<PAGE>   1


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

                                  FORM 10-K/A-2
                               AMENDMENT NO. 2 TO

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

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

                         COMMISSION FILE NUMBER 0-21314

                              U.S. CAN CORPORATION

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                                   06-1094196
                      (I.R.S. EMPLOYER IDENTIFICATION NO.)

                                    DELAWARE
         (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)

                               900 COMMERCE DRIVE
                            OAK BROOK, ILLINOIS 60523
          (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)

                                 (630) 571-2500
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

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

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
value $0.01.

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 (the
"Exchange Act") during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

                                    Yes  X  No

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

As of February 28, 1998, the aggregate market value of the voting stock held by
non-affiliates of U.S. Can Corporation was approximately $182,283,090.

As of February 28, 1998, 13,049,157 shares of Common Stock were outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

Certain portions of U.S. Can Corporation's 1998 Proxy Statement are incorporated
in Part III hereof by reference.


<PAGE>   2



                      U.S. CAN CORPORATION AND SUBSIDIARIES

                                    FORM 10-K
                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                                     PAGE
                                                                                                                     ----
<S>                   <C>                                                                                           <C>
PART I
Item 1.               Business                                                                                         4
Item 2.               Properties                                                                                       9
Item 3.               Legal Proceedings                                                                               10
Item 4.               Submission of Matters to a Vote of Security Holders                                             11

PART II

Item 5.               Market for the Company's Common Equity and Related
                      Stockholder Matters                                                                             11
Item 6.               Selected Financial Data                                                                         12
Item 7.               Management's Discussion and Analysis of Financial Condition
                      and Results of Operations                                                                       14
Item 7A.              Quantitative and Qualitative Disclosures About Market Risk                                      21
Item 8.               Financial Statements and Supplementary Data                                                     21
Item 9.               Changes in and Disagreements With Accountants on Accounting
                      and Financial Disclosure                                                                        50

PART III

Item 10.              Directors and Executive Officers of the Registrant                                              50
Item 11.              Executive Compensation                                                                          50
Item 12.              Security Ownership of Certain Beneficial Owners and
                      Management                                                                                      50
Item 13.              Certain Relationships and Related Transactions                                                  50

PART IV

Item 14.              Exhibits, Financial Statement Schedules, and Reports
                      on Form 8-K                                                                                     50

</TABLE>


<PAGE>   3



                    INCLUSION OF FORWARD-LOOKING INFORMATION

         CERTAIN STATEMENTS UNDER THE CAPTIONS "BUSINESS," "LEGAL PROCEEDINGS,"
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" AND ELSEWHERE IN THIS REPORT CONSTITUTE "FORWARD-LOOKING STATEMENTS"
WITHIN THE MEANING OF SECTION 21E OF THE EXCHANGE ACT OF 1934, AS AMENDED (THE
"EXCHANGE ACT"). SUCH STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS AND
UNCERTAINTIES WHICH MAY CAUSE THE COMPANY'S ACTUAL RESULTS, PERFORMANCE OR
ACHIEVEMENTS, OR INDUSTRY RESULTS, TO BE MATERIALLY DIFFERENT THAN ANY FUTURE
RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED IN OR BY SUCH
FORWARD-LOOKING STATEMENTS. BY WAY OF EXAMPLE AND NOT LIMITATION, KNOWN RISKS
AND UNCERTAINTIES INCLUDE THE COMPANY'S ABILITY TO SUCCESSFULLY INTEGRATE OR
IMPROVE THE PERFORMANCE OF ACQUIRED BUSINESSES, THE TIMING AND COST OF PLANT
START-UPS AND CLOSURES, THE LEVEL OF COST REDUCTION ACHIEVED THROUGH
RESTRUCTURING, CHANGES IN MARKET CONDITIONS OR PRODUCT DEMAND, LOSS OF IMPORTANT
CUSTOMERS, COMPETITION AND CURRENCY FLUCTUATIONS. IN LIGHT OF THESE AND OTHER
RISKS AND UNCERTAINTIES, THE INCLUSION OF A FORWARD-LOOKING STATEMENT IN THIS
REPORT SHOULD NOT BE REGARDED AS A REPRESENTATION BY THE COMPANY THAT ANY FUTURE
RESULTS, PERFORMANCE OR ACHIEVEMENTS WILL BE ATTAINED.






<PAGE>   4



                      U.S. CAN CORPORATION AND SUBSIDIARIES

                             FORM 10-K ANNUAL REPORT
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

                                     PART I

ITEM 1.  BUSINESS

                                     GENERAL

         References in this Report to the "Company" mean U.S. Can Corporation
and its subsidiaries, collectively, unless the context otherwise requires; and
references to "U.S. Can" mean solely United States Can Company and, unless the
context otherwise requires, does not include U.S. Can's foreign subsidiaries
(collectively referred to as "USC Europe"). U.S. Can Corporation is a Delaware
corporation, which owns all of U.S. Can's outstanding capital stock. The
references in this Report to market positions or market share are based on
information derived from annual reports, trade publications and management
estimates which the Company believes to be reliable.

         The Company is a leading manufacturer of steel and plastic containers
for personal care, household, automotive, paint and industrial products in the
United States and Europe. The Company's sales are generated by four major
groups: (i) U.S. aerosol; (ii) European aerosol; (iii) U.S. paint, plastic and
general line; and (iv) custom and specialty products. The Company believes it
currently has the number one or two market share in the U.S. aerosol, European
aerosol and U.S. paint, plastic and general line product groups. The Company
conducts its principal business operations in the general packaging (non-food
and non-beverage) segment of the metal container industry. The Company is a
supplier to numerous large consumer products manufacturers in the United States
and Europe, including The Sherwin-Williams Company, The Gillette Company
("Gillette"), ICI-Glidden, The Procter & Gamble Company, Reckitt & Coleman Inc.,
Henkel Kommanditgeselschaft and Elida Gibbs Faberge, a division of Unilever PLC.

Aerosol

         The Company is the leader in sales of aerosol cans in the United
States, accounting for approximately 58% of all aerosol cans sold domestically
in 1997. USC Europe produced approximately 26% of all steel aerosol cans sold in
Europe in 1997 and was the second largest manufacturer of steel aerosol cans in
Europe. Aerosol containers represent the Company's largest product line,
accounting for approximately 58.8% of the Company's total net sales in 1997, and
are used to package personal care, household, automotive, paint and various
other products. The Company offers a wide range of aerosol containers in order
to meet its customers' requirements, including stylized necked-in cans and
barrier-pack cans used for products such as shaving gel.

         In March 1998, the Company acquired a 36.5% equity interest in
Formametal S.A. ("Formametal"), an aerosol can manufacturing company located in
the Province of Buenos Aires, Argentina for approximately $4.6 million. In
connection with this investment, Formametal has agreed to purchase approximately
$2.6 to $3.0 million of manufacturing equipment from the Company, and the
Company has agreed to provide certain technical assistance to Formametal, in
order to modernize and expand Formametal's manufacturing operations.

Paint, Plastic and General Line

         Paint, plastic and general line, the Company's second largest product
grouping, accounted for approximately 28.9% of the Company's total net sales in
1997. This product group includes round cans for paint and coatings, oblong cans
for products such as turpentine and charcoal lighter, and metal and plastic
pails and other containers for industrial and consumer products. Management
estimates that U.S. Can is second in market share in the United States, on a
unit volume basis, in steel round and general line containers. Management
believes U.S. Can produced more than 40% of all steel round and general line
containers sold in the United States during 1997.

Custom and Specialty Products

         The Company has a significant presence in the custom and specialty
products market. Its product lines include a wide array of functional and
decorative containers and tins, caps and closures, fitments and stampings, and
collectible items such as metal trading cards and signs. Through the early 1997
acquisition of the Erie metal business from Owens-Illinois, the Company
significantly increased its seamless container presence and supplemented its
closure capabilities with the addition of the highly decorative unishell product
line. Major customers in these two lines include Northern Labs and Meguiars, car
wax companies which purchase seamless containers, and Avon and Carmex, consumer
product firms which purchase unishell closures. Custom and specialty contributed
sales of approximately $89 million or 11.7% of the Company's total net sales in
1997.



<PAGE>   5

Restructuring Activities

         During the second half of 1997, the Company undertook a number of
restructuring activities including the closure of four manufacturing facilities,
the sale of one manufacturing facility, and certain asset divestitures and
organizational changes. A number of factors contributed to these restructuring
activities including the loss of S.C. Johnson & Son, Inc. ("S.C. Johnson") as an
aerosol customer and increased manufacturing efficiency at other plants. The
purposes of these restructuring activities include cost and debt reductions, as
well as an emphasis on the Company's core product groups. As a result of these
restructuring activities, the Company recorded pre-tax charges of $52.2 million
and $10.8 million in the third and fourth quarters of 1997, respectively, and
plans to sell its discontinued commercial metal services business.

         As part of these restructuring activities, the Company's aerosol
assembly plant in Racine, Wisconsin, lithography centers in Alsip, Illinois and
Sparrows Point, Maryland, and a custom and specialty plant in Vernalis,
California have been or will be closed. In addition, the Company has sold the
assets of the North Brunswick, New Jersey steel pail business and certain other
non-core product lines, and expects to sell (i) the commercial metal services
operations located in Chicago, Illinois; Trenton, New Jersey and Brookfield,
Ohio (collectively, "Metal Services"), (ii) the Orlando, Florida machine
engineering center ("OMEC") and (iii) certain other non-core product lines.
During 1997, 1996 and 1995, the discontinued operations generated approximately
15.3%, 15.3% and 11.4%, respectively, of the Company's total net sales. The
Company's reorganization activities also include reductions in the Company's
salaried and hourly workforce.

         For more details on these restructuring activities, see "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Restructuring" and Note (3) of the Notes to Consolidated Financial
Statements included elsewhere in this Report.






<PAGE>   6
                                      SALES

         The Company's sales from continuing operations are derived from four
major groups: (i) U.S. aerosol, (ii) European aerosol, (iii) U.S. paint, plastic
and general line, and (iv) custom and specialty products. The following table
sets forth the percentage of sales contributed by each of these groups for each
of the last three fiscal years:


<TABLE>
<CAPTION>
                                                  1995       1996        1997
                                                  ----       ----        ----
<S>                                               <C>        <C>         <C>  
U.S. aerosol                                      56.5%      52.5%       44.9%
European aerosol (acquired in late 1996)          --          5.0        13.9
U.S. paint, plastic and general line              31.2       30.8        28.9
Custom and specialty products, and other          12.3       11.7        12.3
</TABLE>

                                    CUSTOMERS

         As of December 31, 1997, in the United States, the Company had
approximately 7,500 customers for its products, as compared to approximately
9,000 and 6,600 customers as of December 31, 1996 and 1995, respectively. No
single customer accounted for more than 10% of the Company's total net sales
during 1997, 1996 or 1995.

         In accordance with industry practice, the Company enters into one-year
or multi-year supply agreements with its major customers. These agreements
specify the number of containers a customer will purchase (or the mechanism for
determining such number), pricing, volume discounts (if any) and, in the case of
many of the Company's multi-year supply agreements, a provision permitting the
Company to pass through announced price increases in certain raw material costs.

         In the United States, U.S. Can markets its products primarily through a
sales force comprised of inside and outside sales representatives. The sales
force is comprised of five groups -- Aerosol Sales, Paint, Plastic and General
Line Sales, Metal Services Sales, Custom and Specialty Sales and OMEC Sales. The
Company expects to sell Metal Services and OMEC as part of its restructuring
activities. In total, as of February 1, 1998, the Company had 47 outside sales
representatives and 52 inside sales representatives working in the domestic
market. USC Europe has eight inside sales representatives and eight outside
sales representatives working in the U.K., France, Spain, Germany and Italy.

                                  RAW MATERIALS

         The Company's principal raw materials are tin-plated steel ("tin
plate") and coatings and inks used to print its customers' designs and logos
onto the tin plate. U.S. Can purchases tin plate principally from domestic steel
manufacturers, with a minor portion purchased from Asian and European mills.
Both U.S. Can and USC Europe primarily rely on local mills to satisfy their
plants' tin plate requirements, but may also buy tin plate from other suppliers.
Tin plate accounted for approximately 86% of U.S. Can's total domestic raw
material purchases in 1997. Periodically, U.S. Can's major suppliers announce
increases in prices for tin plate and, in October 1997, such suppliers announced
an increase of 3% in the price of tin plate, effective January 1998.
Historically, U.S. Can has been able to negotiate lower price increases than
those announced by its major suppliers. However, there can be no assurance that
U.S. Can will be successful in negotiating lower price increases with respect to
future price increases. Many of U.S. Can's multi-year supply agreements with its
customers permit it to pass through tin plate price increases and, in some
cases, other raw material costs. However, historically, U.S. Can has not always
been able to immediately offset increases in tin plate prices with price
increases on its products.

         The Company believes that adequate quantities of tin plate will
continue to be available from steel manufacturers. The individual suppliers of
raw materials accounting for more than 10% of the total steel used by U.S. Can
in 1997 were USX's U.S. Steel group, Weirton Steel Corporation and LTV
Corporation. The percentage of total raw materials supplied to U.S. Can by each
of these suppliers ranged from approximately 28% to 30% for the year ended
December 31, 1997.

         Periodically, USC Europe's major suppliers have announced price
increases for tin plate. USC Europe has on occasion been able to negotiate lower
price increases than those announced by its major suppliers. However, there can
be no assurance that USC Europe will be successful in negotiating lower price
increases with respect to future price increases. Although supply agreements
with customers often permit USC Europe to pass on announced raw material cost
increases in the form of higher prices, USC Europe has not always been able to
fully offset increases in tin plate prices.

         The Company has not historically entered into written supply contracts
with steel makers and believes that other can manufacturers follow the same
practice. The Company allocates its purchases among steel makers on the basis of
price and performance, and uses a structured quality and service rating system
which monitors each supplier's performance on a monthly basis. Typically, the
Company reaches an oral agreement with each of its domestic tin plate suppliers
on the volume of the Company's purchases and pricing once per calendar year,
based on good faith estimates. Pricing is subject 




<PAGE>   7

to renegotiation if the steel maker's raw material costs increase or decrease.
Since the inception of the Company, the annual steel price agreements have not
been renegotiated for any reason. Agreements with foreign steel makers are
substantially similar.

         The Company's second largest raw material expense is for coatings and
inks, which are used to print designs and logos onto the tin plate prior to
assembly. Coatings and inks accounted for approximately 9% of U.S. Can's
domestic raw material costs in fiscal year 1997 and are purchased from
indigenous suppliers. Based on the ready availability of these materials in the
past and the number of manufacturers which continue to make these products,
management does not anticipate any lack of availability of coatings and inks in
the foreseeable future.

         The Company's plastic products are produced from two main types of
resin, which is a petroleum or natural gas product. High density polyethylene
resin is used to make pails, drums and agricultural products. 100%
post-industrial and consumer use, recycled polyethylene or polypropolene resin
is used in the production of the Plastite line of paint cans. The price of resin
fluctuates significantly and management believes that it is standard industry
practice, as well as the Company's contractual right/obligation in many of its
supply agreements, to pass on increases and decreases in resin prices to the
customer.

                                      LABOR

         As of February 1, 1998, in the United States, the Company employed
approximately 3,757 salaried and hourly employees. At that date, there were a
total of 2,089 employees, or 56% of the Company's total workforce, who were
members of various labor unions, including the United Steelworkers of America
("USWA"), the International Association of Machinists ("IAM"), Local 810 Steel,
Metals, Alloys and Hardware Fabricators and Warehousemen, affiliated with the
International Brotherhood of Teamsters (the "Teamsters"), the Sheet Metal
Workers of America ("SMWA"), Graphic Communications International Union
("GCIU"), and the International Leather Goods, Plastic, Novelty and Service
Workers Union ("ILGPNSWU"). Labor agreements with the IAM (covering
approximately 36 employees) and with the GMP (covering approximately 75
employees), for the Wheeling, West Virginia plant, were ratified in March and
August 1997, respectively. A new agreement with the USWA was entered into at the
end of March 1997, covering approximately 62 employees at U.S. Can's Chicago
Metal Services facility. In August 1997, the Company completed negotiations at
its Burns Harbor, Indiana plant with the GCIU for the renewal of the labor
agreement for approximately 48 employees. In December 1997, the labor agreement
with the GCIU covering approximately 147 employees at the Weirton, West Virginia
plant was extended to February 15, 2002. The Company has also concluded
negotiations to discontinue its operations at its Midwest Litho Center in Alsip,
Illinois, involving the Teamster's unit of approximately 72 employees; the
Racine, Wisconsin plant involving the IAM's unit of approximately 75 employees;
and the Sparrows Point, Maryland plant with the USWA covering approximately 81
employees.

         USC Europe employed approximately 721 people at the end of 1997. The
workforce is skilled and committed, as demonstrated over the last six years by
increasing productivity and very limited work stoppage due to labor disputes. In
line with common European practices, all plants are unionized. Labor relations
are excellent at all plants. Each of the USC Europe plants is managed by an
experienced management team, comprised of, in most cases, a general manager,
plant manager, sales manager and finance manager.

         The Company has followed a labor strategy designed to enhance its
flexibility and productivity through constructive relations with its employees
and collective bargaining units. Elements of this strategy have included
implementation of flexible staff schedules, plant-level profit sharing plans and
plants staffed entirely by salaried workers. Management believes the 401(k) plan
first negotiated at U.S. Can's Elgin, Illinois plant is unique in the packaging
industry and provides incentives for local performance, while reducing the
Company's exposure to defined benefit plan costs traditionally bargained for by
unions. Currently, unionized workers at nine domestic plants are included in
this plan. In 1997, the ILGPNSWU unit at Newnan, Georgia, the GCIU unit at Burns
Harbor, Indiana, the USWA unit at Chicago Metal Services and employees of the
Alliance, Ohio plant were included in this plan.

         Management believes the Company and its employees have benefited from
dealing directly with local unions in order to tailor their contracts to local
employee issues. In the future, management intends to negotiate separately with
the unions at acquired plants to reach individual site contracts with the
respective local unions. This policy has the effect of staggering renewal
negotiations with the various bargaining units. Management believes the
Company's relations with its employees and their collective bargaining units are
generally good, as evidenced by the fact that the Company has had only two work
stoppages in its history--a five-day work stoppage at the Horsham, Pennsylvania,
facility in November, 1992, and a one-day work stoppage at the now-closed San
Leandro, California, facility in June, 1988.

                                   COMPETITION

         The principal methods of competition in the general packaging industry
are price, quality and service. The Company believes that it competes favorably
in each of these areas. The Company can also compete more effectively by


<PAGE>   8

reducing manufacturing costs and enhancing operating efficiencies through
investments in capital equipment and technology. Price competition in the
industry is vigorous and limits the Company's ability to increase prices.
Generally, customers of all general line containers are demanding more
consistent product availability with shorter lead times. Because aerosol cans
are used for personal care, household and other packaged products, and because
they are pressurized, aerosol cans are more sensitive to quality, can decoration
and other consumer-oriented features than paint and general line containers.

         Competition has increased in the general packaging industry as a result
of mature markets, customer consolidations and consolidation within the
container industry. In steel aerosol containers, U.S. Can competes primarily
with Crown, Cork & Seal ("Crown") and BWAY Corporation. Crown is larger and has
greater financial resources than the Company. USC Europe competes in the steel
aerosol market with Crown, Impress, Staehle, and a group of other smaller
regional producers. Domestically, U.S. Can also competes with Advanced Monobloc
and two other smaller firms which manufacture aluminum aerosol containers. In
Europe, USC Europe competes with aluminum aerosol container manufacturers,
Alusuisse-Lonza Holding AG/Boxal and Pechiney International, S.A./Cebal.

         In paint and general line, the Company competes primarily with BWAY
Corporation and one smaller, private firm. The Company's products also face
competition from aluminum, glass and plastic containers. In 1995, the Company
entered the plastic container line through the acquisition of Plastite
Corporation ("Plastite"). In 1996, the Company expanded its plastics operations
by acquiring three related plastic molding firms (the "CPI Group"). Major
plastic container competitors include Berry Plastics, Letica, Plastican, Nampac
and Norton.

         Because shipping costs associated with the delivery of cans from
outside major geographical markets would add a significant additional component
of cost, the industry has historically had relatively little competition from
manufacturers outside these markets. Management believes that this condition is
unlikely to change in the foreseeable future. Management also believes that, due
to the substantial transportation costs involved in shipping empty cans over
long distances, its large number of facilities and their strategic locations
near customers are a major competitive advantage.

         Management believes that the following factors benefit the Company from
a competitive standpoint: (i) reputation for quality and service; (ii)
strategically located manufacturing facilities and a strong sales force; (iii)
substantial capital investment in new technology such as necked-in and barrier
package designs, high-speed presses and assembly equipment, and
computer-controlled lithography; (iv) quality control systems, including
statistical process control and electronic "vision" error detection; (v) breadth
of product line; (vi) in-house decorating and lithography capacity; and (vii) a
successful labor strategy.

         Custom and specialty products compete with a large number of container
manufacturers and closure suppliers; it does not compete across its entire
product spectrum with any single company. Competition is based principally on
price, quality and service, geographical proximity to customers and production
capability, with varying degrees of intensity according to the specific product
category. The Company believes it has the ability to compete favorably in each
aspect of the custom and specialty business as market conditions may require.




