10-K 1 k74444e10vk.txt ANNUAL REPORT FOR FISCAL YEAR ENDED 11/02/02 FORM 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [ X ] ANNUAL REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended November 2, 2002 OR [ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 333-73552 PLASTIPAK HOLDINGS, INC. (Exact name of registrant as specified in its charter) Delaware 38-2418126 ------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 9135 General Court, Plymouth, Michigan 48170 (Address of principal executive offices) (734) 455-3600 (Registrant's telephone number, including area code) ------------------------------------ (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No -------------------------------------------------------------------------------- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] There is no public trading market for the common stock of the registrant. The number of shares of the registrant's common stock, $1.00 par value, outstanding as of November 2, 2002 was 28,316. -------------------------------------------------------------------------------- DOCUMENTS INCORPORATED BY REFERENCE: NONE PLASTIPAK HOLDINGS, INC. FORM 10K INDEX PART I ............................................................. 1 Item 1. Business .................................................. 1 Item 2. Properties................................................... 14 Item 3. Legal Proceedings .......................................... 15 Item 4. Submission of Matters to a Vote of Security Holders ........ 16 PART II ............................................................. 16 Item 5. Market for Registrant's Common Equity and Related Stockholder Matters ......................................... 16 Item 6. Selected Financial Data ..................................... 16 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations ...................... 18 Item 7A. Quantitative and Qualitative Disclosures About Market Risk ................................................ 27 Item 8. Financial Statements and Supplementary Data ................ 27 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ........................ 59 PART III ............................................................. 59 Item 10. Advisory Committee Members, Directors and Executive Officers of the Registrant ....................... 59 Item 11. Executive Compensation ..................................... 60 Item 12. Security Ownership of Certain Beneficial Owners and Management .............................................. 64 Item 13. Certain Relationships and Related Transactions ............ 65 PART IV ............................................................. 70 Item 14. Controls and Procedures...................................... 70 Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K ........................................ 70 ii PART I ITEM 1. BUSINESS Plastipak Holdings, Inc. ("Plastipak") is a privately held Michigan corporation that was formed in 1998 to act as a holding company for several related companies. On October 30, 1999, Plastipak acquired all of the equity interests in Plastipak Packaging, Inc. ("Packaging"), Whiteline Express, Ltd. ("Whiteline"), Clean Tech, Inc. ("Clean Tech") and TABB Realty, LLC ("TABB"), and a majority of the equity interests of Plastipak Packaging do Brasil, Ltda ("Plastipak Brazil"), through a reorganization (the "Reorganization"). Packaging, our principal operating company whose business commenced operations in 1967, designs and manufactures rigid plastic containers, and was incorporated in Delaware in 1982. Packaging also owns the remainder of Plastipak Brazil. Whiteline is a trucking company which serves our transportation and logistics needs, and was incorporated in Delaware in 1982. Clean Tech, a plastics recycling operation, provides a source of clean, high quality post-consumer recycled plastic raw material, and was incorporated in Michigan in 1989. TABB owns real estate and leases it to Packaging, Whiteline, and Clean Tech. Plastipak Brazil produces injection-molded plastic preforms, blow molds rigid plastic packaging in Paulinia and Manaus. Plastipak Brazil also maintains a sales office in Buenos Aires, Argentina. Other than Plastipak Brazil and its subsidiaries, all of the Plastipak group of companies are headquartered in Plymouth, Michigan. Plastipak is a leading manufacturer of plastic packaging containers for many of the world's largest consumer products companies. During fiscal 2002, we manufactured and distributed approximately 6.8 billion containers worldwide for over 450 customers. In North America, we are the exclusive supplier of plastic containers to Procter & Gamble for heavy-duty, liquid laundry detergents and the largest supplier of plastic containers to Kraft Foods for their salad dressings, barbecue sauces and grated cheeses. We are recognized by our customers as an innovator in blow-molded package design and manufacturing, and we have obtained over 100 U.S. patents, many of which are registered in foreign countries, for our state-of-the-art, package-manufacturing processes. For 35 years, we have worked as a strategic partner with our customers in the early stages of their new marketing initiatives. We provide integrated transportation and logistics services, and satisfy our customers' needs for recycling, reliability and dependability in plastic packaging. For the year ended November 2, 2002, our revenue was $812.2 million, our earnings were $8.6 million and our EBITDA was $96.5 million. We have increased our revenue between 1998 and 2002 at a compounded annual growth rate (CAGR) of approximately 9.5%, exceeding the industry average. Further, all of our revenue growth has been organic. This continued growth is being driven by the advantages of plastic over glass and metal (e.g., weight, strength and shatter resistance), customer preferences for plastic and technological advances. We believe that we are well positioned to capitalize on the conversion trend and to increase our market share in our product categories. We locate our manufacturing plants near the filling sites of our key customers. In addition to our track record of innovative design, superior customer service and low-cost manufacturing processes, the proximity of our locations to our key customers helps us retain our major customers. To meet the demand of our diverse customer base, we operate fourteen plants in the United States and Brazil. The total square footage of our manufacturing and warehousing facilities is in excess of five million square feet. Our expansion in Brazil has given us additional customer service capability and access to South America's rapidly expanding plastic packaging market. We plan to use our relationships with key customers to create new opportunities in North and South America. Our principal executive offices are located at 9135 General Court, Plymouth, Michigan 48170-0907. Our mailing address is P.O. Box 2500C, Plymouth, Michigan 48170-0907, and our telephone number is (734) 455-3600. THE FORWARD-LOOKING STATEMENTS CONTAINED IN THIS FORM 10K MAY NOT PROVE TO BE ACCURATE. This Form 10K contains certain "forward-looking statements," including, in particular, the statements about our plans and strategies, under the headings "Management's Discussion and Analysis of Financial Condition and Results of Operations", and "Business." Although we believe that our plans, intentions and expectations reflected in such forward-looking statements are reasonable, we cannot assure you that such plans, intentions or expectations will be achieved. Important factors that could cause actual results to differ materially from our forward looking statements 1 are set forth above in this "Risk Factors" section and elsewhere in this Form 10K. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements. OVERVIEW Because our broad range of product lines serves customers in diverse industries and geographic regions, we believe our revenue and cash flow are relatively predictable, reducing our exposure to market or economic fluctuations. We have increased revenue organically between 1998 and 2002 at a CAGR of approximately 9.5%. To support our revenue growth, we have invested more than $290.0 million in facilities, machinery and equipment over the last five years. We believe our commitment to investing in state-of-the-art facilities, machinery and equipment has resulted in significant additional capacity to serve our customers' needs, and enables us to produce plastic containers at competitive prices. In 1999, we initiated a continuous effort to redesign business processes to reduce waste and non-value added costs. Our recent results of operations reflect a strong gross profit improvement. In fiscal 2002, our gross profit improved by $14.4 million over fiscal 2001. This improvement is substantially the result of the implementation of process redesign initiatives and reliability improvements in our manufacturing facilities. We believe we will continue to improve operating margins through further development and implementation of process redesigns. In the year ended November 2, 2002, 73% of our revenue was generated by our top ten customers, nine of whom are under contracts having terms of between one and five years. These contracts, however, may be terminated earlier by the customer or ourselves under certain circumstances. Terms and conditions of our customer contracts vary, but in general the contracts are requirements contracts that do not obligate the customer to purchase any given amount of product from us. Our primary raw materials consist of PET and HDPE resins. Although revenue is affected by fluctuations in resin prices, our gross margin is, in general, substantially unaffected by these fluctuations. In general, industry practice and contractual arrangements historically have permitted us to pass price increases through to our customers by means of corresponding changes in product pricing. As a result, we believe that our gross profits are relatively insulated from resin price fluctuations. We design, manufacture and distribute plastic containers in five product categories: - carbonated and non-carbonated beverage; - consumer cleaning; - food and processed juices; - industrial, automotive and agricultural; and - health, personal care and distilled spirits. OUR PRODUCT CATEGORIES CARBONATED AND NON-CARBONATED BEVERAGE We are a leader in the beverage packaging industry. Our carbonated and non-carbonated beverage business has continued to grow, as plastic has continued to make inroads in replacing other packaging materials. This product category includes carbonated soft drinks ("CSD"), bottled water, juice drinks and beer. We have seen significant growth in non-CSD demand for PET bottles, which are clear and light-weight, and have become the standard for the bottled water industry. We are one of the largest suppliers of PET bottles used for Pepsi's Aquafina and Dr Pepper's Deja Blue water. In addition, we were recently awarded a long-term contract from Buffalo Rock, the largest Pepsi franchise to supply CSD and bottled water containers. This business will be serviced out of our new facility in McCalla, Alabama. 2 We are also a leading producer of bottles for the CSD industry, where production complexity is relatively low and production runs are relatively long. We are a leading supplier to Pepsi Cola Bottlers of PET bottles for all of its Pepsi brands, including Pepsi, Diet Pepsi and Mountain Dew. Our other large CSD customers include AmBev (South America's largest brewer), Beverage Associates (Cadbury Beverages), Dr Pepper/Seven Up Bottling Group, and National Beverage. CONSUMER CLEANING Procter & Gamble and Reckitt Benckiser are among our largest customers in this product category. We are the sole supplier for all of Procter & Gamble's branded heavy-duty, liquid laundry detergent containers in North America, including Tide, Cheer, Era and Gain. We also supply containers for various household products, such as Procter & Gamble's Bounce and Febreze and Reckitt's Lysol, Resolve and Electrasol. We partner with many of our customers to create distinctive containers such as Procter & Gamble's award-winning 300-oz. Tide dispenser bottle launched in 2000. We have long been an industry leader in developing new proprietary plastic packaging for consumer cleaning products. In 1984, also with Procter & Gamble, we developed the system for applying the "Drip Proof" spout for Tide liquid laundry detergent. We also use many of our patents for value-added features such as in-mold labeling, where a plastic or paper brand label is molded into and becomes part of the actual plastic container in a single process, replacing glued-on, post-manufacture labeling. We use a sophisticated preferential heating process to produce oval PET bottles suitable for trigger spray applications, a product with growing popularity among consumers. We are pursuing significant growth opportunities associated with the continued conversion to HDPE and PET packaging of household cleaners. We continue to grow as liquid detergents, which are primarily packaged in plastic, capture market share from powdered detergents, which are primarily packaged in cardboard. Consumer cleaning container sales provided 29.8% of our revenue for the year ended November 2, 2002. FOOD AND PROCESSED JUICES We produce HDPE, PET and polypropylene (PP) containers for customers in the food industry, with a focus on customers for whom proprietary packaging designs are critical to product identification and distinction. AC Humko, Everfresh, Ken's Foods, Kraft Foods, The Kroger Company, Marzetti and Tropicana are among our primary customers in this product category. We are the largest supplier of plastic containers to Kraft Foods in North America for their salad dressings, 10 and 18-oz. squeeze mayonnaise and Miracle Whip, barbecue sauces and grated cheeses. We also produce plastic containers for such popular processed foods as coffee creamers, relishes and vegetable oils. From 1998 through 2002, we grew our food and processed juices revenue at a CAGR of 10.8%. This substantial growth has been driven by the continuing conversion from metal, glass and paper containers to plastic bottles, as the functionality, safety and improving economics of plastic became more apparent, and as consumer preference for plastic packaging continued to grow. PET squeeze bottles for such condiments as salad dressing and mayonnaise have proven extremely popular with consumers who recognize the added convenience that plastic provides. We are increasing our activity and presence in the production of PET bottles required for the hot-fill packaging of shelf-stable juices and juice drinks. The hot-fill process, in which bottles are filled at between 180 to 190 degrees Fahrenheit to kill bacteria, permits the shipment and display of juices and juice drinks without refrigeration. The manufacturing process for hot-fill PET packaging is more demanding than that used for cold-fill beverage containers, and typically involves slower processing speeds, greater shape complexity and heavier weights. Recently, we were awarded a long-term contract from Pepsi to supply Gatorade bottles beginning in 2004. This business will be serviced out of our facility in Garland, Texas. Food and processed juices container sales accounted for 13.6% of our revenue in the year ended November 2, 2002. INDUSTRIAL, AUTOMOTIVE AND AGRICULTURAL Castrol, Equilon, Chevron/Texaco, Old World Industries (Peak), Shell and Turtle Wax are among our major customers in this product category. To increase our product diversity, we have targeted end markets in this product category, including motor oil, antifreeze, windshield washer fluid and other specialty automotive aftermarket products. We also supply containers for BEHR deck cleaners and BASF chemical products. Industrial, automotive and agricultural container sales generated 5.1% of our revenue in the year ended November 2, 2002. 3 HEALTH, PERSONAL CARE AND DISTILLED SPIRITS Our primary customers in this product category include Dial and Seagram's. We manufacture a wide range of plastic containers for branded products, including Seagram's 7 Crown, Seagram's Gin. We manufacture a full line of liquor bottles, ranging from the 50 milliliter "airplane" miniatures to the 1.75 liter bottle, for Seagram's, Hiram Walker, Black Prince and Kittling Ridge. Our in-mold labeling capabilities are of significant competitive value in this category. We expect to grow alongside our customers in this product category as they expand and build or acquire new brands and products. In the year ended November 2, 2002, we generated 1.4% of our revenue from this category. OUR COMPETITIVE STRENGTHS LONG-TERM RELATIONSHIPS WITH MAJOR CONSUMER PRODUCT COMPANIES IN DIVERSE, STABLE INDUSTRIES We enjoy long-standing relationships that average over 15 years with our top ten customers, including Kraft Foods (over 15 years), Pepsi Cola (over 15 years), Procter & Gamble (over 25 years) and Reckitt Benckiser (over 25 years). With our key customers, we have strategic-supply arrangements, many of which have three years or more remaining before renewal. We attribute these close relationships to our creative design and engineering capabilities, high level of customer service, high quality products, efficient manufacturing, reliable delivery, speed to market and experienced and stable management team and workforce. We supply several of these customers with 100% of their plastic packaging needs nationally, regionally or for a specific brand, including Kraft Foods salad dressings and Tide liquid laundry detergent. Our long-term relationships with our customers are strengthened by our ability to meet their need for cooperative package design and development processes. Our skilled and creative engineering staff and location of plants near key customers' filling facilities encourage continued customer loyalty. STRATEGICALLY LOCATED, STATE-OF-THE-ART OPERATING FACILITIES We serve our U.S. customers through a nationwide network of twelve strategically located, technologically advanced manufacturing facilities, through our Productivity Center in Jackson Center, Ohio, through our Packaging Development Center in Medina, Ohio, and a network of strategically located warehouse facilities. Brazil is served by manufacturing facilities in Paulinia and Manaus. Our plants feature top quality injection molding machines, high speed blow molders (including the multi-station GEM-PAK technology, which was developed and patented by our manufacturing and engineering teams), computerized material and inventory handling, and machines modified to allow the quick changeover of molds to meet varying customer needs. Over the last five years, we have invested over $290.0 million in our facilities and state-of-the-art production equipment, which have significantly reduced our costs. Our facilities are strategically located near the filling sites of most of our key customers, which we believe enables us to facilitate just-in-time inventory management, eliminate costly shipping and handling charges, reduce working capital needs and foster the development of long-term manufacturing and distribution relationships. We believe that locating our facilities near our key customers also creates entry barriers for our competition. With our fleet of approximately 275 tractors and 900 trailers, we offer same-day delivery to many of our customers. Our 98% on-time delivery rate is among the best in the industry. TECHNOLOGY-DEVELOPMENT CAPABILITIES We are proud of our industry leading engineering and design capabilities and believe that we often earn and retain business as a result of these skills. Our packaging development and productivity centers have secured over 100 patents and continue to incorporate leading technology into customer-driven applications. We also believe we have a sustainable competitive advantage because we can produce prototypes of new designs with great speed and creativity for our customers. Recently, we were able to design and deliver a prototype to a customer just two weeks after they first explained their packaging concept to us. We have re-engineered existing manufacturing equipment to allow quick mold changeovers, reducing the changeover process from days to hours, giving us greater production flexibility. 4 Our Packaging Development Center creates innovative product designs for our customers, and our Productivity Center has developed major process improvements in the manufacture of our containers. Our customers rely on our design and technical expertise because brand distinctive package design is a critical component in many of their marketing programs. We have centered a substantial portion of our growth strategy on customers that require custom, as opposed to stock, plastic containers as a critical component of their marketing efforts. PROCESS REDESIGN INITIATIVES AND FLEXIBLE COST STRUCTURE In 1999, we initiated an ongoing effort to redesign our business processes, which has reduced waste, increased safety, improved reliability, decreased claims and returns and increased accuracy of orders, resulting in reduced costs and increased revenue per worker. Our increased operating profit in fiscal 2002 is the direct result of the implementation of process redesign initiatives and reliability improvements in our manufacturing facilities. We believe that we can achieve further savings through continued process improvements. In fiscal 2002, we successfully completed the implementation of Phase I and Phase II of our SAP enterprise software project. This enterprise software integrates and automates many of our sales, purchasing and administrative functions, and assists in our process re-engineering initiatives, which we believe will create significant cost reductions. Additionally, we have created a highly variable cost structure that can adjust quickly to customer demand. Our long-term customer contracts are structured with pricing mechanisms to adjust for fluctuations in raw material prices. CUSTOMER-ORIENTED CULTURE In our 35 years in business, we have created a special culture focused on customer service. Plastipak's engineering teams participate in the early phases of our key customers' new marketing initiatives. As an integrated team, we work alongside our customers to shape the design features of new packaging containers and develop new processes and equipment to manufacture those containers. Further, to ensure that our employees' incentives are aligned with our customers' objectives, compensation for approximately 500 key manufacturing employees with leadership responsibility is based on operating and logistics performance measures. We believe these employee incentives will further enhance our strong relationships with key customers, help us attract new customers and allow us to control costs. MANAGEMENT DEPTH AND EXPERIENCE Our management team has an impressive track record of cultivating our customer base of major consumer product companies, launching innovative product designs and achieving profitable, organic growth. Our top 12 senior executives have on average 22 years experience in the industry and 19 years experience at Plastipak. Our executives are invested in our success through their over 90% ownership of our equity. We believe our retention levels are among the highest in the industry. Our management team includes engineers who have developed many of the processes that we have patented and use to our competitive advantage. OUR BUSINESS STRATEGY Our strategy is to continue to increase our revenues and profitability and to further enhance our leading industry positions. From fiscal 1998 to 2002, we increased our revenues by 43.6% to $812.2 million, our earnings to $8.6 million, our EBITDA by 88.3% to $96.5 million and our production volume by 31.8% to 6.8 billion units, all through organic growth. We will continue to prudently invest in production equipment only after establishing contracts with our customers and completing our normal rigorous internal review process. The key components of our strategy include the following objectives: CAPITALIZE ON CONTINUED INDUSTRY CONVERSION TO PLASTIC CONTAINERS We expect the conversion of food products from glass, paper and cans to plastic containers, which we believe is being driven by consumer preference, favorable total packaging economics, technology advances and improved functionality, will continue. We are well positioned to capitalize on the continuation of these trends. For example, our new product initiatives include PET pickle jars, coffee containers and various juice bottles. 5 In addition to opportunities in the domestic hot-fill PET arena, and increased use of PET containers for household cleaners, we believe that additional conversions to HDPE packaging will occur in various snack, dairy and juice drink applications. Additionally, we expect that over the next three to five years, as barrier technology progresses, a portion of the single serving beer container market will be converted to plastic, for use in venues where breakage is a concern. Brewers in the beer industry are strongly committed to brand identity and differentiation, and would prefer serving their product to customers in stadiums, concerts, sporting events, and at pools and beaches, in a way that permits them to maintain that identity (rather than in paper or plastic cups). Single serving plastic beer bottles offer that method. We also believe that as barrier technology for smaller size plastic containers progresses, we will be positioned to compete for the conversion of single serving CSD packaging from aluminum cans and 10-oz. glass to plastic, a 60 billion-unit market. Last year, a major soft drink manufacturer introduced a 500 ml package utilizing barrier containers Plastipak supplied. Also, owing to environmental concerns about disposable plastic waste, the industries we serve are requiring more high-quality, recycled content in their plastic packaging. We have significant experience in producing high quality HDPE and PET containers with recycled content for various customers. We own a dedicated facility that produces post-consumer recycled plastic resin that offers us a secure source for recycled resin for our products. We believe we are well positioned to capitalize on this growing consumer interest toward recycling. CONTINUE DEVELOPING VALUE-ADDED SERVICES AND PRODUCTS Supported by our technology and packaging development centers, we have successfully researched, developed and launched new-patented technologies in our marketplace. We believe our success in this area differentiates us from our competitors and will enable us to continue to gain market share. For key customers, our technology development is an integral part of their overall marketing strategy and has helped our customers drive innovation in the marketplace. EXPAND MARKET SHARE WITH KEY CUSTOMERS Our high-quality, low-cost manufacturing capabilities and track record of focused customer service position us well to continue growing market share with our customer base of major consumer product companies. As our customers continue to acquire new businesses and brands, we believe that we will secure additional long-term contracts with them and grow our product offerings. Central to our strategy to expand market share with key customers are the continued: - delivery of focused customer service; - location of facilities close to customer plants; - innovation in packaging design; and - provision of low cost manufacturing processes. We also intend to target strategic new customers who require our core competencies in blow molding and injection molding. We are working to translate relationships we have developed with multi-national customers in Brazil into additional business in North and South America. OUR CUSTOMERS Substantially all of our sales are made to major branded consumer products companies, primarily in the United States. Our customers demand a high degree of packaging design and engineering to accommodate complex bottle shapes, performance requirements, materials, speed to market and reliable delivery. As a result, many customers opt for long-term contracts, many of which have terms of one to five years. Nine of our top ten customers are under 6 contracts with terms between one and five years. These contracts, however, may be terminated earlier by us or our customer upon a material breach of the contract or, in some cases, in the event we determine it is not in our best interest to change our terms and conditions through the procedures outlined in the contract to meet competitive prices. Our customers have requested competitive price reductions from time to time in the past under their contracts with us. In many cases, we are the sole supplier of all of a customer's custom plastic bottle requirements nationally, regionally or for a specific brand. Our largest customer is Procter & Gamble. For fiscal 2000, 2001 and 2002, Procter & Gamble accounted for approximately 20%, 23% and 25% of our revenue, respectively. Our largest customers include:

