<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-K/A


(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 29, 2001

[     ] 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.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                       <C>
        Delaware                                       22-3286312
(State of Incorporation)                  (I.R.S. Employer Identification No.)
</TABLE>

                 260 North Denton Tap Road, Coppell, Texas 75019
              (Address of principal executive offices and zip code)

                                 (972) 304-5077
              (Registrant's telephone number, including area code)



Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes  X  No


Indicate the number of shares outstanding of each of the registrant's classes
of stock as of the latest practicable date.
None

Documents Incorporated by Reference: See Index to Exhibits.

                                       1
<PAGE>   2
                                                                TEKNI-PLEX, INC.



                                                                        CONTENTS
================================================================================
<TABLE>
<S>                                                                         <C>
INDEPENDENT AUDITORS' REPORT                                                 F-2

CONSOLIDATED FINANCIAL STATEMENTS:
    Balance sheets                                                           F-3
    Statements of operations                                                 F-4
    Statements of comprehensive income (loss)                                F-5
    Statements of stockholders' equity (deficit)                             F-6
    Statements of cash flows                                                 F-7
    Notes to financial statements                                     F-8 - F-42

INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTAL SCHEDULE                       F-43

SUPPLEMENTAL SCHEDULE:
    Valuation and qualifying accounts and reserves                          F-44
</TABLE>





                                                                            F-1
<PAGE>   3
INDEPENDENT AUDITORS' REPORT



The Board of Directors
Tekni-Plex, Inc.
Somerville, New Jersey

We have audited the accompanying consolidated balance sheets of Tekni-Plex, Inc.
and its wholly owned subsidiaries (the "Company") as of June 29, 2001 and June
30, 2000, and the related consolidated statements of operations, comprehensive
income (loss), stockholders' equity (deficit) and cash flows for each of the
three years in the period ended June 29, 2001. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Tekni-Plex, Inc. and
its wholly owned subsidiaries as of June 29, 2001 and June 30, 2000, and the
results of their operations and their cash flows for each of the three years in
the period ended June 29, 2001, in conformity with accounting principles
generally accepted in the United States of America.



BDO Seidman, LLP
Woodbridge, New Jersey

September 20, 2001, except for Note 6
   for which the date is October 4, 2001

                                                                             F-2
<PAGE>   4
                                                                TEKNI-PLEX, INC.



                                                     CONSOLIDATED BALANCE SHEETS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
================================================================================
<TABLE>
<CAPTION>
                                                               JUNE 29, 2001    June 30, 2000
---------------------------------------------------------------------------------------------
<S>                                                           <C>              <C>
ASSETS
CURRENT:
    Cash                                                          $  44,645        $  12,525
    Accounts receivable, net of an allowance of $1,500 and
        $1,642 for possible losses                                  105,316           96,039
    Inventories (Note 4)                                            106,258           91,233
    Deferred income taxes (Note 7)                                    5,153            4,997
    Refundable income taxes                                              --           14,883
    Prepaid expenses and other current assets                         5,595            2,171
---------------------------------------------------------------------------------------------
              TOTAL CURRENT ASSETS                                  266,967          221,848
PROPERTY, PLANT AND EQUIPMENT, NET (NOTE 5)                         137,008          135,926
INTANGIBLE ASSETS, NET OF ACCUMULATED AMORTIZATION OF
    $62,271 AND $45,480                                             179,616          190,492
DEFERRED FINANCING COSTS, NET OF ACCUMULATED AMORTIZATION
    OF $2,549 AND $0                                                 16,607           18,897
DEFERRED INCOME TAXES (NOTE 7)                                       19,010            5,398
OTHER ASSETS                                                          2,286            2,228
---------------------------------------------------------------------------------------------
                                                                  $ 621,494        $ 574,789
=============================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
    Current portion of long term debt (Note 6)                    $   8,072        $   8,401
    Accounts payable trade                                           34,076           30,026
    Accrued payroll and benefits                                      5,222           11,662
    Accrued interest                                                  1,673            2,359
    Accrued liabilities - other                                      15,446           23,521
    Income taxes payable                                              3,349               --
---------------------------------------------------------------------------------------------
              TOTAL CURRENT LIABILITIES                              67,838           75,969
LONG-TERM DEBT (NOTE 6)                                             670,078          643,192
OTHER LIABILITIES                                                    18,275            4,778
---------------------------------------------------------------------------------------------
              TOTAL LIABILITIES                                     756,191          723,939
---------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (NOTES 7, 8, 9 AND 11)
STOCKHOLDERS' EQUITY (DEFICIT):
    Common stock, $.01 par value, authorized 20,000 shares,
       issued 848 at June 29, 2001 and June 30, 2000                     --               --
    Additional paid-in capital                                      120,176           84,176
    Accumulated other comprehensive loss                             (7,039)          (4,486)
    Accumulated deficit                                             (27,372)          (8,378)
    Less: Treasury stock at cost, 432 shares (Note 2)              (220,462)        (220,462)
---------------------------------------------------------------------------------------------
              TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                 (134,697)        (149,150)
---------------------------------------------------------------------------------------------
                                                                  $ 621,494        $ 574,789
=============================================================================================
</TABLE>
                    See accompanying notes to consolidated financial statements.

                                                                             F-3
<PAGE>   5
                                                                TEKNI-PLEX, INC.


                                           CONSOLIDATED STATEMENTS OF OPERATIONS
                                                          (DOLLARS IN THOUSANDS)
================================================================================

<TABLE>
<CAPTION>
Years ended                                 JUNE 29, 2001    June 30, 2000    July 2, 1999
------------------------------------------------------------------------------------------
<S>                                         <C>              <C>              <C>
NET SALES                                       $ 525,837        $ 524,817        $507,314
COST OF SALES                                     399,836          394,480         376,370
------------------------------------------------------------------------------------------
        GROSS PROFIT                              126,001          130,337         130,944
OPERATING EXPENSES:
  Selling, general and administrative              60,999           58,343          62,534
------------------------------------------------------------------------------------------
        INCOME FROM OPERATIONS                     65,002           71,994          68,410
OTHER EXPENSES:
  Interest, net                                    76,569           38,447          38,977
  Unrealized loss on derivative contracts
    (Note 1)                                       13,891               --              --
  Other (Note 9)                                      605            4,705             286
------------------------------------------------------------------------------------------
        INCOME (LOSS) BEFORE PROVISION
           FOR INCOME TAXES AND
           EXTRAORDINARY ITEM                     (26,063)          28,842          29,147
PROVISION (BENEFIT) FOR INCOME TAXES
  (NOTE 7):
  Current                                           4,098           12,333           7,004
  Deferred                                        (11,167)           2,103           7,146
------------------------------------------------------------------------------------------
        INCOME (LOSS) BEFORE
           EXTRAORDINARY ITEM                     (18,994)          14,406          14,997
EXTRAORDINARY ITEM, NET OF INCOME TAXES
  (NOTE 2)                                             --          (35,374)             --
------------------------------------------------------------------------------------------
NET INCOME (LOSS)                               $ (18,994)       $ (20,968)       $ 14,997
==========================================================================================
</TABLE>

                    See accompanying notes to consolidated financial statements.


                                                                             F-4
<PAGE>   6
                                                                TEKNI-PLEX, INC.



                          CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
                                                          (DOLLARS IN THOUSANDS)
================================================================================

<TABLE>
<CAPTION>
Years ended                          JUNE 29, 2001    June 30, 2000   July 2, 1999
----------------------------------------------------------------------------------
<S>                                  <C>              <C>            <C>
NET INCOME (LOSS)                        $(18,994)        $(20,968)      $ 14,997
OTHER COMPREHENSIVE INCOME (LOSS),
  NET OF TAXES:
    Foreign currency translation           (2,553)          (3,118)        (1,373)
----------------------------------------------------------------------------------
COMPREHENSIVE INCOME (LOSS)              $(21,547)        $(24,086)      $ 13,624
==================================================================================
</TABLE>


                    See accompanying notes to consolidated financial statements.

                                                                             F-5
<PAGE>   7
                                                                TEKNI-PLEX, INC.



                       CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                                                          (DOLLARS IN THOUSANDS)
================================================================================

<TABLE>
<CAPTION>
                                                        Accumulated
                                          Additional       Other
                                 Common     Paid-In    Comprehensive    Accumulated     Treasury
                                  stock     Capital         Loss         deficit         Stock        TOTAL
--------------------------------------------------------------------------------------------------------------
<S>                              <C>      <C>          <C>             <C>             <C>          <C>
BALANCE, JULY 3, 1998            $   --    $ 41,075      $     5       $ (2,407)       $      --    $  38,673
Foreign currency translation         --          --       (1,373)            --               --       (1,373)
Net income                           --          --           --         14,997               --       14,997
--------------------------------------------------------------------------------------------------------------
BALANCE, JULY 2, 1999                --      41,075       (1,368)        12,590               --       52,297
Foreign currency translation         --          --       (3,118)            --               --       (3,118)
Net loss                             --          --           --        (20,968)              --      (20,968)
Purchase of treasury stock           --          --           --             --         (220,462)    (220,462)
Capital contribution                 --      43,101           --             --               --       43,101
--------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 2000               --      84,176       (4,486)        (8,378)        (220,462)    (149,150)
Foreign currency translation         --          --       (2,553)            --               --       (2,553)
Net loss                             --          --           --        (18,994)              --      (18,994)
Capital contributions                --      36,000           --             --               --       36,000
--------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 29, 2001           $   --    $120,176      $(7,039)      $(27,372)       $(220,462)   $(134,697)
==============================================================================================================
</TABLE>


                    See accompanying notes to consolidated financial statements.




