<PAGE>



                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                           -------------------------
                                    FORM 10-K
              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

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

   For the fiscal year ended                             Commission file
       February 29, 2000                                 number 333-05885


                        PACKAGING RESOURCES INCORPORATED
             (Exact name of registrant as specified in its charter)


               DELAWARE                                  36-3321568
(State of Incorporation or organization)      (IRS Employer Identification No.)


                                 One Conway Park
                           100 Field Drive, Suite 300
                           Lake Forest, Illinois 60045
                                 (847) 295-6100
               (Address, including zip code and telephone number,
        including area code, of registrant's principal executive offices)

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

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                      None.

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                                      None.

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

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No _____

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

     As of May 26, 2000, 1,000 shares of the registrant's common stock, $0.01
par value per share, were outstanding. None of the outstanding shares were held
by non-affiliates.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Certain exhibits set forth in Item 14 of Part IV are incorporated by
reference to the registrant's Registration Statement on Form S-1 (Commission
File No. 333-05885) filed on June 13, 1996, Annual Report on Form 10-K
(Commission File No. 333-05885) filed on May 28, 1998, Quarterly Report on Form
10-Q (Commission File No. 333-05885) filed on October 7, 1998, Annual Report on
Form 10-K (Commission File No. 333-05885) filed on May 28, 1999, and Quarterly
Report on Form 10-Q (Commission File No. 333-05885) filed on January 13, 2000.



<PAGE>



                                TABLE OF CONTENTS

                                     PART I
<TABLE>
<CAPTION>



                                                                                                  Page
                                                                                                   No.
                                                                                                  ----
<S>         <C>                                                                                    <C>
Item 1.     Business................................................................................2

Item 2.     Properties..............................................................................8

Item 3.     Legal Proceedings.......................................................................8

Item 4.     Submission of Matters to a Vote of Security Holders.....................................8

                                     PART II

Item 5.     Market for Registrant's Common Equity and Related Stockholder Matters...................9

Item 6.     Selected Financial Data.................................................................9

Item 7.     Management's Discussion and Analysis of Financial Condition and
            Results of Operations...................................................................10

Item 7a.    Quantitative and Qualitative Disclosures About Market Risk..............................15

Item 8.     Financial Statements and Supplementary Data.............................................16

Item 9.     Changes in and Disagreements with Accountants on Accounting and
            Financial Disclosure....................................................................16

                                    PART III

Item 10.    Directors and Executive Officers of the Registrant.....................................16

Item 11.    Executive Compensation.................................................................18

Item 12.    Security Ownership of Certain Beneficial Owners and Management.........................20

Item 13.    Certain Relationships and Related Transactions.........................................22

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K...........................24

</TABLE>

                                        1

<PAGE>







                                     PART I


ITEM 1.  BUSINESS.

FORWARD-LOOKING STATEMENTS

     This Annual Report on Form 10-K includes forward-looking statements as that
term is defined in the Private Securities Litigation Reform Act of 1995. PRI has
based these forward-looking statements on its current expectations and
projections about future events. These forward-looking statements are subject to
risks and uncertainties, including, among other things:

-    PRI's reliance on key customers and supply agreements

-    Trends and conditions in the rigid plastic packaging and plastic beverage
     cup industries, including fluctuations in resin costs

-    PRI's substantial debt and existing defaults thereunder

-    PRI's future capital needs and

-    PRI's ability to compete

     PRI undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. In light of these risks and uncertainties, actual results
may differ materially from those reflected in any forward-looking statements.

GENERAL

     Packaging Resources Incorporated (the "Company" or "PRI") is a leading
developer, manufacturer and marketer of rigid plastic food packaging, serving
primarily as a supplier of customized containers for national branded
consumer products. The Company is the largest domestic manufacturer of shelf
stable, multi-layer (impermeable to air and moisture) containers for
nutritional supplements, frosting containers and reusable/disposable food
storage containers. The Company also is the largest domestic designer and
manufacturer of promotional beverage cups in the United States, marketing
these products primarily to the fast-food and beverage industries. For the
fiscal year ended February 29, 2000, the Company generated net sales of
$146.3 million. Approximately 70% of the Company's net sales in such period
were attributable to rigid plastic food packaging and 30% to promotional
beverage cups.

     The Company's food packaging products are sold to over 80 customers,
including manufacturers of national branded food, dairy and pharmaceutical
products such as General Mills, Inc. ("General Mills"), including its Yoplait
U.S.A. division ("Yoplait"), Ross Laboratories ("Ross Labs"), a division of
Abbott Laboratories, Inc. ("Abbott Labs"), The Haagen Dazs Company, Inc.
("Haagen Dazs"), Pillsbury Company ("Pillsbury") and S.C. Johnson & Son, Inc.
("S.C. Johnson"). The Company is a major supplier of promotional beverage
cups to over 250 companies in the fast-food, sports stadium and beverage
industries, including McDonald's, Coca-Cola, Pepsi-Cola Company ("Pepsi"),
Tricon Restaurant Services Group, Inc. ("Tricon"), Aramark and Burger King.

     PRI was formed as a Delaware corporation in 1984. In 1993, PRI became a
wholly-owned subsidiary of Packaging Resources Group, Inc. ("Group"), a
Delaware corporation.

                                       2

<PAGE>

PRODUCTS AND CUSTOMERS

     The Company's products are divided into two categories: rigid plastic
food packaging and promotional beverage cups.

RIGID PLASTIC FOOD PACKAGING

     The Company serves a number of niche markets within the rigid plastic
food packaging industry with products that include refrigerated yogurt
containers, multi-layer containers for nutritional supplements and infant
formula, frosting cans and lids and reusable/disposable food storage
containers. The Company also produces containers and lids for manufacturers
of cream and ricotta cheeses, concentrated soup bases, ice cream, coffee and
snack products.

     The Company sells its food packaging products to over 80 customers
throughout the United States, including the following manufacturers of
nationally branded products:

      General Mills                 Ross Labs (a division of Abbott Labs)
        Pillsbury                   Yoplait (a division of General Mills)
  S.C. Johnson & Son, Inc.          Haagen Dazs (a division of Pillsbury)

     The Company supplies substantially all of the four ounce yogurt
containers used by Yoplait. The Company is the sole source supplier of the
multi-layer plastic container used by Ross Labs for its ENSURE-Registered
Trademark- nutritional supplement and SIMILAC-Registered Trademark- infant
formula product lines. The Company is also the sole supplier of plastic
frosting cans and lids for Pillsbury and General Mills. PRI is also the sole
supplier to S.C. Johnson of reusable/disposable food storage containers which
are sold under the ZIPLOC-Registered Trademark- brand name. General Mills
(including Yoplait), Ross Labs, and S.C. Johnson represented approximately
19.4%, 12.5% and 11.5%, respectively, of the Company's total net sales in the
fiscal year ended February 29, 2000.

PROMOTIONAL BEVERAGE CUPS

     The Company is the majority supplier to Tricon of a 32 ounce thermoform
CRUISER CUP-Registered Trademark- that has been introduced nationally in the
Taco Bell chain of restaurants. This new disposable plastic cup is available
for soft drinks and replaces all 32 ounce paper cups in the Taco Bell system.
Tricon represented approximately 21.3% of the Company's total net sales in
the fiscal year ended February 29, 2000.

     In addition, the Company has a five year agreement with Pepsi for PRI to
be the sole supplier of a new 32 oz. TWIST N' GO-Registered Trademark-
beverage container that is sold as a cup designed specifically to capture the
fountain beverage take-out market. Shipments of this new container commenced
in the summer of 1999.

     The Company is also engaged in the design, manufacture and marketing of
a wide assortment of injection molded promotional beverage cups ranging in
size from 12 ounces to 64 ounces. Promotional beverage cups are marketed
directly to fast-food and beverage companies, such as McDonald's, Burger
King, Jack-in-the Box, Coca-Cola, Pepsi and Tricon, as well as to specialty
distributors for resale to fast-food and beverage companies, sports stadiums,
movie theaters and food service companies.

                                       3

<PAGE>




MARKETING AND SALES

     The Company directs its sales effort by utilizing its technical
expertise, diverse production capabilities (injection molding and linear melt
phase thermoforming ("thermoforming")), graphics capabilities and marketing
expertise to serve the needs of its new and existing customers. The Company's
comprehensive, multiple-channel sales and marketing approach includes both
the personnel in its technical centers (production/graphic) as well as its
direct sales force. Sales representatives marketing rigid plastic food
packaging solutions focus on companies that supply national branded consumer
products, while representatives selling promotional beverage cups focus on
soft drink manufacturers/distributors, fast food chains and stadium promoters.

     A substantial portion of PRI's sales are made pursuant to multi-year
supply agreements. The following table summarizes key aspects of certain
major supply agreements.

<TABLE>
<CAPTION>


CUSTOMER                            PRODUCT                            EXPIRATION DATE
<S>                                 <C>                                <C>
Ross Products Division of Abbott    Ensure, Isomil and Similac         February, 2001
Laboratories                        plastic cans

S.C. Johnson & Son, Inc.            Ziploc-Registered Trademark-       June, 2003
                                    containers and lids

General Mills Operations, Inc.      Four-ounce multi-pack cups         February, 2003
(Yoplait)

Tricon Restaurant Services Group,   32 oz. polystyrene                 June, 2002
Inc. (1)                            CRUISER CUPS-Registered Trademark-
                                    and lids

Pepsi-Cola Company                  TWIST N' GO-Registered             December, 2004 (2)
                                    Trademark- containers

</TABLE>


     (1)  Tricon Restaurant Services Group, Inc. is made up of the Pizza Hut,
          Taco Bell and Kentucky Fried Chicken restaurant chains.

     (2)  PRI commenced full-scale production under this agreement in August,
          1999.

The prices provided for in these supply agreements generally are based on
specified volume levels and are subject to (i) adjustments for increases or
decreases in resin prices and (ii) annual negotiated adjustments relating to
cost elements other than resin price. Certain of these agreements also
contain minimum volume purchase requirements by customers. The products
manufactured under these agreements generally require the use of proprietary
tooling and molds, some of which PRI owns. In certain cases, the tooling and
molds PRI owns are subject to purchase options which may be exercised by the
customer upon termination of the applicable supply agreement. Certain of
these supply agreements prohibit PRI from selling similar containers to the
customer's competitors during the respective terms of such agreements. All of
PRI's supply agreements require it to satisfy certain product quality
standards. While PRI anticipates that it will be able to extend or renew its
existing supply agreements upon their expiration, no assurance can be given
that PRI will be able to do so or that the terms of any such extension or
renewal will be as favorable to PRI.

                                       4

<PAGE>

MANUFACTURING

     The Company has production capabilities in injection molding and
thermoforming. Because each of these processes offers different advantages in
achieving certain performance features such as structural strength, rigidity
and graphics retention, the Company is able to be highly responsive to
customer requirements and preferences by offering a broader range of
packaging alternatives than many of its competitors.

     Injection molding involves the injection of molten plastic into
multi-cavity male and female molds at extremely high temperatures and the
application of pressure to force the plastic to take the desired form. The
Company operates high speed injection molding machines utilizing modern
multi-cavity hot and cold runner molds. The Company's four 660 ton clamp
capacity injection molding machines are designed specifically to produce
lightweight, thin-walled parts and are among the most technologically
advanced machines of their kind. They are controlled by micro-processors that
provide statistical process control and state-of-the-art diagnostic
capabilities. Recently, the Company also purchased eight new 750 ton
injection molding machines designed specifically to produce the components
for the new TWIST N' GO-Registered Trademark- beverage container for Pepsi.
The Company has the in-house capability to design, test and produce
production molds for its injection molding machines.

     Injection molding generally provides more flexibility in part design
than other forming processes. The use of male and female molds allows both
interior and exterior surfaces to incorporate special design features. In
addition, injection molding results in highly uniform parts with surfaces
that can be more easily textured, pigmented and decorated. Further, injection
molding requires relatively little floor space, thus reducing associated
overhead costs.

     In the thermoforming process, an extruded sheet formed from plastic
resins is rolled over a multi-cavity female steel mold and heated to its
precise melting point. Parts are then formed and cut with a vacuum mold in a
single operation. As with injection molding, the process concludes with the
molded product being ejected for automated handling and processing.
Thermoforming employs molds with higher cavitations than are presently
feasible in other manufacturing processes and, therefore, is a low-cost means
of manufacturing customized packaging products for high volume markets.
Moreover, thermoforming equipment can be retooled relatively quickly and
inexpensively, making the process well-suited for production runs requiring
fast changeover times. The Company has developed thermoforming technologies
that enable substantially all unused portions of the extruded sheet to be
immediately recycled into the manufacturing process, resulting in reduced
product cost and waste.

     When employed in conjunction with co-extrusion, thermoforming permits
the manufacture of shelf stable plastic containers with excellent rigidity
and heat resistance properties. Under this process, materials that combine to
incorporate the precise properties required by the customer are co-extruded
into a multi-layer sheet and then thermoformed into a container. In the
manufacture of shelf stable plastic packaging, the co-extruded sheet contains
co-polymer materials such as vinyl alcohol which effectively prevents gas and
moisture from permeating a container. The Company's thermoforming lines are
used principally in the manufacture of yogurt containers, packaging for
nutritional supplements and infant formula, reusable/disposable food storage
containers, and promotional drink cups. The Company believes that its
thermoforming and co-extrusion abilities are among the most advanced in the
rigid plastic food packaging industry.

     The Company has the ability to produce state-of-the-art graphics on its
packaging and promotional cups. The Company uses advanced computer technology
and color processing to create photograph-like images on pre-formed plastic
containers and cups. Also, the Company has the technology and high-speed
equipment to attach labels, including lenticular labels which provide live
action video or animation on a cup, or souvenir cards to plastic cups.

