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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



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FORM 10-K

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|[X]        |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996)
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|           |  | For the fiscal year ended June 30, 2001                                                                                          
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|[  ]       |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)                       
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|           |  | For the transition period from __________________ to __________________                                                          
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Commission file number 333-13727
PRINTPACK, INC.
(Exact name of registrant as specified in its charter)

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|Georgia                                        |  | 58-0673779                          
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|(State or other jurisdiction of incorporation) |  | (I.R.S. Employer Identification No.)

4335 Wendell Drive, S.W.
Atlanta, Georgia 30336
(Address of principal executive offices)

(404) 691-5830
(Registrants telephone number, including area code)



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(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 the 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]

There is no established trading market for the Common Stock of the
Registrant. All shares of Common Stock are held by affiliates of the registrant
at June 30, 2001.

The number of shares of the registrants Common Stock outstanding at
September 14, 2001 was 4,218,560.



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SAFE HARBOR STATEMENT UNDER THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

From time to time, Printpack, Inc. (Printpack or the Company) makes
oral and written statements that may constitute forward-looking statements
(rather than historical facts) as defined in the Private Securities Litigation
Reform Act of 1995 (the Act) or by the SEC in its rules, regulations and
releases. The Company desires to take advantage of the safe harbor
provisions in the Act for forward-looking statements made from time to time,
including, but not limited to, the forward-looking statements made in this
Report on Form 10-K (the Report), as well as those made in other filings with
the SEC. Forward-looking statements contained in this Report are based on
managements current plans and expectations and are subject to a number of
risks and uncertainties that could cause actual results to differ materially
from those described in the forward-looking statements. In the preparation of
this Report, where such forward-looking statements appear, the Company has
sought to accompany such statements with meaningful cautionary statements
identifying important factors that could cause actual results to differ
materially from those described in the forward-looking statements. Readers of
this Report are encouraged to read these cautionary statements carefully. For
a discussion of specific factors affecting the Companys business and
prospects, see Item 7  Managements Discussion and Analysis of Financial
Condition and Results of Operations  Risk Factors.

The Company does not have, and expressly disclaims, any obligation to
release publicly any updates or any changes in the Companys expectations or
any changes in events, conditions or circumstances on which any forward-looking
statement is based.




PART I

Item 1.  Business

General

Printpack, Inc., a Georgia corporation (Printpack or the Company) is
one of the largest domestic manufacturers and converters of flexible packaging
products with revenues of $1,026.5 million for the fiscal year ended June 30,
2001. The Company supplies packaging products to leading food and consumer
products companies that make salted snacks, cookies/crackers and confectionery,
bakery, cereal, meats, tissue and towels. The Company has long standing
relationships with nationally recognized, brand name food and consumer products
companies such as Frito-Lay, Georgia Pacific, Kellogg, General Mills, Hershey,
Nabisco, Nestle, and Quaker Oats. Based on industry data and the Companys
estimates, management believes that the Company has leading market shares in
several end use categories of flexible packaging including salted snack foods,
cookies/crackers and confectionery products.

Founded in 1956, the Company is a private company headquartered in
Atlanta, Georgia and is owned and managed by the founding family, together with
several long-term members of management. The Company currently operates 17
primary manufacturing facilities in 12 states, Mexico and the United Kingdom.
The Companys products include a wide variety of high value-added flexible
packaging products, including: (i) laminates made of various layers of
plastic film, aluminum foil, metallized films and paper with specialized
coatings; (ii) cast and blown monolayer films; and (iii) co-extruded films.

Industry

Flexible packaging products are thin, pliable bags, pouches, labels or
wraps for food and other consumer goods and related containers, which are
generally produced from single-web substrates or multi-web laminates of various
types of plastic, paper, film and foil. Flexible packaging products are
manufactured to provide a broad range of protection for packaged goods while
also providing packaging that is cost-effective, space-saving, lightweight,
tamper evident, convenient and disposable. Over the last several years, end
users of flexible packaging have increasingly sought better and less expensive
packaging alternatives to meet changing demographics and customer needs. Many
new food categories require more sophisticated packaging structures to improve
freshness, shelf life and resealability. Packaging must have specific barrier
characteristics against light, moisture, gas (primarily oxygen) and aroma
consistent with the type of food packaged. In addition, packaging and changes
in packaging graphics, often for short-term promotions, increasingly are used
to attract customers and differentiate products at the point of sale. Major
end users in the food and other consumer product industries are generally
reducing the number of suppliers which places an emphasis on cultivating strong
customer relationships.

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Management believes that the growth of the flexible packaging industry has
been and will continue to be driven by the following:

|  |  |                                                                                                                                                                          
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the shift from rigid containers (paperboard, glass and plastic) to lower cost and lighter weight flexible packaging;                                                     
| |  | changing demographic trends that have increased the demand for more convenient forms of packaging, such as single servings
and packaging that extends product shelf life;
| |  | the growth in several major end use market segments;                                                                                                                     
| |  | new food categories that require more complex packaging barriers;                                                                                                        
| |  | concerns over waste and resource reduction; and                                                                                                                          
| |  | increasing demand for specialized packaging with enhanced barrier properties and distinctive graphics.                                                                   

Business Strategy

Printpack focuses its sales and marketing efforts, technical development
initiatives, and manufacturing capabilities on targeted end use markets for
flexible packaging, with the goals of achieving critical mass and leading
market shares. Printpack has achieved strong positions in these markets by (i)
making customer service its first priority, (ii) achieving economies of scale
and manufacturing efficiencies to remain a low cost producer, (iii) investing
in state-of-the-art equipment, and technological and production innovation, and
(iv) providing high value-added flexible packaging structures and enhanced
graphics. By focusing its equipment and facilities on specific market segments
and product structures, the Company has been able to provide high quality
products and service and realize production efficiencies. The Company seeks to
leverage its strong customer relationships, market leadership and economies of
scale to earn additional business from existing customers and to attract new
customers. Printpack has developed mutually beneficial relationships with large
food and consumer product companies and has benefited from the expanding market
shares of such customers.

Customer Service

Over the last several years, flexible packaging customers have generally
been reducing the number of their flexible packaging suppliers. Customers have
sought to focus their relationships with suppliers that provide high quality
products, superior service and the ability to offer a broad range of flexible
packaging products at competitive costs. The Company is dedicated to working
with customers to provide products that meet their particular needs and that
can be manufactured efficiently and cost effectively. Management believes that
these efforts have enabled the Company to build and maintain long-term customer
relationships, many of which have existed for over 20 years.

Printpacks product lines also meet a wide spectrum of flexible packaging
end uses, each of which has its own manufacturing and technical complexities.
The Company is able to offer individual market expertise and product focus, as
well as a broad range of flexible packaging alternatives for each end user.
Field service representatives, who are knowledgeable in both the Companys
products and its customers equipment and processes, are often at customer
sites to assist in the use of Company products. Customer service is enhanced in
various other ways as well.

Economies of Scale and Low Cost Structure

The Company has focused its sales, marketing and technical efforts as well
as its operating assets on specific end users and product markets where it
believes it can achieve economies of scale and be a low cost producer. By
dedicating manufacturing plants to a limited number of products, Printpack is
able to effectively allocate the production of various product structures
within its manufacturing network to realize longer runs, improved quality,
greater product structure expertise and lower costs. This allows Printpack to
better plan production runs, shorten cycle times, reduce set-up costs and
realize lower labor costs.

Printpack is one of the largest domestic purchasers of certain key
materials used for flexible packaging manufacturing (such as extrusion grade
resin, oriented polypropylene and other types of packaging film, paper and
foil) and leverages its purchasing power to achieve cost savings and to promote
technical development support from its suppliers.

Technological Innovation

Throughout the development of the flexible packaging industry from simple
surface printed cellophane wrappers to high quality, multi-layer, printed,
laminated and co-extruded plastic packaging, Printpack has been focused
exclusively on flexible packaging and has anticipated end user demands through
continuing product and process innovation. New and more complex product
structures demand manufacturing processes that can produce high quality
packaging that can be changed to meet end user marketing programs,

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yet are cost-effective. Printpacks manufacturing and technical resources
give it significant advantages in this area. The Company also works with
equipment manufacturers to design and build specific new processing
capabilities.

In maintaining its position in technology, Printpack has invested in new
techniques such as laser engraving, photo polymer and other pre-press
processes, and innovative and improved processes for coating, laminating and
metallizing. These new techniques have significantly reduced the length of the
product change cycle as well as the amount of waste produced.

High Value-Added Products

Printpack believes that demand and innovation in the flexible packaging
industry are driven primarily by the larger packaged foods and consumer
products companies. Such users continually seek higher quality, lighter weight
packaging with more complex barrier properties and distinctive graphics.
Flexible packaging must be compatible with such customers packaging machinery
and production lines, and also must maintain product integrity during shipment,
extend a products freshness and shelf life and improve resealability
consistent with each packaged products needs. To accomplish these objectives,
flexible packaging must have specific barrier characteristics to protect
against light, moisture, gas (primarily oxygen) and aroma consistent with the
type of food packaged. In addition, marketing and promotional displays
increasingly require high quality, multicolor printing and packaging. The
Companys flexographic and rotogravure processes allow it to produce high
definition graphics with photographic quality images on flexible substrates.
From Printpacks laser-etched printing plates and cylinders that produce high
quality products to a process that makes it economically attractive to add
holographic images to customers packages, the Company is able to accommodate
its customers desires for advanced graphics capabilities. The Company has
sought to utilize its technological, manufacturing and cost advantages to
achieve strong positions in high value-added packaging product structures.
Printpack is also one of the few flexible packaging manufacturers that produce
high value-added metallized films in-house, thereby capturing time and cost
advantages.

Customers and Markets

Printpack provides its customers with a variety of flexible packaging
materials with a primary focus on packaging products for salted snack foods,
cookies/crackers, confectionery, cereal, beverages, diapers, tissue/towel, copy
paper, rice, meats and bakery end users. Frito-Lay, the largest U.S. salted
snack food company, is Printpacks largest customer and accounted for
approximately 19% of the Companys fiscal 2001 annual revenues. Frito-Lay is
the Companys only customer that accounted for more than 10% of Printpacks
fiscal 2001 revenues. Printpack has historically enjoyed close relationships
with its customers, cultivated over many years by emphasizing value-added
services in packaging design and engineering, consistency of service,
reliability, and competitive costs. There can be no assurance, however, that
the Company will be able to maintain such relationships, and the loss of one or
more major customers, or a material reduction in the sales to such customers
would have a material adverse effect on the Companys results of operations,
EBITDA and cash flow and on its ability to service its indebtedness. See also
Managements Discussion and Analysis of Financial Condition and Results of
Operations  Risk Factors  The Companys operating performance is dependent
upon a limited number of customers.

Sales, Marketing and Distribution

Sales associates primarily work out of sales offices located primarily
throughout the U.S. All Printpack sales force personnel and customer service
representatives undergo extensive training programs before assuming account
responsibilities. Printpacks management believes that it is critical to the
Companys success for its sales and marketing associates to have in-depth
knowledge of the various characteristics and properties of a wide range of the
Companys packaging structures.

The Companys technical service representatives visit customer locations
routinely to ensure that Printpacks packaging materials are running
efficiently on each customers equipment. These customer service
representatives are on call 24 hours a day. In order to accommodate a variety
of customer preferences, the Company distributes its products principally
through customers transportation networks and third party carriers, although
the Company does operate a small fleet of trucks and trailers.

Manufacturing Process

Printpack manufactures a wide variety of high value-added flexible
packaging products, including laminates made of various layers of plastic film,
aluminum foil, metallized films, paper and specialized coatings, as well as
cast and blown monolayer and co-extruded films. The flexible packaging produced
by Printpack uses a range of raw materials, all of which are available from
multiple suppliers. These raw materials consist primarily of plastic resin,
film, paper, foil and ink which typically represent 50-60% of the sales price
of the final products. Flexible packaging manufacturers typically are able to
pass increases in raw material costs on to their

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customers, although the pass-through generally lags several months.
Significant and abrupt increases in raw material prices, particularly those on
low-density and linear low-density polyethylene and on polypropylene, could
have adverse short-term effects on the Companys margins. See also
Managements Discussion and Analysis of Financial Condition and Results of
Operations  Risk Factors  A decline in the supply of raw materials may
increase the Companys operating costs  The Company may not be able to
increase prices in response to increased operating costs.

Employees

At June 30, 2001, the Company had approximately 3,800 employees.
Approximately 900 of these employees at five of the Companys facilities were
covered by eight collective bargaining agreements. The Company considers
relations with its employees to be generally good.

Patents and Trademarks

Printpack has a number of trademarks registered in the U.S. and several
foreign countries, including the Companys principal mark, Printpack. Printpack
also has a number of patents and pending patent applications in the U.S. and in
several other countries. The Company has transferred all its intellectual
property to Printpack Illinois, Inc. (Printpack Illinois), a subsidiary of
the Company. Printpack Illinois has licensed such properties to the Company and
its affiliates. Although Printpacks management considers all such intellectual
property to be valuable assets, management believes that the loss or expiration
of any patents or trademarks, other than the Printpacktrademark, would not
have a material adverse effect on the Companys operations.

Seasonality

Certain of the end uses for certain of the Companys products are
seasonal. Demand in many snack food and soft drink markets is generally higher
in the spring and summer. As a result, the Companys sales and profits are
generally higher in the Companys fourth quarter (ending the last Saturday in
June) than in any other quarter during its fiscal year. The Company has used
borrowings under the bank credit facilities to meet seasonal fluctuations in
working capital requirements, which generally peak during January through March
when sales volumes generally are lowest.

Competition

The flexible packaging industry includes several hundred competitors.
Based on management estimates, the Company believes that it is one of the
largest of these manufacturers in the flexible packaging industry. Other sales
leaders in this industry include American Packaging, Bemis, Bryce, Cryovac (a
division of Sealed Air Corporation), Lawson Mardon Packaging (a division of
Alcan), Pechiney Plastic Packaging (packaging operations of the former American
National Can Corporation), Pliant Corporation (formerly Huntsman Packaging) and
Alcoa Packaging and Consumer Products (a division of Alcoa), many of which are
well capitalized and maintain a strong market presence in the various markets
in which Printpack competes. Several of these competitors are substantially
larger, more diversified and have greater financial, personnel and marketing
resources than the Company and, therefore, may have certain competitive
advantages vis-a-vis Printpack. See also Managements Discussion and Analysis
of Financial Condition and Results of Operations  Risk Factors  The Company
may be unable to repay its indebtedness if it does not successfully compete
within its industry.

Environmental Matters and Government Regulation

The past and present operations of the Company, including its ownership
and operation of real properties, are subject to extensive and changing
federal, state and local 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. Printpack management
believes that the Company generally is in material compliance with applicable
environmental laws and regulations.

The Company cannot assure, however, that it will not in the future incur
any additional liability under environmental statutes and regulations with
respect to contamination of sites formerly or currently owned or operated by
the Company (including contamination caused by prior owners and operators of
such sites), and/or the off-site disposal of hazardous substances. The Company
has been designated by the U.S. Environmental Protection Agency (EPA) and/or
other responsible state agencies as a potentially responsible party (PRP) at
various waste disposal or waste recycling sites that are the subject of
separate investigations or proceedings concerning alleged soil and/or
groundwater contamination and for which no settlement of the Companys
liability has been agreed

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upon. The Company is participating with other PRPs at all such sites and
anticipates that its share of cleanup costs will be determined pursuant to
remedial agreements entered into in the normal course of negotiations with the
EPA or other governmental authorities.

The Company has accrued liabilities for all sites, including sites in
which governmental agencies have designated the Company as a PRP, where it is
probable that a loss will be incurred and the minimum cost or amount of loss
can be reasonably estimated. Currently, amounts accrued in the financial
statements for individual sites and in the aggregate are not material. However,
because of the uncertainties associated with environmental assessment and
remediation activities, future expense to remediate the currently identified
sites, and sites that could be identified in the future for cleanup, could be
higher than the liability currently accrued.

The Company, like all flexible packaging manufacturers that use plastic,
is subject, in certain jurisdictions, to laws and regulations 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.
The Company does not believe that the legislation promulgated to date and
currently pending initiatives will have a material adverse effect on its
business. There can be no assurance that any future legislation or regulatory
efforts will not have a material adverse effect on the Company or its financial
condition, results of operations or cash flows.

The United States Food and Drug Administration (FDA) regulates the
material content of direct-contact food containers and packages, including
certain containers manufactured by the Company. The Company uses approved
resins and other raw materials in the direct-contact aspect of food product
packaging. Company management believes that the Company is in material
compliance with all such applicable FDA regulations. See also Managements
Discussion and Analysis of Financial Condition and Results of Operations  Risk
Factors  Potential exposure to environmental liabilities  The Company may be
liable for penalties under a variety of environmental laws, even if the Company
did not cause any environmental problems.

Item 2.  Properties

Printpack operates in a number of locations in the U.S., one location in
Mexico and one location in the United Kingdom. At the end of fiscal 2001, the
Companys primary locations, all of which are in modern condition and are owned
by the Company, except for leased plants located in Orange, Texas and
Williamsburg, Virginia, were as follows: Atlanta, Georgia; Elgin, Illinois;
Fredericksburg, Virginia; Grand Prairie, Texas; Hendersonville, North Carolina;
Prescott Valley, Arizona; Rhinelander, Wisconsin; Villa Rica, Georgia;
Greensburg, Indiana; Jackson, Tennessee; New Castle, Delaware; Orange, Texas;
Shreveport, Louisiana; St. Louis, Missouri; Williamsburg, Virginia; Queretaro,
Mexico and Bury, England. The Elgin, Illinois, Queretaro, Mexico, and Bury,
England plants are owned and operated by wholly owned subsidiaries of the
Company.

Printpack also operates sales and marketing offices in various locations
throughout the U.S. and one sales office in Mexico. The majority of these sales
offices are leased while some are located at certain manufacturing facilities.

Item 3.  Legal Proceedings

Except for routine litigation incidental to the business of the Company,
there are no pending legal proceedings to which the Company or any of its
subsidiaries is a party or to which any of their property is subject. The
Company has been designated by the EPA and/or other responsible state agencies
as a PRP (as previously defined) at various waste disposal or waste recycling
sites that are the subject of separate investigations or proceedings concerning
alleged soil and/or groundwater contamination and for which no settlement of
the Companys liability has been agreed upon. The Company is participating with
other PRPs at all such sites, and anticipates that its share of cleanup costs
will be determined pursuant to remedial agreements entered into in the normal
course of negotiations with the EPA or other governmental authorities. The
Company believes that the outcome of the proceedings to which it is currently a
party will not have a material adverse effect upon Printpacks financial
condition, results of operations or cash flows. See also Managements
Discussion and Analysis of Financial Condition and Results of Operations  Risk
Factors  Potential exposure to environmental liabilities  The Company may be
liable for penalties under a variety of environmental laws, even if the Company
did not cause any environmental problems.

Item 4.  Submission of Matters to a Vote of Shareholders

No matters were submitted to a vote of the Companys shareholders during
the fourth quarter of the 2001 fiscal year ended June 30, 2001.

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PART II

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

There is no established public trading market for the common stock of the
Company, all of the shares of which were held of record by three holders as of
September 14, 2001. The Company has not sold any securities in the last three
fiscal years.

The Company is currently restricted from paying dividends by the
Indenture, dated August 22, 1996, between the Company and State Street Bank as
Trustee relating to the 9 7/8% Senior Notes due August 2004, the Indenture,
dated August 22, 1996, between the Company and State Street Bank as Trustee
relating to the 10 5/8% Senior Subordinated Notes due August 2006 and the
Amended and Restated Credit Agreement, dated as of May 21, 1999 and amended as
of December 15, 1999, and April 20, 2001, by and among the Company, the lenders
thereto and Bank One, N.A. (formerly the First National Bank of Chicago), as
Contractual Representative. The Company paid no dividends during the fiscal
years ended June 30, 2001 and June 24, 2000.

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Item 6.  Selected Financial Data

The selected historical financial data of Printpack set forth below has
been derived from the Companys audited financial statements as of and for the
fiscal years ended June 30, 2001, June 24, 2000, June 26, 1999, June 27, 1998,
and June 28, 1997. The following selected financial data should be read in
conjunction with the Companys Financial Statements and related notes thereto
included elsewhere in this Report and in Managements Discussion and Analysis
of Financial Condition and Results of Operations contained in Item 7 below.

|                                                        |  |                            |           |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|------------------------------------------------------- |  | -------------------------- | --------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                                        |  | Fiscal Year Ended June (1)
|                                                        |  |                           
|                                                        |  | 2001                       |           | 2000 |  | 1999 |         | 1998 |  | 1997
|                                                        |  |                            |           |      |  |      |         |      |  |     
|                                                        |  | (Dollars in thousands)    
|Statement of Income Data:                               |  |                            |           |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|                                                       
|                                                       
|                                                       
|                                                       
|Net sales                                               |  | $                          | 1,026,506 |      |  | $    | 928,530 |      |  | $    | 867,159 |   |  | $ | 851,600 |   |  | $ | 802,293 |  
|                                                       
|                                                       
|                                                       
|                                                       
|Income from operations                                  |  |                            | 75,668    |      |  |      | 51,249  |      |  |      | 46,695  |   |  |   | 44,959  |   |  |   | 30,833  |  
|                                                       
|                                                       
|                                                       
|                                                       
|Income (loss) before extraordinary item                 |  |                            | 24,825    |      |  |      | 1,086   |      |  |      | (2,376  | ) |  |   | (9,491  | ) |  |   | (14,561 | )
|                                                       
|                                                       
|                                                       
|                                                       
|Extraordinary item-loss on early extinguishment of debt |  |                            |          |      |  |      |        |      |  |      |        |   |  |   |        |   |  |   | (1,631  | )
|                                                       
|                                                       
|                                                       
|                                                       
|Net income (loss)                                       |  |                            | 24,825    |      |  |      | 1,086   |      |  |      | (2,376  | ) |  |   | (9,491  | ) |  |   | (16,192 | )
|                                                       
|                                                       
|                                                       
|                                                       
|Balance Sheet Data:                                     |  |                            |           |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|                                                       
|                                                       
|                                                       
|                                                       
|Total assets                                            |  |                            | 554,008   |      |  |      | 552,877 |      |  |      | 591,363 |   |  |   | 608,436 |   |  |   | 650,510 |  
|                                                       
|                                                       
|                                                       
|                                                       
|Short-term debt                                         |  |                            | 825       |      |  |      | 4,410   |      |  |      | 5,496   |   |  |   | 3,445   |   |  |   | 3,831   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Long-term debt                                          |  |                            | 396,537   |      |  |      | 442,394 |      |  |      | 484,305 |   |  |   | 498,305 |   |  |   | 538,384 |  
|                                                       
|                                                       
|                                                       
|                                                       
|Shareholders equity (deficit)                          |  |                            | 13,968    |      |  |      | (10,633 | )    |  |      | (8,779  | ) |  |   | (5,949  | ) |  |   | 3,542   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Other Financial Data:                                   |  |                            |           |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|                                                       
|                                                       
|                                                       
|                                                       
|Ratio of earnings to fixed charges(2)                   |  |                            | 1.8x      |      |  |      | 1.0x    |      |  |      | 0.9x    |   |  |   | 0.8x    |   |  |   | 0.6x    |  



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|(1) |  | The Companys fiscal year ends on the last Saturday of June.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
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|(2) |  | The ratio of earnings to fixed charges is computed by dividing earnings
by fixed charges. For this purpose, earnings include operating income
(loss) before income taxes and extraordinary items plus fixed charges.
Fixed charges include interest, whether expensed or capitalized,
amortization of debt expense and discount or premium relating to any
indebtedness, whether expensed or capitalized, and the portion of rental
expense that is representative of the interest factor in these rentals. In
fiscal 1999, 1998 and 1997, earnings were insufficient to cover fixed
charges by approximately $3,341,000, $11,251,000 and $17,860,000,
respectively.