                                                                             F-6
<PAGE>   8
                                                                TEKNI-PLEX, INC.



                                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                          (DOLLARS IN THOUSANDS)
================================================================================

<TABLE>
<CAPTION>
Years ended                                                      JUNE 29, 2001   June 30, 2000   July 2, 1999
-------------------------------------------------------------------------------------------------------------
<S>                                                              <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                                  $(18,994)      $ (20,968)      $ 14,997
  Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
      Depreciation                                                     18,741          16,026         16,930
      Amortization                                                     18,929          18,722         18,413
      Unrealized loss on derivative contracts                          13,891
      Provision for bad debts                                             250             310            370
      Deferred income taxes                                           (11,167)          2,103          7,146
      Loss on sale of assets                                               --              62             --
      Extraordinary loss on extinguishment of debt                         --          35,374             --
      Changes in assets and liabilities, net of acquisitions:
        Accounts receivable                                            (9,527)            186         (5,709)
        Inventories                                                   (11,019)        (29,243)        (4,778)
        Prepaid expenses and other current assets                       8,859           4,898         (1,483)
        Other assets                                                      (58)            205           (532)
        Accounts payable and other current liabilities                  2,713         (15,994)        (4,859)
        Income taxes payable                                            3,349            (742)        (1,701)
        Other liabilities                                             (19,233)         (1,454)            --
-------------------------------------------------------------------------------------------------------------
          NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES          (3,266)          9,485         38,794
-------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisitions of net assets including acquisition costs,
    net of cash acquired                                               (9,233)             --        (45,139)
  Capital expenditures                                                (17,116)        (16,258)       (12,950)
  Additions to intangibles                                               (428)           (805)            --
  Cash proceeds from sale of assets                                        --             158             --
-------------------------------------------------------------------------------------------------------------
          NET CASH USED IN INVESTING ACTIVITIES                       (26,777)        (16,905)       (58,089)
-------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net borrowings (repayments) under line of credit                     35,000          (2,030)        22,234
  Proceeds from long-term debt                                             --         645,232             --
  Repayments of long-term debt                                         (8,820)       (448,631)       (10,177)
  Proceeds from capital contributions                                  36,000          43,101             --
  Debt financing costs                                                     --         (18,897)            --
  Purchase of treasury stock                                               --        (220,462)            --
-------------------------------------------------------------------------------------------------------------
          NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES          62,180          (1,687)        12,057
-------------------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                                   (17)           (485)            (8)
-------------------------------------------------------------------------------------------------------------
NET (DECREASE) INCREASE IN CASH                                        32,120          (9,592)        (7,246)
CASH, BEGINNING OF PERIOD                                              12,525          22,117         29,363
-------------------------------------------------------------------------------------------------------------
CASH, END OF PERIOD                                                  $ 44,645       $  12,525       $ 22,117
=============================================================================================================
</TABLE>

                    See accompanying notes to consolidated financial statements.

                                                                             F-7
<PAGE>   9
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
================================================================================


1. SUMMARY OF ACCOUNTING POLICIES

Nature of Business

Tekni-Plex, Inc. ("Tekni-Plex" or the "Company") is a global, diversified
manufacturer of packaging, products, and materials for the healthcare, consumer,
and food packaging industries. The Company has built a leadership position in
its core markets, and focuses on vertically integrated production of highly
specialized products. The Company's operations are aligned under four primary
business groups: Healthcare Packaging, Products, and Materials; Consumer
Packaging and Products; Food Packaging; and Specialty Resins and Compounds.

Consolidation Policy

The consolidated financial statements include the financial statements of
Tekni-Plex, Inc. and its wholly-owned subsidiaries. All intercompany
transactions and balances have been eliminated in consolidation.

Inventories

Inventories are stated at the lower of cost (weighted average) or market.

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciation and amortization
are computed over the estimated useful lives of the assets primarily on the
straight-line method for financial reporting purposes and by accelerated methods
for income tax purposes. Repairs and maintenance are charged to expense as
incurred.

Intangible Assets

The Company amortizes the excess of cost over the fair value of net assets
acquired on a straight-line basis over 15 years, and the cost of acquiring
certain patents and trademarks, over seventeen and ten years, respectively.
Recoverability is evaluated periodically based on the expected undiscounted net
cash flows of the related businesses.


                                                                             F-8
<PAGE>   10
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
================================================================================


Deferred Financing Costs

The Company amortizes the deferred financing costs incurred in connection with
the Company's borrowings over the life of the related indebtedness (5-10 years).

Income Taxes

The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income
Taxes." Deferred income tax assets and liabilities are recognized for
differences between the financial statement and income tax basis of assets and
liabilities based upon statutory rates enacted for future periods. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized.

Revenue Recognition

The Company recognizes revenue when goods are shipped to customers. The Company
provides for returned goods and volume rebates on an estimated basis.

Shipping and Handling Costs

During fiscal year 2001, the Company adopted EITF 00-10, "Accounting for
Shipping and Handling Fees and Costs." Shipping and handling costs of $19,400
were charged to cost of sales for the year ended June 29, 2001. In prior years
these costs were recorded as a reduction to sales. The 2000 and 1999 sales and
cost of sales were reclassified by $18,000 and $18,100, respectively to reflect
the adoption of EITF 00-10.

Cash Equivalents

The Company considers all highly liquid debt instruments with an original
maturity of three months or less to be cash equivalents.

Fiscal Year-End

The Company utilizes a 52/53 week fiscal year ending on the Friday closest to
June 30. The years ended June 29, 2001, June 30, 2000 and July 2, 1999 contained
52 weeks each.

Reclassifications

Certain items in the prior year financial statements have been reclassified to
conform to the current year presentation.



                                                                             F-9
<PAGE>   11
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
================================================================================


Foreign Currency Translation

Assets and liabilities of international subsidiaries are translated at year end
exchange rates and related translation adjustments are reported as a component
of stockholders' equity. Income statement accounts are translated at the average
rates during the period.

Long-Lived Assets

Long-lived assets, such as goodwill and property and equipment, are evaluated
for impairment when events or changes in circumstances indicate that the
carrying amount of the assets may not be recoverable through the estimated
undiscounted future cash flows from the use of these assets. When such
impairments exist, the related assets will be written down to fair value. No
impairment losses have been recorded through June 29, 2001.

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 reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Stock Based Compensation

The Company applies the provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation," which allows the Company to apply APB Opinion 25 and related
interpretations in accounting for its stock options and present pro forma
effects of the fair value of such options.


                                                                            F-10
<PAGE>   12
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
================================================================================


Derivative Instruments

Effective July 1, 2000, Tekni-Plex adopted Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities," as amended
and interpreted. FAS 133 requires that all derivative instruments, such as
interest rate swaps, be recognized in the financial statements and measured at
their fair market value. Changes in the fair market value of derivative
instruments are recognized each period in current operations or stockholders'
equity (as a component of accumulated other comprehensive loss), depending on
whether a derivative instrument qualifies as a hedge transaction.

In the normal course of business, Tekni-Plex is exposed to changes in interest
rates. The objective in managing its exposure to interest rates is to decrease
the volatility that changes in interest rates might have on operations and cash
flows. To achieve this objective, Tekni-Plex uses interest rate swaps and caps
to hedge a portion of total long-term debt that is subject to variable interest
rates. These derivative contracts are considered to be a hedge against changes
in the amount of future cash flows associated with the interest payments on
variable-rate debt obligations however, they do not qualify for hedge
accounting under FASB 133. Accordingly, the interest rate swaps are reflected at
fair value in the Consolidated Balance Sheet and the related gains or losses on
these contracts are recorded as an unrealized loss from derivative instruments
in the Consolidated Statements of Operations. Currently these are the only
derivative instruments held by Tekni-Plex as of June 29, 2001. The fair value of
derivative contracts are determined based on quoted market values obtained from
a third party. At July 1, 2000, there was no cumulative effect adjustment
required to reflect the accounting change. As of July 1, 2000, Tekni-Plex had
interest swap contracts to pay variable rates of interest based on a basket of
LIBOR Benchmarks and receive variable rates of interest based on a 3 month
dollar LIBOR on an aggregate of $344 million amount of indebtedness with
maturity dates ranging from June 2006 through June 2008. In conjunction with
these swap contracts, Tekni-Plex also purchased an interest rate cap. The
aggregate fair market value of these interest rate swap and cap contracts was
$(13,891) on June 29, 2001 and is included in other liabilities on the
Consolidated Balance Sheet. For the year ended June 29, 2001, Tekni-Plex
incurred realized losses of $1,806, which have been reflected in
interest expense.









                                                                            F-11
<PAGE>   13
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
================================================================================


New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board finalized FASB Statements
No. 141, Business Combinations (SFAS 141), and No. 142, Goodwill and Other
Intangible Assets (SFAS 142). SFAS 141 requires the use of the purchase method
of accounting and prohibits the use of the pooling-of-interests method of
accounting for business combinations initiated after June 30, 2001. SFAS 141
also requires that the Company recognize acquired intangible assets apart from
goodwill if the acquired intangible assets meet certain criteria. SFAS 141
applies to all business combinations initiated after June 30, 2001 and for
purchase business combinations completed on or after July 1, 2001. It also
requires, upon adoption of SFAS 142, that the Company reclassify the carrying
amounts of intangible assets and goodwill based on the criteria in SFAS 141.

