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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K



(Mark One)

|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------



FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
|- | ----------------------------------------------------------------------------------------------------------



For the transition period from to
 to
 .



Commission File Number: 333-88157



CONSOLIDATED CONTAINER COMPANY LLC

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 75-2825338                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



3101 Towercreek
Parkway, Suite 300,

Atlanta Georgia 30339

(Address of principal executive offices) (Zip Code)



(678) 742-4600

(Registrants telephone number, including area code)



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



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



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



Indicate by check mark whether the registrant is an
accelerated filer (as defined in Rule 12b-2 of the Exchange Acts).    Yes ̈No    x



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



None of the registrants member units were held by
nonaffiliates as of March 9, 2005.



The number of member units
outstanding as of March 9, 2005 is 1,000.



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TABLE OF CONTENTS

|
|

|
|

|         |  |                                                                                                                             |  |         
|-------- |  | --------------------------------------------------------------------------------------------------------------------------- |  | --------
|         |  |                                                                                                                             |  | Page No.
|         |  |                                                                                                                            
|PART I   |  |                                                                                                                             |  |         
|         |  |                                                                                                                            
|ITEM 1.  |  | Business                                                                                                                    |  | 3       
|         |  |                                                                                                                            
|ITEM 2.  |  | Properties                                                                                                                  |  | 9       
|         |  |                                                                                                                            
|ITEM 3.  |  | Legal Proceedings                                                                                                           |  | 12      
|         |  |                                                                                                                            
|ITEM 4.  |  | Submission of Matters to a Vote of Security Holders                                                                         |  | 12      
|         |  |                                                                                                                            
|PART II  |  |                                                                                                                             |  |         
|         |  |                                                                                                                            
|ITEM 5.  |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities                |  | 13      
|         |  |                                                                                                                            
|ITEM 6.  |  | Selected Historical Financial Data of Consolidated Container Company LLC                                                    |  | 13      
|         |  |                                                                                                                            
|ITEM 7.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations of Consolidated Container Company LLC |  | 15      
|         |  |                                                                                                                            
|ITEM 7A. |  | Quantitative and Qualitative Disclosures about Market Risk                                                                  |  | 27      
|         |  |                                                                                                                            
|ITEM 8.  |  | Financial Statements and Supplementary Data                                                                                 |  | 27      
|         |  |                                                                                                                            
|ITEM 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                                        |  | 27      
|         |  |                                                                                                                            
|ITEM 9A. |  | Controls and Procedures                                                                                                     |  | 27      
|         |  |                                                                                                                            
|PART III |  |                                                                                                                             |  |         
|         |  |                                                                                                                            
|ITEM 10. |  | Management Committee and Executive Officers of the Registrant                                                               |  | 28      
|         |  |                                                                                                                            
|ITEM 11. |  | Executive Compensation                                                                                                      |  | 32      
|         |  |                                                                                                                            
|ITEM 12. |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                              |  | 39      
|         |  |                                                                                                                            
|ITEM 13. |  | Certain Relationships and Related Transactions                                                                              |  | 42      
|         |  |                                                                                                                            
|ITEM 14. |  | Principal Accountant Fees and Services                                                                                      |  | 47      
|         |  |                                                                                                                            
|PART IV  |  |                                                                                                                             |  |         
|         |  |                                                                                                                            
|ITEM 15. |  | Exhibits and Financial Statement Schedules                                                                                  |  | 48      
|         |  |                                                                                                                            
|         |  | Index to Exhibits                                                                                                           |  | 49      



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PART I



|ITEM 1: | BUSINESS
|------- | --------



Background



On July 2, 1999, substantially all of the United States plastic packaging assets held by Franklin Plastics Inc. and Plastic Containers Inc., both subsidiaries of Suiza Foods Corporation, now known as Dean Foods Company (Dean
Foods), and the plastic packaging assets of Reid Plastics Inc., were contributed and merged into Consolidated Container Company LLC (the Company), a Delaware limited liability company. In connection with these and related
transactions, which are referred to herein as the Transactions, Consolidated Container Company LLC and our wholly owned subsidiary, Consolidated Container Capital Inc., issued 101/8% senior subordinated notes due 2009 in an aggregate principal amount of $185.0 million.



On May 20, 2004, the Company entered into a new senior credit facility that included a $220.0 million term loan and a $45.0
million revolving credit facility. On the same date, the Company issued $207.0 million aggregate principal amount due at maturity of 10 3⁄4% senior secured discount notes which generated proceeds of approximately $150.1 million. Additionally, the
Companys parent, Consolidated Container Holdings LLC (Holdings), made a $45.0 million capital contribution from the proceeds of its sale of Series B Convertible Preferred Units. The proceeds from the new term loan, the senior
secured discount notes and the capital contribution (collectively, the Refinancing Transactions) were used to permanently repay outstanding borrowings, accrued interest, deferred interest and deferred fees under the Companys then
existing senior credit facility and fees related to the Refinancing Transactions.



The Company is wholly owned by Holdings, a Delaware limited liability company. Consolidated Container Company LP, a subsidiary of the Company, serves as the operating company for all domestic operations.



Overview



We are a leading North American developer, manufacturer and marketer of rigid plastic containers for many of the largest
branded consumer products and beverage companies in the world. In 2004, we sold containers to the dairy, water, juice & other beverage, household chemicals & personal care, agricultural & industrial, food and automotive sectors. Our
container product line ranges in size from two-ounce to six-gallon containers and consists of single and multi-layer containers made from a variety of plastic resins, including high-density polyethylene (HDPE), polycarbonate
(PC), polypropylene (PP) and polyethylene terephthalate (PET).



We sell our containers to more than 2,000 customers located throughout North America. Our largest customers include many of the worlds leading
branded consumer products and industrial companies. We service these customers through a sales organization consisting of approximately 50 people and are the primary supplier for many of our top customers. We have long-term customer relationships
with many blue-chip companies including: Dean Foods, DS Waters of America, Kroger, Nestle Waters North America, National Dairy Holdings, Procter & Gamble, Coca-Cola North America, Pepsico, Scotts and Colgate-Palmolive.



We serve our customers with a wide range of manufacturing capabilities and
services through a nationwide network of 56 strategically located manufacturing facilities, a debagging operation and a research, development and engineering center located in Atlanta, Georgia. In addition, we have three international manufacturing
facilities in Canada and Mexico. Twenty of our manufacturing facilities are located on-site at customers plants. On-site facilities enable us to work more closely with our customers to facilitate just-in-time inventory management, eliminate
costly shipping and handling charges, reduce working capital needs and foster the development of long-term manufacturing and distribution relationships. Our widely recognized research, development and engineering center is responsible for creating
innovative product designs and process



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improvements which are important in lowering the manufacturing costs of our containers. Additionally, our customers rely on our design and technical
expertise because package design is a critical component in many of their marketing programs.



Our primary manufacturing technique consists of blowmolding. We are the fourth largest blowmolder in North America in terms of sales. Our blowmolding manufacturing platform covers a wide variety of plastic packaging
applications and comprises three primary technologies: wheels, shuttles and reciprocating machines. Wheel technology is typically used in high volume applications and in instances where special features such as multiple layers, in-mold labeling or
fluorination are required. Shuttles are primarily utilized as a lower capital, lower output alternative to wheels and are typically used in low to moderate volume applications. Reciprocating technology is typically used in simple, mono-layer
applications that range from low to high volume. With this diverse technology platform, we are able to service our customers with a broad range of packaging applications in a cost-effective and a capital-efficient manner.



Products



Below are our seven principal product categories:



Dairy. We manufacture one gallon and one-half gallon HDPE bottles and similar products, which we sell primarily to
dairies for resale through retail channels. We have worked with our customers to innovate several products in this sector, including single-serve HDPE and PET milk containers and sleeved milk bottles. Our dairy related products generated
approximately 27.7% of net sales for the year ended December 31, 2004.



Water. We manufacture one and two-and-one-half gallon HDPE bottles and similar products, which we sell primarily to water fillers for resale through retail channels, and three, five and six gallon PC bottles for the bulk packaging of
water for water coolers. Our water related products generated approximately 16.8% of net sales for the year ended December 31, 2004.



Juice & Other Beverage. We manufacture a wide variety of containers for juice and other beverage products using HDPE and PET, consisting of
high value-added technically advanced containers for products such as fruit juices and fruit drinks. We manufacture a wide array of products in this sector, ranging from six to 128 ounce HDPE bottles for fruit drinks and multiple layer one-gallon
HDPE and PP containers for fruit juice. These products generated approximately 13.3% of net sales for the year ended December 31, 2004.



Household Chemicals & Personal Care. Our containers for household chemical products, made mainly from HDPE and also from PET, are used for
laundry detergents, hard surface cleaners, dishwashing liquids, bleaches and fabric softeners. Our containers for personal care products, made primarily from HDPE, are used for shampoos, conditioners, anti-bacterial wipes, and other personal care
products. Our household chemicals and personal care related products generated approximately 15.0% of net sales for the year ended December 31, 2004.



Agricultural, Industrial & Other. We manufacture containers for use by industrial and agricultural manufacturers for products such as insect
repellents, high strength cleaners packaged for commercial and industrial use and fertilizers. Our other products in this category include containers for medical and pharmaceutical supplies, shipping crates, water cooler valves and bottle caps. Our
agricultural, industrial and other related products generated approximately 12.5% of net sales for the year ended December 31, 2004.



Food. We manufacture a wide range of containers using HDPE, PP and PET for a variety of food products, such as ketchup, maple syrup, edible oils
and salsa. We manufacture many innovative products, such as squeezable ketchup bottles and retortable containers, which permit reheating after the filling process without distortion to the container and which are used for infant formula and other
products. Our food related products generated approximately 8.8% of net sales for the year ended December 31, 2004.



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Automotive. We manufacture primarily one quart HDPE bottles for motor oil and one gallon HDPE
containers for anti-freeze and windshield washer solvent. Our automotive related products generated approximately 5.9% of net sales for the year ended December 31, 2004.



Customers



Our customers include many of the major branded consumer products companies, bottled water companies, national juice producers, large food concerns,
national and regional dairies, and chemical and automotive product manufacturers. Net container sales attributable to our largest customer in 2004, Dean Foods, amounted to approximately 13.6%, 12.0%, and 9.7% of the Companys net sales for the
years ending December 31, 2004, 2003 and 2002, respectively. Net container sales to the second largest customer in 2004, The Procter & Gamble Company, amounted to approximately 11.7%, 15.5% and 16.9% of the Companys net sales for the years
ended December 31, 2004, 2003 and 2002, respectively.



In many
cases, we are the sole supplier of substantially all of our customers container requirements for specific products or particular container sizes. In addition, we often have more than one contract with a particular customer because we have
individual contracts for specific products or container sizes or, in some circumstances, separate contracts with one or more operating divisions of a single customer.



Competition



We face substantial competition throughout our product lines from a number of well-established businesses operating nationally, as well as from firms
operating regionally. Our primary national competitors include Constar International, Graham Packaging, Liquid Container, Plastipak Packaging, Ring Technologies and Silgan Holdings. Several of these competitors are larger and have greater financial
and other resources than we do. In addition, we face substantial competition from a number of captive packaging operations with significant in-house bottling and blowmolding capacity, such as those of Nestle Waters North America, Kroger and Dean
Foods.



We believe that our long-term success is largely
dependent on our ability to continue to attract new customers, maintain strong relationships with current customers, develop product innovations, improve our products and production technology, offer our customers competitively priced products that
meet their design and performance criteria, provide superior service to our customers, and reduce our cost structure.



Marketing



Substantially all of our sales are made through the direct efforts of our sales personnel. We conduct sales activities from our corporate headquarters in
Atlanta, Georgia, and from various field sales offices located throughout the geographic territories in which we operate. In addition to our other sales and marketing efforts, we provide our customers with in-house support staff and 24-hour, seven
days a week, year-round customer service.



Research, Development and
Engineering



Research, development and engineering
constitute an important part of our business. We undertake these efforts at our research, development and engineering center in Atlanta, Georgia. We believe that the work performed at the research, development and engineering center makes us a
leader in the innovation and design of new products, product enhancements and manufacturing technologies and processes, and thereby allows us to forge closer relationships with our customers.



We spent approximately $5.2, $6.3, and $7.4 million on research, development
and engineering for the years ended December 31, 2004, 2003 and 2002, respectively. We believe that continuing cost effective product and



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manufacturing innovations are important to meeting customers needs and lowering unit cost, thus permitting us to remain competitive in the markets we
serve.



Intellectual Property



We have developed and continue to develop a number of trademarks and patents
for use in our business. In addition, we hold licenses for the use of several registered trademarks. Because our trademarks, brand names and patented packaging designs create goodwill and result in product differentiation, we believe that these
assets are important to our business. However, we believe that our business is not dependent on any one of these patents or trademarks. In addition, we rely on proprietary know-how, continuing technological innovation and other trade secrets to
develop products and maintain our competitive position. We attempt to protect our proprietary know-how and our other trade secrets by executing, when appropriate, confidentiality agreements with our customers and employees. Although we cannot be
assured that our competitors will not discover comparable or identical knowledge and techniques through independent development or by other legal means, we believe that our business, as a whole, is not dependent on these matters.



Manufacturing and Distribution



Manufacturing.At December 31, 2004, we operated over 540 blowmolding
production lines and six injection molding machines (which are used to produce closures, crates, overcaps, valves and preforms).



Blowmolding is the technique used to convert plastic into bottles and containers by either extrusion or stretch blowmolding, depending on the desired
container attributes. In the extrusion blowmolding production process, resin pellets are blended with colorants or other necessary additives and fed into an extrusion machine, which uses heat and pressure to form the resin into a round hollow tube
of molten plastic called a parison. Bottle molds are used to capture the parisons as they leave the extruders. Once inside the mold, air pressure is used to blow the parison into the bottle shape of the mold. Extrusion blowmolding can be used to
process many different resin types. By contrast, stretch blowmolding is either a one-stage or a two-stage process by which a test-tube shaped pre-form is injection-molded and then heated, stretched and filled with compressed air to fill the mold and
form the bottle. This process provides enhanced physical clarity and gas barrier properties and is generally used for PET bottles but can also be used for PP bottles. This technique can be adapted for either low volume production runs of specialty
containers, such as wide-mouthed jars, or high volume runs of commodity containers.



We were among the first to develop and use wheel blowmolding manufacturing technology. Our wheels operate at high speeds and efficiently manufacture containers with one or more special features, such as multiple
layers, in-mold labeling and fluorination. In most cases, we are actively involved with our customers in the design and manufacture of new packaging features using custom wheel molds.



Twenty of our manufacturing facilities are located on-site at customer plants. On-site plants enable us to work more closely
with customers to facilitate just-in-time inventory management, generate significant savings opportunities through process re-engineering, eliminate costly packing, shipping and handling charges, reduce working capital, and foster the development of
long-term customer relationships.



We believe that capital
investment to maintain and upgrade property, plant and equipment is important to remain competitive. We spent an aggregate amount of approximately $33.5, $30.9, and $33.2 million, in 2004, 2003 and 2002, respectively, on capital expenditures. We
estimate that the capital expenditures required to maintain our current facilities are approximately $10.0 to $12.0 million annually. Additional capital expenditures beyond this amount are required if we choose to expand capacity, implement
significant cost saving programs, or spend additional capital at a customers request in order to grow the relationship.



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Distribution. At our 36 stand-alone domestic plants, we ship our products by common carrier to our
customers. In general, these plants are located within a 250 to 300 mile radius of the customers for which we manufacture containers. At our 20 on-site plants, our operations are usually integrated with the customers manufacturing operations
so that we can make deliveries, as needed, directly to the customers conveyor lines. A number of the on-site locations sell products to outside customers as well.



Raw Materials



Our principal raw materials include HDPE, PC, PP and PET resins, although we use other materials in our manufacturing operations, such as ethyl vinyl
alcohol, resin colorant, corrugated boxes, shipping materials, pallets, labels and inks. Generally, we obtain raw materials from several sources in order to ensure an economical, adequate and timely supply, and we are not dependent on any single
supplier for any of these materials. Although we believe our access to raw materials is generally reliable, there can be no assurances that we will have an uninterrupted supply of raw materials at competitive prices. While our net sales are affected
by fluctuations in resin prices, our gross profit over time is generally unaffected by these changes because industry practice and our contractual arrangements with certain of our customers permit or require us to pass through these cost changes. We
may not, however, always be able to pass through these changes in raw material costs in a timely manner, or at all due to competitive pressures. Based on managements view of the relationship with our raw material suppliers, we believe that
adequate quantities of key raw materials will be available to fulfill our needs.



Employees



At December 31,
2004, we employed approximately 3,500 people. Approximately 1,000 of these employees were hourly workers covered by collective bargaining agreements, which expire between April 30, 2005 and February 28, 2008. Given the seasonal peaks of some of our
product lines (e.g. water and household chemicals), we expect to continue to employ additional full-time, temporary, and seasonal workers as needed to meet production demands. We have not had any material labor disputes in the past three years, and
we consider our current relations with employees to be good.



Environmental,
Health and Safety Matters



In the United States and in the
other countries in which we operate, we are subject to national, state, provincial and/or local environmental, health and safety laws and regulations that impose limitations and prohibitions on the discharge and emission of, and establish standards
for the use, storage, treatment, disposal, and management of, many kinds of substances, materials and waste, and impose liability for the costs of investigating and cleaning up, and damages resulting from, present and past spills, disposals, or
other releases of solid and hazardous substances and materials. Environmental laws and regulations can be complex and change often and we cannot reliably predict the effect that future changes in environmental laws and regulations in the United
States and in other countries in which we operate could have on us. Compliance with these laws and regulations can require significant capital and other expenditures, and violations may result in substantial damages, fines and penalties. In
addition, environmental laws in the United States, such as the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and similar state statutes, impose liability for the investigation and cleanup of contaminated
soil, groundwater, and buildings, and for damage to natural resources. For example, contamination at properties formerly owned or operated by us, as well as at properties we currently own or operate, and properties to which hazardous substances may
have been sent by us, may result in liability for us under these environmental laws and regulations. As a manufacturer, we also have an inherent risk of liability under environmental laws and regulations regarding ongoing operations. Many of these
manufacturing processes also require expenditures in order to comply with health and safety laws such as the Occupational Safety and Health Administration regulations with respect to potential employee exposure.



In addition, a number of governmental authorities in the United States and in
other countries have considered or are expected to consider legislation aimed at reducing the amount of disposed plastic waste. These



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programs have included, for example, mandating rates of recycling and/or the use of recycled materials, imposing deposits or taxes on plastic packaging
material, and/or requiring retailers or manufacturers to take back packaging used for their products. This legislation, as well as voluntary initiatives similarly aimed at reducing the level of plastic waste, could reduce the demand for some plastic
packaging, result in greater costs for plastic packaging manufacturers, or otherwise impact our business. Some consumer products companies (including some of our customers) have responded to these governmental initiatives and to perceived
environmental concerns of consumers by, for example, using bottles made in whole or in part of recycled plastic.



On or before February 2, 2005, we received a Special Notice of Liability letter from the Federal Environmental Protection Agency (EPA) as one
of over ninety potentially responsible parties (PRPs) under CERCLA at the Federal HIMCO Dump Superfund Site, Elkhart, Indiana (HIMCO Site). Previously, we received correspondence from counsel to one of the HIMCO Site PRPs,
which included a copy of a General Notice of Liability from EPA addressed to his client, another business not affiliated with us. In the Special Notice of Liability letter, EPA invited the Company, along with the other PRPs, to organize into a group
and present EPA with an offer stating that the PRPs will undertake remedial work and reimburse EPA for past costs spent at the HIMCO Site. The EPAs Special Notice of Liability letter is addressed to Consolidated Container Company (obo
Continental Can). We, as the successor in interest to certain of Continental Cans assets and liabilities, are currently investigating this matter to determine whether or not we have any responsibility with respect to the HIMCO Site.
Although we cannot estimate with certainty the ultimate legal and financial liability with respect to this site, based on our investigation to date, we believe that we are not responsible for this site.



On or about June 24, 2004, we received a document production subpoena
initiated by the EPA, Criminal Investigation Division, regarding removal of about 300 linear feet of asbestos-containing materials (ACM) that occurred during a 2003 partial renovation of the Companys property at 6300 Strawberry
Lane, Louisville, Kentucky. After reviewing our response, the EPA has informed us that it is declining to pursue the matter. Also, on or before February 17, 2005, we received a Notice of Violation from the Louisville-Jefferson County Air Pollution
Control District (APCD) regarding the same removal activities, alleging a $68,400 civil penalty, and inviting the Company to enter into a settlement agreement. Previously, we were notified and responded to an information request from
APCD. We are currently evaluating APCDs Notice of Violation and settlement offer.



On or before October 29, 2004, we received a Notification of RD/RA Consent Decree Negotiations letter from the EPA as one of over fifty PRPs under CERCLA at the Spectron Superfund Site, Elkton, Maryland
(Spectron Site). The apparent purpose of the Notification letter, which made no specific demand on us, was to inform us that we may be eligible to enter into a future de minimis settlement agreement with EPA regarding the Spectron Site.
The EPAs Notification letter is addressed to Continental Plastics c/o Consolidated Container Company. We, as the successor in interest to certain of Continental Plastic Containers assets and liabilities, are currently
investigating this matter to determine whether or not we have any responsibility with respect to the Spectron Site. Although we cannot estimate with certainty the ultimate legal and financial liability with respect to this site, based on our
investigation to date, we believe that we are not responsible for this site.



On or before December 15, 2004, we received a letter from a private attorney representing one or more of over forty PRPs under CERCLA at the Duane Marine Superfund Site, Perth Amboy, New Jersey (Duane Marine
Site). The letter requested that the Company pay $1,246 to the Duane Marine Steering Committee to finance work that the PRP group will be performing at the Duane Marine Site. According to the letter, Continental Can is alleged to
be responsible for 0.36% of the Duane Marine Site. We declined to pay the requested amount and, as the successor in interest to certain of Continental Cans assets and liabilities, are currently investigating this matter to determine whether or
not we have any responsibility with respect to the Duane Marine Site. Although we cannot estimate with certainty the ultimate legal and financial liability with respect to this site, based on our investigation to date, we believe that we are not
responsible for this site.



On or about August 1, 2004, we
responded to correspondence from a private attorney representing one or more of over ninety PRPs under CERCLA at the Lammers Barrel Factory Superfund Site, Beaver Creek, Ohio



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(Lammers Barrel Site). The letter invited us to join a PRP group that is addressing the Lammers Barrel Site. According to the letter, Continental
Can is alleged to be responsible for some unspecified portion of the Lammers Barrel Site. We declined to join the PRP Group and, as the successor in interest to certain of Continental Cans assets and liabilities, are currently investigating
this matter to determine whether or not we have any responsibility with respect to the Lammers Barrel Site. Although we cannot estimate with certainty the ultimate legal and financial liability with respect to this site, based on our investigation
to date, we believe that we are not responsible for this site.



Although compliance with environmental laws and regulations requires ongoing expenditures and clean-up activities, our capital expenditures for property, plant and equipment for environmental control activities and other expenditures for
compliance with environmental laws and regulations were not material in 2004 and are not expected to be material in 2005. Additionally, our capital expenditures related to safety were not material in 2004 and are not expected to be material in 2005.
We believe that we are in material compliance with all applicable national, state, provincial and local environmental and safety laws and regulations. We are currently not engaged in any clean-up activities required by governmental regulatory
authorities under environmental laws and regulations.



Geographic Areas



Our revenues are generated principally in
the United States. Foreign net sales were approximately $24.5, $26.8, and $34.0 million, respectively in 2004, 2003 and 2002. Net sales are attributed to countries based on location of the customer. The companys long-lived assets located
outside of the United States are not significant.



Recent
Developments



On February 15, 2005, we announced the
acquisition of STC Plastics, Inc. (STC), a blowmolder of polycarbonate and HDPE bottles in Chino, California. As consideration for all the issued and outstanding shares of STC, the stockholders of STC received: (1) a cash payment of $5.5
million at closing, (2) a promissory note in the approximate principal amount of $1.5 million payable on January 1, 2008 and (3) options to purchase, in the aggregate, 3.19 million units of Holdings. The option grants, which are exercisable upon
certain liquidity events of Holdings, include a commitment by Holdings to repurchase the options for no less than $3.0 million, in the aggregate, upon the same liquidity events.



In 2005, we were notified by our second largest customer, The Procter & Gamble Company, that they do not intend to renew
one of their contracts with us, which expires on December 31, 2005, regarding PET bottle production at our Kansas City, Kansas facility. The Company is currently in negotiations to finalize terms and timing of the transition of this business. In
2004, this business accounted for $41.8 million or 5.5% of our sales.



Online Publication Reports



As soon as
reasonably practicable following their electronic filing with the Securities and Exchange Commission, our Annual Reports on Form 10-K, as well as all subsequent periodic reports on Forms 10-Q and 8-K, will be available free of charge on our website.
Our internet address is www.cccllc.com.



|ITEM 2: | PROPERTIES
|------- | ----------



We use various owned and leased properties located throughout the United States, Canada, and Mexico for our manufacturing plants, corporate headquarters,
warehouses, technical center and sales offices. At December 31, 2004, we had 59 manufacturing plants, 12 of which we owned and 47 of which we leased.



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The table below lists the location of our active manufacturing and other facilities (by region in the
United States and by country and, within region and country, in alphabetical order), along with related information, in each case as of December 31, 2004.



|                                   |  |                    |  |                |  |                                |  |         | 
|---------------------------------- |  | ------------------ |  | -------------- |  | ------------------------------ |  | ------- | 
|Location of Facilities             |  | Size inSquare Feet |  | Owned orLeased |  | Principal Use                  |  | On-Site
|Northeast                          |  |                    |  |                |  |                                |  |         | 
|New Britain, Connecticut           |  | 5,500              |  | Leased         |  | Manufacturing                  |  | ü       | 
|Windsor, Connecticut               |  | 58,000             |  | Leased         |  | Manufacturing                  |  |         | 
|Portland, Maine                    |  | 5,000              |  | Leased         |  | Manufacturing                  |  | ü       | 
|Franklin, Massachusetts            |  | 55,000             |  | Leased         |  | Manufacturing                  |  |         | 
|Franklin, Massachusetts            |  | 24,300             |  | Leased         |  | Manufacturing                  |  | ü       | 
|Marlborough, Massachusetts         |  | 4,600              |  | Leased         |  | Manufacturing                  |  | ü       | 
|Hampstead, New Hampshire           |  | 42,000             |  | Owned          |  | Manufacturing                  |  |         | 
|Elizabeth, New Jersey              |  | 40,000             |  | Owned          |  | Manufacturing                  |  |         | 
|Monroe Township, New Jersey        |  | 62,000             |  | Owned          |  | Manufacturing                  |  |         | 
|Batavia, New York                  |  | 21,700             |  | Leased         |  | Manufacturing                  |  |         | 
|Rochester, New York                |  | 65,000             |  | Owned          |  | Manufacturing                  |  |         | 
|Allentown, Pennsylvania            |  | 80,000             |  | Leased         |  | Manufacturing                  |  |         | 
|Berwick, Pennsylvania              |  | 197,000            |  | Owned          |  | Manufacturing                  |  |         | 
|Breinigsville, Pennsylvania        |  | 8,500              |  | Leased         |  | Manufacturing                  |  | ü       | 
|Lancaster, Pennsylvania            |  | 18,100             |  | Leased         |  | Manufacturing                  |  | ü       | 
|Leetsdale, Pennsylvania            |  | 42,000             |  | Leased         |  | Manufacturing                  |  |         | 
|New Castle, Pennsylvania           |  | 92,000             |  | Owned          |  | Manufacturing                  |  |         | 
|Oil City, Pennsylvania             |  | 96,000             |  | Owned          |  | Manufacturing                  |  |         | 
|Penn Township Kelton, Pennsylvania |  | 36,400             |  | Leased         |  | Manufacturing                  |  |         | 
|Verona, Pennsylvania               |  | 90,200             |  | Leased         |  | Manufacturing                  |  |         | 
|York, Pennsylvania                 |  | 32,000             |  | Leased         |  | Manufacturing                  |  |         | 
|                                   |  |                    |  |               
|Mid-Atlantic                       |  |                    |  |                |  |                                |  |         | 
|Baltimore, Maryland                |  | 151,000            |  | Owned          |  | Manufacturing                  |  |         | 
|                                   |  |                    |  |               
|Southeast                          |  |                    |  |                |  |                                |  |         | 
|Lakeland, Florida                  |  | 218,000            |  | Leased         |  | Manufacturing                  |  |         | 
|Tampa, Florida                     |  | 22,500             |  | Leased         |  | Manufacturing                  |  |         | 
|Winter Haven, Florida              |  | 3,335              |  | Leased         |  | Manufacturing                  |  | ü       | 
|Zephyrhills, Florida               |  | 7,400              |  | Leased         |  | Manufacturing                  |  | ü       | 
|Atlanta, Georgia                   |  | 85,000             |  | Leased         |  | Manufacturing                  |  |         | 
|Atlanta, Georgia                   |  | 39,105             |  | Leased         |  | Engineering &DevelopmentCenter |  |         | 
|Atlanta, Georgia                   |  | 21,205             |  | Leased         |  | CorporateOffice                |  |         | 
|McDonough, Georgia                 |  | 4,000              |  | Leased         |  | Manufacturing                  |  | ü       | 
|Greensboro, North Carolina         |  | 30,000             |  | Leased         |  | Manufacturing                  |  |         | 
|Louisville, Kentucky               |  | 4,000              |  | Owned          |  | Held for Sale                  |  |         | 



10



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##### Index to Financial Statements

|                                         |  |                    |  |                |  |                        |  |         | 
|---------------------------------------- |  | ------------------ |  | -------------- |  | ---------------------- |  | ------- | 
|Location of Facilities                   |  | Size inSquare Feet |  | Owned orLeased |  | Principal Use          |  | On-Site
|South                                    |  |                    |  |                |  |                        |  |         | 
|Demopolis, Alabama                       |  | 44,000             |  | Owned          |  | Warehouse              |  |         | 
|Demopolis, Alabama                       |  | 98,000             |  | Owned          |  | Manufacturing          |  |         | 
|West Memphis, Arkansas                   |  | 67,000             |  | Leased         |  | Manufacturing          |  |         | 
|Kentwood, Louisiana                      |  | 10,000             |  | Leased         |  | Manufacturing          |  | ü       | 
|Memphis, Tennessee                       |  | 42,000             |  | Leased         |  | Manufacturing          |  |         | 
|Dallas, Texas (2 facilities)             |  | 31,000             |  | Leased         |  | Manufacturing          |  | ü       | 
|Fort Worth, Texas                        |  | 8,000              |  | Leased         |  | Manufacturing          |  | ü       | 
|Houston, Texas                           |  | 80,000             |  | Leased         |  | Manufacturing          |  |         | 
|Houston, Texas                           |  | 122,800            |  | Leased         |  | Warehouse              |  |         | 
|Katy, Texas                              |  | 10,000             |  | Leased         |  | Manufacturing          |  | ü       | 
|Sherman, Texas                           |  | 101,000            |  | Leased         |  | Manufacturing          |  |         | 
|                                         |  |                    |  |               
|Mid-West                                 |  |                    |  |                |  |                        |  |         | 
|DuPage, Illinois                         |  | 104,000            |  | Leased         |  | Manufacturing          |  |         | 
|DuPage, Illinois                         |  | 38,900             |  | Leased         |  | Warehouse              |  |         | 
|Elk Grove, Illinois                      |  | 181,400            |  | Leased         |  | Manufacturing          |  |         | 
|Elk Grove, Illinois                      |  | 26,890             |  | Leased         |  | Sales &MarketingOffice |  |         | 
|Harvard, Illinois                        |  | 126,300            |  | Leased         |  | Manufacturing          |  |         | 
|Hutchinson, Kansas                       |  | 2,000              |  | Leased         |  | Manufacturing          |  | ü       | 
|Kansas City, Kansas                      |  | 85,000             |  | Leased         |  | Manufacturing          |  | ü       | 
|Lenexa, Kansas                           |  | 173,000            |  | Leased         |  | Manufacturing          |  |         | 
|Omaha, Nebraska                          |  | 11,500             |  | Leased         |  | AccountingCenter       |  |         | 
|Columbus, Ohio                           |  | 8,600              |  | Leased         |  | Manufacturing          |  | ü       | 
|Springdale, Ohio                         |  | 130,000            |  | Leased         |  | Manufacturing          |  |         | 
|                                         |  |                    |  |               
|West                                     |  |                    |  |                |  |                        |  |         | 
|Phoenix, Arizona                         |  | 59,760             |  | Leased         |  | Warehouse              |  |         | 
|Phoenix, Arizona                         |  | 44,000             |  | Owned          |  | Manufacturing          |  |         | 
|Anaheim, California                      |  | 161,000            |  | Leased         |  | Manufacturing          |  |         | 
|City of Industry (Railroad), California  |  | 22,000             |  | Leased         |  | Manufacturing          |  | ü       | 
|City of Industry (Samuelson), California |  | 135,100            |  | Leased         |  | Manufacturing          |  |         | 
|Ontario, California                      |  | 40,000             |  | Leased         |  | Manufacturing          |  | ü       | 
|Riverside, California                    |  | 17,000             |  | Leased         |  | Manufacturing          |  | ü       | 
|Santa Ana, California                    |  | 103,000            |  | Owned          |  | Manufacturing          |  |         | 
|Tracy, California                        |  | 160,000            |  | Owned          |  | Manufacturing          |  |         | 
|Union City, California                   |  | 15,000             |  | Leased         |  | Manufacturing          |  | ü       | 
|Tukwila, Washington                      |  | 67,000             |  | Leased         |  | Manufacturing          |  |         | 
|Vancouver, Washington                    |  | 43,800             |  | Owned          |  | Held for sale          |  |         | 
|                                         |  |                    |  |               
|Canada                                   |  |                    |  |                |  |                        |  |         | 
|Mississauga, Ontario                     |  | 34,800             |  | Leased         |  | Manufacturing          |  |         | 
|                                         |  |                    |  |               
|Mexico                                   |  |                    |  |                |  |                        |  |         | 
|Irapuato                                 |  | 25,000             |  | Leased         |  | Manufacturing          |  |         | 
|Mexico City                              |  | 24,300             |  | Leased         |  | Manufacturing          |  |         | 



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##### Index to Financial Statements

|ITEM 3: | LEGAL PROCEEDINGS
|------- | -----------------



Environmental Matters. We are a party to a number of environmental legal proceedings. The circumstances surrounding these proceedings are discussed
in Item 1 under the heading Environmental, Health and Safety Matters.



