<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                               ------------------

                                    FORM 10-K

(MARK ONE)

/X/      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 1997

                                                        OR

/ /      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the transition period from ___________ to _______________.

                         COMMISSION FILE NUMBER 0-30067

                            PVC CONTAINER CORPORATION
-------------------------------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


            Delaware                                     13-2616435
--------------------------------                -----------------------------
(STATE OF OTHER JURISDICTION OF                      IRS IDENTIFICATION
 INCORPORATION OR ORGANIZATION)                            NUMBER


401 Industrial Way West, Eatontown, New Jersey                         07724
----------------------------------------------                     -------------
   (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                          (ZIP CODE)



        REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (908) 542-0060
--------------------------------------------------------------------------------
                 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF
THE ACT:

Title of each class                     Name of exchange on which registered
        None                                            None


<PAGE>   2
           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                          Common Stock, $.01 par value
                                (TITLE OF CLASS)

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


The aggregate market value of the voting stock held by non-affiliates of the
registrant, based on the average bid and asked prices of such stock as of
September 11, 1997, was $8,110,768.

The number of shares outstanding of the registrant's only class of common stock,
as of the latest practicable date, is as follows:


           Class                            Outstanding as of September 11, 1997
           -----                            ------------------------------------
Common Stock, $.01 par value                              7,004,705



                       EXHIBIT INDEX is located at Page 20


                                        2

<PAGE>   3
                                     PART I


Item 1.           Description of Business.

                  General. PVC Container Corporation (the "Company") was
incorporated in Delaware on June 14, 1968. The Company's major business activity
consists of the manufacture and sale of a line of plastic bottles made from
polyvinyl chloride ("PVC") compounds and high-density polyethylene ("HDPE")
resins. Some of the HDPE bottles are fluorinated to improve the chemical
resistance and barrier properties of the containers manufactured by the
Company's wholly-owned subsidiary known as Airopak Corporation. The Company
recently began the manufacture and sale of plastic bottles made from injection
stretch blow molding grades of polyethylene terephlalcate ("PET"). The Company
also manufactures PET preforms which can be converted into various sizes of
plastic bottles and which can be economically shipped in their pre-form state
prior to such conversion. The Company plans to utilize the PET capability as
both a defensive and growth strategy by seeking new packaging opportunities that
require PET bottles. See "Competition and Marketing." These bottles ("plastic
bottles") are used primarily for the packaging of cosmetics, toiletries, foods,
household chemicals lawn and garden and industrial chemical products.

                  PVC compounds are used by the Company or sold to other plastic
bottle manufacturers for the production of plastic bottles which compete with
those produced by the Company. These PVC compounds are sold through the
Company's wholly-owned subsidiary, Novatec Plastics Corporation, Inc.
("Novatec"). During the last several years, the Company has made some progress
in its efforts to diversify its PVC compound business. For example, the Company
recently developed and began to sell several categories of specialty PVC
compounds for non-bottle applications ("specialty compounds") including extruded
profiles for window frames and accessories, furniture, molding and other indoor
fixtures, and a variety of injection molded electrical and electronic housings
(the "Company's targeted markets'"). Sales of specialty compounds have been
encouraging, although no assurance can be given as to their ultimate market
acceptance.

                  The Company operates its business in one industry segment.
Accordingly, no information is being furnished herein or in the accompanying
financial statements relating to industry segments of the Company. The Company
has not identified in its annual reports to shareholders revenue and income
relating to lines of business because the Company believes it has been engaged
since its inception in one dominant line of business consisting of the
manufacture and sale of plastic containers and compounds used in the manufacture
of containers.

                  Sales. The Company's plastic bottles are sold primarily to
manufacturers of toiletries and cosmetics, food, household chemicals, lawn and
garden and industrial chemical products, private label manufacturers of similar
products, and bottle distributors who sell to such manufacturers. PVC compounds
are sold to the Company and to other manufacturers of plastic bottles, and a
small but increasing amount of specialty compounds are sold to a diverse range
of manufacturers of other products. A limited amount of the Company's total
sales is made through commission sales representatives. During the fiscal year
ended June 30, 1997, no one customer accounted for 10% or more of the Company's
net sales.

                  Sales of the Company's plastic bottles and PVC bottle
    compounds have accounted for most of the Company's net income; sales of
specialty compounds to non-bottle customers have
<PAGE>   4
accounted for the remainder of the Company's net income. Plastic bottles are
offered in food grade and non-food grade materials, fluorinated or
non-fluorinated, in clear and opaque colors and in a range of sizes from one
ounce to two and one-half gallons. The Company produces plastic bottles
utilizing its own molds, in proprietary designs ("stock bottles") which are of
its own design and also produces on a contractual basis plastic bottles in molds
owned by the customer, utilizing their designs and specifications ("custom
bottles").

                  Sales of plastic bottles are generally a "regional" business.
The majority of the Company's customers are within a 300 mile radius of the
Company's respective plastic bottle manufacturing plants. Freight costs prohibit
shipping plastic bottles long distances due to their bulky nature, except for
specialty bottles of a unique design or fluorinated containers that are not
available from local manufacturers. In contrast, the Company's PVC compounds
which are sold in the form of plastic pellets and are denser than plastic
bottles can be shipped throughout the continental United States and Canada, and
tend to be less regional and more of a "national" business.

                  The Company's business is usually characterized by low
customer demand during the months of July and August and the last half of
December due to shutdowns of buyers' plants during those periods.

                  Manufacturing Operations. The Company uses extrusion blow
molding equipment to manufacture its PVC plastic bottles. The same equipment is
also used to manufacture fluorinated and non-fluorinated plastic bottles from
HDPE and can also be used with some modifications, to process bottles from other
blow molding polymers, including polypropylene, glycol-modified polyethylene
terephthalate ("PETG") and some new extrusion grade polyethylene terephathalate
resins ("EPET") which are presently semi-commercial.

                  The Company operates facilities in Eatontown, New Jersey,
Paris, Illinois, Manchester, Pennsylvania and Walterboro, South Carolina for the
manufacturing of plastic bottles. In August 1989, the Company relocated its
existing plastic bottle business from a leased facility in Eatontown, New Jersey
to a newly constructed plant, also in Eatontown, New Jersey, owned by the
Company. This new facility provided the Company with additional space needed to
support manufacturing in efficiencies and capacity. In April 1993, the Company
commenced operations in a new facility, located in Paris, Illinois which was
added to support growth of the Company's midwest bottle business. On August 4,
1994, the Company acquired from Air Products and Chemicals Inc., through its
recently incorporated wholly-owned subsidiary known as Airopak Corporation the
assets of a specialty container business. The business is conducted from leased
facilities located in Manchester, Pennsylvania, and relates to the manufacture
and sale of AIROPAK(R) fluorinated HDPE containers. The assets of the business
consist of equipment, machinery and inventory used in connection with the
manufacturing of such containers. A description of the Company's plastic bottle
facilities is set forth below in item 2 entitled "Properties".

                  The Company manufactures plastic compounds utilizing a two
stage process consisting of mixing a powder blend of various resins and other
ingredients in an intensive mixer, and subsequently melting the powder in a
compounding extrusion system for pelletizing the final plastic compound
products. Three compounding lines are located in a separate facility in
Eatontown, New Jersey, which began operations during October 1982. The Company
will continue to purchase small amounts of PVC bottle compounds produced by
others for use in the manufacturing of plastic bottles where customers specify a
competing material. The capacity of the Company's PVC compounding


                                       -2-

<PAGE>   5



facility is more than adequate to supply the Company's current requirements for
PVC compound. The Company uses its excess PVC compounding capacity to produce
PVC bottle compounds and specialty compounds for sale to other plastic
processors of PVC bottles and other targeted markets. A description of the
Company's compound facility is set forth below in Item 2 entitled "Properties".

                  The Company is the only manufacturer of plastic bottles that
is vertically integrated in the manufacturing of PVC bottle compounds. The
Company uses its ability to produce specialized plastic bottle compounds to
enhance its technology as a specialty blow molder of plastic bottles. Although
there are derived marketing advantages resulting from this unique integration,
the economic advantage the Company previously enjoyed as a manufacturer of both
plastic bottles and PVC compounds has greatly diminished, because of intense
competition in the supply of PVC bottle compounds.

                  Raw Materials. Since the Company completed and opened its PVC
compounding facility in 1982, the Company has manufactured for its own use most
of the PVC compounds used by it in the manufacture of plastic bottles. PVC
compounds are the principal raw material used in connection with manufacturing
such plastic bottles. The major ingredients used to manufacture such PVC
compounds are PVC resins (approximately 85%) and MBS
(methacrylate-butadiene-styrene) impact modifiers (approximately 12%). The
balance of such ingredients includes heat stabilizers, lubricants, processing
aids, and toners (pigments), which materials are readily available from various
suppliers.

                  A shortage of petroleum, should it develop, would have an
effect on the availability and the cost of the raw materials used by the Company
in connection with its business. Moreover, certain grades of PVC resins used in
the manufacture of the Company's PVC compounds are made by a limited number of
domestic suppliers of PVC resin. The availability and price of such PVC resins
have a direct effect on the business of the Company. Although sufficient PVC
resin and HDPE are currently available for the Company's operations, no
assurance can be given that adequate supply of plastic resins will be available
to the Company in the future. During the first six months of the fiscal year
ended June 30, 1996 PVC and HDPE resin prices declined dramatically, then
stabilized and have subsequently increased steadily through the fiscal year
ended June 30, 1996. PVC resin prices increased by approximately 5% during the
last six months of the fiscal year ended June 30, 1997 and since July 1997 have
decreased by approximately 10%. HDPE resin prices for the first six months of
fiscal year ended June 30, 1997 increased approximately 20% and stabilized at
that level during the balance such fiscal year. PET resin prices decreased
approximately 25% during the fiscal year ended June 30, 1996. During the first
six months of the fiscal year ended June 30, 1997, resin prices declined another
20% but recovered and stabilized at the June 1996 level by the end of the 1997
fiscal year. The Company has been able to recover the cost of the resin price
increase by increasing the sales price of its plastic bottles. Higher prices for
PVC resins as well as HDPE are the result of the supply/demand of plastic resins
and ethylene becoming in balance or in tight supply due to the improving world
wide economy and the lack of new polymer resin capacity being built in time to
support growth of these plastic resins. See "Competition & Marketing" below.

                  Inventory. Depending upon the level of demand and scheduling
requirements for the Company's products, the Company maintains on average 4-6
weeks of plastic bottles finished goods inventory and approximately 2-3 weeks of
plastic compound finished goods inventory. From time to time, depending upon the
prices and availability of raw materials (principally PVC resins), the Company
will pre-buy or increase inventory of raw materials from a normal 2-3 week
supply to up to


                                       -3-

<PAGE>   6



a 2 month supply, in order to offset anticipated price increases. During peak
sales periods, it is sometimes necessary to store inventory of the Company's
products and raw materials in outside warehousing.

                  Backlog. The backlog of unfilled orders of the Company as at
June 30, 1997 was approximately $4,750,000; the backlog of unfilled orders as at
June 30, 1996 was approximately $5,000,000. The Company expects that
substantially all of the backlog as at June 30, 1997 will be filled within the
fiscal year ending June 30, 1998.

