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                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

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

                                   FORM 10-K

(MARK ONE)

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<C>        <S>
   /X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
           SECURITIES EXCHANGE ACT OF 1934
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                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
                                       OR

<TABLE>
<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

                       COMMISSION FILE NUMBER: 333-76057

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

                         RUSSELL-STANLEY HOLDINGS, INC.

               (Exact name of Registrant as specified in charter)

<TABLE>
<S>                                              <C>
                DELAWARE                                      22-3525626
     (State or other jurisdiction of              (IRS Employer Identification No.)
     incorporation or organization)

685 ROUTE 202/206 BRIDGEWATER, NEW JERSEY                     08807-1762
(Address of principal executive offices)                      (Zip Code)
</TABLE>

                                 (908) 203-9500
              (Registrant's telephone number, including area code)

          Securities registered pursuant to Section 12(g) of the Act:

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<S>                                              <C>
                  NONE                                           NONE
           Title of each class                   Name of exchange on which registered
</TABLE>

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

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

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in a definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes / /  No /X/

    There is no established market for our common stock. There were 2,200,764
shares of Common Stock outstanding as of March 31, 2001.

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                               TABLE OF CONTENTS

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                                                                                       PAGE
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PART I

Item 1:                Business....................................................      3

Item 2:                Properties..................................................     10

Item 3:                Legal Proceedings...........................................     10

Item 4:                Submission of Matters to a Vote of Security Holders.........     10

PART II

Item 5:                Market for Registrant's Common Equity and Related
                       Stockholders' Matters.......................................     11

Item 6:                Selected Financial Data.....................................     11

Item 7:                Management's Discussion and Analysis of Financial Condition
                       and Results of Operations...................................     12

Item 7A:               Quantitative and Qualitative Disclosures about Market
                       Risk........................................................     18

Item 8:                Financial Statements and Supplementary Data.................     18

Item 9:                Changes in and Disagreements with Accountants on Accounting
                       and Financial Disclosure....................................     18

PART III

Item 10:               Directors and Executive Officers of the Registrant..........     19

Item 11:               Executive Compensation......................................     21

Item 12:               Security Ownership of Certain Beneficial Owners and
                       Management..................................................     25

Item 13:               Certain Relationships and Related Transactions..............     26

PART IV

Item 14:               Exhibits, Financial Statement Schedules, and Reports on Form
                       8-K.........................................................     27

SIGNATURES.........................................................................     63
</TABLE>

                                       2
<PAGE>
                         RUSSELL-STANLEY HOLDINGS, INC.
                                     PART I

ITEM 1. BUSINESS

    We are a manufacturer and marketer of plastic and steel industrial
containers and a leading provider of related container services in the United
States and Canada. Our container manufacturing division manufactures and sells
new plastic and steel rigid industrial containers. Our services division
provides industrial container services for both plastic and steel rigid
industrial containers. These services include reconditioning and selling plastic
and steel industrial containers, plastic container fleet management, retrieval
and recycling of empty industrial containers and leasing of plastic drums and
intermediate bulk containers.

    Our container manufacturing and services divisions together have over 1,500
active customers in the agricultural, chemical, food product, lubricant,
pharmaceutical and specialty chemical industries.

    We believe that our customers base their purchasing decisions primarily on
price, quality and service and are increasingly looking to maintain
relationships with fewer suppliers who can provide a broad range of high-quality
industrial containers and related container services at competitive prices,
often on a national or international basis.

    We currently operate eleven plastic drum manufacturing plants, three steel
drum manufacturing plants and six container services plants throughout the
United States and Canada, enabling us to be strategically located near our major
customers. We sell, service and lease plastic containers in most markets in the
United States and in most of the major industrial regions in Canada. We sell new
steel drums in the Northeast, the Gulf Coast, parts of the Midwest and Ontario,
Canada; regions where there is a high concentration of purchasers of steel
drums. We sell reconditioned steel drums in the Northeast and Mid-Atlantic
states.

    We own approximately 1,100 trailers and lease approximately 600 trailers to
help ensure on-time delivery of containers directly to our customers'
facilities.

    Our statements in this report regarding the breadth of our product offerings
and our market share positions are based on our knowledge of the industry and
information we have developed internally, principally through our sales and
marketing efforts.

    Russell-Stanley-Registered Trademark- was incorporated in 1950 as a steel
drum manufacturer and was acquired in June 1989 by affiliates of Vestar Capital
Partners.

    For recent business developments, refer to the information set forth under
the captions "Liquidity and Capital Resources" in Part II, Item 7 of this
report.

ACQUISITIONS

    In July 1997, we began consummating several acquisitions in furtherance of
our goal to become the preeminent provider of rigid industrial containers and
related container services in the United States and Canada. We acquired
Container Management Services in July 1997, Hunter Drums Limited in
October 1997, the plastics division of Smurfit Packaging Corporation in
November 1997 and New England Container in July 1998.

    As a result of these acquisitions, we have overseen the integration of more
than 100 products and the addition of our services division. In addition, we
increased the number of our facilities from 8 to 20.

                                       3
<PAGE>
ALLIANCES

    We formed several strategic alliances in 1999. We joined forces with Trilla
Steel Drum and Vopak Corporation, formerly known as Paktank Corporation in May,
and North America Packaging Corporation (NAMPAC), formerly known as Southcorp
Packaging USA, Inc. in September. Trilla Steel Drum operates in the Chicago
metro market, where we do not have a steel drum facility. Our alliance has
enabled us to compete against companies in that area that manufacture both
plastic and steel containers. Vopak Corporation is a subsidiary of Royal
Pakhoed, the world's premiere logistics services company. As a result of this
alliance, we can now offer container manufacturing, filling, packaging and
logistics services in key markets to customers in the chemical, petroleum, food,
and related markets. NAMPAC, one of the largest manufacturers of smaller size
containers, produces plastic packaging in the USA, Canada, and Puerto Rico. With
this alliance, we now offer a full line of rigid plastic packaging from 1 to 330
gallons.

    As a result of these alliances, we have been able to enhance our products
and services offering to meet more of the changing needs of our customers.

INDUSTRY SEGMENT OVERVIEW

    As reported by The Freedonia Group Incorporated, an international
study/database company, in a study dated August 1999, the rigid industrial
container industry consists of new plastic, steel and fiber drums, rigid
intermediate bulk containers, pails, bulk boxes, and materials handling
containers. According to The Freedonia Group, the U.S. market had sales of
approximately $4.5 billion in 1998, the most recent period for which The
Freedonia Group reported relevant industry data. This represents a compound
annual growth rate of approximately 5.4% from 1989 sales of approximately
$2.8 billion. Our container manufacturing division competes in a sector of the
rigid industrial container industry, which approximates $3.0 billion. We define
our sector as consisting of new and reconditioned plastic, steel and fiber
drums, rigid intermediate bulk containers and small containers/pails. Our
services division competes with other providers of similar services. We do not
know of any third-party source of market data for the industrial container
services industry.

    Plastic drums are used primarily in the storage and transportation of
chemical, food and agricultural products and are also increasingly being used
for the storage and transportation of petroleum and lubricants. Plastic drums
are available in a variety of capacities, ranging from 5 to 70 gallons, with the
55-gallon drum being the most widely used. According to The Freedonia Group,
there were $270 million of new plastic drums shipped from U.S. manufacturing
establishments in 1998. Steel drums are used primarily for the transportation
and storage of liquids, semi-solids and dry products, particularly petroleum,
lubricants and chemical products, and have been utilized in these industries for
more than 40 years. Steel drums typically range in capacities from 13 to 110
gallons, with the 55-gallon drum being the most widely used. According to The
Freedonia Group, there were $680 million of new steel drums shipped from U.S.
manufacturing establishments in 1998.

    Based on the changes we have experienced in our business and direct
discussions with our customers, we believe the following trends will continue to
play an important role in our industry's future:

    - larger competitors which offer broader product lines and have greater
      manufacturing capacities, higher operating efficiencies and a greater
      ability to invest in enhanced products and services will capture
      increasing market share as smaller, regional companies find it more
      difficult to compete, resulting in further consolidation of the industry.
      This consolidation is also extending to customer and supplier bases;

    - customers are increasingly looking to fewer suppliers to provide an
      increasing percentage of their industrial container supply and servicing
      requirements;

                                       4
<PAGE>
    - customers are increasingly seeking broader product lines and global
      service; consequently, our industry is becoming less regional, with
      customers moving towards national and international supply arrangements.

COMPETITION

    The markets for our products are competitive, and competition from current
and future competitors could reduce unit volumes and selling prices and have a
material adverse effect on our results of operations. We believe competition is
based primarily on price, quality and service. Price competition may require us
to match competitors' prices to retain business or market share. We believe that
our competitive cost structure, high quality products, broad geographic coverage
and high level of customer service enable us to compete effectively. Greif Bros.
Corporation completed its purchase of Van Leer Industrial in March 2001 and is
our primary container manufacturing competitor in both plastic and steel drums.
Our other primary competitors are Hoover Materials Handling Group, Inc. and
Schutz Container Systems, Inc. in plastic drums and Evans Industries, Inc. in
steel drums. Our services division competes primarily with Greif Bros.
Corporation, Hoover Materials Handling Group, Inc. and PalEx, Inc. Both of our
divisions also compete with smaller industry participants.

CONTAINER MANUFACTURING DIVISION

    Our container manufacturing division manufactures and sells new plastic and
steel rigid industrial containers.

    PLASTIC CONTAINERS

    We operate eleven plastic drum manufacturing facilities serving most markets
in the United States and most of the major industrial regions in Canada. Our
large containers include full lines of both tight-head and open-top drums in
sizes ranging from 30 to 64 gallons. We also produce a line of smaller plastic
containers in sizes ranging from 5 to 20 gallons.

    We believe that we are the principal manufacturer in the United States and
Canada of 55-gallon plastic tight-head drums, which we sell under the brand
names L-1 (LR-1 in Canada) and Delcon. Based on our knowledge of the industry
and our customers' preferences, we believe that the designs of the L-1 and
Delcon drums are the most popular designs for 55-gallon plastic tight-head drums
in the United States and Canada, and we own and/or have a license to use
important proprietary technology relating to the manufacture and sale of these
drums. We believe that the L-1 and Delcon drums offer significant production
cost advantages over earlier two-piece drum designs, including higher
manufacturing speeds and lower manufacturing costs. We also believe that the L-1
and Delcon drums are superior to our competitors' similar products because of
their design features. We believe that the primary advantages offered by the
design features of the L-1 and Delcon drums are:

    - superior design which easily accommodates both new and old drum handling
      equipment and which is available with an optimally drainable feature,
      which we were instrumental in pioneering; and

    - excellent performance with high structural integrity.

    A key component of our strategy has been to build on the acceptance of the
L-1 and Delcon drums by enhancing our broad product offering. We introduced a
number of new drum designs for use in specific markets, including a plastic
export drum that significantly reduces freight costs for exporters who use
overseas shipping containers, an open-top plastic drum, the RS-OH, that is
designed for the returnable container market served by our services division and
a returnable/reusable drum principally for use in the agricultural market.

                                       5
<PAGE>
    We also manufacture several specialty tight-head drums, including three
different performance levels of high-purity "clean" drums for use in the
electronic chemical market, drums for the lubricant industry which use special
replaceable closures and are capable of four-high stacking, a "raised head" drum
for end users with special stacking requirements and a "heavy" drum that meets
United Nations international shipping standards for particular products. Other
products include plastic liners used for steel composite drums and a
comprehensive accessory line.

    STEEL CONTAINERS

    We have three steel drum facilities which serve the Northeast, the Gulf
Coast, parts of the Midwest and Ontario, Canada; regions where there is a high
concentration of purchasers of steel drums.

    We produce a broad line of the widely used 55-gallon steel drum,
manufactured to customer specifications, including steel gauge, special linings,
custom painting and special closure systems. Our line of steel drum products
also includes lined and unlined tight-head and open-top drums and tight-head
drums that incorporate our optimally drainable design feature. In addition, we
also manufacture a steel export drum that significantly reduces freight costs
for exporters who use overseas shipping containers and a steel composite drum
which contains a plastic liner for applications requiring permeation protection.

SERVICES DIVISION

    Our services division provides industrial container services for both
plastic and steel rigid industrial containers. These services include
reconditioning and selling plastic and steel industrial containers, plastic
container fleet management, retrieval and recycling of empty industrial
containers and leasing of plastic drums and intermediate bulk containers.

    The addition of these container services to our historical manufacturing
business enables us to serve a wider range of our customers' evolving industrial
container requirements and is an important aspect of our strategy to retain and
enhance a leading market position as our customers increasingly look to maintain
relationships with fewer suppliers.

    PLASTIC CONTAINER SERVICES

    Our services division pioneered the businesses of plastic container leasing
on a per use or round-trip basis and plastic container fleet management in the
United States and Canada utilizing bar coded tracking technology. Under the
lease model, our services division leases a plastic container to a customer, who
fills the container and ships the full container to its customer, the end-user.
The end-user then calls a toll-free number, and we arrange to pick up the empty
container directly from the end-user. Upon its return, the container is
thoroughly inspected, cleaned, graded and either inventoried for re-use or, if
below grade, recycled or sold. We charge our leasing customers a flat per use
price. The drum lease business model has become less economically viable over
time due to poor return rates and greater geographic coverage for reverse
logistics. Consequently we are transitioning the lease model to a reconditioning
business model. Under this model, the customer purchases new plastic drums from
our container manufacturing division. We provide the customer with the same
services described above through our services division, however customers are
incentivized to assist us in maximizing container return rates and lower their
packaging costs.

    In our plastic container fleet management business, our services division
provides the customer with the same services as described above, but using the
customer's fleet of containers purchased from our container manufacturing
division or from another manufacturer. We also charge our container fleet
management customers a flat per use price.

                                       6
<PAGE>
    STEEL RECONDITIONING

    We began steel drum reconditioning in July 1998 with the acquisition of New
England Container, a leader in terms of quality and service. Our services
division arranges for the retrieval of empty industrial containers of all types,
including containers manufactured by other manufacturers. Larger end-users of
drums are provided with trailers to store their empty drums. When the trailer is
filled, we arrange for it to be returned to our service facility and leave an
empty trailer in its place. We also arrange to pick up empty drums from smaller
customers on request. Used drums are returned to our service facility where they
are thoroughly inspected, sorted and graded. The drums are then cleaned and
either processed for recycling or fully reconditioned. The reconditioning
process includes metal preparation to prepare the steel for a new coating, metal
bending to remove all dents and insure the drum meets dimensional
specifications, leak testing, interior lining and exterior painting to meet the
filling customer's specifications. A reconditioned steel drum sells for
approximately 60% of the price of a new steel drum. We generally charge our
customers a fee to pick up and dispose of used drums. In some cases, however, we
will pay the customer a small fee for drums which are in high demand and are of
reconditionable quality.

    CONTAINER RECYCLING

    We provide for the environmentally sound destruction of plastic, fiber and
steel containers that are not suitable for reconditioning on a contract basis.
The empty containers are cleaned in an environmentally sound manner and are then
processed for sale as recycled material. We have also successfully manufactured
a 55-gallon plastic open head drum from recycled resin. We will commercialize
this product in 2001.

CUSTOMERS

    We have a broad customer base and are not dependent upon a single customer,
or a few customers. Our top twenty-five customers account for approximately
one-third of consolidated net sales and no individual customer exceeds 3% of
consolidated net sales.

RAW MATERIALS

    The principal raw material and most significant cost component for our
plastic containers is high-density polyethylene resin, also known as HDPE resin.
We generally maintain less than one month of HDPE resin inventory at each
plastic manufacturing facility.

    The principal raw material and most significant cost component for our steel
drums is cold-rolled steel. We generally maintain one to two months of
cold-rolled steel inventory at each steel manufacturing facility. We maintain
this level of inventory because we purchase a portion of our cold-rolled steel
from foreign suppliers who do not ship as frequently as domestic suppliers.
There is no effect on our operating margin from maintaining this additional
inventory.

    Raw materials purchasing is centrally managed from our corporate
headquarters. We maintain relationships with various suppliers for HDPE resin,
cold-rolled steel and other raw materials. While we generally believe our access
to raw materials is good, we may not have an uninterrupted supply of raw
materials at competitive prices. We generally do not have long-term supply
contracts with our suppliers, and our purchases of raw materials are subject to
market prices. We generally attempt to pass changes in the prices of raw
materials to our customers over a period of time, but recently due to increased
competition we have not been able to pass through all of the higher raw material
costs.

    We do not manufacture rigid intermediate bulk containers. Our rigid
intermediate bulk container purchases are affected through individual purchase
orders. The unavailability or unwillingness of a manufacturer to supply us with
rigid intermediate bulk containers, or IBCs, on commercially reasonable

                                       7
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terms, or at all, would restrict our ability to offer IBC leasing services to
our customers, which could have a material adverse effect on our results of
operations. In addition, the inability of a manufacturer to supply IBCs in a
timely fashion, or to satisfy our quality standards, could cause us to miss the
delivery date requirements of our customers for those items, which could result
in a cancellation of orders, refusal to accept delivery or a reduction in prices
and, as a result, could have a material adverse effect on our results of
operations. We purchase IBCs which our services division leases to our
customers. Our IBC suppliers are also our competitors in some of our product
lines. We do not have long-term contracts for the supply of IBCs with these
manufacturers and compete with other companies for production capacity. Should
we need to secure alternative suppliers, only a small number of alternative
suppliers exist.

SALES AND MARKETING

    Our sales and marketing is conducted primarily through a direct sales force
of 37 people. Our sales force sells all product and service lines, and includes
a group of Strategic Account Managers who sell and market to our large customers
who tend to purchase across a wide range of products and services. Our sales
force promotes us as a source for all of our customers' rigid industrial
container requirements.

    Our Strategic Account Managers also coordinate our participation in the
Mauser International Packaging Institute and Drumnet associations of industrial
container suppliers. We and other participants in these organizations can offer
to supply and service a customer's industrial container requirements through the
network of participants in more than 30 countries, primarily in North America,
Europe and Asia. Our ability to provide for our customers' industrial container
requirements on an international basis results in stronger relationships with
large international customers operating in U.S. and Canadian markets.

    Our sales personnel work closely with our customers and business operators
to satisfy all of our customers' industrial container requirements. Our sales
personnel are trained to seek and recognize opportunities to cross-sell all of
our products and services. In addition, we have employees who are trained to
provide extensive technical and regulatory support to our customers.

INTELLECTUAL PROPERTY

    We have the exclusive license from Mauser-Werke GmbH, a German company, to
manufacture the L-1 drum throughout all of the United States, except particular
parts of the Southeast, and throughout all of Canada. We and one other
manufacturer have the exclusive right to sell the L-1 throughout the United
States and we have the exclusive right to sell the LR-1 in Canada. There are
over 40 licensees worldwide for Mauser plastic drum technology, which is
generally acknowledged as one of the best large plastic blow mold production
technologies worldwide. Our rights to the Mauser technology derive from a series
of licenses. These licenses terminate on July 31, 2008, unless one or more
improvement patents are issued, in which case they terminate on the earlier of:

    (1) the expiration of the latest to expire of these improvement patents; or

    (2) July 31, 2015, unless extended by Mauser.

    Mauser can terminate our licenses if we fail to comply with the covenants
contained in the licenses, including our obligations to make royalty payments.
Approximately 23% of our total revenues are generated by products created under
the Mauser licenses.

    We also have the non-exclusive license from Gallay S.A. to manufacture steel
containers using Gallay's patented production process at our steel drum
manufacturing facilities and the non-exclusive license to sell these steel
containers throughout the United States and Canada. The duration of the Gallay
licenses extends to the time of expiration of the last of any patent licensed
under our

                                       8
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agreements with Gallay. Approximately 30% of our total revenues are generated by
products created under the Gallay licenses.