Other Matters. We are a party to various litigation matters arising in the ordinary course of our business. We cannot estimate with certainty the ultimate legal and financial liability with respect to those
litigation matters but believe, based on our examination of these matters, experience to date, and discussions with counsel, that any ultimate liability will not be material to our financial position, results of operations or cash flows.



|ITEM 4: | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------



No matters were submitted to a vote of security holders during the fourth quarter of 2004.



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##### Index to Financial Statements

PART II



|ITEM 5: | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|------- | ------------------------------------------------------------------------------------------------------------



There is no established public trading market for our member units, and as of
March 9, 2004, there was one holder of record, Holdings. For a list of certain holders of the member units of Holdings, see Item 12 (Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters) of this Annual
Report on Form 10-K.



We are required to make tax distributions
to holders of member units for reimbursement of tax obligations. There were no distributions to our sole member, Holdings, during the year ended December 31, 2004. The indentures, as described below, under which the Company and Consolidated
Container Capital issued their notes, as well as the senior credit facility of the Company, contain restrictions on our ability to pay dividends to Holdings.



|ITEM 6: | SELECTED HISTORICAL FINANCIAL DATA OF CONSOLIDATED CONTAINER COMPANY LLC
|------- | ------------------------------------------------------------------------



The following table presents selected historical financial data for the years ended December 31, 2004, 2003, 2002, 2001, and
2000 of the Company.



The selected historical consolidated
financial data have been derived from and should be read in conjunction with the audited Consolidated Financial Statements of Consolidated Container Company LLC, the notes to the financial statements, and Managements Discussion and
Analysis of Financial Condition and Results of Operations of Consolidated Container Company LLC, included elsewhere in this report.



13



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##### Index to Financial Statements

Selected Historical Consolidated Financial Data

(Amounts in millions)



|                                             |  |                         |       |   |      |   |       |      |  |   |        |   |  |      |       |   |  |   |         |  
|-------------------------------------------- |  | ----------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ------ | - |  | ---- | ----- | - |  | - | ------- | -
|                                             |  | Year Ended December 31, |      
|                                             |  | 2004                    |       |   | 2003 |   |       | 2002 |  |   | 2001   |   |  | 2000 |      
|Income Statement Data:                       |  |                         |       |   |      |   |       |      |  |   |        |   |  |      |       |   |  |   |         |  
|Net sales                                    |  | $                       | 761.3 |   |      | $ | 739.8 |      |  | $ | 746.5  |   |  | $    | 783.4 |   |  | $ | 754.7   |  
|Cost of goods sold                           |  |                         | 670.6 |   |      |   | 647.5 |      |  |   | 654.1  |   |  |      | 690.9 |   |  |   | 627.0   |  
|                                             |  |                         |       |   |      |   |       |      |  |   |        |   |  |      |       |   |  |   |         |  
|Gross profit                                 |  |                         | 90.7  |   |      |   | 92.3  |      |  |   | 92.4   |   |  |      | 92.5  |   |  |   | 127.7   |  
|Selling, general and administrative expenses |  |                         | 41.0  |   |      |   | 46.4  |      |  |   | 50.9   |   |  |      | 48.8  |   |  |   | 36.0    |  
|Amortization expense                         |  |                         |      |   |      |   | 1.3   |      |  |   | 2.5    |   |  |      | 14.0  |   |  |   | 14.1    |  
|Stock based compensation expense             |  |                         | 0.6   |   |      |   | 0.8   |      |  |   | 0.4    |   |  |      | 0.3   |   |  |   |        |  
|Restructuring charges (credits)(a)           |  |                         |      |   |      |   |      |      |  |   | 0.1    |   |  |      | 3.5   |   |  |   | (4.0    | )
|Goodwill impairment                          |  |                         |      |   |      |   |      |      |  |   | 290.0  |   |  |      |      |   |  |   |        |  
|Contract dispute settlement and other (b)    |  |                         |      |   |      |   |      |      |  |   |       |   |  |      | 6.6   |   |  |   |        |  
|Loss on disposal of assets                   |  |                         | 5.4   |   |      |   | 4.4   |      |  |   | 1.7    |   |  |      |      |   |  |   |        |  
|                                             |  |                         |       |   |      |   |       |      |  |   |        |   |  |      |       |   |  |   |         |  
|Operating income (loss)                      |  |                         | 43.7  |   |      |   | 39.4  |      |  |   | (253.2 | ) |  |      | 19.3  |   |  |   | 81.6    |  
|Interest expense, net (c)                    |  |                         | 59.5  |   |      |   | 56.8  |      |  |   | 47.2   |   |  |      | 50.5  |   |  |   | 58.6    |  
|                                             |  |                         |       |   |      |   |       |      |  |   |        |   |  |      |       |   |  |   |         |  
|                                             |  |                         |       |   |     
|Income (loss) before                         |  |                         |       |   |      |   |       |      |  |   |        |   |  |      |       |   |  |   |         |  
|income taxes                                 |  |                         | (15.8 | ) |      |   | (17.4 | )    |  |   | (300.4 | ) |  |      | (31.2 | ) |  |   | 23.0    |  
|Income tax expense                           |  |                         | 0.4   |   |      |   |      |      |  |   |       |   |  |      |      |   |  |   |        |  
|Minority interest in subsidiaries            |  |                         |      |   |      |   |      |      |  |   |       |   |  |      |      |   |  |   | (0.2    | )
|                                             |  |                         |       |   |      |   |       |      |  |   |        |   |  |      |       |   |  |   |         |  
|Net income (loss)                            |  | $                       | (16.2 | ) |      | $ | (17.4 | )    |  | $ | (300.4 | ) |  | $    | (31.2 | ) |  | $ | 23.2    |  
|                                             |  |                         |       |   |      |   |       |      |  |   |        |   |  |      |       |   |  |   |         |  
|                                             |  |                         |       |   |     
|Other Data:                                  |  |                         |       |   |      |   |       |      |  |   |        |   |  |      |       |   |  |   |         |  
|Net cash flows from operating activities     |  | $                       | 17.2  |   |      | $ | 14.1  |      |  | $ | 38.2   |   |  | $    | 43.2  |   |  | $ | 69.2    |  
|Net cash flows from investing activities     |  |                         | (26.1 | ) |      |   | (28.7 | )    |  |   | (34.1  | ) |  |      | (15.8 | ) |  |   | (60.8   | )
|Net cash flows from financing activities     |  |                         | (14.8 | ) |      |   | 21.8  |      |  |   | 19.2   |   |  |      | (35.2 | ) |  |   | (0.5    | )
|Depreciation and amortization                |  |                         | 39.0  |   |      |   | 39.8  |      |  |   | 38.3   |   |  |      | 48.4  |   |  |   | 47.8    |  
|Capital expenditures                         |  |                         | 33.5  |   |      |   | 30.9  |      |  |   | 33.2   |   |  |      | 44.1  |   |  |   | 68.2    |  
|Cash paid during the period for interest (d) |  |                         | 47.3  |   |      |   | 42.8  |      |  |   | 42.3   |   |  |      | 48.6  |   |  |   | 55.2    |  
|                                             |  |                         |       |   |     
|Balance Sheet Data (at end of period):       |  |                         |       |   |      |   |       |      |  |   |        |   |  |      |       |   |  |   |         |  
|Cash and cash equivalents                    |  | $                       | 7.9   |   |      | $ | 31.6  |      |  | $ | 24.4   |   |  | $    | 1.2   |   |  | $ | 9.0     |  
|Working capital                              |  |                         | 47.6  |   |      |   | 24.8  |      |  |   | (59.5  | ) |  |      | (34.4 | ) |  |   | (14.6   | )
|Total assets                                 |  |                         | 677.5 |   |      |   | 697.1 |      |  |   | 691.5  |   |  |      | 965.0 |   |  |   | 1,001.6 |  
|Total debt                                   |  |                         | 563.9 |   |      |   | 602.4 |      |  |   | 577.0  |   |  |      | 554.0 |   |  |   | 588.5   |  
|Total members equity (deficit)              |  |                         | (68.0 | ) |      |   | (95.4 | )    |  |   | (83.6  | ) |  |      | 234.0 |   |  |   | 278.4   |  

---

|(a) | Restructuring charges were recognized in connection with plans to consolidate certain manufacturing and administrative functions and facilities. The charges consisted of severance
and other personnel-related costs, facility closing costs and remaining obligations under noncancelable operating leases. Restructuring credits were recognized when sub-leases were obtained on certain closed facilities.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Contract dispute settlements and other represents customer related charges.
|--- | ---------------------------------------------------------------------------

|(c) | Represents interest expense, net of interest income.
|--- | ----------------------------------------------------

|(d) | Cash paid during the period for interest excludes amortization of deferred financing fees.
|--- | ------------------------------------------------------------------------------------------



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##### Index to Financial Statements

|ITEM 7: | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF CONSOLIDATED CONTAINER COMPANY LLC
|------- | ---------------------------------------------------------------------------------------------------------------------------



Critical Accounting Policies And Estimates



The preparation of financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States requires management to make judgments, assumptions and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes. Note 1
to the consolidated financial statements elsewhere in this report describes the significant accounting policies and methods used in the preparation of the consolidated financial statements. Estimates are used for, but not limited to, the accounting
for the allowance for doubtful accounts, customer claim accruals, workers compensation and benefit plan accruals, provisions for closed facilities, and other contingencies. Actual results could differ from these estimates. The following
critical accounting policies are impacted significantly by judgments, assumptions and estimates used in the preparation of the consolidated financial statements.



The allowance for doubtful accounts is based on our assessment of how much of specific customer accounts will be collected
and what portion of the remaining customer accounts will not be collected. Our specific review is focused on our significant customers and overdue balances. Our review of the remaining, individually smaller customer balances is based on historical
rates of default and other economic and industry information which may impact our customers collective ability to pay. If there is an unanticipated deterioration of a major customers credit worthiness or if actual defaults are higher
than our historical experience, the actual recoverability of amounts due us could differ from our estimates and adversely affect our financial results.



A reserve for workers compensation claims is established based on claim count/severity information and historical loss trends. If actual claims
experience related to claims incurred on or before December 31, 2004 deviates significantly from historical loss trends, our expense could be affected and adversely affect our financial results.



Accounting for employee retirement plans involves estimating the cost of
benefits that are to be provided in the future and attempting to match, for each employee, that estimated cost to the period worked. To accomplish this, extensive use is made of advice from actuaries and assumptions are made about inflation,
investment returns, mortality, employee turnover, and discount rates that ultimately impact amounts recorded. While we believe that the amounts recorded in the accompanying financial statements related to these retirement plans are based on the best
estimates and judgments available to us, the actual outcomes could differ from our estimates and adversely affect our financial results.



We test goodwill for impairment annually, on December 31, and between annual measurement dates if an event occurs or circumstances change that would
indicate the carrying amount may be impaired. Our assessment of goodwill is based on the requirements of Statement of Financial Accounting Standard (SFAS) No. 142, Goodwill and Other Intangible Assets, which requires
management to estimate the fair value of the Company (as we have only one reporting unit) and if applicable the fair value of our assets and liabilities. Determination of fair value is dependent upon many factors including managements estimate
of future cash flows, appropriate discount rates, identification and evaluation of comparable businesses and amounts paid in market transactions for the sale of comparable businesses. Any one of a number of future events could cause us to conclude
that impairment indicators exist and that the carrying value of these assets cannot be recovered.



We periodically test our long-lived assets for impairment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets. Accordingly, long-lived assets, such as property, plant, equipment, and purchased intangibles subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. We adopted SFAS No. 144 on January 1, 2002, and such adoption did not have a material affect on our consolidated financial statements. Our judgments regarding the existence of impairment indicators are based on legal factors,
market conditions and the operational performance of our businesses. Actual impairment losses incurred could vary



15



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##### Table of Contents

##### Index to Financial Statements

significantly from amounts that we estimate. Additionally, future events could cause us to conclude that impairment indicators exist and that associated
long-lived assets of our businesses are impaired. Any resulting impairment loss could have a material adverse impact on our financial condition and results of operations.



We are subject to the possibility of various loss contingencies arising in the ordinary course of business. When determining
loss contingencies, we consider the likelihood of the loss or impairment of an asset, the likelihood of the incurrence of a liability, and our ability to reasonably estimate the amount of any loss. An estimated loss contingency is accrued when it is
probable that a liability has been incurred or an asset has been impaired and the amount of loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether such accruals should be adjusted.



Results Of Operations



Year Ended December 31, 2004, Compared to Year Ended December 31, 2003



Overview. In 2004, we saw an unprecedented
increase in the price of our primary raw material, resin. The published index prices for HDPE resin, for example, increased $0.22 per pound (or approximately 44%) in 2004, which was in addition to the $0.10 per pound increase in 2003. The steep rise
in resin price contributed to slightly lower volumes in 2004 as compared to 2003, as did the closure and sale of several plants in 2004. Despite the lower volumes and the competitive price environment, sales increased, in part due to our effective
pass through of raw material costs. Further, operating income improved in 2004 compared to 2003 mainly driven by the termination of a portion of our retiree benefit plan.



Net Sales.Net sales increased by approximately $21.5 million or 2.9% to $761.3 million for the year ended December
31, 2004 from $739.8 million in the year 2003. Excluding the estimated impact of higher average resin prices during 2004, sales would have been approximately $717.7 million, a decrease of 3.0% from 2003. This decrease was primarily attributable to
the sale or closure of several plants (seven in 2004 and two in 2003), relatively weak demand at our water plants, lower resin brokering revenue and modest declines in volumes with a few key customers. Additionally, some price declines with
customers in 2003 negatively impacted the 2004 results; these negative factors were, however, substantially offset by increased volumes related to the commercialization of many new business projects in 2004.



Gross Profit. Gross profit was $90.7 million in 2004 compared to $92.3
million in 2003. The decrease in gross profit was primarily attributable to the lower volume mentioned above along with higher delivery and employee benefits expenses, offset somewhat by lower total labor cost and lease expense.



Selling, General and Administrative Expense.Selling, general and
administrative expense (SG&A) includes non-production related costs including salaries, benefits, travel, rent, and other costs for our corporate functions (such as executive management, sales, procurement, finance, accounting, human
resources, etc.). SG&A expense decreased by $5.4 million to $40.9 million, or 11.7%, from $46.4 million in 2003. This change resulted from a $4.9 million credit to post-retirement expenses caused by the termination of three out of five
components of our post-retirement benefit plans, announced in September 2004, costs of approximately $1.8 million incurred in 2003 to relocate our engineering and development center to Atlanta, Georgia and overall lower spending levels resulting
from our cost management initiatives implemented in the second half of 2003 impacting areas such as salary and benefits, third-party contractor fees, travel, lease expense and various other expenses. These improvements were partially offset by an
increase in incentive compensation expense of $1.5 million.



Amortization Expense.Amortization expense primarily includes the amortization of acquired contracts and non-compete agreements. Amortization expense for 2004 decreased by approximately $1.3 million or 97.5%, compared to the same
period in 2003. The change was primarily attributable to the completion of our amortization of the supply agreement related to our purchase of the remaining 49% of Reid Mexico, S.A. de C.V. at the end of 2003.



16



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##### Index to Financial Statements

Loss on Disposal of Assets. Loss on disposal of assets for 2004 was $5.4 million compared to $4.4
million for the same period of 2003. The loss related to 2004 was primarily due to the sale of five plants for an aggregate loss of $1.7 million and a $1.8 million impairment charge related to assets held at our used equipment warehouse. The loss
during the same period of 2003 was primarily attributable to disposals of assets related to one project and the disposal of financial systems taken out of service in 2003 due to the implementation of a new system.



Interest Expense.Interest expense primarily includes interest as set
forth in the terms of our senior credit facility, senior secured discount notes and senior subordinated notes and the amortization of deferred financing fees. Net interest expense increased by approximately 4.6%, or $2.6 million, to $59.4 million in
2004 from $56.8 million in 2003. This increase is primarily due to the write-off of deferred financing fees related to our former senior credit facility, which totaled $6.5 million, and higher weighted average interest rates on floating and fixed
rate debt. This amount was partially offset by lower amortization of deferred financing costs of $2.3 million and overall lower debt levels, both of which resulted from the Refinancing Transactions, and lower revolver borrowings.



Income Tax Expense.Income tax expense was $0.4 million in 2004. This
expense is due to the taxes incurred in association with the sale of our Puerto Rico facility.



Year Ended December 31, 2003, Compared to Year Ended December 31, 2002



Overview.In 2003, not only did we feel the full impact of lower volumes related to business lost during 2001 and 2002, but weakness in the general
economy and poor weather during the spring and early summer negatively impacted demand for our products as well. Despite these poor volumes, we were more than able to offset their negative financial impact through a combination of lower costs and
some favorable settlements on certain contracts with customers (where volumes were significantly below projected levels), which ultimately led to improved operating income compared to 2002, even after adjusting for the goodwill impairment charge in
2002.



Also notable during 2003 was the significant increase in
the price of HDPE resin (our primary raw material.) There was a temporary, but unprecedented, $0.06 per pound surcharge that was put in place during the spring by the major resin producers, and published index prices for this resin rose
approximately $0.10 per pound (or more than 20%) over the course of the year.



Net Sales.Net sales decreased by approximately 0.9% to $739.8 million for the year ended December 31, 2003 from $746.5 million in the year 2002. Excluding the estimated impact of higher average resin prices
during 2003, sales would have been approximately $693.7 million, a decrease of 7.1% from 2002. The majority of the decrease is attributable to lower volumes due to the full year impact of prior years lost business, general weakness in the
demand for plastic packaging, weakness in end-user demand for products from some key customers for whom the Company is the sole provider of specific packages, the closure of four facilities (two in 2002 and two in 2003), and cool, wet weather in the
spring and early summer of 2003. Additionally, the decline was caused by price concessions which were generally related to contract renewals/extensions executed during 2002.



Gross Profit.Gross profit was $92.3 million in 2003 compared to $92.4 million in 2002. Despite the significant
decline in volumes and additional pension costs of $3.3 million, which primarily reflected the impact of the markets poor performance on our fund assets and changes in actuarial assumptions including the discount rate used to estimate such
costs, we were able to maintain our gross profit level through significant reductions in direct labor, delivery cost, repair and maintenance, and salaried labor in the plants, as well as fewer workers compensation and quality claims. These
cost reductions were all by products of our manufacturing excellence initiative, which we began implementing in 2002.



17



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##### Index to Financial Statements

Selling, General and Administrative Expense.Selling, general and administrative expense decreased
by $4.6 million to $46.4 million in 2002, or 9.1%, from $51.0 million in 2002. This decrease was primarily the result of the implementation of several company-wide cost management initiatives that resulted in reduced headcount, significant
reductions in travel and entertainment spending, a reduction in the incentive accrual, and an elimination of most of our non-mandatory, third-party contractor expense. Additionally, relocation expense was lower than in 2002, and two large projects
that required the use of third-party contractors were not continued in 2003. We also undertook several initiatives to consolidate and reduce the cost of our travel, office supply, and overnight shipping contracts.



Amortization Expense.Amortization expense decreased to approximately
$1.3 million from approximately $2.5 million in 2002. The change was primarily attributable to decreased amortization of the supply agreement related to our purchase of Reid Mexico, S.A. de C.V. and officers contracts that were fully amortized
by the end of 2002.



Goodwill Impairment.There was no
charge for goodwill impairment in 2003. Goodwill impairment of $290.0 million was recorded in the fourth quarter of 2002. This impairment was the result of several factors including a revision of managements view of future operational
improvements and prospects, a decline in market trading multiples from publicly traded peers, and the recognition of significant intangible assets (primarily customer contracts) previously reported as a part of goodwill.



Loss on Disposal of Assets. Loss on disposal of assets for 2003 was
$4.4 million compared to $1.7 million for the same period of 2002. The increase was primarily due to a loss of $2.8 million on the disposal of financial systems taken out of service in 2003 due to the implementation of a new system.



Interest Expense.Net interest expense increased by approximately
20.4%, or $9.6 million, to $56.8 million in 2003 from $47.2 million in 2002. This change was primarily attributable to additional interest and fees, which totaled $10.5 million, created by the terms of an amendment to our then existing senior credit
facility, which we entered into in the first quarter of 2003. Of this $10.5 million, the payment of $8.9 million was deferred until the maturity of the related debt, resulting in an increase in cash interest expense of approximately $1.6 million for
the year.



Liquidity and Capital Resources



Our principal uses of cash are for capital expenditures, working capital,
debt service, and acquisitions. Funds for these purposes are generated primarily from operations and borrowings under our senior credit facility.



Cash provided by operations in 2004 was $17.2 million, compared to $14.1 million in 2003, an improvement of $3.1 million, which was caused by a number of
factors. Accounts receivable positively affected cash flow by $11.7 million due primarily to better management of our collections in 2004 compared to 2003. Accounts payable also had a positive impact of $8.9 million, primarily driven from and more
than offset by a $19.3 million inventory increase caused by the previously mentioned resin price increases during 2004 as well as an inventory build at year end.



Cash used in investing activities in 2004 was $26.1 million, compared to $28.7 million in 2003. The change was primarily due
to higher proceeds from asset disposals due to the sale of five plants in 2004, partially offset by higher capital expenditures, including a $1.1 million increase in payments made to purchase leased property.



Cash used in financing activities in 2004 was $14.8 million, a change of
$36.6 million compared to the net cash received from financing activities of $21.8 million during 2003. This was primarily due to the Refinancing Transactions that are discussed more fully below.



18



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##### Index to Financial Statements

On May 20, 2004, the Company entered into a new senior credit facility that included a $220.0 million
term loan and a $45.0 million revolving credit facility, of which $10.0 million was drawn on the transaction date. On the same date, the Company issued $207.0 million aggregate principal amount due at maturity of 103⁄4% senior secured discount
notes which generated proceeds of approximately $150.1 million. Additionally, the Companys parent, Holdings, made a $45.0 million capital contribution from the proceeds of its sale of Series B Convertible Preferred Units. The proceeds from the
new term loan, the senior secured discount notes and the capital contribution were used to permanently repay outstanding borrowings, accrued interest, deferred interest and deferred fees of $13.0 million under the Companys then existing senior
credit facility and fees expected to ultimately reach approximately $11.5 million related to the Refinancing Transactions.



Senior Credit FacilityFollowing the Refinancing Transactions, our senior credit facility consisted of:



| |  |  | a committed term loan totaling $220.0 million, and
| | - |  | --------------------------------------------------



| |  |  | a $45.0 million revolving credit facility.
| | - |  | ------------------------------------------



At December 31, 2004, we had no funded borrowings outstanding on the revolving credit facility, and $12.3 million was reserved for outstanding standby
letters of credit. The revolving credit facility matures on December 15, 2008. The amortization schedule of the term loan includes quarterly principal installments of $550,000 that commenced September 30, 2004 and continue through September 2008,
with the remaining balance due December 15, 2008.



Borrowings
under the senior credit facility bear interest, at the Companys option, at either:



| |  |  | a base rate, which will be the higher of 1/2 of 1% in excess of the overnight federal funds rate and the prime lending rate of Deutsche Bank Trust Company Americas, plus an interest
margin of 2.25% with respect to term loans and 2.75% with respect to revolving loans; or
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a Eurodollar rate on deposits for one, two, three or six month periods or, if and when available to all of the relevant lenders, nine or twelve month periods, which are offered to
Deutsche Bank Trust Company Americas in the interbank Eurodollar market, plus an interest margin of 3.25% with respect to term loans and 3.75% with respect to revolving loans.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In addition, the Company pays a commitment fee on the unused commitments
under the revolving credit facility ranging from 0.50% to 0.75% on an annual basis dependent on its senior secured term debt leverage ratio, payable quarterly in arrears. The fee percentage at December 31, 2004 was 0.75%.



The senior credit facility also provides for mandatory repayments from the
net proceeds of asset sales, debt issuances, a portion of equity issuances, a portion of excess cash flow and insurance recoveries and condemnation events. No such payments were required for the period ended December 31, 2004.



Senior Secured Discount NotesIn May 2004 the Company
completed an offering of $207.0 million aggregate principal amount at maturity of 103⁄4% senior secured discount notes, which generated proceeds of approximately $150.1 million at issuance. As of December 31, 2004, the accreted value of the
bonds, upon which interest expense was calculated, was $160.0 million. The notes will mature on June 15, 2009.



Unless the Company elects to accrue and pay cash interest as described below, the interest on the notes, combined with the initial proceeds, will accrete
to $207.0 million during the period from the issue date of the notes until June 15, 2007 at a rate of 103/4% per
annum, compounded semiannually on June 15 and December 15 of each year. After June 15, 2007, the Company is required to accrue and pay cash interest on the notes semi-annually on June 15 and December 15 at a rate of 103/4% per annum, with cash interest payments in arrears commencing on December 15, 2007.



At the Companys option, it may irrevocably elect to commence accruing
cash interest before June 15, 2007. If such an election is made, the Company must make that election on or before the interest payment date



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##### Index to Financial Statements

preceding the first cash interest payment. Additionally, once the election is made to begin accruing and paying cash interest, (i) the Company will be
obligated to pay cash interest on all subsequent interest payment dates, (ii) the notes will cease to accrete in principal amount and (iii) the outstanding principal amount at maturity will be equal to the accreted value of the new notes as of the
date on which the notes commenced accruing cash interest.



Senior Subordinated NotesThe senior subordinated notes that were issued in July 1999, have an original face value of $185.0 million and are due in full on July 15, 2009. The notes bear interest at a fixed interest rate
of 101/8%, payable semiannually in July and January of each year.



The obligations under the senior credit facility on a first-priority basis
and obligations under the senior secured discount notes on a second-priority basis are (i) secured by substantially all of the assets of Holdings (in the case of the senior credit facility) and its direct and indirect domestic subsidiaries and (ii)
guaranteed (on a joint and several basis) by the Companys direct and indirect domestic subsidiaries other than Consolidated Container Capital Inc. (in the case of the senior secured discount notes) and, in each case, are subject to customary
exceptions. The separate financial statements of each guaranteeing subsidiary are not presented because the Companys management has concluded that such financial results, separate and apart from the Companys results, are not material to
investors.



The senior credit facility, the senior secured
discount notes, and/or the senior subordinated notes contain covenants that restrict, among other things, the Companys ability to: (i) make certain restricted payments; (ii) incur additional debt or issue preferred equity; (iii) pay dividends
or make distributions on our equity interests or repurchase our equity interests; (iv) repurchase subordinated indebtedness; (v) issue stock of subsidiaries; (vi) make certain investments; (vii) create liens on our assets; (viii) enter into certain
transactions with affiliates; (ix) merge or consolidate with another company; (x) sell, lease or otherwise dispose of our assets; (xi) enter sales and leaseback transactions; and (xii) make capital expenditures above specified levels. The senior
credit facility has financial maintenance covenants regarding first-lien debt to earnings before interest, taxes, depreciation and amortization (EBITDA), total secured debt to consolidated EBITDA and interest coverage. Additionally, the
senior credit facility contains a maximum capital spending covenant. At December 31, 2004, the Company was in compliance with all covenants under the senior credit facility, the senior secured discount notes and the senior subordinated notes.



The Company, its officers, principal shareholders or
affiliates thereof may, from time to time, enter the market to purchase or sell our securities, including our senior secured discount notes and/or our senior subordinated notes, in compliance with any applicable securities laws and our internal
restrictions and procedures.



Management believes cash on hand
at December 31, 2004, future funds generated by operations and future borrowings under our senior credit facility will be sufficient to meet working capital and capital expenditure requirements for fiscal year 2005.



