##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM
10-K/A
 AMENDMENT NO. 1
  þ
    
    ANNUAL REPORT
PURSUANT TO SECTION
13 OR 15(d) OF THE
SECURITIES EXCHANGE
ACT OF 1934 FOR THE
FISCAL YEAR ENDED
JUNE 29, 2007
 o
    
    TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE
SECURITIES EXCHANGE
ACT OF 1934 FOR THE
TRANSITION PERIOD
FROM        TO
 COMMISSION
FILE NUMBER 333-28157
 
 TEKNI-PLEX, INC.
  DELAWARE
    
    22-3286312(State of Incorporation)
    
    (I.R.S. Employer
Identification No.)260 NORTH DENTON TAP ROAD
    
    75019COPPELL, TEXAS
(Address of principal executive offices)
    
    (Zip Code)
 
 
 
 o þ
 o þ
 þ o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a
smaller reporting company)
 o þ




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TABLE OF CONTENTS  PART IIITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAPART IVITEM 15. EXHIBITS, FINANCIAL STATEMENTSIGNATURESEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATION    Table of Contents  
  
   
  
         2




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##### Table of Contents



TEKNI-PLEX, INC.By:

/s/ F. Patrick SmithF. Patrick SmithChairman of the Board and
Chief Executive Officer  3




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
 F-1




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##### Table of Contents



TEKNI-PLEX,
    INC.
  CONSOLIDATED
    BALANCE SHEETS
  June 29,


June 30,2007


2006(Dollars in thousands, except share and per share amounts)ASSETSCURRENT:Cash

$
22,345


$
20,689Accounts receivable, net of allowances of $2,928 and $7,070
    respectively


129,500



145,699Inventories


131,884



135,758Prepaid expenses and other current assets


5,129



5,363Total current assets


288,858



307,509Property, plant and equipment, net


164,027



167,787Goodwill


167,284



167,284Intangible assets, net of accumulated amortization of $8,116 and
    $6,806 respectively


4,117



4,096Deferred charges, net of accumulated amortization of $17,653 and
    $15,229 respectively


11,944



14,618Other assets


3,063



2,061$
639,293


$
663,355LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Current portion of long term debt

$
876


$
1,241Accounts payable  trade


51,670



39,532Accrued payroll and benefits


9,639



16,057Accrued interest


11,453



11,427Accrued liabilities  other


25,442



17,787Income taxes payable


6,259



6,050Total current liabilities


105,339



92,094Long-term debt


786,385



772,907Series A redeemable preferred stock


86,033



74,495Other liabilities


9,163



12,790Total liabilities


986,920



952,286Commitments and ContingenciesStockholders deficit:Common stock






Additional paid-in capital


188,018



188,018Accumulated other comprehensive (loss) gain


1,031



(1,587
)Accumulated deficit


(316,153
)


(254,839
)Less treasury stock


(220,523
)


(220,523
)Total stockholders deficit


(347,627
)


(288,931
)$
639,293


$
663,355    F-2




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##### Table of Contents



TEKNI-PLEX,
    INC.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  June 29,


June 30,


July 1,Years Ended

2007


2006


2005(Dollars in thousands)Net sales

$
773,337


$
742,683


$
695,524Cost of sales


656,150



621,983



600,170Gross profit


117,187



120,700



95,354Operating expenses:Selling, general and administrative


64,469



96,490



60,690Integration expenses


1,715



5,250



10,478Income from operations


51,003



18,960



24,186Other expenses (income):Interest


104,468



104,831



89,899Unrealized gain on derivative contracts


(243
)


(3,800
)


(8,287
)Other expense (income)


2,307



(2,737
)


(2,194
)(Loss) before provision for income taxes


(55,529
)


(79,334
)


(55,232
)Provision for income taxes


5,785



4,977



26,247Net loss

$
(61,314
)

$
(84,311
)

$
(81,479
)    F-3




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##### Table of Contents



TEKNI-PLEX,
    INC.
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS DEFICIT
  AccumulatedAdditional


OtherCommon


Paid-In


Comprehensive


Accumulated


TreasuryStock


Capital


Loss


Deficit


Stock


Total(Dollars in thousands)BALANCE, JULY 2, 2004





$
210,518


$
(6,000
)

$
(89,049
)

$
(220,523
)

$
(105,054
)Net loss














(81,479
)






(81,479
)Foreign currency translation










(4
)










(4
)Unrealized loss on pension plan










(4,290
)










(4,290
)Comprehensive loss






















(85,773
)Exchange of Capital for Series A redeemable preferred stock
    (see Note 7E)






(22,500
)














(22,500
)BALANCE, JULY 1, 2005






188,018



(10,294
)


(170,528
)


(220,523
)


(213,327
)Net loss














(84,311
)






(84,311
)Foreign currency translation










3,680











3,680Unrealized gain on pension plan










5,027











5,027Comprehensive loss






















(75,604
)BALANCE, JUNE 30, 2006






188,018



(1,587
)


(254,839
)


(220,523
)


(288,931
)Net loss














(61,314
)






(61,314
)Foreign currency translation










2,240











2,240Unrealized gain on pension plan










(7,520
)










(7,520
)Comprehensive loss






















(66,594
)Adjustment to initially apply FASB 158










7,898











7,898BALANCE, JUNE 29, 2007





$
188,018


$
1,031


$
(316,153
)