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

This discussion contains certain forward-looking statements based on current
expectations which involve risks and uncertainties. Actual results and the
timing of certain events could differ materially from the forward-looking
statements as a result of a number of factors. For a discussion of the risk
factors that could cause actual results to differ materially from the
forward-looking statements, see Risk Factors below.

Recent Developments

On July 9, 2001, the Company completed the acquisition of the business and
assets of Independent Packaging, L.P. Independent Packaging is the third
largest manufacturer in the United States of flexible film packaging for the
wholesale bakery business. Independent Packaging employs 160 people at its
Bloomington, Indiana manufacturing site and its offices in Dallas, Texas.

Results of Operations

General

Printpack, Inc. (the Company) is one of the largest domestic
manufacturers and converters of flexible packaging products with revenues of
$1,026.5 million for the fiscal year ended June 30, 2001. The Company supplies
packaging products to leading food and consumer products companies that make
salted snacks, cookies/crackers and confectionery, bakery, cereal, meats,
tissue and towels. The Company has longstanding relationships with nationally
recognized, brand name food and consumer products companies such as Frito-Lay,
Georgia Pacific, Kellogg, General Mills, Hershey, Nabisco, Nestle, and Quaker
Oats.

Founded in 1956, the Company is a private company headquartered in
Atlanta, Georgia and is owned and managed by the founding family, together with
several long-term members of management. The Company currently operates 17
primary manufacturing facilities in 12 states, Mexico and the United Kingdom.
The Companys products include a wide variety of high value-added flexible
packaging products including: (i) laminates made of various layers of plastic
film, aluminum foil, metallized films, and paper with specialized coatings;
(ii) cast and blown monolayer films; and (iii) co-extruded films.

7



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As a result of the additional assets obtained in a significant acquisition
that occurred in fiscal 1997, the Company recorded expenses that are in excess
of its historical levels, as well as reserves for cost reduction measures and
other adjustments to its balance sheet. In addition, the results of operations
of the Company in fiscal 2001, 2000 and 1999, as compared with historical
results, were significantly affected by the substantial increase in the
Companys outstanding indebtedness in connection with the financing of the
acquisition, including interest charges on the Companys indebtedness. The
Companys credit agreements include various affirmative, negative and financial
covenants with which it must comply, including but not limited to, the
maintenance of certain financial ratios, and limitations on the incurrence of
additional indebtedness and the payment of dividends.

Over the last several years, several of the Companys larger customers
have consolidated their purchasing of flexible packaging materials with a
smaller number of suppliers. More recently, certain of the Companys customers
have sought to reduce their packaging costs by seeking price reductions from
their suppliers. The Companys customers regularly seek competitive bids for
flexible packaging materials and in some cases the Company has reduced its
prices to respond to competitive price pressure. In order to counteract the
impact of this pricing pressure on operating margins, the Company has sought to
reduce its costs through productivity improvements and other internal cost
control initiatives. The Company expects that it will continue to experience
competitive pricing pressure and intends to continue to focus on productivity
improvements in order to protect operating margins.

Fiscal Year 2001 Compared to Fiscal Year 2000

Net Sales

Net sales increased $98.0 million (10.6%) to $1,026.5 million in fiscal
2001 from $928.5 million in fiscal 2000. Printpack Enterprises, Ltd, the
Companys subsidiary acquired during fiscal 2000, accounted for approximately
$38.5 million or 4.1% of the increase. The majority of the remaining increase
was primarily due to higher sales volumes.

Gross Margin

Gross margin in fiscal 2001 increased $31.7 million or 22.7% to $171.6
million from $139.9 million in fiscal 2000. Gross margin as a percentage of net
sales in fiscal 2001 increased to 16.7% compared to 15.1% in fiscal 2000. The
increase in gross margin percentage is primarily attributable to increases in
sales prices and productivity improvements.

Operating Expenses

Selling, administrative and research and development expenses increased
$7.2 million (8.5%) to $92.1 million in fiscal 2001 from $84.9 million in
fiscal 2000. The increase is primarily a result of increases in salaries,
bonuses, and related costs. In addition, the Company incurred additional
operating expenses as a result of the acquisition of Printpack Enterprises,
Ltd. described above. Selling, administrative and research and development
expenses as a percentage of net sales decreased to 9.0% in fiscal 2001 from
9.1% in fiscal 2000.

The Company recorded impairment charges of $786,000 and $656,000 during
fiscal 2001 and 2000, respectively, to write-down the carrying value of certain
fixed assets.

Operating Income

Income from operations increased $24.5 million (47.9%) to $75.7 million in
fiscal 2001 from $51.2 million in fiscal 2000. The increase was due to higher
margins, partially offset by higher selling, administrative and research and
development expenses described above.

Other Income and Expense

Interest expense in fiscal 2001 decreased by $3.7 million (7.4%) to $46.0
million in fiscal 2001 from $49.7 million in fiscal 2000. The decrease in
interest expense for fiscal 2001 as compared to fiscal 2000 is primarily due to
reductions in outstanding debt, partially offset by higher interest rates.

During the fourth quarter of fiscal 2001, the Company recorded a gain on
life insurance policies totaling approximately $5.9 million.

8



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As a result of the foregoing, income before provision for income taxes
totaled $36.5 million in fiscal 2001 as compared to $1.5 million in fiscal
2000. Income tax expense for fiscal 2001 totaled $11.7 million (32.0% of
income before provision for income taxes) as compared $0.4 million in fiscal
2000 (29.2% of income before provision for income taxes). The increase in the
effective tax rate from fiscal 2000 to fiscal 2001 is primarily due to the
adjustment of valuation allowances for a portion of the deferred tax assets
related to taxable loss carryforwards in various state and foreign
jurisdictions, partially offset by the non-taxable gain on life insurance
policies described above.

Net income for fiscal 2001 was $24.8 million as compared to net income of
$1.1 million in fiscal 2000. The increase in income is primarily a result of
the increase in net sales and other changes described above.

Fiscal Year 2000 Compared to Fiscal Year 1999

Net Sales

Net sales increased $61.3 million (7.1%) to $928.5 million in fiscal 2000
from $867.2 million in fiscal 1999, primarily due to higher sales volumes. The
Company was also able to pass along increases in the prices of certain raw
material costs that also contributed to the increase in net sales.

Gross Margin

Gross margin in fiscal 2000 increased $17.3 million or 14.1% to $139.9
million from $122.6 million in fiscal 1999. Gross margin as a percentage of
net sales in fiscal 2000 increased to 15.1% compared to 14.1% in fiscal 1999.
The increase in gross margin percentage is primarily attributable to higher
sales volume and lower waste in fiscal 2000 as compared to fiscal 1999 and cost
reduction initiatives. In addition, the Company recorded expense of $4.8
million in fiscal 2000 and income of $0.3 million in fiscal 1999 related to the
Companys use of the LIFO inventory valuation method. Excluding the impact of
these items, gross margin would have been approximately $4.8 million higher in
fiscal 2000 and $0.3 million lower in fiscal 1999.

Operating Expenses

Operating expenses in fiscal 2000 increased $12.8 million (16.9%) to $88.7
million from $75.9 million in fiscal 1999. Operating expenses as a percentage
of net sales increased to 9.6% in fiscal 2000 from 8.8% in fiscal 1999. The
increase in operating expense dollars is primarily attributable to increases in
salaries, bonuses and the value of performance shares under the Incentive
Compensation Plan in fiscal 2000 as compared to fiscal 1999.

Operating Income

Income from operations in fiscal 2000 increased $4.5 million (9.6%) from
$46.7 million in fiscal 1999 to $51.2 million in fiscal 2000, primarily as a
result of the increase in net sales and other changes described above.

Other Expense

Interest expense in fiscal 2000 decreased by $0.2 million (0.1%) to $49.7
million in fiscal 2000 from $49.9 million in fiscal 1999. The decrease in
interest expense for fiscal 2000 as compared to fiscal 1999 is primarily due to
reductions in outstanding debt, partially offset by higher interest rates.

As a result of the foregoing, income before provision for income taxes
totaled $1.5 million in fiscal 2000 as compared to loss before benefit for
income taxes of $3.8 million in fiscal 1999. Income tax expense for fiscal
2000 totaled $0.4 million (29.2% of income before provision for income taxes)
as compared to a net benefit of $1.4 million in fiscal 1999 (37.4% of loss
before benefit for income taxes). The decline in the effective tax rate from
fiscal 1999 to fiscal 2000 is primarily the result of the reversal in fiscal
2000 of a valuation allowance for a portion of the deferred tax assets related
to taxable loss carryforwards in foreign jurisdictions established in prior
years.

Net income for fiscal 2000 was $1.1 million as compared to a loss of $2.4
million in fiscal 1999. The increase in income is primarily a result of the
increase in net sales and other changes described above.

9



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Research and Development

The Company expenses its research and development costs as incurred. Such
expenditures were $10.9 million, $10.3 million and $10.2 million in fiscal
2001, 2000 and 1999, respectively.

Liquidity and Capital Resources

Cash and cash equivalents increased $6.7 million to $7.6 million at June
30, 2001 as compared to $0.9 million at June 24, 2000. The increase is
primarily due to an increase in cash at the Companys United Kingdom subsidiary
in anticipation of settling an outstanding balance payable to an affiliated
entity. Cash flows from operations were $98.5 million in fiscal 2001, $24.8
million (33.6%) higher than in fiscal 2000. This increase reflected a number of
items, primarily increases in working capital and increased profitability.

In fiscal 2001, cash flows used in investing activities increased 26.1% to
$38.6 million. Capital expenditures of $38.9 million in fiscal 2001 and $20.9
million in fiscal 2000 continued to be principally for new property, plant and
equipment. Proceeds from the disposition of property and equipment were
negligible for both fiscal 2001 and fiscal 2000. In addition, the Company spent
$10.1 million during fiscal 2000 to purchase certain assets and
assume certain liabilities of the Bury,
England facility of an affiliated entity.

Cash used in financing activities in fiscal 2001 was $53.2 million
compared to $43.9 million in fiscal 2000. The increase in cash used in
financing activities is primarily a result of planned efforts to reduce
long-term debt. As a result of the increases in operating cash flow of 33.6%
and 64.9% in fiscal 2001 and 2000, respectively, the Company has been able to
accelerate its repayment of long-term debt. Scheduled debt repayments totaled
approximately $9,769,000 in both fiscal 2001 and 2000 while actual repayments
totaled approximately $34,769,000 and $44,769,000 in fiscal 2001 and 2000,
respectively. In addition, the Company was able to reduce borrowings under its
other credit facilities by $17,000,000 and $4,000,000 during fiscal 2001 and
2000, respectively.

The Company advanced approximately $1,690,000 and $948,000 to its parent,
Printpack Holdings, Inc. during fiscal 2001 and 2000, respectively. The
indentures and credit agreement entered into in fiscal 1997 restrict future
contributions to Printpack Holdings, Inc.s and Printpack Enterprises, Inc.s
European operations. Total outstanding debt at June 30, 2001 of approximately
$395.1 million included $84.8 million of floating rate and $310.3 million of
fixed rate obligations.

The Companys primary sources of liquidity have been cash flows from
operations and borrowings under bank credit facilities. The Company has used
borrowings under the bank credit facilities to meet seasonal fluctuations in
working capital requirements, which generally peak during January through March
when sales volumes generally are lowest. The credit facilities consist of term
loans totaling approximately $54 million, a $60 million revolving credit
facility, a $10 million line of credit and a $50 million receivables
securitization facility. On June 30, 2001, Printpack had approximately $87.5
million available under its credit facilities.

The Companys current ratio was 1.60 and 1.61 in fiscal 2001 and 2000,
respectively.

The Company believes that its primary liquidity needs will consist of
capital expenditures, debt service and working capital. Estimated annual
capital expenditures for the Company are expected to be approximately $55.0 to
$60.0 million, excluding the Independent Packaging, L.P. acquisition described
above. Approximately $15.0 million per year is expected to be used for
replacements and other capital expenditures, with the balance expected to be
used for productivity improvements and to meet the specific needs of the
Companys customers.

Based upon current levels of operations and continued cost saving
measures, the Company believes that cash flow from operations, borrowings under
the credit facilities, sales of accounts receivable under its receivables
securitization facility and other sources of liquidity will be adequate to meet
the Companys anticipated requirements for working capital, capital
expenditures, interest payments and scheduled principal payments for at least
the next 12 months. There can be no assurance, however, that the Companys
business will continue to generate cash flows from operations at or above
current levels or that anticipated improvements in operations and cost savings
will be realized.

Effects of Inflation

Inflation has not had a significant effect on the Companys operations.
Increases in raw material costs to Printpack typically lag movements in the
markets for such materials. Thus, in a period of rising prices, the effects of
such increases are delayed several months and Printpacks ability to pass these
price increases to its customers also is subject to similar lags.

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Accounts Receivable

Accounts receivable are generally collected in approximately 30 days.
Printpack has historically experienced minimal chargeoffs (less than $1 million
per year or less than 0.1% of sales), reflective of the high quality of the
Companys customer base.

Effects of Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board issued Statements
of Financial Accounting Standards No. 141, Business Combinations (SFAS No.
141) and No. 142, Goodwill and Other Intangible Assets (SFAS No. 142).
SFAS 141 supercedes Accounting Principles Bulletin No. 16 Business
Combinations and Statement of Financial Accounting Standards No. 38,
Accounting for Preacquisition Contingencies of Purchased Enterprises. SFAS
142 supercedes Accounting Principles Bulletin No. 17, Intangible Assets.
These statements require use of the purchase method of accounting for all
business combinations initiated after June 30, 2001, thereby eliminating use of
the pooling-of-interests method. Goodwill and indefinite lived intangible
assets will no longer be amortized but will be reviewed annually for
impairment. Separable intangible assets that are not deemed to have an
indefinite life will continue to be amortized over their useful lives. The
statements are effective for business combinations initiated after June 30,
2001 with the entire provisions of SFAS No. 141 and SFAS No. 142 becoming
effective beginning June 30, 2002. Management is currently evaluating the
impact of these statements on the Companys consolidated financial statements.

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 143, Accounting for Asset Retirement
Obligations (SFAS No. 143). This statement requires that the fair value of a
liability for an asset retirement obligation be recognized in the period in
which it is incurred. The associated asset retirement costs are capitalized as
part of the carrying amount of the long-lived asset with subsequent changes in
the liability recognized as a result of the passage of time or revisions in the
timing or amount of the estimated cash flows. The statement is effective
beginning on June 30, 2002. Management is currently evaluating the impact of
this statement on the Companys consolidated financial statements.

Shipping and Handling Fees and Costs

In September 2000, the Emerging Issues Task Force (EITF) reached a
final consensus on Issue No. 00-10, Accounting for Shipping and Handling Fees
and Costs. EITF 00-10 is effective in the fourth quarter of fiscal 2001 and
addresses the income statement classification of amounts billed to customers
for shipping and handling, as well as costs incurred related to shipping and
handling. The EITF concluded that amounts billed to a customer in a sale
transaction related to shipping and handling should be classified as revenue.
Costs incurred related to shipping and handling included in revenues are
required to be reclassified to cost of sales. The EITF also concluded that if
costs incurred related to shipping and handling are significant and not
included in the cost of sales, an entity should disclose both the amount of
such costs and the line item on the income statement that includes them.

The Company implemented EITF 00-10 in the fourth quarter of fiscal 2001.
Prior to implementing EITF 00-10, the Company classified shipping and handling
amounts billed to customers as revenue. However, costs incurred related to
shipping and handling were classified as a reduction of revenue. As such,
shipping and handling costs were reclassified from revenue to cost of sales and
totaled approximately $22,367,000, $21,991,000, $21,572,000, $19,911,000, and
$19,850,000 in fiscal 2001, 2000, 1999, 1998, and 1997, respectively.

Risk Factors

This Report contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act
including, in particular, the statements about the Companys plans, strategies,
and prospects. Although Management believes that the Companys plans,
intentions and expectations reflected in or suggested by such forward-looking
statements are reasonable, Management can give no assurance that such plans,
intentions or expectations will be achieved. These cautionary statements,
however, are not intended to be exhaustive, and should be read in conjunction
with other cautionary statements made herein and in the Companys other
publicly filed reports. Important factors that could cause actual results to
differ materially from the forward-looking statements the Company makes in this
Report are set forth below and elsewhere in this Report. All forward-looking
statements attributable to the Company or persons acting on our behalf are
expressly qualified in their entirety by the following cautionary statements.

Leverage and debt service  The Companys substantial indebtedness could
adversely affect the financial health of the Company and prevent it from
fulfilling its obligations.

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The Company has a significant amount of debt. As of June 30, 2001, the
Company had approximately $395.1 million of indebtedness. The Company also had
approximately $87.5 million of additional borrowing availability under its
credit facilities. Stockholders equity at June 30, 2001 was approximately
$14.0 million.

For the fiscal year ended June 26, 1999 earnings were insufficient to
cover fixed charges by approximately $3,341,000.

The amount of debt the Company owes could have important consequences. For example, it could:

|  |  |                                                                                                                                                                                                                                                                                                                               
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | make it more difficult for the Company to satisfy its obligations with respect to indebtedness;                                                                                                                                                                                                                               
| |  | increase the Companys vulnerability to general adverse economic and industry conditions;                                                                                                                                                                                                                                     
| |  | limit the Companys ability to fund future working capital, capital expenditures, research and development costs
and other general corporate requirements;                                                                                                                                                                    
| |  | require the Company to dedicate a substantial portion of its cash flow from operations to payments on its
indebtedness, thereby reducing the availability of its cash flow to fund working capital, capital expenditures, research and
development efforts and other general corporate purposes;                              
| |  | limit the Companys flexibility in planning for, or reacting to, changes in its business and the industry in which it operates;                                                                                                                                                                                               
| |  | place the Company at a competitive disadvantage compared to its competitors that have less debt; and                                                                                                                                                                                                                          
| |  | limit, along with the financial and other restrictive covenants in its indebtedness, among other things, the Companys
ability to borrow additional funds. And, failing to comply with those covenants could result in an event of default which, if
not cured or waived, could have a material adverse effect on the Company.

Additional Borrowings Available  Despite current indebtedness levels, the
Company and its subsidiaries may still be able to incur substantially more
debt. This could further exacerbate the risks described above.

The Company and its subsidiaries may be able to incur substantial
additional indebtedness in the future. The terms of the indentures for the
Companys 9 7/8% Senior Notes due 2004 and the 10 5/8% Senior Subordinated
Notes due 2006 (together, the Notes) do not fully prohibit the Company or its
subsidiaries from doing so. As of June 30, 2001, the indentures for the Notes
would permit additional borrowing of up to $87.5 million. If new debt is added
to the Companys and its subsidiaries current debt levels, the related risks
could intensify.

The Companys indebtedness prevents it from engaging in certain activities.

The Companys credit facilities and the indentures for its Notes each contain a
number of significant covenants. These covenants limit or restrict the
Companys ability to:

12



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|  |  |                                                                                                             
|- |  | ------------------------------------------------------------------------------------------------------------
| |  | incur additional debt;                                                                                      
| |  | repay other debt;                                                                                           
| |  | make certain investments or acquisitions;                                                                   
| |  | dispose of assets;                                                                                          
| |  | pay distributions;                                                                                          
| |  | repurchase or redeem ownership interests;                                                                   
| |  | engage in mergers or consolidations; and                                                                    
| |  | engage in certain transactions with subsidiaries and affiliates and otherwise restrict corporate activities.

These limitations and restrictions may adversely affect the Companys
ability to finance its future operations or capital needs or engage in other
business activities that may be in its best interests. In addition, the
Companys credit facilities also require it to comply with certain financial
ratios and the Companys ability to comply with these financial ratios may be
affected by events beyond its control. If the Company breaches any of the
covenants in its credit facilities, the indentures for its Notes or in any new
credit facility the Company enters into, or if the Company is unable to comply
with the financial ratios, the Company may default under the credit facilities,
the indentures for the Notes or any new credit facility. If the Company
defaults under the credit facilities, the lenders can declare all borrowings
outstanding, including accrued interest and other fees, due and payable. If
the Company uses all of its available cash to repay borrowings under the credit
facilities, the Company may not be able to make payments on the Notes. If the
Company is unable to repay the borrowings when due, the lenders under the
Companys credit facilities could proceed against the collateral, which
consists of substantially all of the Companys assets. If the lenders
accelerate the repayment of indebtedness under the credit facilities or the
Notes, the Company may not have sufficient assets to repay all of the
indebtedness.

Ability to service debt  To service its indebtedness, the Company will require
a significant amount of cash. The Companys ability to generate cash depends on
many factors beyond its control.

The Companys ability to make payments on and to refinance its
indebtedness and to fund planned capital expenditures and research and
development efforts will depend on its ability to generate cash in the future.
This, to a certain extent, is subject to general economic, financial,
competitive, legislative, regulatory and other factors that are beyond the
Companys control.

Based upon current levels of operations and continued cost saving
measures, the Company believes that cash flow from operations, borrowings under
the credit facilities, sales of accounts receivable under its accounts
receivable securitization facility and other sources of liquidity will be
adequate to meet the Companys anticipated requirements for working capital,
capital expenditures, interest payments and scheduled principal payments for at
least the next 12 months. There can be no assurance, however, that the
Companys business will continue to generate cash flows from operations at or
above current levels or that anticipated cost savings will be realized.

