXHIBIT
- - --------------------- ----------------------

3.1(a) Certificate of Formation of Consolidated Container
Company LLC. (The Certificate of Formation, included as
Exhibit 3.1(a)to the Registration Statement on Form S-4 of
Consolidated Container Company LLC, Consolidated Container
Capital, Inc. and the Registrant Guarantors listed therein
(the "Registration Statement") as filed on January 20,
2000 is hereby incorporated herein by reference.)
3.1(b) Limited Liability Company Agreement of Consolidated
Container Company LLC. (The Limited Liability Company
Agreement, included as Exhibit 3.1(b) to the Registration
Statement as filed on January 20, 2000 is hereby
incorporated herein by reference.)
3.2(a) Certificate of Formation of Consolidated Container
Holdings LLC. (The Certificate of Formation, included as
Exhibit 3.7(a) to the Registration Statement as filed on
January 20, 2000 is hereby incorporated herein by
reference.)
3.3(b) Amended and Restated Limited Liability Company Agreement of
Consolidated Container Holdings LLC. (The Limited
Liability Company Agreement, included as Exhibit 3.7(b)
to the Registration Statement as filed on January 20, 2000
is hereby incorporated herein by reference.)
4.1 Indenture dated as of July 1, 1999 among Consolidated
Container Company LLC and Consolidated Container
Capital, Inc., as Issuers, the Subsidiary Guarantors
listed therein and The Bank of New York, as Trustee. (The
Indenture, included as Exhibit 4.1 to the Registration
Statement as filed on January 20, 2000 is hereby
incorporated herein by reference.)
4.2 Form of 10 1/8% Senior Subordinated Note due 2009 and
annexed Guarantees. (The Form of Note, included as
Exhibit 4.2 to the Registration Statement as filed on
January 20, 2000 is hereby incorporated herein by
reference.)
10.1 Credit Agreement dated as of July 1, 1999 among Consolidated
Container Holdings LLC, Consolidated Container
Company LLC, various Banks, Bankers Trust Company, as
Administrative Agent, Morgan Guaranty Trust Company of New
York, as Documentation Agent and Donaldson, Lufkin &
Jenrette Securities Corporation, as Syndication Agent.
(The Credit Agreement, included as Exhibit 10.1 to the
Registration Statement as filed on January 20, 2000 is
hereby incorporated herein by reference.)
10.2 Pledge Agreement dated as of July 1, 1999 by Consolidated
Container Holdings LLC, Consolidated Container
Company LLC, the Subsidiary Guarantors and each other
Subsidiary of Consolidated Container Company LLC that is
required to execute a counterpart thereof and Bankers
Trust Company as Collateral Agent. (The Pledge Agreement,
included as Exhibit 10.2 to the Registration Statement as
filed on January 20, 2000 is hereby incorporated herein by
reference.)
10.3 Security Agreement dated as of July 1, 1999 among
Consolidated Container Holdings LLC, Consolidated
Container Company LLC, Various Subsidiaries and Bankers
Trust Company as Collateral Agent .(The Security
Agreement, included as Exhibit 10.3 to the Registration
Statement as filed on January 20, 2000 is hereby
incorporated herein by reference.)

35

EXHIBIT NO. DESCRIPTION OF EXHIBIT
- - --------------------- ----------------------

10.4 Subsidiary Guaranty dated as of July 1, 1999 by Reid
Plastics Group LLC, Plastic Containers LLC, Continental
Plastic Containers LLC and Continental Caribbean
Containers, Inc. (The Subsidiary Guaranty, included as
Exhibit 10.4 to the Registration Statement as filed on
January 20, 2000 is hereby incorporated herein by
reference.)
10.6 Trademark License Agreement dated as of July 1, 1999 between
Continental Can Company, Inc., Consolidated Container
Holdings LLC and Consolidated Container Company LLC. (The
Trademark License Agreement, included as Exhibit 10.6 to
the Registration Statement as filed on January 20, 2000 is
hereby incorporated herein by reference.)
10.7 Management Agreement dated as of April 29, 1999 among
Consolidated Container Holdings LLC, Consolidated
Container Company LLC and Vestar Capital
Partners III L.P. (The Management Agreement, included as
Exhibit 10.7 to the Registration Statement as filed on
January 20, 2000 is hereby incorporated herein by
reference.)
10.8 Transition Services Agreement dated as of July 2, 1999 by
and among Suiza Foods Corporation, Consolidated Container
Holdings LLC and Consolidated Container Company LLC. (The
Transition Services Agreement, included as Exhibit 10.8 to
the Registration Statement as filed on January 20, 2000 is
hereby incorporated herein by reference.)
10.9(a)* Consolidated Container Holdings LLC 1999 Unit Option Plan.
(The Unit Option Plan, included as Exhibit 10.9(a) to the
Registration Statement as filed on January 20, 2000 is
hereby incorporated herein by reference.)
10.9(b)* Form of Option Agreement relating to the Consolidated
Container Holdings LLC 1999 Unit Option Plan.(The Form of
Option Agreement, included as Exhibit 10.9(b) to the
Registration Statement as filed on January 20, 2000 is
hereby incorporated herein by reference.)
10.9(c)* Special Unit Acquisition, Ownership and Redemption Agreement
relating to the Consolidated Container Holdings LLC 1999
Unit Option Plan. (The Special Unit Acquisition, Ownership
and Redemption Agreement, included as Exhibit 10.9(c) to
the Registration Statement as filed on January 20, 2000 is
hereby incorporated herein by reference.)
10.10(a)* Consolidated Container Holdings LLC Replacement Units Option
Plan for Options Issued Pursuant to the Franklin
Plastics, Inc. 1998 Stock Option Plan. (The Replacement
Units Option Plan, included as Exhibit 10.10(a) to the
Registration Statement as filed on January 20, 2000 is
hereby incorporated herein by reference.)
10.10(b)* Form of Original Consolidated Container Holdings LLC
Replacement Units Option Agreement for Option Issued
Pursuant to the Franklin Plastics, Inc. 1998 Stock Option
Plan. (The Form of Replacement Units Option Agreement,
included as Exhibit 10.10(b) to the Registration
Statement as filed on January 20, 2000 is hereby
incorporated herein by reference.)
10.10(c)* Form of Modified Consolidated Container Holdings LLC
Replacement Units Option Agreement for Options Issued
Pursuant to the Franklin Plastics, Inc. 1998 Stock Option
Plan. (The Form of Replacement Units Option Agreement,
included as Exhibit 10.10(c) to the Registration
Statement as filed on January 20, 2000 is hereby
incorporated herein by reference.)
10.11* Long-Term Incentive Plan. (The Long-Term Incentive Plan,
included as Exhibit 10.11 to the Registration Statement as
filed on January 20, 2000 is hereby incorporated herein by
reference.)

36

EXHIBIT NO. DESCRIPTION OF EXHIBIT
- - --------------------- ----------------------

10.12* Employment Agreement dated as of July 5, 1999 between
Consolidated Container Company LLC and Peter Bernon. (The
Employment Agreement, included as Exhibit 10.12 to the
Registration Statement as filed on January 20, 2000 is
hereby incorporated herein by reference.)
10.13* Employment Agreement dated as of July 2, 1999 between
Consolidated Container Company LLC and William Estes. (The
Employment Agreement, included as Exhibit 10.13 to the
Registration Statement as filed on January 20, 2000 is
hereby incorporated herein by reference.)
10.14* Employment Agreement dated as of July 5, 1999 between
Consolidated Container Company LLC and Ronald E. Justice.
(The Employment Agreement, included as Exhibit 10.14 to
the Registration Statement as filed on January 20, 2000 is
hereby incorporated herein by reference.)
10.15* Employment Agreement dated as of July 5, 1999 between
Consolidated Container Company LLC and Henry Carter. (The
Employment Agreement, included as Exhibit 10.15 to the
Registration Statement as filed on January 20, 2000 is
hereby incorporated herein by reference.)
10.16* Amended and Restated Employment Agreement dated as of
September 15, 1998 by and between Reid Plastics, Inc. and
B. Joseph Rokus. (The Amended and Restated Employment
Agreement, included as Exhibit 10.16 to the Registration
Statement as filed on January 20, 2000 is hereby
incorporated herein by reference.)
12 Statement regarding the Computation of the Ratios of
Earnings to Fixed Charges. (Filed herewith.)
21 List of Subsidiaries of the Registrant. (The List of
Subsidiaries, included as Exhibit 21 to the Registration
Statement as filed on January 20, 2000 is hereby
incorporated herein by reference.)
27 Financial Data Schedule. (Filed herewith.)
99.1 Contribution and Merger Agreement by and among Suiza Foods
Corporation, Franklin Plastics, Inc. and affiliates,
Vestar Packaging LLC, Reid Plastics Holdings, Inc. and
affiliates, Consolidated Container Holdings LLC,
Consolidated Container Company LLC and Reid Plastics
Group LLC dated as of April 29, 1999, as amended
(incorporated herein by reference to Exhibit 2.1 of Suiza
Foods Corporation's Current Report on Form 8-K dated
July 19, 1999).
99.2 Amendment No. 1 to Contribution and Merger Agreement dated
June 28, 1999 (incorporated herein by reference to
Exhibit 2.2 of Suiza Foods Corporation's Current Report on
Form 8-K dated July 19, 1999).
99.3 Forward-Looking Statements. (Filed herewith.)

- - ------------------------

* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to Form 10-K pursuant to Item 14(c).

(b) CURRENT REPORTS ON FORM 8-K

During the fourth quarter of 1999, Consolidated Container Company LLC did
not file any Current Reports on Form 8-K.

37

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.

CONSOLIDATED CONTAINER COMPANY LLC

By: /s/ TIMOTHY W. BRASHER
-----------------------------------------
Timothy W. Brasher
SENIOR VICE PRESIDENT, CHIEF FINANCIAL
OFFICER AND SECRETARY

Dated: March 30, 2000

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- ----

/s/ RON V. DAVIS
------------------------------------------- Chairman of the Management March 30, 2000
Ron V. Davis Committee

/s/ PETER M. BERNON
------------------------------------------- Vice Chairman of the March 30, 2000
Peter M. Bernon Management Committee

/s/ B. JOSEPH ROKUS
------------------------------------------- Vice Chairman of the March 30, 2000
B. Joseph Rokus Management Committee

President, Chief Executive
/s/ WILLIAM L. ESTES Officer and Manager
------------------------------------------- (principal executive March 30, 2000
William L. Estes officer)

Senior Vice President, Chief
/s/ TIMOTHY W. BRASHER Financial Officer and
------------------------------------------- Manager (principal financial March 30, 2000
Timothy W. Brasher officer and principal
accounting officer)

/s/ WILLIAM G. BELL
------------------------------------------- Manager March 30, 2000
William G. Bell

38

SIGNATURE TITLE DATE
--------- ----- ----

/s/ JAMES P. KELLEY
------------------------------------------- Manager March 30, 2000
James P. Kelley

/s/ LEONARD LIEBERMAN
------------------------------------------- Manager March 30, 2000
Leonard Lieberman

/s/ RICHARD L. ROBINSON
------------------------------------------- Manager March 30, 2000
Richard L. Robinson

/s/ JOHN R. WOODARD
------------------------------------------- Manager March 30, 2000
John R. Woodard

39

INDEPENDENT AUDITORS' REPORT

To the Management Committee of
Consolidated Container Company LLC:

We have audited the accompanying consolidated balance sheets of Consolidated
Container Company LLC and subsidiaries (the "Company") as of December 31, 1998
(Predecessor) and 1999 (Successor), and the related consolidated statements of
operations and comprehensive income (loss), shareholders'/member's equity, and
cash flows for the period from January 1, 1997 through October 14, 1997, for the
period from October 15, 1997 through December 31, 1997, for the year ended
December 31, 1998, for the period from January 1, 1999 through July 1, 1999
(Predecessor Period), and for the period from July 2, 1999 through December 31,
1999 (Successor Period). These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Consolidated Container Company
LLC and subsidiaries as of December 31, 1998 (Predecessor) and 1999 (Successor),
and the results of their operations and their cash flows for the period from
January 1, 1997 through October 14, 1997, for the period from October 15, 1997
through December 31, 1997, for the year ended December 31, 1998, for the period
from January 1, 1999 through July 1, 1999 (Predecessor Period) and for the
period from July 2, 1999 through December 31, 1999 (Successor Period), in
conformity with accounting principles generally accepted in the United States of
America.

DELOITTE & TOUCHE LLP

Dallas, Texas
March 27, 2000

F-1

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1998 (PREDECESSOR) AND 1999 (SUCCESSOR)

(DOLLARS IN THOUSANDS)

1998 1999
(PREDECESSOR) (SUCCESSOR)
------------- -----------

ASSETS

CURRENT ASSETS:
Cash and cash equivalents................................. $ 5,408 $ 1,066
Investment securities..................................... -- 5,484
Accounts receivable, net of allowance for doubtful
accounts of $1,366 and $6,144........................... 17,143 105,404
Inventories............................................... 10,001 39,443
Prepaid expense........................................... 2,364 2,656
Other receivables......................................... 2,924 690
Income taxes receivable................................... 1,135 --
Deferred income taxes..................................... 7,810 --
-------- --------
Total current assets.................................... 46,785 154,743
PROPERTY AND EQUIPMENT, Net................................. 55,416 283,830
INTANGIBLES AND OTHER ASSETS................................ 117,675 552,016
-------- --------
$219,876 $990,589
======== ========

LIABILITIES AND SHAREHOLDERS'/MEMBER'S EQUITY

CURRENT LIABILITIES:
Accounts payable.......................................... $ 11,284 $ 50,318
Accrued liabilities....................................... 12,411 58,410
Revolving credit facility................................. -- 17,500
Current portion of long-term debt......................... 9,046 16,052
-------- --------
Total current liabilities............................... 32,741 142,280
DEFERRED INCOME TAXES....................................... 7,810 --
LONG-TERM DEBT.............................................. 112,454 554,011
OTHER LIABILITIES........................................... 14,948 37,227
MINORITY INTEREST........................................... 677 243

COMMITMENTS AND CONTINGENCIES (Note 10)

SHAREHOLDERS'/MEMBER'S EQUITY:
Preferred stock, no par value; 100,000 shares authorized;
no shares issued and outstanding........................ -- --
Common stock, Class A, no par value; 500,000 shares
authorized; 14,500 shares issued and outstanding........ 55,293 --
Accumulated deficit....................................... (3,507) --
Member's equity........................................... -- 257,346
Foreign currency translation adjustment................... (540) (518)
-------- --------
Total shareholders'/member's equity..................... 51,246 256,828
-------- --------
$219,876 $990,589
======== ========

See notes to consolidated financial statements.

F-2

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(DOLLARS IN THOUSANDS)

PERIOD FROM PERIOD FROM PERIOD FROM
PERIOD FROM OCTOBER 15, JANUARY 1, JULY 2,
JANUARY 1, 1997 1997 1999 1999
THROUGH THROUGH YEAR ENDED THROUGH THROUGH
OCTOBER 14, DECEMBER 31, DECEMBER 31, JULY 1, DECEMBER 31,
1997 1997 1998 1999 1999
(PREDECESSOR) (PREDECESSOR) (PREDECESSOR) (PREDECESSOR) (SUCCESSOR)
--------------- ------------- ------------- ------------- -------------

NET SALES..................... $164,750 $33,236 $175,134 $85,423 $388,665

COST OF SALES................. 144,520 31,832 144,712 67,411 315,218
-------- ------- -------- ------- --------

GROSS PROFIT.................. 20,230 1,404 30,422 18,012 73,447

SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES..... (14,072) (3,439) (18,016) (9,001) (37,211)

RESTRUCTURING CHARGES......... (9,162) -- -- -- (8,766)
-------- ------- -------- ------- --------

OPERATING INCOME (LOSS)....... (3,004) (2,035) 12,406 9,011 27,470

INTEREST EXPENSE, Net......... (6,337) (1,909) (10,497) (4,484) (26,965)

OTHER INCOME.................. 624 27 1,347 478 219
-------- ------- -------- ------- --------

INCOME (LOSS) BEFORE INCOME
TAXES....................... (8,717) (3,917) 3,256 5,005 724

INCOME TAX (EXPENSE)
BENEFIT..................... 1,199 105 (2,836) (2,890) --

MINORITY INTEREST IN
SUBSIDIARIES................ (285) (61) (54) 250 183
-------- ------- -------- ------- --------

INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM.......... (7,803) (3,873) 366 2,365 907

EXTRAORDINARY ITEM, EARLY
EXTINGUISHMENT OF DEBT, NET
OF INCOME TAX BENEFIT OF
$781........................ -- -- -- (1,171) --
-------- ------- -------- ------- --------

NET INCOME (LOSS)............. (7,803) (3,873) 366 1,194 907

OTHER COMPREHENSIVE INCOME
(LOSS)--Foreign currency
translation adjustment...... (7) 88 (628) 72 (50)
-------- ------- -------- ------- --------

COMPREHENSIVE INCOME (LOSS)... $ (7,810) $(3,785) $ (262) $ 1,266 $ 857
======== ======= ======== ======= ========

See notes to consolidated financial statements.