$
(220,523
)

$
(347,627
)    F-4




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##### Table of Contents



TEKNI 
    PLEX, INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Years Ended

June 29, 2007


June 30, 2006


July 1, 2005(Dollars in thousands)CASH FLOWS FROM OPERATING ACTIVITIES:Net loss

$
(61,314
)

$
(84,311
)

$
(81,479
)Adjustments to reconcile net loss to cash provided by (used in)
    operating activities:Depreciation


23,278



26,191



25,857Amortization


5,736



5,805



6,796Goodwill impairment






35,131



Fixed assets disposal


2,026







Unrealized gain on derivative contracts


(243
)


(3,800
)


(8,287
)Provision for bad debts


4,826



1,044



1,970Interest accretion


11,538



15,228Deferred income taxes


59



30



21,247Gain on sale of assets






(2,856
)


Changes in assets and liabilitiesAccounts receivable


11,537



(7,117
)


(2,328
)Inventories


3,954



(5,606
)


20,601Prepaid expenses and other current assets


327



678



960Other assets










(561
)Accounts payable and other current liabilities


12,559



(8,139
)


(6,491
)Income taxes payable


206



(341
)


4,538Other liabilities


(301
)


16,864



(7,284
)Net cash provided by (used in) operating activities


14,188



(11,199
)


(24,461
)Cash flows from investing activities:Capital expenditures


(21,544
)


(19,082
)


(18,246
)Additions to intangibles


(1,654
)


(3,638
)


(754
)Proceeds from sale of assets






4,142



Deposits and other assets


(982
)


(296
)


Net cash (used in) investing activities


(24,180
)


(18,874
)


(19,000
)CASH FLOWS FROM FINANCING ACTIVITIES:Repayments under line of credit


(41,000
)


(25,000
)


(113,200
)Borrowings under line of credit


53,000



52,000



49,200Proceeds from long-term debt


(390
)






146,318Proceeds from issue of Series A redeemable preferred stock






5,423



32,322Repayments of long-term debt






(17
)


(71,648
)Debt financing costs


250



192



(10,720
)Net cash provided by financing activities


11,860



32,598



32,272Effect of exchange rate changes on cash


(212
)


(420
)


38Net increase (decrease) in cash and cash equivalents


1,656



2,105



(11,151
)Cash, and cash equivalents beginning of year


20,689



18,584



29,735Cash, and cash equivalents end of year

$
22,345


$
20,689


$
18,584    F-5




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##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands, except percentages and share
    amounts)
  1.
    SUMMARY
    OF ACCOUNTING POLICIES  Nature
    of Business
    Consolidation
    Policy
    Accounts
    Receivable and Allowance for Possible Losses
    Accounting for Transfers and
    Servicing of Financial Assets and Extinguishment of
    Liabilities third-party third-party
    Inventories
    Property,
    Plant and Equipment
    Intangible
    Assets (other than goodwill)
  straight-line
 F-6




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##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Deferred
    Financing Costs
    Income
    Taxes
    Revenue
    Recognition
    Sales
    Allowances
    Shipping
    and Handling Costs
    Research
    and Development
    Cash
    Equivalents
    Fiscal
    Year-End
    Reclassifications
    Foreign
    Currency Translation
    Long-Lived
    Assets
   F-7




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##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Environmental
    Liabilities
    Use of
    Estimates
    Comprehensive
    Loss
      June 29,


June 30,2007


2006Cumulative translation adjustment

$
8,551


$
6,311Minimum pension liability, net






(7,898
)Actuarial loss not yet recognized in cost (pension), net


(6,578
)Actuarial loss not yet recognized in cost (postretirement), net


(942
)Accumulated other comprehensive income (loss)

$
1,031


$
(1,587
)   Stock
    Based Compensation
    Derivative
    Instruments
   F-8




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##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              Goodwill
    and Business Combinations
      New
    Accounting Pronouncements
     F-9




---



##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        SFAS No. 157,
    Fair Value Measurements
        2.
    RECAPITALIZATION   F-10




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##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    1 4 1 4
  3 4
  3.
    ACQUISITIONS      Balance


Costs


Balance


Costs


Balance


Costs


BalanceJuly 2,


Charged to


July 1,


Charged to


June 30,


Charged to


June 29,2004


Reserve


2005


Reserve


2006


Reserve


2007Legal and environmental liability

$
1,163


$
19


$
1,144


$
26


$
1,118


$
2


$
1,116$
1,163


$
19


$
1,144


$
26


$
1,118


$
2


$
1,116         Costs





Costs





CostsBalance


Charged


Balance


Charged


Balance


Charged


BalanceJuly 2,


to


July 1,


to


June 30,


to


June 29,2004


Reserve


2005


Reserve


2006


Reserve


2007Legal and environmental

$
1,281


$
316


$
965


$
216


$
749


$
139


$
610$
1,281


$
316


$
965


$
216


$
749


$
139


$
610  F-11




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##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  4.
    INVENTORIES    June 29,