<PAGE>   9


ITEM 2.  PROPERTIES

         The Company has 35 manufacturing facilities located in 12 states in the
U.S. and in five countries abroad, many of which are strategically positioned
near principal customers and suppliers. In Europe, USC Europe has production
locations in the five largest regional markets, including the United Kingdom,
France, Spain, Italy and Germany. The following table sets forth certain
information with respect to these plants as of February 28, 1998.


<TABLE>
<CAPTION>

       LOCATION                      SIZE              STATUS                                 FUNCTION
       --------                      ----              ------                                 --------
<S>                              <C>                   <C>             <C> 
UNITED STATES
Elgin, IL                        481,346 sq. ft.        Owned          Manufacture and assembly of a full range of aerosol cans, 
                                                                       round gallons and oblong cans of all sizes; Technical Center.
Chicago, IL                      266,269 sq. ft.        Owned          Steel slitting and shearing, coating and lithography.
Tallapoosa, GA                   228,080 sq. ft.        Owned          Manufacture and assembly of a full range of aerosol cans and 
                                                                       round gallons.
Commerce, CA                     215,860 sq. ft.       Leased          Manufacture and assembly of aerosol cans, oblong cans and 
                                                                       round quarts and gallons.
Sparrows Point, MD*              211,670 sq. ft.       Leased          Steel shearing, coating and lithography.
Glen Dale, WV                    210,000 sq. ft.        Owned          Manufacture of metal caps and closures, and custom and 
                                                                       specialty products.
Burns Harbor, IN                 190,000 sq. ft.       Leased          Steel shearing, coating and lithography.
Hubbard, OH                      174,970 sq. ft.        Owned          Manufacture and assembly of a full range of round and general
                                                                       line cans.
Baltimore, MD                    150,000 sq. ft.       Leased          Assembly of round cans.
Horsham, PA                      132,000 sq. ft.        Owned          Assembly of aerosol cans and manufacture of
                                                                       ends.
Racine, WI*                      130,000 sq. ft.        Owned          Assembly of aerosol cans.
Brookfield, OH                   129,900 sq. ft.       Leased          Steel slitting, shearing and processing.
Green Bay, WI                    127,000 sq. ft.       Leased          Assembly of aerosol cans.
Baltimore, MD
  (Steeltin Plant)               123,000 sq. ft.        Owned          Assembly of specialty cans.
Columbiana, OH                   121,000 sq. ft.       Leased          Manufacture of custom and specialty products.
Morrow, GA                       110,160 sq. ft.       Leased          Manufacture of plastic containers.
Weirton, WV                      108,000 sq. ft.       Leased          Steel shearing, coating and lithography.
Danville, IL(1)                  100,000 sq. ft.        Owned          Assembly of aerosol cans and manufacture of
                                                                       ends.
Trenton, NJ                       98,700 sq. ft.       Leased          Steel shearing, coating and lithography.
Newnan, GA                        95,000 sq. ft.       Leased          Manufacture of plastic pails and other
                                                                       products.
Fern Park, FL                     90,081 sq. ft.       Leased          Manufacture and overhaul of packaging equipment and parts.
Dallas, TX                        87,000 sq. ft.        Owned          Manufacture of round cans.
Vernalis, CA*                     74,000 sq. ft.       Leased          Manufacture of custom and specialty
                                                                       containers.
Alsip, IL                         64,349 sq. ft.       Leased          Assembly of round flat-top and screw-neck
                                                                       cans.
Warren, OH                        58,000 sq. ft.       Leased          Coating and lithography.
Alliance, OH                      52,000 sq. ft.       Leased          Manufacture of plastic products.
Baltimore, MD
  (Columbia Specialty)            45,000 sq. ft.       Leased          Manufacture of specialty tins and components.
New Castle, PA                    22,750 sq. ft.        Owned          Coating and lithography.
Tallapoosa, GA                    21,400 sq. ft.        Owned          Sporri Development Center; assembly of a variety of specialty
                                                                       cans, including small-size aerosol cans.

EUROPE

Merthyr Tydfil, UK               320,000 sq. ft.     Leased(2)         Manufacture and assembly of aerosol cans.
Southall, UK                     253,000 sq. ft.        Owned          Manufacture and assembly of aerosol cans.
Laon, France                     220,000 sq. ft.      Owned(3)         Manufacture and assembly of aerosol cans.
Reus, Spain                      182,250 sq. ft.        Owned          Manufacture and assembly of aerosol cans.
Voghera, Italy                    45,200 sq. ft.       Leased          Assembly of aerosol cans.
Schwedt, Germany                  35,500 sq. ft.       Leased          Assembly of aerosol cans.

</TABLE>

<PAGE>   10




*        These facilities are in the process of being closed due to the
         Company's restructuring activities and are expected to be sold or
         sublet.

(1)      Subject to a mortgage in favor of The First National Bank of Danville.

(2)      The property at Merthyr Tydfil is subject to a 999-year lease with a
         pre-paid option to buy which becomes exercisable in January 2007. Up to
         that time, the landowner may require the Company to purchase the
         property for a payment of 1? British Sterling.

(3)      Subject to a mortgage in favor of Societe Generale.

         Currently, the Company's facility at Merthyr Tydfil is subject to a
pledge of the leasehold interests and personal property located thereon to
secure amounts outstanding under a credit agreement entered into with General
Electric Capital Corporation.

         In addition to its manufacturing facilities, the Company owns
approximately 22 acres of undeveloped land in Raeford, North Carolina; leases
37,734 square feet of office space in Oak Brook, Illinois to house its corporate
headquarters; leases approximately 102,400 square feet of office and warehouse
space in Baltimore, Maryland to house a custom and specialty sales office and
distribution center; and owns a 145,000 square-foot building in Baltimore,
Maryland, where Alltrista Metal Services ("AMS") conducted metal service
operations. The Company has agreed to sublet approximately 58,200 square feet of
office and warehouse space in Saddle Brook, New Jersey, and expects to sell or
lease a former manufacturing facility also located in Saddle Brook.

         Management believes the Company's facilities are adequate for its
present needs and that its properties are generally in good condition,
well-maintained and suitable for their intended use. All of the manufacturing
plants described in the table above are operating in regular service with one or
more shifts per day. The Company continuously evaluates the composition of its
various manufacturing facilities in light of current and expected market
conditions and demand. While no plans currently exist to further consolidate
plant operations, such actions may be deemed appropriate in the future.

ITEM 3.  LEGAL PROCEEDINGS

         The Company is involved in a number of legal proceedings arising in the
ordinary course of business consistent with past experiences. Management does
not believe that these proceedings will have a material adverse effect on the
business or financial condition of the Company either individually or in the
aggregate. In addition, the Company is involved in the following matters.

         The groundwater in San Leandro, California, formerly a site of one of
the Company's can assembly facilities, is contaminated at shallow and
intermediate depths, and the area of concern partially extends to the
groundwater below the facility formerly owned by the Company. In connection with
sales in 1994 and 1995 of land on which this facility was located, the Company
agreed to indemnify the purchaser against environmental claims related to the
Company's ownership of the property. In April 1996, the California Department of
Toxic Substances Control ("CDTSC") issued an order to certain past and present
owners of this facility, including U.S. Can, directing such owners to conduct
remediation activities at this site. No specific form of remediation was
indicated. Consultants retained by the Company to evaluate the site concluded
that the Company's operations had not impacted the groundwater at this site and
that the contamination detected at this site resulted from migration from
off-site, upgradient sources. However, in January 1998, the CDTSC informed the
Company that it disagrees with these conclusions and wants the Company to
conduct extensive additional testing. With the CDTSC's consent, the Company is
preparing an appeal to the CDTSC Director. To date, there has been no resolution
of this matter between the Company and the CDTSC, although discussions are
ongoing. There can be no assurance that the Company will not incur material
costs and expenses in connection with the CDTSC order and remediation at the
site.

         The National Labor Relations Board ("NLRB") has issued a decision
finding the Company in violation of certain sections of the National Labor
Relations Act as a result of the Company's closure of certain facilities in 1991
and failure to offer inter-plant job opportunities to affected employees. The
Company has appealed to an Administrative Law Judge of the NLRB and is awaiting
a decision. Management does not believe that the resolution of this matter will
have a material adverse effect on the Company's financial condition or results
of operations.

         For a discussion of Superfund sites in the U.S., see "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Environmental Matters."


<PAGE>   11

         The litigation between U.S. Can and Continental Holdings Inc.
concerning U.S. Can's 1987 acquisition of the general packaging business of
Continental Can Company, USA, Inc. has been settled by the exchange of mutual
releases and dismissal of all litigation with prejudice, without payment of any
monies by either party.

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

         No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of 1997.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

                        MARKET PRICE AND DIVIDEND POLICY

         U.S. Can Corporation's common stock, par value $0.01 per share (the
"Common Stock"), has been listed on the New York Stock Exchange since April 7,
1995, trading under the symbol "USC." Prior to that time, the Common Stock was
included in the Nasdaq National Market under the trading symbol "USCN." The
table below sets forth the high and low bid information for the Common Stock for
each quarter of 1996 and 1997.

<TABLE>
<CAPTION>
               QUARTER                     HIGH                LOW
               -------                     ----                ---
<S>                                       <C>                <C>    
         First quarter, 1996              $17.375            $13.250
         Second quarter, 1996              18.250             16.125
         Third quarter, 1996               16.375             14.500
         Fourth quarter, 1996              17.250             15.250
         First quarter, 1997               17.750             14.500
         Second quarter, 1997              17.250             14.000
         Third quarter, 1997               17.375             12.875
         Fourth quarter, 1997              18.750             15.750
</TABLE>


         As of February 28, 1998, there were 637 record holders of the Common
Stock. No cash dividends have been declared on the Common Stock by U.S. Can
Corporation during 1996 or 1997, and U.S. Can Corporation has no intention to
pay cash dividends in the foreseeable future. There are restrictions under U.S.
Can's credit agreements on the ability of U.S. Can to transfer funds to U.S. Can
Corporation in the form of cash dividends, loans or advances, and U.S. Can
Corporation's ability to pay dividends, that currently limit U.S. Can
Corporation's ability to pay cash dividends and are likely to limit the future
payment of dividends on the Common Stock.


<PAGE>   12


                        SALES OF UNREGISTERED SECURITIES

         In February 1997, 270,000 shares of restricted Common Stock were
awarded to officers of the Company, as compensation. In June 1997, 62,000 shares
of restricted Common Stock were awarded to officers of the Company and U.S. Can,
as compensation. In October 1997, 3,101 shares of restricted Common Stock were
awarded to outside directors of the Company, in lieu of part of these directors'
annual retainer. In December 1997, 15,000 shares of restricted Common Stock were
awarded to an executive officer of U.S. Can, as compensation. Each of these
awards was exempt pursuant to Section 4(2) of the Securities Act of 1933, as
amended (the "Act").

ITEM 6.  SELECTED FINANCIAL DATA

         The following selected historical financial data has been derived from
the Company's consolidated financial statements and should be read in
conjunction with the audited Consolidated Financial Statements and the Notes
thereto, for the years ended December 31, 1995, 1996 and 1997, contained in Item
8 of this Report, and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," contained in Item 7 of this Report.



                      U.S.CAN CORPORATION AND SUBSIDIARIES

<TABLE>
<CAPTION>
                                                                          FOR THE YEAR ENDED DECEMBER 31,
                                                      -------------------------------------------------------------------------
                                                          1993           1994           1995           1996           1997
                                                      -------------  -------------  -------------  -------------  -------------
                                                               (000'S OMITTED, EXCEPT PER SHARE DATA AND PERCENTAGES)
<S>                                                      <C>            <C>            <C>            <C>            <C>     
OPERATING DATA:
Net sales                                                $440,595       $532,652       $562,728       $660,623       $755,675
Cost of sales                                             377,968        451,684        491,084        571,667        665,755
                                                         --------       --------       --------       --------       --------
     Gross income                                          62,627         80,968         71,644         88,956         89,920
Selling, general and administrative expenses               19,818         24,087         26,547         28,441         33,047
Special charges (a)                                             -              -          8,000              -         62,980
                                                         --------       --------       --------       --------       --------
     Operating income (loss)                               42,809         56,881         37,097         60,515         (6,107)
Interest expense on borrowings                             19,576         21,830         24,513         28,387         36,867
Amortization of deferred financing costs                    1,052          1,307          1,543          1,518          1,738
Consolidation expense                                         622            463            326              -              -
Other expense                                                 648          1,117          1,571          1,788          1,986
                                                         --------       --------       --------       --------       --------
Income (loss) from continuing operations before
 income taxes, minority interest and extraordinary item    20,911         32,164          9,144         28,822        (46,698)
Provision (benefit) for income taxes                        9,018         13,474          4,195         12,267        (16,792)
                                                         --------       --------       --------       --------       --------
Income (loss) from continuing operations before
 minority interest and extraordinary item                  11,893         18,690          4,949         16,555        (29,906)
Minority interest (b)                                        (608)             -              -              -              -
                                                         --------       --------       --------       --------       --------
Income (loss) from continuing operations before
 extraordinary item                                        11,285         18,690          4,949         16,555        (29,906)
Discontinued operations, net of income taxes (c)
     Net income (loss) from discontinued operations          (361)          (120)        (1,010)           446          1,078
     Net (loss) on sale of business                             -              -              -              -         (3,204)
Extraordinary item - loss from early
 extinguishment of debt, net of income taxes               (3,402)             -              -         (5,250)             -
                                                         --------       --------       --------       --------       --------
Net income (loss)                                        $  7,522       $ 18,570       $  3,939       $ 11,751       $(32,032)
                                                         ========       ========       ========       ========       ========
DILUTED PER SHARE DATA (D)
Income (loss) from continuing operations before
 extraordinary item                                         $1.23          $1.74          $0.39          $1.26       $  (2.29)
Discontinued operations                                     (0.04)         (0.01)         (0.08)          0.04          (0.16)
Extraordinary item                                          (0.37)          -              -             (0.40)          -
                                                         --------       --------       --------       --------       --------
Net income (loss)                                         $  0.82       $   1.73       $   0.31       $   0.90       $  (2.45)
                                                         ========       ========       ========       ========       ========
Weighted average shares outstanding (000's)                 9,212         10,714         12,839         13,090         13,048
                                                         --------       --------       --------       --------       --------
OTHER DATA:
Capital expenditures                                     $ 22,010       $ 32,516       $ 31,379       $ 48,630       $ 54,030
Gross margin                                                14.2%          15.2%          12.7%          13.5%          11.9%
Operating margin                                             9.7%          10.7%           6.6%           9.2%          -0.8%
</TABLE>




<PAGE>   13



<TABLE>
<CAPTION>
                                                                           AS OF ENDED DECEMBER 31,                     
                                                        ----------------------------------------------------------------
                                                         1993          1994          1995          1996          1997
                                                         ----          ----          ----          ----          ----
                                                                                (000'S OMITTED)
<S>                                                     <C>           <C>           <C>           <C>           <C>     
BALANCE SHEET DATA:
Current assets                                          $ 99,551      $134,279      $147,185      $232,564      $230,619
Total assets                                             306,588       400,724       455,436       643,616       633,704
Current liabilities                                       70,171        95,475        98,237       126,934       149,848
Total debt (including current maturities)                182,822       200,646       244,576       375,810       376,141
Total stockholders' equity (e)                            18,509        74,910        81,827        96,785        62,313
</TABLE>


(a)      The Company recorded a pretax charge of approximately $8.0 million in
         the fourth quarter of 1995 related to actions taken to reduce overhead
         and to eliminate redundant manufacturing capacity. In 1997, the Company
         committed to significant business and operational realignments that
         resulted in a pre-tax restructuring provision of $63.0 million. The
         restructuring includes the closure of several of the Company's domestic
         facilities, a significant work force reduction and the sale of its
         metal pail business. See Note 3 of the "Notes to Consolidated Financial
         Statements."

(b)      Minority interest represents participation of the former holder of U.S.
         Can's Class 1 Preferred Stock, by virtue of its accretion right, in the
         earnings of U.S. Can. All remaining shares of Class 1 Preferred Stock
         were redeemed in connection with the Company's initial public equity
         offering in March 1993.

(c)      In 1997, the Company committed to a plan to sell its commercial Metal
         Services business, providing for a $2.7 million after tax loss on the
         sale of the Metal Services business. See Note 3 of the "Notes to
         Consolidated Financial Statements."

(d)      Dilutive net income (loss) per common share amounts are computed by
         dividing net income applicable to common stock (computed as net income
         (loss) less dividends earned during the period on the Company's
         preferred stock and accretion on the Company's redeemable warrants,
         such stock and warrants outstanding only through March 1993) by the
         weighted average common shares and common equivalent shares outstanding
         during the periods. Such average shares include common shares
         outstanding and common shares subject to outstanding dilutive stock
         options and stock purchase warrants.

(e)      The significant increases in stockholders' equity in 1994 was primarily
         due to the Company's equity offering in November 1994, which resulted
         in a net increase of $34.2 million.


<PAGE>   14

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

         Since 1995, the Company has made a number of acquisitions. In 1995, the
Company acquired the stock of Plastite, Hunter Container Corporation ("Hunter")
and Metal Litho International and the assets of related partnerships ("MLI"), as
well as certain assets of Prospect Industries Corporation ("Prospect"). The
Company sold the assets and operations formerly owned by Prospect in November
1997. In April 1996, the Company acquired the assets of AMS. The stock of the
CPI Group and the stock and assets of USC Europe were acquired in August 1996
and September 1996, respectively. The former MLI and AMS operations have been
reclassified as discontinued operations in the financial statements included
elsewhere in this Report and are included in Metal Services, which the Company
is actively attempting to sell.

                              RESULTS OF OPERATIONS

         In the third quarter of 1997, the Company established a pre-tax
restructuring provision of $35 million, primarily for plant closings and
overhead cost reductions associated with the loss of a major aerosol customer
(the customer representing approximately $35 million of annual sales) who
awarded its global aerosol business to a U.S. Can competitor. In addition, the
Company established a pre-tax disposition provision of $17.2 million for the
anticipated loss on the closure of its metal pail operation in North Brunswick,
New Jersey. Such closure would have resulted in certain severance and related
payments, the write-off of several long-lived assets and ongoing building costs.
However, in the fourth quarter of 1997, the Company successfully negotiated and
completed the sale of this facility at a net pre-tax loss of $13.3 million and
appropriately adjusted the provision in the fourth quarter of 1997.

         In the fourth quarter of 1997, the Company, at the direction of its
Board of Directors, employed the assistance of external business consultants to
review operations and explore other avenues for enhancing shareholder value. As
a result of this review, the Company established another pre-tax restructuring
provision (including the adjustment described above) of $10.8 million, primarily
to include further personnel reductions and the reduction of asset value
associated with equipment used in the businesses the Company has exited or is in
the process of exiting.

         The key elements of the third and fourth quarter restructuring include
closure of the Racine, Wisconsin aerosol assembly plant, the Midwest litho
center in Alsip, Illinois, the Sparrows Point litho center in Baltimore,
Maryland, and the California Specialty plant in Vernalis, California; a
write-down to estimated proceeds for the sale of the Orlando, Florida machine
engineering center ("OMEC") and the Baltimore, Maryland specialty and paint can
distribution business; and organizational changes designed to reduce general
overhead. The Company expects the sale of OMEC will be completed in 1998.

         The third and fourth quarter restructuring provisions included a $41.7
million for the non-cash write-off of assets related to the facilities to be
closed or sold, $13.2 million for severance and related termination benefits for
approximately 115 salaried and 370 hourly employees, and $5.9 million for other
related closure costs, such as, building restoration, equipment disassembly and
future lease payments. In addition to these charges, the Company provided $2.2
million related to the carrying costs (principally contractual lease payments)
related to the closed Saddle Brook, New Jersey facility. The write-off of the
assets included in the charge, primarily relates to fixed assets ($32.8 million)
which cannot be transferred or used in the Company's other operations and
unamoritized goodwill related to the closed operations. As of December 31, 1997,
approximately $16.3 million of cash costs remain, of which the majority is
expected to be spent in 1998.

         In November 1997, as part of the business and operational realignments,
the Company sold its steel pail business which was conducted entirely from its
North Brunswick, New Jersey facility, for $1.4 million in cash and notes, plus
the assumption of certain liabilities and future payments. 1997 revenues of the
metal pail business, up to the point of sale, were $19.2 million. Previous
reporting of the metal pail business as a discontinued operation for the years
ended December 31, 1997 and prior have been amended in this report so that the
results of this business are included in continuing operations.

         The Company is actively seeking to sell its commercial metal services
business ("Metal Services"). Metal Services includes two plants in Chicago,
Illinois, one plant in each of Trenton, New Jersey and Brookfield, Ohio and the
closed Midwest Litho plant. 1997, 1996 and 1995 revenues from these operations
were $116 million, $101 million, and $64 million (excluding intra-Company sales
which are expected to be continued by the buyer and including third-party sales
from the closed Midwest Litho plant, which (other than sales to S.C. Johnson)
have been transferred to other Metal Services plants). The Company anticipates
that the sale of Metal Services will be completed in 1998. The Company provided
for a $2.7 million loss on the sale of the Metal Services business, primarily
representing the excess of recorded carrying value over the anticipated
aggregate net sales proceeds for the net assets to be sold in the dispositions.
As of December 31, 1997, the net assets of Metal Services, excluding the
discontinued operations reserve, included net current 


<PAGE>   15

assets of approximately $16.0 million and net other assets of approximately
$29.4 million. The Company's historical financial statements have been restated
to reflect the Metal Services business as a discontinued operation.