F-3

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS'/MEMBER'S EQUITY

(DOLLARS IN THOUSANDS)

OTHER
COMPREHENSIVE
MEMBER'S COMMON ACCUMULATED INCOME
EQUITY STOCK DEFICIT (LOSS) TOTAL
-------- -------- ----------- ------------- --------

PERIOD FROM JANUARY 1, 1997 THROUGH
OCTOBER 14, 1997 (PREDECESSOR)

BALANCE, JANUARY 1, 1997..................... $ -- $20,132 $ (190) $ (96) $ 19,846
Net loss................................... -- -- (7,803) -- (7,803)
Dividends paid............................. -- -- (257) -- (257)
Foreign currency translation adjustment.... -- -- -- (7) (7)
-------- ------- ------- ----- --------

BALANCE, OCTOBER 14, 1997.................... $ -- $20,132 $(8,250) $(103) $ 11,779
======== ======= ======= ===== ========

PERIOD FROM OCTOBER 15, 1997 THROUGH JULY 1,
1999 (PREDECESSOR)

NEW CAPITALIZATION, OCTOBER 15, 1997......... $ -- $58,293 $ -- $ -- $ 58,293
Net loss................................... -- -- (3,873) -- (3,873)
Foreign currency translation adjustment.... -- -- -- 88 88
-------- ------- ------- ----- --------

BALANCE, DECEMBER 31, 1997................... -- 58,293 (3,873) 88 54,508
Net income................................. -- -- 366 -- 366
Escrow payments returned to shareholders... -- (3,000) -- -- (3,000)
Foreign currency translation adjustment.... -- -- -- (628) (628)
-------- ------- ------- ----- --------

BALANCE, DECEMBER 31, 1998................... -- 55,293 (3,507) (540) 51,246
Net income................................. -- -- 1,194 -- 1,194
Foreign currency translation adjustment.... -- -- -- 72 72
-------- ------- ------- ----- --------

BALANCE, JULY 1, 1999........................ $ -- $55,293 $(2,313) $(468) $ 52,512
======== ======= ======= ===== ========

PERIOD FROM JULY 2, 1999 THROUGH DECEMBER 31,
1999 (SUCCESSOR)

NEW CAPITALIZATION, JULY 2, 1999............. $256,439 $ -- $ -- $(468) $255,971
Net income................................. 907 -- -- -- 907
Foreign currency translation adjustment.... -- -- -- (50) (50)
-------- ------- ------- ----- --------

BALANCE, DECEMBER 31, 1999................... $257,346 $ -- $ -- $(518) $256,828
======== ======= ======= ===== ========

See notes to consolidated financial statements.

F-4

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS)

PERIOD FROM PERIOD FROM
JANUARY 1, OCTOBER 15, PERIOD FROM PERIOD FROM
1997 1997 JANUARY 1, JULY 2, 1999
THROUGH THROUGH YEAR ENDED 1999 THROUGH
OCTOBER 14, DECEMBER 31, DECEMBER 31, THROUGH DECEMBER 31,
1997 1997 1998 JULY 1, 1999 1999
------------- ------------- ------------- ------------- -------------
(PREDECESSOR) (PREDECESSOR) (PREDECESSOR) (PREDECESSOR) (SUCCESSOR)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................... $(7,803) $ (3,873) $ 366 $ 1,194 $ 907
Adjustment to reconcile net income (loss) to net
cash provided by operating activities:
Minority interest............................. -- -- -- (250) (183)
Depreciation and amortization................. 12,620 4,121 15,918 7,173 26,852
Early extinguishment of debt.................. -- -- -- 1,171 --
Currency translation.......................... -- -- -- -- (50)
Gain on disposal of assets.................... -- -- -- -- (250)
Changes in operating assets and liabilities:
Accounts receivable......................... (4,002) 1,859 3,040 (8,988) (19,011)
Inventories................................. 8,338 (1,044) 2,506 534 (2,236)
Prepaid expenses............................ (531) 637 (2,218) 697 (206)
Other receivables........................... 2,712 1,193 (2,253) (61) (691)
Other assets and management contracts....... (1,518) 674 (58) -- --
Accounts payable............................ (8,987) (1,339) (5,381) 804 11,456
Accrued liabilities......................... 869 (4,182) (591) (1,774) 14,874
Other liabilities........................... 5,864 811 319 (996) (4,024)
Income taxes and other...................... (2,069) 2,824 (297) 525 --
------- -------- -------- --------- ---------
Net cash provided by operating
activities.............................. 5,493 1,681 11,351 29 27,438
------- -------- -------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................ (9,313) (4,785) (12,708) (5,129) (24,940)
Net change in investments....................... -- -- -- -- 3,128
Proceeds from disposal of property and
equipment..................................... 801 280 1,651 58 590
Cash paid for acquisitions, net of cash
acquired...................................... -- -- -- -- 4,605
Other assets.................................... -- -- -- 96 1,103
------- -------- -------- --------- ---------
Net cash used in investing activities..... (8,512) (4,505) (11,057) (4,975) (15,514)
------- -------- -------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from (payments on) revolving line
of credit..................................... 2,500 7,000 -- -- (10,000)
Borrowing under notes payable to banks.......... -- 27,000 -- -- --
Principal payments on notes payable to banks.... (3,612) (10,608) (647) (113,356) (4,924)
Payments on other notes payable and capital
leases........................................ (1,570) (4,662) (1,709) (4,312) (1,233)
Debt issuance costs............................. -- (8,328) (867) -- (22,108)
Issuance of new common stock.................... -- 60,000 -- -- --
Issuance of member units, net of issuance
costs......................................... -- -- -- -- 56,272
Borrowings under credit facilities.............. -- -- -- -- 412,500
Issuance of senior subordinated notes........... -- -- -- -- 185,000
Repayment of PCI notes.......................... -- -- -- -- (136,700)
Payments of Suiza Packaging debt................ -- -- -- -- (372,459)
Repurchase of old common stock.................. -- (35,139) -- -- --
Escrow deposits................................. -- (7,000) 4,000 -- --
Redemption of senior preferred stock............ -- (18,421) -- -- --
Redemption of Series A preferred stock.......... -- (1,769) -- -- --
Dividends paid.................................. (257) -- -- -- --
Payments on noncompete agreements............... -- (1,516) (100) -- --
Capital contribution............................ -- -- -- 122,117 (122,117)
------- -------- -------- --------- ---------
Net cash provided by (used in) financing
activities.............................. (2,939) 6,557 677 4,449 (15,769)
------- -------- -------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS..................................... (5,958) 3,733 971 (497) (3,845)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.... 6,662 704 4,437 5,408 4,911
------- -------- -------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD.......... $ 704 $ 4,437 $ 5,408 $ 4,911 $ 1,066
======= ======== ======== ========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for interest........ $ 6,299 $ 1,763 $ 10,664 $ 4,517 $ 13,435
======= ======== ======== ========= =========
Net cash (received) paid during the period for
income taxes.................................. $ 1,420 $ 215 $ (41) $ 506 $ --
======= ======== ======== ========= =========

See notes to consolidated financial statements.

F-5

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS ORGANIZATION--On July 2, 1999, Reid Plastics, Inc., a wholly owned
subsidiary of Reid Plastics Holdings, Inc., acquired substantially all of the
U.S. plastics packaging assets of Franklin Plastics, Inc. ("Franklin") and
Plastic Containers, Inc. ("PCI"), each of which had been subsidiaries of Suiza
Foods Corporation ("Suiza"). Suiza managed the operations of Franklin and its
subsidiaries and PCI and its subsidiaries as one entity called "Suiza
Packaging." Vestar Capital Partners III, L.P., through its controlled affiliate
Vestar Reid LLC owned 82.6% of Reid Plastics Holdings, Inc. prior to the
acquisitions of Franklin and PCI. The acquisitions were effected by
contributions and mergers under a Contribution and Merger Agreement dated as of
April 29, 1999, among Suiza, Franklin, Suiza's domestic plastics subsidiaries,
Vestar Packaging LLC, Reid Plastics Holdings, Inc., Reid Plastics, Inc.'s
domestic plastic subsidiaries, Reid Plastics Group LLC, Consolidated Container
Holdings LLC ("Holdings"), a Delaware limited liability company and the 100%
owner of Consolidated Container Company LLC, and Consolidated Container Company
LLC, a Delaware limited liability company (the "Company"). Financial information
prior to July 2, 1999 is referred to as the Predecessor period and financial
information subsequent to July 2, 1999 is referred to as the Successor period.
The contributions and mergers are summarized below:

- Vestar Packaging, which is controlled by Vestar Capital Partners III,
L.P., received 20.5% of the member units in Holdings in exchange for its
contribution of $60.8 million in cash to Holdings.

- Reid Plastics Holdings, Inc., which has been indirectly controlled by
Vestar Capital Partners III, L.P., received 30.5% of the member units in
Holdings in exchange for causing:

- Reid Plastics, Inc. and each of its domestic subsidiaries to merge into
Reid Plastics Group LLC

- Reid Plastics, Inc.'s Canadian subsidiaries to become wholly owned
subsidiaries of Reid Plastics Group LLC

- Reid Plastics, Inc.'s equity interest in its Mexican joint venture,
Reid Mexico, S.A. de C.V., to become owned by Reid Plastics Group LLC

- Franklin, which has been controlled by Suiza, received 49% of the member
units in Holdings in exchange for:

- Its contribution of the limited liability company interests of PCI to
the Company

- The contribution of substantially all of its assets to the Company by
the merger of the subsidiaries of Franklin into the Company

In connection with the mergers and contributions described above, the
following transactions were completed:

- The issue of $185,000,000 in aggregate principal amount of 10 1/8% Senior
Subordinated Notes due 2009 of the Company and Consolidated Container
Capital, Inc. ("Capital"), a Delaware corporation

- The entering into of a new $485,000,000 senior credit facility

- The consent solicitation and tender offer by PCI for its outstanding 10%
Senior Secured Notes due in 2006

F-6

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
- The repayment of substantially all of the outstanding debt of Reid
Plastics, Inc. and Franklin, the redemption of the preferred stock of
Franklin, plus the payment of certain accrued interest and dividends on
the debt and preferred stock of Franklin, aggregating approximately
$372,500,000. Regarding the repayment of the existing debt of Reid
Plastics, Inc., $1,952,000 of unamortized deferred financing costs were
written off and recorded as an extraordinary loss on early extinguishment
of debt

The acquisition of Suiza Packaging has been accounted for using the purchase
method of accounting with Reid Plastics, Inc. being the accounting acquiror. The
consolidated balance sheet as of December 31, 1999, reflects the allocation of
the purchase price and the related accounting adjustments, including goodwill.
Assets acquired and liabilities assumed were as follows (in thousands):

Total purchase price, net of cash acquired ($4,605)......... $ 140,723
---------

Fair value of net liabilities acquired:
Fair value of assets acquired............................. $ 312,573
Fair value of liabilities assumed......................... (596,376)
---------
Total net liabilities acquired.......................... $(283,803)
---------
Goodwill.................................................... $ 424,526
=========

The excess of the purchase price over the fair value of the net assets was
$424,526,000, which has been recorded as goodwill and is being amortized on a
straight-line basis over 40 years.

The following unaudited pro forma consolidated results of operations are
presented as if the acquisition of Suiza Packaging had been made at the
beginning of the periods presented (in thousands):

DECEMBER 31,
-------------------
1998 1999
-------- --------

Net sales............................................... $687,285 $737,360
======== ========
Net income.............................................. $ 12,737 $ 26,189
======== ========

The pro forma consolidated results of operations include adjustments to give
effect to amortization of goodwill, interest expense to reflect interest on the
proceeds of the debt private placement and certain other adjustments, together
with the elimination of income taxes since the Company is a limited liability
company that is not subject to corporate income taxes. The unaudited pro forma
information is not necessarily indicative of the results of operations that
would have occurred had the purchase been made at the beginning of the periods
presented or the future results of the combined operations.

In connection with the acquisition of Suiza Packaging, the Company developed
a restructuring plan to pursue opportunities for cost reduction and operating
synergies through the consolidation of administrative and manufacturing
functions and facilities. Through purchase accounting, the Company recorded a
restructuring accrual of $4,616,000, which includes $1,914,000 for severance and
other personnel-related costs and $2,702,000 for facility closing costs in
connection with the closing of certain Suiza Packaging facilities. In the third
quarter of 1999, the Company recognized a restructuring charge of $1,541,000 for
severance and other personnel-related costs relative to the closing of its
corporate

F-7

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
administrative and accounting office in California and the consolidation of
those operations with Suiza Packaging. In the fourth quarter of 1999, the
Company recognized a restructuring charge of $7,225,000 in connection with plans
to close certain Reid manufacturing facilities. Of this charge, $611,000
represents severance and other personnel-related costs and $6,614,000 represents
remaining commitments under noncancellable operating leases and other facility
closing costs.

On October 14, 1997, the Company recorded a restructuring charge of
$9,162,000 representing a provision for loss on closed facilities subject to
operating leases. This loss related to the closure of a manufacturing facility,
a warehouse and an administrative facility in Southern California and a
warehouse in Northern California. These facilities were consolidated in order to
make more efficient use of leased facilities.

In connection with a 1997 acquisition, the Company accrued the estimated
cost associated with a restructuring plan when recording the acquisition under
the purchase method. The components of the restructuring charges were primarily
severance costs and closed facilities subject to operating leases. During 1998,
the Company finalized its plan and purchase accounting entries.

Reconciliation of the preacquisition and postacquisition restructuring
expenses during 1997, 1998 and 1999 were as follows:

PURCHASE
1997 ACCOUNTING 1999
RESTRUCTURING RESTRUCTURING RESTRUCTURING
CHARGES ACCRUALS CHARGES
------------- ------------- -------------
(DOLLARS IN THOUSANDS)

PREDECESSOR
Closed facilities subject to operating leases........... $9,162 $ -- $ --
Severance costs......................................... -- 2,017 --
1997 charges............................................ (766) -- --
------ ------ ------

Balance at December 31, 1997............................ 8,396 2,017 --

Closed facilities subject to operating leases........... -- 2,523 --
Severance costs......................................... -- 571 --
1998 charges............................................ (976) (1,237) --
------ ------ ------

Balance at December 31, 1998............................ 7,420 3,874 --

Closed facilities subject to operating leases........... -- -- --
Severance costs......................................... -- -- --
1999 charges............................................ (770) (779) --
------ ------ ------

Balance at July 1, 1999................................. 6,650 3,095 --

SUCCESSOR
Closed facilities subject to operating leases........... -- 2,702 6,614
Severance costs......................................... -- 1,914 2,152
1999 charges............................................ (273) (866) (817)
------ ------ ------

Balance at December 31, 1999............................ $6,377 $6,845 $7,949
====== ====== ======

F-8

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Items charged to the accrual in 1997, 1998 and 1999 were cash items.

BUSINESS OPERATIONS--The Company develops, manufactures and distributes a
wide range of custom extrusion blow-mold plastic containers for the dairy, juice
and water industries, automotive products and motor oil, household chemicals,
industrial and agricultural chemicals and hair care products. Based on the
nature of the product, the production process, types of customers, and methods
used to distribute products, the Company operates in one reportable segment
under Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosures
About Segments of an Enterprise and Related Information."

CONSOLIDATED AND FOREIGN OPERATIONS--The Company maintains wholly owned
subsidiaries in the United States and Canada. In addition, the Company owns 51%
of Reid Mexico S.A. de C.V., which operates exclusively in Mexico. The Company's
foreign operations are not significant.

All significant intercompany accounts and transactions have been eliminated
in consolidation.

TRANSLATION OF FOREIGN CURRENCIES--The Company considers the functional
currency under SFAS No. 52, "Foreign Currency Translation," to be the local
currency for its Canadian subsidiaries and its Mexican subsidiary.

Assets and liabilities of the Company's Canadian and Mexican subsidiaries
are converted to U.S. dollars using the current exchange rate at period-end, and
revenues and expenses of these subsidiaries are translated at the average
exchange rate during the period, with the resulting translation adjustment made
to a separate component of member's equity.

USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities and
revenues and expenses during the reporting period. Actual results could differ
from these estimates.

CASH AND CASH EQUIVALENTS--Included in cash and cash equivalents are highly
liquid cash investments with remaining maturities at date of purchase of three
months or less.

INVESTMENT SECURITIES--Investment securities consist of held-for-trading
U.S. government obligations, certificates of deposit, eurodollar deposits and
highly rated commercial paper, all of which are due within one year.These
investment securities are stated at market value.

INVENTORIES--Inventories consist of raw materials, spare parts and supplies,
and finished goods.Inventories are stated at the lower of cost, using the
first-in, first-out ("FIFO") method, or market. Finished goods inventories
include raw materials, direct and indirect labor costs, and factory overhead.

PROPERTY AND EQUIPMENT--Property and equipment are stated at cost and are
depreciated or amortized using the straight-line method over the estimated
useful lives of the related assets. Plant and equipment held under capital
leases and leasehold improvements are amortized over the shorter of the lease
term or the estimated useful life of the asset.

F-9

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Estimated useful lives are as follows:

ASSET USEFUL LIFE
- - ----- --------------

Buildings................................................... 25 to 40 years
Machinery and equipment..................................... 5 to 20 years
Furniture and fixtures...................................... 3 to 10 years

Expenditures for repairs and maintenance that do not improve or extend the
life of the assets are expensed as incurred.

INTANGIBLE ASSETS--Intangible assets include primarily goodwill. Goodwill is
amortized using the straight-line method over 40 years. Deferred financing costs
are amortized over the term of the related debt using the effective interest
method. Payments relating to noncompete agreements and multiple-year management
contracts are amortized over the term of the applicable agreement or contract.

Periodically, the Company reviews the recoverability of goodwill and other
intangible assets. The measurement of possible impairment is based primarily on
the ability to recover the balance of the goodwill and other intangible assets
from expected future operating cash flows on an undiscounted basis. In
management's opinion, no material impairment exists at December 31, 1999.

INSURANCE--The Company purchases commercial insurance policies to cover its
insurance risks; however, certain of its subsidiaries are self-insured in
certain states for workers' compensation, general liability and property and
casualty coverages in excess of varying deductible amounts. Self-insurance
liabilities are accrued based on claims filed and estimates for claims incurred
but not reported.

INCOME TAXES--As a limited liability company, the Company is not subject to
corporate income taxes. Accordingly, the Company expects to distribute cash to
its sole member, Holdings, to allow its members to pay income taxes to the
extent required. No distributions were required for 1999.

STOCK-BASED COMPENSATION--The Company accounts for stock- based compensation
using the intrinsic value method prescribed in Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." The Company
has adopted the disclosure requirements of SFAS No. 123, "Accounting for Stock
Based Compensation."

IMPAIRMENT OF LONG-LIVED ASSETS--The Company evaluates the impairment of
long-lived assets if circumstances indicate that the carrying value of those
assets may not be recoverable. Recoverability of the assets to be held and used
is measured by a comparison of the carrying amount of the asset to future
undiscounted cash flows expected to be generated by the asset.