EMPLOYEES

    As of December 31, 2000, we employed 1,310 persons, of whom 31 were employed
at corporate headquarters, 234 were regional or area managers and support
personnel and 1,045 were employed at our manufacturing and service facilities.
Approximately 35% of our employees are represented under collective bargaining
agreements, which expire from May 2001 to March 2006. None of our employees are
working under expired collective bargaining agreements. We do not anticipate any
difficulty in extending or renegotiating our collective bargaining agreements as
they expire. While we believe that our labor relations with our unionized
employees are good, a prolonged labor dispute could have a material adverse
effect on our business and results of operations.

ENVIRONMENTAL MATTERS

    Our operations are subject to federal, state, local and Canadian
environmental laws that continue to be adopted and amended. These environmental
laws regulate, among other things, air and water emissions and discharges at our
manufacturing and service facilities; our generation, storage, treatment,
transportation and disposal of solid and hazardous waste; and the release of
toxic substances, pollutants and contaminants into the environment at properties
that we operate and at other sites. In some circumstances and jurisdictions,
these laws also impose requirements regarding the environmental conditions at
properties prior to a transfer or sale. These laws may apply to facilities that
we previously owned or operated. Our business involves the manufacture, sale,
lease and reconditioning of containers, which may be used for food,
agricultural, petroleum and chemical products. Risks of significant costs and
liabilities are inherent in our operations and facilities, as they are with
other companies engaged in like businesses. We believe, however, that our
operations are in substantial compliance with all applicable environmental laws.

    In addition, under environmental laws, a current or previous owner of real
property, and parties that generate or transport hazardous substances that are
disposed of at real property, may be liable for the costs of investigating and
remediating these substances on or under the property. The federal Comprehensive
Environmental Response, Compensation & Liability Act, as amended, and similar
laws, may impose this liability on a joint and several basis, regardless of
whether the liable party was at fault for the presence of the hazardous
substances. We have not incurred significant liability in several of these cases
asserted against us and settled to date involving the cleanup of off-site
locations where we allegedly disposed of waste. However, we cannot assure that a
material claim under these laws will not arise in the future.

    The U.S. Environmental Protection Agency (the "EPA") confirmed the presence
of contaminants, including dioxin, in and along the Woonasquatucket River in
Rhode Island. Prior to 1970, New England Container ("NEC") operated a facility
in North Providence, Rhode Island along the Woonasquatucket River at a site
where contaminants have been found. NEC, the current owners of the property, and
others have been formally identified by the EPA as potentially responsible
parties, with the site added to the National Priority Superfund Site list in
February 2000. Although NEC no longer operates the facility, and did not operate
the facility at the time we acquired the outstanding capital stock of NEC in
July 1998, NEC could incur liability under federal and state environmental laws
and/or as a result of civil litigation. Any resulting liability is subject to a
contractual indemnity from Vincent J. Buonanno, one of our directors and the
former owner of NEC, subject to a $2.0 million limit, and rights of contribution
from other potential responsible parties. In January 2001, the EPA announced it
was proceeding with an interim soil removal project and will be undertaking
further testing and analysis to determine what, if any, remedial action in
addition to the interim soil removal will be required. On March 26, 2001, the
EPA issued a unilateral administrative order pursuant to Section 106(a) of the

                                       9
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federal Comprehensive Environmental Response, Compensation and Liability Act
requiring NEC and the other potentially responsible parties to perform the
interim soil removal project. We currently are unable to estimate the likelihood
or extent of any liability; however, this matter may result in liability to NEC
that could have a material adverse effect on our financial condition and results
of operations.

ITEM 2. PROPERTIES

    We own or lease eleven plastic and three steel drum manufacturing facilities
and six service facilities. The following table sets forth particular
information as of December 31, 2000 with respect to our facilities:

<TABLE>
<CAPTION>
LOCATION                                 DESCRIPTION          AREA (SQUARE FEET)   LEASED OR OWNED
--------                          --------------------------  ------------------   ---------------
<S>                               <C>                         <C>                  <C>
Allentown, Pennsylvania           Plastic Manufacturing                145,000        Leased
Romeoville, Illinois              Plastic Manufacturing                 70,000        Owned
Houston, Texas                    Plastic Manufacturing                 50,000        Owned
Rancho Cucamonga, California      Plastic Manufacturing                 73,500        Owned
Nitro, West Virginia              Plastic Manufacturing                 58,000        Leased
Reserve, Louisiana                Plastic Manufacturing                 72,000        Owned
The Woodlands, Texas              Plastic Manufacturing                 90,000        Leased
Atlanta, Georgia                  Plastic Manufacturing                 95,000        Owned
South Brunswick, New Jersey       Plastic Manufacturing                110,000        Leased
Addison, Illinois                 Plastic Manufacturing                135,000        Owned
Bramalea, Ontario                 Plastic Manufacturing                 80,000        Leased
Woodbridge, New Jersey            Steel Manufacturing                  120,000        Owned
Houston, Texas                    Steel Manufacturing                  106,500        Owned
Burlington, Ontario               Steel Manufacturing                   60,000        Owned
Simpsonville, South Carolina
  (two facilities)                Plastic Services              123,000/40,000        Leased
Allentown, Pennsylvania           Plastic Services                     145,000        Leased
Smithfield, Rhode Island          Plastic and Steel Services            44,000        Owned
Baltimore, Maryland               Steel Services                        39,000        Leased
Richmond, Virginia                Steel Services                        16,500        Leased
</TABLE>

    Our leased corporate and executive headquarters, located in Bridgewater, New
Jersey, provides administrative services to our facilities, including
accounting, accounts receivable, financial reporting, human resources,
information technology, insurance, marketing, taxes and treasury services.

    All of our facilities are generally well maintained and adequate for the
purpose for which they are intended. We conduct continuing reviews of our
facilities with the view to modernization and cost reduction.

ITEM 3. LEGAL PROCEEDINGS

    We are a party to various lawsuits arising in the ordinary course of
business. We do not believe these lawsuits are material to our results of
operations or financial condition.

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

    None.

                                       10
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                                    PART II

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

    There is no established trading market for our common stock, of which there
were fifteen (15) holders of record on December 31, 2000. We have not paid any
dividends on our common stock and do not plan to pay any such dividends in the
foreseeable future. Our senior credit facility prohibits us from paying
dividends, as does the indenture pursuant to which our outstanding senior
subordinated notes were issued.

ITEM 6. SELECTED FINANCIAL DATA

    Set forth below is selected consolidated financial data as of and for the
years ended December 31, 2000, 1999, 1998, 1997 and 1996. The data presented
below should be read in conjunction with the discussion under Item 7.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our financial statements.

    Certain amounts in 1999 and 1998 have been reclassified to conform to the
2000 and 1999 presentations.

<TABLE>
<CAPTION>
                                                                FISCAL YEAR ENDED DECEMBER 31,
                                                     ----------------------------------------------------
                                                       2000       1999       1998       1997       1996
                                                     --------   --------   --------   --------   --------
                                                                    (DOLLARS IN MILLIONS)
<S>                                                  <C>        <C>        <C>        <C>        <C>
STATEMENT OF OPERATIONS DATA:
Net sales:
  Container manufacturing division.................  $ 217.5     $224.9     $230.0     $161.1     $141.9
  Services division................................     56.0       62.2       46.6       15.2         --
                                                     -------     ------     ------     ------     ------
    Total net sales................................    273.5      287.1      276.6      176.3      141.9
Cost of sales......................................    224.5      222.5      213.2      133.6      103.6
                                                     -------     ------     ------     ------     ------
Gross profit.......................................     49.0       64.6       63.4       42.7       38.3
Selling, general and administrative
  expenses.........................................     48.3       51.4       45.5       26.8       24.3
Non-recurring charges..............................       --        1.9        6.2         --         --
                                                     -------     ------     ------     ------     ------
Income from operations.............................      0.7       11.3       11.7       15.9       14.0
Other (income) expense, net........................       --       (0.1)       0.5        0.2        0.3
Interest expense...................................     23.2       21.1       16.0        8.8        7.5
                                                     -------     ------     ------     ------     ------
Income (loss) before income taxes and
  extraordinary items..............................    (22.5)      (9.7)      (4.8)       6.9        6.2
Provision (benefit) for income taxes...............     (6.6)      (2.2)      (0.5)       2.9        2.5
                                                     -------     ------     ------     ------     ------
Income (loss) before extraordinary items...........  $ (15.9)    $ (7.5)    $ (4.3)    $  4.0     $  3.7
                                                     =======     ======     ======     ======     ======
OTHER FINANCIAL DATA:
Cash flows from (used in):
  Operating activities.............................  $   0.7     $ 14.3     $ 30.8     $ 17.7     $  4.4
  Investing activities.............................    (20.8)     (28.6)     (41.2)    (140.3)      (3.3)
  Financing activities.............................     20.9       13.3       11.0      122.5       (1.3)
  Capital expenditures.............................     20.8       28.6       28.7        9.9        3.3
  Depreciation and amortization....................     30.1       30.1       26.6       10.1        5.9
BALANCE SHEET DATA:
  Working capital..................................  $(194.9)    $ 14.5     $ 12.9     $ 20.2     $ 17.6
  Property, plant and equipment, net...............     87.6       94.6       92.6       85.0       31.2
  Total assets.....................................    259.8      268.0      258.3      245.5       88.8
  Total debt.......................................    214.3      192.8      171.6      161.4       86.2
  Redeemable preferred stock.......................       --         --         --         --       27.5
  Total stockholders' equity (deficit).............      9.9       26.6       33.5       38.8      (14.5)
</TABLE>

                                       11
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

INTRODUCTION

    The rigid industrial container industry continues to undergo consolidation
and remains extremely competitive. We believe that the industry will evolve to
support a few participants who are able to provide a broad range of containers
and related container services.

    All of our revenues are derived from sales of our products and services. Our
expenses consist primarily of cost of sales, selling, general and administrative
expenses and interest expense. The most significant component of cost of sales
is our expense for purchases of HDPE resin, which is the principal raw material
for plastic drums, and cold-rolled steel, which is the principal raw material
for steel drums. Consolidation of resin producers narrows supplier choices to a
few large players and could make price negotiations more difficult. Over a
period of time, we generally attempt to pass changes in the prices for HDPE
resin and cold-rolled steel through to our customers, but recently due to
increased competition we have not been able to pass through all of the higher
raw material costs. At times, we will increase the purchase of HDPE resin and
cold-rolled steel in anticipation of price increases. Plastic drum financial
performance has been recently impacted by rising fuel and electricity costs as
well as electrical supply interruptions impacting our Southern California plant.
Our overall results of operations are affected by the level of economic activity
in the industries served by our customers, which in turn may be affected, by the
level of economic activity in the U.S. and foreign markets, which they serve.
Because we operate with little or no backlog, changes in economic activity,
positive and negative affect our results of operations more quickly than these
changes would affect the results of operations of a company that operated with a
backlog.

    We expect plastic drum shipments in the United States to move with the gross
domestic product, with gains being restrained as users of rigid industrial
containers increasingly convert to IBCs, which we expect to rise 10% annually
through 2003. A typical IBC replaces the need for approximately five 55-gallon
drums. Although we provide IBCs through our services division, currently, we do
not manufacture IBCs and are evaluating options for obtaining or acquiring the
capacity to do so. There can be no assurance that we will be successful in
obtaining or acquiring this capacity.

    Financial performance of the steel drum and steel reconditioning industry
reflects lower margins due to excess capacity, which keeps prices depressed. The
natural gas price escalation of late has a further negative impact on new and
reconditioned steel drum margins. Although we anticipate minimal/flat growth in
the overall steel drum and steel reconditioning market, we believe opportunities
exist to increase our market share for our steel products mainly from
competitors exiting the business, due to a lack of funds for equipment,
environmental and quality initiatives as well as geographic expansion.

    The following discussion and analysis provides information that we believe
is relevant to an understanding of our consolidated financial position and
results of operations. The following discussion and analysis should be read in
conjunction with our financial statements and the related notes included in this
report.

                                       12
<PAGE>
RESULTS OF OPERATIONS

    The following table sets forth, for each of the periods indicated, statement
of operations data, expressed as a percentage of net sales:

<TABLE>
<CAPTION>
                                                               FISCAL YEAR ENDED
                                                                  DECEMBER 31,
                                                         ------------------------------
STATEMENT OF OPERATIONS DATA:                              2000       1999       1998
-----------------------------                            --------   --------   --------
<S>                                                      <C>        <C>        <C>
Net sales..............................................   100.0%     100.0%     100.0%
Cost of sales..........................................    82.1       77.5       77.1
Gross profit...........................................    17.9       22.5       22.9
Selling, general and administrative expenses...........    17.6       17.9       16.4
Income from operations.................................     0.3        3.9        4.2
Interest expense.......................................     8.5        7.3        5.8
Loss before taxes and extraordinary items..............    (8.2)      (3.4)      (1.7)
Loss before extraordinary items........................    (5.8)      (2.7)      (1.6)
</TABLE>

FISCAL YEAR ENDED DECEMBER 31, 2000 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
  1999

    NET SALES

    Net sales decreased 4.7% to $273.5 million in 2000 from $287.1 million in
1999. Our container manufacturing division's net sales declined 3.3% to
$217.5 million in 2000, from $224.9 million in 1999, due primarily to unit
volume decreases coupled with competitive price pressures. Unit volume decreased
due primarily to a slowdown in the economy. Net sales in our services division
decreased 10% to $56.0 million in 2000 from $62.2 million in 1999 due to planned
lower trip leasing volumes associated with our transition to a reconditioning
business model, customer rationalization, and lower drum prices.

    GROSS PROFIT

    Gross profit decreased $15.6 million to $49.0 million in 2000 from
$64.6 million in 1999, due to significantly higher raw material prices and lower
unit volumes in our container manufacturing division. Due to increased
competition, we have not been able to pass through all of the higher raw
material prices in the form of increased selling prices. As a result, gross
profit as a percentage of net sales decreased to 17.9% in 2000 from 22.5% in
1999.

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

    Selling, general and administrative expenses as a percentage of net sales
decreased to 17.6% in 2000 from 17.9% in 1999 primarily due to the
implementation of cost savings initiatives, including personnel reductions, to
offset higher raw material prices.

    NON-RECURRING CHARGES

    In 1999, we developed a plan to further streamline our operations as a
result of our change in management. We recorded approximately $1.9 million of
additional non-recurring charges in 1999 that related to severance and other
personnel related costs. No such charges were incurred in 2000.

    INCOME FROM OPERATIONS

    Income from operations decreased by $10.6 million to $0.7 million in 2000
from $11.3 million in 1999 as a result of the factors described above.

                                       13
<PAGE>
    INTEREST EXPENSE

    Interest expense was $23.2 million in 2000 compared with $21.1 million in
1999. The increase in interest expense is the result of increased debt levels
and a higher weighted average interest rate.

    LOSS BEFORE INCOME TAXES AND EXTRAORDINARY ITEM

    In 2000, the loss before income taxes and extraordinary item was
$22.5 million versus $9.7 million in 1999, as the result of the factors
described above.

    INCOME TAX (BENEFIT)

    The effective tax rate on the loss was (29.3)% in 2000 and (23.0)% in 1999,
both lower than the statutory federal income tax benefit due to the
non-deductible portion of goodwill associated with our acquisitions and higher
foreign income taxes.

    LOSS BEFORE EXTRAORDINARY ITEM

    In 2000, the loss before extraordinary item was $15.9 million versus
$7.5 million in 1999 due to the factors described above.

    EXTRAORDINARY ITEM

    As a result of the February 1999 refinancing of our revolving credit loan
and term loans, we incurred an extraordinary charge of $0.8 million, which is
net of tax benefits of $0.5 million, relating to the write-off of unamortized
deferred financing costs. No such item occurred in 2000.

    NET LOSS

    In 2000, the net loss was $15.9 million versus $8.2 million in 1999, as a
result of the factors described above.

FISCAL YEAR ENDED DECEMBER 31, 1999 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
  1998

    NET SALES

    Net sales increased 3.8% to $287.1 million in 1999 from $276.6 million in
1998. Our container manufacturing division's net sales declined 2.2% to
$224.9 million in 1999, from $230.0 million in 1998, due primarily to selling
price declines in response to lower raw material prices coupled with competitive
pressures. Net sales in our services division increased 33.5% to $62.2 million
in 1999 from $46.6 million in 1998 due to the net sales of New England
Container, which was acquired in July 1998, and growth in IBC leasing. Excluding
the impact of the New England Container acquisition, our services division's net
sales increased approximately 9.5%, despite lower selling prices in response to
competitive pressures.

    GROSS PROFIT

    Gross profit increased $1.2 million to $64.6 million in 1999 from
$63.4 million in 1998, primarily from the benefit of higher unit sales volume
and lower raw material prices, which more than offset the impact of across the
board lower selling prices, and higher return freight costs and depreciation
expense in services. Gross profit as a percentage of net sales decreased to
22.5% in 1999 from 22.9% in 1998 as a result of lower selling prices.

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

    Selling, general and administrative expenses as a percentage of net sales
increased to 17.9% in 1999 from 16.4% in 1998 primarily due to investments in
our services infrastructure, the impact of the

                                       14
<PAGE>
New England Container acquisition, higher inter-region delivery costs, a legal
settlement provision and lower average selling prices.

    NON-RECURRING CHARGES

    In conjunction with the integration of acquired entities and expansion of
our operations, we developed a plan to streamline our operations and sales force
and consolidate and relocate our corporate headquarters in order to improve
operating efficiencies and reduce costs. As part of this plan, we recorded
non-recurring charges of approximately $3.5 million during the year ended
December 31, 1998. These charges primarily include costs related to the closure
of a container manufacturing facility, severance and other personnel related
costs, such as the relocation of our corporate headquarters and other
miscellaneous costs. Non-recurring charges for the year ended December 31, 1998
also include $2.7 million of costs associated with proposed acquisitions that
were not consummated. In 1999, we developed a plan to further streamline our
operations as a result of our change in management. We recorded approximately
$1.9 million of additional non-recurring charges in 1999 that related to
severance and other personnel related costs.

    INCOME FROM OPERATIONS

    Income from operations decreased by $0.4 million to $11.3 million in 1999
from $11.7 million in 1998 as a result of the factors described above.

    OTHER (INCOME) EXPENSE, NET

    In 1999, we recorded other income, net of $0.1 million as compared to other
expense, net of $0.5 million in 1998. The change was due to currency movements
impacting the fair value of foreign exchange contracts.

    INTEREST EXPENSE

    Interest expense was $21.1 million in 1999 compared with $16.0 million in
1998. The increase in interest expense is the result of increased debt levels
associated with the acquisition of New England Container in July 1998 and the
refinancing of our revolving credit loan and term loans and the senior
subordinated notes offering in February 1999. In addition, our weighted average
interest rate on this indebtedness is higher than the rate on our former senior
credit agreement.

    LOSS BEFORE INCOME TAXES AND EXTRAORDINARY ITEM

    In 1999, the loss before income taxes and extraordinary item was
$9.7 million versus $4.8 million in 1998, as the result of the factors described
above.

    INCOME TAX (BENEFIT)

    The effective tax rate on the loss was (23.0)% in 1999 and (10.4)% in 1998,
both lower than the statutory federal income tax benefit due to the
non-deductible portion of goodwill associated with our acquisitions and higher
foreign income taxes.

    LOSS BEFORE EXTRAORDINARY ITEM

    In 1999, the loss before extraordinary item was $7.5 million versus
$4.3 million in 1998 due to the factors described above.