SFAS 142 requires, among other things, that companies no longer amortize
goodwill, but instead test goodwill for impairment at least annually. In
addition, SFAS 142 requires that the Company identify reporting units for the
purposes of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets, and cease
amortization of intangible assets with an indefinite useful life. An intangible
asset with an indefinite useful life should be tested for impairment in
accordance with the guidance in SFAS 142. SFAS 142 is required to be applied in
fiscal years beginning after December 15, 2001 to all goodwill and other
intangible assets recognized at that date, regardless of when those assets were
initially recognized. SFAS 142 requires the Company to complete a transitional
goodwill impairment test six months from the date of adoption. The Company is
also required to reassess the useful lives of other intangible assets within the
first interim quarter after adoption of SFAS 142.


The Company's previous business combinations were accounted for using the
purchase method. As of June 29, 2001, the net carrying amount of goodwill is
$179,100 and other intangible assets is $6,516. Amortization expense during the
period ended June 29, 2001 was $15,400. Currently, the Company is assessing but
has not yet determined how the adoption of SFAS 141 and SAFS 142 will impact its
financial position and results of operations.

2. RECAPITALIZATION

In June 2000, the Company entered into a Recapitalization (the
"Recapitalization") with certain of its stockholders, whereby the Company
purchased approximately 51% of the outstanding stock for approximately $220,500
including related transaction fees. This stock has been reflected as treasury
stock in the accompanying balance sheet.

As a result of provisions in the Company's Senior Debt and Subordinated Note
Agreements, the Company redeemed it's $200,000 9-1/4% Senior Subordinated
Notes, its $75,000 11-1/4% Senior Subordinated Notes and repaid its Senior Debt
in the amount of approximately $153,000. These transactions resulted in an
extraordinary loss on the extinguishment of debt of approximately $35,374. The
extraordinary loss is comprised of prepayment penalties and other interest costs
of $39,303, the write-off of deferred financing costs of $16,696 and other fees
of $1,325, net of a tax benefit of $21,950.

These transactions were funded by $43,101 of new equity, $275,000 12-3/4%
Senior Subordinated Notes (see Note 6(b)) and initial borrowings of $374,000 on
a $444,000 Senior Credit Facility (see Note 6(a)).




                                                                            F-12
<PAGE>   14
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
================================================================================


3. ACQUISITIONS

In November 2000, the Company purchased certain assets of Super Plastics
Division ("Super Plastics") of RCR International, Inc., for approximately
$10,200. The acquisition was recorded under the purchase method, whereby Super
Plastics' net assets were recorded at estimated fair value and its operations
have been reflected in the statement of operations since that date. As a result
of the acquisition, goodwill of approximately $5,500 has been recorded, which is
being amortized over 15 years. In connection with the acquisition, the Company
established a reserve of $2,600. The reserve was comprised of the costs to close
a duplicate facility and terminate employees. There is no balance remaining in
this reserve at June 29, 2001. Proforma results of operations, assuming Super
Plastics was acquired on July 3, 1999, would not be materially different from
the consolidated results of operations.


In April 1999, the Company purchased certain assets and assumed certain
liabilities of High Voltage Engineering Corp. - Natvar Division ("Natvar"), for
approximately $26,000. The acquisition was recorded under the purchase method,
whereby Natvar's net assets were recorded at estimated fair value and its
operations have been reflected in the statement of operations since that date.
As a result of the acquisition, goodwill of approximately $19,786 has been
recorded, which is being amortized over 15 years.

In January 1999, the Company purchased certain assets and assumed certain
liabilities of Tri-Seal International, Inc. ("Tri-Seal") for approximately
$21,000. The acquisition was recorded under the purchase method and Tri-Seal's
operations have been reflected in the statement of operations since that date.
As a result of the acquisition, goodwill of approximately $13,848 has been
recorded, which is being amortized over 15 years.





                                                                            F-13
<PAGE>   15

                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
================================================================================


The following table presents the unaudited pro forma results of operations as
though the acquisition of Tri-Seal and Natvar occurred on July 4, 1998:


<TABLE>
<CAPTION>
Years ended                                                       JULY 2, 1999
--------------------------------------------------------------------------------
<S>                                                               <C>
Net sales                                                             $510,050
Income from operations                                                  70,691
Income before provision for income taxes                                31,211
================================================================================
</TABLE>

4. INVENTORIES

Inventories are summarized as follows:

<TABLE>
<CAPTION>
                                                  JUNE 29, 2001   June 30, 2000
--------------------------------------------------------------------------------
<S>                                               <C>             <C>
Raw materials                                          $ 33,971         $44,002
Work-in-process                                           7,812           7,024
Finished goods                                           64,475          40,207
--------------------------------------------------------------------------------
                                                       $106,258         $91,233
================================================================================
</TABLE>

5. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
                                                                    Estimated
                                 JUNE 29, 2001   June 30, 2000     useful lives
--------------------------------------------------------------------------------
<S>                              <C>             <C>            <C>
Land                                  $ 15,390        $ 15,106
Building and improvements               34,886          32,016    30 - 40 years
Machinery and equipment                139,591         124,549     5 - 10 years
Furniture and fixtures                   6,176           4,045     5 - 10 years
Construction in progress                10,115          10,009
--------------------------------------------------------------------------------
                                       206,158         185,725
Less: Accumulated depreciation          69,150          49,799
--------------------------------------------------------------------------------
                                      $137,008        $135,926
================================================================================
</TABLE>


                                                                            F-14
<PAGE>   16
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
================================================================================


6. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                  JUNE 29, 2001   June 30, 2000
--------------------------------------------------------------------------------
<S>                                               <C>             <C>
Senior Debt(a):
  Revolving line of credit                             $ 65,000        $ 30,000
  Term notes                                            336,560         344,000
Senior Subordinated Notes issued
  June 21, 2000 at 12-3/4%, due
  June 15, 2010 (less unamortized
  discount of $3,391 and $3,768)(b).                    271,609         271,232
Other, primarily foreign term loans, with
  interest rates ranging from 4.44% to 5.44%
  and maturities from 2000 to 2010.                       4,981           6,361
--------------------------------------------------------------------------------
                                                        678,150         651,593
Less: Current maturities                                  8,072           8,401
--------------------------------------------------------------------------------
                                                       $670,078        $643,192
================================================================================
</TABLE>

a) Senior Debt

The Company has a Senior Debt agreement, which includes a $100,000 revolving
credit agreement, and two term loans in the original amount of $344,000. The
proceeds of the credit agreement were used as part of the Recapitalization.
These loans are senior to all other indebtedness and are collateralized by
substantially all the assets of the Company. The debt agreement includes various
covenants including a limitation on capital expenditures and compliance with
customary financial ratios.

On October 4, 2001, the Company's Senior Debt agreement was amended to
retroactively modify certain financial covenants effective June 29, 2001 and
thereafter. The Company is in compliance with all such financial covenants, as
amended.







                                                                            F-15


<PAGE>   17
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)


Revolving Credit Agreement

Borrowings under the agreement may be used for general corporate purposes and
$35,000 is available for borrowing at June 29, 2001. Interest, at the Company's
option, is charged at the Prime Rate, plus the Applicable Base Rate (initially
2%) or the Adjusted LIBOR Rate, as defined, plus the Applicable Euro-Dollar
Margin (initially 3%). The Applicable Base Rate and Applicable Euro-Dollar
Margin can be reduced by up to 1.25 % based on the maintenance of certain
leverage ratios. At June 29, 2001 the balance of $65,000 outstanding was
borrowed at various rates ranging from 6.75% to 8.75%. At June 30, 2000, the
rates charged were 9.69% on $25,000 and 11.5% on $5,000. The Revolving Credit
Agreement expires in June 2006.

Term Loan A

Borrowings under this loan, in the original amount of $100,000, were used in
connection with the Recapitalization. Interest is payable quarterly at the same
rates and margins discussed above under the Revolving Credit Agreement, 7.5% and
9.81% at June 29, 2001 and June 30, 2000, respectively. Principal is currently
payable in quarterly installments of $1,250. The quarterly installments
subsequently increase with payments totaling $70,000 due in the final two years
in the period ending in June 2006.

Term Loan B

Borrowings under this loan in the original amount of $244,000 were used in
connection with the Recapitalization. Interest is payable quarterly at the same
rate discussed above, except the Applicable Base Rate is initially 2.5% and the
Applicable Euro-Dollar Margin is initially 3.5%. Rates of 7.25% and 10.31% were
charged at June 29, 2001 and June 30, 2000, respectively. In addition, the
Applicable Base Rate and Applicable Euro-Dollar Margin can be reduced by .5%
based on the maintenance of certain leverage ratios. Principal is currently
payable in quarterly installments of $610. The quarterly installments
subsequently increase with payments totaling $229,000 due in the final two years
in the period ending in June 2008.