DERIVATIVE FINANCIAL INSTRUMENTS--The Company entered into interest-rate
floor and cap agreements to reduce the impact of fluctuations in interest rates
on its floating-rate long-term debt. At December 31, 1998, the Company had two
interest rate cap agreements and an interest rate collar agreement outstanding,
which were canceled June 30, 1999. Effective October 4, 1999, the Company
entered into an interest rate cap agreement with the lender. The interest rate
cap was for a notional amount of $75 million and effectively caps the interest
rate at 7%. The agreement terminates October 9, 2001. The fair value of these
agreements at December 31, 1998 and 1999, was not material.

CONCENTRATION OF CREDIT RISK--Financial instruments that subject the Company
to credit risk consists primarily of investment securities and accounts
receivable. The Company places its temporary cash

F-10

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
investment securities with high-credit qualified financial institutions and, by
policy, limits the amount of investment exposure to any one financial
institution. Accounts receivable are generally diversified due to the large
number of entities comprising the Company's customer base and their geographic
dispersion. Sales to one customer amounted to approximately 15% of the Company's
net sales for the period form July 2, 1999 through December 31, 1999 and
accounts receivable from this customer amounted to approximately $17,300,000 at
December 31, 1999. The Company performs ongoing credit evaluations of its
customers and maintains an allowance for potential credit losses.

FAIR VALUE OF FINANCIAL INSTRUMENTS--The carrying amounts of cash and cash
equivalents, accounts receivable and accounts payable approximate fair value
because of the short maturities of these instruments. The carrying amounts of
the senior subordinated notes are a reasonable estimate of their fair value
based on interest rates and other terms currently available to the Company. The
carrying amounts of the term loans under the senior credit facility approximate
their respective estimated fair values since floating rates, which approximate
current market rates, are charged on these notes.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS--SFAS No. 133, "Accounting for
Derivative Financial Instruments and Hedging Activities," was issued in
June 1998, and establishes standards for accounting and reporting for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. The statement is effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000. The Company has not
yet determined the impact of this accounting pronouncement.

2. INVENTORIES

Inventories consist of the following at December 31, 1998 and 1999:

1998 1999
(PREDECESSOR) (SUCCESSOR)
------------- -----------
(DOLLARS IN THOUSANDS)

Raw materials........................................ $ 6,073 $21,876
Parts and supplies................................... -- 1,603
Finished goods....................................... 3,928 15,964
------- -------
$10,001 $39,443
======= =======

F-11

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. PROPERTY AND EQUIPMENT

Property and equipment consist of the following at December 31, 1998 and
1999:

1998 1999
(PREDECESSOR) (SUCCESSOR)
------------- -----------
(DOLLARS IN THOUSANDS)

Land................................................. $ 3,573 $ 10,953
Buildings............................................ 5,911 20,751
Leasehold improvements............................... 4,479 15,909
Machinery and equipment.............................. 36,593 241,063
Equipment under capital leases....................... 6,766 10,916
Furniture and equipment.............................. 2,470 5,866
------- --------
59,792 305,458

Less accumulated depreciation........................ 12,674 51,924
------- --------
47,118 253,534

Construction in progress............................. 8,298 30,296
------- --------
$55,416 $283,830
======= ========

4. INTANGIBLES AND OTHER ASSETS

Other assets consist of the following at December 31, 1998 and 1999:

1998 1999
(PREDECESSOR) (SUCCESSOR)
------------- -----------
(DOLLARS IN THOUSANDS)

Goodwill............................................. $116,182 $540,708
Deferred financing costs............................. 3,104 22,108
Noncompete agreement................................. 2,001 1,160
Deposits and other................................... 846 1,169
-------- --------
122,133 565,145

Less accumulated amortization........................ (4,458) (13,129)
-------- --------
$117,675 $552,016
======== ========

NONCOMPETE AGREEMENT--In 1997, the Company entered into a five-year
noncompete agreement with a former management shareholder. During 1998, the
noncompete agreement was revised to guarantee payments totaling $400,000 per
year for five years. In addition, a nonguaranteed portion of up to $8,193,000
will be paid based on the valuation of the Company during future ownership
changes. No amount was required to be provided at December 31, 1999 for
potential nonguaranteed payments.

F-12

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. ACCRUED LIABILITIES

Accrued liabilities consist of the following at December 31, 1998 and 1999:

1998 1999
(PREDECESSOR) (SUCCESSOR)
------------- -----------
(DOLLARS IN THOUSANDS)

Provision for severances............................. $ 1,288 $ 4,582
Provision for unfavorable leases and contracts....... 1,024 --
Noncancellable lease commitments on closed
facilities......................................... 1,443 6,117
Employee compensation and benefits................... 4,152 15,512
Accrued interest..................................... -- 12,218
Accrued real estate and personal property taxes...... -- 2,217
Other................................................ 4,504 17,764
------- -------
$12,411 $58,410
======= =======

6. REVOLVING CREDIT FACILITY AND LONG-TERM DEBT

Long-term debt consists of the following at December 31, 1998 and 1999:

1998 1999
(PREDECESSOR) (SUCCESSOR)
------------- -----------
(DOLLARS IN THOUSANDS)

Senior subordinated notes............................ $ -- $185,000
Senior credit facility--term loans................... -- 380,075
Capital lease obligations............................ 4,644 4,988
Notes payable to a bank.............................. 116,856 --
-------- --------
121,500 570,063
Less current portion................................. (9,046) (16,052)
-------- --------
$112,454 $554,011
======== ========

In connection with the mergers and contributions (Note 1), the Company
issued Senior Subordinated Notes and entered into a new Senior Credit Facility
and Revolving Credit Facility. As a result, all of the outstanding debt under
the Company's loan agreement with a bank, which was amended on October 15, 1997,
(the "Restated Loan Agreement") was repaid.

SENIOR SUBORDINATED NOTES--The senior subordinated notes (the "Notes") were
issued on July 2, 1999, and have an original par value of $185,000,000. The
Notes, which are due in 2009, bear interest at a fixed interest rate of 10-1/8%,
payable semiannually in July and January of each year.

SENIOR CREDIT FACILITY--The Senior Credit Facility (the "Facility") consists
of three tranches of term loans in a total principal amount of $485,000,000 and
a $90,000,000 revolving credit facility (the "Revolver"). The term loan
facilities and Revolver are summarized below:

- Tranche A--The tranche A term loan totals $150,000,000 in principal, of
which $146,250,000 was outstanding at December 31, 1999. The Company is
required to repay the tranche A term loan in quarterly installments
through 2005.

F-13

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. REVOLVING CREDIT FACILITY AND LONG-TERM DEBT (CONTINUED)
- Tranche B--The tranche B term loan totals $235,000,000 in principal, of
which $233,825,000 was outstanding at December 31, 1999. The Company is
required to repay installments on the tranche B term loan in annual
principal amounts of 1% of its total principal amount for the first six
years and the remaining amount in eight quarterly payments in the seventh
and eighth years.

- Tranche C--The tranche C term loan totals $100,000,000 in principal and is
uncommitted. Through July 2, 2002, the Company may request one or more
lenders under the Facility to make one or more tranche C term loans, if
the Company satisfies specified financial ratios and other conditions. The
facility may, alternatively, take the form of additional revolving credit
loans under the Revolver or a combination of one or more tranche C term
loans and additional revolving credit loans. The lenders are not required,
however, to make any tranche C term loans.

- REVOLVING CREDIT FACILITY--At December 31, 1999, the Company had
$17,500,000 outstanding under the Revolver, which expires in 2005.
Additionally, the Company had approximately $7,328,000 of outstanding
letters of credit under the Revolver.

The Company pays a commitment fee on the unused commitments under the
Revolver, ranging from 0.25% to 0.50% dependent on its leverage ratio,
payable quarterly in arrears, and an annual administration fee to Bankers
Trust Company.

Borrowings under the Facility bear interest at a base rate which is the
higher of 1/2 of 1% in excess of the overnight federal funds rate and the prime
lending rate of Bankers Trust Company, plus a margin; or a eurodollar rate on
deposits for one-, two-, three- or six-month periods; or, if and when available
to all the lenders, nine- or twelve-month periods, which are offered to Bankers
Trust Company in the interbank eurodollar market, plus the applicable interest
margin. The margin on base rate and eurodollar rate loans is based on the
leverage ratio of the Company. At December 31, 1999, the margin on base rate and
eurodollar rate loans was .75% and 1.75%, respectively, for tranche A and the
Revolver and 1.25% and 2.25%, respectively, for tranche B. Tranche A term loans
and the Revolver and tranche B term loans bear interest at 7.94% and 8.44%,
respectively, at December 31, 1999.

The obligations under the Facility are secured and are unconditionally and
irrevocably guaranteed jointly and severally by Holdings and each of its direct
and indirect domestic subsidiaries other than the Company and Capital and, in
each case, are subject to customary exceptions. The separate financial
statements of each guaranteeing subsidiary are not presented because the
Company's management has concluded that such financial statements are not
material to investors, as nonguarantor subsidiaries are considered
inconsequential (See Note 13).

The Notes and the Facility contain covenants that restrict, among other
things, the Company's ability to do the following: to make certain capital
expenditures; to make certain restricted payments; to incur debt in addition to
the Company's outstanding debt; to incur certain liens; to make certain
investments; to enter into certain sale and leaseback transactions; and to
merge, consolidate or sell all or substantially all of the Company's and its
subsidiaries' assets, subject to certain conditions; and to enter into
transactions with affiliates. The Facility also requires the Company to maintain
financial ratios relating to the maximum level of earnings before interest and
taxes plus depreciation and amortization and minimum interest coverage. In
addition, the Notes and Facility restrict the Company's ability to pay
dividends. The Company is in compliance with the debt covenants at December 31,
1999.

F-14

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. REVOLVING CREDIT FACILITY AND LONG-TERM DEBT (CONTINUED)
NOTES PAYABLE TO A BANK--Under the Restated Loan Agreement, J.P. Morgan
Securities arranged a $27,000,000 Term Loan C (tranche C), maturing on
December 31, 2004, which was added to the Company's facilities. The facilities
were comprised of a $40,000,000 revolver and a $45,600,000 Term Loan A (tranche
A), both maturing on November 12, 2002, and a $32,000,000 Term Loan B (tranche
B), maturing on November 12, 2003. All amounts outstanding under the Restated
Loan Agreement were repaid on July 2, 1999.

SCHEDULED MATURITIES--The scheduled annual maturities of long-term debt
(excluding capital leases) at December 31, 1999, were as follows (in thousands):

Year ending December 31,
2000...................................................... $ 13,600
2001...................................................... 21,100
2002...................................................... 28,600
2003...................................................... 36,100
2004...................................................... 39,850
Thereafter.................................................. 425,825
--------
$565,075
========

7. OTHER LIABILITIES

Other liabilities consist of the following at December 31, 1998 and 1999:

1998 1999
(PREDECESSOR) (SUCCESSOR)
------------- -----------
(DOLLARS IN THOUSANDS)

Noncancellable lease commitments on closed
facilities......................................... $ 8,447 $12,274
Advance from vendor.................................. 2,500 1,487
Obligation under noncompete agreement................ 1,500 1,084
Accrued terminated employee benefit plan
obligation......................................... 1,345 1,404
Insurance reserves................................... -- 13,457
Accrued postretirement benefits...................... -- 6,058
Other................................................ 1,156 1,463
------- -------
$14,948 $37,227
======= =======

8. EMPLOYEE BENEFITS

The Company sponsors both defined benefit and defined contribution
retirement plans on behalf of certain of its subsidiaries, and contributes to
various multi employer union pension plans.

DEFINED BENEFIT PLANS--The Company succeeded to a defined benefit pension
plan for substantially all salaried employees of PCI hired prior to August 1,
1997. Plan benefits are based on all years of continuous service and the
employee's compensation during the highest five continuous years of the last ten
years of employment, minus a profit sharing annuity. The profit sharing annuity
is based on the amount of profit sharing contributions received for 1988 through
1992. Any employee who terminated employment prior to August 31, 1993, is
governed by the terms of the plan in effect at the time the

F-15

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. EMPLOYEE BENEFITS (CONTINUED)
termination occurred. The plan was frozen for future accruals as of
December 31, 1999. In addition, the Company maintains a benefit equalization
plan for salaried employees hired prior to August 1, 1997, whose compensation
level exceeds the limits within the defined benefit pension plan. The Plan was
frozen for future accruals as of September 1, 1998.

The Company also succeeded to a noncontributory defined benefit pension plan
for substantially all hourly employees of PCI hired prior to August 1, 1997, who
have attained 21 years of age. Plan benefits vary by location and by union
contract, but are based primarily on years of service and the employee's highest
wage classification for 12 consecutive months in the five-year period prior to
retirement. Normal retirement is at age 65, with at least a five-year period of
continuous service. However, employees may retire as early as age 55 and receive
reduced benefits.

Subject to the limitation on deductibility imposed by federal income tax
laws, the Company's policy is to contribute funds to the plans annually in
amounts required to maintain sufficient plan assets to provide for accrued
benefits. Plan assets are held in a master trust and are composed primarily of
common stock, corporate bonds and U.S. government and government agency
obligations.

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS--The Company provides certain
health care and life insurance benefits for retired PCI employees. Certain of
PCI's hourly and salaried employees became eligible for these benefits when they
became eligible for an immediate pension under a formal company pension plan. In
1993, the plan was amended to eliminate health care benefits for employees hired
after January 1, 1993. The Company's policy is to fund the cost of medical
benefits as claims are issued.

At July 2, 1999, as part of the purchase accounting adjustments regarding
the Suiza Packaging acquisition, the accrued pension liability and accrued
postretirement benefit liability were adjusted to fair value, and all previously
unrecognized gains and losses were recognized as part of the purchase
allocation.

F-16

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. EMPLOYEE BENEFITS (CONTINUED)
The following table provides a reconciliation of the benefit obligation,
plan assets and funded status of the pension and postretirement benefit plans:

OTHER
PENSION POST-RETIREMENT
BENEFITS BENEFITS
-------- ---------------
(DOLLARS IN THOUSANDS)

Change in benefit obligation:
Benefit obligation at July 2, 1999................. $66,814 $ 5,821
Service cost....................................... 619 55
Interest cost...................................... 2,480 214
Actuarial gain..................................... (3,864) (332)
Benefits paid...................................... (2,178) (32)
------- -------
Benefit obligation at December 31.................... 63,901 5,726

Change in plan assets:
Fair value of plan assets at July 2, 1999.......... 66,921 --
Actual return on plan assets....................... 3,546 --
Employer contribution.............................. 6 32
Plan participant contribution...................... -- 99
Benefits paid...................................... (2,178) (131)
------- -------
Fair value of plan assets at December 31............. 68,295 --

Funded status........................................ 4,394 (5,726)
Unrecognized actuarial gain.......................... (4,526) (332)
------- -------
Accrued benefit cost................................. $ (132) $(6,058)
======= =======
Weighted average assumptions as of December 31:
Discount rate...................................... 8.00% 8.00%
Expected asset return.............................. 9.00% 9.00%
Rate of compensation increase...................... 5.00%

The components of net periodic benefit cost for the period from July 2, 1999
through December 31, 1999 are as follows:

OTHER
PENSION POST-RETIREMENT
BENEFITS BENEFITS
-------- ---------------
(DOLLARS IN THOUSANDS)

Service cost......................................... $ 619 $ 55
Interest cost........................................ 2,480 214
Expected return on plan assets....................... (2,884) --
------- ----
Net periodic benefit cost.......................... $ 215 $269
======= ====

Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. A 1% increase in assumed health care
cost trend rates would increase the total of the service and interest cost
components for 1999 and the postretirement benefit obligation as of

F-17

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. EMPLOYEE BENEFITS (CONTINUED)
December 31, 1999 by $35,000 and $560,000, respectively. A 1% decrease in
assumed health care cost trend rates would decrease the total of the service and
interest cost components for 1999 and the postretirement benefit obligation as
of December 31, 1999 by $30,000 and $501,000, respectively.

DEFINED CONTRIBUTION PLAN--Employees of certain of the Company's
subsidiaries are eligible to participate in a 401(k) employees savings plan.
Employees who have completed one or more years of service and have met other
requirements of the plans are eligible to participate in the plan. The employees
participating in the plan can generally make contributions up to 15% of their
annual compensation, and the Company can elect to match such employee
contributions up to a maximum of 25% of the employee's contribution. The
matching contributions vest 100% after five years.

The Company succeeded to a defined contribution plan that covers
substantially all PCI's hourly employees who meet certain eligibility
requirements. Provisions regarding employee and employer contributions and the
benefits provided under the plan vary between PCI's manufacturing facilities.
The Company also succeeded to a defined contribution 401(k) savings plan that
covers substantially all PCI's nonorganized salaried employees. Employees may
contribute up to 12% and 8% of compensation on a pretax and after-tax basis,
respectively. However, the total employee contribution rate may not exceed 15%
of compensation. The Company matches up to 3% of employees' pretax
contributions. Employees vest in the Company's contributions at 25% per year,
becoming fully vested after four years of employment. Employees may make
withdrawals from the plan prior to attaining age 59 1/2, subject to certain
penalties.

MULTIEMPLOYER PLANS--The Company's PCI subsidiary contributes to various
multiemployer union pension plans under its labor agreements.

STOCK OPTION PLAN--During 1998, Suiza Packaging adopted the Franklin
Plastics, Inc. 1998 Stock Option Plan, which reserved 187,089 shares of common
stock for grants and granted stock options to certain key employees at exercise
prices that approximated the fair market value of such shares at the date of
grant. Stock options granted under this plan were exercisable over a three-year
period from the date of grant and could become exercisable upon the termination
of an individual's employment following a change in control. As a result of the
Company's merger, participants were able to convert options granted under the
plan to the Modified Replacement Option Plan. As a result, 116,944 shares
outstanding under the plan were converted to the Company's units, using a
conversion rate of 2.9429, resulting in 344,766 options outstanding, none of
which were exercisable at that date.

The following table summarizes the information about stock options
outstanding at December 31, 1999:

WEIGHTED
AVERAGE WEIGHTED
REMAINING AVERAGE
CONTRACTUAL EXERCISE
SHARES LIFE PRICE
-------- ----------- --------

Range of exercise prices:
$3.40........................................ 264,382 10 years $ 3.40
$10.19....................................... 80,384 10 years 10.19

If the Company had elected to follow the measurement provisions of SFAS
No. 123, "Accounting for Stock-Based Compensation", in accounting for its stock
options, compensation expense would be

F-18

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. EMPLOYEE BENEFITS (CONTINUED)
recognized based on the fair value of options at the date of the grant. This
amount was not material for the period from July 2, 1999 through December 31,
1999.