June 30,2007


2006Raw materials

$
56,561


$
60,715Work-in-process


13,318



12,834Finished goods


62,005



62,209$
131,884


$
135,758   5.
    PROPERTY,
    PLANT AND EQUIPMENT    June 29,


June 30,


Estimated2007


2006


Useful LivesLand

$
15,832


$
15,832Building and improvements


61,959



61,299



25  40 yearsMachinery and equipment


278,636



263,088



5  10 yearsFurniture and fixtures


11,703



10,937



5  10 yearsConstruction in progress


10,316



8,666378,446



359,822Less accumulated depreciation


214,419



192,035$
164,027


$
167,787   6.
    INTANGIBLE
    ASSETS    June 29,


June 30,2007


2006Goodwill

$
167,284


$
167,284Customer list and non-compete agreement


9,340



8,541Patents


2,893



2,361179,517



178,186Less accumulated amortization


8,116



6,806$
171,401


$
171,380    F-12




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##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  7.
    LONG-TERM
    DEBT    June 29,


June 30,Senior Debt (A):

2007


2006Revolving line of credit Term notes

$
51,000


$
39,000Senior Subordinated Notes issued June 21, 2000 at
    12-3/4%,
    due June 15, 2010 (less unamortized discount of $1,129 and
    $1,506)(B)


273,871



273,494Senior Subordinated Notes issued May 2002 at
    12-3/4%,
    due June 15, 2010 (less unamortized premium of $212 and
    $287)(B)


40,212



40,287Senior Secured Notes issued November 21, 2003 at
    8-3/4%
    , due November 15, 2013 (less unamortized discount of
    $4,853 and $5,609)(C)


270,080



269,391Senior Secured Notes issued June 10, 2005 at 10.875% due
    August 15, 2012 (less unamortized discount of $2,433 and
    $2,904)(D)


147,530



147,096Series A Redeemable Preferred Stock(E)


86,033



75,473Other, primarily foreign term loans, with interest rates ranging
    from 4.44% to 5.44% and maturities from 2007 to 2013


4,568



4,880873,294



849,621Less: Current maturities


876



1,241$
872,418


$
848,380   (A)
    SENIOR
    DEBT              
    incur and voluntarily prepay certain of our and our
    subsidiaries debt;
    grant liens on our and our subsidiaries assets; F-13




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##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    undertake certain mergers, consolidations and
    sales / purchases of assets;
    pay certain dividends or distributions and redeem, purchase,
    retire or make other acquisitions of our equity interests;
    make certain investments and acquisitions;
    transact with our affiliates; and
    make capital expenditures.    
    our failure to pay when due amounts owed under the asset based
    facility;
    our or our subsidiaries failure to observe or perform the
    covenants set forth in the asset based facility;
    the inaccuracy of the representations and warranties set forth
    in the asset based facility;
    the imposition of certain judgments against us or our
    subsidiaries;
    our or our subsidiaries failure to pay certain other of
    our or our subsidiaries debt;
    the acceleration of the maturity of material debt;
    the occurrence of certain bankruptcy or insolvency proceedings
    or events;
    the invalidity or unenforceability of any lien or guarantee
    securing our obligations under the asset based facility; and
    the occurrence of a change of control.  (B)
    SENIOR
    SUBORDINATED NOTES  3 4 3 4
    RedemptionPeriod

Price2007


102.125
%2008 and thereafter


100.000
%       
    incur additional indebtedness and issue preferred stock;
    pay dividends or make other distributions; F-14




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##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    create liens;
    incur restrictions on the ability of our restricted subsidiaries
    to pay dividends or other payments to us;
    sell assets;
    merge or consolidate with other entities;
    enter into transactions with affiliates;
    issue capital stock of restricted subsidiaries; and
    effect acquisitions.        (C)
    SENIOR
    SECURED NOTES DUE 2013  3 4
      
    all of the stock and equity interests of certain of our domestic
    subsidiaries and 65% of the capital stock and equity interests
    of certain of the our foreign subsidiaries;
    all accounts, inventory, general intangibles, equipment and
    insurance policies;
    all documents of title covering, evidencing or representing
    goods;
    all instruments and chattel paper;
    commercial tort claims;
    certain Company-owned real property;
    rights under certain railcar leases;
    patents, trademarks, copyrights and other intellectual property;
    all letter of credit rights;
    all supporting obligations; F-15




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##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    certain deposit accounts; and
    all proceeds of, and all other profits, products, rents or
    receipts, arising from the collection, sale, lease, exchange,
    assignment, licensing or other disposition or realization upon
    the collateral described in (1) through (11) above.    (D)
    SENIOR
    SECURED NOTES DUE 2012  7 8
      
    all of the stock and equity interests of certain of our domestic
    subsidiaries and 65% of the capital stock and equity interests
    of certain of the our foreign subsidiaries;
    all accounts, inventory, general intangibles, equipment and
    insurance policies;
    all documents of title covering, evidencing or representing
    goods;
    all instruments and chattel paper;
    commercial tort claims;
    certain Company-owned real property;
    rights under certain railcar leases;
    patents, trademarks, copyrights and other intellectual property;
    all letter of credit rights;
    all supporting obligations; F-16




---



##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    certain deposit accounts; and
    all proceeds of, and all other profits, products, rents or
    receipts, arising from the collection, sale, lease, exchange,
    assignment, licensing or other disposition or realization upon
    the collateral described in (1) through (11) above.  (E)
    SERIES A
    REDEEMABLE PREFERRED STOCK      Liquidation Event.
  Mandatory Redemption.
  Dividends.
  Trigger Event.
        Rule 1-02(w) Regulation S-X)
 F-17




---



##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
                  Voting Rights.
    Protective Provisions.
  