Management cannot assure that the Company will generate sufficient cash
flow from operations to enable it to repay its indebtedness or to fund its
other liquidity needs. If the Company cannot generate sufficient cash flow from
operations in the future, the Company may need to refinance all or a portion of
its indebtedness on or before maturity. Management cannot assure that the
Company will be able to refinance any of its indebtedness, including the credit
facilities and the Notes, on commercially reasonable terms or at all.

The Companys operating performance is dependent upon a limited number of
customers.

The Company is dependent upon a limited number of large customers with
substantial purchasing power for a majority of its sales, many of which are
reducing their number of suppliers. Frito-Lay accounted for approximately 19%
of total sales in fiscal 2001. The end user market for flexible packaging has
been consolidating with the larger end users gaining market share and realizing
the highest growth rates. This has also resulted in increased cost pressures
from these large end users. Other end users have exited the market. In
addition, the Companys future business, financial condition and results of
operations will depend to a significant extent upon the commercial success of
its major customers and their continued willingness to purchase the Companys
products. Any significant downturn in the business of the Companys major
customers could cause them to reduce or discontinue their purchases from the
Company. This could have a material adverse effect on the Companys business,
financial condition and results of operations. As is customary in the
industry, the Company annually establishes volume estimates with most of its
customers, but generally has no long-term contracts with them, and
substantially all such relationships can be terminated on short notice by such
customers.

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Net losses  The Company incurred net losses in fiscal years 1999, 1998 and
1997 and there can be no assurance that such net losses will not occur in the
future.

The Company incurred net losses (before extraordinary items) of $2.4
million in fiscal 1999, $9.5 million in fiscal 1998 and $14.6 million in fiscal
1997. The Company believes that these net losses were the result of financing
costs incurred in connection with a significant acquisition that occurred in
fiscal 1997, slowed growth in end user markets and continuing price pressure
from the Companys competitors and significant customers. Although the Company
does not anticipate that these net losses will recur in the near future, there
can be no assurance that these net losses will not return in the future or that
the Company will be able to continue to profitably operate.

CompetitionThe Company may be unable to repay its indebtedness if it does not
successfully compete within its industry.

The Company operates in a highly competitive industry and competes against
a number of companies, including divisions of large companies, of which some
have significantly greater financial, personnel, technological and marketing
resources than the Company. The Company believes that its ability to compete
depends on product performance, short lead-time and timely delivery,
competitive pricing, superior customer service and support and continued
certification under customer quality requirements and assurance programs. The
Company competes on the basis of price, service, quality and innovation in
product structures and graphics. The Company has experienced significant
pricing pressure over the last few years as many of its competitors reduce
prices in attempts to acquire market share. In addition to several hundred
smaller competitors, the Company faces strong competition from various large
flexible packaging companies, including American Packaging, Bemis, Bryce,
Cryovac (a division of Sealed Air Corporation), Lawson Mardon Packaging (a
division of Alcan), Pechiney Plastic Packaging (packaging operations of former
American National Can Corporation), Pliant Corporation (formerly Huntsman
Packaging), and Alcoa Packaging and Consumer Products (a division of Alcoa), of
which some have significantly greater financial, personnel and technological
and marketing resources than the Company. Although the Company has broad
product lines and is continually developing its product structures, from time
to time, customers may determine to use alternative product structures not
offered by the Company, with a corresponding reduction in existing and
potential revenues from these customers.

Restructuring  The Company often considers cost saving measures to enhance its
performance, financial condition and results of operations.

The Company has in the past taken cost saving measures to enhance its
performance, financial condition and results of operations, including plant
closings, reductions in capital expenditures and other cost saving measures.
Such restructuring measures have required the Company in the past to take
charges against earnings. Management has no definitive plans to undertake any
such cost saving measures at this time, but there can be no assurance that such
cost saving measures will not be taken in the future. If such cost saving
measures are taken in the future, the Company may be required to take charges
against earnings, including cash and non-cash charges, which could adversely
affect its business, financial condition or results of operations.

Effective subordination  Substantially all of the Companys assets are pledged
to secure the credit facilities and certain of the Companys operations are
conducted through subsidiaries.

Substantially all of the Companys assets and the real and personal
property the Company uses in its business operations secure the Companys
obligations under its credit facilities. If the Company defaults on any
payments required under any secured indebtedness, the secured lenders could
declare all amounts outstanding, together with accrued and unpaid interest,
immediately due and payable. If the Company is unable to repay amounts due,
the lenders could proceed against the collateral. If the lenders proceed
against any of the collateral, the Company may not have sufficient assets
remaining to pay its noteholders. Moreover, if the Company becomes bankrupt or
similarly reorganizes, the Company will not be able to use its assets to pay
the noteholders until the Company pays all of its secured indebtedness. Since
a portion of the Companys operations are conducted through subsidiaries, the
creditors of those subsidiaries will have prior claims to the assets of those
subsidiaries. As a result, the Notes effectively rank junior to the
liabilities of the Companys subsidiaries, including trade payables. As of
June 30, 2001, the Company had approximately $84 million of secured debt under
its credit facilities.

Financing change of control offer  The Company may not have the ability to
raise the funds necessary to finance the change of control offer required by
the indenture.

14



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Upon the occurrence of certain specific kinds of change of control events,
the Company will be required to offer to repurchase all outstanding Notes.
However, it is possible that the Company will not have sufficient funds at the
time of the change of control to make the required repurchase of the Notes or
that restrictions in the Companys credit facilities or any new credit facility
the Company may enter into will not allow such repurchases.

A decline in the supply of raw materials may increase the Companys operating
costs  The Company may not be able to increase prices in response to increased
operating costs.

The Company uses large quantities of various raw materials, including
resins and films, in the manufacture of its products. The Company has
historically been able to pass along increases in the costs of resins and other
raw materials to its customers. However, large, abrupt increases in the price
of raw materials could harm the Companys operating margins. Such adverse
effects historically have been only temporary. There is no assurance that a
significant increase in resin or other raw material prices, or a cancellation
of one or more favorable resin supply contracts, would not have an adverse
effect on the Companys business, results of operations and debt service
capabilities.

Potential exposure to environmental liabilitiesThe Company may be liable for
penalties under a variety of environmental laws, even if the Company did not
cause any environmental problems.

Various federal, state and local environmental laws govern the use of the
Companys facilities. Such laws govern: (1) discharges to air and water, (2)
the handling and disposal of solid and hazardous substances and wastes and (3)
the remediation of contamination associated with releases of hazardous
substances at the Companys facilities and offsite disposal locations. Laws
relating to workplace safety and worker health also govern the Companys
operations. These laws establish formaldehyde, asbestos and noise standards
and regulate the use of hazardous chemicals in the workplace. Management has
taken, and will continue to take, steps to comply with these laws and
requirements. Management believes, based upon currently available information,
that complying with environmental and health and safety laws and requirements
will not require material capital expenditures in the foreseeable future.
However, management cannot assure that complying with the foregoing
environmental or health and safety laws and requirements will not adversely
affect the Companys business, financial condition and results of operations.
Moreover, management cannot assure that future laws, ordinances or regulations
will not give rise to additional compliance or remediation costs which could
have a material adverse effect on the Companys business, financial condition
and results of operations.

Seasonality  The Companys sales and profits are generally seasonal.

Certain of the end uses for certain of the Companys products are
seasonal. Demand in many snack food and soft drink markets is generally higher
in the spring and summer. As a result, the Companys sales and profits are
generally higher in the Companys fourth quarter (ending the last Saturday in
June) than in any other quarter during its fiscal year.

The Companys operating performance is dependent upon good relations with its
officers and employees  The Company may be adversely affected if it cannot
retain its existing officers and employees or find similarly skilled
replacements.

The Company is dependent upon the abilities and experience of its
executive officers, key employees and workforce in general. Although the
Company considers its relationship with its employees to be generally good, a
strike by employees at the Greensburg, Indiana facility began in the last week
of June 1997 and lasted until September 12, 1997. Labor contracts were
recently renegotiated in a majority of the Companys covered facilities. In
addition, the union representing the employees of the Orange, Texas facility
voted to decertify the union at the Orange facility during the first quarter of
fiscal 2001. If the Company loses any of its executive officers or key
employees and is unable to hire similarly skilled persons or if the Companys
relationship with its workforce in general deteriorates, the Companys
business, financial condition and results of operations may be adversely
affected.

The Company may have conflicts of interest with its controlling equity holder 
The Company is controlled by the Love family, whose interests may not be
aligned with noteholders.

Printpack Enterprises, Inc. (Enterprises) owns approximately 100% of the
Company, and Printpack Holdings, Inc. (Holdings) owns approximately 97% of
Printpack Enterprises, Inc. The principal shareholders of Printpack Holdings,
Inc. include several members of the family of J. Erskine Love, Jr., the
Companys founder, and a limited partnership which is controlled by the Love
family. As a result, the Love family has the power to elect all of the
Companys directors and appoint new management.

15



---



Consequently, the Love family has the ability to control the Companys policies
and operations. Circumstances may occur in which the interests of the Love
family could be in conflict with the interests of the holders of the Notes.

Risks associated with international operations  The Company does business in
Mexico and the United Kingdom and there are certain risks inherent in doing
business in Mexico and on an international level in general.

The Company has plants in Queretaro, Mexico and Bury, England and may in
the future expand into additional international markets. There are certain
risks inherent in doing business on an international level in general. Such
risks include:

|  |  |                                                                                                                           
|- |  | --------------------------------------------------------------------------------------------------------------------------
| |  | unexpected changes in or delays resulting from regulatory requirements, tariffs, customs, duties and other trade barriers;
| |  | difficulties in staffing and managing foreign operations;                                                                 
| |  | longer payment cycles and problems in collecting accounts receivable;                                                     
| |  | political instability, expropriation, nationalization, war, insurrection and other political risks;                       
| |  | fluctuations in currency exchange rates and foreign exchange controls which restrict or prohibit repatriation of funds;   
| |  | technology export and import restrictions or prohibitions;                                                                
| |  | delays from customs brokers or government agencies;                                                                       
| |  | seasonal reductions in business activity; and                                                                             
| |  | potentially adverse tax consequences.                                                                                     

Any of these factors could have an adverse effect on the Companys future
international operations in Mexico and England and elsewhere if it chooses to
expand and, consequently, on its business, financial condition and results of
operations.

Item 7A.Quantitative and Qualitative Disclosures about Market Risk

The following discussion should be read in conjunction with the Financial
Statements for the fiscal years ended June 30, 2001, June 24, 2000 and June 26,
1999, as well as the notes thereto.

Interest Rate Risk

With respect to its credit facilities entered into for other than trading
purposes, the Company is subject to market risk exposure related to changes in
interest rates. The Company is the obligor on the following variable interest
rate long-term debt instruments: (i) $48,463,000 (at June 30, 2001) secured
senior notes to banks payable in quarterly installments of $2,442,000 each
through the second quarter of fiscal 2002, $2,383,000 in the third quarter of
fiscal 2002, $220,000 in the fourth quarter of fiscal 2002 and continuing
through the second quarter of fiscal 2004 and a final payment of
$39,656,000
during the third quarter of fiscal 2004 (final installment due March 2004),
with an interest rate tied to LIBOR and payable monthly; (ii) $5,484,000 (at
June 30, 2001) secured notes to a bank payable in annual installments of
$1,406,000 each beginning in fiscal 2002 and continuing through fiscal 2004 and
a final payment of $1,266,000 during fiscal 2005 (final installment due July
2004), with an interest rate tied to the banks Base Rate as published from
time to time and payable monthly; (iii) a $60,000,000 revolving credit facility
with banks due in December 2003 with an interest rate tied to LIBOR and payable
quarterly (at June 30, 2001, nothing was outstanding under this facility); (iv)
a $10,000,000 line of credit with an interest rate tied to the Federal Funds
rate (approximately $825,000 outstanding at June 30, 2001); and (v) $30,000,000
(at June 30, 2001) outstanding under an accounts receivable securitization
facility with a bank due in December 2003, with an interest rate tied to LIBOR
and payable quarterly. The Company has also guaranteed the debt of Orflex
Ltd., a joint venture with the OR Group, which totaled approximately $915,000
at June 30, 2001. This debt is subject to repayment requirements through a
final maturity date of January 2005. The interest rate on such debt is tied to
LIBOR. While changes in LIBOR, the Federal Funds rate and a banks Base Rate
would affect the cost of these funds in the future, the Company does not
consider its current exposure to changes in such rates to be material, and the
Company believes that the effect, if any, of reasonably possible near-term
changes in interest rates on the Companys financial position, results of
operations or cash flows would not be material. The carrying amounts of the
Companys variable rate long-term debt approximate their fair values.

At June 30, 2001, the Companys fixed interest rate long-term debt
instruments included: (i) $200,000,000 in 10.625% unsecured senior
subordinated notes payable in August 2006 with interest payable semi-annually;
(ii) $100,000,000 in 9.875% unsecured senior notes payable in August 2004 with
interest payable semi-annually; and (iii) $10,305,000 in 11% unsecured
subordinated notes to shareholders of Holdings payable in an installment of
$3,422,000 in May 2005 and the remaining principal payable in May 2014 with
interest payable annually. There is no material market risk related to the
Companys fixed interest rate long-term debt.

16



---



Foreign Currency Risk

The Companys revenue derived from international operations is not
material and, therefore, the risk related to foreign currency exchange rates is
not material.

The Company periodically uses foreign exchange derivative instruments or
spot purchases to hedge its known liabilities in foreign currencies to reduce
the impact of foreign currency gains and losses in its financial results. It is
the Companys policy not to enter into derivative transactions for speculative
purposes. There were no material gains or losses recognized in fiscal years
2001, 2000 or 1999.

Investment Portfolio

The Company does not use financial instruments for trading purposes. The
Company invests its excess cash in short-term, highly liquid investments
consisting primarily of overnight repurchase agreements. The market risk on
such investments is minimal.

Pursuant to a note arrangement, the Company has extended certain working
capital loans to Orflex Ltd., a joint venture between the Company and the OR
Group. Such loans, which bear interest at the rate of LIBOR plus 2.75%, are
payable upon demand by the Company. Advances related to such loans, including
accrued interest, totaled approximately $5,400,000 at June 30, 2001. While
changes in LIBOR would affect the funds received by the Company from such loans
in the future, the Company believes that the effect, if any, of reasonably
possible near-term changes in such interest rate on the Companys financial
position, results of operations or cash flows would not be material.

Item 8.  Financial Statements and Supplementary Data

The financial statements and financial statement schedule in Part IV, Item
14(a)1 and 2 of this Report are incorporated by reference into this Item 8.

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

Not applicable.

17



---



PART III

Item 10.  Directors and Executive Officers of the Registrant

Executive Officers and Directors

Set forth below are the names, ages, positions and offices held (as the
date hereof) and a brief account of the business experience for each executive
officer and director of Printpack.

|                        |  |                       |    |          |  |                                                           
|----------------------- |  | --------------------- | -- | -------- |  | ----------------------------------------------------------
|                        |  | Age                   |    |         
|Name                    |  | (as of June 30, 2001) |    | Position
|                        |  |                       |    |         
|Dennis M. Love          |  |                       | 45 |          |  | President, Chief Executive Officer and Director(1)        
|                       
|                       
|                       
|                       
|James J. Greco          |  |                       | 58 |          |  | Vice President and General Manager                        
|                       
|                       
|                       
|                       
|James E. Love, III      |  |                       | 44 |          |  | Vice President, General Manager and Director(1)           
|                       
|                       
|                       
|                       
|Nicklas D. Stucky       |  |                       | 55 |          |  | Vice President, Human Resources                           
|                       
|                       
|                       
|                       
|R. Michael Hembree      |  |                       | 52 |          |  | Vice President, Finance and Administration                
|                       
|                       
|                       
|                       
|Neil Williams           |  |                       | 65 |          |  | Director (2)                                              
|                       
|                       
|                       
|                       
|August Franchini, Jr.   |  |                       | 58 |          |  | Vice President, Engineering                               
|                       
|                       
|                       
|                       
|Terrence P. Harper      |  |                       | 43 |          |  | Vice President, Technology and Support                    
|                       
|                       
|                       
|                       
|Dellmer B. Seitter, III |  |                       | 36 |          |  | Treasurer and Assistant Secretary                         
|                       
|                       
|                       
|                       
|Gay M. Love             |  |                       | 72 |          |  | Director(1)                                               
|                       
|                       
|                       
|                       
|Hugh M. Chapman         |  |                       | 68 |          |  | Director(2)                                               
|                       
|                       
|                       
|                       
|Daniel K. Frierson      |  |                       | 59 |          |  | Director(3)                                               
|                       
|                       
|                       
|                       
|Roy Richards, Jr.       |  |                       | 42 |          |  | Director(3)                                               
|                       
|                       
|                       
|                       
|Timothy C. Tuff         |  |                       | 54 |          |  | Director(2)                                               
|                       
|                       
|                       
|                       
|C. Keith Love           |  |                       | 40 |          |  | Plant Manager, Hendersonville, N.C. Plant, and Director(1)
|                       
|                       
|                       
|                       
|William J. Love         |  |                       | 39 |          |  | Director(1)                                               
|                       
|                       
|                       
|                       
|William E. Lewis        |  |                       | 57 |          |  | Vice President and General Manager                        
|                       
|                       
|                       
|                       
|John N. Stigler         |  |                       | 53 |          |  | Vice President and General Manager                        
|                       
|                       
|                       
|                       
|Michael A. Fisher       |  |                       | 54 |          |  | Vice President and General Manager                        



---

|(1) |  | Dennis M. Love, James E. Love, III, William J. Love and C. Keith Love are
all the children of Gay M. Love, who is the controlling shareholder of the
Company.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) |  | Member of the Audit Committee                                                                                                                                
|(3) |  | Member of the Compensation Committee                                                                                                                         

Dennis M. Love  President, Chief Executive Officer and Director.Mr.
Love became President and Chief Executive Officer of Printpack and a member of
its Board of Directors in February 1987. Mr. Love has been involved with the
Company since 1978, holding various positions in sales and marketing. Mr. Love
also serves as a director of SunTrust Banks of Georgia, Caraustar Industries,
Inc. and AGL Resources, all of which have securities registered under the 1934
Act; and Cleveland Group.

James J. Greco  Vice President and General Manager.Mr. Greco has been
Vice President and General Manager since April 1991. In such capacity, he was
responsible for serving the Companys largest customer from April 1991 through
April 1999. Prior to holding this position, Mr. Greco served as Director of
Sales for 10 years and has held various other sales positions since he joined
the Company in 1971. Mr. Greco also served as a director of the Company from
July 1996 until January 1998. Mr. Greco is also a director of Orflex, Ltd.

James E. Love, III  Vice President, General Manager and Director. Mr.
Love became Vice President and General Manager in May 1999. In such capacity,
he is responsible for serving the Companys largest customer. Prior to holding
this position, Mr. Love served as Vice President, Corporate Development from
June 1996 through April 1999 and Director of Strategic Planning from July 1992
through May 1996. Mr. Love became a member of the Board of Directors in
February 1987. Prior to joining Printpack, Mr. Love worked in the Corporate
Finance Department of The Robinson-Humphrey Company, Inc., an investment
banking firm, from 1983 to 1992.

Nicklas D. Stucky  Vice President, Human Resources.Mr. Stucky became
Vice President of Human Resources in 1982. Prior to that time, he served as
Director of Personnel from 1978 to 1982 and has held various other human
resources positions since he joined Printpack in 1973.

18



---



R.     Michael Hembree  Vice President, Finance and Administration.Mr.
Hembree joined the Company as Controller in 1980 and has served in his present
position since 1982. Mr. Hembree also served as a director of the Company from
July 1996 until January 1998.

Neil Williams  Director.Mr. Williams has served as General Counsel and
Global Partner for Amvescap PLC since September 1999. Prior to that time, Mr.
Williams was a partner at the law firm of Alston & Bird LLP (Managing Partner
from 1984 until 1996), counsel to the Company. Mr. Williams also serves as a
director of National Data Corporation and National Service Industries, both of
which have securities registered under the 1934 Act. Mr. Williams has served
as member of the Companys Board of Directors since 1977 and also served as the
Companys Secretary until September 1999.

August Franchini, Jr.  Vice President, Engineering.Mr. Franchini became
Vice President, Engineering in June 1989. Prior to becoming Vice President,
Engineering, Mr. Franchini served as the Companys Manager of Industrial
Engineering, as well as Plant Manager of the Companys Grand Prairie, Texas
plant.

Terrence P. Harper  Vice President, Corporate Technology and Support.
Mr. Harper assumed his present position in May 1999. Prior to that time, Mr.
Harper served as a General Manager from 1997 to 1999. From 1995 to 1997, Mr.
Harper was an Operations Planning Manager and held various other positions with
the Company since joining it in 1989 in connection with the Companys
acquisition of Daniels Packaging.

Dellmer B. Seitter  Treasurer and Assistant Secretary.Mr. Seitter became
Treasurer and Assistant Secretary in 1998, after previously serving as the
Companys Assistant Treasurer and Tax Manager since 1996. Prior to joining the
Company, Mr. Seitter was employed at Price Waterhouse LLP, most recently as Tax
Manager.

Gay M. Love  Director.Ms. Love is the widow of the Companys founder,
and her primary occupation is Chairman of the Board of Printpack Holdings, Inc.
She was elected a director of the Company in July 1996, but has been a
director and Chairman of Enterprises since 1987.

Hugh M. Chapman  Director.Mr. Chapman retired from NationsBank South of
Atlanta, Georgia, a division of NationsBank Corporation of Charlotte, North
Carolina, on June 30, 1997. Previously, he served as Chairman of NationsBank
South for more than 5 years. Mr. Chapman was first elected as a director of the
Company during fiscal 1998. He also serves as a director of Scana Corporation,
West Point-Stevens and The Williams Companies, each of which have securities
registered under the 1934 Act.

Daniel K. Frierson  Director.Mr. Frierson has served as Chief Executive
Officer of The Dixie Group, Inc., a carpet manufacturing business, since 1979.
Since 1987, Mr. Frierson has also served as Chairman of the Board of Directors
of such company, which has securities registered under the 1934 Act. Mr.
Frierson was first elected as a director of the Company during fiscal 1998. He
also serves as a director of SunTrust Bank of Chattanooga, N.A. and Astec
Industries, Inc., both of which have securities registered under the 1934 Act.

Roy Richards, Jr.  Director.Mr. Richards has served as Chairman of the
Board of Directors and Chief Executive Officer of Southwire Company since
October 1988. Southwire is a privately owned company and is the largest
producer of electrical wire and cable in North America.

Timothy C. Tuff  Director.Mr. Tuff is Chairman of the Board, President
and CEO of John H. Harland Company, which has securities registered under the
1934 Act. John H. Harland Company offers a wide range of products and services
to financial institutions, including checks, database marketing and loan
automation software. Mr. Tuff has served in this position since December 1998.
Prior to holding this position, Mr. Tuff served as President and CEO of Boral
Industries, Inc., which produces building and construction materials, from
September 1993.