                                                                            F-16


<PAGE>   18
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)


b) Senior Subordinated Notes Issued June 2000

   In June 2000, the Company issued $275,000 of 12 -3/4% ten year Senior
   Subordinated Notes less a discount of $3,768, the proceeds of which were used
   in connection with the Recapitalization. The discount is being amortized over
   the term of the notes on the interest method. Interest is payable
   semi-annually and the notes are unsecured obligations and rank subordinate to
   existing and future senior debt, including current term loans and revolving
   credit facilities. The notes are callable by the Company after June 15, 2005
   at a premium of 6.375%, which decreases to par after June 2008. In addition,
   prior to June 15, 2003, the Company may call up to 35% of the principal
   amount of the notes outstanding with proceeds from one or more public
   offerings of the Company's Capital Stock at a premium of 12.75%. Upon a
   change in control, the Company is required to make an offer to repurchase the
   notes at 101% of the principal amount. These notes also contain various
   covenants including a limitation on future indebtedness; limitation of
   payments, including prohibiting the payment of dividends; and limitations on
   mergers, consolidations and the sale of assets.

Principal payments on long-term debt over the next five years and thereafter are
as follows:

<TABLE>
<CAPTION>
-------------------------------------------
<S>                              <C>
2002                             $    8,072
2003                                 12,913
2004                                 12,913
2005                                 37,913
2006                                102,913
Thereafter                          506,817
===========================================
</TABLE>


                                                                            F-17


<PAGE>   19
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)


The Company believes the recorded value of long-term debt approximates fair
value based on current rates available to the Company for similar debt.


7.  INCOME TAXES

The provision for income taxes , excluding the income tax benefit associated
with the extraordinary item in 2000, is summarized as follows:


<TABLE>
<CAPTION>
Years ended                           JUNE 29, 2001     June 30, 2000   July 2, 1999
------------------------------------------------------------------------------------
<S>                                   <C>              <C>             <C>
Current:
    Federal                              $     --         $  7,763        $  3,604
    Foreign                                 3,984            3,554           2,900
    State and local                           114            1,016             500
------------------------------------------------------------------------------------
                                            4,098           12,333           7,004
------------------------------------------------------------------------------------
Deferred:
    Federal                                (9,945)           1,756           5,918
    Foreign                                  (370)             217             328
    State and local                          (852)             130             900
------------------------------------------------------------------------------------
                                          (11,167)           2,103           7,146
------------------------------------------------------------------------------------
Provision (benefit) for income taxes     $ (7,069)        $ 14,436        $ 14,150
====================================================================================
</TABLE>


The components of income (loss) before income taxes are as follows:

<TABLE>
<CAPTION>
Years ended   JUNE 29, 2001  June 30, 2000  July 2, 1999
--------------------------------------------------------
<S>           <C>            <C>            <C>
Domestic       $(38,116)       $ 20,150       $ 21,198
Foreign          12,053           8,692          7,949
--------------------------------------------------------
               $(26,063)       $ 28,842       $ 29,147
========================================================
</TABLE>


                                                                            F-18

<PAGE>   20
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)


The provision (benefit) for income taxes differs from the amounts computed by
applying the applicable Federal statutory rates due to the following:

<TABLE>
<CAPTION>
Years ended                                JUNE 29, 2001   June 30, 2000  July 2, 1999
--------------------------------------------------------------------------------------
<S>                                        <C>             <C>            <C>
Provision (benefit) for Federal income
    taxes at statutory rate                  $ (8,861)       $  9,806       $  9,910
State and local income taxes, net of
    Federal benefit                              (677)            756            330
Non-deductible goodwill amortization            2,785           2,310          3,765
Foreign tax rates in excess of Federal
    tax rate                                     (470)            785            465
Other, net                                        154             779           (320)
--------------------------------------------------------------------------------------
Provision (benefit) for income taxes         $ (7,069)       $ 14,436       $ 14,150
======================================================================================
</TABLE>


Significant components of the Company's deferred tax assets and liabilities are
as follows:

<TABLE>
<CAPTION>
                                                   JUNE 29, 2001   June 30, 2000
--------------------------------------------------------------------------------
<S>                                                <C>             <C>
Current deferred taxes:
    Allowance for doubtful accounts                   $    582        $    637
    Inventory                                            1,190             309
    Net operating loss carryforwards                     3,201              --
    Accrued expenses                                       180           4,051
--------------------------------------------------------------------------------
        Total current deferred tax assets             $  5,153        $  4,997
================================================================================
Long-term deferred taxes:
    Net operating loss carryforwards                  $ 39,593        $ 29,997
    Accrued pension and post-retirement                  1,457           1,434
    Accrued expenses                                       620           1,108
    Unrealized loss on derivative contracts              5,360              --
    Difference in book vs. tax basis of assets          (3,028)         (4,556)
    Accelerated tax vs. book depreciation              (19,292)        (16,885)
--------------------------------------------------------------------------------
        Total long-term net deferred tax assets         24,710          11,098
Valuation allowance                                     (5,700)         (5,700)
--------------------------------------------------------------------------------
Total long-term net deferred tax assets               $ 19,010        $  5,398
================================================================================
</TABLE>


                                                                            F-19

<PAGE>   21
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)


Net Operating Losses

The Company and its U.S. subsidiaries file a consolidated tax return. The
Company and its U.S. subsidiaries have net operating loss ("NOL") carryforwards
of approximately $106,578. These NOL's expire at various dates from 2009 through
2021. $86,166 of the NOL's are as a result of the acquisition of PureTec in 1997
(the "PureTec NOL's"). The PureTec NOL's are subject to IRC Section 382 change
of ownership annual limitation of approximately $5,900.

In addition to the domestic NOL balances, the Company has incurred losses
relating to a subsidiary, taxable in Northern Ireland. Through fiscal 2001
losses aggregated $2,500 which have no expiration date. The Company believes
that it is more likely than not that this deferred tax asset will not be
realized and has recorded a full valuation allowance on these amounts.

In addition, the net long-term domestic deferred tax assets have been subjected
to a valuation allowance since management believes it is more likely than not
that a portion of the (NOL) balance will not be realized as a result of the
various limitations on their usage, discussed above.

The domestic net operating losses are subject to matters discussed above and are
subject to change due to the restructuring at the subsidiary level, as well as
adjustment for the timing of inclusion of expenses and losses in the federal
returns as compared to amounts included for financial statement purposes.

8. EMPLOYEE BENEFIT PLANS

(a) Savings Plans

      i.    The Company had a defined contribution profit sharing plan for the
            benefit of all employees having completed one year of service with
            its Dolco Division ("Dolco"). The Company contributed 3% of
            compensation for each participant and a matching contribution of up
            to 1% when an employee contributed 3% compensation. Contributions
            totaled approximately $727 for the year ended July 2, 1999.


                                                                            F-20


<PAGE>   22
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)


      ii.   Additionally, the Company had a savings plan for all employees of
            two wholly-owned subsidiaries who are not covered under a collective
            bargaining agreement. The two subsidiaries are Plastic Specialties &
            Technology, Inc. ("PST") and Burlington Resins, Inc. ("Burlington").
            Under the savings plan, the Company matched each eligible employees'
            contribution up to 3% of the employees' earnings. Such contributions
            amounted to approximately $362 for the year ended July 2, 1999.

      iii.  The Company maintains a discretionary 401(k) plan covering all
            eligible employees, excluding those employed by Dolco and PureTec,
            with at least one year of service. Contributions to the plan were
            determined annually by the Board of Directors. There were no
            contributions for year ended July 2, 1999.

            Effective December 1, 1999 the Dolco, PST and Burlington plans were
            merged into this plan. The Company will determine matching
            contributions to the plan each year not to exceed 2% of the
            employee's eligible compensation. Contributions for the fiscal years
            ended June 29, 2001 and June 30, 2000 amounted to approximately $863
            and $996, respectively.


                                                                            F-21

<PAGE>   23
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)


(b) Pension Plans

      i.    The Company's Burlington subsidiary has a non-contributory defined
            benefit pension plan that covers substantially all hourly
            compensated employees covered by a collective bargaining agreement,
            who have completed one year of service. The funding policy of the
            Company is to make contributions to this plan based on actuarial
            computations of the minimum required contribution for the plan year.

            The components of net periodic pension costs are as follows:

<TABLE>
<CAPTION>
                                                      YEAR ENDED JUNE  29,               Year ended June 30,
                                                             2001                                 2000
------------------------------------------------------------------------------------------------------------
<S>                                                   <C>                                <C>
Service cost                                               $   105                             $   117
Interest cost on projected benefit
    obligation                                                 393                                 390
Expected actual return on plan assets                         (494)                               (492)
------------------------------------------------------------------------------------------------------------
Net pension cost                                           $     4                             $    15
============================================================================================================
CHANGE IN PROJECTED BENEFIT OBLIGATION
Projected benefit obligation,
    beginning of period                                    $ 5,334                             $ 5,292
Service cost                                                   105                                 117
Interest cost                                                  393                                 390
Actuarial (gain) loss                                           38                                (230)
Benefits paid                                                 (270)                               (235)
------------------------------------------------------------------------------------------------------------
Projected benefit obligation, end of
    period                                                 $ 5,600                             $ 5,334
============================================================================================================
CHANGE IN PLAN ASSETS
Plan assets at fair value, beginning
    of period                                              $ 5,550                             $ 5,431
Actual return on plan assets                                     3                                 158
Company contributions                                          157                                 196
Benefits paid                                                 (270)                               (235)
------------------------------------------------------------------------------------------------------------
Plan assets at fair value, end of
    period                                                 $ 5,440                             $ 5,550
============================================================================================================
</TABLE>


                                                                            F-22


<PAGE>   24
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)


            The funded status of the Plan and amounts recorded in the Company's
            balance sheets are as follows:

<TABLE>
<CAPTION>
                            JUNE 29, 2001  June 30, 2000
--------------------------------------------------------
<S>                         <C>            <C>
Funded status of the plan       $(160)       $ 216
Unrecognized net gain             676          147
--------------------------------------------------------
Prepaid pension cost            $ 516        $ 363
========================================================
</TABLE>

            The expected long-term rate of return on plan assets was 9% for the
            periods presented and the discount rate was 7 -1/2% at June 29, 2001
            and June 30, 2000.

      ii.   The Company maintains a non-contributory defined benefit pension
            plan that covers substantially all non-collective bargaining unit
            employees of PST and Burlington, who have completed one year of
            service and are not participants in any other pension plan. The
            funding policy of the Company is to make contributions to the plan
            based on actuarial computations of the minimum required contribution
            for the plan year. On September 8, 1998, the Company approved a plan
            to freeze this defined benefit pension plan effective September 30,
            1998, resulting in a curtailment gain of $576.