                                       15
<PAGE>
    EXTRAORDINARY ITEM

    As a result of the February 1999 refinancing of our revolving credit loan
and term loans, we incurred an extraordinary charge of $0.8 million, which is
net of tax benefits of $0.5 million, relating to the write-off of unamortized
deferred financing costs.

    NET LOSS

    In 1999, the net loss was $8.2 million versus $4.3 million in 1998, as a
result of the factors described above.

LIQUIDITY AND CAPITAL RESOURCES

    Our principal uses of cash are for capital expenditures, interest expense
and working capital. We utilize funds generated from operations and borrowings
to meet these requirements. For the years ended December 31, 2000, 1999 and
1998, net cash generated by operating activities totaled approximately
$0.7 million, $14.3 million and $30.8 million, respectively. The decline in net
cash generated by operating activities is due to lower earnings in 2000 and
higher interest charges coupled with lower accounts payable due to timing of
payments.

    For the years ended December 31, 2000, 1999 and 1998, we made capital
expenditures of approximately $20.8 million, $28.6 million and $28.7 million,
respectively. Our capital expenditures included approximately $10.5 million,
$18.0 million and $14.7 million for purchases of containers for our plastic
services business for the years ended December 31, 2000, 1999 and 1998,
respectively. We currently have no capital commitments outside the ordinary
course of business. Our principal working capital requirements are to finance
accounts receivable and inventories.

    On February 10, 1999, we refinanced our revolving credit loan and term loans
by amending our senior credit facility to provide for a $75.0 million revolving
credit line (including a $15.0 million Canadian credit line), which bears
interest, at our election, at a combination of domestic source and Eurodollar
borrowing rates which fluctuate based on our earnings before income taxes,
depreciation and amortization (EBITDA) and debt levels, and a $25.0 million term
loan, bearing interest at 9.48%. The revolving credit facility matures in
February 2004 and the term loan matures in two equal installments in June 2006
and 2007. In addition, we issued $150.0 million of 10 7/8% senior subordinated
notes due February 15, 2009, issued at 99.248% resulting in an effective yield
of 11.0%. The senior credit facility contains certain covenants and restrictions
and is secured by substantially all our assets. The notes require semi-annual
interest payments which commenced August 15, 1999 and mature February 2009. The
notes are subordinate to all existing and future senior indebtedness and are
unconditionally guaranteed by the domestic subsidiaries and contain a number of
customary covenants and restrictions. Deferred financing charges of
approximately $7.7 million were incurred in connection with the refinancing in
1999 and $0.4 million in 2000 in connection with the amendment to the Credit
Agreement. As of December 31, 2000, we and our subsidiaries had total
indebtedness of approximately $214.3 million, approximately $65.0 million of
which was senior indebtedness.

    We announced on January 26, 2001 that we retained The Blackstone Group, L.P.
in order to assist in developing a financial restructuring plan and that an ad
hoc committee of senior subordinated noteholders has been organized. We have
commenced discussions with this committee towards developing a consensual
financial restructuring plan to de-leverage our capital structure. We are
seeking to restructure our bond debt and do not intend to impair in any way our
trade creditors or implement layoffs as part of this financial restructuring
plan. Discussions with this committee and banks are in their preliminary stages,
and there can be no assurance that a financial restructuring will be completed.

    Due to the impact of a weaker economic environment on our business results,
we failed to comply with the minimum interest coverage and minimum adjusted
EBITDA covenants of our Credit

                                       16
<PAGE>
Agreement at December 31, 2000. In addition, management evaluated its 2001 cash
flow projections and debt service requirements and based upon this evaluation,
management believes that we will most likely not comply with certain debt
covenants throughout 2001. We also elected not to make the interest payment due
February 15, 2001 on our Senior Subordinated Notes. The failure to make the
scheduled interest payment constitutes a default under the Bond Indenture,
subject to a 30-day grace period, and also constitutes an Event of Default
pursuant to Article 15.1 (f) of the Credit Agreement relating to making any
payments in respect of Material Indebtedness (as defined in the Credit
Agreement). The 30-day grace period to make the interest payment to cure the
default expired on March 15, 2001 and as a consequence, the Senior Subordinated
Notes, revolving credit loans and term loan are callable and therefore have been
classified as current liabilities in the December 31, 2000 consolidated balance
sheet. The Company and its lenders under the Credit Agreement have entered into
a 60-day Forbearance and Amendment Agreement (the Forbearance Agreement), dated
February 15, 2001, pursuant to which the lenders will not call the Company's
outstanding debt through the termination of the Forbearance Agreement and will
continue to allow the Company to draw on their revolving credit facility to
satisfy working capital needs subject to certain limitations. In addition, the
interest rate on the Company's term loan and the revolving credit loan margin
was increased 0.5% and the facility's commitment was temporarily reduced from
$75.0 million to $60.0 million. The Forbearance Agreement terminates on the
earlier of (a) the occurrence of an additional event of default (as defined);
(b) April 17, 2001 or (c) the date on which the Senior Subordinated Notes are
accelerated. We anticipate extending the Forbearance Agreement an additional
sixty days from April 17, 2001 as negotiations with the lenders and noteholders
progress.

    The consolidated financial statements of the Company indicate that as a
result of the above matters, at December 31, 2000, current liabilities exceeded
current assets by $194.9 million. Historically, cash flows generated from
operations, supplemented by the unused borrowing capacity under the Revolving
Credit Agreement, have been sufficient to pay the Company's debts as they come
due, provide for its capital expenditures and meet its other cash requirements.
The consolidated financial statements of the Company presented herein do not
reflect any adjustments that could result from the Company's financial
restructuring plan and there can be no assurance that such a plan will be
completed. Failure to complete this plan would raise substantial doubt about the
Company's ability to continue as a going concern.

EFFECT OF INFLATION

    Inflation generally affects our business by increasing the interest expense
of floating rate indebtedness and by increasing the cost of raw materials, labor
and equipment. As discussed above, the inability to recover the higher costs of
raw materials in 2000 has had a material effect on our business.

RECENTLY ISSUED ACCOUNTING STANDARDS

    In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements." SAB 101 summarizes certain of the SEC's views in applying generally
accepted accounting principles to revenue recognition in financial statements.
The Company has determined that it is in compliance with the revenue recognition
provisions and criteria set forth in SAB 101 and that no modifications are
necessary to the Company's current revenue recognition policies and procedures.

    Statement of Financial Accounting Standards ("SFAS") 133, Accounting for
Derivative Instruments and Hedging Activities, as amended by SFAS 137,
Accounting for Derivative Instruments and Hedging Activities--Deferral of the
Effective Date of FASB Statement No. 133, and SFAS 138, Accounting for Certain
Derivative Instruments and Certain Hedging Activities, took effect for the
Company on January 1, 2001. These standards require that an entity recognize all
derivatives as either assets or liabilities measured at fair value. The
accounting for changes in the fair value of a derivative depends

                                       17
<PAGE>
on the use of the derivative. In addition, certain contracts that were not
formerly considered derivatives may now meet the definition of a derivative.
Adoption of these new accounting standards did not have a material impact on the
Company's financial condition or results of operations.

FORWARD LOOKING STATEMENTS

    Readers are cautioned that the Results of Operations and other sections of
this report contain forward-looking statements that are based on management's
current expectations and projections about future events. Although we believe
that our assumptions made in connection with the forward-looking statements are
reasonable, we cannot assure you that our assumptions and expectations will
prove to have been correct. We undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise. A description of some of the factors that could
cause actual results to differ materially from expectations expressed in the
Company's forward-looking statements set forth in the Company's Form S-4 (File
No. 333-76057) filed with the Securities and Exchange Commission under the
caption "Forward-Looking Statements" is incorporated herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    MANAGING FOREIGN CURRENCY AND INTEREST RATE EXPOSURE

    The Company is exposed to market risk from foreign currency exchange rate
fluctuations as measured against the U.S. dollar and interest rates. We manage
this exposure through internal policies and procedures and the use of derivative
financial instruments when considered appropriate. As a matter of policy, the
Company does not speculate in financial markets and therefore does not hold or
issue derivative financial instruments for trading purposes.

    INTEREST RATE RISK

    The revolving indebtedness under our senior credit facility bears interest
at a floating rate. Our primary exposure to interest rate risk is as a result of
changes in interest expense related to this indebtedness due to changes in
market interest rates. A 10% increase in interest rates at December 31, 2000
would not have a material adverse affect on our results of operations, financial
condition or cash flows.

    FOREIGN CURRENCY EXCHANGE RATE RISK

    We have operations in Canada and sales denominated in Canadian dollars. Our
primary exposure to foreign currency exchange rate risk is as a result of
changes in the exchange rate between the U.S. dollar and the Canadian dollar. We
currently do not maintain any derivative financial instruments to limit our
exposure to this risk. The Company has entered into foreign currency forwards to
hedge the currency exposure of firm fixed asset purchases denominated in
Deutsche Marks.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    See the "Index to Financial Statements" which is located on page 30 of this
report.

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

    None.

                                       18
<PAGE>
                                    PART III
                                   MANAGEMENT

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    Our Directors and executive officers are as follows:

<TABLE>
<CAPTION>
NAME                                          AGE                           POSITION
----                                        --------                        --------
<S>                                         <C>        <C>
Daniel W. Miller..........................     50      Chairman of the Board of Directors, President and
                                                       Chief Executive Officer, Assistant Secretary and
                                                         Director
Michael W. Hunter.........................     43      Executive Vice President--Global Marketing, Sales
                                                       and Business Development, and Director
John H. Hunter............................     54      Vice President, Operations and
                                                       Engineering--Container Manufacturing Division
David C. Garrison.........................     61      Vice President, Operations--Container Manufacturing
                                                         Division
Ronald M. Litchkowski.....................     43      Vice President, Chief Financial Officer, Treasurer
                                                       and Secretary
Arthur C. Pisano, Jr......................     41      Vice President, Labor, Operations, and Human
                                                         Resources
Norman W. Alpert..........................     42      Director
Vincent J. Buonanno.......................     56      Director
Todd N. Khoury............................     35      Director
Leonard Lieberman.........................     72      Director
Kevin Mundt...............................     46      Director
Arthur J. Nagle...........................     62      Director
Vincent J. Naimoli........................     62      Director
Daniel S. O'Connell.......................     47      Director
John W. Priesing..........................     72      Director
Robert L. Rosner..........................     41      Director
</TABLE>

    DANIEL W. MILLER joined Russell-Stanley in March 1995 and was appointed
Senior Vice President and Chief Financial Officer in February 1996. Mr. Miller
was appointed Senior Vice President, Finance and Chief Financial Officer in
June 1996 and became Executive Vice President and Chief Financial Officer in
May 1998. Prior to May 1998, Mr. Miller was also a Managing Director of Vestar
Resources, Inc., an affiliate of Vestar, which he joined in 1993. He was
appointed President of Russell-Stanley in October 1999, Chief Executive Officer
in March 2000 and Chairman of the Board in January 2001. Mr. Miller's prior
experience includes executive positions at Dresser Industries, Inc., Forstmann
Little & Co. and Wesray Capital Corporation. Mr. Miller is a C.P.A. and holds a
B.S. from Northern Illinois University.

    MICHAEL W. HUNTER joined Russell-Stanley as Executive Vice President and
President of Hunter Drums Limited with the acquisition of Hunter Drums Limited
in 1997. Mr. Hunter is currently Executive Vice President--Global Marketing,
Sales and Business Development. He joined Hunter Drums Limited in 1979 and
became President in 1984. Mr. Hunter holds a B.A. from the University of Western
Ontario.

    JOHN H. HUNTER joined Russell-Stanley in 1984 as a Vice President and was
appointed Vice President--Plastics Division in 1986. Mr. Hunter is currently
Vice President, Operations and Engineering--Container Manufacturing Division.
Prior to joining Russell-Stanley, Mr. Hunter was a Plant Manager for ACT.
Mr. Hunter holds a B.S. from the University of Strathclyde in Glasgow, Scotland.

                                       19
<PAGE>
    DAVID C. GARRISON joined Russell-Stanley as Vice President, Operations in
1991. Mr. Garrison is currently Vice President, Operations-Container
Manufacturing Division. Prior to joining Russell-Stanley, Mr. Garrison was Vice
President and General Manager at Eastern Steel Barrel Corp. From 1962 to 1978,
he was employed by American Thermoplastics Corporation, a subsidiary of Phillips
Petroleum Company. Mr. Garrison holds a B.S. from Lehigh University.

    RONALD M. LITCHKOWSKI joined Russell-Stanley as Vice President, Controller
in 1997. He was appointed Vice President, Chief Financial Officer, Treasurer and
Secretary in October 1999. Prior to joining Russell-Stanley, Mr. Litchkowski was
Vice President of Finance and Administration for the Institutional Products
Division of Colgate-Palmolive Company, where he worked in various executive
financial management positions since 1989. His initial experience was gained as
an audit manager with Price Waterhouse. Mr. Litchkowski is a C.P.A. and holds a
B.S. from King's College.

    ARTHUR C. PISANO, JR. joined Russell-Stanley in the Sales and Marketing
Department in 1991. He was appointed Vice President, Labor, Operations, and
Human Resources in January of 2000. In his tenure with Russell-Stanley,
Mr. Pisano has held management positions of increasing responsibility in
operations, human resources, labor relations and union negotiations. Prior to
joining Russell-Stanley, Mr. Pisano held various operating positions with Radial
Castings. Mr. Pisano holds a B.S. from St. Thomas Aquinas College.

    NORMAN W. ALPERT is a Managing Director of Vestar and was a founding partner
of Vestar at its inception in 1988. Mr. Alpert is Chairman of the Board of
Directors of Advanced Organics, Inc., and Aearo Corporation, and a Director of
MCG Credit Corp., Internet Venture Works, L.L.C., Cluett American Corp.,
Siegelgale Holdings, Inc. and Remington Products Company, L.L.C., all companies
in which Vestar has a significant equity interest. Mr. Alpert holds an A.B. from
Brown University.

    VINCENT J. BUONANNO is the Chairman and Chief Executive Officer of Tempel
Steel Company of Chicago, a producer of magnetic steel laminations.
Mr. Buonanno was the principal stockholder and President of New England
Container from 1980 until 1997 and is a trustee of Brown University.
Mr. Buonanno holds an A.B. from Brown University.

    TODD N. KHOURY is a Managing Director of Vestar and joined Vestar in 1993.
Mr. Khoury is also a director of MCG Credit Corp., Siegelgale Holdings, Inc.,
and Valor Telecommunications, L.L.C., all companies in which Vestar has a
significant equity interest. Mr. Khoury holds a B.A. from Yale University and a
M.B.A. from Harvard University.

    LEONARD LIEBERMAN is a retired Chief Executive Officer of Supermarkets
General Corporation and Outlet Communications, Inc. Mr. Lieberman is also a
director of Advanced Organics, Inc., and Consolidated Container Company, LLC,
companies in which Vestar has a significant equity interest, Sonic Corporation,
and Nice-Pak Products, Inc. Mr. Lieberman holds a B.A. from Yale University, a
J.D. from Columbia University and participated in the Advanced Management
Program at Harvard University.

    KEVIN MUNDT is a Vice President, member of the Board of Directors, and head
of the Retail and Consumer and Financial Services practices of Mercer Management
Consulting. Prior to that, Mr. Mundt was a founding partner of Corporate
Decisions, Inc., a Boston strategy consulting firm that focused on developing
growth strategies in changing markets that later merged with Mercer. Mr. Mundt
holds an A.B. from Brown University and holds a M.B.A. from Harvard University.

    ARTHUR J. NAGLE is a Managing Director of Vestar and was a founding partner
of Vestar at its inception in 1988. Mr. Nagle is a director of Advanced Organics
Holdings, Inc., Aearo Corporation, Gleason Corporation, Remington Products
Company, L.L.C., and Sheridan Healthcare, all companies in which Vestar has a
significant equity interest. Mr. Nagle holds a B.A. from Pennsylvania State
University and a M.B.A. from Columbia University.

                                       20
<PAGE>
    VINCENT J. NAIMOLI is the Chairman, President and Chief Executive Officer of
Anchor Industries International. Mr. Naimoli is also Managing General Partner
and Chief Executive Officer of the Tampa Bay Devil Rays, Ltd. Major League
Baseball Club and a director of JLM Corporation. Mr. Naimoli holds a B.S.M.E.
from the University of Notre Dame, a M.S.M.E. from New Jersey Institute of
Technology, a M.B.A. from Fairleigh Dickinson University and attended the
Advanced Management Program at Harvard University.

    DANIEL S. O'CONNELL is the founder and Chief Executive Officer of Vestar.
Mr. O'Connell is a director of Aearo Corporation, Cluett American Corporation,
Insight Communications Company, L.P., Michael Foods, Inc., Remington Products
Company, L.L.C., Siegelgale Holdings, Inc., Sunrise Medical, Inc., and St. John
Knits, Inc., all companies in which Vestar has a significant equity interest.
Mr. O'Connell holds an A.B. from Brown University and a M.B.A. from Yale
University.

    JOHN W. PRIESING is a director of Advanced Organics Holdings, Inc., a
company in which Vestar has a significant equity interest, where he served as
Chief Executive Officer during 1999. Mr. Priesing was Russell-Stanley's Chairman
from 1993 to 1997 and President and Chief Executive Officer from 1993 to 1996.
Prior to joining Russell-Stanley, Mr. Priesing served as President and Chief
Executive Officer of Axel Johnson, Inc. From 1973 to 1978, Mr. Priesing was
group Vice President and Director of Phelps Dodge Industries. Mr. Priesing holds
a B.A. from Amherst College and a M.B.A. from Harvard University and is Trustee
Emeritus at St. Lawrence University.

    ROBERT L. ROSNER is a Managing Director of Vestar and was a founding partner
of Vestar at its inception in 1988. Mr. Rosner was Chairman of Russell-Stanley's
Board of Directors from 1998 until January 2001. Mr. Rosner is also a director
of Remington Products Company, L.L.C., and Sheridan Healthcare, Inc., both
companies in which Vestar has a significant equity interest. Mr. Rosner holds a
B.A. from Trinity College and a M.B.A. from the University of Pennsylvania.

    There are no family relationships among any of our directors or executive
officers.

    During 2000, Todd N. Khoury, Leonard Lieberman and Arthur J. Nagle served on
the Compensation Committee of our board of directors.

BOARD COMPENSATION

    All directors are reimbursed for expenses incurred in attending all Board
and committee meetings. Directors who are also employees of ours or Vestar do
not receive remuneration for serving as directors. Each director of the Board
receives $15,000 per year for his service as a director, $2,000 for each meeting
of the Board attended in person, $1,000 for each meeting of the Board attended
by teleconference, $1,000 for each committee meeting attended in person and $500
for each committee meeting attended by teleconference.

ITEM 11.  EXECUTIVE COMPENSATION

    The following table sets forth summary information concerning compensation
for services in all capacities awarded to, earned by or paid to our Chief
Executive Officer and each of our other four most highly compensated executive
officers whose aggregate cash and cash equivalent compensation exceeded $100,000
(collectively, the "Named Executive Officers"), with respect to the year ended
December 31, 2000.