                  Competition and Marketing. The Company believes it is one of
approximately thirty manufacturers of plastic bottles in the United States, one
of at least five manufacturers of PVC bottle compounds and one of at least five
manufacturers of specialty compounds for use in the Company's targeted markets.
The dominant manufacturers of plastic bottles are Owens-Brockway, Inc. and
Silgan Corp. The dominant manufacturers of PVC bottle compounds and PVC
specialty compounds are Occidental Chemical Corporation, Geon, Inc., and Georgia
Gulf Corporation. The Company's sales volume, production capacity, and
consumption of PVC resin are small compared to its competitors. The Company's
major PVC compound competitors are large, integrated petrochemical companies
with greater financial resources than the Company, many of which also
manufacture PVC resin.

                  The Company principally competes in the plastic bottle market
on the basis of quality, customer service and product design. The Company
believes it produces a relatively high quality product in a timely manner in
accordance with customer specifications and requirements, with a high level of
customer service, and believes that this constitutes one of the primary areas in
which the Company can compete with others in the same industry.

                  The Company sometimes purchases its supply of PVC resin from
its PVC compound competitors. This has, at times, caused the Company to have
difficulty obtaining adequate supplies of PVC resin and has permitted its
competitors to increase PVC resin costs charged to the Company, which has
resulted in reduced profit margins on PVC bottle compound; profit margins on PVC
specialty compounds remain stronger because the Company faces less price
competition.

                  The market for PVC bottles and PVC bottle compounds has
declined somewhat during the past several years due to industry concern of PVC
based packaging's ability to cope with solid waste issues. (See item entitled
"Environmental Issues.") Industry demand for PVC bottles and compounds is,
however, currently stable. The demand for PVC specialty compounds for use in the
Company's targeted markets is experiencing modest growth which is higher than
that of PVC bottle compounds. Competition in the area of PVC bottle compounds
will remain intense during the foreseeable future because of excess PVC bottle
compound manufacturing capacity and because PVC bottle compound buyers are
increasingly concerned about price and less concerned about quality and service.
In this respect, PVC bottle compound resembles a commodity business. This trend
may inhibit the Company from further expanding its share of the PVC bottle
compound market.

                  In response to these pressures in the PVC bottle compound
market, the Company is continuing in its effort to develop specialty compounds
for a diverse range of targeted markets. The Company believes that these
specialty compound markets will be less sensitive to wide swings in the cost of
PVC resin and may be more influenced by the performance, quality, and service
which is characteristic of a specialty type business. In particular, the Company
is marketing injection molding


                                       -4-

<PAGE>   7



PVC compound for use in the communications, electronics and appliance markets
and extrusion compounds for use in window frames, indoor furniture and other
specialty "profile" markets.

                  The Company believes its technical, marketing and
manufacturing capability is equal to that of its major competitors in the
plastic bottle market in its region, particularly in the toiletry, cosmetic and
household chemical product segments, and believes its technical and marketing
ability is equal to that of its major competitors in the PVC compound markets in
its region; its manufacturing capability for the PVC compound markets is limited
by its lack of a facility to produce PVC resin.

                  A shortage of labor and higher cost of living in New Jersey
has caused the Company to increase the hourly wages it pays employees at its New
Jersey bottle manufacturing plant and has caused it to experience increased
turnover. This trend has resulted in some difficulty in hiring and retaining
labor for work on swing shifts, weekends and holidays. Since the Company's
business is labor-intensive, the Company believes it will eventually need to
increase automation of its operation, but in the near term may face a
disadvantage relative to competitors in areas with a larger labor pool. The
Company has been able, however, to offset this condition by expanding and
shifting a portion of its business to its lower cost facility located in Paris,
Illinois and its new plastic bottle facility in Walterboro, South Carolina which
facility became operational during October 1996, and as a result also
contributes to making the Company more cost competitive. See "Properties".

                  The Company lacks the ability to apply some types of
decorations (such as silk screen printing and hot stamped foils) to plastic
bottles, unlike many leading plastic bottle manufacturers with which it
competes. As a result, the Company must ship its plastic bottles to and from
subcontractors at added freight expense to perform this work. The Company
realizes a small profit by charging a premium for subcontracted decoration.
During April 1990 the Company installed a new Therimage decorating line for the
high speed application of heat transfer labels to plastic bottles. This
represented the Company's first entry in decorating activity which has resulted
in added value to the Company's products. During May 1992, the Company started
up its second Thermage decorating line to support additional demand for this
type of decorated bottle. However, the Company believes it will eventually need
to develop additional capabilities to decorate plastic bottles, and in the near
term may face a slight disadvantage relative to some competitors who have
greater decorating capabilities compared to the Company.

                  PVC competes with PET and PETG as a material for use in the
manufacture of transparent plastic bottles. Manufacturers of bottles made of PET
have captured a portion of the edible oil, household chemical and medicinal
segments of the plastic bottle market from PVC bottle manufacturers. Because the
price of PET bottles becomes competitive on high volume orders of custom bottles
(i.e., orders of more than approximately 5 million to 10 millions units), there
is a substantial risk that customers who have large custom bottle requirements
may increasingly consider using PET bottles instead of PVC bottles. Because most
of the Company's custom bottle business consists of low or mid-range volume
orders, the Company's custom bottle business has been less vulnerable to PET.
However, recently several stock PET containers of similar shape and size to some
of the Company's PVC stock bottles are becoming more prevalent in the Company's
markets. Although injection PET tooling is considerably more expensive than PVC
extrusion tooling, some components of PET molds and tooling can be shared over
several custom or stock designs thereby reducing the higher tooling/mold
intensity associated with the injection based PET stock and custom bottle
business. Additionally, some plastic bottle buyers have recently turned to PETG
because they believe it is an environmentally safer alternative to PVC bottles,
notwithstanding PETG's 30-50%


                                       -5-

<PAGE>   8



higher resin price as compared to PVC compound. The Company has the ability to
manufacture PETG bottles by modifying its equipment, and recently the Company
has manufactured and sold PETG bottles. Also, several new grades of EPET resins
(lower cost than PETG) have recently been introduced that potentially could
displace PVC in some bottle applications. Although there have been limited
commercial successes to date, the Company has been successful in manufacturing
several designs of plastic bottles using EPET on its existing equipment. As
indicated above, under "General", the Company has commenced the manufacture and
sale of PET plastic bottles and pre-forms at its facility in Paris, Illinois as
a defensive and marketing strategy. This new capacity allows the Company to
compete for PET bottle applications in the plastic bottle market. See
"Environmental Regulation" below.

                  Research and Development. The Company spent approximately
$240,000 during the past fiscal year ended June 30, 1997 and approximately
$252,072 during the fiscal years ended June 30, 1996 on research activities
relating to the development of new designs of containers and the production of
compounds. The major thrust of the Company's research and development efforts is
currently in the area of new PVC compound development.

                  Environmental Regulation. The Company does not believe that
compliance with federal, state and local laws and regulations which have been
enacted or adopted regulating the discharge of material into the environment, or
otherwise relating to the protection of the environment, has had or will have
any material effect upon the capital expenditures, earnings or competitive
position of the Company. However, the future of PVC as a material for packaging
foods has been dampened by the Food and Drug Administration's ("FDA's")
unwillingness to implement standards with regard to levels of residual vinyl
chloride monomer ("VCM") acceptable for food packaging. Although the FDA's
proposed levels of VCM are expected to be easily attainable by the Company's
industry, the FDA has been precluded from issuing the standards by the
Environmental Protection Agency ("EPA"). The EPA is insisting that a new
environmental impact statement be developed prior to promulgating new standards.
The EPA's concern is that the adoption of the FDA's new regulations will
stimulate additional demand for PVC bottles and, hence, add to the PVC in the
waste stream. The Society of Plastics Industry ("SPI"), and Vinyl Institute
("VI") which represent the PVC industry on this issue, estimates that it will
take several years to complete an acceptable environmental impact statement.

                  In addition, as it is now a supplier of a primary raw
material, the Company may have to comply with existing regulations promulgated
by the EPA with respect to the emission of VCM into the environment and
regulations promulgated by the Occupational Safety and Health Administration
regarding material safety.

                  Additionally, solid waste disposal and mandatory recycling
have become a major environmental issue with respect to plastic packaging in
general. Concerns over the incineration of PVC compounds, which allegedly result
in hydrochloric acid and dioxin emissions, have also recently been voiced.
Further, the state and national concern over disposal of solid waste has
resulted in several states proposing bans of certain plastics including PVC
packaging materials. Thus far, however, no bans have been implemented that would
affect PVC as a packaging material. The SPI and VI have effectively lobbied
state legislatures which have enacted legislation supporting the recycling of
plastics. The Company is currently implementing a program that is mandatory in
certain states of placing a recycling code on the bottom of most bottles 8
ounces in capacity or larger. The Company believes, however, that the threat of
further regulatory actions inhibiting the future growth


                                       -6-

<PAGE>   9



of PVC as a viable packaging material will be minimal, although no assurances
can be given that further regulatory, or the threat of further regulatory action
would not have a negative affect on the Company's business.

                  Employees. As at June 30, 1997, the Company employed a total
of 224 people at its Eatontown facilities, of whom 25 are in executive,
administrative and clerical positions, 15 are engaged in sales activities and
184 are engaged in general manufacturing. The Company employed 100 people at its
Paris, Illinois facility and 37 people at its Walterboro, South Carolina
facility as at June 30, 1997. The Company renewed its collective bargaining
agreement with Local 108 of the Retail, Wholesale and Department Store Union,
AFL-CIO, effective September 1, 1997 through August 31, 2000. As at June 30,
1997 Airopak Corporation employed 80 people. The Company considers its relations
with its work force and the union to be good.


Discontinuance of Business.

                  As of June 30, 1997 there was an agreement in principle to
terminate the 50-50 Joint Venture (called Edge Craft USA, Inc.) with Edge Craft
Ltd of Ontario, Canada relating to the manufacture and sale of vinyl edgebanding
manufactured with PVC compounds produced by the Company's wholly-owned
subsidiary, Novatec Plastics Corporation. The discontinuance of this Joint
Venture will have no material adverse affect on the business or financial
condition of the Company. Pursuant to the agreement in principle, the Company's
50% of the Joint Venture is being sold to Edge Craft Ltd. The details of the
termination have not been finalized as of the date of this report.


Financial Information about Foreign and
Domestic Operations and Export Sales

                  The Company had export sales of $5,264,000 during the fiscal
year ended June 30, 1997. Net sales to the northeast of the United States
amounted to $21,937,000 during such fiscal year; net sales to the Midwest
amounted to $19,459,000 net sales to the southeast amounted to $8,582,000; and
net sales to other domestic regions amounted to $3,150,000 during such fiscal
year.

Item 2.           Properties.