---------- (a) These companies include their predecessors, if applicable. While our business is concentrated with our major customers, we believe that our technological skills and low-cost position, coupled with long-term "partnering" relationships with our customers, make the complete loss of any of these major customers less likely. Our ten largest customers have been associated with us for an average of over 15 years. RAW MATERIALS Resin and energy, the principal raw materials of our plastics business, have remained widely available to our U.S. operations, though subject to considerable price volatility. The great majority of Plastipak's customer contracts allow us to pass through resin price increases on 30 days' notice. Since we usually receive 30 days' notice of price increases from our resin suppliers, we are generally able to tolerate price increases without substantial harm to profits, although contracts containing pass-through provisions may not be available to us in the future. See "Risks Related to Our Business." As a major consumer of resin, we also leverage our bulk purchasing power to gain favorable pricing and terms. Clean Tech has continued to be able to meet almost all of our needs for post-consumer recycled material. Post-consumer recycled material prices tend to fluctuate in tandem with the virgin resin markets, since demand for post-consumer recycled material increases as prices for virgin material rise above those for post-consumer recycled material. 7 Trade restrictions and currency devaluations have driven up the cost of imported resin in Brazil. See "Risks Related to Our Business." MANUFACTURING AND DISTRIBUTION We serve our customers with a wide range of state-of-the-art manufacturing capabilities and services. Our 14 manufacturing facilities are strategically located near the filling sites of our key customers. We believe that our proximity to key customers enables us to work closely with our customers, to facilitate just-in-time inventory management, to eliminate costly shipping and handling charges, to reduce working capital needs and to foster the development of long-term manufacturing and distribution relationships. We continue to be an industry leader in production technologies for plastic containers by: - efficiently manufacturing containers with specialized features, such as multiple layers, barrier coatings, in-mold labeling and bottles designed to accommodate trigger sprayers; - improving manufacturing technology to allow ever increasing production volumes without increasing the need for floor space (including the multi-station GEM-PAK, which we developed and patented and which significantly increases production capability as compared to older blow-molding machines); and - making innovative modifications to our blow molders to effect tooling changes in a matter of hours, instead of days, allowing quick shifts in product mix. To meet demand and reduce our inventory costs, our facility managers receive real-time order and forecasting information from some of our customers. We have completed the implementation of phase I and phase II of our SAP enterprise software project, which has integrated, automated and streamlined many of our supply chain operations. As a result, we will better serve our customers' needs. Our subsidiary, Whiteline, is a fully licensed ICC common carrier, and serves approximately 70% of our transportation needs. With Whiteline's fleet of approximately 275 tractors and 900 trailers, we offer same-day delivery to many of our customers. Our 98% on-time delivery rate is among the best in the industry. PACKAGING DEVELOPMENT Our Productivity and Packaging Development Centers create innovative product designs for our customers and process improvements in the manufacture of our containers. Our customers rely on our design and technical expertise because package design is a critical component in many of their marketing programs. We have an in-house staff of approximately 70 employees at our Productivity and Packaging Development Centers dedicated to product development and improvement. These professionals work closely with customers to develop new products and designs, often using sophisticated computer-aided design software. We are capable of generating new product designs within weeks of customer requests. We also believe that our customized designs help our customers differentiate their products in the marketplace while also improving the appeal and performance of their products. We believe that these capabilities have given us a significant competitive advantage in certain high-margin niche container product markets where the ability to produce sophisticated package designs and deliver high quality graphics at a reasonable cost is crucial to a product's success. Additionally, we have the engineering capabilities in-house to create new machines, which can more efficiently produce the proprietary products developed for our customers. Packaging development expenses were approximately $6.3 million, $7.1 million and $8.6 million for fiscal 2000, 2001 and 2002, respectively. SALES AND MARKETING We reach our large and diversified base of over 450 customers primarily through our direct field sales force. A large number of our sales representatives focus their work on particular product lines and national accounts, while the remaining field sales staff covers specific geographic territories. We believe that our direct field sales force is 8 able to focus on target markets and create strong, enduring customer relationships. A direct sales force also allows us to coordinate centralized pricing strategies. FOREIGN OPERATIONS Since 1996, we have expanded our operations into South America. We are working to leverage our relationships with new customers in Brazil into new opportunities in North and South America. Our initial operation was a plant located in suburban Sao Paulo (Paulinia), Brazil. We recently opened a facility in Manaus, a tax-free zone in the state of Amazonia, Brazil. We also have a sales office in Buenos Aires, Argentina. Our Brazilian net revenue has grown from $8.0 million in 1996 to $65.9 million for the year ended November 2, 2002. We believe that the global trend in the conversion of glass, metal and paper to plastic packaging will continue, particularly in the developing world, as consumer economies expand and industrialization continues. We are exploring opportunities to opening up a small facility somewhere in the Eastern European region. COMPETITION We face substantial competition throughout our product categories from a number of well-established national and regional companies. Our primary national competitors include Amcor, American National Can, Inc., Ball Plastics, Consolidated Container Company, Constar International, Crown Cork & Seal Company, Inc., Graham Packaging Company, Liqui-Box Corporation, Owens-Illinois, Inc., and Silgan Holdings, Inc. In addition, we face substantial competition from a number of captive packaging operations with significant in-house bottling and blow-molding capacity, such as Dean Foods, The Kroger Company, The Perrier Group of America and Suiza Foods. INTELLECTUAL PROPERTY We own over 100 U.S. patents, and have over 30 patent applications currently pending at the United States Patent and Trademark Office. In addition, over 300 foreign patents have been issued and approximately 175 are pending, although not all of our U.S. patents are registered in foreign countries. Our patents include patents for our GEM-PAK molding system, a gas clamping electronically controlled molding machine. We are continually developing new patents. Because our patented packaging designs create goodwill and result in product differentiation, we believe that these intellectual property assets are important to our business. Our business is not dependent on any one of these patents, since plastics manufacturing technology continues to move forward rapidly. Patent licensing, however, serves to keep the new technologies we develop proprietary, giving us a short, but important, window of competitive advantage. In addition, we rely on proprietary know-how, continuing technological innovation and other trade secrets to develop products and maintain our competitive position. We attempt to protect our proprietary know-how and our other trade secrets by executing, when appropriate, confidentiality agreements with our customers and employees. We cannot assure you that our competitors will not discover comparable or the same knowledge and techniques through independent development or other means. We have also licensed or sub-licensed certain of our intellectual property rights to third parties. These range from trimming systems that eliminate any plastic waste or "chips" from containers to our unique "in-mold labeling" equipment for bottle decoration. Many bottle designs are also licensed for revenue generation. In some cases, patented bottle designs are assigned or used by our customers, as their needs arise. Since our unique customer relationships allow us to be in on the ground floor in bottle design development, our customers often attain patent coverage for our joint design efforts. ENVIRONMENTAL COMPLIANCE We are subject to national, state, local and foreign laws and regulations that impose limitations and prohibitions on the discharge and emission of, and establish standards for the use, disposal, and management of, some kinds of materials and waste, and impose liability for the costs of investigating and cleaning up, and damages resulting from, present and past spills, disposals, or other releases of hazardous substances or materials. Environmental laws and regulations can be complex and may change often. Compliance with these laws and regulations can require 9 significant capital expenditures, and violations may result in substantial fines and penalties. In addition, environmental laws in the United States, such as the Comprehensive Environmental Response, Compensation and Liability Act, impose liability on several grounds for the investigation and cleanup of contaminated soil, groundwater, and buildings, and for damages to natural resources, at a wide range of properties. For example, contamination at properties formerly owned or operated by us, as well as at properties we currently own or operate, and properties to which hazardous substances were sent by us, may result in liability for us under these environmental laws and regulations. As a manufacturer, we also have an inherent risk of liability under environmental laws and regulations regarding ongoing operations. From time to time, we have been subject to claims asserted against us by regulatory agencies for environmental matters relating to the generation and disposal of hazardous substances and wastes. Some of these claims have related to properties or business lines acquired by us after a release has occurred. In each known instance, however, we believe that the claims asserted against us, or obligations incurred by us, will not result in a material adverse effect upon our business, financial position or results of operations. Nonetheless, there can be no assurance that activities at these facilities or facilities acquired in the future, or changes in environmental laws and regulations, will not result in additional environmental claims being asserted against us or additional investigations or remedial actions being required. In addition, a number of governmental authorities in the United States and in other countries have enacted and are expected to continue to enact legislation aimed at reducing the amount of disposed plastic wastes. These programs have included, for example, mandating rates of recycling and/or the use of recycled materials, imposing deposits or taxes on plastic packaging material, and/or requiring retailers or manufacturers to take back packaging used for their products. This legislation, as well as voluntary initiatives similarly aimed at reducing the level of plastic wastes, could reduce the demand for some plastic packaging, result in greater costs for plastic packaging manufacturers or otherwise affect our business. To date, these initiatives and developments have not materially and adversely affected us. Some consumer products companies (including some of our customers) have responded to these governmental initiatives and to perceived environmental concerns of consumers by, for example, using bottles made in whole or in part of recycled plastic. Our subsidiary, Clean Tech, is among the top 20 suppliers of post-consumer recycled materials in the United States. Clean Tech supplies approximately 90% of Plastipak's post-consumer recycled materials needs. EMPLOYEES We have approximately 3,700 non-union employees in the U.S. and 170 employees in Brazil. Given the seasonality of the plastic bottling industry, we expect to continue to employ temporary and seasonal workers during peak production months, in both the United States and Brazil. We have not had any material labor disputes in the past five years and consider our relations with our employees to be good. RISKS RELATED TO OUR BUSINESS COMPETITION -- WE FACE CONSIDERABLE COMPETITIVE RISKS. We face substantial competition from a number of well-established national and regional companies. Our primary national competitors include Amcor, American National Can, Inc., Ball Plastics, Consolidated Container Company, Constar International, Crown Cork & Seal Company, Inc., Graham Packaging Company, Liqui-Box Corporation, Owens-Illinois, Inc., and Silgan Holdings, Inc. In addition, we face substantial competition from a number of captive packaging operations with significant in-house bottling and blow-molding capacity, such as Dean Foods, The Kroger Company, The Perrier Group of America and Suiza Foods. Many of our competitors have financial and other resources that are substantially greater than ours. In order to compete successfully, we will need to continue to make substantial capital expenditures to develop new products and streamline our manufacturing processes. Competition in our industry could negatively affect our business operations. See "Business -- Competition." 10 CONCENTRATION OF CUSTOMERS -- WE HAVE SEVERAL MAJOR CUSTOMERS, THE LOSS OF WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON US. For the fiscal year ended November 2, 2002, our largest single customer accounted for approximately 25% of our revenue. Our ten largest customers accounted for approximately 73% of our revenue. The termination by any of these customers of their relationship with us could have a material adverse effect on our business and results of operations. Nine of our top ten customers are under contracts with terms of between one and five years. In general, these contracts are requirements contracts that do not obligate our customers to purchase any specific minimum product from us. These contracts may be terminated by us or by our customer prior to their expiration dates upon a material breach of the contract or, in some cases, in the event we determine it is not in our best interest to change our terms and conditions through the procedures outlined in the contract to meet competitive prices. Our customers have requested competitive price reductions from time to time in the past under their contracts with us. ECONOMIC AND POLITICAL RISK IN SOUTH AMERICA -- WE HAVE SPECIAL RISKS ASSOCIATED WITH OUR SOUTH AMERICAN OPERATIONS. We have significant operations in Brazil. We currently have two plants located in Brazil. We also have a sales office in Buenos Aires, Argentina. For the year ended November 2, 2002, net sales of our Brazilian subsidiaries totaled approximately $65.9 million, representing approximately 8% of our worldwide revenue for such period. We experienced a net loss of approximately $12.8 million on our Brazilian sales for the year ended November 2, 2002. Our results to date in Brazil have been less than we expected, as currency devaluations, high interest rates, inflation, import restrictions and a legal system which makes it difficult to enforce contracts have reduced both revenue and profits. Import duties on equipment needed to upgrade our production capabilities in Brazil are significant. We are working diligently to improve and expand our operations in Brazil to make them profitable, but we cannot assure you that our Brazilian operations will ever become profitable. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business -- Foreign Operations." The following factors create higher risks to our South American operations than we experience in the United States: - continuing high nominal interest rates; - limitations on conversion of foreign currencies into U.S. dollars or remittance of dividends and other payments; - imposition or increase of withholding and other taxes on remittances and other payments; - inability to fully utilize foreign tax credits and fully pass through foreign losses here in the U.S. due to limitations imposed by U.S. tax laws; - the potential for political instability and inflation and the imposition or increase of restrictions on investments and other restrictions by foreign governments; - inability of our foreign subsidiaries to enforce certain of their key agreements through the legal systems in South America. CURRENCY FLUCTUATIONS -- WE HAVE SIGNIFICANT FOREIGN EXCHANGE RISKS WITH RESPECT TO OUR BRAZILIAN OPERATIONS THAT WE CANNOT CONTROL. Our Brazilian contracts are priced in U.S. dollars; however, we invoice our customers in the Brazilian Real. Following several significant devaluations of Brazil's currency, despite "make whole" agreements in our contracts, some of our customers agreed to only partial price increases. These increases accounted for only a portion of the cost to us of devaluation, leading to a reduction in our gross margin in Brazil. 11 Fluctuations in the value of the U.S. dollar may adversely affect our results of operations. Because our consolidated financial results are reported in dollars, if we generate sales or earnings in other currencies the translation of those results into dollars can result in a significant increase or decrease in the amount of those sales or earnings. In addition, our debt service requirements are primarily in U.S. dollars, even though a portion of our cash flow is generated in the Brazilian Real. Significant changes in the value of the Brazilian Real relative to the U.S. dollar could have a material adverse effect on our financial condition and our ability to meet interest and principal payments on U.S. dollar denominated debt, including the exchange notes and borrowings under the Amended Credit Agreement. Given the volatility of exchange rates, we may not be able to effectively manage our currency transaction and/or translation risks. It is expected that the volatility in currency exchange rates will continue to have a material effect on the financial condition or results of operations of our foreign subsidiaries. We expect that the portion of our revenue denominated in non-dollar currencies will continue to increase in future periods. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Effects of Changes in Exchange Rates." In addition, the value of our investment in Plastipak Brazil is partially a function of the currency exchange rate between the U.S. dollar and the Brazilian Real. We have not executed hedge transactions to endeavor to reduce our exposure to foreign currency exchange rate risks, and do not believe that hedging is a viable option for us in the immediate future. FUTURE CAPITAL REQUIREMENTS -- IF WE CANNOT OBTAIN THE FUNDS TO MAKE THE SIGNIFICANT CAPITAL EXPENDITURES THAT OUR BUSINESS WILL REQUIRE, WE MAY NOT BE ABLE TO MAINTAIN OUR CURRENT LEVEL OF OPERATIONS OR GROW OUR BUSINESS. To fund our growth plans and maintain our current level of operations, we will continue to make substantial capital expenditures for product development and improvements in our manufacturing processes. In fiscal 2001 and 2002, we made capital expenditures of approximately $56 million and $85 million, respectively. We estimate that capital expenditures in each of fiscal 2003 and 2004 will be approximately $105 million and $90 million, respectively. In addition, we may be required to make additional investments as the demands of our industry and our customers evolve. We may not be able to fund any necessary investments, and the failure to do so could have a material adverse effect on our business, financial condition and results of operations. ACQUISITION STRATEGY -- WE COULD FACE CONSIDERABLE BUSINESS AND FINANCIAL RISKS IN IMPLEMENTING OUR ACQUISITION STRATEGY. Our growth strategy may include acquisitions of other consumer goods packaging businesses, although we do not currently have any commitments or agreements with respect to any such acquisitions. Risks we could face with respect to acquisitions include: - problems in assimilating operations, technologies, services and products; - diversion of management's attention from existing business concerns; and - incurrence of debt and contingent liabilities. Any of these risks could have a material adverse effect upon our business, financial condition and results of operations. We may not be successful in consummating future acquisitions on favorable terms or at all. EXPOSURE TO FLUCTUATIONS IN RESIN PRICES AND DEPENDENCE ON RESIN SUPPLIERS -- WE ARE EXPOSED TO THE RISKS ASSOCIATED WITH FLUCTUATIONS IN THE PRICES OF RESIN. We face the risk that our access to resin is interrupted or that we may not be able to purchase it at competitive prices. We use large quantities of plastic resins in manufacturing our products. Plastic resin accounted for approximately one-third of our cost of goods sold in fiscal 2002. Plastic resins are subject to substantial price fluctuations caused by shortages in supply and changes in the prices of natural gas, crude oil and other petrochemical products from which these resins are produced. We may experience supply interruptions in the future. Our purchases of raw materials are subject to market prices. Although we generally have pass through provisions in many of our customer contracts, market conditions may not permit us to pass through any future raw material price increases. The inability to procure resin or significant increases in resin prices, coupled with an inability to promptly pass such increases on to customers, would have a material adverse effect on our financial condition and results of 12 operations. Furthermore, a significant increase in resin prices could slow the pace of conversion from paper, glass and metal containers to plastic containers to the extent that these costs are passed on to the customer. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business -- Raw Materials." DEPENDENCE ON KEY PERSONNEL -- WE ARE DEPENDENT ON SEVERAL KEY SENIOR MANAGERS, THE LOSS OF WHOM COULD HAVE A MATERIAL EFFECT ON OUR BUSINESS AND DEVELOPMENT. Our business and our future success depend to a significant extent upon the continued service of our executive officers and senior managers. In particular, the loss of the services provided by William C. Young, William A. Slat, Michael J. Plotzke, Gene W. Mueller, Pradeep Modi, Thomas Busard, Frank Pollock, Richard Darr, J. Ronald Overbeck, Leann M. Underhill and David Daugherty, among others, could have a material adverse effect on our business and results of operations. Our failure to retain such key personnel could have a material adverse effect on our business, financial condition and results of operations. We do not have key man life insurance. OTHER RISKS CONCENTRATION OF OWNERSHIP OF OUR COMMON STOCK -- WE ARE CONTROLLED BY THE YOUNG FAMILY. William C. Young, our Chief Executive Officer, and members of his immediate family own over 90% of our common stock on a fully-diluted basis and, therefore, control our board of directors. As a result, the Young family will continue to have the ability to elect and remove directors and determine the outcome of matters presented for approval by our shareholders. Circumstances may occur in which the interests of the Young family could be in conflict with the interests of the holders of the notes. REGULATION -- OUR OPERATIONS AND PRODUCTS ARE SUBJECT TO SUBSTANTIAL ENVIRONMENTAL, HEALTH AND SAFETY REGULATIONS. Our operations and properties are subject to stringent federal, state, local and foreign laws and regulations relating to pollution, environmental protection and workplace health and safety. Such laws and regulations frequently change, are different in every jurisdiction, and can impose substantial fines and sanctions for violations. Our operations must comply with these laws, and must adapt to regulatory requirements in all jurisdictions in which we operate as these requirements change. Environmental laws generally impose liability for costs to investigate and remediate contamination without regard to fault and, under certain circumstances, liability may be joint and several resulting in one responsible party being held responsible for the entire obligation. We have incurred, and may continue to incur, such costs related to at least two of our properties. Although we believe our operations and properties are substantially in compliance, new laws and regulations, stricter enforcement or interpretation of existing laws and regulations or the discovery of previously unknown contamination or previously unknown off-site liability, the imposition of new clean-up requirements, or claims for property damage or personal injury arising from environmental matters could require us to incur costs or become the basis for the new or increased liabilities that could have a material adverse effect on our business, financial condition or results of operations. Legislation concerning mandatory rates of recycling, mandatory use of recycled materials, deposits or taxes on plastic packaging material or requirements that retailers or manufacturers take back packaging used for their products could reduce the demand for certain plastic packaging, result in greater costs for plastic packaging manufacturers and, therefore, have a material adverse effect on our business, financial condition and results of operations. 13 PRODUCT LIABILITY RISK -- WE FACE PRODUCTS LIABILITY RISK. IN ADDITION, OUR BUSINESS IS EXPOSED TO THE PRODUCTS LIABILITY RISK OF OUR CUSTOMERS. Because our plastic containers are used for consumer products, our business is exposed to products liability risk and the risk of negative publicity. The amount and scope of our product liability insurance may not be adequate to cover a products liability claim that is successfully asserted against us. In addition, we are exposed to the products liability risk and negative publicity of our customers and suppliers. Because many of our customers are carbonated soft drink, dairy, water and branded consumer products companies, with their own products liability risk, our sales may decline if any of our or our competitors' customers are sued on a products liability claim. We may also suffer a decline in sales from the negative publicity associated with such a lawsuit or with adverse public perceptions in general regarding our products or our customers' products in our containers. INTELLECTUAL PROPERTY PROTECTION -- WE ENJOY LIMITED PROTECTION FOR OUR INTELLECTUAL PROPERTY, AND ARE SUBJECT TO A PATENT INFRINGEMENT CLAIM. We have a number of patents covering design and construction of our products and manufacturing equipment. Patents do not ensure that competitors will not develop competing products or infringe upon our patents, or that the patents will withstand challenge in litigation. The costs of litigation to defend our patents could be substantial and may outweigh the benefits of enforcing our rights under our patents. Patent laws of foreign countries may offer less protection than the patent laws of the United States. We also rely on unpatented proprietary technology, trade secrets and know-how. Others may independently develop the same or similar technology or otherwise obtain access to our unpatented technology. If we are unable to maintain the proprietary nature of our technologies, we could be materially adversely affected. In 1999, North American Container filed a lawsuit against us and 41 other defendants claiming some of our products infringe one of their patents and requesting an unspecified amount in damages. See "Business -- Legal Proceedings". Defendants prepared and filed a motion for summary disposition that will be renewed and refiled due to a ruling by the court's special master regarding claims construction, and the renewed and revised motion will be presented as is appropriate under the court's schedule. If we do not prevail in the litigation, our business and financial condition could be materially adversely affected. ITEM 2. PROPERTIES We occupy a number of owned and leased properties located throughout the United States, Brazil and Argentina for our technical centers, manufacturing plants, corporate headquarters and sales offices. We currently utilize 41 facilities, 15 of which we own and 26 of which we lease. Our interests in all of our U.S. facilities are pledged to secure our current credit facility. The following table lists the location, square footage, principal use and ownership interest in our facilities. 14