9. INCOME TAXES

As a limited liability company, the Company is not subject to corporate
income taxes. Accordingly, the Company expects to distribute cash to its sole
member, Holdings, to allow its members to pay income taxes to the extent
required. Significant components of deferred income taxes prior to the
contributions and mergers are as follows:

DECEMBER 31, 1998
(PREDECESSOR)
-------------------
FEDERAL STATE
-------- --------
(DOLLARS IN
THOUSANDS)

Deferred income tax assets:
AMT credit................................................ $ 359 $ 185
Accrued compensation...................................... 306 157
Allowance for doubtful accounts........................... 245 126
Accrued liabilities....................................... 6,171 3,179
NOL carryforward.......................................... 265 137
Other..................................................... 707 365
------- -------
Total deferred income tax assets............................ 8,053 4,149
Less valuation allowance.................................... (2,898) (1,494)
------- -------
Net deferred income tax assets.............................. $ 5,155 $ 2,655
======= =======
Deferred income tax liabilities--Property and equipment..... $(5,155) $(2,655)
======= =======

The provision for income taxes attributable to the earnings before income
taxes and extraordinary item consists of the following (dollars in thousands):

PERIOD FROM PERIOD FROM
JANUARY 1, OCTOBER 15, PERIOD FROM
1997 1997 JANUARY 1,
THROUGH THROUGH YEAR ENDED 1999
OCTOBER 15, DECEMBER 31, DECEMBER 31, THROUGH
1997 1997 1998 JULY 1, 1999
(PREDECESSOR) (PREDECESSOR) (PREDECESSOR) (PREDECESSOR)
------------- ------------- ------------- -------------

Current..................................... $(1,578) $105 $ (276) $ (635)
Deferred.................................... 2,777 -- (2,025) (1,926)
Foreign..................................... -- -- (535) (329)
------- ---- ------- -------
Income tax (expense)........................ $ 1,199 $105 $(2,836) $(2,890)
======= ==== ======= =======

Provision has not been made for U.S. taxes on $5,243,000 of cumulative
undistributed earnings of foreign subsidiaries since those earnings are intended
to be permanently reinvested. The tax benefit allocated to the 1999
extraordinary charge was $781,000.

F-19

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. INCOME TAXES (CONTINUED)
The tax expense (benefit) was different from the amount computed by applying
the federal statutory rate to the earnings before income taxes and extraordinary
item as follows (dollars in thousands):

PERIOD FROM
PERIOD FROM OCTOBER 15, 1997 PERIOD FROM
JANUARY 1, 1997 THROUGH YEAR ENDED JANUARY 1, 1999
THROUGH DECEMBER 31, DECEMBER 31, THROUGH JULY 1,
OCTOBER 14, 1997 1997 1998 1999
------------------- ------------------- ------------------- -------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
-------- -------- -------- -------- -------- -------- -------- --------

Tax at federal statutory rate........ $(3,051) (34)% $(1,332) (34)% $1,107 34% $1,701 34%
Amortization of goodwill and other... 1,373 15 336 8 1,398 43 575 12
State taxes.......................... -- -- -- -- 265 8 407 8
Valuation allowance.................. 394 5 869 22 (82) (3) -- --
Other................................ 85 1 22 1 148 5 207 4
------- --- ------- --- ------ -- ------ ---
Effective tax rate................... $(1,199) (13)% $ (105) (3)% $2,836 87% $2,890 58%
======= === ======= === ====== == ====== ===

10. COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS--The Company is obligated under capital leases for a
manufacturing facility, which expire in December 2000, and certain machinery and
equipment, which expire in 2004. Included in the consolidated balance sheet are
capital lease assets of $10,916,000 and accumulated amortization of $5,239,000
at December 31, 1999.

The Company leases certain property, plant and equipment used in its
operations under noncancellable operating lease agreements. Such leases, which
are primarily for facilities, machinery and equipment and vehicles, have lease
terms ranging from two to nine years. Certain of the operating lease agreements
require the payment of additional rentals for maintenance, along with additional
rentals, based on miles driven or units produced.

Future minimum lease payments at December 31, 1999, are summarized below (in
thousands):

CAPITAL OPERATING
LEASES LEASES
-------- ---------

Year ending December 31:
2000.................................................... $2,430 $14,650
2001.................................................... 2,051 13,776
2002.................................................... 793 11,420
2003.................................................... 55 9,849
2004.................................................... 58 5,269
Thereafter................................................ -- 8,924
------ -------
5,387 $63,888
-------
Less portion representing interest........................ 399
------
Present value of minimum lease payments................... $4,988
------

F-20

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. COMMITMENTS AND CONTINGENCIES (CONTINUED)
CONTINGENCIES--The Company and its subsidiaries are parties, in the ordinary
course of business, to certain claims and litigation. In management's opinion,
the settlement of such matters is not expected to have a material impact on the
Company's financial position, results of operations or cash flows.

In addition, the Company is a party to employment agreements with certain
officers which provided for minimum compensation levels and incentive bonuses
along with provisions for termination of benefits in certain circumstances.

11. RELATED PARTY TRANSACTIONS

MANAGEMENT AGREEMENT--In April 1999, the Company entered into a management
agreement with Vestar Capital Partners to provide ongoing management services.
The Company will pay an annual fee of the greater of $500,000 or 0.42% of the
earnings before interest and taxes plus depreciation and amortization of the
prior year and all out-of-pocket expenses regarding these services.

Simultaneously with the closing of the transactions, the Company entered
into the following agreements:

- SUPPLY AGREEMENTS--The Company entered into agreements to supply Suiza
with bottles and bottle components. The prices for bottles are based on
the prices that were in effect in July 1999 between Suiza Foods and Suiza
Packaging prior to the transactions and are subject to adjustment based on
changes in raw material, manufacturing and delivery costs.

- TRADEMARK LICENSE AGREEMENT--The Company entered into a trademark license
agreement with Continental Can Company, Inc. ("Continental Can"), a wholly
owned subsidiary of Suiza. Continental Can granted the Company a
nonexclusive license to use some of its trademarks in the United States.
The trademark license is royalty-free as long as Suiza owns 10% or more of
Holdings. The Company will be required to pay Continental Can an annual
trademark licensing free of $100,000 if Suiza owns less than 10% of
Holdings.

- TRANSITION SERVICE AGREEMENT--The Company entered into a transition
service agreement with Suiza. Under the agreement, Suiza and its
affiliates agreed to continue to supply office and other services to
Holdings and the Company in the manner which and to the extent that they
had historically provided these services to Suiza Packaging prior to the
closing of the transactions. These services include the lease of office
space at Suiza's actual allocable cost of rent; telephone services at
Suiza's actual allocable cost; computer services at $50,000 per month;
electricity services at $285,000 per month for all leased facilities;
medical insurance policies and employee benefits for some of our senior
officers at Suiza's actual allocable costs; and payments under insurance
policies, letters of credit and related performance or payment guarantees
regarding equipment leases, workers' compensation claims and related
matters at Suiza's actual allocable share of payments. The transition
services agreement terminated at December 31, 1999.

The Company had bottle sales to Suiza of approximately $33,000,000 for the
period from July 2, 1999 through December 31, 1999. Accounts receivable from
Suiza at December 31, 1999 amounted to approximately $5,500,000.

F-21

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. ALLOWANCE FOR DOUBTFUL ACCOUNTS

BALANCE AT BALANCE AT
BEGINNING RECOVERIES END OF
PERIOD ENDED OF PERIOD PROVISION (WRITE-OFFS) OTHER PERIOD
- - ------------ ---------- --------- ------------ -------- ----------
(DOLLARS IN THOUSANDS)

PREDECESSOR
December 31, 1997............................. $1,824 $ 256 $ (648) $257 $1,689
December 31, 1998............................. 1,689 418 (896) 155 1,366
July 1, 1999.................................. 1,366 266 (160) -- 1,472

SUCCESSOR
December 31, 1999............................. 5,439 2,030 (1,325) -- 6,144

The successor balance sheet at the beginning of the period includes
allowance for doubtful accounts balances added as a result of the acquisition of
Suiza Packaging (see Note 1).

The provision for doubtful accounts in 1999 reflects amounts added to
provide for the bankruptcy of a significant customer.

13. SUBSIDIARY SUMMARY CONSOLIDATING CONDENSED FINANCIAL STATEMENTS

Consolidated Container Capital, Inc. ("Capital"), a wholly owned subsidiary
of the Company was formed to serve as a co-issuer of the senior subordinated
notes. Capital has only nominal assets, does not conduct any operations and was
formed solely to act as co-issuer of the notes.

The summary consolidating condensed financial statements of the Company's
subsidiaries (the "Subsidiaries") are presented because the domestic
subsidiaries have guaranteed the notes. The Subsidiaries included in the
consolidating condensed financial statements presented below are all wholly
owned and constitute all of the Company's direct and indirect subsidiaries. The
guarantees of the Subsidiaries of the notes are full, unconditional, and joint
and several. Separate financial statements of the Subsidiaries are not presented
because management has determined that they would not be material to investors.
There are no significant restrictions on the Company's ability to obtain funds
from the Subsidiaries by dividend or loan.

The outstanding notes are guaranteed by the following four companies:

- Reid Plastics Group LLC, a wholly owned subsidiary of the Company

- Plastic Containers LLC, a wholly owned subsidiary of the Company

- Continental Plastic Containers LLC, a wholly owned subsidiary of Plastic
Containers LLC

- Continental Caribbean Containers, Inc., a wholly owned subsidiary of
Plastic Containers LLC

F-22

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. SUBSIDIARY SUMMARY CONSOLIDATING CONDENSED FINANCIAL STATEMENTS (CONTINUED)

Consolidating Condensed Balance Sheet as of December 31, 1998 (Predecessor):

REID PLASTICS
EXCLUDING
NONGUARANTOR NONGUARANTOR REID PLASTICS
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------- ------------ ------------ -------------
(DOLLARS IN THOUSANDS)

Total current assets........................ $ 40,263 $ 7,440 $ (918) $ 46,785
Property and equipment...................... 53,726 2,528 (838) 55,416
Intangibles and other assets................ 117,891 227 (443) 117,675
Investment in nonguarantor subsidiaries..... 6,517 -- (6,517) --
-------- ------- ------- --------
$218,397 $10,195 $(8,716) $219,876
======== ======= ======= ========
CURRENT LIABILITIES:
Accounts payable.......................... $ 10,619 $ 2,041 $(1,376) $ 11,284
Other current liabilities................. 12,382 1,529 (1,500) 12,411
Current portion of long-term debt......... 9,046 -- -- 9,046
-------- ------- ------- --------
Total current liabilities............... 32,047 3,570 (2,876) 32,741
Long-term debt.............................. 112,454 -- -- 112,454
Other liabilities........................... 22,650 108 -- 22,758
Minority interest........................... -- -- 677 677
Total shareholders' equity.................. 51,246 6,517 (6,517) 51,246
-------- ------- ------- --------
$218,397 $10,195 $(8,716) $219,876
======== ======= ======= ========

Consolidating Condensed Balance Sheet as of December 31, 1999 (Successor):

CONSOLDIATED
CONTAINER CONSOLDIATED
COMPANY CONTAINER
GUARANTOR NONGUARANTOR COMPANY
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------
(DOLLARS IN THOUSANDS)

Total current assets......................... $148,258 $ 9,642 $(3,157) $154,743
Property and equipment....................... 282,055 2,415 (640) 283,830
Intangibles and other assets................. 551,330 (2,620) 3,306 552,016
Investment in nonguarantor subsidiaries...... 5,627 -- (5,627) --
-------- ------- ------- --------
$987,270 $ 9,437 $(6,118) $990,589
======== ======= ======= ========
CURRENT LIABILITIES:
Accounts payable........................... $ 47,887 $ 3,370 $ (939) $ 50,318
Other current liabilities.................. 57,765 440 205 58,410
Revolving credit facility.................. 17,500 -- -- 17,500
Current portion of long-term debt.......... 16,052 -- -- 16,052
-------- ------- ------- --------
Total current liabilities................ 139,204 3,810 (734) 142,280
Long-term debt............................... 554,011 -- -- 554,011
Other liabilities............................ 37,227 -- -- 37,227
Minority interest............................ -- 243 243
Total member's equity........................ 256,828 5,627 (5,627) 256,828
-------- ------- ------- --------
$987,270 $ 9,437 $(6,118) $990,589
======== ======= ======= ========

F-23

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. SUBSIDIARY SUMMARY CONSOLIDATING CONDENSED FINANCIAL STATEMENTS (CONTINUED)
Period from January 1, 1997 through October 14, 1997 Consolidating Statement
of Operations (Predecessor):

REID PLASTICS
EXCLUDING
NONGUARANTOR NONGUARANTOR REID PLASTICS
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------- ------------ ------------ -------------
(DOLLARS IN THOUSANDS)

Net sales................................... $148,189 $19,428 $(2,867) $164,750
Cost of sales............................... 131,673 15,740 (2,893) 144,520
-------- ------- ------- --------

Gross profit................................ 16,516 3,688 26 20,230

Selling, general and administrative......... 13,151 921 -- 14,072
Restructuring charges....................... 9,162 -- -- 9,162
Other (income) expense...................... (1,170) 301 245 (624)
Interest expense, net....................... 6,337 -- -- 6,337
Equity in earnings of nonguarantor
subsidiaries.............................. (1,652) -- 1,652 --
-------- ------- ------- --------

Income (loss) before taxes.................. (9,312) 2,466 (1,871) (8,717)

Income tax expense (benefit)................ (2,013) 814 -- (1,199)

Minority interest in subsidiaries........... -- -- 285 285
-------- ------- ------- --------
$ (7,299) $ 1,652 $(2,156) $ (7,803)
======== ======= ======= ========

Period from October 15, 1997 through December 31, 1997 Consolidating
Statement of Operations (Predecessor):

REID PLASTICS
EXCLUDING
NONGUARANTOR NONGUARANTOR REID PLASTICS
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------- ------------ ------------ -------------
(DOLLARS IN THOUSANDS)

Net sales................................... $29,097 $4,856 $(717) $33,236
Cost of sales............................... 28,621 3,935 (724) 31,832
------- ------ ----- -------

Gross profit................................ 476 921 7 1,404

Selling, general and administrative......... 3,285 154 -- 3,439
Restructuring charges....................... -- -- -- --
Other (income) expense...................... (82) 30 25 (27)
Interest expense, net....................... 1,909 -- -- 1,909
Equity in earnings of nonguarantor
subsidiaries.............................. (480) -- 480 --
------- ------ ----- -------

Income (loss) before taxes.................. (4,156) 737 (498) (3,917)

Income tax expense (benefit)................ (342) 237 -- (105)
Minority interest in subsidiaries........... -- -- (61) (61)
------- ------ ----- -------
$(3,814) $ 500 $(559) $(3,873)
======= ====== ===== =======

F-24

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. SUBSIDIARY SUMMARY CONSOLIDATING CONDENSED FINANCIAL STATEMENTS (CONTINUED)
Year Ended December 31, 1998 Consolidating Statement of Operations
(Predecessor):

REID PLASTICS
EXCLUDING
NONGUARANTOR NONGUARANTOR REID PLASTICS
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------- ------------ ------------ -------------
(DOLLARS IN THOUSANDS)

Net sales................................... $156,199 $24,491 $(5,556) $175,134
Cost of sales............................... 129,059 22,072 (6,419) 144,712
-------- ------- ------- --------

Gross profit................................ 27,140 2,419 863 30,422

Selling, general and administrative......... 17,753 263 -- 18,016
Other (income) expense...................... (3,324) 582 1,395 (1,347)
Interest expense, net....................... 10,490 7 -- 10,497
Equity in earnings of nonguarantor
subsidiaries.............................. (1,487) -- 1,487 --
-------- ------- ------- --------

Income (loss) before taxes.................. 3,708 1,567 (2,019) 3,256

Income tax expense (benefit)................ 2,756 80 -- 2,836

Minority interest in subsidiaries........... -- -- (54) (54)
-------- ------- ------- --------
$ 952 $ 1,487 $(2,073) $ 366
======== ======= ======= ========

Period from January 1, 1999 through July 1, 1999 Consolidating Statement of
Operations (Predecessor):

REID PLASTICS
EXCLUDING
NONGUARANTOR NONGUARANTOR REID PLASTICS
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------- ------------ ------------ -------------
(DOLLARS IN THOUSANDS)

Net sales................................... $75,580 $11,334 $(1,491) $85,423
Cost of sales............................... 58,945 11,110 (2,644) 67,411
------- ------- ------- -------

Gross profit................................ 16,635 224 1,153 18,012
Selling, general and administrative......... 8,876 125 -- 9,001
Other (income) expense...................... (454) (50) 26 (478)
Interest expense, net....................... 4,406 (18) 96 4,484
Equity in earnings of nonguarantor
subsidiaries.............................. (167) -- 167 --
------- ------- ------- -------

Income (loss) before taxes.................. 3,974 167 864 5,005
Income tax expense (benefit)................ 2,890 -- -- 2,890

Extraordinary item.......................... 1,171 -- -- 1,171

Minority interest in subsidiaries........... -- -- 250 250
------- ------- ------- -------
$ (87) $ 167 $ 1,114 $ 1,194
======= ======= ======= =======

F-25

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. SUBSIDIARY SUMMARY CONSOLIDATING CONDENSED FINANCIAL STATEMENTS (CONTINUED)
Period from July 2, 1999 through December 31, 1999 Consolidating Statement
of Operations (Successor):

CONSOLIDATED
CONTAINER CONSOLIDATED
COMPANY CONTAINER
GUARANTOR NONGUARANTOR COMPANY
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------
(DOLLARS IN THOUSANDS)