                                       21
<PAGE>
                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                             ANNUAL COMPENSATION        LONG TERM COMPENSATION
                                            ----------------------      -----------------------
                                                                        SECURITIES
                                                                        UNDERLYING      LTIP
                                                                         OPTIONS      PAYOUTS      ALL OTHER
NAME AND                                     SALARY        BONUS           (#)          ($)       COMPENSATION
PRINCIPAL POSITION                 YEAR       ($)           ($)           AWARDS      PAYOUTS        ($)(1)
------------------               --------   --------      --------      ----------   ----------   ------------
<S>                              <C>        <C>           <C>           <C>          <C>          <C>
Daniel W. Miller...............    2000     330,000                                                   10,988(2)
  Chairman of the Board,           1999     280,000       135,000                                     11,600(3)
  President and Chief Executive    1998     247,308(4)    125,000(5)      15,000
  Officer

Michael W. Hunter..............    2000     267,330(6)                                               473,523(7)
  Executive Vice President-        1999     254,600(8)     94,470(9)                                 473,523(7)
  Global Marketing, Sales and      1998     238,319(10)    94,470(9)      17,500                     473,523(7)
  Business Development

John H. Hunter.................    2000     182,000                                    48,475         11,255(11)
  Vice President,                  1999     172,000        60,000                      45,146         11,066(12)
  Operations and Engineering-      1998     166,000        60,000          3,000       41,667         18,889(13)
  Container Manufacturing
  Division

Ronald M. Litchkowski..........    2000     165,000                                                    8,082(14)
  Vice President,                  1999     143,000        37,500                                      8,857(15)
  Chief Financial Officer          1998     130,000        35,000          2,100

David C. Garrison..............    2000     150,000                                    35,144         13,024(16)
  Vice President,                  1999     140,000        30,000                      32,730         13,314(17)
  Operations--Container            1998     135,000        30,000          2,700       30,208         14,356(18)
  Manufacturing Division
</TABLE>

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

(1) Russell-Stanley maintains a group life insurance policy under which some
    employees, including all of the Named Executive Officers, receive life
    insurance with a death benefit equal to the lesser of the employee's salary
    and $300,000. The premiums paid in respect of any individual are not
    significant.

(2) Represents a contribution of $10,988 by Russell-Stanley under
    Russell-Stanley's 401(k) Savings and Retirement Plan.

(3) Represents a contribution of $11,600 by Russell-Stanley under
    Russell-Stanley's 401(k) Savings and Retirement Plan.

(4) Represents payment by Russell-Stanley of $75,000 to Vestar in consideration
    for Mr. Miller's services as Russell-Stanley's Senior Vice President and
    Chief Financial Officer from January through May 1998 and the payment by
    Russell-Stanley of $172,308 to Mr. Miller as salary in respect of the period
    from May through December 1998.

(5) Represents a bonus of $100,000 paid by Russell-Stanley and a payment of
    $25,000 from Vestar.

(6) Mr. Hunter's salary is $399,000 (Canadian) per year. The amount reflected in
    the table represents this amount converted at the rate of 0.67 U.S. dollars
    per Canadian dollar.

(7) Represents payment by Russell-Stanley of $700,000 (Canadian) pursuant to a
    stay/pay agreement and a contribution of $6,750 (Canadian) by Hunter under a
    money purchase pension plan. The

                                       22
<PAGE>
    amount reflected in the table represents this amount converted at the rate
    of 0.67 U.S. dollars per Canadian dollar.

(8) Mr. Hunter's salary was $380,000 (Canadian) per year. The amount reflected
    in the table represents this amount converted at the rate of 0.67 U.S.
    dollars per Canadian dollar.

(9) Mr. Hunter's bonus was $141,000 (Canadian). The amount reflected in the
    table represents this amount converted at the rate of 0.67 U.S. dollars per
    Canadian dollar.

(10) Mr. Hunter's salary was $355,700 (Canadian) per year. The amount reflected
    in the table represents this amount converted at the rate of 0.67 U.S.
    dollars per Canadian dollar.

(11) Represents a contribution of $11,255 by Russell-Stanley under
    Russell-Stanley's 401(k) Savings and Retirement Plan.

(12) Represents a contribution of $11,066 by Russell-Stanley under
    Russell-Stanley's 401(k) Savings and Retirement Plan.

(13) Represents a contribution of $3,760 by Russell-Stanley under
    Russell-Stanley's 401(k) Savings Plan and a contribution of $15,129 in 1998
    by Russell-Stanley under a defined contribution plan maintained by
    Russell-Stanley.

(14) Represents a contribution of $8,082 by Russell-Stanley under
    Russell-Stanley's 401(k) Savings and Retirement Plan.

(15) Represents a contribution of $8,857 by Russell-Stanley under
    Russell-Stanley's 401(k) Savings and Retirement Plan.

(16) Represents a contribution of $13,024 by Russell-Stanley under
    Russell-Stanley's 401(k) Savings and Retirement Plan.

(17) Represents a contribution of $13,314 by Russell-Stanley under
    Russell-Stanley's 401(k) Savings and Retirement Plan.

(18) Represents a contribution of $2,902 by Russell-Stanley under
    Russell-Stanley's 401(k) Savings Plan and a contribution of $11,454 in 1998
    by Russell-Stanley under a defined contribution plan maintained by
    Russell-Stanley.

STOCK OPTION GRANTS

    During the year ended December 31, 2000, Russell-Stanley did not grant any
stock options to the Named Executive Officers.

                                       23
<PAGE>
OPTION EXERCISES AND YEAR-END HOLDINGS

    During the year ended December 31, 2000, none of the Named Executive
Officers exercised their stock options. The following table sets forth
information with respect to unexercised stock options held by each Named
Executive Officer as of December 31, 2000.

<TABLE>
<CAPTION>
                                                    NUMBER OF SECURITIES        VALUE OF UNEXERCISED IN-THE-
                                                   UNDERLYING UNEXERCISED             MONEY OPTIONS AT
                                                      OPTIONS AT FISCAL               FISCAL YEAR-END
                                                          YEAR-END               UNEXERCISABLE/EXERCISABLE
NAME                                            UNEXERCISABLE/EXERCISABLE (#)              ($)(1)
----                                            -----------------------------   ----------------------------
<S>                                             <C>                             <C>
Daniel W. Miller..............................          9,000/17,650                      0/296,000
Michael W. Hunter.............................          10,500/7,000                            0/0
John H. Hunter................................          1,800/17,200                      0/592,000
Ronald M. Litchkowski.........................             1,260/840                            0/0
David C. Garrison.............................           1,620/2,080                       0/37,000
</TABLE>

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

(1) Values have been determined assuming a fair market value of $45.00 per share
    of Russell-Stanley's common stock based on the most recent third-party
    valuation of Russell-Stanley's equity value. Stock options become
    exercisable in five equal installments commencing one year after the date of
    grant and become immediately exercisable in the event of a change in control
    or in an initial public offering of Russell-Stanley's common stock or other
    voting securities.

LONG-TERM INCENTIVE PLAN

    We maintain a performance unit incentive plan for key employees, including
the Named Executive Officers. During the year ended December 31, 1998,
Russell-Stanley awarded a total of 7,575 units to the Named Executive Officers
and established a target EBITDA (as defined in the plan) for the three-year
period from January 1, 1998 through December 31, 2000 pursuant to the plan. Each
unit has a value of $100.00 if the EBITDA target is achieved. In 1999 and 2000
no long-term incentive plan awards were made due to the 3-year life of the plan.
Since less than 85% of the EBITDA target was achieved for the three-year period
ended December 31, 2000, there are no payments due under this plan.

EMPLOYMENT CONTRACTS

    The Named Executive Officers, except Michael W. Hunter, have entered into
employment agreements with the Company which the Board of Directors adopted
effective December 11, 2000. These agreements are designed to provide the
executives with reasonable compensation if their employment is terminated in
certain defined circumstances, primarily following a change of control of the
Company. These agreements shall continue in effect for two years and shall be
automatically extended for one year periods on each anniversary unless 60 days
written notice is given by either the Named Executive Officer or
Russell-Stanley.

    Michael W. Hunter entered into an employment agreement with Russell-Stanley
on October 30, 1997 which has similar provisions to the above agreements. The
employment agreement has an initial term of five years which is automatically
renewed for one-year periods unless 60 days prior written notice is given by
either Mr. Hunter or Russell-Stanley.

                                       24
<PAGE>
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The following table sets forth information concerning the beneficial
ownership shares of our common stock on December 31, 2000 by

    - each person known by us to be the beneficial owner of more than 5% of any
      class of our common stock,

    - each director who is a shareholder,

    - our Chief Executive Officer and each of our Named Executive Officers, and

    - all of our executive officers and directors as a group:

<TABLE>
<CAPTION>
                                                                       PERCENTAGE OF
                                                 NUMBER OF SHARES          SHARES
NAME OF BENEFICIAL OWNER                       BENEFICIALLY OWNED(A)   OUTSTANDING(A)
------------------------                       ---------------------   --------------
<S>                                            <C>                     <C>
5% STOCKHOLDERS
Vestar Capital Partners III, L.P.............
  245 Park Avenue
  New York, New York 10167                           1,163,637             53.55%
Vestar/R-S Investment, L.P...................
  245 Park Avenue
  New York, New York 10167                             490,000             22.55%
New York Life Insurance Company..............
  51 Madison Avenue
  New York, New York 10010                             290,909             13.39%
Vestar Portfolio Investments, L.P............
  245 Park Avenue
  New York, New York 10167                              29,318              1.35%
OFFICERS AND DIRECTORS
Daniel W. Miller.............................           17,650(b)              *
Michael W. Hunter............................           10,500(c)              *
John H. Hunter...............................           21,925(d)           1.00%
Ronald M. Litchkowski........................            1,260(e)              *
David C. Garrison............................            2,620(f)              *
Norman W. Alpert(g)..........................               --                --
Vincent J. Buonanno..........................           24,243              1.12%
Leonard Lieberman............................            3,160                 *
Arthur J. Nagle(g)...........................               --                --
Vincent J. Naimoli...........................            3,160                 *
Daniel S. O'Connell(g).......................               --                --
John W. Priesing.............................           22,000(h)           1.00%
Robert L. Rosner(g)..........................               --                --
All executive officers and directors as a
  group (16 persons).........................          106,518(i)           4.90%
</TABLE>

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

*   Less than one percent.

(a) The amounts and percentage of common stock beneficially owned are reported
    on the basis of regulations of the Securities and Exchange Commission
    governing the determination of beneficial ownership of securities. Under the
    regulations, a person is deemed to be a "beneficial owner" of a security if
    that person has or shares "voting power," which includes the power to vote
    or to direct the voting of that security, or "investment power," which
    includes the power to dispose of or to

                                       25
<PAGE>
    direct the disposition of that security. A person is also deemed to be a
    beneficial owner of any securities of which that person has a right to
    acquire beneficial ownership within 60 days. Under these rules, more than
    one person may be deemed a beneficial owner of the same securities and a
    person may be deemed to be a beneficial owner of securities as to which he
    has no economic interest.

(b) Includes currently exercisable options to purchase 17,650 shares of common
    stock.

(c) Includes currently exercisable options to purchase 10,500 shares of common
    stock.

(d) Includes currently exercisable options to purchase 17,800 shares of common
    stock.

(e) Includes currently exercisable options to purchase 1,260 shares of common
    stock.

(f) Includes currently exercisable options to purchase 2,620 shares of common
    stock.

(g) Mr. O'Connell is the President and Chief Executive Officer and
    Messrs. Rosner, Nagle and Alpert are Vice Presidents of Vestar Associates
    Corporation III. Vestar Associates Corporation III is the sole general
    partner of Vestar Associates III, L.P., and Vestar Associates III, L.P. is
    the sole general partner of Vestar Capital Partners III, L.P., which owns
    1,163,637 shares of our common stock. Messrs. O'Connell, Rosner, Nagle and
    Alpert, as executive officers of Vestar Associates Corporation III, may be
    deemed to share beneficial ownership of those shares. Each of these
    individuals disclaims that beneficial ownership.

    Messrs. Alpert, Nagle and O'Connell are general partners of Vestar/R-S
    Investment, L.P. which owns 490,000 shares of our common stock.
    Messrs. Alpert, Nagle and O'Connell, as general partners of Vestar/R-S
    Investment, L.P., may be deemed to share beneficial ownership of those
    shares. Each of these individuals disclaims that beneficial ownership.

    Messrs. Alpert, Nagle and O'Connell are general partners of Vestar/MAG
    Aerospace Limited Partnership. Vestar/MAG Aerospace Limited Partnership is
    the sole general partner of Vestar Portfolio Investments, L.P., which owns
    29,318 shares of our common stock. Messrs. Alpert, Nagle and O'Connell, as
    general partners of Vestar/MAG Aerospace Limited Partnership, may be deemed
    to share beneficial ownership of those shares. Each of these individuals
    disclaims that beneficial ownership.

(h) Includes currently exercisable options to purchase 22,000 shares of common
    stock.

(i) Includes currently exercisable options to purchase 71,830 shares of common
    stock.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    In July 1997, we entered into a management agreement with Vestar. Pursuant
to the management agreement, Vestar provides us with advisory and consulting
services for an annual fee equal to the greater of $225,000 or 0.25% of our net
sales for that fiscal year, plus reimbursement of out-of-pocket expenses. The
management agreement terminates at any time that Vestar and its affiliates hold,
in the aggregate, less than 10% of the voting power of our outstanding voting
stock. See "Ownership of Common Stock." In 2000, we paid Vestar $790,000 in fees
based on net sales for advisory and consulting services, which included
out-of-pocket expenses.

    In 1999, we entered into a consulting agreement with Mr. Vincent Buonanno.
In consideration for his advising us on matters relating to the steel drum
reconditioning business, we agreed to pay Mr. Buonanno four payments of
$250,000, each prior to December 31, 2001, of which one payment was made in 2000
and two payments were made in 1999.

                                       26
<PAGE>
                                    PART IV

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

    (a) Exhibits and Consolidated Financial Statement Schedules

       (a) Financial Statements: (see index to financial statements at page 30)

       (b) Financial Statement Schedule: Schedule II--Valuation and Qualifying
           Accounts

       (c) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT NO.                                DESCRIPTION OF EXHIBIT
-----------                                ----------------------
<C>                     <S>
         *3.1           Certificate of Incorporation of Russell-Stanley Holdings,
                        Inc.

         *3.2           By-Laws of Russell-Stanley Holdings, Inc.

         *3.3           Amended and Restated Certificate of Incorporation of
                        Russell-Stanley Corp.

         *3.4           By-Laws of Russell-Stanley Corp.

         *3.5           Articles of Incorporation of Container Management Services,
                        Inc.

         *3.6           By-Laws of Container Management Services, Inc.

         *3.7           Restated Articles of Incorporation of New England Container
                        Co., Inc.

         *3.8           Amended and Restated By-Laws of New England Container
                        Co., Inc.

         *3.9           Articles of Incorporation of Russell-Stanley, Inc.

         *3.10          By-Laws of Russell-Stanley, Inc.

         *3.11          Certificate of Incorporation of RSLPCO, Inc.

         *3.12          By-Laws of RSLPCO, Inc.

         *3.13          Certificate of Limited Partnership of Russell-Stanley, L.P.

         *3.14          Agreement of Limited Partnership of Russell-Stanley, L.P.

         *4.1           Indenture, dated as of February 10, 1999, by and among
                        Russell-Stanley Holdings, Inc., the guarantors named therein
                        and The Bank of New York, as the Trustee

         *4.2           Form of 10 7/8% Senior Subordinated Notes due 2009 (included
                        as part of the Indenture filed as Exhibit 4.1 hereto)

        *10.1           Fifth Amended and Restated Revolving Credit and Term Loan
                        Agreement, dated as of February 10, 1999, among
                        Russell-Stanley Holdings, Inc. and its subsidiaries, as
                        borrowers, the lenders listed therein and BankBoston, N.A.
                        as administrative agent, and Goldman Sachs Credit Partners,
                        L.P., as syndication agent

        *10.2           Stock Purchase Agreement dated as of July 21, 1998, among
                        Vincent J. Buonanno, New England Container Co., Inc. and
                        Russell-Stanley Holdings, Inc.

        *10.3           Stock Purchase Agreement dated as of July 1, 1997, among
                        Mark E. Daniels, Robert E. Daniels, Mark E. Daniels
                        Irrevocable Family Trust, R.E. Daniels Irrevocable Family
                        Trust, Container Management Services, Inc. and
                        Russell-Stanley Corp.
</TABLE>

                                       27
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO.                                DESCRIPTION OF EXHIBIT
-----------                                ----------------------
<C>                     <S>
        *10.4           Share Purchase Agreement dated as of October 24, 1997, among
                        Michael W. Hunter, John D. Hunter, Michael W. Hunter
                        Holdings Inc., John D. Hunter Holdings Inc., Hunter Holdings
                        Inc., 373062 Ontario Limited, Hunter Drums Limited,
                        Russell-Stanley Holdings, Inc. and HDL Acquisition, Inc.

        *10.5           Purchase and Sale Agreement dated as of October 23, 1997,
                        among Smurfit Packaging Corporation, Russell-Stanley
                        Holdings, Inc. and Russell-Stanley Corp.

        *10.6           Vestar Management Agreement dated as of July 23, 1997, among
                        Russell-Stanley Holdings, Inc., Russell-Stanley Corp.,
                        Container Management Services, Inc. and Vestar Capital
                        Partners

       +*10.7           Know How and Patent Licensing Agreement between Mauser-Werke
                        GmbH and Russell-Stanley Corp., dated June 26, 1995

       +*10.8           Licensing Agreement between Mauser-Werke GmbH and
                        Russell-Stanley Corp., dated June 26, 1995

       +*10.9           Know How and Patent Licensing Agreement between Mauser-Werke
                        GmbH and Russell-Stanley Corp., dated June 26, 1995

       +*10.10          Know How and Patent Licensing Agreement between Mauser-Werke
                        GmbH and Hunter Drums Limited, dated July 31, 1996

       +*10.11          Know How and Patent Licensing Agreement between Mauser-Werke
                        GmbH and Hunter Drums Limited, dated July 31, 1996

       +*10.12          Consent and Agreement between Hunter Drums Limited and
                        Mauser-Werke GmbH, dated September 29, 1997

        *10.13          1998 Stock Option Plan

        *10.15          Employment Agreement, dated October 30, 1997, among
                        Russell-Stanley Holdings, Inc., Hunter Drums Limited and
                        Michael W. Hunter

        *10.16          Stay Pay Agreement, dated October 30, 1997, among
                        Russell-Stanley Holdings, Inc., Hunter Drums Limited and
                        Michael W. Hunter

        *10.21          Services Agreement, dated as of February 10, 1999, between
                        Russell-Stanley Holdings, Inc. and Vincent J. Buonanno

        *10.22          License Agreement between Gallay SA and Hunter Drums
                        Limited, dated February 7, 1997

        *10.23          License Agreement between Gallay SA and Hunter Drums
                        Limited, dated April 16, 1987

       **10.24          Amendment No. 1 to the Fifth Amended and Restated Revolving
                        Credit and Term Loan Agreement, dated as of August 11, 2000,
                        among Russell-Stanley Holdings, Inc. and its subsidiaries,
                        as borrowers, the lenders listed therein and Fleet National
                        Bank (f/k/a BankBoston, N.A.), as administrative agent, and
                        Goldman Sachs Credit Partners, L.P., as syndication agent

      ***10.25          Forbearance and Amendment Agreement to the Fifth Amended and
                        Restated Revolving Credit and Term Loan Agreement, dated as
                        of February 10, 1999 among the Registrant, certain of its
                        subsidiaries, the lenders party thereto and Fleet National
                        Bank, as agent

         10.26          Employment and Change-In-Control Severance Agreement, dated
                        as of December 11, 2000, between Russell-Stanley Holdings,
                        Inc. and Daniel W. Miller
</TABLE>

                                       28
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO.                                DESCRIPTION OF EXHIBIT
-----------                                ----------------------
<C>                     <S>
         10.27          Employment and Change-In-Control Severance Agreement, dated
                        as of December 11, 2000, between Russell-Stanley Holdings,
                        Inc. and Ronald M. Litchkowski

         10.28          Employment and Change-In-Control Severance Agreement, dated
                        as of December 11, 2000, between Russell-Stanley Holdings,
                        Inc. and John H. Hunter

         10.29          Employment and Change-In-Control Severance Agreement, dated
                        as of December 11, 2000, between Russell-Stanley Holdings,
                        Inc. and David C. Garrison

         12             Computation of Ratio of Earnings to Fixed Charges

        *21             Subsidiaries of the Company
</TABLE>

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

*   This Exhibit is incorporated by reference to the Exhibit of the same number
    filed as part of the Company's Registration Statement on Form S-4 (File
    No. 333-76057)

**  This Exhibit is incorporated by reference to the Exhibit of the same number
    filed as part of the Company's Form 10-Q for the period ended September 30,
    2000.