<TABLE>
<CAPTION>
                                       YEAR ENDED JUNE 29,    Year ended June 30,
                                              2001                  2000
-------------------------------------------------------------------------------
<S>                                    <C>                    <C>
Service cost                                  $  --                 $  --
Interest cost on projected benefit
    obligation                                  750                   704
Expected actual return on plan assets          (978)                 (986)
-------------------------------------------------------------------------------
Net pension cost                              $(228)                $(282)
===============================================================================
</TABLE>


                                                                            F-23


<PAGE>   25
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                             YEAR ENDED         Year ended
                                           JUNE 29, 2001      June 30, 2000
----------------------------------------------------------------------------
<S>                                        <C>               <C>
CHANGE IN PROJECTED BENEFIT OBLIGATION
Projected benefit obligation,
    beginning of period                        $  9,978          $  9,555
Interest cost                                       750               704
Actuarial (gain) loss                               204               146
Benefits paid                                      (431)             (427)
----------------------------------------------------------------------------
Projected benefit obligation, end of
    period                                     $ 10,501          $  9,978
============================================================================
CHANGE IN PLAN ASSETS
Plan assets at fair value, beginning
    of period                                  $ 11,055          $ 11,113
Actual return on plan assets                        (79)              369
Benefits paid                                      (431)             (427)
----------------------------------------------------------------------------
Plan assets at fair value, end of
    period                                     $ 10,545          $ 11,055
============================================================================
</TABLE>

The funded status of the Plan and amounts recorded in the Company's balance
sheets are as follows:

<TABLE>
<CAPTION>
                                 JUNE 29, 2001   June 30, 2000
--------------------------------------------------------------
<S>                              <C>             <C>
Funded status of the plan            $   44         $1,077
Unrecognized net gain (loss)          1,557            296
--------------------------------------------------------------
Prepaid pension cost                 $1,601         $1,373
==============================================================
</TABLE>


The expected long-term rate of return on plan assets was 9% for the periods
presented and the discount rate was 7-1/2% at June 29, 2001 and June 30, 2000.


                                                                            F-24

<PAGE>   26
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)


      iii.  The Company also has a defined benefit pension plan for the benefit
            of all employees having completed one year of service with Dolco.
            The Company's policy is to fund the minimum amounts required by
            applicable regulations. Dolco's Board of Directors approved a plan
            to freeze the pension plan on June 30, 1987, at which time benefits
            ceased to accrue. The Company has not been required to contribute to
            the plan since 1990.

(c) Post-retirement Benefits

      In addition to providing pension benefits, the Company also sponsors the
      Burlington Retiree Welfare Plan, which provides certain healthcare
      benefits for retired employees of the Burlington division who were
      employed on an hourly basis, covered under a collective bargaining
      agreement and retired prior to July 31, 1997. Those employees and their
      families became eligible for these benefits after the employee completed
      five years of service, if retiring at age fifty-five, or at age
      sixty-five, the normal retirement age. Post retirement healthcare benefits
      paid for the years ended June 29, 2001 and June 30, 2000 amounted to $182
      and $130, respectively.


                                                                           F-25

<PAGE>   27
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)


      Net periodic post-retirement benefit costs are as follows:

<TABLE>
<CAPTION>
                                                  YEAR ENDED         Year ended
                                                 JUNE 29, 2001      June 30, 2000
---------------------------------------------------------------------------------
<S>                                              <C>                <C>
Service cost                                        $    45          $    45
Interest cost                                           179              155
Transition obligation                                     4               --
---------------------------------------------------------------------------------
     Net post-retirement benefit cost               $   228          $   200
=================================================================================
CHANGE IN PROJECTED BENEFIT OBLIGATION
Projected benefit obligation, beginning of
    period                                          $ 2,457          $ 2,101
Service cost                                             45               45
Interest cost                                           179              155
Actuarial (gain) loss                                   348              286
Benefits paid                                          (182)            (130)
---------------------------------------------------------------------------------
Projected benefit obligation, end of period         $ 2,847          $ 2,457
=================================================================================
CHANGE IN PLAN ASSETS
Plan assets at fair value, beginning of
    period                                          $    --          $    --
Company contributions                                   182              130
Benefits paid                                          (182)            (130)
---------------------------------------------------------------------------------
Plan assets at fair value, end of period            $    --          $    --
=================================================================================
</TABLE>


                                                                          F-26

<PAGE>   28
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)


The funded status of the Plan and amounts recorded in the Company's balance
sheets are as follows:

<TABLE>
<CAPTION>
                                   YEAR ENDED       Year ended
                                  JUNE 29, 2001    June 30, 2000
----------------------------------------------------------------
<S>                               <C>              <C>
Funded status of the plan            $(2,847)         $(2,457)
Unrecognized gain (loss)                 630              286
----------------------------------------------------------------
Accrued post retirement cost         $(2,217)         $(2,171)
================================================================
</TABLE>

The accumulated post-retirement benefit obligation was deter-mined using a
7-1/2% discount rate for the periods presented. The healthcare cost trend rate
for medical benefits was assumed to be 6%, gradually declining until it reaches
a constant annual rate of 5% in 2002. The healthcare cost trend rate assumption
has a significant effect on the amounts reported. A 1% increase in healthcare
trend rate would increase the accumulated post-retirement benefit obligation by
$295 and $254 and increase the service and interest components by $27 and $26 at
June 29, 2001 and June 30, 2000, respectively.


9. RELATED PARTY TRANSACTIONS

The Company had a management consulting agreement with an affiliate of a
stockholder. The terms of the agreement required the Company to pay a fee of
approximately $30 per month for a period of ten years, with certain renewal
provisions. Consulting service fees were approximately $400 for the year ending
July 2, 1999. In June 2000 the Company agreed to terminate the management
consulting agreement at a cost of $3,651 which has been included in other
income/expense.


                                                                       F-27

<PAGE>   29
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)


10. STOCK OPTIONS

In January 1998, the Company adopted an incentive stock plan (the "Stock
Incentive Plan"). Under the Stock Incentive Plan, 41.72948 shares are available
for awards to employees of the Company. Options will be granted at fair market
value on the date of grant. During 2001, 2000, 1999 and 1998, options were
granted to purchase 4.02, 1.26, 7.32 and 28.37 shares of common stock at an
exercise price of $559, $507, $222 and $154 per share, respectively. The options
are subject to vesting provisions, as determined by the Board of Directors, at
date of grant and generally vest 100% five years from grant date and expire 10
years from date of grant. In connection with the Recapitalization 22.88 of the
1998 options were cancelled.

At June 29, 2001, no options were exercisable and no options have been exercised
or forfeited as of June 29, 2001.

The Company applies APB Opinion 25 and related interpretations in accounting for
these options. Accordingly, no compensation cost has been recognized. Had
compensation cost been determined based on the fair value at the grant dates for
these awards consistent with the method of SFAS Statement 123, the Company's
income (loss) before extraordinary items would have been reduced (increased) to
the pro forma amounts indicated below. The calculations were based on a risk
free interest rate of 4.0%, 5.7% and 4.75% for the 2001, 2000 and 1999 options,
respectively, expected volatility of zero, a dividend yield of zero and expected
lives of 8 years.

<TABLE>
<CAPTION>
Years ended                             JUNE 29, 2001     June 30, 2000     July 2, 1999
----------------------------------------------------------------------------------------
<S>                                     <C>               <C>              <C>
Income (loss) before extraordinary
  item:
As reported                                $(18,994)         $ 14,406         $ 14,997
========================================================================================
Pro forma                                  $(19,154)         $ 14,343         $ 14,868
========================================================================================
</TABLE>


                                                                            F-28

<PAGE>   30
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)


11. COMMITMENTS AND CONTINGENCIES

    Commitments

      (a)   The Company leases building space and certain equipment in
            approximately 20 locations throughout the United States, Canada and
            Europe. At June 29, 2001, the Company's future minimum lease
            payments are as follows:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
<S>                                                                        <C>
2002                                                                       $  4,423
2003                                                                          2,504
2004                                                                          1,796
2005                                                                          1,171
2006                                                                            782
Thereafter                                                                    5,900
-----------------------------------------------------------------------------------
                                                                            $16,576
===================================================================================
</TABLE>

            Rent expense, including escalation charges, amounted to
            approximately $4,308, $3,427 and $3,756 for the years ended June 29,
            2001, June 30, 2000 and July 2, 1999, respectively.