Net sales..................................... $377,594 $13,767 $(2,696) $388,665
Cost of sales................................. 304,224 13,690 (2,696) 315,218
-------- ------- ------- --------
Gross profit.................................. 73,370 77 -- 73,447
Selling, general and administrative........... 37,209 2 -- 37,211
Restructuring charges......................... 8,766 8,766
Other (income) expense........................ (219) -- -- (219)
Interest expense, net......................... 27,009 (44) -- 26,965
Equity in earnings of nonguarantor
subsidiaries................................ (119) -- 119 --
-------- ------- ------- --------
Income (loss) before taxes.................... 724 119 (119) 724
Income tax expense (benefit).................. -- -- -- --
Minority interest in subsidiaries............. -- -- 183 183
-------- ------- ------- --------
$ 724 $ 119 $ 64 $ 907
======== ======= ======= ========

Period from January 1, 1997 through October 14, 1997 Consolidating Condensed
Statement of Cash Flows (Predecessor):

REID PLASTICS
EXCLUDING
NONGUARANTOR NONGUARANTOR REID PLASTICS
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------- ------------ ------------ -------------
(DOLLARS IN THOUSANDS)

Net cash provided by operating activities... $ 5,122 $1,930 $(1,559) $ 5,493
------- ------ ------- -------
Cash flows from investing activities:
Capital expenditures...................... (8,697) (616) -- (9,313)
Proceeds from disposal of property and
equipment............................... 801 -- -- 801
------- ------ ------- -------
(7,896) (616) -- (8,512)
------- ------ ------- -------
Cash flows from financing activities:
Net proceeds from revolving line of
credit.................................. 2,500 -- -- 2,500
Principal payments on notes payable to
banks................................... (3,612) -- -- (3,612)
Payments on other notes payable and
capital leases.......................... (1,570) -- -- (1,570)
Dividends paid............................ (257) -- -- (257)
------- ------ ------- -------
(2,939) -- -- (2,939)
------- ------ ------- -------
Net increase (decrease) in cash and cash
equivalents............................... (5,713) 1,314 (1,559) (5,958)
Cash and cash equivalents, beginning of
period.................................... 3,448 1,257 1,957 6,662
------- ------ ------- -------
Cash and cash equivalents, end of period.... $(2,265) $2,571 $ 398 $ 704
======= ====== ======= =======

F-26

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. SUBSIDIARY SUMMARY CONSOLIDATING CONDENSED FINANCIAL STATEMENTS (CONTINUED)

Period from October 15, 1997 through December 31, 1997 Consolidating
Condensed Statement of Cash Flows (Predecessor):

REID PLASTICS
EXCLUDING
NONGUARANTOR NONGUARANTOR REID PLASTICS
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------- ------------ ------------ -------------
(DOLLARS IN THOUSANDS)

Net cash provided by operating activities... $ 1,516 $ 530 $(365) $ 1,681
-------- ------ ----- --------
Cash flows from investing activities:
Capital expenditures...................... (4,785) -- -- (4,785)
Proceeds from disposal of property and
equipment............................... 280 -- -- 280
-------- ------ ----- --------
(4,505) -- -- (4,505)
-------- ------ ----- --------
Cash flows from financing activities:
Net proceeds from revolving line of
credit.................................. 7,000 -- -- 7,000
Borrowing under notes payable to banks.... 27,000 -- -- 27,000
Principal payments on notes payable to
banks................................... (10,608) -- -- (10,608)
Payments on other notes payable and
capital leases.......................... (4,662) -- -- (4,662)
Payment of deferred financing costs and
other acquisition costs................. (8,328) -- -- (8,328)
Issuance of new common stock.............. 60,000 -- -- 60,000
Repurchase of old common stock............ (35,139) -- -- (35,139)
Escrow deposits........................... (7,000) -- -- (7,000)
Redemption of senior preferred stock...... (18,421) -- -- (18,421)
Redemption of Series A preferred stock.... (1,769) -- -- (1,769)
Payments on noncompete agreements......... (1,516) -- -- (1,516)
-------- ------ ----- --------
6,557 -- -- 6,557
-------- ------ ----- --------
Net increase (decrease) in cash and cash
equivalents............................... 3,568 530 (365) 3,733
Cash and cash equivalents, beginning of
period.................................... (2,265) 2,571 398 704
-------- ------ ----- --------
Cash and cash equivalents, end of period.... $ 1,303 $3,101 $ 33 $ 4,437
======== ====== ===== ========

F-27

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. SUBSIDIARY SUMMARY CONSOLIDATING CONDENSED FINANCIAL STATEMENTS (CONTINUED)
Year Ended December 31, 1998 Consolidating Condensed Statement of Cash Flows
(Predecessor):

REID PLASTICS
EXCLUDING
NONGUARANTOR NONGUARANTOR REID PLASTICS
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------- ------------ ------------ -------------
(DOLLARS IN THOUSANDS)

Net cash provided by (used in) operating
activities................................
$ 10,805 $ (96) $642 $ 11,351
-------- ------- ---- --------
Cash flows from investing activities:
Capital expenditures...................... (11,776) (932) -- (12,708)
Proceeds from disposal of property and
equipment............................... 1,651 -- -- 1,651
-------- ------- ---- --------
(10,125) (932) -- (11,057)
-------- ------- ---- --------
Cash flows from financing activities:
Principal payments on notes payable to
banks................................... (647) -- -- (647)
Payments on other notes payable and
capital leases.......................... (1,709) -- -- (1,709)
Payment of deferred financing costs and
other acquisition costs................. (867) -- -- (867)
Escrow deposits........................... 4,000 -- -- 4,000
Payments on noncompete agreements......... (100) -- -- (100)
-------- ------- ---- --------
677 -- -- 677
-------- ------- ---- --------
Net increase (decrease) in cash and cash
equivalents............................... 1,357 (1,028) 642 971
Cash and cash equivalents, beginning of
period.................................... 1,303 3,101 33 4,437
-------- ------- ---- --------
Cash and cash equivalents, end of period.... $ 2,660 $ 2,073 $675 $ 5,408
======== ======= ==== ========

F-28

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. SUBSIDIARY SUMMARY CONSOLIDATING CONDENSED FINANCIAL STATEMENTS (CONTINUED)
Period from January 1, 1999 through July 1, 1999 Consolidating Condensed
Statement of Cash Flows (Predecessor):

REID PLASTICS
EXCLUDING
NONGUARANTOR NONGUARANTOR REID PLASTICS
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------- ------------ ------------ -------------
(DOLLARS IN THOUSANDS)

Net cash provided by (used in) operating
activities................................
$ (416) $1,120 $(675) $ 29
--------- ------ ----- ---------
Cash flows from investing activities:
Capital expenditures...................... (4,805) (324) -- (5,129)
Proceeds from disposal of property and
equipment............................... 58 -- -- 58
Other assets.............................. 96 -- -- 96
--------- ------ ----- ---------
(4,651) (324) -- (4,975)
--------- ------ ----- ---------
Cash flows from financing activities:
Principal payments on notes payable to
banks................................... (113,356) -- -- (113,356)
Payments on other notes payable and
capital leases.......................... (4,312) -- -- (4,312)
Capital contributions..................... 122,117 -- -- 122,117
--------- ------ ----- ---------
Net cash provided by financing
activities............................ 4,449 -- -- 4,449
--------- ------ ----- ---------
Net increase (decrease) in cash and cash
equivalents............................... (618) 796 (675) (497)
Cash and cash equivalents, beginning of
period.................................... 2,660 2,073 675 5,408
--------- ------ ----- ---------
Cash and cash equivalents, end of period.... $ 2,042 $2,869 $ -- $ 4,911
========= ====== ===== =========

F-29

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. SUBSIDIARY SUMMARY CONSOLIDATING CONDENSED FINANCIAL STATEMENTS (CONTINUED)
Period from July 2, 1999 through December 31, 1999 Consolidating Condensed
Statement of Cash Flows (Successor):

CONSOLIDATED
CONTAINER CONSOLIDATED
COMPANY CONTAINER
GUARANTOR NONGUARANTOR COMPANY
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------
(DOLLARS IN THOUSANDS)

Net cash provided by (used in) operating
activities.................................
$ 28,339 $ (901) $ -- $ 27,438
-------- ------- ---------- --------
Cash flows from investing activities:
Capital expenditures....................... (24,680) (260) -- (24,940)
Proceeds from disposal of property and
equipment................................ 590 -- -- 590
Other...................................... 4,231 -- -- 4,231
Cash paid for acquisitions, net of cash
acquired................................. 4,605 -- -- 4,605
-------- ------- ---------- --------
(15,254) (260) -- (15,514)
-------- ------- ---------- --------
Cash flows from financing activities:
Principal payments on notes payable to
banks.................................... (10,000) -- -- (10,000)
Payments on other notes payable and capital
leases................................... (6,157) -- -- (6,157)
Debt issuance cost......................... (22,108) -- -- (22,108)
Issuance of member units................... 56,272 -- -- 56,272
Borrowings under credit facilities......... 412,500 -- -- 412,500
Issuance of Senior Subordinated notes...... 185,000 -- -- 185,000
Repayment of PCI notes..................... (136,700) -- -- (136,700)
Payment of Suiza Packaging Debt............ (372,459) -- -- (372,459)
Capital contribution....................... (122,117) -- -- (122,117)
-------- ------- ---------- --------
(15,769) -- -- (15,769)
-------- ------- ---------- --------
Net increase (decrease) in cash and cash
equivalents................................ (2,684) (1,161) -- (3,845)
Cash and cash equivalents, beginning of
period..................................... 2,042 2,869 -- 4,911
-------- ------- ---------- --------
Cash and cash equivalents, end of period..... $ (642) $ 1,708 $ -- $ 1,066
======== ======= ========== ========

F-30

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
Suiza Foods Corporation
Dallas, Texas

We have audited the accompanying combined balance sheet of Franklin
Plastics, Inc. and subsidiaries ("Franklin") and Plastic Containers, Inc. and
subsidiaries ("PCI"), collectively "Suiza Packaging" or the "Company," as of
December 31, 1998, and the related combined statements of operations,
stockholders' equity and cash flows for the five-month period from the date of
acquisition of Franklin (July 31, 1997) to December 31, 1997 and the year ended
December 31, 1998. The combined financial statements include the accounts of
Franklin from its date of acquisition on July 31, 1997, and PCI from its date of
acquisition on May 29, 1998, both of which are majority-owned subsidiaries of
Suiza Foods Corporation. We have also audited the combined statements of
operations, stockholders' equity and cash flows of the predecessor of Franklin,
Plastics Management Group, for the four-month pre-acquisition period from April
1, 1997 to July 30, 1997. These combined financial statements are the
responsibility of the companies' management. Our responsibility is to express an
opinion on these combined financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall combined
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such combined financial statements present fairly, in all
material respects, the combined financial position of Suiza Packaging at
December 31, 1998, and their combined results of operations and cash flows for
the five-month period ended December 31, 1997 and the year ended December 31,
1998, in conformity with generally accepted accounting principles.

In addition, in our opinion, the combined predecessor financial statements
present fairly, in all material respects, the results of operations and cash
flows of Plastics Management Group for the four-month period ended July 31,
1997, in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

February 9, 1999
(April 30, 1999, as to Note 17)

F-31

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders of
Plastics Management Group:

We have audited the accompanying combined statements of operations,
stockholders' equity and cash flows of Plastics Management Group for the six
month period ended March 31, 1997. These statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, Plastic Management Group's results of
operations and cash flows for the six month period ended March 31, 1997, in
conformity with generally accepted accounting principles.

PricewaterhouseCoopers LLP

Boston, Massachusetts
July 1, 1997

F-32

SUIZA PACKAGING

COMBINED BALANCE SHEET

DECEMBER 31, 1998 (IN THOUSANDS)

ASSETS

CURRENT ASSETS:
Cash and cash equivalents................................. $ 1,681
Temporary investments..................................... 9,216
Accounts receivable, net of allowance for doubtful
accounts of $2,078...................................... 44,714
Inventories............................................... 23,365
Prepaid expenses and other current assets................. 676
Deferred income taxes..................................... 2,395
--------
Total current assets.................................... 82,047

PROPERTY, PLANT AND EQUIPMENT............................... 218,644

DEFERRED INCOME TAXES....................................... 23,937

INTANGIBLE AND OTHER ASSETS................................. 267,277
--------

TOTAL ASSETS................................................ $591,905
========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued expenses..................... $ 63,926
Dividends payable......................................... 7,906
Revolving credit facility................................. 26,370
Current portion of long-term debt......................... 6,032
--------
Total current liabilities............................... 104,234

LONG-TERM DEBT.............................................. 372,339

DEFERRED INCOME TAXES....................................... 7,098

OTHER LONG-TERM LIABILITIES................................. 22,359

COMMITMENTS AND CONTINGENCIES (Note 14)

STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, $1,000 stated
value--1,000,000 shares authorized; 72,594 shares issued
and outstanding......................................... 72,594
Common stock, $.001 par value--5,000,000 shares
authorized, 1,451,877 shares, issued and outstanding.... 1
Additional paid-in capital................................ 14,899
Retained deficit.......................................... (1,619)
--------
Total stockholders' equity.............................. 85,875
--------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................. $591,905
========

See notes to combined financial statements.

F-33

SUIZA PACKAGING

COMBINED STATEMENTS OF OPERATIONS

(IN THOUSANDS)

PREDECESSOR
---------------------------
SIX-MONTH FIVE-MONTH
PERIOD FOUR-MONTH PERIOD
ENDED PERIOD ENDED YEAR ENDED
MARCH 31, ENDED DECEMBER 31, DECEMBER 31,
1997 JULY 31, 1997 1997 1998
---------- -------------- ------------- -------------

NET SALES................................... $48,781 $40,847 $49,699 $367,903

COST OF SALES............................... 43,292 36,447 38,995 283,122
------- ------- ------- --------
Gross profit.............................. 5,489 4,400 10,704 84,781

OPERATING EXPENSES:
Selling, general and administrative....... 1,115 706 5,347 33,075
Amortization of intangibles............... 48 32 947 5,126
------- ------- ------- --------
Total operating expenses................ 1,163 738 6,294 38,201
------- ------- ------- --------
INCOME FROM OPERATIONS...................... 4,326 3,662 4,410 46,580

OTHER EXPENSE:
Interest expense, net..................... (932) (618) (4,663) (26,847)
Other expense, net........................ (176) (62)
------- ------- ------- --------
Total other expense..................... (1,108) (618) (4,663) (26,909)
------- ------- ------- --------

INCOME (LOSS) BEFORE INCOME TAXES........... 3,218 3,044 (253) 19,671

INCOME TAX EXPENSE.......................... 218 190 228 9,486
------- ------- ------- --------

NET INCOME (LOSS)........................... $ 3,000 $ 2,854 $ (481) $ 10,185
======= ======= ======= ========

See notes to combined financial statements.

F-34

SUIZA PACKAGING

COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY

(IN THOUSANDS)

PREFERRED STOCK COMMON STOCK ADDITIONAL RETAINED TOTAL
------------------- -------------------- PAID-IN EARNINGS STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL (DEFICIT) EQUITY
-------- -------- --------- -------- ---------- --------- -------------

PREDECESSOR

BALANCE, OCTOBER 1, 1996............. -- $ -- 1,660 $ 143 $ 1,548 $ 5,789 $ 7,480

Repurchase of common stock......... (200) (21) (21)
Stockholders' distribution......... (751) (751)
Net income......................... 3,000 3,000
------ ------- --------- ------- ------- ------- -------

BALANCE, MARCH 31, 1997.............. -- -- 1,460 122 1,548 8,038 9,708

Stockholders' distribution......... (3,380) (3,380)
Net income......................... 2,854 2,854
------ ------- --------- ------- ------- ------- -------

BALANCE, JULY 31, 1997............... -- $ -- 1,460 $ 122 $ 1,548 $ 7,512 $ 9,182
====== ======= ========= ======= ======= ======= =======

SUIZA PACKAGING

Common stock issued................ -- $ -- 453,425 $ -- $ 4,535 $ -- $ 4,535
Preferred stock issued............. 22,671 22,671 22,671
Issuance of warrants............... 383 383
Preferred dividends declared....... (1,417) (1,417)
Net loss........................... (481) (481)
------ ------- --------- ------- ------- ------- -------
BALANCE, DECEMBER 31, 1997........... 22,671 22,671 453,425 -- 4,918 (1,898) 25,691

Common stock issued................ 998,452 1 9,981 9,982
Preferred stock issued............. 49,923 49,923 49,923
Stockholder distribution........... (2,000) (2,000)
Preferred dividends declared....... (7,906) (7,906)
Net income......................... 10,185 10,185
------ ------- --------- ------- ------- ------- -------

BALANCE, DECEMBER 31, 1998........... 72,594 $72,594 1,451,877 $ 1 $14,899 $(1,619) $85,875
====== ======= ========= ======= ======= ======= =======

See notes to combined financial statements.

F-35

SUIZA PACKAGING

COMBINED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

PREDECESSOR
---------------------------
SIX-MONTH FIVE-MONTH
PERIOD FOUR-MONTH PERIOD
ENDED PERIOD ENDED YEAR ENDED
MARCH 31, ENDED DECEMBER 31, DECEMBER 31,
1997 JULY 31, 1997 1997 1998
---------- -------------- ------------- -------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................... $ 3,000 $ 2,854 $ (481) $ 10,185
Adjustments to net income (loss):
Depreciation and amortization................. 2,820 2,149 2,233 17,333
Loss on disposal of assets.................... 62
Deferred income taxes......................... 228 10,194
Changes in assets and liabilities, net of
acquisitions:
Receivables................................. 1,063 (3,333) (727) (4,113)
Inventories................................. (123) (120) (154) 2,154
Prepaid expenses and other assets........... (477) 269 142 111
Accounts payable and accrued expenses....... 800 89 7,983 (9,160)
------- ------- --------- ---------
Net cash provided by operating
activities.............................. 7,083 1,908 9,224 26,766
------- ------- --------- ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturity of temporary
investments................................... 26,740
Purchase of temporary investments............... (13,790)
Additions to property, plant and equipment...... (7,335) (7,402) (9,343) (63,721)
Cash paid for acquisitions, net of cash
acquired...................................... (45) (136,027) (91,700)
------- ------- --------- ---------
Net cash used in investing activities..... (7,380) (7,402) (145,370) (142,471)
------- ------- --------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid and stockholders' distributions,
net........................................... (2,571) (3,380) (3,417)
Net borrowings from parent company.............. 8,874 108,822 100,097
Issuance of common and preferred stock.......... 27,206 25,343
Issuance of warrants............................ 383
Repayment of long-term debt..................... (48) (4,902)
Borrowings on debt.............................. 2,077
------- ------- --------- ---------
Net cash provided by (used in) financing
activities.............................. (542) 5,494 136,411 117,121
------- ------- --------- ---------

INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS..................................... (839) -- 265 1,416

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.... 839 265
------- ------- --------- ---------

CASH AND CASH EQUIVALENTS, END OF PERIOD.......... $ -- $ -- $ 265 $ 1,681
======= ======= ========= =========

See notes to combined financial statements.