*** This Exhibit is incorporated by reference to the Exhibit filed in the
    Company's Form 8-K dated February 15, 2001.

+   The Registrant was afforded confidential treatment of portions of this
    exhibit by the Securities and Exchange Commission. Accordingly, portions
    thereof have been omitted and filed separately with the Securities and
    Exchange Commission.

    (b) Reports on Form 8-K filed during the Quarter ended December 31, 2000

           None.

                                       29
<PAGE>
INDEX TO FINANCIAL STATEMENTS

                 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF
                         RUSSELL-STANLEY HOLDINGS, INC.
                                AND SUBSIDIARIES

<TABLE>
<CAPTION>
                                                                PAGE
                                                              --------
<S>                                                           <C>
Financial Statements as of December 31, 2000 and 1999
  and for Each of the Years Ended December 31, 2000, 1999,
  and 1998:

  Consolidated Statements of Operations and Comprehensive
  (Loss) Income.............................................    31

  Consolidated Balance Sheets...............................    32

  Consolidated Statements of Stockholders' Equity...........    33

  Consolidated Statements of Cash Flows.....................    34

  Notes to Consolidated Financial Statements................  35-61

  Independent Auditors' Report..............................    62
</TABLE>

                                       30
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

     CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                2000       1999       1998
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Net sales...................................................  $273,490   $287,118   $276,624
Cost of sales...............................................   224,463    222,556    213,207
                                                              --------   --------   --------
  Gross profit..............................................    49,027     64,562     63,417
                                                              --------   --------   --------
Operating expenses
  Selling...................................................    22,030     23,965     20,114
  General and administrative................................    23,258     24,332     22,271
  Amortization of intangibles...............................     2,979      3,073      3,127
  Non-recurring charges (Note 18)...........................        --      1,900      6,167
                                                              --------   --------   --------
    Total expenses..........................................    48,267     53,270     51,679
                                                              --------   --------   --------
Income from operations......................................       760     11,292     11,738
Interest expense............................................    23,236     21,079     16,025
Other (income) expense--net.................................       (37)      (119)       550
                                                              --------   --------   --------
Loss before income taxes and extraordinary item.............   (22,439)    (9,668)    (4,837)
Income tax benefit (Note 9).................................    (6,569)    (2,223)      (505)
                                                              --------   --------   --------
Loss before extraordinary item..............................   (15,870)    (7,445)    (4,332)
Extraordinary item, net of tax benefit of $508..............        --        763         --
                                                              --------   --------   --------
Net loss....................................................   (15,870)    (8,208)    (4,332)
Other comprehensive (loss) income...........................      (839)     1,438     (2,012)
                                                              --------   --------   --------
Comprehensive loss..........................................  $(16,709)  $ (6,770)  $ (6,344)
                                                              ========   ========   ========
</TABLE>

                See notes to consolidated financial statements.

                                       31
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2000 AND 1999
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                2000       1999
                                                              --------   --------
<S>                                                           <C>        <C>
                                     ASSETS
CURRENT ASSETS
  Cash and cash equivalents.................................  $  1,077   $    704
  Accounts receivable, less allowances of $531 and $460,
    respectively............................................    27,019     30,135
  Inventories (Note 3)......................................    22,658     24,595
  Prepaid taxes and income taxes receivable-net (Note 9)....       827      2,395
  Prepaid expenses and other current assets.................     1,715      1,009
  Deferred tax benefit-net (Note 9).........................        --      1,247
                                                              --------   --------
      Total current assets..................................    53,296     60,085
                                                              --------   --------
PROPERTY, PLANT, AND EQUIPMENT-net (Notes 4 and 6)..........    87,597     94,573
                                                              --------   --------
OTHER ASSETS
  Goodwill and other intangibles-net (Note 5)...............   103,144    106,297
  Deferred financing costs-net (Note 8).....................     6,173      6,892
  Other noncurrent assets...................................       183        156
  Deferred tax benefit-net (Note 9).........................     9,424         --
                                                              --------   --------
      Total other assets....................................   118,924    113,345
                                                              --------   --------
TOTAL ASSETS................................................  $259,817   $268,003
                                                              ========   ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable and accrued expenses (Notes 7 and 14)....  $ 32,124   $ 45,607
  Current portion of long-term debt (Notes 1 and 8).........   214,263         --
  Deferred taxes-net (Note 9)...............................     1,760         --
                                                              --------   --------
      Total current liabilities.............................   248,147     45,607
LONG-TERM DEBT (Notes 1, 8 and 17)..........................        --    192,769
DEFERRED TAXES-net (Note 9).................................        --        481
OTHER NONCURRENT LIABILITIES (Note 14)......................     1,728      2,508
                                                              --------   --------
      Total liabilities.....................................   249,875    241,365
                                                              --------   --------
COMMITMENTS AND CONTINGENCIES (Note 14)

STOCKHOLDERS' EQUITY-At December 31, 2000 and 1999,
  2,201 shares were outstanding.............................     9,942     26,638
                                                              --------   --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..................  $259,817   $268,003
                                                              ========   ========
</TABLE>

                See notes to consolidated financial statements.

                                       32
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
                       (IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
                                                                                          OTHER COMPREHENSIVE
                                                                                             (LOSS) INCOME
                                                                                       -------------------------
                                                                                                       MINIMUM         NOTES
                                        COMMON STOCK       ADDITIONAL                  CUMULATIVE      PENSION      RECEIVABLE
                                    --------------------    PAID-IN     ACCUMULATED    TRANSLATION    LIABILITY    FOR SHARES TO
                                     SHARES      AMOUNT     CAPITAL       DEFICIT      ADJUSTMENTS   ADJUSTMENTS    MANAGEMENT
                                    ---------   --------   ----------   ------------   -----------   -----------   -------------
<S>                                 <C>         <C>        <C>          <C>            <C>           <C>           <C>
Balance, January 1, 1998..........  2,180,521     $23       $69,089       $(24,938)      $  (103)       $(363)         $(64)
  Net loss........................         --      --            --         (4,332)           --           --            --
  Shares issued...................     24,243      --         1,090             --            --           --            --
  Minimum pension liability
    adjustment....................         --      --            --             --            --         (381)           --
  Translation adjustment..........         --      --            --             --        (1,631)          --            --
                                    ---------     ---       -------       --------       -------        -----          ----
Balance, December 31, 1998........  2,204,764      23        70,179        (29,270)       (1,734)        (744)          (64)
  Net loss........................         --      --            --         (8,208)           --           --            --
  Minimum pension liability
    adjustment....................         --      --            --             --            --          542            --
  Translation adjustment..........         --      --            --             --           896           --            --
  Notes paid......................         --      --            --             --            --           --            51
  Reacquired by purchase..........     (4,000)     --            --             --            --           --            --
                                    ---------     ---       -------       --------       -------        -----          ----
Balance, December 31, 1999........  2,200,764      23        70,179        (37,478)         (838)        (202)          (13)
  Net loss........................         --      --            --        (15,870)           --           --            --
  Minimum pension liability
    adjustment....................         --      --            --             --            --         (437)           --
  Translation adjustment..........         --      --            --             --          (402)          --            --
  Notes paid......................         --      --            --             --            --           --            13
                                    ---------     ---       -------       --------       -------        -----          ----
Balance, December 31, 2000........  2,200,764     $23       $70,179       $(53,348)      $(1,240)       $(639)         $ --
                                    =========     ===       =======       ========       =======        =====          ====

<CAPTION>

                                      TREASURY STOCK          TOTAL
                                    -------------------   STOCKHOLDERS'
                                     SHARES     AMOUNT       EQUITY
                                    --------   --------   -------------
<S>                                 <C>        <C>        <C>
Balance, January 1, 1998..........  239,500    $(4,853)      $38,791
  Net loss........................       --         --        (4,332)
  Shares issued...................       --         --         1,090
  Minimum pension liability
    adjustment....................       --         --          (381)
  Translation adjustment..........       --         --        (1,631)
                                    -------    -------       -------
Balance, December 31, 1998........  239,500     (4,853)       33,537
  Net loss........................       --         --        (8,208)
  Minimum pension liability
    adjustment....................       --         --           542
  Translation adjustment..........       --         --           896
  Notes paid......................       --         --            51
  Reacquired by purchase..........    4,000       (180)         (180)
                                    -------    -------       -------
Balance, December 31, 1999........  243,500     (5,033)       26,638
  Net loss........................       --         --       (15,870)
  Minimum pension liability
    adjustment....................       --         --          (437)
  Translation adjustment..........       --         --          (402)
  Notes paid......................       --         --            13
                                    -------    -------       -------
Balance, December 31, 2000........  243,500    $(5,033)      $ 9,942
                                    =======    =======       =======
</TABLE>

                                       33
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                              FISCAL YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Cash Flows from Operating Activities:
  Net loss..................................................  $(15,870)  $ (8,208)  $ (4,332)
  Adjustments to reconcile net loss to net cash provided by
    operating activities:
    Depreciation............................................    27,162     26,998     23,479
    Amortization of intangibles.............................     2,979      3,073      3,127
    Amortization of deferred financing costs................       968        807        276
    Deferred income tax provision...........................    (6,898)    (4,826)      (848)
    Extraordinary item, noncash (Note 15)...................        --      1,271         --
    Other noncash items.....................................       112        107        770
Changes in operating assets and liabilities, excluding
  effects of acquisitions:
  Decrease (increase) in accounts receivable................     3,116       (727)     1,916
  Decrease (increase) in inventories........................     1,937     (5,834)     1,024
  Decrease in prepaids and other current assets.............       862      2,188        672
  (Decrease) increase in accounts payable, accrued expenses
    and income taxes payable................................   (13,483)     2,528      4,482
  (Decrease) increase in other-net..........................      (228)    (3,029)       231
                                                              --------   --------   --------
    Net cash provided by operating activities...............       657     14,348     30,797
                                                              --------   --------   --------
Cash Flows from Investing Activities:
  Acquisitions, net of cash acquired........................        --         --    (13,874)
  Capital expenditures......................................   (20,839)   (28,556)   (28,679)
  Proceeds from sale of property, plant and equipment.......        --         --      1,394
  Other, net................................................        --         --        (74)
                                                              --------   --------   --------
    Net cash used in investing activities...................   (20,839)   (28,556)   (41,233)
                                                              --------   --------   --------
Cash Flows from Financing Activities:
  Proceeds from long-term borrowings........................        --    187,063         --
  Repayments of long-term borrowings........................        --   (161,958)      (429)
  Net borrowings (repayments of) under revolving credit
    facility................................................    21,382     (4,034)    11,777
  Cash paid for financing costs.............................      (438)    (7,676)       (72)
  Other, net................................................        13       (129)      (287)
                                                              --------   --------   --------
    Net cash provided by financing activities...............    20,957     13,266     10,989
                                                              --------   --------   --------
Effect of exchange rate changes on cash and cash
  equivalents...............................................      (402)        16         26
                                                              --------   --------   --------
Net change in cash and cash equivalents.....................       373       (926)       579
Cash and cash equivalents, beginning of period..............       704      1,630      1,051
                                                              --------   --------   --------
Cash and cash equivalents, end of period....................  $  1,077   $    704   $  1,630
                                                              ========   ========   ========
Supplemental Disclosures of Cash Flow Information:
  Cash paid (received) during the year for:
  Interest..................................................  $ 21,875   $ 17,175   $ 12,883
                                                              ========   ========   ========
  Income taxes..............................................  $ (1,335)  $  1,796   $    209
                                                              ========   ========   ========
</TABLE>

                See notes to consolidated financial statements.

                                       34
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

1. NATURE OF BUSINESS

    ORGANIZATION--Through its direct operating subsidiaries, Russell-Stanley
Corp. ("RSC"), Container Management Services, Inc. ("CMS"), Hunter Drums Limited
("Hunter"), and New England Container Co., Inc. ("NEC"), Russell-Stanley
Holdings, Inc. ("Holdings" or the "Company") is a leading manufacturer and
marketer of plastic and steel industrial containers and a leading provider of
related container services in the United States and Canada. The Company's
products are used in a broad range of industries including agricultural,
chemical, food product, lubricant, pharmaceutical and specialty chemicals.

    As previously discussed, the Company announced on January 26, 2001 that it
has retained The Blackstone Group, L.P. in order to assist in developing a
financial restructuring plan and that an ad-hoc committee of its senior
subordinated noteholders has been organized. The Company has commenced
discussions with this committee towards developing a consensual financial
restructuring plan to de-leverage the Company's capital structure. The Company
is seeking to restructure its bond debt and does not intend to impair in any way
its trade creditors or implement layoffs as part of its financial restructuring
plan. Discussions with this committee and banks are in their preliminary stages,
and there can be no assurance that a financial restructuring will be completed.

    Due to the impact of a weaker economic environment on the Company's business
results, the Company failed to comply with the minimum interest coverage and
minimum Adjusted EBITDA covenants of its Credit Agreement at December 31, 2000.
In addition, management evaluated its 2001 cash flow projections and debt
service requirements and based upon this evaluation, management believes that it
will most likely not comply with certain debt covenants throughout 2001. The
Company also elected not to make the interest payment due February 15, 2001 on
its Senior Subordinated Notes. The failure to make the scheduled interest
payment constitutes a default under its Bond Indenture, subject to a 30-day
grace period, and also constitutes an Event of Default pursuant to
Article 15.1(f) of the Credit Agreement (see Note 8) relating to making any
payments in respect of Material Indebtedness (as defined in the Credit
Agreement). The 30-day grace period to make the interest payment to cure the
default, expired on March 15, 2001 and as a consequence, the Senior Subordinated
Notes, revolving credit loans and term loan are callable and therefore have been
classified as current liabilities in the December 31, 2000 consolidated balance
sheet. The Company and its lenders under the Credit Agreement have entered into
a 60-day Forbearance and Amendment Agreement (the Forbearance Agreement), dated
February 15, 2001, pursuant to which the lender will not call the Company's
outstanding debt through the termination of the Forbearance Agreement and will
continue to allow the Company to draw on their revolving credit facility to
satisfy working capital needs subject to certain limitations (see Note 8). In
addition, the interest rate on the Company's term loan and the revolving credit
loan margin was increased 0.5% and the facility's commitment was temporarily
reduced from $75.0 million to $60.0 million. The Forbearance Agreement
terminates on the earlier of (a) the occurrence of an additional event of
default (as defined); (b) April 17, 2001 or (c) the date on which the Senior
Subordinated Notes are accelerated. We anticipate extending the Forbearance
Agreement an additional sixty days from April 17, 2001 as negotiations with the
lenders and noteholders progress.

    The consolidated financial statements of the Company indicate that as a
result of the above matters, at December 31, 2000, current liabilities exceeded
current assets by $194.9 million. Historically, cash flows generated from
operations, supplemented by the unused borrowing capacity under the Revolving
Credit Agreement, have been sufficient to pay the Company's debts as they come
due, provide for its capital expenditures and meet its other cash requirements.
The consolidated financial statements of the Company presented herein do not
reflect any adjustments that could result from the

                                       35
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                 YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

1. NATURE OF BUSINESS (CONTINUED)
Company's financial restructuring plan and there can be no assurance that such a
plan will be completed.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    PRINCIPLES OF CONSOLIDATION--The consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.

    REVENUE RECOGNITION--Revenue is recognized when products are shipped and
title is transferred to customers or when services are provided to customers.
Net sales reflect units shipped or services provided at negotiated selling
prices reduced by volume rebate allowances and cash discounts.

    USE OF ESTIMATES--The preparation of these financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those estimates.
Estimates are used to a significant extent in determining the recoverability of
intangibles from future operations and in establishing other valuation
allowances.

    CASH EQUIVALENTS--The Company considers all highly liquid investments
purchased with an original maturity of three months or less to be cash
equivalents and are valued at cost which approximates fair value.

    INVENTORIES--Inventories are stated at the lower of cost or market value.
Cost is determined on the first-in, first-out (FIFO) method.

    PROPERTY, PLANT AND EQUIPMENT--Property, plant and equipment, stated at
cost, is being depreciated for financial reporting purposes on the straight-line
method over the estimated useful lives of the assets or the lease term,
whichever is shorter. The estimated useful lives for each class of property,
plant and equipment are as follows:

<TABLE>
<S>                                                           <C>
Buildings and improvements..................................  15 - 30 years
Furniture and fixtures......................................  3 - 7 years
Machinery and equipment.....................................  3 - 10 years
Containers held for lease...................................  13 - 25 months
</TABLE>

    The Company evaluates at each balance sheet date whether events or
circumstances have occurred that indicate possible impairment.

    GOODWILL AND OTHER INTANGIBLES--The excess of cost over the fair value of
net assets acquired ("goodwill") is being amortized on a straight-line basis
over its estimated useful life of 40 years. Other intangible assets, consisting
primarily of customer lists and patents, are recorded at cost and are being
amortized over the life of the related assets (up to 17 years), using the
straight-line method. Management periodically evaluates the estimated useful
lives of goodwill and other intangibles. In addition, management periodically
evaluates the recoverability of long-term assets, including goodwill, based upon
current and future anticipated income and cash flows. For the three-year period
ended

                                       36
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                 YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
December 31, 2000, there were no adjustments to the useful lives or the carrying
values of long-term assets resulting from those evaluations.

    DEFERRED FINANCING COSTS--Deferred financing costs incurred in connection
with the Company's debt restructurings are being amortized for financial
reporting purposes over the average life of the debt, using the straight-line
method.

    INCOME TAXES--Deferred tax assets and liabilities are recognized for the
expected future tax consequences attributable to the difference between the
financial statement carrying amounts of assets and liabilities and their
respective tax basis. Management periodically evaluates the available evidence
about future taxable income and other possible sources of realization of
deferred tax assets and establishes valuation allowances if necessary.

    TRANSLATION OF FOREIGN CURRENCIES--The assets and liabilities of Hunter are
translated into U.S. dollars at year-end exchange rates, with resulting
translation gains and losses accumulated in a separate component of
stockholders' equity. Income and expense items are converted into U.S. dollars
at average rates of exchange prevailing throughout the year.

    RECENTLY ISSUED ACCOUNTING STANDARDS--In December 1999, the Securities and
Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 101 ("SAB
101"), "Revenue Recognition in Financial Statements." SAB 101 summarizes certain
of the SEC's views in applying generally accepted accounting principles to
revenue recognition in financial statements. The Company has determined that it
is in compliance with the revenue recognition provisions and criteria set forth
in SAB 101 and that no modifications are necessary to the Company's current
revenue recognition policies and procedures.