We believe that our plants, which are of varying ages and types of construction, are in good condition, are suitable for our operations and generally provide sufficient capacity to meet our requirements for the foreseeable future. ITEM 3. LEGAL PROCEEDINGS We are a party to various litigation matters arising in the ordinary course of our business. We cannot estimate with certainty the ultimate legal and financial liability of this litigation but we believe, based on our examination of 15 these matters, experience to date and discussions with counsel, that the ultimate liability will not be material to our business, financial condition or results of operations. In the fall of 1999, North American Container, Inc. ("NAC") filed suit in the U.S. District Court for the Northern District of Texas (Civil Action No. 3-99CV1749-D), claiming damages in an unspecified amount against Plastipak and 41 other defendants for the alleged infringement of NAC U.S. Patent No. 5,072,841. On April 4, 2000 this patent reissued as patent RE 36,639, with 14 new claims. The new claims were the primary focus of NAC's case against Plastipak and the major manufacturers, as well as major food and beverage distributors. Plastipak is spending approximately $75,000 per month to vigorously defend this suit for the alleged patent infringement of NAC's "plastic container." The claim construction phase of the litigation is coming to a close. The master proposed claim construction will eliminate a large number of bottles produced by us from consideration in the lawsuit. The court has allowed discovery. Defendants have filed a motion for summary disposition. Because the Special Master changed his position on claims construction, the court is permitting the defendants to refile the motion for summary disposition. In the event defendants fail on the summary judgment motion, our cost of defending this action for a protracted period of time could exceed $1.0 million. Camplas, one of Plastipak Brazil's customers, failed to pay for bottles supplied to it by Plastipak Brazil. In 1998, Plastipak Brazil filed suit for payment. In response to Plastipak Brazil's suit, Camplas filed a counterclaim alleging that the bottles were defective. Camplas seeks damages from Plastipak Brazil in the amount of approximately R$12,200,000 (reais), which as of the date of this Form 10K was approximately $3.4 million. The litigation is progressing through their legal system. We do not believe this litigation presents the risk of a material adverse effect on our business or financial condition. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. PART II ITEM 5. MARKET FOR REGISTRANTS, COMMON EQUITY AND RELATED STOCKHOLDER MATTERS There is no public market for Plastipak Holdings common equity. ITEM 6. SELECTED FINANCIAL DATA The following selected consolidated financial data for the four fiscal years ended November 2, 2002 were derived from our audited consolidated financial statements. The following selected financial data for the year ended October 31, 1998 was derived from audited combined financial statements of the predecessor companies. The selected consolidated financial data should be read in conjunction with the consolidated financial statements and the related notes, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other financial information included elsewhere in this Form 10K.