F-36

SUIZA PACKAGING

NOTES TO COMBINED FINANCIAL STATEMENTS FOR 1997 AND 1998

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS--Suiza Packaging (the "Company") includes the operations of
Franklin Plastics, Inc. and subsidiaries ("Franklin"), a majority-owned
subsidiary of Suiza Foods Corporation ("Suiza" or the "Parent"); and Plastics
Containers, Inc. and subsidiaries ("PCI"), an indirect majority-owned subsidiary
of Suiza. On July 31, 1997, Franklin was acquired by Suiza and on May 29, 1998,
PCI and its immediate parent company, Continental Can Company, Inc.
("Continental Can"), were acquired by Suiza. Both of these acquisitions have
been accounted for using the purchase method of accounting, and the related
accounting adjustments, including goodwill, have been pushed down and are
reflected in the combined financial statements of the Company as of their
respective acquisition dates. The combined financial statements of the Company
for the periods before July 31, 1997, were prepared using the predecessor's
historical basis of accounting. Because of the application of the purchase
method of accounting, as of the respective acquisition dates of Franklin and
PCI, the operating results of Suiza Packaging and its predecessor, Plastics
Management Group, are presented using different bases of accounting that affect
the comparability of their operating results.

The Company develops, manufactures and distributes a wide range of custom
extrusion blow-mold plastic containers used primarily in the milk, juice and
water industries. Based on the nature of the product, the production process,
types of customers, and methods used to distribute products, the Company
operates in one reportable segment.

USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities and
revenues and expenses during the reporting period. Actual results could differ
from these estimates.

PRINCIPLES OF COMBINATION--The accompanying combined financial statements
include the accounts of Franklin and PCI and their wholly owned subsidiaries.
All significant intercompany balances and transactions are eliminated in
combination.

CASH AND CASH EQUIVALENTS--Included in cash and cash equivalents are highly
liquid cash investments, with remaining maturities at date of purchase of three
months or less.

TEMPORARY INVESTMENTS--Temporary investments consist of available-for-sale
U.S. government obligations, certificates of deposit, Eurodollar deposits and
highly rated commercial paper, all of which are due within one year. These
temporary investments are stated at amortized cost, which approximates market
value.

INVENTORIES--Inventories consist of raw materials, spare parts and supplies,
and finished goods inventories and are stated at the lower of cost, using the
first-in, first-out ("FIFO") method, or market. Finished goods inventories
include raw materials, direct labor costs and indirect labor and overhead costs.

PROPERTY, PLANT AND EQUIPMENT--Property, plant and equipment are stated at
cost. Depreciation and amortization are provided using the straight-line method
over the estimated useful lives of the assets, which range from three to forty
years. Plant and equipment held under capital leases and leasehold improvements
are amortized over the shorter of the lease term or the estimated useful life of
the asset. Expenditures for repairs and maintenance that do not improve or
extend the life of the assets are expensed as incurred.

F-37

SUIZA PACKAGING

NOTES TO COMBINED FINANCIAL STATEMENTS FOR 1997 AND 1998 (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INTANGIBLE ASSETS--Intangible assets include primarily goodwill and are
stated at cost and are amortized using the straight-line method over 40 years.

INSURANCE--The Company purchases commercial insurance policies to cover its
insurance risks; however, certain of its subsidiaries are self-insured in
certain states for workers' compensation, general liability, and property and
casualty coverages in excess of varying deductible amounts. Self-insurance
liabilities are accrued based on claims filed and estimates for claims incurred
but not reported.

RESEARCH, DEVELOPMENT AND ENGINEERING--Expenditures for research,
development and engineering are expensed as incurred. Costs charged to
operations for research, development and engineering for the year ended
December 31, 1998, were $5.1 million. There were no similar costs incurred prior
to 1998.

REVENUE--Revenue is recognized when the product is shipped to the customer.
The Company provides credit terms to customers generally ranging up to 30 days,
performs ongoing credit evaluations of its customers and maintains allowances
for potential credit losses based on historical experience.

INCOME TAXES--Deferred income taxes are provided for temporary differences
in the financial statement and tax bases of assets and liabilities using current
tax rates. Deferred tax assets, including the benefit of net operating loss
carryforwards, are evaluated based on the guidelines for realization and may be
reduced by a valuation allowance if deemed necessary. Beginning with the
acquisition by Suiza on July 31, 1997, the Company has been included in the
consolidated federal income tax return of Suiza; however, income taxes in the
combined financial statements have been provided as if the Company filed a
separate income tax return. Prior to July 31, 1997, the predecessor was
organized as a group of affiliated companies under Subchapter S of the Internal
Revenue Code, and was not subject to corporate-level federal income taxes.
Accordingly, income generated by the predecessor was taxed to the stockholders
individually, and no federal income tax expense was recorded in the predecessor
financial statements.

ASSET IMPAIRMENT--In accordance with Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
to Be Disposed Of," the Company evaluates the impairment of long-lived assets if
circumstances indicate that the carrying value of those assets may not be
recoverable. Recoverability of the assets to be held and used is measured by a
comparison of the carrying amount of the asset to future undiscounted cash flows
expected to be generated by the asset.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS--SFAS No. 133, "Accounting for
Derivative Financial Instruments and Hedging Activities," was issued in June
1998, and establishes standards for accounting and reporting for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. SFAS No. 133 is effective for the year
ending December 31, 2000. The Company is currently analyzing the effect of this
standard and does not expect it to have a material effect on the combined
financial position, results of operations or cash flows.

2. ACQUISITIONS

On July 31, 1997, Suiza formed Suiza Packaging and purchased the net assets
of Plastics Management Group for approximately $136 million in cash, which was
funded primarily by borrowings under Suiza's senior credit facilities. In
connection with this acquisition, Suiza Packaging sold warrants

F-38

SUIZA PACKAGING

NOTES TO COMBINED FINANCIAL STATEMENTS FOR 1997 AND 1998 (CONTINUED)

2. ACQUISITIONS (CONTINUED)
to the former stockholders of Plastics Management Group to acquire 91,880 shares
of common stock of Suiza Packaging (equal to 17.5% of the outstanding common
stock) at an exercise price of $10 per share in consideration for a cash payment
of $383,000, which approximated the fair market value of such warrants. Pursuant
to a stockholders' agreement, the purchase price of Plastics Management Group
was pushed down to Suiza Packaging with the following capital structure:

- 55% of the purchase price in the form of senior notes payable to Suiza

- 25% of the purchase price in the form of mezzanine notes payable to Suiza

- 16 2/3% of the purchase price in the form of preferred stock issued to
Suiza

- 3 1/3% of the purchase price in the form of common stock issued to Suiza

In addition to the push-down of the original purchase price of Plastics
Management Group, the stockholders' agreement also required any future
acquisitions of plastic packaging businesses by Suiza to be made on behalf of
Suiza Packaging, with the related purchase prices pushed down to Suiza Packaging
using the above-described capital structure. In addition, for future Suiza
Packaging acquisitions, the warrant holders were entitled to protective
participation rights whereby they could elect to purchase 17.5% of both the
preferred and common stock issued by Suiza Packaging in connection with these
future acquisitions.

On May 29, 1998, Suiza issued approximately 2.5 million shares of its common
stock or replacement stock options to the shareholders of Continental Can in
exchange for substantially all of the issued and outstanding shares of common
stock and stock options of Continental Can. The total purchase price for this
acquisition, including assumed debt, was approximately $354.4 million, of which
approximately $207.4 million of the purchase price was allocated to PCI based on
PCI's relative contribution to Continental Can's operations.

During 1998, in addition to the PCI acquisition, the Company completed the
acquisition of eleven other plastic packaging businesses. The aggregate purchase
price for the other acquisitions, none of which were individually significant,
was $89.3 million. All of the acquisitions were funded primarily with borrowing
under Suiza's senior credit facilities.

These acquisitions were all accounted for using the purchase method of
accounting as of their respective acquisition dates. Accordingly, only the
results of operations of the acquired companies subsequent to their respective
acquisition dates are included in the combined financial statements. At the
acquisition date, the purchase prices, which were pushed down to Suiza Packaging
based on the capital structure discussed above, were allocated to assets
acquired, including identifiable intangibles and liabilities assumed based on
their fair market values. The excess of the total purchase prices over

F-39

SUIZA PACKAGING

NOTES TO COMBINED FINANCIAL STATEMENTS FOR 1997 AND 1998 (CONTINUED)

2. ACQUISITIONS (CONTINUED)
the fair values of the net assets acquired represented goodwill. In connection
with the 1997 and 1998 acquisitions, assets were acquired and liabilities were
assumed as follows:

1997 1998
-------- --------
(IN THOUSANDS)

Total purchase prices, net of cash acquired............. $136,027 $292,161

Fair value of net assets acquired:
Fair value of assets acquired......................... 57,654 216,868
Fair value of liabilities assumed..................... 12,588 106,561
-------- --------
Total net assets acquired............................. 45,066 110,307
-------- --------
Goodwill................................................ $ 90,961 $181,854
======== ========

The following table presents the unaudited combined pro forma results of
operations of Suiza Packaging as if these acquisitions had occurred at the
beginning of each of the periods presented:

1997 1998
-------- --------
(IN THOUSANDS)

Net sales............................................... $484,755 $512,151
======== ========
Income (loss) before taxes.............................. $ (75) $ 18,858
======== ========
Net income (loss)....................................... $ (56) $ 11,053
======== ========

The unaudited combined pro forma results of operations are not necessarily
indicative of what the actual results of operations would have been had the
acquisitions occurred at the beginning of 1997, nor do they purport to be
indicative of the future results of operations of Suiza Packaging.

Regarding the acquisition of PCI, a liability of $2.2 million was recognized
relative to a plan to close PCI's Lima, Ohio, facility. This liability included
approximately $.8 million for employee severance costs related to approximately
100 employees, including production, supervisory and administrative personnel
located at the facility, and approximately $1.4 million for noncancelable lease
obligations and related facility closing costs. The Company remains obligated
under the facility lease through December 2000. In addition, the allocation of
purchase price to fixed assets included a reduction of approximately
$5.7 million of carrying costs of the Lima facility to reduce such costs to
their estimated fair values. This facility is expected to close by the end of
the second quarter of 1999.

3. INVENTORIES

Inventory expenses as of December 31, 1998, are as follows (in thousands):

Raw materials............................................... $ 9,586
Parts and supplies.......................................... 3,045
Finished goods.............................................. 10,734
-------
Total....................................................... $23,365
=======

F-40

SUIZA PACKAGING

NOTES TO COMBINED FINANCIAL STATEMENTS FOR 1997 AND 1998 (CONTINUED)

4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment expenses as of December 31, 1998, are as
follows (in thousands):

Land........................................................ $ 7,350
Buildings and improvements.................................. 24,586
Machinery and equipment..................................... 189,587
Furniture and fixtures...................................... 808
Construction in progress.................................... 9,913
--------
232,244
Less accumulated depreciation............................... (13,600)
--------
Total....................................................... $218,644
========

5. INTANGIBLE AND OTHER ASSETS

Intangible and other assets expenses as of December 31, 1998, are as follows
(in thousands):

Goodwill.................................................... $272,815
Deposits and other.......................................... 535
--------
273,350
Less accumulated amortization............................... (6,073)
--------
Total....................................................... $267,277
========

6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses as of December 31, 1998, are as
follows (in thousands):

Accounts payable............................................ $27,980
Accrued interest payable to Suiza........................... 9,499
Employee compensation and benefits.......................... 8,629
Accrual for plant closings.................................. 3,585
Accrued rebates............................................. 1,757
Other....................................................... 12,476
-------
Total....................................................... $63,926
=======

F-41

SUIZA PACKAGING

NOTES TO COMBINED FINANCIAL STATEMENTS FOR 1997 AND 1998 (CONTINUED)

7. DEBT

Debt as of December 31, 1998, is as follows (in thousands):

Revolving credit facility with Suiza........................ $ 26,370
========
Long-term debt:
Notes payable to Suiza:
Senior notes payable.................................... $125,502
Mezzanine notes payable................................. 118,749
Senior secured notes payable.............................. 131,114
Capital lease obligations................................. 3,006
--------
378,371
Less current portion........................................ (6,032)
--------
Total....................................................... $372,339
========

NOTES PAYABLE TO SUIZA--The Company has entered into various credit
arrangements with Suiza, which include a non-interest-bearing revolving credit
facility, payable on demand, to fund the Company's working capital and capital
expenditure requirements, and senior and mezzanine notes payable to fund a
portion of the purchase prices for acquired businesses pursuant to the capital
structure required by the stockholders' agreement, as discussed in Note 2.

The senior notes payable that are unsecured notes, were issued in connection
with the Company's acquisitions, at various dates in 1997 and 1998, and require
quarterly principal installments of 2% of the initial principal balance
beginning September 30, 1999, and ending on their maturity date, June 30, 2004.
Amounts outstanding under the senior notes bear interest, payable quarterly, at
a floating rate based on the London Interbank Offering Rate plus 300 basis
points. The interest rate in effect, including the applicable interest rate
margin, was 8.78% at December 31, 1998.

The mezzanine notes payable that are unsecured notes, were issued in
connection with the Company's acquisitions, at various dates in 1997 and 1998,
and are due in full on their maturity date, June 30, 2007. Of the amounts
outstanding at December 31, 1998, approximately $57 million bear interest at a
fixed rate of 12.5%, while the remaining $61.7 million bear interest at 13.9%.
Interest on these notes is payable quarterly.

SENIOR SECURED NOTES--The senior secured notes were issued in December 1996
and have an original par value of $125 million. These notes, which are due in
2006, bear interest at a fixed interest rate of 10%, payable semiannually in
July and December of each year, and are secured by substantially all assets
other than inventory, receivables and certain equipment of PCI, along with the
stock of certain of PCI's subsidiaries. In connection with the acquisition of
PCI in 1998, these notes were revalued to fair value using a market yield of
8.6% resulting in a premium of $10.4 million at the acquisition date. This
premium is being amortized as an adjustment to interest expense over the life of
the notes. These notes are redeemable, in whole or in part, at the option of PCI
beginning on December 16, 2001, at an initial price of 105% of par value,
declining ratably each year to par value on December 15, 2004. In addition, the
indenture requires PCI to offer to redeem the notes at a redemption price of
101% of par value upon the occurrence of certain other events. The tender offer
to redeem these notes in connection with the acquisition of PCI resulted in the
redemption of

F-42

SUIZA PACKAGING

NOTES TO COMBINED FINANCIAL STATEMENTS FOR 1997 AND 1998 (CONTINUED)

7. DEBT (CONTINUED)
$3.8 million of these notes. The indenture places certain restrictions on the
payment of dividends, additional liens, disposition of the proceeds of asset
sales, sale and leaseback transactions and additional borrowings.

CAPITAL LEASE OBLIGATIONS--The Company is obligated under capital leases for
a manufacturing facility, which expires in December 2000, and certain machinery
and equipment, which expires in April 2000. The equipment lease arrangement
commenced on April 1, 1996, in connection with the issuance of tax-exempt
industrial development revenue bonds. Included in the combined balance sheet are
capital lease assets of $4.5 million and accumulated amortization of
$.3 million at December 31, 1998.

Future minimum lease payments under these capital leases are as follows (in
thousands):

Year ending December 31:
1999...................................................... $1,172
2000...................................................... 919
2001...................................................... 871
2002...................................................... 349
------
Total future minimum lease payments......................... 3,311
Less portion representing interest.......................... (305)
------
Net minimum lease payments.................................. $3,006
======

SCHEDULED MATURITIES--The scheduled annual maturities of long-term debt at
December 31, 1998, were as follows (in thousands):

SUIZA OTHER
NOTES DEBT TOTAL
-------- -------- --------

1999.......................................... $ 5,020 $ 1,012 $ 6,032
2000.......................................... 10,040 848 10,888
2001.......................................... 10,040 784 10,824
2002.......................................... 10,040 362 10,402
2003.......................................... 10,040 10,040
Thereafter.................................... 199,071 131,114 330,185
-------- -------- --------
$244,251 $134,120 $378,371
======== ======== ========

8. OPERATING LEASES

The Company leases certain property, plant and equipment used in its
operations under noncancelable operating lease agreements. Such leases, which
are primarily for facilities, machinery and equipment, and vehicles, have lease
terms ranging from two to nine years. Certain of the operating lease agreements
require the payment of additional rentals for maintenance, along with additional
rentals, based on miles driven or units produced. Lease expense, including
additional rent, was $11.6 million for the year ended December 31, 1998,
$1.3 million for the five-month period ended

F-43

SUIZA PACKAGING

NOTES TO COMBINED FINANCIAL STATEMENTS FOR 1997 AND 1998 (CONTINUED)

8. OPERATING LEASES (CONTINUED)
December 31, 1997, $0.7 million for the four-month period ended July 31, 1997,
and $2.1 million for the six-month period ended March 31, 1997.