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##### Index to Financial Statements

We have contractual obligations and commercial commitments that may affect our financial condition. The
following tables identify material obligations and commitments as of December 31, 2004 (customer-specific commitments arising in the ordinary course of business are not included):



|                                   |  |                                  |         |               |   |           |  |           |         |              |   |         |  |   |       
|---------------------------------- |  | -------------------------------- | ------- | ------------- | - | --------- |  | --------- | ------- | ------------ | - | ------- |  | - | ------
|                                   |  | Payments Due by Period          
|Contractual Cash Obligations       |  | Total                            |         | 1 Yearor Less |   | 2-3 Years |  | 4-5 Years |         | After 5Years
|                                   |  | (in thousands)                  
|Long Term Debt (a)                 |  | $                                | 610,900 |               | $ | 2,200     |  | $         | 4,400   |              | $ | 604,300 |  | $ |      
|Interest on Long-Term Debt (b)     |  |                                  | 186,201 |               |   | 31,684    |  |           | 72,399  |              |   | 82,118  |  |   |      
|Operating Leases (c)               |  |                                  | 124,273 |               |   | 20,119    |  |           | 37,063  |              |   | 30,659  |  |   | 36,432
|                                   |  |                                  |         |               |   |           |  |           |         |              |   |         |  |   |       
|Total Contractual Cash Obligations |  | $                                | 921,374 |               | $ | 54,003    |  | $         | 113,862 |              | $ | 717,077 |  | $ | 36,432
|                                   |  |                                  |         |               |   |           |  |           |         |              |   |         |  |   |       
|                                   | 
|                                   |  | Commitment Expiration per Period
|Other Commercial Commitments       |  | Total                            |         | 1 Yearor Less |   | 2-3 Years |  | 4-5 Years |         | After 5Years
|                                   |  | (in thousands)                  
|Standby Letters of Credit          |  | $                                | 12,275  |               | $ | 12,275    |  | $         |        |              | $ |        |  | $ |      
|Revolving Credit Facility (d)      |  |                                  | 32,725  |               |   | 32,725    |  |           |        |              |   |        |  |   |      
|                                   |  |                                  |         |               |   |           |  |           |         |              |   |         |  |   |       
|Total Commercial Commitments       |  | $                                | 45,000  |               | $ | 45,000    |  | $         |        |              | $ |        |  | $ |      
|                                   |  |                                  |         |               |   |           |  |           |         |              |   |         |  |   |       

---

|(a) | The amount included in the above schedule for our senior secured discounts notes is the amount due at maturity. As of December 31, 2004, the unamortized discount on that debt was
$47.0 million, leaving the total book value of long term debt at $563.9 million. A description of significant terms and conditions of our senior credit facility, senior secured discount notes and senior subordinated notes is included herein.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Interest on long term debt includes interest on our fixed- and floating-rate debt as well as unutilized and letter of credit fees. The interest portion was estimated assuming the
weighted average interest rate in effect for floating-rate debt as of December 31, 2004 remained in effect through the maturity of the debt.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | Included in operating leases are non-cancelable lease arrangements for facilities, machinery and equipment and vehicles. Minimum payments have not been reduced by minimum sublease
rentals of $1.3 million due in the future under non-cancelable subleases.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) | The revolving credit facility represents the unused borrowing commitment available to us as of December 31, 2004, excluding our minimum borrowing increment of $0.1 million.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Off-Balance Sheet Arrangements



At December 31, 2004, we did not have any relationships with unconsolidated
entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow
or limited purposes.



Recently Issued Accounting Standards



In November 2004, the Financial Accounting Standards Board
(FASB) issued SFAS No. 151, Inventory Costs (SFAS 151). This Statement amends the guidance in Accounting Research Bulletin No. 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal
amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). SFAS 151 requires that those items be recognized as current-period charges. In addition, this Statement requires that allocation of fixed production overheads
to the costs of conversion be based on the normal capacity of the production facilities. The provisions of SFAS 151 are effective for inventory costs incurred in fiscal years beginning after June 15, 2005. As such, the Company is required to adopt
these provisions at the beginning of fiscal year 2006. The Company is currently evaluating the impact of SFAS 151 on its consolidated financial statements.



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##### Index to Financial Statements

In December 2004, the FASB issued SFAS No. 123R, Share-Based Payment (SFAS 123R),
which requires companies to measure and recognize compensation expense for all stock-based payments at fair value. SFAS 123R is effective for the first annual reporting period beginning after December 15, 2005 and, thus, will be effective for the
Company beginning with the first quarter of fiscal year 2006. Early adoption is encouraged and retroactive application of the provisions of SFAS 123R to the beginning of the fiscal year that includes the effective date is permitted, but not
required. The Company is currently evaluating the impact of SFAS 123R on its financial statements.



Forward Looking Statements



The statements other than statements of historical facts included in this annual report, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected costs and plans and objectives
of management for future operations, are forward-looking statements, as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We have based these forward-looking
statements on our current assumptions, expectations and projections about future events.



Forward-looking statements may be indicated by phrases such as will, estimates, plans, strategy, believes, anticipates, expects,
intends, foresees, projects, forecasts or words of similar meaning or import. We have made such statements in prior filings with the Securities and Exchange Commission and in this. Such statements are
subject to certain risks, uncertainties, or assumptions, and therefore, management can make no representations or warranties as to the accuracy or reasonableness of such statements. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary materially from those set forth in applicable forward looking statements.



These statements may also involve risks and uncertainties that could cause our actual results of operations or financial condition to materially differ
from our expectations in this, including, but not limited to:



| |  |  | the costs and availability of raw materials, particularly resins;
| | - |  | -----------------------------------------------------------------



| |  |  | increases in the costs of compliance with laws and regulations, including environmental laws and regulations;
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | the loss of any of our major customers, including the risk that our customers will purchase less of our products than we expect under requirements contracts;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | unseasonable weather changes, particularly during the spring and summer months;
| | - |  | -------------------------------------------------------------------------------



| |  |  | the ability to compete effectively regionally and nationally;
| | - |  | -------------------------------------------------------------



| |  |  | the ability to develop or adapt to new technologies;
| | - |  | ----------------------------------------------------



| |  |  | our dependence on key management;
| | - |  | ---------------------------------



| |  |  | our ability to obtain additional financing or make payments on our debt;
| | - |  | ------------------------------------------------------------------------



| |  |  | our high degree of leverage and substantial indebtedness;
| | - |  | ---------------------------------------------------------



| |  |  | regulatory developments, industry conditions and market conditions; and
| | - |  | -----------------------------------------------------------------------



| |  |  | general economic conditions.
| | - |  | ----------------------------



Any forward-looking statements made herein speak only as of the date hereof. We expressly disclaim any obligation or undertaking to release publicly any
updates or revisions to any such statements, to reflect any change in our expectations with regard thereto or any change in events, conditions, or circumstances on which any such statement is based.



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##### Index to Financial Statements

Risk Factors



Key factors that may have a direct bearing on our results and financial condition include, but are not limited to, the following:



Fluctuations in raw material prices and raw material availability may affect our
results.



We face the risk that our access to some raw
materials may be interrupted or that we may not be able to purchase these raw materials at prices that are acceptable to us. We use large quantities of high-density polyethylene, polycarbonate, polypropylene and polyethylene terephthalate resins in
manufacturing our products. In general, we do not have long-term supply contracts with our suppliers, and our purchases of raw materials are subject to market prices. Although generally we are able to pass changes in the prices of raw materials
through to our customers over a period of time, we may not always be able to do so or there may be a lag between the time our costs increase and the time we pass those costs through to our customers. We cannot assure you that we will be able to pass
through all future raw material price increases in a timely manner. Any limitation on our ability to pass through price increases on a timely basis could negatively affect our results of operations.



We depend on several large customers, the loss of which could have a material adverse
effect on us. In addition, because many of our customers contracts are requirements contracts, we face the risk that they will purchase less than we anticipated.



For the year ended December 31, 2004, our largest customer accounted for approximately 14% of our container sales, and our
ten largest customers accounted for approximately 49% of such sales. The termination of any of our top customer relationships or significant declines in demand for their products could have a material adverse affect on our business. Furthermore,
many of our contracts with large customers are requirements-based contracts that do not obligate the customer to purchase fixed amounts of product from us. As a result, despite the existence of contracts with several key customers, we generally face
the risk that the customers will not purchase expected amounts of the products covered under contracts. Additionally, customer contracts come up for renewal on a regular basis in the ordinary course of business and we cannot guarantee that we will
be able to successfully renew these contracts as they expire.



We face
considerable competitive risk.



We face substantial
competition throughout our product lines from a number of well-established businesses operating nationally and from firms operating regionally. Several of these competitors are larger and/or have greater financial resources than we do. Our primary
national competitors include Constar International, Graham Packaging, Liquid Container, Plastipak Packaging, Ring Technologies and Silgan Holdings. In addition, we face substantial competition from a number of companies with significant in-house
bottling and blowmolding capacity, such as Nestle Waters North America, Kroger and Dean Foods. We cannot assure you that we will be able to compete effectively or that our competition will not cause our revenues or profitability to decrease.



We have substantial leverage, which may affect our ability to use funds
for other purposes.



We have a substantial amount of
outstanding indebtedness. A substantial portion of our cash flow will be dedicated to the payment of principal and interest on our indebtedness, which will reduce funds available to us for other purposes, including capital expenditures. We also
carry a higher degree of leverage than some of our competitors, which could place us at a disadvantage to some of our competitors in certain circumstances. If we were to experience poor financial and operational results, the combination of the poor
performance and our substantial leverage might create difficulties in complying with the covenants contained in our senior credit facility and indentures. The failure to comply with such covenants could result in an event of default under these
agreements, thereby permitting an acceleration of such indebtedness as well as indebtedness under other instruments that contain cross-default or cross-acceleration provisions.



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##### Index to Financial Statements

Our substantial indebtedness could adversely affect our cash flow and our ability to fulfill our obligations.



Our substantial level of indebtedness increases the
possibility that we may be unable to generate cash sufficient to pay, when due, the principal of, interest on or other amounts due in respect of our senior subordinated notes and our senior secured discount notes, which we refer to together as the
notes, and our other indebtedness. We may also borrow additional debt under our senior credit facility, increasing the risks discussed below. Our substantial leverage could have significant consequences, including:



| |  |  | making it more difficult for us to satisfy our obligations with respect to the notes;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | increasing our vulnerability to general adverse economic and industry conditions;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | limiting our ability to obtain additional financing;
| | - |  | ----------------------------------------------------



| |  |  | requiring us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, which will reduce the amount of our cash flow available for other
purposes, including capital expenditures and other general corporate purposes;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | requiring us to sell debt securities or to sell some of our core assets, possibly on unfavorable terms;
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | restricting us from making strategic acquisitions, introducing new products or exploiting business opportunities;
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | limiting our flexibility in planning for, or reacting to, changes in our business and our industry; and
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | placing us at a possible competitive disadvantage compared to our competitors that have less debt.
| | - |  | --------------------------------------------------------------------------------------------------



Restrictive covenants in our notes and our other indebtedness could adversely affect our business by limiting our operating and
strategic flexibility.



The indentures governing our
outstanding indebtedness and our new senior credit facility contain restrictive covenants that limit our ability to:



| |  |  | incur additional debt or issue preferred equity;
| | - |  | ------------------------------------------------



| |  |  | pay dividends or make distributions on our equity interests or repurchase our equity interests;
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | repurchase subordinated indebtedness;
| | - |  | -------------------------------------



| |  |  | issue stock of subsidiaries;
| | - |  | ----------------------------



| |  |  | make certain investments;
| | - |  | -------------------------



| |  |  | create liens on our assets to secure debt;
| | - |  | ------------------------------------------



| |  |  | enter into transactions with affiliates;
| | - |  | ----------------------------------------



| |  |  | merge or consolidate with another company;
| | - |  | ------------------------------------------



| |  |  | sell, lease or otherwise dispose of all or substantially all of our assets; and
| | - |  | -------------------------------------------------------------------------------



| |  |  | make capital expenditures above specified levels.
| | - |  | -------------------------------------------------



These covenants could have an adverse effect on our business by limiting our ability to take advantage of financing, merger and acquisition and other
corporate opportunities. In addition, our other indebtedness and our new senior credit facility contain other and more restrictive covenants that prohibit us from prepaying our other indebtedness, including the notes. Our senior credit facility
requires us to maintain specified financial ratios. Our ability to meet those financial ratios can be affected by events beyond our control, and we cannot assure you that we will meet those ratios. A breach of any of these covenants, ratios or
restrictions could result in an event of default under our senior credit facility and any of our other indebtedness that may be cross-defaulted to such indebtedness, including the notes. Upon the occurrence of an event of default under our new
senior credit facility or such other indebtedness, the lenders or holders of such indebtedness could elect to declare all amounts



24



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##### Index to Financial Statements

outstanding under such indebtedness, together with accrued interest, to be immediately due and payable. If these lenders accelerate the payment of that
indebtedness, we cannot assure you that our assets would be sufficient to repay in full that indebtedness and any other debt, including the notes.



To service our indebtedness, make capital expenditures and fund our operations, we will require a significant amount of cash. Our ability to generate cash depends
on many factors beyond our control.



Our ability to
make payments on and to refinance our indebtedness, including the notes, and to fund planned capital expenditures will depend on our ability to generate and have excess cash in the future, which is dependent on various factors. These factors include
the price and availability of raw materials such as resin, as well as general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.



We cannot assure you that our business will generate sufficient cash flow from operations, that currently anticipated cost
savings and operating improvements will be realized on schedule or at all or that future borrowings will be available to us under our new senior credit facility or otherwise in amounts sufficient to enable us to pay the notes or our indebtedness, or
to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness, including the notes, on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness, including our new senior
credit facility and the notes, on commercially reasonable terms or at all.



Despite current indebtedness levels, we and our subsidiaries may still be able to incur substantially more debt, which could exacerbate the risks described above.



We and our subsidiaries may be able to incur substantial additional indebtedness in the future. The terms of the indentures
and our senior credit facility limit but do not fully prohibit our subsidiaries or us from incurring additional indebtedness. In addition, we could incur significant additional indebtedness under our senior credit facility, which our domestic
subsidiaries guarantee. If new debt is added to our and our domestic subsidiaries current debt levels, the related risks that we now face could intensify.



We operate under a variety of safety and environmental laws and regulations, and are subject to national, state, provincial, international and/or local laws and
regulations.



We are subject to a broad range of
national, state, provincial, international and local environmental laws and safety regulations, including those governing discharges to air, soil and water, the handling and disposal of hazardous substances and the investigation and remediation of
contamination resulting from the release of hazardous substances. Compliance with these laws and regulations can require significant capital expenditures and operating expenses. These laws and regulations can be complex and may change often, making
it difficult to maintain compliance, and violations of these laws and regulations may result in substantial fines and penalties. In addition, environmental laws such as CERCLA, also known as Superfund in the United States, impose strict,
and in some cases joint and several, liability on specified parties for the investigation and cleanup of contaminated soil, groundwater and buildings, and liability for damages to natural resources, at a wide range of properties. As a result,
contamination at properties that we formerly owned or operated, as well as contamination at properties that we currently own or operate or to properties to which we may have sent hazardous substances, may result in our liability under environmental
laws. As a manufacturer, we have an inherent risk of liability under environmental laws, both with respect to ongoing operations and with respect to contamination that may have occurred in the past on our properties or as a result of our operations.
We could, in the future, incur a material liability arising from the costs of complying with environmental laws, claims concerning non-compliance, or liability from contamination.



In addition, a number of governmental authorities both in the United States and abroad have considered or are expected to
consider legislation aimed at reducing the amount of plastic wastes disposed. Proposed legislation has included mandating certain rates of recycling and/or the use of recycled materials, imposing deposits or taxes on plastic packaging material, and
requiring retailers or manufacturers to take back packaging used for their



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##### Index to Financial Statements

products. Legislation, as well as voluntary initiatives similarly aimed at reducing levels of plastic wastes, could reduce the demand for certain plastic
packaging, result in greater costs for plastic packaging manufacturers, or otherwise negatively impact our business.



Rapid changes in available technologies could render our products and services obsolete.



Significant technology advances could render our existing technology or our products obsolete. The markets in which we
operate are characterized by rapid technological change, frequent new product and service introductions and evolving industry standards. We attribute much of our sales to our existing technology, and our ability to compete may dissipate if our
technology becomes obsolete. If we are unsuccessful in responding to these developments or do not respond in a cost-effective manner, our sales and profitability may decline. To be successful, we must adapt to changing markets by continually
improving our products and services and by developing new products and services to meet the demand of our customers.



Our business is exposed to product liability risk and negative publicity of our customers.



Our business entails products liability risk. Currently, we maintain approximately $51 million of insurance for products
liability claims, but the amount and scope of our insurance may not be adequate to cover a products liability claim that is successfully asserted against us. In addition, products liability insurance could become more expensive and difficult to
maintain and, in the future, may not be available to us on commercially reasonable terms or at all. Accordingly, we cannot assure you that we have, or will continue to have, adequate insurance coverage against possible products liability claims
against us. In addition, our customers are exposed to products liability risk and possible negative publicity concerning their products for which they use our containers, which could cause us to lose those customers as well as future customers.



The interests of our controlling equity holders, Vestar Capital Partners
III and Dean Foods Company, may conflict with our noteholders.



The interests of Vestar Capital Partners III, L.P. (Vestar Capital Partners III) and Dean Foods, the ultimate controlling equity holders of Holdings, our parent company, may conflict with the holders of our outstanding notes.
For example, Vestar Capital Partners III and Dean Foods, as equity holders, may have an incentive to increase the value of their equity investment or cause us to distribute funds at the expense of our financial risk and our ability to make payments
on the outstanding notes. Each of Vestar Capital Partners III, through affiliates which it controls, and Dean Foods, through its indirect ownership, is able to veto most major decisions regarding our management and operations. In addition, Vestar
Capital Partners III, through affiliates which it controls, will have the sole power to elect a majority of the management committee and appoint new officers and management and, therefore, will effectively control many other major decisions
regarding our operations. We cannot assure you that the interests of either Vestar Capital Partners III or Dean Foods will not conflict with the interests of the holders of our outstanding notes.



We are dependent on several key senior managers, the loss of whom could have a material
effect on our business and development.



We have
several key personnel, the loss of whom could have a material adverse effect on our business. The loss of the services provided by Stephen E. Macadam, our President and Chief Executive Officer, among others, could interrupt our business before we
are able to find a suitably qualified and experienced replacement.



Employee slowdowns, strikes and similar actions could have a material adverse effect on our business and operations.



At December 31, 2004, we employed approximately 3,500 people. Approximately 1,000 of these employees were hourly workers covered by collective bargaining
agreements which expire between April 30, 2005 and



26



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##### Table of Contents

##### Index to Financial Statements

February 28, 2008. In addition, the transportation and delivery of raw materials to our manufacturing facilities and of our products to our customers by
union members is critical to our business. A prolonged labor dispute, slowdown, strike or similar action could have a material adverse effect on our business and results of operations.



We cannot ensure that we will be able to successfully accomplish our objectives of meeting, exceeding or complying with all
of the key factors summarized above. If we are not successful, our business and results of operations could be negatively impacted.



Any forward-looking statements made or incorporated by reference herein speak only as of the date hereof. We expressly disclaim any obligation or
undertaking to release publicly any updates or revisions to any such statements, to reflect any change in its expectations with regard thereto or any change in events, conditions, or circumstances on which any such statement is based.



|ITEM 7A:    QUANTITATIVE | AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------------------------ | ---------------------------------------------



Our primary exposure to market risk is changing interest rates due to some of our debt bearing a floating rate of interest. Our policy is to manage
interest rate risk by using a combination of fixed and floating rate debt. A hypothetical 10% increase in interest rates for the year ended December 31, 2004, would have increased floating-rate interest expense by approximately $1.5 million. The
fair value of the Companys long-term debt is based on quoted market prices. At December 31, 2004, the estimated fair value of the senior subordinated notes was $181.3 million and the estimated fair value of the senior secured discount notes
was $173.1 million.



|ITEM 8: | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|------- | -------------------------------------------



The financial statements and supplementary data are listed on the index at Item 15 and included herein beginning on page F-1.



|ITEM 9: | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|------- | ------------------------------------------------------------------------------------



There were no changes in accountants or disagreements with accountants on matters related to accounting or financial
disclosure during the fiscal years ended December 31, 2004 and 2003.



|ITEM 9A:    CONTROLS | AND PROCEDURES
|-------------------- | --------------



Evaluation of disclosure controls and procedures. Our management, including a disclosure committee that includes the Chief Executive Officer, the
Chief Financial Officer and other members of our senior management and finance teams, has conducted an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2004. Based on that evaluation, the disclosure
committee concluded that at present the disclosure controls and procedures were adequate and effective in ensuring that all material information required to be filed in this report has been made known to them in a timely fashion.



Changes in internal control over financial reporting. There have been
no significant changes in the Companys internal controls over financial reporting during the fourth fiscal quarter for the period ended December 31, 2004 that have materially affected, or are reasonably likely to materially affect, such
internal controls. Our management continues to review our internal controls and procedures and the effectiveness of those controls. During the fourth fiscal quarter for the period ended December 31, 2004 the Company formally initiated the process of
documenting internal controls over financial reporting in an effort to be in compliance with the Sarbanes-Oxley Act of 2002 Rule 404 by December 31, 2006. Also during the fourth fiscal quarter for the period ended December 31, 2004 the Company
initiated the process of developing and organizing an Internal Audit function within the Company.



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##### Index to Financial Statements

PART III



|ITEM 10:    MANAGEMENT | COMMITTEE AND EXECUTIVE OFFICERS OF THE REGISTRANT
|---------------------- | --------------------------------------------------



We are managed by our sole member, Holdings. Holdings is managed by a management committee presently consisting of nine members. As of March 9, 2005, five
of the members were appointed by or serving at the request of Vestar CCH Preferred LLC, James P. Kelley, John R. Woodard, Leonard Lieberman, B. Joseph Rokus and Stephen P. Donovan and two were appointed by Franklin Plastics, Inc., Ronald H. Klein
and Richard L. Robinson. Of the remaining two members, one is our chief executive officer, currently Stephen E. Macadam, and one is an independent member, William B. Bell. Mr. Ronald V. Davis was a member of the management committee from
the closing of the Transactions until his resignation from such position as of December 31, 2004.



As of March 9, 2005, the members of the management committee of Holdings and our executive officers and their ages and positions are as follows:



|                    |  |     |  |                                                                             
|------------------- |  | --- |  | ----------------------------------------------------------------------------
|Name                |  | Age |  | Position                                                                    
|James P. Kelley     |  | 50  |  | Chairman of the Management Committee                                        
|B. Joseph Rokus     |  | 50  |  | Vice Chairman of the Management Committee                                   
|William G. Bell     |  | 58  |  | Member of the Management Committee                                          
|Stephen P. Donovan  |  | 64  |  | Member of the Management Committee                                          
|Ronald H. Klein     |  | 39  |  | Member of the Management Committee                                          
|Leonard Lieberman   |  | 76  |  | Member of the Management Committee                                          
|Richard L. Robinson |  | 75  |  | Member of the Management Committee                                          
|John R. Woodard     |  | 40  |  | Assistant Secretary and Member of the Management Committee                  
|Stephen E. Macadam  |  | 44  |  | President and Chief Executive Officer and Member of the Management Committee
|Richard P. Sehring  |  | 42  |  | Chief Financial Officer                                                     
|Robert K. Brower    |  | 56  |  | Senior Vice President, Operations Services & Procurement                    
|Laura H. Fee        |  | 45  |  | Senior Vice President, Human Resources                                      
|Louis Lettes        |  | 40  |  | Senior Vice President, General Counsel and Secretary                        
|Douglas A. Smith    |  | 45  |  | Assistant Treasurer and Director of Accounting Operations                   



James P. Kelleyhas served as a member of the management committee since the closing of the Transactions and has served as Chairman of the management committee since April 2003. Mr. Kelley is President of Vestar Capital Partners, an affiliate of Vestar Capital
Partners III, L.P., and was a founding partner of Vestar Capital Partners, Inc. (Vestar Capital Partners) at its inception in 1988. Vestar Capital Partners specializes in management buyouts, recapitalizations and growth capital
investments. Mr. Kelley is a director of several companies in which Vestar Capital Partners investment funds have significant equity interests, including Reid Plastics Holdings and St. John Knits, Inc., a premier name in elegant knitwear. Mr.
Kelley received a B.S. from the University of Northern Colorado, a J.D. from the University of Notre Dame and an M.B.A. from Yale University.



B. Joseph Rokushas served as the Vice Chairman of the management committee since the closing of the Transactions. Since December 1998, Mr. Rokus
has served as Chairman of the Boards of Directors of Reid Plastics Holdings and Reid Plastics. Between 1993 and December 1998, Mr. Rokus served as President and Chief Executive Officer of Reid Plastics Holdings and Reid Plastics. He serves on the
Board of Trustees of Pepperdine University and also serves as Chairman of the Board of Berkley Industries, a custom thermoformer that specializes in packaging for both the medical and consumer industries. Mr. Rokus received a B.S. from Pepperdine
University and an M.B.A. from the University of Southern California.



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##### Index to Financial Statements

William G. Bellhas served as a member of the management committee since the closing of the
Transactions. Mr. Bell has been the owner and President of Aqua Filter Fresh, Inc., a bottled water and water filtration company, since 1980 and the Executive Vice President of Tyler Mountain Water Co. Inc., a bottled water company, since 1985. Mr.
Bell was also the President of Bell Sales, Inc., a provider of high quality water coolers and water filtration systems, from 1980 to 2000. Mr. Bell is a director of Reid Plastics Holdings, Aqua Filter Fresh, Inc., Wissahickon Spring Water Company, a
bottled water company, Glacier Water Services Inc., a company specializing in water filtration/treatment systems contained in outdoor and indoor vending machines, Clear Mountain Spring Water LLC and Bell Sales, Inc. Mr. Bell also served as the
Chairman of the International Bottled Water Association, an organization with which he has been affiliated since 1989. In 2002, Mr. Bell was inducted into the Beverage World Bottled Water Hall of Fame.



Stephen P. Donovan was appointed to serve on the management committee
beginning January 25, 2005. Mr. Donovan spent thirty-five years with Procter & Gamble Company, a global consumer products company, where he held a variety of senior positions in marketing and general management, most recently in the position of
President of the Global Beverage and North American Food & Beverage segments. He currently serves on the board of directors of Birds Eye Foods, an affiliate of Vestar Capital Partners. Mr. Donovan received a B.S. from the University of
Massachusetts.



Ronald H. Kleinwas appointed by
Franklin Plastics to serve on the management committee following the closing of the Refinancing Transactions. Mr. Klein has served as Senior Vice President, Corporate Development of Dean Foods since February 2002. In mid-1998 Mr. Klein became Vice
President, Corporate Development of Dean Foods, focused primarily on acquisition and divesture transactions and financial planning.



Leonard Liebermanhas served as a member of the management committee since the closing of the Transactions. Mr. Lieberman was Chairman, President
and Chief Executive Officer of Supermarkets General Corporation from 1982 to 1987 and of Outlet Communications, Inc. in 1991. Since 1995, Mr. Lieberman has served as a consultant to Vestar Capital Partners III, L.P., and its affiliates. Currently,
Mr. Lieberman is a director of Sonic Corp., a chain of quick-service drive-ins in the US, and Enterprise NewsMedia, which owns 11 papers in the Boston area. Mr. Lieberman received a B.A. from Yale University, a J.D. from Columbia University and
participated in the Advanced Management Program at Harvard Business School.



Richard L. Robinsonhas served as a member of the management committee since January 2000. Mr. Robinson has been Co-CEO of Robinson Dairy, LLC, a full-line milk and ice cream products company and a wholly owned
subsidiary of Dean Foods, a food and beverage company in the US, since August of 1999. From June 1975 until August 1999, Mr. Robinson was the Chairman and Chief Executive Officer of Robinson Dairy, Inc. Currently, Mr. Robinson is a director of
HCA/HealthOne, a Colorado healthcare organization. Mr. Robinson received a B.S. from Colorado State University. In December 2004, Mr. Robinson received an honorary doctorate from Colorado State University.



John R. Woodardhas served as a member of the management committee
since the closing of the Transactions. Mr. Woodard is a Managing Director of Vestar Capital Partners and joined Vestar Capital Partners in 1998. Between March 1996 and February 1998, he served as a Managing Director in the private equity practice of
The Blackstone Group, an investment and advisory firm. From April 1990 to March 1996, Mr. Woodard was a Vice President of Vestar Capital Partners. Mr. Woodard is also a Director of Reid Plastics Holdings. Mr. Woodard received a B.A. from Williams
College.



Stephen E. Macadamhas served as our President
and Chief Executive Officer and as a member of the management committee since August 2001. Mr. Macadam previously served with Georgia-Pacific Corporation, an international manufacturer of building products and paper goods, where he held the position
of Executive Vice President, Pulp & Paperboard, from July 2000 until August 2001, and the position of Senior Vice President, Containerboard & Packaging, from March 1998 until July 2000. Mr. Macadam held positions of increasing responsibility
with McKinsey and Company, Inc., an international management consulting firm, from 1988 until



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##### Index to Financial Statements

1998, culminating in the role of Principal in charge of McKinseys Charlotte, North Carolina operation. Mr. Macadam received a B.S. in Mechanical
Engineering from the University of Kentucky, an M.S. in Finance from Boston College, and an M.B.A. from Harvard Business School, where he was a Baker Scholar. Mr. Macadam is also a Director of Bluelinx Holdings Inc., a publicly held distributor of
building products.



Richard P. Sehringhas served as our
Chief Financial Officer since January 2005. Prior to January, Mr. Sehring served as our Senior Vice President, Finance and Accounting, and Chief Accounting Officer since November 2001. Mr. Sehring served as Vice President Finance and Administration
for LaRoche Industries, Inc., a producer and distributor of a variety of chemicals, from June 2000 until June 2001. Between 1997 and 2000, Mr. Sehring served as Chief Financial Officer, in Frankfurt, Germany, and Vice President of Finance Neuilly
Sur Seine, France for LII Europe SARL, a wholly owned subsidiary of LaRoche Industries, Inc. Mr. Sehring served as Corporate Controller for LaRoche Industries, Inc. from 1994 until 1997, and various financial positions up to Corporate Controller
from 1989 until 1994 with LaRoche Chemicals, Inc. Mr. Sehring received his B.S. in Business Administration with a major in accounting and a minor in finance from Louisiana State University.



Robert K. Browerhas served as our Senior Vice President for
Operations Services and Procurement since October 2001. Prior to that date, Mr. Brower served as Vice President, Strategic Sourcing, for us since May 1999. Mr. Brower served in a variety of positions within the procurement organization of
Newell-Rubbermaid Corporation, a producer of nonedible consumer products, from 1997 until 1999 eventually becoming the Vice President for Global Procurement. Mr. Brower served for 26 years in the United States Army, retiring in 1997 with the rank of
Colonel. Mr. Brower received a B.A. and M.A. from the University of Richmond and an M.B.A. from Long Island University.



Laura H. Feehas served as our Senior Vice President, Human Resources, since September 2003. Prior to that date, Ms. Fee served as our Vice
President, Engineering, Technology and Capital, since January 2002. Ms. Fee previously served with Georgia-Pacific Corporation where she held positions of increasing responsibility from June 1992 until January 2002. Most recently Ms. Fee held the
position of Director, Strategic Sourcing from January 2001 to January 2002 and the position of Manager, Paper Business from August 1998 to January 2001. Ms. Fee was also Manager, Quality, Director, Technical Services and Senior Business Analyst for
Georgia-Pacific Corporation. Ms. Fee received a B.S. in Chemical Engineering from the University of Illinois and an M.S. in Environmental Engineering also from the University of Illinois.



Louis Letteshas served as our Senior Vice President since July 2004 and as our General Counsel and Secretary since
January 2002. From January 2002 until July 2004, Mr. Lettes had also served as our Vice President. Previously, Mr. Lettes served as Vice President and General Manager of Homestore.com, an on-line real estate service, from 1999 to 2001. Mr. Lettes
served in various positions at Turner Broadcasting System, a producer of global news and entertainment products, from 1992 to 1999 and as an associate at the law firm of Alston & Bird from 1989 to 1992. Mr. Lettes received an A.B. from Princeton
University and a J.D. from Vanderbilt University School of Law. Mr. Lettes is a member of the State Bar of Georgia.