                  The Company's manufacturing activities with respect to its
continuing businesses are conducted at the six facilities described in the
following table:



                                       -7-

<PAGE>   10



                                                            Building Area
                                                            -------------
Location                  Purpose of Facility               (square feet)
--------                  -------------------               
Eatontown, New Jersey     Plastic Bottle Plant and            136,998(1)
                          warehousing and Office
Eatontown, New Jersey     Plastic Compounding Plant,           50,162(2)
                          warehouse and office
Manchester, Pennsylvania  Airopak Corporation Plant and        69,140(3)
                          warehousing
Manchester, Pennsylvania  Airopak Corporation                  25,000(4)
                          warehousing
Paris, Illinois           Plastic bottle Plant and            125,000(5)
                          warehousing and office
Walterboro, S.C.          Plastic bottle Plant                 61,430(6)
                          warehousing and office

                  1. The Eatontown bottle plant manufacturing facility is
located at 401 Industrial Way West, Eatontown, New Jersey on 8.1 acres of real
property owned by the Company. The Company's principal executive offices are
also located at this location. The building is constructed from concrete panels,
and was completed in June 1989. In connection with the construction and
acquisition of certain equipment for this facility, the Company obtained
financing through the NJEDA. During June 1996 the Company completed the
construction of an additional 34,000 sq. foot warehouse and manufacturing space.
This expansion was financed by the Company through its revolving credit facility
at Fleet Bank N.A. as at June 30, 1996. On September 6, 1996 the Company
obtained additional financing in the amount of $1,200,000. See Note 5 to the
Notes to the Consolidated Financial Statements below.

                  2. The Company's PVC Compounding manufacturing facility is
located at 275 Industrial Way West, Eatontown, New Jersey on 5.5 acres of real
property owned by the Company. It contains manufacturing, R&D, warehouse, and
administrative offices and is constructed from steel and concrete panels. In
March 1994, the Company completed the construction of an additional 21,000
square feet of warehouse and refinanced the facility with a new term Note and
mortgage from National Westminster Bank, NJ. See Note 5 to the Notes to the
Consolidated Financial Statements below.

                  3. As described in the section entitled "Manufacturing
Operations" the Company acquired a business located in Manchester, Pennsylvania.
The facilities in Manchester are leased and consist of a manufacturing and
warehouse facility in a steel building having a total of 69,140 square feet.

                  4. Airopak corporation also leases 25,000 square feet of
separate warehouse space also in a steel building. The aggregate annual rental
payable with respect to the manufacturing and warehouse space for the Airopak
Corporation detailed above and in Item 4 is $320,136 plus real estate taxes,
utilities and certain other charges payable under net leases which expire on
April 30, 1998 with respect to the manufacturing and warehouse facility. It is
believed that these facilities are large enough to allow for future growth of
the business conducted at these facilities.

                  5. The Company commenced operations during April, 1993 in a
new 62,500 square foot concrete plastic bottle manufacturing facility located in
Paris, Illinois. The Company owns this facility and twenty acres of land on
which it is located. Financing for this facility was obtained from the Edgar
County Bank, the City of Paris, Illinois and the Illinois Small Business
Development Agency. In July 1997, the Company completed the construction of an
additional 62,500 square feet of warehouse and manufacturing space. This
expansion was financed by the Company through the issuance of Industrial
Development Revenue Bonds by the City of Paris, Illinois, in the amount of
$3,500,000. See Note 5 to the Notes to the Consolidated Financial Statements
below.

                  6. In October 1996, the Company completed construction and
began operations in a new plastic bottle manufacturing plant located in
Walterboro, South Carolina. This facility consists of 61,430 square feet of
warehouse and manufacturing space, located on 8.83 acres of real property which
is owned by the Company. Financing for this facility was obtained through the
South Carolina Economic Development Authority in the amount of $5,500,000. See
Note 5 to the Notes to the Consolidated Financial Statements below. See Note 5
to the Notes to the Consolidated Financial Statements below.




                                       -8-

<PAGE>   11
Item 3.           Legal Proceedings.

                  There is pending one action and several claims relating to
products of the Company manufactured and sold in the ordinary course of business
and which, in the opinion of management, will not adversely affect the business
or financial condition of the Company.


Item 4.           Submission of Matters to a Vote of Securityholders.

                  During the fiscal year ended June 30, 1997 there was a special
meeting of the shareholders of the Company held on January 16, 1997 at which
four new directors were elected and the 1996 Incentive Stock Option Plan was
approved by the shareholders.


                                       -9-

<PAGE>   12
                                     PART II


Item 5.           Market for Registrant's Common Stock
                  and Related Securityholder Matters.

                  The principal market in which the Company's common stock is
traded is the over-the-counter market. The mean quotation on September 11, 1997
was $4.00. The shares of common stock currently are quoted on NASDAQ and bear
the symbol "PVCC." The average closing bid and asked quotations during the
fiscal years ended June 30, 1997 and June 30, 1996 are as follows:


<TABLE>
<CAPTION>
       Year Ended June 30, 1997

                                          Bid                   Asked
                                          ---                   -----

<S>                                      <C>                    <C>  
              1st Quarter                $3.14                  $3.42

              2nd Quarter                 3.17                   3.46

              3rd Quarter                 3.86                   4.19

              4th Quarter                 3.38                   3.78



       Year Ended June 30, 1996

                                          Bid                   Asked

              1st Quarter                $2.875                 $3.125

              2nd Quarter                 2.375                  2.625

              3rd Quarter                 2.875                  3.125

              4th Quarter                 2.375                  2.625
</TABLE>


                  As at September 11, 1997, the number of holders of record of
the issued and outstanding common stock of the Company was approximately 663.

                  The Company on December 20, 1991 paid to shareholders its
first dividend of $.05 per share of common stock, and a second, third and fourth
dividend in the same amount was paid on December 18, 1992 December 8, 1993 and
January 18, 1995. The Company declared on January 29, 1996 a stock dividend in
the amount of 3% per share and a total of 202,817 shares were paid on February
26, 1996 to shareholders in connection with this dividend. The Company declared
on August 29, 1996 a cash dividend of $.06 per share payable on September 20,
1996 to shareholders of record as of the close of business on September 13,
1996.



                                      -10-

<PAGE>   13






Item 6.           Selected Financial Data.

<TABLE>
<CAPTION>
                                    Years Ended June 30
--------------------------------------------------------------------------------------------------------------------------------
                                1997                   1996                   1995                 1994              1993
                                ----                   ----                   ----                 ----              ----
--------------------------------------------------------------------------------------------------------------------------------
SELECTED INCOME
STATEMENT DATA:
--------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>                      <C>                   <C>                  <C>             <C>        
Net Sales                    $58,392,310              $57,216,317           $53,886,103          $38,352,843     $37,036,068
--------------------------------------------------------------------------------------------------------------------------------
Income from operations       $4,206,218               $4,950,200            $3,556,095           $1,535,767      $2,587,080
--------------------------------------------------------------------------------------------------------------------------------
Net Income                   $2,250,528               $2,552,570            $1,610,665           $647,260        $1,398,453
--------------------------------------------------------------------------------------------------------------------------------
Earnings per share:*                                                        
  Weighted average shares
outstanding*                 7,004,705                6,964,705             6,964,730            6,931,256       6,905,683   
--------------------------------------------------------------------------------------------------------------------------------
Income from operations       $       .60              $      .71            $       .51          $       .22     $       .37
--------------------------------------------------------------------------------------------------------------------------------
Net Income                   $       .32              $       .37           $       .23          $       .09     $       .20
--------------------------------------------------------------------------------------------------------------------------------
Cash dividends per share     $       .06              $        --           $       .05          $       .05     $       .05
--------------------------------------------------------------------------------------------------------------------------------
Stock dividends per share    $       ---              $      .08            $        --          $       --      $        --
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
SELECTED BALANCE
SHEET DATA
--------------------------------------------------------------------------------------------------------------------------------
Current assets               $20,386,764              $19,274,008           $16,605,173          $14,716,364     $13,931,064
--------------------------------------------------------------------------------------------------------------------------------
Current liabilities          $11,876,707              $12,299,121           $10,655,197          $10,084,651     $9,598,949
--------------------------------------------------------------------------------------------------------------------------------
Working capital              $8,510,057               $6,974,887            $5,949,976           $4,631,713      $4,332,115
--------------------------------------------------------------------------------------------------------------------------------
Total assets                 $46,041,366              $44,181,871           $34,158,390          $32,159,249     $30,597,507
--------------------------------------------------------------------------------------------------------------------------------
Noncurrent liabilities       $17,525,635              $17,196,372           $11,369,189          $11,213,163     $10,596,293
--------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity         $16,639,024              $14,686,378           $12,134,004          $10,861,435     $10,402,265
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>


--------
*                 Earnings per share calculations are based on the weighted
                  average number of shares of common stock and common stock
                  equivalents outstanding. Retroactively restated for the 3%
                  stock dividend paid on February 26, 1996 to shareholders of
                  records on February 9, 1996.


                                      -11-

<PAGE>   14
Item 7.           Management's Discussion and Analysis of
                  Financial Condition and Results of Operations.

         Results of Operations

         The Company's net sales for the fiscal year ended June 30, 1997 reached
a level of $58,392,000, an increase of approximately 2.1% over the 1996 level of
$57,216,000. Lower than expected demand for the general line of plastic bottles
was more than offset by increased demand in the Company's Airopak specialty
container division and its Novatec Plastics PVC compound division. Cost of goods
sold decreased marginally from 78.4% of net sales in 1996 to 78.2% for 1997.
Selling, general and administrative expenses ("SG&A") was $5,394,000, or 9.2% of
net sales for the fiscal year ended June 30, 1997 as compared to $4,505,000, or
7.9% of net sales for the fiscal year ended June 30, 1996, representing a 19.7%
increase over the same period last year. SG&A expenses have increased to support
the anticipated future growth in revenue that is expected from the Company's
expansion in South Carolina and its entry into the PET market.

         Income from operations for the fiscal year ended June 30, 1997
decreased to $4,206,000 or 7.2% of net sales from $4,950,000 or 8.7% of net
sales for the prior fiscal year. Higher sales margins were more than offset by
the higher SG&A expenses referred to in the preceding paragraph. The Company's
share of the operating loss in the Edge Craft USA joint venture, including the
write-off associated with its sale, amounted to $162,000.

         Net interest expense increased $35,000 during the fiscal year ended
June 30, 1997, as compared to fiscal 1996. Lower interest rates, offset by
additional borrowings resulted in the slight increase in interest expense.

         Net income for the year ended June 30, 1997 decreased $302,000 to
$2,251,000 or $.32 per share as compared to $2,553,000 or $.37 per share for
fiscal 1996.

                     Fiscal 1996 As Compared to Fiscal 1995

         The Company's net sales for the fiscal year ended June 30, 1996 reached
a record level of $57,216,000, increasing by approximately 6.2% over the 1995
amount of $53,886,000. The increase in revenues was the result of improvements
in all areas of the Company's business. Plastic bottle sales and PVC compound
sales all showed some modest growth during the fiscal year.

         Gross profit as a percentage of net sales was 21.6% for the fiscal year
ended June 30, 1996, compared to 19.0% for the fiscal year ended June 30, 1995.
The cost of goods sold increased approximately $1,218,000 to a level of
$44,839,000, or 78.4% of net sales for the fiscal year as compared to
$43,621,000, or 81.0% of net sales for the prior fiscal year. The major reasons
for the improvement in the gross profit margin and decrease in cost of goods
sold as a percentage of net sales was the fluctuating PVC and HDPE resin prices
that saw a


                                      -12-

<PAGE>   15



steep decline in the first six months of the fiscal year, and then a slow steady
increase in the second half of the fiscal year, which were, however, offset with
some product price increases that have raised margins to a healthier level than
historically achieved in prior years. Additionally, the Company experienced
higher operating capacity utilization during the fiscal year compared to the
prior year, which also improved plant efficiency and operating margins.