      (b)   The Company had employment contracts with two employees, which
            provided for combined minimum salaries of $1,800 and bonuses based
            on performance and was scheduled to expire in June 2002. Combined
            salaries and bonuses for the year ended July 2, 1999 under these
            contracts were $15,271. As part of the Recapitalization, the above
            employment agreements were amended and restated on June 21, 2000,
            providing minimum salaries of $7,500 with no mandatory bonuses. The
            salaries will increase 10% annually until the agreements expire on
            July 2, 2004. Salaries and bonuses for the year ended June 29, 2001
            were $7,500 and for the year ended June 30, 2000 were $8,733.

      Contingencies

      (a)   The Company is a party to various other legal proceedings arising in
            the normal conduct of business. Management believes that the final
            outcome of these proceedings will not have a material adverse effect
            on the Company's financial position.



                                                                            F-29

<PAGE>   31
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)


12. CONCENTRATIONS OF CREDIT RISKS

Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash deposits and trade
accounts receivable.

The Company provides credit to customers on an unsecured basis after evaluating
customer credit worthiness. Since the Company sells to a broad range of
customers, concentrations of credit risk are limited. The Company provides an
allowance for bad debts where there is a possibility for loss.

The Company maintains demand deposits at several major banks throughout the
United States. As part of its cash management process, the Company periodically
reviews the credit standing of these banks.


13. SUPPLEMENTAL CASH FLOW INFORMATION

      (a)   Cash Paid

<TABLE>
<CAPTION>
Years ended        JUNE 29, 2001    June 30, 2000     July 2, 1999
------------------------------------------------------------------
<S>                <C>              <C>              <C>
Interest             $ 74,568         $102,359         $ 37,376
==================================================================
Income taxes         $  1,661         $  7,540         $ 10,185
==================================================================
</TABLE>

      (b)   Non-Cash Financing and Investing Activities

            The Company purchased certain assets of RCR International, Inc.
            effective November 2000, for approximately $10,226 in cash. In
            conjunction with the acquisition, liabilities were assumed as
            follows:
<TABLE>
<CAPTION>

----------------------------------------------
<S>                                   <C>
Fair value of assets acquired         $  7,314
Goodwill                                 5,558
Purchase price                         (10,226)
----------------------------------------------
Liabilities assumed                   $  2,646
==============================================
</TABLE>


                                                                            F-30

<PAGE>   32
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)


            The Company purchased certain assets and assumed certain liabilities
            of High Voltage, effective April 1999, for approximately $26,169 in
            cash. In conjunction with the acquisition, liabilities were assumed
            as follows:


<TABLE>
<CAPTION>
----------------------------------------------
<S>                                   <C>
Fair value of assets acquired         $  7,513
Goodwill                                19,786
Cash paid                              (26,169)
----------------------------------------------
Liabilities assumed                   $  1,130
==============================================
</TABLE>

            The Company purchased certain assets and assumed certain liabilities
            of Tri-Seal, effective January 1999, for approximately $21,272 in
            cash. In conjunction with the acquisition, liabilities were assumed
            as follows:

<TABLE>
<CAPTION>
----------------------------------------------
<S>                                   <C>
Fair value of assets acquired         $ 11,400
Goodwill                                13,848
Cash paid                              (21,272)
----------------------------------------------
Liabilities assumed                   $  3,976
==============================================
</TABLE>

14. SEGMENT INFORMATION

The Company operates in four industry segments: healthcare packaging, products,
and materials; consumer packaging and products; food packaging; and specialty
resins and compounds. The healthcare packaging, products, and materials segment
principally produces pharmaceutical packaging, medical tubing and medical device
materials. The consumer packaging and products segment principally produces
precision tubing and gaskets, and garden and irrigation hose products. The food
packaging segment produces foamed polystyrene packaging products for the
poultry, meat and egg industries. The specialty resins and compounds segment
produces specialty PVC resins, recycled PET resins, and general purpose PVC
compounds. The healthcare packaging, products, and materials and consumer
packaging and products segments have operations in the United States, Europe and
Canada.


                                                                            F-31

<PAGE>   33
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)


<TABLE>
<CAPTION>
                       Healthcare
                       Packaging,       Consumer                           Specialty
                      Products and      Packaging           Food          Resins and
June 29, 2001           Materials      and Products       Packaging        Compounds           TOTALS
------------------------------------------------------------------------------------------------------
<S>                   <C>              <C>                <C>             <C>                 <C>
Revenues from
   external
   customers             $148,363         $202,038         $124,526         $ 50,910          $525,837
Interest expense           24,029           23,644           18,215           10,681            76,569
Depreciation and
   amortization            10,962           13,501            8,385            4,544            37,392
Segment income
   (loss) from
   operations              21,227           36,914           22,465           (2,986)           77,620
Segment assets            169,410          270,731           75,266           88,894           604,301
Expenditures for
   segment fixed
   assets                   2,710            8,047            3,245            3,114            17,116
======================================================================================================
</TABLE>


<TABLE>
<CAPTION>
                      Healthcare
                       Packaging,        Consumer                          Specialty
                      Products and       Packaging           Food         Resins and
June 30, 2000          Materials        and Products      Packaging        Compounds       TOTALS
--------------------------------------------------------------------------------------------------------
<S>                   <C>              <C>                <C>             <C>              <C>
Revenues from
   external
   customers            $159,116         $195,936         $110,011         $ 59,754         $524,817
Interest expense          11,217           12,537            9,001            5,692           38,447
Depreciation and
   amortization           10,876           12,316            6,866            4,480           34,538
Segment income from
   operations             26,202           35,491           22,842              161           84,696
Segment assets           171,764          220,576           77,642           83,900          553,882
Expenditures for
   segment fixed
   assets                  7,224            4,012            3,247            1,775           16,258
========================================================================================================
</TABLE>


                                                                            F-32

<PAGE>   34
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)


<TABLE>
<CAPTION>
                            Healthcare
                            Packaging,      Consumer                           Specialty
                           Products and    Packaging             Food          Resins and
July 2, 1999                Materials     and Products        Packaging        Compounds        TOTALS
--------------------------------------------------------------------------------------------------------
<S>                        <C>            <C>                 <C>              <C>              <C>
Revenues from
   external
   customers                $142,309         $191,584         $103,858         $ 69,563         $507,314
Interest expense              11,818           13,254            8,014            5,891           38,977
Depreciation and
   amortization                7,327           13,072            9,640            5,086           35,125
Segment income from
   operations                 25,027           37,848           18,777            6,810           88,462
Segment assets               173,704          216,067           73,351           83,601          546,723
Expenditures for
   segment fixed
   assets                      3,761            3,540            4,567            1,082           12,950
========================================================================================================
</TABLE>


                                                                            F-33

<PAGE>   35
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                        JUNE 29, 2001    June 30, 2000       July 2, 1999
-----------------------------------------------------------------------------------------
<S>                                     <C>              <C>                 <C>
PROFIT OR LOSS
Total operating profit for
   reportable segments before
   income taxes                         $  77,620          $  84,696          $  88,462
Corporate and eliminations                (12,618)           (12,702)           (20,052)
-----------------------------------------------------------------------------------------
                                        $  65,002          $  71,994          $  68,410
=========================================================================================
ASSETS
Total assets from reportable
   segments                             $ 604,301          $ 553,882          $ 546,723
Other unallocated amounts                  17,193             20,907             12,713
-----------------------------------------------------------------------------------------
       Consolidated total               $ 621,494          $ 574,789          $ 559,436
=========================================================================================
DEPRECIATION AND AMORTIZATION
Segment totals                          $  37,392          $  34,538          $  35,125
Corporate                                     278                210                218
-----------------------------------------------------------------------------------------
       Consolidated total               $  37,670          $  34,748          $  35,343
=========================================================================================
REVENUES
-----------------------------------------------------------------------------------------
GEOGRAPHIC INFORMATION
United States                           $ 466,804          $ 477,489          $ 463,680
Canada                                     14,834              5,975              4,996
Europe                                     44,199             41,353             38,638
-----------------------------------------------------------------------------------------
    Total                               $ 525,837          $ 524,817          $ 507,314
=========================================================================================
LONG-LIVED ASSETS
-----------------------------------------------------------------------------------------
GEOGRAPHIC INFORMATION
United States                           $ 307,328          $ 323,691          $ 339,409
Canada                                     10,035              2,580              2,549
Europe                                     32,273             26,670             25,779
-----------------------------------------------------------------------------------------
    Total                               $ 349,636          $ 352,941          $ 367,737
=========================================================================================
</TABLE>


                                                                            F-34


<PAGE>   36
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)


Income from operations is total net sales less cost of goods sold and operating
expenses of each segment before deductions for general corporate expenses not
directly related to an individual segment and interest. Identifiable assets by
industry are those assets that are used in the Company's operation in each
industry segment, including assigned value of goodwill. Corporate identifiable
assets consist primarily of cash, prepaid expenses, deferred income taxes and
fixed assets.

No customer had sales of 10% or more of total sales during the year ended June
29, 2001. One customer represented 11% of accounts receivable at June 29, 2001.

For the year ended June 30, 2000, one customer represented 10% of sales and
another customer represented 11% of accounts receivable at June 30, 2000.

For the year ended July 2, 1999, one customer represented 11% of sales and two
customers each represented 10% of accounts receivable at July 2, 1999.


                                                                            F-35

<PAGE>   37
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)

15.   SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

Tekni-Plex, Inc. issued 12 -3/4 % Senior Subordinated Notes in June 2000. These
notes are guaranteed by all domestic subsidiaries of Tekni-Plex. The following
condensed consolidating financial statements present separate information for
Tekni-Plex (the "Issuer") and its domestic subsidiaries (the "Guarantors") and
the foreign subsidiaries (the "Non-Guarantors").