Douglas A. Smithhas served as our Assistant Treasurer and Director of Accounting Operations since July 2002. Prior to that date, Mr. Smith had
been our Manager of Accounting since our inception in 1999. Mr. Smith started working for Plastic Containers, Inc. in 1988 as an accounting supervisor and was later promoted to the position of Manager of Accounting. Plastic Containers, Inc. was
merged into Consolidated Container in July 1999. Mr. Smith received his B.S. in Business Administration with a major in accounting from the University of Nebraska.



Except as described in this section, there are no arrangements or understandings between any member of the management
committee or executive officer and any other person under which that person was elected or appointed to their position.



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##### Index to Financial Statements

Following the closing of the Transactions, the management committee established a compensation committee,
comprised of Messrs. Davis, as chairman, Bell, Kelley and Robinson. Mr. Davis resigned from the management committee and the compensation committee as of December 31, 2004. Mr. Kelley was subsequently named chairman of the compensation committee. In
addition, the management committee established an audit committee, comprised of Messrs. Lieberman, as chairman, Rokus and Woodard. Since we do not currently have equity securities that are traded on a securities exchange or other quotation system,
we are not required to have an audit committee financial expert. The management committee therefore has not made a determination as to whether any of the members of the audit committee qualify as a financial expert.



Executive Severance Agreements



On January 20, 2004, the Company entered into severance agreements with
certain of its key employees. Under these agreements, the Company promised to pay, in certain circumstances, severance pay equal to either 100% or 150% (such percentages differing among the employees) of the employees annual base salary in
installments consistent with the Companys payroll practices and health and welfare benefits for the period of time in which severance pay is paid. Circumstances giving rise to these obligations include, among others, (a) termination of the
employees employment (other than for Cause, as defined in the agreements, death or disability) within twelve months of a Threshold Event (which is defined as the termination of Mr. Macadams employment as Chief Executive Officer of the
Company) and (b) resignation by the employee for Good Reason (as defined in the agreement) within twelve (12) months of a Threshold Event. In consideration of such commitments by the Company, each employee agreed to abide by certain restrictive
covenants following termination of employment and to execute certain releases in favor of the Company upon termination. These severance agreements expire on December 31, 2006.



Code of Ethics



We have adopted the Consolidated Container Company Code of Business Conduct, which applies to all members of our management committee, officers and
employees. The standards of conduct and ethics are publicly available on our website at www.cccllc.com. If the Company makes any substantive amendments or grants of waivers to the standards of conduct and ethics, including any implicit
waivers that apply to our chief executive officer or chief financial officer, we will disclose the nature of the amendment or waiver on that website. We may also elect to disclose the amendment or waiver in a report on Form 8-K filed with the SEC.



In addition, the management committee adopted a Code of
Business Conduct and Ethics applicable to all members of the management committee effective January 25, 2005. This Code, which is also available to the public on our website, provides guidelines on issues such as conflicts of interest, corporate
opportunities and confidentiality, among others.



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##### Index to Financial Statements

|ITEM 11:    EXECUTIVE | COMPENSATION
|--------------------- | ------------



The table below shows the compensation paid or earned by the current Chief Executive Officer and the five other most highly paid executive officers of
Consolidated Container Company as of December 31, 2004. For all such officers, the table shows compensation during the years ended December 31, 2004, 2003 and 2002 where applicable:



SUMMARY COMPENSATION TABLE



|                                                                                                                                                   |  |              |  |                        |  |                        |  |                                          |  |                      
|-------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ |  | ---------------------- |  | ---------------------- |  | ---------------------------------------- |  | ---------------------
|Name and Principal Position                                                                                                                        |  | Year         |  | Salary                 |  | Bonus                  |  | Number ofSecurities UnderlyingOptions(1) |  | All OtherCompensation
|Stephen E. Macadam(2) President and Chief Executive Officer                                                                                        |  | 200420032002 |  | $540,800520,000519,417 |  | $514,000280,000520,000 |  | 12,700,000625,000575,000                 |  | $7,4356,4055,634     
|Tyler L. Woolson(3) Chief Financial Officer (resigned in January 2005)                                                                             |  | 200420032002 |  | 310,962300,000276,923  |  | 121,60045,00045,000    |  | 1,800,000125,000100,000                  |  | 6,0895,0669,195      
|Robert K. Brower(4) Senior Vice President, Operation Services & Procurement                                                                        |  | 200420032002 |  | 249,848236,900233,449  |  | 129,00050,00030,000    |  | 1,320,00040,00011,000                    |  | 6,0627,087129,133    
|Richard P. Sehring(5) Senior Vice President, Finance & Accounting & Chief Accounting Officer (promoted to Chief Financial Officer in January 2005) |  | 200420032002 |  | 208,769200,000200,000  |  | 76,00040,00020,000     |  | 1,320,00035,00030,000                    |  | 5,7895,1655,666      
|Laura H. Fee(6) Senior Vice President, Human Resources                                                                                             |  | 200420032002 |  | 188,404169,903146,058  |  | 57,00035,00023,000     |  | 330,00020,0003,000                       |  | 5,7821,09635,000     
|Louis Lettes(7) Senior Vice President, General Counsel & Secretary                                                                                 |  | 200420032002 |  | 189,615175,000171,635  |  | 50,00025,00010,000     |  | 330,00020,00015,000                      |  | 5,7075,4703,891      

---

|(1) | Included for each year presented are not only those options granted during such year, but also any options that were repriced during such year. Accordingly, the 2004 numbers
represent total outstanding options at December 31, 2004, and subsume 2002 and 2003 numbers.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Mr. Macadam joined Consolidated Container Company in August 2001. Included in the Number of Securities Underlying Options column for Mr. Macadam are repriced options (625,000 in
2004, 575,000 in 2003 and 525,000 in 2002). Included in All Other Compensation for Mr. Macadam is imputed income on company provided life insurance ($1,140 in 2004, $1,080 in 2003 and $1,200 in 2002) and employer matching contributions for the
Company-sponsored 401(k) plan ($6,295 in 2004, $5,325 in 2003 and $4,434 in 2002).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Mr. Woolson joined Consolidated Container Company in January 2002 and resigned on January 14, 2005. The amount shown in the Bonus column for 2002 represents an initial signing bonus
($20,000) as well as a performance bonus for that year ($25,000). Included in the Number of Securities Underlying Options column for Mr. Woolson are repriced options (125,000 in 2004 and 100,000 in 2003). Mr. Woolsons resignation resulted in a
reduction in the number of securities underlying his options. Such reduction is not reflected in the above table. Included in All Other Compensation for Mr. Woolson is imputed income on company provided life insurance ($466 in 2004, $1,086 in 2003
and $1,080 2002), employer matching contributions for the Company-sponsored 401(k) plan ($5,623 in 2004, $3,980 in 2003 and $3,115 in 2002) and reimbursement for COBRA coverage prior to the Company benefits becoming effective ($5,000 in 2002).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Included in the Number of Securities Underlying Options column for Mr. Brower are repriced options (40,000 in 2004, 11,000 in 2003 and 7,700 in 2002). Included in
All Other Compensation for Mr. Brower is imputed income on company provided life insurance ($389 in 2004, $1,087 in 2003 and $133 in 2002),
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | employer matching contributions for the Company-sponsored 401(k) plan ($5,673 in 2004, $6,000 in 2003 and $5,500 in 2002) and relocation expenses paid by the
Company in 2002 to cover Mr. Browers relocation from Dallas, Texas to Atlanta, Georgia of $123,500.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Included in the Number of Securities Underlying Options column for Mr. Sehring are repriced options (35,000 in 2004, 30,000 in 2003 and 30,000 in 2002). Included in All Other
Compensation for Mr. Sehring is imputed income on company provided life insurance ($130 in 2004, $389 in 2003 and $15 in 2002), employer matching contributions for the Company-sponsored 401(k) plan ($5,659 in 2004, $4,776 in 2003 and $3,692 in 2002)
and reimbursement for COBRA coverage prior to the Company benefits becoming effective ($1,959 in 2002).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Ms. Fee joined Consolidated Container Company in January 2002. The amount shown in the Bonus column for 2002 represents an initial signing bonus ($10,000) as well as a performance
bonus for that year ($13,000). Included in the Number of Securities Underlying Options column for Ms. Fee are repriced options (20,000 in 2004, 3,000 in 2003 and 3,000 in 2002). Included in All Other Compensation for Ms. Fee is imputed income on
company provided life insurance ($130 in 2004, $310 in 2003 and $11 in 2002), reimbursement of relocation expenses to cover Ms. Fees relocation from Crossett, Arkansas to Atlanta, Georgia ($34,989 in 2002) and employer matching contributions
for the Company-sponsored 401(k) plan ($5,652 in 2004 and $786 in 2003).
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Mr. Lettes joined Consolidated Container Company in January 2002. Included in the Number of Securities Underlying Options column for Mr. Lettes are repriced options (20,000 in 2004,
15,000 in 2003 and 10,000 in 2002). Included in All Other Compensation for Mr. Lettes is imputed income on company provided life insurance ($130 in 2004, $324 in 2003 and $12 in 2002), employer matching contributions for the Company-sponsored 401(k)
plan ($5,577 in 2004, $5,146 in 2003 and $1,212 in 2002) and reimbursement for COBRA coverage prior to the Company benefits becoming effective ($2,667 in 2002).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Employment Agreements



As of August 13, 2001, we entered into an employment agreement with Stephen E. Macadam. The employment agreement provides that Mr. Macadam will be
employed as our President and Chief Executive Officer at an initial annual base salary of $500,000 for a term of five years, subject to adjustment by the management committee and his earlier termination for cause. Cause
includes willful misconduct, his conviction of a felony, or his resignation without good reason. Commencing with August 13, 2006, and on each August 13 thereafter, the Employment Term shall be automatically extended for an additional
one-year period, unless we or Mr. Macadam provides the other with 60 days written notice. Mr. Macadam is entitled to a bonus of up to 100% of his base salary at the discretion of the management committee, to participate in any executive bonus plan
and all employee benefit plans maintained by us and, under some circumstances, to an additional payment to offset negative tax effects on his benefits.



In the event we terminate Mr. Macadam without cause or he resigns for good reason before the employment agreement expires, Mr. Macadam will be entitled to
receive:



| |  |  | any payments and benefits provided under any plans or programs in which he participated before the termination;
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | payment of the average of the base salary and annual bonus earned in the two years prior to his termination multiplied by two (2);
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | a cash lump sum payment for unused vacation and unpaid other compensation; and
| | - |  | ------------------------------------------------------------------------------



| |  |  | continued employee medical and life insurance plans for the term of any severance payments.
| | - |  | -------------------------------------------------------------------------------------------



In the event of his death or permanent disability, Mr. Macadam or his estate will be entitled to a reduced compensation
package. In addition, Mr. Macadam agreed not to disclose any confidential information regarding us and our affiliates, not to be engaged in, in any capacity, any business that competes with us, nor to solicit any



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##### Index to Financial Statements

person who was employed by us or our affiliates during the twelve months preceding that solicitation for a period of twenty-four months after the date of his
termination of employment.



Option Plans



Following the closing of the Transactions, Holdings adopted a 1999 Unit
Option Plan to provide some of our key employees with options to acquire up to 596,206, or 5.5% on a fully diluted basis, of the member units of Holdings. The number of options available under this plan has since been increased to 27,690,000 as of
March 9, 2005, pursuant to resolutions of the management committee and amendments to the option plan to account for, among other things, the dilution in value of the underlying common units as a result of the issuance of Series B Convertible
Preferred Units in connection with the Refinancing Transactions. Under the current option plan, known as the Second Amended and Restated Consolidated Container Holdings LLC 1999 Unit Option Plan (the CCH Plan), Holdings has granted
options to certain key employees that represent the right to acquire, in total, 22,476,997 member units of Holdings as of December 31, 2004. The exact pricing, performance criteria, vesting terms and redemption of options granted under this plan are
governed by individual unit option agreements between such employees and Holdings and, if the options are exercised, the terms of the options will be governed by special unit acquisition, ownership and redemption agreements.



In addition to the options to purchase member units in Holdings that were
granted to some of our key employees under the above plan, certain of these employees also hold options to purchase member units of Holdings that were issued in exchange for previously owned Franklin Plastics options. Under this plan, the rights to
acquire 132,601 member units were outstanding as of December 31, 2004. The compensation committee of the management committee administers these option plans.



The table below shows the options granted to the most highly paid executive officers of Consolidated Container Company
during the fiscal year 2004:



OPTION GRANTS IN 2004



|                    |  |                                                |  |                                                                |   |    |                        |      |                |              |                                                                                              |   |         |  |   |          
|------------------- |  | ---------------------------------------------- |  | -------------------------------------------------------------- | - | -- | ---------------------- | ---- | -------------- | ------------ | -------------------------------------------------------------------------------------------- | - | ------- |  | - | ---------
|                    |  |                                                |  |                                                                |   |    |                        |      |                |              | PotentialRealizable Value atAssumed
AnnualRates of Stock PriceAppreciationfor Option Term(4)
|                    |  | Number ofSecuritiesUnderlyingOptionsGranted(2) |  | Percentage ofTotal OptionsGranted toEmployeesin Fiscal Year(3) |   |    | ExercisePricePer Share |      | ExpirationDate |             
|Name                |  |                                                |  |                                                                |   | 5% |                        | 10% 
|Stephen E. Macadam  |  | 12,700,000                                     |  | 56.4                                                           | % |    | $                      | 0.05 |                | July 1, 2014 |                                                                                              | $ | 399,348 |  | $ | 1,012,026
|Tyler L. Woolson(1) |  | 1,800,000                                      |  | 8.0                                                            | % |    |                        | 0.05 |                | July 1, 2014 |                                                                                              |   | 56,601  |  |   | 143,437  
|Robert K. Brower    |  | 1,320,000                                      |  | 5.9                                                            | % |    |                        | 0.05 |                | July 1, 2014 |                                                                                              |   | 41,507  |  |   | 105,187  
|Richard P. Sehring  |  | 1,320,000                                      |  | 5.9                                                            | % |    |                        | 0.05 |                | July 1, 2014 |                                                                                              |   | 41,507  |  |   | 105,187  
|Laura H. Fee        |  | 330,000                                        |  | 1.5                                                            | % |    |                        | 0.05 |                | July 1, 2014 |                                                                                              |   | 10,377  |  |   | 26,297   
|Louis Lettes        |  | 330,000                                        |  | 1.5                                                            | % |    |                        | 0.05 |                | July 1, 2014 |                                                                                              |   | 10,377  |  |   | 26,297   

---

|(1) | In accordance with Mr. Woolsons option agreement, the expiration date of these options changed upon his resignation on January 14, 2005, to one year from the date of his
termination. Using the revised termination date for the potential realizable value calculation at 5% and 10% annual appreciation, the values are $7,004 and $14,190, respectively.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Included in the Number of Securities Underlying Options Granted column for Mr. Macadam, Mr. Woolson, Mr. Brower, Mr. Sehring, Ms. Fee, and Mr. Lettes are repriced options in the
amounts of 625,000, 125,000, 40,000, 35,000, 20,000 and 20,000, respectively.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Calculation assumes all options repriced during the year are included in total options granted.
|--- | -----------------------------------------------------------------------------------------------

|(4) | Illustrative, assumes that fair market value of options was equal to $.05/share at date of grant.
|--- | -------------------------------------------------------------------------------------------------



34



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##### Index to Financial Statements

AGGREGATED FISCAL YEAR END OPTION VALUES



|                    |  |                                                               |  |                                                                                        |  |              |   |  |           
|------------------- |  | ------------------------------------------------------------- |  | -------------------------------------------------------------------------------------- |  | ------------ | - |  | ----------
|                    |  | Number of securitiesunderlying unexercisedoptions at year-end |  | Value ofunexercised in-the-moneyoptions at fiscalyear-end ($)Exercisable/Unexercisable |  | Totaloptions
|Name                |  | Exercisable                                                   |  | Unexercisable                                                                          |  |             
|Stephen E. Macadam  |  | 5,021,425                                                     |  | 7,678,575                                                                              |  | $            | 0 |  | 12,700,000
|Tyler L. Woolson(1) |  | 1,080,000                                                     |  | 720,000                                                                                |  |              | 0 |  | 1,800,000 
|Robert K. Brower    |  | 492,164                                                       |  | 827,836                                                                                |  |              | 0 |  | 1,320,000 
|Richard P. Sehring  |  | 407,211                                                       |  | 912,789                                                                                |  |              | 0 |  | 1,320,000 
|Laura H. Fee        |  | 198,000                                                       |  | 132,000                                                                                |  |              | 0 |  | 330,000   
|Louis Lettes        |  | 198,000                                                       |  | 132,000                                                                                |  |              | 0 |  | 330,000   

---

|(1) | Mr. Woolson resigned on January 14, 2005, resulting in a reduction in the number of securities underlying his options. Such reduction is not reflected in the above table.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Report on Repricing of Options



In July 2004, to account for the dilution in value of the underlying common
units as a result of the issuance of Series B Convertible Preferred Units in connection with the Refinancing Transactions, and to more closely align the option exercise price to levels commensurate with our performance and the estimated value of the
company, the management committee reduced the exercise price on all options previously issued under the CCH Plan from $1.00 to $0.05.



While there is no market for our equity, our management committee made adjustments to the exercise price of certain options in 2004 and in each of the
previous two years in good-faith attempts to set an exercise price that was at or above fair market value. In 2002, in an effort to adjust the option exercise prices to reflect our financial performance and the estimated value of the Company, the
management committee replaced $10.50 and $29.66 options that had been granted to the new management team in 2001 and 2002, respectively, with options having an exercise price of $6.50. In 2003, to more closely align the option exercise price to
levels commensurate with our performance and the estimated value of the Company, the management committee reduced the $6.50 and $15.00 exercise prices on options that had been granted to the new management team to $1.00. In 2004, for the same
reasons as in the past, these options were further reduced from $1.00 to $0.05 as reflected in the table below.



10-YEAR OPTION REPRICINGS



|                    |  |                                                           |  |                                                     |      |                                               |   |                   |  |                                                                        |      |  |             
|------------------- |  | --------------------------------------------------------- |  | --------------------------------------------------- | ---- | --------------------------------------------- | - | ----------------- |  | ---------------------------------------------------------------------- | ---- |  | ------------
|Name                |  | Number of securitiesunderlying optionsrepriced or amended |  | Market priceof stock attime ofrepricing oramendment |      | Exercise priceat timeof repricing oramendment |   | New exerciseprice |  | Length of originaloption termremaining at dateof repricing oramendment
|Stephen E. Macadam  |  | 525,000                                                   |  | $                                                   | 0.05 |                                               | $ | 1.00              |  | $                                                                      | 0.05 |  | 8 yrs, 0 mos
|Stephen E. Macadam  |  | 50,000                                                    |  |                                                     | 0.05 |                                               |   | 1.00              |  |                                                                        | 0.05 |  | 8 yrs, 1 mo 
|Stephen E. Macadam  |  | 50,000                                                    |  |                                                     | 0.05 |                                               |   | 1.00              |  |                                                                        | 0.05 |  | 9 yrs, 1 mo 
|Tyler L. Woolson(1) |  | 100,000                                                   |  |                                                     | 0.05 |                                               |   | 1.00              |  |                                                                        | 0.05 |  | 8 yrs, 0 mos
|Tyler L. Woolson(1) |  | 25,000                                                    |  |                                                     | 0.05 |                                               |   | 1.00              |  |                                                                        | 0.05 |  | 8 yrs, 7 mos
|Tyler L. Woolson(1) |  | 25,000                                                    |  |                                                     | 0.05 |                                               |   | 1.00              |  |                                                                        | 0.05 |  | 9 yrs, 7 mos
|Robert K. Brower    |  | 11,000                                                    |  |                                                     | 0.05 |                                               |   | 1.00              |  |                                                                        | 0.05 |  | 8 yrs, 0 mos
|Robert K. Brower    |  | 29,000                                                    |  |                                                     | 0.05 |                                               |   | 1.00              |  |                                                                        | 0.05 |  | 9 yrs, 0 mos
|Richard P. Sehring  |  | 30,000                                                    |  |                                                     | 0.05 |                                               |   | 1.00              |  |                                                                        | 0.05 |  | 8 yrs, 0 mos
|Richard P. Sehring  |  | 5,000                                                     |  |                                                     | 0.05 |                                               |   | 1.00              |  |                                                                        | 0.05 |  | 9 yrs, 0 mos



35



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##### Table of Contents

##### Index to Financial Statements

|             |  |                                                           |  |                                                     |  |                                              |  |                   |  |                                                                       
|------------ |  | --------------------------------------------------------- |  | --------------------------------------------------- |  | -------------------------------------------- |  | ----------------- |  | ----------------------------------------------------------------------
|Name         |  | Number of securitiesunderlying optionsrepriced or amended |  | Market priceof stock attime ofrepricing oramendment |  | Exercise priceat timeof repricin oramendment |  | New exerciseprice |  | Length of originaloption termremaining at dateof repricing oramendment
|Laura H. Fee |  | 3,000                                                     |  | 0.05                                                |  | 1.00                                         |  | 0.05              |  | 8 yrs, 0 mos                                                          
|Laura H. Fee |  | 17,000                                                    |  | 0.05                                                |  | 1.00                                         |  | 0.05              |  | 9 yrs, 0 mos                                                          
|Louis Lettes |  | 15,000                                                    |  | 0.05                                                |  | 1.00                                         |  | 0.05              |  | 8 yrs, 0 mos                                                          
|Louis Lettes |  | 5,000                                                     |  | 0.05                                                |  | 1.00                                         |  | 0.05              |  | 9 yrs, 0 mos                                                          

---

|(1) | Mr. Woolson resigned on January 14, 2005, resulting in a reduction in the number of securities underlying his options. Such reduction is not reflected in the above table.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Respectfully submitted,



THE COMPENSATION COMMITTEE



James P. Kelley, Chairman

William G. Bell

Richard L. Robinson





Long-Term Incentive Plan



In July 2004, the management committee of Holdings terminated an existing
long-term incentive plan and adopted a new long-term incentive plan (LTIP) for some of the key employees of the Company. Under the LTIP, if a liquidity event were to occur, then the compensation committee of Holdings management
committee would approve cash payments to participants based on formulas which would take into account, among other factors, the appreciation in value of the member units of Holdings, the allocation percentage granted to each participant, and the
vesting of each award. As defined in the LTIP, a liquidity event includes:



| |  |  | the sale of units of Holdings held by Vestar Packaging LLC and its affiliates, for cash or marketable securities, resulting in Vestar Packaging LLC and its affiliates owning
less than a majority of the total voting power of Holdings;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the sale of substantially all of the assets of the Company or of Holdings; or
| | - |  | -----------------------------------------------------------------------------



| |  |  | an initial public offering of the member units of Holdings.
| | - |  | -----------------------------------------------------------



Each participants award is subject to reduction or forfeiture in the event the participants employment with the Company is terminated prior to
the occurrence of a liquidity event, depending on the reason for such termination of employment.



The aggregate of all awards granted under the LTIP (which includes two separate pools referred to as Bonus Pool-A and Bonus Pool-B) is limited to a
maximum payout of approximately $11.8 million, which includes maximum payouts of approximately $8.8 million under Bonus Pool-A and approximately $3.0 million under Bonus Pool-B. As of March 9, 2005, no awards have been granted with respect to Bonus
Pool-B. The compensation committee of Holdings management committee administers the plan. The following table shows the awards under our LTIP plan to the most highly paid executive officers of the Company during the fiscal year 2004. The
percentages and estimated payouts in this table reflect Bonus Pool-A only.



36



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##### Table of Contents

##### Index to Financial Statements

LONG-TERM INCENTIVE PLANSAWARDS IN LAST FISCAL YEAR



|                    |  |                                         |              |                                                     |              |                                                           |               |           |  |          
|------------------- |  | --------------------------------------- | ------------ | --------------------------------------------------- | ------------ | --------------------------------------------------------- | ------------- | --------- |  | ---------
|Name                |  | Number ofShares,Units orOtherRights (%) |              | Performance orOther PeriodUntil Maturationor Payoff |              | Estimate Future Payouts Under Non-Stock Based-Price Plans
|                    |  |                                         | Threshold($) |                                                     | Target(1)($) |                                                           | Maximum(2)($)
|Stephen E. Macadam  |  | 25                                      |              | Liquidity Event                                     |              |                                                          |               | 1,407,071 |  | 2,199,600
|Tyler L. Woolson(3) |  | 11                                      |              | Liquidity Event                                     |              |                                                          |               | 619,111   |  | 967,824  
|Robert K. Brower    |  | 11                                      |              | Liquidity Event                                     |              |                                                          |               | 619,111   |  | 967,824  
|Richard P. Sehring  |  | 10                                      |              | Liquidity Event                                     |              |                                                          |               | 562,829   |  | 879,840  
|Laura H. Fee        |  | 8                                       |              | Liquidity Event                                     |              |                                                          |               | 450,263   |  | 703,872  
|Louis Lettes        |  | 8                                       |              | Liquidity Event                                     |              |                                                          |               | 450,263   |  | 703,872  

---

|(1) | Target estimated payout was calculated by determining the Companys net equity value as of December 31, 2004. Net equity value, as defined by the LTIP, equals the
enterprise value of the Company less total debt and preferred units.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Maximum estimated payout assumes that the Companys net equity value as of the date of a liquidity event will be at least $25.4 million, which is the net equity
value required under the LTIP for a maximum payout.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Mr. Woolsons award and estimated payouts are calculated as of December 31, 2004; however Mr. Woolsons subsequent resignation from the Company on January 14, 2005 caused
Mr. Woolson to forfeit a portion of his award.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Management
Committee Compensation



All members of the management
committee are reimbursed for their usual and customary expenses incurred in attending all management committee and committee meetings. Members of the management committee who are also our employees or employees of Vestar Capital Partners or Dean
Foods or affiliates of either do not receive additional remuneration for serving as members of the management committee. Each other member of the management committee receives compensation of $2,500 for each meeting of the management committee that
such member attends in person or telephonically and $3,750 for each calendar quarter of service as a member of the management committee.



Compensation Committee Interlocks and Insider Participation



As of March 9, 2005, William Bell, James Kelley and Richard Robinson serve on the compensation committee of the management committee of Holdings. None of
such individuals are employees of the Company. In addition, none of our executive officers served as a member of a board of directors of any other entity that has an executive officer who served on our compensation committee. For information on the
certain relationships between the members of the compensation committee, or their affiliates, and us, see Item 13: Certain Relationships and Related Transactions.



Report of the Compensation Committee



Our compensation program is designed to attract, retain and motivate quality people in a highly competitive business environment. Our annual and long-term
incentive compensation strategy is designed to link our long-term strategic objectives to the compensation of our key executives and managers. Our compensation packages are comprised of base salaries, annual performance-based cash bonuses, and
equity based long-term incentives. Our compensation targets are set based on a number of factors including, but not limited to, compensation practices at companies within our industry and other industries that are similar in terms of their
complexity of operations, experience, and skill levels.



37



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##### Table of Contents

##### Index to Financial Statements

Base Salaries. Base salaries of all officers, including the executive officers named in the
Summary Compensation Table on page 32, are reviewed and approved annually by the Compensation Committee. Salaries are set at levels that are deemed necessary to attract and retain appropriate talent; however, these rates will vary due to individual
performance, the scope of responsibilities and the competitive nature of the marketplace. The leadership team at the Company received an average of 4.5% annual merit increases during 2004. Additionally, Mr. Sehring received an 18% increase in base
salary upon promotion to the position of CFO.



Annual
Incentives. Annual bonuses are earned based on performance under the Companys management incentive program and as approved by the compensation committee. Payments under the management incentive plan vary based on the achievement of
performance targets set at the beginning of each year by the leadership team of Consolidated Container Company that have both objective and subjective components. Performance above or below these targets will result in proportionately higher or
lower bonuses.



Earnings before interest, taxes, depreciation,
and amortization, known as EBITDA, is the primary objective financial metric used to determine bonuses in the management incentive plan. The subjective component consists of the Chief Executive Officers discretion based on qualitative and
quantitative financial and non-financial goals that are set individually for the officer group and are ultimately approved by the compensation committee. Such measures include, but are not limited to, safety, successful project implementation, and
performance against department budgets. The minimum threshold EBITDA target was achieved for 2004 performance for the Company as a whole and incentive payments were as per the plan design based on company and business unit performance. The minimum
levels of EBITDA for 2003 and 2002 were not achieved by the Company as a whole, and therefore awards were made only under the subjective components of the plan or contractual agreements. A listing of the awards made to the executive officers named
in the Summary Compensation Table can be found on page 32.



Long-Term Incentives through Option Grants. Our unit option plans are intended to align the incentives of the covered employees with our long-term success by giving us the ability to reward employees for increasing the equity
value of Consolidated Container Company and its affiliates. The compensation committee has the authority under each of these plans to set the terms and conditions of any grants and awards. Net of options retired, repurchased, forfeited, or canceled
and exchanged, options covering 21,387,037 units were granted during 2004.



Chief Executive Officer Compensation. Steve Macadam, the President and Chief Executive Officer of Consolidated Container Company, participates in the compensation programs described in this report. His cash
compensation for 2004, 2003 and 2002 is summarized in the Summary Compensation Table.



The committees determination of Mr. Macadams compensation in 2004, 2003 and 2002 was based on an assessment of base salaries for executives of a similar caliber of talent. Mr. Macadams annual
incentive payment for 2004 and 2003 was determined by the management committee in light of the Companys financial performance compared to plan and based on a discretionary assessment of his performance during the year. Mr. Macadams bonus
was guaranteed for 2002.



Mr. Macadams base salary,
annual bonus and equity incentives are intended to keep his compensation competitive with executives with similar skill sets and experience, and to align his financial interests significantly with the overall success of Consolidated Container
Company.



Respectfully submitted,



THE COMPENSATION COMMITTEE



James P. Kelley, Chairman

William G. Bell

Richard L. Robinson



38



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##### Table of Contents

##### Index to Financial Statements

|ITEM 12: | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|-------- | ----------------------------------------------------------------------------------------------



Holdings is the beneficial owner of all of the equity of Consolidated Container Company. Holdings address is 3101
Towercreek Parkway, Suite 300, Atlanta, Georgia 30339.