C.     Keith Love  Plant Manager, Hendersonville, N.C. Plant, and Director.
Mr. Love has been a director since March 1987, and assumed his current position
as Plant Manager in February 1996. He formerly served as a Shift Coordinator
from September 1991 to February 1996 and as a Systems Coordinator from May 1987
to September 1991.

William J. Love  Director.Mr. Love has served as Director of Sales for
Printpack Europe, an affiliated entity, since October 1998 and has been a
director of Printpack since March 1987. Prior to holding his current position,
Mr. Love was a Senior Accounts Manager for the Company from June 1994 through
October 1998.

19



---



William E. Lewis  Vice President and General Manager.Mr. Lewis was
appointed to this position in July 1996. Previously, he served as a General
Manager from April 1991 to May 1996 and Director of Sales, Marketing and
Technical Support from September 1993 to May 1996. Prior to joining Printpack
in connection with the Companys acquisition of Daniels Packaging in 1989, Mr.
Lewis served as Daniels National Sales Manager.

John N. Stigler  Vice President and General Manager.Mr. Stigler was
appointed to this position in June 1994. He joined Printpack in 1976 as a Sales
Representative and has held various positions, including Sales Manager,
Director of Midwest Sales and General Manager.

Michael A. Fisher  Vice President and General Manager.Mr. Fisher was
appointed to this position in October 1993. Previously, Mr. Fisher served as
the Companys Director of Development from March 1993 to October 1993, its
Director of Business Support from August 1992 to March 1993 and Managing
Director, European Operations from August 1989 to August 1992.

20



---



Item 11.  Executive Compensation

Executive Officer Compensation

The following table presents certain summary information concerning
compensation paid or accrued by the Company for services rendered in all
capacities during fiscal years 2001, 2000, and 1999, for the Companys Chief
Executive Officer and the Companys four most highly compensated executive
officers other than the Chief Executive Officer for the fiscal year ended June
30, 2001.

Summary Compensation Table

|                                      |                                    |  |      |      |  |        |                     |          |              |            |           |                 |  |  |        |         |  |   |       |       | 
|------------------------------------- | ---------------------------------- |  | ---- | ---- |  | ------ | ------------------- | -------- | ------------ | ---------- | --------- | --------------- |  |  | ------ | ------- |  | - | ----- | ----- | 
|                                      |                                    |  |      |      |  |        | Annual Compensation |          | Long Term    |            |           |                 | 
|                                      |                                    |  |      |      |  |        |                     |          | Compensation |            | All Other
|Name and Principal Position(s)        |                                    |  |      |      |  | Salary |                     | Bonus(1) |              | Payouts(2) |           | Compensation(3)
|                                      |                                    |  |      |      |  |        |                     |          |              |            |           |                
|Mr. Dennis M. Love                    |                                    |  | 2001 |      |  | $      | 538,775             |          |              | $          | 263,899   |                 |  |  |       |         |  | $ | 6,800 |      
|                                     
|                                     
|                                     
|                                     
|President and Chief Executive Officer |                                    |  | 2000 |      |  |        | 508,938             |          |              |            | 191,840   |                 |  |  |       |         |  |   | 6,680 |      
|                                     
|                                     
|                                     
|                                     
|                                      |                                    |  | 1999 |      |  |        | 427,680             |          |              |            | 122,441   |                 |  |  |       |         |  |   | 5,097 |      
|                                     
|                                     
|                                     
|                                     
|Mr. Nicklas D. Stucky                 |                                    |  | 2001 |      |  |        | 166,220             |          |              |            | 84,413    |                 |  |  |       |         |  |   | 6,800 |      
|                                     
|                                     
|                                     
|                                     
|                                      | Vice President, Human Resources    |  |      | 2000 |  |        |                     | 159,990  |              |            |           | 59,888          |  |  |        |        |  |   |       | 6,088 | 
|                                     
|                                     
|                                     
|                                     
|                                      |                                    |  | 1999 |      |  |        | 148,460             |          |              |            | 45,070    |                 |  |  |       |         |  |   | 5,062 |      
|                                     
|                                     
|                                     
|                                     
|Mr. James E. Love, III                |                                    |  | 2001 |      |  |        | 339,655             |          |              |            | 87,119    |                 |  |  |       |         |  |   | 6,058 |      
|                                     
|                                     
|                                     
|                                     
|                                      | Vice President and General Manager |  |      | 2000 |  |        |                     | 327,251  |              |            |           | 87,967          |  |  |        |        |  |   |       | 5,200 | 
|                                     
|                                     
|                                     
|                                     
|                                      |                                    |  | 1999 |      |  |        | 257,645             |          |              |            | 47,400    |                 |  |  |       |         |  |   | 4,092 |      
|                                     
|                                     
|                                     
|                                     
|Mr. James J. Greco                    |                                    |  | 2001 |      |  |        | 250,840             |          |              |            | 192,435   |                 |  |  |       |         |  |   | 6,800 |      
|                                     
|                                     
|                                     
|                                     
|                                      | Vice President and General Manager |  |      | 2000 |  |        |                     | 240,840  |              |            |           | 124,583         |  |  |        |        |  |   |       | 6,348 | 
|                                     
|                                     
|                                     
|                                     
|                                      |                                    |  | 1999 |      |  |        | 205,895             |          |              |            | 81,628    |                 |  |  | 70,280 |         |  |   | 5,000 |      
|                                     
|                                     
|                                     
|                                     
|Mr. R. Michael Hembree                |                                    |  | 2001 |      |  |        | 202,240             |          |              |            | 97,466    |                 |  |  |       |         |  |   | 6,800 |      
|                                     
|                                     
|                                     
|                                     
|                                      | Vice President, Finance and        |  |      | 2000 |  |        |                     | 198,100  |              |            |           | 67,410          |  |  |        |        |  |   |       | 6,230 | 
|                                     
|                                     
|                                     
|                                     
|                                      | Administration                     |  |      | 1999 |  |        |                     | 172,280  |              |            |           | 50,465          |  |  |        | 105,261 |  |   |       | 4,998 | 



---

|(1) |  | Consists of cash bonuses paid under the Economic Value Added Plan portion
of the Companys Incentive Compensation Plan (the Incentive Plan). Under
the Incentive Plan, the Company establishes performance improvements over
the prior years results. These performance improvements are calculated
and measured with respect to economic value added (EVA) standards, and
participants earn bonuses based on realization of EVA improvements.
Annually, participants bonuses are paid 75% in cash and 25% in
performance shares.                                                                                                       
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) |  | Consists of cash payments paid pursuant to the Companys Performance
Share Plan as more fully described below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(3) |  | Consists of Company contributions to the officers account under the
Companys Savings and Profit Sharing Plan. The Companys Savings and
Profit Sharing Plan is a defined contribution employee benefit plan
qualified under section 401(k) of the Internal Revenue Code of 1986, as
amended. Under this plan, the Company matches 100% of the first three
percent of contributions and 50% of contributions between four and five
percent, made by each qualified participant and may contribute other fixed
amounts for the benefit of each qualified participant based upon a formula
derived from years of service and base compensation.

21



---



LONG-TERM INCENTIVE PLAN AWARDS IN FISCAL YEAR 2001

|                       |  |                   |        |                  |  |                |  | 
|---------------------- |  | ----------------- | ------ | ---------------- |  | -------------- |  | 
|                       |  |                   |        |                  |  | Performance or
|                       |  | Number of Shares, |        | Other Period    
|                       |  | Units or          |        | Until Maturation
|Name                   |  | Other Rights(1)   |        | or Payout       
|                       |  |                   |        |                 
|Mr. Dennis M. Love     |  |                   | 610.32 |                  |  | March 2006    
|                      
|                      
|                      
|                      
|Mr. Nicklas D. Stucky  |  |                   | 195.23 |                  |  | March 2006    
|                      
|                      
|                      
|                      
|Mr. James E. Love, III |  |                   | 201.48 |                  |  | March 2006    
|                      
|                      
|                      
|                      
|Mr. James J. Greco     |  |                   | 445.05 |                  |  | March 2006    
|                      
|                      
|                      
|                      
|Mr. R. Michael Hembree |  |                   | 225.41 |                  |  | March 2006    



---

|(1) |  | Represents units of phantom stock (performance shares) granted in fiscal
year 2001 pursuant to the Performance Share Plan portion of the Incentive
Plan. Each year, 25% of the bonus, if any, is required to be invested in
phantom stock (performance shares). The value of these shares is based on
a formula which uses a multiple of EBITDA and debt to calculate an
estimate of the market value of the Company. The value of the shares
rises or falls as the overall calculated market value of the Company rises
or falls. These performance shares are eligible for redemption after four
years and may be exercised for cash at any time thereafter. There is no
guarantee that the value of these performance shares will have appreciated
at their redemption. No shares of Company stock are actually issued
pursuant to the Performance Share Plan. Historically, bonuses including
performance shares have been accrued during each fiscal year, but not
awarded until the subsequent fiscal year.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Director Compensation

Members of the Board who are not employees of the Company received a
quarterly retainer of $4,000 each, $2,500 each per board meeting attended, and
$1,000 each per committee meeting attended during the fiscal year ended June
30, 2001.

Incentive and Deferred Compensation

Incentive Compensation Plan

The Company maintains a non-qualified, long-term incentive compensation
plan for its employees (the Incentive Plan) which is designed to align the
short and long-term interests of its employees with its shareholders
interests. Under the Incentive Plan, the Company establishes performance
improvements over the prior years results. These performance improvements are
calculated and measured with respect to economic value added (EVA) standards
and are established on a Company-wide basis.

The Incentive Plan includes two tiers of incentive-based compensation
linked to the Companys EVA. Although participation in the Incentive Plan is
generally limited to managers within the Company, the final determination of an
employees eligibility to participate in the plan is made in the sole
discretion of a committee which consists of the Companys President and the
Vice-Presidents of Finance and Administration, and of Human Resources. Each
year a participants bonus, if any, (EVA Bonus) is allocated from a bonus
pool composed of two parts, a base award and an improvement award. The base
award is calculated using the previous years EVA and the individual
participants base salary. The improvement award is based on the improvement of
the EVA from the previous year. The first tier consists of 75% of the EVA Bonus
which is paid in cash to the participants as a short-term incentive.

The second tier of the plan (the Performance Share Plan) is a phantom
stock plan, which acts as a long-term incentive. Twenty-five percent of each
participants EVA Bonus, if any, is reserved by the Company and invested in
phantom stock called performance shares, the value of which rises or falls
based on a formula which uses a multiple of EBITDA and debt to estimate the
market value of the Company. There is no guarantee that these performance
shares will have appreciated in value when they become payable. These
performance shares are eligible for redemption after four years and may be
exercised by a participant at any time thereafter. The maximum number of
performance shares available under the Performance Share Plan is equivalent to
15% of the Companys outstanding common stock. The percent of the EVA Bonus
that must be invested in performance shares may be reduced pro rata if the 15%
limit would be exceeded because of the full investment. The Company may call
outstanding performance shares from participants as it deems advisable if the
15% limit is reached so that new shares may be issued.

Deferred Compensation Agreements

The Companys founder agreed to pay Neil Williams or his beneficiary
$40,000 per year in deferred compensation beginning at age 65. Mr. Williams,
who has served as a director since 1977 and from 1977 until September 1999,
served as the Companys Secretary, was the Companys only outside director who
was not a salaried employee or a principal shareholder until fiscal 1998.

22



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The Company also maintains Family Security Agreements with certain of its
key employees (the Family Security Agreements). These agreements provide that
certain disability and death benefits will be paid to such employees or their
family members. In the case of the employees death, his or her spouse will
receive annually for the rest of such spouses life, 50% of the employees
total cash compensation, including bonuses, for the last full year of
employment. In the event of the employees disability while an employee of
Printpack, Printpack shall pay the employee $40,000 annually for the employees
life. The agreements also provide certain other benefits to children of the
employees who are under the age of 23. If the employee voluntarily terminates
his employment (except upon retirement), engages in an activity which the
Companys board of directors deems harmful to the Company or the employee
ceases to provide advice to the Company when reasonably requested, all benefits
under the Family Security Agreement will be forfeited. If Printpack terminates
the employees employment, there is a vesting schedule ranging from 50% at five
years of employment to 100% at more than 10 years. All payments to be made
under a Family Security Agreement are indexed to the All Urban Consumers Cost
of Living Index published by the U.S. Government. The Company currently has
Family Security Agreements with Dennis M. Love, James E. Love, III, R. Michael
Hembree, and Nicklas D. Stucky, all of whom are fully vested.

The Company believes that it has substantially funded these benefits
through insurance policies previously purchased.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

The Company was reorganized effective June 29, 1996 to facilitate an
acquisition and its financing. Previously, the Company was owned and operated
together with Enterprises, a Georgia corporation that had elected to be taxed
as a Subchapter S corporation under the Internal Revenue Code of 1986, as
amended. Printpack and Enterprises were affiliated by common ownership and
management. Following the Companys 1996 fiscal year, Printpack and Enterprises
were reorganized into a holding company structure (the Reorganization).
Holdings, a new Delaware corporation, was formed, and Enterprises contributed
substantially all its assets and liabilities to Printpack.

Enterprises owns approximately 100% of the Company and Holdings owns
approximately 97% of Enterprises. The principal shareholders of Holdings as of
this date included several members of the family of J. Erskine Love, Jr., the
Companys founder, and a limited partnership which is controlled by the Love
family. Certain of the principal shareholders of Holdings serve on the boards
of directors of the Company, Enterprises and Holdings and are involved in the
management of the Company.

Item 13.  Certain Relationships and Related Transactions

As of June 30, 2001, the Company had approximately $10.3 million aggregate
principal amount of subordinated notes outstanding from shareholders (the
Shareholder Notes). These notes bear interest of 11% which is payable
annually. All of the shareholders of Holdings who are also directors and
officers of the Company are holders of the Shareholder Notes.

As of June 30, 2001, the Company had loans outstanding to Dennis M. Love
and Gay M. Love totaling approximately $35,000 and $119,000, respectively.
These amounts are payable on demand and bear no interest. During fiscal 2001,
the highest amount outstanding during the year from Gay M. Love was
approximately $119,000 and from Dennis M. Love was approximately $65,000.

During fiscal 2001, 2000 and 1999, the Company advanced approximately
$1,690,000, $948,000 and $949,000, respectively, to Holdings for the redemption
of common stock held by retired, non-family shareholders. These advances have
been reflected as a reduction in shareholder equity in the consolidated balance
sheets of the Company. All amounts under these advances are still outstanding,
are payable on demand and bear no interest.

During fiscal 2001, the Companys subsidiary Printpack Enterprises,
Limited, (PEL) entered into various transactions with an affiliated entity.
Such transactions primarily consisted of management fees charged to PEL by the
affiliated entity for invoicing customers, payment of vendors, human resources
management, marketing and various other administrative functions. Such
management fees totaled approximately $2,347,000 during fiscal 2001. As of June
30, 2001, PEL had an outstanding payable balance of approximately $3,556,000 to
the affiliated entity. In addition, this affiliated entity transferred
ownership of fixed assets and corresponding capital lease obligations to PEL
during fiscal 2001. The carrying value of the fixed assets and capital lease
obligations were approximately $2,466,000 as of the date of transfer.

During fiscal 2000 and 1999, the Company sold inventory and equipment and
had other miscellaneous charges in the amount of approximately $200,000 and
$2,061,000, respectively, to the affiliated entity.

23



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Pursuant to an employment agreement between the Company and its founder,
J. Erskine Love, Jr. dated June 23, 1983, the Company agreed to make certain
death benefit payments to Mr. Loves wife, Gay M. Love. These payments, which
began at Mr. Loves death in 1987 and will continue for the rest of Ms. Loves
life, equaled $499,529 in fiscal 2001 and are adjusted each year based upon the
Consumer Price Index. See Item 11  Incentive and Deferred Compensation for a
description of other deferred compensation arrangements with Mr. Williams.

Dennis M. Love currently serves as a director of SunTrust Banks of Georgia (SunTrust). SunTrust is a
participant in the Companys term loan secured bank facility and in its
revolving credit facility. SunTrust is the lender on the Companys $10 million
swing line facility used to fund daily cash flow fluctuations and cash
management needs. These facilities were negotiated at arms-length with SunTrust
prior to Mr. Love becoming a SunTrust director, and it is believed that such
loans were made in the ordinary course, on substantially the same terms,
including interest rates and collateral as comparable transactions with other
persons and did not involve more than the normal risk of collectibility or
present other unfavorable features. See Note 6 to Financial Statements.

Mr. Williams is a former partner at the law firm of Alston & Bird LLP,
counsel to the Company.

The Company purchases for resale to its customers certain finished goods
inventories from Orflex. During fiscal 2001, purchases from Orflex totaled
approximately $1,119,000.

24



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PART IV

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

(a)  1. Financial Statements

The following financial statements of Printpack, Inc., incorporated by
reference into Item 8, are attached hereto beginning on page F-1:



| |                                                                                                
| | -----------------------------------------------------------------------------------------------
| | Report of Independent Accountants                                                              
|
| | Balance Sheets as of June 30, 2001 and June 24, 2000                                           
|
| | Statements of Operations and Comprehensive Income for the Three Years Ended June 30, 2001      
|
| | Statements of Cash Flows for the Three Years Ended June 30, 2001                               
|
| | Statements of Changes in Shareholders Equity (Deficit) for the Three Years Ended June 30, 2001
|
| | Notes to Financial Statements                                                                  

2.     Financial Statement Schedules. The following financial statement
schedule of Printpack, Inc. is attached hereto:

Schedule VIII  Valuation and Qualifying Accounts

SCHEDULE VIII  VALUATION AND QUALIFYING ACCOUNTS

|                         |                                   |           |                |          |            |            |   |           |  |  |         |      |   |  |   |       | 
|------------------------ | --------------------------------- | --------- | -------------- | -------- | ---------- | ---------- | - | --------- |  |  | ------- | ---- | - |  | - | ----- | 
|                         |                                   |           | Balance at     |          | Charged to |            |   |           |  |  | Balance
|                         |                                   |           | Beginning      |          | Costs and  |            |   |           |  |  | at End 
|Description              |                                   | of Period |                | Expenses |            | Deductions |   | of Period
|                         |                                   |           |                |          |            |            |   |          
|                         |                                   |           | (In thousands)
|Year ended June 26, 1999 |                                   |           |                |          |            |            |   |           |  |  |         |      |   |  |   |      
|                        
|                        
|                        
|                        
|                         | Allowance for Doubtful Accounts   |           | $              | 559      |            |            | $ | 514       |  |  | $       | (187 | ) |  | $ | 886   | 
|                        
|                        
|                        
|                        
|                         | Allowance for Deferred Tax Assets |           | $              | 2,950    |            |            | $ | 168       |  |  | $       |     |   |  | $ | 3,118 | 
|                        
|                        
|                        
|                        
|Year ended June 24, 2000 |                                   |           |                |          |            |            |   |           |  |  |         |      |   |  |   |      
|                        
|                        
|                        
|                        
|                         | Allowance for Doubtful Accounts   |           | $              | 886      |            |            | $ | 367       |  |  | $       | (504 | ) |  | $ | 749   | 
|                        
|                        
|                        
|                        
|                         | Allowance for Deferred Tax Assets |           | $              | 3,118    |            |            | $ |          |  |  | $       | (94  | ) |  | $ | 3,024 | 
|                        
|                        
|                        
|                        
|Year ended June 30, 2001 |                                   |           |                |          |            |            |   |           |  |  |         |      |   |  |   |      
|                        
|                        
|                        
|                        
|                         | Allowance for Doubtful Accounts   |           | $              | 749      |            |            | $ | 115       |  |  | $       | (95  | ) |  | $ | 769   | 
|                        
|                        
|                        
|                        
|                         | Allowance for Deferred Tax Assets |           | $              | 3,024    |            |            | $ |          |  |  | $       | (89  | ) |  | $ | 2,935 | 

The notes to the financial statements are an integral part of this schedule.

25



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REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE

To the Board of Directors and
Shareholders of Printpack, Inc.

Our audits of the consolidated financial statements referred to in our report
dated September 4, 2001 appearing in the 2001 Annual Report to Shareholders of
Printpack, Inc. (which report and consolidated financial statements are
incorporated by reference in the Annual Report on Form 10-K) also included an
audit of the financial statement schedule listed in Item 14(a)(2) of this Form
10-K. In our opinion, this financial statement schedule presents fairly, in
all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.

/s/ PricewaterhouseCoopers LLP

Atlanta, Georgia
September 4, 2001

26



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All other schedules have been omitted, as they are not required under the
related instructions or are inapplicable, or because the information required
is included in the consolidated financial statements.