---------- (a) An extraordinary loss was recorded as a result of the early retirement of senior subordinated notes and related warrants. (b) A gain was recorded for a change in accounting principle due to a change in accounting for parts and supplies. Through October 30, 1999, Packaging expensed parts and supplies utilized in its manufacturing facilities. Effective October 31, 1999, these items are inventoried and are charged to expense when used. Due to increased volume of purchases of such items, management believes that this method is preferable and it provides for a better matching of revenues and expenses. The financial statements for the years preceding the fiscal year ended October 28, 2000 have not been restated. See Note N to the consolidated financial statements. (c) EBITDA represents earnings (loss) before interest expense, income taxes, depreciation and amortization. EBITDA is not presented as, and should not be considered an alternative measure of operating results or cash flows from operations (as determined by generally accepted accounting principles), but it is a widely accepted financial indicator of a company's ability to incur and service debt. While commonly used, however, EBITDA is not identically calculated by companies presenting EBITDA and is, therefore, not necessarily an accurate means of comparison and may not be comparable to similarly titled measures disclosed by our competitors. (d) The ratio of earnings to fixed charges was computed by dividing earnings (loss) by fixed charges. For this purpose, earnings (loss) consists of earnings (loss) before taxes extraordinary item and change in accounting principle plus the portion of rents representative of the interest factor, interest expense and capitalized interest. Fixed charges consist of interest incurred (whether expensed or capitalized), the portion of rent expense that is representative of the interest factor, and amortization of debt discount and issuance costs. (e) For the years ended October 31, 1998 and October 30, 2000, earnings were inadequate to cover fixed charges by $2,530 and $1,631, respectively. 17 (f) Net debt equals total debt less cash and cash equivalents. (g) Working capital represents current assets less cash and cash equivalents minus current liabilities less short-term debt and current portion of long-term debt. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's discussion and analysis should be read in conjunction with the consolidated financial statements and the accompanying notes. Please refer to the "Risk Related to Our Business" section for a summary of factors that could cause actual results to differ materially from those projected in a forward-looking statement. As you read the material below, we urge you to carefully consider our financial statements and related information provided herein. All statements other than statements of historical fact included in this Form 10K, including statements regarding our future financial position, economic performance and results of operations, as well as our business strategy, budgets and projected costs and plans and objectives of management for future operations are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "anticipate", "believe", or "continue" or the negative thereof or variations thereon or similar terminology. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from our expectations include, without limitation, risks associated with our Brazilian operations, competition in our product categories, including the impact of possible new technologies, our high degree of leverage and substantial debt service obligations, the restrictive covenants contained in instruments governing our indebtedness, our exposure to fluctuations in resin and energy prices, our dependence on significant customers and the risk that customers will not purchase our products in the amounts we expect, our dependence on key management and our labor force and the material adverse effect that could result from the loss of their services. All forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements set forth in this paragraph. RESULTS OF OPERATIONS We report our results of operations on the basis of a 52-53 week period. Our fiscal year end is the closest Saturday to October 31 each year. The fiscal years ended November 2, 2002 and October 28, 2000 were 52 weeks long. The fiscal year ended November 3, 2001 was 53 weeks long. Listed in the table below are our revenues and related percentages of revenue for the years ended November 2, 2002, November 3, 2001 and October 30, 2000. Our historic revenue growth has been achieved organically due to increased business with new and existing customers. 18