         Selling, general and administrative expenses ("SG&A) was $4,505,000, or
7.9% of net sales for the fiscal year ended June 30, 1996 as compared to
$3,996,000, or 7.4% of net sales for the fiscal year ended June 30, 1995,
representing a 12.8% increase over the same period last year. The increase in
SG&A was due in part to higher office incentive compensation, which is
proportionate to higher pretax income, increased workers compensation insurance
expense, due to a larger number of claims experience from prior years, as well
as some additional consulting expenses related to the Company's reengineering of
its operations and management information systems.

         Income from operations for the fiscal year ended June 30, 1996
increased 39.2% to $4,950,000, or 8.7% of net sales as compared to $3,556,000,
or 6.6% of net sales for fiscal 1995. Higher operating income was the result of
increased sales volume across the entire Company's product mix, lower raw
material costs, and higher operating utilization in the Company's manufacturing
plants. The Company's share of the operating loss in the Edge Craft USA joint
venture was $108,000.

         Net interest expense decreased $101,000 during the fiscal year ended
June 30, 1996, as compared to fiscal 1995. Lower interest expenses reflect lower
interest payments on several capital lease arrangements which were completed
during 1996, where payments of principal accounted for an increasing portion of
the payment as opposed to interest. Additionally, the overall interest rates on
the Company's financing from EDA loans decreased, reflecting lower bond yields
in fiscal 1996 compared to fiscal 1995.

         Net income for the year ended June 30, 1996 increased 58.5% or
approximately $942,000 to $2,553,000, or $.37 per share as compared to
$1,611,000 or $.23 per share for fiscal 1995. The increase is due to the higher
gross profit from operations for fiscal 1996 compared to fiscal 1995.

                  Liquidity and Capital Resources

         The Company's liquidity position at June 30, 1997 improved from the
prior year. Working capital increased approximately $1,535,000 to $8,510,000 at
June 30, 1997 from $6,975,000 at June 30, 1996. The current ratio increased to
1.72 at June 30, 1997 from 1.57 at June 30, 1996.

         Cash flows from operations during fiscal 1997 in the amount of
$2,944,000 represent a decrease of $1,906,000 from the prior year. The major
reason for the decrease is


                                      -13-

<PAGE>   16
attributable to the higher working capital requirements needed to support the
current and expected sales growth. An increase in accounts receivable of
$409,000, as well as an increase of $1,044,000 in inventories are the primary
factors for this change.

         The Company received $2,759,000 from the sale of building and
equipment, as well as $1,152,000 in proceeds from long term debt. These funds,
combined with cash flow from operations, were used to acquire $3,103,000 in
capital assets, reduce long term debt by $4,462,000, and declare and pay out
cash dividends in the amount of $418,000.

         In April 1995, the Company formed a 50/50 joint venture (called "Edge
Craft USA, Inc.") with Edge Craft, Ltd. of Ontario, Canada for the manufacture
and sale of vinyl edgebanding manufactured with PVC compounds produced by the
Company's wholly-owned subsidiary, Novatec Plastics Corporation. In June 1997,
the Company agreed to sell its share of the joint venture to its venture
partner, Edge Craft Ltd.

         The Company's short term liquidity and short term capital resources are
projected to be adequate to allow the Company to continue to make timely
payments to trade and other creditors. The Company believes that the financial
resources available to it, including internally generated funds and amounts
available under its revolving credit facility would be sufficient to meet its
foreseeable working capital requirements. As of June 30, 1997, the Company had
unused sources of liquidity consisting of cash and cash equivalents of $222,000
and available unused credit under a revolving credit facility of $5,000,000.

Item 8.           Financial Statements and Supplementary Data.

         See annexed financial statements.

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

                                     -None-


                                      -14-

<PAGE>   17
                                    PART III


Item 10.          Directors and Executive Officers of the Registrant.

         The following table sets forth the directors and executive officers of
the Company. Each director holds office until his successor is elected and
qualifies.

<TABLE>
<CAPTION>
Name                              Age        Held Office Since      Offices with the Company
----                              ---        -----------------      ------------------------
<S>                              <C>         <C>                    <C>                        
Phillip L. Friedman                50               1982            President, Chief Executive, and
                                                                    Director
John C. D'Avella                   49               1978            Chief Operating Officer, Secretary
                                                                    and Director
Joel Francis Roberts               59               1989            Vice President Operations
William A. Del Pizzo               39               1996            Vice President, Chief Financial
                                                                    Officer
John F. Turben                     62               1996            Director
Raymond A. Lancaster               51               1996            Director
Michael Sherwin                    56               1996            Director
George R. Begley                   55               1996            Director
</TABLE>


         PHILLIP L. FRIEDMAN was employed by Occidental Chemical Corporation
(formerly Hooker Chemical Corporation), a leading manufacturer and supplier of
PVC resins and compounds from 1969 until December 1981, when he joined the
Company. During his last 5 years with Occidental, Mr. Friedman was Manager of
Business Development and Director of Commercial Development for the Polyvinyl
Chloride Plastics Division. As the Director of Commercial Development, he was
responsible for coordinating and reducing to commercial practice various
research and development projects within the plastics industry. He is a member
of the Executive Committee of the Company.

         JOHN C. D'AVELLA, from June 1973 to July 1974, was an employee of
Cosmetics Unlimited, Bogota, New Jersey in the area of purchasing and inventory
control. From July 1974 to September 1975 he was employed as the General Manager
in charge of purchasing and sales at D'Avella's Pharmacy in Newark, New Jersey.
Mr. D'Avella was employed from September 1975 to 1978 as Sales Manager of the
Company. In 1978 he became Vice President in Charge of Sales and Secretary of
the Company.

         JOEL FRANCIS ROBERTS, from 1984 to July 1986, was a plant manager for
Technical Plastics Extruders, an extruder of sheet material. During July 1986 he
joined the Company as a plant manager and became a Director of Operations during
1989. He became a Vice President for Operations during November 1989.

         WILLIAM A. DEL PIZZO, was employed by Price Waterhouse from 1978 to
1980, when he joined Allied Signal Corporation where he held a variety of
accounting and financial positions from 1980 until 1989. He then joined Ausimont
USA, Inc., a manufacturer of fluoropolymers and specialty chemicals, where he
served as Chief Financial Officer until 1996. In October 1996, he joined the
Company as Vice President and Chief Financial Officer.


                                      -15-

<PAGE>   18
         GEORGE R. BEGLEY

         Mr. Begley is an independent investment advisor, a director of North
Coast Energy and a member of the audit committee of the Company.

         RAYMOND A. LANCASTER

         Mr. Lancaster is the Managing Partner of Kirtland Capital Partners II
L.P. (see "Security Ownership of Certain Beneficial Owners and Management") and
was the managing partner of Kirtland Capital Partners from 1995 to 1996 and of
Key Corp. from 1990 to 1995. He is a member of the Executive and Audit Committee
of the Company. Currently, Mr. Lancaster is a KCP I and KCP II Advisory Board
member and a member of the Board of Directors of Fairmont Minerals, Ltd., PVC
Container Corporation, R. Tape Corporation, ShoreBridge Corp., STERIS
Corporation, and Unifrax Corporation.

         MICHAEL SHERWIN

         Mr. Sherwin is the Vice Chairman of Mid-West Forge Corporation and
Chairman and Chief Executive Officer of Columbiana Boiler Company. Prior to
joining Mid-West Forge Corporation, Mr. Sherwin was the President of National
City Venture Corporation and National City Capital Corporation, both
subsidiaries of National City Corporation. He is chairman of the Audit Committee
of the Company.

         JOHN F. TURBEN

         Mr. Turben is Chairman of Kirtland Capital Partners and is a KCP I and
KCP II Advisory Board member and serves as Chairman of The Hickory Group, PVC
Container Corporation and Harrington and Richardson 1871, Inc. He is also
Chairman of the Executive Committee of Fairmount Minerals, Ltd. and Execution
Services Inc. He is a director of NACCO Industries, Unifrax Corporation and
TruSeal Technologies Inc. He is Chairman of the Board of the Company and a
member of its Executive Committee.                 


Item 11.          Executive Compensation.

         Incorporated by reference from the Company's definitive information
statement to be filed with the Commission not later than 120 days following the
end of the Company's fiscal year.


Item 12. Security Ownership of Certain Beneficial Owners and Management.

         Incorporated by reference from the Company's definitive or information
statement to be filed with the Commission not later than 120 days following the
end of the Company's fiscal year.

Item 13. Certain Relationships and Related Transactions.

         None.



                                      -16-

<PAGE>   19
                                     PART IV


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

(a)      The following documents are filed as part of this report:

         (1)      Consolidated Financial Statements.

                  Report of Independent Auditors

                  Consolidated Balance Sheets at June 30, 1997 and 1996

                  Consolidated Statements of Income for the three years ended
                  June 30, 1997

                  Consolidated Statements of Stockholders' Equity for the three
                  years ended June 30, 1997

                  Consolidated Statements of Cash Flows for the three years
                  ended June 30, 1997

                  Notes to Consolidated Financial Statements

         (2)      Consolidated Financial Statement Schedules.

                  Report of Independent Auditors on Consolidated Financial
                  Statement Schedules

                  For the three years ended June 30, 1997

                           Schedule II    - Valuation and Qualifying Accounts


         (3)      Exhibits.

                  3.1      Certificate of Incorporation of the Company filed
                           with the Secretary of State of the State of Delaware
                           (filed as Exhibit 3.1 to the Company's Form 10-K for
                           the fiscal year ended June 30, 1988 (the "1988
                           10-K"), and incorporated herein by reference).

                  3.2      The Company's By-Laws (filed as Exhibit 3.2 to the
                           1988 10-K, and incorporated herein by reference).

                  10.1     Deferred Compensation Plan established June 4, 1986
                           and effective July 1, 1986 (filed as Exhibit 10.1 to
                           the Company's Form 10-K for the fiscal year ended
                           June 30, 1987 (the "1987 10-K"), and incorporated
                           herein by reference).



                                      -17-

<PAGE>   20
                  10.2     Profit Sharing Savings Plan (Flexinvest 401(k) Plan)
                           effective July 1, 1984 (filed as Exhibit 10.2 to the
                           1987 10-K, and incorporated herein by reference).

                  10.3     1981 Incentive Stock Option Plan filed as an Exhibit
                           to the Company's Form 10-K for fiscal 1982 and
                           incorporated herein by reference (filed as Exhibit
                           10.3 to the 1987 10-K, and incorporated herein by
                           reference).

                  10.4     Employment Agreement between the Company and Phillip
                           L. Friedman dated July 1, 1982 as amended on June 4,
                           1986 (filed as Exhibit 10.4 to the 1987 10-K, and
                           incorporated herein by reference).

                  10.5     Lease for the Company's container manufacturing plant
                           dated October 5, 1973 and amended July 2, 1974
                           between John Donato, Jr. and the Company (filed as
                           Exhibit 10.5 to the 1987 10-K, and incorporated
                           herein by reference).

                  10.7     Loan and Security Agreement among the Company, First
                           Jersey National Bank and Novatec dated June 1, 1984
                           and modified March 31, 1986 (filed as Exhibit 10.7 to
                           the 1987 10-K, and incorporated herein by reference).