         The Company continuously evaluates the composition of its various
manufacturing facilities in light of current and expected market conditions and
demand. While no formal plans currently exist to further consolidate plant
operations, such actions may be deemed appropriate in the future.

         For further details on the restructuring provisions and the
discontinued operations, see Note (3) of the Notes to Consolidated Financial
Statements.

         The following comparisons exclude the impact of the metal services
business.

YEAR ENDED DECEMBER 31, 1997, AS COMPARED TO YEAR ENDED DECEMBER 31, 1996

Net Sales

         Net sales for the year ended December 31, 1997 were $755.7 million, an
increase of 14% over the corresponding period in 1996. Sales gains were the
result of the Company's acquisition of USC Europe in September 1996, and modest
growth in domestic steel paint and oblong unit volumes. The USC Europe
acquisition accounted for nearly 71% of the total year-to-year increase.

Gross Income

         Gross income of $89.9 million was up $1.0 million or 1% from 1996.
Gross margin declined to 11.9% in 1997 versus 13.5% in 1996. Competitive pricing
pressure and increased steel costs compressed margins.

Operating Income

         Operating income in 1997 before the restructuring provision was $56.9
million versus $60.5 million last year. Lower gross margins adversely impacted
1997 operating income. Selling, general, and administrative expenses rose
slightly from 4.3% to 4.4% of net sales through 1996 and 1997, respectively.

         Including the impact of the $63.0 million restructuring provision, the
Company reported an operating loss of $6.1 million for 1997. Due to the timing
of the plant closings and other cost reduction actions included in the
restructuring provision, no material benefit was realized in the 1997 results.

Interest and Other Expenses

         Interest expense on borrowings increased $8.5 million in 1997 as
compared to 1996, due to increased borrowing, primarily to finance the Company's
acquisition of USC Europe, and the refinancing of shorter-term, lower-rate bank
debt with a portion of the proceeds of the 10 1/8% Notes issued in October 1996.
Other expenses were flat year-to-year as a percent of net sales.

Net Income (Loss)

         Net loss from continuing operations in 1997 was $29.9 million or $2.29
per share, versus net income of $16.6 million or $1.28 per share in 1996. The
restructuring provision recorded in 1997 had a negative after-tax effect of
$37.8 million or $2.90 per share.

         Net loss for 1997 was $32.0 million or $2.45 per share, (including $2.1
million or $0.16 per share loss on the discontinued metal service business)
versus 1996 net income of $11.8 million or $0.91 per share (including
discontinued operations loss of $0.41 million and extraordinary loss on debt
extinguishment of $5.2 million after-tax).


YEAR ENDED DECEMBER 31, 1996, AS COMPARED TO YEAR ENDED DECEMBER 31, 1995

Net Sales

         Net sales for the year ended December 31, 1996 totaled $660.6 million,
an increase of 17.4% over the corresponding period in 1995. Companies acquired
by U.S. Can during the first three quarters of 1996, including USC Europe, added
approximately $45.4 million to sales in 1996. The Company has also realized
additional sales as a result of 


<PAGE>   16

the Plastite and Hunter acquisitions in 1995 and the CPI Group and USC Europe
acquisitions in 1996. Sales gains for the year also reflect volume growth in
substantially all of the Company's products.

Gross Income

         Gross income of $89.0 million for 1996 was $17.3 million, or 24.2%,
higher than gross income for 1995. The 1996 acquisitions were the primary reason
for this increase. Volume gains in 1996 with stable costs contributed to
improved performance. Gross margin increased to 13.5% of net sales in 1996 from
12.7% of net sales in 1995 despite a significant advance purchase of steel in
late 1994 which resulted in the Company not realizing the full impact of the
1995 steel price increase in the first quarter of 1995. In 1995, margins, as
well as sales, were negatively impacted by weak second half demand. In 1996, the
fourth quarter and full year were impacted by the somewhat lower margins of
acquired businesses and seasonality of the new European operations. However,
these were more than offset by improved sales and margins in core operations.

Operating Income

         The Company's operating income of $60.5 million for 1996 was $23.4
million, or 63.1%, higher than operating income for 1995. Income was favorably
impacted by increased sales, improved margins and the effect of an overhead
reduction program begun in late 1995. Operating income as a percent of net sales
was 9.2% for 1996 as compared to 6.6% for 1995. The Company experienced an
increase in selling, general and administrative expenses during 1996, primarily
due to acquisitions. However, these expenses as a percent of net sales decreased
from 4.7% of net sales in 1995 to 4.3% of net sales in 1996.

Interest and Other Expenses

         Interest expense on borrowings increased by approximately $3.9 million
in 1996 as compared to 1995. The increase is a result of increased borrowing,
primarily to finance the Company's acquisitions and the refinancing of shorter
term bank debt with a portion of the proceeds of the 10 1/8% $275 million note
issue in October 1996. Amortization of deferred financing costs and other
expense remained flat in 1996 as compared to 1995. The Company believes more
permanent long-term capital is the most appropriate means to finance
acquisitions, and, accordingly, issued the Notes to repay short-term acquisition
debt, in addition to the 13 1/2% Notes. As a result, repayment of lower cost,
shorter term debt with the Note proceeds has generated somewhat higher interest
expense even though a portion of the proceeds was used to redeem higher cost 13
1/2% Notes.

Net Income

         For 1996, income before discontinued operations and extraordinary item
was $16.6 million, more than three times the $4.9 million reported in 1995.
During 1996, the Company redeemed its 13 1/2% Notes with the proceeds from the
issuance of the 10 1/8% Notes. The early extinguishment of the 13 1/2% Notes
resulted in an extraordinary charge of $5.2 million (net of income taxes of $3.5
million) primarily representing a prepayment premium and the write off of
related unamortized deferred financing costs. Earnings per share before
discontinued operations and extraordinary item were $1.28 for the year. Final
net income was $11.8 million ($0.91 per share) in 1996 compared to net income of
$3.9 million ($0.31 per share) in 1995.

                         LIQUIDITY AND CAPITAL RESOURCES

         During the last three fiscal years, the Company has met its liquidity
needs primarily through internally generated cash flows, borrowings under its
credit lines and proceeds of securities offerings. Principal liquidity needs
have included operations, repayment of indebtedness and related interest,
capital expenditures and acquisitions. Cash flow from operations has increased
from $24.8 million in 1995 to $30.1 million in 1996 and $64.4 million in 1997,
primarily due to improved working capital management in 1997. 1997 results also
include $5.7 million of payments related to the Company's recent restructuring
activities, including costs related to its discontinued operations. The Company
anticipates spending another $12.5 million of such costs in 1998. The remainder
of the restructuring provision primarily consists of non-cash items associated
with the write off of assets.

         On October 17, 1996, U.S. Can Corporation issued $275 million of 10
1/8% Notes in a private placement. Of the $268.1 million net proceeds to the
Company from the issuance, (i) approximately $109.7 million was deposited in an
escrow account and used to redeem U.S. Can's 13 1/2% Notes on January 15, 1997,
and pay the remaining interest thereon; (ii) approximately $67.3 million of the
net proceeds was used to retire acquisition-related borrowings; and (iii)
approximately $91.1 million of the net proceeds was used to repay a portion of
the borrowings outstanding under the Company's working capital line. In March
1997, the Company completed a registered exchange of the private Notes for
freely transferable Exchange Notes (the "Exchange Offer"). All of the Notes were
tendered in the Exchange Offer and, as a result, only the Exchange Notes remain
outstanding.



<PAGE>   17

         In April 1997, U.S. Can entered into an Amended and Restated Credit
Agreement with a group of banks (the "Credit Agreement"), providing a $110
million revolving credit facility (the "Revolving Credit Facility"). In February
1998, the Revolving Credit Facility was reduced to $80 million. Obligations
under the Credit Agreement are secured by U.S. Can's domestic accounts
receivable and inventory. Funds available under the Revolving Credit Facility
may be used for general corporate purposes (including ongoing working capital
needs and funds for permitted acquisitions). The Credit Agreement has a
five-year maturity and amended and restated the April 1994 credit agreement (the
"1994 Credit Agreement"). The Credit Agreement permits the Company to borrow
funds available under the Revolving Credit Facility in U.S. Dollars, British
Pounds or French Francs. The weighted average interest rate on this indebtedness
at December 31, 1997 was 6.7%.

         As of December 31, 1997, the Company's total debt was approximately
$378.4 million and scheduled principal payments (excluding principal due on the
Revolving Credit Facility) were approximately $9.5 million, $9.0 million, $6.0
million, $7.7 million and $40.4 million for the years 1998, 1999, 2000, 2001 and
2002, respectively. As of March 18, 1998, U.S. Can had borrowings of $23.9
million outstanding under the Credit Agreement, $12.5 million in letters of
credit had been issued pursuant thereto and $43.6 million of unused credit
remained available thereunder.

         Primarily as a result of the 1997 special charges and discontinued
operations, the Company failed to comply with certain financial ratios,
including total leverage, maximum domestic leverage and interest coverage,
during the year and at year end. The Company obtained permanent waivers from the
appropriate lenders and the Company and such lenders have amended the Credit
Agreement to better reflect the Company's current configuration and expected
operating results. The Company expects to remain in compliance with the amended
financial ratios in the Credit Agreement through 1998. As of December 31, 1997,
U.S. Can was in compliance with the Credit Agreement and its other long-term
debt agreements.

         The Company's capital expenditures totaled $54.0 million in 1997, $48.6
million in 1996 and $31.4 million in 1995. Of the total capital expenditures in
1997 and 1996, approximately $30 million relates to the start-up of the Merthyr
Tydfil, UK plant. In each year, these capital expenditures also included
investments in new can production lines, paint can line enhancements, advanced
lithography technology and computer integrated manufacturing, to increase
manufacturing capacity, reduce changeover times and improve productivity. The
Company has also invested capital in plant expansions and the installation of
state-of-the-art end-making presses and automated packaging equipment.

         The Company expects to spend approximately $100 to $150 million on
capital expenditures during the five years commencing in 1998, in an amount of
approximately $20 million in 1998 and in roughly equal amounts of approximately
$20.0 to $32.5 million in each year thereafter. The Company makes capital
expenditures principally for improvements in the productivity and quality of
lithography operations, continued technological enhancement of existing
equipment, automation of existing processes, computer-integrated manufacturing
techniques, quality and service improvements, facility expansion, and, if
necessary to meet demand, additional can-making capacity. The Company's capital
investments have historically yielded reduced operating costs and improved the
Company's profit margins, and management believes that the strategic deployment
of capital will enable the Company to improve its overall profitability by
leveraging the economies of scale inherent in the manufacture of containers.

         Management believes that cash flow from operations, amounts available
under its credit facilities and proceeds from equipment financings should
provide sufficient funds for the Company's short-term and long-term capital
expenditure and debt amortization requirements, and other cash needs in the
ordinary course of business. The Company believes it will be able to refinance
the Revolving Credit Facility on or prior to maturity. If future strategic
acquisition opportunities arise, the Company would expect to finance them though
some combination of cash, stock and/or debt financing.

                                  ACQUISITIONS

         During 1995, the Company acquired four businesses for an aggregate of
approximately $30.2 million in cash, plus contingent payments of up to $2.5
million, and the assumption of approximately $6.7 million in debt. The cash
portion of the purchase prices was financed primarily from borrowings under U.S.
Can's revolving line of credit.

         In April and June 1996, the Company acquired from Alltrista Corporation
("Alltrista") for approximately $14.4 million and the assumption of a $0.5
million liability substantially all of the assets (other than steel inventory)
of Alltrista Metal Services ("AMS"), a division of Alltrista. In June 1996, the
Company purchased AMS's remaining inventory for $8 million. The acquisitions
were financed with borrowings under U.S. Can's revolving line of credit. In July
of 1996, the Company discontinued operations at two of the former AMS plants.

         In August 1996, the Company completed the acquisition of all of the
outstanding stock of three related companies, CPI Plastics, Inc., CP Ohio, Inc.
and CP Illinois, Inc. (collectively, the "CPI Group"), engaged in manufacturing
molded plastic drums and pails, and poultry products. The Company paid
approximately $15.1 million in cash to the stockholders of the CPI Group at
closing. In addition, U.S. Can has made contingent payments, based upon the CPI
Group's financial 



<PAGE>   18

performance during 1996 and 1997, aggregating $1.0 million. This acquisition was
financed with borrowings under a special acquisition line of credit provided to
U.S. Can by its senior lenders.

         In September 1996, the Company completed the acquisition of a portion
of Crown Cork & Seal Company, Inc.'s ("Crown's") European aerosol can businesses
("USC Europe") for $48.3 million, in addition to the assumption debt of $5.8
million. This acquisition included manufacturing operations in the United
Kingdom, France, Spain and Germany and the aerosol can manufacturing equipment
and assets from a Crown facility in Italy. The companies acquired and
established in connection with the USC Europe acquisition comprise the majority
of the European Subsidiaries. The Company incurred $3.5 million of costs in
completing this acquisition which have been included in total acquisition costs.

         In January 1997, the Company acquired certain assets from
Owens-Illinois Closure Inc. ("O-I") for cash consideration of $10 million,
subject to adjustment based upon the actual value of the inventory acquired and
potential contingent payments of up to $1.5 million based upon realization of
certain new business which O-I was seeking at the time of the acquisition. The
assets acquired by the Company include machinery, equipment, inventory and raw
materials of O-I's Erie, Pennsylvania metal business. These lines have been
relocated into one or more of the Company's plants.

         The Company will continue to evaluate and selectively pursue
acquisitions which it believes are strategically important to meeting its
customers needs, attracting new customers, adding new products, complementing
its existing business and expanding its geographic reach.

                              ENVIRONMENTAL MATTERS

         For a discussion of the San Leandro, California environmental order,
see "Legal Proceedings." There can be no assurance that the Company will not
incur material costs and expenses in connection with this order.

         The processes involved in the lithography and certain aspects of the
manufacture of steel containers have historically involved the use and handling
of materials now classified as hazardous substances under various laws. These
activities described above may expose owners and operators of facilities
involved in those activities to potential liability for the cost to clean up or
remedy any environmental contamination resulting from such substances relating
to those businesses. As of December 31, 1997, the Company's reserves for future
ascertainable costs of environmental remediation in the United States were
approximately $450,000. Management does not believe that such costs, if any, in
excess of the reserve will have a material adverse affect on the Company's
results of operations or financial condition. In making this assessment, the
Company considered all information available to it including its and other
companies' reported prior experience in dealing with such matters, data released
by the EPA and reports by independent environmental consultants regarding
certain matters. It is possible that the Company's insurance coverage may extend
to certain environmental liabilities, but the Company has not been able to
estimate such coverage due to the complexity and uncertainty inherent in such an
estimate. In addition, the Company has obtained indemnities against certain
liabilities in connection with its recent acquisitions. However, the statements
related to environmental liabilities made by the Company in this Report are made
without regard to any potential insurance recovery or recovery of amounts from
indemnitors.

         A variety of propellants are used in the Company's principal product,
aerosol cans. These propellants include hydrocarbons, compressed gases (for
example, carbon dioxide and nitrous oxide), and volatile organic compounds such
as propane, butane and isobutane (individually, "VOC" and collectively "VOCs").
Some United States and European regulations have caused consumer product
manufacturers (the Company's customers) to reformulate either their products,
the propellants used therein or both if they contain VOCs. To date, most of the
Company's customers have been successful in reformulating both their products
and propellants. However, there can be no assurance that all customers will be
able to effect such reformulations or future reformulations, if any, in either
products or propellants with satisfactory results. If customers are unable to do
so, this could have an adverse effect on the market for aerosol cans.

         USC Europe includes five aerosol can-making operations located in the
United Kingdom, France, Spain, Germany and Italy. The Company has retained an
independent environmental consultant to perform an initial environmental
inventory, and the seller provided disclosure on environmental matters relating
to each plant and site. The Company has also performed its own audit of plant
operations and facilities. In connection with this acquisition and with the
Company audit, no subsurface sampling was performed to identify possible
contamination. Several of the facilities have been operating at their locations
for more than ten years and, according to a survey conducted by an independent
environmental consultant, it is likely there have been releases of hazardous
substances at these locations in the past. The operation in Southall, UK and
Schwedt, Germany are in historically industrialized areas, and there is
potential for area-wide contamination involving adjacent sites. There can be no
assurance that there are not significant environmental liabilities unknown to
the Company.

         The Company has made, and expects to continue to make, significant
capital expenditures to upgrade its facilities in accordance with current and
pending environmental regulations.



<PAGE>   19

         The Company received a request for information from the U.S. EPA in
January 1997, concerning the lithography operations at its Chicago facility
(formerly owned by Alltrista). In March 1997, representatives of the U.S. EPA
inspected the Chicago facility and requested additional information, including
compliance tests and reports. The Company has cooperated fully with the U.S. EPA
inquiry. The Company does not know what the outcome of this inquiry will be. In
the acquisition agreement between the Company and Alltrista, Alltrista agreed to
indemnify the Company for compliance costs that relate back to Alltrista's
operation of this facility.

         As a potentially responsible party ("PRP") at various Superfund sites
in the U.S., the Company is or may be legally responsible, jointly and severally
with the other members of the PRP group, for the cost of remediation of these
sites. Based on currently available data (including EPA data, internal records
and other sources believed to be reliable), the Company believes its
contribution, and/or the contribution of its predecessors, to these sites was de
minimis. Based on the information available as of the date of this Report,
management does not believe that its aggregate remediation costs or potential
liabilities in connection with these sites will have a material adverse effect
on the Company's financial condition or results of operations. However, there
can be no assurance that the other PRP's will pay their proportionate share of
the remediation costs at these sites and, as a result, future costs or
liabilities incurred by the Company could be material.

                                   SEASONALITY

         The Company's business as a whole is not affected to any significant
degree by seasonal variations, although quarterly sales and earnings tend to be
slightly stronger starting in early spring (second quarter) and extending
through late summer (third quarter). Aerosol sales do not tend to fluctuate
during the year, with only relatively minor spring and summer increases related
to household products and insect repellents. Paint sales tend to be stronger in
spring and early summer due to the favorable weather conditions. Portions of the
custom and specialty products line tend to vary seasonally, because of holiday
sales late in the year.

                         INTEREST RATES/FOREIGN CURRENCY

         Management does not believe that interest rate fluctuations have a
material effect on the Company's results of operations and financial condition.
As of December 31, 1997, 11.62% of the Company's borrowings were floating rate
obligations. In the past, management has adopted strategies to increase the
Company's floating-rate exposure to benefit from declining rates. Currently, the
Company holds no interest rate swaps. However, in an effort to limit foreign
exchange risk related to the financing of the Merthyr Tydfil facility, the
Company has entered into a series of British Pound/Dollar forward contracts that
will not exceed $37 million in notional amount or a term of more than seven
years. The Indenture under which the 10 1/8% Notes were issued limits the
Company's ability to enter into currency hedging transactions that would be
considered speculative, but the Company is specifically permitted to hedge
payment obligations on indebtedness permitted by the Indenture.

         To the extent that the Company obtains financing in United States
dollars and receives revenues and incurs expenses in the development,
construction and operation of USC Europe in its local currencies, the Company
will encounter currency exchange rate risks. While the Company may consider
entering into transactions to hedge the risk of exchange rate fluctuations,
there can be no assurance that the Company will engage in such transactions, or,
if the Company decides to engage in such transactions, that shifts in the
currency exchange rates will not have an adverse effect on the Company's
financial condition or its ability to repay principal or interest on its debt
obligations.

                                    INFLATION

         Historically, the Company has not always been able to immediately
offset increases in tin plate prices with price increases on the Company's
products. However, in most years, a combination of factors has permitted the
Company to improve its profitability notwithstanding these conditions. The
Company's capital spending programs and manufacturing process upgrades have
increased operating efficiencies and thereby reduced the Company's unit cost of
production. In addition, historically, the Company has been able to negotiate
lower price increases than those announced by its major suppliers. See "Business
-- Raw Materials." The operating efficiencies and reduced unit cost of
production which have been achieved through the Company's capital spending
programs have mitigated the impact of inflation on the Company's cost structure.
In 1995 and 1997, higher material costs were one of the factors contributing to
the Company's reported earnings.

                    CUSTOMER RELATIONSHIPS/AEROSOL CONTAINERS

         Aerosol containers accounted for 58.8% of the Company's total net sales
for the year ended December 31, 1997. A significant reduction in the number of
aerosol containers used by the Company's customers could have a material adverse
effect on the Company and, in particular, its European operations which are
comprised solely of aerosol manufacturing facilities.



<PAGE>   20

         In October 1996, U.S. Can received written confirmation of Gillette's
intention to purchase certain annual unit volumes of aerosol cans from U.S. Can,
including U.S. Can's European operations, through 1998, with the option to
extend for an additional period, subject to price adjustment for actual volumes
purchased. The Company's manufacturing facility in Merthyr Tydfil, in which the
Company has invested approximately $30 million, was opened in large part due to
Gillette's decision. The loss of Gillette as a customer or a material reduction
in the benefits to the Company expected under this arrangement would have an
adverse impact on the profitability of that facility and the Company's ability
to recoup the start-up costs of establishing the facility. It is not U.S. Can's
policy to have any plant devoted exclusively to one customer and management
plans to service other customers from this facility.