(a) The periods ended November 2, 2002 and October 28, 2000 were 52 weeks long. The period ended November 3, 2001 contained 53 weeks. (b) Other revenue includes Clean Tech (recycling), Whiteline (transportation and logistics) and other miscellaneous sources of revenue. YEAR ENDED NOVEMBER 2, 2002 COMPARED TO YEAR ENDED NOVEMBER 3, 2001 REVENUE Revenue increased 0.3% to $812.2 million for the year ended November 2, 2002 while unit sales increased 5.1% for the period to 6.8 billion units compared to the year ended November 3, 2001. The relatively flat revenue growth is due to several factors. First, the year ended November 2, 2002 contained only 52 weeks, while the year ended November 3, 2001 contained 53 weeks. If 2002 revenue were restated for 53 weeks, 2002 revenue would have increased over the prior period by approximately 2.4%. Second, resin prices (which represent a significant cost of the product) have decreased in the year ended November 2, 2002 as compared to the year ended November 3, 2001. Lower resin prices were passed on to our customers in the form of lower sales prices for the products we sell. We estimate that lower resin prices resulted in approximately a $28.0 million reduction in revenue for fiscal year 2002. Finally, we exited a piece of business through an asset sale in fiscal year 2001 which resulted in lower sales revenue for fiscal year 2002. Revenue and unit sales increases and decreases by category are discussed more specifically below: - Carbonated and non-carbonated beverage revenue decreased 2.8% to $362.7 million while unit sales during the year ended November 2, 2002 increased by 7.6% over the year ended November 3, 2001. Unit sales growth was attributable to the U.S. market where unit sales increased 7.6% from the period 2001. Increased business in Brazil resulted in an increase of 7.4% of unit sales over the period in 2001. Increased activity in the water market continues to drive increased unit volume. While unit sales increased, revenue declined in this category due to lower average raw material prices, a product mix shift to more single service packages that have lower selling prices, and currency devaluations in Brazil. 19 - Consumer cleaning revenue increased 3.8% to $242.1 million. Unit sales increased 3.0% over the prior year. Sales growth was driven by several new packaging initiatives in this category. - Food and processed juices revenue increased 0.2% to $110.1 million. Unit sales during the year ended November 2, 2002 decreased 4.0% over the year ended November 3, 2001. The decrease in sales units was primarily the result of the sale of production assets in this category during the second quarter of fiscal year 2001. - Industrial, agricultural and automotive revenue decreased 7.8% to $41.8 million, while unit sales for the year ended November 2, 2002 increased 2.6% over the same period in 2001. New product awards in this category primarily drove unit sales growth. In addition, the market successes of large multi-use containers provided incremental volume growth in a category that is otherwise flat. Dollar sales were impacted by the change in resin pricing with revenue down for fiscal year 2002 compared to the same period in 2001. - Health, personal care and distilled spirits revenue decreased 0.8% to $11.0 million. Unit sales for the year ended November 2, 2002 were down 7.4% over the year ended November 3, 2001. During 2002, our exit from a piece of business in this sector resulted in the drop in sales units and revenue. - Other revenue increased 19.6% to $44.5 million. This increase is attributable mainly to an increase in freight, recycling, and other miscellaneous revenue. GROSS PROFIT Gross profit increased 14.3% to $115.2 million for the year ended November 2, 2002. Gross profit as a percent of revenue improved to 14.2% from 12.4% in the prior period. The improvement in gross profit as a percent of revenue was partially due to lower resin costs that decreased revenue without decreasing associated gross profit. Gross profit increases were the result of improved manufacturing reliability and throughput in fiscal 2002. In addition, current process redesign initiatives helped generate increased gross profit. Our primary raw materials consist of PET and HDPE resins. Although our revenue is affected by fluctuations in resin prices, our gross profit is, in general, substantially unaffected by these fluctuations. In general, industry practice and contractual arrangements with our customers permit price changes to be passed through to customers. As a result, we have in the past experienced revenue changes without corresponding changes in gross profit. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses increased 6.2% to $68.5 million for year ended November 2, 2002. As a percentage of revenue, selling, general and administrative expenses increased slightly to 8.4% in the year ended November 2, 2002 from 8.0% in the year ended November 3, 2001. The increase was related to the reclassification of $1.3 million of site management wages from manufacturing expenses a $1.2 million increase related to the implementation of SAP. Increases in corporate labor contributed approximately $2.2 million to the increase. The increase in corporate labor is mainly due to compensation expense recorded for restricted stock options in the amount of approximately $2.4 million. INTEREST EXPENSE Interest expense increased by 21.2% to $35.1 million. The increase was due to the sale of $275.0 million and $50 million of the 10.75% Senior Notes in August 2001 and September 2002, respectively. In addition, our debt level was approximately $54.8 million higher as compared to the prior year ending November 3, 2001. 20 OTHER (INCOME) AND EXPENSE Other income decreased by $1.3 million to $(1.8) million principally due to $0.8 decrease in sundry income and a $0.6 million decrease in foreign currency exchange rate losses that were principally related to the devaluation of the Peso in Argentina. NET EARNINGS Net earnings increased by $1.5 million from net earnings of $7.1 million for the year ended November 1, 2001 to net earnings of $8.6 million for the year ended November 2, 2002. The increase in net earnings was primarily due to improvements in operating profit. YEAR ENDED NOVEMBER 3, 2001 COMPARED TO YEAR ENDED OCTOBER 28, 2000 REVENUE Revenue increased 15.4% to $809.8 million for the year ended November 3, 2001. Unit sales for the year ended November 3, 2001 increased 12.6% to approximately 6.5 billion units from the year ended October 28, 2000. The increases in revenue and unit sales are due to a number of factors: - Carbonated and non-carbonated beverage revenue increased 16.2% to $373.1 million. Additional growth was driven by increased demand for water containers along with new business commitments in the Northeast. Also, we continue to develop the plastic beer bottle market with increased sales to several regional breweries. - Consumer cleaning revenue increased 24.1% to $233.2 million. The increase in revenue was attributable primarily to our sales of corrugated boxes and labels to Procter & Gamble. Procter & Gamble previously purchased corrugated boxes and labels from another supplier, but requested in June 2000 that we begin to sell these materials to them in order to streamline their production process. As a result, we now ship our plastic containers to Procter & Gamble in corrugated boxes with labels in place. Procter & Gamble simply fills and caps the containers, seals the cartons and ships the filled containers to their customers. We began this arrangement with Procter & Gamble by purchasing their existing inventory of corrugated boxes and labels, and we now purchase these items from vendors approved by Procter & Gamble. The prices we charge Procter & Gamble include an amount to cover our costs of boxing and labeling the plastic containers we sell them. We estimate that $83 million of our increased revenue for 2001 was attributable to this new arrangement with Procter & Gamble. Additional growth was attributable to broad-based volume increases across all customers within the category. - Food and processed juices revenue increased 4.9% to $109.9 million. This growth is attributable to increased business in juice-type products, pourable dressings, and squeezable mayonnaise containers. These volume gains were partially offset by the divestiture of volume previously supplied to Sunny Delight. - Industrial, agricultural and automotive revenue increased 31.1% to $45.3 million. This increase was driven by growth primarily from F Style gallons, motor oil quarts and our proprietary Handi-Grip container. - Health, personal care and distilled spirits revenue decreased 11.3% to $11.1 million. This decrease is attributable to reduced business activity with customers within this product category and a shift to smaller, lower priced packages within our product mix. - Other revenue decreased 9.6% to $37.2 million. This decrease is attributable to less project revenue with existing customers. GROSS PROFIT Gross profit increased 32.3% to $100.8 million for the year ended November 3, 2001. The increase in gross profit resulted primarily from the higher sales unit volume as compared to the prior year period. Gross profit 21 increases were also the result of improved manufacturing reliability and throughput in fiscal 2001. In addition, current process redesign initiatives generated increased gross profit. Gross profit as a percent of revenue improved to 12.5% from 10.9% in the prior period. The improvement in gross profit as a percent of revenue was partially due to lower resin costs which decreased revenue without decreasing associated gross profit. Gross profit as a percent of revenue was also improved by increased gross profit generated by current process redesign initiatives. Increases in gross profit as a percent of revenue were partially offset by $50.3 million of additional sales of corrugated boxes and labels to Procter and Gamble. These sales did not increase gross profit and therefore negatively affected gross profit as a percent of revenue. Our primary raw materials consist of PET and HDPE resins. Although our revenue is affected by fluctuations in resin prices, our gross profit is, in general, substantially unaffected by these fluctuations. In general, industry practice and contractual arrangements with our customers permit price changes to be passed through to customers by means of generally corresponding changes in product pricing. As a result, we have in the past experienced revenue changes without corresponding changes in gross profit. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses increased 26.5% to $64.5 million for the year ended November 3, 2001. As a percentage of revenue, selling, general and administrative expenses increased to 8.0% in the year ended November 3, 2001 from 7.3% in the year ended October 28, 2000. The increase was related to non-recurring charges including expenses related to the SAP implementation and an increase in our reserve for doubtful accounts by approximately $2.0 million related to our operations in South America. The increase was also the result of higher spending on property taxes, state and local taxes, deferred salary continuation, legal expenses and employee wages. INTEREST EXPENSE Interest expense increased by 7.1% to $29.0 million. The increase was due to an increase in our working capital borrowings required to support our revenue growth. The increase was also due to the sale on August 20, 2001 of $275.0 million of the outstanding notes. The average interest rate for the year ended November 3, 2001 was approximately 9.44% compared to an average interest rate of approximately 8.38% for the prior period. OTHER (INCOME) AND EXPENSE Other income increased to $3.1 million principally due to improvement in foreign currency exchange rates. NET EARNINGS Net earnings increased $2.2 million from net earnings of $4.9 million for the year ended October 28, 2000 to net earnings of $7.1 million for the year ended November 3, 2001. This increase is largely due to increased gross profit generated by additional sales unit volume and reduced manufacturing costs and improved performance. YEAR ENDED OCTOBER 28, 2000 COMPARED TO YEAR ENDED OCTOBER 30, 1999 REVENUE Overall revenue increased 24.1% to $701.9 million for the year ended October 28, 2000. This increase is primarily attributable to an increase of approximately 10% in unit volume while average resin prices significantly increased. Specifically, our revenue by product category was as follows: - Carbonated and non-carbonated beverage revenue increased 18% to $321.0 million. This growth is attributable to additional business from Beverage Associates Cooperative, Dr Pepper and Pepsi. - Consumer cleaning revenue increased 62.0% to $188.0 million. The increase in revenue was attributable primarily to our sales of corrugated boxes and labels to Procter & Gamble, which we began to sell Procter & Gamble in June 2000 in order to streamline their production process, as discussed above. We now ship our plastic containers to Procter & Gamble in corrugated boxes with labels in place. Procter & Gamble simply fills and caps the containers, seals the cartons and ships the filled containers to their customers. We estimate that $32 million of our increased revenue for 2000 was attributable to this new arrangement with Procter & Gamble. Additional growth was gained by incremental volume increases with Procter & Gamble and Reckitt Benckiser. 22 - Food and processed juices revenue increased 11.0% to $104.7 million. This growth is attributable to increased business with AC Humko, Ken's Foods and Kraft Foods. Additional volume was gained through earning new business with Marzetti. - Industrial, automotive and agricultural revenue decreased 6.0% to $34.5 million. This decrease is attributable primarily to a weak antifreeze market during the year. - Health, personal care and distilled spirits revenue increased 16.0% to $12.5 million. This growth is attributable to additional volume with Johnson & Johnson and Procter & Gamble. GROSS PROFIT Gross profit for the year ended October 28, 2000 increased $1.7 million to $76.2 million from the year ended October 30, 1999. This increase in gross profit resulted primarily from the higher unit sales volume as compared to the prior year period. The increase in gross profit was not in line with our 24.1% increase in revenue for this period, primarily because of sales of lower-margin corrugated boxes and labels as discussed above. Gross profit as a percent of revenue decreased to 10.9% as compared to 13.2% in the prior period. The decrease is partially the result of significant increases in the cost of resin from the prior period. The decrease is also the result of approximately $32.4 million of revenue generated from the sale of corrugated boxes and labels to Procter and Gamble with no contribution to gross profit. In addition, the decrease in gross profit as a percent of revenue was also caused by the additional material scrap, introduction of new products and increased transportation costs over the prior year period. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses increased 1.4% to $51.0 million in fiscal 2000. As a percentage of revenue, selling, general and administrative expenses decreased to 7.3% from 8.9% due to increased economies of scale in our business. INTEREST EXPENSE Interest expense increased 3.9% to $27.0 million. This increase is primarily due to an increase in interest rate during the period. OTHER (INCOME) EXPENSE Other income decreased 83.1% to $1.4 million for fiscal 2000. This resulted primarily from the realization of an approximate $1.3 million loss from currency devaluation versus a currency gain in fiscal 1999 of $5.9 million. CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE Through October 30, 1999, we expensed parts and supplies utilized in our manufacturing facilities. Effective October 31, 1999, these items are inventoried and are charged to expense when used. Due to the increased volume of purchases of such items, management believes that this method is preferable and it provides for a better matching of revenue and expenses. For these reasons, the after-tax cumulative effect of the change in accounting principle was $3.1 million in fiscal 2000. NET EARNINGS (LOSS) Net earnings increased from a net loss of $0.9 million to net earnings of $4.9 million for fiscal 2000. The increase is primarily due to an improvement in operating profit of $1.0 million and the change in accounting principle of $3.1 million. FINANCIAL CONDITION We intend to expand our business, both domestically and internationally. We have a significant amount of financing capacity to fund the continued growth of our business. Past expenditures have been used to maintain equipment and expand capacity for revenue growth. These expenditures were funded with cash flow from operations, bank debt and additional operating leases. Future capital expenditures will be used in the same manner as past expenditures. 