<PAGE>

================================================================================

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

                             ______________________

                                    FORM 10-K

                                   (MARK ONE)

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934 FOR THE FISCAL YEAR ENDED JULY 2, 2004

[ ]   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)

       DELAWARE                                          22-3286312
(State of Incorporation)                              (I.R.S. Employer
                                                     Identification No.)

        260 NORTH DENTON TAP ROAD                           75019
              COPPELL, TEXAS                              (Zip Code)
(Address of principal executive offices)

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

           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.

================================================================================
<PAGE>

ITEM 1. BUSINESS

INTRODUCTION

      We were founded as a Delaware corporation in 1967 to acquire the General
Felt Products division of Standard Packaging Corporation. At that time, we were
located in Brooklyn, NY, where we produced laminated closure (cap) liners
primarily for the pharmaceutical and food industries. Over the years, we have
built a reputation for solving difficult packaging problems and providing
customers with high quality, advanced packaging materials. In 1970, we built an
additional manufacturing facility in Somerville, New Jersey, diversifying into
the business of producing polystyrene foam trays for the poultry processing
industry.

      In March 1994, Tekni-Plex was acquired by Dr. F. Patrick Smith and other
investors. Dr. Smith was elected Chief Executive Officer. In April 1994, Mr.
Kenneth W.R. Baker joined our company and was appointed Chief Operating Officer.
At that time, the principal product lines consisted of clear, high-barrier
laminations for pharmaceutical blister packaging (which we refer to as clear
blister packaging); closure liners, primarily for pharmaceutical end-uses; and
foam processor trays primarily for the poultry industry.

      In December 1995, Tekni-Plex acquired the Flemington, NJ, plant and
business of Hargro Flexible Packaging Corporation. The Flemington plant utilized
lamination and coating technology to produce packaging materials primarily for
pharmaceutical products such as transdermal patches, sutures, iodine and alcohol
swabs, aspirin and other physician samples. We relocated the Brooklyn equipment
and business into the Flemington facility during 1996. The synergistic result of
having complementary technologies in one location created a combined operation
with considerably higher efficiencies and lower costs than the sum of the
stand-alone operations.

      In February 1996, we expanded our food packaging business by completing
our acquisition of Dolco Packaging Corp., a publicly-traded $81 million foam
products company that was nearly twice the size of Tekni-Plex. Dolco had been in
the business of producing foam packaging products since the 1960s and had
attained the leading share of foam egg carton sales in the United States. The
Dolco acquisition also solidified our position as a leading supplier of foam
processor trays. In August 1997, Dolco, which had been a wholly owned subsidiary
of Tekni-Plex, was merged into Tekni-Plex.

      In July 1997, we acquired the business and operating facility of PurePlast
Inc. of Cambridge, Ontario, Canada. PurePlast produced calendered polyvinyl
chloride (vinyl) sheet primarily for food and electronics packaging
applications. Following the acquisition, we diversified the end markets served
by this location by developing proprietary formulations of vinyl sheet for
vertical integration into our clear blister packaging business and for sale
directly to our global pharmaceutical customers.

      In March 1998, Tekni-Plex acquired PureTec Corporation, a publicly-traded
company with annual sales of $315 million. PureTec was a leading manufacturer of
plastic packaging, products, and materials primarily for the healthcare and
consumer markets. PureTec enjoyed leading market positions in its core products,
including garden and irrigation hose, precision tubing and gaskets primarily for
the aerosol packaging industry, vinyl medical tubing, and vinyl compounds for
the production of medical devices. PureTec is a wholly-owned subsidiary of
Tekni-Plex.

      In January 1999, we acquired substantially all the assets of Tri-Seal
International, Inc., a leader in sophisticated extruded and co-extruded
capliners and seals. The Tri-Seal operations have been integrated with and into
our closure liner business.

      In April 1999, we acquired substantially all the assets of Natvar, a
producer of disposable medical tubing and electrical sheathing. As with
Tri-Seal, the Natvar acquisition was intended to strengthen our existing core
business and expand product offerings. The Natvar operation has been integrated
into our medical tubing and industrial extrusions businesses.

      In June 2000, we completed a recapitalization of Tekni-Plex. As part of
the recapitalization, existing investors other than management sold most of
their interests, and a group of new investors contributed an aggregate of $167
million in new equity and agreed to contribute up to $103 million in additional
equity over the next five years. All members of management maintained 100% of
their interests in the Company. Also, Tekni-Plex entered into a new credit
agreement, issued $275 million in new senior subordinated notes, and repaid the
debt that existed prior to the recapitalization.

      In October 2000, we acquired substantially all the assets of the Super
Plastics division of RCR International Inc. Super Plastics is primarily a
manufacturer of garden hose and has a manufacturing facility in Mississauga,
Ontario, Canada. The Super Plastics operations have been integrated with and
into our garden hose business.

                                       2
<PAGE>

      In October 2001, we acquired substantially all of the assets of the garden
hose business of Mark IV Industries, Inc. which operates under the name Swan
Hose. Swan, which has one manufacturing facility located in Bucyrus, Ohio,
enhanced Tekni-Plex's geographic coverage of the North American garden hose
market. The Swan operations have been integrated with and into our garden hose
business.

      In July 2002, we acquired substantially all of the assets of Elm Packaging
Company. Elm produces polystyrene foam plates, bowls, and meat and bakery trays.
The Elm acquisition significantly increases our capacity to produce foamed
polystyrene products primarily for customers in the food packaging and
foodservice markets.

      In July 2004, we acquired the egg carton business of Genpak and we have
integrated this business into our food packaging operations.

DESCRIPTION OF SEGMENTS

      See footnote 14 of our July 2, 2004 audited financial statements.

DESCRIPTION OF BUSINESS

      We are a global, diversified manufacturer of packaging, packaging products
and materials as well as tubing products. We primarily serve the food,
healthcare and consumer markets. We have built leadership positions in our core
markets, and focus on vertically integrated production of highly specialized
products. We have operations in the United States, Europe and Canada. We believe
that our end market and product line diversity has the effect of reducing
overall risk related to any single product or customer. Our operations are
aligned under two business segments: Packaging and Tubing Products. Products
that do not fit in either of these two segments, including recycled PET, vinyl
compounds and specialty resins have been reflected in Other. Representative
product lines in each of our business segments are listed below:

                                BUSINESS SEGMENT

<TABLE>
<CAPTION>
               PACKAGING                                         TUBING PRODUCTS
               ---------                                         ---------------
<S>                                                    <C>
-   Foam egg cartons                                   -   Garden and irrigation hose
-   Pharmaceutical blister films                       -   Medical tubing
-   Poultry and meat processor trays                   -   Pool and vacuum hose
-   Closure Liners
-   Aerosol and pump packaging components
-   Foam plates
</TABLE>

COMPETITIVE STRENGTHS

      We believe that our competitive strengths include:

      -     Strong customer relationships. We have long-standing relationships
            with many of our customers. We attribute our long-term customer
            relationships to our ability to consistently manufacture high
            quality products and provide a superior level of customer service.
            We routinely win customer awards for our superior products and
            customer service and have recently been recognized for supplier
            excellence by 3M Pharmaceuticals, Pfizer, Eli Lilly, Boston
            Scientific, and Kraft Foods, among others.

      -     Strong market positions in core businesses. We have a strong market
            presence in our core product lines. The following table shows what
            we believe to be our market position in the U.S. in our primary
            product lines:

                             PRODUCT MARKET POSITION

<TABLE>
<S>                                                                               <C>
Vinyl medical device materials..................................................  1
Vinyl medical tubing............................................................  1
Laminated, clear, high barrier pharmaceutical blister packaging.................  1
Multi-layered co-extruded and laminated closure liners..........................  1
Garden and irrigation hose......................................................  1
Precision tubing and gaskets for aerosol packaging..............................  1
Egg cartons.....................................................................  1
Foam processor trays............................................................  2
</TABLE>

                                       3
<PAGE>


      -     Experienced management team. Our management team has been successful
            in selecting and integrating strategic acquisitions as well as
            improving underlying business fundamentals. After significantly
            improving the business of Tekni-Plex following our 1994 acquisition,
            management successfully integrated both the Flemington and Dolco
            operations during 1996, the latter being a public company then
            nearly twice our size. During the same period, our Brooklyn
            operation was successfully merged into our Flemington plant. In
            1997, we acquired and integrated the PurePlast operations. In 1998,
            we acquired PureTec, a public company then more than twice our size.
            In 1999, we acquired and integrated the assets and business of
            Tri-Seal and Natvar. In 2000, we acquired and integrated all of the
            assets of the Super Plastics division of RCR International, Inc. In
            2001, we acquired and integrated the Swan Hose business of Mark IV
            Industries, Inc. In 2002, we acquired the assets and business of Elm
            Packaging. Management has substantially improved the operating
            margins of each of these acquisitions. Members of our management
            team have integrated acquisitions, effected turnarounds, provided
            strategic direction and leadership, increased sales and market
            share, improved manufacturing efficiencies and productivity, and
            developed new technologies to enhance the competitive strengths of
            the companies they have managed.

      -     Cost efficient producer. We continually focus on improving
            underlying operations and reducing costs. Our acquisitions since
            1995 have provided significant opportunities to realize cost savings
            and synergies in the combined businesses through the sharing of
            complementary technologies and manufacturing techniques, as well as
            economies of scale, including the purchase of raw materials.

      -     Producer of high quality, technically sophisticated products. We
            believe, based upon our knowledge and experience in the industry, we
            have a long-standing reputation as a manufacturer of high quality,
            high performance products, materials and primary packaging (where
            the packaging material comes into direct contact with the end
            product). Our emphasis on quality is evidenced by our product lines
            which address the more technically sophisticated areas of their
            respective markets.

      -     Strong equity sponsorship. We have obtained a strong equity
            commitment from co-investors in conjunction with the
            recapitalization in June 2000. New investors agreed to $269.6
            million in aggregate equity commitments to Tekni-Plex Partners, of
            which $167.0 million was contributed to consummate the
            recapitalization in June 2000. The remaining $102.6 million was
            contributed in conjunction with our acquisitions of Super Plastics,
            Mark IV's Swan Division, and Elm Packaging. In fiscal 2004 we raised
            an additional $22.5 million of new equity from a combination of new
            and existing investors. In connection with the recapitalization, all
            members of our current management maintained their entire equity
            investment.

EMPLOYEES

      We have approximately three thousand two hundred employees. A portion of
our employees are represented by labor unions, and we believe our labor
relations with those unions are good.

BUSINESS STRATEGY

      We seek to maximize our profitability and growth and take advantage of our
competitive strengths by pursuing the following business strategy:

      -     Ongoing cost reduction through technical process improvement. We
            have an ongoing program to improve manufacturing and other processes
            in order to drive down costs. Examples of cost improvement programs
            include:

            -     material and energy conservation through enhanced process
                  controls and advanced product design;

            -     reduction in machine set-up time through the use of
                  proprietary technology;

            -     continual product line rationalization; and

            -     development of backward and forward integration opportunities.

      -     Internal growth through product line extension and improvement. We
            continually seek to improve and extend our product lines and
            leverage our existing technological capabilities in order to
            increase market share in existing markets, effectively penetrate new
            markets and improve profitability. Our strategy is to emphasize our
            expertise in providing packaging, products

                                       4
<PAGE>

            and materials with specific high performance characteristics through
            the development of various unique proprietary materials and
            proprietary manufacturing process techniques.

      -     Growth through acquisitions. We will continue to pursue acquisitions
            selectively when the opportunity arises. Our objective is to pursue
            acquisitions that provide us with the opportunity to gain economies
            of scale and reduce costs through, among other things, technology
            sharing and synergistic cost reduction.

      -     Growth through international expansion. We believe that there is
            significant opportunity to expand our international sales, which
            currently represent approximately 14.2% of our total revenues. At
            present, we have manufacturing operations with attached sales
            offices in Belgium, Italy, The United Kingdom, Canada and Argentina.
            We have a regional sales office in Singapore covering southeast
            Asia, including the People's Republic of China. In addition, we have
            manufacturing liaisons and strategic supplier agreements in Japan,
            Germany and Italy and a manufacturing licensee in Japan. We have
            recently added sales representatives for Jordan, Saudi Arabia and
            the United Arab Emirates as well as in the Philippines and India to
            our existing representatives in Australia/New Zealand, South Africa,
            Central America, Brazil, Mexico, Chile, China (including Hong Kong),
            Taiwan, Greece and Turkey. We believe that our growing international
            presence, which is a combination of our own regional manufacturing
            and sales forces and independent sales representatives, will
            continue to generate opportunities to increase our sales.

PACKAGING SEGMENT

      The Packaging segment of our business had revenues of $306.1 million
(48.2% of total revenues) for the year ended July 2, 2004 and $291.8 million
(47.8% of total revenues) for the year ended June 27, 2003. Further details of
the major markets served by this segment are given below:

FOAM EGG CARTONS

      We believe that we are the leading manufacturer of egg cartons in the
United States. Thermoformed foam polystyrene packaging has been the material of
choice for food packaging cartons for many years. In terms of economic and
functional characteristics, foamed polystyrene products offer a combination of
high strength, minimum material content and superior moisture barrier
performance. Foamed polystyrene products also offer greater dimensional
consistency that enhances the high speed mechanical feeding of cartons into
automated package filling operations. We sell these products through our direct
sales force.

      In the egg packaging market, our primary competitor manufactures
pulp-based egg cartons. We believe that we compete effectively based on product
quality, performance and prompt delivery. Our customer base includes most of the
domestic egg packagers (including those owned by egg retailers).

PHARMACEUTICAL BLISTER FILMS

      We believe that we are a market leader for clear, high-barrier laminations
for pharmaceutical blister packaging. These packaging materials are used for
fast-acting pharmaceuticals that are generally highly reactive to moisture.
Transparent, high-barrier blister packaging is primarily used to protect drugs
from moisture vapor infiltration or desiccation. Blister packaging is the
preferred packaging form when dispenser handling can affect shelf life or drug
efficacy, or when unit dose packaging is needed. Unit dose packaging is being
used to improve patient compliance with regard to dosage regimen, and has been
identified as the packaging form of choice in addressing child safety aspects of
drug packaging. The advantages of transparent blisters, as opposed to opaque
foil-based materials manufactured by various competitors, include the ability to
visually inspect the contents of the blister and to present the product with
maximum confidence.

      We believe the flexible and semi-rigid packaging segment of the
pharmaceutical packaging industry is growing at a faster rate than the
non-plastics segments because of the generally lower package cost and broader
range of functional characteristics of plastic packaging. As a result, the
technologies used to manufacture plastic packaging materials continue to develop
at a faster pace than those used in the more mature paper, glass, and metal
products.

      Our high-barrier blister packaging is sold to major pharmaceutical
companies (or their designated contract packagers). We market our full
pharmaceutical product line directly on a worldwide basis, and have assembled a
global network of sales and marketing personnel on six continents.

                                       5
<PAGE>

      In the clear blister packaging market, we have two principal competitors
worldwide with resources equal to or greater than ours. However, we believe that
neither of these competitors has the breadth of product offering to match ours,
and that this differentiation is significant as viewed by the pharmaceutical
industry. Also, the high manufacturing and audit compliance standards imposed by
the pharmaceutical companies on their suppliers provide a significant barrier to
the entry of new competitors. Entry barriers also arise due to the lengthy and
stringent approval process required by pharmaceutical companies. Since approval
requires that the drug be tested while packaged in the same packaging materials
intended for commercial use, changing materials after approval risks renewed
scrutiny by the FDA. The packaging materials for pharmaceutical applications
also require special documentation of material sources and uses within the
manufacturing process as well as heightened quality assurance measures.

POULTRY AND MEAT PROCESSOR TRAYS

      Our processor tray operations produce thermoformed foam polystyrene
poultry and meat processor trays. We are a leading supplier of processor trays
to the poultry industry.

      As with egg cartons, thermoformed foam polystyrene has been the material
of choice for processor trays for the same reasons noted above.

      Within the polystyrene foam processor tray market, we compete principally
with one large competitor, who has significantly greater financial resources
than ours and who controls the largest share of this market.

CLOSURE LINERS

      Tekni-Plex is also a leading producer of sophisticated extruded,
co-extruded and laminated cap-liners and seals, known as closure liners, for
glass and plastic bottles. Closure liners perfect the seal between a container
and its closure, for example, between a bottle and its cap. The liner material
has become an integral part of the container/closure package. Without the
gasketing effect of the liner, most container/closure packages would not be
secure enough to protect the contents from contamination or loss of product
efficacy.

      We sell these products through our direct sales force primarily to
packagers of pharmaceutical, healthcare and food products. We have two principal
competitors in North America but also compete with several smaller companies
having substantially smaller market shares. However, as a result of the Tri-Seal
acquisition, we believe that we offer the widest range of liner materials in the
industry. We remain competitive by focusing on product quality, performance and
prompt delivery.

AEROSOL AND PUMP PACKAGING COMPONENTS

      Our Aerosol and Pump Packaging Components business produces dip tubes,
which transmit the contents of the container to the nozzle, and specialized,
molded or punched rubber-based valve gaskets that serve to control the release
of the product from the container. The group also produces writing instrument
products, including pen barrels and ink tubing as well as ink reservoirs for
felt-tip pens.

      Sales are primarily to manufacturers of aerosol valves, dispenser pumps,
and writing instruments. These products are sold throughout the United States
and Europe, as well as selected worldwide markets. Sales are made through our
direct sales force. We believe that we are the leading supplier of aerosol valve
and dispenser pump gaskets and dip tubes in the world.

      Our dip tubes and pen barrels are manufactured at extremely high speeds
while holding to precise tolerances. The process enhancements that allow
simultaneous high speed and precision are proprietary to us. The precision
rubber gasket products, which we have manufactured for over fifty years, are
produced using proprietary formulations. These formulations are designed to
provide consistent functional performance throughout the entire shelf life of
the product by incorporating chemical resistance characteristics appropriate to
the fluid being packaged. For example, we have developed unique formulations
that virtually eliminate contamination of the products packaged in spray
dispensers. This has greatly expanded the use of these dispensers for personal
hygiene products, foods, and fragrances. The Company has also developed
proprietary methods for achieving extremely accurate thickness control, superior
surface finish, and the elimination of internal imperfections prevalent in other
processing methods.

      We are the single-source supplier to much of the industry. The principal
competitive pressure in this product line, particularly the dip tube portion, is
the possibility of customers switching to internal production, or vertical
integration. To counteract this possibility, the Company focuses on product
quality, cost reduction, prompt delivery, technical service and innovation.

                                       6
<PAGE>

FOAM PLATES

      Our foam plate operations produce thermoformed foam polystyrene disposable
plates, bowls, and hinged-lid containers as well as agricultural packaging
products. Our sales are primarily to the consumer, agricultural and foodservice
industries. We compete with numerous participants who use a variety of materials
including foam polystyrene, pulp-based products and various plastic materials.

TUBING SEGMENT

      The Tubing Products segment of our business had revenues of $210.2 million
(33.1% of total revenues) for the year ended July 2, 2004 and $209.7 million
(34.3% of total revenues) for the year ended June 27, 2003. Further details of
the major markets served by this segment are given below:

GARDEN AND IRRIGATION HOSE PRODUCTS

      We believe that we are the leading producer of garden hose in North
America. We have produced garden hose products for over fifty years, and produce
its primary components internally, including proprietary material formulations
and brass couplings. Innovations have included the patented Colorite(R)
Evenflow(R) design and ultra high quality product lines that utilize
medical-grade plastics. We also manufacture specialty hose products such as air
hose and irrigator "soaker hose".