Condensed Consolidating Statement of Operations - For the year ended June 29,
2001

<TABLE>
<CAPTION>
                                                              Non-
                              Issuer        Guarantors     Guarantors         TOTAL
-------------------------------------------------------------------------------------
<S>                          <C>            <C>            <C>              <C>
Sales, net                   $ 161,854       $ 304,950      $  59,033       $ 525,837
Cost of sales                  121,521         236,723         41,592         399,836
-------------------------------------------------------------------------------------
Gross profit                    40,333          68,227         17,441         126,001
Selling, general and
   administrative               38,295          17,320          5,384          60,999
-------------------------------------------------------------------------------------
Income from operations           2,038          50,907         12,057          65,002
Interest expense, net           76,958            (318)           (71)         76,569
Unrealized loss on
   derivative contract          13,891               -              -          13,891
Other expense (income)          (1,119)           1,063           661             605
-------------------------------------------------------------------------------------
Income (loss) before
   provision for income
   taxes                       (87,692)         50,162         11,467         (26,063)
Provision (benefit) for
   income taxes                (16,574)          6,626          2,879          (7,069)
-------------------------------------------------------------------------------------
Net income (loss)            $ (71,118)      $  43,536      $   8,588       $ (18,994)
======================================================================================
</TABLE>


                                                                            F-36

<PAGE>   38
                                                               TEKNI-PLEX, INC.



                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)

Condensed Consolidating Balance Sheet - at June 29, 2001

<TABLE>
<CAPTION>
                                                          Non-
                          Issuer        Guarantors     Guarantors    Eliminations         TOTAL
-------------------------------------------------------------------------------------------------
<S>                      <C>            <C>            <C>           <C>                <C>
CURRENT ASSETS           $  80,305       $ 146,839      $  39,823       $       -       $ 266,967
Property, plant and
  equipment, net            38,788          79,517         18,703               -         137,008
Intangible assets           13,208         153,960         12,448               -         179,616
Investment in
  subsidiaries             457,641               -              -        (457,641)              -
Deferred financing
  costs, net                16,607               -              -               -          16,607
Deferred taxes              19,022             (12)             -               -          19,010
Other long-term
  assets                    28,577         261,520         12,510        (300,321)          2,286
-------------------------------------------------------------------------------------------------
     TOTAL ASSETS        $ 654,148       $ 641,824      $  83,484       $(757,962)      $ 621,494
=================================================================================================
CURRENT LIABILITIES      $  22,370       $  26,923      $  18,545       $       -       $  67,838
Long-term debt             665,729               -          4,349               -         670,078
Other long-term
   liabilities              92,460         190,399         35,737        (300,321)         18,275
-------------------------------------------------------------------------------------------------
     TOTAL
        LIABILITIES        780,559         217,322         58,631        (300,321)        756,191
-------------------------------------------------------------------------------------------------
Additional paid-in
   capital                 120,156         296,784         15,656        (312,420)        120,176
Retained earnings
   (deficit)               (26,105)        127,685         16,269        (145,221)        (27,372)
Cumulative
   currency
   translation
   adjustment                    -              33         (7,072)              -          (7,039)
Treasury stock            (220,462)              -              -               -        (220,462)
-------------------------------------------------------------------------------------------------
     TOTAL EQUITY         (126,411)        424,502         24,853        (457,523)       (134,697)
-------------------------------------------------------------------------------------------------
     TOTAL
        LIABILITIES
        AND EQUITY       $ 654,148       $ 641,824      $  83,484       $(757,844)      $ 621,494
=================================================================================================
</TABLE>



Condensed Consolidating Statement of Cash Flows-For the year ended June 29, 2001

<TABLE>
<CAPTION>
                                                 Issuer         Guarantors     Non-Guarantors          TOTAL
-------------------------------------------------------------------------------------------------------------
<S>                                               <C>             <C>            <C>                <C>
Net cash provided by operating
   activities:                                    $(47,908)        $ 36,694         $  7,948         $ (3,266)
-------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
    Acquisitions, net of cash acquired                  --           (9,233)              --           (9,233)
    Capital expenditures                            (2,710)         (11,208)          (3,198)         (17,116)
    Additions to intangibles                          (322)            (106)              --             (428)
    Cash proceeds from sale of assets                   --               --               --               --
-------------------------------------------------------------------------------------------------------------
Net cash used in investing activities               (3,032)         (20,547)          (3,198)         (26,777)
-------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
    Net borrowings (repayment) under
        line of credit                              35,000               --               --           35,000
    Repayments of long-term debt                    (7,400)              --           (1,420)          (8,820)
    Proceeds from capital contribution              36,000               --               --           36,000
     Change in intercompany accounts                14,592          (14,592)              --               --
-------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing
   activities                                       78,192          (14,592)          (1,420)          62,180
-------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash                 --               --              (17)             (17)
-------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash                     27,252            1,555            3,313           32,120
Cash, beginning of period                            5,638            3,766            3,121           12,525
-------------------------------------------------------------------------------------------------------------
CASH, END OF PERIOD                               $ 32,890         $  5,321         $  6,434         $ 44,645
=============================================================================================================
</TABLE>


                                                                           F-37
<PAGE>   39
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)

Condensed Consolidating Statement of Operations - For the year ended June 30,
2000

<TABLE>
<CAPTION>
                                                                Non-
                               Issuer       Guarantors      Guarantors        TOTAL
-------------------------------------------------------------------------------------
<S>                          <C>            <C>             <C>             <C>
Sales, net                   $ 151,587       $ 325,902       $  47,328      $ 524,817
Cost of sales                  110,272         251,512          32,696        394,480
-------------------------------------------------------------------------------------
Gross profit                    41,315          74,390          14,632        130,337
Selling, general and
   administrative               37,991          16,042           4,310         58,343
-------------------------------------------------------------------------------------
Income from operations           3,324          58,348          10,322         71,994
Interest expense, net           38,717            (280)             10         38,447
Other expense (income)           4,272          (1,187)          1,620          4,705
-------------------------------------------------------------------------------------
Income (loss) before
   provision for income
   taxes and
   extraordinary item          (39,665)         59,815           8,692         28,842
Provision (benefit) for
   income taxes                (22,359)         33,211           3,584         14,436
-------------------------------------------------------------------------------------
Income (loss) before
   extraordinary item          (17,306)         26,604           5,108         14,406
Extraordinary item             (35,374)              -               -        (35,374)
-------------------------------------------------------------------------------------
Net income (loss)            $ (52,680)      $  26,604       $   5,108      $ (20,968)
=====================================================================================
</TABLE>


                                                                            F-38


<PAGE>   40
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)

Condensed Consolidating Balance Sheet - At June 30, 2000

<TABLE>
<CAPTION>
                                                          Non-
                          Issuer        Guarantors     Guarantors    Eliminations         TOTAL
-------------------------------------------------------------------------------------------------
<S>                      <C>            <C>            <C>           <C>                <C>
CURRENT ASSETS           $  61,275       $ 134,456      $  26,117       $       -       $ 221,848
Property, plant and
  equipment, net            41,852          78,957         15,117               -         135,926
Intangible assets           31,519         150,476          8,497               -         190,492
Investment in
  subsidiaries             398,879               -              -        (398,879)              -
Deferred financing
  costs, net                18,897               -              -               -          18,897
Deferred taxes               5,398               -              -               -           5,398
Other long-term
  assets                    50,471         240,823         12,636        (301,702)          2,228
-------------------------------------------------------------------------------------------------
     TOTAL ASSETS        $ 608,291       $ 604,712      $  62,367       $(700,581)      $ 574,789
=================================================================================================
CURRENT LIABILITIES      $  37,296       $  24,390      $  14,283       $       -       $  75,969
Long-term debt             637,793               -          5,399               -         643,192
Other long-term
   liabilities              72,660         211,846         20,682        (300,410)          4,778
-------------------------------------------------------------------------------------------------
     TOTAL
        LIABILITIES        747,749         236,236         40,364        (300,410)        723,939
-------------------------------------------------------------------------------------------------
Additional paid-in
   capital                  85,355         296,880         15,641        (313,700)         84,176
Retained earnings
   (deficit)                (4,351)         71,596         10,848         (86,471)         (8,378)
Cumulative
   currency
   translation
   adjustment                    -               -         (4,486)              -          (4,486)
Treasury stock            (220,462)              -              -               -        (220,462)
-------------------------------------------------------------------------------------------------
     TOTAL EQUITY         (139,458)        368,476         22,003        (400,171)       (149,150)
-------------------------------------------------------------------------------------------------
     TOTAL
        LIABILITIES
        AND EQUITY       $ 608,291       $ 604,712      $  62,367       $(700,581)      $ 574,789
=================================================================================================
</TABLE>