23 As part of our process redesign initiatives, we are investing heavily in information systems, process management and training. We have successfully completed the implementation of phase I and phase II of our SAP enterprise software project. We expect to spend an additional $1 to $2 million in the aggregate on the remaining projects. During the year ended November 2, 2002, we spent approximately $85 million to cover the capital requirements of our operations. We expect to incur capital expenditures of approximately $105 million in fiscal 2003. We are using technology that will allow us to pursue opportunities in the beer, condiment, sauce and beverage markets. South America provides significant opportunities with our current customer base. Our largest customer in Brazil, AmBev, is also the largest brewer in South America. Our overall financial condition improved during fiscal 2002. We had positive cash flow from operating activities of $55.4 million, which in part funded our capital expenditures of approximately $85 million. The remaining balance of capital expenditures was covered cash and cash equivalents and by financing activities. SEASONALITY The carbonated soft drink (CSD) and, to a lesser extent, the other beverage portions of our business are highly seasonal, with peak demand during warmer summer months, and reduced demand during the winter. We normally add temporary staff and build inventory of products for our CSD and water customers in anticipation of seasonal demand in the quarter preceding the summer. INFLATION We use large quantities of plastic resins in manufacturing our products. These resins accounted for approximately one-third of our cost of goods sold in the year ended November 2, 2002, and are subject to substantial price fluctuations resulting from shortages in supply and changes in the prices of natural gas, crude oil and other petrochemical products from which these resins are produced. We generally enter into three-year agreements with our resin suppliers, and our purchases of raw materials are subject to market prices and inflation. EFFECT OF CHANGES IN EXCHANGE RATES In general, our results of operations are partially affected by changes in foreign exchange rates. We invoice our Brazilian and Argentina customers in the Brazilian Real and Argentine Peso, respectively. A portion of those invoices is pegged to the U.S. exchange rate. As a result, subject to market conditions, a decline in the value of the U.S. dollar relative to the Brazilian Real and Argentine Peso can have a favorable effect on our profitability. Conversely, an increase in the value of the dollar relative to the Brazilian Real and Argentine Peso can have a negative effect on our profitability. Exchange rate fluctuations had a material effect on the results of operations for the year ended November 2, 2002, resulting in a loss of approximately $0.6 million. We severely curtailed shipping to Argentina given the economic crisis that country is experiencing. As a result, our exposure to Argentina is minimal as of November 2, 2002. INFORMATION SYSTEMS INITIATIVE We completed an evaluation and assessment of our business systems and processes in the calendar year 2000. The two major activities of this evaluation included an internal effort to redesign our business practices through an initiative called "Process Redesign," and a comprehensive project to evaluate SAP enterprise resource planning software and functionality. As a result of these evaluations, we decided to purchase and install this industry-leading manufacturing and distribution software solution. As of November 2, 2002, we have completed phase I and II of the SAP implementation. We have incurred costs of approximately $9.5 million to purchase, test and install SAP hardware and software. Any additional enhancements implemented in phase III will be completed with internal resources; therefore, the costs associated with phase III are estimated at $1-2 million. LIQUIDITY AND CAPITAL RESOURCES Net cash provided from operating activities increased 26.3% to $55.4 million for the fiscal year ended November 2, 2002 as compared to the fiscal year ended November 3, 2001. The increase in cash was primarily the result of a $6.4 million increase in non-cash expenses that include items such as depreciation and amortization, bad debt 24 expense, deferred income tax expense, and foreign currency translation. Net working capital and other asset and liability changes increased net cash by $3.6 million. Improved operating performance of $1.5 million also contributed to the increase in cash. For the fiscal years ended 2001, 2000 and 1999 net cash generated from operations was $43.8, $75.6 and $24.7 million, respectively. The decrease in 2001 was primarily the result of net working capital and other asset and liability changes. The increase in working capital resulted primarily from decreases in accounts payable and accounts receivable. The reductions were partially offset by improved operating performance with net earnings increasing $2.2 million from fiscal 2000. The decrease was also offset by an increase in depreciation and amortization of $2.5 million from fiscal 2000. The reduction was also offset by increased deferred tax expense of $2.0 million from fiscal 2000. The increase in 2000 was primarily the result of net working capital an other asset an liability improvements that increased net cash $46.3 million from 1999. Net cash used in investing activities was $89.6 million and $52.8 million for fiscal 2002 and 2001, respectively. Investing activities were primarily attributed to the acquisition of property and equipment. For the years ended November 2, 2002 and November 3, 2001, property and equipment acquisitions were $84.6 million and $56.0 million, respectively. For the fiscal years 2001, 2000, and 1999 net cash used in investing activities was $52.8, $55.7, and $38.1 million, respectively. Investing activities were primarily attributed to the acquisition of property and equipment. In 2001, 2000, and 1999 property and equipment acquisitions were $56.0, $58.0, and $61.0 million, respectively. Net cash (used in) provided from financing activities was $50.4 million and $59.1 million for the years ended November 2, 2002 and November 3, 2001, respectively. In the year ended November 2, 2002, net cash of $9.1 million was used to make principal payments on long-term obligations. The use of cash was primarily offset by net proceeds from long-term obligations of $58.7 million. In the year ended November 2, 2002, net cash provided from borrowings was partially used to finance property and equipment acquisitions. The remaining net cash provided from borrowings will be used for general corporate purposes, including working capital and capital expenditures in fiscal year 2003. For the fiscal years 2001, 2000, and 1999 net cash (used in) provided from financing activities was $59.1, $(25.0), and $16.9 million, respectively. In 2001, cash provided from borrowings was partially used to finance property and equipment acquisitions. In 2000, cash was used to pay $15.4 million of long-term obligations, $7.0 million of revolving credit facility debt, and pay capitalized loan costs of $2.6 million. In 1999, net cash provided from borrowings was used to finance property and equipment acquisitions. On August 20, 2001 and September 25, 2002, we sold an aggregate total principal amount of $275 million and $50 million, respectively, of 10.75% Senior Notes to qualified institutional buyers. The notes have a maturity date of September 2011, and we have the option to redeem all or a portion of the notes at any time on or after September 1, 2006. Interest under the notes is payable on September 1 and March 1 of each year. The indenture under which the notes were issued places restrictions on our ability to declare or pay dividends, purchase or acquire equity interests of Plastipak, and retire indebtedness that is subordinate to the notes. The notes also have covenants that place restrictions on the incurrence of debt, the issuance of stock, and granting of liens. The proceeds from the Senior Notes sold on August 20, 2001 were used to pay off existing debt. We intend to use the net proceeds from the September 25, 2002 sale of Senior Notes for general corporate purposes, including working capital, capital expenditures and technology development. On August 20, 2001, in conjunction with the Senior Notes, we entered into an Amended Credit Agreement which allows us to borrow up to $150 million, subject to a borrowing base consisting of 85% of eligible domestic accounts receivable, 65% of the value of eligible domestic inventory and 50% of the value of domestic property, plant and equipment. The Amended Credit Agreement has a five-year term. Interest under the Amended Credit Agreement is payable at 200 to 350 basis points per annum over Eurodollar or at prime rates, as we select. The Amended Credit Agreement is secured by substantially all of our assets, including pledges of the stock of Plastipak and all of its material foreign subsidiaries. Packaging, Whiteline, Clean Tech, and TABB are the borrowers and guarantors under the Amended Credit Agreement and Plastipak guarantees obligations under the Amended Credit Agreement. As of November 2, 2002, $54.1 million in letters of credit were outstanding under the Amended Credit Agreement and we had $95.9 million available for borrowing. Looking forward, we have the following short-term and medium-term capital needs. Our overall capital expenditure budget in fiscal 2003 is approximately $105 million and $90 million in 2004, a majority of which is 25 expected to be discretionary capital expenditures. Our new site in Florida began production in December 2002. Additionally, we expect to have a new site in Alabama start up in the first half of fiscal 2003. We expect to finance all of our capital expenditures with operating cash flows and the net proceeds of the offering of $50.0 million principal amount of 10.75% Senior Notes due 2011 that closed in September 2002, and to cover any shortfalls with borrowings under the Amended Credit Agreement. In conjunction with negotiations with a major customer for a substantial expansion of new business and extension of our current business, we have agreed in principle to significant price reductions over a five-year period that will begin in May 2003. We believe we will be able to partially or fully offset the negative effect on our margins of these price reductions with the expansion of our business with this customer and making more efficient the manufacturing process associated with our business. If we are unable to offset the effects of these price reductions through the expansion of our business with this customer and through manufacturing products more efficiently, or otherwise offset the effects of such price reductions, our margins will likely be materially adversely affected. Based on our current level of operations and anticipated cost savings and operating improvements, we believe that cash flow from operations and available cash, together with available borrowings under the Amended Credit Agreement, will be adequate to meet our future liquidity needs for at least the next few years. As of November 2, 2002, we had approximately $69.7 million in cash and cash equivalents. It is possible, however, that our business will not generate sufficient cash flow from operations, that anticipated revenue growth and operating improvements will not be realized or that future borrowings will not be available under the Amended Credit Agreement in an amount sufficient to enable us to service our indebtedness, or to fund our other liquidity needs. In addition, we may not be able to refinance any of our indebtedness, including the Amended Credit Agreement or the 10.75% Senior Notes due 2011, on commercially reasonable terms or at all. CRITICAL ACCOUNTING POLICIES The Company's discussion and analysis of its financial condition and results of operations are based upon the Company's financial statements, which have been prepared in accordance with accounting principles accepted in the United States. The preparation of these financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. The significant accounting policies are discussed in Note A of the Company's financial statements. These critical accounting policies are subject to judgments and uncertainties, which affect the application of these policies. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable under the circumstances. On an on-going basis, the Company evaluates its estimates. In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current information. The material accounting policies that the Company believes are most critical to the understanding of the Company's financial position and results of operations that require significant management estimates and judgments are discussed below. The Company provides for losses on accounts receivable based upon their current status, historical experience and management's evaluation of existing economic conditions. Significant changes in customer profitability or general economic conditions may have a significant effect on the Company's allowance for doubtful accounts. Property, plant and equipment are recorded at cost. Depreciation is computed principally using the straight-line method based upon estimated useful lives ranging from 3 to 10 years for machinery and equipment and up to 39 years for buildings. Amortization of leasehold improvements is provided over the terms of the various leases. These estimates require assumptions that are believed to be reasonable. Long-lived assets are tested for impairment annually and when an event occurs that indicates an impairment may exist. IMPACT OF NEW ACCOUNTING POLICIES In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 142 ("SFAS 142"), Accounting for Goodwill and Other Intangibles. SFAS 142 requires that goodwill and certain other intangible assets no longer be amortized to earnings, but instead be reviewed periodically for potential impairment. The standard will be effective for the fiscal year beginning November 3, 2002. In October 2001, the FASB issued Statement of Financial Accounting Standards No. 144 ("SFAS 144"), Accounting for the Impairment or Disposal of Long-Lived Assets, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. While SFAS 144 supersedes SFAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, it retains many of the fundamental provisions of that statement. The standard will be effective for the fiscal year beginning November 3, 2002. The Company expects that the adoption of these standards will not have a material impact on its financial position or results from operations. 26 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK FOREIGN EXCHANGE CONTRACTS At November 2, 2003 we had no material foreign exchange contracts. We do not enter into foreign exchange contracts for trading or speculative purposes. SHORT-TERM AND LONG-TERM DEBT We are exposed to interest rate risk primarily through our borrowing activities. Our policy has been to utilize United States dollar denominated borrowings to fund our working capital and investment needs. Short-term debt, if required, is used to meet working capital requirements, while long-term debt is generally used to finance long-term investments. There is inherent rollover risk for borrowings as they mature and are renewed at current market rates. The extent of this risk is not quantifiable or predictable because of the variability of future interest rates and our future financing requirements. On July 16, 2002, we entered into an interest rate swap agreement. In connection with the Senior Notes, we exchanged fixed rate interest of 10.75% on a notional amount of $100,000,000 for variable rate interest. The variable rate was equal to six month LIBOR plus 5.165%. On September 11 2002, pursuant to an agreement with the bank to terminate the interest rate swap agreement; we received approximately $3.0 million cash. The proceeds were used to finance capital expenditures. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (PENDING GRANT THORNTON) FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES FOR THE YEARS ENDING NOVEMBER 2, 2002, NOVEMBER 3, 2001 AND OCTOBER 28, 2000 27 CONTENTS