    Create, authorize or issue any securities of the Company or any
    significant subsidiary other than common stock or options to
    purchase common stock not to exceed 45.75206 shares of
    common stock and (ii) certain refinancing securities as
    defined in the Amended and Restated    
    Amend the Amended and Restated Certificate of Incorporation or
    the by-laws of the Company; F-18




---



##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    Except where the proceeds are used to redeem the Series A
    Preferred Stock, consummate any sale of the Company or any
    significant subsidiary or sale of substantially all of the
    assets of the Company or any significant subsidiary;
    Liquidate or dissolve the Company or any significant subsidiary;
    Declare or pay any dividend or other distribution of the Company
    or its significant subsidiaries securities or redeem or
    repurchase any securities of the Company or any significant
    subsidiaries other than Series A Preferred Stock;
    Increase or decrease the authorized number of directors of the
    Company;
    Enter into any related party transactions in excess of $1,000 in
    the aggregate;
    Incur any indebtedness other than indebtedness the terms of
    which do not prohibit the Redemption of the Series A
    Preferred Stock in full in cash on February 15, 2014;
    Amend the Companys agreements relating to indebtedness
    that would prohibit the redemption of the Series A
    Preferred Stock in full in cash on February 15, 2014;
    Hire or terminate the Chief Executive Officer, the Chief
    Financial Officer or the Chief Operating Officer or making any
    modifications to their compensation arrangements; or
    Report a distribution on the Series A Preferred Stock for
    tax purposes except to the extent such Distribution is paid in
    cash or to the extent that the Company has received consent from
    the Representative chosen by a majority of the Series A
    Preferred Stockholder, which consent shall not be unreasonably
    withheld.    2008

$
8762009


51,4402010


314,4262011


3242012


317Thereafter


505,911$
873,294    F-19




---



##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  8.
    INCOME
    TAXES    June 29,


June 30,


July 1,Years Ended

2007


2006


2005Current:Federal

$



$
(102
)

$
Foreign


4,253



4,408



4,652State and local


150



106



348$
4,403


$
4,412


$
5,000Deferred:Federal










21,530Foreign


1,382



565



(283
)State and local










1,382



565



21,247Provision (benefit) for income taxes

$
5,785


$
4,977


$
26,247     June 29,


June 30,


July 1,Years Ended

2007


2006


2005Domestic

$
(73,170
)

$
(91,860
)

$
(66,900
)Foreign


17,641



12,526



11,668$
(55,529
)

$
(79,334
)

$
(55,232
)     June 29,


June 30,


July 1,Years Ended

2007


2006


2005Provision (benefit) for Federal income taxes at statutory rate

$
(18,880
)

$
(26,974
)

$
(18,779
)State and local income taxes,


99



net of Federal benefit






(3,142
)


(2,187
)Non-deductible goodwill impairment






11,945



Non-deductible preferred stock interest accretion


3,256



4,845



Foreign tax rates in excess of Federal tax rate


(363
)


714



402Increase in Valuation Allowance


2,941



15,373



47,459Foreign Dividends


4,896Expiration of NOLs


12,170Other, net


1,666



2,216



(648
)Provision (benefit) for income taxes

$
5,785


$
4,977


$
26,247  F-20




---



##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    June 29,


June 30,2007


2006Current deferred taxes:Allowance for doubtful accounts


870



1,416Inventory


724



855Net operating loss carryforwards


2,421



3,171Accrued expenses


3,180



3,251Total current deferred tax assets


7,195



8,693Long-term deferred taxes:Net operating loss carryforwards


111,292



104,647Accrued pension and post-retirement


2,949



2,822Unrealized loss on derivative contracts


280



372Unrealized loss of pension plan


2,858



3,001Difference in book and tax basis of assets


(609
)


(609
)Difference in depreciation


(15,570
)


(15,633
)Goodwill  deductible for tax purposes


(12,053
)


(9,740
)Other expenses


722



570Other foreign


(1,637
)


(3,019
)Total long-term net deferred tax assets


88,232



82,411Total current and long term deferred tax assets


95,427



91,104Valuation allowance


(97,064
)


(94,123
)Total long-term net deferred tax assets/(liabilities)


(1,637
)


(3,019
)   Net
    Operating Losses
         F-21




---



##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  9.
    EMPLOYEE
    BENEFIT PLANS    (a)
    Savings
    Plans      (b)
    Pension
    Plans              Year Ended


Year Ended


Year EndedJune 29,


June 30,


July 1,2007


2006


2005Service cost

$
129


$
161


$
125Interest cost on projected benefit obligation


1,507



1,379



1,479Expected actual return on plan assets


(1,582
)


(1,505
)


(1,581
)Amortization of unrecognized:Prior service cost


12



12



12Net loss


488



823



527Net pension cost

$
554


$
870


$
562   F-22




---



##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year Ended


Year EndedJune 29,


June 30,2007


2006CHANGE IN PROJECTED BENEFIT OBLIGATIONProjected benefit obligation, beginning of period

$
24,732


$
28,798Service cost


129



161Interest cost


1,508



1,380Actuarial loss(gain)