                  10.8     Credit Agreement among the Company, New Jersey
                           Economic Development Authority, United Jersey Bank
                           and The First Jersey National Bank dated as of
                           November 1, 1981 (filed as Exhibit 10.8 to the 1987
                           10-K, and incorporated herein by reference).

                  10.9     Bond Financing Agreement among the Company, New
                           Jersey Economic Development Authority, United Jersey
                           Bank and The First Jersey National Bank dated
                           November 27, 1984 (filed as Exhibit 10.9 to the 1987
                           10-K, and incorporated herein by reference).

                  10.10    Collective Bargaining Agreement dated September 1,
                           1988 between the Company and Local 108, Retail,
                           Wholesale and Department Store Union, AFL-CIO (filed
                           as Exhibit 10.10 to the 1988 10-K, and incorporated
                           herein by reference).

                  10.11    Third Amendment to Employment Agreement between
                           Phillip L. Friedman and the Company dated November
                           29, 1989 (filed as Exhibit 10.11 to 1990 10-K and
                           incorporated herein by reference).

                  10.12    Asset Purchase Agreement between Airopak Corporation
                           and Air Products and Chemicals, Inc. dated 8/4/94
                           (filed as Exhibit 10 to the report on Form 8-K filed
                           on August 8, 1994 and incorporated herein by
                           reference).

                  10.13    Employment Agreement between the Company and Phillip
                           L. Friedman dated July 1, 1996 (filed as Exhibit 10.2
                           to the December 12, 1996 8-K, and incorporated herein
                           by reference).



                                      -18-

<PAGE>   21



                  10.14    Stock Purchase Agreement among the Company, Kirtland
                           Capital Partners, and Rimer Anstalt, dated December
                           3, 1996 (filed as Exhibit 10.1 to the December 12,
                           1996 8-K and incorporated herein by reference).

                  10.15    1996 Incentive Stock Option Plan (filed as Exhibit
                           10.3 to the December 12, 1996 8-K, and incorporated
                           herein by reference).

                  16       Letter dated March 1, 1989 from Gassman, Rebhun &
                           Co., P.C. regarding resignation as certifying
                           accountant for the Company (filed as Exhibit 16 to
                           the February 28, 1989 8-K, and incorporated herein by
                           reference).

                  22       Subsidiaries of the Company (filed as Exhibit 22 to
                           the 1987 10-K, and incorporated herein by reference).

                  23       Consent of Ernst & Young LLP



                  99.1     Second Amendment to the PVC Container Corporation
                           1981 Incentive Stock Option Plan, dated July 6, 1989,
                           with the unanimous written consent of Directors of
                           the Company (filed as Exhibit 28.1 to 1990 10-K and
                           incorporated herein by reference.

                  99.2     Letter dated September 22, 1989 from Phillip L.
                           Friedman to Bidyuk AG regarding the termination of
                           their Option Agreement dated December 14, 1987 (filed
                           as Exhibit 28.2 to 1990 10-K and incorporated herein
                           by reference).

                  Exhibits filed herewith:

                           None.

(b)      Reports on Form 8-K filed during last quarter of the year ended June
         30, 1997:

         None.

(c)      Exhibits

         None.

(d)      Financial statement schedules

         The financial statement schedules required by Regulation S-X are
         submitted as a separate section of this filing.


                                      -19-

<PAGE>   22
                                INDEX TO EXHIBITS

Exhibit
Number   Description of Exhibit                                             Page
------   ----------------------                                             ----

3.1      Certificate of Incorporation of the Company filed with the Secretary of
         State of the State of Delaware (filed as Exhibit 3.1 to the Company's
         Form 10-K for the fiscal year ended June 30, 1988 (the "1988 10-K"),
         and incorporated herein by reference).


3.2      The Company's By-Laws (filed as Exhibit 3.2 to the 1988 10-K, and
         incorporated herein by reference).


10.1     Deferred Compensation Plan established June 4, 1986 and effective July
         1, 1986 (filed as Exhibit 10.1 to the Company's Form 10-K for the
         fiscal year ended June 30, 1987 (the "1987 10-K"), and incorporated
         herein by reference).


10.2     Profit Sharing Savings Plan Flexinvest 401(k) Plan) effective July 1,
         1984 (filed as Exhibit 10.2 to the 1987 10-K, and incorporated herein
         by reference).


10.3     1981 Incentive Stock Option Plan filed as an Exhibit to the Company's
         Form 10-K for fiscal 1982 and incorporated herein by reference (filed
         as Exhibit 10.3 to the 1987 10-K, and incorporated herein by
         reference).


10.4     Employment Agreement between the Company and Phillip L. Friedman dated
         July 1, 1982 as amended on June 4, 1986 (filed as Exhibit 10.4 to the
         1987 10-K, and incorporated herein by reference).


10.5     Lease for the Company's container manufacturing plant dated October 5,
         1973 and amended July 2, 1974 between John Donato, Jr. and the Company
         (filed as Exhibit 10.5 to the 1987 10-K, and incorporated herein by
         reference).


10.7     Loan and Security Agreement among the Company, First Jersey National
         Bank and Novatec dated June 1, 1984 and modified March 31, 1986 (filed
         as Exhibit 10.7 to the 1987 10-K, and incorporated herein by
         reference).


10.8     Credit Agreement among the Company, New Jersey Economic Development
         Authority, United Jersey Bank and The First Jersey National Bank dated
         as of November 1, 

                                      -20-
<PAGE>   23

         1981 (filed as Exhibit 10.8 to the 1987 10-K, and incorporated herein
         by reference).


10.9     Bond Financing Agreement among the Company, New Jersey Economic
         Development Authority, United Jersey Bank and The First Jersey National
         Bank dated November 27, 1984 (filed as Exhibit 10.9 to the 1987 10-K,
         and incorporated herein by reference).


10.10    Collective Bargaining Agreement dated September 1, 1988 between the
         Company and Local 108, Retail, Wholesale and Department Store Union,
         AFL-CIO (filed as Exhibit 10.10 to the 1988 10-K, and incorporated
         herein by reference).


10.11    Third Amendment to Employment Agreement between Phillip L. Friedman and
         the Company dated November 29, 1989 and incorporated herein by
         reference.


10.12    Asset Purchase Agreement between Airopak Corporation and Air Products
         and Chemicals, Inc. dated August 4, 1994 (filed as Exhibit 10 to the
         report on Form 8-K filed on August 8, 1994 and incorporated herein by
         reference).


10.13    Employment Agreement between the Company and Phillip L. Friedman dated
         July 1, 1996 (filed as Exhibit 10.2 to the December 12, 1996 8-K, and
         incorporated herein by reference)


10.14    Stock Purchase Agreement among the Company, Kirtland Capital Partners,
         and Rimer Anstalt, dated December 3, 1996 (filed as Exhibit 10.1 to the
         December 12, 1996 8-K and incorporated herein by reference).


10.15    1996 Incentive Stock Option Plan (filed as Exhibit 10.3 to the December
         12, 1996 8-K, and incorporated herein by reference).


16       Letter dated March 1, 1989 from Gassman, Rebhun & Co., P.C. regarding
         resignation as certifying accountant for the Company (filed as Exhibit
         16 to the February 28, 1989 8-K, and incorporated herein by reference).


22       Subsidiaries of the Company (filed as Exhibit 22 to the 1987 10-K, and
         incorporated herein by reference).


23       Consent of Ernst & Young LLP.




                                      -21-
<PAGE>   24




99.1     Second Amendment to the PVC Container Corporation 1981 Incentive Stock
         Option Plan, dated July 6, 1989, with the unanimous written consent of
         Directors of the Company and incorporated herein by reference.


99.2     Letter dated September 22, 1989 from Phillip L. Friedman to Bidyuk AG
         regarding the termination of their Option Agreement dated December 14,
         1987 and incorporated herein by reference.





                                      -22-
<PAGE>   25
                                   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.


                                        PVC CONTAINER CORPORATION
                                              (Registrant)

                                        By:/s/ Phillip L. Friedman
                                           --------------------------
                                           Phillip L. Friedman,
                                           President and Chief Executive Officer


                                          Date:    September 9, 1997


         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/ Phillip L. Friedman       Chief Executive               September 9, 1997
--------------------------    Officer and Director
Phillip L. Friedman           
                              
/s/ John C. D'Avella          Chief Operating Officer       September 9, 1997
--------------------------    and Director
John C. D'Avella                         
                              
/s/ William A. Del Pizzo      Vice President, Chief         September 9, 1997
--------------------------    Financial and Accounting
William A. Del Pizzo          Officer
                                               
                              
 /s/ John F. Turben           Director                      September 9, 1997
--------------------------
John F. Turben

/s/Raymond A. Lancaster       Director                      September 9, 1997
--------------------------
Raymond A. Lancaster

 /s/ George R. Begley         Director                      September 9, 1997
--------------------------
George R. Begley

/s/ Michael Sherwin           Director                      September 9, 1997
--------------------------
Michael Sherwin

<PAGE>   26
                            PVC CONTAINER CORPORATION



                        CONSOLIDATED FINANCIAL STATEMENTS



                                    FORM 10-K



                                  JUNE 30, 1997



                                      -24-
<PAGE>   27


                            PVC Container Corporation

                        Consolidated Financial Statements

                          June 30, 1997, 1996 and 1995





                                    CONTENTS


Report of Independent Auditors...............................................1
Consolidated Balance Sheets..................................................2
Consolidated Statements of Income............................................3
Consolidated Statements of Stockholders' Equity..............................4
Consolidated Statements of Cash Flows........................................5
Notes to Consolidated Financial Statements...................................6


<PAGE>   28

                         Report of Independent Auditors


The Board of Directors and Stockholders
PVC Container Corporation

We have audited the consolidated financial statements of PVC Container
Corporation listed in the accompanying index to financial statements (Item
14(a)(1)). Our audits also included the financial statement schedule listed in
the Index at Item 14(a)(2). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule 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 financial statements listed in the accompanying index to
financial statements (Item 14(a)(1)) present fairly, in all material respects,
the consolidated financial position of PVC Container Corporation at June 30,
1997 and 1996 and the consolidated results of their operations and their cash
flows for each of the three years in the period ended June 30, 1997 in
conformity with generally accepted accounting principles. Also, in our opinion,
the related financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.