      We sell these products primarily through our direct sales force and also
through independent representatives. Both private label and brand-name products
are sold to the retail market, primarily to home centers, hardware cooperatives,
food, automotive, drug and mass merchandising chains and catalog companies
throughout the United States and Canada. Our customers include some of the
fastest growing and the most widely respected retail chains in North America.
Our market strategy is to provide a complete line of innovative, high-quality
products along with superior customer service.

      The garden hose business is highly seasonal with approximately 75% of
sales occurring in the spring and early summer months. This seasonality tends to
have an impact on the Company's financial results from quarter to quarter.

MEDICAL TUBING

      We believe we are the leading non-captive supplier of vinyl medical tubing
in North America and Europe. We manufacture medical tubing using proprietary
plastic extrusion processes. The primary raw materials are proprietary
compounds, which we produce. We specialize in high-quality; close tolerance
tubing for various surgical procedures and related medical applications. These
applications include intravenous ("IV") therapy, hemodialysis therapy,
cardio-vascular procedures such as coronary bypass surgery, suction and
aspiration products, and urinary drainage and catheter products. New medical
tubing products we have developed include microbore tubing and silicone
substitute formulations. Microbore tubing can be used to regulate the delivery
of critical intravenous fluids without the need for more expensive drip control
devices. Medical professionals can precisely control the drug delivery speed
simply by selecting the proper (color-coded) diameter tube, thereby improving
accuracy and reducing cost. More importantly, as home healthcare trends
continue, the use of microbore tubing will help eliminate critical dosage errors
on the part of the non-professional caregiver or the patient.

      Medical tubing is sold primarily to manufacturers of medical devices that
are packaged specifically for such procedures and applications. These products
are sold through our direct sales force. We remain competitive by focusing on
product quality, performance and prompt delivery.

ITEM 2. FACILITIES

      The Company believes that its facilities are suitable for their purposes
and have sufficient productive capacity for its current and foreseeable
operational and administrative needs. Set forth below is a list and brief
description of all of the Company's offices and facilities, all of which are
owned unless otherwise indicated.

                                       7
<PAGE>

<TABLE>
<CAPTION>
                                                                                                              APPROXIMATE
                LOCATION                           PRIMARY FUNCTION                                           SQUARE FEET
                --------                           ----------------                                           -----------
<S>                                           <C>                                                             <C>
Auburn, Maine(2)...........................   Manufacturing                                                      24,000
Belfast, Northern Ireland..................   Manufacturing                                                      47,580
Blauvelt, New York(6)......................   Manufacturing                                                      56,400
Burlington, New Jersey.....................   Manufacturing                                                     124,000
Bucyrus, Ohio..............................   Manufacturing                                                     587,649
Buenos Aires, Argentina(4).................   Manufacturing and warehouse                                        12,900
Cambridge, Ontario, Canada.................   Manufacturing and warehouse                                        40,000
City of Industry, California(7)............   Manufacturing                                                     110,000
Clayton, North Carolina....................   Manufacturing                                                      99,665
Clinton, Illinois..........................   Manufacturing                                                      69,000
Columbus, Ohio(3)..........................   Sales Offices                                                       3,761
Coppell, Texas(4)..........................   Executive Offices                                                   3,125
Dallas, Texas..............................   Manufacturing                                                     139,000
Decatur, Indiana...........................   Manufacturing                                                     187,000
East Farmingdale, New York(4)..............   Manufacturing                                                      56,556
East Farmingdale, New York (4).............   Warehouse                                                          11,000
Erembodegem (Aalst), Belgium...............   Manufacturing                                                     125,667
Flemington, New Jersey.....................   Manufacturing                                                     145,000
Fullerton, California (9)..................   Manufacturing and warehouse                                        60,250
Harrison, New Jersey(5)....................   Warehouse                                                         135,501
Huntingdon, Tennessee (3)..................   Warehouse                                                          25,000
Lawrenceville, Georgia.....................   Manufacturing                                                     150,000
Lawrenceville, Georgia(3)..................   Warehouse                                                          13,000
Livonia, Michigan(1).......................   Warehouse                                                           7,240
McKenzie, Tennessee........................   Manufacturing and warehouse                                        60,000
Memphis, Tennessee(6)......................   Manufacturing and warehouse                                       149,800
Memphis, Tennessee(2)......................   Warehouse                                                          50,000
Milan (Gaggiano), Italy(4).................   Warehouse                                                          12,920
Milan (Gaggiano), Italy....................   Manufacturing                                                      14,900
Milan (Gaggiano), Italy....................   Manufacturing                                                      25,800
Milan (Rosate), Italy(6)...................   Manufacturing                                                      24,000
Mississauga, Ontario, Canada(10)...........   Manufacturing                                                     118,196
Mississauga, Ontario, Canada(5)............   Manufacturing                                                     100,000
Piscataway, New Jersey(5)..................   Manufacturing                                                     155,000
Ridgefield, New Jersey.....................   Manufacturing                                                     330,000
Rockaway, New Jersey.......................   Manufacturing                                                      90,550
Schaumburg, Illinois(12)...................   Manufacturing                                                      59,100
Schiller Park, Illinois....................   Manufacturing                                                      15,232
Shelby, Ohio(7)............................   Warehouse                                                         350,000
Singapore(1)...............................   Sales Office                                                          550
Somerville, New Jersey.....................   Manufacturing                                                     172,000
Sparks, Nevada(8)..........................   Manufacturing                                                     448,000
Tonawanda, New York(8).....................   Manufacturing                                                      32,000
Troy, Ohio(6)..............................   Manufacturing and warehouse                                       200,000
Waco, Texas................................   Manufacturing                                                     104,600
Wenatchee, Washington......................   Manufacturing                                                      97,000
Wenatchee, Washington(6)...................   Warehouse                                                          26,200
Wenatchee, Washington(1)...................   Warehouse                                                           8,000
</TABLE>

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

(Years relate to calendar years)

(1)   Leased on a month-to-month basis.

(2)   Lease expires in 2004.

                                       8
<PAGE>

(3)   Lease expires in 2005.

(4)   Lease expires in 2006.

(5)   Lease expires in 2007.

(6)   Lease expires in 2008.

(7)   Lease expires in 2009.

(8)   Lease expires in 2012.

(9)   Lease expires in 2013.

(10)  Lease expires in 2015.

(11)  Lease expires in 2019.

(12)  Lease expires in 2020.

ITEM 3. LEGAL PROCEEDINGS AND ENVIRONMENTAL MATTERS

      We are regularly involved in legal proceedings arising in the ordinary
course of business, none of which are currently expected to have a material
adverse effect on our businesses, financial condition or results of operation.

      Like similar companies, our facilities, operations and properties are
subject to foreign, federal, state, provincial and local laws and regulations
relating to, among other things, emissions to air, discharges to water, the
generation, handling, storage, transportation and disposal of hazardous and
non-hazardous materials and wastes and the health and safety of employees. We
maintain a primary commitment to employee health and safety, and environmental
responsibility. Our intention and policy are to be at all times a responsible
corporate citizen.

      Our management includes a Director of Environmental Affairs who is
responsible for compliance with all foreign, federal, state and local laws and
regulations relating to the environment, and health and safety. This director
performs internal auditing procedures and provides direction to all local
facility managers in the compliance areas. The Director of Environmental Affairs
and our President direct outside environmental counsel and outside environmental
consulting firms to ensure that regulations are properly interpreted and
reporting requirements are met.

      We are also subject to environmental laws requiring the investigation and
cleanup of environmental contamination. Currently, we are remediating
contamination resulting from past industrial activity at three of our New Jersey
facilities which we acquired from PureTec in 1998. This remediation is being
conducted pursuant to the requirements of New Jersey's Industrial Site Recovery
Act which were triggered by the 1998 PureTec transaction. We believe that any
costs ultimately borne by us in connection with this remediation would not be
material.

      Although we believe that, based on historical experience, the costs of
achieving and maintaining compliance with environmental laws and regulations are
unlikely to have a material adverse effect on our business, financial condition
or results of operations, it is possible that we could incur significant fines,
penalties, capital costs or other liabilities associated with any confirmed
noncompliance or remediation of contamination or natural resource damage
liability at or related to any of our current or former facilities, the precise
nature of which we cannot now predict. Furthermore, we cannot assure you that
future environmental laws or regulations will not require substantial
expenditures by us or significant modifications of our operations.

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS

      Not Applicable.

                                       9
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

      The following table sets forth selected historical consolidated financial
information of the Company, and has been derived from and should be read in
conjunction with the Company's audited consolidated financial statements,
including the notes thereto, which appear elsewhere herein. Acquisitions the
Company made in certain years result in years not being comparable.

<TABLE>
<CAPTION>
                                                                                     YEARS ENDED
                                                          ----------------------------------------------------------------
                                                           JUNE 30,     JUNE 29,      JUNE 28,      JUNE 27,     JULY 2,
                                                             2000        2001           2002         2003         2004
                                                          ----------   ----------    -----------   ----------   ----------
                                                                                (DOLLARS IN THOUSANDS)
<S>                                                       <C>          <C>           <C>           <C>          <C>
INCOME STATEMENT DATA:
Net sales.............................................    $  524,817   $  525,837    $   577,749   $  610,663   $  635,642
Cost of goods sold....................................       394,480      399,836        430,457      459,471      527,646
Gross profit..........................................       130,337      126,001        147,292      151,192      107,996
Integration Expense                                               --           --             --       11,164        7,775
Selling, general and administrative expenses..........        58,343       60,999         69,444       61,600       69,159
Income from operations................................        71,994       65,002         77,848       78,428       31,062
Interest expense, net(a)..............................        73,821       76,569         70,934       71,266       84,451
Unrealized loss (gain) on derivative contracts........            --       13,891          7,830        1,997      (10,654)
Other expense (income)................................         4,705          605             (6)        (531)         605
Pre-tax income (loss).................................        28,842      (26,063)          (910)       5,696      (43,340)
Income tax provision (benefit)........................        14,436       (7,069)         5,677        2,306       11,121
Net income (loss).....................................       (20,968)     (18,994)        (6,587)       3,390      (54,461)
BALANCE SHEET DATA (AT PERIOD END):
Working capital.......................................       145,879      199,129    $   218,919      249,665      229,876
Total Assets..........................................       574,789      621,494        691,963      784,764      747,682
Total debt (including current portion)................       651,593      678,150        692,821      729,484      734,007

Stockholders' equity (deficit)........................      (149,150)    (134,697)       (91,111)     (64,811)    (101,035)
OTHER FINANCIAL DATA:
Depreciation and amortization.........................        34,748       37,670    $    39,863       28,342       32,304
Capital expenditures..................................        16,258       17,116         24,653       32,232       30,128
Cash flows:
From operations.......................................         9,485       (3,266)         7,922       15,029       (7,364)
From investing........................................       (16,905)     (26,777)       (88,446)     (49,994)     (34,126)
From financing........................................        (1,687)      62,180         64,092       54,203       23,513
</TABLE>

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

(a)   In connection with the adoption of SFAS 145, included in interest expense
      for the year ended June 30, 2000 is approximately $35,374 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. For the period ended July 2, 2004, interest expense
      included a $5,000 reduction in deferred financing costs.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

      You should read the following discussion and analysis in conjunction with
the "Selected Historical Financial Information" and the Financial Statements
included elsewhere in this Annual Report. The table below sets forth, for the
periods indicated, selected operating data as a percentage of net sales.


                                       10
<PAGE>

                         SELECTED FINANCIAL INFORMATION
                            (PERCENTAGE OF NET SALES)

<TABLE>
<CAPTION>
                                                                     YEARS ENDED
                                                          ------------------------------------
                                                          JUNE 28,        JUNE 27,     JULY 2,
                                                            2002            2003        2004
                                                          --------        --------     -------
<S>                                                       <C>             <C>          <C>
Net sales...........................................       100.0%          100.0%       100.0%
Cost of sales.......................................        74.5            75.2         83.0
Gross profit........................................        25.5            24.8         17.0
Integration Expense.................................                         1.8          1.2
Selling, general and administrative expenses........        12.0            10.1         10.9
Income from operations..............................        13.5            12.8          4.9
Interest expense....................................        12.3            11.7         13.3
Provision (Benefit) for income taxes................         1.0             0.4          1.7
Net income (loss)...................................        (1.1)            0.6         (8.6)
Depreciation and amortization.......................         6.9             4.6          5.1
</TABLE>

YEAR ENDED JULY 2, 2004 COMPARED TO THE YEAR ENDED JUNE 27, 2003

      Net Sales, increased to $635.6 million for the year ended July 2, 2004
from $610.7 million for the year ended June 27, 2003, representing an increase
of $25.0 million or 4.1%. Our Packaging Segment reported a 4.9% increase in Net
Sales to $306.1 million in the fiscal year ended July 2, 2004 compared to $291.8
million in the fiscal year ended June 27, 2003. Our Tubing Products Segment's
Net Sales increased 0.3%, to $210.2 million from $209.7 million last year. Net
Sales for our other products increased to $119.3 million in the current year
from $109.2 million in the previous year, which represents a 9.2% increase.

      Cost of Goods Sold, increased to $527.6 million for the year ended July 2,
2004 from $459.5 million for the year ended June 27, 2003. Expressed as a
percentage of Net Sales, Cost of Goods Sold increased to 83.0% of Net Sales for
the year ended July 2, 2004 compared to 75.2% for the year ended June 27, 2003,
primarily due to significantly higher raw material costs.

      Gross Profit, as a result, decreased to $108.0 million for the year ended
July 2, 2004 from $151.2 million for the year ended June 27, 2003. The ratio of
Gross Profit to Net Sales decreased to 17.0% for the year ended July 2, 2004
from 24.8% for the year ended June 27, 2003. Our Packaging Segment Gross Profit
decreased by $5.5 million to $82.8 million from $88.3 million in the fiscal year
ended July 2, 2004 primarily due to a lower margin product mix for our foam
products as well as significantly higher raw material costs. This was partially
offset by strong performances by our other packaging businesses. Measured as a
percentage of Net Sales our Packaging Segment Gross Profit decreased to 27.1%
for the year ended July 2, 2004 from 30.3% for the year ended June 27, 2003. Our
Tubing Products Segment Gross Profit decreased to $20.6 million for the year
ended July 2, 2004 from $52.9 million in the fiscal year ended June 27, 2003.
Measured as a percentage of Net Sales our Tubing Products Segment Gross Profit
decreased to 9.8% for the year ended July 2, 2004 from 25.2% for the year ended
June 27, 2003. This decline was largely due to higher raw material cost at our
Garden Hose unit which could not be passed through to our customers during the
fiscal year. In addition, we wrote-down our inventory by $4.6 million to reflect
market values for some garden hoses that were less than our cost and we adjusted
our estimates of accruals for rebates, discounts and sales allowances resulting
in an $8.0 million increase in our reserves. Gross Profit for our other products
declined to $4.5 million in the current fiscal year from $10.0 million in the
previous year. Measured as a percentage of Net Sales, other Gross Profit
decreased to 3.8% in the current fiscal year from 9.2% in the previous year
primarily due to our inability to fully pass through significantly higher raw
material costs.

      Selling, General and Administrative Expenses increased to $69.2 million
for the year ended July 2, 2004 from $61.6 million for the year ended June 27,
2003 primarily due to a charge of $10 million from a write-off in goodwill
associated with our specialty resin operations. The resultant ratio to Net Sales
increased to 10.9% for the year ended July 2, 2004 from 10.1% for the year ended
June 27, 2003.

      Operating Profit, as a result of the above, decreased to $31.1 million in
the current fiscal year compared to $78.4 million in the previous year. Measured
as a percentage of Net Sales, Operating Profit decreased to 4.9% in fiscal 2004
from 12.8% in fiscal 2003. Our Packaging Segment Operating Profit decreased to
$54.0 million from $60.2 million last year. Measured as a percentage of Net
Sales, Packaging Segment Operating Profit decreased to 17.7% in the year ended
July 2, 2004 compared to 20.6% in the previous year. Our Tubing Products Segment
Operating Profit decreased to $6.5 million from $35.4 million in the year ended
July 2, 2004. Measured as a percentage of Net Sales, Tubing Products Segment
Operating Profit decreased to 3.1% from 16.9% last year. Operating Profit for
our other products declined to a ($11.8) million loss in the current year from a
$3.5 million gain in the previous year largely

                                       11
<PAGE>

due to a $10.0 million write-down of goodwill associated with our Specialty
Resin operations. Measured as a percentage of Net Sales, other Operating Profit
declined to a (9.9%) loss in the current fiscal year from a 3.2% gain in the
previous fiscal year.

      Interest Expense, increased to $84.5 million for the fiscal year ending
July 2, 2004 from $71.3 million for the fiscal year ending June 27, 2003
primarily due to higher interest rates as well as the write-off of $5.0 million
of deferred financing costs resulting from the early retirement of some of our
term loans. The unrealized (gain) loss on derivative obligations reflected a
($10.7) million gain in the current fiscal year compared to a $2.0 million loss
in the previous fiscal year.

      Depreciation and Amortization Expense, increased to $32.3 million or 5.1%
of Net Sales for the fiscal year ending July 2, 2004 from $28.3 million or 4.6%
of Net Sales for the fiscal year ending June 27, 2003.

      The provision for income taxes increased to $11.1 million in the current
fiscal year from $2.3 million in the previous year primarily due to $7.0 million
reduction in our deferred tax asset. In addition, the company increased its
reserve on deferred taxes by approximately 15.0 million to reserve for deferred
taxes generated by 4th Quarter losses.

      Net Income (loss), as a result, was a loss of ($54.5) million or (8.6%)
of Net Sales for the fiscal year ending July 2, 2004 compared to income of $3.4
million or 0.6% of Net Sales for the year ending June 27, 2003.

YEAR ENDED JUNE 27, 2003 COMPARED TO THE YEAR ENDED JUNE 28, 2002

      Net Sales, increased to $610.7 million for the year ended June 27, 2003
from $577.7 million for the year ended June 28, 2002, representing an increase
of $33.0 million or 5.7%. Our Packaging Segment reported a 15.1% increase in Net
Sales to $291.8 million in the fiscal year ended June 27, 2003 compared to
$253.6 million in the fiscal year ended June 28, 2002. (The increase was
primarily due to the inclusion of our Elm acquisition that occurred in July
2002.) Our Tubing Products Segment's Net Sales decreased by $6.9 million or
3.2%, to $209.7 million from $216.6 million last year, primarily due to soft
garden hose sales in our Fourth Quarter resulting from an unusually rainy Spring
and Summer throughout most of North America. Net Sales for our other products
increased to $109.2 million in the current year from $107.6 million in the
previous year primarily due to higher volume.

      Cost of Goods Sold, increased to $459.5 million for the year ended June
27, 2003 from $430.5 million for the year ended June 28, 2002. Expressed as a
percentage of Net Sales, Cost of Goods Sold increased to 75.2% of Net Sales for
the year ended June 27, 2003 compared to 74.5% for the year ended June 28, 2002,
primarily due to higher raw material costs.