    Statement of Financial Accounting Standards ("SFAS") 133, Accounting for
Derivative Instruments and Hedging Activities, as amended by SFAS 137,
Accounting for Derivative Instruments and Hedging Activities--Deferral of the
Effective Date of FASB Statement No. 133, and SFAS 138, Accounting for Certain
Derivative Instruments and Certain Hedging Activities, is effective for the
Company as of January 1, 2001. These standards require that an entity recognize
all derivatives as either assets or liabilities measured at fair value. The
accounting for changes in the fair value of a derivative depends on the use of
the derivative. In addition, certain contracts that were not formerly considered
derivatives may now meet the definition of a derivative. Adoption of these new
accounting standards did not have a material impact on the Company's financial
condition or results of operations.

    RECLASSIFICATIONS--Certain amounts in 1999 and 1998 have been reclassified
to conform to the 2000 and 1999 presentations.

3. INVENTORIES

    Inventory consists of the following:

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
                                                                (IN THOUSANDS)
<S>                                                           <C>        <C>
Raw materials...............................................  $11,980    $14,381
Work-in-process.............................................    2,338      2,406
Finished goods..............................................    8,340      7,808
                                                              -------    -------
    Total...................................................  $22,658    $24,595
                                                              =======    =======
</TABLE>

                                       37
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                 YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

4. PROPERTY, PLANT, AND EQUIPMENT

   Property, plant, and equipment consists of the following:

<TABLE>
<CAPTION>
                                                             DECEMBER 31,
                                                         --------------------
                                                           2000        1999
                                                         ---------   --------
                                                            (IN THOUSANDS)
<S>                                                      <C>         <C>
Land...................................................  $   5,569   $  5,570
Buildings and improvements.............................     16,823     16,245
Machinery and equipment................................    184,528    165,784
                                                         ---------   --------
Total..................................................    206,920    187,599
Less accumulated depreciation..........................   (119,323)   (93,026)
                                                         ---------   --------
    Total..............................................  $  87,597   $ 94,573
                                                         =========   ========
</TABLE>

    Included in machinery and equipment are containers held for lease,
consisting of plastic drums and intermediate bulk containers ("IBCs"), which are
leased to customers.

    Due to a fire at one of the Company's facilities in September 2000,
machinery and equipment with a net book value of $0.4 million was written off.
All losses, including clean up costs, are covered by insurance proceeds. No
gains on the involuntary conversion have been recorded since the timing and
total amount of insurance recoveries has not been resolved.

5. GOODWILL AND OTHER INTANGIBLES

    Goodwill and other intangibles consists of the following:

<TABLE>
<CAPTION>
                                                             DECEMBER 31,
                                                          -------------------
                                                            2000       1999
                                                          --------   --------
                                                            (IN THOUSANDS)
<S>                                                       <C>        <C>
Goodwill................................................  $118,366   $118,921
Customer lists and other intangibles....................     3,139      2,817
Patents.................................................       278        293
                                                          --------   --------
                                                           121,783    122,031
Less accumulated amortization...........................   (18,639)   (15,734)
                                                          --------   --------
    Total...............................................  $103,144   $106,297
                                                          ========   ========
</TABLE>

6. LEASES

    CAPITAL LEASES--Leased equipment included in machinery and equipment
consists of the following:

<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                              -------------------------
                                                                2000             1999
                                                              --------         --------
                                                                   (IN THOUSANDS)
<S>                                                           <C>              <C>
Leased equipment............................................    $52              $25
Less accumulated depreciation...............................     (5)             (11)
                                                                ---              ---
Total.......................................................    $47              $14
                                                                ===              ===
</TABLE>

                                       38
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                 YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

6. LEASES (CONTINUED)
    OPERATING LEASES--The Company has operating lease commitments expiring at
various dates, principally for real property, machinery and equipment, and
transportation equipment. Total lease expense amounted to $7,081,000,
$6,698,000, and $4,416,000 in 2000, 1999 and 1998, respectively.

    Future minimum lease payments under the terms of the noncancelable capital
lease and operating leases with initial or remaining terms in excess of one year
at December 31, 2000 are as follows:

<TABLE>
<CAPTION>
                                                  CAPITAL LEASE    OPERATING LEASES
                                                  (IN THOUSANDS)    (IN THOUSANDS)
                                                  --------------   ----------------
<S>                                               <C>              <C>
2001............................................        $ 11           $ 6,328
2002............................................          11             5,220
2003............................................          11             4,318
2004............................................          12             3,434
2005............................................          --             2,633
Thereafter......................................          --            10,790
                                                        ----           -------
Total...........................................          45           $32,723
                                                                       =======
Less imputed interest...........................           6
                                                        ----
Total...........................................        $ 39
                                                        ====
</TABLE>

7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

    Accounts payable and accrued expenses consists of the following:

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                            -------------------
                                                              2000       1999
                                                            --------   --------
                                                              (IN THOUSANDS)
<S>                                                         <C>        <C>
Accounts payable..........................................  $11,352    $22,549
Accrued payroll...........................................    1,778      3,320
Accrued interest payable..................................    7,264      6,975
Other accrued expenses....................................   11,730     12,763
                                                            -------    -------
Total.....................................................  $32,124    $45,607
                                                            =======    =======
</TABLE>

                                       39
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                 YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

8. INDEBTEDNESS

    Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                             DECEMBER 31,
                                                          -------------------
                                                            2000       1999
                                                          --------   --------
                                                            (IN THOUSANDS)
<S>                                                       <C>        <C>
Senior subordinated notes...............................  $     --   $148,966
Revolving credit loans and term loan....................        --     43,803
                                                          --------   --------
Long-term debt..........................................  $     --   $192,769
                                                          ========   ========
 .
</TABLE>

    On February 10, 1999, the Company refinanced its revolving credit loan and
term loans by amending its senior credit facility to provide for a
$75.0 million revolving credit line (including a $15.0 million Canadian credit
line in U.S. dollars), which bears interest, at the Company's election, at a
combination of domestic source and Eurodollar borrowing rates which fluctuate
based on the Company's EBITDA and debt levels, and a $25.0 million term loan,
bearing interest at 9.48% (collectively, the "Senior Credit Facility"). The
revolving credit facility matures in February 2004 and the term loan matures in
two equal installments in June 2006 and 2007. In addition, the Company issued
$150.0 million of 10.875% Senior Subordinated Notes (the "Notes") due
February 15, 2009, at 99.248%, resulting in an effective yield of 11.0%. The
Senior Credit Facility contains certain covenants and restrictions and is
secured by substantially all assets of the Company. The Notes require
semi-annual interest payments, which commenced August 15, 1999 and mature
February 2009. The Notes are subordinate to all existing and future senior
indebtedness of the Company and are unconditionally guaranteed by the domestic
subsidiaries. The Company is required to meet certain financial covenants under
the Agreements including fixed charge and leverage ratios and capital
expenditure spending limits. The debt is secured by substantially all assets of
the Company. Deferred financing charges of approximately $8.1 million were
incurred in connection with the refinancing and related amendments.

    As discussed in Note 1 of the consolidated financial statements, the Company
elected to withhold the payment of interest due on February 15, 2001 on its
Senior Subordinated Notes and did not make the payment within the 30-day grace
period. Also, the Company was in violation of certain covenants contained in the
Credit Agreement as of December 31, 2000, which failures created an Event of
Default. The Company subsequently negotiated a 60-day Forbearance and Amendment
Agreement under its revolving credit facility. Management is negotiating with
the ad hoc committee of senior subordinated noteholders and lenders on a
financial restructuring plan. As a result of violations of the covenants under
the Credit Agreement and the interest payment default, the Senior Subordinated
Notes, the revolving credit loans and term loan have been classified as current
liabilities in the December 31, 2000 consolidated balance sheet.

                                       40
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                 YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

8. INDEBTEDNESS (CONTINUED)
    The Notes, revolving credit loan and term loan have the following provisions
(dollars in thousands):

<TABLE>
<CAPTION>
                                                                    INTEREST                      INTEREST
                                                                    RATE AT,     BALANCE AT,      RATE AT,     BALANCE AT,
                            DOMESTIC             EURODOLLAR       DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                          INTEREST RATE        INTEREST RATE          2000           2000           1999           1999
                       -------------------   ------------------   ------------   ------------   ------------   ------------
<S>                    <C>                   <C>                  <C>            <C>            <C>            <C>
                       Prime plus margin     LIBOR plus margin       9.19-         $ 32,543         8.31-        $ 10,141
Revolving............  not less than 1.25%   not less than           10.75%                          9.75%
 credit loan                                 2.75%

                       Canadian prime plus   --                       9.25            7,639          8.25           8,662
Revolving............  margin not less
 credit loan--         than
 Foreign               1.75%

Term Loan C--........  Fixed rate            Fixed rate               9.48           25,000          9.48          25,000

Senior...............  Fixed rate            --                      10.88          149,081         10.88         148,966
 Subordinated
 Notes
                                                                                   --------                      --------

Total................                                                              $214,263                      $192,769
                                                                                   ========                      ========
</TABLE>

    In addition to the interest rate provisions stated above, the Company pays a
commitment fee on the unused portion of the revolving credit line at a rate that
fluctuates based on the Company's EBITDA and debt levels. The rate was 0.75% at
December 31, 2000.

9. INCOME TAXES

    Income (loss) before income taxes and extraordinary items:

<TABLE>
<CAPTION>
                                                     YEAR ENDED DECEMBER 31,
                                                  ------------------------------
                                                    2000       1999       1998
                                                  --------   --------   --------
                                                          (IN THOUSANDS)
<S>                                               <C>        <C>        <C>
U.S.............................................  $(23,888)  $(11,840)  $(7,538)
Foreign.........................................     1,449      2,172     2,701
                                                  --------   --------   -------
Total...........................................  $(22,439)  $ (9,668)  $(4,837)
                                                  ========   ========   =======
</TABLE>

                                       41
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                 YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

9. INCOME TAXES (CONTINUED)
    The provision (benefit) for income taxes consists of the following:

<TABLE>
<CAPTION>
                                                        YEAR ENDED DECEMBER 31,
                                                     ------------------------------
                                                       2000       1999       1998
                                                     --------   --------   --------
                                                             (IN THOUSANDS)
<S>                                                  <C>        <C>        <C>
Current:
  Federal..........................................  $    --    $    --     $ (261)
  Foreign..........................................      764      2,246        461
  State............................................      (68)       (14)      (235)
                                                     -------    -------     ------
Total current......................................      696      2,232        (35)
                                                     -------    -------     ------
Deferred:
  Federal..........................................   (7,305)    (3,293)    (1,963)
  Foreign..........................................       40     (1,162)     1,493
                                                     -------    -------     ------
Total deferred.....................................   (7,265)    (4,455)      (470)
                                                     -------    -------     ------
Net provision (benefit) for income taxes...........  $(6,569)   $(2,223)    $ (505)
                                                     =======    =======     ======
</TABLE>

    The difference between the effective income tax and the statutory Federal
income tax rate is explained as follows:

<TABLE>
<CAPTION>
                                                                YEAR ENDED DECEMBER 31,
                                                          ------------------------------------
                                                            2000          1999          1998
                                                          --------      --------      --------
<S>                                                       <C>           <C>           <C>
Federal statutory tax rate..........................       (34.0)%       (34.0)%       (34.0)%
Goodwill amortization...............................         2.7           6.4           9.7
State taxes, net of Federal tax benefit.............        (0.2)         (0.1)          6.3
Travel and entertainment............................         0.4           0.8           2.2
Foreign tax rate differential.......................         1.4           3.6           2.5
Other...............................................         0.4           0.3           2.9
                                                           -----         -----         -----
Effective tax (benefit) rate........................       (29.3)%       (23.0)%       (10.4)%
                                                           =====         =====         =====
</TABLE>

                                       42
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                 YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

9. INCOME TAXES (CONTINUED)

    The components of the net deferred tax assets and liabilities as of
December 31, 2000 and 1999 were as follows:

<TABLE>
<CAPTION>
                                                                   2000                     1999
                                                          ----------------------   ----------------------
                                                          DEFERRED    DEFERRED     DEFERRED    DEFERRED
                                                            TAX          TAX         TAX          TAX
                                                           ASSETS    LIABILITIES    ASSETS    LIABILITIES
                                                          --------   -----------   --------   -----------
                                                                          (IN THOUSANDS)
<S>                                                       <C>        <C>           <C>        <C>
Current:
  Accounts receivable...................................  $   319      $    --      $  131      $   --
  Inventory.............................................       --          570          --         686
  Prepaid expenses......................................       27           --          --         101
  Accrued expenses......................................       --        1,588       1,837          --
  Other.................................................       52           --          66          --
                                                          -------      -------      ------      ------
Total current...........................................  $   398      $ 2,158      $2,034      $  787
                                                          =======      =======      ======      ======
Noncurrent:
  Property, plant and equipment.........................  $    --      $ 7,224      $   --      $6,792
  Goodwill..............................................       --        1,937          --       1,637
  Accrued expenses......................................       --           29         589          --
  Alternative minimum tax credit........................      229           --         229          --
  Net operating loss....................................   19,939           --       6,836          --
  Other.................................................       --        1,554         294          --
                                                          -------      -------      ------      ------
Total noncurrent........................................  $20,168      $10,744      $7,948      $8,429
                                                          =======      =======      ======      ======
</TABLE>

    As of December 31, 2000, the Company had a net operating loss carryover for
Federal tax purposes of $56.0 million. The carryover will expire after
December 31, 2018. The Company also had an alternative minimum tax credit
carryover of $229,000. This credit can be carried forward indefinitely.

10. RETIREMENT BENEFIT PLANS

    Effective January 1, 1999, the 401(k) plans for all non-union RSC, former
Smurfit Plastic Packaging (SPP) and CMS employees were replaced with a new
401(k) savings and retirement plan. For salary employees, there is immediate
eligibility. For hourly employees, eligibility in the plan is dependent upon the
attainment of age 21, as well as the completion of one year of service.
Effective June 1, 1999, the 401(k) plan for salary NEC employees was replaced
with this plan. Eligibility in the plan for NEC employees is dependent upon the
attainment of age 21. Under the plan, the Company matches 100% of the employee's
contribution, up to 4%. In addition, the Company contributes an annual profit
sharing contribution of 1% to 4.75% of each employee's salary, as defined,
depending upon age. The Company's total contributions expense for 2000 and 1999
was $1,173,000 and $1,122,000, respectively.

    The vesting period for the Company's match in the 401(k) savings and
retirement plan is 20% after the first year and each year thereafter, until the
participant becomes fully vested after a five-year period. The vesting period
for the Company's profit sharing contribution to the 401(k) savings and

                                       43
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                 YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

10. RETIREMENT BENEFIT PLANS (CONTINUED)
retirement plan is 60% after three years and 20% each year thereafter, until the
participant becomes fully vested after a five-year period.

    The Company contributes to a defined benefit pension plan for certain union
employees. The defined benefit pension plan assets are comprised primarily of
mutual funds. The vesting period for the defined benefit pension plan is 20%
after three years and each year thereafter, until the participant becomes fully
vested after a seven-year period.

    Net pension cost for this defined benefit pension plan is as follows:

<TABLE>
<CAPTION>
                                                                2000       1999       1998
                                                              --------   --------   --------
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
Service cost--benefits earned during the period.............  $   171    $   170      $141
Interest cost on projected benefit obligation...............      174        120       119
Expected return on plan assets..............................     (116)       (77)      (93)
Prior service cost amortization.............................       57         29        29
Loss amortization...........................................       20         19         6
Amortization of transition obligation.......................       13         13        13
                                                              -------    -------      ----
Net periodic pension cost...................................  $   319    $   274      $215
                                                              =======    =======      ====
</TABLE>

    Assumptions used in the accounting for the plans were:

<TABLE>
<CAPTION>
                                                                2000       1999       1998
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Weighted-average discount rates.............................      7.3%       7.8%      6.5%
Expected long-term rate of return on assets.................      8.5        8.5       8.5
</TABLE>

    The following table sets forth the funded status and amounts recognized for
this defined benefit pension plan at December 31:

<TABLE>
<CAPTION>
                                                                2000       1999
                                                              --------   --------
                                                                (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
Total accumulated benefit obligation........................  $ 2,455    $ 1,635
                                                              -------    -------
Projected benefit obligation for service rendered to date...  $(2,455)   $(1,635)
Plan assets at fair value...................................    1,500        854
                                                              -------    -------
Projected benefit obligation in excess of plan assets.......     (955)      (781)
Prior service cost not yet recognized in net periodic
  pension cost..............................................      513        189
Unrecognized portion of net obligation existing at date of
  adoption of SFAS No. 87...................................       27         41
Unrecognized net loss.......................................      639        202
Adjustment to recognize minimum liability...................   (1,179)      (432)
                                                              -------    -------
Accrued pension cost........................................  $  (955)   $  (781)
                                                              =======    =======
</TABLE>

                                       44
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                 YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

10. RETIREMENT BENEFIT PLANS (CONTINUED)

    The following table sets forth the change in benefit obligation and plan
assets for this defined benefit pension plan at December 31:

<TABLE>
<CAPTION>
                                                                2000       1999
                                                              --------   --------
                                                                (IN THOUSANDS)
<S>                                                           <C>        <C>
Change in benefit obligation:
  Benefit obligation at beginning of year...................   $1,635     $1,851
  Service cost..............................................      171        170
  Interest cost.............................................      174        120
  Actuarial loss/(gain).....................................      242       (401)
  Benefits paid.............................................     (299)      (105)
Change due to amendments....................................      380         --
Change in actuarial assumptions.............................      152         --
                                                               ------     ------
  Benefit obligation at end of year.........................    2,455      1,635
                                                               ------     ------
Change in plan assets:
  Fair value of plan assets at beginning of plan year.......      854        889
  Actual return on plan assets..............................       53         45
  Employer contributions....................................      892         25
  Benefits paid.............................................     (299)      (105)
                                                               ------     ------
  Fair value of plan assets at end of year..................    1,500        854
                                                               ------     ------
  Funded status.............................................     (955)      (781)
  Unrecognized actuarial loss...............................      639        202
  Unrecognized prior service cost...........................      513        189
  Unrecognized net obligation...............................       27         41
                                                               ------     ------
  Net amount recognized.....................................   $  224     $ (349)
                                                               ======     ======
Amounts recognized in the balance sheet consist of:
  Accrued benefit liability.................................     (955)      (781)
  Intangible asset..........................................      540        230
  Accumulated other comprehensive income....................      639        202
                                                               ------     ------
  Net amount recognized.....................................   $  224     $ (349)
                                                               ======     ======
</TABLE>

    Hourly employees of NEC are covered under a 401(k) plan. Eligibility in the
plan is dependent upon the completion of one year of service and the attainment
of age 21. Participants can defer up to 15% of eligible compensation. Matching
contributions are provided by the employer at the rate of 10% of the participant
contributions, up to a maximum of 5% of each participant's compensation in any
plan year. Employer contributions were $4,650 and $7,500 in 2000 and 1999,
respectively.

    Certain employees of Hunter are covered under a money purchase pension plan.
Eligibility in the plan is dependent upon the completion of one year of service.
Employees can contribute up to 3% of eligible income and executives can
contribute up to 9% of eligible income, with a maximum yearly contribution of
$6,750. Hunter matches 100% of employee and executive contributions and these

                                       45
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                 YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

10. RETIREMENT BENEFIT PLANS (CONTINUED)
employer contributions vest after two full years as a member of the plan.
Company contributions for the periods ended December 31, 2000, 1999 and 1998
were $92,000, $83,000 and $80,000, respectively.