Provided below is information as of March 9, 2005, the most recent date practicable, concerning the beneficial ownership of the member units and the economic interests in Holdings by:



| |  |  | each person known by us to be the beneficial owner of more than 5% of the member units of Holdings;
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | each member of the management committee of Holdings, which effectively serves as the management committee of Consolidated Container Company;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | each of the named executive officers of Consolidated Container Company, as listed on the Summary Compensation Table; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | the officers and members of the management committee as a group.
| | - |  | ----------------------------------------------------------------



SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT



|                                                                                                             |  |                                           |  |                                         |   |  |                                                          |  |                                                 |  
|------------------------------------------------------------------------------------------------------------ |  | ----------------------------------------- |  | --------------------------------------- | - |  | -------------------------------------------------------- |  | ----------------------------------------------- | -
|Name and Address of Beneficial Owner                                                                         |  | Number ofCommon UnitsBeneficiallyOwned(1) |  | Percentage ofCommon UnitsOutstanding(1) |   |  | Number ofSeries BPreferred UnitsBeneficiallyOwned(1)(13) |  | Percentage ofSeries BPreferred UnitsOutstanding |  
|5 % Equity Holders:                                                                                          |  |                                           |  |                                         |   |  |                                                          |  |                                                 |  
|Vestar Packaging LLC(2) Seventeenth Street Plaza 1225 17th Street, Suite 1660 Denver, Colorado 80202         |  | 2,050,000                                 |  | 16.61                                   | % |  |                                                         |  |                                                |  
|Reid Plastics Holdings, Inc.(3) Seventeenth Street Plaza 1225 17th
Street, Suite 1660 Denver, Colorado 80202 |  | 3,050,000                                 |  | 24.71                                   | % |  |                                                         |  |                                                |  
|Franklin Plastics, Inc.(4) 2515 McKinney Avenue, Suite 1200 Dallas, Texas 75201                              |  | 5,568,513                                 |  | 45.11                                   | % |  | 11,956.889                                               |  | 26.57                                           | %
|Vestar CCH LLC(5)(6) Seventeenth Street Plaza 1225 17th Street, Suite 1660 Denver, Colorado 80202            |  | 1,671,284                                 |  | 13.54                                   | % |  | 33,043.111                                               |  | 73.43                                           | %
|Vestar CCH Preferred LLC(6) Seventeenth Street Plaza 1225 17th Street, Suite 1660 Denver, Colorado 80202     |  |                                          |  |                                        |   |  | 33,043.111                                               |  | 73.43                                           | %



39



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##### Table of Contents

##### Index to Financial Statements

|                                                                                 |  |                                           |  |                                         |   |  |                                                          |  |                                                 |  
|-------------------------------------------------------------------------------- |  | ----------------------------------------- |  | --------------------------------------- | - |  | -------------------------------------------------------- |  | ----------------------------------------------- | -
|                                                                                 |  |                                           |  |                                        
|                                                                                 |  | Number ofCommon UnitsBeneficiallyOwned(1) |  | Percentage ofCommon UnitsOutstanding(1) |   |  | Number ofSeries BPreferred UnitsBeneficiallyOwned(1)(13) |  | Percentage ofSeries BPreferred UnitsOutstanding |  
|Named Executive Officers and Management Committee Members:                       |  |                                           |  |                                         |   |  |                                                          |  |                                                 |  
|James P. Kelley(2)(3)(5)(6)(7)                                                   |  | 6,771,284                                 |  | 54.86                                   | % |  | 33,043.111                                               |  | 73.43                                           | %
|B. Joseph Rokus(3)(6)                                                            |  | 3,050,000                                 |  | 24.71                                   | % |  | 33,043.111                                               |  |                                                |  
|William G. Bell(6)                                                               |  | 1,686                                     |  | *                                       |   |  | 33,043.111                                               |  | 73.43                                           | %
|Stephen P. Donovan                                                               |  |                                          |  |                                        |   |  |                                                         |  |                                                |  
|Ronald H. Klein(4)(8)                                                            |  | 5,568,513                                 |  | 45.11                                   | % |  | 11,956.889                                               |  | 26.57                                           | %
|Leonard Lieberman(2)(3)(5)(6)(9)                                                 |  | 6,771,284                                 |  | 54.86                                   | % |  | 33,043.111                                               |  | 73.43                                           | %
|Richard L. Robinson(6)                                                           |  | 1,686                                     |  | *                                       |   |  | 33,043.110                                               |  | 73.43                                           | %
|John R. Woodard(2)(3)(5)(6)(10)                                                  |  | 6,771,284                                 |  | 54.86                                   | % |  | 33,043.111                                               |  | 73.43                                           | %
|Stephen E. Macadam(6)(11)                                                        |  | 5,912,165                                 |  | 32.39                                   | % |  | 33,043.111                                               |  | 73.43                                           | %
|Tyler L. Woolson(6)(11)                                                          |  | 546,904                                   |  | 4.24                                    | % |  | 33,043.111                                               |  | 73.43                                           | %
|Robert K. Brower(11)                                                             |  | 499,792                                   |  | 3.89                                    | % |  |                                                         |  |                                                |  
|Richard P. Sehring(6)(11)                                                        |  | 584,746                                   |  | 4.52                                    | % |  | 33,043.111                                               |  | 73.43                                           | %
|Laura H. Fee(6)(11)                                                              |  | 221,144                                   |  | 1.76                                    | % |  | 33,043.111                                               |  | 73.43                                           | %
|Louis Lettes(6)(11)                                                              |  | 221,145                                   |  | 1.76                                    | % |  | 33,043.111                                               |  | 73.43                                           | %
|                                                                                 |  |                                           |  |                                         |   |  |                                                          |  |                                                 |  
|All Officers and Members of the Management Committee As a Group (14 persons)(12) |  | 20,329,065                                |  | 100.0                                   | % |  | 45,000.000                                               |  | 100.0                                           | %

---

|* | Indicates less than 1.0% ownership
|- | ----------------------------------

|(1) | The amounts and percentage of common and preferred units beneficially owned are reported on the basis of regulations of the 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 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.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Vestar Packaging LLC, a Delaware limited liability company, is 69.4% owned by Vestar Capital Partners III, L.P., 4.9% owned by Vestar Reid LLC, 1.1% owned by Holdings 8.0% owned by
BT Capital Investors, L.P., an affiliate of Deutsche Bank Securities Inc., 8.0% owned by DLJ Private Equity Partners Fund, L.P., DLJ Fund Investment Partners II, L.P., DLJ Private Equity Employees Fund, L.P. and DLJ Capital Partners I, LLC, each an
affiliate of Donaldson, Lufkin & Jenrette Securities Corporation, and some employees of Donaldson, Lufkin & Jenrette Securities Corporation, 0.16% owned by Leonard Lieberman, 0.05% owned by John R. Woodard and 8.4% owned by other persons.
Vestar Reid LLC, a Delaware limited liability company, is 94.2% owned by Vestar Capital Partners III, L.P., 3.3% owned by Holdings and 2.5% owned by other persons. In addition, each of James P. Kelley and John R. Woodard is a Vice President of
Vestar Associates Corporation III. Vestar Associates Corporation III is the sole general partner of Vestar Associates III, L.P. Vestar Associates III, L.P., is the sole general partner of Vestar Capital Partners III, L.P. Vestar Capital Partners
III, L.P. controls Vestar Packaging LLC, which owns 16.6% of the common units in Holdings, and is the 94.2% owner of Vestar Reid LLC, which owns 82.8% of Reid Plastics Holdings, Inc., which, in turn, owns 24.7% of the common units in Holdings. Mr.
Lieberman has a 0.03% interest in Vestar Capital Partners III, L.P.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Reid Plastics Holdings, Inc., a Delaware corporation, is 82.8% owned by Vestar Reid LLC, 13.8% owned by B. Joseph Rokus, and 3.5% owned by others. Vestar Reid LLC,
a Delaware limited liability company, is 94.2% owned by Vestar Capital Partners III, L.P., 3.3% owned by Holdings and 2.5% owned by other
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



40



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##### Table of Contents

##### Index to Financial Statements

| | persons. Mr. Rokus, as a direct owner of Reid Plastics Holdings, Inc., may be deemed to share beneficial ownership of Reid Plastics Holdings, Inc.s
member units of Holdings. Mr. Rokus disclaims this beneficial ownership.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Franklin Plastics, Inc., a Delaware corporation, is 99% owned (on an as-converted basis after conversion of Series B Convertible Preferred Units) by Franklin Holdings, Inc. f/k/a
Continental Can Company, Inc.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Vestar CCH LLC, a Delaware limited liability company, is 96.4% owned by Vestar Capital Partners III, L.P., 0.07% owned by Leonard Lieberman, 0.08% owned by John R. Woodard, and
3.42% owned by others.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Vestar CCH Preferred LLC, a Delaware limited liability company, is 90.46% owned by Vestar CCH LLC, 1.12% owned by Vestar CCH Investors LLC, 4.63% owned by B. Joseph Rokus, 1.59%
owned by DLJ Private Equity Partners Fund, L.P., DLJ Fund Investment Partners II, L.P., DLJ Private Equity Employees Fund, L.P. and DLJ Capital Partners I, LLC, each an affiliate of Donaldson, Lufkin & Jenrette Securities Corporation, and some
employees of Donaldson, Lufkin & Jenrette Securities Corporation, 1.51% owned by Mr. Macadam, 0.15% owned by Mr. Woolson, 0.08% owned by Mr. Sehring, 0.12% owned by Ms. Fee, 0.05% owned by Mr. Lettes, 0.08% owned by Richard L. Robinson, 0.02%
owned by William G. Bell and 0.20% owned by others. Vestar Capital Partners III, L.P. is the managing member of Vestar CCH LLC and Vestar CCH Investors LLC, and owns 100% of Vestar CCH Investors LLC. Messrs. Kelley, Woodard, Bell, Robinson, Rokus,
Macadam, Woolson, Sehring and Lettes and Ms. Fee may be deemed to share beneficial ownership of the member units of Holdings held by Vestar CCH Preferred LLC. Messrs. Kelley, Woodard, Bell, Robinson, Rokus, Macadam, Woolson, Sehring and Lettes and
Ms. Fee disclaim this beneficial ownership.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Mr. Kelley, as an executive officer of Vestar Associates Corporation III, L.P., may be deemed to share beneficial ownership of the membership units of Holdings held by each of
Vestar CCH LLC, Vestar Packaging LLC, Vestar CCH Preferred LLC and Reid Plastics Holdings, Inc. Mr. Kelley disclaims this beneficial ownership.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | Mr. Klein, as an executive officer of Dean Foods, may be deemed to share beneficial ownership of the member units of Holdings held by Franklin Plastics, Inc. Mr. Klein disclaims
this beneficial ownership.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | Mr. Lieberman, as an owner of Vestar Packaging LLC and Vestar Capital Partners III, L.P. may be deemed to share beneficial ownership of the member units of Holdings held by each of
Vestar CCH LLC, Vestar Packaging LLC, Vestar CCH Preferred LLC and Reid Plastics Holdings, Inc. Mr. Lieberman disclaims this beneficial ownership.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(10) | Mr. Woodard, as an executive officer of Vestar Associates Corporation III, L.P. and as an owner of each of Vestar Packaging LLC and Vestar CCH LLC, may be deemed to share beneficial
ownership of the member units of Holdings held by each of Vestar CCH LLC, Vestar Packaging LLC, Vestar CCH Preferred LLC and Reid Plastics Holdings, Inc. Mr. Woodard disclaims this beneficial ownership.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(11) | The number of common units beneficially owned represents presently exercisable options (including those that have vested as of March 9, 2005, and those that will vest within 60 days
of March 9, 2005) to purchase common units of Holdings.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(12) | The officers and members of the management committee of Holdings as a group own, in total, 3,372 common units and presently exercisable options to purchase 7,985,896 common units of
Holdings. See above footnotes for individual information on deemed beneficial ownership.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(13) | The Series B Convertible Preferred Units are convertible into shares of the common units of Holdings. Upon such conversion, the holders of such converted units would own in the
aggregate approximately 95% of the then outstanding units of Holdings in addition to their common unit holdings set forth above. For a description of the Series B Convertible Preferred Units, see Certain Relationships and Related
TransactionsSeries B Convertible Preferred Units.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



41



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##### Table of Contents

##### Index to Financial Statements

Equity Compensation Plan Information



The following table provides aggregate data on outstanding and available options under our equity compensation plans as of
December 31, 2004:



|                                                            |  |                                                                                          |  |                                                                            |      |                                                                                                                                      |          
|----------------------------------------------------------- |  | ---------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------- | ---- | ------------------------------------------------------------------------------------------------------------------------------------ | ---------
|Plan Category                                               |  | Number ofsecurities to beissued uponexercise ofoutstandingoptions, warrantsand rights(a) |  | Weighted-averageexercise price ofoutstandingoptions, warrantsand rights(b) |      | Number ofsecuritiesremainingavailable for futureissuance underequitycompensationplans (excludingsecurities reflectedin
column(a))(c)
|Equity compensation plan approved by security holders(1)(2) |  | 22,609,598                                                                               |  | $                                                                          | 0.08 |                                                                                                                                      | 1,890,402
|Equity compensation plans not approved by security holders  |  | n/a                                                                                      |  |                                                                            | n/a  |                                                                                                                                      | n/a      
|                                                            |  |                                                                                          |  |                                                                            |      |                                                                                                                                      |          
|Total                                                       |  | 22,609,598                                                                               |  | $                                                                          | 0.08 |                                                                                                                                      | 1,890,402

---

|(1) | This number includes 22,476,997 options issued under the CCH Plan and 132,601 options issued under the Consolidated Container Holdings LLC Replacement Units Option Plan for
Options Issued Pursuant to the Franklin Plastics Inc. 1998 Stock Option Plan. Upon any exercise of options under the latter plan, Franklin Plastics will transfer to Holdings, for cancellation without payment, a number of units equal to the
number of units issued to the individual exercising the option.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Subsequent to December 31, 2004, the management committee approved a 3,190,000 increase in the number of options available to be issued under the CCH Plan in relation to the
Companys acquisition of STC Plastics, Inc., which is discussed further in Recent Developments in Item 1. These additional options are not reflected in this table.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ITEM 13: | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
|-------- | ----------------------------------------------



Summarized below are the material terms and provisions of material agreements and arrangements that relate to the Company as of December 31, 2004, and
which involve directors, officers, certain significant beneficial owners of the securities of Holdings, and their family members that involved in excess of $60,000.



Limited Liability Company Agreement of Consolidated Container Holdings



Simultaneously with the closing of the Transactions, Vestar Packaging LLC,
Reid Plastics Holdings, Inc. and Franklin Plastics, Inc. entered into a limited liability company agreement of Holdings, our sole member, which was amended and restated in connection with the Refinancing Transactions.



The limited liability company agreement was further amended in December 2004
to modify the formula for determining whether the issuance of management options at any given time exceeds 9% of total equity (for purposes of, among other things, determining whether an option grant would be considered a Major
Decision). Under this amendment, the part of the formula defining total equity was expanded to include the total number of units outstanding, on a fully diluted, as-converted basis after giving effect to the Series B Convertible Preferred
Units issued in connection with the Refinancing Transactions.



The limited liability company agreement was further amended in January 2005 to increase the foregoing percentage from 9.0% to 10.1% to enable the Company to grant options in connection with the acquisition of STC Plastics, Inc., as
described in Recent Developments in Item 1.



The
limited liability company agreement of Holdings provides for its management, non-compete arrangements, transfer restrictions and related matters.



42



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##### Index to Financial Statements

Management



The management committee of Holdings has general powers of supervision, direction and control over the business of Holdings, us and our subsidiaries. The
management committee currently consists of nine members. As of March 9, 2005, five of the members were appointed by or serving at the request of Vestar CCH Preferred LLC, James P. Kelley, John R. Woodard, Leonard Lieberman, B. Joseph Rokus and
Stephen P. Donovan and two were appointed by Franklin Plastics, Inc., Ronald H. Klein and Richard L. Robinson. Of the remaining two members, one is our chief executive officer, currently Stephen E. Macadam, and one is an independent
member, William B. Bell. Mr. Ronald V. Davis was a member of the management committee from the closing of the Transactions until his resignation from such position as of December 31, 2004.



A majority of the members of the management committee, including the
affirmative vote of at least one Franklin Plastics-appointed member and one Vestar CCH Preferred-appointed member, is required for certain decisions by the management committee. These decisions include, among others, the following:



| |  |  | issuing any equity securities, other than private offerings that, in the aggregate, do not exceed $50 million and issuances under Holdings option plan;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | accepting or requiring additional capital contributions;
| | - |  | --------------------------------------------------------



| |  |  | incurring debt in excess of $80 million;
| | - |  | ----------------------------------------



| |  |  | selling, pledging or granting a security interest in all or substantially all of our assets;
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | acquiring any business or assets having a value, individually or in aggregate, in excess of $80 million, excluding acquisitions of raw materials and supplies in the ordinary course
of business;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | selling any operations or assets having a value, individually or in aggregate, in excess of $80 million, excluding sales or other dispositions of inventory in the ordinary course of
business;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | entering into or amending any agreement with a member or its affiliate; and
| | - |  | ---------------------------------------------------------------------------



| |  |  | expanding the scope of business beyond the plastic packaging business.
| | - |  | ----------------------------------------------------------------------



Non-Competition Arrangements



Reid Plastics Holdings and its affiliates (collectively, Reid), Franklin Plastics and its affiliates (collectively, Franklin
Plastics) and entities controlled by Vestar Equity Partners, L.P. or Vestar Capital Partners III, L.P. (collectively, Vestar) are subject to non-competition arrangements limiting their ability to compete in the business for plastic
packaging products and plastic bottles for dairy, water, juice or other beverages in the same geographical area served by the companies that formed us (prior to the Transactions) or the geographical area served by Holdings, us and our subsidiaries
since the Transactions. In general, these geographic areas are in the United States, Mexico and Canada. The non-competition arrangements applying to Franklin Plastics and its affiliates will terminate upon the date on which Franklin Plastics and its
affiliates, in the aggregate, cease to own at least 10% of the member units of Holdings. The non-competition arrangements applying to Vestar and its affiliates as well as those applying to Reid and its affiliates will terminate upon the date on
which the Vestar entities that are members of Holdings and Reid, in the aggregate, cease to own at least 10% of the member units of Holdings. The following exceptions apply to these non-competition arrangements:



| |  |  | Franklin Plastics may continue to operate certain Puerto Rico plastic operations that were not contributed to us in the Transactions.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Certain affiliates of Franklin Plastics may manufacture plastic packaging products solely for their own use.
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | In connection with future acquisitions, Franklin Plastics may operate any plastic packaging operations that it acquires and that generated 50% or less of the revenue of that
acquired business for the preceding twelve months, provided that Franklin Plastics:
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



43



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##### Index to Financial Statements

| |  |  | offers to sell the competing plastic packaging operations to us within six months of that acquisition at a mutually acceptable purchase price; or
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | if a purchase price cannot be agreed upon, sells the competing plastic packaging operations to an unaffiliated third party within twelve months of that acquisition.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Vestar and its affiliates may make (a) a non-controlling equity investment in a competing business if that equity investment is for less than $75 million and (b) a non-controlling,
non-equity investment in a competing business.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Vestar and its affiliates, excluding Reid Plastics Holdings, may operate any plastic packaging operations that either:
| | - |  | ----------------------------------------------------------------------------------------------------------------------



| |  |  | constitute 50% or less of the revenue of that acquired business and generate less than $25 million in revenue for the twelve month period prior to that acquisition;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | constitute 50% or less of the revenue of that acquired business, provided that Vestar Packaging LLC or its appropriate affiliate (a) offers to sell the competing plastic packaging
operations us within six months of that acquisition, or (b) sells the competing plastic packaging operations to an unaffiliated third-party within twelve months of that acquisition, if an agreement with us cannot be reached; or
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | are in a product category in which we and our subsidiaries have less than $25 million in revenues.
| | - |  | --------------------------------------------------------------------------------------------------



Series B Convertible Preferred Units



In 2004, Holdings sold a total of 45,000 Series B Convertible Preferred Units to Vestar CCH Preferred LLC, an affiliate of Vestar Capital Partners III,
L.P., and to Franklin Plastics, Inc., an affiliate of Dean Foods, for $1,000 per unit in cash. Certain named executive officers of our Company and members of the Holdings management committee subsequently invested in Vestar CCH Preferred LLC,
purchasing in the aggregate approximately 6.7% of such entity. See the table Security Ownership of Certain Beneficial Owners and Management at Item 12 above. The Series B Convertible Preferred Units, which are senior to the outstanding
common units, have an initial liquidation preference of $1,000 that will increase annually by 16%. The Series B Convertible Preferred Units are convertible at any time into common units at the option of the holder or into a combination of Series C
Preferred Units and common units on the third and fourth anniversaries of their issuance. The Series C Preferred Units, which are transferable and entitled to registration rights, have similar terms to the Series B Convertible Preferred Units
except, among other things, (i) the liquidation preference of the Series C Preferred Units will increase annually by 14%, (ii) the Series C Preferred Units do not have preemptive rights, and (iii) the Series C Preferred Units are not convertible
into common units and do not have anti-dilution rights. Subject to the terms of the new senior credit facilities, the indenture governing our senior subordinated notes and the indenture governing the notes, Holdings is required to redeem the Series
B Convertible Preferred Units and the Series C Preferred Units upon certain insolvency events or upon the sale, disposition or other transfer of all or substantially all of the assets of Holdings and its subsidiaries. In addition, Holdings shall
redeem, at the option of each holder, the Series B Convertible Preferred Units and the Series C Preferred Units, to the extent not prohibited by the Companys new senior credit facilities, the indenture governing our senior subordinated notes
and the indenture governing the senior secured discount notes, (i) immediately following an initial public offering of equity securities of Holdings or (ii) immediately prior to a change of control. As part of the Refinancing Transactions, Holdings
made a capital contribution to us of the $45.0 million in proceeds received from the sale of the Series B Convertible Preferred Units.



Management Agreement



We entered into a management agreement on April 29, 1999, which was amended on September 1, 2003, with Holdings and Vestar Capital Partners, relating to
our management and the management of Holdings. Under the management agreement, we and Holdings paid Vestar Capital Partners an aggregate fee of $5 million and reimbursed Vestar Capital Partners for all out-of-pocket expenses incurred by it in
connection with the closing of



44



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##### Table of Contents

##### Index to Financial Statements

the Transactions. In addition, Vestar Capital Partners has been providing on-going management services to Holdings and us since the closing of the
Transactions, including strategic, financial planning and advisory services. For these services, we pay Vestar Capital Partners an annual fee of the greater of $500,000 or 0.42% of the prior years earnings before interest, taxes, depreciation
and amortization, as defined in the management agreement, of us, Holdings, and their subsidiaries on a consolidated basis, and we reimburse Vestar Capital Partners for all out-of-pocket expenses incurred by it in connection with these services. The
management agreement will terminate upon the earlier of Vestar Packaging, Vestar Capital Partners III, L.P., their members, the partners therein and their respective affiliates collectively owning less than 25% of the member units of Holdings or
following the closing of an initial public offering of Holdings. Holdings and the Company have also agreed to indemnify Vestar Capital Partners against some of the liabilities and costs incurred in connection with its engagement.



Limited Liability Company Agreement of Consolidated Container Company



Simultaneously with the closing of the Transactions, Holdings, as our sole
member, entered into a limited liability company agreement for the governance of the Company. As our sole member, Holdings, through its management committee, manages us under this agreement.



Supply Agreements



In July 1999, we entered into agreements to supply Suiza Foods Corporation, now known as Dean Foods, with bottles and bottle
components. The prices for bottles are based on the prices that were in effect in July 1999 between Suiza Foods Corporation and us and are subject to adjustments based on changes in raw material, manufacturing and delivery costs. In June 2004, we
amended and restated our bottle components agreement with Dean Foods, providing for, among other things, an expiration date of December 31, 2006. We had sales to Dean Foods of approximately $191.6 million for the year ended December 31, 2004,
including both bottle and resin sales.



Trademark License Agreement



Simultaneously with the closing of the Transactions,
Holdings and we, which are referred to collectively in this description as the licensee, entered into a trademark license agreement with Continental Can Company, Inc., then a wholly owned subsidiary of Suiza Foods Corporation, now known as Dean
Foods. Continental Can granted licensee a non-exclusive license to use some of its trademarks in the United States. The trademark license will be royalty free as long as Dean Foods directly or indirectly owns 10% or more of licensee. Licensee will
be required to pay Continental Can an annual trademark-licensing fee of $100,000 if Dean Foods directly or indirectly owns less than 10% of Licensee. For the year ended December 31, 2004, no amounts were paid under this agreement. This agreement
shall remain effective until the parties agree otherwise.



Assumption
Agreement



Simultaneously with the closing of the
Transactions, Holdings and we entered into an assumption agreement with Reid Plastics Holdings to assume all of Reid Plastics Holdings obligations to B. Joseph Rokus under various agreements entered into between 1997 and 1999. The agreement,
relating to the 1997 acquisition of a controlling interest in Reid Plastics Holdings by Vestar Reid, called for payments of up to $3.4 million if specified investment returns of Reid Plastics are achieved, and up to $4.8 million upon an initial
public offering of Reid Plastics Holdings, if specified investment returns are achieved, or specified qualified sales of Reid Plastics Holdings by Vestar Reid, the parent of Reid Plastics Holdings and a controlled affiliate of Vestar Capital
Partners III, L.P. Holdings has agreed to indemnify Suiza Foods Corporation, now known as Dean Foods, for some of these payments. We made no payment for the year ended December 31, 2004 under the terms of the 1997 agreement.



45



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##### Table of Contents

##### Index to Financial Statements

In 2003, we renegotiated certain agreements that Reid Plastics Inc. and/or Reid Plastics Holdings entered
into with Mr. Rokus including his 1998 employment agreement. Under the 2003 agreement, we agreed to pay Mr. Rokus a payment of $100,000 in 2003 in lieu of various compensation and benefits that would have come due to Mr. Rokus. We further agreed to
make annual payments through 2014 in lieu of providing Mr. Rokus with health insurance coverage that would have been required under earlier agreements. In sum, we paid Mr. Rokus $16,500 in 2004 and $115,000 under this agreement in 2003.



In a letter agreement dated September 20, 2000, between the Company and
Mr. Rokus, Mr. Rokus agreed to refrain from making sales of any products, with certain exceptions, to any person or entity that is a customer or competitor of CCC in consideration for CCCs consent to Mr. Rokuss acquisition of Omni
Plastics, Inc. Such non-compete obligations will terminate when Mr. Rokus ceases to serve as Vice Chairman of Holdings management committee.



Additional Matters



Ronald H. Klein, a member of the management committee, serves as Senior Vice President, Corporate Development, of Dean Foods. In addition to Dean
Foods investment in connection with the Refinancing Transactions and the purchases of resin and bottles discussed above under Supply Agreements, during 2004 we sold three of our manufacturing plants (each of which operated on-site
at a Dean Foods filling location) to Dean Foods for an aggregate of approximately $2.8 million in an arms length transaction.



William G. Bell, a member of the management committee, and his family own 75% of Aqua Filter Fresh, Inc., of which Mr. Bell is currently a director. Aqua
Filter Fresh has purchased containers from us at market prices and terms. In 2004, these purchases amounted to approximately $1.1 million.



In addition, Aqua Filter Fresh wholly owns Bell Sales, Inc., of which Mr. Bell is a past President and is currently a director. Mr. Bells son is
President of Bell Sales. Bell Sales purchases and resells containers on behalf of us. In 2004, we paid Bell Sales approximately $0.1 million in commissions.



Until December 31, 2004, Mr. Bell served as Executive Vice President of Tyler Mountain Water Company, Inc., which purchases
containers from us at market prices and terms. Mr. Bell retired as Executive Vice President effective December 31, 2004, but remains on the management committee and continues to own 8.9% of Tyler Mountain Water. In 2004, these purchases by Tyler
Mountain Water and its subsidiaries amounted to approximately $1.2 million.



Mr. Bell is also a director of Wissahickon Spring Water Company, which purchases containers from us. In 2004, these purchases amounted to $5.2 million.



B. Joseph Rokus, a member of the management committee, is a trustee of Rokus Capital, of which his five minor children
collectively own 100%. Rokus Capital is a 7.7% shareholder of Berkeley Industries, which purchased Omni Plastics in 2001. Omni Plastics and Reid Plastics, Inc., entered into a contract as of February 10, 1997, amended as of October 28, 1998, whereby
Omni agreed to supply Reid Plastics, now doing business as Consolidated Container Company, with valves. We paid Omni approximately $2.0 million for such valves in 2004. Additionally, we had sales to Berkeley Industries of $0.5 million in 2004.



Richard L. Robinson, a member of the management committee, is
co-CEO of Robinson Dairy LLC, a wholly owned subsidiary of Dean Foods. Robinson Dairy purchased bottles and resin from us in 2004 totaling approximately $1.5 million.



Ronald V. Davis resigned as a member of Holdings management committee effective December 31, 2004. Prior to that date,
Mr. Davis and/or certain of his affiliates (Ron Davis LLC and Davis Capital LLC) owned 27,100 units of Holdings (the Holdings Units); 27,100 options to purchase units of Holdings (the Holdings



46



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##### Table of Contents

##### Index to Financial Statements

Options); and various interests in Vestar Packaging LLC, Vestar Reid LLC and Reid Plastics Holdings, Inc. (collectively, the Vestar
Interests). In connection with his 1999 purchase of the Holdings Units, Mr. Davis had issued a note to Holdings in the aggregate principal amount of $803,795. Effective December 31, 2004, Holdings entered into an agreement with Mr. Davis and
his affiliates whereby, in connection with his resignation as a member of Holdings management committee, Holdings canceled the note, Mr. Davis forfeited his Holdings Options, and Mr. Davis and his affiliates conveyed to Holdings the Holdings
Units and the Vestar Interests. As a result, neither Mr. Davis nor his affiliates have any interests in Holdings or its owners.



|ITEM 14: | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|-------- | --------------------------------------



Audit Fees



The aggregate fees billed by
Deloitte & Touche LLP (Deloitte) for the fiscal years ended December 31, 2004 and 2003 (in thousands):



|                      |  |      |     |      |   |    
|--------------------- |  | ---- | --- | ---- | - | ---
|                      |  | 2004 |     | 2003
|Audit Fees(1)         |  | $    | 396 |      | $ | 403
|Audit Related Fees(2) |  |      | 123 |      |   |   
|Tax Fees(3)           |  |      | 239 |      |   | 192
|                      |  |      |     |      |   |    
|TOTAL FEES            |  | $    | 758 |      | $ | 595
|                      |  |      |     |      |   |    

---

|(1) | Audit Fees include the aggregate fees billed for professional services rendered by the principal accountant for the audit of the Companys annual financial statements and the
review of financial statements included in the Companys quarterly financial statements.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Audit Related Fees includes services related to obtaining a consent for and review of the S-4 filing of the senior secured discount notes issued as a part of the Refinancing
Transactions.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Tax Fees includes the aggregate fees billed for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. Included in this balance
are fees associated with tax services provided on behalf of certain members of Holdings in the amounts of approximately $122,000 and $40,000 in 2004 and 2003, respectively.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Approval of the audit committee is required (and was obtained for calendar year 2004) for Deloitte to continue as the
Companys primary auditors. Additionally, the audit committees approval is required for all non-audit work performed by Deloitte for the Company. For calendar year 2004, the audit committee gave approval for up to $250,000 to be spent by
the Company in order to retain Deloitte to perform tax related work so long as the audit committee is apprised of each of the specific projects being worked on and so long as none of the work relates to the formation of tax shelters and/or the
formation of special purpose entities for purposes of facilitating off-balance sheet transactions or arrangements.



In considering the nature of the services provided by the independent auditor, the audit committee determined that such services are compatible with the
provision of independent audit services. The audit committee discussed these services with the independent auditor and Company management to determine that they are permitted under the rules and regulations concerning auditor independence
promulgated by the U.S. Securities and Exchange Commission (the SEC) to implement the Sarbanes-Oxley Act of 2002, as well as the American Institute of Certified Public Accountants.



47



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##### Index to Financial Statements

|ITEM 15: | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|-------- | ------------------------------------------



(a)(1) Financial Statements



INDEX TO FINANCIAL STATEMENTS



|                                                                                                                   |  |     
|------------------------------------------------------------------------------------------------------------------ |  | ----
|                                                                                                                   |  | Page
|Consolidated Container Company LLC                                                                                 |  |     
|Report of Independent Registered Public Accounting Firm                                                            |  | F-1 
|Consolidated Balance Sheets as of December 31, 2004 and 2003                                                       |  | F-2 
|Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2004, 2003, and 2002 |  | F-3 
|Consolidated Statements of Members Equity (Deficit) for the years ended December 31, 2004, 2003, and 2002         |  | F-4 
|Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003, and 2002                        |  | F-5 
|Notes to Consolidated Financial Statements                                                                         |  | F-6 





48



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##### Index to Financial Statements

(a)(2) Financial Statement Schedules



All schedules are inapplicable or have been disclosed in the Notes to Consolidated Financial Statements and, therefore, have
been omitted.