3.     Exhibits

Unless indicated below, the exhibits are incorporated by reference herein
from the Companys Registration Statement on Form S-1 (File No. 333-13727)
filed with the Securities and Exchange Commission. Copies of such exhibits will
be furnished to any requesting shareholder of the Company upon request to
Secretary, Printpack Inc., 4335 Wendell Drive, S.W., Atlanta, Georgia 30336.
There is a charge of $.50 per page to cover expenses for copying and mailing.

|           |  |     |  |                                                                                                                                                                                                                                                                   
|---------- |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit    |  |     |  |                                                                                                                                                                                                                                                                   
|Number     |  |     |  | Description of Exhibits                                                                                                                                                                                                                                           
|           |  |     |  |                                                                                                                                                                                                                                                                   
|3.1        |  |    |  | Restated Articles of Incorporation of Printpack, Inc.                                                                                                                                                                                                             
|          
|          
|          
|          
|3.2        |  |    |  | Bylaws of Printpack, Inc.                                                                                                                                                                                                                                         
|          
|          
|          
|          
|4.1        |  |    |  | Indenture, dated August 22, 1996, between Printpack, Inc. and State Street Bank (successor to Fleet National Bank), as Trustee relating
to the 9 7/8% Senior Notes due 2004.                                                                                      
|          
|          
|          
|          
|4.2        |  |    |  | Indenture, dated August 22, 1996, between Printpack, Inc. and State Street Bank (successor to Fleet National Bank), as Trustee relating
to the 10 5/8% Senior Subordinated Notes due 2006.                                                                        
|          
|          
|          
|          
|10.1      |  |    |  | Amended and Restated Credit Agreement, dated as of May 21, 1999, by and among Printpack, Inc., the Institutions from time to time
thereto, as lenders, and The First National Bank of Chicago, as Agent.                                                          
|          
|          
|          
|          
|***10.1(a) |  |    |  | Amendment No. 1, dated as of December 15, 1999, among Printpack, Inc., the Institutions from time to time parties hereto, as lenders,
and Bank One, NA, as Agent.                                                                                                 
|          
|          
|          
|          
|*10.1(b)   |  |    |  | Consent, dated
as of April 20, 2001, among Printpack, the Institutions from time to time parties thereto, as lenders, and Bank One, NA
(formerly The First National Bank of Chicago, as Agent)                                                                    
|          
|          
|          
|          
|10.2       |  |    |  | Note Purchase Agreement, dated as of March 13, 1995 by and among Printpack, Inc. and certain shareholders of Printpack, Inc., as amended.                                                                                                                         
|          
|          
|          
|          
|10.3       |  |    |  | Printpack, Inc. Savings and Profit Sharing Plan, as amended.                                                                                                                                                                                                      
|          
|          
|          
|          
|***10.4    |  |    |  | Printpack, Inc. Incentive Compensation Plan, amended as of July 15, 1999.                                                                                                                                                                                         
|          
|          
|          
|          
|*10.5      |  |    |  | Printpack, Inc. Deferred Compensation Plan, effective and as amended November 1, 2000.                                                                                                                                                                            
|          
|          
|          
|          
|*10.5(a)   |  |    |  | Amendment Number One to the Printpack, Inc. Deferred Compensation Plan, effective November 1, 2000.                                                                                                                                                               
|          
|          
|          
|          
|10.6       |  |    |  | Guarantee dated as of January 5, 1995 made by Printpack, Inc. in favor of PNC Bank, Ohio, National Association, as amended.                                                                                                                                       
|          
|          
|          
|          
|10.7
10.8  |  | 
 |  | Registration Rights Agreement dated as of August 22, 1996 by and between Printpack, Inc. and Donaldson, Lufkin & Jenrette Securities
Corporation.
Receivables Sale Agreement dated as of August 22, 1996 by and between Printpack, Inc. and Flexible Funding Corp.
|          
|          
|          
|          
|10.9       |  |    |  | Receivables Purchase Agreement dated as of August 22, 1996 by and among Flexible Funding Corp. as Seller, Falcon Asset Securitization
Corporation and the financial institutions party thereto as Investors and The First National Bank of Chicago, as Agent.     
|          
|          
|          
|          
|10.9(a)  |  |     |  | Waiver and Amendment of Receivables Purchase Agreement dated as of September 21, 1998, by and among Flexible Funding Corp., as Seller,
Falcon Asset Securitization Corporation and The First National Bank of Chicago, individually and as Agent.                 
|          
|          
|          
|          
|10.9(b) |  |     |  | Amendment of Receivables Purchase Agreement dated as of May 21, 1999, by and among Flexible Funding Corp., as Seller, Falcon Asset
Securitization Corporation and The First National Bank of Chicago, individually and as Agent.                                  
|          
|          
|          
|          
|10.10      |  |    |  | Intercreditor Agreement, dated August 22, 1996, by and between The First National Bank of Chicago, as Contractual Representative and The
First National Bank of Chicago, as Agent.                                                                                
|          
|          
|          
|          
|*12        |  |    |  | Computation of Ratio of Earnings to Fixed Charges.                                                                                                                                                                                                                
|          
|          
|          
|          
|*21        |  |    |  | List of Subsidiaries.                                                                                                                                                                                                                                             
|          
|          
|          
|          
|*24        |  |    |  | Power of Attorney (included on page 29)                                                                                                                                                                                                                           

27



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|        |  |   |  |                                                                                                                                                                                                                                                                                                                                                                                              
|------- |  | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|99.1    |  |  |  | Contribution Agreement dated as of January 5, 1995 by and between Printpack, Inc. and Orflex Ltd.                                                                                                                                                                                                                                                                                            
|       
|       
|       
|       
|99.2    |  |  |  | Lease dated September 11, 1980 by and between Gulf Oil Corporation and Crown Zellerbach Corporation relating to the Orange, Texas Plant
(the rights and obligations of the lessee under the foregoing Lease have been assigned ultimately to Printpack, Inc.)                                                                                                                                
|       
|       
|       
|       
|99.3    |  |  |  | Ground Lease dated September 11, 1980 by and between Gulf Oil Corporation and Crown Zellerback Corporation relating to the Orange, Texas
Plant (the rights and obligations of the lessee under the foregoing Lease have been assigned ultimately to Printpack, Inc.)                                                                                                                         
|       
|       
|       
|       
|99.4    |  |  |  | Ground Lease Agreement dated January 1, 1981 by and between Gulf Oil Corporation and Crown Zellerbach Corporation relating to the
Orange, Texas Plant (the rights and obligations of the lessee under the foregoing Lease have been assigned ultimately to Printpack,
Inc.)                                                                                                                  
|       
|       
|       
|       
|99.5    |  |  |  | Ground Lease dated September 9, 1985 by and between Chevron Chemical Company and Crown Zellerbach Corporation relating to the Orange,
Texas Plant (the rights and obligations of the lessee under the foregoing Lease have been assigned ultimately to Printpack, Inc.)                                                                                                                      
|       
|       
|       
|       
|99.6    |  |  |  | Lease dated July 25, 1990 by and between The Lawson Group, LTD. and Shell Oil Company relating to the Williamsburg, Virginia plant (the
rights and obligations of the lessee under the foregoing Lease have been assigned ultimately to Printpack, Inc.)                                                                                                                                     
|       
|       
|       
|       
|99.10   |  |  |  | Deferred Income Agreement dated July 10, 1996 with Neil Williams.                                                                                                                                                                                                                                                                                                                            
|       
|       
|       
|       
|99.11   |  |  |  | Family Security Agreement dated April 4, 1986 with Dennis M. Love.                                                                                                                                                                                                                                                                                                                           
|       
|       
|       
|       
|99.12   |  |  |  | Family Security Agreement dated February 24, 1986 with R. Michael Hembree.                                                                                                                                                                                                                                                                                                                   
|       
|       
|       
|       
|99.14   |  |  |  | Family Security Agreement dated February 24, 1986 with Nicklas D. Stucky.                                                                                                                                                                                                                                                                                                                    
|       
|       
|       
|       
|99.15   |  |  |  | Amended and Restated Employment Agreement dated June 23, 1983 with J. Erskine Love, Jr.                                                                                                                                                                                                                                                                                                      
|       
|       
|       
|       
|**99.16 |  |  |  | Lease Amendment dated May 20, 1998 by and between GF Associates and Printpack, Inc. relating to the Williamsburg, Virginia plant
(Amendment to the lease by and between The Lawson Group, LTD. and Shell Oil Company noted as exhibit 99.6 above originally filed on the
Companys Registration Statement on Form S-1 (File No. 333-13727) filed with the Securities and Exchange Commission)



---

|*   |  | Items filed herewith.                                                                                                                            
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|**  |  | Exhibit is incorporated by reference herein to the exhibit of the same number in the Companys Form 10-K for the fiscal year ended
June 27, 1998.
|   
|   
|   
|   
|**  |  | Exhibit is incorporated by reference herein to the exhibit of the same number in the Companys Form 10-K for the fiscal year
ended June 24, 2000.
|   
|   
|   
|   
|   |  | Exhibit is incorporated by reference herein to exhibit 99.1 in the
Companys Form 8-K, dated June 10, 1999.                                      
|   
|   
|   
|   
|  |  | Exhibit is incorporated by reference herein to exhibit 99.2 in the
Companys Form 8-K, dated June 10, 1999.                                      
|   
|   
|   
|   
| |  | Exhibit is incorporated by reference herein to exhibit 99.3 in the
Companys Form 8-K, dated June 10, 1999.                                      

(b)  Reports on Form 8-K

The Registrant filed no Current Reports on Form 8-K during the last
quarter of the fiscal year ended June 30, 2001.

28



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized on September 19,
2001.

| |  |                 |  |                                      
| |  | --------------- |  | -------------------------------------
| |  | PRINTPACK, INC.
|
|
|
| |  | By:             |  | /s/ DENNIS M. LOVE                   
| |  |                 |  |                                      
| |  |                 |  | Dennis M. Love                       
| |  |                 |  | President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears on the
signature page to this Report constitutes and appoints Dennis M. Love and R.
Michael Hembree and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this report, and to file
the same, with all exhibits hereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and grants unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and grants or any of them, or their or his substitutes, may
lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange of 1934, this report has been signed by the following persons in the
capacities indicated on September 19, 2001.

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|/s/ DENNIS M. LOVE     |  | President and Chief Executive Officer and   
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|Dennis M. Love         |  |                                             
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|/s/ R. MICHAEL HEMBREE |  | Vice President, Finance and Administration  
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|R. Michael Hembree     |  |                                             
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|/s/                    |  | Director                                    
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|C. Keith Love          |  |                                             
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|/s/ GAY M. LOVE        |  | Director                                    
|                       |  |                                             
|Gay M. Love            |  |                                             
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|/s/ JAMES E.
LOVE, III |  | Director                                    
|                       |  |                                             
|James E. Love, III     |  |                                             
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|/s/                    |  | Director                                    
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|William J. Love        |  |                                             
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|/s/ HUGH M.
CHAPMAN    |  | Director                                    
|                       |  |                                             
|Hugh M. Chapman        |  |                                             
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|/s/                    |  | Director                                    
|                       |  |                                             
|Daniel K. Frierson     |  |                                             
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|/s/                    |  | Director                                    
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|Roy Richards, Jr.      |  |                                             
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|/s/ TIMOTHY C. TUFF    |  | Director                                    
|                       |  |                                             
|Timothy C. Tuff        |  |                                             
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|/s/ NEIL WILLIAMS      |  | Director                                    
|                       |  |                                             
|Neil Williams          |  |                                             

29



---



REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
andShareholders of Printpack, Inc.

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations and comprehensive income, of changes in
shareholders equity (deficit) and of cash flows present fairly, in all
material respects, the financial position of Printpack, Inc. (the Company)
and its subsidiaries at June 30, 2001 and June 24, 2000, and the results of
their operations and their cash flows for each of the three years in the period
ended June 30, 2001, in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the Companys management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.

/s/ PricewaterhouseCoopers LLP

Atlanta, Georgia

September 4, 2001

F-1



---



PRINTPACK, INC.
BALANCE SHEETS

|                                                               |                                                                                                   |                                      |                                                |        |                |   |          |         |         |   | 
|-------------------------------------------------------------- | ------------------------------------------------------------------------------------------------- | ------------------------------------ | ---------------------------------------------- | ------ | -------------- | - | -------- | ------- | ------- | - | 
|                                                               |                                                                                                   |                                      |                                                |        | June 30,       |   | June 24,
|                                                               |                                                                                                   |                                      |                                                |        | 2001           |   | 2000    
|                                                               |                                                                                                   |                                      |                                                |        |                |   |         
|                                                               |                                                                                                   |                                      |                                                |        | (in thousands)
|                                                               |                                                                                                   |                                      | ASSETS                                        
|                                                              
|                                                              
|                                                              
|                                                              
|Current assets                                                
|                                                               | Cash and cash equivalents                                                                         |                                      | $                                              | 7,609  |                |   | $        | 870     |        
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Trade accounts receivable, less allowance for doubtful accounts of $769 and $749                  |                                      |                                                | 83,034 |                |   |          | 72,408  |        
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Inventories                                                                                       |                                      |                                                | 82,489 |                |   |          | 84,323  |        
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Prepaid expenses and other current assets                                                         |                                      |                                                | 21,649 |                |   |          | 13,678  |        
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Deferred income taxes                                                                             |                                      |                                                | 1,782  |                |   |          | 1,526   |        
|                                                               |                                                                                                   |                                      |                                                |        |                |   |          |        
|                                                               |                                                                                                   | Total current assets                 |                                                |        | 196,563        |   |          |         | 172,805 |  
|                                                              
|                                                              
|                                                              
|                                                              
|Property, plant and equipment, net                             |                                                                                                   |                                      | 297,206                                        |        |                |   | 309,328  |        
|                                                              
|                                                              
|                                                              
|                                                              
|Goodwill, less accumulated amortization of $29,223 and $25,391 |                                                                                                   |                                      | 38,846                                         |        |                |   | 42,678   |        
|                                                              
|                                                              
|                                                              
|                                                              
|Other assets                                                   |                                                                                                   |                                      | 21,393                                         |        |                |   | 24,822   |        
|                                                              
|                                                              
|                                                              
|                                                              
|Deferred income taxes                                          |                                                                                                   |                                      |                                               |        |                |   | 3,244    |        
|                                                               |                                                                                                   |                                      |                                                |        |                |   |          |        
|                                                               |                                                                                                   | $                                    | 554,008                                        |        |                | $ | 552,877  |        
|                                                               |                                                                                                   |                                      |                                                |        |                |   |          |        
|                                                               |                                                                                                   |                                      | LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)
|                                                              
|                                                              
|                                                              
|                                                              
|Current liabilities                                            |                                                                                                   |                                      |                                                |        |                |   |          |        
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Accounts payable and accrued expenses                                                             |                                      | $                                              | 90,676 |                |   | $        | 74,477  |        
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Accrued salaries, wages, benefits and bonuses                                                     |                                      |                                                | 21,592 |                |   |          | 18,673  |        
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Current maturities of long-term debt                                                              |                                      |                                                | 8,893  |                |   |          | 9,769   |        
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Current portion of capital lease obligations                                                      |                                      |                                                | 512    |                |   |          |        |        
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Short-term borrowings under line of credit                                                        |                                      |                                                | 825    |                |   |          | 4,410   |        
|                                                               |                                                                                                   |                                      |                                                |        |                |   |          |        
|                                                               |                                                                                                   | Total current liabilities            |                                                |        | 122,498        |   |          |         | 107,329 |  
|                                                              
|                                                              
|                                                              
|                                                              
|Long-term debt                                                 |                                                                                                   |                                      | 175,054                                        |        |                |   | 222,320  |        
|                                                              
|                                                              
|                                                              
|                                                              
|Subordinated long-term debt                                    |                                                                                                   |                                      | 210,305                                        |        |                |   | 210,305  |        
|                                                              
|                                                              
|                                                              
|                                                              
|Long-term capital lease obligations                            |                                                                                                   |                                      | 1,773                                          |        |                |   |         |        
|                                                              
|                                                              
|                                                              
|                                                              
|Deferred income taxes                                          |                                                                                                   |                                      | 1,405                                          |        |                |   |         |        
|                                                              
|                                                              
|                                                              
|                                                              
|Other long-term liabilities                                    |                                                                                                   |                                      | 29,005                                         |        |                |   | 23,556   |        
|                                                               |                                                                                                   |                                      |                                                |        |                |   |          |        
|                                                               |                                                                                                   | Total liabilities                    |                                                |        | 540,040        |   |          |         | 563,510 |  
|                                                               |                                                                                                   |                                      |                                                |        |                |   |          |        
|Shareholders equity (deficit)                                 |                                                                                                   |                                      |                                                |        |                |   |          |        
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Common stock, no par value, 15,000,000 shares authorized, 4,218,560
shares issued and outstanding |                                      |                                                | 1,011  |                |   |          | 1,011   |        
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Additional paid-in capital                                                                        |                                      |                                                | 6,687  |                |   |          | 6,687   |        
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Retained earnings (deficit)                                                                       |                                      |                                                | 9,888  |                |   |          | (14,937 | )      
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Receivable from parent                                                                            |                                      |                                                | (3,587 | )              |   |          | (1,897  | )      
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Accumulated other comprehensive income                                                            |                                      |                                                | (31    | )              |   |          | (1,497  | )      
|                                                               |                                                                                                   |                                      |                                                |        |                |   |          |        
|                                                               |                                                                                                   | Total shareholders equity (deficit) |                                                |        | 13,968         |   |          |         | (10,633 | )
|                                                               |                                                                                                   |                                      |                                                |        |                |   |          |        
|Commitments and contingencies                                  |                                                                                                   |                                      |                                               |        |                |   |         |        
|                                                               |                                                                                                   |                                      |                                                |        |                |   |          |        
|                                                               |                                                                                                   | $                                    | 554,008                                        |        |                | $ | 552,877  |        
|                                                               |                                                                                                   |                                      |                                                |        |                |   |          |        

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

F-2



---



PRINTPACK, INC.STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

|                                                              |                                                                                                                      |   |                |        |            |   |            |        |   |   |         |        |  
|------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------- | - | -------------- | ------ | ---------- | - | ---------- | ------ | - | - | ------- | ------ | -
|                                                              |                                                                                                                      |   | Year Ended     |        | Year Ended |   | Year Ended
|                                                              |                                                                                                                      |   | June 30,       |        | June 24,   |   | June 26,  
|                                                              |                                                                                                                      |   | 2001           |        | 2000       |   | 1999      
|                                                              |                                                                                                                      |   |                |        |            |   |           
|                                                              |                                                                                                                      |   | (in thousands)
|Net sales                                                     |                                                                                                                      | $ | 1,026,506      |        |            | $ | 928,530    |        |   | $ | 867,159 |       
|                                                             
|                                                             
|                                                             
|                                                             
|Cost of goods sold                                            |                                                                                                                      |   | 854,868        |        |            |   | 788,596    |        |   |   | 744,522 |       
|                                                              |                                                                                                                      |   |                |        |            |   |            |        |   |   |         |       
|Gross margin                                                  |                                                                                                                      |   | 171,638        |        |            |   | 139,934    |        |   |   | 122,637 |       
|                                                             
|                                                             
|                                                             
|                                                             
|Selling, administrative and research and development expenses |                                                                                                                      |   | 92,138         |        |            |   | 84,853     |        |   |   | 72,110  |       
|                                                             
|                                                             
|                                                             
|                                                             
|Amortization of goodwill                                      |                                                                                                                      |   | 3,832          |        |            |   | 3,832      |        |   |   | 3,832   |       
|                                                              |                                                                                                                      |   |                |        |            |   |            |        |   |   |         |       
|Income from operations                                        |                                                                                                                      |   | 75,668         |        |            |   | 51,249     |        |   |   | 46,695  |       
|                                                             
|                                                             
|                                                             
|                                                             
|Other (income) expense:                                      
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Interest expense                                                                                                     |   |                | 46,021 |            |   |            | 49,673 |   |   |         | 49,857 |  
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Other, net                                                                                                           |   |                | (6,859 | )          |   |            | 43     |   |   |         | 635    |  
|                                                              |                                                                                                                      |   |                |        |            |   |            |        |   |   |         |       
|Income (loss) before provision (benefit) for income taxes     |                                                                                                                      |   | 36,506         |        |            |   | 1,533      |        |   |   | (3,797  | )     
|                                                              |                                                                                                                      |   |                |        |            |   |            |        |   |   |         |       
|Provision (benefit) for income taxes:                        
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Current                                                                                                              |   |                | 5,542  |            |   |            | 933    |   |   |         | 560    |  
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Deferred                                                                                                             |   |                | 6,139  |            |   |            | (486   | ) |   |         | (1,981 | )
|                                                              |                                                                                                                      |   |                |        |            |   |            |        |   |   |         |       
|                                                              |                                                                                                                      |   | 11,681         |        |            |   | 447        |        |   |   | (1,421  | )     
|                                                              |                                                                                                                      |   |                |        |            |   |            |        |   |   |         |       
|Net income (loss)                                             |                                                                                                                      |   | 24,825         |        |            |   | 1,086      |        |   |   | (2,376  | )     
|                                                              |                                                                                                                      |   |                |        |            |   |            |        |   |   |         |       
|Other comprehensive income, net of tax:                      
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Foreign currency translation adjustment (net of income tax
(benefit) expense of $361, ($482) and $193,
respectively) |   |                | 767    |            |   |            | (1,172 | ) |   |         | 302    |  
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | Minimum pension liability adjustment (net of income tax
(benefit) expense of $98 and ($98), respectively)            |   |                | 240    |            |   |            | (240   | ) |   |         |       |  
|                                                              |                                                                                                                      |   |                |        |            |   |            |        |   |   |         |       
|Comprehensive income (loss)                                   |                                                                                                                      | $ | 25,832         |        |            | $ | (326       | )      |   | $ | (2,074  | )     
|                                                              |                                                                                                                      |   |                |        |            |   |            |        |   |   |         |       