      Gross Profit, as a result, increased to $151.2 million for the year ended
June 27, 2003 from $147.3 million for the year ended June 28, 2002. The ratio of
Gross Profit to Net Sales decreased to 24.8% for the year ended June 27, 2003
from 25.5% for the year ended June 28, 2002. Our Packaging Segment Gross Profit
increased by $16.5 million to $88.3 million from $71.8 million in the fiscal
year ending June 27, 2003 primarily due to our Elm acquisition. Measured as a
percentage of Net Sales our Packaging Segment Gross Profit increased to 30.3%
for the year ended June 27, 2003 from 28.3% for the year ended June 28, 2002.
Our Tubing Products Segment Gross Profit decreased by $7.4 million to $52.9
million from $60.3 million in the fiscal year ending June 27, 2003. Measured as
a percentage of Net Sales our Tubing Products Segment Gross Profit decreased to
25.2% for the year ended June 27, 2003 from 27.9% for the year ended June 28,
2002. This decline was the result of both higher raw material costs as well as
weak garden hose sales in the Fourth Quarter as noted above. Gross Profit for
our other products declined to $10.0 million in the current fiscal year from
$15.1 million in the previous year. Measured as a percentage of Net Sales, other
Gross Profit decreased to 9.2% in the current fiscal year from 14.1% in the
previous year primarily due to our inability to fully pass through higher raw
material costs for our specialty resins business.

      Selling, General and Administrative Expenses decreased to $61.6 million
for the year ended June 27, 2003 from $69.4 million for the year ended June 28,
2002 primarily due to the elimination of $12.4 million of goodwill amortization
expense due to a mandated change in accounting for goodwill effective during the
year ended June 27, 2003 offset by an increase in expenses due to the Elm
acquisition. The resultant ratio to Net Sales decreased to 10.1% for the year
ended June 27, 2003 from 12.0% for the year ended June 28, 2002.

      Operating Profit, as a result of the above, increased to $78.4 million in
the current fiscal year compared to $77.8 million in the previous year. Measured
as a percentage of Net Sales, Operating Profit decreased to 12.8% in fiscal 2003
from 13.5% in fiscal 2002. Our Packaging Segment Operating Profit increased by
$12.9 million or 27.3% to $60.2 million from $47.3 million last year. Measured
as a percentage of Net Sales, Packaging Segment Operating Profit improved to
20.6% in the year ended June 27, 2003 compared to 18.6% in the previous year.
Our Tubing Products Segment Operating Profit decreased by $5.4 million to $35.4
million from $40.8 million in the year ended June 27, 2003. Measured as a
percentage of Net Sales, Tubing Products Segment Operating Profit decreased

                                       12
<PAGE>

to 16.9% from 18.8% last year. Operating Profit for our other products declined
to $3.5 million in the current year from $6.6 million in the previous year.
Measured as a percentage of Net Sales, other Operating Profit declined to 3.2%
in the current fiscal year from 6.2% in the previous fiscal year.

      Interest Expense, increased to $71.3 million for the fiscal year ending
June 27, 2003 from $70.9 million for the fiscal year ending June 28, 2002
primarily due to higher average debt levels. The unrealized loss on derivative
obligations decreased to $2.0 million in the current fiscal year compared to a
loss of $7.8 million in the previous fiscal year.

      Depreciation and Amortization Expense, decreased to $28.3 million or 4.6%
of Net Sales for the fiscal year ending June 27, 2003 from $39.9 million or 6.9%
of Net Sales for the fiscal year ending June 28, 2002 primarily due to a $12.4
million reduction in goodwill amortization resulting from a mandated change in
the accounting for goodwill effective during the year ended June 27, 2003.

      The provision for income taxes decreased to $2.3 million in the current
fiscal year from $5.7 million in the previous year due to lower earnings. Our
effective tax rate declined to 40.4% in 2003 from 623.8% in 2002 due to a large
portion of our goodwill amortization not being tax deductible in 2002.

      Net Income (loss), as a result, was income of $3.4 million or 0.6% of Net
Sales for the fiscal year ending June 27, 2003 compared to a loss of ($6.6)
million or (1.1%) of Net sales for the year ending June 28, 2002.

LIQUIDITY AND CAPITAL RESOURCES

      For the year ended July 2, 2004, net cash used by operating activities was
$(7.4) million compared to $15.0 million of cash provided by operating
activities in the prior year. The $22.4 million decrease was due primarily to
lower earnings. Various year-over-year changes in operating assets, accrued
expenses, and liabilities are generally due to offsetting timing differences.

      Working capital at July 2, 2004 was $229.9 million compared to $249.7
million at June 27, 2003. The decrease was primarily caused by lower borrowings
on the revolver and lower inventories.

      As of July 2, 2004, we had an outstanding balance of $76.0 million under
our $100.0 million revolving credit line of our existing credit facility. This
was a decrease of $15.0 million from the $91.0 million outstanding balance as of
June 27, 2003. The decrease in revolver borrowings resulted from the use of cash
to reduce the revolver balance in fiscal 2004 compared to fiscal 2003.

      In March of 2004 we raised $10.5 million of equity from a new investor and
in July of 2004 we raised an additional $12 million of equity from an existing
investor.

      Our principal uses of cash will be debt service, capital expenditures and
working capital requirements. Our capital expenditures for the years ended July
2, 2004, June 27, 2003 and June 29, 2001 were $30.1 million, $32.2 million and
$24.7 million, respectively.

      In June 2000, Tekni-Plex entered into a series of interest rate derivative
transactions designed to protect us from rising interest rates on our senior
term debt facilities while enabling us to partially benefit from falling
interest rates. Accordingly, we recorded an unrealized (gain) loss from
derivative transactions of ($10.7) million and $2.0 million in fiscal years 2004
and 2003, respectively.

      Management believes that cash generated from operations plus funds from
our existing credit facility will be sufficient to meet our expected debt
service requirements, planned capital expenditures and operating needs. However,
we cannot assure you that sufficient funds will be available from operations or
borrowings under our credit facility to meet our anticipated cash needs. To the
extent we pursue future acquisitions, we may be required to obtain additional
financing. We cannot assure you that we will be able to obtain such financing in
amounts and on terms acceptable to us.

      Our Senior debt and our Senior Subordinated Notes include various
covenants, the most restrictive of which require a minimum consolidated EBITDA,
as defined in the debt agreement, minimum fixed charge coverage ratio and a
minimum leverage ratio. We have amended certain of such covenants, as a result
of violations, for the period ending July 2, 2004 and future periods. In
connection with that amendment, the interest rate margins of the credit
facilities have been increased by approximately 50 basis points.

      At July 2, 2004, the Company's contractual obligations for borrowings are
as follows:

                                       13
<PAGE>

<TABLE>
<CAPTION>
                                     LONG-TERM
    PAYMENTS DUE BY PERIOD             DEBT               LEASES              TOTAL
    ----------------------           ---------          -----------         ----------
                                                      (IN THOUSANDS)
<S>                                 <C>                 <C>                 <C>
Less than 1 year.................   $     2,121         $     8,037         $  10,158
Year 2...........................        77,076               7,844            84,920
Year 3...........................        35,145               7,411            42,556
Year 4...........................        35,161               6,028            41,189
Year 5...........................           380               4,577             4,957
After 5 years....................       584,124              16,822           600,946
</TABLE>

      Not included in this table is interest expense and a contractural
obligation under a derivative contract with a liability of $13.1 million at
July 2, 2004.

CRITICAL ACCOUNTING POLICIES

      The Company prepares its financial statements in accordance with
accounting principles generally accepted in the United States. Preparing
financial statements in accordance with generally accepted accounting principles
requires the Company to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities as of the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. The following paragraphs
include a discussion of some critical areas where estimates are required. You
should also review Note 1 to the financial statements for further discussion of
significant accounting policies.

      The Company records revenue when products are shipped. Legal title and
risk of loss with respect to the products pass to customers at the point of
shipment. The Company provides an allowance for returned product and volume
sales rebates on an estimated basis based on written agreements and past
experience.

      The Company evaluates its long-lived assets for impairment based on the
undiscounted future cash flows of such assets. If a long-lived asset is
identified as impaired, the value of the asset will be reduced to its fair
value.

      The Company records inventories at the lower of cost (weighted average) or
market. We record inventory reserves to reduce the carrying value of inventory
for estimated obsolescence or unmarketable inventory equal to the difference
between the cost of inventory and estimated market value based on assumptions
about future demand and market conditions. If actual market conditions are less
favorable than those projected by management, additional inventory reserves may
be required. At the end of fiscal 2004, we reduced our inventory by
approximately $4.6 million to reflect market values that were lower than cost.

      The Company extends credit based upon evaluations of a customer's
financial condition and provide for any anticipated credit losses in our
financial statements based upon management's estimates and ongoing reviews of
recorded allowances. If the financial conditions of our customers were to
deteriorate, resulting in an impairment of their ability to make payments,
additional reserves may be required. Conversely, reserves are deducted to
reflect credit and collection improvements.

      The Company has intangible assets related to acquired intangibles. The
determination of related estimated useful lives and whether or not these assets
are impaired involves management judgments. Changes in strategy and/or market
conditions could significantly impact these judgments and required adjustments
to recorded asset balances. We adopted SFAS 142, which requires us to cease
amortization of goodwill, but instead be tested for impairment at least
annually or earlier if there are impairment indicators. The Company performs a
two-step process for impairment testing of goodwill as required by SFAS No.
142. The first step of this test, used to identify potential impairment,
compares the fair value of a reporting unit with its carrying amount. The
second step (if necessary) measures the amount of the impairment. As a result
of impairment tests being performed at the end of 2004, the Company recorded an
impairment charge of $10.0 million associated with its Specialty Resin
operations.

      In performing the above noted goodwill impairment testing, the Company
uses a measure of fair value based on an evaluation of future discounted cash
flows. This evaluation utilized what management believes to be the best
information available in the circumstances, including what management believes
to reasonable and supportable assumptions and projections. Such assumptions are
consistent with those utilized in the Company's annual planning process and
appropriately take into account managements' initiatives to improve operational
efficiencies. If these turnaround initiatives do not achieve their earning
objectives, the assumptions and estimates underlying this goodwill impairment
evaluation could be modified in the future leading to further impairment in the
recorded value of goodwill.

      The Company records a valuation allowance to reduce the amount of our
deferred tax assets to the amount that is more likely than not to be realized.
While we have considered future taxable income and ongoing tax planning
strategies in assessing the need for the valuation allowance, in the event that
we determined that we would not be able to realize our deferred tax assets in
the future in excess of the net recorded amount, an adjustment to the deferred
tax asset would increase income in the period such determination was made.
Likewise, if it were determined that we would not be able to realize all or part
of the net deferred tax asset in the future, an adjustment to the deferred tax
asset would be charged to income in the period such determination was made.
Based on our recent financial performance, In fiscal 2004 we created a valuation
allowance that reduced our deferred tax asset by approximately $7.0 million.

      The Company makes estimates of sales rebates and allowances related to
current period product revenue. Management analyzes historical trends, current
economic conditions, and compliance with written agreements when evaluating the
adequacy of the reserve for sales rebates and allowances. Management judgments
and estimates must be made and used in connection with establishing the

                                       14
<PAGE>
sales rebates and allowances in any accounting period. Based on investigation
and review of charge backs, at the end of fiscal 2004 we modified our estimates
for sales rebates and allowances, increasing this accrual by $8.0 million.

NEW ACCOUNTING PRONOUNCEMENTS

      In July 2003, the FASB issued SFAS 150, "Accounting for Certain Financial
Instruments With Characteristics of Both Liabilities and Equity." SFAS 150
requires the shares that are mandatorily redeemable for cash or other assets at
a specified or determinable date or upon an event certain to occur, be
classified as liabilities, not as part of shareholders equity. SFAS 150 does not
currently apply to the Company.

INFLATION

      During fiscal 2004, we contended with significant and rapidly rising raw
material prices. Over, the long term, we believe we have generally been able to
offset the effects thereof through continuing improvements in operating
efficiencies and by increasing prices to our customers to the extent permitted
by competitive factors. However, we cannot assure you that such cost increases
can be passed through to our customers in the future or that the effects can be
offset by further improvements in operating efficiencies.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The market risk inherent in the Company's financial instruments and positions
represents the potential loss arising from adverse changes in interest rates. At
July 2, 2004 and June 27, 2003 the principal amount of the Company's aggregate
outstanding variable rate indebtedness was $153.0 million and $416.6 million
respectively. A hypothetical 1% adverse change in interest rates would have had
an annualized unfavorable impact of approximately $1.5 million and $4.2 million
respectively, on the Company's earnings and cash flows based upon these year-end
debt levels. To ameliorate these risks, in June 2000, the Company entered into
interest rate Swap and Cap Agreements for a notional amount of $344.0 million.

ITEM 8. FINANCIAL STATEMENTS

      The financial statements commence on Page F-1.

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

      None

ITEM 9a. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Company maintains
disclosure controls and procedures designed to ensure that information required
to be disclosed in its Exchange Act reports is recorded, processed, summarized
and reported within the time periods specified in the SEC's rules and forms, and
that such information is accumulated and communicated to the Company's
management, including its Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding required disclosure.  In
designing and evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives, and management necessarily was required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and procedures.

In connection with the completion of its audit of and the issuance of an
unqualified report on the Company's consolidated financial statements for the
fiscal year ended July 2, 2004, the Company's independent auditors, BDO Seidman,
LLP ("BDO"), communicated to the Company's Audit Committee that the following
matters involving the Company's internal controls and operations were considered
to be "reportable conditions", as defined under standards established by the
American Institute of Certified Public Accountants or AICPA:

      o  Lack of quantity of staff which led to issues related to timeliness of
         financial reporting and year end closing process.

      o  Lack of quantity of staff which led to issues related to process
         related to estimating chargeback reserves and inventory lower of cost
         or market analysis, including preparation and review of analysis.

Reportable conditions are matters coming to the attention of the independent
auditors that in their judgment, relate to significant deficiencies in the
design or operation of internal controls and could adversely affect the
Company's ability to record, process, summarize and report financial data
consistent with the assertions of management in the financial statements.  In
addition, BDO has advised the Company that they consider these matters, which
are listed above, to be "material weaknesses" that, by themselves or in a
combination, may increase the possibility that a material misstatement in our
financial statements might not be prevented or detected by our employees in the
normal course of performing their assigned functions.

As required by SEC Rule 13a-15(b), the Company carried out an evaluation under
the supervision and with the participation of its management, including its
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operations of the Company's disclosure controls and procedures as of
July 2, 2004.  Based on the foregoing, the Company's Chief Executive Officer and
Chief Financial Officer determined that the deficiencies identified by BDO could
cause the Company's disclosure controls and procedures to be less effective at a
reasonable assurance level than was desirable.  However, the Chief Executive
Officer and Chief Financial Officer noted that the Company is actively seeking
to remedy the deficiencies identified herein including hiring additional staff
to assure timeliness of financial reporting as well as reviewing our estimates
of chargeback reserves and inventory on a more frequent basis.  The Company's
Chief Executive Officer and Chief Financial Officer did not note any other
material weakness or significant deficiencies in the Company's disclosure
controls and procedures during their evaluation.  The Company continues to
improve and refine its internal controls.  This process is ongoing.

Other than for the matters discussed above, the Company's Chief Executive
Officer and Chief Financial Officer have determined that the Company's internal
controls and procedures were effective as of the end of the period covered by
this report. In the fourth quarter of fiscal 2004, there were no significant
changes in the Company's internal control over financial reporting or in other
factors that materially affected, or are reasonably likely to materially affect,
the Company's internal controls over financial reporting.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      Our current directors and executive officers are listed below. Each
director is elected at the annual meeting of the stockholders of Tekni-Plex to
serve a one year term until the next annual meeting or until a successor is
elected and qualified, or until his earlier resignation. Each executive officer
holds his office until a successor is chosen and qualified or until his earlier
resignation or removal.

                                       15

<PAGE>

Pursuant to our by-laws, we indemnify our officers and directors to the fullest
extent permitted by the General Corporation Law of the State of Delaware and our
certificate of incorporation.

      The board of directors is composed of six directors. A nominating
committee composed of Dr. Smith and Mr. Cronin designate two directors, Dr.
Smith designates three directors, and Mr. Cronin designates one director.
Directors may only be removed for cause or at the request of the person entitled
to designate that director.

<TABLE>
<CAPTION>

                       NAME                                AGE                      POSITION
                       ----                                ---                      --------
<S>                                                        <C>       <C>
Dr. F. Patrick Smith.................................      56        Chairman of the Board and Chief Executive Officer
Kenneth W.R. Baker...................................      60        President, Chief Operating Officer and Director
Arthur P. Witt.......................................      74        Corporate Secretary and Director
John S. Geer.........................................      58        Director
J. Andrew McWethy....................................      63        Director
Michael F. Cronin....................................      50        Director
</TABLE>

      Dr. F. Patrick Smith has been Chairman of the Board and Chief Executive
Officer of Tekni-Plex since March 1994. He received his doctorate degree in
chemical engineering from Texas A&M University in 1975. He served as Senior
Chemical Engineer to Texas Eastman Company, a wholly owned chemical and plastics
subsidiary of Eastman Kodak, where he developed new grades of polyolefin resins
and hot melt and pressure sensitive adhesives. In 1979, he became Technical
Manager of the Petrochemicals and Plastics Division of Cities Service Company,
and a Member of the Business Steering Committee of that division. From 1982 to
1984, Dr. Smith was Vice President of R&D and Marketing for Guardian Packaging
Corporation, a diversified flexible packaging company. Thereafter, he joined
Lily-Tulip, Inc. and managed their research and marketing functions before
becoming Senior Vice President of Manufacturing and Technology. Following the
acquisition of Lily-Tulip by Fort Howard Corporation in 1986, he became the
Corporate Vice President of Fort Howard, responsible for the manufacturing and
technical functions of the combined Sweetheart Products and Lily-Tulip
operations. From 1987 to 1990, Dr. Smith was Chairman and Chief Executive
Officer of WFP Corporation. Since 1990, Dr. Smith has been a principal of Brazos
Financial Group, a business consulting firm. Since 2000, Dr. Smith has been a
general partner of Eastport Operating Partners L.P.

      Kenneth W.R. Baker has served as Tekni-Plex Chief Operating Officer since
April 1994 and as President since July 1995. Mr. Baker served in various
management roles including systems development, finance, industrial engineering,
research and development, and manufacturing operations at Owens-Illinois, Inc.
and Lily-Tulip, Inc. from 1965 to 1985. From 1986 to 1987, he served as Vice
President, Operations at Fort Howard Cup Corporation. In 1987, Mr. Baker joined
WFP Corporation, Inc. as Senior Vice President, Operations and eventually became
the company's President and CEO before leaving the company in 1992. Thereafter,
Mr. Baker became Vice President, Research and Development at the Molded Products
Division of Carlisle Plastics, Inc. until joining Tekni-Plex in 1994.

      Arthur P. Witt has been a director of Tekni-Plex since March 1994 and was
appointed Secretary in January 1997. Since July 1989, he has been president of
PAJ Investments which is involved in financial consulting and property
management. Over the same period, Mr. Witt also served as a temporary chief
financial officer for WFP Corporation and Flexible Technology. Prior to 1989,
Mr. Witt served in a number of senior management positions for companies such as
Lily-Tulip, Inc., BMC Industries and Fort Howard Paper Co.

      John S. Geer has served as a director of Tekni-Plex since June 2000. He is
a partner of Mellon Ventures, Inc., having joined Mellon in 1997. Previously,
Mr. Geer was senior vice president of Security Pacific Capital Corp. He has
served on 20 boards of directors of emerging growth and middle market companies.