11. RELATED PARTIES

    The Company has a management agreement with Vestar Capital Partners, Inc.,
together with its affiliates ("Vestar"), a majority shareholder of the Company,
which provides the Company with certain management services for the greater of
$225,000 per year or .25% of the consolidated net sales of the Company, plus
out-of-pocket expenses. For the years ended December 31, 2000, 1999 and 1998,
the Company paid $790,000, $773,000 and $952,000, respectively, for these
services. In conjunction with the 1998 acquisition, Vestar was paid transaction
fees of approximately $160,000.

    Prior to May 1998, the Company's former Executive Vice President and Chief
Financial Officer, who was also one of the Company's directors, was a Managing
Director of Vestar Resources, Inc., an affiliate of Vestar. Between
February 1996, when he became Senior Vice President and Chief Financial Officer,
and May 1998, when he became a full-time employee of the Company, we paid Vestar
at the rate of $150,000 per year for his services as our Senior Vice President
and Chief Financial Officer. Pursuant to this arrangement, we paid Vestar
$75,000 in respect of these services for the period from January 1998 through
May 1998. He is currently Chairman of the Board, President and Chief Executive
Officer of the company.

    One of the Company's directors is a Vice President, member of the Board of
Directors and head of the Retail and Consumer and Financial Services practices
of Mercer Management Consulting ("Mercer"). In 1998, the Company engaged Mercer
to provide consulting services to CMS, for which the Company paid Mercer
approximately $189,000. In 1998, the Company also engaged Mercer to provide
consulting services to the Company, for which the Company paid Mercer
approximately $272,000.

    In June 1998, the Company made an interest-free loan in the amount of
$77,000 to one of the executive officers, in connection with his relocation to
the headquarters in Bridgewater, New Jersey. The loan was repaid in full in
August 1998.

    In 1999, the Company entered into a consulting agreement with Mr. Vincent
Buonanno, one of the directors. In consideration for his advice on matters
relating to the steel drum reconditioning business, the Company will pay
Mr. Buonanno four payments of $250,000, each prior to December 31, 2001. One
such payment was made in 2000 and two payments were made in 1999.

    New York Life Insurance Company, one of the Company's 5% stockholders, and
New York Life Insurance and Annuity Corporation, an affiliate of New York Life
Insurance Company, were lenders under the Company's senior credit agreement,
with an aggregate term loan commitment of $20.0 million which bore interest at
9.48% per annum. The term loan remains outstanding under the Company's new
senior credit facility bearing the same interest rate and will mature in two
equal installments in June 2006 and June 2007. In connection with the execution
of the new senior credit facility, the Company paid fees of approximately
$100,000 to these lenders.

                                       46
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                 YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

12. LONG-TERM INCENTIVE PLAN

    During 1998, the Company established a new performance unit incentive plan
for certain key employees to cover the three-year period ended December 31,
2000. Under the new plan 27,925 units were awarded to the participants of the
plan in 1998. The value of each unit is dependent upon the Company's achievement
of certain EBITDA levels, as defined, for the three-year period ended
December 31, 2000. The Company recognizes expense in relation to this plan based
on the estimate of the final payout of the plan. Accordingly, the Company
recognized expense of $233,000 in 1999 and 1998. These amounts were reversed in
2000 as the performance target levels were not met and no payments are due under
the plan.

13. COMMON STOCK

    COMMON STOCK--The par value of the Company's common stock is $0.01. There
were 3,000,000 shares of common stock authorized at December 31, 2000 and 1999.
In 1989, common stock was issued to two of the Company's management in exchange
for notes receivable totaling $64,000. Both notes were paid in full, one in
January 1999 and the other note was paid in March 2000.

    The shares of the Company's common stock issued to directors and management
investors are subject to various restrictions on transferability and the Company
has the right to repurchase such shares under certain circumstances.

    The Company maintains a stock option plan, which provides for the granting
of stock options to certain officers and key employees at exercise prices
ranging from $8.00 to $50.00 per share. Information relating to the option plan
is as follows:

<TABLE>
<CAPTION>
                                                                2000       1999       1998
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Options outstanding at January 1............................  184,288    253,276    174,679
Options forfeited...........................................  (23,250)   (68,988)   (46,953)
Options granted.............................................       --         --    125,550
                                                              -------    -------    -------
Options outstanding at December 31..........................  161,038    184,288    253,276
                                                              =======    =======    =======
Options exercisable at December 31..........................  127,858     99,979     75,430
                                                              =======    =======    =======
Weighted average exercise price of options outstanding......  $ 36.83    $ 37.80    $ 34.44
Weighted average exercise price of options forfeited........  $ 52.15    $ 35.71    $ 28.63
Weighted average exercise price of options granted..........  $    --    $    --    $ 50.40
Weighted average remaining contractual life.................  7 years    8 years    9 years
Weighted average exercise price of options exercisable......  $ 32.54    $ 28.56    $ 17.12
</TABLE>

    No options expired or were exercised during any of the years presented. In
1999, a 1989 grant of 6,000 options was extended to 2005.

    Common stock acquired in accordance with the stock option agreement is not
transferable except as provided in the Stockholders' Transfer Rights Agreement
or pursuant to an effective registration statement filed under the provisions of
the Securities Act of 1933.

    The 33,180 nonvested options at December 31, 2000 will become vested over
the following periods: 24,180 vest evenly over three years commencing in
February 2001 and 9,000 vest evenly over three

                                       47
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                 YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

13. COMMON STOCK (CONTINUED)
years commencing in May 2001. All options must be exercised, or will expire,
within 10 years of the date of the grant. In addition, in the event of a change
in control, all options vest.

    The Company accounts for the stock option plan in accordance with Accounting
Principles Board Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, under
which no compensation cost has been recognized for stock option awards. However,
under Statement of Financial Accounting Standards No. 123, ACCOUNTING FOR
STOCK-BASED COMPENSATION ("SFAS 123"), the Company must disclose the pro forma
net loss as if the Company had adopted the accounting requirements of SFAS 123.
Based on the Minimum Value Method of SFAS 123, the Company's pro forma net loss
for 2000, 1999, and 1998 would have been $16,170,000, $8,353,000, and
$4,588,000, respectively.

    The fair value of each stock option grant is estimated on the date of grant
using the Minimum Value Method with the following weighted average assumptions
used for grants:

<TABLE>
<CAPTION>
                                                            2000          1999          1998
                                                          --------      --------      --------
<S>                                                       <C>           <C>           <C>
Risk-free interest rate.................................    5.00%         5.00%         6.00%
Expected dividend yield.................................       0             0             0
Expected life in years..................................       5             5             5
Expected volatility.....................................       0             0             0
</TABLE>

14. COMMITMENTS AND CONTINGENCIES

    The Company has entered into employment agreements with certain employees,
through its acquisitions, whereby the Company is committed to provide employment
and reimbursement for specified expenses providing the employees comply with the
provisions of said agreements. These payments were recorded in conjunction with
purchase accounting; $515,000 and $1,285,000 are included in accounts payable
and accrued expenses at December 31, 2000 and 1999, respectively and $660,000
and $1,175,000 are included in other noncurrent liabilities at December 31, 2000
and 1999, respectively. Future minimum payments under these agreements as of
December 31, 2000 are $515,000 in 2001 and $330,000 in both 2002 and 2003.

    In January 1999, the U.S. Environmental Protection Agency (the "EPA")
confirmed the presence of contaminants, including dioxin, in and along the
Woonasquatucket River in Rhode Island. Prior to 1970, NEC operated a facility in
North Providence, Rhode Island along the Woonasquatucket River at a site where
contaminants have been found. NEC, the current owners of the property, and
others have been formally identified by the EPA as potentially responsible
parties, with the site added to the National Priority Superfund Site list in
February 2000. Although NEC no longer operates the facility, and did not operate
the facility at the time the Company acquired the outstanding capital stock of
NEC in July 1998, NEC could incur liability under federal and state
environmental laws and/or as a result of civil litigation. Any resulting
liability is subject to a contractual indemnity from Vincent J. Buonanno, one of
its directors and the former owner of NEC, subject to a $2.0 million limit, and
rights of contribution from other potential responsible parties. In
January 2001, the EPA announced it was proceeding with an interim soil removal
project and will be undertaking further testing and analysis to determine what,
if any, remedial action in addition to the interim soil removal will be
required. On March 26, 2001, the EPA issued a unilateral administrative order
pursuant to Section 106(a) of the federal Comprehensive Environmental Response,
Compensation and Liability Act requiring NEC and

                                       48
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                 YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

14. COMMITMENTS AND CONTINGENCIES (CONTINUED)
the other potentially responsible parties to perform the interim soil removal
project. The Company is currently unable to estimate the likelihood or extent of
any liability; however, this matter may result in liability to NEC that could
have a material adverse effect on the Company's financial condition, cash flows
and results of operations.

    The Company is also party to various other claims, legal actions, complaints
and union negotiations arising out of the ordinary course of business.
Management proactively reviews and manages its exposure to, and the impact of,
environmental matters and other contingencies. While it is possible that the
Company's cash flows and results of operations in particular quarterly or annual
periods could be affected by the one-time impacts of the resolution of the above
contingencies, it is the opinion of management that the ultimate disposition of
these matters, to the extent not previously provided for, will not have a
material impact on the Company's financial condition or ongoing cash flows and
results of operations.

15. EXTRAORDINARY ITEM

    The Company incurred extraordinary charges in February 1999 totaling
approximately $763,000, net of tax benefits, consisting of the write-off of
unamortized deferred financing costs. No such charges were incurred in 2000 or
1998.

16. ACQUISITIONS

    In July 1998, the Company acquired NEC which provided the Company entry into
the steel drum reconditioning market. The purchase price of the stock
acquisition was $14.0 million, plus transaction-related expenses and 24,243
shares of common stock valued at $45 per share.

17. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES

    FAIR VALUE OF FINANCIAL INSTRUMENTS--The Company does not enter into
financial instruments for trading purposes. The carrying value of cash, cash
equivalents, accounts receivable, accounts payable, and accrued expenses
approximates their fair value due to the relatively short maturity of these
financial instruments. Due to the Credit Agreement covenant violations and
interest payment default, fair value of long-term debt cannot be reliably
determined by the Company as of December 31, 2000. At December 31, 1999, the
carrying amount approximated fair value based on borrowing rates in effect at
the time.

    Included in other (income) expense-net for the years ended December 31, 1999
and 1998, was a gain of $101,700 and a loss of $629,000, respectively, on
foreign exchange contracts. The Company has entered into foreign currency
forwards to hedge the foreign currency exposure of firm fixed asset purchases
denominated in Deutsche Marks.

18. NON-RECURRING CHARGES

    In 1998, a provision of $3.5 million was established to cover non-recurring
charges to streamline the Company's operations and sales forces and to
consolidate and relocate the Company's corporate headquarters in order to
improve operating efficiencies and reduce costs. The primary elements of the
reserve related to the closure of a container manufacturing facility, severance
and other personnel

                                       49
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                 YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

18. NON-RECURRING CHARGES (CONTINUED)
related costs, such as the relocation of our corporate headquarters and other
miscellaneous costs. The severance and other personnel-related costs arose from
the elimination of 10 positions at the corporate headquarters and 36 positions
at a container manufacturing facility. Non-recurring charges for the year ended
December 31, 1998 also include $2.7 million of costs associated with proposed
acquisitions that were not consummated.

    In 1999, a provision of $1.9 million was established to further streamline
operations as a result of our change in management. The non-recurring charges of
$1.9 million related to severance costs for the elimination of six corporate
positions.

    The costs of completing the streamlining of operations to date approximated
the original reserve. The balance remaining as of December 31, 2000 is
$0.1 million and is classified as a current liability in the consolidated
balance sheet under the caption accounts payable and accrued expenses which will
be paid in the first quarter of 2001.

19. SEGMENT REPORTING

    The Company has two reportable operating segments. The containers division
manufactures and sells new plastic and steel rigid industrial containers. The
services division provides industrial container services for both plastic and
steel rigid industrial containers. These services include reconditioning and
selling plastic and steel industrial containers, plastic container fleet
management, retrieval and recycling of empty industrial containers and leasing
of plastic drums and intermediate bulk containers.

    Information as to the operations of the Company's business segments is set
forth below based on the nature of the products and services offered. The
Company evaluates performance based on several factors, of which the primary
financial measure is business segment profit or loss from operations before
interest, income taxes, depreciation, amortization of intangible assets and
extraordinary items. The accounting policies of the segments are the same as
those described in the summary of significant accounting policies (Note 2).
Intersegment sales are recorded at cost plus applicable margin and are
eliminated upon consolidation.

                                       50
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

19. SEGMENT REPORTING (CONTINUED)

<TABLE>
<CAPTION>
                                                                2000       1999       1998
                                                              --------   --------   --------
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
Sales:
  Containers................................................  $222,588   $229,886   $232,274
  Services..................................................    55,970     62,217     46,650
                                                              --------   --------   --------
                                                               278,558    292,103    278,924
Intersegment sales:
  Containers................................................     5,068      4,985      2,300
  Services..................................................        --         --         --
                                                              --------   --------   --------
                                                                 5,068      4,985      2,300
Net sales:
  Containers................................................   217,520    224,901    229,974
  Services..................................................    55,970     62,217     46,650
                                                              --------   --------   --------
Consolidated net sales......................................  $273,490   $287,118   $276,624
                                                              ========   ========   ========
Earnings before interest, income taxes, depreciation and
  amortization (EBITDA)(1):
  Containers................................................  $ 20,862   $ 28,506   $ 23,453
  Services..................................................    10,076     12,976     14,341
                                                              --------   --------   --------
                                                                30,938     41,482     37,794

Interest expense............................................    23,236     21,079     16,025
Depreciation and amortization expense.......................    30,141     30,071     26,606
                                                              --------   --------   --------
Consolidated loss before income taxes and extraordinary
  items.....................................................  $(22,439)  $ (9,668)  $ (4,837)
                                                              ========   ========   ========
Depreciation and amortization expense:
  Containers................................................  $ 12,183   $ 11,944   $ 11,617
  Services..................................................    17,958     18,127     14,989
                                                              --------   --------   --------
Consolidated depreciation and amortization expense..........  $ 30,141   $ 30,071   $ 26,606
                                                              ========   ========   ========
Segment assets:
  Containers................................................  $195,021   $195,942   $188,376
  Services..................................................    62,205     68,586     64,902
  Other.....................................................     2,591      3,475      4,976
                                                              --------   --------   --------
Consolidated segment assets.................................  $259,817   $268,003   $258,254
                                                              ========   ========   ========
Capital expenditures:
  Containers................................................  $  8,374   $  7,795   $ 10,484
  Services..................................................    12,465     20,761     18,195
                                                              --------   --------   --------
Consolidated capital expenditures...........................  $ 20,839   $ 28,556   $ 28,679
                                                              ========   ========   ========
</TABLE>

------------------------
(1) EBITDA should not be considered a substitute for net income, cash flow from
    operating activities or other cash flow statement data prepared in
    accordance with generally accepted accounting standards or as an alternative
    to net income or as an indicator of operating performance or cash flows as a
    measure of liquidity. EBITDA is presented here only to provide additional
    information with respect to the Company's ability to satisfy debt service.
    While EBITDA is frequently used as a measure of operations and the ability
    to meet debt service requirements, it is not necessarily comparable to other
    similarly titled captions of other companies due to potential
    inconsistencies in the method of calculation.

                                       51
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

19. SEGMENT REPORTING (CONTINUED)
    Net sales by geographic area, as determined by the location of customer, are
as follows:

<TABLE>
<CAPTION>
                                                                2000       1999       1998
                                                              --------   --------   --------
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
Net sales by geographic area:
  United States.............................................  $255,219   $273,445   $259,732
  Canada....................................................    17,363     12,795     15,490
  Other countries...........................................       908        878      1,402
                                                              --------   --------   --------
Total.......................................................  $273,490   $287,118   $276,624
                                                              ========   ========   ========
</TABLE>

    Long-lived assets by geographic area, consisting of property, plant and
equipment--net and goodwill and other intangibles--net, as determined by
location of the asset, is as follows:

<TABLE>
<CAPTION>
                                                                2000       1999       1998
                                                              --------   --------   --------
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
Long-lived assets--net by geographic area:
  United States.............................................  $168,068   $176,382   $177,345
  Canada....................................................    22,673     24,488     23,493
                                                              --------   --------   --------
Total.......................................................  $190,741   $200,870   $200,838
                                                              ========   ========   ========
</TABLE>

    The Company does not have a single customer which represents 10 percent or
more of consolidated revenues.

20. QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                           FIRST      SECOND     THIRD      FOURTH
                                          QUARTER    QUARTER    QUARTER    QUARTER
                                          --------   --------   --------   --------
                                                       (IN THOUSANDS)
<S>                                       <C>        <C>        <C>        <C>
2000
  Net sales.............................  $72,378    $70,255    $68,453    $62,404
  Gross profit..........................   14,444     11,936     11,943     10,704
  Net loss..............................   (2,873)    (4,186)    (3,569)    (5,242)
1999
  Net sales.............................  $70,938    $73,185    $71,549    $71,446
  Gross profit..........................   17,985     17,148     15,503     13,926
  Net loss..............................     (393)    (1,187)    (1,827)    (4,801)
</TABLE>

21. GUARANTOR SUBSIDIARIES

    The Company's payment obligations under the Notes are fully,
unconditionally, jointly and severally guaranteed by its current domestic
subsidiaries, principally: RSC, CMS, and NEC (collectively, the "Guarantor
Subsidiaries"). Each of the Guarantor Subsidiaries is a direct or indirect
wholly-owned subsidiary of the Company. The Company's payment obligations under
the Notes are not guaranteed by the remaining subsidiary, Hunter (the
"Non-Guarantor Subsidiary"). The obligations of each Guarantor

                                       52
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

21. GUARANTOR SUBSIDIARIES (CONTINUED)
Subsidiary under their guarantee of the Notes are subordinated to each
subsidiary's obligations under their guarantee of the Senior Credit Facility.

    Presented below is condensed combining financial information for the Parent
Company, the Guarantor Subsidiaries and the Non-Guarantor Subsidiary. In the
Company's opinion, separate financial statements and other disclosures
concerning each of the Guarantor Subsidiaries would not provide additional
information that is material to investors. Therefore, the Guarantor Subsidiaries
are combined in the presentation below.

    Investments in subsidiaries are accounted for by the Parent Company on the
equity method of accounting. Earnings of subsidiaries are, therefore, reflected
in the Parent Company's investments in and advances to/from subsidiaries account
and earnings (losses). The elimination entries eliminate investments in
subsidiaries, related stockholders' equity and other intercompany balances and
transactions.