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

F-3



---



PRINTPACK, INC.
STATEMENTS OF CASH FLOWS

|                                                 |                                                                                                                        |                                                          |       |            |         |            |       |                |         |   |       |         |         |  
|------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | ----- | ---------- | ------- | ---------- | ----- | -------------- | ------- | - | ----- | ------- | ------- | -
|                                                 |                                                                                                                        |                                                          |       | Year Ended |         | Year Ended |       | Year Ended    
|                                                 |                                                                                                                        |                                                          |       | June 30,   |         | June 24,   |       | June 26,      
|                                                 |                                                                                                                        |                                                          |       | 2001       |         | 2000       |       | 1999          
|                                                 |                                                                                                                        |                                                          |       |            |         |            |       |               
|                                                 |                                                                                                                        |                                                          |       |            |         |            |       | (in thousands)
|                                                 |                                                                                                                        |                                                          |       |            |         |            |       |               
|Operating activities                            
|                                                 | Net income (loss)                                                                                                      |                                                          | $     | 24,825     |         |            | $     | 1,086          |         |   |       | $(2,376 | )      
|                                                 |                                                                                                                        |                                                          |       |            |         |            |       |                |         |   |       |        
|                                                 | Adjustments to reconcile net income (loss) to net cash provided
by operating activities                               
|                                                 |                                                                                                                        | Depreciation and amortization of goodwill                |       |            | 57,041  |            |       |                | 55,807  |   |       |         | 55,488  |  
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                                                        | Amortization of prepaid financing costs                  |       |            | 2,992   |            |       |                | 3,033   |   |       |         | 3,106   |  
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                                                        | Loss on sale of property, plant and equipment            |       |            | 1,226   |            |       |                | 941     |   |       |         | 635     |  
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                                                        | Deferred income taxes                                    |       |            | 4,393   |            |       |                | (1,861  | ) |       |         | (4,641  | )
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                                                        | Employee benefits, including performance shares          |       |            | 6,580   |            |       |                | 4,248   |   |       |         | (419    | )
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                                                        | Other                                                    |       |            | (1,528  | )          |       |                | (75     | ) |       |         | 998     |  
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                                                        | Changes in operating assets and liabilities             
|                                                 |                                                                                                                        | (Increase) decrease in accounts receivable               |       |            | (10,626 | )          |       |                | 5,083   |   |       |         | (6,732  | )
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                                                        | (Increase) decrease in inventories                       |       |            | 1,834   |            |       |                | 3,902   |   |       |         | (3,008  | )
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                                                        | (Increase) decrease in prepaid expenses and other assets |       |            | (7,333  | )          |       |                | 1,439   |   |       |         | 858     |  
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                                                        | Increase in accounts payable and accrued liabilities     |       |            | 19,118  |            |       |                | 130     |   |       |         | 801     |  
|                                                 |                                                                                                                        |                                                          |       |            |         |            |       |                |         |   |       |        
|                                                 |                                                                                                                        | Total adjustments                                        |       |            | 73,697  |            |       |                | 72,647  |   |       |         | 47,086  |  
|                                                 |                                                                                                                        |                                                          |       |            |         |            |       |                |         |   |       |        
|                                                 |                                                                                                                        | Net cash provided by operating activities                |       |            | 98,522  |            |       |                | 73,733  |   |       |         | 44,710  |  
|                                                 |                                                                                                                        |                                                          |       |            |         |            |       |                |         |   |       |        
|Investing activities                            
|                                                 | Purchases of property, plant and equipment                                                                             |                                                          |       | (38,866    | )       |            |       | (20,891        | )       |   |       | (33,862 | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from sale of property, plant and equipment                                                                    |                                                          |       | 273        |         |            |       | 437            |         |   |       | 4,436   |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Purchase of net assets from affiliated entity                                                                          |                                                          |       |           |         |            |       | (10,108        | )       |   |       |        |        
|                                                 |                                                                                                                        |                                                          |       |            |         |            |       |                |         |   |       |        
|                                                 |                                                                                                                        | Net cash used in investing activities                    |       |            | (38,593 | )          |       |                | (30,562 | ) |       |         | (29,426 | )
|                                                 |                                                                                                                        |                                                          |       |            |         |            |       |                |         |   |       |        
|Financing activities                            
|                                                 | Principal payments on long-term debt                                                                                   |                                                          |       | (34,768    | )       |            |       | (44,769        | )       |   |       | (18,000 | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from issuance of long-term debt                                                                               |                                                          |       |           |         |            |       | 5,937          |         |   |       |        |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Net proceeds (repayments) from borrowings on line of credit,
revolving credit and receivable securitization facilities |                                                          |       | (16,585    | )       |            |       | (4,086         | )       |   |       | 6,051   |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Payments under capital lease obligations                                                                               |                                                          |       | (147       | )       |            |       |               |         |   |       |        |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Debt issuance costs                                                                                                    |                                                          |       |           |         |            |       |               |         |   |       | (1,236  | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | Payment for receivable from parent                                                                                     |                                                          |       | (1,690     | )       |            |       | (948           | )       |   |       | (949    | )      
|                                                 |                                                                                                                        |                                                          |       |            |         |            |       |                |         |   |       |        
|                                                 |                                                                                                                        | Net cash used in financing activities                    |       |            | (53,190 | )          |       |                | (43,866 | ) |       |         | (14,134 | )
|                                                 |                                                                                                                        |                                                          |       |            |         |            |       |                |         |   |       |        
|Increase (decrease) in cash and cash equivalents |                                                                                                                        |                                                          | 6,739 |            |         |            | (695  | )              |         |   | 1,150 |        
|                                                
|                                                
|                                                
|                                                
|Cash and cash equivalents, beginning of year     |                                                                                                                        |                                                          | 870   |            |         |            | 1,565 |                |         |   | 415   |        
|                                                 |                                                                                                                        |                                                          |       |            |         |            |       |                |         |   |       |        
|Cash and cash equivalents, end of year           |                                                                                                                        | $                                                        | 7,609 |            |         | $          | 870   |                |         | $ | 1,565 |        
|                                                 |                                                                                                                        |                                                          |       |            |         |            |       |                |         |   |       |        

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

F-4



---



PRINTPACK, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY (DEFICIT)

|                            |                                         |   |                |   |         |   |            |   |             |   |               |        |           |  |         |        |       |  |        |        |   |   |         |        |  
|--------------------------- | --------------------------------------- | - | -------------- | - | ------- | - | ---------- | - | ----------- | - | ------------- | ------ | --------- |  | ------- | ------ | ----- |  | ------ | ------ | - | - | ------- | ------ | -
|                            |                                         |   |                |   |         |   | Additional |   | Retained    |   |               |        |           |  | Other   |        | Total
|                            |                                         |   | Common         |   | Paid-In |   | Earnings   |   | Receivable  |   | Comprehensive |        | Equity   
|                            |                                         |   | Stock          |   | Capital |   | (Deficit)  |   | From Parent |   | Income        |        | (Deficit)
|                            |                                         |   |                |   |         |   |            |   |             |   |               |        |          
|                            |                                         |   | (in thousands)
|Balance as of June 27, 1998 |                                         | $ | 1,011          |   |         | $ | 6,687      |   |             |   | $(13,647      | )      |           |  |        |        |       |  |       |        |   |   | $(5,949 | )     
|                           
|                           
|                           
|                           
|                            | Net loss                                |   |                |  |         |   |            |  |             |   |               | (2,376 | )         |  |         |       |       |  |        |       |   |   |         | (2,376 | )
|                           
|                           
|                           
|                           
|                            | Receivable from parent                  |   |                |  |         |   |            |  |             |   |               |       |           |  |         | $(949  | )     |  |        |       |   |   |         | (949   | )
|                           
|                           
|                           
|                           
|                            | Foreign currency translation adjustment |   |                |  |         |   |            |  |             |   |               |       |           |  |         |       |       |  | $      | 495    |   |   |         | 495    |  
|                            |                                         |   |                |   |         |   |            |   |             |   |               |        |           |  |         |        |       |  |        |        |   |   |         |       
|Balance as of June 26, 1999 |                                         |   | 1,011          |   |         |   | 6,687      |   |             |   | (16,023       | )      |           |  | (949    | )      |       |  | 495    |        |   |   | (8,779  | )     
|                           
|                           
|                           
|                           
|                            | Net income                              |   |                |  |         |   |            |  |             |   |               | 1,086  |           |  |         |       |       |  |        |       |   |   |         | 1,086  |  
|                           
|                           
|                           
|                           
|                            | Receivable from parent                  |   |                |  |         |   |            |  |             |   |               |       |           |  |         | (948   | )     |  |        |       |   |   |         | (948   | )
|                           
|                           
|                           
|                           
|                            | Foreign currency translation adjustment |   |                |  |         |   |            |  |             |   |               |       |           |  |         |       |       |  |        | (1,654 | ) |   |         | (1,654 | )
|                           
|                           
|                           
|                           
|                            | Minimum pension liability adjustment    |   |                |  |         |   |            |  |             |   |               |       |           |  |         |       |       |  |        | (338   | ) |   |         | (338   | )
|                            |                                         |   |                |   |         |   |            |   |             |   |               |        |           |  |         |        |       |  |        |        |   |   |         |       
|Balance as of June 24, 2000 |                                         |   | 1,011          |   |         |   | 6,687      |   |             |   | (14,937       | )      |           |  | (1,897  | )      |       |  | (1,497 | )      |   |   | (10,633 | )     
|                           
|                           
|                           
|                           
|                            | Net income                              |   |                |  |         |   |            |  |             |   |               | 24,825 |           |  |         |       |       |  |        |       |   |   |         | 24,825 |  
|                           
|                           
|                           
|                           
|                            | Receivable from parent                  |   |                |  |         |   |            |  |             |   |               |       |           |  |         | (1,690 | )     |  |        |       |   |   |         | (1,690 | )
|                           
|                           
|                           
|                           
|                            | Foreign currency translation adjustment |   |                |  |         |   |            |  |             |   |               |       |           |  |         |       |       |  |        | 1,128  |   |   |         | 1,128  |  
|                           
|                           
|                           
|                           
|                            | Minimum pension liability adjustment    |   |                |  |         |   |            |  |             |   |               |       |           |  |         |       |       |  |        | 338    |   |   |         | 338    |  
|                            |                                         |   |                |   |         |   |            |   |             |   |               |        |           |  |         |        |       |  |        |        |   |   |         |       
|Balance as of June 30, 2001 |                                         | $ | 1,011          |   |         | $ | 6,687      |   |             | $ | 9,888         |        |           |  | $(3,587 | )      |       |  | $(31   | )      |   | $ | 13,968  |       
|                            |                                         |   |                |   |         |   |            |   |             |   |               |        |           |  |         |        |       |  |        |        |   |   |         |       

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

F-5



---



PRINTPACK, INC.

NOTES TO FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Printpack, Inc. (Printpack or the Company) manufactures flexible
packaging material primarily for the food and other consumer goods industries
throughout North America and the United Kingdom. Printpack is a wholly-owned
subsidiary of Printpack Enterprises, Inc. (Enterprises) which is 97% owned
by Printpack Holdings, Inc. (Holdings). Holdings and Enterprises are
non-operating holding companies that also control flexible packaging operations
conducted through separately chartered United Kingdom affiliates. In June
2000, the Company established Printpack Enterprises, Ltd. (PEL) as a
subsidiary operating in the United Kingdom. As more fully described in Note 2
below, PEL subsequently acquired certain assets and assumed certain
liabilities of the Bury, England facility of an affiliated
entity.

Principles of Consolidation

The consolidated financial statements present the financial position and
operating results of Printpack and its majority owned subsidiaries. Significant
intercompany balances and transactions have been eliminated. Investments in
unconsolidated affiliates which are at least 20% owned are accounted for using
the equity method and are stated at cost plus the Companys share of
undistributed earnings or losses.

Fiscal Year

The Companys fiscal year ends on the last Saturday in June. The Companys
fiscal year ended June 30, 2001 included 53 weeks. Fiscal years ended June 24,
2000 and June 26, 1999 included 52 weeks.

Cash and Cash Equivalents

Cash and cash equivalents consist principally of highly liquid, short-term
investments with original maturities of three months or less and are recorded
at cost, which approximates market value.

Inventories

Inventories are stated at the lower of cost or current market value. Cost
is determined using the last-in, first-out (LIFO) method for domestic
inventories and first-in, first-out (FIFO) method for international
inventories.

Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated
depreciation and amortization, which is provided using the straight-line method
over the estimated useful lives of the assets ranging from 10 to 30 years for
buildings and 5 to 10 years for all other assets. Major renewals and
improvements are capitalized, while maintenance and repairs are expensed when
incurred. The cost and accumulated depreciation of property, plant and
equipment sold or retired are relieved from the accounts, and resulting gains
or losses are reflected in income.

Pension and Other Postretirement Benefits

Effective June 28, 1998, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 132, Employers Disclosures about
Pensions and Other Postretirement Benefits (SFAS No. 132) that revise
disclosure requirements of Statement of Financial Accounting Standards No. 87,
Employers Accounting for Pensions (SFAS No. 87), Statement of Financial
Accounting Standards No. 88, Employers Accounting for Settlements and
Curtailments of Defined Benefit Pension Plans and for Termination Benefits,
and Statement of Financial Accounting Standards No. 106, Employers Accounting
for Postretirement Benefits Other Than Pensions. SFAS No. 132 does not change
the recognition or measurement of pension or postretirement benefit obligations
or expenses, but standardizes disclosure requirements for pensions and other
postretirement benefits, eliminates certain disclosures and requires some
additional information.

F-6



---



Income Taxes

The Company has historically been included in the consolidated Federal
income tax return of Holdings. Income taxes reflected in the accompanying
consolidated statements of operations and comprehensive income represent the
Companys share of the consolidated tax provision, which approximates the tax
effect that would have been recognized had a separate income tax return been
filed. Deferred tax assets and liabilities are determined based on differences
between the financial reporting and tax basis of assets and liabilities and are
measured by applying enacted tax rates and laws to taxable years in which such
differences are expected to reverse.

Intangible Assets

Intangible assets resulting from business acquisitions consist of the
excess of the acquisition cost over the fair value of the net identifiable
assets of businesses acquired (goodwill). Goodwill is amortized on a
straight-line basis over 15 to 20 years. Other intangible assets are amortized
on a straight-line basis over their estimated useful lives. The recoverability
of goodwill is periodically evaluated to determine whether current events or
circumstances warrant adjustment to the carrying value. As of June 30, 2001 and
June 24, 2000, management believes that goodwill has not been impaired.

Revenue

Revenue is recognized at the time of shipment. Sales to one customer
approximated 19%, 14% and 15% of net sales during fiscal 2001, 2000 and 1999,
respectively.

Comprehensive Income

The Company adopted Statement of Financial Accounting Standards No. 130,
Reporting Comprehensive Income (SFAS No. 130) as of the first quarter of
fiscal 1999. SFAS No. 130 establishes rules for the reporting and display of
comprehensive income and its components. However, it has no impact on the
Companys net income or shareholders equity (deficit).

Accumulated other comprehensive income presented on the accompanying
consolidated balance sheets as of June 30, 2001 and June 24, 2000 consists of
accumulated gains and losses arising from translating the financial statements
of the Companys subsidiaries operating in Mexico and the United Kingdom from
the functional currency to the reporting currency and also includes net gains
and losses recognized pursuant to SFAS No. 87 as an additional pension
liability not yet recognized as net periodic pension cost.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of trade accounts receivable.
The Company extends credit to its customers based on an evaluation of the
customers financial condition, generally without requiring collateral.
Exposure to losses on receivables is primarily dependent on each customers
financial condition. The Company monitors its exposure for credit losses and
maintains allowances for such losses.

Foreign Currency Translation

The financial statements of the Companys subsidiary operating in Mexico
have historically been measured using the dollar as the functional currency due
to Mexicos economy being considered highly inflationary. Gains and losses arising from remeasuring these
financial statements from the local currency to the functional currency are
included in net income for the six-months ended December 26, 1998. As of December 27,
1998, Mexicos economy ceased being considered highly inflationary and the
Mexican Peso became the functional currency of the financial statements of the
Companys Mexican subsidiary. Accordingly,
gains and losses arising from translating these financial statements from the
functional currency to the reporting currency are included in equity on the
June 30, 2001 and June 24, 2000 consolidated balance sheets and as a component
of other comprehensive income on the consolidated statements of operations and
comprehensive income.

The Companys subsidiary operating in the United Kingdom uses the British
Pound as the functional currency of the subsidiarys financial statements.
Accordingly, gains and losses arising from translating these financial
statements from the functional currency to the reporting currency are included
in equity on the June 30, 2001 and June 24, 2000 consolidated balance sheets
and as a component of other comprehensive income on the consolidated statements
of operations and comprehensive income for the periods then ended.

F-7



---



Derivative Instruments

The Company periodically uses foreign exchange derivative instruments or
spot purchases to hedge its known liabilities in foreign currencies and reduce
the impact of foreign currency gains and losses in its financial results. It is
the Companys policy not to enter into derivative transactions for speculative
purposes. Gains and losses on foreign exchange derivative instruments, which
qualify as accounting hedges, are deferred and recognized when the underlying
foreign exchange exposure is realized. To qualify for hedge accounting, the
contracts must meet defined correlation and effectiveness criteria, be
designated as hedges and result in cash flows and financial statement effects
that substantially offset those of the position being hedged. Gains and losses
on foreign exchange derivative instruments that do not qualify as hedges for
accounting purposes are recognized currently based on the change in the market
value of the derivative instrument. There were no material gains or losses
recognized in fiscal 2001, 2000, and 1999.

Research and Development Costs

The Company expenses all research and development costs when incurred.
Research and development costs expensed during fiscal 2001, 2000 and 1999 were
approximately $10,949,000, $10,281,000 and $10,185,000, respectively.

Use of Estimates

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

Segment Information

The Company adopted SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information (SFAS No. 131) as of the beginning of
fiscal 1999. SFAS No. 131 established standards for reporting information
about operating segments in financial statements. Operating segments are
defined as components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker, or decision making group, in deciding how to allocate resources
and in assessing performance.

The Companys reportable segments are strategic business units that offer
similar products with similar economic characteristics, production processes,
customers and distribution methods. All products fall within the category of
flexible packaging. Accordingly, the reporting segments have been aggregated
into one operating segment.

The accounting policies of the reporting segments are the same as those of
the consolidated company except that the disaggregated financial results are
prepared using a management approach, which is consistent with the basis and
manner in which the Companys management internally disaggregates financial
information for the purposes of assisting in making internal operating
decisions. The Company evaluates performance based on stand alone reporting
segment operating income and generally accounts for intersegment sales and
transfers as if the sales or transfers were to third parties, that is, at
current market prices.

Foreign operations in fiscal 2001, 2000 and 1999 were conducted in two
foreign countries and are not considered material to the Companys consolidated
financial statements.

Effects of Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board issued Statements
of Financial Accounting Standards No. 141, Business Combinations (SFAS No.
141) and No. 142, Goodwill and Other Intangible Assets (SFAS No. 142).
SFAS 141 supercedes Accounting Principles Bulletin No. 16 Business
Combinations and Statement of Financial Accounting Standards No. 38,
Accounting for Preacquisition Contingencies of Purchased Enterprises. SFAS
142 supercedes Accounting Principles Bulletin No. 17, Intangible Assets.
These statements require use of the purchase method of accounting for all
business combinations initiated after June 30, 2001, thereby eliminating use of
the pooling-of-interests method. Goodwill and indefinite lived intangible
assets will no longer be amortized but will be reviewed annually for
impairment. Separable intangible assets that are not deemed to have an
indefinite life will continue to be amortized over their useful lives. The
statements are effective for business combinations initiated after June 30,
2001 with the entire provisions of SFAS No. 141 and SFAS No. 142 becoming
effective beginning June 30, 2002. Management is currently evaluating the
impact of these statements on the Companys consolidated financial statements.

F-8



---



In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 143, Accounting for Asset Retirement
Obligations (SFAS No. 143). This statement requires that the fair value of a
liability for an asset retirement obligation be recognized in the period in
which it is incurred. The associated asset retirement costs are capitalized as
part of the carrying amount of the long-lived asset with subsequent changes in
the liability recognized as a result of the passage of time or revisions in the
timing or amount of the estimated cash flows. The statement is effective
beginning on June 30, 2002. Management is currently evaluating the impact of
this statement on the Companys consolidated financial statements.

Shipping and Handling Fees and Costs

In September 2000, the Emerging Issues Task Force (EITF) reached a
final consensus on Issue No. 00-10, Accounting for Shipping and Handling Fees
and Costs. EITF 00-10 is effective in the fourth quarter of fiscal 2001 and
addresses the income statement classification of amounts billed to customers
for shipping and handling, as well as costs incurred related to shipping and
handling. The EITF concluded that amounts billed to a customer in a sale
transaction related to shipping and handling should be classified as revenue.
Costs incurred related to shipping and handling included in revenues are
required to be reclassified to cost of sales. The EITF also concluded that if
costs incurred related to shipping and handling are significant and not
included in the cost of sales, an entity should disclose both the amount of
such costs and the line item on the income statement that includes them.

The Company implemented EITF 00-10 in the fourth quarter of fiscal 2001.
Prior to implementing EITF 00-10, the Company classified shipping and handling
amounts billed to customers as revenue. However, costs incurred related to
shipping and handling were classified as a reduction of revenue. As such,
shipping and handling costs were reclassified from revenue to cost of sales and
totaled approximately $22,367,000, $21,991,000, and $21,572,000, in fiscal
2001, 2000, and 1999, respectively.

Reclassifications

Certain prior year amounts have been reclassified to conform with the
current year presentation.

2. ACQUISITION

During fiscal 2000, the Company established Printpack Enterprises,
Limited, (PEL). PEL entered into an agreement with an affiliated entity to
purchase certain assets and assume certain liabilities of the Bury, England
facility, which also manufactures flexible packaging material primarily for
food industries in the United Kingdom and Europe. The agreement was consummated
on June 23, 2000 for a purchase price of approximately $10.1 million. This
acquisition was financed through the issuance of a new term loan of $5.9
million and borrowings on the existing credit facilities of Printpack totaling
$4.2 million. The acquisition of the facility was accounted for as a purchase
from an affiliated entity, and accordingly, the purchase was accounted for at
book value of net assets acquired, which approximated fair market value.

3. INVENTORIES

Inventories are summarized as follows:

|                                                                 |  |                |         |      |  |   |         | 
|---------------------------------------------------------------- |  | -------------- | ------- | ---- |  | - | ------- | 
|                                                                 |  | 2001           |         | 2000
|                                                                 |  |                |         |     
|                                                                 |  | (In thousands)
|Raw materials                                                    |  | $              | 32,007  |      |  | $ | 35,205  | 
|                                                                
|                                                                
|                                                                
|                                                                
|Work-in-process                                                  |  |                | 11,030  |      |  |   | 9,996   | 
|                                                                
|                                                                
|                                                                
|                                                                
|Finished goods                                                   |  |                | 64,948  |      |  |   | 60,222  | 
|                                                                 |  |                |         |      |  |   |         | 
|                                                                 |  |                | 107,985 |      |  |   | 105,423 | 
|                                                                
|                                                                
|                                                                
|                                                                
|Reduction to state inventories at last-in, first-out cost (LIFO) |  |                | 25,496  |      |  |   | 21,100  | 
|                                                                 |  |                |         |      |  |   |         | 
|                                                                 |  | $              | 82,489  |      |  | $ | 84,323  | 
|                                                                 |  |                |         |      |  |   |         | 

The Company recorded expense of approximately $4,440,000 and $4,800,000 in
fiscal 2001 and 2000, respectively, related to the Companys use of the LIFO
inventory valuation method, of which approximately $4,220,000 was recorded in
the fourth quarter of fiscal 2001.

F-9



---



4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are summarized as follows:

|                                               |  |                |          |      |  |   |          |  
|---------------------------------------------- |  | -------------- | -------- | ---- |  | - | -------- | -
|                                               |  | 2001           |          | 2000
|                                               |  |                |          |     
|                                               |  | (In thousands)
|Land                                           |  | $              | 9,656    |      |  | $ | 8,854    |  
|                                              
|                                              
|                                              
|                                              
|Buildings                                      |  |                | 117,713  |      |  |   | 117,085  |  
|                                              
|                                              
|                                              
|                                              
|Machinery and equipment                        |  |                | 531,006  |      |  |   | 507,447  |  
|                                              
|                                              
|                                              
|                                              
|Leasehold improvements                         |  |                | 6,929    |      |  |   | 6,927    |  
|                                              
|                                              
|                                              
|                                              
|Construction in progress                       |  |                | 19,431   |      |  |   | 6,492    |  
|                                               |  |                |          |      |  |   |          |  
|                                               |  |                | 684,735  |      |  |   | 646,805  |  
|                                              
|                                              
|                                              
|                                              
|Less accumulated depreciation and amortization |  |                | (387,529 | )    |  |   | (337,477 | )
|                                               |  |                |          |      |  |   |          |  
|                                               |  | $              | 297,206  |      |  | $ | 309,328  |  
|                                               |  |                |          |      |  |   |          |  

Depreciation expense was $53,209,000, $51,975,000 and $51,656,000 in
fiscal 2001, 2000 and 1999, respectively. Included in depreciation expense for
fiscal 2001 was approximately $513,000 of amortization expense for property
under capital lease obligations.