      J. Andrew McWethy has served as a director of Tekni-Plex since March 1994.
He co-founded and managed MST Partners L.P., a private equity investment fund,
from 1989 to 2000. In 2000, Mr. McWethy co-founded Eastport Operating Partners,
L.P., a private equity investment fund that he continues to manage. Prior to
1989, Mr. McWethy was employed by Irving Trust Company for 12 years.

      Michael F. Cronin has served as a director of Tekni-Plex since March 1994.
He has invested in emerging growth companies and various industrial and service
businesses since 1978. Since June 1991, Mr. Cronin has been a general partner of
Weston Presidio Capital.

COMPENSATION OF DIRECTORS

                                       16

<PAGE>

      Tekni-Plex reimburses directors for any reasonable out-of-pocket expenses
incurred by them in connection with services provided in such capacity. In
addition, each director is paid an annual fee of $50,000.

COMPENSATION OF EXECUTIVE OFFICERS

      The following table sets forth the remuneration paid by Tekni-Plex to the
Chief Executive Officer and the two next most highly compensated executive
officers of Tekni-Plex

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                              FISCAL                                    STOCK         OTHER ANNUAL
              NAME & PRINCIPAL POSITION                        YEAR        SALARY         BONUS        OPTIONS       COMPENSATION(a)
              -------------------------                       ------       ------         -----        -------       ---------------
<S>                                                           <C>       <C>            <C>             <C>           <C>
Dr. F. Patrick Smith....................................       2004     $ 6,655,000    $       --         --            $ 16,000
Chairman and Chief Executive Officer                           2003       6,050,000            --         --              16,000
                                                               2002       5,500,000            --         --              16,000

Mr. Kenneth W.R. Baker..................................       2004     $ 3,327,500    $       --         --            $  9,000
President and Chief Operating Officer                          2003       3,025,000            --         --               9,000
                                                               2002       2,750,000            --         --               9,000

Mr. James E. Condon.....................................       2004     $   540,000    $  175,000         --            $  7,200
  Vice President and Chief Financial                           2003         500,000       140,000         --               7,200
   Officer                                                     2002         400,000       105,000         --               7,200
</TABLE>

(a) Includes amounts reimbursed during the fiscal year for payment of taxes,
auto expense, membership fees, etc.

                      OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                                                                       POTENTIAL REALIZABLE
                                                                                                         VALUE AT ASSUMED
                                                           PERCENT OF                                     ANNUAL RATES OF
                                            NUMBER OF        TOTAL         EXERCISE                         STOCK PRICE
                                           SECURITIES     OPTIONS/SARS     OR BASE                       APPRECIATION FOR
                                           UNDERLYING      GRANTED TO       PRICE                           OPTION TERM
                                          OPTIONS/SARS    EMPLOYEES IN       PER      EXPIRATION       --------------------
                    NAME                     GRANTED       FISCAL YEAR      SHARE        DATE            5%            10%
                    ----                  ------------    ------------     --------   ----------       ------         ----
<S>                                       <C>             <C>              <C>        <C>              <C>            <C>
Dr. F. Patrick Smith...................        --              --%           --           --             --            --
Kenneth W.R. Baker.....................        --              --%           --           --             --            --
James E. Condon........................        --              --%           --           --             --            --
</TABLE>

               AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                          AND FY-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
                                                                                                   NUMBER OF
                                                                                                  SECURITIES         VALUE ($000)
                                                                                                  UNDERLYING        OF UNEXERCISED
                                                                                                  UNEXERCISED        IN-THE-MONEY
                                                                                                 OPTIONS/SARS        OPTIONS/SARS
                                                                                                   AT FY-END           AT FY-END
                                                         SHARES ACQUIRED                         EXERCISABLE/        EXERCISABLE/
                        NAME                               ON EXERCISE       VALUE REALIZED      UNEXERCISABLE       UNEXERCISABLE
                        ----                             ---------------     --------------      -------------      --------------
<S>                                                      <C>                 <C>                 <C>                <C>
Dr. F. Patrick Smith..............................            --                   --                 --                --/--
Kenneth W.R. Baker................................            --                   --                 --                --/--
James E. Condon...................................            --                   --                 --                --/--
</TABLE>

EMPLOYMENT AGREEMENTS

      In June 2000, Dr. Smith and Mr. Baker entered into amended and restated
employment agreements that currently expire June 29, 2007 and contain renewal
provisions. The employment agreements provide for a 10% annual salary increase.

                                       17
<PAGE>

      Each employment agreement provides that the executive may be terminated by
us for cause or upon death or disability of the executive. Each of Dr. Smith and
Mr. Baker is entitled to severance benefits if he is terminated due to death or
disability. The employment agreements also contain certain non-compete
provisions.

      Neither Dr. Smith's nor Mr. Baker's amended and restated employment
agreement provides for any mandatory bonus compensation.

COMPENSATION COMMITTEE

    The board of directors maintains a three-member compensation committee
comprised of Dr. Smith, Mr. Witt and Mr. Cronin. The compensation committee's
duties include the annual review and approval of the compensation for each of
our Chief Executive Officer and President, as well as the administration of our
stock incentive plan. No member of the compensation committee is allowed to vote
on issues pertaining to that member's compensation (including option grants).
The board may also delegate additional duties to the compensation committee in
the future.

      Compensation levels and bonus awards for all other employees are
controlled by Dr. Smith and Mr. Baker.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

      As Chief Executive Officer of Tekni-Plex, Dr. Smith participated in
deliberations concerning the compensation of the Chief Operating Officer of
Tekni-Plex (but not the compensation for himself).

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      Tekni-Plex Partners LLC holds approximately 94.0% (approximately 91.7% on
a fully diluted basis) and MST/TP Partners LLC holds approximately 6.0%
(approximately 5.8% on a fully diluted basis) of Tekni-Plex's outstanding common
stock.

      Tekni-Plex Management LLC, controlled by Dr. Smith, is the sole managing
member of both Tekni-Plex Partners LLC and MST/TP Partners LLC.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CONSULTING ARRANGEMENTS

      Our policy is not to enter into any significant transaction with one of
our affiliates unless a majority of the disinterested directors of the board of
directors determines that the terms of the transaction are at least as favorable
as those we could obtain in a comparable transaction made on an arm's-length
basis with unaffiliated parties. This determination is made in the board's sole
discretion.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

      In accordance with the requirements of the Sarbanes-Oxley Act of 2002 and
the Audit Committee's charter, all audit and audit-related work and all
non-audit work performed by our independent accountants, BDO Seidman LLP, is
approved in advance by the Audit Committee, including the proposed fees for such
work. The Audit Committee is informed of each service actually rendered.

      Audit and audit-related fees billed or expected to be billed to us by BDO
Seidman LLP for the audit of the financial statements included in our Annual
Report on Form 10-K and reviews of the financial statements included in our
Quarterly Reports on Form 10-Q, for the fiscal years ended July 2, 2004 and June
27, 2003 totaled approximately $740,000 and $63,500 and $720,000 and $50,000,
respectively. Audit related fees include reviews of Form 10-Q, offering and SEC
comment letters.

      Tax preparation, review, and advisory services billed or expected to be
billed to us by BDO for the fiscal years ended July 2, 2004 and June 27, 2003
totaled approximately $411,000 and $367,000, respectively.

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1)    Financial Statements and Schedules

          The financial statements listed in the Index to Financial Statements
          under Part II, Item 8 and the financial statement schedules listed
          under Exhibit 27 are filed as part of this annual report.

(a)(2)    Financial Statement Schedule-- Schedule II-- Valuation and Qualifying
          Accounts

(a)(3)    Exhibits

          The exhibits listed on the Index to Exhibits following the Signature
          Page herein are filed as part of this annual report or by
          incorporation by reference from the documents there listed.

  (b)     Reports on Form 8-K

                                       18
<PAGE>

      None

                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

                                                TEKNI-PLEX, INC.

                                                By:    /s/ F. PATRICK SMITH
                                                    ---------------------------
                                                         F. Patrick Smith
                                                    Chairman of the Board and
                                                     Chief Executive Officer

Dated: October 15, 2004

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

                                                By:     /s/ JAMES E. CONDON
                                                    ----------------------------
                                                          James E. Condon
                                                      Chief Financial Officer

Dated: October 15, 2004

      Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of Registrant
and in the capacities indicated, on August , 2004.

         SIGNATURE                                TITLE
---------------------------    --------------------- ---------------------------
   /s/ F. PATRICK SMITH        Chairman of the Board and Chief Executive Officer
---------------------------
     F. Patrick Smith

  /s/ KENNETH W.R. BAKER      President and Chief Operating Officer and Director
---------------------------
    Kenneth W.R. Baker

    /s/ ARTHUR P. WITT                 Corporate Secretary and Director
---------------------------
      Arthur P. Witt

     /s/ JOHN S. GEER                              Director
---------------------------
       John S. Geer

  /s/ J. ANDREW MCWETHY                            Director
---------------------------
    J. Andrew McWethy

  /s/ MICHAEL F. CRONIN                            Director
---------------------------
    Michael F. Cronin

                                       19
<PAGE>



                                 EXHIBIT INDEX


<Table>
<Caption>
Exhibit
 No.                                       Description                                              Page
-------   -------------------------------------------------------------------------------------     ----
<S>       <C>                                                                                       <C>
3.1       Restated Certificate of Incorporation of Tekni-Plex, Inc.*
3.2       Amended and Restated By-laws of Tekni-Plex, Inc.*
3.3       Certificate of Incorporation of PureTec Corporation.*
3.4       By-laws of PureTec Corporation.*
3.5       Certificate of Incorporation of Tri-Seal Holdings, Inc.*
3.6       By-laws of Tri Seal Holdings, Inc.*
3.7       Certificate of Incorporation of Natvar Holdings, Inc.*
3.8       By-laws of Natvar Holdings.*
3.9       Certificate of Incorporation of Plastic Specialties and Technologies, Inc.*
3.10      By-laws of Plastic Specialties and Technologies, Inc.*
3.11      Certificate of Incorporation of Plastic Specialties and Technologies Investments, Inc.*
3.12      By-laws of Plastic Specialties and Technologies Investments, Inc.*
3.13      Certificate of Incorporation of Burlington Resins, Inc.*
3.14      By-laws of Burlington Resins, Inc.*
3.15      Certificate of Incorporation of Pure Tech APR, Inc.*
3.16      By-laws of Pure Tech APR, Inc.*
3.17      Certificate of Incorporation of TPI Acquisition Subsidiary, Inc.*
3.18      By-laws of TPI Acquisition Subsidiary, Inc.*
3.19      Certificate of Incorporation of Coast Recycling North, Inc.*
3.20      By-laws of Coast Recycling North, Inc.*
3.21      Certificate of Incorporation of Distributors Recycling, Inc.*
3.22      By-laws of Distributors Recycling, Inc.*
3.23      Certificate of Incorporation of REI Distributors, Inc.*
3.24      By-laws of REI Distributors, Inc.*
3.25      Certificate of Incorporation of Pure Tech Recycling of California.*
3.26      By-laws of Pure Tech Recycling of California.*
3.27      Certificate of Incorporation of Alumet Smelting Corp.*
3.28      By-laws of Alumet Smelting Corp.*
3.29      Certificate of Incorporation of TP/Elm Acquisition Subsidiary, Inc.*
3.30      By-laws of TP/Elm Acquisition Subsidiary, Inc.*
4.1       Indenture, dated as of June 21, 2000 among Tekni-Plex, Inc.,
          the Guarantors listed therein and HSBC Bank USA, as Trustee.*
4.2       First Supplemental Indenture, dated as of May 6, 2002 among
          Tekni-Plex, Inc., TPI Acquisition Subsidiary, Inc. and HSBC
          Bank USA, as Trustee*
4.3       Second Supplemental Indenture, dated as of August 22, 2002
          among Tekni-Plex, Inc., TP/Elm Acquisition Subsidiary, Inc.
          and HSBC Bank USA, as Trustee*
4.4       Senior Subordinated Note and Guarantee (original not
          included; form of Note and Guarantee included in Exhibit 4.1)
4.5       Purchase Agreement, dated as of May 1, 2002 among
          Tekni-Plex, Inc., the Guarantors listed therein, and Lehman
          Brothers Inc.*
4.6       Registration Right Agreement, dated as of May 6, 2002 among
          Tekni-Plex, Inc., the Guarantors listed therein and
          Lehman Brothers Inc.*
31.1      Certification of Chief Executive Officer, as required
          by Section 302 of the Sabanes-Oxley Act of 2002**
31.2      Certification of Chief Financial Officer, as required
          by Section 302 of the Sabanes-Oxley Act of 2002**
32.1      Certification of Chief Executive Officer and Chief Financial Officer,
          pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
          Section 906 of the Sarbanes-Oxley Act of 2002**
</Table>
--------------------------------
 *   Filed previously as an Exhibit to the Form S-4 (File No. 333-43800) filed
     on August 15, 2000.

**   Filed herewith.





<PAGE>

                                TEKNI-PLEX, INC.

                                               CONSOLIDATED FINANCIAL STATEMENTS

                          YEARS ENDED JULY 2, 2004, JUNE 27, 2003, JUNE 28, 2002

                                                                             F-1
<PAGE>

                                                                TEKNI-PLEX, INC.

                                                                        CONTENTS

<TABLE>
<S>                                                                             <C>
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                            3

CONSOLIDATED FINANCIAL STATEMENTS:
   Balance sheets                                                                  4
   Statements of operations                                                        5
   Statements of stockholders' deficit                                             6
   Statements of cash flows                                                        7
   Notes to financial statements                                                8-53

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON SUPPLEMENTAL SCHEDULE  54

SUPPLEMENTAL SCHEDULE:
   Valuation and qualifying accounts and reserves                                 55
</TABLE>

                                                                             F-2
<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited the accompanying consolidated balance sheets of Tekni-Plex, Inc.
and its subsidiaries (the "Company") as of July 2, 2004 and June 27, 2003, and
the related consolidated statements of operations, stockholders' deficit and
cash flows for each of the three years in the period ended July 2, 2004. 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 of the Public
Company Accounting Oversight Board (United States). 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 subsidiaries as of July 2, 2004 and June 27, 2003, and the results of their
operations and their cash flows for each of the three years in the period ended
July 2, 2004, in conformity with accounting principles generally accepted in the
United States of America.

As discussed in Note 1, the Company changed its policy of accounting for
goodwill in 2002 as required by Financial Accounting Standards Board Statement
Number 142, "Goodwill and Other Intangible Assets."

/s/ BDO Seidman, LLP
Woodbridge, New Jersey

October 3, 2004

                                                                             F-3
<PAGE>

                                                                TEKNI-PLEX, INC.

                                                     CONSOLIDATED BALANCE SHEETS
                      (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                JULY 2, 2004      June 27, 2003
                                                                                ------------      -------------
<S>                                                                             <C>               <C>
ASSETS
CURRENT:
   Cash and cash equivalents                                                    $     29,735      $      48,062
   Accounts receivable, net of an allowance of $8,408 and $8,398 for
      possible losses and sales allowances                                           138,109            135,719
   Inventories                                                                       153,807            161,333
   Deferred income taxes                                                                   -              6,735
   Prepaid expenses and other current assets                                           6,355              7,939
                                                                                ------------      -------------
              TOTAL CURRENT ASSETS                                                   328,006            359,788
PROPERTY, PLANT AND EQUIPMENT, NET                                                   182,749            179,521
INTANGIBLE ASSETS, NET INCLUDING GOODWILL OF $198,532 AND $209,189
RESPECTIVELY                                                                         207,278            213,152
DEFERRED FINANCING COSTS, NET OF ACCUMULATED AMORTIZATION OF $9,122 AND $6,899         9,652             11,851

DEFERRED INCOME TAXES                                                                 18,793             19,172
OTHER ASSETS                                                                           1,204              1,280
                                                                                ------------      -------------
                                                                                $    747,682      $     784,764
                                                                                ============      =============

LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
   Current portion of long term debt                                            $      2,121      $      16,709
   Accounts payable                                                                   54,312             52,371
   Accrued payroll and benefits                                                       10,945              9,525
   Accrued interest                                                                    6,763              6,317
   Accrued integration reserve                                                         2,444              5,000
   Accrued liabilities - other                                                        19,692             14,143
   Income taxes payable                                                                1,853              6,058
                                                                                ------------      -------------
              TOTAL CURRENT LIABILITIES                                               98,130            110,123
LONG-TERM DEBT, LESS CURRENT PORTION                                                 731,886            712,775
OTHER NON-CURRENT LIABILITIES                                                         18,701             26,677
                                                                                ------------      -------------
              TOTAL LIABILITIES                                                      848,717            849,575
                                                                                ------------      -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT:
   Common stock, $.01 par value, authorized 20,000 shares, issued 1,008
      at July 2, 2004 and June 27, 2003                                                    -                  -
   Additional paid-in capital                                                        210,518            188,018
   Accumulated other comprehensive loss                                               (6,000)            (1,737)
   Accumulated deficit                                                               (85,030)           (30,569)
   Less treasury stock at cost, 431 shares                                          (220,523)          (220,523)
                                                                                ------------      -------------
              TOTAL STOCKHOLDERS' DEFICIT                                           (101,035)           (64,811)
                                                                                ------------      -------------
                                                                                $    747,682      $     784,764
                                                                                ============      =============
</TABLE>

                    See accompanying notes to consolidated financial statements.


                                                                             F-4
<PAGE>

                                                                TEKNI-PLEX, INC.

                                           CONSOLIDATED STATEMENTS OF OPERATIONS
                                                          (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                    Years ended                            JULY 2, 2004  June 27, 2003  June 28, 2002
                    -----------                            ------------  -------------  -------------
<S>                                                        <C>           <C>            <C>
NET SALES                                                   $  635,642     $  610,663     $  577,749
COST OF SALES                                                  527,646        459,471        430,457
                                                            ----------     ----------     ----------
              GROSS PROFIT                                     107,996        151,192        147,292
OPERATING EXPENSES:
   Selling, general and administrative                          69,159         61,600         69,444
   Integration expenses                                          7,775         11,164              -
                                                            ----------     ----------     ----------
              INCOME FROM OPERATIONS                            31,062         78,428         77,848
OTHER (INCOME) EXPENSES:
   Interest, net                                                84,451         71,266         70,934
   Unrealized loss (gain) on derivative contracts              (10,654)         1,997          7,830
   Other                                                           605           (531)            (6)
                                                            ----------     ----------     ----------
              INCOME (LOSS) BEFORE PROVISION
                FOR INCOME TAXES                               (43,340)         5,696           (910)
PROVISION FOR INCOME TAXES                                      11,121          2,306          5,677
                                                            ----------     ----------     ----------
NET INCOME (LOSS)                                           $  (54,461)    $    3,390     $   (6,587)
                                                            ==========     ==========     ==========
</TABLE>

                    See accompanying notes to consolidated financial statements.

                                                                             F-5
<PAGE>


                                                                TEKNI-PLEX, INC.