28 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Directors Plastipak Holdings, Inc. and Subsidiaries We have audited the accompanying consolidated balance sheets of Plastipak Holdings, Inc. and Subsidiaries as of November 2, 2002 and November 3, 2001 and the related consolidated statements of earnings, stockholders' equity and cash flows for the three years in the period ended November 2, 2002. 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 auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Plastipak Holdings, Inc. and Subsidiaries as of November 2, 2002 and November 3, 2001 and the results of their operations and their cash flows for each of the three years in the period ended November 2, 2002, in conformity with accounting principles generally accepted in the United States of America. As discussed in Note L, the accompanying consolidated financial statements for the year ended November 3, 2001 and October 28, 2000 have been adjusted to reflect an obligation for awards issued under a stock bonus plan. As discussed in Note N to the consolidated financial statements, during the year ended October 28, 2000, the Company changed its method of accounting for the purchase of parts and supplies used in its manufacturing facilities. We have also audited Schedule II of Plastipak Holdings, Inc. and Subsidiaries for the years ended November 2, 2002, November 3, 2001 and October 28, 2000. In our opinion these schedules present fairly, in all material respects, the information required to be set forth therein. /s/ GRANT THORNTON LLP Southfield, Michigan January 8, 2003 29 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 30

31 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 32 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 33 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 34 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS -- CONTINUED