686



(4,451
)Benefits paid


(1,461
)


(1,156
)Projected benefit obligation, end of period


25,594



24,732CHANGE IN PLAN ASSETSPlan assets at fair value, beginning of period


19,039



18,478Actual return on plan assets


3,152



1,217Company contributions


1,479



500Benefits paid


(1,461
)


(1,156
)Plan assets at fair value, end of period


22,209



19,039Funded status of the Plan

$
(3,385
)

$
(5,693
)     June 29,2007Other non-current liabilities

$
(3,385
)Net pension liability, end of fiscal year

$
(3,385
)     June 29,2007Net actuarial loss

$
6,526Prior service cost


52Total

$
6,578     (c)
    Post-retirement
    Benefits   F-23




---



##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended


Year EndedJune 29,


June 30,2007


2006Service cost

$
198


$
221Interest cost


312



273Prior service cost


20



20Net loss


72



153Net post-retirement benefit cost

$
602


$
667   Year Ended


Year EndedJune 29,


June 30,CHANGE IN PROJECTED BENEFIT
    OBLIGATION

2007


2006Projected benefit obligation, beginning of period

$
5,155


$
5,584Service cost


198



221Interest cost


312



273Retiree contributions


4



15Actuarial (gain)


(335
)


(726
)Benefits paid


(217
)


(211
)Projected benefit obligation, end of period

$
5,117


$
5,156CHANGE IN PLAN ASSETSPlan assets at fair value, beginning of period






Retiree contributions


4



15Company contributions


213



196Benefits paid


(217
)


(211
)Plan assets at fair value, end of period






Funded status of the Plan

$
(5,117
)

$
(5,156
)     June 29,2007Current liabilities

$
(383
)Noncurrent liabilities


(4,734
)Net pension liability, end of fiscal year

$
(5,117
)     June 29,2007Net actuarial loss

$
853Prior service cost


89Total

$
942    F-24




---



##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Target


PercentageAllocation


of Plan AssetsSecurity Type

2008


2007


2006Guaranteed Investment Contract


0
%


0
%


6
%Fixed Income Securities


35
%


40
%


0
%Equity Securities


65
%


60
%


51
%Debt Securities


0
%


0
%


43
%Total Plan Assets


100
%


100
%


100
%         2008

$
1,7122009


1,9142010


2,0322011


2,1282012


2,2232013-2017


11,635   10.
    STOCK
    OPTIONS     F-25




---



##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  11.
    COMMITMENTS
    AND CONTINGENCIES  Commitments
    2008

$
12,7932009


9,1402010


6,8192011


5,8932012


5,548Thereafter


13,077$
53,270       Contingencies
         F-26




---



##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          12.
    CONCENTRATIONS
    OF CREDIT RISKS        13.
    SUPPLEMENTAL
    CASH FLOW INFORMATION  Cash
    Paid
  June 29,


June 30,


July 1,Years Ended

2007


2006


2005Interest

$
89,544


$
82,054


$
86,406Income taxes


5,417



3,129


$
4,546Non-Cash Financing Activities:Exchange of Capital for Series A Redeemable Preferred Stock









$
22,500  F-27




---



##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  14.
    SEGMENT
    INFORMATION      TubingYear End June 29, 2007

Products


Packaging


Other


TotalsRevenues from external customers

$
205,632


$
405,429


$
162,276


$
773,337Interest expense


49,013



33,310



22,145



104,468Depreciation and amortization


5,573



15,309



7,112



27,994Segment income (loss) from operations


4,588



66,331



(988
)


69,931Goodwill


70,099



78,641



18,544



167,284Segment assets


239,110



275,214



121,877



636,201Expenditures for segment fixed assets


4,276



13,050



3,605



20,931   TubingYear End June 30, 2006

Products


Packaging


Other


TotalsRevenues from external customers

$
215,801


$
374,063


$
152,819


$
742,683Interest expense


49,139



33,524



22,168



104,831Depreciation and amortization


9,039



14,344



7,590



30,973Segment income (loss) from operations


(30,538
)


63,569



3,015



36,046Goodwill


70,099



78,641



18,544



167,284Segment assets


248,532



263,843



142,606



654,981Expenditures for segment fixed assets


3,959



10,247



4,275



18,481   TubingYear End July 1, 2005

Products


Packaging


Other


TotalsRevenues from external customers

$
213,052


$
348,675


$
133,797


$
695,524Interest expense


42,188



28,662



19,049



89,899Depreciation and amortization


9,311



15,255



7,063



31,629Segment income(loss) from operations


(6,473
)


48,967



(1,239
)


41,255Goodwill


108,593



63,943



25,996



198,532Segment assets


295,176



255,827



132,166



683,169Expenditures for segment fixed assets


2,481



10,886



4,219



17,586   F-28




---



##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  June 29,


June 30,


July 1,Years Ended

2007


2006


2005OPERATING PROFITTotal operating profit for reportable segments before
    income taxes

$
69,931


$
36,046


$
41,255Corporate and eliminations


(18,928
)


(17,086
)