     The Company, like its competitors, is subject to rigorous quality control
standards imposed by its customers. The Company has implemented a comprehensive
quality assurance program, which includes computer-aided testing of parts for
size, color, strength and, where appropriate, barrier properties. Using advanced
laser measuring technology as well as state-of-the-art high speed vision
systems, the Company is



                                       5

<PAGE>





able to satisfy and exceed the most demanding customer requirements. Statistical
quality control methods are also used to promote total customer satisfaction.

     The Company's manufacturing operations are conducted in four facilities.
The Company's geographic coverage and the proximity of its facilities to major
customers reduce transportation costs and enable the Company to more effectively
serve its customers, many of which maintain "just-in-time" inventory systems.

TECHNICAL CENTERS

     The Company's two technical centers feature extensive in-house design,
engineering, tooling, prototype production and processing capabilities utilizing
CAD/CAM technology. In addition to overseeing the ongoing maintenance and
performance of the Company's manufacturing operations, these technical centers
provide key support for the Company's marketing efforts. In this regard, the
Company's in-house design and production engineers work closely with existing
and potential customers in the preliminary stages of product design and
development, in many instances using single cavity thermoforming and injection
molding machines which are dedicated to product research and development to test
prototype molds and packaging parts. Substantially all of the production molds
used by the Company's injection molding and thermoforming operations are
designed and manufactured/assembled at the Company's technical centers in New
Vienna, Ohio and Coleman, Michigan. In the fiscal year ended February 29, 2000,
the Company spent approximately $2.0 million on research and development
activities. Management believes that the Company's in-house design, engineering
and graphics capabilities are among the most extensive and sophisticated in the
industry and significantly reduce the Company's tooling and equipment costs as
well as product development time.

COMPETITION

     The Company's business is highly competitive, with the degree of
competition varying by product. Major competitive factors in the Company's
business are product quality and differentiation, graphics design and print
quality, innovation, service and price. As more companies adopt "just-in-time"
inventory systems, delivery lead time has also taken on increased importance.
Since the Company's products are shipped by customers' trucks or common carrier,
the proximity of the manufacturing facility to the customer's plant can
significantly affect the price of products. The locations of the Company's
facilities make it well-positioned to serve national markets. Because the
Company's products are bulky and shipping costs are relatively high, foreign
competition has not been an important factor.

     The Company's main competitors in the rigid plastic food packaging business
are Landis Plastics, Inc., PolyTainer Inc. and Fabri-Kal Corp. In the
promotional beverage cup business, the Company's principal competitors are Berry
Plastics, Pescor, Sweetheart Cup Company Inc. and Whirley Industries, Inc.


                                       6

<PAGE>



RAW MATERIALS

     The raw materials used by the Company for the manufacture of plastic
containers and beverage cups are primarily resins in pellet form such as
polyethylene, polypropylene and polystyrene. The Company's resin supplies are
purchased under agreements with several suppliers for unspecified quantities.
The price the Company pays for resin is determined at the time of purchase. The
Company believes that its resin volume requirements are among the largest in the
industry, and that its ability to purchase such materials in large quantity
shipments enables it to obtain favorable pricing.

     Most of the plastic resins used by the Company are available from a variety
of sources. The Company's current supply agreement with Ross Labs requires that
it purchase one of several of the resins required for the shelf stable,
multi-layer containers that the Company manufactures for Ross Labs exclusively
from Exxon Corporation ("Exxon"). During the fiscal year ended February 29,
2000, this resin accounted for approximately 4.5% of the resins purchased by the
Company. The Company has relied on Exxon as the sole source supplier of this
particular resin since it began manufacturing products for Ross Labs in 1991 and
has no reason to believe that Exxon will not continue to supply the Company with
this resin. However, there can be no assurance that Exxon will be able to
continue to supply the Company with adequate amounts of this resin on a timely
basis in the future to allow the Company to meet its production requirements for
Ross Labs' containers. The unanticipated loss of Exxon as a supplier or a delay
in its shipments could have a material adverse effect on the Company's business,
financial condition and results of operations. PRI maintains a renewable
one-year supply contract with Exxon which is scheduled to expire on December 31,
2000. With the exception of its relationship with Exxon, the Company does not
believe that it is materially dependent upon any single source for any of its
raw materials. The Company anticipates that it will be able to purchase
sufficient quantities of resin for the foreseeable future. However, should any
of its suppliers fail to deliver under their arrangements, the Company would be
forced to purchase raw materials on the open market, and no assurances can be
given that it would be able to make such purchases at prices which would allow
it to remain competitive.

     Over 76% of the Company's sales in the fiscal year ended February 29, 2000
were made pursuant to multi-year customer supply agreements that generally allow
the Company to pass through increases in resin prices (and obligate the Company
to pass on resin price decreases) to customers. The risk associated with resin
price fluctuations in beverage cup sales not under long-term contracts is
mitigated in many instances by the relatively short time period between product
order and delivery (approximately 3 to 6 weeks).

ENVIRONMENTAL MATTERS AND GOVERNMENT REGULATION

     The past and present operations of the Company and the past and present
ownership and operations of real property by the Company are subject to
extensive and changing federal, state and local environmental laws and
regulations pertaining to the discharge of materials into the environment, the
handling and disposition of wastes or otherwise relating to the protection of
the environment.

     The Food and Drug Administration regulates the material content of
direct-contact food containers and packages, including certain containers
manufactured by the Company. The Company uses approved resins and pigments in
its direct-contact food products.

     The Company, like all companies in the plastics industry, is also subject
to federal, state, local and foreign legislation designed to reduce solid wastes
by requiring, among other things, plastics to be degradable in landfills,
minimum levels of recycled content, various recycling requirements, disposal
fees and limits on the use of plastic products. In addition, various consumer
and special interest groups have lobbied from time to time for the
implementation of additional environmental protection measures.


                                       7

<PAGE>


PATENTS AND TRADEMARKS

     The Company owns a number of patents and trademarks. However, the Company
believes that the design, innovation and quality of its products and its
relationships with its customers are substantially more important to the
maintenance and growth of its business than its patents and trademarks.
Accordingly, the Company does not believe that its business is dependent to any
material extent upon any single patent or group of patents.

EMPLOYEES

     As of February 29, 2000, the Company had approximately 971 employees, of
which 877 were engaged in production or production support, 49 in research,
development and engineering, 18 in marketing and sales and 27 in corporate
management and administration. None of the Company's employees are covered by a
collective bargaining agreement.

ITEM 2.  PROPERTIES.

     The Company's operations are conducted through four facilities in four
states within the United States. The Company's principal executive offices are
located in Lake Forest, Illinois and are leased by the Company. The Company's
facilities are designed to provide for efficient manufacturing, material
handling and storage of its products. Management believes that substantially all
of the Company's property and equipment is in good condition and that it has
sufficient capacity to meet its current manufacturing and distribution
requirements.

     The following table provides certain information regarding the Company's
operating facilities.

<TABLE>
<CAPTION>

                                             BUILDING
         FACILITY             OWNERSHIP      SQ. FEET         FUNCTION                       LEASE EXPIRATION
         --------             ---------      --------         --------                       ----------------
<S>                            <C>           <C>      <C>                                    <C>
      Coleman, MI               Owned        148,000  Manufacturing/Technical Center                -
      Mt. Carmel, PA            Owned        142,000  Manufacturing                                 -
      New Vienna, OH            Owned        292,000  Manufacturing/Technical Center                -
      Phoenix, AZ               Leased       178,000  Manufacturing                          August 31, 2008

</TABLE>


     The Company leases a 280,000 square foot building in Kansas City, Missouri
that is used in the distribution of the Company's products. This lease expires
on October 31, 2000. In addition, the Company is a lessee under a lease for a
133,000 square foot manufacturing facility that PRI formerly occupied in Cedar
Grove, New Jersey. PRI has entered into a sub-lease with respect to the Cedar
Grove facility that is scheduled to expire concurrently with the Company's
underlying lease in June 2000.

     The owned facilities in Coleman, Michigan, Mt. Carmel, Pennsylvania, and
New Vienna, Ohio are subject to a mortgage, and the leased facilities in Kansas
City, Missouri and Phoenix, Arizona are subject to a leasehold mortgage, in
favor of the trustee under the Indenture governing the Senior Secured Notes (as
defined below) to secure the obligations under such Senior Secured Notes. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operation-Liquidity and Capital Resources."

ITEM 3.  LEGAL PROCEEDINGS.

     Management does not believe that any of the litigation in which the Company
is currently engaged will have a material adverse effect on the Company's
business, financial condition or results of operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         None.

                                       8

<PAGE>



                                     PART II

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

     All of the outstanding common stock of the Company is held by Group. All of
the outstanding common stock of Group is held by HPH Industries, Ltd. ("HPH"),
which is wholly-owned by Howard P. Hoeper, the Chairman of the Board of
Directors, Chief Executive Officer and President of Group and PRI. As of
February 29, 2000, assuming the exercise of all outstanding warrants to acquire
the common stock of Group ("Warrants"), HPH, Apollo Packaging Partners, L.P., a
Delaware limited partnership and an affiliate of Apollo Advisors, L.P.
("Apollo"), and TCW/Crescent Mezzanine Partners, L.P. ("TCW Partners"), together
with TCW/Crescent Mezzanine Trust ("TCW Trust"), would beneficially own 60%,
29.3% and 10.7% of such stock, respectively. TCW Partners and TCW Trust (and
together with TCW/Crescent Mezzanine Investment Partners, L.P., the "TCW
Entities") are affiliates of Trust Company of the West. The holders of at least
25% of the Warrants (or shares of capital stock of Group obtainable upon
exercise of the Warrants) on up to three separate occasions may require Group,
subject to certain conditions, to effect the registration of such securities
under the Securities Act of 1933, as amended (the "Securities Act"). In addition
to such demand registration rights, such holders also may, subject to certain
limitations, require Group to register such securities if Group registers any of
its equity securities under the Securities Act. See "Certain Relationships and
Related Transactions - Equity Registration Rights Agreement."

     The Indenture governing the Senior Secured Notes and the Credit Agreement
(as defined below) restrict the Company's ability to pay dividends in respect of
the Company's common stock based on, among other things, the Company's fixed
charge coverage ratio and consolidated net income. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -Liquidity and
Capital Resources."

ITEM 6.  SELECTED FINANCIAL DATA.

     The following selected financial data are derived from the financial
statements of the Company which have been audited by KPMG LLP, independent
auditors. The data should be read in conjunction with the financial statements,
related notes and other financial information included herein and Management's
Discussion and Analysis of Financial Condition and Results of Operations.


<TABLE>
<CAPTION>

                                                                                  Fiscal Year Ended
                                                           ------------------------------------------------------------

                                                             Feb. 29    Feb. 28      Feb. 28       Feb. 28     Feb. 29
                                                              1996       1997          1998         1999         2000
                                                           ---------   ---------    ---------    ---------   ---------
<S>                                                        <C>         <C>          <C>          <C>         <C>
STATEMENT OF OPERATIONS DATA:
Net sales                                                  $ 132,852   $ 120,086    $ 121,303    $ 136,558   $ 146,326
Cost of goods sold                                           110,544      98,942       99,998      111,338     123,285
                                                           ---------   ---------    ---------    ---------   ---------
Gross profit                                                  22,308      21,144       21,305       25,220      23,041
Selling, general and administrative expenses                   6,864       6,983        5,897        6,244       8,005
Amortization of intangibles and other assets                   2,434         712          712          712         713
Other expense (a)                                                 --          --          800           --       6,721
                                                           ---------   ---------    ---------    ---------   ---------
Operating income                                              13,010      13,449       13,896       18,264       7,602
Interest expense                                              10,671      12,711       13,580       13,891      15,703
                                                           ---------   ---------    ---------    ---------   ---------
Income (loss) before income taxes and extraordinary item       2,339         738          316        4,373      (8,101)
Income tax expense (benefit)                                   1,006         491          346        1,880      (3,240)
                                                           ---------   ---------    ---------    ---------   ---------
Income (loss) before extraordinary item                        1,333         247          (30)       2,493      (4,861)
Extraordinary item, net (b)                                       --      (1,139)          --           --          --
                                                           ---------   ---------    ---------    ---------   ---------

Net income (loss)                                          $   1,333   $    (892)   $     (30)   $   2,493   $  (4,861)
                                                           ---------   ---------    ---------    ---------   ---------
Total assets                                               $ 110,639   $ 118,207    $ 121,079    $ 154,816   $ 156,134
                                                           =========   =========    =========    =========   =========
Long-term debt                                             $  67,174   $ 110,000    $ 110,000    $ 130,668   $ 141,500
                                                           =========   =========    =========    =========   =========
OTHER OPERATING DATA:
EBITDA (c)                                                 $  22,731   $  21,488    $  22,616    $  27,028   $  23,926
Depreciation and amortization (d)                              9,721       8,039        7,920        8,764       9,603
Capital expenditures                                           3,449       7,629        9,130       32,805      30,548
Ratio of earnings to fixed charges (e)                         1.21x       1.06x        1.02x        1.30x        (f)

</TABLE>




                                       9

<PAGE>




(a)  The other expense in the fiscal year ended February 28, 1998 represents the
     loss on the sale of the Louisiana, Missouri property and in the fiscal year
     ended February 29, 2000 represents the write-off of leasehold improvements
     and machinery and equipment no longer used in the business. See note 8 to
     the company's financial statements contained herein.
(b)  The extraordinary item in the fiscal year ended February 28, 1997
     represents the write-off of unamortized financing fees and costs and the
     payment of certain premiums in connection with the refinancing that
     occurred in May 1996.
(c)  EBITDA represents earnings (loss) before interest expense, provision
     (benefit) for income taxes, depreciation and amortization (excluding
     amortization of deferred financing costs), adjusted to exclude the other
     nonrecurring charges and extraordinary items. EBITDA is presented because
     such data is used by certain investors to measure a company's ability to
     service debt. EBITDA should not be considered as an alternative to cash
     flow from operations as determined under generally accepted accounting
     principles, and does not necessarily indicate whether cash flow will be
     sufficient for cash requirements.
(d)  Depreciation and amortization as presented excludes amortization of
     deferred financing costs.
(e)  For purposes of this computation, earnings are defined as income before
     income taxes plus fixed charges. Fixed charges consist of interest
     (including amortization of deferred financing costs and debt discount or
     premium) and that portion of rental expense that is representative of
     interest (deemed to be one-third of operating lease rental expense).
(f)  The Company's earnings were inadequate to cover fixed charges for the
     fiscal year ended February 29, 2000 by $8.1 million.