         The Company's relationships with its customers are critical to its
business. A significant portion of the Company's annual net sales is
attributable to repeat customers. The loss of a significant number of such
customers could have a material adverse effect on the Company.

                                    YEAR 2000

         U.S. Can is currently in the process of converting from an IBM
mainframe legacy system to an integrated AS/400 software package from American
Software, that is Year 2000 compliant. Order entry and accounts receivable
functions have been converted to the AS/400-based system, and general ledger and
accounts payable functions are scheduled for conversion no later than the third
quarter of 1998. In addition, several plant manufacturing operating and data
base management systems are being upgraded to Year 2000 compliance at a minimal
cost. The Company has also surveyed its primary vendors which have indicated
they will be Year 2000 compliant. The Company has also reviewed certain
telephone, time and attendance, voice mail, and programmable logic control
systems. The Company believes it will be Year 2000 compliant in advance of the
new millennium, and does not believe the compliance costs will be material.



<PAGE>   21



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Inapplicable.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
<CAPTION>
                                                                                 PAGE
                                                                                 ----
<S>                                                                              <C>
Report of Independent Public Accountants                                           22

U.S. Can Corporation and Subsidiaries Consolidated Balance Sheets as
  of December 31, 1996 and 1997                                                    23

U.S. Can Corporation and Subsidiaries Consolidated Statements of
  Operations for the Years Ended December 31, 1995, 1996 and 1997                  24

U.S. Can Corporation and Subsidiaries Consolidated Statements of
  Stockholders' Equity for the Years Ended December 31, 1995, 1996
  and 1997                                                                         25

U.S. Can Corporation and Subsidiaries Consolidated Statements of Cash
  Flows for the Years Ended December 31, 1995, 1996 and 1997                       26

U.S. Can Corporation and Subsidiaries Notes to Consolidated Financial
  Statements                                                                       27

U.S. Can Corporation and Subsidiaries Quarterly Financial Data (Unaudited)         49

</TABLE>


<PAGE>   22


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To U.S. Can Corporation:

         We have audited the accompanying consolidated balance sheets of U.S.
CAN CORPORATION (a Delaware corporation) AND SUBSIDIARIES as of December 31,
1996 and 1997, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of U.S.
Can Corporation and Subsidiaries as of December 31, 1996 and 1997, and their
results of operations and cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles.


                                                             ARTHUR ANDERSEN LLP



Chicago, Illinois
February 18, 1998

<PAGE>   23



                      U.S. CAN CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                       (000'S OMITTED, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>
                                                                                       DECEMBER 31,        DECEMBER 31,
                                                                                           1996                1997
                                                                                       ------------        ------------
                                     ASSETS
<S>                                                                                       <C>                 <C>      
CURRENT ASSETS:
  Cash and cash equivalents                                                               $   7,966           $   6,773
  Accounts receivable, less allowances of $10,895 and
    $15,134 in 1996 and 1997, respectively                                                   86,822              74,137
  Inventories                                                                               113,143             109,458
  Prepaid expenses and other current assets                                                  15,261              17,503
  Prepaid income taxes                                                                        9,372              22,748
                                                                                          ---------           ---------
         Total current assets                                                               232,564             230,619
                                                                                          ---------           ---------
PROPERTY, PLANT AND EQUIPMENT:
  Land                                                                                        5,425               5,485
  Buildings                                                                                  62,421              73,277
  Machinery, equipment and construction in process                                          408,428             427,404
                                                                                          ---------           ---------
                                                                                            476,274             506,166
  Less -- Accumulated depreciation and amortization                                        (153,160)           (181,869)
                                                                                          ---------           ---------
         Total property, plant and equipment                                                323,114             324,297
                                                                                          ---------           ---------
MACHINERY REPAIR PARTS                                                                        6,057               6,396
INTANGIBLES                                                                                  67,206              59,578
OTHER ASSETS                                                                                 14,675              12,814
                                                                                          ---------           ---------
         Total assets                                                                     $ 643,616           $ 633,704
                                                                                          =========           =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Current maturities of long-term debt                                                    $  11,928           $   9,635
  Cash overdrafts                                                                             3,769               7,800
  Accounts payable                                                                           56,355              50,686
  Accrued payrolls and benefits                                                              25,786              24,358
  Accrued insurance                                                                           6,770               6,607
  Restructuring reserves                                                                         --              31,645
  Other current liabilities                                                                  22,326              19,117
                                                                                          ---------           ---------
         Total current liabilities                                                          126,934             149,848
                                                                                          ---------           ---------
SENIOR DEBT                                                                                  88,882              91,506
SUBORDINATED DEBT                                                                           275,000             275,000
                                                                                          ---------           ---------
         Total long-term debt                                                               363,882             366,506
                                                                                          ---------           ---------
OTHER LONG-TERM LIABILITIES:
  Postretirement benefits                                                                    26,128              27,387
  Deferred income taxes                                                                      27,892              17,973
  Other long-term liabilities                                                                 1,995               9,677
                                                                                          ---------           ---------
         Total other long-term liabilities                                                   56,015              55,037
                                                                                          ---------           ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
  Preferred stock, $.01 par value; 10,000,000 shares
    authorized, none issued or outstanding                                                       --                  --
  Common stock, $.01 par value; 50,000,000 shares
    authorized 12,995,636 and  13,097,855 shares
    issued in 1996 and 1997, respectively                                                       130                 131
  Paid-in capital                                                                           105,582             108,003
  Unearned restricted stock                                                                  (2,581)             (2,558)
  Treasury common stock, at cost; 20,651 and 44,159
    shares in 1996 and 1997, respectively                                                      (256)               (714)
  Currency translation adjustment                                                             1,622              (2,193)
  Retained deficit                                                                           (7,712)            (40,356)
                                                                                          ---------           ---------
         Total stockholders' equity                                                          96,785              62,313
                                                                                          ---------           ---------
           Total liabilities and stockholders' equity                                     $ 643,616           $ 633,704
                                                                                          =========           =========
</TABLE>


       The accompanying Notes to Consolidated Financial Statements are an
                     integral part of these balance sheets.



<PAGE>   24



                      U.S.CAN CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     (000'S OMITTED, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                                         FOR THE YEAR ENDED DECEMBER 31,
                                                                       -----------------------------------
                                                                         1995         1996         1997
                                                                       ---------    ---------    ---------
<S>                                                                    <C>          <C>          <C>    
NET SALES                                                              $ 562,728    $ 660,623    $ 755,675
COST OF SALES                                                            491,084      571,667      665,755
                                                                       ---------    ---------    ---------
     Gross income                                                         71,644       88,956       89,920
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                              26,547       28,441       33,047
SPECIAL CHARGES                                                            8,000         --         62,980
                                                                       ---------    ---------    ---------
     Operating income (loss)                                              37,097       60,515       (6,107)
INTEREST EXPENSE ON BORROWINGS                                            24,513       28,387       36,867
AMORTIZATION OF DEFERRED FINANCING COSTS                                   1,543        1,518        1,738
OTHER EXPENSES                                                             1,897        1,788        1,986
                                                                       ---------    ---------    ---------
     Income (loss) before income taxes                                     9,144       28,822      (46,698)
PROVISION (BENEFIT) FOR INCOME TAXES                                       4,195       12,267      (16,792)
                                                                       ---------    ---------    ---------
     Income (loss) from continuing operations before                       4,949       16,555      (29,906)
       extraordinary item
DISCONTINUED OPERATIONS, net of income taxes
     Net income (loss) from discontinued operations                       (1,010)         446        1,078
     Net loss on sale of business                                           --           --         (3,204)
EXTRAORDINARY ITEM, net of income taxes                                     --         (5,250)        --
                                                                       ---------    ---------    ---------
NET INCOME (LOSS)                                                      $   3,939    $  11,751    $ (32,032)
                                                                       =========    =========    =========

PER SHARE DATA:
     Basic:
       Income (loss) from continuing operations before                 $    0.39    $    1.28    $   (2.29)
          extraordinary item
       Discontinued operations                                             (0.08)        0.04        (0.16)
       Extraordinary item                                                   --          (0.41)        --
                                                                       ---------    ---------    ---------
          Net income (loss)                                            $    0.31    $    0.91    $   (2.45)
                                                                       =========    =========    =========

          Weighted average shares outstanding (000's)                     12,659       12,929       13,048
                                                                       =========    =========    =========

    Diluted:
       Income (loss) from continuing operations before                 $    0.39    $    1.26    $   (2.29)
         extraordinary item
       Discontinued operations                                             (0.08)        0.04        (0.16)
       Extraordinary item                                                   --          (0.40)        --
                                                                       ---------    ---------    ---------
          Net income (loss)                                            $    0.31    $    0.90    $   (2.45)
                                                                       =========    =========    =========

          Weighted average and equivalent shares outstanding (000's)      12,839       13,090       13,048
                                                                       =========    =========    =========
</TABLE>


       The accompanying Notes to Consolidated Financial Statements are an
                       integral part of these statements.



<PAGE>   25



                     U. S. CAN CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
                                 (000'S OMITTED)

<TABLE>
<CAPTION>
                                                                  UNEARNED       TREASURY      CUMULATIVE      RETAINED
                                         COMMON      PAID-IN     RESTRICTED       COMMON       TRANSLATION     EARNINGS
                                         STOCK       CAPITAL       STOCK          STOCK        ADJUSTMENT     (DEFICIT)
                                         ------     ---------    ----------      --------     ------------    ----------
<S>                                       <C>       <C>          <C>             <C>          <C>             <C> 
BALANCE AT DECEMBER 31, 1994               $126      $ 98,799       $    --       $  (468)        $    --       $(23,547)
  Net income                                 --            --            --            --              --          3,939
  Payments of common stock
    issuance costs                           --           (22)           --            --              --             --
  Issuance of stock under
    employee benefit plans                    1         1,488            --            --              --             --
  Purchase of treasury stock                 --            --            --          (209)             --             --
  Issuance of treasury stock                              704                         358
  Exercise of stock options                   1           123            --            --              --             --
  Income tax benefit related
    to exercise of nonqualified
    stock options                            --           661            --            --              --             --
  Issuance of restricted stock                1         2,160        (2,161)           --              --             --
  Amortization of unearned
    restricted stock                         --            --           109            --              --             --
  Equity adjustment to reflect
    minimum pension liability                --            --            --            --              --           (236)
                                           ----   -----------     ---------       -------         -------       --------
BALANCE AT DECEMBER 31, 1995                129       103,913        (2,052)         (319)             --        (19,844)
  Net income                                 --            --            --            --              --         11,751
  Issuance of stock under
    employee benefit plans                   --           516            --                            --             --
  Purchase of treasury stock                 --            --            --          (233)             --             --
  Issuance of treasury stock                 --           129            --           296              --             --
  Exercise of stock options                  --            18            --            --              --             --
  Issuance of restricted stock                1         1,006        (1,007)           --              --             --
  Amortization of unearned
    restricted stock                         --            --           478            --              --             --
  Equity adjustment to reflect
    minimum pension liability                --            --            --            --              --            381
  Cumulative translation
    adjustment                               --            --            --            --           1,622             --
                                           ----      --------       -------       -------         -------       --------
BALANCE AT DECEMBER 31, 1996                130       105,582        (2,581)         (256)          1,622         (7,712)
  Net loss                                   --            --            --            --              --        (32,032)
  Issuance of stock under
    employee benefit plans                                778            --           721              --             --
  Purchase of treasury stock                 --            --            --        (1,179)             --             --
  Exercise of stock options                  --           152            --            --              --             --
  Issuance of restricted stock                1         1,491        (1,492)           --              --             --
  Amortization of unearned
    restricted stock                         --            --         1,515            --              --             --
  Equity adjustment to reflect
    minimum pension liability                --            --            --            --              --           (612)
  Cumulative translation
    adjustment                               --            --            --            --          (3,815)            --
                                           ----      --------       -------       -------         -------       --------
BALANCE AT DECEMBER 31, 1997               $131      $108,003       $(2,558)      $  (714)        $(2,193)      $(40,356)
                                           ====      ========       =======       =======         =======       ========
</TABLE>



       The accompanying Notes to Consolidated Financial Statements are an
                       integral part of these statements.



<PAGE>   26


                      U.S. CAN CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (000'S OMITTED)

<TABLE>
<CAPTION>
                                                              YEAR ENDED DECEMBER 31,        
                                                        -----------------------------------  
                                                           1995         1996        1997
                                                        ---------    ---------    ---------
<S>                                                     <C>          <C>          <C>       
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                     $   3,939    $  11,751    $ (32,032)
  Adjustments to reconcile net income (loss)
    to net cash provided by  operating
    activities--
      Depreciation and amortization                        28,238       33,977       42,434
      Special charges                                       8,000         --         62,980
      Loss on sale of business                               --           --         12,413
      Extraordinary loss on extinguishment
        of debt                                              --          5,250         --
      Deferred income taxes                                  (497)       4,124      (17,788)
  Change in operating assets and
      liabilities, net of effect of acquired and sold
      businesses--
  Accounts receivable                                      (1,373)      (7,948)      12,059
      Inventories                                           4,716      (15,942)       3,785
      Accounts payable                                    (15,832)       6,077       (5,193)
      Accrued payrolls and benefits, insurance
        and other                                          (3,784)      (5,644)     (20,172)
      Postretirement benefits                                 545          599        1,259
      Other, net                                              840       (1,322)       4,679
                                                        ---------    ---------    ---------
        Net cash provided by operating
          activities                                       24,792       30,922       64,424
                                                        ---------    ---------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                    (31,379)     (48,630)     (54,030)
  Acquisition of businesses, net of cash
      acquired                                            (29,941)     (80,894)     (12,398)
  Proceeds on sale of business                               --           --          1,000
  Change in restricted cash                                (3,500)       1,455         --
  Proceeds from sale of property                              600        1,515          630
  Machinery repair parts usage
      (purchases), net                                         63         (662)        (362)
                                                        ---------    ---------    ---------
        Net cash used in investing activities             (64,157)    (127,216)     (65,160)
                                                        ---------    ---------    ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Issuance of common stock and exercise of
      stock options                                           124           18          152
  Net borrowings under the revolving line
    of credit and changes in cash overdrafts               46,884      (25,052)       1,931
  Issuance of 10 1/8% notes                                  --        275,000         --
  Amounts paid in escrow                                     --       (109,728)        --
  Borrowings of other long-term debt,
    including capital lease obligations                    10,911       14,247       24,935
  Payments of other long-term debt, including
    capital lease obligations                             (17,973)     (41,424)     (22,352)
  Payments of debt refinancing costs                         (337)      (9,259)      (1,574)
  Payments of common stock issuance costs                     (22)        --           --
  Purchase of treasury stock, net                            (209)        (233)      (1,179)
                                                        ---------    ---------    ---------
      Net cash provided by financing activities            39,378      103,569        1,913
                                                        ---------    ---------    ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                      --            555       (2,370)
                                                        ---------    ---------    ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS               13        7,830       (1,193)
CASH AND CASH EQUIVALENTS, beginning of year                  123          136        7,966
                                                        ---------    ---------    ---------
CASH AND CASH EQUIVALENTS, end of year                  $     136    $   7,966    $   6,773
                                                        =========    =========    =========
</TABLE>


       The accompanying Notes to Consolidated Financial Statements are an
                       integral part of these statements.


<PAGE>   27



                      U.S. CAN CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1995, 1996 AND 1997

(1)  BASIS OF PRESENTATION AND OPERATIONS

         The consolidated financial statements include the accounts of U.S. Can
Corporation (the "Corporation"), its wholly owned subsidiary, United States Can
Company ("U.S. Can") and U.S. Can's subsidiaries, all of which are European
companies formed or acquired during 1996 (the "European Subsidiaries"). All
significant intercompany balances and transactions have been eliminated. The
consolidated group is referred to herein as the Company.

         The Company is a manufacturer of steel and plastic containers for
personal care products and household, automotive, paint and industrial supplies.
The Company manufactures a broad line of aerosol containers for consumer and
household products in the United States and Europe. In its paint, plastic and
general line business, the Company produces metal and plastic, round and oblong
containers, for household and industrial paints and additives and other
industrial products in the United States. The Company also manufactures a wide
variety of custom and specialty tins, decorative containers and products. The
Company owns or leases 35 plants, located in 12 States, and 6 plants located in
the United Kingdom, France, Germany, Spain and Italy, many of which are
positioned near principal customers and suppliers. Certain of the operations and
plants are being discontinued or closed as further described in Note 3.

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         (a) Cash and Cash Equivalents -- The Company considers all liquid
interest-bearing instruments purchased with an original maturity of three months
or less to be cash equivalents.

         (b) Cash Overdrafts -- Cash overdrafts represent the aggregate amount
of checks which have been issued and have not yet cleared the Company's
zero-balance disbursement accounts, net of any cash in specific Company
depository accounts which will be automatically drawn against as such checks
clear the disbursement accounts. Cash on-hand and cash in Company accounts at
banks not subject to the automatic netting are reported as cash and cash
equivalents.

         (c) Accounts Receivable Allowances -- Activity in the accounts
receivable allowances accounts was as follows (000's omitted):


<TABLE>
<CAPTION>
                                                     YEAR ENDED DECEMBER 31,
                                                --------------------------------
                                                  1995       1996         1997
                                                --------    --------    --------
<S>                                             <C>         <C>         <C>     
Balance at beginning of year                    $  4,116    $  5,451    $ 10,895
  Provision for doubtful accounts                    220         459       1,065
  Reserve for doubtful accounts from business
    acquisitions                                     160       2,636        --
  Provision for discounts, allowances and
    rebates                                        7,911      10,551      22,036
  Write-offs of doubtful accounts, net of
    recoveries                                      (242)       (546)       (560)
  Discounts, allowances and rebates taken         (6,714)     (7,656)    (18,302)
                                                --------    --------    --------
Balance at end of year                          $  5,451    $ 10,895    $ 15,134
                                                ========    ========    ========
</TABLE>


         (d) Inventories -- All domestic inventories, except machine parts, are
stated at cost determined by the last-in, first-out ("LIFO") cost method, not in
excess of market. Inventories of approximately $16.4 million at the European
Subsidiaries and machine shop inventory are stated at cost determined by the
first-in, first-out ("FIFO") cost method, not in excess of market. Inventory
costs include material, labor and factory overhead. FIFO cost of LIFO
inventories approximated their LIFO value at December 31, 1996 and 1997.

         Tin-plated steel accounted for approximately 86% of the Company's total
raw material purchases during 1997. Negotiations with the Company's domestic
tin-plated steel suppliers occur once per year. At that time, the prices for
tin-plated steel are set for the upcoming year. Due to competition among steel
suppliers and the volume of tin-plated steel purchased by the Company in the
United States, the Company has historically negotiated raw materials pricing
which is more favorable than that publicly announced by its suppliers. However
no assurance can be given that the Company will continue to be able to do so in
the future. With respect to the European Subsidiaries, the Company has only
limited prior purchasing history with its tin-plated steel suppliers. No
assurance can be given that the European Subsidiaries will be able to continue
to purchase its tin-plated steel requirements from such existing sources at
prices below those publicly announced by its suppliers.



<PAGE>   28



                      U.S. CAN CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)


         Inventories reported in the accompanying balance sheets were classified
as follows (000's omitted):

<TABLE>
<CAPTION>
                           DECEMBER 31,
                         -------------------
                           1996       1997
                         --------   --------
<S>                      <C>        <C>     
Raw materials            $ 34,257   $ 33,746
Work in progress           48,654     42,763
Finished goods             26,053     28,037
Machine shop inventory      4,179      4,912
                         --------   --------
                         $113,143   $109,458
                         ========   ========
</TABLE>

         (e) Property, Plant and Equipment -- Property, plant and equipment is
recorded at cost. Major renewals and betterments which extend the useful life of
an asset are capitalized; routine maintenance and repairs are expensed as
incurred. Total maintenance and repairs expense charged against earnings was
approximately $22.5 million, $25.2 million and $30.9 million in 1995, 1996 and
1997, respectively. Upon sale or retirement of these assets, the asset cost and
related accumulated depreciation are removed from the accounts and any related
gain or loss is reflected in income.

         Depreciation for financial reporting purposes is principally provided
using the straight-line method over the estimated useful lives of the assets as
follows: buildings -- 25 to 40 years; machinery and equipment -- 5 to 20 years.
Property, plant and equipment under capital leases are amortized over the
shorter of the estimated useful life of the asset or the term of the lease.
Accelerated methods are used for income tax purposes, where permitted.

         (f) Machinery Repair Parts -- Machinery repair parts are capitalized
when purchased and are expensed, at cost, as they are used in the course of
operations. These parts are recorded at the lower of cost or net realizable
value in the accompanying balance sheets.

         (g) Intangibles -- Intangible assets consist principally of the excess
purchase price over the fair value of the net assets of businesses acquired
("goodwill"), which is principally amortized over a 40 year life. The related
amortization expense was $2.0 million, $1.5 million and $1.8 million for the
years ended December 31, 1995, 1996 and 1997, respectively. Total accumulated
amortization was $9.0 million and $10.5 million at December 31, 1996 and 1997,
respectively. Additionally, during 1997, net goodwill was reduced by $13.5
million as a result of the special charges and discontinued businesses described
in Note 3. After an acquisition, the Company continually reviews whether
subsequent events and circumstances have occurred that indicate the remaining
estimated useful life of goodwill may warrant revision or that the remaining
balance of goodwill may not be recoverable. If events and circumstances indicate
that goodwill related to a particular business should be reviewed for possible
impairment the Company uses projections to assess whether future operating
income (net of tax) of the business is expected to exceed the goodwill
amortization over the remaining life of the goodwill, to determine whether a
write-down of goodwill to recoverable value (generally as determined by the same
projections) is appropriate.