(17,069
)Consolidated total

$
51,003


$
18,960


$
24,186ASSETSTotal assets from reportable segments

$
636,201


$
654,981


$
683,169Other unallocated amounts


3,092



8,374



8,526Consolidated total

$
639,293


$
663,355


$
691,695DEPRECIATION AND AMORTIZATIONSegment totals

$
27,994


$
30,973


$
31,629Corporate


1,020



1,024



1,024Consolidated total

$
29,014


$
31,997


$
32,653EXPENDITURES FOR SEGMENT FIXED ASSETSSegment totals

$
20,931


$
18,481


$
17,586Other unallocated expenditures


613



601



660Consolidated total

$
21,544


$
19,082


$
18,246REVENUES GEOGRAPHIC INFORMATIONUnited States

$
642,029


$
641,661


$
594,145Canada


17,328



13,603



18,832China & Argentina


8,557



4,333



2,805Europe, primarily Belgium


105,423



83,086



79,742Total

$
773,337


$
742,683


$
695,524LONG-LIVED ASSETS GEOGRAPHIC INFORMATIONUnited States

$
302,687


$
320,630


$
364,864Canada


8,483



9,582



9,552China & Argentina


4,028



2,466



427Europe


35,237



23,168



24,423Total

$
350,435


$
355,846


$
399,266      F-29




---



##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    15.
    SUPPLEMENTAL
    CONDENSED CONSOLIDATING FINANCIAL STATEMENTS  3 4 3 4
  Condensed
    Consolidating Statement of Operations  For the year
    ended June 29, 2007
  Non-Issuer


Guarantors


Guarantors


TotalSales, net

$
198,203


$
443,826


$
131,308


$
773,337Cost of sales


147,572



411,218



97,360



656,150Gross profit


50,631



32,608



33,948



117,187Selling, general and administrative


26,072



26,766



11,631



64,469Integration expense


712



1,003







1,715Income (loss) from operations


23,847



4,839



22,317



51,003Interest expense, net


104,282



(1
)


187



104,468Unrealized loss (gain) on derivative contract


(243
)










(243
)Other expense (income)


(1,650
)


(532
)


4,489



2,307Income (loss) before provision for income taxes


(78,542
)


5,372



17,641



(55,529
)Provision for income taxes


150







5,635



5,785Net income (loss)

$
(78,692
)

$
5,372


$
12,006


$
(61,314
)  F-30




---



##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Condensed
    Consolidating Balance Sheet  at June 29,
    2007
  Non-Issuer


Guarantors


Guarantors


Eliminations


TotalCURRENT ASSETS

$
37,002


$
185,019


$
66,837


$



$
288,858Property, plant and equipment, net


39,203



97,873



26,951







164,027Intangible assets


16,995



145,793



8,613







171,401Investment in subsidiaries


568,642











(568,642
)


Deferred financing costs, net


11,944















11,944Other long-term assets


438,409



424,167



844



(860,357
)


3,063TOTAL ASSETS

$
1,112,195


$
852,852


$
103,245


$
(1,428,999
)

$
639,293CURRENT LIABILITIES


37,916



30,642



36,781







105,339Long-term debt


782,693



29



3,663







786,385Preferred stock


86,033















86,033Other long-term liabilities


569,565



298,846



1,109



(860,357
)


9,163Total Liabilities


1,476,207



329,517



41,553



(860,357
)


986,920Additional paid-in capital


188,018



296,764



20,251



(317,015
)


188,018Retained earnings (accumulated deficit)


(316,154
)


215,546



36,082



(251,627
)


(316,153
)Accumulated other comprehensive (income) loss


(1,216
)


(6,460
)


8,707







1,031Treasury stock


(220,523
)














(220,523
)Total stockholders deficit


(349,875
)


505,850



65,040



(568,642
)


(347,627
)Total liabilities and stockholders deficit

$
1,126,332


$
835,367


$
106,593


$
(1,428,999
)

$
639,293  F-31




---



##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Condensed
    Consolidating Cash Flows  For the year ended
    June 29, 2007
    Non-Issuer


Guarantors


Guarantors


TotalNet cash provided by (used in) operating activities:

$
(51,860
)

$
41,310


$
24,738


$
14,188Cash flows from investing activities:Capital expenditures


(4,614
)


(11,487
)


(5,443
)


(21,544
)Additions to intangibles


(2,342
)


1,119



(431
)


(1,654
)Deposits and other assets






417



(1,399
)


(982
)Net cash used in investing activities


(6,956
)


(9,951
)


(7,273
)


(24,180
)Cash flows from financing activities:Repayments under line of credit


(41,000
)










(41,000
)Borrowings under line of credit


53,000











53,000Proceeds from long-term debt










(390
)


(390
)Debt financing


250











250Change in intercompany accounts


47,765



(30,051
)


(17,714
)


Net cash flows provided by (used in) financing activities


60,015



(30,051
)


(18,104
)


11,860Effect of exchange rate changes on cash










(212
)


(212
)Net increase (decrease) in cash


1,199



1,308



(851
)


1,656Cash, beginning of year


4,250



4,895



11,544



20,689Cash, end of year

$
5,449


$
6,203


$
10,693


$
22,345   Condensed
    Consolidating Statement of Operations  For the year
    ended June 30, 2006
  Non-Issuer