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

OVERVIEW

     The Company's fiscal year ends on the last day of February in each year.
All references in this report to fiscal years refer to the fiscal year of the
Company ended in the year indicated. For example, "fiscal 2000" refers to the
fiscal year of the Company ended February 29, 2000.

     The Company is a leading developer, manufacturer and marketer of rigid
plastic food packaging, serving primarily as a supplier of customized containers
for national branded consumer products. The Company is the largest domestic
manufacturer of shelf stable, multi-layer (impermeable to air and moisture)
containers for nutritional supplements and infant formula, reusable/disposable
food storage containers and promotional beverage cups. The promotional beverage
cups are marketed primarily to the fast-food and beverage industries. During
fiscal 2000, approximately 70% of the Company's net sales were attributable to
packaging products and the balance related to sales of beverage cups. The
Company expects that over the next year, its net sales will be divided more
evenly between food packaging and promotional beverage cups. This shift away
from packaging reflects, in part, the termination of certain business with
Dannon and Yoplait and the replacement of this business with sales of
promotional beverage cups to customers such as Tricon, Coca-Cola and Pepsi.


                                       10

<PAGE>



     The following table sets forth, for the fiscal years indicated, the income
statement of the Company expressed as a percentage of net sales:

<TABLE>
<CAPTION>

                                                                                1998     1999      2000
                                                                                ----     ----      ----
<S>                                                                              <C>       <C>    <C>
 Net sales by product category:
   Packaging products......................................................      87.3%     78.3%  70.3%
   Promotional beverage cups...............................................      12.7%     21.7%  29.7%
                                                                                 -----     -----  -----

Net sales..................................................................      100.0     100.0  100.0
Cost of goods sold.........................................................       82.4      81.5   84.3
                                                                                 -----     -----  -----

Gross profit...............................................................       17.6      18.5   15.7
Selling, general and administrative expenses...............................        4.9       4.6    5.5
Amortization of intangibles................................................        0.6       0.5    0.5
Other expense..............................................................        0.6        -     4.6
                                                                                 -----     -----  -----

Operating income...........................................................       11.5      13.4    5.1
Interest expense...........................................................       11.2      10.2   10.7
                                                                                  ----      ----   ----

Income (loss) before income taxes .........................................        0.3       3.2   (5.6)

Income tax expense (benefit) ..............................................        0.3       1.4   (2.2)
                                                                                 -----     -----  -----
   Net income (loss) ......................................................          -       1.8   (3.4)
                                                                                 =====     =====  =====
</TABLE>



RESULTS OF OPERATIONS

     The following discussion represents the analysis by the Company's
management of the results of operations for fiscal 1998, 1999 and 2000. This
discussion should be read in conjunction with the financial statements of the
Company and the notes thereto included elsewhere herein.

FISCAL 2000 COMPARED TO FISCAL 1999

NET SALES. Net sales increased $9.7 million, or 7.1%, from $136.6 million in
fiscal 1999 to $146.3 million in fiscal 2000. Rigid plastic packaging sales
decreased $4.0 million, or 3.7%, from $106.9 million in fiscal 1999 to $102.9
million in fiscal 2000 primarily due to lower sales to Yoplait and Dannon
that were partially offset by higher sales to S.C. Johnson. Take-out beverage
container sales increased $13.7 million, or 46.1%, from $29.7 million in
fiscal 1999 to $43.4 million in fiscal 2000. This increase was due to higher
volume sales of the Company's 32 oz. polystyrene CRUISER CUP-Registered
Trademark- to Tricon and sales of the new TWIST N'Go-Registered Trademark-
beverage container to Pepsi.

GROSS PROFIT. Gross profit decreased $2.2 million, from $25.2 million in fiscal
1999 to $23.0 million in fiscal 2000. Gross margins decreased from 18.5% in
fiscal 1999 to 15.7% in fiscal 2000. Gross profit decreased primarily due to the
combination of unfavorable product mix from lower sales of higher margin Yoplait
and Dannon products, inefficiencies associated with the start-up of certain new
products, costs related to the transfer of production activities from the
Company's Kansas City facility to other plants, and additional costs related to
equipment leases entered into in fiscal 2000. This decrease was partially offset
by higher net sales in fiscal 2000 versus fiscal 1999.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $1.8 million, from $6.2 million in fiscal 1999
to $8.0 million in fiscal 2000, and increased as a percentage of net sales from
4.6% to 5.5% due to higher salary and travel expenses.


                                       11

<PAGE>




OTHER EXPENSE. A one-time charge of $6.7 million was recorded during the fourth
quarter of fiscal 2000. This charge represents the write-down of certain items
of equipment that will be disposed of at the Company's Kansas City facility in
connection with the Company's decision to cease manufacturing activities at that
facility. In addition, the Company identified certain other equipment items that
were specifically related to products produced for a customer whose contract
with the Company terminated and, therefore, were also written down.

OPERATING INCOME. Operating income decreased $10.7 million, from $18.3 million,
or 13.4% of net sales, in fiscal 1999 to $7.6 million, or 5.1% of net sales, in
fiscal 2000 due to the reasons noted above.

INTEREST EXPENSE. Interest expense increased $1.8 million, from $13.9 million in
fiscal 1999 to $15.7 million in fiscal 2000, primarily due to higher borrowings
under the Company's Credit Agreement.

INCOME TAXES. Income tax expense was $1.9 million in fiscal 1999. Income tax
benefit amounted to $3.2 million in fiscal 2000. The Company's effective state
and Federal tax rate was 43% and 40% in fiscal 1999 and 2000, respectively.

NET INCOME (LOSS). For the reasons noted above, net income decreased from $2.5
million in fiscal 1999 to a net loss of $4.9 million in fiscal 2000.

FISCAL 1999 COMPARED TO FISCAL 1998

NET SALES. Net sales increased $15.3 million, or 12.6%, from $121.3 million
for fiscal 1998 to $136.6 million for fiscal 1999. Rigid plastic packaging
sales increased $1.0 million, or 1.0%, from $105.9 million for fiscal 1998 to
$106.9 million for fiscal 1999 primarily due to new sales of food storage
containers to S.C. Johnson that were partially offset by lower selling prices
related to declining resin prices. Net sales to Yoplait increased $1.7
million in fiscal 1999 compared to fiscal 1998, to an aggregate of $30.2
million due to higher unit volume. This increase was offset by a decrease in
net sales to Ross Labs of $3.6 million, to an aggregate of $17.4 million, and
a decrease in net sales to Dannon of $2.2 million, to an aggregate of $20.8
million, due to lower unit volumes and lower selling prices related to
declining resin prices. Promotional sales increased $14.3 million, or 92.9%,
from $15.4 million in fiscal 1998 to $29.7 million in fiscal 1999. This
increase was due to higher volume including sales of the Company's new 32
ounce polystyrene CRUISER CUP-Registered Trademark- to Tricon.

GROSS PROFIT. Gross profit increased $3.9 million, from $21.3 million for fiscal
1998 to $25.2 million for fiscal 1999 due to higher sales. Gross margin
increased from 17.6% in fiscal 1998 to 18.5% in fiscal 1999 primarily due to
higher plant utilization resulting from increased sales.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased from $5.9 million during fiscal 1998 to $6.2
million for fiscal 1999, but decreased as a percentage of net sales from 4.9% to
4.6% due to the higher level of sales.

OTHER EXPENSE. In fiscal 1998, the Company recorded a $0.8 million loss related
to the sale of the Louisiana, Missouri property.

OPERATING INCOME. Operating income increased $4.4 million, from $13.9 million
for fiscal 1998 to $18.3 million for fiscal 1999, and increased as a percentage
of net sales from 11.5% to 13.4% due to the reasons noted above.

INTEREST EXPENSE. Interest expense increased $0.3 million, from $13.6 million in
fiscal 1998 to $13.9 million in fiscal 1999. The increase was due to borrowings
in fiscal 1999 under the Company's Credit Agreement.

INCOME TAXES. Income taxes increased from $0.3 million for fiscal 1998 to $1.9
million for fiscal 1999 due to higher earnings. The relationship of income tax
expense to income before income taxes was higher in fiscal 1998 due to the
provision for state income taxes.

NET INCOME (LOSS). For the reasons stated above, net loss was $30 in fiscal
1998 compared to net income of $2,493 in fiscal 1999.


                                       12

<PAGE>




LIQUIDITY AND CAPITAL RESOURCES

The Company's liquidity needs arise primarily from capital investments, working
capital requirements and interest payments on its indebtedness. The Company has
met these liquidity requirements in past fiscal years primarily with funds
provided by long-term borrowings, borrowings under the Credit Agreement and cash
generated by operating activities.

PRI issued $110.0 million in Senior Secured Notes due 2003 (the "Senior Secured
Notes") in May 1996. In conjunction with this transaction, the Company also
entered into a credit agreement (the "Credit Agreement") that, subject to
certain borrowing conditions and limitations, provided for revolving credit
borrowings of up to $20.0 million. During fiscal 1999, the Credit Agreement was
amended to permit the Company to borrow an additional $10.0 million through
equipment acquisition term loans. In April 1999, the Company further amended the
Credit Agreement to increase the revolving credit capacity to a maximum of $22.5
million, and to reduce the amount of available equipment acquisition term loans
to $7.5 million. During fiscal 2000, the Credit Agreement was amended to
increase the revolving credit facility to a maximum of $25.5 million. In May
2000, the Company amended the Credit Agreement to reduce the revolving credit
facility to a maximum of $24.0 million and to increase the amount of available
equipment acquisition term loans to $9.0 million. As of February 29, 2000, there
was $33.0 million of outstanding borrowings under the Credit Agreement.

Cash provided by operating activities increased to $12.3 million for fiscal 2000
from $5.7 million for fiscal 1999. The increase resulted primarily from deposits
made in fiscal 1999 on equipment which was delivered to PRI in fiscal 2000, and
spending on equipment which was purchased by a third party and leased to PRI in
fiscal 2000. These deposits and spending more than offset the decreased cash
provided by lower net income and advanced payments received from customers for
certain tooling projects.

During fiscal 2000, cash provided by financing activities was $16.0 million
which included $8.5 million borrowed under the revolving credit facility, $3.7
million borrowed through equipment acquisition term loans, and $5.6 million of
proceeds from the sale/leaseback of equipment. During fiscal 2000, a dividend of
$1.8 million was paid to Packaging Resources Group, Inc. for the purpose of
paying interest on its debt.

Instruments governing the Company's indebtedness, including the Credit Agreement
and the Indenture governing the Senior Secured Notes, contain financial and
other covenants that restrict, among other things, the Company's ability to
incur additional indebtedness, incur liens, pay dividends or make certain other
restricted payments, consummate certain asset sales, enter into certain
transactions with affiliates, merge or consolidate with any other person or
sell, assign, transfer, lease, convey or otherwise dispose of substantially all
of the assets of the Company. Such limitations, together with the highly
leveraged nature of the Company, could limit corporate and operating activities,
including the Company's ability to respond to market conditions, to provide for
unanticipated capital investments or to take advantage of business
opportunities.

The Company continued to spend heavily in fiscal 2000 to expand its production
capacity for both promotional and packaging products. Capital expenditures for
fiscal 2000 were $30.5 million compared to $32.8 million in fiscal 1999.
Management believes that these expenditures have positioned the Company to
pursue additional business opportunities with new and existing customers.
However, the failure to obtain certain anticipated new business on a timely
basis has restricted the Company's available liquidity. As a result, the Company
did not make the interest payment of $6.4 million due May 1, 2000 on its 11 5/8%
Senior Secured Notes and does not expect to pay a dividend to its parent,
Packaging Resources Group, Inc., in order to fund the interest payment of $1.8
million due May 31, 2000 on Packaging Resources Group's 13% Senior Notes due
June 30, 2003.

The failure to make the interest payments discussed above will constitute
defaults under both of the Indentures governing such Notes. In addition, the
defaults under the Indentures will trigger certain cross-default provisions with
respect to the Company's Credit Agreement. PRI has entered into discussions with
the holders of the Notes and the lenders under its Credit Agreement to obtain
waivers or amendments to resolve the defaults. However, there can be no
assurance as to whether and when the Company will obtain any such waiver or
amendment . The Company announced on April 20, 2000 that it has retained the
investment banking firm Deutsche Bank, Inc. to explore the potential sale of the
Company. There can be no assurance whatsoever that any transaction with any
third party will take place or, even if one does occur, about the nature and
extent of any terms and conditions of any such potential transaction. The
Company's financial condition raises substantial doubt about the Company's
ability to continue as a going concern. The financial statements do not include
any adjustment to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.


                                       13
<PAGE>


SEASONALITY

The Company's business is somewhat seasonal in nature with its fourth fiscal
quarter historically the weakest due to lower consumer demand for refrigerated
yogurt and soft drink products. The Company's working capital requirements
historically have been relatively constant throughout the year but are subject
to periodic fluctuations due to, among other things, large volume orders of
promotional beverage cups that require increased inventories.

INCOME TAX MATTERS

At February 29, 2000, the Company had net operating loss carryforwards ("NOL's")
of approximately $15.2 million which will expire at various dates from 2004
through 2020. Such NOL's are available to reduce future taxable income for
Federal income tax purposes under a tax sharing agreement with HPH. See "Certain
Relationships and Related Transactions - Tax Sharing Agreement."