                                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                                                          (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                             Accumulated
                                                              Additional       Other
                                                               Paid-In      Comprehensive   Accumulated   Treasury
                                               Common stock    Capital          Loss          Deficit       Stock          TOTAL
                                               ------------   ----------     ------------   -----------   --------         -----
<S>                                            <C>            <C>           <C>             <C>          <C>            <C>
BALANCE, JUNE 29, 2001                                -           120,176         (7,039)       (27,372)    (220,462)      (134,697)
Net loss                                              -                 -              -         (6,587)           -         (6,587)
Foreign currency translation                          -                 -          3,319              -            -          3,319
Unrealized loss on pension plan, net of tax           -                 -         (3,085)             -            -         (3,085)
                                                                                                                        -----------
Comprehensive loss                                    -                 -              -              -            -         (6,353)
Acquisition of shares                                 -                 -              -              -          (61)           (61)
Capital contributions                                 -            50,000              -              -            -         50,000
                                                  -----       -----------    -----------    -----------  -----------    -----------
BALANCE, JUNE 28, 2002                                            170,176         (6,805)       (33,959)    (220,523)       (91,111)
Net income                                            -                 -              -          3,390            -          3,390
Foreign currency translation                          -                 -          6,320              -            -          6,320
Unrealized loss on pension plan                       -                 -         (1,252)             -            -         (1,252)
                                                                                                                        -----------
  Comprehensive income                                -                 -              -              -            -          8,458
Capital contributions                                 -            17,842              -              -            -         17,842
                                                  -----       -----------    -----------    -----------  -----------    -----------
BALANCE, JUNE 27, 2003                                -           188,018         (1,737)       (30,569)    (220,523)       (64,811)
Net loss                                              -                 -              -        (54,461)           -        (54,461)
Foreign currency translation                          -                 -           (771)             -            -           (771)
Unrealized loss on pension plan                       -                 -         (3,492)             -            -         (3,492)
                                                                                                                        -----------
   Comprehensive loss                                 -                 -              -              -            -        (58,724)
Capital contributions                                 -            22,500              -              -            -         22,500
                                                  -----       -----------    -----------    -----------  -----------    -----------
BALANCE, JULY 2, 2004                                 -       $   210,518    $    (6,000)   $   (85,030) $  (220,523)   $  (101,035)
                                                  =====       ===========    ===========    ===========  ===========    ===========
</TABLE>

                    See accompanying notes to consolidated financial statements.

                                                                             F-6
<PAGE>

                                                                TEKNI-PLEX, INC.

                                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                          (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                         Years ended                               JULY 2, 2004   June 27, 2003   June 28, 2002
                         -----------                               ------------   -------------   -------------
<S>                                                                <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)                                               $    (54,461)   $     3,390     $    (6,587)
   Adjustments to reconcile net income (loss) to net cash
      provided by (used in) operating activities:
        Depreciation                                                     25,377         24,615          20,981
        Amortization                                                      6,927          3,727          18,882
        Goodwill impairments                                             10,000              -               -
        Unrealized (gain) loss on derivative contracts                  (10,654)         1,997           7,830
        Provision for bad debts                                           2,316          2,350             484
        Deferred income taxes                                             7,290         (2,547)          1,234
        Loss on sale of assets                                              177              -               -
        Changes in assets and liabilities, net of acquisitions:
              Accounts receivable                                        (4,806)         4,388         (35,632)
              Inventories                                                 7,305        (40,372)          4,226
              Prepaid expenses and other current assets                     129           (567)            866
              Other assets                                                   76           (202)            (50)
              Accounts payable and other current liabilities              2,600         13,630          (6,136)
              Income taxes payable                                       (2,318)         4,625           5,419
              Other liabilities                                           2,678             (5)         (3,595)
                                                                   ------------    -----------     -----------
                NET CASH PROVIDED BY (USED IN) OPERATING
                   ACTIVITIES                                            (7,364)        15,029           7,922
                                                                   ------------    -----------     -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Acquisitions                                                          (5,780)       (16,762)        (63,624)
   Capital expenditures                                                 (29,472)       (32,232)        (24,653)
   Cash proceeds from sale of assets                                      1,346              -               -
   Additions to intangibles                                                (220)        (1,000)           (169)
                                                                   ------------    -----------     -----------
                NET CASH USED IN INVESTING ACTIVITIES                   (34,126)       (49,994)        (88,446)
                                                                   ------------    -----------     -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net borrowings (repayments) under line of credit                     (15,000)        45,000         (19,000)
   Proceeds from long-term debt                                         267,438          1,116          40,747
   Repayments of long-term debt                                        (248,658)        (9,755)         (7,440)
   Proceeds from capital contributions                                   22,500         17,842          50,000
   Debt financing costs                                                  (2,767)             -            (154)
   Purchase of treasury stock                                                 -              -             (61)
                                                                   ------------    -----------     -----------
                NET CASH PROVIDED BY FINANCING ACTIVITIES                23,513         54,203          64,092
                                                                   ------------    -----------     -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                                    (350)           625             (14)
                                                                   ------------    -----------     -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                    (18,327)        19,863         (16,446)
CASH, BEGINNING OF PERIOD AND CASH EQUIVALENTS                           48,062         28,199          44,645
                                                                   ------------    -----------     -----------
CASH, END OF PERIOD AND CASH EQUIVALENTS                           $     29,735    $    48,062     $    28,199
                                                                   ============    ===========     ===========
</TABLE>

                    See accompanying notes to consolidated financial statements.

                                                                             F-7

<PAGE>

                                                                TEKNI-PLEX, INC.

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

1. SUMMARY OF ACCOUNTING POLICIES     Nature of Business

                                      Tekni-Plex, Inc. and its subsidiaries
                                      ("Tekni-Plex" or the "Company") is a
                                      global, diversified manufacturer of
                                      packaging, packaging products, and
                                      materials as well as tubing products. The
                                      Company primarily serves the food,
                                      healthcare and consumer markets. 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 three primary
                                      business groups: Packaging, Tubing
                                      Products, and other.

                                      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.

                                      Accounts Receivable and Allowance for
                                      Possible Losses

                                      Accounts receivable are customer
                                      obligations due under normal trade terms.
                                      The Company sells its products primarily
                                      to large manufacturers, retailers, and
                                      pharmaceutical companies. The Company
                                      performs continuing credit evaluations of
                                      its customers' financial condition and
                                      although the Company generally does not
                                      require collateral, letters of credit may
                                      be required from its customers in certain
                                      circumstances.

                                      Management reviews accounts receivable on
                                      a monthly basis to determine if any
                                      receivables will potentially be
                                      uncollectible. The Company includes any
                                      accounts receivable balances that are
                                      determined to be uncollectible, along with
                                      a general reserve, in its overall
                                      allowance for possible losses. After all
                                      attempts to collect a receivable have
                                      failed, the receivable is written off
                                      against the allowance. Based on the
                                      information available, the Company
                                      believes its allowance for possible losses
                                      as of July 02, 2004 is adequate. However,
                                      actual write-offs might exceed the
                                      recorded allowance.

                                      Inventories

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

                                                                             F-8
<PAGE>

                                                                TEKNI-PLEX, INC.

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

                                      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 (other than goodwill)

                                      The cost of acquiring certain patents,
                                      trademarks, and customer lists is
                                      amortized over seventeen, ten and five
                                      years, respectively.

                                      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 title
                                      and risk of loss has transferred to the
                                      customer which is generally when goods are
                                      shipped to customers. The Company provides
                                      for returned goods and volume rebates on
                                      an estimated basis based upon agreements
                                      and past experience.

                                      Sales Allowances

                                      The Company accounts for sales allowances,
                                      including volume rebates and advertising
                                      programs, on an accrued basis as a
                                      reduction in net revenue according to
                                      Emerging, Task Force Issue ("EITF") 01-09
                                      "Accounting for consideration given by a
                                      vendor to a customer or a reseller of the
                                      vendor's products" in the period in which
                                      the sales are recognized.

                                      Shipping and Handling Costs

                                      Shipping and handling costs are recorded
                                      to cost of sales.

                                                                             F-9
<PAGE>

                                                                TEKNI-PLEX, INC.

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

                                      Research and Development

                                      Research and development expenditures for
                                      the Company's projects are expensed as
                                      incurred.

                                      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 27, 2003 and June
                                      28, 2002 each contained 52 weeks, and July
                                      2, 2004 contained 53 weeks.

                                      Reclassifications

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

                                      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
                                      accumulated other comprehensive income
                                      (loss). The statement of operations
                                      accounts are translated at the average
                                      rates during the period.

                                      Long-Lived Assets

                                      Long-lived assets, excluding goodwill, are
                                      evaluated annually 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 which would
                                      be determined based on the net present
                                      value of estimated future cash flows. No
                                      impairment losses have been recorded
                                      through July 2, 2004.

                                                                            F-10
<PAGE>

                                                                TEKNI-PLEX, INC.

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

                                      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," as amended by SFAS No. 148,
                                      "Accounting for Stock Based Compensation -
                                      Transition and Disclosure," 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.
                                      Had compensation cost been determined
                                      based on the fair value at the grant dates
                                      for these awards consistent with the
                                      method of SFAS No. 123, the Company's net
                                      income (loss) would have been reduced to
                                      the pro forma amounts indicated below. The
                                      calculations were based on a risk free
                                      interest rate of 4.0%, expected volatility
                                      of zero, a dividend yield of zero, and
                                      expected lives of 8 years.

<TABLE>
<CAPTION>
Years ended              JULY 2, 2004  June 27, 2003  June 28, 2002
                         ------------  -------------  -------------
<S>                      <C>           <C>            <C>
Net income (loss):
      As reported          $(54,461)       $3,390        $(6,587)
                           ========        ======        =======
      Adjustment for
        fair value of
        stock options,
        net of tax         $    (88)       $ (124)       $  (138)
                           ========        ======        =======
      Pro forma            $(54,549)       $3,266        $(6,725)
                           ========        ======        =======
</TABLE>

                                                                            F-11
<PAGE>

                                                                TEKNI-PLEX, INC.

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

                                      Derivative Instruments

                                      The Company applies the provision of
                                      Financial Accounting Standards No. 133,
                                      "Accounting for Derivative Instruments and
                                      Hedging Activities," as amended and
                                      interpreted by SFAS 149 "Amendment of
                                      Statement 133 on Derivative Instruments
                                      and Hedging Activities." SFAS 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 SFAS 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 gain or loss
                                      from derivative instruments in the
                                      Consolidated Statements of Operations.
                                      These are the only derivative instruments
                                      held by Tekni-Plex as of July 2, 2004. The
                                      fair value of derivative contracts are
                                      determined based on quoted market values
                                      obtained from a third party.

                                                                            F-12
<PAGE>

                                                                TEKNI-PLEX, INC.

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

                                      Tekni-Plex has 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
                                      $290,000 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
                                      $(13,065), $(23,719) and $(21,721) on July
                                      2, 2004, June 27, 2003 and June 28, 2002,
                                      respectively, and is included in other
                                      liabilities on the Consolidated Balance
                                      Sheet. For the years ended July 2, 2004,
                                      June 27, 2003 and June 28, 2002,
                                      Tekni-Plex incurred realized gain (losses)
                                      of $10,654, $(8,677) and $(7,939),
                                      respectively, which have been reflected in
                                      interest expense.

                                      Goodwill and Business Combinations

                                      On June 29, 2002 the Company adopted SFAS
                                      142 which 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.

                                      The Company's business combinations were
                                      accounted for using the purchase method
                                      and goodwill was amortized over 15 years.
                                      In accordance with SFAS 142 no
                                      amortization expense was recorded during
                                      the year ended July 2, 2004. During the
                                      year ended June 28, 2002 the acquisition
                                      of the Swan garden hose division of Mark
                                      IV Industries, Inc. resulted in customer
                                      lists and goodwill of $3,900 and $36,200
                                      respectively. In accordance with SFAS 142,
                                      the Swan goodwill was not amortized during
                                      the year ended July 2, 2004.

                                                                            F-13
<PAGE>

                                                                TEKNI-PLEX, INC.

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

                                      If the Company had adopted SFAS 142 on
                                      July 2, 1999, the Company's net income
                                      (loss) for each of the three years in the
                                      period ended July 2, 2004 would have been
                                      as follows:

<TABLE>
<CAPTION>
                               JULY 2,   June 27,   June 28,
                                2004       2003       2002
                              --------   --------   --------
<S>                           <C>        <C>        <C>
Net income (loss) as
   previously reported        $(54,461)   $3,390    $(6,587)
Add amortization, net of tax         -         -      9,299
Adjusted net income (loss)    $(54,461)   $3,390    $ 2,712
                              ========    ======    =======
</TABLE>

                                      The Company completed its year-end
                                      analysis of goodwill, and has concluded an
                                      impairment charge of $10.0 million was
                                      required in accordance with SFAS 142. The
                                      impaired goodwill resulted from the recent
                                      losses of our Specialty Resin operations
                                      of our Other Segment.

                                      New Accounting Pronouncements

                                      In July 2003, the FASB issued SFAS 150,
                                      "Accounting for Certain Financial
                                      Instruments With Characteristics of Both
                                      Liabilities and Equity." SFAS 150 requires
                                      the shares that are mandatorily redeemable
                                      for cash or other assets at a specified or
                                      determinable date or upon an event certain
                                      to occur, be classified as liabilities,
                                      not as part of shareholders equity. SFAS
                                      150 does not currently apply to the
                                      Company.

                                                                            F-14
<PAGE>

                                                                TEKNI-PLEX, INC.

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

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 during
                                      2000.

                                      These transactions were funded by $43,101
                                      of new equity, $275,000 12 3/4% Senior
                                      Subordinated Notes (see Note 7(b)) and
                                      initial borrowings of $374,000 on a
                                      $444,000 Senior Credit Facility (see Note
                                      7(a)).

                                                                            F-15
<PAGE>

                                                                TEKNI-PLEX, INC.

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

3. ACQUISITIONS                       a)  In July 2004, the Company acquired
                                          substantially all the net assets of
                                          the egg carton business of Genpak
                                          ("Genpak") for $5,780. Genpak produces
                                          a variety of foam products, including
                                          foam egg cartons. The financial
                                          results of the Genpak transaction are
                                          included in the Packaging Segment. The
                                          proforma results of operation of the
                                          Genpak assets as though the
                                          acquisition occurred on June 28, 2002
                                          are immaterial. The acquisition was
                                          recorded under the purchase method,
                                          whereby the acquired Genpak net assets
                                          were recorded at estimated fair value,
                                          and its operations have been reflected
                                          in the statement of operations since
                                          that date. The allocation of purchase
                                          price is as follows:

<TABLE>
<S>                                              <C>
Assets:
Inventory                                        $    303
Plant property and equipment                        1,044
Customer list and covenant not to compete           4,433
                                                  -------
Total Assets                                        5,780
Liabilities                                            --
                                                  -------
Net Investment                                   $  5,780
                                                  =======
</TABLE>

                                      b)  In July 2002, the Company acquired
                                          substantially all the net assets of
                                          Elm Packaging Company ("ELM") for
                                          $16,762. Elm produces polystyrene foam
                                          plates, bowls, and meat and bakery
                                          trays. The financial results of Elm
                                          are included in the Packaging segment.
                                          The acquisition was recorded under the
                                          purchase method, whereby Elm's net
                                          assets were recorded at estimated fair
                                          value and its operations have been
                                          reflected in the statement of
                                          operations since that date. The
                                          allocation of purchase price is as
                                          follows:

<TABLE>
<S>                                       <C>
Assets:
Accounts receivable                       $ 3,449
Inventory                                   1,829
Deferred taxes                              1,695
Fixed assets                               12,487
Goodwill                                   10,051
Other assets                                  334
                                          -------
      Total Assets                         29,845
                                          =======
</TABLE>

                                                                            F-16
<PAGE>

                                                                TEKNI-PLEX, INC.

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

<TABLE>
<S>                                       <C>
Liabilities:
Accounts payable and accrued expenses       8,583
Integration reserve                         4,500
                                          -------
Net investment                            $16,762
                                          =======
</TABLE>

                                      The components of the Integration reserve
                                      and activity through July 2, 2004 was as
                                      follows:

<TABLE>
<CAPTION>
                                Costs                    Costs
                    Balance   charged to    Balance    charged to    Balance
                   July 2002   reserve     July 2003    reserve    July 2, 2004
                   ---------  ----------   ---------   ----------  ------------
<S>                <C>        <C>          <C>         <C>         <C>
Reduction in
   personnel and
   related costs     $1,000        1,000   $        -  $       -   $         -
Legal and
   environmental
   liability         $3,500        1,000        2,500      1,337         1,163
                     ------   ----------   ----------  ---------   -----------
                     $4,500   $    2,000   $    2,500  $   1,337   $     1,163
                     ======   ==========   ==========  =========   ===========
</TABLE>

                                      The remaining legal and environmental
                                      costs are expected to extend over the next
                                      four years.

                                      The following table represents the
                                      unaudited proforma results of operations
                                      as though the acquisition of Elm occurred
                                      on June 29, 2001. The proforma effect on
                                      the year ended July 2, 2004 would be
                                      immaterial.

<TABLE>
<CAPTION>
                             Year ended
                            June 28, 2002
                            -------------
<S>                         <C>
Net sales                     $617,892
Income from operations          75,553
Loss before income taxes        (4,794)
                              ========
</TABLE>

                                                                            F-17
<PAGE>

                                                                TEKNI-PLEX, INC.

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

                                      In October 2001, the Company purchased
                                      certain assets and assumed certain
                                      liabilities of Swan for approximately
                                      $63,600. Swan is a manufacturer of garden
                                      hose. The financial results of Swan are
                                      included in the tubing segment. The
                                      acquisition was recorded under the
                                      purchase method, whereby Swan's net assets
                                      were recorded at estimated fair value and
                                      its operations have been reflected in the
                                      statement of operations since that date.
                                      The allocation of the purchase price is as
                                      follows:

<TABLE>
<S>                                       <C>
Assets:
Accounts Receivable                       $    7,184
Inventory                                     15,600
Deferred Taxes                                 3,570
Fixed Assets                                  17,568
Customer lists                                 3,900
Goodwill                                      35,008
                                          ----------
      Total Assets                            82,830
Liabilities:

Accounts Payable and accrued expenses         11,230
Integration reserve                            8,000
                                          ----------
Net Investment                            $   63,600
                                          ==========
</TABLE>

                                                                            F-18
<PAGE>


                                                                TEKNI-PLEX, INC.

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

                                      In connection with the acquisition, the
                                      Company incurred an integration reserve of
                                      $10 million.  The components of the
                                      Integration reserve and activity through
                                      July 2, 2004 was as follows:

<TABLE>
<CAPTION>
                                                      Costs              Cost                 Balance   Costs
                                                     charged  Balance   charged                June    charged  Adjustments  Balance
                                            October     to    June 28,    to     Adjustments    27,      to          to      July 2,
                                              2001   Reserve    2002    Reserve  to Reserve    2003    Reserve    Reserve     2004
                                            -------  -------  --------  -------  -----------  -------  -------  -----------  -------
<S>                                         <C>      <C>      <C>       <C>      <C>          <C>      <C>      <C>          <C>
Cost to close duplicate facilities          $ 3,500   $1,340  $ 2,160    $  101    $(2,059)   $    -   $    -        $ -     $    -
Reduction in personnel and related costs      2,100      718    1,382         -     (1,382)        -        -          -          -
Legal and environmental                       1,275       40    1,235     1,360      2,625     2,500    1,219          -      1,281
Manufacturing reconfiguration                 1,455      175    1,280         -     (1,280)        -        -          -          -
Other                                         1,670      972      698       794         96         -        -          -          -
                                            -------   ------  -------    ------    -------    ------   ------        ---     ------
                                            $10,000   $3,245  $ 6,755    $2,255    $(2,000)*  $2,500   $1,219        $ -     $1,281
                                            =======   ======  =======    ======    =======    ======   ======        ===     ======
</TABLE>

                                      *$2,000 adjustment was recorded to
                                      beginning balance Integration reserve as
                                      an adjustment to the original estimates
                                      prepared by the Company. Goodwill was
                                      adjusted for the aforementioned amount.