Guarantors


Guarantors


TotalSales, net

$
196,727


$
444,934


$
101,022


$
742,683Cost of sales


143,386



403,692



74,905



621,983Gross profit


53,341



41,242



26,117



120,700Selling, general and administrative


25,798



60,444



10,248



96,490Integration expense


1,494



3,756







5,250Income (loss) from operations


26,049



(22,958
)


15,869



18,960Interest expense, net


104,552



144



135



104,831Unrealized loss (gain) on derivative contract


(3,800
)










(3,800
)Other (income) expense


(4,921
)


(1,024
)


3,208



(2,737
)Loss (income) before provision for income taxes


(69,782
)


(22,078
)


12,526



(79,334
)Provision for income taxes


(67
)


71



4,973



4,977Net income (loss)

$
(69,715
)

$
(22,149
)

$
7,553


$
(84,311
)  F-32




---



##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Condensed
    Consolidating Balance Sheet  at June 30,
    2006
  Non-Issuer


Guarantors


Guarantors


Eliminations


TotalCURRENT ASSETS

$
36,233


$
203,580


$
67,696


$



$
307,509Property, plant and equipment, net


40,641



101,724



25,422







167,787Intangible assets


14,929



147,109



9,342







171,380Investment in subsidiaries


547,778











(547,778
)


Deferred taxes


8,502



(8,502
)










Deferred financing costs, net


14,502



116











14,618Other long-term assets


418,403



283,922



452



(700,716
)


2,061TOTAL ASSETS

$
1,080,988


$
727,949


$
102,912


$
(1,248,494
)

$
663,355CURRENT LIABILITIES


33,085



28,800



30,209







92,094Long-term debt


769,268







3,639







772,907Preferred stock


74,495















74,495Other long-term liabilities


492,811



205,765



14,930



(700,716
)


12,790Total Liabilities


1,369,659



234,565



48,778



(700,716
)


952,286Additional paid-in capital


188,011



294,585



18,951



(313,529
)


188,018Retained earnings (accumulated deficit)


(254,840
)


205,381



28,869



(234,249
)


(254,839
)Accumulated other comprehensive (income) loss


(1,319
)


(6,582
)


6,314







(1,587
)Treasury stock


(220,523
)














(220,523
)Total stockholders deficit


(288,671
)


493,384



54,134



(547,778
)


(288,931
)Total liabilities and stockholders deficit

$
1,080,988


$
727,949


$
102,912


$
(1,248,494
)

$
663,355  F-33




---



##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Condensed
    Consolidating Cash Flows  For the year ended
    June 30, 2006
  Non-Issuer


Guarantors


Guarantors


TotalNet cash provided by (used in) operating activities:

$
(49,790
)

$
27,864


$
10,727


$
(11,199
)Cash flows from investing activities:Capital expenditures


(3,406
)


(10,835
)


(4,841
)


(19,082
)Cash proceeds from sale of assets






4,142







4,142Additions to intangibles


263



(3,898
)


(3
)


(3,638
)Deposits and other assets


(3
)


(260
)


(33
)


(296
)Net cash used in investing activities


(3,146
)


(10,851
)


(4,877
)


(18,874
)Cash flows from financing activities:Net borrowings (repayment) under line of credit


27,000











27,000Proceeds from long-term debt










(17
)


(17
)Repayment of long-term debt














Debt financing


(237
)






429



192Change in intercompany accounts


18,029



(19,850
)


1,821



Proceeds from issuance of Series A redeemable preferred
    stock


5,423











5,423Net cash flows provided by (used in) financing activities


50,215



(19,850
)


2,233



32,598Effect of exchange rate changes on cash










(420
)


(420
)Net increase (decrease) in cash


(2,721
)


(2,837
)


7,663



2,105Cash, beginning of year


6,971



7,732



3,881



18,584Cash, end of year

$
4,250


$
4,895


$
11,544


$
20,689  F-34




---



##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Condensed
    Consolidating Statement of Operations  For the year
    ended July 1, 2005
  Non-Issuer


Guarantors


Guarantors


TotalSales, net

$
180,687


$
413,458


$
101,379


$
695,524Cost of sales


136,358



387,452



76,360



600,170Gross profit


44,329



26,006



25,019



95,354Selling, general and administrative


25,872



25,289



9,529



60,690Integration expense


2,399



8,079







10,478Income (loss) from operations


16,058



(7,362
)


15,490



24,186Interest expense, net


89,762







137



89,899Unrealized loss (gain) on derivative contract


(8,287
)










(8,287
)Other expense (income)


(4,021
)


(1,858
)


3,685



(2,194
)Income (loss) before provision for income taxes


(61,396
)


(5,504
)


11,668



(55,232
)Provision for income taxes


21,820



58



4,369



26,247Net income (loss)

$
(83,216
)

$
(5,562
)

$
7,299


$
(81,479
)   Condensed
    Consolidating Balance Sheet  at July 1,
    2005
  Non-Issuer


Guarantors


Guarantors


Eliminations


TotalCURRENT ASSETS

$
38,998


$
192,614


$
60,817


$



$
292,429Property, plant and equipment, net


42,397



109,750



24,035







176,182Intangible assets


15,268



179,210



10,164







204,642Investment in subsidiaries


562,374











(562,374
)


Deferred financing costs, net


16,561



116











16,677Other long-term assets


379,589



214,261



203



(592,288
)


1,765TOTAL ASSETS

$
1,055,187


$
695,951


$
95,219


$
(1,154,662
)