INFLATION

The principal component of the Company's products is resin. In recent years,
resin prices have fluctuated, in part, due to industry capacity, consumption
levels of resins and changes in the cost of feed stocks. In the event of
significant inflationary pressures, the cost of the Company's raw materials,
including resins, may increase. Under supply agreements with customers that
accounted for more than 76% of the Company's sales in fiscal 2000, the Company
has the ability to pass through resin price increases (as well as the obligation
to credit any resin price decreases). In the case of sales which are not made
pursuant to supply agreements containing such pass-through provisions, the
Company historically has passed on increases in resin prices (as well as
decreases in resin prices) to its customers through price adjustments. Sales
prices for promotional beverage cups are generally determined in advance of a
promotion and, accordingly, the Company bears the risk of resin price increases
while producing such products. Because plastic resin is the principal component
in the Company's products, the Company's financial performance is materially
dependent on its ability to pass resin price increases on to its customers
through contractual arrangements or otherwise. There can be no assurance that a
significant increase in resin prices would not negatively impact the Company.

IMPACT OF NEW ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting For Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivative instruments and hedging activities. In June 1999, the
FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of SFAS No. 133 - An Amendment of
FASB Statement 133." This statement delays the effective date for this standard
until fiscal years beginning after June 15, 2000. The Company is required to
comply with SFAS No. 133 and SFAS No. 137 in fiscal year 2002. The Company
estimates that the adoption of these standards will not have a material effect
on its financial statements.


                                       14

<PAGE>




ITEM 7a.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     The Company is exposed to market risks from changes in interest rates which
may adversely affect its results of operations and financial condition. The
Company seeks to minimize these risks through its regular operating and
financing activities.

     The Company engages in neither speculative nor derivative financial or
trading activities and is not exposed to market risks from changes in foreign
currency exchange rates.

     The Company has exposure to interest rate risk related to certain
instruments entered into for other than trading purposes. Specifically,
borrowings under the Credit Agreement (both the equipment acquisition term loans
and revolving credit facility) bear interest based on the Lenders' Reference
Rate (as defined in the Credit Agreement) or LIBOR Rate plus an applicable
margin. See Note 7 to the Company's financial statements. Changes in the
Reference Rate or the LIBOR Rate could affect the cost of funds borrowed in the
future. Based on borrowings outstanding under the Credit Agreement as of
February 29, 2000, the Company estimates that a 1% increase in interest rates
would result in an approximate $330,000 increase in annual interest expense.

     The Company's Senior Secured Notes due 2003 are at a fixed interest rate of
11 5/8%. As a result, a change in the fixed interest rate market could change
the estimated fair market value of such notes.

     The Company is exposed to credit risk on certain assets, primarily accounts
receivable. The Company provides credit to customers in the ordinary course of
business and performs ongoing credit evaluations. Concentrations of credit risk
with respect to trade receivables are significant due to the Company's
dependence on a limited number of large customers. The Company believes its
allowance for doubtful accounts is sufficient to cover customer credit risk.

                                       15

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The financial statements are included in this report beginning on page F-1.

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

         None.
                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

  Set forth below is certain information concerning the individuals who are
directors and executive officers of the Company as of May 26, 2000.

<TABLE>
<CAPTION>

         Name                 Age                 Position
         ----                 ---                 --------
<S>                           <C>   <C>
    Howard P. Hoeper           60   Chairman of the Board of Directors, Chief
                                    Executive Officer and President
    Jerry J. Corirossi         56   Executive Vice President - Finance &
                                    Administration, Chief Financial Officer,
                                    Secretary and Director
    Walter C. Riesen           69   Executive Vice President - Research &
                                    Development and Director
    Bimal A. Kalvani           37   Vice President - Manufacturing
    John D. Hoeper             32   Director
    Carol Hoeper               43   Director

</TABLE>


     Set forth below is a description of the business experience of each
director and executive officer of the Company.

HOWARD P. HOEPER. Mr. Hoeper has been Chairman of the Board, Chief Executive
Officer and President of Group since its formation in 1993, and has served as
Chairman of the Board and Chief Executive Officer of PRI since 1984. He was also
elected President of PRI in 1989. Mr. Hoeper has been elected to serve as
Chairman of the Board of each of Group and PRI until the next annual meeting of
the stockholders or until his successor is elected and qualified. Mr. Hoeper is
the sole shareholder of HPH, which owns all of the outstanding capital stock of
Group. Mr. Hoeper is married to Carol Hoeper and the father of John D. Hoeper.

JERRY J. CORIROSSI. Mr. Corirossi was promoted to Executive Vice President -
Finance & Administration, Chief Financial Officer on October 1, 1998 and has
been Secretary of the Company since 1989, and has been a Director of Group since
its formation in 1993 and a Director of PRI since February 1990. Prior to then
he had been Vice President - Finance & Administration, Chief Financial Officer
and Secretary of the Company since 1989. Mr. Corirossi shall serve as a director
of such companies until the next annual meeting of stockholders or until his
successor is elected and qualified. Mr. Corirossi is a Certified Public
Accountant and has over twenty-five years of financial managerial experience.

WALTER C. RIESEN. Mr. Riesen was promoted to Executive Vice President - Research
& Development on October 1, 1998 and has been a Director of PRI since March
1999. Prior to then he had been Vice President - Manufacturing (Eastern
Operations) since 1989. Mr. Riesen has more than twenty years of experience in
the rigid plastics packaging industry with a concentration in the injection
molding and pressure forming processes.

BIMAL A. KALVANI. Mr. Kalvani was promoted to Vice President - Manufacturing in
January 2000. Prior to that, he had been Vice President, Regional Manufacturing
since October 1999. Mr. Kalvani joined PRI as the Vice President, Planning and
Analysis in March of 1999 after more than 6 years of technical engineering and
general manufacturing management positions with Tetra Pak, as well as Tenneco
Packaging. Mr. Kalvani has a total of 15 years experience in the plastics
industry.

JOHN D. HOEPER. Mr. Hoeper has been Vice President - Operations, Sales &
Marketing of PRI since August 1998 and has been a Director of PRI since March
1999. From 1995 to August 1998 Mr. Hoeper was Director of Marketing. Prior to
then he had been Marketing Analyst since 1990. John D. Hoeper is the son of
Howard P. Hoeper.

                                       16

<PAGE>






CAROL HOEPER. Ms. Hoeper has been the Vice President, Development of HPH
Industries, Ltd. since July 1996 and has been a Director of PRI since March
1999. Carol Hoeper is married to Howard P. Hoeper.


     Effective April 24, 1998, Mr. Antony P. Ressler and Mr. David B. Kaplan
resigned as Directors of PRI. Each of Messrs. Ressler and Kaplan had been
designated by Apollo to serve as a Director of PRI in June 1993 pursuant to the
Stockholders Agreement (as defined below). See "Certain Relationships and
Related Transactions - Stock and Warrant Holders Agreement and Option." Each of
Carol Hoeper and John D. Hoeper were elected to replace Messrs. Ressler and
Kaplan in accordance with the terms of the Stockholders Agreement.

     Until April 1998, Messrs. Kaplan and Ressler had served as directors of
Group and PRI pursuant to the Stock and Warrant Holders Agreement dated as of
June 30, 1993 and amended as of September 24, 1996 (the "Stockholders
Agreement"), which provides that two individuals designated by Apollo be elected
as directors of Group and PRI so long as Apollo owns or has the right to acquire
15% or more of Group's voting securities (or one individual in the event Apollo
owns or has the right to acquire between 10% and 14.99% of Group's voting
securities). Apollo has not designated replacements for Messrs. Ressler and
Kaplan to serve as Directors of Group and PRI. In addition, pursuant to the
Stockholders Agreement, certain fundamental corporate actions proposed to be
taken by Group or PRI require the approval of any Apollo designees serving as
directors. See "Certain Relationships and Related Transactions - Stock and
Warrant Holders Agreement and Option." Apollo has given an undertaking to Group
that, if Group objects, no such designee will serve as a director of a direct
competitor of the Company. Mr. Hoeper has agreed with Apollo and the TCW
Entities that he will not compete directly or indirectly with the business
carried on by the Company or any of its subsidiaries until the later of (i) two
years following cessation of his employment with the Company or its subsidiaries
and (ii) the date on which he and the members of his family do not own, directly
and indirectly, at least 50% of Group's capital stock.


                                       17

<PAGE>



ITEM 11.  EXECUTIVE COMPENSATION.

     The following table summarizes information concerning annual and long-term
cash and non-cash compensation paid to or accrued for the benefit of the Chief
Executive Officer and each of the three other most highly compensated executive
officers of the Company (collectively, the "named executive officers") for all
services rendered in all capacities to the Company for fiscal 1998, 1999 and
2000.

<TABLE>
<CAPTION>

                           SUMMARY COMPENSATION TABLE

                                      FISCAL
      NAME AND PRINCIPAL POSITION     YEAR        SALARY      BONUS (1)         OTHER ANNUAL        ALL OTHER COMPENSATION
      ---------------------------     ------      ------      ---------      COMPENSATION(2),(3)    ----------------------
                                                                            -------------------              (4)
                                                                                                             ---
<S>                                   <C>        <C>                           <C>                        <C>
   Howard P. Hoeper                    2000       $789,000            -          $600,000                   $5,600
     Chairman of the Board, Chief      1999        397,800      100,000           600,000                    5,600
     Executive Officer and             1998        337,700      379,000           600,000                    5,600
     President
   Jerry J. Corirossi                  2000        225,000            -                 -                    5,600
     Executive Vice President -        1999        209,300       70,000                 -                    5,600
     Finance & Administration          1998        197,000       50,000                 -                    5,600
     and Chief Financial Officer
   Walter C. Riesen                    2000        225,000            -                 -                    5,600
     Executive Vice President -        1999        209,300       70,000                 -                    5,600
     Research & Development            1998        197,000       50,000                 -                    5,600
   Bimal A. Kalvani (5)                2000        112,750            -                 -                    2,246
     Vice President -                  1999              -            -                 -                        -
     Manufacturing                     1998              -            -                 -                        -

</TABLE>



-----------
Notes:

(1) No bonus awards were accrued in fiscal 2000 and/or paid in fiscal 2001
pursuant to PRI's Bonus Plan. See "Bonus Plan".

(2) The Company does not have restricted stock award plans or long-term
incentive plans and has not granted stock appreciation rights.

(3) "Other Annual Compensation" for Mr. Hoeper consists of fees paid by PRI to
HPH pursuant to a management agreement. See "Certain Relationships and Related
Transactions - Management Agreement." None of the other named executive officers
received reportable "Other Annual Compensation" in fiscal 1998, 1999 or 2000.

(4) Consists of contributions made by PRI on behalf of the named executive
officers pursuant to the Pension Plan (as defined below).

(5) Mr. Kalvani was promoted to Vice President - Manufacturing in January 2000.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     The Company's compensation policies are determined and executive officer
compensation decisions are made by Mr. Hoeper, subject to the right of the
directors designated by Apollo to approve the adoption of any employee stock
option plan, stock bonus plan or any similar plan. Mr. Hoeper is the Chairman of
the Board, Chief Executive Officer and President of the Company and indirectly
owns, through his ownership of HPH, all of the outstanding capital stock of
Group. See "Security Ownership of Certain Beneficial Owners and Management."


                                       18

<PAGE>



BONUS PLAN

     The Company maintains a cash bonus plan (the "Bonus Plan") for all of its
executive officers and for certain other key management personnel. The bonus
amount and the extent of participation in the Bonus Plan are discretionary. In
the past, bonus awards to employees have been based on various qualitative and
quantitative indicators of corporate and individual performance. There were no
discretionary bonus awards accrued during fiscal 2000.

PENSION PLAN

     On September 30, 1985, the Company established a qualified defined
contribution pension plan (the "Pension Plan") for the purpose of providing
funds to its employees upon their retirement. Participation in the Pension Plan
is open to substantially all of the Company's employees. The Pension Plan
requires the Company to contribute a specified percentage of an employee's total
compensation for each plan year, and such amounts are credited to each
employee's individual account on an annual basis. If any employee retires at age
65, or at such later date as permitted under the Pension Plan, then the entire
amount of his account becomes 100% vested as of that date. The amount in an
employee's account will also be fully vested at the time of his death or total
permanent disability. Distributions under the Pension Plan may be made in one
lump sum payment, in designated installments, in installments based upon an
employee's life expectancy at retirement, or in the form of an annuity, at the
employee's election. If employment is terminated for any reason other than
retirement, death or total and permanent disability, then the employee's account
will be deemed to have been 20% vested for each year of service. The amounts
accrued for the benefit of the named executive officers pursuant to the Pension
Plan during fiscal 2000 are reflected in the Summary Compensation Table above.

401(K) SAVINGS PLAN

     PRI has adopted a plan pursuant to Section 401(k) of the Internal Revenue
Code (the "401(k) Plan") for employees that are age 18 or older and have been
employed by PRI for at least three (3) months. Under the 401(k) Plan, each
eligible employee is able to defer a portion of his or her salary each year on a
before-tax basis. The portion deferred is paid by PRI to the trustee under the
401(k) Plan for the account of the participant. The Company does not match
employee contributions or otherwise contribute to the 401(k) Plan on behalf of
employee-participants. All employee-participant contributions are fully vested
upon contribution.

CHANGE OF CONTROL PLAN

     The Board of Directors adopted a Change of Control Plan in May 1999.
Approximately 30 officers and managers participate in the plan, including all
the individuals listed in the Summary Compensation Table.