(a)(3) Exhibits



|            |      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|----------- | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |      |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|            |     
|3.1         |      |  | Certificate of Formation of Consolidated Container Company LLC. (The Certificate of Formation, included as Exhibit 3.1(a) to the Registration Statement on Form S-4 of Consolidated Container
Company LLC, Consolidated Capital, Inc. and the Registrant Guarantors listed therein (the Registration Statement) as filed on January 21, 2000 is hereby incorporated herein by reference).                                                                                                        
|            |     
|3.2         |      |  | Limited Liability Company Agreement of Consolidated Container Company LLC. (The Limited Liability Company Agreement, included as Exhibit 3.1(b) to the Registration Statement as filed on
January 21, 2000 is incorporated herein by reference.)                                                                                                                                                                                                                                                   
|            |     
|3.3         |      |  | Certificate of Formation of Consolidated Container Holdings LLC. (The Certificate of Formation, included as Exhibit 3.7(a) to the registration Statement as filed on January 21, 2000 is
incorporated herein by reference.)                                                                                                                                                                                                                                                                        
|            |     
|3.4         | (a)  |  | Amended and Restated Limited Liability Company Agreement of Consolidated Container Holdings LLC. (The Limited Liability Company Agreement, included as Exhibit 3.1 to the Form 8-K as filed on
May 27, 2004, is incorporated herein by reference.)                                                                                                                                                                                                                                                 
|            |     
|3.4         | (b)* |  | Amendment No. 1 to the Amended and Restated Limited Liability Company Agreement of Consolidated Container Holdings LLC.                                                                                                                                                                                                                                                                                                                                                                            
|            |     
|3.4         | (c)* |  | Amendment No. 2 to the Amended and Restated Limited Liability Company Agreement of Consolidated Container Holdings LLC.                                                                                                                                                                                                                                                                                                                                                                            
|            |     
|4.1         | (a)  |  | Indenture dated as of July 1, 1999 among Consolidated Container Company LLC and Consolidated Container Capital, Inc. as Issuers, the Subsidiary Guarantors listed therein and The Bank of New
York, as Trustee. (The Indenture, included as Exhibit 4.1 to the Registration Statement as filed on January 21, 2000 is incorporated herein by reference.)                                                                                                                                           
|            |     
|4.1         | (b)  |  | Supplemental Indenture dated as of March 31, 2000 among Consolidated Container Company LLC and Consolidated Container Capital, Inc., as issuers, Reid Plastics Group LLC, Plastics Containers
LLC, Continental Plastic Containers LLC, Continental Caribbean Containers LLC and Franklin Plastics Holdings LLC, as guarantors, and the Bank of New York, as trustee. (The Supplemental Indenture, included as Exhibit 4.1 to the 8-K as filed on May
12, 2000 is incorporated herein by reference.)
|            |     
|4.2         |      |  | Form of 10 1/8% Senior Subordinate Note due 2009 and annexed Guarantees. (The Form of Note, included as Exhibit 4.2 to Registration Statement as filed on January 21, 2000 is incorporated
herein by reference.)                                                                                                                                                                                                                                                                                   
|            |     
|4.3         |      |  | Indenture, dated as of May 20, 2004, among Consolidated Container Company LLC, Consolidated Container Holdings LLC, the Guarantors and The Bank of New York, as Trustee. (The Indenture,
included as Exhibit 4.2 to the Form 8-K as filed on May 27, 2004, is incorporated herein by reference.)                                                                                                                                                                                                   
|            |     
|4.4         |      |  | Forms of 10 3/4% Senior Secured Discount Notes due 2009. (The Forms of Notes, included as Exhibit 4.3 to the Form 8-K as filed on May 27, 2004, is incorporated herein by
reference.)                                                                                                                                                                                                                                                                                                              
|            |     
|10.1        |      |  | Credit Agreement, dated as of May 20, 2004, among Consolidated Container Company LLC, Consolidated Container Holdings LLC, various banks as lenders and Deutsche Bank Trust Company Americas,
as Administrative Agent. (The Credit Agreement, included as Exhibit 10.1 to the Form 8-K as filed on May 27, 2004, is incorporated herein by reference.)                                                                                                                                             



49



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##### Index to Financial Statements

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                        
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                                                                                                 
|            | 
|10.2        |  | Security Agreement dated as of May 20, 2004 among Consolidated Container Company LLC, Consolidated Container Holdings LLC, various subsidiaries of the Company and Deutsche Bank Trust Company
Americas, as Collateral Agent. (The Security Agreement, included as Exhibit 10.14 to the Form 8-K as filed on May 27, 2004, is incorporated herein by reference.)                                                       
|            | 
|10.3        |  | Pledge Agreement dated as of May 20, 2004 among Consolidated Container Company LLC, Consolidated Container Holdings LLC., various subsidiaries of the Company and Deutsche Bank Trust Company
Americas, as Collateral Agent. (The Pledge Agreement, included as Exhibit 10.3 to the Form 8-K as filed on May 27, 2004, is incorporated herein by reference.)                                                           
|            | 
|10.4        |  | Subsidiary Guaranty dated as of May 20, 2004 among Reid Plastics Group LLC, Consolidated Container Company LP, Plastic Container LLC, Consolidated Container Capital, Inc., Continental
Caribbean Container, Inc. and Deutsche Bank Trust Company Americas, as Administrative Agent. (The Subsidiary Guaranty, included as Exhibit 10.4 to the Form 8-K as filed on May 27, 2004, is incorporated herein by reference.)
|            | 
|10.5        |  | Assignment and Assumption Agreement dated as of March 31, 2000 between Consolidated Container Company LLC and Franklin Plastics Holdings LLC. (Assignment and Assumption Agreement, included as
Exhibit 10.1 to the 8-K as filed on May 12, 2000 is incorporated herein by reference.)                                                                                                                                 
|            | 
|10.6        |  | Trademark License Agreement dated as of July 1, 1999 between Continental Can Company, Inc., Consolidated Container Holdings LLC and Consolidated Container Company LLC. (The Trademark License
Agreement, included as Exhibit 10.6 to the Registration Statement as filed on January 21, 2000 is incorporated herein by reference.)                                                                                    
|            | 
|10.7        |  | Management Agreement dated as of April 29, 1999 among Consolidated Container Holdings LLC, Consolidated Container Company LLC and Vestar Capital Partners III, L.P. (The Management Agreement,
included as Exhibit 10.7 to the Registration Statement as filed on January 21, 2000 is incorporated herein by reference.)                                                                                               
|            | 
|10.8(a)    |  | Consolidated Container Holdings LLC 1999 Unit Option Plan and Form of Special Unit Acquisition, Ownership and Redemption Agreement, as amended and restated. (The Unit Option Plan and Form of
Special Unit Acquisition, Ownership and Redemption Agreement, included as Exhibit 10.9(a) to the 10-K filed March 31, 2003, is incorporated herein by reference.)                                                       
|            | 
|10.8(b)    |  | Form of Consolidated Container Holdings LLC 2002 Unit Option Agreement, as amended and restated. The Form of Unit Option Agreement, included as Exhibit 10.9(b) to the 10-K filed March 31,
2003, is incorporated herein by reference.)                                                                                                                                                                                
|            | 
|10.9(a)*   |  | Amended and Restated Consolidated Container Holdings LLC 1999 Unit Option Plan and Form of Special Unit Acquisition, Ownership and Redemption Agreement, as amended and restated.                                                                                                                                                                                                                                      
|            | 
|10.9(b)*   |  | Form of Consolidated Container Holdings LLC 2003 Unit Option Agreement.                                                                                                                                                                                                                                                                                                                                                
|            | 
|10.10(a)*  |  | Second Amended and Restated Consolidated Container Holdings LLC 1999 Unit Option Plan and Form of Special Unit Acquisition, Ownership and Redemption Agreement, as amended and
restated.                                                                                                                                                                                                                               
|            | 
|10.10(b)*  |  | Form of Consolidated Container Holdings LLC 2004 Unit Option Agreement                                                                                                                                                                                                                                                                                                                                                 
|            | 
|10.11(a)   |  | Consolidated Container Holdings LLC Replacement Units Option Plan for Options Issued Pursuant to the Franklin Plastics, Inc. 1998 Stock Option Plan. (The Replacement Units Option plan,
included as Exhibit 10.10(a) to the Registration Statement as filed on January 21, 2000 is incorporated herein by reference.)                                                                                                 



50



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##### Index to Financial Statements

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|            | 
|10.11(b)   |  | Form of Original Consolidated Container Holdings LLC Replacement Units Option Agreement for Option Issued Pursuant to the Franklin Plastics, Inc. 1998 Stock Option Plan. (The Form of
Replacement Units Option Agreement, included as Exhibit 10.10(b) to the Registration Statement as filed on January 21, 2000 is incorporated herein by reference.)                                                                                                                             
|            | 
|10.11(c)   |  | Form of Modified Consolidated Container Holdings LLC Replacement Units Option Agreement for Options Issued Pursuant to the Franklin Plastics, Inc. 1998 Stock Option Plan, (The Form of
Replacement Units Option Agreement, included as Exhibit 10.10(c) to the Registration Statement as filed on January 21, 2000 is incorporated herein by reference.)                                                                                                                            
|            | 
|10.12      |  | 2004 Consolidated Container Holdings LLC Long-Term Incentive Plan. (The Long-Term Incentive Plan, included as Exhibit 10.1 to the Quarterly Report on Form 10-Q as filed on November 13, 2004
is incorporated herein by reference.)                                                                                                                                                                                                                                                  
|            | 
|10.13      |  | Employment Agreement dated as of August 13, 2001 between Consolidated Container Company LLC and Stephen Macadam (The Employment Agreement, included as Exhibit 10.17 to the 10-K filed March
29, 2002 is incorporated herein by reference.)                                                                                                                                                                                                                                          
|            | 
|10.14      |  | Employment Agreement dated as of January 11, 2002 between Consolidated Container Company LLC and Tyler L. Woolson (The Employment Agreement, included as Exhibit 10 to the Quarterly Report on
Form 10-Q as filed on May 15, 2002 is incorporated herein by reference.)                                                                                                                                                                                                              
|            | 
|10.15*     |  | Executive Severance Agreement for Richard Sehring dated January 20, 2004.                                                                                                                                                                                                                                                                                                                                                                                                            
|            | 
|10.16*     |  | Executive Severance Agreement for Keith Brower dated January 20, 2004.                                                                                                                                                                                                                                                                                                                                                                                                               
|            | 
|10.17*     |  | Executive Severance Agreement for Laura Fee dated January 20, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                  
|            | 
|10.18*     |  | Executive Severance Agreement for Louis Lettes dated January 20, 2004.                                                                                                                                                                                                                                                                                                                                                                                                               
|            | 
|21          |  | List of Subsidiaries of the Registrant. (The List of Subsidiaries of the Registrant, included as Exhibit 21 to the 10-K filed on March 31, 2003 is incorporated herein by
reference.)                                                                                                                                                                                                                                                                                                
|            | 
|31.1*       |  | Certification pursuant to Rule 13a-14(a)                                                                                                                                                                                                                                                                                                                                                                                                                                             
|            | 
|31.2*       |  | Certification pursuant to Rule 13a-14(a)                                                                                                                                                                                                                                                                                                                                                                                                                                             
|            | 
|99.1        |  | Contribution and Merger Agreement by and among Suiza Foods Corporation, now known as Dean Foods, Franklin Plastics, Inc. and affiliates, Vestar Packaging LLC, Reid Plastics Holdings, Inc. and
Affiliates, Consolidated Container Holdings LLC, Consolidated Container Company LLC and Reid Plastics Group LLC dated as of April 29, 1999, as amended (incorporated herein by reference to Exhibit 2.1 of Suiza Foods Corporations Current Report
on Form 8-K dated July 19, 1999.)
|            | 
|99.2        |  | Amendment No. 1 to Contribution and Merger Agreement dated June 28, 1999 (incorporated herein by reference to Exhibit 2.2 of Suiza Foods Corporations Current Report on Form 8-K dated
July 19, 1999.)                                                                                                                                                                                                                                                                              

---

|* | Filed herewith
|- | --------------

| | Management contract of compensatory plan of arrangement required to be filed as an exhibit to Form 10-K pursuant to Item 15(c).
|- | -------------------------------------------------------------------------------------------------------------------------------



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##### Index to Financial Statements

SIGNATURES



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



Consolidated Container Company LLCBy:

/S/    RICHARD P.
SEHRINGRichard P. Sehring Chief Financial OfficerDated: March 22, 2005






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



|                                                    |  |                                                                              |  |               
|--------------------------------------------------- |  | ---------------------------------------------------------------------------- |  | --------------
|Signature                                           |  | Title                                                                        |  | Date          
|                                                    |  |                                                                             
|/S/    JAMES P.
KELLEYJames P.
Kelley               |  | Chairman of the Management Committee                                         |  | March 22, 2005
|                                                    |  |                                                                             
|/S/    B. JOSEPH
ROKUSB. Joseph
Rokus               |  | Vice Chairman of the Management Committee                                    |  | March 22, 2005
|                                                    |  |                                                                             
|/S/    WILLIAM G.
BELLWilliam G.
Bell               |  | Manager                                                                      |  | March 22, 2005
|                                                    |  |                                                                             
|/S/    STEPHEN P. DONOVAN
JR.Stephen P. Donovan
Jr. |  | Manager                                                                      |  | March 22, 2005
|                                                    |  |                                                                             
|/S/    RONALD H.
KLEINRonald H.
Klein               |  | Manager                                                                      |  | March 22, 2005
|                                                    |  |                                                                             
|/S/    LEONARD
LIEBERMANLeonard
Lieberman           |  | Manager                                                                      |  | March 22, 2005
|                                                    |  |                                                                             
|/S/    RICHARD L.
ROBINSONRichard L.
Robinson       |  | Manager                                                                      |  | March 22, 2005
|                                                    |  |                                                                             
|/S/    JOHN R.
WOODARDJohn R.
Woodard               |  | Manager                                                                      |  | March 22, 2005
|                                                    |  |                                                                             
|/S/    STEPHEN E.
MACADAMStephen E.
Macadam         |  | President, Chief Executive Officer and Manager (principal executive officer) |  | March 22, 2005
|                                                    |  |                                                                             
|/S/    RICHARD P.
SEHRINGRichard P.
Sehring         |  | Chief Financial Officer (principal financial and accounting officer)         |  | March 22, 2005



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##### Index to Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Management Committee of

Consolidated Container Company LLC

Atlanta, Georgia



We have
audited the accompanying consolidated balance sheets of Consolidated Container Company LLC and subsidiaries (the Company) as of December 31, 2004 and 2003, and the related consolidated statements of operations and comprehensive loss,
members deficit, and cash flows, for each of the three years in the period ended December 31, 2004. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on the
financial statements based on our audits.



We conducted our
audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, 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 Consolidated Container Company
LLC and subsidiaries as of December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004, in conformity with accounting principles generally accepted in the
United States of America.



As discussed in Note 1 to the
consolidated financial statements, the Company changed its method of accounting for goodwill and other intangible assets in 2002 to conform to Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other
Intangible Assets.



As discussed in Note 1 to the
consolidated financial statements, the Company changed its method of accounting for stock options in 2002 to conform to SFAS No. 123, Accounting for Stock-Based Compensation, and SFAS No. 148, Accounting for Stock-Based
CompensationTransition and Disclosurean amendment of SFAS No. 123.



/s/ DELOITTE & TOUCHE LLP

Omaha, Nebraska

March 17, 2005



F-1



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##### Index to Financial Statements

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2004 AND 2003

(Amounts
in thousands)



|                                                                                                  |  |      |         |   |      |   |         |  
|------------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                                                                  |  | 2004 |         |   | 2003 |  
|ASSETS                                                                                            |  |      |         |   |      |   |         |  
|CURRENT ASSETS:                                                                                   |  |      |         |   |      |   |         |  
|Cash and cash equivalents                                                                         |  | $    | 7,896   |   |      | $ | 31,635  |  
|Investment securities                                                                             |  |      | 87      |   |      |   | 97      |  
|Accounts receivable (net of allowance for doubtful accounts of $1,164 in 2004 and $1,293 in 2003) |  |      | 88,230  |   |      |   | 86,477  |  
|Inventories                                                                                       |  |      | 64,172  |   |      |   | 42,722  |  
|Other current assets                                                                              |  |      | 27,471  |   |      |   | 32,093  |  
|                                                                                                  |  |      |         |   |      |   |         |  
|Total current assets                                                                              |  |      | 187,856 |   |      |   | 193,024 |  
|PROPERTY AND EQUIPMENT, Net                                                                       |  |      | 259,213 |   |      |   | 276,064 |  
|GOODWILL                                                                                          |  |      | 209,859 |   |      |   | 209,859 |  
|INTANGIBLES AND OTHER ASSETS                                                                      |  |      | 20,596  |   |      |   | 18,200  |  
|                                                                                                  |  |      |         |   |      |   |         |  
|                                                                                                  |  | $    | 677,524 |   |      | $ | 697,147 |  
|                                                                                                  |  |      |         |   |      |   |         |  
|LIABILITIES AND MEMBERS DEFICIT                                                                  |  |      |         |   |      |   |         |  
|CURRENT LIABILITIES:                                                                              |  |      |         |   |      |   |         |  
|Accounts payable                                                                                  |  | $    | 89,273  |   |      | $ | 85,626  |  
|Accrued liabilities                                                                               |  |      | 48,794  |   |      |   | 41,522  |  
|Revolving credit facility                                                                         |  |      |        |   |      |   | 29,500  |  
|Current portion of long-term debt                                                                 |  |      | 2,200   |   |      |   | 11,587  |  
|                                                                                                  |  |      |         |   |      |   |         |  
|Total current liabilities                                                                         |  |      | 140,267 |   |      |   | 168,235 |  
|LONG-TERM DEBT                                                                                    |  |      | 561,721 |   |      |   | 561,333 |  
|OTHER LIABILITIES                                                                                 |  |      | 43,487  |   |      |   | 62,952  |  
|COMMITMENTS AND CONTINGENCIES (Note 12)                                                           |  |      |         |   |      |   |         |  
|                                                                                                  |  |     
|MEMBERS DEFICIT:                                                                                 |  |      |         |   |      |   |         |  
|Members deficit                                                                                  |  |      | (38,585 | ) |      |   | (67,292 | )
|Accumulated other comprehensive income:                                                           |  |      |         |   |      |   |         |  
|Foreign currency translation adjustment                                                           |  |      | (63     | ) |      |   | (394    | )
|Minimum pension liability adjustment                                                              |  |      | (29,303 | ) |      |   | (27,687 | )
|                                                                                                  |  |      |         |   |      |   |         |  
|Total members deficit                                                                            |  |      | (67,951 | ) |      |   | (95,373 | )
|                                                                                                  |  |      |         |   |      |   |         |  
|                                                                                                  |  | $    | 677,524 |   |      | $ | 697,147 |  
|                                                                                                  |  |      |         |   |      |   |         |  



See notes to
consolidated financial statements.



F-2



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##### Table of Contents

##### Index to Financial Statements

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS

(Amounts in thousands)



|                                             |  |                            |         |   |                            |   |         |                            |  |   |          |  
|-------------------------------------------- |  | -------------------------- | ------- | - | -------------------------- | - | ------- | -------------------------- |  | - | -------- | -
|                                             |  | Year EndedDecember 31,2004 |         |   | Year EndedDecember 31,2003 |   |         | Year EndedDecember 31,2002 | 
|Net sales                                    |  | $                          | 761,313 |   |                            | $ | 739,774 |                            |  | $ | 746,476  |  
|Cost of sales                                |  |                            | 670,638 |   |                            |   | 647,504 |                            |  |   | 654,036  |  
|                                             |  |                            |         |   |                            |   |         |                            |  |   |          |  
|Gross profit                                 |  |                            | 90,675  |   |                            |   | 92,270  |                            |  |   | 92,440   |  
|Selling, general and administrative expenses |  |                            | 40,946  |   |                            |   | 46,364  |                            |  |   | 50,978   |  
|Amortization expense                         |  |                            | 33      |   |                            |   | 1,300   |                            |  |   | 2,468    |  
|Stock based compensation expense             |  |                            | 599     |   |                            |   | 799     |                            |  |   | 396      |  
|Restructuring charges                        |  |                            |        |   |                            |   |        |                            |  |   | 83       |  
|Goodwill impairment                          |  |                            |        |   |                            |   |        |                            |  |   | 290,000  |  
|Loss on disposal of assets                   |  |                            | 5,431   |   |                            |   | 4,421   |                            |  |   | 1,743    |  
|                                             |  |                            |         |   |                            |   |         |                            |  |   |          |  
|Operating income (loss)                      |  |                            | 43,666  |   |                            |   | 39,386  |                            |  |   | (253,228 | )
|Interest expense, net                        |  |                            | 59,434  |   |                            |   | 56,821  |                            |  |   | 47,180   |  
|                                             |  |                            |         |   |                            |   |         |                            |  |   |          |  
|Loss before income taxes                     |  |                            | (15,768 | ) |                            |   | (17,435 | )                          |  |   | (300,408 | )
|Income tax expense                           |  |                            | 427     |   |                            |   |        |                            |  |   |         |  
|                                             |  |                            |         |   |                            |   |         |                            |  |   |          |  
|Net loss                                     |  |                            | (16,195 | ) |                            |   | (17,435 | )                          |  |   | (300,408 | )
|Other comprehensive income (loss)            |  |                            |         |   |                            |   |         |                            |  |   |          |  
|Foreign currency translation adjustment      |  |                            | 331     |   |                            |   | 454     |                            |  |   | 14       |  
|Minimum pension liability adjustment         |  |                            | (1,616  | ) |                            |   | 3,508   |                            |  |   | (17,765  | )
|                                             |  |                            |         |   |                            |   |         |                            |  |   |          |  
|COMPREHENSIVE LOSS                           |  | $                          | (17,480 | ) |                            | $ | (13,473 | )                          |  | $ | (318,159 | )
|                                             |  |                            |         |   |                            |   |         |                            |  |   |          |  





See notes to consolidated financial statements.



F-3



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##### Table of Contents

##### Index to Financial Statements

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF MEMBERS EQUITY
(DEFICIT)

(Amounts in thousands)



|                                        |  |                          |          |   |                                   |   |         |       |  |   |          |  
|--------------------------------------- |  | ------------------------ | -------- | - | --------------------------------- | - | ------- | ----- |  | - | -------- | -
|                                        |  | MembersEquity (Deficit) |          |   | AccumulatedOtherComprehensiveLoss |   |         | Total | 
|BALANCE, JANUARY 1, 2002                |  | $                        | 248,286  |   |                                   | $ | (14,292 | )     |  | $ | 233,994  |  
|Net loss                                |  |                          | (300,408 | ) |                                   |   |        |       |  |   | (300,408 | )
|Foreign currency translation adjustment |  |                          |         |   |                                   |   | 14      |       |  |   | 14       |  
|Minimum pension liability adjustment    |  |                          |         |   |                                   |   | (17,765 | )     |  |   | (17,765  | )
|Stock based compensation                |  |                          | 396      |   |                                   |   |        |       |  |   | 396      |  
|Taxes received on behalf of members     |  |                          | 127      |   |                                   |   |        |       |  |   | 127      |  
|                                        |  |                          |          |   |                                   |   |         |       |  |   |          |  
|BALANCE, DECEMBER 31, 2002              |  |                          | (51,599  | ) |                                   |   | (32,043 | )     |  |   | (83,642  | )
|Net loss                                |  |                          | (17,435  | ) |                                   |   |        |       |  |   | (17,435  | )
|Foreign currency translation adjustment |  |                          |         |   |                                   |   | 454     |       |  |   | 454      |  
|Minimum pension liability adjustment    |  |                          |         |   |                                   |   | 3,508   |       |  |   | 3,508    |  
|Stock based compensation                |  |                          | 799      |   |                                   |   |        |       |  |   | 799      |  
|Taxes received on behalf of members     |  |                          | 943      |   |                                   |   |        |       |  |   | 943      |  
|                                        |  |                          |          |   |                                   |   |         |       |  |   |          |  
|BALANCE, DECEMBER 31, 2003              |  |                          | (67,292  | ) |                                   |   | (28,081 | )     |  |   | (95,373  | )
|Net loss                                |  |                          | (16,195  | ) |                                   |   |        |       |  |   | (16,195  | )
|Foreign currency translation adjustment |  |                          |         |   |                                   |   | 331     |       |  |   | 331      |  
|Minimum pension liability adjustment    |  |                          |         |   |                                   |   | (1,616  | )     |  |   | (1,616   | )
|Stock based compensation                |  |                          | 599      |   |                                   |   |        |       |  |   | 599      |  
|Taxes paid on behalf of members         |  |                          | (54      | ) |                                   |   |        |       |  |   | (54      | )
|Equity investment from Holdings         |  |                          | 44,357   |   |                                   |   |        |       |  |   | 44,357   |  
|                                        |  |                          |          |   |                                   |   |         |       |  |   |          |  
|BALANCE, DECEMBER 31, 2004              |  | $                        | (38,585  | ) |                                   | $ | (29,366 | )     |  | $ | (67,951  | )
|                                        |  |                          |          |   |                                   |   |         |       |  |   |          |  







See notes to consolidated financial statements.



F-4



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##### Table of Contents

##### Index to Financial Statements

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)



|                                                                             |  |                            |          |   |                            |   |         |                            |  |   |          |  
|---------------------------------------------------------------------------- |  | -------------------------- | -------- | - | -------------------------- | - | ------- | -------------------------- |  | - | -------- | -
|                                                                             |  | Year EndedDecember 31,2004 |          |   | Year EndedDecember 31,2003 |   |         | Year EndedDecember 31,2002 | 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                        |  |                            |          |   |                            |   |         |                            |  |   |          |  
|Net loss                                                                     |  | $                          | (16,195  | ) |                            | $ | (17,435 | )                          |  | $ | (300,408 | )
|Adjustment to reconcile net loss to net cash flow from operating activities: |  |                            |          |   |                            |   |         |                            |  |   |          |  
|Depreciation and amortization                                                |  |                            | 38,990   |   |                            |   | 39,807  |                            |  |   | 38,260   |  
|Goodwill impairment                                                          |  |                            |         |   |                            |   |        |                            |  |   | 290,000  |  
|Amortization of debt issuance costs                                          |  |                            | 10,437   |   |                            |   | 6,256   |                            |  |   | 4,807    |  
|Stock based compensation                                                     |  |                            | 599      |   |                            |   | 799     |                            |  |   | 396      |  
|Currency translation                                                         |  |                            | 331      |   |                            |   | 454     |                            |  |   | 14       |  
|Loss on disposal of assets                                                   |  |                            | 5,431    |   |                            |   | 4,421   |                            |  |   | 1,743    |  
|Accretion of senior secured discount notes                                   |  |                            | 9,919    |   |                            |   |        |                            |  |   |         |  
|Changes in operating assets and liabilities                                  |  |                            |          |   |                            |   |         |                            |  |   |          |  
|Accounts receivable                                                          |  |                            | (1,753   | ) |                            |   | (13,434 | )                          |  |   | 9,902    |  
|Inventories                                                                  |  |                            | (21,450  | ) |                            |   | (2,136  | )                          |  |   | (2,220   | )
|Other current assets                                                         |  |                            | 4,622    |   |                            |   | 2,712   |                            |  |   | (8,148   | )
|Intangibles and other assets                                                 |  |                            | (3,626   | ) |                            |   | (2,964  | )                          |  |   | 430      |  
|Accounts payable                                                             |  |                            | 3,647    |   |                            |   | (5,266  | )                          |  |   | 7,516    |  
|Accrued liabilities                                                          |  |                            | 7,448    |   |                            |   | (7,115  | )                          |  |   | 498      |  
|Other long term liabilities                                                  |  |                            | (21,209  | ) |                            |   | 8,026   |                            |  |   | (4,635   | )
|                                                                             |  |                            |          |   |                            |   |         |                            |  |   |          |  
|Net cash flow from operating activities                                      |  |                            | 17,191   |   |                            |   | 14,125  |                            |  |   | 38,155   |  
|                                                                             |  |                            |          |   |                            |   |         |                            |  |   |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                        |  |                            |          |   |                            |   |         |                            |  |   |          |  
|Capital expenditures                                                         |  |                            | (33,471  | ) |                            |   | (30,899 | )                          |  |   | (33,176  | )
|Net change in investments                                                    |  |                            | 10       |   |                            |   | 9       |                            |  |   | 8        |  
|Proceeds from disposal of property and equipment                             |  |                            | 7,540    |   |                            |   | 2,733   |                            |  |   | 2,089    |  
|Cash paid for acquisitions                                                   |  |                            | (176     | ) |                            |   | (501    | )                          |  |   | (3,052   | )
|                                                                             |  |                            |          |   |                            |   |         |                            |  |   |          |  
|Net cash flow from investing activities                                      |  |                            | (26,097  | ) |                            |   | (28,658 | )                          |  |   | (34,131  | )
|                                                                             |  |                            |          |   |                            |   |         |                            |  |   |          |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                        |  |                            |          |   |                            |   |         |                            |  |   |          |  
|Net (payments on) proceeds from revolving lines of credit                    |  |                            | (29,500  | ) |                            |   | (1,500  | )                          |  |   | 8,000    |  
|Issuance of notes payable                                                    |  |                            | 220,000  |   |                            |   | 35,000  |                            |  |   | 36,500   |  
|Issuance of senior secured discount notes                                    |  |                            | 150,102  |   |                            |   |        |                            |  |   |         |  
|Payments on notes payable to banks and capital leases                        |  |                            | (389,020 | ) |                            |   | (8,056  | )                          |  |   | (21,518  | )
|Payment of debt issuance cost                                                |  |                            | (10,718  | ) |                            |   | (4,601  | )                          |  |   | (3,938   | )
|Members contribution net of related costs (Note 13)                         |  |                            | 44,357   |   |                            |   |        |                            |  |   |         |  
|Tax (distribution) receipt to the benefit of the member                      |  |                            | (54      | ) |                            |   | 943     |                            |  |   | 127      |  
|                                                                             |  |                            |          |   |                            |   |         |                            |  |   |          |  
|Net cash flow from financing activities                                      |  |                            | (14,833  | ) |                            |   | 21,786  |                            |  |   | 19,171   |  
|                                                                             |  |                            |          |   |                            |   |         |                            |  |   |          |  
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                         |  |                            | (23,739  | ) |                            |   | 7,253   |                            |  |   | 23,195   |  
|CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                 |  |                            | 31,635   |   |                            |   | 24,382  |                            |  |   | 1,187    |  
|                                                                             |  |                            |          |   |                            |   |         |                            |  |   |          |  
|CASH AND CASH EQUIVALENTS, END OF YEAR                                       |  | $                          | 7,896    |   |                            | $ | 31,635  |                            |  | $ | 24,382   |  
|                                                                             |  |                            |          |   |                            |   |         |                            |  |   |          |  
|SUPPLEMENTAL CASH FLOW INFORMATION:                                          |  |                            |          |   |                            |   |         |                            |  |   |          |  
|Cash paid during the period for interest                                     |  | $                          | 47,307   |   |                            | $ | 42,793  |                            |  | $ | 42,334   |  
|                                                                             |  |                            |          |   |                            |   |         |                            |  |   |          |  



See notes to
consolidated financial statements.