Condensed Consolidating Statement of Cash Flows-For the year ended June 30, 2000

<TABLE>
<CAPTION>
                                                 Issuer          Guarantors      Non-Guarantors         Total
---------------------------------------------------------------------------------------------------------------
<S>                                             <C>              <C>             <C>                  <C>
Net cash provided by operating
   activities:                                  $ (25,883)        $  29,834         $   5,534         $   9,485
---------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
    Acquisitions, net of cash acquired                 --                --                --                --
    Capital expenditures                           (7,224)           (6,747)           (2,287)          (16,258)
    Additions to intangibles                         (805)               --                --              (805)
    Cash proceeds from sale of assets                  --                --               158               158
---------------------------------------------------------------------------------------------------------------
Net cash used in investing activities              (8,029)           (6,747)           (2,129)          (16,905)
---------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
    Net borrowings (repayments) under
      line of credit                               (2,030)               --                --            (2,030)
    Proceeds from long-term debt                  645,232                --                --           645,232
    Repayments of long-term debt                 (446,661)               --            (1,970)         (448,631)
    Proceeds from capital contribution             43,101                --                --            43,101
    Debt financing costs                          (18,897)               --                --           (18,897)
    Purchase of treasury stock                   (220,462)               --                --          (220,462)
    Change in intercompany accounts                34,880           (26,508)           (8,372)               --
---------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing
   activities                                      35,163           (26,508)          (10,342)           (1,687)
---------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash                --                --              (485)             (485)
---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash                     1,251            (3,421)           (7,422)           (9,592)
Cash, beginning of period                           4,387             7,187            10,543            22,117
---------------------------------------------------------------------------------------------------------------
Cash, end of period                             $   5,638         $   3,766         $   3,121         $  12,525
===============================================================================================================
</TABLE>

                                                                            F-39


<PAGE>   41
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)

Condensed Consolidating Statement of Operations - For the year ended July 2,
1999

<TABLE>
<CAPTION>
                                                                Non-
                              Issuer        Guarantors      Guarantors        TOTAL
-------------------------------------------------------------------------------------
<S>                          <C>            <C>             <C>             <C>
Sales, net                   $ 155,141       $ 308,539       $  43,634      $ 507,314
Cost of sales                  114,634         231,928          29,808        376,370
-------------------------------------------------------------------------------------
Gross profit                    40,507          76,611          13,826        130,944
Selling, general and
   administrative               44,815          13,243           4,476         62,534
-------------------------------------------------------------------------------------
Income (loss) from
   operations                   (4,308)         63,368           9,350         68,410
Interest expense
   (income), net                39,487            (739)            229         38,977
Other expense (income)             294          (1,180)          1,172            286
-------------------------------------------------------------------------------------
Income (loss) before
   provision for income
   taxes                       (44,089)         65,287           7,949         29,147
Provision (benefit) for
   income taxes                (23,682)         34,604           3,228         14,150
-------------------------------------------------------------------------------------
Net income (loss)            $ (20,407)      $  30,683       $   4,721      $  14,997
=====================================================================================
</TABLE>


                                                                            F-40

<PAGE>   42
                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)

Condensed Consolidating Balance Sheet - at July 2, 1999:

<TABLE>
<CAPTION>
                                                           Non-
                           Issuer      Guarantors      Guarantors    Eliminations         TOTAL
-------------------------------------------------------------------------------------------------
<S>                      <C>           <C>             <C>           <C>                <C>
CURRENT ASSETS           $  45,967      $ 117,689       $  28,050       $       -       $ 191,706
Property, plant and
  equipment, net            44,507         77,132          15,314               -         136,953
Intangible assets           50,965        153,747           1,428               -         206,140
Investment in
  subsidiaries             367,167              -               -        (367,167)              -
Deferred financing
  costs, net                19,257           (128)            229               -          19,358
Deferred taxes               1,346              -               -               -           1,346
Other long-term
  assets                   106,330         18,938          11,350        (132,685)          3,933
-------------------------------------------------------------------------------------------------
     TOTAL ASSETS        $ 635,539      $ 367,378       $  56,371       $(499,852)      $ 559,436
=================================================================================================
CURRENT LIABILITIES      $  52,551      $  26,868       $  10,842       $       -       $  90,261
Long-term debt             404,288              -           6,358               -         410,646
Other long-term
   liabilities             119,759              -          19,158        (132,685)          6,232
-------------------------------------------------------------------------------------------------
     TOTAL
        LIABILITIES        576,598         26,868          36,358        (132,685)        507,139
-------------------------------------------------------------------------------------------------
Additional paid-in
   capital                  41,095        296,747          15,641        (312,408)         41,075
Retained earnings
   (deficit)                17,846         43,763           5,740         (54,759)         12,590
Cumulative
   currency
   translation
   adjustment                    -              -          (1,368)              -          (1,368)
-------------------------------------------------------------------------------------------------
     TOTAL EQUITY           58,941        340,510          20,013        (367,167)         52,297
-------------------------------------------------------------------------------------------------
     TOTAL
        LIABILITIES
        AND EQUITY       $ 635,539      $ 367,378       $  56,371       $(499,852)      $ 559,436
=================================================================================================
</TABLE>




Condensed Consolidating Statement of Cash Flows-For the year ended July 2, 1999

<TABLE>
<CAPTION>
                                                 Issuer         Guarantors     Non-Guarantors       Total
-----------------------------------------------------------------------------------------------------------
<S>                                             <C>             <C>            <C>                 <C>
Net cash provided by operating
   activities:                                  $(23,064)        $ 52,896         $  8,962         $ 38,794
-----------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
    Acquisitions, net of cash acquired                --          (45,139)              --          (45,139)
    Capital expenditures                          (3,761)          (8,673)            (516)         (12,950)
    Additions to intangibles                          --               --               --               --
    Cash proceeds from sale of assets                 --               --               --               --
-----------------------------------------------------------------------------------------------------------
Net cash used in investing activities             (3,761)         (53,812)            (516)         (58,089)
-----------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
    Net borrowings (repayments) under
      line of credit                              22,234               --               --           22,234
    Repayments of long-term debt                  (5,816)              --           (4,361)         (10,177)
    Change in intercompany accounts                4,592           (4,592)              --               --
-----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing
   activities                                     21,010           (4,592)          (4,361)          12,057
-----------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash               --               --               (8)              (8)
-----------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash                   (5,815)          (5,508)           4,077           (7,246)
Cash, beginning of period                         10,202           12,695            6,466           29,363
-----------------------------------------------------------------------------------------------------------
Cash, end of period                             $  4,387         $  7,187         $ 10,543         $ 22,117
===========================================================================================================
</TABLE>



                                                                            F-41
<PAGE>   43

                                                                TEKNI-PLEX, INC.



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)

16.   QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
                       First          Second*          Third*         Fourth
2001                  Quarter         Quarter         Quarter         Quarter
------------------------------------------------------------------------------
<S>                  <C>             <C>             <C>             <C>
Net sales            $ 111,907       $ 105,873       $ 140,681       $ 167,376
Gross profit            22,422          24,123          36,785          42,671
Income from
  operations             7,311           9,755          21,127          26,809
Net income
  (loss)                (5,739)        (12,136)         (1,473)            354

2000
------------------------------------------------------------------------------
Net sales            $ 114,424       $ 106,879       $ 143,370       $ 160,144
Gross profit            29,005          27,498          37,994          35,840
Income from
  operations            14,863          12,652          23,988          20,491
Extraordinary
  item - net of
  taxes                      -               -               -         (35,374)
Net income
  (loss)                 2,556           1,197           7,020         (31,741)

1999
------------------------------------------------------------------------------
Net sales            $ 112,589       $  98,524       $ 134,274       $ 161,927
Gross profit            27,091          24,878          37,680          41,295
Income from
  operations            13,131          10,320          21,273          23,686
Net income               1,543             505           5,849           7,100
==============================================================================
</TABLE>


*The second and third quarters reflect adjustments of $(7,229) and $(1,919),
respectively to net income (loss) from previously issued financial statements
related to unrealized losses on derivative instruments. The related 10-Q's are
in the process of being amended.

Fluctuations in net sales are due primarily to seasonality in a number of
product lines, particularly garden hose and irrigation hose products.

The extraordinary loss in the fourth quarter of fiscal 2000 was the result of
the Recapitalization (Note 2).


                                                                            F-42


<PAGE>   44
INDEPENDENT AUDITORS' REPORT
    ON SUPPLEMENTAL SCHEDULE


Board of Directors
Tekni-Plex, Inc.
Somerville, New Jersey

The audits referred to in our report dated September 10, 2001 relating to the
consolidated financial statements of Tekni-Plex, Inc. and its wholly owned
subsidiaries (the "Company"), included the audits of the financial statement
schedule for the years ended June 29, 2001, June 30, 2000 and July 2, 1999
listed in the accompanying index. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statement schedule based upon our audits.

In our opinion, such financial statement schedule presents fairly, in all
material respects, the information set forth therein.


BDO Seidman, LLP
Woodbridge, New Jersey

September 20, 2001


                                                                            F-43

<PAGE>   45

                                                                TEKNI-PLEX, INC.



                                  VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                                    (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>

                              Balance at      Charged to      Charged to                  BALANCE AT
                             Beginning of     Costs and         Other       Deductions       END
                                Period       Expenses (1)      Accounts         (2)       OF PERIOD
====================================================================================================
<S>                          <C>             <C>              <C>           <C>           <C>
 YEAR ENDED JULY 2, 1999
     Accounts receivable
       allowance                   $1,326          $  370        $  68(3)     $  102          $1,662
====================================================================================================
 YEAR ENDED JUNE 30, 2000
     Accounts receivable
       allowance                   $1,662          $  310        $  -         $  330          $1,642
====================================================================================================
 YEAR ENDED JUNE 29, 2001
     Accounts receivable
       allowance                   $1,642          $  250        $  -         $  392          $1,500
====================================================================================================
</TABLE>


(1) To increase accounts receivable allowance.

(2) Uncollectible accounts written off, net of recoveries.

(3) Balances related to acquisitions.


                                                                            F-44