     If a change in control (as described below) occurs, the participant is
entitled to benefits from PRI. In general, those benefits include: (i) a lump
sum payment of three (3) or two (2) (depending on the participant's position)
times annual salary and average annual bonus over the previous three years; (ii)
a lump sum payment equal to (a) employer contributions the participant would
have received under the Company pension plan if employment had continued for two
(2) or three (3) (depending on the participant's position) years at current
compensation levels and (b) the difference between the participant's total
account balance under the Company pension plan and the participant's vested
account balance under the Company pension plan; and (iii) continuation of
medical and other benefits for up to two (2) or three (3) (depending on the
participant's position) years. In addition, PRI will compensate the participant
for any excise tax liability as a result of payments under the plan. Each of
the individuals listed in the Summary Compensation Table qualify for benefits
based upon the higher multiple or greater number of years outlined above.

     In general, the plan defines a change in control to include (a) the
required sale by shareholders of either PRI or Group of their equity interests
pursuant to Section 3.5(c) of the Stock and Warrant Holders Agreement and (b) a
change in the majority of the Board of Directors of either PRI or Group.


                                       19

<PAGE>



SEVERANCE PLAN

     On April 20, 2000, the Company established a Severance Plan to provide
severance pay to certain employees who terminate employment with the Company or
an affiliate of the Company under certain circumstances. Approximately 46
employees participate in the plan, including all the individuals listed in the
Summary Compensation Table.

     Certain employees, including Howard P. Hoeper, Jerry J. Corirossi and
Walter Riesen, are eligible to receive a lump sum payment upon a change of
control. Certain other employees, including Bimal A. Kalvani, whose employment
with an employer is terminated within six months of a change of control by
such employer are eligible to receive a lump sum payment under certain
conditions. In no event shall a covered employee who receives, or is eligible
to receive, benefits under the Packaging Resources Change of Control Plan be
eligible to receive severance pay under the severance plan. Severance pay
shall be in addition to accrued but unpaid vacation benefits payable in
connection with the termination of employment. Pursuant to the Severance Plan
Mr. Hoeper, Mr. Corirossi, Mr. Riesen and Mr. Kalvani are eligible to receive
$800,000, $450,000, $450,000 and $132,000, respectively.

     In general, a change of control shall be deemed to occur upon the
consummation by the Company of a reorganization, merger or consolidation or a
sale or other disposition of all or substantially all of the assets of the
Company or of a majority of the voting stock of the Company, which has been
approved or recommended by the Board of Directors of the Company.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

     PRI's Certificate of Incorporation contains a provision permitted under the
Delaware General Corporation Law (the "DGCL") eliminating (with limited
exceptions) each director's personal liability for monetary damages for breach
of any duty as a director. PRI's Certificate of Incorporation and Bylaws
authorize PRI to indemnify its present and former directors and officers and to
pay or reimburse expenses for such individuals in advance of the final
disposition of a proceeding to the maximum extent permitted from time to time
under the DGCL. The DGCL provides that indemnification of a person who is a
party, or threatened to be made a party, to legal proceedings by reason of the
fact that such a person is or was a director, officer, employee or agent of a
corporation, or is or was serving as a director, officer, employee or agent of a
corporation or other firm at the request of a corporation, against expenses,
judgments, fines and amounts paid in settlement, is mandatory in certain
circumstances and permissive in others, subject to authorization by the
corporation's board of directors.

     PRI has entered into indemnification agreements with each of its directors
and executive officers. The indemnification agreements require, among other
things, that PRI indemnify such officers and directors to the fullest extent
permitted by law, and advance to the officers and directors all related
expenses, subject to reimbursement if it is subsequently determined that
indemnification is not permitted. The indemnification agreements also require
PRI to indemnify and advance all expenses incurred by officers and directors
seeking to enforce their rights thereunder and cover officers and directors
under the Company's directors' and officers' liability insurance. Although the
indemnification agreements offer substantially the same scope of coverage
afforded by provisions in PRI's Certificate of Incorporation and Bylaws, they
provide greater assurance to directors and officers that indemnification will be
available, because, as a contract, it cannot be unilaterally modified by the
Board of Directors or by the stockholders to eliminate the rights it provides.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     Group owns all of the outstanding capital stock of the Company. The
following table sets forth certain information, as of February 29, 2000,
regarding beneficial ownership of the capital stock of Group by each stockholder
who is known by the Company to own beneficially more than 5% of the outstanding
capital stock of Group. Except as identified below with respect to Mr. Hoeper,
none of the executive officers or directors of Group beneficially own any shares
of the capital stock of Group.



                                       20
<PAGE>





<TABLE>
<CAPTION>


                                                                         Percentage of       Percentage of
                                                          Amount Owned  Voting Securities   Voting Securities
           Name and Complete Mail Address                   (Shares)          Owned                Owned (1)
           ------------------------------                 ------------  -----------------   -----------------
<S>                                                      <C>             <C>                <C>
   HPH Industries, Ltd. (2)                                  56,250            100%               60.0%
     One Conway Park
     100 Field Drive
     Suite 300
     Lake Forest, Illinois 60045
   Apollo Packaging Partners, L.P. (3), (4)                  27,500              _                29.3%
     c/o Apollo Advisors, L.P.
     Two Manhattanville Road
     Purchase, New York 10577
   TCW/Crescent Mezzanine Partners, L.P. (3), (5)             7,613              _                 8.1%
     11100 Santa Monica Boulevard
     Suite 2000
     Los Angeles, California 90025
   TCW/Crescent Mezzanine Trust (3), (5)                      2,387              _                 2.6%
     11100 Santa Monica Boulevard
     Suite 2000
     Los Angeles, California 90025

</TABLE>



-----------
Notes:

(1) On a fully diluted basis, assuming the exercise of all of the Warrants (as
discussed in note 3 below).

(2) Through his ownership of HPH, Mr. Hoeper beneficially owns and exercises
sole investment and voting rights with respect to 56,250 shares of capital stock
of Group representing 100% of Group's outstanding capital stock.

(3) Apollo and the TCW Entities own Warrants to purchase 27,500 and 10,000
shares of Group's capital stock, respectively (or 29.3% and 10.7% of such
capital stock of Group, respectively, assuming full exercise of the Warrants).
The Warrants are exercisable for an exercise price of $213.33 per share of
capital stock of Group. The Warrants expire on June 30, 2003. Apollo and the TCW
Entities also own an option to purchase additional shares of capital stock of
Group under certain circumstances. See "Certain Relationships and Related
Transactions - Stock and Warrant Holders Agreement and Option."

(4) The general partner of Apollo is AIF II, L.P., the general partner of which
is Apollo Advisors, L.P. The general partner of Apollo Advisors, L.P. is Apollo
Capital Management, Inc., the directors and stockholders of which are Messrs.
Leon D. Black and John J. Hannan. See "Directors and Executive Officers of the
Registrant." Messrs. Black and Hannan disclaim any beneficial ownership of the
capital stock of Group.

(5) The general partner of TCW Partners and the managing owner of TCW Trust is
TCW/Crescent Mezzanine, L.L.C. ("TCW/Crescent LLC"). Messrs. Robert D. Beyer and
Jean-Marc Chapus are portfolio managers of TCW/Crescent LLC and exercise voting
and dispositive powers on its behalf. Messrs. Beyer and Chapus disclaim any
beneficial ownership of the capital stock of Group.



                                       21

<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

MANAGEMENT AGREEMENT

     Since its inception, PRI has paid certain fees to HPH in exchange for
financial and management consulting services and has reimbursed HPH for expenses
incurred in connection with the performance of such services. HPH owns all of
the outstanding capital stock of Group and is itself wholly-owned by Mr. Hoeper,
the Chairman, Chief Executive Officer and President of Group and PRI. The
aggregate amount of payments received by HPH during fiscal 1998, 1999 and 2000
in respect of such fees and reimbursements were $600,000, $600,000 and $600,000,
respectively. PRI and HPH entered into a management agreement pursuant to which
HPH will receive a fixed payment for financial and management consulting
services in the amount of $600,000 per fiscal year, subject to increase at the
discretion of the Company and to the extent permitted by instruments governing
indebtedness of PRI, including the Indenture governing the Senior Secured Notes,
or decrease to the extent required by the terms of such indebtedness. Because of
the personal nature of the services provided by HPH and Mr. Hoeper, the Company
cannot determine whether it could obtain the same services on more favorable
terms from a third party.

TAX SHARING AGREEMENT

     The operations of Group and PRI are included in the Federal income tax
returns filed by HPH. The three companies have entered into a tax sharing
agreement (the "Tax Sharing Agreement") which apportions the consolidated income
tax liability of the affiliated group. Under the Tax Sharing Agreement, the
Federal income tax liability of PRI is calculated on a separate return basis and
the amount so calculated, which in no event may exceed the group's consolidated
tax liability for such year, is paid to HPH which then pays the group's taxes
for such year. None of HPH, Group or PRI is liable for (or is due) any amount to
(or from) the others even though the tax liability of the group may have been
reduced by reason of the inclusion of Group or PRI as a member of the group.

STOCK AND WARRANT HOLDERS AGREEMENT AND OPTION

     HPH, Apollo, the TCW Entities, Mr. Hoeper and Group are parties to the
Stockholders Agreement which, among other things, gives Apollo and the TCW
Entities the pre-emptive right to acquire a portion of additional shares of
capital stock of Group issued by Group, a right of first refusal on shares of
capital stock of Group owned by HPH, the right to require Group to purchase
their equity interests if Group has not had a public offering of voting stock
prior to June 30, 1999 (to the extent permitted under the Credit Agreement and
the Indenture governing the Senior Secured Notes) and, subject to certain
exceptions, the right to participate in any sale of capital stock of Group by
HPH. In addition, if at any time after June 30, 1999, the holders of a majority
of the shares of capital stock of Group propose to sell their shares, they may
require the other parties to the Stockholders Agreement to participate in such
sale. The Stockholders Agreement also provides that Mr. Hoeper will not, as long
as HPH owns at least 10% of Group, transfer any shares of capital stock of HPH,
except pursuant to the laws of descent. If any shares of HPH capital stock are
transferred pursuant to laws of descent, Apollo and the TCW Entities will have
the right to require the descendants to purchase their equity interests in Group
at the fair market value thereof. Group has granted Apollo and the TCW Entities
an option to purchase at fair market value that number of shares of capital
stock of Group which, when aggregated with the other shares owned by them or
which they have the right to acquire, equal 51% of the outstanding shares on a
fully diluted basis. The option is exercisable during the period of 180 days
following the date on which Mr. Hoeper and his heirs do not own and have the
right to vote all of the shares of HPH. The exercise of the option is
conditioned upon a simultaneous offer by the holders to purchase at fair market
value all shares of Group owned by HPH.

     The Stockholders Agreement also provides, among other things, that Apollo
has the right to designate (i) two members of the Board of Directors of Group
and PRI so long as it owns or has the right to acquire 15% or more of the voting
securities of Group outstanding as of the date of consummation of the
Stockholders Agreement (the "Initial Voting Securities") and (ii) one member of
the Board of Directors of Group and PRI so long as it owns or has the right to
acquire between 10% and 14.99% of the Initial Voting Securities. In addition, a
majority of the Apollo designees serving as members of the Board of Directors of
Group or PRI must approve certain fundamental corporate actions proposed to be
taken by each such company, including (i) the sale of all or substantially all
of its assets, (ii) a merger, consolidation or dissolution, (iii) an acquisition

                                       22

<PAGE>




involving consideration of more than $10.0 million, (iv) certain transactions
with affiliates, (v) an amendment to its Certificate of Incorporation or
By-laws, (vi) the adoption of certain employee benefit plans and (vii) any
material change in its line of business. The Stockholders Agreement terminates
on June 30, 2003.

EQUITY REGISTRATION RIGHTS AGREEMENT

     Group, Apollo and the TCW Entities are parties to the Equity Registration
Rights Agreement dated as of June 30, 1993 (the "Equity Registration Rights
Agreement"). Under the Equity Registration Rights Agreement, the holders of at
least 25% of the Warrants (or shares of capital stock of Group obtainable upon
exercise of the Warrants (collectively, the "Registrable Equity Securities")) on
up to three separate occasions may require Group, subject to certain conditions,
to effect the registration of the Registrable Equity Securities under the
Securities Act. In addition to such demand registration rights, such holders
also may, subject to certain limitations, require Group to register their
Registrable Equity Securities if Group registers any of its equity securities
under the Securities Act. Group has agreed to bear all expenses incident to the
registration rights provided under the Equity Registration Rights Agreement,
except that expenses incurred in connection with any second or third demand
registration are to be allocated equally between Group and the selling
securityholders. Group has also agreed to indemnify selling securityholders
against certain liabilities, including liabilities under the Securities Act.



                                       23

<PAGE>

                                     PART IV

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

         (a)1 Financial Statements

<TABLE>
<CAPTION>


PACKAGING RESOURCES INCORPORATED                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
Independent Auditors' Report....................................................................................F-1
Balance Sheets as of February 28, 1999 and February 29, 2000....................................................F-2
Statements of Operations for the years ended February 28, 1998, 1999, and February 29, 2000.....................F-3
Statements of Stockholder's Deficit for the years ended February 28, 1998, 1999, and February 29, 2000..........F-4
Statements of Cash Flows for the years ended February 28, 1998, 1999, and February 29, 2000 ....................F-5
Notes to Financial Statements...................................................................................F-6

         (a)2 Financial Statement Schedule

Independent Auditors' Report....................................................................................S-1
Schedule II -- Packaging Resources Incorporated's Valuation and Qualifying Accounts Information.................S-2

</TABLE>


All other Financial Statement Schedules are omitted as they are inapplicable,
immaterial or the required information is included in the financial statements
or notes hereto.