         (h) Environmental Liabilities -- The Company's operations and products
are subject to Federal, state, local and foreign regulatory requirements
relating to environmental protection. It is the Company's policy to comply fully
with all such applicable requirements. The Company may be subject to potential
liabilities for the costs of environmental remediation at currently or
previously owned or operated sites or sites to which it, or predecessor owners,
transported materials.

         It is the Company's policy to accrue for the estimated cost of
environmental matters, on a non-discounted basis, when it is probable that a
liability has been incurred and the amount of the liability can be reasonably
estimated. Such provisions and accruals exclude claims for recoveries from
insurance carriers or other third parties. Such claims are recognized as
receivables only if realization is probable.

         Statement of Position ("SOP") 96-1, "Environmental Remediation
Liabilities" was issued in October 1996 and adopted by the Company in 1997. This
SOP provides authoritative guidance on specific accounting issues that are
present in the recognition, measurement and disclosure of environmental
remediation liabilities. The impact of adopting this SOP did not have a material
effect on the Company's financial position or results of operations.

         (i) Revenue -- Revenue is recognized when goods are shipped to the
customer. Estimated sales returns and allowances are recognized as an offset
against revenue in the period in which the related revenue is recognized.

<PAGE>   29


                      U.S. CAN CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)


         (j) Foreign Currency Translation -- The functional currency for
substantially all of the European Subsidiaries is the applicable local currency.
The translation from the applicable foreign currencies to U.S. dollars is
performed for balance sheet accounts using current exchange rates in effect at
the balance sheet date and for revenue and expense accounts using an average
exchange rate prevailing during the period. The gains or losses resulting from
such translation are included in stockholders' equity. Gains or losses resulting
from foreign currency transactions are included in other income and were not
material in 1996 or 1997.

         (k) New Accounting Pronouncements -- Statement of Financial Accounting
Standard ("SFAS") No. 128, "Earnings Per Share" was issued in February 1997 and
adopted by the Company as of December 31, 1997. This new pronouncement
established revised reporting standards for earnings per share and has been
retroactively applied to all periods presented herein. Previously reported
earnings per share for such periods were not materially different than currently
reported diluted earnings per share. Additionally, application of the new
standard for 1997 did not materially impact the calculation of diluted earnings
per share versus what would have been reported under the prior standard. Diluted
earnings per share for the Company includes the impact of assumed exercise of
dilutive stock options.

         SFAS No. 130, "Reporting Comprehensive Income" was issued in July 1997
and will be adopted by the Company in 1998. This new pronouncement establishes
standards for the reporting and display of comprehensive income and its
components which, for the Company, include cumulative translation and minimum
pension adjustments.

         SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information" was also issued in July 1997 and introduces a new model for segment
reporting, called the "management approach." The management approach is based on
the way that the chief operating decision maker organizes segments within the
company for making operating decisions and assessing performance. Management of
the Company is evaluating this new pronouncement to determine its impact upon
current reporting. Adoption of this new standard is scheduled for late 1998.

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

(3)  SPECIAL CHARGES AND DISCONTINUED OPERATIONS

         In 1995, the Company recorded a pretax charge of $8 million related to
actions taken to reduce overhead expenses and to eliminate redundant
manufacturing capacity. The primary components of the charge include costs
associated with severance packages for a number of identified salaried employees
throughout the Company and with the Company's Saddle Brook, New Jersey
manufacturing facility which was closed as part of the consolidation of the
Company's steel pail business into the Company's North Brunswick, New Jersey
manufacturing facility.


         In the third quarter of 1997, the Company established a pre-tax
restructuring provision of $35 million, primarily for plant closings and
overhead cost reductions associated with the loss of a major aerosol customer
(the customer representing approximately $35 million of annual sales) who
awarded its global aerosol business to a U.S. Can competitor. In addition, the
Company established a pre-tax disposition provision of $17.2 million for the
anticipated loss on the closure of its metal pail operation in North Brunswick,
New Jersey. Such closure would have resulted in certain severance and related
payments, the write-off of several long-lived assets and ongoing building costs.
However, in the fourth quarter of 1997, the Company successfully negotiated and
completed the sale of this facility at a net pre-tax loss of $13.3 million and
appropriately adjusted the provision in the fourth quarter of 1997.

         In the fourth quarter of 1997, the Company, at the direction of its
Board of Directors, employed the assistance of external business consultants to
review operations and explore other avenues for enhancing shareholder value. As
a result of this review, the Company established another pre-tax restructuring
provision (including the adjustment described above) of $10.8 million, primarily
to include further personnel reductions and the reduction of asset value
associated with equipment used in the businesses the Company has exited or is in
the process of exiting.

         The key elements of the third and fourth quarter restructuring include
closure of the Racine, Wisconsin aerosol assembly plant, the Midwest litho
center in Alsip, Illinois, the Sparrows Point litho center in Baltimore,
Maryland, and the California Specialty plant in Vernalis, California; a
write-down to estimated proceeds for the sale of the Orlando, Florida machine
engineering center ("OMEC") and the Baltimore, Maryland specialty and paint can
distribution business; and


<PAGE>   30

                      U.S. CAN CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)


organizational changes designed to reduce general overhead. The Company expects
the sale of OMEC will be completed in 1998.

         The third and fourth quarter restructuring provisions included a $41.7
million for the non-cash write-off of assets related to the facilities to be
closed or sold, $13.2 million for severance and related termination benefits for
approximately 115 salaried and 370 hourly employees, and $5.9 million for other
related closure costs, such as, building restoration, equipment disassembly and
future lease payments. In addition to these charges, the Company provided $2.2
million related to the carrying costs (principally contractual lease payments)
related to the closed Saddle Brook, New Jersey facility. The write-off of the
assets included in the charge, primarily relates to fixed assets ($32.8 million)
which cannot be transferred or used in the Company's other operations and
unamoritized goodwill related to the closed operations. As of December 31, 1997,
approximately $16.3 million of cash costs remain, of which the majority is
expected to be spent in 1998.

         In November 1997, as part of the business and operational realignments,
the Company sold its steel pail business which was conducted entirely from its
North Brunswick, New Jersey facility, for $1.4 million in cash and notes, plus
the assumption of certain liabilities and future payments. 1997 revenues of the
steel pail business, up to the point of sale, were $19.2 million. Previous
reporting of the metal pail business as a discontinued operation for the years
ended December 31, 1997 and prior have been amended in this report so that the
results of this business are included in continuing operations.


          The Company is actively seeking to sell its commercial metal services
business ("Metal Services"). Metal Services includes two plants in Chicago,
Illinois, one plant in each of Trenton, New Jersey and Brookfield, Ohio and the
closed Midwest Litho plant. 1997, 1996 and 1995 revenues from these operations
were $116 million, $101 million, and $64 million (excluding intra-Company sales
which are expected to be continued by the buyer and including third-party sales
from the closed Midwest Litho plant, which (other than sales to S.C. Johnson)
have been transferred to other Metal Services plants). The Company anticipates
that the sale of Metal Services will be completed in 1998. The Company provided
for a $2.7 million loss on the sale of the Metal Services business, primarily
representing the excess of recorded carrying value over the anticipated
aggregate net sales proceeds for the net assets to be sold in the dispositions.
As of December 31, 1997, the net assets of Metal Services, excluding the
discontinued operations reserve, included net current assets of approximately
$16.0 million and net other assets of approximately $29.4 million. The Company's
historical financial statements have been restated to reflect the Metal Services
business as a discontinued operation.

         The Company continuously evaluates the composition of its various
manufacturing facilities in light of current and expected market conditions and
demand. While no formal plans currently exist to further consolidate plant
operations, such actions may be deemed appropriate in the future.

(4)  ACQUISITIONS

         During 1995, the Company acquired four businesses for an aggregate of
approximately $30.2 million in cash, plus contingent payments of up to $2.5
million, and the assumption of approximately $6.7 million in debt. The cash
portion of the purchase prices was financed primarily from borrowings under U.S.
Can's revolving line of credit.

         In April and June 1996, the Company acquired from Alltrista Corporation
("Alltrista") for approximately $14.4 million and the assumption of a $0.5
million liability substantially all of the assets (other than steel inventory)
of Alltrista Metal Services ("AMS"), a division of Alltrista. In June 1996, the
Company purchased AMS's remaining inventory for $8 million. The acquisitions
were financed with borrowings under U.S. Can's revolving line of credit. In July
of 1996, the Company discontinued operations at two of the former AMS plants.

         In August 1996, the Company completed the acquisition of all of the
outstanding stock of three related companies, CPI Plastics, Inc., CP Ohio, Inc.
and CP Illinois, Inc. (collectively, the "CPI Group"), engaged in manufacturing
molded plastic drums and pails and poultry products. The Company paid
approximately $15.1 million in cash to the stockholders of the CPI Group at
closing. In addition, U.S. Can has made contingent payments, based upon the CPI
Group's financial performance during 1996 and 1997, aggregating $1.0 million.
This acquisition was financed with borrowings under a special acquisition line
of credit provided to U.S. Can by its senior lenders.


<PAGE>   31


                      U.S. CAN CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

         In September 1996, the Company completed the acquisition of a portion
of Crown Cork & Seal Company, Inc.'s ("Crown's") European aerosol can businesses
("USC Europe") for $48.3 million, in addition to the assumption debt of $5.8
million. This acquisition included manufacturing operations in the United
Kingdom, France, Spain and Germany and the aerosol can manufacturing equipment
and assets from a Crown facility in Italy. The companies acquired and
established in connection with the USC Europe acquisition comprise the majority
of the European Subsidiaries. The Company incurred $3.5 million of costs in
completing this acquisition which have been included in total acquisition costs.

         In January 1997, the Company acquired certain assets from
Owens-Illinois Closure Inc. ("O-I") for cash consideration of $10 million
subject to adjustment based upon the actual value of the inventory acquired and
potential contingent payments of up to $1.5 million based upon realization of
certain new business which O-I was seeking at the time of the acquisition. The
assets acquired by the Company include machinery, equipment, inventory and raw
materials of O-I's Erie, Pennsylvania metal business. The purchase price
allocation resulted in goodwill of $7.1 million.

         Each of the foregoing business acquisitions was accounted for as a
purchase for financial reporting purposes. Accordingly, assets and liabilities
of the acquired companies were revalued to estimated fair values as of the
acquisition date. Changes in these estimates, if any, are not expected to be
material.

         The operating results of each acquired business are included in the
consolidated statement of operations from the date of acquisition. Amortization
of excess purchase price over the estimated fair value of the net value of
assets acquired is made over a period of 40 years. All acquired companies, other
than those comprising USC Europe, have been merged into U.S. Can.

         The following data represents the Company's unaudited pro forma 1995
and 1996 results of operations as if the significant acquisitions of the CPI
Group and USC Europe had occurred on January 1 of the applicable year (000's
omitted, except per share data):


<TABLE>
<CAPTION>
                                                                  1995       1996
                                                                --------   --------
<S>                                                             <C>        <C>     
Net sales                                                       $711,221   $766,985
Income from continuing operations before extraordinary item        2,081     11,986
Net income                                                         5,411     12,629
Basic & Diluted Per Share Data:
  Income from continuing operations before extraordinary item   $   0.17   $   1.00
  Net income                                                    $   0.42   $   0.96
</TABLE>

         The pro forma operating results include each businesses'
pre-acquisition results of operations for the indicated years with adjustments
to reflect amortization of goodwill, additional depreciation on the increases to
the fair market value of fixed assets, interest expense on the acquisition
borrowings and the effect of income taxes thereon. The pro forma information
given above does not purport to be indicative of the results that actually would
have been obtained if the operations were combined during the periods presented
and is not intended to be a projection of future results or trends.

(5)  DEBT OBLIGATIONS

         The primary debt obligations of the Company at December 31, 1996 and
1997, consisted of the following (000's omitted):


<TABLE>
<CAPTION>
                                       1996         1997
                                    ---------    ---------
<S>                                 <C>          <C>      
Senior debt--
  Revolving line of credit          $  34,700    $  32,600
  Secured equipment notes              12,021        4,825
  Capital lease obligations            35,894       30,050
  Secured term loan                     9,122       24,840
  Industrial revenue bonds              7,500        7,500
  Mortgages and other                   1,573        1,326
                                    ---------    ---------
                                      100,810      101,141
Less--Current maturities              (11,928)      (9,635)
                                    ---------    ---------
         Total senior debt             88,882       91,506
Senior subordinated 10 1/8% notes     275,000      275,000
                                    ---------    ---------
         Total long-term debt       $ 363,882    $ 366,506
                                    =========    =========
</TABLE>

<PAGE>   32



                      U.S. CAN CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)


         In April 1997, U.S. Can entered into an Amended and Restated Credit
Agreement with a group of banks (the "Credit Agreement"), providing a $110.0
million revolving credit facility. Obligations under the Credit Agreement are
secured by U.S. Can's domestic accounts receivable and inventories. Funds
available under the Credit Agreement may be used for general corporate purposes
(including working capital needs and permitted acquisitions.) The Credit
Agreement permits the Company to borrow in U.S. Dollars, British Pounds or
French Francs. The Credit Agreement has a five-year maturity and amends and
restates the April 1994 credit agreement (the "1994 Credit Agreement").

         The loans under the Credit Agreement bear interest at a floating rate
equal to, at the election of U.S. Can, one of the following: (i) the Base Rate
(as defined in the Credit Agreement) per annum, or (ii) based on the current
pricing ratio, a reserve-adjusted Eurodollar rate plus the then applicable
margin, for specified interest periods (selected by U.S. Can) of one, two,
three, or six months. The weighted average interest rate of the loans
outstanding under the Credit Agreement was 6.7% at both December 31, 1996 and
1997. U.S. Can is required to pay letter of credit fees based on the outstanding
face amount outstanding on each letter of credit and a commitment fee based on
the average daily unused portion of each lender's commitment under the Credit
Agreement.

         Certain temporary supplemental borrowing facilities were provided to
the Company under the 1994 Credit Agreement during 1996 to fund business
acquisitions and seasonal working capital needs. These supplemental facilities
were repaid and terminated upon the 1996 issuance of the 10 1/8% Notes described
below.

         As of December 31, 1997, U.S. Can had borrowings of $32.6 million
outstanding under the Credit Agreement, $12.5 million in letters of credit
issued pursuant thereto, and $64.9 million of unused credit remained available.

         Secured equipment notes, issued at various times since 1990, mature in
varying amounts from 1998 to 2003 and bear interest at various rates between
8.1% and 10.4%. Proceeds from these notes were used to purchase certain
manufacturing equipment, and the notes are secured by that equipment.

         Capital lease obligations, mature in varying amounts from 1998 to 2007
and bear interest at various rates between 4.57% and 19.64%. Other debt,
consisting of various governmental loans and real estate mortgages at interest
rates between 7.0% and 9.77%, mature at various times through 2025, and were
used to finance the expansion of several manufacturing facilities. Included in
other assets as of December 31, 1996 are proceeds of $2.0 million from certain
industrial revenue bonds which were restricted for the relocation and expansion
of the Company's Wheeling, West Virginia plant. These proceeds were used for
their intended purposes in 1997.

         On December 20, 1996, U.K. Can, Ltd., one of the European Subsidiaries,
entered into (and U.S. Can guaranteed) a $28 million secured term loan with
General Electric Capital Corporation, to finance the acquisition of land,
building and equipment comprising the Merthyr Tydfil, Wales aerosol can
production facility. This credit facility is secured by the real and personal
property of U.S. Can's Merthyr Tydfil operation. The loan is denominated in U.S.
Dollars. During 1997, in connection with the transaction, the Corporation
entered into foreign currency contracts which allow the Company to exchange a
fixed amount of U.K. Pounds for U.S. Dollars at certain dates which coincide
with the repayment of principal and interest on the loan. The forward contracts
are intended to hedge against fluctuations in currency rates.

         On October 17, 1996, the Corporation issued $275.0 million principal
amount of 10 1/8% Senior Subordinated Notes due 2006 in a private placement.
These notes were exchanged in March 1997 for similar notes which are publicly
registered. These exchange notes (the "10 1/8% Notes") are unsecured and are
subordinated to all other senior debt of the Corporation and its subsidiaries.
The 10 1/8% Notes are fully and unconditionally guaranteed on an unsecured
senior subordinated basis by U.S. Can. On or after October 15, 2001, the
Corporation may, at its option, redeem all or some of the 10 1/8% Notes at
declining redemption premiums which begin at approximately 105.1% in 2001. Upon
a change of control of the Corporation, as defined, the Noteholders could
require that the Corporation repurchase all or some of the 10 1/8% Notes at a
101% premium.

         Net proceeds from the issuance of the 10 1/8% Notes were $268.1
million. Approximately $158.4 million of these net proceeds were used to pay
down amounts under the 1994 Credit Agreement and $109.7 million was used to
redeem all of the 13 1/2% Senior Subordinated Notes due 2002 (the "13 1/2%
Notes") and remaining interest thereon on January 15, 1997. The Company recorded
the early extinguishment of the 13 1/2% Notes as of October 17, 1996 which
resulted in an extraordinary charge in the fourth quarter of 1996 of $5.2
million (net of income taxes of $3.5 million) primarily representing the
write-off of related unamortized deferred financing costs.




<PAGE>   33


                      U.S. CAN CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

         Based upon borrowing rates currently available to the Company for
borrowings with similar terms and maturities, the fair value of the Company's
total debt was approximately $345 million and $350 million as of December 31,
1996 and 1997, respectively. No quoted market value is available (except on the
10 1/8% Notes). These amounts, because they do not include certain costs such as
prepayment penalties, do not represent the amount the Company would have to pay
to reacquire and retire all of its outstanding debt in a current transaction.

         Financing costs related to the issuance of new debt are deferred and
amortized over the terms of the related debt agreements. Net deferred financing
costs are recorded as other assets in the accompanying balance sheets.

         The Company paid interest on borrowings, excluding amounts paid into
the escrow, of $24.7 million, $25.7 million and $35.2 million in 1995, 1996 and
1997, respectively. As of December 31, 1996 and 1997, accrued interest on
borrowings totaled $6.0 million and $6.7 million, respectively.

         The Credit Agreement and certain of the Company's other debt agreements
contain various financial and other restrictive covenants, as well as
cross-default provisions. The financial covenants include, but are not limited
to, limitations on annual capital expenditures and certain ratios of borrowings
to earnings before interest, taxes, depreciation and amortization ("EBITDA"),
senior debt to EBITDA and interest coverage. The covenants also restrict the
Company's and U.S. Can's ability to distribute dividends, to incur additional
indebtedness, to dispose of assets and to make investments, acquisitions,
mergers and transactions with affiliates. Primarily as a result of the 1997
special charges and discontinued operations, the Company failed to comply with
certain financial ratios and other covenants during the year and at year end.
The Company obtained waivers from the appropriate lenders and have amended the
Credit Agreement to better reflect the Company's current configuration and
expected operating results. In conjunction with the amended agreement, the
Company elected to permanently reduce maximum and current availability by $30
million.

         The Credit Agreement also provides that U.S. Can would be in default if
there is a change after December 31, 1996, which could reasonably be expected to
have a material adverse effect on the business, financial condition, operations,
properties or prospects of U.S. Can and its subsidiaries. Management is not
aware of, nor does it anticipate, any such change and, accordingly, the
borrowings under these agreements have been classified as long-term debt in the
accompanying balance sheets.

         Under existing agreements, maturities of long-term debt as of December
31, 1997 (including capital lease obligations), are as follows (000's omitted):

<TABLE>
<S>                               <C>     
                1998              $  9,518
                1999                 9,037
                2000                 6,038
                2001                 7,720
                2002                40,366
                Thereafter         303,462
                                  --------
                                  $376,141
                                  ========
</TABLE>


(6)  INCOME TAXES

         The Company does not provide for U. S. income taxes which would be
payable if undistributed earnings of the European Subsidiaries were remitted to
the U.S. because the Company either considers these earnings to be invested for
an indefinite period or anticipates that if such earnings were distributed, the
U.S. income taxes payable would be substantially offset by foreign tax credits.
Such unremitted earnings were $0.5 million and $1.8 million as of December 31,
1996 and 1997 respectively.

         The provision for income taxes before discontinued operations and
extraordinary item consisted of the following on a domestic pretax loss from
continuing operations of $49.0 million and foreign pretax earnings of $2.3
million for 1997. 1996 and 1995 pretax results were primarily from domestic
operations (000's omitted):


<TABLE>
<CAPTION>
             1995        1996       1997
           --------    --------   --------
<S>        <C>         <C>        <C>   
Current    $  4,692    $  7,844   $   --
Deferred       (497)      4,124    (17,788)
Foreign        --           299        996
           --------    --------   --------
  Total    $  4,195    $ 12,267   $(16,792)
           ========    ========   ========
</TABLE>

<PAGE>   34


                      U.S. CAN CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)


         Income taxes, net of refunds, of $5.8 million, $2.9 million and $0.5
million were paid in 1995, 1996 and 1997, respectively.