                                                           /s/ ERNST & YOUNG LLP

MetroPark, New Jersey
August 8, 1997
<PAGE>   29


                            PVC Container Corporation

                           Consolidated Balance Sheets


<TABLE>
<CAPTION>
                                                                                     JUNE 30
                                                                              1997             1996
                                                                        -----------------------------------
ASSETS
Current assets:
<S>                                                                       <C>              <C>           
 Cash and cash equivalents                                                $      222,490   $    1,059,166
 Accounts receivable, less allowance of $243,000 in 1997 and 1996              9,272,018        8,863,444
 Inventories                                                                   9,407,146        8,363,522
 Prepaid expenses, taxes and other current assets                                538,593          292,210
 Deferred income taxes                                                           946,517          695,666
                                                                        -----------------------------------
Total current assets                                                          20,386,764       19,274,008

Unexpended proceeds from construction loan                                     4,244,334        5,239,425
Properties, plant and equipment at cost - net of
 accumulated depreciation                                                     21,410,268       19,377,239
Investment in jointly owned company                                                               291,199
                                                                        -----------------------------------
                                                                             $46,041,366      $44,181,871
                                                                        ===================================
LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
 Accounts payable                                                         $    6,443,880   $    6,864,889
 Accrued expenses                                                              3,147,719        2,801,882
 Income taxes payable                                                            418,460          831,950
 Current portion of long-term debt                                             1,866,648        1,800,400
                                                                        -----------------------------------
Total current liabilities                                                     11,876,707       12,299,121

Long-term debt                                                                16,337,169       16,165,229
Deferred income taxes                                                          1,188,466        1,031,143

Stockholders' equity:
 Preferred stock, par value $1.00, authorized 1,000,000 shares, none
   issued
 Common stock, par value $.01, authorized 10,000,000 shares, 7,004,705 and
   6,964,705 shares issued and outstanding as of June 30, 1997 and
   1996, respectively                                                             70,047           69,647
 Capital in excess of par value                                                3,646,747        3,527,147
 Retained earnings                                                            12,922,230       11,089,584
                                                                        -----------------------------------
Total stockholders' equity                                                    16,639,024       14,686,378
                                                                        -----------------------------------
                                                                             $46,041,366      $44,181,871
                                                                        ===================================
</TABLE>


See accompanying notes.




                                                                               2
<PAGE>   30
                            PVC Container Corporation

                        Consolidated Statements of Income




<TABLE>
<CAPTION>
                                                                    FISCAL YEAR ENDED JUNE 30
                                                              1997             1996             1995
                                                        ---------------------------------------------------

<S>                                                          <C>              <C>              <C>        
Net sales                                                    $58,392,310      $57,216,317      $53,886,103

Cost and expenses:
 Cost of goods sold (exclusive of depreciation and
   amortization expense shown separately below)               45,650,484       44,838,971       43,620,839
 Selling, general and administrative expense                   5,393,838        4,505,330        3,995,793
 Depreciation and amortization expense                         2,979,982        2,813,340        2,713,376
 Equity in loss of jointly owned company                         161,788          108,476
                                                        ---------------------------------------------------
                                                              54,186,092       52,266,117       50,330,008
                                                        ---------------------------------------------------
Income from operations                                         4,206,218        4,950,200        3,556,095

Other income (expenses):
 Interest expense                                               (834,695)        (796,463)        (897,765)
 Interest income                                                   4,093            1,346              298
 Other income                                                    250,261          139,284           96,034
                                                        ---------------------------------------------------
                                                                (580,341)        (655,833)        (801,433)
                                                        ---------------------------------------------------
Income before provision for income taxes                       3,625,877        4,294,367        2,754,662

Provision for income taxes                                     1,375,349        1,741,797        1,143,997
                                                        ---------------------------------------------------
Net income                                                    $2,250,528       $2,552,570       $1,610,665
                                                        ===================================================

Earnings per share                                                 $.32             $.37             $.23
Cash dividends per share                                            .06                               .05
Stock dividends per share                                                            .08
</TABLE>


See accompanying notes.

                                                                               3
<PAGE>   31

                            PVC Container Corporation

                 Consolidated Statements of Stockholders' Equity




<TABLE>
<CAPTION>
                                           COMMON STOCK
                                            ISSUED AND                                                           
                                           OUTSTANDING            CAPITAL IN                            TOTAL
                                    ----------------------------  EXCESS OF        RETAINED           STOCKHOLDERS'
                                        SHARES       AMOUNT       PAR VALUE        EARNINGS             EQUITY
                                    ------------------------------------------------------------------------------

<S>                                      <C>          <C>           <C>           <C>             <C>        
Balance, June 30, 1993                   6,461,813    $64,618       $2,824,498$    $7,513,149       $10,402,265
 Net income                                                                           647,260           647,260
 Cash dividends                                                                      (338,090)         (338,090)
 Issuance of common stock                  300,000      3,000          147,000                          150,000
                                    ------------------------------------------------------------------------------
Balance, June 30, 1994                   6,761,813     67,618        2,971,498      7,822,319        10,861,435
 Net income                                                                         1,610,665         1,610,665
 Cash dividends                                                                      (338,096)         (338,096)
                                    ------------------------------------------------------------------------------
Balance, June 30, 1995                   6,761,813     67,618        2,971,498      9,094,888        12,134,004
 Net income                                                                         2,552,570         2,552,570
 Cash dividends                                                                          (196)             (196)
 Stock dividends                           202,892      2,029          555,649       (557,678)                -
                                    ------------------------------------------------------------------------------
Balance, June 30, 1996                   6,964,705     69,647        3,527,147     11,089,584        14,686,378
 Net income                                                                         2,250,528         2,250,528
 Cash dividends                                                                      (417,882)         (417,882)
 Issuance of common stock                   40,000        400          119,600                          120,000
                                    ------------------------------------------------------------------------------
Balance, June 30, 1997                   7,004,705    $70,047       $3,646,747    $12,922,230       $16,639,024
                                    ==============================================================================
</TABLE>


See accompanying notes.


                                                                               4
<PAGE>   32
                            PVC Container Corporation

                      Consolidated Statements of Cash Flows


<TABLE>
<CAPTION>
                                                                        FISCAL YEAR ENDED JUNE 30
                                                                  1997             1996             1995
                                                            ---------------------------------------------------
<S>                                                               <C>             <C>              <C>       
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                        $2,250,528      $2,552,570       $1,610,665
Adjustments to reconcile net income to net
 cash provided by operating activities:
   Depreciation and amortization                                   2,979,982       2,813,340        2,713,376
   Equity in loss of jointly owned company                           161,788         108,476
   Deferred income taxes                                             (93,528)       (275,577)         115,344
   Gain on sale of building and equipment                           (167,250)
   Changes in assets and liabilities:
    Accounts receivable                                             (408,574)       (657,711)        (953,233)
    Inventories                                                   (1,043,624)     (1,928,514)         279,434
    Prepaid expenses, taxes and other current assets                (246,383)         33,682         (133,459)
    Accounts payable and accrued expenses                            (75,172)      1,712,530         (543,825)
    Income taxes payable                                            (413,490)        491,459          158,973
                                                            ---------------------------------------------------
Net cash provided by operating activities                          2,944,277       4,850,255        3,247,275

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures                                              (3,103,208)     (4,376,787)      (1,873,708)
Investment in (proceeds from) jointly owned company                  291,199        (399,675)
Proceeds from sale of building and equipment                       2,759,167
Purchase of business                                                                               (1,070,173)
                                                            ---------------------------------------------------
Net cash used in investing activities                                (52,842)     (4,776,462)      (2,943,881)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt                                       1,151,583       2,175,000        3,270,000
Payments on indebtedness                                          (4,461,812)     (2,360,568)      (2,581,842)
Dividends paid                                                      (417,882)           (196)        (338,096)
                                                            ---------------------------------------------------
Net cash (used in) provided by financing activities               (3,728,111)       (185,764)         350,062
                                                            ---------------------------------------------------
Net (decrease) increase in cash and cash equivalents                (836,676)       (111,971)         653,456
Cash and cash equivalents, beginning of year                       1,059,166       1,171,137          517,681
                                                            ---------------------------------------------------
Cash and cash equivalents, end of year                              $222,490      $1,059,166       $1,171,137
                                                            ===================================================
</TABLE>


See accompanying notes.


                                                                               5
<PAGE>   33
                            PVC Container Corporation

                   Notes to Consolidated Financial Statements

                          June 30, 1997, 1996 and 1995


                                                                                
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BUSINESS

PVC Container Corporation (the "Company") was incorporated in Delaware on June
14, 1968. The Company's major business activity primarily consists of the
manufacture and sale of a line of plastic bottles made from polyvinyl chloride
compounds and high density polyethylene resins. These bottles are used primarily
for the packaging of cosmetics, toiletries, foods, household chemicals, lawn and
garden, and industrial chemical products.

CONSOLIDATION

The accompanying financial statements include the accounts of PVC Container
Corporation and its wholly-owned subsidiaries, Novatec Plastics Corporation,
Airopak Corporation and PVC Container International Sales Corporation, a foreign
sales company incorporated in the U.S. Virgin Islands on March 1, 1993. All
intercompany accounts have been eliminated.

STOCK PURCHASE AGREEMENT

Pursuant to a stock purchase agreement dated December 3, 1996, and executed on
December 12, 1996, approximately 4.37 million shares of the Company's common
stock was purchased by Kirtland Capital Partners II LP and an affiliate, from
Rimer Anstalt (former majority shareholder) and certain other shareholders of
the Company.

ACQUISITION

On August 4, 1994, the Company acquired certain assets from Air Products and
Chemicals, Inc., for its recently incorporated wholly-owned subsidiary known as
Airopak Corporation for $1.57 million.

The Company accounted for the acquisition as a purchase. Accordingly, the
acquired assets have been recorded at their estimated fair values at the date of
acquisition. The results of operations of the acquired business are included in
the accompanying consolidated statement of income from the date of acquisition.
The pro forma results of operations for the period July 1, 1994 to August 4,
1994 have not been presented as such amounts are not material.


                                                                               6
<PAGE>   34
                            PVC Container Corporation

             Notes to Consolidated Financial Statements (continued)




                                                                                
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

CASH EQUIVALENTS

The Company considers investments with maturities of three months or less when
acquired to be cash equivalents.

INVENTORIES

Inventories are stated at the lower of LIFO cost or market value. Cost for
substantially all of the inventories is determined under the LIFO method.

DEPRECIATION

Depreciation is provided for financial reporting purposes on a straight-line
method over the estimated useful lives of the related assets. Maintenance and
repairs are charged to operations as incurred. Major renewals and betterments
are capitalized.

INCOME TAXES

The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes, which requires an
asset and liability approach to financial accounting and reporting for income
taxes. Deferred income tax assets and liabilities are computed annually for
differences between the financial statement and tax basis of assets and
liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized. Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred tax assets and
liabilities.

RESEARCH AND DEVELOPMENT COSTS

All research and development costs are charged to expense as incurred and
amounted to $240,000, $252,000 and $217,000 in 1997, 1996 and 1995,
respectively.


                                                                               7
<PAGE>   35
                            PVC Container Corporation

             Notes to Consolidated Financial Statements (continued)


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

STOCK-BASED COMPENSATION

As permitted by FASB Statement No. 123, Accounting for Stock-Based Compensation
(FASB 123), the Company has elected to follow Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees (APB 25) and related
interpretations in accounting for its employee stock option plans. Under APB 25,
compensation expense is calculated at the time of option grant based upon the
difference between the exercise price of the option and the fair market value of
the Company's common stock at the date of grant, recognized over the vesting
period.

EARNINGS PER SHARE

In February 1997, the Financial Accounting Standards Board issued FASB Statement
No. 128, Earnings Per Share, effective for periods ending after December 15,
1997. The Company will adopt the Statement in its quarterly report for the
quarter ended December 31, 1997. At that time, the Company will be required to
change the method it currently uses to compute earnings per share and to restate
all prior periods. Under the new requirements for calculating primary earnings
per share, the dilutive effect of stock options will be excluded. The impact of
Statement 128 on the calculation of primary and fully diluted earnings per share
is not expected to be material.

Earnings per share are based on the weighted average number of shares of common
stock and common stock equivalents outstanding retroactively restated for the 3%
stock dividend declared by the Board of Directors payable on February 26, 1996
to stockholders of record on February 9, 1996. No common stock dividend was paid
in 1995.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.