F-5



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##### Table of Contents

##### Index to Financial Statements

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Business OrganizationConsolidated Container Company LLC,
the Company, is wholly owned by Consolidated Container Holdings LLC, a Delaware limited liability company (Holdings). Holdings is a holding company with no assets, operations, or cash flow separate from its investment in the
Company and its subsidiaries. The common units of Holdings are 24.7% owned by Reid Plastics Holdings Inc., 16.6% owned by Vestar Packaging LLC, 13.5% owned by Vestar CCH LLC, and 45.1% owned by Franklin Plastics, Inc., a subsidiary of Dean Foods
Company. Each of Reid Plastics Holdings Inc., Vestar CCH LLC, and Vestar Packaging LLC are controlled by Vestar Capital Partners, III L.P. and its affiliates. Additionally, as discussed more fully in Note 13, Holdings recently issued Series B
Convertible Preferred Units, which are 73.4% owned by Vestar CCH Preferred LLC and 26.6% owned by Franklin Plastics Inc. Upon conversion of the Series B Convertible Preferred Units, the holders of such converted units would own in the aggregate in
excess of approximately 95% (before management options) of the then outstanding units of Holdings.



Business OperationsThe Company develops, manufactures and distributes a wide range of extrusion blow-mold plastic containers for the
following product categories: dairy, water, juice & other beverage, household chemicals & personal care, agricultural & industrial, food, and automotive. Based on the nature of the product, the production process, types of customers, and
methods used to distribute products, the Company operates in one reportable segment under Statement of Financial Accounting Standards (SFAS) No. 131, Disclosures About Segments of an Enterprise and Related Information.



Principals of ConsolidationThe
consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.



Consolidated and Foreign OperationsThe Company maintains
several wholly owned subsidiaries in the United States, Canada, and Mexico. All significant inter-company accounts and transactions have been eliminated in consolidation.



Translation of Foreign CurrenciesThe Company considers the functional currency under SFAS No. 52,
Foreign Currency Translation, to be the local currency for its Canadian subsidiaries. Further, assets and liabilities of the Companys Canadian subsidiaries are converted to U.S. dollars using the current exchange rate at
period-end, and revenues and expenses of these subsidiaries are translated at the average exchange rate during the period, with the resulting translation adjustment made to a separate component of members equity. The Company operates its
Mexican subsidiary using the U.S. dollar as its functional currency. As a result, the financial statements have been re-measured from Mexican pesos into U.S. dollars using (i) current exchange rates for monetary asset and liability accounts, (ii)
historical exchange rates for non-monetary asset and liability accounts and related revenue and expense accounts, and (iii) the weighted average exchange rate of the reporting period for all other revenues and expenses. The resulting re-measurement
impact is recorded as a component of net loss.



Use of
EstimatesThe preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and
liabilities and revenues and expenses during the reporting period. Actual results could differ from these estimates.



Cash and Cash EquivalentsIncluded in cash and cash equivalents are highly liquid cash investments with remaining maturities at date of
purchase of three months or less.



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##### Table of Contents

##### Index to Financial Statements

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Investment SecuritiesInvestment securities consist of held-for-trading U.S.
government obligations, certificates of deposit, Eurodollar deposits and highly rated commercial paper, all of which are due within one year. These investment securities are stated at market value, and related unrealized gains or losses are included
in the statement of operations.



Other Current
AssetsVendor rebate receivables are included in the Companys other current assets. Receivables from the Companys vendors under volume rebate programs are recorded in the same period that the purchases are recorded. Spare
parts and supplies inventory are also included in other current assets.



InventoriesInventories consist of raw materials and finished goods. Inventories are stated at the lower of cost, using the first-in, first-out (FIFO) method, or market. Finished goods inventories include raw
materials, direct and indirect labor costs, and factory overhead.



Property and EquipmentProperty and equipment are stated at cost and are depreciated or amortized using the straight-line method over the estimated useful lives of the related assets. Plant and equipment held under
capital leases and leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the asset.



Estimated useful lives are as follows:



|                        |  |               
|----------------------- |  | --------------
|Asset                   |  | Useful Life   
|Buildings               |  | 25 to 40 years
|Machinery and equipment |  | 5 to 20 years 
|Furniture and fixtures  |  | 3 to 10 years 



Expenditures for
repairs and maintenance that do not improve or extend the life of the assets are expensed as incurred.



Intangible and Other AssetsIntangible and other assets include primarily deferred financing costs, which are amortized over the term
of the related debt using the effective interest and straight-line methods. Payments relating to non-compete agreements and multiple-year management contracts are amortized over the term of the applicable agreement or contract.



GoodwillA majority of the goodwill on the Companys
balance sheet is a result of the July 9, 1999 acquisition of the domestic plastic packaging assets of Suiza Foods Corporation, now doing business as Dean Foods Company, by Reid Plastics, Inc., the accounting acquirer. The remaining goodwill is a
result of prior acquisitions by Reid Plastics, Inc.



The
Company adopted SFAS No. 142, Goodwill and Other Intangible Assets (SFAS 142), on January 1, 2002. SFAS 142 required, among other things, the discontinuation of goodwill amortization. In addition, the standard included
provisions for the reclassification of certain existing recognized intangibles as goodwill, reassessment of the useful lives of existing recognized intangibles, reclassification of certain intangibles out of previously reported goodwill and the
identification of reporting units for the purpose of assessing potential future impairments of goodwill.



In 2002, when management undertook its transitional goodwill impairment test under SFAS 142, they determined that several factors related to the
determination of the fair value of the Company had changed. The Company amended its financial covenants and senior debt amortization schedule, had received an additional term



F-7



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##### Table of Contents

##### Index to Financial Statements

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



loan in the amount of $35.0 million, and had a significant portion of business come up for renewal. Additionally, at December 31, 2002 management refined its
view of future operational improvements and growth prospects, and market trading multiples for publicly traded peer companies had declined. As a result of these factors a goodwill impairment charge in the amount of $290.0 million was recorded in the
fourth quarter of 2002. Results of the December 31, 2003 and December 31, 2004 impairment testing indicated no further impairment at those dates.



Goodwill was reduced by approximately $0.1 million in 2002 when estimates of the remaining liabilities for closed facilities changed. No further changes
occurred in 2003 and 2004.



InsuranceThe
Company purchases commercial insurance policies to cover its insurance risks; however, certain of its subsidiaries are self-insured in certain states for workers compensation, general liability, property, and casualty coverages in excess of
varying deductible amounts. Self-insurance liabilities are accrued based on estimated development on claims filed and estimates for claims incurred but not reported.



Income TaxesAs a limited liability company, the Company is generally not subject to federal income
taxes, or, except on a limited basis, state income taxes. However, the Company expects to distribute cash to its sole member, Holdings, to allow its members to pay income taxes to the extent required.



Stock-Based CompensationAt December 31, 2004, the Company
has two stock-based employee compensation plans, which are described more fully in Note 10. Prior to 2002, the Company accounted for those plans under the recognition and measurement provisions of Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and related Interpretations. Effective July 1, 2002, the Company adopted the fair value recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation (SFAS
123), prospectively to all employee awards granted, modified, or settled after January 1, 2002. Awards under the Companys plans vest over a range of three to five years. As such, the expense for all awards granted after the beginning of
the year will be recognized as compensation expense, as will all future grants. The value of unit options granted after January 1, 2002 was based on the Black-Scholes option-pricing model, approved for use in valuing compensatory stock options in
accordance with SFAS 123. Therefore, the cost related to stock-based employee compensation included in the determination of net income for all periods after adoption is less than that which would have been recognized if the fair value based method
had been applied to all awards since the original effective date of SFAS 123. Compensation cost charged against income for the years ended December 31, 2004 and 2003 was $0.6 million and $0.8 million, respectively. The expense in 2002 related to the
buy-back of a former executives options. See Note 10.



Impairment of Long-Lived AssetsThe Company evaluates the impairment of long-lived assets if circumstances indicate that the carrying value of those assets may not be recoverable. Recoverability of the assets to be held
and used is measured by a comparison of the carrying amount of the asset to the future undiscounted cash flows expected to be generated by the asset. Any indicated impairment would be measured based on fair value.



During December 2004, the Company recognized a $1.8 million impairment charge
related to idle assets held at an equipment warehouse upon assessment that the carrying amount of the assets exceeded the net realizable value in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long Lived
Assets. The impairment charge is included in loss on disposal of assets in the accompanying consolidated statement of operations and comprehensive loss.



Concentration of Credit RiskFinancial instruments that subject the Company to credit risk consist
primarily of temporary cash investments and accounts receivable. The Company places its temporary cash



F-8



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##### Table of Contents

##### Index to Financial Statements

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



investments with high-credit qualified financial institutions and limits the amount of investment exposure with any one financial institution. Accounts
receivable are generally diversified due to the large number of entities comprising the Companys customer base and their geographic dispersion. Net container sales to the largest customer in 2004 amounted to approximately 13.6%, 12.0%, and
9.7% of the Companys net sales for the years ended December 31, 2004, 2003 and 2002, respectively. Accounts receivable from this customer amounted to approximately $17.3 million and $12.0 million at December 31, 2004 and 2003, respectively.
Net container sales to the second largest customer in 2004 amounted to approximately 11.7%, 15.5% and 16.9% of the Companys net sales for the years ended December 31, 2004, 2003 and 2002, respectively. Accounts receivable from this customer
amounted to approximately $7.5 and $11.0 million at December 31, 2004 and 2003, respectively. The Company evaluates each customers credit worthiness on a case-by-case basis. If such evaluations indicate substantial credit risk, the Company may
choose not to conduct business with the customer, or at a minimum, require cash payments upon delivery of goods. The Company may obtain collateral upon extension of credit based upon the credit evaluation.



EmployeesAt December 31, 2004, we employed approximately
3,500 people. Approximately 1,000 of these employees were hourly workers covered by collective bargaining agreements, which expire between April 30, 2005 and February 28, 2008. Given the seasonal peaks of some of our product lines (e.g. water and
household chemicals), we expect to continue to employ additional full-time, temporary, and seasonal workers as needed to meet production demands. We have not had any material labor disputes in the past three years and we consider our relations with
employees to be good.



Recently Issued Accounting
PronouncementsIn November 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 151, Inventory Costs (SFAS 151). This Statement amends the guidance in Accounting Research Bulletin
(ARB) No. 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). SFAS 151 requires that those items be recognized as
current-period charges. In addition, this Statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The provisions of SFAS 151 are effective for
inventory costs incurred in fiscal years beginning after June 15, 2005. As such, the Company is required to adopt these provisions at the beginning of fiscal year 2006. The Company is currently evaluating the impact of SFAS 151 on its consolidated
financial statements.



In December 2004, the FASB issued SFAS
No. 123R, Share-Based Payment (SFAS 123R), which requires companies to measure and recognize compensation expense for all stock-based payments at fair value. SFAS 123R is effective for the first annual reporting period
beginning after December 15, 2005 and, thus, will be effective for the Company beginning with the first quarter of fiscal year 2006. Early adoption is encouraged and retroactive application of the provisions of SFAS 123R to the beginning of the
fiscal year that includes the effective date is permitted, but not required. The Company is currently evaluating the impact of SFAS 123R on its financial statements.



Revenue RecognitionIn accordance with Staff Accounting Bulletin 104 Revenue Recognition,
revenue is recognized when all four of the following conditions have been met; 1) transfer of title and risk of loss to the customer; which, depending on the terms of sale, occurs either at the time product is shipped or when the product is received
by the customer, 2) collection of the relevant receivable is probable, 3) persuasive evidence of an arrangement exists and 4) the sales price is fixed or determinable.



Pension PlansThe Company sponsors both defined benefit and defined contribution retirement plans on
behalf of certain of its subsidiaries, and currently contributes to one multi-employer union pension plan, all of



F-9



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##### Table of Contents

##### Index to Financial Statements

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



which are more fully defined at note 10. For the defined benefit plans, the Companys policy is to contribute funds to the plans annually in amounts
required to maintain sufficient plan assets to provide for accrued benefits.



ReclassificationsCertain prior year accounts have been reclassified to conform to current year presentation.



2. INVENTORIES



Inventories consist of the following at December 31, 2004 and 2003:



|               |  |                        |        |      |   |       
|-------------- |  | ---------------------- | ------ | ---- | - | ------
|               |  | 2004                   |        | 2003
|               |  | (Amounts in thousands)
|Raw materials  |  | $                      | 38,032 |      | $ | 21,077
|Finished goods |  |                        | 26,140 |      |   | 21,645
|               |  |                        |        |      |   |       
|               |  | $                      | 64,172 |      | $ | 42,722
|               |  |                        |        |      |   |       



3. OTHER CURRENT ASSETS



Other current assets consist of the following at December
31, 2004 and 2003:



|                             |  |                        |        |      |   |       
|---------------------------- |  | ---------------------- | ------ | ---- | - | ------
|                             |  | 2004                   |        | 2003
|                             |  | (Amounts in thousands)
|Rebate receivables           |  | $                      | 13,348 |      | $ | 22,222
|Parts and supplies inventory |  |                        | 8,136  |      |   | 7,505 
|Other current assets         |  |                        | 5,987  |      |   | 2,366 
|                             |  |                        |        |      |   |       
|                             |  | $                      | 27,471 |      | $ | 32,093
|                             |  |                        |        |      |   |       



4. PROPERTY AND EQUIPMENT



Property and equipment consist of the following at
December 31, 2004 and 2003:



|                              |  |                        |          |   |      |   |          |  
|----------------------------- |  | ---------------------- | -------- | - | ---- | - | -------- | -
|                              |  | 2004                   |          |   | 2003 |  
|                              |  | (Amounts in thousands) |         
|Machinery and equipment       |  | $                      | 353,983  |   |      | $ | 347,583  |  
|Buildings                     |  |                        | 22,166   |   |      |   | 23,586   |  
|Leasehold improvements        |  |                        | 21,441   |   |      |   | 19,776   |  
|Furniture and equipment       |  |                        | 9,905    |   |      |   | 8,989    |  
|Land                          |  |                        | 9,763    |   |      |   | 10,513   |  
|                              |  |                        |          |   |      |   |          |  
|                              |  |                        | 417,258  |   |      |   | 410,447  |  
|Less accumulated depreciation |  |                        | (173,831 | ) |      |   | (155,077 | )
|                              |  |                        |          |   |      |   |          |  
|                              |  |                        | 243,427  |   |      |   | 255,370  |  
|Construction in progress      |  |                        | 15,786   |   |      |   | 20,694   |  
|                              |  |                        |          |   |      |   |          |  
|                              |  | $                      | 259,213  |   |      | $ | 276,064  |  
|                              |  |                        |          |   |      |   |          |  



Depreciation expense
for the years ended December 31, 2004, 2003 and 2002 was $37.4, $37.0 and $35.8 million, respectively.



F-10



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##### Table of Contents

##### Index to Financial Statements

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



5. INTANGIBLE AND OTHER ASSETS



Intangible and other assets consist of the following at December 31, 2004 and 2003:



|                              |  |                        |        |   |      |   |         |  
|----------------------------- |  | ---------------------- | ------ | - | ---- | - | ------- | -
|                              |  | 2004                   |        |   | 2003 |  
|                              |  | (Amounts in thousands) |       
|Deferred financing costs      |  | $                      | 18,543 |   |      | $ | 30,851  |  
|Deposits and other            |  |                        | 6,071  |   |      |   | 2,539   |  
|Intangible assets             |  |                        | 5,039  |   |      |   | 8,139   |  
|                              |  |                        |        |   |      |   |         |  
|                              |  |                        | 29,653 |   |      |   | 41,529  |  
|Less accumulated amortization |  |                        | (9,057 | ) |      |   | (23,329 | )
|                              |  |                        |        |   |      |   |         |  
|                              |  | $                      | 20,596 |   |      | $ | 18,200  |  
|                              |  |                        |        |   |      |   |         |  



The Companys
purchased intangible assets, primarily customer contracts, are amortized over the estimated useful life of the respective assets, which is 3-5 years. They are carried at cost of $5.0 million less accumulated amortization of $3.3 million at December
31, 2004, compared to a cost of $8.1 million less accumulated amortization of $5.1 million at December 31, 2003. The aggregate amortization of intangible assets for the twelve months ended December 31, 2004, December 31, 2003 and December 31, 2002
was $1.3, $2.8 and $2.5 million respectively. Of this amortization, $1.2 and $1.5 million for the twelve months ended December 31, 2004 and 2003, respectively, related to customer contract amortization, which is an offset to sales. Customer contract
amortization in 2002 was immaterial. The annual estimated amortization expense is as follows (amounts in thousands):



|                         |  |   |      
|------------------------ |  | - | -----
|Year ending December 31, |  |   |      
|2005                     |  | $ | 1,231
|2006                     |  |   | 450  
|2007                     |  |   | 34   
|2008                     |  |   | 34   
|                         |  |   |      
|                         |  | $ | 1,749
|                         |  |   |      



6. ACCRUED LIABILITIES



Accrued liabilities consist of the following at December
31, 2004 and 2003:



|                                                |  |                        |        |      |   |       
|----------------------------------------------- |  | ---------------------- | ------ | ---- | - | ------
|                                                |  | 2004                   |        | 2003
|                                                |  | (Amounts in thousands)
|Rebates and other payables                      |  | $                      | 24,017 |      | $ | 21,223
|Employee compensation and benefits              |  |                        | 12,289 |      |   | 8,384 
|Accrued interest                                |  |                        | 9,489  |      |   | 8,818 
|Accrued real estate and personal property taxes |  |                        | 2,096  |      |   | 1,925 
|Accrual for customer claims                     |  |                        | 712    |      |   | 994   
|Provision for severance and lease commitments   |  |                        | 191    |      |   | 178   
|                                                |  |                        |        |      |   |       
|                                                |  | $                      | 48,794 |      | $ | 41,522
|                                                |  |                        |        |      |   |       



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##### Table of Contents

##### Index to Financial Statements

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



7. REVOLVING CREDIT FACILITY AND LONG-TERM DEBT



Long-term debt consisted of the following at December 31, 2004 and 2003:



|                                  |  |                        |         |   |      |   |         |  
|--------------------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | -
|                                  |  | 2004                   |         |   | 2003 |  
|                                  |  | (Amounts in thousands) |        
|Senior credit facilityterm loans |  | $                      | 218,900 |   |      | $ | 387,833 |  
|Senior secured discount notes     |  |                        | 160,021 |   |      |   |        |  
|Senior subordinated notes         |  |                        | 185,000 |   |      |   | 185,000 |  
|Capital lease obligations         |  |                        |        |   |      |   | 87      |  
|                                  |  |                        |         |   |      |   |         |  
|                                  |  |                        | 563,921 |   |      |   | 572,920 |  
|Less current portion              |  |                        | (2,200  | ) |      |   | (11,587 | )
|                                  |  |                        |         |   |      |   |         |  
|                                  |  | $                      | 561,721 |   |      | $ | 561,333 |  
|                                  |  |                        |         |   |      |   |         |  



On May 20, 2004, the
Company entered into a new senior credit facility (the Senior Credit Facility) that included a $220.0 million term loan and a $45.0 million revolving credit facility (the Revolver), of which $10.0 million was drawn on the
transaction date. On the same date, the Company issued $207.0 million aggregate principal amount due at maturity of 103/4% senior secured discount notes which generated proceeds of approximately $150.1 million. Additionally, the Companys parent, Holdings, made a $45.0 million capital contribution from the proceeds of its sale of Series B
Convertible Preferred Units. The proceeds from the new term loan, the senior secured discount notes and the capital contribution were used to permanently repay outstanding borrowings, accrued interest, deferred interest and deferred fees of $13.0
million under the Companys then existing senior credit facility, and fees expected to ultimately reach approximately $11.5 million related to the refinancing. These fees have been deferred and are included in intangibles and other assets in
the accompanying consolidated balance sheet and are being amortized over the terms of the applicable debt. The retirement of our then existing debt also required the write-off of related deferred financing costs in the amount of $6.5 million, which
is included in interest expense in the accompanying consolidated statement of operations and comprehensive loss.



Senior Credit FacilityThe Senior Credit Facility consists of a term loan with a total original principal amount of $220.0 million and
a $45.0 million revolving credit facility. The term loan facility and Revolver are summarized below:



Term Loan



The term loan was originally $220.0 million in principal, of which $218.9 million was outstanding at December 31, 2004. The Company is
required to repay the term loan in quarterly installments of $550,000 that commenced on September 30, 2004 and continue through September 2008, with the remaining balance due December 15, 2008.



Revolver



The commitment amount under the Revolver was $45.0 million
as of December 31, 2004, of which no principal amount was outstanding. Additionally, as of December 31, 2004 the Company had approximately $12.3 million of outstanding letters of credit under the Revolver. The Revolver will terminate on December 15,
2008 and all outstanding revolving loans will be due and payable on that date.



Borrowings under the Senior Credit Facility bear interest, at the Companys option, at either:



| |  |  | a base rate, which will be the higher of 1/2of 1% in excess of the overnight federal funds rate and the prime lending rate of Deutsche Bank Trust Company Americas, plus an interest margin of 2.25% with respect to term loans and 2.75% with respect to revolving loans; or
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-12



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##### Table of Contents

##### Index to Financial Statements

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



| |  |  | a Eurodollar rate on deposits for one, two, three or six month periods or, if and when available to all of the relevant lenders, nine or twelve month periods, which are offered to
Deutsche Bank Trust Company Americas in the interbank Eurodollar market, plus an interest margin of 3.25% with respect to term loans and 3.75% with respect to revolving loans.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As of December 31, 2004, the term loan bore an interest rate
of 5.1%. Interest on base rate loans is paid on a quarterly basis. Interest on Eurodollar loans is paid on the last day of each interest period applicable thereto, and, if the interest period is longer than three months, on the date occurring at
three month intervals after the first day of the interest period. In addition, the Company pays a commitment fee on the unused commitments under the revolving credit facilities ranging from 0.50% to 0.75% on an annual basis dependent on its senior
secured term debt leverage ratio, payable quarterly in arrears. The fee percentage at December 31, 2004 was 0.75%.



The Senior Credit Facility also provides for mandatory repayments from the net proceeds of asset sales, debt issuances, a portion of
equity issuances, a portion of excess cash flow and insurance recoveries and condemnation events. No such payments were required for the period ended December 31, 2004.



Senior Secured Discount NotesIn May, 2004 the Company completed an offering of $207.0 million aggregate
principal amount at maturity of 103/4% senior secured discount notes, which generated proceeds of approximately
$150.1 million at issuance. As of December 31, 2004, the accreted value of the notes, upon which interest expense was calculated, was $160.0 million. The notes will mature on June 15, 2009. The fair value of the Companys long-term debt is
based on quoted market prices. At December 31, 2004, the estimated fair value of the senior secured discount notes was $173.1 million.



Unless the Company elects to accrue and pay cash interest as described below, the interest on the notes, combined with the initial proceeds, will accrete
to $207.0 million during the period from the issue date of the notes until June 15, 2007 at a rate of 103/4% per
annum, compounded semiannually on June 15 and December 15 of each year. The accretion on these notes is based on the effective interest method. After June 15, 2007, the Company is required to accrue and pay cash interest on the notes semi-annually
on each June 15 and December 15 at a rate of 103/4% per annum, with cash interest payments in arrears commencing
on December 15, 2007.



At the Companys
option, it may irrevocably elect to commence accruing cash interest before June 15, 2007. If such an election is made, the Company must make that election on or before the interest payment date preceding the first cash interest payment.
Additionally, once the election is made to begin accruing and paying cash interest, (i) the Company will be obligated to pay cash interest on all subsequent interest payment dates, (ii) the notes will cease to accrete in principal amount and (iii)
the outstanding principal amount at maturity will be equal to the accreted value of the new notes as of the date on which the notes commenced accruing cash interest.



Senior Subordinated NotesThe senior subordinated notes that were issued in July 1999, have an original
face value of $185.0 million and are due in full on July 15, 2009. The notes bear interest at a fixed interest rate of 101/8%, payable semiannually in July and January of each year. At December 31, 2004, the estimated fair value of the senior subordinated notes was $181.3 million.



The obligations under the Senior Credit Facility on a first-priority basis and obligations under the senior secured discount
notes on a second-priority basis are (i) secured by substantially all of the assets of Holdings (in the case of the Senior Credit Facility) and its direct and indirect domestic subsidiaries and (ii) guaranteed (on a joint and several basis) by the
Companys direct and indirect domestic subsidiaries other than Consolidated Container Capital Inc., (in the case of the senior secured discount notes) and, in each case, are subject to customary exceptions.



F-13



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##### Table of Contents

##### Index to Financial Statements

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The Senior Credit Facility, the senior secured discount notes, and/or the senior subordinated notes
contain covenants that restrict, among other things, the Companys ability to: (i) make certain restricted payments; (ii) incur additional debt or issue preferred equity; (iii) pay dividends or make distributions on our equity interests or
repurchase our equity interests; (iv) repurchase subordinated indebtedness; (v) issue stock of subsidiaries; (vi) make certain investments; (vii) create liens on our assets; (viii) enter into transactions with affiliates; (ix) merge or consolidate
with another company; (x) sell, lease or otherwise dispose of our assets; (xi) enter sales and leaseback transactions; and (xii) make capital expenditures above specified levels. The Senior Credit Facility has financial maintenance covenants
regarding first-lien debt to earnings before interest, taxes, depreciation and amortization (EBITDA), total secured debt to consolidated EBITDA and interest coverage. Additionally, the Senior Credit Facility contains a maximum capital
spending covenant. At December 31, 2004, the Company was in compliance with all covenants under the Senior Credit Facility, the senior secured discount notes and the senior subordinated notes.



Scheduled MaturitiesThe scheduled annual maturities of
long-term debt at December 31, 2004, were as follows (amounts in thousands):



|                                                            |  |   |         |  
|----------------------------------------------------------- |  | - | ------- | -
|Year ending December 31,                                    |  |   |         |  
|2005                                                        |  | $ | 2,200   |  
|2006                                                        |  |   | 2,200   |  
|2007                                                        |  |   | 2,200   |  
|2008                                                        |  |   | 212,300 |  
|2009                                                        |  |   | 392,000 |  
|                                                            |  |   |         |  
|Total amounts due at maturity                               |  | $ | 610,900 |  
|Less: Unamortized discount on senior secured discount notes |  |   | (46,979 | )
|                                                            |  |   |         |  
|                                                            |  | $ | 563,921 |  
|                                                            |  |   |         |  



8. OTHER LIABILITIES



Other liabilities consist of the following at December 31,
2004 and 2003:



|                                                      |  |                        |        |      |   |       
|----------------------------------------------------- |  | ---------------------- | ------ | ---- | - | ------
|                                                      |  | 2004                   |        | 2003
|                                                      |  | (Amounts in thousands)
|Accrued pension                                       |  | $                      | 26,236 |      | $ | 28,556
|Insurance reserve                                     |  |                        | 6,936  |      |   | 7,349 
|Noncancellable lease commitments on closed facilities |  |                        | 6,321  |      |   | 6,581 
|Deferred income                                       |  |                        | 1,314  |      |   | 3,878 
|Accrued post-retirement benefits                      |  |                        | 2,680  |      |   | 7,530 
|Deferred interest                                     |  |                        |       |      |   | 8,887 
|Other                                                 |  |                        |       |      |   | 171   
|                                                      |  |                        |        |      |   |       
|                                                      |  | $                      | 43,487 |      | $ | 62,952
|                                                      |  |                        |        |      |   |       



F-14



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##### Table of Contents

##### Index to Financial Statements

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



9. RESTRUCTURING ACCRUALS



In connection with the acquisition of Suiza Packaging in 1999, the Company developed a restructuring plan that resulted in a
restructuring charge of $1.5 million in the third quarter due to the closing of its corporate administrative and accounting office in California and the consolidation of those operations with Suiza Packaging. In the fourth quarter of 1999, the
Company recognized a restructuring charge of $7.2 million in connection with plans to close certain Reid Plastics manufacturing facilities. The remaining restructuring accrual totaling $3.0 million as of December 31, 2004 relates to lease payments
offset by sublease income.



On October 14, 1997, the
predecessor company, Reid Plastics, Inc., recorded a restructuring charge of $9.2 million representing a provision for loss on closed facilities in California subject to operating leases. The remaining restructuring accrual totaling $3.5 million as
of December 31, 2004 relates to lease payments offset by sublease income.



Reconciliation of the pre-acquisition and post-acquisition restructuring expenses during 2002, 2003 and 2004 were as follows:



|                             |  |                        |       |   |                    |   |       |  
|---------------------------- |  | ---------------------- | ----- | - | ------------------ | - | ----- | -
|                             |  | 1997 Restructuring     |       |   | 1999 Restructuring |  
|                             |  | (Amounts in thousands) |      
|Balance at January 1, 2002   |  | $                      | 3,835 |   |                    | $ | 3,189 |  
|Severance cost               |  |                        |      |   |                    |   |      |  
|2002 charges                 |  |                        | (24   | ) |                    |   | (58   | )
|                             |  |                        |       |   |                    |   |       |  
|Balance at December 31, 2002 |  |                        | 3,811 |   |                    |   | 3,131 |  
|2003 charges                 |  |                        | (103  | ) |                    |   | (81   | )
|                             |  |                        |       |   |                    |   |       |  
|Balance at December 31, 2003 |  |                        | 3,708 |   |                    |   | 3,050 |  
|2004 charges                 |  |                        | (159  | ) |                    |   | (87   | )
|                             |  |                        |       |   |                    |   |       |  
|Balance at December 31, 2004 |  | $                      | 3,549 |   |                    | $ | 2,963 |  
|                             |  |                        |       |   |                    |   |       |  



Items charged to the
accrual in all years presented were cash items.



10. EMPLOYEE BENEFITS



The Company sponsors both defined benefit and defined
contribution retirement plans on behalf of certain of its subsidiaries, and currently contributes to one multi-employer union pension plan.



Defined Benefit PlansThe Company succeeded to a defined benefit pension plan for substantially all salaried employees of Plastic
Containers Inc. (PCI) hired prior to August 1, 1997. (PCI no longer exists as a legal entity, but the Company is successor in interest to these benefit plans.) The Plan was frozen for future accruals as of December 31, 1999.



In addition, the Company maintains a benefit equalization plan for
salaried employees hired prior to August 1, 1997, whose compensation level exceeds the limits within the defined benefit pension plan. The Plan was frozen for future accruals as of September 1, 1998.



The Company also succeeded to a noncontributory defined benefit pension plan
for substantially all hourly employees of the former PCI who have attained 21 years of age. Plan benefits vary by location and by union contract, but are based primarily on years of service and the employees highest wage classification for 12



F-15



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##### Table of Contents

##### Index to Financial Statements

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



consecutive months in the five-year period prior to retirement. Normal retirement is at age 65, with at least a five-year period of continuous service.
However, employees may retire as early as age 55 and receive reduced benefits.



Post-retirement Benefits Other Than PensionsThe Company provides certain health care and life insurance benefits for retired employees of the former PCI hired before 1994. Certain of the former
PCIs hourly and salaried employees became eligible for these benefits when they became eligible for an immediate pension under a formal company pension plan.



In September 2004, the Company announced plans to terminate its other post-retirement benefits for three of its existing
five component plans as of April 1, 2005. Participants affected by this change were given the option of continuing the same coverage for a period of 18 months by paying the full cost themselves. This change resulted in a $4.9 million reduction in
the accumulated pension benefit obligation (APBO) in the third quarter of 2004, which was reflected in selling, general and administrative expenses in the accompanying statement of operations and comprehensive loss.



A measurement date of December 31 of each year presented was used for the
disclosures that follow.