         The principal items comprising the difference between taxes on income
before income taxes and extraordinary item computed at the Federal statutory
rate and the actual provision (benefit) for such income taxes for the years
presented were as follows (000's omitted):


<TABLE>
<CAPTION>
                                                    1995       1996       1997
                                                  --------   --------   --------
<S>                                               <C>        <C>        <C>      
Tax provision (benefit) computed at the
  statutory rates                                 $  3,109   $ 10,088   $(16,344)
Nondeductible amortization of intangible assets        308        370        396
State taxes, net of Federal benefit                    470      1,299       (801)
Other, net                                             308        510        (43)
                                                  --------   --------   --------
  Provision (benefit) for income taxes            $  4,195   $ 12,267   $(16,792)
                                                  ========   ========   ========
</TABLE>

         Deferred income taxes are determined based on the estimated future tax
effects of differences between the financial statement and tax bases of assets
and liabilities given the provisions of the enacted tax laws. The tax effect of
significant temporary differences representing deferred income tax benefits and
obligations consisted of the following (000's omitted):


<TABLE>
<CAPTION>
                                                    DECEMBER 31, 1996                   DECEMBER 31, 1997
                                               ----------------------------        ---------------------------
                                               BENEFITS         OBLIGATIONS        BENEFITS        OBLIGATIONS
                                               --------         -----------        --------        -----------
<S>                                            <C>              <C>                <C>             <C>      
Vacation accrual                                $ 3,352          $     --          $ 3,421          $     --
Debt extinguishment costs                         2,686                --               --                --
Overhead reduction reserves                       1,454                --            1,147                --
Postretirement benefits                          10,682                --           11,069                --
Workers' compensation accrual                     1,067                --              898                --
Pension accrual                                   2,026                --            2,303                --
Inventory valuation reserves                         --            (7,443)              --            (7,214)
Depreciation                                         --           (38,474)              --           (37,707)
Alternative minimum tax credit
  carryforwards                                   4,195               --             4,470                --
Restructuring reserves                               --               --            18,061                --
Net operating loss                                   --               --             5,909                --
Other                                             5,621            (3,686)           6,769            (4,348)
                                                -------          --------          -------          --------
Total deferred income tax benefits
  (obligations)                                 $31,083          $(49,603)         $54,044          $(49,269)
                                                =======          ========          =======          ========
</TABLE>

         Other than as described below, the Company did not record any valuation
allowances against deferred income tax benefits at December 31, 1996 or 1997, as
all such benefits are expected to be realized as tax deductions in future tax
returns.

         In addition to the above deferred benefits and obligations, a German
subsidiary of the Company has net operating loss carryforward credits of
approximately $1.6 million. Some of the European subsidiaries have other net
deferred income tax assets primarily due to operating losses (not significant)
and non-deductible reserves. The Company has established a 100% valuation
allowance of $1.8 million against the European Subsidiaries' net deferred income
tax assets as of December 31, 1997 as realization of the related tax benefit is
not assured. If such assets are, in fact, realized in a future period, the
resulting benefit will reduce the future period's income tax expense.

(7)  EMPLOYEE BENEFIT PLANS

         The Company maintains separate noncontributory pension and defined
contribution plans covering most domestic hourly employees and all domestic
salaried personnel, respectively. It is the Company's policy to fund accrued
pension and defined contribution plan costs in compliance with ERISA
requirements. The total cost of these plans charged against earnings was
approximately $5.9 million, $6.1 million and $6.5 million for 1995, 1996 and
1997, respectively.


<PAGE>   35
                      U.S. CAN CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)


         The following table sets forth the funded status of the Company's
domestic defined benefit pension plans, at December 31, 1996 and 1997 (000's
omitted):

<TABLE>
<CAPTION>
                                                            1996        1997
                                                          --------    --------
<S>                                                       <C>         <C>     
Actuarial present value of benefit obligation--
  Vested benefits                                         $ 20,418    $ 27,636
  Nonvested benefits                                         2,059       3,066
Accumulated benefit obligation                              22,477      30,702
  Effect of projected future compensation levels              --          --
                                                          --------    --------
Projected benefit obligation                                22,477      30,702
Plan assets at fair value                                   20,707      24,966
                                                          --------    --------
  Projected benefit obligation in excess of plan assets      1,770       5,736
Unrecognized net gain                                           85       1,004
Unrecognized prior-service cost                             (1,033)     (1,956)
Unrecognized transition liability                             (332)        (67)
Additional minimum liability adjustment                      1,280       3,206
                                                          --------    --------
  Accrued pension costs                                   $  1,770    $  7,743
                                                          ========    ========
</TABLE>

         In accordance with the provisions of SFAS No. 87--"Employers'
Accounting for Pensions," the Company recorded an additional minimum liability
at the end of 1996 representing the excess of the accumulated benefit obligation
over the plan assets at fair value and the unfunded accrued pension cost. The
additional minimum liability was offset to the extent possible by an intangible
asset. Because the asset recognized may not exceed the amount of unrecognized
prior-service cost and unrecognized transition liability, the balance of the
offset of the additional minimum liability was reported as a reduction of
retained earnings, net of related income tax benefits.

         The projected benefit obligation as of December 31, 1995, 1996 and 1997
was determined using an assumed discount rate of 7.5%, 7.5% and 7.0%,
respectively. The expected long-term rate of return on plan assets used in
determining net periodic pension cost was 8.0%, 8.0% and 8.5% in 1995, 1996, and
1997, respectively. The plan has a flat benefit formula; accordingly, the effect
of projected future compensation levels is zero. The plan's assets consist
primarily of shares of the Corporation's common stock, equity and bond funds,
corporate bonds and investment contracts with insurance companies.

         Net periodic pension costs for the Company's domestic defined benefit
pension plan for the years ended December 31, 1995, 1996 and 1997 included the
following components (000's omitted):


<TABLE>
<CAPTION>
                                                   1995       1996        1997
                                                  -------    -------    -------
<S>                                               <C>        <C>        <C>    
Service cost on benefits earned during the year   $   625    $   690    $   871
Interest cost on projected benefit obligation       1,085      1,133      1,679
Actual return on plan assets                       (1,562)    (1,166)    (3,549)
Net amortization and deferral                       1,041        507      2,231
Curtailment loss on severed employees                --         --        2,595
                                                  -------    -------    -------
Net periodic pension cost                         $ 1,189    $ 1,164    $ 1,232
                                                  =======    =======    =======
</TABLE>

         In addition, hourly employees at eight plants are covered by
union-sponsored, collectively bargained, multi-employer pension plans. The
Company contributed to these plans and charged to expense approximately $1.2
million, $1.5 million and $1.4 million in 1995, 1996 and 1997, respectively. The
contributions are generally determined in accordance with the provisions of the
negotiated labor contracts and are generally based on a per employee per week
amount.

         The impact from discontinued operations on the above disclosures is not
material.

         While the Company does provide limited severance and certain
supplemental unemployment benefits for certain domestic employees in connection
with certain collective bargaining agreements, benefits paid under these
arrangements have been and are expected to continue to be minimal.
Postemployment benefits associated with restructuring programs are appropriately
provided.



<PAGE>   36

                     U.S. CAN CORPORATION AND SUBSIDIARIES
                                        
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

         In March 1995, 1996 and 1997, the Corporation contributed shares of
Common Stock, valued at $1.1 million, $0.4 million and $0.9 million,
respectively, to U.S. Can's Salaried Employees Savings and Retirement
Accumulation Plan.

         In Europe, the Company maintains two defined benefit plans for certain
of its employees in the United Kingdom and in France. The United Kingdom plan
benefits are based primarily on years of service and employee compensation. As
of December 31, 1996 and 1997, the preliminary actuarially-determined
accumulated benefit obligation was $28.8 million and $29.1 million,
respectively, with such amount being fully funded. The French plan benefits are
based primarily on length of employee service. As of December 31, 1996 and 1997,
the actuarially-determined accumulated benefit obligation was approximately $1.4
million and $1.8 million, respectively, all of which was non-vested. This plan
is not funded. The aggregate net pension expense in 1996, from the date of the
USC Europe acquisition and 1997, for these two plans was approximately $0.2
million and $0.8 million, respectively.

(8)  POSTRETIREMENT BENEFIT PLANS

         The Company provides health and life insurance benefits for certain
domestic retired employees in connection with certain collective bargaining
agreements.

         Net periodic postretirement benefit costs for the Company's domestic
postretirement benefit plans for the years ended December 31, 1995, 1996 and
1997, included the following components (000's omitted):

<TABLE>
<CAPTION>
                                                   1995     1996     1997
                                                  ------   ------   ------
<S>                                               <C>      <C>      <C>   
Service cost on benefits earned during the year   $  333   $  388   $  406
Amortization of net loss                            --       --         10
Interest cost on accumulated postretirement
  benefit obligation                               1,836    1,851    1,994
                                                  ------   ------   ------
  Net periodic postretirement benefit cost        $2,169   $2,239   $2,410
                                                  ======   ======   ======
</TABLE>


         The Company's postretirement benefit plans currently are not funded.
The status of the plans at December 31, 1996 and 1997, is as follows (000's
omitted):

<TABLE>
<CAPTION>
                                                          1996      1997
                                                         -------   -------
<S>                                                      <C>       <C>    
Actuarial present value of accumulated post-retirement
  benefit obligation--
  Retirees, beneficiaries and dependents of retirees     $15,687   $17,740
  Active employees and dependents                         10,381    11,793
                                                         -------   -------
Total accumulated postretirement benefit obligation       26,068    29,533
Unrecognized net loss                                      1,700     4,317
                                                         -------   -------
  Accrued postretirement benefit costs                   $24,368   $25,216
                                                         =======   =======
</TABLE>


         The assumed health care cost trend rate used in measuring the
accumulated postretirement benefit obligation was 11% in 1995, 10% in 1996, and
9% in 1997, gradually declining to 7% by the year 1999 and remaining at that
level thereafter. A one-percentage-point increase in the assumed health care
cost trend rate for each year would increase the accumulated postretirement
benefit obligation as of December 31, 1997, by approximately $3.1 million and
the total of the service and interest cost components of net postretirement
benefit cost for the year then ended by approximately $0.3 million. The assumed
discount rate used in determining the accumulated postretirement benefit
obligation was 7.5%, 7.5% and 7.0%, in 1995, 1996 and 1997, respectively.

         The impact from discontinued operations on the above disclosures is not
material.

         An executive, director and stockholder of the Corporation is eligible
to receive postretirement benefits under a non-qualified supplemental benefit
plan. Annual expense for this plan is approximately $0.4 million. As of December
31, 1996 and 1997, the Company had recorded a liability of $3.0 million and $3.3
million, respectively, for benefits for which the executive was fully eligible
to receive at that date. The principal source of funding for this obligation is
an insurance policy on the executive's life on which the Company is currently
paying the premium. The cash surrender value, net of appropriate reserves, is
reflected as a component of other assets.
<PAGE>   37


                      U.S. CAN CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)


(9)  COMMITMENTS AND CONTINGENCIES

         The groundwater in San Leandro, California, formerly a site of one of
the Company's can assembly facilities, is contaminated at shallow and
intermediate depths, and the area of concern partially extends to the
groundwater below the facility formerly owned by the Company. In connection with
sales in 1994 and 1995 of land on which the facility was located, the Company
agreed to indemnify the purchaser against environmental claims related to the
Company's ownership of the property. In April 1996, the California Department of
Toxic Substances Control ("CDTSC") issued an order to certain past and present
owners of this facility, including U.S. Can, directing such owners to conduct
remediation activities at this site. No specific form of remediation was
indicated. Consultants retained by the Company to evaluate the site concluded
that the Company's operations had not impacted the groundwater at this site and
that the contamination detected at this site resulted from migration from
off-site, upgradient sources. However, in January 1998, the CDSTC informed the
Company that it disagrees with these conclusions and wants the Company to
conduct extensive additional testing. With the CDTSC's consent, the Company is
preparing an appeal to the CDTSC's Director. To date, there has been no
resolution of this matter between the Company and the CDTSC, although discussion
are ongoing. There can be no assurance that the Company will not incur material
costs and expenses in connection with the CDTSC order and remediation at the
site.

         The processes involved in the lithography and certain aspects of the
manufacture of steel containers have historically involved the use and handling
of materials now classified as hazardous substances under various laws. These
activities described above may expose owners and operators of facilities
involved in those activities to potential liability for the cost to clean up or
remedy any environmental contamination resulting from such substances relating
to those businesses. As of December 31, 1997, the Company's reserves for future
ascertainable costs of environmental remediation in the United States were
approximately $0.5 million. Management does not believe that such costs, if any,
in excess of the reserve will have a material adverse effect on the Company's
results of operations or financial condition. In making this assessment, the
Company considered all information available to it including its and others
companies' reported prior experience in dealing with such matters, data released
by the EPA and reports by independent environmental consultants regarding
certain matters. It is possible that the Company's insurance coverage may extend
to certain environmental liabilities, but the Company has not been able to
estimate such coverage due to the complexity and uncertainty inherent in such an
estimate. In addition, the Company has obtained indemnities against certain
liabilities in connection with its recent acquisitions.

         A variety of propellants are used in the Company's principal product,
aerosol cans. These propellants includes hydrocarbons, compressed gases (for
example, carbon dioxide and nitrous oxide), and volatile organic compounds such
as propane, butane and isobutane (individually, "VOC" and collectively "VOCs").
Some United States and European regulations have caused consumer product
manufacturers (the Company's customers) to reformulate either their products,
the propellants used therein or both if they contain VOCs. To date, most of the
Company's customers have been successful in reformulating both their products
and propellants. However, there can be no assurance that all customers will be
able to effect such reformulations or future reformulations, if any, in either
products or propellants with satisfactory results. If customers are unable to do
so, this could have an adverse effect on the market for aerosol cans.

         USC Europe includes five aerosol can-making operations located in the
United Kingdom, France, Spain, Germany, and Italy. The Company has retained an
independent environmental consultant to perform an initial environmental
inventory, and the seller provided disclosure on environmental matters relating
to each plant and site. The Company has also performed its own audit of plant
operations and facilities. In connection with this acquisition and with the
Company audit, no subsurface sampling was performed to identify possible
contamination. Several of the facilities have been operating at their locations
for more than ten years and, according to a survey conducted by an independent
environmental consultant, it is likely there have been releases of hazardous
substances at these locations in the past. The operations in Southall, UK and
Schwedt, Germany are in historically industrialized areas, and there is
potential for area-wide contamination involving adjacent sites. There can be no
assurance that there are not significant environmental liabilities unknown to
the company.

         The Company has made, and expects to continue to make, significant
capital expenditures to upgrade its facilities in accordance with current and
pending environmental regulations.

         The Company received a request for information from the U.S. EPA in
January 1997, concerning the lithography operations at its Chicago facility
(formerly owned by Alltrista). In March 1997, representatives of the U.S. EPA
inspected the Chicago facility and requested additional information, including
compliance tests and reports. The Company has cooperated fully with the U.S. EPA
inquiry. The Company does not know what the outcome of this inquiry will be. In
the 



<PAGE>   38

                     U.S. CAN CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

acquisition agreement between the Company and Alltrista, Alltrista agreed to
indemnify the Company for compliance costs that relate back to Alltrista's
operation of this facility.

         As a potentially responsible party ("PRP") at various Superfund sites
in the U.S., the Company is or may be legally responsible, jointly and severally
with the other members of the PRP group, for the cost of remediation of these
sites. Based on currently available data (including EPA data, internal records
and other sources believed to be reliable), the Company believes its
contribution, and/or the contribution of its predecessors, to these sites was de
minimis. Based on the information available as of the date of this Report,
management does not believe that its aggregate remediation costs or potential
liabilities in connection with these sites will have a material adverse effect
on the financial condition or results of operations. However, there can be no
assurance that the other PRP's will pay their proportionate share of the
remediation costs at these sites and, as a result, future costs or liabilities
incurred by the Company could be material.

         The Company, including the European Subsidiaries, is involved in
various other environmental and legal actions and administrative proceedings.
Management is of the opinion that their outcome will not have a material effect
on the Company's financial position or results of operations.

         In 1995, Continental Holdings Inc. ("CHI") filed a Complaint against
U.S. Can and others asserting claims based upon alleged indemnity obligations of
U.S. Can to a CHI affiliate, arising from the 1987 acquisition by U.S. Can of
the general packaging business of another affiliate. In May 1997, CHI and U.S.
Can agreed to settle the litigation by dismissing their respective claims and
counterclaims with prejudice and exchanging full releases. No payment of monies
was included in this settlement.

         The Company has entered into agreements to lease certain property under
terms which qualify as capital leases. Capital leases consist primarily of data
processing equipment and various production machinery and equipment. Most
capital leases contain renewal options and some contain purchase options. The
December 31, 1996 and 1997 capital lease asset balances were $51.6 million and
$37.8 million, net of accumulated amortization of $19.0 million and $18.8
million, respectively. Capital lease obligations extend through 2005. Capital
lease additions included as capital expenditures in the accompanying statements
of cash flows were $5.8 million, $2.1 million and $0.1 million in 1995, 1996 and
1997, respectively.

         The Company also maintains operating leases on various plant and office
facilities and office equipment. Rent expense under operating leases for the
years ended December 31, 1995, 1996 and 1997, was $8.1 million, $9.2 million,
and $6.8 million, respectively.

         At December 31, 1997 minimum payments due under these leases are as
follows (000's omitted):


<TABLE>
<CAPTION>
                                                             CAPITAL            OPERATING
                                                             LEASES              LEASES
                                                             -------           ----------
<S>                                                          <C>               <C>    
1998                                                         $ 5,937             $ 6,876
1999                                                           6,012               5,795
2000                                                           3,957               4,853
2001                                                           5,532               3,804
2002                                                           5,169               2,457
Thereafter                                                     1,882               6,560
                                                             -------             -------
Total minimum lease payments                                  28,488             $30,345
Amount representing interest                                  (5,266)            =======
                                                             -------
Present value of net minimum capital lease payments
  (including $2,236 classified as current)                   $23,222
                                                             =======
</TABLE>


         The Company was contingently liable for outstanding letters of credit
totaling $12.5 million as of December 31, 1997. Such letters of credits were
issued primarily to guarantee workers' compensation claims, which have been
accrued but not funded, and certain debt.

(10)  STOCK OPTION PLANS

  Incentive Stock Option Plan

         The Corporation maintains an Incentive Stock Option Plan (the "ISO
Plan") for certain key employees of the Company. Directors who are not regular
employees of the Company are not eligible to participate in the ISO Plan. In
addition, no employee of the Company is eligible to participate in the ISO Plan
if such employee owns stock constituting 10% or more



<PAGE>   39


                      U.S. CAN CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)


of the total voting power of the Corporation. The Corporation has reserved
240,000 shares for issuance under the ISO Plan. The exercise price for options
granted under the ISO Plan may not be less than 100% of the fair market value of
the underlying stock on the date the option is granted. Options under the plan
may have a maximum term of 10 years and are exercisable at the time specified by
the Board of Directors. Payment upon exercise of an option is to be in full, in
either cash or shares of Common Stock with a value equal to the option price, or
a combination of the two.

  Nonqualified Stock Option Agreement

         The Corporation was a party to a Nonqualified Stock Option Agreement
under which options to purchase a total of 300,000 shares were granted to an
executive officer and a former executive officer of the Company. During 1995,
the remaining 115,000 outstanding options were exercised.

  1993 and 1994 Option Plans

         The Company maintains two non-qualified option plans pursuant to which
employees of the Company may be granted options to purchase up to a total of
550,000 shares of Common Stock at a per share exercise price equal to the per
share market price of the Common Stock as of the date the option is granted.
Pursuant to these plans, the Company has issued options to purchase 543,375
shares of Common Stock at prices ranging from $12.00 to $21.50 per share. These
options have a maximum term of 10 years and vest over a four-year period, 25%
becoming fully vested on the first anniversary date of their issuance, with the
rest of the options vesting monthly in equal amounts over the remaining three
years.

  Stock Purchase Plan

         The Company maintains an annual non-qualified employee stock purchase
plan (the "Stock Purchase Plan") available to all salaried employees and certain
designated groups of hourly employees. The purpose of the plan is to promote
increased employee stock ownership in the Company and to provide a benefit to
employees. Participating employees are able to purchase shares of Common Stock
through payroll deductions. Each annual Stock Purchase Plan is in effect for a
one-year period. Eligible employees are able to elect to purchase shares of
Common Stock at a price equal to the current market price, less a 15% discount,
in an amount up to 7.5% of each participating employee's salary. Fifteen days
prior to the exercise date, each participant has the option to complete the
purchase of shares under the Stock Purchase Plan or to withdraw the amounts
withheld from the employee's salary pursuant to the plan. During 1995, 1996 and
1997, the Corporation issued Common Stock valued at $1.6 million, $0.5 million
and $0.7 million related to the Stock Purchase Plan. The Stock Purchase Plan
established for the 1997--1998 plan year has an exercise price of $14.556 per
share.

  Incentive Plan

         In 1995, the Company adopted an equity incentive plan (the "Incentive
Plan") pursuant to which employees of the Company may be granted stock options
("Options"), stock appreciation rights ("SARs") and shares of restricted stock
("Restricted Shares"). The number of shares of Common Stock that may be issued
or transferred under this plan upon the exercise of Options or as Restricted
Shares may not exceed 650,000 shares. The exercise price of the Options may not
be less than 100% of the fair market value of the underlying stock on the date
of the grant. Options have a maximum term of ten years and are exercisable at
the time specified by the Board of Directors.