                                                                               8
<PAGE>   36
                            PVC Container Corporation

             Notes to Consolidated Financial Statements (continued)


2.  INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
                                                           1997            1996
                                                     ---------------------------------
<S>                                                       <C>             <C>       
Raw materials                                             $3,227,543      $3,299,353
Finished goods                                             5,546,262       4,656,053
                                                     ---------------------------------
Total LIFO inventories                                     8,773,805       7,955,406

Molds for resale, in production                              278,800         109,465
Supplies                                                     354,541         298,651
                                                     ---------------------------------
Total                                                     $9,407,146      $8,363,522
                                                     =================================
</TABLE>

The excess of inventory valued on FIFO basis which approximates replacement cost
over LIFO cost at June 30, 1997 was approximately $2,000. Replacement cost
exceeded LIFO cost by approximately $216,000 at June 30, 1996.

3.  PROPERTIES, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
                                                                                        ESTIMATED
                                                                                     USEFUL LIFE IN
                                                        1997              1996            YEARS
                                                  ---------------------------------------------------
<S>                                                 <C>              <C>           
Land                                                $      250,686   $      653,965
Building and improvements                               13,071,247       11,341,533        20-25
Machinery and equipment                                 26,096,983       23,544,007         7-10
Molds                                                    3,088,678        2,549,376         3- 5
Office furniture and equipment                           1,171,927        1,003,397         5-l0
Motor vehicles                                              34,447           34,447         3- 5
Leasehold improvements                                      13,521            5,300
                                                  ------------------------------------
                                                        43,727,489       39,132,025
Less accumulated depreciation                           22,317,221       19,754,786
                                                  ------------------------------------
                                                       $21,410,268      $19,377,239
                                                  ====================================
</TABLE>



                                                                               9
<PAGE>   37
                            PVC Container Corporation

             Notes to Consolidated Financial Statements (continued)


4.  ACCRUED EXPENSES

Accrued expenses at June 30 consists of:

<TABLE>
<CAPTION>
                                                       1997           1996
                                                 --------------------------------
<S>                                                <C>             <C>          
Accrued payroll                                    $     475,866   $     467,000
Accrued vacation                                         615,210         603,852
Accrued employee incentives                            1,387,857       1,187,142
Other accrued expenses                                   668,786         543,888
                                                 --------------------------------
                                                      $3,147,719      $2,801,882
                                                 ================================
</TABLE>

5.  LONG-TERM DEBT

Long-term debt at June 30 consists of the following:

<TABLE>
<CAPTION>
                                                                      1997             1996
                                                                -----------------------------------

<S>                                                               <C>              <C>           
Notes payable:
 South Carolina Economic Development Authority:
   Loan                                                           $    5,500,000   $    5,500,000
 New Jersey Economic Development Authority:
   Series D Note                                                       3,400,000        3,650,000
 GE Capital Public Finance:
   Equipment loan                                                      2,261,667
   Building loan                                                       1,189,916
 Fleet Bank of New Jersey:
   435 Industrial Way Mortgage                                                            705,000
   Equipment Notes                                                                      1,565,088
   Term notes                                                          4,541,111        2,968,800
   Revolving note                                                                       2,175,000
 Edgar County Bank Construction Loan                                     534,374          568,125
 City of Paris:
   Community Development Assistance Loan                                 380,335          409,877
   Revolving Loan Fund                                                   114,240          123,068
 Illinois Small Business Development Loan                                282,174          300,671
                                                                -----------------------------------
                                                                      18,203,817       17,965,629
 Less current portion                                                 (1,866,648)      (1,800,400)
                                                                -----------------------------------
                                                                     $16,337,169      $16,165,229
                                                                ===================================
</TABLE>


                                                                              10
<PAGE>   38
                            PVC Container Corporation

             Notes to Consolidated Financial Statements (continued)


5.  LONG-TERM DEBT (CONTINUED)

Maturities of long-term debt are as follows: 1998 - $1,866,648; 1999 -
$1,758,876; 2000 - $1,630,525; 2001 - $940,131; 2002 - $950,512; and 2003 to
2016 - $11,057,125. Interest paid amounted to $837,461, $749,327 and $881,021 in
1997, 1996 and 1995, respectively.

NOTE PAYABLE - SOUTH CAROLINA ECONOMIC DEVELOPMENT AUTHORITY "S.C. EDA"

This note was obtained to finance the construction of the Company's South
Carolina manufacturing facility and is due April 1, 2016. Prepayments may be
made without penalty. This note is subject to prior mortgages in favor of the
Fleet Bank of New Jersey. The effective interest rate on this obligation was
3.8% in 1997 and 3.9% in 1996.

The agreement contains certain provisions which require the funds to be held in
trust (the "Trust") by a third-party financial institution until such time that
equipment purchases are made. The funds are invested at rates of return
comparable to the interest rate paid by the Company on the obligation. Equipment
purchases in connection with this agreement are paid directly from the Trust.

S.C. EDA has issued tax exempt bonds to fund the debt. Should the tax exempt
status of this bond issue be negated, the rate of interest of this note would be
retroactively adjusted.

NOTE PAYABLE - NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY "N.J. EDA"

SERIES D NOTE

This note is due October 3l, 2006 and is payable as follows: $250,000 due on
October l, each year through October l, 2006 and $900,000 due on October 31,
2006. Prepayments may be made without penalty. This note is subject to prior
mortgages in favor of the Fleet Bank of New Jersey. The effective interest rate
on this obligation was 3.6% and 3.7% in 1997 and 1996, respectively.

N.J. EDA has issued tax exempt bonds to fund the debt. Should the tax exempt
status of this bond issue be negated, the rate of interest of this note would be
retroactively adjusted.



                                                                              11
<PAGE>   39
                            PVC Container Corporation

             Notes to Consolidated Financial Statements (continued)


5.  LONG-TERM DEBT (CONTINUED)

GE CAPITAL PUBLIC FINANCE BUILDING AND EQUIPMENT LOAN

During fiscal year 1997, the City of Paris, Illinois approved $1,200,000 Series
1997A and $2,300,000 Series 1997B Industrial Development Revenue Bonds. The
Bonds were purchased and are held by GE Capital Public Finance, Inc., who is
financing a loan to the Company in conjunction with the Company's expansion of
its Paris, Illinois manufacturing facility. The loan is payable in 120
decreasing monthly installments at an interest rate of 5.90% with a final lump
sum payment of $602,952 on April 1, 2007. The loan may be prepaid in whole or in
part subject to certain requirements stated in the loan agreement. The loan is
collateralized by the property and the equipment.

The agreement contains provisions which require the funds to be held in trust
(the "Trust") by a third-party financial institution until such time that
building, construction or equipment purchases are made. The funds are invested
at rates of return comparable to the interest rate paid by the Company on the
obligation. Purchases in connection with this agreement are paid directly from
the Trust.

The bonds issued by the City of Paris to fund the debt are tax-exempt bonds.
Should the tax-exempt status of these bonds be negated, the rate of interest of
this note would be retroactively adjusted.

435 INDUSTRIAL WAY MORTGAGE

During fiscal year 1992, the Company financed $900,000 for the purchase of a
building adjacent to its property. In July 1996, the Company sold the building
and repaid the remaining principal on the mortgage totaling approximately
$705,000 with a portion of the proceeds from the sale.

EQUIPMENT NOTES

During fiscal year 1995, the Company received a second draw down on its
$2,300,000 equipment loan from Fleet Bank, amounting to $1,260,000. The note
requires principal payments of $21,355 and interest at 9.31% on the first of
every month through the note's maturity in March 1999, at which time the full
unpaid principal and interest are due. The first draw down note provides for the
monthly payment of interest at 7.82% through and including May 1, 1995.
Principal payments of $10,000 and interest are due thereafter on the first of
every month through the note's maturity in March 1999, at which time the full
unpaid principal and interest are due. During 1997, these notes were
consolidated into the $2,530,000 term note with Fleet Bank as discussed below.



                                                                              12
<PAGE>   40
                            PVC Container Corporation

             Notes to Consolidated Financial Statements (continued)

5.  LONG-TERM DEBT (CONTINUED)

During fiscal year 1995, the Company obtained a $950,000 equipment loan from
Fleet Bank for its newly acquired Airopak division. The note is payable in
eighty-four monthly payments of $11,310, plus interest at 9.19%. During 1997,
the note was consolidated into the $2,530,000 term note with Fleet Bank as
discussed below.

TERM NOTES

During fiscal year 1997, the Company consolidated various equipment and term
notes through a $2,530,000 term loan with Fleet Bank. The loan provides for
monthly payments of $70,278 including principal and interest at 7.72%. The note
matures on April 1, 2000 and is collateralized by the equipment. The Company may
prepay this note in whole or in part subject to certain requirements stated in
the loan agreement.

During fiscal year 1997, the Company obtained a $1.2 million loan from Fleet
Bank to finance the expansion of its New Jersey manufacturing facility. The loan
is payable in 180 monthly payments of $6,667 including principal and interest at
9.35%, through the notes maturity in November 2011. The note is collateralized
by the building.

During fiscal year 1994, the Company purchased $1,200,000 of property and
equipment which was financed through a term note with Fleet Bank. The note
provides for principal payments of $5,000 and interest due monthly through the
note's maturity, March 1, 1999, when the full amount of unpaid principal and
interest is due. The note may be prepaid in whole or in part subject to certain
requirements stated in the loan agreement. The note is collateralized by the
property and equipment purchased.

During fiscal year 1993, the Company purchased $3,000,000 of equipment which was
financed through three term notes with Fleet Bank. The notes, with original
principal balances of $1,500,000, $900,000 and $600,000 are payable in sixty
monthly payments of $50,000 plus interest at 7.29%, 6.8% and 6.69%,
respectively. These notes were consolidated into the $2,530,000 term note with
Fleet Bank as discussed above.

REVOLVING NOTE

During fiscal year 1996, the Company purchased $2,175,000 of property and
equipment which was financed through a revolving note with Fleet Bank.
Borrowings under this revolving note bear interest at the prime rate (8.25% at
June 30, 1996) and are payable in full on October 31, 1997. During fiscal year
1997, the note was prepaid in full in

                                                                              13
<PAGE>   41
                            PVC Container Corporation

             Notes to Consolidated Financial Statements (continued)


5.  LONG-TERM DEBT (CONTINUED)

accordance with the requirements stated in the loan agreement. On April 1, 1997,
the Company entered into a new $5,000,000 line of credit agreement with Fleet
Bank. Borrowings under this note bear interest payable monthly at the prime
rate, and principal borrowings are due in full on October 31, 1999. The Company
was in compliance with all covenants of this loan agreement at June 30, 1997.

EDGAR COUNTY BANK CONSTRUCTION LOAN

During fiscal year 1993, the Company financed $675,000 for real estate
improvements for a manufacturing plant in Paris, Illinois. The loan is payable
in sixty monthly principal payments of $2,813 and a final lump sum payment of
$506,250 on April 30, 1998, plus interest at 6.75%. The loan is collateralized
by a shared first lien interest for the land and building in Paris, Illinois in
conjunction with an inter creditor agreement between the bank and the City of
Paris.