     (a)3 Exhibits

<TABLE>
<CAPTION>


 Exhibit
    No.                                    Exhibit
 -------                                   -------

<S>            <C>
3.1 **         Amended and Restated Certificate of Incorporation of PRI

3.2(a)**       Amended and Restated By-Laws of PRI

3.2(b)****     Amendment to Amended and Restated By-Laws of PRI

4.1**          Indenture dated as of May 17, 1996 between PRI and LaSalle
               National Bank, as Trustee, relating to the Senior Secured Notes
               (including form of certificate to be delivered in connection with
               transfers to institutional accredited investors)

4.2**          Registration Rights Agreement dated as of May 17, 1996 between
               PRI and BT Securities Corporation and Donaldson, Lufkin &
               Jenrette Securities Corporation

4.3**          Credit Agreement dated as of May 17, 1996 among PRI, the lenders
               Signatory thereto and LaSalle National Bank, as administrative
               agent

4.3(a)#        Fifth Amendment dated as of August 5, 1998 to the Credit
               Agreement dated as of May 17, 1996 among PRI, the lenders
               signatory thereto and LaSalle National Bank, as administrative
               agent.

4.3(b)****     Seventh Amendment dated as of April 27, 1999 to the Credit
               Agreement dated as of May 17, 1996 among PRI, the lenders
               signatory thereto and LaSalle National Bank, as administrative
               agent

</TABLE>

                                       24

<PAGE>



<TABLE>
<CAPTION>


<S>            <C>
4.3(c)##       Tenth Amendment dated as of October 7, 1999 to the Credit
               Amendment dated as of May 17, 1996 among PRI, the lenders
               signatory thereto and LaSalle National Bank, as administrative
               agent

4.3(d)         Twelfth Amendment dated as of February 17, 2000 to the Credit
               Agreement dated as of May 17, 1996 among PRI, the lenders
               signatory thereto and LaSalle National Bank, as administrative
               agent.

4.3(e)         Thirteenth Amendment dated as of March 10, 2000 to the Credit
               Agreement dated as of May 17, 1996 among PRI, the lenders
               signatory thereto and LaSalle National Bank, as administrative
               agent.

4.3(f)         Fourteenth Amendment dated as of May 10, 2000 to the Credit
               Agreement dated as of May 17, 1996 among PRI, the lenders
               signatory thereto and LaSalle National Bank, as administrative
               agent

10.5**         Management Agreement dated as of May 17, 1996 between HPH
               Industries, Ltd. and PRI(1)

10.6**         Agreement Apportioning the Consolidated Income Tax Liability
               of HPH Industries, Ltd. Affiliated Group effective as of May
               17, 1996 among HPH, Group and PRI

10.7**         The Dannon Company, Inc. 4 oz. Sprinkl'ins Dannon Cup Mold and
               Cup Manufacture Agreement between The Dannon Company, Inc. and
               PRI dated July 10, 1992, as amended April 4, 1994 and February
               6, 1995*

10.8**         The Dannon Company, Inc. 6 oz. Blended Cup Mold and Cup
               Manufacture Agreement between The Dannon Company, Inc. and PRI
               dated April 18, 1991, as amended July 10, 1992, April 4, 1994 and
               June 26, 1995*

10.9**         The Dannon Company, Inc. 8 oz. Mold Manufacture and Cup
               Production Agreement between The Dannon Company, Inc. and PRI
               dated December 9, 1991, as amended October 27, 1992, April 4,
               1994 and February 15, 1996*

10.9(a)**      Extension Letter dated June 20, 1996 with respect to The Dannon
               Company, Inc. 8 oz. Mold Manufacture and Cup Production Agreement
               between The Dannon Company, Inc. and PRI*

10.10**        The Dannon Company 8 oz. Mold Manufacture and Cup Production
               Agreement between The Dannon Company, Inc. and PRI (as successor
               to Miner Container of Texas, Inc.) dated January 15, 1992, as
               amended November 16, 1992*

10.11***       The Parts Supply Agreement dated January 1, 1998 between General
               Mills Operations, "Yoplait", and PRI++

10.11(a)***    The Multi-Pack Supply Agreement dated March 1, 1998 between
               General Mills Operations, "Yoplait", and PRI++

10.12****      The Cans Supply Agreement dated as of March 1, 1998 between Ross
               Products Division, a Division of Abbott Laboratories, and PRI++

10.13**        Form of Indemnification Agreement dated as of May 17, 1996
               between PRI and each of its directors and officers

10.14**        Description of Annual Bonus Plan (1)

</TABLE>


                                       25

<PAGE>



<TABLE>
<CAPTION>

<S>            <C>
10.15****      Packaging Resources Change of Control Plan (1)

10.16****      The Sales and Purchase Agreement dated as of June 1, 1998
               between Tricon Restaurant Services Group, Inc. and PRI++

10.16(a)       Amendment No. 1 dated as of April 17, 2000, between Unified
               Foodservice Purchasing Co-op, LLC ("UFPC") and PRI to that
               certain Sales and Purchase Agreement dated as of June 1, 1998
               between Tricon Restaurant Services Group, Inc. and PRI+

10.17          Twist N' Go Supply Agreement dated September 9, 1999 between
               Pepsi-Cola Company, a division of PepsiCo, Inc., and PRI+

10.18          Packaging Resources Incorporated Severance Plan +(1)

12.1           Statement re Computation of Ratios

27.1           Financial Data Schedule

</TABLE>


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

+    The Registrant is filing contemporaneously herewith a request that certain
     portions of this agreement be given confidential treatment pursuant to Rule
     24b-2 of the Securities Exchange Act of 1934, as amended; an unredacted
     copy is being filed with the Securities and Exchange Commission.

++   The Registrant has omitted certain portions of this agreement for which
     the Registrant has obtained confidential treatment pursuant to Rule
     24b-2 of the Securities Exchange Act of 1934, as amended; unredacted
     copies have been filed with the Securities and Exchange Commission.

*    The Registrant has omitted certain portions of this agreement for which the
     Registrant has obtained confidential treatment pursuant to Rule 406 of the
     Securities Act of 1933, as amended; unredacted copies have been filed with
     the Securities and Exchange Commission.

**   Incorporated by reference to the similarly numbered exhibits to the
     Registration Statement on Form S-1 (Commission File No. 333-05885) filed on
     June 13, 1996.

***  Incorporated by reference to the similarly numbered exhibits to the Annual
     Report on Form 10-K (Commission File No. 333-05885) filed on May 28, 1998.

**** Incorporated by reference to the similarly numbered exhibits to the Annual
     Report on Form 10-K (Commission File No. 333-05885) filed on May 28, 1999.

#    Incorporated by reference to the similarly numbered exhibit to the
     Quarterly Report on Form 10-Q (Commission File No. 333-05885) filed on
     October 7, 1998.

##   Incorporated by reference to the similarly numbered exhibit to the
     Quarterly Report on Form 10-Q (Commission File No. 333-05885) filed on
     January 13, 2000.

(1)  A management contract or compensatory plan or arrangement.

     (b)  Reports on Form 8-K.
               A report on Form 8-K, dated April 20, 2000, was filed by PRI
               which reported under Items 5 and 7 financial results for the
               fiscal year ended February 29, 2000 and the retention of
               investment banking firm Deutsche Bank Securities, Inc.


                                       26

<PAGE>




                          INDEPENDENT AUDITORS' REPORT


The Board of Directors
and Stockholder of
Packaging Resources Incorporated:


We have audited the accompanying balance sheets of Packaging Resources
Incorporated as of February 28, 1999 and February 29, 2000, and the related
statements of operations, stockholder's deficit, and cash flows for the years
ended February 28, 1998 and 1999 and February 29, 2000. These financial
statements are the responsibility of the management of Packaging Resources
Incorporated. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Packaging Resources
Incorporated as of February 28, 1999 and February 29, 2000, and the results of
its operations and its cash flows for the years ended February 28, 1998 and 1999
and February 29, 2000, in conformity with generally accepted accounting
principles.

The accompanying financial statements have been prepared assuming that Packaging
Resources Incorporated will continue as a going concern. As discussed in note 14
to the financial statements, the Company's continued high level of capital
spending in fiscal 2000 coupled with the failure to obtain certain anticipated
new business on a timely basis has restricted its available liquidity. As a
result, the Company did not make the interest payment due May 1, 2000 on its 11
5/8% Senior Notes and does not expect to pay a dividend to its parent, Packaging
Resources Group, Inc., in order to fund the interest payment due May 31, 2000 on
Packaging Resources Group, Inc.'s 13% Senior Notes. These matters raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in note 14. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.


KPMG LLP


March 20, 2000, except for notes 7 and 14, as to which
the date is May 25, 2000
Chicago, Illinois

                                       F-1
<PAGE>


                        PACKAGING RESOURCES INCORPORATED

                                 BALANCE SHEETS

                     FEBRUARY 28, 1999 AND FEBRUARY 29, 2000
             (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE INFORMATION)

<TABLE>
<CAPTION>

                                 ASSETS                                    1999         2000
                                                                         ---------    ---------
<S>                                                                      <C>          <C>
Current assets:
    Cash and cash equivalents.........................................   $   1,672    $     304
    Accounts receivable, net of allowance for doubtful accounts of $135
      in 1999 and 2000, respectively .................................      13,915       15,541
   Inventories .......................................................      24,922       30,353
   Other current assets ..............................................         431        1,210
   Deferred income taxes .............................................         776          868
                                                                         ---------    ---------


Total current assets .................................................      41,716       48,276
Property, plant, and equipment, net ..................................      75,988       86,946
Intangibles, net .....................................................      19,081       18,368
Other assets .........................................................      18,031        2,544
                                                                         ---------    ---------
                                                                         $ 154,816    $ 156,134
                                                                         =========    =========

                            LIABILITIES AND STOCKHOLDER'S DEFICIT

Current liabilities:
   Current maturities of long-term debt ..............................   $     126    $   1,500
   Accounts payable ..................................................      12,114       15,121
   Accrued expenses ..................................................      10,195        9,491
   Deferred revenue ..................................................       4,454        1,173
                                                                         ---------    ---------

Total current liabilities ............................................      26,889       27,285

Long-term debt .......................................................     130,668      141,500
Deferred income taxes ................................................       9,184        5,942
                                                                         ---------    ---------

Total liabilities ....................................................     166,741      174,727
                                                                         ---------    ---------

Stockholder's deficit:
   Common stock, $.01 par value; 1,000 shares authorized,
    issued, and outstanding in 1999 and 2000 .........................        --           --
   Additional paid-in capital ........................................        --           --
   Accumulated deficit ...............................................     (11,925)     (18,593)
                                                                         ---------    ---------

Total stockholder's deficit ..........................................     (11,925)     (18,593)
                                                                         ---------    ---------

                                                                         $ 154,816    $ 156,134
                                                                         =========    =========

</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       F-2

<PAGE>


                         PACKAGING RESOURCES INCORPORATED

                            STATEMENTS OF OPERATIONS
          YEARS ENDED FEBRUARY 28, 1998 AND 1999 AND FEBRUARY 29, 2000
                          (DOLLAR AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>

                                                             1998         1999          2000
                                                           --------     ---------   ----------
<S>                                                        <C>          <C>         <C>
Net sales ..............................................   $ 121,303    $ 136,558   $ 146,326

Cost of goods sold .....................................      99,998      111,338     123,285
                                                           ---------    ---------   ----------

Gross profit ...........................................      21,305       25,220      23,041

Selling, general, and administrative expenses ..........       5,897        6,244       8,005

Amortization of intangibles and other assets ...........         712          712         713

Other expense (note 8) .................................         800           --       6,721
                                                           ---------    ---------   ----------

Operating income .......................................      13,896       18,264       7,602

Interest expense .......................................      13,580       13,891      15,703
                                                           ---------    ---------   ----------

Income (loss) before income taxes ......................         316        4,373      (8,101)

Income tax expense (benefit) ...........................         346        1,880      (3,240)
                                                           ---------    ---------   ----------

Net income (loss) ......................................   $     (30)   $   2,493   $  (4,861)
                                                           =========    =========   ==========

</TABLE>



   The accompanying notes are an integral part of these financial statements.

                                       F-3


<PAGE>

                        PACKAGING RESOURCES INCORPORATED

                       STATEMENTS OF STOCKHOLDER'S DEFICIT

          YEARS ENDED FEBRUARY 28, 1998 AND 1999 AND FEBRUARY 29, 2000
                          (DOLLAR AMOUNTS IN THOUSANDS)


<TABLE>
<CAPTION>


                                                                                               TOTAL
                                                      COMMON     ADDITIONAL                    STOCK-
                                          COMMON      STOCK       PAID-IN      ACCUMULATED    HOLDER'S
                                           STOCK     WARRANTS     CAPITAL        DEFICIT       DEFICIT
<S>                                       <C>        <C>         <C>           <C>            <C>
                                          ------     --------    ---------     -----------    ----------
Balances at February 28, 1997 ........... $    -     $      -    $       -      $(14,388)     $(14,388)

Net loss ................................      -            -            -           (30)          (30)
                                          ------     --------     --------      --------      --------

Balances at February 28, 1998 ...........      -            -            -       (14,418)      (14,418)

Net income ..............................      -            -            -         2,493         2,493
                                          ------     --------     --------      --------      --------

Balances at February 28, 1999 ...........      -            -            -       (11,925)      (11,925)

Net loss ................................      -            -            -        (4,861)       (4,861)

Dividends paid ..........................      -            -            -        (1,807)       (1,807)
                                          ------     --------     --------      --------      --------

Balances at February 29, 2000 ........... $    -     $      -     $      -      $(18,593)     $(18,593)
                                          ======     ========     ========      ========      ========
</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                       F-4

<PAGE>


                        PACKAGING RESOURCES INCORPORATED


                            STATEMENTS OF CASH FLOWS

          YEARS ENDED FEBRUARY 28, 1998 AND 1999 AND FEBRUARY 29, 2000

                          (DOLLAR AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                     1998        1999        2000
                                                                    -------    --------    --------
<S>                                                                 <C>        <C>         <C>
Cash flows from operating activities:
   Net income (loss) .............................................. $   (30)   $  2,493    $ (4,861)
   Adjustments to reconcile net income (loss) to net cash
      provided by operating activities:
       Depreciation and amortization ..............................   8,584       9,428      10,267
       Write-down of assets .......................................       -           -       6,721