                                      The remaining legal and environmental
                                      costs are expected to extend over the next
                                      four years.

                                      The following table represents the
                                      unaudited proforma results of operations
                                      as though the acquisition of Swan occurred
                                      on June 29, 2001.

<TABLE>
<CAPTION>
                           Year ended June
                               28, 2002
                           ---------------
<S>                        <C>
Net sales                    $ 589,045
Income from operations          75,863
                             ---------
Loss before income taxes        (2,895)
                             =========
</TABLE>

                                                                            F-19
<PAGE>

                                                                TEKNI-PLEX, INC.

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

                                      In November 2000, the Company purchased
                                      certain assets of Super Plastics Division
                                      ("Super Plastics") of RCR International,
                                      Inc., for approximately $10,226. 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.

4. INVENTORIES                        Inventories are summarized as follows:

<TABLE>
<CAPTION>
                 JULY 2, 2004       June 27, 2003
                 ------------       -------------
<S>               <C>               <C>
Raw materials     $   58,881          $  51,810
Work-in-process       12,668             10,219
Finished goods        82,258             99,304
                  ----------          ---------
                  $  153,807          $ 161,333
                  ==========          =========
</TABLE>

5. PROPERTY, PLANT AND EQUIPMENT      Property, plant and equipment consists of
                                      the following:

<TABLE>
<CAPTION>
                                                                 Estimated
                                 JULY 2, 2004   June 27, 2003   useful lives
                                 ------------   -------------   ------------
<S>                              <C>            <C>             <C>
Land                              $   15,663     $   16,315
Building and improvements             57,097         54,072     25-40 years
Machinery and equipment              221,552        199,645     5 - 10 years
Furniture and fixtures                 9,581          7,837     5 - 10 years
Construction in progress              20,660         17,366
                                  ----------     ----------
                                     324,553        295,235
Less accumulated depreciation        141,804        115,714
                                  ----------     ----------
                                  $  182,749     $  179,521
                                  ==========     ==========
</TABLE>

                                                                            F-20
<PAGE>


                                                                TEKNI-PLEX, INC.

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

6. INTANGIBLE ASSETS                  Intangible assets consist of the
                                      following:

<TABLE>
<CAPTION>
                                                 JULY 2, 2004          June 27, 2003
                                                 ------------          -------------
<S>                                              <C>                   <C>
Goodwill                                           $ 276,182             $286,839
Customer list and non-compete agreement                9,680                3,900
Patents                                                1,966                1,745
                                                   ---------             --------
                                                     287,828              292,484
Less accumulated amortization                         80,550               79,332
                                                   ---------             --------
                                                   $ 207,278             $213,152
                                                   =========             ========
</TABLE>

                                      As a result of the adoption of SFAS 142,
                                      the Company discontinued amortizing
                                      goodwill effective June 29, 2002. Patents
                                      and customer list continue to be
                                      amortized. Amortization of customer list
                                      will be $780 annually through the first
                                      quarter of 2007. Patents will be amortized
                                      $439 annually. Amortization is expected to
                                      continue at this amount until 2010 when it
                                      will begin to decline. Accumulated
                                      amortization for Goodwill, customer list
                                      and Patents at July 2, 2004 and June 27,
                                      2003 were $77,650, $2,144, $756 and
                                      $77,650, $1,365, and $317, respectively.
                                      During the Company's SFAS 142 impairment
                                      tests, it was noted that $10,000 of
                                      goodwill related to the Specialty Resin
                                      operation of our Other Segment was
                                      impaired due to this units recent
                                      performance. This amount was written off
                                      as of July 2, 2004.

                                                                            F-21
<PAGE>

                                                                TEKNI-PLEX, INC.

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

7. LONG-TERM DEBT                     Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                               JULY 2, 2004     June 27, 2003
                                               ------------     -------------
<S>                                            <C>              <C>
Senior Debt (a):
   Revolving line of credit                    $     76,000     $     91,000
   Term notes                                        71,263          319,790
Senior Subordinated Notes issued June 21,
   2000 at 12-3/4%, due June 15, 2010 (less
   unamortized discount of $2,260 and
   $2,637) (b).                                     272,740          272,363
Senior Subordinated Notes issued May 2002 at
   12-3/4%, due June 15, 2010 (less
   unamortized premium of $437 and $512 (b).        40,437           40,512
Senior Secured Notes issued November 21,
   2003 at 8-3/4 %, due November 15, 2013
   (less unamortized discount of $7,121)            267,879                -
Other, primarily foreign term loans, with
   interest rates ranging from 4.44% to
   5.44% and maturities from 2003 to 2010.            5,688            5,819
                                               ------------     ------------
                                                    734,007          729,484
Less: Current maturities                              2,121           16,709
                                               ------------     ------------
                                               $    731,886     $    712,775
                                               ============     ============
</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 aggregate
                                          amount of $344,000. These loans are
                                          senior to all other indebtedness and
                                          are collateralized by substantially
                                          all the assets of the Company. The
                                          amended debt agreement includes
                                          various covenants which include a
                                          limitation on capital expenditures and
                                          compliance with customary financial
                                          ratios. The Company paid off one of
                                          the term loans with the issuance of
                                          the Senior Secured Notes. The Company
                                          was in violation of certain financial
                                          covenants as of July 2, 2004 which
                                          were subsequently waived and amended
                                          for future periods.

                                                                            F-22
<PAGE>

                                                                TEKNI-PLEX, INC.

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

                                          Revolving Credit Agreement

                                          Borrowings under the agreement may be
                                          used for general corporate purposes
                                          with $24 million of additional
                                          borrowings available at July 2, 2004.
                                          Interest, at the Company's option, is
                                          charged at the Prime Rate (4.25% at
                                          July 2, 2004), plus the Applicable
                                          Base Rate Margin (currently 2.5%) or
                                          the Adjusted LIBOR Rate, as defined,
                                          plus the Applicable Euro-Dollar Margin
                                          (currently 3.5%). At July 2, 2004 the
                                          balance of $76,000 outstanding was
                                          borrowed at various rates ranging from
                                          4.8% to 6.5%. At June 27, 2003, the
                                          rate charged was 4.875%. The Revolving
                                          Credit Agreement expires in June 2006.
                                          The Company also had approximately
                                          $2.2 million of outstanding letters of
                                          credit as of July 2, 2004.

                                          Term Loan A

                                          This loan, in the original amount of
                                          $100,000, with interest payable
                                          quarterly at the same rates and
                                          margins discussed above under the
                                          Revolving Credit Agreement, 4.4% at
                                          June 27, 2003, was repaid with
                                          proceeds from the issuance of the
                                          Senior Secured Notes.

                                          Term Loan B

                                          This loan, in the original amount of
                                          $244,000, bears interest payable
                                          quarterly at the same rate discussed
                                          above, except the Applicable Base Rate
                                          Margin is currently 3.0% and the
                                          Applicable Euro-Dollar Margin is
                                          currently 4.0%. Rates of 5.6% and 4.9%
                                          were charged at July 2, 2004 and June
                                          27, 2003, respectively. This loan was
                                          paid down by $164,250 with the
                                          proceeds of the issuance of the Senior
                                          Secured Notes. Principal is currently
                                          payable in quarterly installments of
                                          $186. The quarterly installments
                                          subsequently increase with payments
                                          totaling $69,778 due in the final two
                                          years in the period ending in June
                                          2008.

                                                                            F-23
<PAGE>

                                                                TEKNI-PLEX, INC.

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

                                      b)  Senior Subordinated Notes Issued June
                                          2000 and May 2002

                                          In June 2000, the Company issued
                                          $275,000 of 12-3/4% ten year Senior
                                          Subordinated Notes less a discount of
                                          $3,768. The discount is being
                                          amortized over the term of the notes
                                          on the straight line method. Interest
                                          is payable semi-annually and the notes
                                          are unsecured obligations and rank
                                          subordinate to existing and future
                                          senior debt, including the 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. 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.

                                          On May 6, 2002, the Company issued an
                                          additional $40,000 of 12-3/4% Senior
                                          Subordinated Notes plus a premium of
                                          $600, the proceeds of which were used
                                          to repay borrowings under the
                                          revolving credit facility. The premium
                                          is being amortized over the term of
                                          the notes on the interest method.
                                          These notes have the same terms and
                                          maturity as the June 2000 notes
                                          discussed above.

                                                                            F-24
<PAGE>

                                                                TEKNI-PLEX, INC.

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

                                          Senior Secured Notes

                                          On November 21, 2003, the Company
                                          issued $275,000 of 8-3/4 % Senior
                                          Secured Notes less a discount of
                                          $7,563. The proceeds were used to pay
                                          off Term Loan A and pay down Term Loan
                                          B. The discount is being amortized
                                          over the term of the notes on the
                                          straight line method. Interest is
                                          payable semi-annually and the notes
                                          are secured obligations and rank
                                          subordinate to the Senior Debt. Up to
                                          35% of the Notes are callable by the
                                          Company prior to November 15, 2006 at
                                          a premium of 8.75%. All the notes are
                                          callable by the Company after November
                                          15, 2008 at a premium of 4.375% which
                                          decreases to par after November 2011.
                                          Upon a change in control, the holders
                                          have the right to require the Company
                                          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.

                                          Scheduled principal payments on debt
                                          over the next five years and
                                          thereafter are as follows:

<TABLE>
                                          <C>              <C>
                                          2005             $   2,121
                                          2006                77,076
                                          2007                35,145
                                          2008                35,161
                                          2009                   380
                                          Thereafter         584,124
</TABLE>

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

                                                                            F-25
<PAGE>

                                                                TEKNI-PLEX, INC.

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

8. INCOME TAXES                       The provision for income taxes is
                                      summarized as follows:

<TABLE>
<CAPTION>
                             JULY 2,       June 27,         June 28,
Years ended                   2004           2003             2002
                           ---------      ---------         -------
<S>                        <C>            <C>               <C>
Current:
   Federal                  $      -      $       -         $   259
   Foreign                     3,781          4,504           2,180
   State and local                50            349           2,004
                            --------      ---------         -------
                               3,831          4,853           4,443
                            --------      ---------         -------
Deferred:
   Federal                     7,000         (2,072)            474
   Foreign                       290            (89)            676
   State and local                 -           (386)             84
                            --------      ---------         -------
                               7,290         (2,547)          1,234
                            --------      ---------         -------
Provision (benefit) for
  income taxes              $ 11,121      $   2,306         $ 5,677
                            ========      =========         =======
</TABLE>

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

<TABLE>
<CAPTION>
                             JULY 2,       June 27,         June 28,
Years ended                   2004           2003             2002
                           ---------      ---------         -------
<S>                        <C>            <C>               <C>
Domestic                    $(51,586)     $  (5,918)        $(9,448)
Foreign                        8,246         11,614           8,538
                            --------      ---------         -------
                            $(43,340)     $   5,696         $  (910)
                            ========      =========         =======
</TABLE>

                                                                            F-26
<PAGE>

                                                                TEKNI-PLEX, INC.

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (DOLLARS IN THOUSANDS, EXCEPT PERCENTAGES AND 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>
                                           JULY 2,    June 27,    June 28,
Years ended                                 2004        2003        2002
                                        ----------    --------    -------
<S>                                     <C>           <C>         <C>
Provision (benefit) for Federal
   income taxes at statutory rate       $  (14,736)   $  1,937    $  (309)
State and local income taxes, net
   of Federal benefit                       (1,655)        (24)     1,427
Non-deductible goodwill
   impairment                                3,400           -      3,647
Foreign tax rates in excess of
   Federal tax rate                          1,262         406        874
Increase in Valuation Allowance             23,319           -          -
Other, net                                    (469)        (13)        38
                                        ----------    --------    -------
Provision (benefit) for income taxes    $   11,121    $  2,306    $ 5,677
                                        ==========    ========    =======
</TABLE>

                                                                           F-27

<PAGE>

                                                                TEKNI-PLEX, INC.

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

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

<TABLE>
<CAPTION>
                                                JULY 2,          June 27,
                                                 2004              2003
                                              ----------        ----------
<S>                                           <C>               <C>
Current deferred taxes:
   Allowance for doubtful accounts            $    1,961        $    1,302
   Inventory                                       2,103             1,877
   Net operating loss carryforwards                1,009               557
   Accrued expenses                                1,365             2,999
                                              ----------        ----------
       Total current deferred tax assets      $    6,438        $    6,735
                                              ----------        ----------
Long-term deferred taxes:
   Net operating loss carryforwards           $   54,400        $   33,983
   Accrued pension and post-retirement             2,657             1,265
   Unrealized loss on derivative contracts         4,965             9,013
   Unrealized loss of pension plan                 3,265             2,657
   Difference in book and tax basis of assets       (609)             (848)
   Difference in depreciation                    (16,139)          (18,720)
   Goodwill - deductible for tax purposes         (5,202)           (2,768)
   Other expenses                                    309               190
                                              ----------        ----------
       Total long-term net deferred tax
         assets                                   43,646            24,772
                                              ----------        ----------
       Total current and long term deferred
         tax assets                               50,084            31,507
Valuation allowance                              (31,291)           (5,600)
                                              ----------        ----------
Total long-term net deferred tax assets       $   18,793        $   19,172
                                              ==========        ==========
</TABLE>

                                                                            F-28
<PAGE>
                                                                TEKNI-PLEX, INC.

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (DOLLARS IN THOUSANDS, EXCEPT PERCENTAGES AND 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
                                   $150,000. These NOL's expire at various dates
                                   from 2009 through 2024. Approximately $82,000
                                   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 $5,600. As a
                                   result of this limitation the Company can
                                   utilize a maximum of $79,600 of PureTec
                                   NOL's.

                                   The Company and its U.S. subsidiaries would
                                   need to generate income of $150,000 through
                                   2023, of which $82,000 is limited as
                                   discussed above, in order to fully realize
                                   the benefit of the NOL carry forwards. The
                                   net long-term domestic deferred tax assets
                                   have been subjected to a valuation allowance
                                   of $21,300 which relates to Federal NOL's
                                   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. Net deferred tax asset on the balance
                                   sheet has been recognized based on our
                                   projected usage of NOL's over the next three
                                   years.

                                   In addition to the domestic NOL balances, the
                                   Company has incurred losses relating to a
                                   subsidiary, taxable in Northern Ireland.
                                   Through fiscal 2004 losses aggregated $597
                                   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.

9.    EMPLOYEE BENEFIT PLANS       (a)  Savings Plans

                                        i.  The Company maintains a
                                            discretionary 401(k) plan covering
                                            all eligible employees (excluding
                                            Elm employees) with at least one
                                            year of service. Contributions to
                                            the plan are determined annually by
                                            the Board of Directors.

                                                                            F-29
<PAGE>

                                                                TEKNI-PLEX, INC.

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

                                            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 July 2,
                                            2004, June 27, 2003 and June 28,
                                            2002, amounted to 1,043, $1,207,
                                            $1,130, respectively.

                                        ii. The Company maintains a 401(k) plan
                                            covering all eligible Elm employees
                                            with at least sixty days of service
                                            and who have attained the age of
                                            twenty-one. The Company matches 50%
                                            of employee contributions up to 6%
                                            of the employee's eligible
                                            compensation. Contributions for the
                                            fiscal year ended July 2, 2004
                                            amounted to $94.

                                   (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.

                                                                            F-30
<PAGE>
                                                                TEKNI-PLEX, INC.

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

                                           The components of net periodic
                                           pension costs are as follows:

<TABLE>
<CAPTION>
                                                   YEAR ENDED       Year ended       Year ended
                                                     JULY 2,         June 27,         June 28,
                                                      2004             2003             2002
                                                  ------------     ------------     ------------
<S>                                               <C>              <C>              <C>
Service cost                                      $        127     $        107     $        105
Interest cost on projected benefit obligation              421              420              400
Expected actual return on plan assets                     (443)            (451)            (494)
Amortization of unrecognized:
     Prior service cost                                     12               12                -
     Net loss                                              182              105                -
                                                  ------------     ------------     ------------
Net pension cost                                  $        299     $        193     $         11
                                                  ============     ============     ============
</TABLE>

<TABLE>
<CAPTION>
                                                     YEAR ENDED       Year ended
                                                       JULY 2,         June 27,
                                                        2004             2003
                                                    ------------     ------------
<S>                                                 <C>              <C>
CHANGE IN PROJECTED BENEFIT OBLIGATION
Projected benefit obligation, beginning of period   $      6,835     $      6,034
Service cost                                                 127              107
Interest cost                                                421              420
Actuarial loss                                                71              612
Benefits paid                                               (340)            (338)
                                                    ------------     ------------
Projected benefit obligation, end of period         $      7,114     $      6,835
                                                    ============     ============
CHANGE IN PLAN ASSETS
Plan assets at fair value, beginning of period      $      5,013     $      5,167
Actual return on plan assets                                 311              158
Company contributions                                        154               26
Benefits paid                                               (340)            (338)
                                                    ------------     ------------
Plan assets at fair value, end of period            $      5,138     $      5,013
                                                    ============     ============
</TABLE>

                                                                            F-31
<PAGE>
                                                                TEKNI-PLEX, INC.

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

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

<TABLE>
<CAPTION>
                                                         JULY 2, 2004     June 27, 2003
                                                         ------------     -------------
<S>                                                      <C>              <C>
Funded status of the plan                                $     (1,976)    $     (1,822)
Unrecognized prior service cost                                    87               99
Unrecognized net loss                                           2,316            2,294
                                                         ------------     ------------
Prepaid pension cost                                     $        427     $        571
                                                         ============     ============
</TABLE>

                                           The expected long-term rate of return
                                           on plan assets was 9% for the periods
                                           presented and the discount rate was
                                           6.25% and 6.25% at July 2, 2004 and
                                           June 27, 2003.

                                           The Company recorded an unrecognized
                                           pension liability of $2,316 and
                                           $2,294 at July 2, 2004 and June 27,
                                           2003, respectively, as an accumulated
                                           other comprehensive loss adjustment
                                           to stockholders' equity. These
                                           amounts represent a portion of the
                                           unrecognized net actuarial loss for
                                           the years ending July 2, 2004 and
                                           June 27, 2003 as a result of an
                                           investment return less than the
                                           actuarial assumption.

                                           The Company maintains a
                                           non-contributory defined benefit
                                           pension plan that covers
                                           substantially all non-collective
                                           bargaining unit employees of
                                           Plastics, Specialties and Technology
                                           ("PS&T") and Burlington, who have
                                           completed one year of service and are
                                           not participants in any other pension
                                           plan required by applicable
                                           regulations. 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.

                                                                            F-32
<PAGE>

                                                                TEKNI-PLEX, INC.