Benefit Obligations. The
following table provides a reconciliation of the beginning and ending benefit obligation for the defined benefit plans and the post-retirement plan:



|                                        |  |                            |        |   |                            |   |        |                               |  |   |                            |   |  |   |       |  
|--------------------------------------- |  | -------------------------- | ------ | - | -------------------------- | - | ------ | ----------------------------- |  | - | -------------------------- | - |  | - | ----- | -
|                                        |  |                            |        |   |                            |   |        | Other Post-RetirementBenefits | 
|                                        |  | Pension Benefits           |        |  
|                                        |  | Year endedDecember 31,2004 |        |   | Year endedDecember 31,2003 |   |        | Year endedDecember 31,2004    |  |   | Year endedDecember 31,2003 |  
|                                        |  | (Amounts in thousands)     |       
|Change in benefit obligation:           |  |                            |        |   |                            |   |        |                               |  |   |                            |   |  |   |       |  
|Benefit obligation at beginning of year |  | $                          | 89,065 |   |                            | $ | 82,471 |                               |  | $ | 6,985                      |   |  | $ | 6,616 |  
|Service cost                            |  |                            | 651    |   |                            |   | 851    |                               |  |   | 92                         |   |  |   | 133   |  
|Interest cost                           |  |                            | 5,582  |   |                            |   | 5,409  |                               |  |   | 334                        |   |  |   | 413   |  
|Amendments                              |  |                            | 320    |   |                            |   | 72     |                               |  |   | (4,903                     | ) |  |   |      |  
|Actuarial loss                          |  |                            | 4,634  |   |                            |   | 5,962  |                               |  |   | 80                         |   |  |   | 205   |  
|Benefits paid                           |  |                            | (6,487 | ) |                            |   | (5,700 | )                             |  |   | (329                       | ) |  |   | (382  | )
|                                        |  |                            |        |   |                            |   |        |                               |  |   |                            |   |  |   |       |  
|Benefit obligation at December 31       |  | $                          | 93,765 |   |                            | $ | 89,065 |                               |  | $ | 2,259                      |   |  | $ | 6,985 |  
|                                        |  |                            |        |   |                            |   |        |                               |  |   |                            |   |  |   |       |  



|                                                                                      |  |      |   |  |      |   |  |      |   |  |      |  
|------------------------------------------------------------------------------------- |  | ---- | - |  | ---- | - |  | ---- | - |  | ---- | -
|Weighted average assumptions used to determine benefit obligations as of December 31: |  |      |   |  |      |   |  |      |   |  |      |  
|Discount rate                                                                         |  | 6.00 | % |  | 6.25 | % |  | 6.00 | % |  | 6.25 | %
|Rate of compensation increase                                                         |  | n/a  |   |  | 5.00 | % |  |      |   |  |      |  



The accumulated
benefit obligation of our pension plans at the end of 2004 and 2003 was $93.8 million and $89.0 million, respectively.



F-16



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##### Table of Contents

##### Index to Financial Statements

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Plan Assets. The reconciliation of the beginning and ending balances of the fair value of plan
assets was as follows:

|                                               |  |                        |        |   |                                |   |        |      |  |   |      |   |  |   |      |  
|---------------------------------------------- |  | ---------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | - | ---- | - |  | - | ---- | -
|                                               |  | Pension Benefits       |        |   | Other Post- RetirementBenefits |  
|                                               |  | 2004                   |        |   | 2003                           |   |        | 2004 |  |   | 2003 |  
|                                               |  | (Amounts in thousands) |       
|Change in plan assets:                         |  |                        |        |   |                                |   |        |      |  |   |      |   |  |   |      |  
|Fair value of plan assets at beginning of year |  | $                      | 60,294 |   |                                | $ | 53,473 |      |  | $ |     |   |  | $ |     |  
|Actual return on plan assets                   |  |                        | 5,787  |   |                                |   | 10,642 |      |  |   |     |   |  |   |     |  
|Employer contribution                          |  |                        | 7,935  |   |                                |   | 1,879  |      |  |   | 329  |   |  |   | 382  |  
|Plan participant contribution                  |  |                        |       |   |                                |   |       |      |  |   | 216  |   |  |   | 230  |  
|Benefits paid                                  |  |                        | (6,487 | ) |                                |   | (5,700 | )    |  |   | (545 | ) |  |   | (612 | )
|                                               |  |                        |        |   |                                |   |        |      |  |   |      |   |  |   |      |  
|Fair value of plan assets at December 31       |  | $                      | 67,529 |   |                                | $ | 60,294 |      |  | $ |     |   |  | $ |     |  
|                                               |  |                        |        |   |                                |   |        |      |  |   |      |   |  |   |      |  



The expected long-term
rate of return on our pension plan assets was 8.75% and 9% in 2004 and 2003, respectively. Our post-retirement benefits are funded as claims are incurred. The weighted average asset allocation for these plan assets at the end of 2004 and 2003 and
the target allocation for 2004, by asset category, follows:



|                  |  |                  |   |  |                                       |   |  |      |  
|----------------- |  | ---------------- | - |  | ------------------------------------- | - |  | ---- | -
|                  |  | TargetAllocation |   |  | Percentageof PlanAssets AtDecember 31 |  
|                  |  | 2005             |   |  | 2004                                  |   |  | 2003 |  
|Asset Category    |  |                  |   |  |                                       |   |  |      |  
|Equity Securities |  | 60               | % |  | 66                                    | % |  | 61   | %
|Fixed Income      |  | 40               | % |  | 34                                    | % |  | 39   | %
|                  |  |                  |   |  |                                       |   |  |      |  
|                  |  | 100              | % |  | 100                                   | % |  | 100  | %
|                  |  |                  |   |  |                                       |   |  |      |  



Subject to the
limitation on deductibility imposed by federal income tax laws, the Companys policy is to contribute funds to the plans annually in amounts required to maintain sufficient plan assets to provide for accrued benefits. The Company also considers
additional contributions, subject to cash flow constraints. Plan assets are held in a master trust and are composed primarily of common stock, corporate bonds, and U.S. government and government agency obligations, based on the target allocations
noted above.



F-17



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##### Table of Contents

##### Index to Financial Statements

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Funded Status. The funded status of the plans, reconciled to the amount reported on the
consolidated balance sheets as of December 31 follows:



|                                       |  |                  |         |   |                                |   |         |      |  |   |        |   |  |   |        |  
|-------------------------------------- |  | ---------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | ------ | - |  | - | ------ | -
|                                       |  | Pension Benefits |         |   | Other Post-Retirement Benefits |  
|                                       |  | 2004             |         |   | 2003                           |   |         | 2004 |  |   | 2003   |  
|Funded status                          |  | $                | (26,236 | ) |                                | $ | (28,771 | )    |  | $ | (2,259 | ) |  | $ | (6,985 | )
|Unrecognized actuarial loss (gain)     |  |                  | 29,304  |   |                                |   | 27,903  |      |  |   | (345   | ) |  |   | (436   | )
|Unrecognized prior service cost        |  |                  | 312     |   |                                |   | 184     |      |  |   |       |   |  |   |       |  
|                                       |  |                  |         |   |                                |   |         |      |  |   |        |   |  |   |        |  
|Prepaid (accrued) benefit cost         |  | $                | 3,380   |   |                                | $ | (684    | )    |  | $ | (2,604 | ) |  | $ | (7,421 | )
|                                       |  |                  |         |   |                                |   |         |      |  |   |        |   |  |   |        |  
|Accrued benefit liability              |  | $                | (26,236 | ) |                                | $ | (28,556 | )    |  | $ | (2,604 | ) |  | $ | (7,421 | )
|Intangible asset                       |  |                  | 312     |   |                                |   | 184     |      |  |   |       |   |  |   |       |  
|Accumulated other comprehensive income |  |                  | 29,304  |   |                                |   | 27,688  |      |  |   |       |   |  |   |       |  
|                                       |  |                  |         |   |                                |   |         |      |  |   |        |   |  |   |        |  
|Net amount recognized                  |  | $                | 3,380   |   |                                | $ | (684    | )    |  | $ | (2,604 | ) |  | $ | (7,421 | )
|                                       |  |                  |         |   |                                |   |         |      |  |   |        |   |  |   |        |  



Expected Cash
Flows. Our expected contributions for all defined benefit pension plans during 2005 are $6.3 million.



Estimated Future Benefit Payments. Our expected future benefit payments under our pension and other post-retirement plans, using the same
assumptions used to estimate the Companys benefit obligation at December 31, 2004, are as follows:



|                         |  |         |        |                 |    
|------------------------ |  | ------- | ------ | --------------- | ---
|                         |  | Pension |        | Post-Retirement
|Year ending December 31, |  |         |        |                 |    
|2005                     |  | $       | 6,030  |                 | 165
|2006                     |  |         | 6,106  |                 | 116
|2007                     |  |         | 6,197  |                 | 120
|2008                     |  |         | 6,302  |                 | 115
|2009                     |  |         | 6,444  |                 | 113
|20102014                |  |         | 34,473 |                 | 575



F-18



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##### Table of Contents

##### Index to Financial Statements

Net Period Cost. The components of the net period cost for the years ended December 31, 2004, 2003
and 2002 are as follows:



|                                   |  |                            |        |   |                                |   |        |                            |  |   |                            |   |  |                            |        |                            |  |   |     |  |   |    
|---------------------------------- |  | -------------------------- | ------ | - | ------------------------------ | - | ------ | -------------------------- |  | - | -------------------------- | - |  | -------------------------- | ------ | -------------------------- |  | - | --- |  | - | ---
|                                   |  | Pension Benefits           |        |   | Other Post-Retirement Benefits
|                                   |  | Year endedDecember 31,2004 |        |   | Year endedDecember 31,2003     |   |        | Year endedDecember 31,2002 |  |   | Year endedDecember 31,2004 |   |  | Year endedDecember 31,2003 |        | Year endedDecember 31,2002
|                                   |  | (Amounts in thousands)    
|Service cost                       |  | $                          | 651    |   |                                | $ | 851    |                            |  | $ | 903                        |   |  | $                          | 92     |                            |  | $ | 133 |  | $ | 109
|Interest cost                      |  |                            | 5,581  |   |                                |   | 5,409  |                            |  |   | 5,209                      |   |  |                            | 334    |                            |  |   | 413 |  |   | 421
|Expected return on plan assets     |  |                            | (5,360 | ) |                                |   | (4,656 | )                          |  |   | (5,365                     | ) |  |                            |       |                            |  |   |    |  |   |   
|Amortization of prior service cost |  |                            | 192    |   |                                |   | 282    |                            |  |   | 231                        |   |  |                            |       |                            |  |   |    |  |   |   
|Recognized actuarial (gain) loss   |  |                            | 2,807  |   |                                |   | 3,293  |                            |  |   | 798                        |   |  |                            | (11    | )                          |  |   |    |  |   |   
|Recognized curtailment             |  |                            |       |   |                                |   |       |                            |  |   |                           |   |  |                            | (4,903 | )                          |  |   |    |  |   |   
|                                   |  |                            |        |   |                                |   |        |                            |  |   |                            |   |  |                            |        |                            |  |   |     |  |   |    
|Net periodic benefit cost          |  | $                          | 3,871  |   |                                | $ | 5,179  |                            |  | $ | 1,776                      |   |  | $                          | (4,488 | )                          |  | $ | 546 |  | $ | 530
|                                   |  |                            |        |   |                                |   |        |                            |  |   |                            |   |  |                            |        |                            |  |   |     |  |   |    



Prior service costs
resulting from collective bargaining agreements are amortized over the life of the contracts. Other amortizations occur over the future working lifetimes.



The Companys major assumptions used to determine net cost for pension plans are presented as weighted averages:



|                                                   |  |                            |   |  |                                |   |  |                            |   |  |                            |   |  |                            |   |  |                            |  
|-------------------------------------------------- |  | -------------------------- | - |  | ------------------------------ | - |  | -------------------------- | - |  | -------------------------- | - |  | -------------------------- | - |  | -------------------------- | -
|                                                   |  | Pension Benefits           |   |  | Other Post-Retirement Benefits |  
|                                                   |  | Year endedDecember 31,2004 |   |  | Year endedDecember 31,2003     |   |  | Year endedDecember 31,2002 |   |  | Year endedDecember 31,2004 |   |  | Year endedDecember 31,2003 |   |  | Year endedDecember 31,2002 |  
|Discount rate                                      |  | 6.25                       | % |  | 6.50                           | % |  | 7.25                       | % |  | 6.25                       | % |  | 6.50                       | % |  | 7.25                       | %
|Expected return on plan assets                     |  | 8.75                       | % |  | 9.00                           | % |  | 9.00                       | % |  |                            |   |  |                            |   |  |                            |  
|Rate of compensation increase                      |  | 5.00                       | % |  | 5.00                           | % |  | 5.00                       | % |  |                            |   |  |                            |   |  |                            |  
|Health care cost                                   |  |                            |   |  |                                |   |  |                            |   |  |                            |   |  |                            |   |  |                            |  
|trend rates:                                       |  |                            |   |  |                                |   |  |                            |   |  |                            |   |  |                            |   |  |                            |  
|Initial                                            |  |                            |   |  |                                |   |  |                            |   |  | 8.00                       | % |  | 9.00                       | % |  | 10.00                      | %
|Ultimate                                           |  |                            |   |  |                                |   |  |                            |   |  | 6.00                       | % |  | 6.00                       | % |  | 6.00                       | %
|Year that the rate reaches the ultimate trend rate |  |                            |   |  |                                |   |  |                            |   |  | 2007                       |   |  | 2007                       |   |  | 2007                       |  



The selected long-term
rate of return on plan assets was based primarily on the allocation of the plans assets. Analysis of the historic returns of the various included asset classes combined with projections of future returns were considered in setting the
long-term rate of return. The Company reviews these factors annually to ensure the assumption used is consistent with these trends. The Company has elected to decrease the asset return assumption from 8.75% to 8.5% for the 2005 fiscal year.



Assumed health care cost trend rates have a significant effect
on the amounts reported for the health care plans. A 1% increase in assumed health care cost trend rates would increase the total of the service and interest cost components for 2004 and the post-retirement benefit obligation as of December 31, 2004
by $59,000 and $175,000 respectively. A 1% decrease in assumed health care cost trend rates would decrease the total of the



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##### Index to Financial Statements

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



service and interest cost components for 2004 and the postretirement benefit obligation as of December 31, 2004, by $49,000 and $160,000, respectively.



Defined Contribution PlanCertain employees
not covered by collective bargaining agreements are eligible to participate in a 401(k) employee savings plan. Employees who have met certain requirements are eligible to participate in the plan upon date of hire. The employees participating in the
plan can generally make contributions up to 20% of their annual compensation, and the Company can elect to match such employee contributions up to a maximum of 50% of the employees first 6%. The matching contributions vest 100% after four
years.



Certain unionized employees are eligible to participate
in a Savings Plan. Eligibility rules vary based upon the terms of the respective applicable locations collective bargaining agreement.



The Companys defined contribution plan expense was $1.3, $1.5 and $1.3 million for the years ended December 31, 2004, 2003 and 2002, respectively.



Multi-employer PlansThe Company currently
contributes to two multi-employer pension plans. The Companys expense related to these plans was $1.0, $1.0 and $1.1 million for the years ended December 31, 2004, 2003 and 2002, respectively.



Stock Option PlansDuring 1998, Suiza Packaging adopted
the Franklin Plastics, Inc. 1998 Stock Option Plan, which reserved 187,089 shares of common stock for grants and granted stock options to certain key employees at exercise prices that approximated the fair market value of such shares at the date of
grant. Stock options granted under this plan were exercisable over a three-year period from the date of grant and could become exercisable upon the termination of an individuals employment following a change in control. As a result of the
transactions surrounding the formation of the Company, participants were able to convert options granted under the Franklin plan to the Consolidated Container Holdings LLC Replacement Units Option Plan. As a result, 116,964 shares exercisable
pursuant to previously issued and outstanding options under the Franklin plan were converted to become exercisable in the units of Holdings, using a conversion rate of 2.94295 units per share, resulting in 344,167 options outstanding at July 2,
1999, none of which were exercisable at that date. As of December 31, 2004, there were 132,601 options outstanding with an average strike price of $4.81 per member unit.



In addition, Holdings adopted a 1999 Unit Option Plan to provide some of the Companys managers and other key employees
with options to acquire up to 596,206 or 5.5%, on a diluted basis, of the member units of Holdings. This plan, now known as the Second Amended and Restated Consolidated Container Holdings LLC 1999 Unit Option Plan (the CCH Plan), was
subsequently expanded to enable the Company to grant options to acquire 24,500,000 member units of Holdings. As of December 31, 2004, there were 22,476,997 options outstanding with an average exercise price of $0.05 per member unit.
The exact pricing, performance criteria, vesting terms and redemption of options granted under this plan are governed by individual unit option agreements between the employee and Holdings and, if the options are exercised, the terms of the options
will be governed by special unit acquisition, ownership and redemption agreements.



Under a previous version of the CCH Plan, during 2002, certain employees were offered the opportunity to exchange options formerly granted with a strike price ranging from $10.50 to $40.00 for options with a five-year
vesting period, ten-year contractual life, and a strike price ranging from $6.50 to $15.00 on a 1-for-1 basis. A total of 645,700 options were canceled and reissued under this program. Additionally, in the fourth quarter of 2002, certain employees
were offered the opportunity to exchange options formerly granted with a strike price of $29.66 for options with a five-year vesting period, ten-year contractual life, and a strike price of $6.50 on a 4-for-1 basis. As a result, 38,000 of the
$29.66-strike price options were canceled and 9,494 options with a strike price



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##### Index to Financial Statements

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



of $6.50 were granted. Terms of these newly issued options made the beginning of the vesting schedule retroactive to July 2, 2002, the date on which the
exchange offer was approved by the management committee. Any prior vesting of exchanged options was foregone as part of the exchange process. As these options relate to the parent companys securities, the expense has been reflected in the
Companys consolidated statements of operations and as a capital contribution in the parent company financial statements.



Also under a previous version of the CCH Plan, during 2003, in an effort to properly align the option values with the current performance of the Company,
all outstanding options with a strike price of $6.50 or $15.00 were re-priced to $1.00. Other terms of the options (except for changes in certain terms affecting vesting and termination of options) were not changed by this amendment. Additionally,
in 2004, following the Companys refinancing, the management committee further reduced the exercise price on all options from $1.00 to $0.05 and awarded additional options to certain employees. The impact on the financial statements of these
re-pricing transactions was negligible.



The fair value of each
option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighed average assumptions for grants in 2004: no dividend yield; no expected volatility; risk-free interest rate of 3.73 percent; and
expected lives of two and one half to five years. Because the fair market value of the equity underlying the options that were granted in 2004 was negligible, the estimated value for these options on the date of grant using the Black Scholes
model was negligible. For this reason, no compensation expense was recognized related to the grant of these options in 2004.



The members of Holdings have agreed that, upon exercise of 344,167 options outstanding as of December 31, 2004, with a weighted exercise price of $1.88,
some portion of the proceeds would be remitted to one of the members, Franklin Plastics, Inc., who would release one of its member units to the exercising party. The portion of the proceeds that were not remitted to the member would be remitted to
Consolidated Container Company.



Stock option activity from the
years ending December 31, 2002, 2003 and 2004 is summarized below:



|                                  |  |            |   |  |                               |      
|--------------------------------- |  | ---------- | - |  | ----------------------------- | -----
|                                  |  | Shares     |   |  | Weightedaverageexercise price
|Unexercised at December 31, 2001  |  | 973,306    |   |  | $                             | 20.72
|Granted                           |  | 892,494    |   |  |                               | 10.34
|Forfeited or exercised.           |  | (835,882   | ) |  |                               | 23.35
|                                  |  |            |   |  |                               |      
|Unexercised at December 31, 2002  |  | 1,029,918  |   |  |                               | 9.59 
|Granted                           |  | 271,384    |   |  |                               | 1.00 
|Forfeited or exercised.           |  | (78,741    | ) |  |                               | 7.98 
|                                  |  |            |   |  |                               |      
|Unexercised at December 31, 2003. |  | 1,222,561  |   |  |                               | 2.07 
|Granted                           |  | 21,449,738 |   |  |                               | 0.05 
|Forfeited or exercised.           |  | (62,701    | ) |  |                               | 13.37
|                                  |  |            |   |  |                               |      
|Unexercised at December 31, 2004  |  | 22,609,598 |   |  | $                             | 0.08 
|                                  |  |            |   |  |                               |      



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##### Table of Contents

##### Index to Financial Statements

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following table summarizes the information about stock options outstanding at December 31, 2004:



|                          |  |                     |  |                                         |  |                     |        |  |                              |  |   |      
|------------------------- |  | ------------------- |  | --------------------------------------- |  | ------------------- | ------ |  | ---------------------------- |  | - | -----
|                          |  | Options Outstanding |  | Weightedaverageexerciseprice            |  | Options Exercisable
|                          |  | Shares              |  | WeightedAverageRemainingContractualLife |  |                     | Shares |  | Weightedaverageexerciseprice
|Range of exercise prices: |  |                     |  |                                         |  |                     |        |  |                              |  |   |      
|$0.05                     |  | 22,476,997          |  | 10                                      |  | $                   | 0.05   |  | 9,020,454                    |  | $ | 0.05 
|$3.40                     |  | 105,059             |  | 6                                       |  |                     | 3.40   |  | 105,059                      |  |   | 3.40 
|$10.19                    |  | 27,542              |  | 5                                       |  |                     | 10.19  |  | 27,542                       |  |   | 10.19



Long-Term
Incentive PlanIn July 2004, the management committee of Holdings terminated an existing long-term incentive plan and adopted a new long-term incentive plan (LTIP) for some of the key employees of the Company. Under the
LTIP, if a liquidity event were to occur, then the compensation committee of Holdings management committee would approve cash payments to participants based on formulas which would take into account, among other factors, the appreciation in
value of the member units of Holdings, the allocation percentage granted to each participant, and the vesting of each award. As defined in the plan, a liquidity event includes:



| |  |  | the sale of units of Holdings held by Vestar Packaging LLC and its affiliates, for cash or marketable securities, resulting in Vestar Packaging LLC and its affiliates owning
less than a majority of the total voting power of Holdings;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the sale of substantially all of the assets of the Company or of Holdings; or
| | - |  | -----------------------------------------------------------------------------



| |  |  | an initial public offering of the member units of Holdings.
| | - |  | -----------------------------------------------------------



Each participants award is subject to reduction or forfeiture in the event the participants employment with the Company is terminated prior to
the occurrence of a liquidity event, depending on the reason for such termination of employment.



The aggregate of all awards granted under the LTIP (which includes two separate pools referred to as Bonus Pool-A and Bonus Pool-B) is limited to a
maximum payout of approximately $11.8 million. The compensation committee of Holdings management committee administers the plan.



11. INCOME TAXES



As a limited liability company, the Company is generally not subject to United States federal income tax. Some states, which do not conform to the federal
treatment of limited liability companies, do assess a franchise tax that is generally based on the equity of the Company. However, the Company is required to distribute cash to its sole member, Holdings, to allow its equity members to pay income and
franchise tax on their share of income or loss pursuant to their membership interest. Total distributions, net of refunds received on the overpayment of the equity members prior year taxes, for the years ended December 31, 2004, 2003 and 2002
were $0.1, ($0.9) and ($0.1) million, respectively. The Company estimates that there will be no tax distributions in 2005 for 2004.



The Companys wholly owned subsidiary, Continental Caribbean Containers, Inc., ceased operations and sold substantially all of its assets during
December 2004. As a result of the asset sale, a $0.4 million tax charge was recognized which is included in income tax expense in the accompanying consolidated statement of operations and comprehensive loss. The tax charge relates to a capital gain
tax accrued for the sale of assets and a tollgate tax accrued for subsequent transfer of remaining assets from Puerto Rico to the United States.



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##### Index to Financial Statements

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



In addition, the equity members of Holdings will be subject to United States income taxes upon the
distribution to the Company of un-remitted earnings from the Companys foreign subsidiaries of $4.8, $4.5 and $4.7 million as of December 31, 2004, 2003, and 2002, respectively. A determination of the United States income tax liability for each
of the equity members related to the ongoing foreign entities is not practicable. As of December 31, 2004, management has not made any plans to distribute un-remitted earnings of the Companys ongoing foreign operations. Therefore, un-remitted
earnings will be reinvested as part of the Companys ongoing foreign operation. The earnings of the Companys wholly owned subsidiary, Continental Caribbean Containers, Inc., will be remitted to the Company in the form of a dividend during
2005.



12. COMMITMENTS AND CONTINGENCIES



Lease CommitmentsThe Company leases certain property,
plant and equipment used in its operations under non-cancelable operating lease agreements. Such leases, which are primarily for facilities, machinery and equipment and vehicles, have lease terms ranging from three to twenty-four years. Certain of
the operating lease agreements require the payment of additional rentals for maintenance, along with additional rentals, based on miles driven or units produced. Rent expense for such leases was $19.9, $24.2 and $27.4 million for the years ended
December 31, 2004, 2003 and 2002, respectively.



Future minimum
lease payments at December 31, 2004, are summarized below (dollar amounts in thousands):



|                                   |  |                 |        
|---------------------------------- |  | --------------- | -------
|                                   |  | OperatingLeases
|Year ending December 31:           |  |                 |        
|2005                               |  | $               | 20,119 
|2006                               |  |                 | 18,610 
|2007                               |  |                 | 18,453 
|2008                               |  |                 | 17,584 
|2009                               |  |                 | 13,075 
|Thereafter                         |  |                 | 36,432 
|                                   |  |                 |        
|Total minimum payments required(1) |  | $               | 124,273
|                                   |  |                 |        

---

|(1) | Minimum payments have not been reduced by minimum sublease rentals of $1.3 million due in the future under non-cancelable subleases. Included in operating lease expense is $4.4
million in lease payments related to a sales leaseback transaction in 2001.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



ContingenciesThe Company and its subsidiaries are parties, in the ordinary course of business, to certain claims and litigation. In managements opinion, the settlement of such matters is not
expected to have a material impact on the consolidated financial statements. The Company is also party to several ongoing Environmental Protection Agency (EPA) investigations. Although the Company cannot estimate with certainty the
ultimate legal and financial liability with respect to the sites under investigation, based on the investigation performed to date, the Company believes that they are not responsible for the sites.



In 1997, the Company entered into an agreement with a former management
shareholder. The agreement calls for payments of up to $3.4 million if specified investment returns of Reid Plastics are achieved, and up to $4.8 million upon an initial public offering of Reid Plastics Holdings, if specified investment returns are
achieved, or specified qualified sales of Reid Plastics Holdings by Vestar Reid, the parent of Reid Plastics Holdings and a controlled affiliate of Vestar Capital Partners III, L.P. The Company made no payment for the year ended December 31, 2004
under the terms of the 1997 agreement.



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##### Index to Financial Statements

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



In addition, the Company is a party to employment agreements with certain officers that provide for
minimum compensation levels and performance-based incentive bonuses along with provisions for termination of benefits in certain circumstances.



The Company also has a Long-Term Incentive Plan for some of the key employees of the Company, which is described more fully in Note 10. Under this plan,
if a liquidity event occurs and certain criteria are met, cash payments will be made to participants in this plan.



13. RELATED PARTY TRANSACTIONS



Management AgreementIn April 1999, the Company entered into a management agreement with Vestar Capital Partners to provide ongoing
management services. The Company will pay to Vestar Capital Partners an annual fee of the greater of $500,000 or 0.42% of the prior years earnings before interest, taxes, depreciation and amortization year and all out-of-pocket expenses
regarding these services.



Simultaneously, during the formation
of the Company on July 9, 1999, the Company entered into the following agreements:



| |  |  | Supply AgreementsThe Company entered into supply agreements with Suiza Foods Corporation, now doing business as Dean Foods Company. The prices for bottles and bottle
components are based on the prices that were in effect in July 1999 between Suiza Foods and the Company and are subject to adjustment based on changes in raw material, manufacturing and delivery costs. In June 2004, the Company amended and restated
its bottle components agreement with Dean Foods, providing for, among other things, an expiration date of December 31, 2006.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Trademark License AgreementThe Company entered into a trademark license agreement with Continental Can Company, Inc. (Continental Can), a wholly owned
subsidiary of Suiza, now doing business as Dean Foods Company. Continental Can granted the Company a nonexclusive license to use some of its trademarks in the United States. The trademark license is royalty-free as long as Dean Foods owns 10% or
more of Holdings. Should Dean Foods ownership interest fall below 10%, an annual royalty of $100,000 would be charged to the Company.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Company had bottle and resin sales to Dean Foods of approximately $191.6, $160.7 and $129.7 million for the years ended December 31, 2004, 2003,
and 2002, respectively. Accounts receivable from Dean Foods, net of amounts owed at December 31, 2004 and 2003, amounted to approximately $17.3 and $12.0 million, respectively.



In connection with the refinancing in May 2004, Holdings sold 45,000 Series B Convertible Preferred Units to Vestar CCH
Preferred LLC, an affiliate of Vestar Capital Partners III, L.P., and to Franklin Plastics, Inc., an affiliate of Dean Foods Company, for $1,000 per unit in cash. Consolidated Container Holdings then made a capital contribution to the Company of the
$45.0 million in proceeds received from the sale of the Series B Convertible Preferred Units. This contribution, offset by the associated issuance costs for which the Company paid on behalf of Holdings, has been recorded in Members Deficit.



In addition to Dean Foods investment in connection with
the refinancing discussed above and purchase of bottles from us, during 2004 we sold three of our manufacturing plants (each of which operated on-site at a Dean Foods filling location) to Dean Foods for an aggregate of approximately $2.8
million in an arms length transaction.



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##### Index to Financial Statements

CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



14. ALLOWANCE FOR DOUBTFUL ACCOUNTS



|                  |  |                              |       |           |     |                        |        |   |                        |   |      
|----------------- |  | ---------------------------- | ----- | --------- | --- | ---------------------- | ------ | - | ---------------------- | - | -----
|Period Ended      |  | Balance atBeginningof Period |       | Provision |     | Recoveries(Write-offs) |        |   | Balance atEnd ofPeriod
|                  |  | (Amounts in thousands)      
|December 31, 2002 |  | $                            | 3,561 |           | 46  |                        | (2,193 | ) |                        | $ | 1,414
|December 31, 2003 |  | $                            | 1,414 |           | 92  |                        | (213   | ) |                        | $ | 1,293
|December 31, 2004 |  | $                            | 1,293 |           | 632 |                        | (761   | ) |                        | $ | 1,164



15. GUARANTOR FINANCIAL STATEMENTS



Separate financial statements of the subsidiary
guarantors are not included herewith as management has determined that such information is not material to investors because (i) the subsidiary guarantors constitute substantially all of the Companys direct and indirect subsidiaries and have
fully and unconditionally guaranteed the notes on a joint and several basis, and (ii) Holdings is a holding company with no assets, operations or cash flow separate from its investment in the subsidiary guarantors.



|16. | SUBSEQUENT EVENTS
|--- | -----------------



On February 15, 2005, the Company announced the acquisition of STC Plastics, Inc. (STC), a blowmolder of polycarbonate and high-density
polyethylene bottles in Chino, California. As consideration for all the issued and outstanding shares of STC, the stockholders of STC received: (1) a cash payment of $5.5 million at closing, (2) a promissory note in the approximate principal amount
of $1.5 million payable on January 1, 2008 and (3) options to purchase, in the aggregate, 3.19 million units of Holdings. The option grants, which are exercisable upon certain liquidity events of Holdings, include a commitment to repurchase the
options for no less than $3.0 million, in the aggregate, upon the same liquidity events.



In 2005, we were notified by our second largest customer, The Procter & Gamble Company, that they do not intend to renew one of their contracts with us, which expires on December 31, 2005, regarding polyethylene
terephthalate bottle production at our Kansas City, Kansas facility. The Company is currently in negotiations to finalize terms and timing of the transition of this business. In 2004, this business accounted for $41.8 million or 5.5% of our sales.



******



F-25