       Deferred income taxes ......................................     162       1,478      (3,334)
       (Gain) loss on sale of property, plant, and equipment ......     800         162        (533)
       Change in assets and liabilities:
        Accounts receivable .......................................  (2,571)       (366)     (1,626)
        Inventories ...............................................     867      (4,393)     (6,622)
        Other current assets ......................................    (215)       (147)       (779)
        Other assets ..............................................  (1,658)    (12,057)     14,078
        Accounts payable ..........................................   1,817       5,070       3,007
        Accrued expenses ..........................................   1,405         390        (704)
        Deferred revenue ..........................................     471       3,610      (3,281)
                                                                    -------    --------    --------

Net cash provided by operating activities .........................   9,632       5,668      12,333
                                                                    -------    --------    --------

Cash flows from investing activities:
   Proceeds from sale of property, plant, and equipment ...........   1,473          86         857
   Proceeds from sale of leased equipment .........................     750           -           -
   Capital expenditures ...........................................  (9,130)    (32,805)    (30,548)
                                                                    -------    --------    --------

Net cash used in investing activities .............................  (6,907)    (32,719)    (29,691)
                                                                    -------    --------    --------


Cash flows from financing activities:
   Net borrowings under credit agreement ..........................       -      17,000       8,500
   Net borrowings under equipment acquisition loans ...............       -       3,794       3,706
   Dividends paid .................................................       -           -      (1,807)
   Payment of promissory notes ....................................    (950)          -           -
   Proceeds from sale/leaseback of equipment ......................       -           -       5,591
                                                                    -------    --------    --------

Net cash provided by (used in) financing activities ...............    (950)     20,794      15,990
                                                                    -------    --------    --------

Net increase (decrease) in cash and cash equivalents ..............   1,775      (6,257)     (1,368)
Cash and cash equivalents at beginning of year ....................   6,154       7,929       1,672
                                                                    -------    --------    --------
Cash and cash equivalents at end of year .......................... $ 7,929    $  1,672    $    304
                                                                    =======    ========    ========

Supplemental disclosure of cash flow information - cash paid for:
   Interest ....................................................... $12,924    $ 13,152    $ 14,989
   Income taxes ................................................... $   251    $    512    $    599
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       F-5


<PAGE>

                        PACKAGING RESOURCES INCORPORATED

                          NOTES TO FINANCIAL STATEMENTS
                FEBRUARY 28, 1998 AND 1999 AND FEBRUARY 29, 2000
                          (DOLLAR AMOUNTS IN THOUSANDS)


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (a) DESCRIPTION OF BUSINESS

     Packaging Resources Incorporated (PRI or the Company) was organized in 1984
as a wholly owned subsidiary of HPH Industries, Ltd. (HPH). During fiscal 1994
PRI Holdings, Inc. (Holdings) acquired all of the common stock of PRI from HPH.
During fiscal 1995 Holdings changed its name to Packaging Resources Group, Inc.
(Group). Packaging Resources Group, Inc. is a wholly owned subsidiary of HPH.

     The primary business of PRI is the manufacture and sale of promotional
beverage cups and plastic packaging for the food, dairy, and pharmaceutical
industries. PRI has manufacturing facilities in Coleman, Michigan; Mt. Carmel,
Pennsylvania; Phoenix, Arizona; and New Vienna, Ohio.

     (b) CASH AND CASH EQUIVALENTS

     Cash and cash equivalents consist of deposits with banks and short-term
investments with original maturities of three months or less.

     (c) INVENTORIES

     Inventories are stated at the lower of first-in, first-out cost or net
realizable value.

     (d) PROPERTY, PLANT, AND EQUIPMENT

     Property, plant, and equipment are stated at cost. Depreciation on plant
and equipment is calculated on the straight-line method over the following
estimated useful lives of the assets:

<TABLE>
<CAPTION>

     <S>                                                     <C>
     Furniture and fixtures..............................      5 years
     Molds...............................................    3-5 years
     Machinery and equipment.............................     13 years
     Buildings and improvements..........................     35 years
     Land improvements...................................     35 years
</TABLE>

     Leasehold improvements are amortized ratably over the shorter of the lease
term or estimated useful life of the assets.

     (e) INTANGIBLES

     Intangibles consist of patent costs, amortized over 14 years, and the
excess of the cost over the fair value of net assets purchased, amortized over
40 years. The intangibles are amortized on a straight-line basis over their
respective useful lives. Accumulated amortization was $6,002 and $6,715 at
February 28, 1999 and February 29, 2000, respectively.

At each balance sheet date, PRI evaluates the realizable value of intangibles
on the basis of whether the intangibles are fully recoverable from projected,
undiscounted net cash flows. Based on its most recent analysis, PRI believes
no impairment of the carrying values of intangibles exists.


                                      F-6
<PAGE>

                        PACKAGING RESOURCES INCORPORATED

                          NOTES TO FINANCIAL STATEMENTS
                          (DOLLAR AMOUNTS IN THOUSANDS)


     (f) REVENUE RECOGNITION

     The Company recognizes revenue from product sales upon shipment to the
customer.

     (g) OTHER ASSETS

     The costs of debt issuance are included in other assets and are amortized
over the term of the related debt on the straight-line method.

     (h) INCOME TAXES

     PRI is included in the consolidated Federal income tax return of HPH.
Federal income taxes are calculated on a separate company basis and remitted to
HPH.

     Deferred income taxes are determined based on the difference between the
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect in the years in which the differences are expected to reverse.
Deferred tax assets are recorded when it is more likely than not that such tax
benefits will be realized.

     (i) RETIREMENT PLANS

     PRI has two defined contribution retirement plans covering substantially
all of its employees. PRI's Money Purchase Retirement Plan is funded entirely by
employer contributions based upon a defined percentage of participating
employees' compensation. PRI also has a 401(k) plan where participants elect to
have a designated percentage of their salary withheld and contributed to the
plan.

     (j) USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

     (k) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF

     The Company accounts for long-lived assets in accordance with the
provisions of SFAS No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
AND FOR LONG-LIVED ASSET TO BE DISPOSED OF. This Statement requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceeds the fair value of
the assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell.


                                      F-7


<PAGE>


                        PACKAGING RESOURCES INCORPORATED

                          NOTES TO FINANCIAL STATEMENTS
                          (DOLLAR AMOUNTS IN THOUSANDS)


(2) INVENTORIES

     Inventories consist of the following at February 28, 1999 and February 29,
2000:

<TABLE>
<CAPTION>

                                                                                      1999         2000
                                                                                   ---------    ---------
    <S>                                                                            <C>          <C>
    Finished goods .............................................................   $  13,216    $  19,012
    Raw materials ..............................................................       5,404        6,072
    Supplies and mold materials ................................................       6,302        5,269
                                                                                   ---------    ---------

   Total .......................................................................   $  24,922    $  30,353
                                                                                   =========    =========

</TABLE>

(3) PROPERTY, PLANT, AND EQUIPMENT

      Property, plant, and equipment consist of the following at February 28,
1999 and February 29, 2000:

<TABLE>
<CAPTION>

                                                                                     1999          2000
                                                                                   ---------    ---------
    <S>                                                                            <C>          <C>
    Land .......................................................................   $     309    $     309
    Buildings ..................................................................      12,248       13,949
    Machinery, equipment, and fixtures .........................................     104,319      121,606
    Leasehold improvements .....................................................       1,946        3,609
    Construction in-progress ...................................................      15,879        7,768
                                                                                   ---------    ---------
                                                                                     134,701      147,241
    Less allowance for depreciation and amortization ...........................     (58,713)     (60,295)
                                                                                   ---------    ---------

    Total ......................................................................   $  75,988    $  86,946
                                                                                   =========    =========

</TABLE>

     Construction in-progress includes building improvements and machinery and
equipment which have not yet been placed in service, and molds which are in the
process of being manufactured. Depreciation expense for the years ended February
28, 1998, 1999, and February 29, 2000 was $7,208, $8,051, and $8,890,
respectively.


                                      F-8


<PAGE>

                        PACKAGING RESOURCES INCORPORATED

                          NOTES TO FINANCIAL STATEMENTS
                          (DOLLAR AMOUNTS IN THOUSANDS)

(4) OTHER ASSETS

     Other assets consist of the following at February 28, 1999 and February 29,
2000:

<TABLE>
<CAPTION>

                                                                     1999        2000
                                                                    -------     -------
<S>                                                                 <C>         <C>
Debt issuance cost, net....................................         $ 2,795     $ 2,131
Leased equipment, net......................................             745         ---
Equipment deposits.........................................          14,491         413
                                                                    -------     -------

                                                                    $18,031     $ 2,544
                                                                   ========     =======

</TABLE>

     The debt issuance costs were incurred in connection with the 11-5/8% Senior
Secured Notes described in note 7. The cost is being amortized over the
remaining life of the notes. Amortization of these costs was $664 for each of
the years ended February 28, 1999 and February 29, 2000. Leased equipment
represents equipment leased and available for lease to PRI's customers.
Equipment deposits represent deposits made on equipment to be delivered to PRI
in the following fiscal year and equipment which will be purchased by a third
party and leased to PRI.

(5) LEASES

     PRI has several noncancelable operating leases for substantial portions of
the Company's plant and office facilities and machinery and equipment. Leased
plant and office facilities generally contain renewal options. Rental expense
for operating leases for the years ended February 28, 1998, 1999, and February
29, 2000, aggregated $1,554, $1,672, and $5,203, respectively. Additionally, PRI
has one facility which is being subleased.

     Future minimum lease payments and related sublease income under
noncancelable operating leases (with initial or remaining lease terms in excess
of one year) as of February 29, 2000 are:

<TABLE>
<CAPTION>

                                                             OPERATING    OPERATING
                                                               LEASE       SUBLEASE
    FISCAL YEAR                                              PAYMENTS       INCOME
    -----------                                              --------     ----------
    <S>                                                      <C>            <C>
    2001.........................................            $ 5,565        $ (162)
    2002.........................................              5,251             -
    2003.........................................              4,900             -
    2004.........................................              4,488             -
    2005.........................................              3,744             -
    Thereafter...................................              6,362             -
                                                             -------        ------

    Total minimum lease payments (income)........            $30,310        $ (162)
                                                             =======        =======

</TABLE>


                                      F-9


<PAGE>

                        PACKAGING RESOURCES INCORPORATED

                          NOTES TO FINANCIAL STATEMENTS
                          (DOLLAR AMOUNTS IN THOUSANDS)


(6) ACCRUED EXPENSES

     Accrued expenses consist of the following at February 28, 1999 and February
29, 2000:

<TABLE>
<CAPTION>

                                                              1999         2000
                                                             -------     -------
    <S>                                                      <C>         <C>
    Interest.............................................    $ 4,358     $ 4,408
    Pension..............................................      1,161       1,372
    Other................................................      4,676       3,711
                                                             -------     -------

                                                             $10,195     $ 9,491
                                                             =======     =======

</TABLE>

(7) LONG-TERM DEBT

     On May 17, 1996, PRI issued $110,000 of 11-5/8% Senior Secured Notes due
2003. At that time, the Company also entered into a Senior Credit Facility which
consists of a revolving credit facility and a letter of credit facility which
permit borrowing at either LIBOR plus 2.00% or the prime rate plus 0.50% up to a
maximum of $20,000 and $2,000, respectively. The Senior Credit Facility matures
on July 31, 2001. During fiscal 1999, the Senior Credit Facility was amended to
permit the Company to borrow an additional $10,000 through equipment acquisition
term loans. In April 1999, the Company further amended the Senior Credit
Facility to increase the revolving credit facility to a maximum of $22,500, and
to reduce the amount of available equipment acquisition term loans to $7,500.
During fiscal 2000, the Senior Credit Facility was amended to increase the
revolving credit facility to a maximum of $25,500. In May 2000, the Company
amended the Senior Credit Facility to reduce the revolving credit facility to a
maximum of $24,000 and to increase the amount of available equipment acquisition
term loans to $9,000. The Company pays a commitment fee of 0.50% per annum on
the average daily unused amount of the revolving credit facility. The Senior
Secured Notes are secured by certain equipment, fixtures, and general
intangibles, and mortgages on substantially all of the owned and certain of the
leased real property of the Company, and proceeds therefrom. Obligations under
the revolving credit facility are secured by all of PRI's accounts receivable
and raw materials and finished goods inventory, including any proceeds
therefrom. The equipment acquisition term loans are secured by specific eligible
equipment.


                                      F-10


<PAGE>

                        PACKAGING RESOURCES INCORPORATED

                          NOTES TO FINANCIAL STATEMENTS
                          (DOLLAR AMOUNTS IN THOUSANDS)


Long term debt consists of the following at February 28, 1999 and February 29,
2000:

<TABLE>
<CAPTION>

                                                                             1999        2000
                                                                           --------    --------

    <S>                                                                    <C>         <C>
    Senior Secured Notes, interest at 11-5/8%, paid semi-
      annually on May 1 and November 1, payable in full in
      May of 2003......................................................    $110,000    $110,000
    Revolving Credit Facility, interest at LIBOR plus 2%, maturing
      on July 31, 2001.................................................      17,000      25,500
    Equipment Acquisition Term Loans, interest at LIBOR plus
      2.25%, due in 60 monthly installments commencing March 1,
      2000.............................................................       3,794       7,500
                                                                           --------    --------

                                                                            130,794     143,000
     Less current maturities of long-term debt                                  126       1,500
                                                                           --------    --------

                                                                           $130,668    $141,500
                                                                           ========    ========

</TABLE>


     As of May 15, 2000, $24,000 was outstanding under the revolving credit
facility and $8,442 was outstanding under equipment acquisition term loans.

     PRI's credit agreements and other outstanding debt contain restrictions on
incurring additional debt or liens, making investments, or making payments such
as dividends, stock repurchases, or debt prepayments, and payments to
affiliates.