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

                                           The components of net periodic
                                           pension cost are as follows:

<TABLE>
<CAPTION>
                                                 YEAR ENDED       Year ended       Year ended
                                                   JULY 2,         June 27,         June 28,
                                                    2004             2003             2002
                                                ------------     ------------     ------------
<S>                                             <C>              <C>              <C>
Service cost                                    $          -     $          -     $          -
Interest cost on projected benefit obligation            792              790              762
Expected actual return on plan assets                   (816)            (839)            (931)
Amortization of unrecognized
Net loss                                                 280              178               25
                                                ------------     ------------     ------------
Net pension cost                                $        256     $        129     $       (144)
                                                ============     ============     ============
</TABLE>

<TABLE>
<CAPTION>
                                                                YEAR ENDED       Year ended
                                                                  JULY 2,         June 27,
                                                                   2004             2003
                                                               ------------     ------------
<S>                                                            <C>              <C>
CHANGE IN PROJECTED BENEFIT OBLIGATION
Projected benefit obligation, beginning of period              $     12,932     $     11,274
Interest cost                                                           792              790
Actuarial loss                                                          (32)           1,370
Benefits paid                                                          (482)            (502)
                                                               ------------     ------------
Projected benefit obligation, end of period                    $     13,210     $     12,932
                                                               ============     ============
CHANGE IN PLAN ASSETS
Plan assets at fair value, beginning of period                 $      9,303     $      9,539
Actual return on plan assets                                            839              266
Benefits paid                                                          (482)            (502)
                                                               ------------     ------------
Plan assets at fair value, end of period                       $      9,660     $      9,303
                                                               ============     ============
</TABLE>

                                                                            F-33
<PAGE>
                                                                TEKNI-PLEX, INC.

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

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

<TABLE>
<CAPTION>
                                                        JULY 2, 2004     June 27, 2003
                                                        ------------     -------------
<S>                                                     <C>              <C>
Funded status of the plan                               $     (3,551)    $     (3,628)
Unrecognized net loss                                          4,912            5,245
                                                        ------------     ------------
Prepaid pension cost                                    $      1,361     $      1,617
                                                        ============     ============
</TABLE>

                                            The expected long-term rate of
                                            return on plan assets was 9% for the
                                            periods presented and the discount
                                            rate 6.25% and 6.25% at July 2, 2004
                                            and June 27, 2003.

                                            The Company recorded an unrecognized
                                            pension liability of $4,912 and
                                            $5,245 as of July 2, 2004 and June
                                            27, 2003, respectively, as an
                                            accumulated other comprehensive loss
                                            adjustment to stockholders' equity.
                                            These amounts represent a portion of
                                            the unrecognized net actuarial loss
                                            for the years ending July 2, 2004
                                            and June 27, 2003 as a result of an
                                            investment return less than the
                                            actuarial assumption.

                                        ii. The Company also has a defined
                                            benefit pension plan for the benefit
                                            of all employees having completed
                                            one year of service with Dolco. The
                                            funding policy of the Company is to
                                            make the minimum required
                                            contribution for the plan year
                                            required by applicable regulations.
                                            Dolco's Board of Directors approved
                                            a plan to freeze this defined
                                            benefit 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.

                                                                            F-34
<PAGE>
                                                                TEKNI-PLEX, INC.

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

                                            The components of net periodic
                                            pension costs are as follows:

<TABLE>
<CAPTION>
                                          YEAR ENDED       Year ended       Year ended
                                            JULY 2,         June 27,         June 28,
                                             2004             2003             2002
                                         ------------     ------------     ------------
<S>                                      <C>              <C>              <C>
Service cost                             $          -     $          -     $          -
Interest cost on projected benefit
     obligation                                   251              261              257
Expected actual return on plan assets            (234)            (285)            (301)
Amortization of unrecognized net loss             111               79               28
                                         ------------     ------------     ------------
Net pension cost                         $        128     $         55     $        (16)
                                         ============     ============     ============
</TABLE>

<TABLE>
<CAPTION>
                                                      YEAR ENDED       Year ended
                                                        JULY 2,         June 27,
                                                         2004            2003
                                                     ------------     ------------
<S>                                                  <C>              <C>
CHANGE IN PROJECTED BENEFIT OBLIGATION

Projected benefit obligation, beginning of period    $      4,205     $      4,049
Interest cost                                                 251              261
Actuarial loss (gain)                                        (126)             365
Benefits paid                                                (378)            (470)
                                                     ------------     ------------
Projected Benefit Obligation, end of period          $      3,952     $      4,205
                                                     ============     ============
CHANGE IN PLAN ASSETS

Plan assets at Fair Value, beginning of period       $      3,144     $      3,388
Actual return on plan assets                                  271              226
Company contributions                                         343
Benefits paid                                                (378)            (470)
                                                     ------------     ------------
Plan assets at Fair Value, end of period             $      3,380     $      3,144
                                                     ============     ============
</TABLE>

                                                                            F-35
<PAGE>
                                                                TEKNI-PLEX, INC.

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

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

<TABLE>
<CAPTION>
                                                     JULY 2, 2004     June 27, 2003
                                                     ------------     -------------
<S>                                                  <C>              <C>
Funded status of the Plan                            $       (571)    $     (1,061)
Unrecognized net loss                                       1,367            1,642
                                                     ------------     ------------
Prepaid pension cost                                 $        796     $        581
                                                     ============     ============
</TABLE>

                                        The expected long term rate of return on
                                        plan assets was 7.5% and the discount
                                        rate was 6.0% for the periods presented.

                                        The Company recorded an unrecognized
                                        pension liability of $1,367 and $1,642
                                        as of July 2, 2004 and June 27, 2003,
                                        respectively, an accumulated other
                                        comprehensive loss and adjustment to
                                        stockholders equity. These amounts
                                        represent a portion of the unrecognized
                                        net loss for the years ending July 2,
                                        2004 and June 27, 2003.

                                   (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 July 2, 2004, June 27,
                                        2003 and June 28, 2002 amounted to $407,
                                        $337 and $177, respectively, net of
                                        retiree contributions.

                                                                            F-36
<PAGE>
                                                                TEKNI-PLEX, INC.

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

                                        Net periodic post-retirement benefit
                                        costs are as follows:

<TABLE>
<CAPTION>
                                           YEAR ENDED       Year ended      Year ended
                                          JULY 2, 2004    June 27, 2003   June 28, 2002
                                          ------------    -------------   -------------
<S>                                       <C>              <C>              <C>

Service cost                              $        154    $         82    $         55
Interest cost                                      409             247             206
Prior service cost                                 141               -               -
Net loss                                           246              91              34
                                          ------------    ------------    ------------
      Net post-retirement benefit cost    $        950    $        420    $        295
                                          ============    ============    ============
</TABLE>

<TABLE>
<CAPTION>
                                                      YEAR ENDED       Year ended
CHANGE IN PROJECTED BENEFIT OBLIGATION               JULY 2, 2004     June 27, 2003
                                                     ------------     -------------
<S>                                                  <C>              <C>
Projected benefit obligation, beginning of period    $      6,699     $      3,621
Service cost                                                  154               82
Interest cost                                                 409              247
Plan amendments                                                 -            1,198
Actuarial loss                                             (1,267)           1,888
Benefits paid                                                (407)            (337)
                                                     ------------     ------------
Projected benefit obligation, end of period          $      5,588     $      6,699
                                                     ============     ============
CHANGE IN PLAN ASSETS

Plan assets at fair value, beginning of period       $          -     $          -
Company contributions                                         407              337
Benefits paid                                                (407)            (337)
                                                     ------------     ------------
Plan assets at fair value, end of period             $          -     $          -
                                                     ============     ============
</TABLE>

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

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (DOLLARS IN THOUSANDS, EXCEPT PERCENTAGES AND 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
                                                JULY 2, 2004     June 27, 2003
                                                ------------     -------------
<S>                                             <C>              <C>
Funded status of the plan                       $     (5,588)    $     (6,699)
Unrecognized loss                                      1,569            3,081
Unrecognized service cost                              1,057            1,198
                                                ------------     ------------
Accrued post retirement cost                    $     (2,962)    $     (2,420)
                                                ============     ============
</TABLE>

                                        The accumulated post-retirement benefit
                                        obligation was determined using a 6.25%
                                        and 6.25% discount rate for the periods
                                        presented. The healthcare cost trend
                                        rate for medical benefits was changed
                                        from a flat 6.00% as of June 28, 2002 to
                                        a graded trend started at 12% for 2003
                                        and decreasing 1% each year to 6.00% in
                                        2009 and then to an ultimate rate of
                                        5.50% for 2010 and beyond. 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 $378 and $518 and increase
                                        the service and interest components by
                                        $47 and $33 at July 2, 2004 and June 27,
                                        2003, respectively.

                                        The Company's plan asset allocation at
                                        2004 and 2003 and target allocations for
                                        2005 are as follows:

<Table>
<Caption>
Security                                  Percentage of          Target
  Type                                      Plan Assets        Allocation
--------                                 ---------------       ----------
                                         2004       2003          2005
                                         ----       ----          ----
<S>                                      <C>        <C>        <C>
Guaranteed Investment
  Contract                                  6%         7%            5%

Equity Securities                          57%        52%           55%

Debt Securities                            37%        41%           40%
                                         ----       ----          ----

Total Plan Assets                         100%       100%          100%
                                         ====       ====          ====
</Table>

                                        The Company's investment policy is to
                                        invest in stock and balanced funds of
                                        mutual fund and insurance companies to
                                        preserve principal while at the same
                                        time establish a minimum rate of return
                                        of approximately 5%. No more than
                                        one-third of the total plan assets are
                                        placed in any one fund.

                                        The expected long-term
                                        rate-of-return-on-assets is 8.5%. This
                                        return is based upon the historical
                                        performance of the currently invested
                                        funds.

                                        The benefits expected to be paid for
                                        each of the next five years and in the
                                        aggregate for the following five years
                                        are:

                                           2005            $1,239
                                           2006             1,324
                                           2007             1,418
                                           2008             1,512
                                           2009             1,589
                                           2010-2014        8,616


10.   STOCK OPTIONS           In January 1998, the Company  adopted an incentive
                              stock plan (the "Stock Incentive Plan"). Under the
                              Stock Incentive Plan, 45.75206 shares are
                              available for awards to employees of the Company.
                              Options are granted at fair market value on the
                              date of grant. As of July 2, 1999 options to
                              purchase 38.17 shares of common stock were
                              outstanding at weighted-average exercise price of
                              $177. During 2001 options were granted to purchase
                              4.02 shares of common stock at weighted average
                              exercise prices of $559 per share. During 2003
                              options to purchase 2.01 shares of common stock at
                              a weighted average exercise price of $177 were
                              forfeited and options to purchase 2.01 shares of
                              common stock at a weighted average exercise price
                              of $680 were issued. The options are subject to
                              vesting provisions, as determined by the Board of
                              Directors, and generally vest 100% five years from
                              grant date and expire 10 years from date of grant.

                                                                            F-38
<PAGE>
                                                                TEKNI-PLEX, INC.

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

                              At July 2, 2004, 18.29 options were outstanding,
                              5.49 options were exercisable and no options have
                              been exercised.

11.   COMMITMENTS AND         Commitments
      CONTINGENCIES
                              (a)  The Company leases building space and certain
                                   equipment in approximately 20 locations
                                   throughout the United States, Canada and
                                   Europe. At July 2, 2004, the Company's
                                   future minimum lease payments are as
                                   follows:

<TABLE>
                                   <S>                   <C>
                                   2005                  $  8,037
                                   2006                     7,844
                                   2007                     7,411
                                   2008                     6,028
                                   2009                     4,577
                                   Thereafter              16,822
                                                         --------
                                                         $ 50,719
                                                         ========
</TABLE>

                                   Rent expense, including escalation charges,
                                   amounted to approximately $10,964, $10,941
                                   and $8,259 for the years ended July 2, 2004,
                                   June 27, 2003 and June 28, 2002,
                                   respectively.

                             (b)   The Company has employment contracts with
                                   two officers, providing minimum annual
                                   salaries of $7,500 with no mandatory
                                   bonuses. The salaries will increase 10%
                                   annually until the agreements expire on June
                                   29, 2007. Salaries and bonuses to these
                                   officers for the years ended July 2, 2004,
                                   June 27, 2003 and June 28, 2002 amounted to
                                   $9,983, $9,075 and $8,250.

                             Contingencies

                             (a)   The Company is a party to various 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, results of operations or
                                   cash flows.

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

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

12. CONCENTRATIONS OF      Financial instruments that potentially subject the of
    CREDIT RISKS           Company to significant concentrations of credit risk
                           consist principally 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, Canada
                           and Europe. As part of its cash management
                           process, the Company periodically reviews the
                           credit standing of these banks.

13. SUPPLEMENTAL CASH      (a)   Cash Paid
    FLOW INFORMATION

<TABLE>
<CAPTION>
                                       JULY 2,         June 27,        June 28,
Years ended                             2004             2003            2002
-----------                         ------------     ------------     ------------
<S>                                 <C>              <C>              <C>
Interest                            $     78,547     $     69,642     $     65,831
                                    ============     ============     ============
Income taxes                        $      3,880     $      1,027     $      2,771
                                    ============     ============     ============
</TABLE>

                            (b)   Non-Cash Financing and Investing Activities

                                  The Company purchased certain customer lists
                                  of GenPak effective July 2, 2004, for $5,780
                                  in cash. In conjunction with the
                                  acquisition, a non-compete agreement was
                                  executed.

                                  The Company purchased certain assets of ELM
                                  effective July 2002, for $16,762 in cash. In
                                  conjunction with the acquisition,
                                  liabilities were assumed as follows:

<TABLE>
<S>                                    <C>
Fair value of assets acquired          $ 19,794
Goodwill                                 10,051
Purchase price                          (16,762)
                                       --------
Liabilities assumed                    $ 13,083
                                       ========
</TABLE>

                                                                            F-40
<PAGE>
                                                                TEKNI-PLEX, INC.

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

                                    The Company purchased certain assets of Swan
                                    effective October 2001, for $63,600 in cash.
                                    In conjunction with the acquisition,
                                    liabilities were assumed as follows:

<TABLE>
<S>                                   <C>
Fair value of assets acquired         $ 48,728
Goodwill                                36,228
Purchase price                         (63,600)
                                      --------
Liabilities assumed                   $ 21,356
                                      ========
</TABLE>

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

14. SEGMENT INFORMATION       Tekni-Plex management reviews its operating plants
                              to evaluate performance and allocate resources.
                              Tekni-Plex has aggregated its operating plants
                              into three primary industry segments: Tubing
                              Products, Packaging and Other. The Tubing Products
                              segment principally produces garden and irrigation
                              hose, medical tubing and pool hose. The Packaging
                              segment principally produces foam egg cartons,
                              pharmaceutical blister films, poultry and meat
                              processor trays, closure liners, aerosol and pump
                              packaging components and foam plates. Products
                              that do not fit in either of these segments,
                              including recycled PET, vinyl compounds and
                              specialty resins, have been reflected in Other.
                              The Tubing Products and Packaging segments have
                              operations in the United States, Europe and
                              Canada. The Other segment has operations in the
                              United States.

                                                                            F-41
<PAGE>
                                                                TEKNI-PLEX, INC.

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

                              Financial information concerning the Company's
                              business segments and the geographic areas in
                              which it operates are as follows:

<TABLE>
<CAPTION>
       Year end July 2, 2004           Tubing Products   Packaging        Other          TOTALS
       ---------------------           ---------------   ---------       --------       --------
<S>                                     <C>              <C>             <C>            <C>
Revenues from external customers          $210,239        $306,131       $119,272       $635,642
Interest expense                            39,633          26,889         17,929         84,451
Depreciation and amortization                9,426          15,021          6,833         31,280
Segment income (loss)  from operations       6,489          54,044        (11,798)        48,735
Segment assets                             326,882         271,432        138,705        737,019
Expenditures for segment fixed assets        4,878          17,226          7,323         29,427
</TABLE>

<TABLE>
<CAPTION>
      Year end June 27, 2003           Tubing Products   Packaging          Other         TOTALS
      ----------------------           ---------------   ---------        --------        -------
<S>                                    <C>               <C>              <C>             <C>
Revenues from external customers          $209,655        $291,794        $109,214        $610,663
Interest expense                            33,420          22,698          15,148          71,266
Depreciation and amortization                6,769          14,243           6,482          27,494
Segment income from operations              35,361          60,175           3,540          99,076
Segment assets                             322,822         297,303         141,638         761,763
Expenditures for segment fixed assets        5,371          18,603           7,460          31,434

</TABLE>

<TABLE>
<CAPTION>
     Year end June 28, 2002            Tubing Products  Packaging       Other          TOTALS
     ----------------------            ---------------  ---------      -------        --------
<S>                                    <C>              <C>            <C>            <C>
Revenues from external customers           $216,564      $253,624      $107,561       $577,749
Interest expense                             31,851        24,703        14,380         70,934
Depreciation and amortization                11,674        20,097         7,046         38,817
Segment income from operations               44,802        47,277         6,622         98,701
Segment assets                              326,520       222,798       130,050        679,368
Expenditures for segment fixed assets         5,669        13,717         4,473         23,859
</TABLE>

                                                                            F-42
<PAGE>
                                                                TEKNI-PLEX, INC.

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

<TABLE>
<CAPTION>
       Years ending                               JULY 2, 2004     June 27, 2003   June 28, 2002
       ------------                               ------------     -------------   -------------
<S>                                               <C>              <C>             <C>
OPERATING PROFIT
Total operating profit for reportable segments
   before income taxes                             $   48,735        $  99,076       $  98,701
Corporate and eliminations                            (17,673)         (20,648)        (20,853)
                                                   ----------        ---------       ---------
           Consolidated total                      $   31,062        $  78,428       $  77,848
                                                   ==========        =========       =========
ASSETS
Total assets from reportable segments              $  737,019        $ 761,763       $ 679,368
Other unallocated amounts                              10,663           23,001          12,595
                                                   ----------        ---------       ---------
           Consolidated total                      $  747,682        $ 784,764       $ 691,963
                                                   ==========        =========       =========
DEPRECIATION AND AMORTIZATION
Segment totals                                     $   31,280        $  27,494       $  38,817
Corporate                                               1,024              848           1,046
                                                   ----------        ---------       ---------
           Consolidated total                      $   32,304        $  28,342       $  39,863
                                                   ==========        =========       =========
EXPENDITURES FOR SEGMENT FIXED ASSETS
Segment totals                                     $   29,427        $  31,434       $  23,859
Other unallocated expenditures                            701              798             794
                                                   ----------        ---------       ---------
Consolidated total                                 $   30,128        $  32,232       $  24,653
                                                   ==========        =========       =========

REVENUES
GEOGRAPHIC INFORMATION
United States                                      $  545,597        $ 531,556       $ 516,873
Canada                                                 17,991           12,361          10,078
Europe, primarily Belgium                              72,054           66,746          50,798
                                                   ----------        ---------       ---------
     Total                                         $  635,642        $ 610,663       $ 577,749
                                                   ==========        =========       =========
LONG-LIVED ASSETS
GEOGRAPHIC INFORMATION
United States                                      $  385,120        $ 390,099       $ 361,487
Canada                                                 10,469           11,555           9,876
Europe                                                 24,087           23,322          22,706
                                                   ----------        ---------       ---------
     Total                                         $  419,676        $ 424,976       $ 394,069
                                                   ==========        =========       =========
</TABLE>

                                                                            F-43
<PAGE>
                                                                TEKNI-PLEX, INC.

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (DOLLARS IN THOUSANDS, EXCEPT PERCENTAGES AND 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.

                        For each of the three years in the period ended July 2,
                        2004 no single customer represented at least 10% of
                        sales.

                        Garden hose products represented 30%, 33%, 33% of sales
                        in fiscal years 2004, 2003 and 2002, respectively. Foam
                        egg cartons represented 13%, 17% and 18% of sales in
                        fiscal year 2004, 2003 and 2002, respectively. It is
                        impractical for the Company to provide further product
                        line information. However, no other product lines
                        represented 10% or more of revenues in any years
                        presented.