$
691,695CURRENT LIABILITIES


27,709



39,040



24,862







91,611Long-term debt


740,739







3,874







744,613Preferred stock


54,822















54,822Other long-term liabilities


437,185



148,101



20,978



(592,288
)


13,976TOTAL LIABILITIES


1,260,455



187,141



49,714



(592,288
)


905,022Additional paid-in capital


187,999



296,783



16,765



(313,529
)


188,018Retained earnings (accumulated deficit)


(170,528
)


222,736



26,109



(248,845
)


(170,528
)Accumulated other comprehensive (income) loss


(2,216
)


(10,709
)


2,631







(10,294
)Treasury stock


(220,523
)














(220,523
)TOTAL STOCKHOLDERS DEFICIT


(205,268
)


508,810



45,505



(562,374
)


(213,327
)TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT

$
1,055,187


$
695,951


$
95,219


$
(1,154,662
)

$
691,695  F-35




---



##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Condensed
    Consolidating Cash Flows  For the year ended
    July 1, 2005
  Non-Issuer


Guarantors


Guarantors


TotalNet cash provided by (used in) operating activities:

$
(74,070
)

$
42,357


$
7,252


$
(24,461
)Cash flows from investing activities:Acquisitions


(93
)










(93
)Capital expenditures


(3,826
)


(13,027
)


(1,393
)


(18,246
)Additions to intangibles


(331
)


(241
)


(89
)


(661
)Net cash used in investing activities


(4,250
)


(13,268
)


(1,482
)


(19,000
)Cash flows from financing activities:Net borrowings (repayment) under line of credit


(64,000
)










(64,000
)Proceeds from long-term debt


178,640











178,640Repayment of long-term debt


(70,943
)






(705
)


(71,648
)Debt financing


(10,720
)










(10,720
)Change in intercompany accounts


40,424



(30,280
)


(10,144
)


Net cash flows provided by (used in) financing activities


73,401



(30,280
)


(10,849
)


32,272Effect of exchange rate changes on cash










38



38Net increase (decrease) in cash


(4,919
)


(1,191
)


(5,041
)


(11,151
)Cash, beginning of year


11,890



8,923



8,922



29,735Cash, end of year

$
6,971


$
7,732


$
3,881


$
18,584   16.
    QUARTERLY
    RESULTS OF OPERATIONS (UNAUDITED)  First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter2007Net sales

$
172,005


$
156,106


$
211,681


$
233,545Gross profit


26,935



26,163



34,098



29,991
(3)Income (loss) from operations


11,036



11,236



17,169



11,562
(3)Net (loss)

$
(14,872
)(2)

$
(15,661
)

$
(12,158
)

$
(18,623
)(3)2006Net sales

$
162,751


$
152,396


$
194,568


$
232,968Gross profit


18,508



22,474



36,914



42,804Income (loss) from operations


1,437



(27,987
)(1)


19,830



25,680Net (loss)

$
(24,299
)

$
(54,528
)(1)

$
(4,564
)

$
(920
)     (1)
    
    In September 2005, we concluded our annual garden hose contract
    negotiations. While we were largely successful in securing our
    target price increases, we lost meaningful market share. With
    this information in mind, in the second quarter of fiscal 2006
    we deemed it appropriate to retest the goodwill in our Tubing
    segment. Accordingly, we recorded a $35.1 million
    impairment charge against the goodwill associated with our Swan
    operations as we anticipate reducing the capacity of this
    operation, eliminating much of its fixed costs, to reflect our
    reduced market position. F-36




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##### Table of Contents



TEKNI-PLEX,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (2)
    
    The first quarter of fiscal 2007 included a $2.4 million
    reduction in interest expense due to a change in the methodology
    used to accrete our preferred stock to its mandatory redemption
    value from the straight-line method to the effective interest
    method.(3)
    
    The fourth quarter of fiscal 2007 includes certain fourth
    quarter adjustments, including the following:  (1)
    $1.1 million reduction in inventory to correct a misstated
    inventory count at our Action Technology unit in Clinton, IL.(2)
    $2.8 million increase in fixed assets to correct excess
    depreciation charged in prior years. F-37




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    ON SUPPLEMENTAL SCHEDULE
           
    F-38




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##### Table of Contents



TEKNI-PLEX,
    INC.
  VALUATION
    AND QUALIFYING ACCOUNTS AND RESERVES
  Balance at


Charged toBeginning of


Costs and





Balance at EndPeriod


Expenses(1)


Deductions(2)


of Period(3)(Dollars in thousands)YEAR ENDED JULY 1, 2005Accounts receivable allowance for possible losses

$
5,328


$
1,970


$
1,234


$
6,064YEAR ENDED JUNE 30, 2006Accounts receivable allowance for possible losses

$
6,064


$
1,044


$
4,156


$
2,952YEAR ENDED JUNE 29, 2007Accounts receivable allowance for possible losses

$
2,952


$
4,826


$
4,850


$
2,928     (1)
    
    To increase accounts receivable allowance.(2)
    
    Uncollectible accounts written off, net of recoveries.(3)
    
    Amounts do not include certain accounts receivable reserves that
    are disclosed as allowances on the Consolidated
    Balance Sheets since they are not valuation reserves. F-39