         Options granted under the Incentive Plan may be either incentive stock
options ("ISOs") or non-qualified stock options ("NSOs"). Pursuant to the
Incentive Plan, the Company has issued ISOs to purchase 192,500 shares of Common
Stock at prices ranging from $16.50 to $20.875 per share and NSOs to purchase
5,000 shares of Common Stock at a price of $18.75 per share.

         SARs may be granted in connection with any Option granted under the
Incentive Plan, either at the time of the Option grant or any time thereafter
during the term of the Option. SARs entitle the holder of the related Option to
surrender to the Company the unexercised, related option, or any portion
thereof, in exchange for an amount equal to the excess of the market value of a
share of Common Stock on the date the SAR is exercised over the Option's
exercise price times the number of shares covered by the surrendered Option, or
portion thereof. The Company has yet to grant any SARs.

         Shares issued as Restricted Shares under the Incentive Plan provide all
the rights of ownership with respect to such shares, including the right to vote
the shares and receive all dividends or other distributions made or paid with
respect to such shares. The shares are restricted in that ownership is dependent
on continued employment with the Company and transferability is limited. These
restrictions lapse upon the completion of a period of time as specified by the
Board of




<PAGE>   40



                      U.S. CAN CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Directors at the time of issuance. Restricted Shares issued under the plan are
recorded at their fair value on the date of issuance with a corresponding charge
to stockholders' equity representing the compensation to be recognized during
the restriction period. The unearned compensation is amortized as expense on a
straight-line basis over the restriction period. In 1995, 1996 and 1997, 131,000
restricted shares were awarded at an aggregate value of $2.2 million, 67,000
restricted shares were awarded at an aggregate value of $1.1 million and 95,630
restricted shares were awarded at an aggregate value of $1.4 million,
respectively. Amortization of unearned compensation amounted to $0.1 million,
$0.5 million and $2.4 million during 1995, 1996 and 1997, respectively.

  1997 Equity Incentive Plan

         During the year, the Company adopted a non-qualified equity incentive
plan (the "1997 Equity Incentive Plan") pursuant to which employees, directors,
officers, consultants and independent contractors of the Company may be granted
options or awarded restricted stock in an aggregate amount not in excess of
400,000 shares. The exercise price of any option may not be less than the market
value per share at the date of the grant. Pursuant to the 1997 Equity Incentive
Plan, the Company has issued options to a management consulting firm to purchase
100,000 shares of Common Stock at prices ranging from $16.125 to $20.00 per
share. These options have a maximum term of 7 years and were fully vested upon
issuance. Stock appreciation rights may also be issued under this plan.

         The Company has entered into a restricted stock agreement with its
current chief executive officer which provides for the issuance of up to 250,000
shares of the Company's common stock under the 1997 Equity Incentive Plan if
certain per share market prices are reached and sustained for certain periods.
The specified periods over which the certain market prices must be sustained
extend through February 2000. Based on the per share market price through
February 19, 1998, 33,333 shares otherwise issuable under this agreement have
been forfeited and, based on the per share market price as of February 19, 1998,
none of the conditions for future issuances have yet been attained. Certain
other provisions of this agreement would require immediate issuance of unissued
shares upon the occurrence of specified events, none of which are contemplated
as of December 31, 1997.

         A summary of the status of the Company's stock option plans at December
31, 1995, 1996 and 1997 and changes during the years then ended is presented in
the tables below:


<TABLE>
<CAPTION>
                                               OPTIONS OUTSTANDING                       EXERCISABLE OPTIONS    
                                          ----------------------------              ---------------------------
                                                             WTD. AVG.                                WTD. AVG.
                                                             EXERCISE                                 EXERCISE
                                           SHARES              PRICE                 SHARES             PRICE
                                          --------           ---------              ---------         ---------
<S>                                       <C>               <C>                     <C>               <C>   
January 1, 1995                            871,183           $11.26                  356,730           $ 7.15
  Granted                                  335,917            17.11
  Exercised                               (217,162)            7.63
  Canceled                                 (33,146)           15.34
                                          --------           ------
December 31, 1995                          956,792           $14.00                  403,469           $11.48
  Granted                                   83,897            14.56
  Exercised                                (28,350)           16.94
  Canceled                                 (94,567)           17.21
                                          --------           ------
December 31, 1996                          917,772           $13.63                  744,499           $13.15
  Granted                                  100,000            19.03
  Exercised                                (12,000)           12.00
  Canceled                                (129,272)            3.63
                                          --------           ------
December 31, 1997                          876,500           $14.63                  867,250           $14.59
                                          ========           ======
</TABLE>



<TABLE>
<CAPTION>
                                              OPTIONS OUTSTANDING                      EXERCISABLE OPTIONS
                                             AT DECEMBER 31, 1997                      AT DECEMBER 31, 1997   
                                ---------------------------------------------      ---------------------------
                                                   WTD. AVG.
                                                   REMAINING        WTD. AVG.                      WTD. AVG.
   RANGE OF                                       CONTRACTUAL       EXERCISE                       EXERCISE
EXERCISE PRICES                 SHARES          LIFE (YEARS)         PRICE         SHARES           PRICE
---------------                 -------         ---------------     ---------      -------         -----------
<S>                             <C>                 <C>             <C>            <C>              <C>   
$  8.00 to $15.75               446,500             5.0             $11.61         445,178          $11.59
$ 16.00 to $21.50               430,000             7.0              17.67         422,072           17.61
                                -------                                            -------          ------
                                876,500             6.0              14.63         867,250          $14.59
                                =======                                            =======          ======
</TABLE>


<PAGE>   41


                      U.S. CAN CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)


         Had compensation costs been determined on the fair value-based
accounting method for options granted in 1995, 1996 and 1997, pro forma net
income/(loss) and diluted earnings per share would have been $3.5 million and
$0.27, respectively, for 1995, $11.0 million and $0.84, respectively, for 1996
and ($32.4 million) and ($2.49), respectively for 1997. As compensation costs
for options granted prior to January 1, 1995, were not remeasured for purposes
of this pro forma disclosure, such disclosure may not be representative of such
future pro forma disclosures.

         The weighted-average estimated fair value of options granted during
1995, 1996 and 1997 was $8.42, $2.42 and $6.80, respectively. The fair value of
each option grant is determined on the date of grant using the Black-Scholes
option pricing model with the following weighted-average assumptions for options
granted in 1995, 1996 and 1997, respectively; risk-free interest rate of 6.3%,
5.8% and 6.2%; expected lives of 7.9 years, 6.3 years and 7.0 years; expected
volatility of 24.9%, 35.4% and 28.3%; and no dividends for any year.

(11) SHAREHOLDER RIGHTS PLAN

         On October 19, 1995, the Corporation's Board of Directors adopted a
Shareholder Rights Plan. The Board declared a distribution of one right (a
"Right") for each share of Common Stock, which was outstanding on October 19,
1995 (the "Record Date"). Each share of Common Stock issued after the Record
Date will be issued with an attached Right. The Rights will not immediately be
exercisable or detachable from the Common Stock. The Rights will become
exercisable and detachable only following the acquisition by a person or a group
of 15 percent or more of the outstanding Common Stock of U.S. Can Corporation or
following the announcement of a tender or exchange offer for 15 percent or more
of the outstanding Common Stock.

         The Rights will, if they become exercisable, permit the holders of the
Rights to purchase a certain amount of preferred stock of the Corporation at a
50 percent discount, or to exchange the Rights for Common Stock, if the Board
permits. Where an acquiring company effects a merger or other control
transaction with the Corporation, the Rights may also entitle the holder to
acquire stock of the acquiring company at a 50 percent discount. If a person or
group acquires 15 percent or more of the Common Stock (or announces a tender or
exchange offer for 15 percent or more of the Common Stock), the acquiring
person's or group's Rights become void. In certain circumstances, the Rights may
be redeemed by the Company at an initial redemption price of $.01 per Right. If
not redeemed, the Rights will expire ten years after the Record Date.

         In addition, the Company has adopted certain change of control
protection that, under certain circumstances, would increase compensation and
benefits of certain executive officers.

(12)  GEOGRAPHICAL AREA INFORMATION

         The following table summarizes certain financial data as of and for the
years ended December 31, 1996 and 1997, by geographical area. The Company had no
foreign operations prior to its acquisition of USC Europe.


<TABLE>
<CAPTION>
                                                                        UNITED
                                                                        STATES             EUROPE          CONSOLIDATED
                                                                        ------             ------          ------------
                                                                                       (000'S OMITTED)
<S>                                                                     <C>                <C>              <C>     
1996
  Net Sales                                                              $627,860           $ 32,763           $660,623
  Operating Income                                                         59,540                975             60,515
  Identifiable Assets                                                     538,389            105,227            643,616

1997
  Net Sales                                                              $650,643           $105,032           $755,675
  Operating Income                                                       (10,413)              4,306            (6,107)
  Identifiable Assets                                                     513,860            119,844            633,704

</TABLE>



<PAGE>   42



                      U.S. CAN CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)


(13)  SUBSIDIARY GUARANTOR INFORMATION

         The 10 1/8% Notes are guaranteed on a full, unconditional, unsecured,
senior subordinated, joint and several basis by each of the Corporation's
Subsidiary Guarantors. As of and through December 31, 1997, U.S. Can, wholly
owned by the Corporation, was the only Subsidiary Guarantor. The Corporation had
no assets or operations separate from its investment in U.S. Can, and there were
no Non-Guarantor Subsidiaries until the acquisition by U.S. Can of USC Europe on
September 11, 1996. Separate financial statements of U.S. Can are not presented
because management of the Company has determined that they are not material to
investors.

         The following condensed consolidating financial data illustrates the
composition of the Corporation (the "Parent"), U.S. Can (the "Subsidiary
Guarantor"), and the European Subsidiaries (the "Non-Guarantor Subsidiaries"),
as of and for the years ended December 31, 1996 and 1997. Investments in
subsidiaries are accounted for by the Parent and the Subsidiary Guarantor under
the equity method for purposes of the supplemental consolidating presentation.
Earnings of subsidiaries are, therefore, reflected in their parent's investment
accounts and earnings.



<PAGE>   43


                      CONDENSED CONSOLIDATING BALANCE SHEET
                             AS OF DECEMBER 31, 1997



<TABLE>
<CAPTION>
                                                            UNITED STATES    USC EUROPE
                                               U.S. CAN      CAN COMPANY        (NON-                         U.S. CAN
                                              CORPORATION    (SUBSIDIARY      GUARANTOR                      CORPORATION
                                               (PARENT)      GUARANTOR)      SUBSIDIARY)     ELIMINATIONS   CONSOLIDATED
                                              -----------    -----------    -------------    ------------   ------------
                                                                           (000'S OMITTED)
<S>                                             <C>            <C>              <C>            <C>             <C>     
CURRENT ASSETS:
  Cash and cash equivalents                     $     --       $    415         $  6,358       $      --       $  6,773
  Accounts receivable                                 --         53,559           20,578              --         74,137
  Inventories                                         --         93,028           16,430              --        109,458
  Prepaid expenses and other assets                   --         13,904            3,599              --         17,503
  Prepaid income taxes                                --         22,748               --              --         22,748
                                                --------       --------         --------       ---------       --------
      Total current assets                                      183,654           46,965              --        230,619
                                                --------       --------         --------       ---------       --------
NET PROPERTY, PLANT AND EQUIPMENT                     --        256,464           67,833              --        324,297
INTANGIBLE ASSETS                                     --         59,578               --              --         59,578
OTHER ASSETS                                       7,347         10,240            1,623              --         19,210
INVESTMENT IN SUBSIDIARIES                       335,962         48,646               --        (384,608)            --
                                                --------       --------         --------       ---------       --------
      Total assets                              $343,309       $558,582         $116,421       $(384,608)      $633,704
                                                ========       ========         ========       =========       ========
CURRENT LIABILITIES:
  Current maturities of long-term
    debt                                        $     --       $  6,817         $  2,818       $      --         $9,635
  Accounts payable                                    --         42,155           16,331              --         58,486
  Other current liabilities                           --         73,480            8,247              --         81,727
                                                --------       --------         --------       ---------       --------
      Total current liabilities                       --        122,452           27,396              --        149,848
                                                --------       --------         --------       ---------       --------
SENIOR DEBT                                           --         61,850           29,656              --         91,506
SUBORDINATED DEBT                                275,000             --               --              --        275,000
OTHER LONG-TERM LIABILITIES                                      52,031            3,006              --         55,037
INTERCOMPANY ADVANCES                              5,996        (13,713)           7,717              --             --
STOCKHOLDERS' EQUITY                              62,313        335,962           48,646        (384,608)        62,313
                                                --------       --------         --------       ---------       --------
      Total liabilities and equity              $343,309       $558,582         $116,421       $(384,608)      $633,704
                                                ========       ========         ========       =========       ========
</TABLE>



<PAGE>   44



                      CONDENSED CONSOLIDATING BALANCE SHEET
                             AS OF DECEMBER 31, 1996


<TABLE>
<CAPTION>
                                                     UNITED STATES       USC EUROPE
                                      U.S. CAN        CAN COMPANY           (NON-                           U.S. CAN
                                     CORPORATION      (SUBSIDIARY         GUARANTOR                        CORPORATION
                                      (PARENT)         GUARANTOR)        SUBSIDIARY)    ELIMINATIONS       CONSOLIDATED
                                     -----------      -----------        -----------    ------------       ------------
                                                                  (000'S OMITTED)
<S>                                  <C>              <C>                <C>            <C>                <C>            
CURRENT ASSETS:
  Cash and cash equivalents           $    --           $     628        $   7,338        $    --            $   7,966      
  Accounts receivable                      --              61,000           25,822             --               86,822    
  Inventories                              --              98,179           14,964             --              113,143    
  Prepaid expenses and other assets        --              12,883            2,378             --               15,261    
  Prepaid income taxes                      696             8,676             --               --                9,372    
                                      ---------         ---------        ---------        ---------          ---------    
      Total current assets                  696           181,366           50,502             --              232,564    
NET PROPERTY, PLANT AND EQUIPMENT          --             269,281           53,833             --              323,114    
INTANGIBLE ASSETS                          --              67,206             --               --               67,206    
OTHER ASSETS                              7,671            12,169              892             --               20,732    
INVESTMENT IN SUBSIDIARIES              364,461            53,232             --           (417,693)              --      
                                      ---------         ---------        ---------        ---------          ---------    
      Total assets                    $ 372,828         $ 583,254        $ 105,227        $(417,693)         $ 643,616    
                                      =========         =========        =========        =========          =========    
CURRENT LIABILITIES                                                                                                       
  Current maturities of long-term                                                                                         
    debt                              $    --           $  11,567        $     361        $    --            $  11,928    
  Accounts payable                         --              40,490           19,634             --               60,124    
  Other current liabilities                --              43,187           11,695             --               54,882    
                                      ---------         ---------        ---------        ---------          ---------    
      Total current liabilities            --              95,244           31,690             --              126,934    
                                      ---------         ---------        ---------        ---------          ---------    
SENIOR DEBT                                --              82,978            5,904             --               88,882    
SUBORDINATED DEBT                       275,000              --               --               --              275,000    
OTHER LONG-TERM LIABILITIES               1,340            53,647            1,028             --               56,015    
INTERCOMPANY ADVANCES                      (297)          (13,076)          13,373             --                 --      
STOCKHOLDERS' EQUITY                     96,785           364,461           53,232         (417,693)            96,785    
                                      ---------         ---------        ---------        ---------          ---------    
      Total liabilities and                                                                                               
        stockholders' equity          $ 372,828         $ 583,254        $ 105,227        $(417,693)         $ 643,616    
                                      =========         =========        =========        =========          =========    
</TABLE>

<PAGE>   45

                CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1997



<TABLE>
<CAPTION>
                                                                 UNITED
                                                               STATES CAN                                    
                                                 U.S. CAN       COMPANY       USC EUROPE                      U.S. CAN              
                                                CORPORATION    (SUBSIDIARY   (NON-GUARANTOR                 CORPORATION            
                                                  (PARENT)      GUARANTOR)    SUBSIDIARIES)  ELIMINATIONS   CONSOLIDATED           
                                                -------------  -------------  -------------  -------------  -------------          
<S>                                             <C>            <C>            <C>            <C>            <C>                     
NET SALES                                           $    --      $ 650,643    $ 105,032        $    --         $ 755,675           
COST OF SALES                                            --        569,292       96,463             --           665,755           
                                                    ---------    ---------    ---------        ---------       ---------           
     Gross income                                        --         81,351        8,569             --            89,920           
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES             --         28,784        4,263             --            33,047           
SPECIAL CHARGES                                          --         62,980         --               --            62,980           
                                                    ---------    ---------    ---------        ---------       ---------           
     Operating income (loss)                             --        (10,413)       4,306                           (6,107)
INTEREST EXPENSE ON BORROWINGS                           --         34,869        1,998                           36,867          
AMORTIZATION OF DEFERRED FINANCING COSTS                 --          1,738         --                              1,738          
OTHER EXPENSES                                           --          1,986         --                              1,986          
EQUITY EARNINGS SUBSIDIARY                            (32,032)       1,312         --             30,720            --             
PROVISION (BENEFIT) FOR INCOME TAXES                     --        (17,788)         996             --           (16,792)          
NET INCOME FROM DISCONTINUED OPERATIONS                  --          1,078         --               --             1,078           
NET LOSS FROM DISCONTINUATION OF BUSINESS                --         (3,204)        --               --            (3,204)
                                                    ---------    ---------    ---------        ---------       ---------           
NET INCOME (LOSS)                                   $ (32,032)   $ (32,032)   $   1,312        $  30,720       $ (32,032)          
                                                    =========    =========    =========        =========       =========           
</TABLE> 




<PAGE>   46

                CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1996


<TABLE>
<CAPTION>
                                                           UNITED
                                                        STATES CAN    
                                           U.S. CAN       COMPANY       USC EUROPE                       U.S. CAN
                                          CORPORATION   (SUBSIDIARY   (NON-GUARANTOR                   CORPORATION
                                            (PARENT)     GUARANTOR)    SUBSIDIARIES)    ELIMINATIONS    CONSOLIDATED
                                          -----------   -----------   --------------    ------------   -------------
<S>                                        <C>           <C>             <C>               <C>            <C>          
NET SALES                                  $    --       $ 627,860       $  32,763         $              $ 660,623    
COST OF SALES                                   --         541,167          30,500             --           571,667    
                                           ---------     ---------       ---------         --------       ---------    
     Gross income                               --          86,693           2,263             --            88,956    
SELLING, GENERAL AND ADMINISTRATIVE                                                                                    
  EXPENSES                                      --          27,153           1,288             --            28,441    
SPECIAL CHARGES                                 --            --              --               --              --      
                                           ---------     ---------       ---------         --------       ---------    
     Operating income                           --          59,540             975             --            60,515    
INTEREST EXPENSE ON BORROWINGS                  --          28,159             228             --            28,387    
AMORTIZATION OF DEFERRED FINANCING COSTS        --           1,518            --               --             1,518    
OTHER EXPENSES                                  --           1,851             (63)            --             1,788    
EQUITY EARNINGS SUBSIDIARY                    11,751           511            --            (12,262)           --      
PROVISION FOR INCOME TAXES                      --          11,968             299             --            12,267    
NET INCOME FROM DISCONTINUED OPERATIONS         --             446            --               --               446    
EXTRAORDINARY ITEM                              --          (5,250)           --               --            (5,250)   
                                           ---------     ---------       ---------         --------       ---------    
NET INCOME (LOSS)                          $  11,751     $  11,751       $     511         $(12,262)      $  11,751    
                                           =========     =========       =========         ========       =========    
</TABLE>




<PAGE>   47


                 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 1997


<TABLE>
<CAPTION>
                                                            UNITED STATES    USC EUROPE
                                               U.S. CAN      CAN COMPANY        (NON-                         U.S. CAN
                                              CORPORATION    (SUBSIDIARY      GUARANTOR                      CORPORATION
                                               (PARENT)      GUARANTOR)      SUBSIDIARY)     ELIMINATIONS   CONSOLIDATED
                                               --------      ----------      -----------     ------------   ------------
                                                                           (000'S OMITTED)
<S>                                             <C>            <C>              <C>            <C>             <C>     
CASH FLOWS FROM OPERATING
  ACTIVITIES                                    $     --       $ 64,947         $   (523)      $      --       $ 64,424
                                                --------       --------         --------       ---------       --------
CASH FLOWS FROM OPERATING
  ACTIVITIES:
  Capital expenditures                                --        (36,122)         (17,908)             --        (54,030)
  Acquisition of businesses, net of
    cash acquired                                     --        (12,398)              --              --        (12,398)
  Proceeds on sale of business                        --          1,000               --              --          1,000
  Proceeds from sale of property                      --             --              630              --            630
  Machinery repair parts usage, net                   --             88             (450)             --           (362)
                                                --------       --------         --------       ---------       --------
    Net cash used in investing
      activities                                      --        (47,432)         (17,728)             --        (65,160)
                                                --------       --------         --------       ---------       --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Issuance of common stock and
    exercise of stock options                         --            152               --              --            152
  Changes in intercompany advances                    --          5,656           (5,656)             --             --
  Net borrowings under the revolving
    line of credit and changes in
    cash overdrafts                                   --          1,931               --              --          1,931
  Borrowings of other long-term
    debt, including capital lease
    obligations                                       --         (1,086)          26,021              --         24,935
  Payments of other long-term debt,
    including capital lease
    obligations                                       --        (21,628)            (724)             --        (22,352)
  Payments of debt refinancing costs                  --         (1,574)              --              --         (1,574)
  Purchase of treasury stock, net                     --         (1,179)              --              --         (1,179)
                                                --------       --------         --------       ---------       --------
    Net cash provided by financing
      activities                                      --        (17,728)          19,641              --          1,913
                                                --------       --------         --------       ---------       --------
EFFECT OF EXCHANGE RATE CHANGES ON
  CASH                                                --             --           (2,370)             --         (2,370)
                                                --------       --------         --------       ---------       --------
INCREASE IN CASH AND CASH EQUIVALENTS                 --           (213)            (980)             --         (1,193)
CASH AND CASH EQUIVALENTS, beginning
  of year                                             --            628            7,338              --          7,966
                                                --------       --------         --------       ---------       --------
CASH AND CASH EQUIVALENTS, end
  of year                                       $     --       $    415         $  6,358       $      --       $  6,773
                                                ========       ========         ========       =========       ========
</TABLE>