Future minimum lease payments at December 31, 1998, under noncancelable
operating leases with terms in excess of one year are summarized below (in
thousands):

1999........................................................ $16,833
2000........................................................ 15,996
2001........................................................ 15,473
2002........................................................ 13,159
2003........................................................ 11,211
Thereafter.................................................. 12,283
-------
Total....................................................... $84,955
=======

9. INCOME TAXES

The following table presents the provision for income taxes of Suiza
Packaging for the periods presented (in thousands):

PREDECESSOR
-----------------------
SIX-MONTH FOUR-MONTH FIVE-MONTH
PERIOD PERIOD PERIOD
ENDED ENDED ENDED YEAR ENDED
MARCH 31, JULY 31, DECEMBER 31, DECEMBER 31,
1997 1997 1997 1998
---------- ---------- ------------- -------------

Current taxes payable:
Federal...................................... $ -- $ -- $(869) $(2,394)
State........................................ 218 190 304 1,114
Deferred income taxes.......................... 793 10,766
---- ---- ----- -------
Total.......................................... $218 $190 $ 228 $ 9,486
==== ==== ===== =======

For the periods ended prior to July 31, 1997, the Company had elected to be
taxed as a Subchapter S Corporation whereby all of its income or losses passed
through to its stockholders. Accordingly, no provision for federal income taxes
is included in the combined financial statements for these periods. The
following is a reconciliation of income taxes reported in the combined
statements of operations (in thousands):

PREDECESSOR
-----------------------
SIX-MONTH FOUR-MONTH FIVE-MONTH
PERIOD PERIOD PERIOD
ENDED ENDED ENDED YEAR ENDED
MARCH 31, JULY 31, DECEMBER 31, DECEMBER 31,
1997 1997 1997 1998
---------- ---------- ------------- -------------

Tax expense at statutory rates................. $ -- $ -- $(89) $6,885
State income taxes, net of federal tax
effect....................................... 218 190 275 1,740
Tax effect of nondeductible goodwill........... 653
Other.......................................... 42 208
---- ---- ---- ------
Total.......................................... $218 $190 $228 $9,486
==== ==== ==== ======

F-44

SUIZA PACKAGING

NOTES TO COMBINED FINANCIAL STATEMENTS FOR 1997 AND 1998 (CONTINUED)

9. INCOME TAXES (CONTINUED)

The tax effects of temporary differences giving rise to deferred income tax
assets and liabilities at December 31, 1998, were (in thousands):

Deferred income tax assets:
Net operating loss carryforwards.......................... $ 18,022
Vacation reserves......................................... 1,031
Self-insurance reserves................................... 3,890
Plant rationalization reserve............................. 1,736
Postretirement benefit reserves........................... 3,373
Premium on senior secured notes........................... 3,748
Deferred financing costs.................................. 1,826
Allowance................................................. 1,034
Other..................................................... 2,426
--------
37,086
Deferred income tax liabilities--depreciation and
amortization.............................................. (17,852)
--------
Net deferred income tax assets.............................. $ 19,234
========

These net deferred income tax assets (liabilities) are classified in the
combined balance sheet at December 31, 1998, as follows (in thousands):

Current assets.............................................. $ 2,395
Noncurrent assets........................................... 23,937
Noncurrent liabilities...................................... (7,098)
-------
Total....................................................... $19,234
=======

In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers
projected future taxable income, the scheduled reversal of deferred tax
liabilities and tax-planning strategies in making this assessment. Based upon
this assessment, management believes it is more likely than not the Company will
realize the benefits of these temporary differences at December 31, 1998.

At December 31, 1998, the Company has operating loss carryforwards for
federal income tax purposes of approximately $50 million, which are available to
offset future federal taxable income. The carryforward periods extend from 2007
through 2010. In addition, the Company has alternative minimum tax credit
carryforwards of approximately $132,000 that are available to reduce future
federal regular income taxes over an indefinite period, and research and
development credits of approximately $480,000 available to reduce future federal
income taxes through 2010.

10. STOCKHOLDERS' EQUITY

CAPITAL SHARES--Authorized capital shares of the Company include 1,000,000
shares of preferred stock with a par value and stated value of $.001 and $1,000
per share, respectively, and 5,000,000 shares

F-45

SUIZA PACKAGING

NOTES TO COMBINED FINANCIAL STATEMENTS FOR 1997 AND 1998 (CONTINUED)

10. STOCKHOLDERS' EQUITY (CONTINUED)
of common stock with a par value of $.001 per share. The rights and preferences
of preferred stock are established by the Company's board of directors upon
issuance.

The shares of preferred stock outstanding include 72,594 and 22,671 shares
at December 31, 1998 and 1997, respectively. These preferred shares have a
cumulative dividend rate of 15% of their stated value and have a liquidation
preference equal to $1,000 per share plus accumulated unpaid dividends.

WARRANTS--In conjunction with the acquisition of the Plastics Management
Group on July 31, 1997, 91,880 warrants were sold for $383,000, which
approximated their fair value, to former stockholders of Plastics Management
Group, giving such holders the right to purchase equity interests in the Company
equal to 17.5% of the outstanding common stock at that date for $10 per share.
These warrants are exercisable, in whole or in part, at various dates through
July 31, 2007.

STOCK OPTIONS--Under the stockholders' agreement, Suiza Packaging was
authorized to grant stock options to key employees. During 1998, the Company
adopted the Franklin Plastics, Inc. 1998 Stock Option Plan, which reserved
187,089 shares of common stock for grants under the plan, and granted stock
options to certain key employees at exercise prices that approximated the fair
market value of such shares at the date of grant. Stock options granted under
this plan are exercisable over a three-year period from date of grant and may
become exercisable upon the termination of an individual's employment following
a change in control. At December 31, 1998, options for 89,836 shares had been
granted and were outstanding at an exercise price of $10 per share, none of
which were exercisable at that date. In addition, on February 1, 1999, the
Company granted stock options for 28,358 shares of common stock to certain key
employees at an exercise price of $30 per share, which approximated the fair
market value of such shares at that date.

11. EMPLOYEE BENEFITS

Suiza Packaging sponsors both defined benefit and defined contribution
retirement plans on behalf of certain of its subsidiaries, and contributes to
various multiemployer union pension plans. The following is a summary of amounts
expensed under these plans (in thousands):

PREDECESSOR
---------------------------
SIX-MONTH FIVE-MONTH
PERIOD FOUR-MONTH PERIOD
ENDED PERIOD ENDED YEAR ENDED
MARCH 31, ENDED DECEMBER 31, DECEMBER 31,
1997 JULY 31, 1997 1997 1998
---------- -------------- ------------- -------------

Defined benefit plans....................... $ -- $ -- $ -- $ 194
Defined contribution plans.................. 118 147 935
Multiemployer plans......................... 573
---- ---- ---- ------
$118 $ -- $147 $1,702
==== ==== ==== ======

DEFINED BENEFIT PLANS--As of May 29, 1998, the Company succeeded to a
defined benefit pension plan for substantially all salaried employees of PCI
hired prior to August 1, 1997. Plan benefits are based on all years of
continuous service and the employee's compensation during the highest five
continuous years of the last ten years of employment, minus a profit sharing
annuity. The profit sharing annuity is based on the amount of profit sharing
contributions received for 1988 through 1992.

F-46

SUIZA PACKAGING

NOTES TO COMBINED FINANCIAL STATEMENTS FOR 1997 AND 1998 (CONTINUED)

11. EMPLOYEE BENEFITS (CONTINUED)
Any employee who terminated employment prior to August 31, 1993, is governed
by the terms of the plan in effect at the time the termination occurred. In
addition, the Company maintains a benefit equalization plan for salaried
employees hired prior to August 1, 1997, whose compensation level exceeds the
limits within the defined benefit pension plan.

The Company also succeeded to a noncontributory defined benefit pension plan
for substantially all hourly employees of PCI hired prior to August 1, 1997, who
have attained 21 years of age. Plan benefits vary by location and by union
contract, but are based primarily on years of service and the employee's highest
wage classification for 12 consecutive months in the five-year period prior to
retirement. Normal retirement is at age 65, with at least a five-year period of
continuous service. However, employees may retire as early as age 55 and receive
reduced benefits.

Subject to the limitation on deductibility imposed by federal income tax
laws, the Company's policy has been to contribute funds to the plans annually in
amounts required to maintain sufficient plan assets to provide for accrued
benefits. Plan assets are held in a master trust and are composed primarily of
common stock, corporate bonds and U.S. government and government agency
obligations.

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS--The Company provides certain
health care and life insurance benefits for retired PCI employees. Certain of
PCI's hourly and salaried employees became eligible for these benefits when they
became eligible for an immediate pension under a formal company pension plan. In
1993, the plan was amended to eliminate health care benefits for employees hired
after January 1, 1993. The Company's policy is to fund the cost of medical
benefits as claims are incurred.

At May 29, 1998, as part of the purchase accounting adjustments in
connection with the PCI acquisition, the accrued pension liability and accrued
postretirement benefit liability were adjusted to fair value, and all previously
unrecognized gains and losses were recognized as part of the purchase
allocation.

F-47

SUIZA PACKAGING

NOTES TO COMBINED FINANCIAL STATEMENTS FOR 1997 AND 1998 (CONTINUED)

11. EMPLOYEE BENEFITS (CONTINUED)
The following table sets forth the funded status of these plans and the
amounts recognized in the balance sheet at December 31, 1998 (in thousands):

OTHER
POST-
PENSION RETIREMENT
BENEFITS BENEFITS
-------- ----------

Change in benefit obligation:
Benefit obligation at acquisition date.................... $71,500 $ 5,900
Service cost.............................................. 865 49
Interest cost............................................. 2,741 215
Actuarial loss............................................ 2,329 (63)
Curtailment............................................... (142)
Benefits paid............................................. (2,423) (184)
------- -------
Benefit obligation at end of year........................... 74,870 5,917

Change in plan assets:
Fair value of plan assets at acquisition date............. 67,907
Actual return on plan assets.............................. 1,989
Employer contribution..................................... 1,165 184
Participant contributions................................. 104
Benefits paid............................................. (2,423) (288)
------- -------
Fair value of plan assets at end of year.................... 68,638 --
------- -------
Funded status............................................... (6,232) (5,917)
Unrecognized actuarial gain................................. 3,752 (63)
------- -------
Accrued benefit liability................................... $(2,480) $(5,980)
======= =======
Weighted average assumptions as of December 31, 1998:
Discount rate............................................. 6.5% 6.5%
Expected asset return..................................... 9.0
Rate of compensation increase............................. 5.0

The components of net periodic benefit cost and net periodic postretirement
benefit cost for the period from the date of acquisition (May 29, 1998) through
December 31, 1998, were as follows (in thousands):

OTHER
POST-
PENSION RETIREMENT
BENEFITS BENEFITS
-------- ----------

Service costs............................................ $ 865 $ 49
Interest costs........................................... 2,741 215
Expected return on plan assets........................... (3,412)
------- ----
Net periodic benefit cost................................ $ 194 $264
======= ====

F-48

SUIZA PACKAGING

NOTES TO COMBINED FINANCIAL STATEMENTS FOR 1997 AND 1998 (CONTINUED)

11. EMPLOYEE BENEFITS (CONTINUED)
Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. A one-percentage point change in
assumed health care cost trend rates would change the amount of the service and
interest components and the postretirement benefit obligation by $37,000 and
$535,000, respectively.

DEFINED CONTRIBUTION PLAN--Employees of certain of the Company's
subsidiaries are eligible to participate in a 401(k) employees' savings plan
sponsored by Suiza and, prior to 1998, similar plans sponsored by individual
subsidiaries. Employees who have completed one or more years of service and have
met other requirements pursuant to the plans are eligible to participate in the
plan. The employees participating in the plan can generally make contributions
up to 15% of their annual compensation, and the Company can elect to match such
employee contributions up to a maximum of 25% of the employee's contribution.
The matching contributions vest 100% after five years.

The Company succeeded to a defined contribution plan that covers
substantially all PCI's hourly employees who meet certain eligibility
requirements. Provisions regarding employee and employer contributions and the
benefits provided under the plan vary between PCI's manufacturing facilities.

The Company also succeeded to a contributory defined contribution 401(k)
savings plan that covers substantially all PCI's nonorganized salaried
employees. Employees may contribute up to 12% and 8% of compensation on a pretax
and after-tax basis, respectively. However, the total employee contribution rate
may not exceed 15% of compensation. The Company matches up to 3% of employees'
pretax contributions. Employees vest in the Company's contributions at 25% per
year, becoming fully vested after four years of employment. Employees may make
withdrawals from the plan prior to attaining age 59 1/2, subject to certain
penalties.

MULTIEMPLOYER PLANS--The Company's PCI subsidiary contributes to various
multiemployer union pension plans pursuant to its labor agreements. Union
benefit plan expense during 1998 was $0.6 million for the period subsequent to
the acquisition date.

12. MAJOR CUSTOMERS

Sales to three customers comprised the following percentages of net sales
for each of the two years ended December 31, 1997 and 1998:

1997 1998
-------- --------

Customer A.................................................. -- 12.0%
Customer B.................................................. 15.4% 4.6
Customer C.................................................. 14.0 4.6

For the six months ended March 31, 1997, two customers represented
approximately 22% and 13% of the combined sales. Concentration of credit risk
with respect to accounts receivable is limited due to the large number of
customers and billing and payment patterns.

In addition to the above major sales to third-party customers, the Company
sells finished products and raw materials to other Suiza subsidiaries. Sales to
these affiliates approximated 11.2% and 4.7% of the Company's net sales for the
years ended December 31, 1998 and 1997, respectively.

F-49

SUIZA PACKAGING

NOTES TO COMBINED FINANCIAL STATEMENTS FOR 1997 AND 1998 (CONTINUED)

13. SUPPLEMENTAL CASH FLOW INFORMATION

PREDECESSOR
---------------------------
SIX-MONTH FIVE-MONTH
PERIOD FOUR-MONTH PERIOD
ENDED PERIOD ENDED YEAR ENDED
MARCH 31, ENDED DECEMBER 31, DECEMBER 31,
1997 JULY 31, 1997 1997 1998
---------- -------------- ------------- -------------

Cash paid for interest......................... $933 $618 $1,807 $22,464
Cash paid for taxes............................ 301 4,341
Preferred dividends declared, but not paid..... 1,417 7,906
Issuance of preferred stock (noncash).......... 34,561

14. COMMITMENTS AND CONTINGENCIES

The Company and its subsidiaries are parties, in the ordinary course of
business, to certain claims and litigation. In management's opinion, the
settlement of such matters is not expected to have a material impact on the
combined financial statements.

In addition, the Company is a party to employment agreements with certain
officers which provided for minimum compensation levels and incentive bonuses
along with provisions for termination of benefits in certain circumstances.

15. FAIR VALUE OF FINANCIAL INSTRUMENTS

Under SFAS No. 107, "Disclosures About Fair Value of Financial Instruments,"
the Company is required to disclose an estimate of the fair value of financial
instruments as of December 31, 1998 and 1997. Differences between the historical
carrying values and estimated fair values of financial instruments can occur for
many reasons, including taxes, commissions, prepayment penalties, make-whole
provisions and other restrictions, as well as the inherent limitations in any
estimation techniques.

Due to their near-term maturities, the carrying amounts of accounts
receivable, temporary investments, accounts payable and the revolving credit
facility loans approximate their fair values. The Company's borrowings under the
senior notes payable to Suiza are at variable interest rates, and their fair
values approximate their carrying values. The Company's subordinated notes
payable to Suiza and the senior secured notes of PCI bear interest at fixed
interest rates. The subordinated notes payable to Suizahave a carrying value of
$118.7 million at December 31, 1998, and the senior secured notes of PCI have a
carrying value of $131.1 million at December 31, 1998. The following table
summarizes the estimated fair values of these fixed rate notes at December 31,
1998 (in thousands):

Subordinated notes payable to Suiza......................... $124,688
Senior secured notes of PCI................................. 127,470

16. SUBSEQUENT EVENT

On July 2, 1999, Suiza Packaging was acquired by Reid Plastics, Inc.
simultaneously through the formation of Consolidated Container Company LLC
("CCC"). Reid Plastics, Inc. was merged into CCC.CCC is a wholly owned
subsidiary of Consolidated Container Holdings ("Holdings"). As a result of the
merger, Suiza, through a subsidiary, received 49% of the member units of
Holdings.

* * * * * *

F-50

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders of
Plastic Containers, Inc.

We have audited the accompanying consolidated statements of operations,
stockholders' equity and cash flows of Plastic Containers, Inc. and subsidiaries
("PCI" or the "Company") for the period from January 1, 1998 through May 29,
1998. These consolidated statements of income, stockholders' equity and cash
flows are the responsibility of the Company's management. Our responsibility is
to express an opinion on these consolidated statements of income, stockholders'
equity and cash flows based on our audit. The consolidated financial statements
of the Company for the years ended December 31, 1996 and 1997, were audited by
other auditors whose report, dated February 6, 1998, expressed an unqualified
opinion on those statements.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated statements of income,
stockholders' equity and cash flows are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated statements of income, stockholders' equity and
cash flows. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated statements of income, stockholders' equity and cash flows
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, such 1998 consolidated statements of operations,
stockholders' equity and cash flows present fairly, in all material respects,
the results of operations of Plastic Containers, Inc. and subsidiaries for the
period from January 1, 1998 through May 29, 1998, in conformity with generally
accepted accounting principles.

DELOITTE & TOUCHE LLP

Omaha, Nebraska
May 21, 1999

F-51

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders of
Plastic Containers, Inc.:

We have audited the accompanying consolidated statements of operations,
stockholders' equity and cash flows of Plastic Containers, Inc. for the year
ended December 31, 1997. These consolidated statements of operations,
stockholders' equity and cash flows are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
statements of operations, stockholders' equity and cash flows based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated statements of operations,
stockholders' equity and cash flows are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated statements of operations, stockholders' equity
and cash flows. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
consolidated statements of operations, stockholders' equity and cash flows
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated statements of operations, stockholders'
equity and cash flows referred to above present fairly, in all material
respects, the results of their operations and their cash flows for the year
ended December 31, 1997, in conformity with generally accepted accounting
principles.

KPMG LLP

Omaha, Nebraska
February 6, 1998

F-52

PLASTIC CONTAINERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS)

PERIOD FROM
YEAR ENDED JANUARY 1, 1998
DECEMBER 31, THROUGH
1997 MAY 29, 1998
------------- ----------------

NET SALES................................................... $279,565 $108,924

COST OF GOODS SOLD.......................................... 234,210 92,159
-------- --------
Gross profit.............................................. 45,355 16,765

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES................ (27,772) (11,617)
-------- --------

OPERATING INCOME............................................ 17,583 5,148

OTHER INCOME (EXPENSES):
Interest income........................................... 1,451 604
Interest expense.......................................... (13,535) (5,643)
Loss on disposal of assets................................ (555) (22)
-------- --------
Total other income (expenses)........................... (12,639) (5,061)
-------- --------

INCOME BEFORE INCOME TAXES.................................. 4,944 87

INCOME TAX BENEFIT.......................................... 961 1,590
-------- --------

NET INCOME.................................................. $ 5,905 $ 1,677
======== ========

See accompanying notes to consolidated financial statements.