     Aggregate maturities of long-term debt after February 29, 2000 are as
follows:

<TABLE>
<CAPTION>

FISCAL YEAR                                                         AMOUNT
-----------                                                        -------
<S>                                                                <C>
2001..........................................................     $  1,500
2002..........................................................       27,000
2003..........................................................        1,500
2004..........................................................      111,500
2005..........................................................        1,500
Thereafter....................................................            0
                                                                   --------
                                                                   $143,000
                                                                   ========
</TABLE>


                                      F-11

<PAGE>

                        PACKAGING RESOURCES INCORPORATED

                          NOTES TO FINANCIAL STATEMENTS
                          (DOLLAR AMOUNTS IN THOUSANDS)

(8)  OTHER EXPENSE

     During fiscal 2000, the Company decided to cease manufacturing activities
at its Kansas City, Missouri facility. The facility ceased manufacturing
operations in December 1999, at which time the Company identified certain items
of equipment that would be disposed of. In addition, the Company identified
certain other equipment items that were specifically related to products
produced for a customer whose contract with the Company terminated as of
December 31, 1999, and, therefore would also be held for disposal. The carrying
value of these assets was written-down to the Company's estimates of fair value
less costs to sell in accordance with SFAS No. 121. The resulting adjustment of
$6,721 to reduce the book value of these assets was recorded during the fourth
quarter of fiscal 2000.

     During fiscal 1998 an $800 loss was incurred related to the sale of the
Louisiana, Missouri property. This property had previously been leased to a
third party.

(9) INCOME TAXES

     Income tax expense (benefit) attributable to income (loss) before income
taxes for the years ended February 28, 1998, 1999, and February 29, 2000
consists of:

<TABLE>
<CAPTION>

                                                     1998
                                      CURRENT      DEFERRED      TOTAL
                                      -------      --------      -----
<S>                                   <C>           <C>          <C>
Federal.............................. $   -         $ 131        $ 131
State................................   184            31          215
                                      -----         -----        -----
                                      $ 184         $ 162        $ 346
                                      =====         =====        =====

</TABLE>

<TABLE>
<CAPTION>

                                                     1999
                                      CURRENT      DEFERRED      TOTAL
                                      -------      --------      -----
<S>                                   <C>           <C>          <C>
Federal.............................. $ 127         $1,190       $1,317
State................................   275            288          563
                                      -----         ------       ------
                                      $ 402         $1,478       $1,880
                                      =====         ======       ======

</TABLE>


<TABLE>
<CAPTION>

                                                     2000
                                      CURRENT      DEFERRED      TOTAL
                                      -------      --------      -----
<S>                                   <C>           <C>          <C>
Federal.............................. $   -         $(2,907)     $(2,907)
State................................    95            (428)        (333)
                                      -----         -------      -------
                                      $  95         $(3,335)     $(3,240)
                                      =====         =======      =======

</TABLE>


                                      F-12

<PAGE>


                        PACKAGING RESOURCES INCORPORATED

                          NOTES TO FINANCIAL STATEMENTS
                          (DOLLAR AMOUNTS IN THOUSANDS)




      Income  tax  expense  (benefit)  differed  from the  amounts  computed  by
applying the U.S.  Federal income tax rate of 34% to income (loss) before income
taxes as a result of the following:

<TABLE>
<CAPTION>

                                                        1998       1999      2000
                                                      --------  --------  --------
<S>                                                   <C>       <C>        <C>
Computed "expected" tax expense (benefit) .........   $   107   $ 1,487    $(2,754)
Increase (decrease) in income taxes resulting from:
      State income taxes, net of Federal
       income tax benefit .........................       143       372       (160)
      Other, net ..................................        96        21       (326)
                                                      -------   -------    -------

                                                      $   346   $ 1,880    $(3,240)
                                                      =======   =======    =======

</TABLE>

     The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at February 28,
1999 and February 29, 2000 are presented below:

<TABLE>
<CAPTION>

                                                            1999          2000
                                                          --------     --------
Deferred tax assets:
<S>                                                       <C>          <C>
      Compensated absences ...........................    $    317     $    420
      Net operating loss carryforwards ...............       3,172        6,092
      Alternative minimum tax credit carryforwards ...         126          108
      Other ..........................................         526          519
                                                          --------     --------

Total gross deferred tax assets ......................       4,141        7,139
                                                          --------     --------

Deferred tax liabilities:

      Plant and equipment ............................     (10,518)     (10,078)
      Intangible assets ..............................      (2,031)      (2,135)
                                                          --------     --------


Total gross deferred tax liabilities .................     (12,549)     (12,213)
                                                          --------     --------

Net deferred liability ...............................    $ (8,408)    $ (5,074)
                                                          ========     ========
</TABLE>


     PRI has not recorded a valuation allowance related to the deferred tax
assets, as management believes that it is more likely than not that the results
of future operations will generate sufficient taxable income to realize the
deferred tax assets.

     At February 29, 2000 PRI has net operating loss carryforwards of
approximately $15,200 which are available to reduce future taxable income for
Federal income tax purposes under a tax sharing agreement with HPH. The
operating loss carryforwards expire at various dates from 2004 through 2020.

     PRI also has alternative minimum tax credit carryforwards of approximately
$108 which are available to reduce future Federal income taxes over an
indefinite period under a tax sharing agreement with HPH.




                                      F-13
<PAGE>



                        PACKAGING RESOURCES INCORPORATED

                          NOTES TO FINANCIAL STATEMENTS
                          (DOLLAR AMOUNTS IN THOUSANDS)



(10)  DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS

     Cash and cash equivalents, receivables, accounts payable, and accrued
expenses: The carrying amounts approximate fair value due to the short maturity
of these instruments.

     Long-term debt: The carrying amounts approximate fair value as all of the
obligations incur interest at a market rate. In addition, the significant terms
of fixed rate obligations do not differ materially from those currently
available to PRI.


(11)  RETIREMENT PLAN

     PRI has a defined contribution retirement plan covering substantially all
employees. Contributions are based upon a defined percentage of compensation.
Provisions for the plan's contributions amounted to $630, $757, and $914 for the
years ended February 28, 1998, 1999, and February 29, 2000, respectively.
Provisions of the plan include 20% vesting per year.

(12)  RELATED-PARTY TRANSACTIONS

     PRI paid management fees to HPH of $600 for each of fiscal years 1998,
1999, and 2000, respectively.

     In fiscal year 2000, PRI paid Group a dividend in the amount of $1,807.
This dividend payment was necessary in order for Group to make the interest
payment on its outstanding debt.

(13) BUSINESS AND CREDIT CONCENTRATIONS

     PRI operates solely in the United States and in one operating segment - the
manufacture and sale of plastic food and beverage containers.

     PRI's business is substantially dependent on a limited number of large
customers. In fiscal years 1998, 1999, and 2000, PRI's ten largest customers
accounted for approximately 83%, 80%, and 86%, respectively, of its net sales.
In fiscal year 2000, PRI's largest customers are Tricon, General Mills
(including Yoplait), Ross Labs, and S.C. Johnson, which represented
approximately 21.3%, 19.4%, 12.5%, and 11.5%, respectively, of PRI's net sales.
Accounts receivable for Tricon, General Mills, Ross Labs, and S.C. Johnson
totaled $10,914 at February 29, 2000. In fiscal year 1999, PRI's largest
customers were General Mills (including Yoplait), Dannon, Ross Labs, and Tricon,
which represented approximately 26.1%, 15.2%, 12.7%, and 11.0%, respectively, of
PRI's net sales. Accounts receivable for General Mills, Dannon, Ross Labs, and
Tricon totaled $7,209 at February 28, 1999.




                                      F-14
<PAGE>



                        PACKAGING RESOURCES INCORPORATED

                          NOTES TO FINANCIAL STATEMENTS
                          (DOLLAR AMOUNTS IN THOUSANDS)




(14)  LIQUIDITY

     The Company's financial statements for the year ended February 29, 2000
have been prepared on a going concern basis, which contemplates the realization
of assets and the settlement of liabilities and commitments in the normal course
of business. The Company continued to spend heavily in fiscal 2000 to expand its
production capacity for both promotional and packaging products. Capital
expenditures for fiscal 2000 were $30.5 million compared to $32.8 million in
fiscal 1999. Although management believes that these expenditures have
positioned the Company to pursue additional business opportunities with new and
existing customers, the Company's high level of capital investment along with
the failure to obtain certain anticipated new business on a timely basis has
restricted its available liquidity. As a result, the Company did not make the
interest payment of $6.4 million due May 1, 2000 on its 11 5/8% Senior Secured
Notes due May 1, 2003, and does not expect to pay a dividend to Group in order
to fund the interest payment of $1.8 million due May 31, 2000 on Group's 13%
Senior Notes due June 30, 2003.

     The failure to make the interest payments discussed above will constitute
defaults under both of the Indentures governing such Notes. In addition, the
defaults under the Indentures will trigger certain cross-default provisions with
respect to the Company's Credit Agreement. PRI has entered into discussions with
the holders of the Notes and the lenders under its Credit Agreement to obtain
waivers or amendments to resolve the defaults. However, there can be no
assurance as to whether and when the Company will obtain any such waiver or
amendment.

     Management recognizes that the Company must generate additional resources
or consider modifications to its existing operating structure in order to enable
the Company to meet its obligations as they mature. To that end, the Company has
announced that it has retained the investment banking firm Deutsche Bank
Securities, Inc. to assist in the sale of the Company. Management expects that
these efforts will result in the introduction of other parties with interests
and resources that are compatible with the Company's objectives. However, there
can be no assurance whatsoever that any transaction with any third party will
take place or, even if one does occur, about the nature and extent of any terms
and conditions of any such potential transaction. Further, there can be no
assurance that the Company will have sufficient resources to make the interest
payments due on its outstanding debt.


                                      F-15
<PAGE>


                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Lake Forest, State of Illinois, on May 26, 2000.


                                    PACKAGING RESOURCES INCORPORATED


                                    By: /s/ Howard P. Hoeper
                                        ---------------------------------------
                                        Howard P. Hoeper
                                        CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE
                                        OFFICER AND PRESIDENT


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


<TABLE>
<CAPTION>


       NAME                                           TITLE                                        DATE
      ------                                         -------                                      -----
<S>                                      <C>                                                  <C>
/s/ Howard P. Hoeper                     Chairman of the Board, Chief Executive               May 26, 2000
-------------------------------------    Officer and President (Principal Executive
Howard P. Hoeper                         Officer)



/s/ Jerry J. Corirossi                   Executive Vice President, Finance and                May 26, 2000
-------------------------------------    Administration
Jerry J. Corirossi                       (Principal Financial Officer and Principal
                                         Accounting Officer)


/s/ Walter C. Riesen                     Director
-------------------------------------
Walter C. Riesen                                                                              May 26, 2000


/s/ John D. Hoeper                       Director
-------------------------------------
John D. Hoeper                                                                                May 26, 2000


/s/ Carol Hoeper                         Director
-------------------------------------
Carol Hoeper                                                                                  May 26, 2000

</TABLE>


<PAGE>

                           INDEPENDENT AUDITORS' REPORT


The Board of Directors and Stockholder of
Packaging Resources Incorporated:

Under date of March 20, 2000, we reported on the balance sheets of Packaging
Resources Incorporated as of February 28, 1999 and February 29, 2000, and the
related statements of operations, stockholder's deficit, and cash flows for
the years ended February 28, 1998 and 1999 and February 29, 2000, included in
the February 29, 2000 annual report on Form 10-K of Packaging Resources
Incorporated. In connection with our audits of the aforementioned financial
statements, we also audited the related financial statement schedule in the
annual report on Form 10-K. This financial statement schedule is the
responsibility of Packaging Resources Incorporated's management. Our
responsibility is to express an opinion on this financial statement schedule
based on our audits.

In our opinion, the financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.

The audit report on the financial statements of Packaging Resources
Incorporated referred to above contains an explanatory paragraph that states
that Packaging Resources Incorporated's continued high level of capital
spending in fiscal 2000 coupled with the failure to obtain certain
anticipated new business on a timely basis has restricted its available
liquidity. As a result, Packaging Resources Incorporated did not make the
interest payment due May 1, 2000 on its 11 5/8% Senior Secured Notes and does
not expect to pay a dividend to its parent, Packaging Resources Group, Inc.
in order to fund the interest payment due May 31, 2000 on Packaging Resources
Group Inc.'s 13% Senior Notes. These matters raise substantial doubt about
Packaging Resources Incorporated's ability to continue as a going concern.
The financial statement schedule included in the annual report on Form 10-K
does not include any adjustments that might result from the outcome of this
uncertainty.


KPMG LLP


Chicago, Illinois
March 20, 2000


                                       S-1
<PAGE>



                                   SCHEDULE II

                        PACKAGING RESOURCES INCORPORATED
                        VALUATION AND QUALIFYING ACCOUNTS

          YEARS ENDED FEBRUARY 28, 1998 AND 1999 AND FEBRUARY 29, 2000

<TABLE>
<CAPTION>



                                                                          ADDITIONS
                                                                          ---------
                                                  BALANCE AT          CHARGED TO         CHARGED
                                                 BEGINNING OF          COSTS AND        TO OTHER                      BALANCE AT
DESCRIPTION                                         PERIOD             EXPENSES         ACCOUNTS    DEDUCTIONS       END OF PERIOD
-----------                                      ------------        -----------        --------    ----------      ---------------
<S>                                              <C>                  <C>             <C>          <C>             <C>
1998
Allowance for Doubtful Accounts                     $135,000             $ --          $ 56,000     $ (56,000)         $135,000

1999
Allowance for Doubtful Accounts                     $135,000             $ --          $ 10,000     $ (10,000)         $135,000

2000
Allowance for Doubtful Accounts                     $135,000             $ --          $  6,000     $  (6,000)         $135,000
</TABLE>



                                      S-2