COMMUNITY DEVELOPMENT ASSISTANCE LOAN

In fiscal year 1993, the Illinois Department of Commerce and Community Affairs
approved a loan with the City of Paris for development of a manufacturing plant
in Illinois for $500,000 which will be payable in 180 monthly installments of
$3,453 including interest at 3%. The loan is collateralized by a shared first
lien interest for the land and building in Paris, Illinois in conjunction with
an inter creditor agreement between the City of Paris and Edgar County Bank.

REVOLVING LOAN FUND

The Illinois Department of Commerce and Community Affairs also approved a
revolving loan fund from the City of Paris to assist in the development of the
manufacturing plant in Illinois for $150,000 in fiscal year 1993. The loan is
payable in 180 monthly installments of $1,033 including interest at 3%. The loan
is collateralized by a subordinate lien interest for the land and building in
Paris, Illinois in conjunction with an inter creditor agreement between the City
of Paris and Edgar County Bank.

ILLINOIS SMALL BUSINESS DEVELOPMENT LOAN

In fiscal year 1994, the Illinois Department of Commerce and Community Affairs
approved a loan with the City of Paris for the expansion of the Company's
manufacturing plant in Illinois for $350,000 which is payable in 180 monthly
installments of $2,767


                                                                              14
<PAGE>   42
                            PVC Container Corporation

             Notes to Consolidated Financial Statements (continued)

5.  LONG-TERM DEBT (CONTINUED)

including interest at 5% and a final payment to satisfy the conditions of the
loan. The loan can be prepaid in whole or in part without penalty. The loan is
collateralized by the property and improvements thereafter as well as the rent
issues and profits of the premises.

6.  OPERATING LEASES

Minimum rental commitments under non-cancellable operating leases are payable as
follows:

<TABLE>
<CAPTION>
     YEAR           AMOUNT
--------------------------------
<S>                  <C>     
     1998            $356,126
     1999             341,820
     2000             316,063
     2001             263,539
     2002             249,822
  Thereafter          327,394
</TABLE>

Rental expense for operating leases amounted to $344,965, $118,594 and $142,179
in 1997, 1996 and 1995, respectively.

7.  PENSION PLAN

On September 1, 1990, the Company instituted a non-contributory defined benefit
pension plan (the Plan) for all eligible full-time union employees. Benefits are
based on years of service. The Company contributes to the Plan amounts,
actuarially determined by the Unit Credit Actuarial Cost Method, which provides
the Plan with sufficient assets to meet future benefit payment requirements. The
assets of the Plan are invested principally in short-term investments. Net
pension cost consists of the following components:

<TABLE>
<CAPTION>
                                                           1997         1996          1995
                                                       -----------------------------------------
<S>                                                      <C>          <C>          <C>      
Normal service cost                                      $  55,439    $  55,513    $  52,085
Interest on projected benefit obligation                    49,946       43,376       37,729
Gain on return of plan assets                              (35,312)     (27,862)     (18,837)
Amortization cost                                           12,039       14,532       12,537
                                                       -----------------------------------------
Net periodic pension cost                                $  82,112    $  85,559    $  83,514
                                                       =========================================
</TABLE>


                                                                              15
<PAGE>   43
                            PVC Container Corporation

             Notes to Consolidated Financial Statements (continued)


7.  PENSION PLAN (CONTINUED)

The reconciliation of the funded status of the Plan to the amount on the
Company's balance sheet is as follows:

<TABLE>
<CAPTION>
                                                                              1997          1996
                                                                         -----------------------------

<S>                                                                       <C>           <C>     
Actuarial present value of:
 Vested benefits                                                            $719,960      $612,944
                                                                         =============================
 Accumulated benefits                                                       $761,667      $667,803
                                                                         =============================

Actuarial present value of projected benefit obligation                     $(761,667)    $(667,803)
Market value of plan assets                                                   565,503       438,265
                                                                         -----------------------------
Accumulated benefit obligation in excess of plan assets                      (196,164)     (229,538)
Unrecognized net obligation existing at transition                            123,561       135,917
Unrecognized net loss                                                         156,046       137,443
Adjustment required to recognize minimum liability                           (279,607)     (273,360)
                                                                         -----------------------------
Accrued pension liability                                                    $196,164      $229,538
                                                                         =============================
</TABLE>

The assumptions used in determining the funded status of the Plan are as
follows: (i) discount rate - 7.5% in 1997 and 1996, and (ii) expected rate of
return on assets of 8.5% for 1997 and 1996.

The Company maintains a voluntary salary reduction 40l(k) plan covering all
non-union employees with more than one year of service. Eligible employees may
elect to contribute up to 6% of their salaries up to ERISA's maximum annual
level. The Company contributes an amount equal to 25% of the employee's
contribution and, at its discretion, may make additional contributions to the
plan based on earnings. The Company contributed $282,991, $520,123 and $337,534
in 1997, 1996 and 1995, respectively.

8.  COMMON STOCK

The Company's Board of Directors approved and ratified on January 16, 1997, an
incentive stock option plan pursuant to which options to purchase an aggregate
of 600,000 shares of the common stock of the Company may be granted. Such plan
conforms to the requirements of Rule 16B-3 of the Securities Exchange Act of
1934. The options granted are exercisable to the extent of 20-25% per year on a
cumulative basis through expiration. During 1997, the Company issued 334,000
options to officers and

                                                                              16
<PAGE>   44
                            PVC Container Corporation

             Notes to Consolidated Financial Statements (continued)


8. COMMON STOCK (CONTINUED)

employees at the average price of $4.30 and 40,000 options to directors at an
average price of $4.13. At June 30, 1997, there were 226,000 options for common
stock which remained for future issuance.

The Company contributed 40,000 shares of common stock to its Employee Stock
Option Plan ("ESOP") on November 21, 1996. The value of the shares at the date
of grant in fiscal 1996 was $120,000 which was included in selling, general and
administrative expenses in fiscal year 1996.

The Company paid cash dividends per share of $.06 and $.05 in the years ended
June 30, 1997 and 1996, respectively. The Company has no intention to pay cash
dividends in the future.

FASB 123 requires pro forma information regarding net income and earnings per
share as if the Company had accounted for its employee stock options and
warrants ("equity awards") under the fair value method of FASB 123. The fair
value of these equity awards was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted average
assumptions for 1997 and 1996, respectively: risk-free interest rates of between
6.16% and 6.23%; expected volatility of 0.3%; expected option life equal to the
vesting period, and an expected dividend yield of 0.0%.

For purposes of pro forma disclosures, the estimated fair value of the equity
awards is amortized to expense over the options vesting period. The expense in
fiscal 1997 would have no impact on the Company's net income and net income per
share of common stock.

9.  INCOME TAXES

The provision for income taxes consists of:

<TABLE>
<CAPTION>
                                             1997           1996          1995
                                        --------------------------------------------
<S>                                     <C>                <C>           <C>       
Current:
  Federal                               $    1,125,441     $1,595,679    $  827,256
  State                                        343,436        421,695       201,397
                                        --------------------------------------------
                                             1,468,877      2,017,374     1,028,653
Deferred:
  Federal                                      (72,485)      (229,015)      112,526
  State                                        (21,043)       (46,562)        2,818
                                        --------------------------------------------
                                               (93,528)      (275,577)      115,344
                                        --------------------------------------------
Total provision                             $1,375,349     $1,741,797    $1,143,997
                                        ============================================
</TABLE>


                                                                              17
<PAGE>   45
                            PVC Container Corporation

             Notes to Consolidated Financial Statements (continued)

9.  INCOME TAXES (CONTINUED)

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets as of June 30, 1997 are as
follows:

<TABLE>
<CAPTION>
                                                               1997           1996
                                                         --------------------------------
<S>                                                          <C>             <C>       
Deferred tax liabilities:
   Fixed assets                                              $1,188,466      $1,031,143
                                                         --------------------------------
Total deferred tax liabilities                                1,188,466       1,031,143

Deferred tax assets:
   Bad debt reserves                                             97,077          97,077
   Inventory reserves                                           214,387         128,728
   Accrued liabilities and other                                635,053         469,861
                                                         --------------------------------
Total deferred tax assets                                       946,517         695,666
                                                         --------------------------------
Net deferred tax liabilities                                   $241,949        $335,477
                                                         ================================
</TABLE>

A reconciliation of the income tax provision and the amount computed by applying
the statutory federal income tax rate to earnings before income taxes is as
follows:

<TABLE>
<CAPTION>
                                                                         1997      1996      1995
                                                                       ------------------------------

<S>                                                                    <C>      <C>       <C>
Federal tax at statutory rate                                              34%      34%       34%
Effect of:
 State income taxes, net of federal income tax benefit                      6        6         6
 Foreign operations                                                        (1)      (1)       (2)
 Other                                                                     (1)       1         3
                                                                       ------------------------------
Effective income tax rate                                                  38%      40%       41%
                                                                       ==============================
</TABLE>

Income taxes paid amounted to $1,812,000, $1,462,000 and $871,000 in 1997, 1996
and 1995, respectively.



                                                                              18
<PAGE>   46
                            PVC Container Corporation

             Notes to Consolidated Financial Statements (continued)


10.  STATEMENT OF CASH FLOWS - SUPPLEMENTAL DISCLOSURES

As more fully described in Note 1, the Company acquired certain assets from Air
Products and Chemicals, Inc. on August 4, 1994. The purchase price was allocated
to the assets based on their estimated market values as follows:

<TABLE>
<CAPTION>
                                                               1995
                                                         -----------------
<S>                                                      <C>           
Inventory                                                $      620,173
Fixed assets                                                    950,000
Notes payable                                                  (500,000)
                                                         -----------------
Net cash paid                                            $    1,070,173
                                                         =================
</TABLE>

Excluded from the consolidated statements of cash flows in 1997 and 1996 was the
effect of certain noncash financing activities related to the $3.5 million loan
from GE Capital obtained by the Company in April 1997 and the $5.5 million South
Carolina EDA loan obtained by the Company in April 1996. Capital expenditures in
connection with these agreements totaled approximately $4.5 million and $261,000
in 1997 and 1996, respectively.


                                                                              19
<PAGE>   47




                            PVC Container Corporation

                 Schedule II - Valuation and Qualifying Accounts





<TABLE>
<CAPTION>
           COLUMN A               COLUMN B                 COLUMN C                COLUMN D       COLUMN E
------------------------------   -----------     ------------------------------  -----------    ------------
                                                          ADDITIONS                
                                                 ------------------------------    AMOUNT
                                                                   CHARGED TO      WRITTEN 
                                   BALANCE       CHARGED TO          OTHER           OFF         BALANCE 
                                 BEGINNING OF     COSTS AND         ACCOUNTS       AGAINST        END OF 
         DESCRIPTION                YEAR          EXPENSES         (DESCRIBED)     RESERVE         YEAR
------------------------------   -----------     ----------     ---------------  -----------    ------------
<S>                               <C>              <C>            <C>              <C>            <C>     
Valuation accounts 
 deducted from assets to 
 which they apply:

   June 30, 1997:
     Accounts receivable          $242,692         $141,000       $     -          $141,000       $242,692
     Inventory                      70,000          152,000             -                 -        222,000

   June 30, 1996:
     Accounts receivable           242,692                -             -                 -        242,692
     Inventory                      50,000           70,000             -            50,000         70,000

   June 30, 1995:
     Accounts receivable           242,692                -             -                 -        242,692
     Inventory                           -           50,000             -                 -         50,000
</TABLE>