F-53

PLASTIC CONTAINERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

YEAR ENDED DECEMBER 31, 1997, AND
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998 (IN THOUSANDS)

NOTE
ADDITIONAL RETAINED RECEIVABLE TOTAL
PAID-IN EARNINGS FROM STOCKHOLDERS'
CAPITAL (DEFICIT) STOCKHOLDER EQUITY
---------- --------- ----------- -------------

BALANCE, JANUARY 1, 1997.......................... $77,722 $(33,434) $(30,074) $14,214
Accrued interest on note receivable from
stockholder................................... 2,111 (2,111) --
Net income...................................... 5,905 5,905
------- -------- -------- -------

BALANCE, DECEMBER 31, 1997........................ 79,833 (27,529) (32,185) 20,119
Loan to stockholder............................. (5,300) (5,300)
Accrued interest on note receivable from
stockholder................................... 925 (925) --
Net income...................................... 1,677 1,677
------- -------- -------- -------

BALANCE, MAY 29, 1998............................. $80,758 $(25,852) $(38,410) $16,496
======= ======== ======== =======

See accompanying notes to consolidated financial statements.

F-54

PLASTIC CONTAINERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

PERIOD FROM
YEAR ENDED JANUARY 1, 1998
DECEMBER 31, THROUGH
1997 MAY 29, 1998
------------- ----------------
(IN THOUSANDS)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 5,905 $ 1,677
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................... 12,946 5,589
Loss on disposal of assets.............................. 555 22
Deferred income taxes................................... (1,000) (1,600)
Changes in assets and liabilities:
Amounts receivable, net............................... 7,444 (709)
Inventories........................................... (553) 1,370
Prepaid expenses...................................... (44) (143)
Accounts payable...................................... (1,522) 2,061
Other current liabilities............................. (2,263) 5,565
Other asset and liabilities........................... (126) 195
-------- --------
Net cash provided by operating activities............. 21,342 14,027
-------- --------

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturity of investment securities........... 25,834 20,767
Purchase of investment securities......................... (45,009) (22,548)
Proceeds from disposal of assets.......................... 565 3
Purchases of property, plant and equipment................ (11,085) (6,787)
Loan to stockholder....................................... (5,300)
-------- --------
Net cash used in investing activities................. (29,695) (13,865)
-------- --------

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term obligations........................ (979) (344)
Financing fees paid....................................... (367)
-------- --------
Net cash used in financing activities................. (1,346) (344)
-------- --------

NET DECREASE IN CASH AND CASH EQUIVALENTS................... (9,699) (182)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.............. 12,178 2,479
-------- --------

CASH AND CASH EQUIVALENTS, END OF PERIOD.................... $ 2,479 $ 2,479
======== ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid............................................. $ 12,541 $ 171
======== ========
Income taxes paid......................................... $ 523 $ 42
======== ========

See accompanying notes to consolidated financial statements.

F-55

PLASTIC CONTAINERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS,
STOCKHOLDERS' EQUITY AND CASH FLOWS

YEAR ENDED DECEMBER 31, 1997, AND
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998 (IN THOUSANDS)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BASIS OF PRESENTATION--The accompanying financial
statements include Plastic Containers, Inc. and its wholly owned subsidiaries
("PCI" or "the Company"), Continental Plastic Containers, Inc. ("CPC") and
Continental Caribbean Containers, Inc. ("Caribbean"). All significant
intercompany transactions have been eliminated in consolidation.

PCI develops, manufactures and markets a wide range of custom extrusion
blow-molded plastic containers for food and juice, automotive products and motor
oil, household chemicals, industrial and agricultural chemicals and hair care
products. Based on the nature of the product, the production processes, types of
customers and methods used to distribute products, the Company operates in one
reportable segment.

PCI is a subsidiary of Continental Can Company, Inc. ("Continental Can"). On
May 29, 1998, Continental Can was acquired by Suiza Foods Corporation ("Suiza")
in a transaction accounted for as a purchase. The consolidated financial
statements of PCI as of and for the periods ended before May 29, 1998, were
prepared using PCI's historical basis of accounting.

CPC and Caribbean constitute all of PCI's direct and indirect subsidiaries
and have fully and unconditionally guaranteed the Company's senior secured notes
on a joint and several basis. PCI is a holding company with no assets,
operations or cash flow separate from its investments in CPC and Caribbean.

PROPERTY, PLANT AND EQUIPMENT--Property, plant and equipment are stated at
cost. Depreciation is computed principally on a straight-line basis over
estimated useful lives of the assets, which range from three to thirty-five
years. Plant and equipment held under capital leases and leasehold improvements
are amortized straight-line over the shorter of the lease term or estimated
useful life of the asset.

Effective January 1, 1997, the Company revised its estimates of the useful
lives of certain machinery and equipment. These changes were made to better
reflect the estimated periods during which these assets remain in service. For
the year ended December 31, 1997, the change had the effect of decreasing
depreciation expense by $1,696, and after adjusting for an assumed tax rate of
38%, increasing net income by $1,052.

INSURANCE--PCI purchases commercial insurance policies, but remains
self-insured in certain states for the purposes of providing workers'
compensation, general liability and property and casualty insurance coverages up
to varying deductible amounts. Self-insurance liabilities are based on claims
filed and estimates for claims incurred but not reported and are included in
other liabilities on the consolidated balance sheets. Costs charged to
operations for self-insurance for the year ended December 31, 1997, and the
period from January 1, 1998 through May 29, 1998, were $1,784 and $214,
respectively.

RESEARCH, DEVELOPMENT AND ENGINEERING--Expenditures for research,
development and engineering are expensed as incurred. Costs charged to
operations for research, development and engineering for the year ended
December 31, 1997, and for the period from January 1, 1998 through May 29, 1998,
were $8,825 and $3,876, respectively.

F-56

PLASTIC CONTAINERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS,
STOCKHOLDERS' EQUITY AND CASH FLOWS (CONTINUED)

YEAR ENDED DECEMBER 31, 1997, AND
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998 (IN THOUSANDS)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS--Goodwill and other
identifiable intangible assets are stated on the basis of cost. Goodwill is
being amortized on a straight-line basis over 40 years. Customer contracts are
being amortized on a straight-line basis over 10 years and finance costs are
being amortized using the effective interest method over periods ranging from
6 to 10 years.

IMPAIRMENT OF LONG-LIVED ASSETS, GOODWILL AND CERTAIN IDENTIFIABLE
INTANGIBLE ASSETS--Long-lived assets, including goodwill and certain
identifiable intangible assets, are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future undiscounted cash flows
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less
costs to sell.

INCOME TAXES--Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carry forwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

Beginning in 1997, the Company filed a consolidated federal income tax
return with Continental Can. Income taxes have been provided as if the Company
files a separate return.

USE OF ESTIMATES--The preparation of consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the
consolidated financial statements and accompanying notes. Although these
estimates are based on management's knowledge of current events and actions it
may undertake in the future, actual results could differ from the estimates.

RECLASSIFICATIONS--Certain amounts have been reclassified to conform to the
current year's presentation.

2. OPERATING LEASES

PCI rents certain property and equipment used regarding its operations under
noncancellable operating leases. Rental expense under these leases was $13,773
and $5,733 for the year ended December 31, 1997, and the period from January 1,
1998 through May 29, 1998, respectively. On December 17, 1996, CPC completed a
sale to General Electric Capital Corporation and certain other financial
institutions, and the leaseback to CPC, of certain equipment located in five of
its facilities. The proceeds to the Company from the sale/leaseback were
$40,566, which approximated the book value of the equipment.

F-57

PLASTIC CONTAINERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS,
STOCKHOLDERS' EQUITY AND CASH FLOWS (CONTINUED)

YEAR ENDED DECEMBER 31, 1997, AND
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998 (IN THOUSANDS)

2. OPERATING LEASES (CONTINUED)
Substantially all of the operating leases require PCI to pay taxes,
maintenance, insurance and certain operating expenses applicable to the lease.
The Company plans to renew or replace many of these leases as they expire.

Future minimum lease payments under noncancellable operating leases are as
follows:

Seven months ending December 31, 1998....................... $ 8,065
Year ending December 31:
1999...................................................... 13,346
2000...................................................... 12,751
2001...................................................... 12,228
2002...................................................... 10,312
2003...................................................... 8,731
Thereafter.................................................. 12,283
-------
Total future minimum lease payments......................... $77,716
=======

3. NOTE RECEIVABLE FROM STOCKHOLDER

On December 17, 1996, the Company loaned Continental Can $30,000. The
Company loaned Continental Can an additional amount of $5,300 on May 29, 1998.
The note matures June 15, 2007, and accrues interest, payable at maturity, at an
annual rate of 6.9%, compounded semiannually. The note receivable and accrued
interest thereon have been presented as a reduction of stockholders' equity.

Proceeds from the $30,000 loan were used by Continental Can to acquire an
additional 34 shares of the Company's common stock from another stockholder,
increasing their ownership in PCI at that time to 84%. The acquisition was
accounted for by Continental Can under the purchase method of accounting and
resulted in the "push down" of goodwill and additional paid-in capital of
$17,648 in the accompanying consolidated financial statements of PCI.

4. INCOME TAXES

Total income tax benefit (expense) for the year ended December 31, 1997, and
for the period from January 1, 1998 through May 29, 1998, consists of the
following:

YEAR ENDED PERIOD FROM JANUARY 1, 1998
DECEMBER 31, 1997 TO MAY 28, 1998
------------------------------------ ------------------------------------
FEDERAL STATE TOTAL FEDERAL STATE TOTAL
-------- -------- -------- -------- -------- --------

Current...................................... $ -- $(39) $ (39) $ -- $(10) $ (10)
Deferred..................................... 900 100 1,000 1,432 168 1,600
---- ---- ------ ------ ---- ------
$900 $ 61 $ 961 $1,432 $158 $1,590
==== ==== ====== ====== ==== ======

F-58

PLASTIC CONTAINERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS,
STOCKHOLDERS' EQUITY AND CASH FLOWS (CONTINUED)

YEAR ENDED DECEMBER 31, 1997, AND
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998 (IN THOUSANDS)

4. INCOME TAXES (CONTINUED)
The income tax benefit for the year ended December 31, 1997, and the period
from January 1, 1998 through May 29, 1998, differed from the "expected" income
tax benefit (expense) computed by applying the federal income tax rate to income
before income taxes as a result of the following:

PERIOD FROM
YEAR ENDED JANUARY 1, 1998
DECEMBER 31, THROUGH
1997 MAY 29, 1998
------------- ----------------

Computed "expected" income tax expense............ $(1,681) $ (30)
Additional benefit (expense) resulting from:
Change in valuation allowance allocated to
continuing operations......................... 2,745 1,573
State and local income taxes, net of federal
income tax benefit............................ 40 (3)
Tax effect of nondeductible goodwill............ (63)
Other........................................... (143) 113
------- ------
Income tax benefit................................ $ 961 $1,590
======= ======

The valuation allowance for deferred tax assets as of January 1, 1997, was
$7,794.The net change in the total valuation allowance for the year ended
December 31, 1997, and for the period from January 1, 1998 through May 29, 1998,
was a decrease of $2,745 and $1,573, respectively. In assessing the
realizability of deferred tax assets, management considers whether it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary
differences become deductible. Management considers projected future taxable
income, the scheduled reversal of deferred tax liabilities and tax-planning
strategies in making this assessment. Based upon this assessment, management
believes it is more likely than not the Company will realize the benefits of
these deductible differences at May 29, 1998.

At May 29, 1998, PCI has operating loss carry forwards for federal income
tax purposes of approximately $50,000, which are available to offset future
federal taxable income. The carryforward periods extend from 2007 through 2010.
In addition, the Company has alternative minimum tax credit carryforwards of
approximately $132 which are available to reduce future federal regular income
taxes over an indefinite period and research and experimentation credits of
approximately $480 available to reduce future federal income taxes through 2010.

5. EMPLOYEE BENEFITS

PENSION PLANS--PCI maintains a defined benefit pension plan for
substantially all salaried employees hired prior to August 1, 1997. Plan
benefits are based on all years of continuous service and the employee's
compensation during the highest five continuous years of the last ten years of
employment, minus a profit sharing annuity. The profit sharing annuity is based
on the amount of profit sharing contributions received for 1988 through 1992.
Any employee who terminated employment

F-59

PLASTIC CONTAINERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS,
STOCKHOLDERS' EQUITY AND CASH FLOWS (CONTINUED)

YEAR ENDED DECEMBER 31, 1997, AND
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998 (IN THOUSANDS)

5. EMPLOYEE BENEFITS (CONTINUED)
prior to August 31, 1993, is governed by the terms of the plan in effect at the
time the termination occurred. In addition, PCI maintains a benefit equalization
plan for salaried employees hired prior to August 1, 1997, whose compensation
level exceeds the limits within the defined benefit pension plan. The plan was
frozen for future accruals as of September 1, 1998.

PCI maintains a noncontributory defined benefit pension plan for
substantially all hourly workers hired prior to August 1, 1997, who have
attained 21 years of age. Plan benefits are variable by location/ contract but
are based primarily on years of service and the employee's highest wage
classification for 12 consecutive months in the five years prior to retirement.
Normal retirement is at age 65, with at least five years of continuous service.
However, employees may retire as early as age 55 and receive reduced benefits.

Subject to the limitation on deductibility imposed by federal income tax
laws, PCI's policy has been to contribute funds to the plans annually in amounts
required to maintain sufficient plan assets to provide for accrued benefits.
Plan assets are held in a master trust and are comprised primarily of common
stock, corporate bonds and U.S. government and government agency obligations.

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS--PCI provides certain health
care and life insurance benefits for retired PCI employees. Certain of PCI's
hourly and salaried employees became eligible for these benefits when they
became eligible for an immediate pension under a formal company pension plan. In
1993, the plan was amended to eliminate health care benefits for employees hired
after January 1, 1993. PCI's policy is to fund the cost of medical benefits as
claims are incurred.

RETIREMENT THRIFT PLAN--PCI maintains a defined contribution plan which
covers substantially all hourly employees who meet eligibility requirements.
Provisions regarding employee and employer contributions and the benefits
provided under the plan vary between PCI's manufacturing facilities. PCI's
defined contribution plan's expense was $303, $302 and $122 for the years ended
December 31, 1996 and 1997 and the period from January 1, 1998 through May 29,
1998, respectively.

SAVINGS PLAN--PCI maintains a contributory defined contribution 401(k)
savings plan which covers substantially all nonorganized salaried employees.
Employees may contribute up to 12% and 8% of pay on a pretax and after-tax
basis, respectively. However, the total employee contribution rate may not
exceed 15% of pay. PCI matches up to 3% of employees' pretax contributions.
Employees vest in PCI's contributions at 25% per year, becoming fully vested
after four years of employment. Employees may make withdrawals from the plan
prior to attaining age 59 1/2, subject to certain penalties. PCI's savings plan
expense was $560 and $262 for the year ended December 31, 1997, and for the
period from January 1, 1998 through May 28, 1998, respectively.

UNION BENEFIT PLANS--PCI contributes to various union pension plans under
its labor agreements.Union benefit plan expense was $1,013 and $419 for the year
ended December 31, 1997, and for the period from January 1, 1998 through
May 29, 1998, respectively.

POSTEMPLOYMENT BENEFITS--PCI provides certain postemployment benefits to
former and inactive employees, their beneficiaries and covered dependents. These
benefits include disability related

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PLASTIC CONTAINERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS,
STOCKHOLDERS' EQUITY AND CASH FLOWS (CONTINUED)

YEAR ENDED DECEMBER 31, 1997, AND
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 29, 1998 (IN THOUSANDS)

5. EMPLOYEE BENEFITS (CONTINUED)
benefits, continuation of health care benefits and life insurance coverage.
Additional costs charged to operations for postemployment benefits in 1997 and
1998 were $57 and $15, respectively.

6. MAJOR CUSTOMERS

Sales to one customer represented approximately 31% and 28.5% of net sales
for the year ended December 31, 1997, and for the period from January 1, 1998 to
May 29, 1998, respectively. A second customer represented approximately 15% and
17% of net sales for the year ended December 31, 1997, and the period from
January 1, 1998 through May 29, 1998, respectively. A third customer represented
approximately 10%, and 11% of net sales for the year ended December 31, 1997,
and the period from January 1, 1998 through May 29, 1998, respectively.

7. PLANT CLOSINGS

In 1996, PCI recorded charges amounting to $6,500 for plant rationalization
and realignment regarding a plan to consolidate certain manufacturing
operations. The Company closed one plant in 1996 and another plant in 1997. The
Company remains obligated under a noncancellable operating lease at one of the
facilities through June 1999. Accrued liabilities include $1,072 at May 29,
1998, related to plant rationalization and realignment. Payments made in 1998
against the accrued liability amounted to approximately $603.

8. CONTINGENCIES

The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management and legal counsel, the
ultimate disposition of these matters will not have a material adverse effect on
the Company's consolidated financial statements.

9. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial Accounting Standards Board's Statement No. 107, "Disclosures about
Fair Value of Financial Instruments," defines fair value of a financial
instrument as the amount at which the instrument could be exchanged in a current
transaction between willing parties. Except for the senior secured notes at
May 29, 1998, the carrying amount approximates fair value for financial
instruments included in the accompanying consolidated balance sheets at
December 31, 1997, and May 29, 1998.

The carrying amounts of cash and cash equivalents, accounts receivable,
accounts payable--trade and other current liabilities approximate fair value
because of the short maturity of those instruments. The fair value of investment
securities is based on the quoted market prices at the reporting date for those
or similar investments. The carrying value and fair value of the senior secured
notes at May 29, 1998, was $125,000 and $135,364, respectively. The fair value
is estimated based on quoted market prices for the notes.

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