In accordance with SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, the Company
identified certain fixed assets as impaired during fiscal 2001 and 2000. The
charge to write-down the value of these assets in the amount of $786,000 and
$656,000 is included in Selling, Administrative and Research and Development
Expenses on the accompanying consolidated Statements of Operations and
Comprehensive Income for the years ended June 30, 2001 and June 24, 2000,
respectively.

5. INVESTMENT IN JOINT VENTURE

The Company has a joint venture investment with the OR Group in Orflex
Ltd. (Orflex), an Ohio limited liability partnership. Under the terms of the
joint venture agreement, the Company contributed a plant in exchange for a 49%
limited partnership interest and cash.

As part of the joint venture agreement, the Company has guaranteed the
debt of the joint venture, which totaled approximately $915,000 at June 30,
2001 and $1,880,000 at June 24, 2000. This debt is subject to repayment
requirements through a final maturity date of January 2005.

Pursuant to a note arrangement which became effective during fiscal 1996,
the Company has extended certain working capital loans to Orflex. Such loans,
which bear interest at the rate of LIBOR plus 2.75%, are payable upon demand by
the Company.

The Company purchases for resale to its customers certain finished goods
inventories from Orflex. During 2001, 2000 and 1999, purchases from Orflex
totaled approximately $1,119,000, $763,000 and $789,000, respectively.

6. LONG-TERM DEBT

Long-term debt is summarized as follows:

|                                                                                                                                                                                                   |  |                |         |      |  |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | ---- |  | - | ------- | -
|                                                                                                                                                                                                   |  | 2001           |         | 2000
|                                                                                                                                                                                                   |  |                |         |     
|                                                                                                                                                                                                   |  | (In thousands)
|10.625% unsecured senior subordinated notes payable in August 2006; interest payable semi-annually                                                                                                 |  | $              | 200,000 |      |  | $ | 200,000 |  
|                                                                                                                                                                                                  
|                                                                                                                                                                                                  
|                                                                                                                                                                                                  
|                                                                                                                                                                                                  
|9.875% unsecured senior notes payable in August 2004; interest payable semi-annually                                                                                                               |  |                | 100,000 |      |  |   | 100,000 |  
|                                                                                                                                                                                                  
|                                                                                                                                                                                                  
|                                                                                                                                                                                                  
|                                                                                                                                                                                                  
|Variable rate secured senior notes to banks due March 2004; interest payable monthly; secured by substantially all of the
Companys assets                                                         |  |                | 48,463  |      |  |   | 83,231  |  
|                                                                                                                                                                                                  
|                                                                                                                                                                                                  
|                                                                                                                                                                                                  
|                                                                                                                                                                                                  
|Variable rate secured note to bank due July 2004; interest payable monthly; secured by substantially all of the
assets of PEL                                                                      |  |                | 5,484   |      |  |   | 5,858   |  
|                                                                                                                                                                                                  
|                                                                                                                                                                                                  
|                                                                                                                                                                                                  
|                                                                                                                                                                                                  
|Revolving credit facility with banks due December 2003; interest payable quarterly at variable rates; secured by
substantially all of the Companys assets                                         |  |                |        |      |  |   |        |  
|                                                                                                                                                                                                  
|                                                                                                                                                                                                  
|                                                                                                                                                                                                  
|                                                                                                                                                                                                  
|Accounts receivable securitization facility with a bank due December 2003; interest payable quarterly at variable rates                                                                            |  |                | 30,000  |      |  |   | 43,000  |  
|                                                                                                                                                                                                  
|                                                                                                                                                                                                  
|                                                                                                                                                                                                  
|                                                                                                                                                                                                  
|11% unsecured subordinated notes payable to Holdings shareholders; payable in an installment of
$3,422,000 in May 2005 and the remaining principal payable in May 2014; interest payable annually |  |                | 10,305  |      |  |   | 10,305  |  
|                                                                                                                                                                                                   |  |                |         |      |  |   |         |  
|                                                                                                                                                                                                   |  |                | 394,252 |      |  |   | 442,394 |  
|                                                                                                                                                                                                  
|                                                                                                                                                                                                  
|                                                                                                                                                                                                  
|                                                                                                                                                                                                  
|Less current portion                                                                                                                                                                               |  |                | (8,893  | )    |  |   | (9,769  | )
|                                                                                                                                                                                                   |  |                |         |      |  |   |         |  
|                                                                                                                                                                                                   |  | $              | 385,359 |      |  | $ | 432,625 |  
|                                                                                                                                                                                                   |  |                |         |      |  |   |         |  

F-10



---



Aggregate principal maturities of long-term debt are as follows (in
thousands):

|                    |  |   |         | 
|------------------- |  | - | ------- | 
|2002                |  | $ | 8,893   | 
|                   
|                   
|                   
|                   
|2003                |  |   | 2,286   | 
|                   
|                   
|                   
|                   
|2004                |  |   | 71,502  | 
|                   
|                   
|                   
|                   
|2005                |  |   | 104,688 | 
|                   
|                   
|                   
|                   
|2006 and thereafter |  |   | 206,883 | 
|                    |  |   |         | 
|                    |  | $ | 394,252 | 
|                    |  |   |         | 

Certain agreements related to debt outstanding to banks as of June 30,
2001 and June 24, 2000 require that the Company, among other things, restrict
the payment of dividends, the redemption of stock and the incurrence of
additional debt; restrict investments; and limit the amount of pledged assets
and advances and loans to employees. As of June 30, 2001 and June 24, 2000, the
Company was in compliance with all such covenants.

On May 21, 1999, the Company amended its variable rate secured senior note
agreements to banks providing for extended repayment terms and restructured
covenants. The Company incurred approximately $1,200,000 in debt restructuring
costs, which costs were deferred and are being amortized to interest expense
over the remaining life of the variable rate secured senior notes.

At June 30, 2001 and June 24, 2000, the Company had a line of credit with
a bank providing for borrowings of up to $10,000,000 bearing interest at the
lower of the banks prime rate or a negotiated rate. Current borrowings under
this line were $825,000 and $4,410,000 at June 30, 2001 and June 24, 2000,
respectively.

The Companys available borrowings under its revolving credit facility
were approximately $87,500,000 and $60,000,000 at June 30, 2001 and June 24,
2000, respectively.

On August 22, 1996, the Company created a wholly owned, bankruptcy remote,
special purpose subsidiary, Flexible Funding Corp. (Flexible Funding), for
the sole purpose of facilitating financing transactions for the Company. The
Company contributed approximately $100,000 of trade receivables in exchange for
the equity in Flexible Funding. Subsequently, Flexible Funding entered into a
revolving line of credit facility with a bank (the Facility). The Facility
allows Flexible Funding to draw a maximum of $50 million on the established
line of credit through December 2003, on a revolving basis, through note
agreements bearing interest at a negotiated rate. The line of credit is
collateralized by 100% of the trade receivables of Flexible Funding. At June
30, 2001 and June 24, 2000, the Company had $30,000,000 and $43,000,000,
respectively, of notes outstanding under the Facility, collateralized by
approximately $73 million and $70 million, respectively, in trade receivables.

Total cash paid for interest, net of amounts capitalized, was
approximately $42,217,000, $46,992,000 and $45,619,000 during fiscal 2001, 2000
and 1999, respectively.

Future minimum payments under capitalized leases that have initial or
remaining non-cancelable lease terms in excess of one year at June 30, 2001 are
as follows (in thousands):

|                                            |  |   |       |  
|------------------------------------------- |  | - | ----- | -
|2002                                        |  | $ | 651   |  
|                                           
|                                           
|                                           
|                                           
|2003                                        |  |   | 628   |  
|                                           
|                                           
|                                           
|                                           
|2004                                        |  |   | 628   |  
|                                           
|                                           
|                                           
|                                           
|2005                                        |  |   | 628   |  
|                                           
|                                           
|                                           
|                                           
|2006                                        |  |   | 70    |  
|                                            |  |   |       |  
|Total minimum lease payments                |  |   | 2,605 |  
|                                           
|                                           
|                                           
|                                           
|Less amounts representing interest          |  |   | (320  | )
|                                            |  |   |       |  
|Present value of net minimum lease payments |  |   | 2,285 |  
|                                           
|                                           
|                                           
|                                           
|Less current portion                        |  |   | (512  | )
|                                            |  |   |       |  
|Long-term portion                           |  | $ | 1,773 |  
|                                            |  |   |       |  

7. DEFERRED COMPENSATION

Pursuant to the terms of a deferred compensation agreement, the Company is
obligated to pay the former chief executives beneficiary certain monthly
amounts over the remainder of the beneficiarys life. At June 30, 2001 and June
24, 2000, approximately $3,312,000 and $3,466,000, respectively, has been
accrued under this agreement. Interest expense on this obligation approximated
$340,000, $354,000 and $368,000 during fiscal 2001, 2000 and 1999,
respectively.

F-11



---



The Company is obligated under deferred compensation agreements to make
monthly payments in varying amounts to certain former officers and directors
through June 2015. At June 30, 2001 and June 24, 2000, the Company had accrued
approximately $723,000 and $709,000, respectively, relating to these
agreements. For fiscal 2001, 2000, and 1999, interest expense related to these
agreements approximated $54,000, $62,000 and $69,000, respectively.

Future minimum annual payments required by deferred compensation
agreements are as follows (in thousands):

|                                                |                        |   |        |       | 
|----------------------------------------------- | ---------------------- | - | ------ | ----- | 
|2002                                            |                        | $ | 635    |      
|                                               
|                                               
|                                               
|                                               
|2003                                            |                        |   | 653    |      
|                                               
|                                               
|                                               
|                                               
|2004                                            |                        |   | 660    |      
|                                               
|                                               
|                                               
|                                               
|2005                                            |                        |   | 676    |      
|                                               
|                                               
|                                               
|                                               
|2006 and thereafter                             |                        |   | 3,683  |      
|                                                |                        |   |        |      
|                                                | Total minimum payments |   |        | 6,307 | 
|                                               
|                                               
|                                               
|                                               
|Less amounts representing interest at 8% to 12% |                        |   | (2,272 | )    
|                                                |                        |   |        |      
|                                                |                        | $ | 4,035  |      
|                                                |                        |   |        |       | 

8. SUPPLEMENTAL BALANCE SHEET INFORMATION

|                                       |  |                |        |      |  |   |        | 
|-------------------------------------- |  | -------------- | ------ | ---- |  | - | ------ | 
|                                       |  | 2001           |        | 2000
|                                       |  |                |        |     
|                                       |  | (In thousands)
|Accounts payable and accrued expenses:
|                                      
|                                      
|                                      
|                                      
|Trade accounts payable                 |  | $              | 44,867 |      |  | $ | 36,469 | 
|                                      
|                                      
|                                      
|                                      
|Accrued interest                       |  |                | 12,201 |      |  |   | 12,183 | 
|                                      
|                                      
|                                      
|                                      
|Other items                            |  |                | 33,608 |      |  |   | 25,825 | 
|                                       |  |                |        |      |  |   |        | 
|                                       |  | $              | 90,676 |      |  | $ | 74,477 | 
|                                       |  |                |        |      |  |   |        | 

9. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value
of each class of financial instrument:

Note Receivable

The carrying amount for the note receivable approximates its fair value
based upon the approximate interest rates at which similar loans would be made.

Long-term Debt and Subordinated Debt

The carrying amounts of floating rate long-term debt approximate their
fair values. The fair value of fixed rate long-term debt is estimated using
quoted market prices where applicable and using a discounted cash-flow analysis
based upon the incremental borrowing rates currently available to the Company
for loans not sold in the public market.

The estimated fair values of the Companys financial instruments are as
follows:

|                          |  |                |          |                |  |          |          |       |  |   |          |   |  |   |          |  
|------------------------- |  | -------------- | -------- | -------------- |  | -------- | -------- | ----- |  | - | -------- | - |  | - | -------- | -
|                          |  | 2001           |          | 2000          
|                          |  |                |          |               
|                          |  | Carrying       |          | Fair           |  | Carrying |          | Fair 
|                          |  | Amount         |          | Value          |  | Amount   |          | Value
|                          |  |                |          |                |  |          |          |      
|                          |  | (In thousands) |          | (In thousands)
|                          |  |                |          |               
|Cash and cash equivalents |  | $              | 7,609    |                |  | $        | 7,609    |       |  | $ | 870      |   |  | $ | 870      |  
|                         
|                         
|                         
|                         
|Note receivable           |  |                | 4,270    |                |  |          | 4,270    |       |  |   | 4,070    |   |  |   | 4,070    |  
|                         
|                         
|                         
|                         
|Long-term debt            |  |                | (183,947 | )              |  |          | (186,947 | )     |  |   | (232,089 | ) |  |   | (228,089 | )
|                         
|                         
|                         
|                         
|Subordinated debt         |  |                | (210,305 | )              |  |          | (218,889 | )     |  |   | (210,305 | ) |  |   | (199,117 | )

The Company does not use financial instruments for trading purposes.

F-12



---



10. EMPLOYEE BENEFITS

The Company maintains a qualified savings and profit sharing plan for
participating eligible employees (associates) that provides for annual
contributions based upon associates savings and the Companys net income. Plan
expense approximated $5,003,000, $3,769,000 and $2,956,000 in fiscal 2001, 2000
and 1999, respectively.

The Company maintains two incentive compensation plans. Under the terms
of both plans, incentive compensation is computed and allocated to individuals
based upon economic value added, as defined within the plan agreements.
Approximately $14,136,000, $9,542,000 and $6,660,000 has been recorded as
expense during fiscal 2001, 2000 and 1999, respectively. Approximately
$11,362,000 and $9,671,000 has been reflected as a liability at June 30, 2001
and June 24, 2000 for bonuses payable to all Company associates.

The plans also have a performance share feature (the Performance Share
Plan). Under the terms of the plans, salaried associates are divided into
tiers. Tier I is comprised of key associates who are required to defer
twenty-five percent of their annual cash bonus into performance shares, the
value of which is based upon a formula as defined in the plan agreement. These
shares must be held at least four years before they are eligible for redemption
but may be held until the associate retires. Tier II is comprised of the
remaining salaried associates. During fiscal 1999, the Performance Share Plan
was extended to Tier II associates who are required to defer ten percent of
their annual cash bonus into performance shares and have the option to defer an
additional fifteen percent of their annual cash bonus into performance shares,
the value of which is based on the same formula as that of Tier I associates.
These shares must be held at least four years before they are eligible for
redemption and must be redeemed at the end of ten years. Approximately
$15,818,000 and $9,027,000 has been reflected as a liability at June 30, 2001
and June 24, 2000, respectively. Approximately $4,795,000, $5,070,000 and
$170,000 has been recorded as expense relative to the Performance Share Plan
during fiscal 2001, 2000 and 1999, respectively.

11. PENSION BENEFITS

As part of the acquisition of
certain net assets from an affiliated entity on June
23, 2000, as more fully described in Note 2, the Companys subsidiary, PEL,
assumed a liability for a defined benefit pension plan for eligible associates.
Benefits under the plan are based on a formula including years of service and
the associates compensation.

The following provides a reconciliation of the benefit obligation, plan
assets and funded status of the plan (in thousands):

|                       |                                              |                                        |   |                |       | 
|---------------------- | -------------------------------------------- | -------------------------------------- | - | -------------- | ----- | 
|                       |                                              |                                        |   | 2001          
|                       |                                              |                                        |   |               
|                       |                                              |                                        |   | (In thousands)
|Change in plan assets:
|                      
|                      
|                      
|                      
|                       | Fair value of plan assets, beginning of year |                                        | $ | 9,975          |      
|                      
|                      
|                      
|                      
|                       | Actual return on plan assets                 |                                        |   | (1,899         | )    
|                      
|                      
|                      
|                      
|                       | Company contributions                        |                                        |   | 536            |      
|                      
|                      
|                      
|                      
|                       | Member contributions                         |                                        |   | 269            |      
|                      
|                      
|                      
|                      
|                       | Translation adjustment                       |                                        |   | (600           | )    
|                       |                                              |                                        |   |               
|                       |                                              | Fair value of plan assets, end of year |   | $              | 8,281 | 
|                       |                                              |                                        |   |               

|                              |                                       |                                 |   |                |       | 
|----------------------------- | ------------------------------------- | ------------------------------- | - | -------------- | ----- | 
|                              |                                       |                                 |   | 2001          
|                              |                                       |                                 |   |               
|                              |                                       |                                 |   | (In thousands)
|Change in benefit obligation:
|                             
|                             
|                             
|                             
|                              | Benefit obligation, beginning of year |                                 | $ | 11,641         |      
|                             
|                             
|                             
|                             
|                              | Service cost                          |                                 |   | 690            |      
|                             
|                             
|                             
|                             
|                              | Interest cost                         |                                 |   | 664            |      
|                             
|                             
|                             
|                             
|                              | Actuarial gains                       |                                 |   | (2,710         | )    
|                             
|                             
|                             
|                             
|                              | Translation adjustment                |                                 |   | (698           | )    
|                              |                                       |                                 |   |               
|                              |                                       | Benefit obligation, end of year |   | $              | 9,587 | 
|                              |                                       |                                 |   |               

|                                       |                       |   |        |                |   |  |  |      |  
|-------------------------------------- | --------------------- | - | ------ | -------------- | - |  |  | ---- | -
|                                       |                       |   | 2001   |                |   |  |  | 2000
|                                       |                       |   |        |               
|                                       |                       |   |        | (In thousands)
|Funded status of the plan              |                       | $ | (1,306 | )              |   |  |  |      | $
|                                      
|                                      
|                                      
|                                      
|Unrecognized actuarial loss            |                       |   | 883    |                |   |  |  |      |  
|                                      
|                                      
|                                      
|                                      
|Unrecognized net transition obligation |                       |   | 223    |                |   |  |  |      |  
|                                      
|                                      
|                                      
|                                      
|Additional pension liability           |                       |   |       |                |   |  |  |      |  
|                                       |                       |   |        |                |   |  |  |      |  
|                                       | Net amount recognized |   | $      | (200           | ) |  |  |      |  
|                                       |                       |   |        |                |   |  |  |      |  

F-13



---



The following table summarizes the principal financial assumptions used in
determining the actuarial present value of the benefit obligation:

|                                   |  |      |     |      |  |  |     |  
|---------------------------------- |  | ---- | --- | ---- |  |  | --- | -
|                                   |  | 2001 |     | 2000
|                                   |  |      |     |     
|Discount rate                      |  |      | 6.3 | %    |  |  | 6.0 | %
|                                  
|                                  
|                                  
|                                  
|Long-term rate of return on assets |  |      | 6.7 | %    |  |  | 7.5 | %
|                                  
|                                  
|                                  
|                                  
|Salary increases                   |  |      | 4.0 | %    |  |  | 4.5 | %

Net periodic pension cost included the following components (in
thousands):

|                                              |          |   |                |     | 
|--------------------------------------------- | -------- | - | -------------- | --- | 
|                                              |          |   | 2001          
|                                              |          |   |               
|                                              |          |   | (In thousands)
|Service cost for benefits earned              |          | $ | 690            |    
|                                             
|                                             
|                                             
|                                             
|Interest cost on projected benefit obligation |          |   | 664            |    
|                                             
|                                             
|                                             
|                                             
|Expected return on plan assets                |          |   | (722           | )  
|                                             
|                                             
|                                             
|                                             
|Member contributions                          |          |   | (269           | )  
|                                             
|                                             
|                                             
|                                             
|Net amortization and deferral                 |          |   | 40             |    
|                                              |          |   |                |    
|                                              | Net cost |   | $              | 403 | 
|                                              |          |   |                |    

An additional minimum pension liability of $240,000 (net of income tax
benefit of $98,000) was included as a component of other comprehensive income
as of June 24, 2000.

12. POSTRETIREMENT BENEFITS

The Company provides group health and life insurance benefits to certain
associates retiring prior to December 31, 1996. Under the terms of this plan,
the Company reimburses qualified retired associates varying percentages of
health care costs and premium costs of life insurance depending upon a retired
associates length of service, with a minimum of 10 years required for plan
eligibility. Net periodic postretirement benefit cost included the following
components:

|                                              |                                                        |          |     |                |     |      |     |      |     |   |     |     |     | 
|--------------------------------------------- | ------------------------------------------------------ | -------- | --- | -------------- | --- | ---- | --- | ---- | --- | - | --- | --- | --- | 
|                                              |                                                        |          |     | 2001           |     | 2000 |     | 1999
|                                              |                                                        |          |     |                |     |      |     |     
|                                              |                                                        |          |     | (In thousands)
|Interest cost on projected benefit obligation |                                                        | $        | 209 |                |     | $    | 247 |      |     | $ | 374 |    
|                                             
|                                             
|                                             
|                                             
|Actuarial loss                                |                                                        |          | 26  |                |     |      | 16  |      |     |   | 102 |    
|                                              |                                                        |          |     |                |     |      |     |      |     |   |     |    
|                                              |                                                        | Net cost |     | $              | 235 |      |     | $    | 263 |   |     | $   | 476 | 
|                                              |                                                        |          |     |                |     |      |     |      |     |   |     |    
|Effect of 1% increase in the trend rates      |                                                        |          |     |                |     |      |     |      |     |   |     |    
|                                              | Accumulated postretirement benefit obligation increase |          | $   | 364            |     |      | $   | 322  |     |   | $   | 373 |    
|                                              |                                                        |          |     |                |     |      |     |      |     |   |     |    
|                                             
|                                             
|                                             
|                                             
|                                              | Interest cost increase                                 |          | $   | 27             |     |      | $   | 26   |     |   | $   | 29  |    
|                                              |                                                        |          |     |                |     |      |     |      |     |   |     |    

The postretirement plans change in benefit obligation, funded status and
amount recognized in the Companys consolidated balance sheets are as follows:

|                              |                                       |  |                |       |      |  |   |       |  
|----------------------------- | ------------------------------------- |  | -------------- | ----- | ---- |  | - | ----- | -
|                              |                                       |  | 2001           |       | 2000
|                              |                                       |  |                |       |     
|                              |                                       |  | (In thousands)
|Change in benefit obligation:
|                             
|                             
|                             
|                             
|                              | Benefit obligation, beginning of year |  | $              | 2,894 |      |  | $ | 3,355 |  
|                             
|                             
|                             
|                             
|                              | Interest cost                         |  |                | 209   |      |  |   | 247   |  
|                             
|                             
|                             
|                             
|                              | Actuarial gain (loss)                 |  |                | 517   |      |  |   | (121  | )
|                             
|                             
|                             
|                             
|                              | Benefits paid                         |  |                | (309  | )    |  |   | (587  | )
|                              |                                       |  |                |       |      |  |   |      
|                              | Benefit obligation, end of year       |  | $              | 3,311 |      |  | $ | 2,894 |  
|                              |                                       |  |                |       |      |  |   |      

|                           |                             |                       |   |                |       |      |   |       |       | 
|-------------------------- | --------------------------- | --------------------- | - | -------------- | ----- | ---- | - | ----- | ----- | 
|                           |                             |                       |   | 2001           |       | 2000
|                           |                             |                       |   |                |       |     
|                           |                             |                       |   | (In thousands)
|Funded status of the plan:
|                          
|                          
|                          
|                          
|                           | Benefit obligation          |                       | $ | 3,311          |       |      | $ | 2,894 |      
|                          
|                          
|                          
|                          
|                           | Unrecognized actuarial loss |                       |   | (1,091         | )     |      |   | (600  | )    
|                           |                             |                       |   |                |       |      |   |      
|                           |                             | Net amount recognized |   | $              | 2,220 |      |   | $     | 2,294 | 
|                           |                             |                       |   |                |       |      |   |      

F-14



---



|                                                       |                           |                       |   |                |       |      |   |       |       | 
|------------------------------------------------------ | ------------------------- | --------------------- | - | -------------- | ----- | ---- | - | ----- | ----- | 
|                                                       |                           |                       |   | 2001           |       | 2000
|                                                       |                           |                       |   |                |       |     
|                                                       |                           |                       |   | (In thousands)
|Amounts recognized in the consolidated balance sheets:
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Accrued benefit liability |                       | $ | 2,220          |       |      | $ | 2,294 |      
|                                                       |                           |                       |   |                |       |     
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                           | Net amount recognized |   | $              | 2,220 |      |   | $     | 2,294 | 
|                                                       |                           |                       |   |                |       |     

The assumed health care cost trend rate and the ultimate rate achieved
July 1, 2001, used in measuring the accumulated postretirement benefit
obligation was 5.00%. The discount rate used to measure the accumulated
postretirement benefit obligation was 7.50% for fiscal 2001, 8.00% for fiscal
2000 and 7.75% for fiscal 1999.