<PAGE>   48

                 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 1996



<TABLE>
<CAPTION>
                                                            UNITED STATES    USC EUROPE
                                               U.S. CAN      CAN COMPANY        (NON-                         U.S. CAN
                                              CORPORATION    (SUBSIDIARY      GUARANTOR                      CORPORATION
                                               (PARENT)      GUARANTOR)      SUBSIDIARY)     ELIMINATIONS   CONSOLIDATED
                                               --------      ----------      -----------     ------------   ------------
                                                                          (000'S OMITTED)
<S>                                            <C>            <C>                <C>            <C>            <C>     
CASH FLOWS FROM OPERATING
   ACTIVITIES                                   $      --      $  26,245         $  4,677       $      --      $ 30,922
CASH FLOWS FROM INVESTING
  ACTIVITIES:
  Capital expenditures                                --        (38,294)         (10,336)             --        (48,630)
  Acquisition of businesses, net
    of cash                                           --        (29,655)         (51,239)             --        (80,894)
  Changes in restricted cash                          --          1,455               --              --          1,455
  Proceeds from sale of property                      --          1,515               --              --          1,515
  Machinery repair parts usage, net                   --             29             (691)             --           (662)
                                               ---------      ---------         --------       ---------      ---------
    Net cash used in investing
      activities                                      --        (64,950)         (62,266)             --       (127,216)
CASH FLOWS FROM FINANCING
  ACTIVITIES:
  Issuance of common stock and
    exercise of stock options                         --        (51,082)          51,100              --             18
  Change in intercompany advances                     --        (13,373)          13,373              --             --
  Net borrowings under the revolving
    line of credit and changes in
    cash overdrafts                                   --        (25,052)              --              --        (25,052)
  Issuance of 10 1/8% Notes                           --        275,000               --              --        275,000
  Amounts paid in escrow                              --       (109,728)              --              --       (109,728)
  Borrowings of other long-term
    debt, including capital lease
    obligations                                       --         14,247               --              --         14,247
  Payments of other long-term debt,
    including capital lease
    obligations                                       --        (41,323)            (101)             --        (41,424)
  Payments of debt refinancing costs                  --         (9,259)              --              --         (9,259)
  Purchase of treasury stock, net                     --           (233)              --              --           (233)
                                               ---------      ---------         --------       ---------      ---------
      Net cash provided from
        financing activities                          --         39,197           64,372              --        103,569
                                               ---------      ---------         --------       ---------      ---------
EFFECT OF EXCHANGE RATE CHANGES ON
  CASH                                                --             --              555              --            555
                                               ---------      ---------         --------       ---------      ---------
INCREASE CASH AND CASH EQUIVALENTS                    --            492            7,338              --          7,830
CASH AND CASH EQUIVALENTS, beginning
  of period                                           --            136               --              --            136
                                               ---------      ---------         --------       ---------      ---------
CASH AND CASH EQUIVALENTS, end
  of period                                    $      --      $     628         $  7,338       $      --      $   7,966
                                               =========      =========         ========       =========      =========

</TABLE>



<PAGE>   49
                      U.S. CAN CORPORATION AND SUBSIDIARIES

                            QUARTERLY FINANCIAL DATA
                                   (UNAUDITED)


     The following is a summary of the unaudited interim results of operations
for each of the quarters in 1996 and 1997.


<TABLE>
<CAPTION>
                                                     FIRST QTR                  SECOND QTR      
                                                ----------------------   ---------------------  
                                                  1996          1997       1996         1997    
                                                ---------    ---------   ---------   ---------
                                                    (000'S OMITTED, EXCEPT PER SHARE DATA)
<S>                                             <C>          <C>         <C>         <C>      
NET SALES                                       $ 149,932    $ 204,175   $ 156,301   $ 196,088
COST OF SALES                                     128,108      178,772     134,132     173,784
                                                ---------    ---------   ---------   ---------

   Gross income                                    21,824       25,403      22,169      22,304
SELLING, GENERAL AND ADMINISTRATIVE
  EXPENSES                                          6,571        8,827       6,647       8,285
SPECIAL CHARGES (a)                                  --           --          --          --   
                                                ---------    ---------   ---------   ---------
   Operating income                                15,253       16,576      15,522      14,019

INTEREST EXPENSE ON BORROWINGS                      6,186        9,255       6,335       9,187
AMORTIZATION OF DEFERRED FINANCING
  COSTS                                               426          439         376         455
OTHER EXPENSE                                         453          510         469         542
                                                ---------    ---------   ---------   ---------
   Income (loss) before income taxes                8,188        6,372       8,342       3,835

PROVISION (BENEFIT) FOR INCOME TAXES                3,448        2,518       3,540       1,469
                                                ---------    ---------   ---------   ---------
   Income (loss) from continuing operations         4,740        3,854       4,802       2,366

DISCONTINUED OPERATIONS, NET OF TAX (a)              (410)         484         275         405
EXTRAORDINARY ITEM - NET OF TAX (b)                  --           --          --          --   
                                                ---------    ---------   ---------   ---------
NET INCOME (LOSS)                               $   4,330    $   4,338   $   5,077   $    2,771
                                                =========    =========   =========   =========

DILUTED EARNINGS (LOSS) PER SHARE               $    0.33    $    0.33   $    0.39   $    0.21
                                                =========    =========   =========   =========

Weighted average shares and equivalent shares      13,005       13,155      13,063      13,163
outstanding (000's)
Stock Market Price Range
      High                                      $  17.375    $  17.750   $  18.250   $  17.250
      Low                                       $  13.250    $  14.500   $  16.125   $  14.000

<CAPTION>

                                                       THIRD QTR               FOURTH QTR     
                                                ---------------------    ---------------------- 
                                                  1996         1997        1996          1997    
                                                ---------   ---------    ---------    ---------
<S>                                             <C>         <C>          <C>          <C>      
NET SALES                                       $ 161,264   $ 195,021    $ 193,126    $ 160,391
COST OF SALES                                     139,585     172,121      169,842      141,078
                                                ---------   ---------    ---------    ---------

   Gross income                                    21,679      22,900       23,284       19,313
SELLING, GENERAL AND ADMINISTRATIVE
  EXPENSES                                          6,688       8,134        8,535        7,801
SPECIAL CHARGES (a)                                  --        52,159         --         10,821
                                                ---------   ---------    ---------    ---------
   Operating income                                14,991     (37,393)      14,749         (691)

INTEREST EXPENSE ON BORROWINGS                      6,992       9,274        8,874        9,151
AMORTIZATION OF DEFERRED FINANCING
  COSTS                                               330         475          386          369
OTHER EXPENSE                                         446         536          420          398
                                                ---------   ---------    ---------    ---------
   Income (loss) before income taxes                7,223     (47,678)       5,069       (9,227)

PROVISION (BENEFIT) FOR INCOME TAXES                3,092     (17,380)       2,187       (3,399)
                                                ---------   ---------    ---------    ---------
   Income (loss) from continuing operations         4,131     (30,298)       2,882       (5,828)

DISCONTINUED OPERATIONS, NET OF TAX (a)               448         491          133       (3,506)
EXTRAORDINARY ITEM - NET OF TAX (b)                  --          --         (5,250)        --
                                                ---------   ---------    ---------    ---------
NET INCOME (LOSS)                               $   4,579   $ (29,807)   $  (2,235)   $  (9,334)
                                                =========   =========    =========    =========

DILUTED EARNINGS (LOSS) PER SHARE               $    0.35   $   (2.26)   $   (0.17)   $   (0.71)
                                                =========   =========    =========    =========

Weighted average shares and equivalent shares      13,120      13,210       13,158       13,129
outstanding (000's)
Stock Market Price Range
      High                                      $  16.375   $  17.375    $  17.250    $  18.750
      Low                                       $  14.500   $  12.875    $  15.250    $  15.750

</TABLE>

(a)  See Note 3 of the "Notes to Consolidated Financial Statements."
(b)  See Note 5 of the "Notes to Consolidated Financial Statements."


<PAGE>   50


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

         None.
                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Incorporated by reference from the Corporation's 1998 Proxy Statement
to be filed with the Commission.

ITEM 11.  EXECUTIVE COMPENSATION

         Incorporated by reference from the Corporation's 1998 Proxy Statement
to be filed with the Commission, excluding, however, the Compensation and
Management Development Committee Report and the performance graph contained
therein.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Incorporated by reference from the Corporation's 1998 Proxy Statement
to be filed with the Commission.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Incorporated by reference from the Corporation's 1998 Proxy Statement
to be filed with the Commission.

                                     PART IV

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

         (a)      (1)      Financial Statements commence on p. 22.

                  (2)      Financial Statement Schedules

                           All schedules are omitted as they are inapplicable or
                           not required, or the required information is included
                           in the financial statements or in the notes thereto.

                  (3)      Exhibits (Note: Management contracts and
                           compensatory plans or arrangements are underlined in
                           the following list.)

<TABLE>
<CAPTION>
                                                                                 INCORPORATION 
EXHIBIT                                                                          BY REFERENCE 
NUMBER                    DESCRIPTION OF DOCUMENT                                (IF APPLICABLE)   
------                    -----------------------                                ---------------   
<S>           <C>                                                                <C>               
  3.1         Restated Certificate of Incorporation                                    @4.3
  3.2         By-laws                                                                 @@4.1
  4.1         Indenture for 10 1/8% Notes                                            @@@4.2
  4.2         Amended and Restated Credit Agreement, dated as of
              April 27, 1997                                                           +4.1
  4.3         Amendment No. 1 to Credit Agreement                                    ++10.3
  4.4         Amendment No. 2 to Credit Agreement                                     ##4.4
  4.5         Shareholder Rights Agreement                                           ###4.1
 10.1         Stock and Warrant Purchase Agreement with Salomon Brothers
              Holding Company dated May 2, 1990                                       *10.1
 10.2         Letter Agreement with Salomon Brothers dated May 2, 1990                *10.3
 10.3         Sublease Agreement for Commerce, CA plant dated,
              February 10, 1989                                                      *10.10
 10.4         Lease, as amended, for Weirton, WV plant dated
              January 1, 1976                                                        *10.11
</TABLE>



<PAGE>   51

<TABLE>
<CAPTION>
                                                                                                INCORPORATION
EXHIBIT                                                                                          BY REFERENCE
NUMBER                       DESCRIPTION OF DOCUMENT                                            (IF APPLICABLE)
------                       -----------------------                                           ---------------
<S>            <C>                                                                             <C>  
  10.5         Lease for Burns Harbor, IN plant dated December 5, 1987                                **10.12
  10.6         Voghera, Italy lease (English translation)                                             ***10.6
  10.7         Lease Agreement, as amended, for Alsip, IL plant dated
               August 1, 1980                                                                         **10.15
  10.8         Employment Agreement with William J. Smith dated March 26, 1993                       ss. 10.9
               ---------------------------------------------------------------
  10.9         Employment Agreement with Timothy W. Stonich dated March 15, 1993                    ss. 10.10
               -----------------------------------------------------------------
 10.10         The Corporation's Incentive Stock Option Plan                                           *10.20
               ---------------------------------------------
 10.11         Lease for Baltimore, MD plant with San Tomas Limited
               Partnership dated October 24, 1991                                                     **10.23
 10.12         Administrative Consent Order with the New Jersey
               Department of Environmental Protection and Energy
               (including  Fully-Funded Trust Agreement)                                              xx10.29
 10.13         Sublease for Green Bay, WI facility, dated October 31, 1992                           ss. 28.2
 10.14         Nonqualified Supplemental Benefit Plan for William J. Smith
               -----------------------------------------------------------
               (including Supplemental Benefit Agreement and Split-Dollar
               ----------------------------------------------------------
               Insurance Agreement)                                                                   xx10.31
               --------------------
 10.15         U.S. Can Corporation Stockholders Agreement                                          ss. 10.25
 10.16         1993 Stock Option Plan                                                                  #10.28
 10.17         Employment Agreement with Frank J. Galvin dated March 26, 1993                       ss. 10.29
 10.18         Lease for Brookfield, OH facility, dated January 8, 1987                             ss. 10.30
 10.19         Second amendment to lease for Oak Brook, IL headquarters dated
               May 16, 1994                                                                         ss. 10.29
 10.20         Amendment No. 4 to lease for Weirton, WV, dated December 29, 1994                    ss. 10.30
 10.21         Lease Amendment to Burns Harbor, IN, dated September 1, 1994                         ss. 10.31
 10.22         Merthyr Tydfil, Wales Lease                                                           ***10.24
 10.23         Lease Amendment to Alsip, IL, dated September 1, 1994                                ss. 10.33
 10.24         Lease for Fern Park, FL, dated May 16, 1994                                          ss. 10.35
 10.25         First amendment to lease for Trenton, NJ, dated January 19, 1995                     ss. 10.36
 10.26         Letter agreement with Salomon Brothers, dated October 11, 1995                        +++10.29
 10.27         Employment agreement with Tony Bonadonna, dated July 1, 1994                          +++10.31
               ------------------------------------------------------------
 10.28         Non-Qualified Supplemental 401(k) Plan                                                +++10.33
               --------------------------------------
 10.29         Non-Qualified Benefit Replacement Plan                                                +++10.34
               --------------------------------------
 10.30         Change in Control Agreement with Frank J. Galvin                                       ###10.3
               -------------------------------------------------
 10.31         Change in Control Agreement with Timothy W. Stonich                                    ###10.5
               ---------------------------------------------------
 10.32         Restricted Stock Agreement with Frank J. Galvin                                        ###10.2
               -----------------------------------------------
 10.33         Restricted Stock Agreement with Timothy W. Stonich                                     ###10.4
               --------------------------------------------------
 10.34         1995 Equity Incentive Plan                                                                 xxx
               --------------------------
 10.35         Amendment No. 1 to Employment Agreement with Frank J. Galvin                          +++10.44
               ------------------------------------------------------------
 10.36         Amendment No. 1 to Employment Agreement with  Timothy W. Stonich                      +++10.45
               ----------------------------------------------------------------
 10.37         Agreement regarding Amendment and Restatement of Oak Brook Lease,
               dated March 6, 1992                                                                   +++10.46
 10.38         Columbiana, Ohio lease Agreement, dated January 23, 1990                              +++10.47
 10.39         Burns Harbor Lease Amendment No. 1, dated August 18, 1994                             +++10.48
 10.40         Burns Harbor Lease Amendment No. 3, dated February 1, 1995                            +++10.49
 10.41         Addendum No. II to Brookfield, Ohio Lease, dated
               September 27, 1991                                                                    +++10.50
</TABLE>


<PAGE>   52




<TABLE>
<CAPTION>
                                                                                              INCORPORATION
EXHIBIT                                                                                        BY REFERENCE
NUMBER                   DESCRIPTION OF DOCUMENT                                             (IF APPLICABLE)
------                   -----------------------                                             ---------------
<S>           <C>                                                                            <C> 
10.42         First Amendment to Lease for the Baltimore, Maryland plant
              with San Tomas Limited Partnership, dated May 8, 1994                               +++10.51
10.43         Lease Agreement for the Columbia Specialty plant in
              Baltimore, Maryland, dated May 6, 1994                                              +++10.52
10.44         Warren, Ohio Lease Agreement, dated January 23, 1990                                +++10.53
10.45         Amendment No. 3 to Weirton Lease Agreement, dated October 29, 1993                  +++10.55
10.46         Engagement agreement and related agreement dated April 25, 1996, 
              with Salomon Brothers Inc                                                              $10.2
10.47         Newnan, Georgia Lease                                                                @@@10.3
10.48         Alliance, Ohio Lease                                                                 @@@10.4
10.49         Salomon Smith Barney Engagement, dated January 30, 1998                              ##10.49
10.50         1997 Equity Incentive Plan                                                           ##10.50
              --------------------------
10.51         Change-In-Control Agreement with David Ford                                          ##10.51
              -------------------------------------------
10.52         David Ford Restricted Stock Agreement                                                ##10.52
              -------------------------------------
10.53         William J. Smith Restricted Stock Agreement                                          ##10.53
              -------------------------------------------
10.54         Paul W. Jones Offer Letter                                                           ##10.54
              --------------------------
10.55         Engagement agreement dated September 3, 1997, with Salomon 
              Brothers Inc                                                                         **10.2
10.56         Indemnification agreement dated July 9, 1997, with
              Salomon Brothers Inc                                                                  **10.1
10.57         Form of Non-employee Director Restricted Stock Agreement and 
              ------------------------------------------------------------
              October 1997 schedule                                                                ##10.57
              ---------------------
10.58         John R. McGowan Employment Agreement                                                 ##10.58
              ------------------------------------
10.59         Lawrence T. Messina Employment Agreement                                             ##10.59
              ----------------------------------------
10.60         Amendment 1 to J. R. McGowan Employment Agreement                                    ##10.60
              -------------------------------------------------
10.61         Amendment dated 11/17/97 to F. J. Galvin Employment Agreement                        ##10.61
              -------------------------------------------------------------
10.62         Amendment 1 to A. F. Bonadonna Employment Agreement                                  ##10.62
              ---------------------------------------------------
 23.1         Consent of Independent Public Accountants
 27.1         Financial Data Schedule (EDGAR version only)
</TABLE>


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

        @     Previously filed with Registration Statement on Form S-3 of the
              Corporation, on June 1, 1994 (Reg. No. 33-79556).

       @@     Previously filed with Form S-8 Registration Statement of the
              Corporation, on March 23, 1994 (Reg. No. 33-76742).

       @@@    Previously filed with Form 10-Q of the Corporation and U.S. Can
              for the quarterly period ended September 29, 1996.

       ###    Previously filed with Form 10-Q of the Corporation and U.S. Can
              for the quarterly period ended October 1, 1995.

         *    Previously filed with Form 10-Q of the Corporation for the
              quarterly period ended April 6, 1997.

        **    Previously filed with Form 10-Q of the Corporation for the
              quarterly period ended October 5, 1997.

       ***    Previously filed with Form 10-K of the Corporation for the year
              ended December 31, 1996.

         x    Previously filed with Form 8-K of the Corporation and U.S. Can
              filed on May 14, 1996.


         +    Previously filed with Form 10-Q of the Corporation and U.S. Can
              for the quarter ended March 31, 1996.

         #    Previously filed with Form 8-K of the Corporation and U.S. Can
              filed on August 9, 1996.



<PAGE>   53

        xx    Previously filed with the Form S-1 Registration Statement of the
              Corporation filed on January 6, 1993 (Registration No. 33-56804).

       xxx    Previously filed with the Corporation's 1995 Proxy Statement.

       ss.    Previously filed with the Form 10-Q Quarterly Report of U.S. Can
              for the Quarterly Period Ended April 3, 1994.

       ss.    Previously filed with the Form 10-K Annual Report of U.S. Can for
              the Fiscal Year Ended December 31, 1992.

       ss.    Previously filed with the Form 10-Q Joint Quarterly Report of the
              Corporation and U.S. Can for the Quarterly Period Ended April 3,
              1994.

        ++    Previously filed with Form 10-Q Joint Quarterly Report of the
              Corporation and U.S. Can for the quarterly period ended July 2,
              1995.

       +++    Previously filed with Form 10-K Joint Annual Report of the
              Corporation and U.S. Can for the fiscal year ended December 31,
              1995.

              Previously filed with the Joint Annual Report of the Corporation 
              and U.S. Can for the Fiscal Year Ended December 31, 1994.

         $    Previously filed with Form 10-Q of the Corporation and U.S. Can
              for the quarter ended June 30, 1996.

        ##    Previously filed with Form 10-K of the Corporation for the year
              ended December 31, 1997.

        $$    Previously filed with Form 8-K of the Corporation and U.S. Can
              filed on September 26, 1996.

       $$$    Previously filed with Registration Statement on Form S-4 of the
              Corporation and U.S. Can filed on December 11, 1996 (Registration
              No. 333-17677).

         The Company agrees that, upon request, it will furnish a copy of any
instrument with respect to long-term debt less than or equal to 10 percent of
its total consolidated assets.

         (b) No reports on Form 8-K were filed by the Corporation during the
fourth quarter of 1997.





<PAGE>   54

                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on January 14, 1999.


                                                U.S. CAN CORPORATION



                                                By:  /s/  JOHN L. WORKMAN
                                                          John L. Workman
                                                     Executive Vice President
                                                     and Chief Financial Officer