15. SUPPLEMENTAL        Tekni-Plex, Inc. issued 12 3/4% Senior Subordinated
    CONDENSED           Notes in June 2000 and May 2002 and 8 3/4% Senior
    CONSOLIDATING       Secured Notes in November 2003. These notes are
    FINANCIAL           guaranteed by all domestic subsidiaries of Tekni-Plex.
    STATEMENTS          The guarantor subsidiaries are 100% owned by the issuer.
                        The guaranties are full and unconditional and joint and
                        several. There are no restrictions on the transfer of
                        funds from guarantor subsidiaries to the issuer. 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").

                                                                            F-44
<PAGE>

                                                                TEKNI-PLEX, INC.

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

Condensed Consolidating Statement of Operations - For the year ended July 2,
2004

<TABLE>
<CAPTION>
                                                                   Non-
                                        Issuer     Guarantors   Guarantors     TOTAL
                                      ----------   ----------   ----------   ----------
<S>                                   <C>          <C>          <C>          <C>
Sales, net                            $  147,923   $  397,674   $   90,045   $  635,642
Cost of sales                            109,294      350,831       67,521      527,646
                                      ----------   ----------   ----------   ----------
Gross profit                              38,629       46,843       22,524      107,996
Selling, general and
  administrative                          36,056       24,552        8,551       69,159
Integration expense                        1,717        6,058           --        7,775
                                      ----------   ----------   ----------   ----------
Income from operations                       856       16,233       13,973       31,062
Interest expense, net                     84,363          (36)         124       84,451
Unrealized loss (gain)
  on derivative contract                 (10,654)          --           --      (10,654)
Other expense (income)                      (847)      (1,734)       3,186          605
                                      ----------   ----------   ----------   ----------
Income (loss) before
  provision for income
  taxes                                  (72,006)      18,003       10,663      (43,340)
Provision for income
  taxes                                    6,417        1,605        3,099       11,121
                                      ----------   ----------   ----------   ----------
Net income (loss)                     $  (78,423)  $   16,398   $    7,564   $  (54,461)
                                      ==========   ==========   ==========   ==========
</TABLE>

                                                                            F-45
<PAGE>

                                                                TEKNI-PLEX, INC.

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

Condensed Consolidating Balance Sheet - at July 2, 2004

<TABLE>
<CAPTION>
                                                                   Non-
                                    Issuer       Guarantors     Guarantors    Eliminations      TOTAL
                                 ------------   ------------   ------------   ------------   ------------
<S>                              <C>            <C>            <C>            <C>            <C>
CURRENT ASSETS                   $     38,357   $    218,542   $     71,107   $          -   $    328,006
Property, plant and
  equipment, net                       43,178        113,335         26,236              -        182,749
Intangible assets                     (19,936)       216,404         10,810              -        207,278
Investment in
  subsidiaries                        560,638              -              -       (560,638)             -
Deferred financing
  costs, net                            9,536            116              -              -          9,652
Deferred taxes                         30,032         (9,205)        (2,034)             -         18,793
Other long-term
  assets                              339,165        257,456           (456)      (594,961)         1,204
                                 ------------   ------------   ------------   ------------   ------------
    TOTAL ASSETS                 $  1,000,970   $    796,648   $    105,663   $ (1,155,599)  $    747,682
                                 ============   ============   ============   ============   ============
CURRENT LIABILITIES                    26,277         47,577         24,276              -         98,130
Long-term debt                        727,577              -          4,309              -        731,886
Other long-term
   liabilities                        343,537        247,947         22,178       (594,961)        18,701
                                 ------------   ------------   ------------   ------------   ------------
    TOTAL LIABILITIES               1,097,391        295,524         50,763       (594,961)       848,717
                                 ------------   ------------   ------------   ------------   ------------
Additional paid-in capital            210,499        296,783         16,765       (313,529)       210,518
Retained earnings
   (accumulated deficit)              (85,030)       211,569         35,540       (247,109)       (85,030)
Accumulated other
   comprehensive
   loss                                (1,367)        (7,228)         2,595              -         (6,000)
Treasury stock                       (220,523)             -              -              -       (220,523)
                                 ------------   ------------   ------------   ------------   ------------
   TOTAL
      STOCKHOLDERS'
      DEFICIT                         (96,421)       501,124         54,900       (560,638)      (101,035)
                                 ------------   ------------   ------------   ------------   ------------
    TOTAL
       LIABILITIES
       AND
       STOCKHOLDERS'
       DEFICIT                   $  1,000,970   $    796,648   $    105,663   $ (1,155,599)  $    747,682
                                 ============   ============   ============   ============   ============
</TABLE>

                                                                            F-46
<PAGE>

                                                                TEKNI-PLEX, INC.

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

Condensed Consolidating Cash Flows - For the year ended July 2, 2004

<TABLE>
<CAPTION>
                                                                   Non-
                                        Issuer     Guarantors   Guarantors     TOTAL
                                      ----------   ----------   ----------   ----------
<S>                                   <C>          <C>          <C>          <C>
Net cash provided by (used
   in) operating activities:          $  (13,327)  $     (942)  $    6,905   $   (7,364)
                                      ----------   ----------   ----------   ----------
Cash flows from investing
  activities:
   Acquisitions                                -       (5,780)           -       (5,780)
   Capital expenditures                   (7,459)     (16,851)      (5,162)     (29,472)
   Cash proceeds on sale of
     assets                                    -        1,222          124        1,346
   Additions to intangibles
                                            (220)           -            -           (220)
                                      ----------   ----------   ----------   ----------
Net cash used in investing
  activities                              (7,679)     (21,409)      (5,038)     (34,126)
                                      ----------   ----------   ----------   ----------
Cash flows from financing
   activities:
   Net borrowings (repayment)
      under line of credit               (15,000)           -            -      (15,000)
   Proceeds from long-term
      debt                               267,438            -            -      267,438
   Repayment of long-term debt          (248,511)           -         (147)    (248,658)
   Proceeds from capital
      contribution                        22,500            -            -       22,500
   Debt financing                         (2,767)           -            -       (2,767)
Change in intercompany
   accounts                              (11,664)      11,624           40            -
                                      ----------   ----------   ----------   ----------
Net cash provided by (used
   in) financing activities               11,996       11,624         (107)      23,513
                                      ----------   ----------   ----------   ----------
Effect of exchange rate
   changes on cash                             -            -         (350)        (350)
                                      ----------   ----------   ----------   ----------
Net increase (decrease) in
   cash                                   (9,010)     (10,727)       1,410      (18,327)
Cash, beginning of  year                  20,900       19,650        7,512       48,062
                                      ----------   ----------   ----------   ----------
Cash, end of  year                    $   11,890   $    8,923   $    8,922   $   29,735
                                      ==========   ==========   ==========   ==========
</TABLE>

                                                                            F-47
<PAGE>

                                                                TEKNI-PLEX, INC.

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

Condensed Consolidating Statement of Operations - For the year ended June 27,
2003

<TABLE>
<CAPTION>
                                                                   Non-
                                        Issuer     Guarantors   Guarantors     TOTAL
                                      ----------   ----------   ----------   ----------
<S>                                   <C>          <C>          <C>          <C>
Sales, net                            $  149,202   $  382,354   $   79,107   $  610,663
Cost of sales                            104,251      296,519       58,701      459,471
                                      ----------   ----------   ----------   ----------
Gross profit                              44,951       85,835       20,406      151,192
Selling, general and
  administrative                          28,709       25,835        7,056       61,600
Integration expense                            -       11,164            -       11,164
                                      ----------   ----------   ----------   ----------
Income from operations                    16,242       48,836       13,350       78,428
Interest expense, net                     71,168          (61)         159       71,266
Unrealized loss on
  derivative contract                      1,997            -            -        1,997
Other expense (income)                      (825)      (1,851)       2,145         (531)
                                      ----------   ----------   ----------   ----------
Income (loss) before
  provision for income
  taxes                                  (56,098)      50,748       11,046        5,696
Provision (benefit) for
  income taxes                           (22,439)      20,330        4,415        2,306
                                      ----------   ----------   ----------   ----------
Net income (loss)                     $  (33,659)  $   30,418   $    6,631   $    3,390
                                      ==========   ==========   ==========   ==========
</TABLE>

                                                                            F-48
<PAGE>

                                                                TEKNI-PLEX, INC.

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

Condensed Consolidating Balance Sheet - at June 27, 2003

<TABLE>
<CAPTION>

                                                     Non-
                           Issuer     Guarantors   Guarantor     Eliminations      TOTAL
                         ----------   ----------   ----------    ------------     --------
<S>                      <C>          <C>          <C>           <C>              <C>
CURRENT ASSETS           $   56,727    $241,910    $  61,151     $        -       $359,788
Property, plant and
  equipment, net             42,411     111,880        25,230             -        179,521
Intangible assets             8,713     192,049        12,390             -        213,152
Investment in
  subsidiaries              535,567           -             -      (535,567)             -
Deferred financing
  costs, net                 11,735         116             -             -         11,851
Deferred taxes               21,204          64        (2,096)            -         19,172
Other long-term
  assets                     81,667     279,227          (647)     (358,967)         1,280
                         ----------    --------    ----------    ----------       --------
    TOTAL ASSETS         $  758,024     825,246    $   96,028    $ (894,534)      $784,764
                         ==========    ========    ==========    ==========       ========
CURRENT LIABILITIES      $   46,758    $ 43,487    $   19,878    $        -       $110,123
Long-term debt              708,115           -         4,660             -        712,775
Other long-term
   liabilities               67,886     292,499        25,259      (358,967)        26,677
                         ----------    --------    ----------    ----------       --------
    TOTAL LIABILITIES       822,759     335,986        49,797      (358,967)       849,575
                         ----------    --------    ----------    ----------       --------
Additional paid-in
   capital                  187,999     296,783        15,656      (312,420)       188,018
Retained earnings
   (accumulated
   deficit)                 (30,569)    195,171        27,976      (223,147)       (30,569)
Accumulated other
   comprehensive
   loss                      (1,642)     (2,694)        2,599             -         (1,737)
Treasury stock             (220,523)          -             -             -       (220,523)
                         ----------    --------    ----------    ----------       --------
   TOTAL STOCKHOLDERS'
      DEFICIT               (64,735)    489,260        46,231      (535,567)       (64,811)
                         ----------    --------    ----------    ----------       --------
    TOTAL LIABILITIES
       AND
       STOCKHOLDERS'
       DEFICIT           $  758,024    $825,246    $   96,028    $ (894,534)      $784,764
                         ==========    ========    ==========    ==========       ========
</TABLE>

                                                                            F-49
<PAGE>

                                                                TEKNI-PLEX, INC.

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

Condensed Consolidating Cash Flows - For the year ended June 27, 2003

<TABLE>
<CAPTION>
                                                                                             Non-
                                                                 Issuer      Guarantors   Guarantors    TOTAL
                                                                 ------      ----------   ----------    -----
<S>                                                             <C>          <C>          <C>          <C>
Net cash provided by (used in) operating activities:            $(33,777)      $42,558      $6,248     $15,029
                                                                --------       -------      ------     -------
Cash flows from investing activities:
   Acquisitions                                                        -       (16,762)          -     (16,762)
   Capital expenditures                                          (11,726)      (15,865)     (4,641)    (32,232)
   Additions to intangibles                                         (149)            -        (851)     (1,000)
                                                                --------       -------      ------     -------
Net cash used in investing activities                            (11,875)      (32,627)     (5,492)    (49,994)
                                                                --------       -------      ------     -------
Cash flows from financing activities:
   Net borrowings (repayment) under line of credit                45,000             -           -      45,000
   Proceeds from long-term debt                                        -             -       1,116       1,116
   Repayment of long-term debt                                    (9,330)            -        (425)     (9,755)
   Proceeds from capital contribution                             17,842             -           -      17,842
Change in intercompany accounts                                    4,229          (941)     (3,288)          -
                                                                --------       -------      ------     -------
Net cash provided by financing activities                         57,741          (941)     (2,597)     54,203
                                                                --------       -------      ------     -------
Effect of exchange rate changes on cash                                -             -         625         625
                                                                --------       -------      ------     -------
Net increase (decrease) in cash                                   12,089         8,990      (1,216)     19,863
Cash, beginning of period                                          9,035        10,660       8,504      28,199
                                                                --------       -------      ------     -------
Cash, end of period                                              $21,124       $19,650     $ 7,288     $48,062
                                                                 =======       =======     =======     =======
</TABLE>

                                                                            F-50
<PAGE>

                                                                TEKNI-PLEX, INC.

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

Condensed Consolidating Statement of Operations - For the year ended June 28,
2002

<TABLE>
<CAPTION>
                                                                                               Non-
                                                             Issuer         Guarantors      Guarantors        TOTAL
                                                             ------         ----------      ----------        -----
<S>                                                         <C>             <C>             <C>             <C>
Sales, net                                                  $ 160,252       $ 356,621        $ 60,876       $ 577,749
Cost of sales                                                 116,130         270,380          43,947         430,457
                                                            ---------       ---------        --------       ---------
Gross profit                                                   44,122          86,241          16,929         147,292
Selling, general and administrative                            39,610          23,464           6,370          69,444
                                                            ---------       ---------        --------       ---------
Income from operations                                          4,512          62,777          10,559          77,848
Interest expense, net                                          70,881            (101)            154          70,934
Unrealized loss on derivative contract                          7,830               -               -           7,830
Other expense (income)                                           (756)         (1,155)          1,905              (6)
                                                            ---------       ---------        --------       ---------
Income (loss) before provision for income taxes               (73,443)         64,033           8,500            (910)
Provision (benefit) for income taxes                          (25,979)         28,597           3,059           5,677
                                                            ---------       ---------        --------       ---------
Net income (loss)                                           $ (47,464)      $  35,436        $  5,441       $  (6,587)
                                                            =========       =========        ========       =========
</TABLE>

                                                                      F-51
<PAGE>

                                                                TEKNI-PLEX, INC.

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

Condensed Consolidating Cash Flows - For the year ended June 28, 2002

<TABLE>
<CAPTION>
                                                                                 Non-
                                                        Issuer    Guarantors   Guarantors   TOTAL
                                                        ------    ----------   ----------   -----
<S>                                                    <C>        <C>          <C>         <C>
Net cash provided by (used in) operating activities:   $(31,450)   $ 35,167     $  4,205   $  7,922
                                                       --------    --------     --------   --------
Cash flows from investing activities:
   Acquisitions                                               -     (63,624)           -    (63,624)
   Capital expenditures                                 (11,147)    (11,421)      (2,085)   (24,653)
   Additions to intangibles                                (169)          -            -       (169)
                                                       --------    --------     --------   --------
Net cash used in investing activities                   (11,316)    (75,045)      (2,085)   (88,446)
                                                       --------    --------     --------   --------
Cash flows from financing activities:
   Net borrowings (repayment) under line of credit      (19,000)          -            -    (19,000)
   Proceeds from long-term debt                          40,600           -          147     40,747
   Repayment of long-term debt                           (7,440)          -            -     (7,440)
   Proceeds from capital contribution                    50,000           -            -     50,000
   Deferred financing costs                                (154)          -            -       (154)
   Purchase of Treasury Stock                               (61)          -            -        (61)
   Change in intercompany accounts                      (45,034)     45,217         (183)         -
                                                       --------    --------     --------   --------
Net cash provided by financing activities                18,911      45,217          (36)    64,092
                                                       --------    --------     --------   --------
Effect of exchange rate changes on cash                       -           -          (14)       (14)
                                                       --------    --------     --------   --------
Net increase (decrease) in cash                         (23,855)      5,339        2,070    (16,446)
Cash, beginning of  year                                 32,890       5,321        6,434     44,645
                                                       --------    --------     --------   --------
Cash, end of  year                                     $  9,035    $ 10,660     $  8,504   $ 28,199
                                                       ========    ========     ========   ========
</TABLE>

                                                                            F-52
<PAGE>

                                                                TEKNI-PLEX, INC.

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

16. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
                                          First            Second
                                         Quarter           Quarter      Third Quarter   Fourth Quarter
                                         -------           -------      -------------   --------------
<S>                                    <C>                <C>           <C>             <C>
2004
Net sales                              $ 136,058          $122,712       $  169,133      $  207,739
Gross profit                              29,828            29,030           44,456           4,682
Income (loss) from operations             13,286            13,506           25,590         (21,320)
Net income (loss)                         (1,141)           (5,512)           3,226         (51,034)(1)

2003
Net sales                              $ 140,583          $118,584       $  166,091      $  185,405
Gross profit                              29,892            31,370           44,125          45,805
Income from operations                    15,981            14,897           23,199          24,351
Net income (loss)                         (4,768)              279            4,352           3,527
                                       =========          ========       ==========      ==========
</TABLE>

                  Fluctuations in net sales are due primarily to seasonality in
                  a number of product lines, particularly garden hose and
                  irrigation hose products. Income from operations in the fourth
                  quarter was adversely impacted by rapidly rising raw material
                  costs, particularly at our garden hose operations where we
                  could not pass these increased costs through to our customers.
                  As a result, we recorded a $4.6 million write-off of garden
                  hose inventory to reflect market values that were below cost
                  at year-end. In addition, the Company increased its reserve on
                  deferred taxes by approximately $15,000 to reserve for
                  deferred taxes generated by 4th quarter losses of 2004.

                  (1) The fourth quarter of 2004 includes certain fourth quarter
                      adjustments including the following;

                        (a)   a $10.0 million impairment of goodwill
                              associated with our other operations; and

                        (b)   a change in our estimates of our sales allowances
                              that increased our allowances
                              by $8.0 million;

                        (c)   a $7.0 million reduction in our deferred tax
                              asset.

                                                                            F-53
<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 ON SUPPLEMENTAL SCHEDULE

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

The audits referred to in our report dated October 3, 2004 relating to the
consolidated financial statements of Tekni-Plex, Inc. and its subsidiaries (the
"Company"), included the audits of the financial statement schedule for the
years ended July 2, 2004, June 27, 2003, and June 28, 2002 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.

/s/ BDO Seidman, LLP

Woodbridge, New Jersey
October 3,  2004

                                                                            F-54
<PAGE>

                                                                TEKNI-PLEX, INC.

                                  VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                                                          (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                            Charged to
                                                        Balance at          Costs and                           BALANCE AT END
                                                   Beginning of Period     Expenses (1)      Deductions (2)      OF PERIOD(3)
                                                  ---------------------   ------------       --------------     --------------
<S>                                               <C>                     <C>                <C>                <C>
YEAR ENDED JUNE 28, 2002
   Accounts receivable allowance for possible
      losses                                              $1,500             $  484               $313               $1,671
                                                          ======             ======               ====               ======
 YEAR ENDED JUNE 27, 2003
   Accounts receivable allowance for possible
      losses                                              $1,671             $2,350               $223               $3,798
                                                          ======             ======               ====               ======
YEAR ENDED JULY 2, 2004
   Accounts receivable allowance for possible
      losses                                              $3,798             $2,316               $786               $5,328
                                                          ======             ======               ====               ======
</TABLE>

(1)  To increase accounts receivable allowance.

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

(3)  Amounts do not include certain accounts receivable reserves that are
     disclosed as "allowances" on the Consolidated Balance Sheets since they
     are not valuation reserves.

                                                                            F-55