13. INCOME TAXES

The provision (benefit) for income taxes consisted of the following:

|                                 |         |   |                |       |      |   |      |      |   |   |        |        |  
|-------------------------------- | ------- | - | -------------- | ----- | ---- | - | ---- | ---- | - | - | ------ | ------ | -
|                                 |         |   | 2001           |       | 2000 |   | 1999
|                                 |         |   |                |       |      |   |     
|                                 |         |   | (In thousands)
|Current tax provision           
|                                
|                                
|                                
|                                
|                                 | Federal |   | $              | 3,792 |      |   | $    | 252  |   |   | $      |       |  
|                                
|                                
|                                
|                                
|                                 | State   |   |                | 152   |      |   |      | 223  |   |   |        | 200    |  
|                                
|                                
|                                
|                                
|                                 | Foreign |   |                | 1,598 |      |   |      | 458  |   |   |        | 360    |  
|                                
|                                
|                                
|                                
|Deferred tax provision (benefit)
|                                
|                                
|                                
|                                
|                                 | Federal |   |                | 4,734 |      |   |      | (92  | ) |   |        | (1,794 | )
|                                
|                                
|                                
|                                
|                                 | State   |   |                | 1,405 |      |   |      | (394 | ) |   |        | (187   | )
|                                 |         |   |                |       |      |   |      |      |   |   |        |       
|                                 |         | $ | 11,681         |       |      | $ | 447  |      |   | $ | (1,421 | )     
|                                 |         |   |                |       |      |   |      |      |   |   |        |       

The differences between total tax provision (benefit) and the amount
determined by applying the federal statutory tax rate to income (loss) before
income taxes result from the following:

|                                                                  |  |      |      |      |  |      |       |   |  |  |       |   
|----------------------------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ----- | - |  |  | ----- | --
|                                                                  |  | 2001 |      | 2000 |  | 1999
|                                                                  |  |      |      |      |  |     
|Tax provision (benefit) at federal statutory rate                 |  |      | 35.0 | %    |  |      | 35.0  | % |  |  | (35.0 | )%
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|State income taxes, net of federal income tax provision (benefit) |  |      | 2.5  |      |  |      | 5.8   |   |  |  | (5.1  | ) 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Foreign taxes                                                     |  |      | 0.5  |      |  |      | 21.0  |   |  |  | 6.3   |   
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Foreign valuation allowance                                       |  |      | (2.1 | )    |  |      | (68.0 | ) |  |  | (6.6  | ) 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Non-taxable gain on life insurance policies                       |  |      | (5.7 | )    |  |      |      |   |  |  |      |   
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Non-deductible items                                              |  |      | 1.1  |      |  |      | 32.8  |   |  |  |      |   
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Other                                                             |  |      | 0.7  |      |  |      | 2.6   |   |  |  | 3.0   |   
|                                                                  |  |      |      |      |  |      |       |   |  |  |       |   
|                                                                  |  |      | 32.0 | %    |  |      | 29.2  | % |  |  | (37.4 | )%
|                                                                  |  |      |      |      |  |      |       |   |  |  |       |   

The increase in the effective tax rate for fiscal 2001 as compared to
fiscal 2000 was primarily due to the adjustment of valuation allowances for a
portion of the deferred tax assets related to taxable loss carryforwards in
various state and foreign jurisdictions, partially offset by the non-taxable
gain on life insurance policies as more fully described in Note 16. The
decrease in the effective tax rate for fiscal 2000 as compared to fiscal 1999
was primarily due to the reversal of a valuation allowance for a portion of the
deferred tax assets related to taxable loss carryforwards in foreign
jurisdictions.

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

|                     |                                                    |                           |   |                |        |      |   |        |        |  
|-------------------- | -------------------------------------------------- | ------------------------- | - | -------------- | ------ | ---- | - | ------ | ------ | -
|                     |                                                    |                           |   | 2001           |        | 2000
|                     |                                                    |                           |   |                |        |     
|                     |                                                    |                           |   | (In thousands)
|Deferred tax assets:
|                    
|                    
|                    
|                    
|                     | Allowance for doubtful accounts                    |                           | $ | 531            |        |      | $ | 643    |       
|                    
|                    
|                    
|                    
|                     | Accrued incentive compensation                     |                           |   | 5,774          |        |      |   | 3,718  |       
|                    
|                    
|                    
|                    
|                     | Deferred income                                    |                           |   | 301            |        |      |   | 451    |       
|                    
|                    
|                    
|                    
|                     | Accrued postretirement and postemployment benefits |                           |   | 1,643          |        |      |   | 1,505  |       
|                    
|                    
|                    
|                    
|                     | Accrued separation expenses                        |                           |   | 28             |        |      |   | 117    |       
|                    
|                    
|                    
|                    
|                     | Deferred compensation                              |                           |   | 1,762          |        |      |   | 1,723  |       
|                    
|                    
|                    
|                    
|                     | Other accrued liabilities                          |                           |   | 3,689          |        |      |   | 3,575  |       
|                    
|                    
|                    
|                    
|                     | Carryforward of net operating loss and tax credits |                           |   | 16,916         |        |      |   | 26,256 |       
|                    
|                    
|                    
|                    
|                     | Other                                              |                           |   | 342            |        |      |   | 295    |       
|                     |                                                    |                           |   |                |        |      |   |       
|                     |                                                    | Total deferred tax assets |   |                | 30,986 |      |   |        | 38,283 |  
|                    
|                    
|                    
|                    
|                     |                                                    | Valuation allowance       |   |                | (2,935 | )    |   |        | (3,024 | )
|                     |                                                    |                           |   |                |        |      |   |       
|                     |                                                    | Net deferred tax assets   |   |                | 28,051 |      |   |        | 35,259 |  

F-15



---



|                          |                                                                |                                |  |        |        |  |  |        |        | 
|------------------------- | -------------------------------------------------------------- | ------------------------------ |  | ------ | ------ |  |  | ------ | ------ | 
|Deferred tax liabilities:
|                         
|                         
|                         
|                         
|                          | Excess of book over tax basis of property, plant and equipment |                                |  | 20,607 |        |  |  | 23,665 |       
|                         
|                         
|                         
|                         
|                          | Excess of book over tax basis of intangible assets             |                                |  | 4,578  |        |  |  | 4,755  |       
|                         
|                         
|                         
|                         
|                          | Voluntary Employee Benefit Association contribution            |                                |  | 1,649  |        |  |  | 1,375  |       
|                         
|                         
|                         
|                         
|                          | Other                                                          |                                |  | 840    |        |  |  | 694    |       
|                          |                                                                |                                |  |        |        |  |  |       
|                          |                                                                | Total deferred tax liabilities |  |        | 27,674 |  |  |        | 30,489 | 
|                          |                                                                |                                |  |        |        |  |  |       
|                          |                                                                | Net deferred tax asset         |  | $      | 377    |  |  | $      | 4,770  | 
|                          |                                                                |                                |  |        |        |  |  |       

The valuation allowance for deferred tax assets at June 30, 2001 and June
24, 2000 was approximately $2,935,000 and $3,024,000, respectively. The net
change in the total valuation allowance for the years ended June 30, 2001 and
June 24, 2000 was ($89,000) and ($94,000), respectively. The Companys net
operating loss carryforwards expire in fiscal 2012, 2013 and 2019. The Company
paid no income taxes during the years ended June 30, 2001, June 24, 2000 and
June 26, 1999.

14. COMMITMENTS AND CONTINGENCIES

The Company leases certain office facilities and transportation equipment
under non-cancelable operating leases expiring on various dates through fiscal
2017. Future minimum annual rentals required by these operating leases are as
follows:

|                    |  |                |        | 
|------------------- |  | -------------- | ------ | 
|                    |  | Minimum       
|                    |  | Annual Rentals
|                    |  |               
|                    |  | (In thousands)
|2002                |  | $              | 1,078  | 
|                   
|                   
|                   
|                   
|2003                |  |                | 998    | 
|                   
|                   
|                   
|                   
|2004                |  |                | 892    | 
|                   
|                   
|                   
|                   
|2005                |  |                | 732    | 
|                   
|                   
|                   
|                   
|2006 and thereafter |  |                | 6,320  | 
|                    |  |                |        | 
|                    |  | $              | 10,020 | 
|                    |  |                |        | 

Rental expense approximated $1,281,000, $1,556,000 and $1,399,000 during
fiscal 2001, 2000 and 1999, respectively.

At June 30, 2001 and June 24, 2000, commitments relating to future
acquisitions of property, plant and equipment approximated $26,140,000 and
$16,008,000, respectively.

The Company is subject to legal proceedings and other claims which arise
in the ordinary course of business. In the opinion of management, the outcome
of these actions will not materially affect the financial position or results
of operations of the Company.

The Company has been designated by the U.S. Environmental Protection
Agency (EPA) and/or other responsible state agencies as a potentially
responsible party (PRP) at various waste disposal or waste recycling sites.
These sites are the subject of separate investigations or proceedings
concerning alleged soil and/or groundwater contamination for which no
settlement of the Companys liability has been agreed upon. The Company is
participating with other PRPs at all such sites, and anticipates that its share
of cleanup costs will be determined pursuant to remedial agreements entered
into in the normal course of negotiations with the EPA or other governmental
authorities.

The Company has accrued liabilities for all sites, including sites in
which governmental agencies have designated the Company as a PRP, where it is
probable that a loss will be incurred and the minimum cost or amount of loss
can be reasonably estimated. Currently, amounts accrued in the financial
statements for individual sites and in the aggregate are not material.
However, because of the uncertainties associated with environmental assessment
and remediation activities, future expense to remediate the currently
identified sites, and sites that could be identified in the future for cleanup,
could be higher than the liability currently accrued.

15. RELATED PARTY TRANSACTIONS

During fiscal 2001, 2000 and 1999, the Company advanced approximately
$1,690,000, $948,000 and $949,000, respectively, to Holdings for the redemption
of common stock held by retired, non-family shareholders. These advances are
recorded as Receivable from parent in the equity section of the accompanying
consolidated balance sheets.

During fiscal 2001, the Companys subsidiary Printpack Enterprises,
Limited, (PEL) entered into various transactions with an affiliated entity.
Such transactions primarily consisted of management fees charged to PEL by the
affiliated entity for invoicing customers, payment of vendors, human resources
management, marketing and various other administrative functions. Such
management fees totaled approximately $2,347,000 during fiscal 2001. As of June
30, 2001, PEL had an outstanding payable balance of approximately $3,556,000 to
the affiliated entity. In addition, this affiliated entity transferred
ownership of fixed assets and

F-16



---



corresponding capital lease obligations to PEL during fiscal 2001. The carrying
value of the fixed assets and capital lease obligations were approximately
$2,466,000 as of the date of transfer.

During fiscal 2000 and 1999, the Company sold inventory and equipment and
had other miscellaneous charges in the amount of approximately $200,000 and
$2,061,000, respectively, to the affiliated entity.

16. INSURANCE PROCEEDS

During the fourth quarter of fiscal 2001, the Company recorded a gain on
life insurance policies totaling approximately $5,938,000. Such amounts are
included in Other, net on the accompanying Statement of Operations and
Comprehensive Income. As of June 30, 2001, approximately $7,781,000 has been
recorded as a receivable related to these insurance policies. Such amounts are
included in Prepaid expenses and other current assets on the accompanying
Balance Sheet.

F-17



---



EXHIBIT INDEX

Unless indicated below, the exhibits are incorporated by reference herein
from the Companys Registration Statement on Form S-1 (File No. 333-13727)
filed with the Securities and Exchange Commission. Copies of such exhibits will
be furnished to any requesting shareholder of the Company upon request to
Secretary, Printpack Inc., 4335 Wendell Drive, S.W., Atlanta, Georgia 30336.
There is a charge of $.50 per page to cover expenses for copying and mailing.

|        |     |   |  |                                                                                                                                                                                                                                                              
|------- | --- | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
|Number  |     |   |  | Description of Exhibits                                                                                                                                                                                                                                      
|        |     |   |  |                                                                                                                                                                                                                                                              
|3.1     |     |  |  | Restated Articles of Incorporation of Printpack, Inc.                                                                                                                                                                                                        
|       
|       
|       
|       
|3.2     |     |  |  | Bylaws of Printpack, Inc.                                                                                                                                                                                                                                    
|       
|       
|       
|       
|4.1     |     |  |  | Indenture, dated August 22, 1996, between Printpack, Inc. and State Street Bank (successor to Fleet National Bank), as
Trustee relating to the 9 7/8% Senior Notes due 2004.                                                                                 
|       
|       
|       
|       
|4.2     |     |  |  | Indenture, dated August 22, 1996, between Printpack, Inc. and State Street Bank (successor to Fleet National Bank), as
Trustee relating to the 10 5/8% Senior Subordinated Notes due 2006.                                                                   
|       
|       
|       
|       
|10.1   |     |  |  | Amended and Restated Credit Agreement, dated as of May 21, 1999, by and among Printpack, Inc., the Institutions from time
to time parties thereto as lenders, and The First National Bank of Chicago, as Agent.                                              
|       
|       
|       
|       
|***10.1 | (a) |  |  | Amendment No. 1, dated as of December 15, 1999, among Printpack, Inc., the Institutions from time to time parties hereto,
as lenders, and Bank One, NA, as Agent.                                                                                            
|       
|       
|       
|       
|*10.1   | (b) |  |  | Consent, dated
as of April 20, 2001, among Printpack, the Institutions from time to time parties thereto, as lenders, and
Bank One, NA (formerly The First National Bank of Chicago, as Agent).                                                              
|       
|       
|       
|       
|10.2    |     |  |  | Note Purchase Agreement, dated as of March 13, 1995 by and among Printpack, Inc. and certain shareholders of Printpack,
Inc., as amended.                                                                                                                    
|       
|       
|       
|       
|10.3    |     |  |  | Printpack, Inc. Savings and Profit Sharing Plan, as amended.                                                                                                                                                                                                 
|       
|       
|       
|       
|***10.4 |     |  |  | Printpack, Inc. Incentive Compensation Plan, amended as of July 15, 1999.                                                                                                                                                                                    
|       
|       
|       
|       
|10.5    |     |  |  | Printpack, Inc. Deferred Compensation Plan, effective and as amended November 1, 2000.                                                                                                                                                                       
|       
|       
|       
|       
|*10.5   | (a) |  |  | Amendment Number One to the Printpack, Inc. Deferred Compensation Plan, effective November 1, 2000.                                                                                                                                                          
|       
|       
|       
|       
|10.6    |     |  |  | Guarantee dated as of January 5, 1995 made by Printpack, Inc. in favor of PNC Bank, Ohio, National Association, as
amended.                                                                                                                                  
|       
|       
|       
|       
|10.7    |     |  |  | Registration Rights Agreement dated as of August 22, 1996 by and between Printpack, Inc. and Donaldson, Lufkin & Jenrette
Securities Corporation.                                                                                                            
|       
|       
|       
|       
|10.8    |     |  |  | Receivables Sale Agreement dated as of August 22, 1996 by and between Printpack, Inc. and Flexible Funding Corp.                                                                                                                                             
|       
|       
|       
|       
|10.9    |     |   |  | Receivables Purchase Agreement dated as of August 22, 1996 by and among Flexible Funding Corp. as Seller, Falcon Asset
Securitization Corporation and the financial institutions party thereto as Investors and The First National Bank of
Chicago, as Agent.
|       
|       
|       
|       
|10.9  | (a) |   |  | Waiver and Amendment of Receivables Purchase Agreement dated as of September 21, 1998, by and among Flexible Funding Corp.,
as Seller, Falcon Asset Securitization Corporation and The First National Bank of Chicago, individually and as Agent.            
|       
|       
|       
|       
|10.9 | (b) |   |  | Amendment of Receivables Purchase Agreement dated as of May 21, 1999, by and among Flexible Funding Corp., as Seller,
Falcon Asset Securitization Corporation and The First National Bank of Chicago, individually and as Agent.                             
|       
|       
|       
|       
|10.10   |     |  |  | Intercreditor Agreement, dated August 22, 1996, by and between The First National Bank of Chicago, as Contractual
Representative and The First National Bank of Chicago, as Agent.                                                                           
|       
|       
|       
|       
|*12     |     |  |  | Computation of Ratio of Earnings to Fixed Charges.                                                                                                                                                                                                           
|       
|       
|       
|       
|*21     |     |  |  | List of Subsidiaries.                                                                                                                                                                                                                                        
|       
|       
|       
|       
|*24     |     |  |  | Power of Attorney (included on page 29).                                                                                                                                                                                                                     
|       
|       
|       
|       
|99.1    |     |  |  | Contribution Agreement dated as of January 5, 1995 by and between Printpack, Inc. and Orflex Ltd.                                                                                                                                                            



---



|        |  |   |  |                                                                                                                                                                                                                                                                                                                                                                                              
|------- |  | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       
|       
|       
|       
|99.2    |  |  |  | Lease dated September 11, 1980 by and between Gulf Oil Corporation and Crown Zellerbach Corporation relating to the
Orange, Texas Plant (the rights and obligations of the lessee under the foregoing Lease have been assigned ultimately to
Printpack, Inc.).                                                                                                                               
|       
|       
|       
|       
|99.3    |  |  |  | Ground Lease dated September 11, 1980 by and between Gulf Oil Corporation and Crown Zellerbach Corporation relating to
the Orange, Texas Plant (the rights and obligations of the lessee under the foregoing Lease have been assigned ultimately
to Printpack, Inc.).                                                                                                                        
|       
|       
|       
|       
|99.4    |  |  |  | Ground Lease Agreement dated January 1, 1981 by and between Gulf Oil Corporation and Crown Zellerbach Corporation
relating to the Orange, Texas Plant (the rights and obligations of the lessee under the foregoing Lease have been assigned
ultimately to Printpack, Inc.).                                                                                                                 
|       
|       
|       
|       
|99.5    |  |  |  | Ground Lease dated September 9, 1985 by and between Chevron Chemical Company and Crown Zellerbach Corporation relating to
the Orange, Texas Plant (the rights and obligations of the lessee under the foregoing Lease have been assigned ultimately
to Printpack, Inc.).                                                                                                                     
|       
|       
|       
|       
|99.6    |  |  |  | Lease dated July 25, 1990 by and between The Lawson Group, LTD and Shell Oil Company relating to the Williamsburg,
Virginia plant (the rights and obligations of the lessee under the foregoing Lease have been assigned ultimately to
Printpack, Inc.).                                                                                                                                     
|       
|       
|       
|       
|99.10   |  |  |  | Deferred Income Agreement dated July 10, 1996 with Neil Williams.                                                                                                                                                                                                                                                                                                                            
|       
|       
|       
|       
|99.11   |  |  |  | Family Security Agreement dated April 4, 1986 with Dennis M. Love.                                                                                                                                                                                                                                                                                                                           
|       
|       
|       
|       
|99.12   |  |  |  | Family Security Agreement dated February 24, 1986 with R. Michael Hembree.                                                                                                                                                                                                                                                                                                                   
|       
|       
|       
|       
|99.14   |  |  |  | Family Security Agreement dated February 24, 1986 with Nicklas D. Stucky.                                                                                                                                                                                                                                                                                                                    
|       
|       
|       
|       
|99.15   |  |  |  | Amended and Restated Employment Agreement dated June 23, 1983 with J. Erskine Love, Jr.                                                                                                                                                                                                                                                                                                      
|       
|       
|       
|       
|**99.16 |  |  |  | Lease Amendment dated May 20, 1998 by and between GF Associates and Printpack, Inc. relating to the Williamsburg,
Virginia plant (Amendment to the lease by and between The Lawson Group, LTD and Shell Oil Company noted as exhibit 99.6
above originally filed on the Companys Registration Statement on Form S-1 (File No. 333-13727) filed with the Securities
and Exchange Commission).



---

|*   |  | Items filed herewith.                                                                                                                            
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|**  |  | Exhibit is incorporated by reference herein to the exhibit of the same
number in the Companys Form 10-K for the fiscal year ended
June 27, 1998.
|   
|   
|   
|   
|*** |  | Exhibit is incorporated by reference herein to the exhibit of the same
number in the Companys Form 10-K for the fiscal year
ended June 24, 2000.
|   
|   
|   
|   
|   |  | Exhibit is incorporated by reference herein to exhibit 99.1 in the
Companys Form 8-K, dated June 10, 1999.                                      
|   
|   
|   
|   
|  |  | Exhibit is incorporated by reference herein to exhibit 99.2 in the
Companys Form 8-K, dated June 10, 1999.                                      
|   
|   
|   
|   
| |  | Exhibit is incorporated by reference herein to exhibit 99.3 in the
Companys Form 8-K, dated June 10, 1999.