                                       53
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

          SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

                      FOR THE YEAR ENDED DECEMBER 31, 2000
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                            PARENT      GUARANTOR     NON-GUARANTOR
                                            COMPANY    SUBSIDIARIES    SUBSIDIARY     ELIMINATIONS   CONSOLIDATED
                                           ---------   ------------   -------------   ------------   ------------
<S>                                        <C>         <C>            <C>             <C>            <C>
Net sales................................  $      --    $ 238,618        $36,074        $ (1,202)      $ 273,490

Cost of sales............................         --      198,614         27,051          (1,202)        224,463
                                           ---------    ---------        -------        --------       ---------

Gross profit.............................         --       40,004          9,023              --          49,027

Total expenses...........................         --       42,669          5,598              --          48,267
                                           ---------    ---------        -------        --------       ---------

Income (loss) from operations............         --       (2,665)         3,425              --             760

Equity loss..............................    (14,476)          --             --          14,476              --

Interest expense.........................      2,130       19,682          1,424              --          23,236

Other (income) expense--net..............         --         (589)           552              --             (37)
                                           ---------    ---------        -------        --------       ---------

(Loss) income before income taxes........    (16,606)     (21,758)         1,449          14,476         (22,439)

(Benefit) provision for income taxes.....       (736)      (6,646)           813              --          (6,569)
                                           ---------    ---------        -------        --------       ---------

Net (loss) income........................  $ (15,870)   $ (15,112)       $   636        $ 14,476       $ (15,870)
                                           =========    =========        =======        ========       =========
</TABLE>

                                       54
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

          SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

                      FOR THE YEAR ENDED DECEMBER 31, 1999
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                       PARENT     GUARANTOR     NON-GUARANTOR
                                      COMPANY    SUBSIDIARIES    SUBSIDIARY     ELIMINATIONS   CONSOLIDATED
                                      --------   ------------   -------------   ------------   ------------
<S>                                   <C>        <C>            <C>             <C>            <C>
Net sales...........................  $    --      $250,658        $37,372           (912)       $287,118

Cost of sales.......................       --       196,129         27,339           (912)        222,556
                                      --------     --------        -------         ------        --------

Gross profit........................       --        54,529         10,033             --          64,562

Total expenses......................       --        47,367          5,903             --          53,270
                                      --------     --------        -------         ------        --------

Income from operations..............       --         7,162          4,130             --          11,292

Equity loss.........................   (6,134)           --             --          6,134              --

Interest expense....................    2,136        17,634          1,309             --          21,079

Other (income) expense--net.........       --          (768)           649             --            (119)
                                      --------     --------        -------         ------        --------

(Loss) income before income taxes
  and extraordinary item............   (8,270)       (9,704)         2,172          6,134          (9,668)

(Benefit) provision for income
  taxes.............................     (825)       (2,482)         1,084             --          (2,223)
                                      --------     --------        -------         ------        --------

(Loss) income before extraordinary
  item..............................   (7,445)       (7,222)         1,088          6,134          (7,445)

Extraordinary item, net of tax......      763            --             --             --             763
                                      --------     --------        -------         ------        --------

Net (loss) income...................  $(8,208)     $ (7,222)       $ 1,088         $6,134        $ (8,208)
                                      ========     ========        =======         ======        ========
</TABLE>

                                       55
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

          SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

                      FOR THE YEAR ENDED DECEMBER 31, 1998
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                       PARENT     GUARANTOR     NON-GUARANTOR
                                      COMPANY    SUBSIDIARIES    SUBSIDIARY     ELIMINATIONS   CONSOLIDATED
                                      --------   ------------   -------------   ------------   ------------
<S>                                   <C>        <C>            <C>             <C>            <C>
Net sales...........................  $    --      $240,874        $35,750         $   --        $276,624

Cost of sales.......................       --       187,550         25,657             --         213,207
                                      --------     --------        -------         ------        --------

Gross profit........................       --        53,324         10,093             --          63,417

Total expenses......................       --        46,252          5,427             --          51,679
                                      --------     --------        -------         ------        --------

Income from operations..............       --         7,072          4,666             --          11,738

Equity loss.........................   (2,876)           --             --          2,876              --

Interest expense....................    2,185        12,505          1,335             --          16,025

Other (income) expense--net.........       --           (79)           629             --             550
                                      --------     --------        -------         ------        --------

(Loss) income before income taxes...   (5,061)       (5,354)         2,702          2,876          (4,837)

(Benefit) provision for income
  taxes.............................     (729)       (1,034)         1,258             --            (505)
                                      --------     --------        -------         ------        --------

Net (loss) income...................  $(4,332)     $ (4,320)       $ 1,444         $2,876        $ (4,332)
                                      ========     ========        =======         ======        ========
</TABLE>

                                       56
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES
               SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
                               DECEMBER 31, 2000
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                          PARENT     GUARANTOR     NON-GUARANTOR
                                         COMPANY    SUBSIDIARIES    SUBSIDIARY     ELIMINATIONS   CONSOLIDATED
                                         --------   ------------   -------------   ------------   ------------
<S>                                      <C>        <C>            <C>             <C>            <C>
ASSETS
CURRENT ASSETS
  Cash................................   $    --      $  1,077        $    --       $      --       $  1,077
  Accounts receivable--net............        --        23,588          3,431              --         27,019
  Inventories.........................        --        20,044          2,614              --         22,658
  Prepaid and other current
    assets--net.......................        --          (427)           378           2,591          2,542
                                         --------     --------        -------       ---------       --------
      Total current assets............        --        44,282          6,423           2,591         53,296
                                         --------     --------        -------       ---------       --------
PROPERTY, PLANT AND EQUIPMENT--net....        --        81,888          5,709              --         87,597
                                         --------     --------        -------       ---------       --------
OTHER ASSETS
  Goodwill and other
    intangibles--net..................        --        86,180         16,964              --        103,144
  Deferred financing costs--net.......        --         6,173             --              --          6,173
  Other noncurrent assets.............        --           183             --              --            183
  Deferred tax benefit--net...........        --        20,168             --         (10,744)         9,424
  Intercompany advances...............    17,199        37,436             69         (54,704)            --
  Investment in subsidiaries..........    17,280            --             --         (17,280)            --
                                         --------     --------        -------       ---------       --------
TOTAL ASSETS..........................   $34,479      $276,310        $29,165       $ (80,137)      $259,817
                                         ========     ========        =======       =========       ========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Accounts payable and accrued
    expenses..........................   $    --      $ 28,526        $ 3,509       $      89       $ 32,124
  Income taxes payable................    (4,129)        1,246             29           2,854             --
  Current portion of long-term debt...    19,997       186,627          7,639              --        214,263
  Deferred taxes--net.................        --         2,180             --            (420)         1,760
                                         --------     --------        -------       ---------       --------
      Total current liabilities.......    15,868       218,579         11,177           2,523        248,147
LONG-TERM DEBT........................        --            --             --              --             --
DEFERRED TAXES--net...................        --         9,627          1,119         (10,746)            --
OTHER NONCURRENT LIABILITIES..........        --         1,205            523              --          1,728
                                         --------     --------        -------       ---------       --------
      Total liabilities...............    15,868       229,411         12,819          (8,223)       249,875
INTERCOMPANY ADVANCES.................        --        46,922          7,043         (53,965)            --
TOTAL STOCKHOLDERS' EQUITY............    18,611           (23)         9,303         (17,949)         9,942
                                         --------     --------        -------       ---------       --------
TOTAL LIABILITIES AND STOCKHOLDERS'
  EQUITY..............................   $34,479      $276,310        $29,165       $ (80,137)      $259,817
                                         ========     ========        =======       =========       ========
</TABLE>

                                       57
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES
               SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
                               DECEMBER 31, 1999
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                             PARENT     GUARANTOR     NON-GUARANTOR
                                            COMPANY    SUBSIDIARIES    SUBSIDIARY     ELIMINATIONS   CONSOLIDATED
                                            --------   ------------   -------------   ------------   ------------
<S>                                         <C>        <C>            <C>             <C>            <C>
ASSETS
CURRENT ASSETS
  Cash and cash equivalents...............  $    --      $    704        $    --        $     --       $    704
  Accounts receivable--net................       --        25,594          4,541              --         30,135
  Inventories.............................       --        20,497          4,098              --         24,595
  Prepaid and other current assets--net...       --           884            292           3,475          4,651
                                            -------      --------        -------        --------       --------
      Total current assets................       --        47,679          8,931           3,475         60,085
                                            -------      --------        -------        --------       --------
PROPERTY, PLANT AND EQUIPMENT--NET........       --        88,301          6,272              --         94,573
                                            -------      --------        -------        --------       --------
OTHER ASSETS
  Goodwill and other intangibles--net.....       --        88,328         17,969              --        106,297
  Deferred financing costs--net...........       --         6,892             --              --          6,892
  Other noncurrent assets.................       --           156             --              --            156
  Intercompany advances...................   18,655        27,150            131         (45,936)            --
  Investment in subsidiaries..............   31,544            --             --         (31,544)            --
                                            -------      --------        -------        --------       --------
TOTAL ASSETS..............................  $50,199      $258,506        $33,303        $(74,005)      $268,003
                                            =======      ========        =======        ========       ========
LIABILITIES AND
  STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Accounts payable and accrued expenses...  $(3,395)     $ 34,429        $ 6,277        $  8,296       $ 45,607
  Current portion of long-term debt.......       --            --             --              --             --
                                            -------      --------        -------        --------       --------
  Total current liabilities...............   (3,395)       34,429          6,277           8,296         45,607
LONG-TERM DEBT............................   19,997       164,110          8,662              --        192,769
DEFERRED TAXES--NET.......................     (749)        4,678          1,123          (4,571)           481
OTHER NONCURRENT LIABILITIES..............       --         2,030          1,020            (542)         2,508
                                            -------      --------        -------        --------       --------
      Total liabilities...................   15,853       205,247         17,082           3,183        241,365
INTERCOMPANY ADVANCES.....................       --        38,655          7,281         (45,936)            --
TOTAL STOCKHOLDERS' EQUITY................   34,346        14,604          8,940         (31,252)        26,638
                                            -------      --------        -------        --------       --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY....................................  $50,199      $258,506        $33,303        $(74,005)      $268,003
                                            =======      ========        =======        ========       ========
</TABLE>

                                       58
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES
          SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 2000
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                      PARENT      GUARANTOR     NON-GUARANTOR
                                      COMPANY    SUBSIDIARIES    SUBSIDIARY     ELIMINATIONS   CONSOLIDATED
                                     ---------   ------------   -------------   ------------   ------------
<S>                                  <C>         <C>            <C>             <C>            <C>
Cash flows from operating
  activities:
Net (loss) income..................  $ (15,870)   $ (15,112)        $  636        $ 14,476       $ (15,870)
  Adjustments to reconcile net
  income (loss) to net cash
  provided by (used in) operating
  activities:
Equity loss........................     14,476           --             --         (14,476)             --
Depreciation and amortization......        968       28,744          1,397              --          31,109
Other changes......................        426      (14,750)          (258)             --         (14,582)
                                     ---------    ---------         ------        --------       ---------
  Net cash provided by (used in)
    operating activities...........         --       (1,118)         1,775              --             657
                                     ---------    ---------         ------        --------       ---------
Cash flows used in investing
  activities.......................         --      (20,289)          (550)             --         (20,839)
                                     ---------    ---------         ------        --------       ---------
Cash flows provided by (used in)
  financing activities.............         --       21,638           (681)             --          20,957
                                     ---------    ---------         ------        --------       ---------
Effect of exchange rate changes on
  cash and cash equivalents........         --           --           (402)             --            (402)
                                     ---------    ---------         ------        --------       ---------
Net change in cash and cash
  equivalents......................         --          231            142              --             373
Cash and cash equivalents,
  beginning of period..............         --        1,022           (318)             --             704
                                     ---------    ---------         ------        --------       ---------
Cash and cash equivalents, end of
  period...........................  $      --    $   1,253         $ (176)       $     --       $   1,077
                                     =========    =========         ======        ========       =========
</TABLE>

                                       59
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES
          SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 1999
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                       PARENT     GUARANTOR     NON-GUARANTOR
                                      COMPANY    SUBSIDIARIES    SUBSIDIARY     ELIMINATIONS   CONSOLIDATED
                                      --------   ------------   -------------   ------------   ------------
<S>                                   <C>        <C>            <C>             <C>            <C>
Cash flows from operating
  activities:
Net (loss) income...................  $(8,208)     $ (7,222)       $ 1,088        $ 6,134        $ (8,208)
Adjustments to reconcile net income
  (loss) to net cash provided by
  (used in) operating activities:
Equity loss.........................    6,134            --             --         (6,134)             --
Depreciation and amortization.......      807        28,738          1,333             --          30,878
Extraordinary item..................    1,271            --             --             --           1,271
Other changes.......................       (4)       (8,866)          (723)            --          (9,593)
                                      --------     --------        -------        -------        --------
  Net cash provided by operating
    activities......................       --        12,650          1,698             --          14,348
                                      --------     --------        -------        -------        --------
Cash flows used in investing
  activities........................       --       (27,727)          (829)            --         (28,556)
                                      --------     --------        -------        -------        --------
Cash flows provided by (used in)
  financing activities..............       --        14,854         (1,588)            --          13,266
                                      --------     --------        -------        -------        --------
Effect of exchange rate changes on
  cash and cash equivalents.........       --            --             16             --              16
                                      --------     --------        -------        -------        --------
Net change in cash and cash
  equivalents.......................       --          (223)          (703)            --            (926)
                                      --------     --------        -------        -------        --------
Cash and cash equivalents, beginning
  of period.........................       --         1,245            385             --           1,630
                                      --------     --------        -------        -------        --------
Cash and cash equivalents, end of
  period............................  $    --      $  1,022        $  (318)       $    --        $    704
                                      ========     ========        =======        =======        ========
</TABLE>

                                       60
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES

          SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

                      FOR THE YEAR ENDED DECEMBER 31, 1998
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                       PARENT     GUARANTOR     NON-GUARANTOR
                                      COMPANY    SUBSIDIARIES    SUBSIDIARY     ELIMINATIONS   CONSOLIDATED
                                      --------   ------------   -------------   ------------   ------------
<S>                                   <C>        <C>            <C>             <C>            <C>
Cash flows from operating
  activities:
Net (loss) income...................  $(4,332)     $(4,320)         $1,444         $2,876         $(4,332)

Adjustments to reconcile net income
  (loss) to net cash provided by
  (used in) operating activities:

Equity loss.........................    2,876           --              --         (2,876)             --

Depreciation and amortization.......      276       25,301           1,305             --          26,882

Other changes.......................    1,252        9,058          (2,063)            --           8,247
                                      -------      -------          ------         ------         -------

    Net cash provided by operating
      activities....................       72       30,039             686             --          30,797
                                      -------      -------          ------         ------         -------

Cash flows used in investing
  activities........................       --      (40,690)           (543)            --         (41,233)
                                      -------      -------          ------         ------         -------

Cash flows provided by (used in)
  financing activities..............      (72)      11,067              (6)            --          10,989
                                      -------      -------          ------         ------         -------

Effect of exchange rate changes on
  cash and cash equivalents.........       --           --              26             --              26
                                      -------      -------          ------         ------         -------

Net change in cash and cash
  equivalents.......................       --          416             163             --             579
                                      -------      -------          ------         ------         -------

Cash and cash equivalents, beginning
  of period.........................       --          829             222             --           1,051
                                      -------      -------          ------         ------         -------

Cash and cash equivalents, end of
  period............................  $    --      $ 1,245          $  385         $   --         $ 1,630
                                      =======      =======          ======         ======         =======
</TABLE>

                                       61
<PAGE>
                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
Russell-Stanley Holdings, Inc.
Bridgewater, New Jersey

    We have audited the accompanying consolidated balance sheets of
Russell-Stanley Holdings, Inc. and subsidiaries (the "Company") as of
December 31, 2000 and 1999, and the related consolidated statements of
operations and comprehensive (loss) income, stockholders' equity, and cash flows
for each of the three years in the period ended December 31, 2000. Our audits
also include the financial statement schedule listed in the index at Item 14.
These financial statements and the financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and the financial statement schedule based
on our audits.

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

    In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company at December 31,
2000 and 1999, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States of America. Also,
in our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.

    The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1, the Company is
in violation of certain of its debt covenants, which raises substantial doubt
about its ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

DELOITTE & TOUCHE LLP
Parsippany, New Jersey
February 27, 2001
(March 26, 2001 as to Note 1,
Note 8 and Note 14)

                                       62
<PAGE>
                                   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 April 17, 2001.

<TABLE>
<S>                                                    <C>  <C>
                                                       RUSSELL-STANLEY HOLDINGS, INC.

                                                       By:             /s/ DANIEL W. MILLER
                                                            -----------------------------------------
                                                                         Daniel W. Miller
                                                             CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE
                                                                             OFFICER
</TABLE>

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed on the 17th day of April, 2001
by the following persons in the capacities indicated:

<TABLE>
<CAPTION>
                      SIGNATURE                                            TITLE
                      ---------                                            -----
<S>                                                    <C>
                /s/ DANIEL W. MILLER                      Chairman, President and Chief Executive
     -------------------------------------------          Officer, Assistant Secretary, and Director
                  Daniel W. Miller                              (principal executive officer)

              /s/ RONALD M. LITCHKOWSKI                   Vice President, Chief Financial Officer,
     -------------------------------------------         Treasurer and Secretary (principal financial
                Ronald M. Litchkowski                              and accounting officer)

                /s/ MICHAEL W. HUNTER
     -------------------------------------------         Executive Vice President-Global Marketing,
                  Michael W. Hunter                      Sales and Business Development and Director

                /s/ ROBERT L. ROSNER
     -------------------------------------------                          Director
                  Robert L. Rosner

                /s/ NORMAN W. ALPERT
     -------------------------------------------                          Director
                  Norman W. Alpert

               /s/ VINCENT J. BUONANNO
     -------------------------------------------                          Director
                 Vincent J. Buonanno

                 /s/ TODD N. KHOURY
     -------------------------------------------                          Director
                   Todd N. Khoury
</TABLE>

                                       63
<PAGE>

<TABLE>
<CAPTION>
                      SIGNATURE                                            TITLE
                      ---------                                            -----
<S>                                                    <C>
                /s/ LEONARD LIEBERMAN
     -------------------------------------------                          Director
                  Leonard Lieberman

                   /s/ KEVIN MUNDT
     -------------------------------------------                          Director
                     Kevin Mundt

                 /s/ ARTHUR J. NAGLE
     -------------------------------------------                          Director
                   Arthur J. Nagle

               /s/ VINCENT J. NAIMOLI
     -------------------------------------------                          Director
                 Vincent J. Naimoli

               /s/ DANIEL S. O'CONNELL
     -------------------------------------------                          Director
                 Daniel S. O'Connell

                /s/ JOHN W. PRIESING
     -------------------------------------------                          Director
                  John W. Priesing
</TABLE>

                                       64
<PAGE>
                RUSSELL-STANLEY HOLDINGS, INC. AND SUBSIDIARIES
                SCHEDULE II---VALUATION AND QUALIFYING ACCOUNTS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                  COLUMN A                      COLUMN B          COLUMN C           COLUMN D     COLUMN E
                  --------                      --------    ---------------------    --------     --------
                                                                  ADDITIONS
                                                            ---------------------
                                               BALANCE AT   CHARGED TO                           BALANCE AT
                                               BEGINNING    COSTS AND                               END
                 DESCRIPTION                   OF PERIOD     EXPENSES     OTHER     DEDUCTIONS   OF PERIOD
                 -----------                   ----------   ----------   --------   ----------   ----------
<S>                                            <C>          <C>          <C>        <C>          <C>
For the year ended December 31, 2000

Allowance for doubtful accounts..............    $   460      $   --       $ 71     $      --      $   531
                                                 =======      ======       ====     =========      =======
Accumulated amortization of goodwill and
  other intangibles..........................    $15,734      $2,963       $(58)    $      --      $18,639
                                                 =======      ======       ====     =========      =======

For the year ended December 31, 1999

Allowance for doubtful accounts..............    $   169      $   --       $291     $      --      $   460
                                                 =======      ======       ====     =========      =======
Accumulated amortization of goodwill and
  other intangibles..........................    $12,707      $2,975       $ 52     $      --      $15,734
                                                 =======      ======       ====     =========      =======

For the year ended December 31, 1998

Allowance for doubtful accounts..............    $   224      $   --       $(55)    $      --      $   169
                                                 =======      ======       ====     =========      =======
Accumulated amortization of goodwill and
  other intangibles..........................    $ 9,580      $3,127       $ --     $      --      $12,707
                                                 =======      ======       ====     =========      =======
</TABLE>

                                      S-1