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 35 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOVEMBER 2, 2002, NOVEMBER 3, 2001 AND OCTOBER 28, 2000 NOTE A -- BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES ORGANIZATION AND BASIS OF PRESENTATION Plastipak Holdings, Inc. ("Plastipak") is a privately held Michigan corporation that was formed in 1998 to act as a holding company for several companies which were under common control. On October 30, 1999, Plastipak acquired all of the equity interests in Plastipak Packaging, Inc. ("Packaging"), W.P. Young Marketing, TABB Investments, Inc., Whiteline Express, Ltd. ("Whiteline"), Clean Tech, Inc. ("Clean Tech") and TABB Realty, LLC ("TABB"), and a portion of the equity interests of Plastipak Packaging do Brasil, Ltda ("Plastipak Brazil"), through a reorganization (the "Reorganization"). Packaging, our principal operating company whose business commenced operations in 1967, designs and manufactures rigid plastic containers, and was incorporated in Delaware in 1982. Packaging also owns the remainder of Plastipak Brazil. Whiteline is a trucking company which serves our transportation and logistics needs, and was incorporated in Delaware in 1982. Clean Tech, a plastics recycling operation, provides a source of clean, high quality post-consumer recycled plastic raw material, and was incorporated in Michigan in 1989. TABB owns real estate and leases it to Packaging, Clean Tech and Whiteline. Plastipak Brazil produces injection-molded plastic performs, blow molds rigid plastic packaging in Paulinia and Manaus. Plastipak Brazil also maintains a sales office in Buenos Aires, Argentina. Other than Plastipak Brazil and its subsidiaries, all of the Plastipak group of companies are headquartered in Plymouth, Michigan. SIGNIFICANT ACCOUNTING POLICIES A summary of the significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements follows. FISCAL PERIOD Plastipak has elected a 52/53 week fiscal period for tax and financial reporting purposes. Plastipak's fiscal period ends on the Saturday closest to October 31. The periods ended November 2, 2002 and October 28, 2000 contained 52 weeks. The period ended November 3, 2001 contained 53 weeks. CASH EQUIVALENTS For purposes of the statement of cash flows, all investments purchased with an original maturity of three months or less are considered to be cash equivalents. ALLOWANCE FOR DOUBTFUL ACCOUNTS Plastipak provides an allowance for losses on accounts receivable based on a review of the current status of existing receivables, historical collection experience and management's evaluation of the effect of existing economic conditions. 36 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOVEMBER 2, 2002, NOVEMBER 3, 2001 AND OCTOBER 28, 2000 NOTE A -- BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES (CONTINUED) INVENTORIES Inventories are stated at the lower of cost or market. Cost is determined on the first-in, first-out (FIFO) method. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost. Depreciation is provided principally on the straight-line method based upon estimated useful lives ranging from 3 to 10 years for machinery and equipment and up to 39 years for buildings. Amortization of leasehold improvements is provided over the lesser of the useful lives of the improvements or the terms of the various leases. Interest costs associated with construction in process of approximately $1,418,000, $1,550,000 and $1,362,000 were capitalized during the years ending November 2, 2002, November 3, 2001 and October 28, 2000, respectively. CAPITALIZED LOAN COSTS Capitalized loan costs are amortized over the term of the related debt agreement. INTANGIBLE ASSETS Periodically, Packaging acquires exclusive manufacturing contracts from a customer. Consideration paid by Packaging for these arrangements is recorded as an intangible asset and amortized over the term of the related contract. Other intangibles relate to Brazil short falls on previous contracts which are being amortized over the life of the new contract. INCOME TAXES Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and the effects of tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. SELF-INSURANCE Plastipak is self-insured for health costs and workers' compensation up to a certain stop loss level. The estimated liability is based upon a review by Plastipak and an independent broker of claims filed and claims incurred but not reported. STOCK-BASED COMPENSATION For options granted to employees, the Company follows the provisions of Accounting Principles Board No. 25, accounting for stock issued to employees, and accordingly, recognizes compensation expense for option grants where the purchase price is less than the fair market value at the date of grant. 37 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOVEMBER 2, 2002, NOVEMBER 3, 2001 AND OCTOBER 28, 2000 NOTE A -- BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES (CONTINUED) USE OF ESTIMATES In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. FAIR VALUE OF FINANCIAL INSTRUMENTS Plastipak's financial instruments include accounts receivable, accounts payable and long-term obligations. The carrying amounts of financial instruments approximate their fair values. RESEARCH AND DEVELOPMENT Research and development costs are expensed as incurred. Research and development costs were approximately $8,600,000, $7,100,000 and $6,300,000, respectively for the years ended November 2, 2002, November 3, 2001 and October 28, 2000, respectively. FOREIGN CURRENCY TRANSLATION The functional currency for Plastipak Brazil is the U.S. dollar. The financial statements for Plastipak Brazil are maintained in the functional currency. Gains and losses associated with exchange rate fluctuations are reflected in operations. INDUSTRY SEGMENTS Plastipak reports information about operating segments pursuant to SFAS No. 131, "Disclosure About Segments of an Enterprise and Related Information." Plastipak is organized and managed on a geographic basis in two operating segments: North America and South America. See Note P. RECLASSIFICATIONS Certain reclassifications have been made to the 2001 and 2000 consolidated financial statements in order for them to conform to the 2002 presentation. NEW ACCOUNTING PRONOUNCEMENTS In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 142 ("SFAS 142"), Accounting for Goodwill and Other Intangibles. SFAS 142 requires that goodwill and certain other intangible assets no longer be amortized to earnings, but instead be reviewed periodically for potential impairment. The standard will be effective for the fiscal year beginning November 3, 2002. 38 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOVEMBER 2, 2002, NOVEMBER 3, 2001 AND OCTOBER 28, 2000 NOTE A -- BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES (CONTINUED) NEW ACCOUNTING PRONOUNCEMENTS (CONTINUED) In October 2001, the FASB issued Statement of Financial Accounting Standards No. 144 ("SFAS 144"), "Accounting for the Impairment or Disposal of Long-Lived Assets," which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. While SFAS 144 supersedes SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," it retains many of the fundamental provisions of that statement. The standard will be effective for the fiscal year beginning November 3, 2002. The Company expects that the adoption of these standards will not have a material impact on its financial position or results from operations. NOTE B - INVENTORIES Inventories consisted of the following at:

39 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOVEMBER 2, 2002, NOVEMBER 3, 2001 AND OCTOBER 28, 2000 NOTE C -- PROPERTY, PLANT AND EQUIPMENT The principal categories of property, plant and equipment are as follows:

Construction in process represents expenditures for assets which have not been placed in service. No depreciation or amortization expense is taken on these assets until they become operational. Depreciation and amortization for property, plant and equipment was approximately $44,000,000, $41,000,000 and $40,000,000 for the years ended November 2, 2002, November 3, 2001 and October 28, 2000, respectively. NOTE D -- LONG-TERM OBLIGATIONS

40 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOVEMBER 2, 2002, NOVEMBER 3, 2001 AND OCTOBER 28, 2000 NOTE D -- LONG-TERM OBLIGATIONS (CONTINUED)

Minimum principal payments on long-term obligations to maturity as of November 2, 2002 are as follows: 2003 $ 5,180,231 2004 2,575,968 2005 1,208,043 2006 51,348,382 ----------- $60,312,624 ===========

The revolving credit facility contains various covenants pertaining to maintenance of net worth and debt to equity ratios and various other restrictions. At November 2, 2002 and November 3, 2001, Plastipak has outstanding letters aggregating $54,100,000 and $53,100,000, respectively. 41 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOVEMBER 2, 2002, NOVEMBER 3, 2001 AND OCTOBER 28, 2000 NOTE E -- SENIOR NOTES In August 2001 and September 2002, the Company issued $275,000,000 and $50,000,000, respectively of 10.75% senior notes due in 2011. Interest is payable semi-annually. The indentures under which the notes were issued place restrictions on the payment of dividends, the acquisition of our common stock, the payment of indebtedness that is subordinate to the notes, asset sales, and the incurrence of debt and issuance of preferred stock. The senior notes are unconditionally guaranteed by all of the Company's domestic subsidiaries. Prior to September 1, 2004, subject to certain limitations, in the event of a common stock offering, the Company may redeem up to 35% of the outstanding notes at a redemption price of 110.75% of the principal amount plus accrued interest. After September 1, 2006, the Company may redeem all or any portion of the outstanding notes at premiums which decline from 105.375% at September 1, 2006 to 101.792% at September 1, 2008. On or after September 1, 2009, the notes may be redeemed at par. The net proceeds received, after underwriting discounts and other fees and expenses, were approximately $263,200,000 and $51,800,000 for the years ending November 3, 2001 and November 2, 2002, respectively. The carrying amount of the senior notes were approximately $327,500,000 and $271,000,000 as of November 2, 2002 and November 1, 2001, respectively. Based upon current market rates primarily provided by outside investment bankers, the fair value of the senior notes at November 2, 2002 and November 1, 2001 was estimated at $334,000,000 and $288,578,000, respectively. NOTE F -- DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Financial Accounting Standards Board Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by Financial Accounting Standards Board Statement No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities," requires companies to recognize all of their derivative instruments as either assets or liabilities at fair value in the statement of financial position. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as either a fair value hedge or a cash flow hedge. For derivative instruments that are designated and qualify as a fair value hedge (i.e., hedging the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings during the period of the change in fair values. For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in current earnings during the period of change. The Company currently uses only fair value hedge accounting. On July 16, 2002, the Company entered into an interest rate swap with a bank pursuant to which it exchanged fixed rate interest in connection with The Senior Notes discussed in Note E on a notional amount of $100,000,000 for a variable rate equal to six months LIBOR plus 5.165% for a 9 year period ending September 1, 2011. On September 11, 2002 pursuant to an agreement between the Company and the bank to terminate the interest rate swap agreement, the bank paid the Company $3,012,000 which has been recorded as an increase in the senior notes and will be amortized over the term of the notes. 42 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOVEMBER 2, 2002, NOVEMBER 3, 2001 AND OCTOBER 28, 2000 NOTE G -- INCOME TAXES The components of earnings (loss) before income taxes and cumulative effect are as follows:

Deferred income tax assets and liabilities consist of the following:

Net operating loss carryforwards expire in years ending through 2022. 43 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOVEMBER 2, 2002, NOVEMBER 3, 2001 AND OCTOBER 28, 2000 NOTE G -- INCOME TAXES (CONTINUED) A reconciliation of the actual federal income tax expense to the expected amounts computed by applying the statutory tax rate percent to earnings or losses before income taxes and cumulative effect is as follows:

NOTE H -- COMMITMENTS Plastipak leases office, equipment and warehouse and manufacturing facilities under operating leases which expire at various dates through 2008. Long-term lease commitments are as follows:

The total rent expense for the years ended November 2, 2002, November 3, 2001 and October 28, 2000 was approximately $31,132,000, $36,154,000 and $42,411,000, respectively. NOTE I -- RELATED PARTY TRANSACTIONS Included in revenues for the periods ended November 2, 2002, November 3, 2001 and October 28, 2000 are approximately $17,834,000, $20,363,000 and $16,083,000, respectively, of sales to companies affiliated through common ownership. Included in accounts receivable at November 2, 2002 and November 3, 2001 are approximately $6,228,000 and $6,695,000, respectively, of receivables from these companies. A company affiliated through common ownership provides engineering services and customizes machinery. During the fiscal years ended 2002, 2001 and 2000, Packaging was invoiced $5,500,000, $2,385,000 and $6,673,000, respectively. 44 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOVEMBER 2, 2002, NOVEMBER 3, 2001 AND OCTOBER 28, 2000 NOTE J -- PROFIT SHARING/401(k) PLAN Plastipak has a profit sharing plan and a 401(k) plan which cover substantially all employees. The profit sharing expense for the periods ended November 2, 2002, November 3, 2001 and October 28, 2000 was approximately $2,505,000, $2,365,000 and $1,930,000, respectively. NOTE K -- MAJOR CUSTOMERS During the years ended November 2, 2002 and November 3, 2001 one customer in each year generated revenues representing approximately 25% and 23% of total revenues, respectively. Accounts receivable for this customer at November 2, 2002 and November 3, 2001, amounted to approximately $5,979,000 and $2,483,000, respectively. NOTE L -- STOCK COMPENSATION PLANS Plastipak sponsors two Restricted Stock Bonus Plans. Pursuant to the terms of the Amended and Restated Stock Bonus Plan the Company has reserved 5,450 common shares for issuance. Vesting under the plan ranges from 0-5 years at the discretion of the Board of Directors. Pursuant to the terms of awards granted in 1985, 1,379 shares had been acquired pursuant to the terms of this plan. At November 3, 2001 and October 28, 2000 there were options outstanding to acquire 1,199 shares at a normal per share price. During the year ended November 2, 2002 the Company granted options to acquire an additional 872 shares, and options for 263 shares were exercised. At November 2, 2002, options to acquire 1,808 shares were outstanding. The Company adopted the 2002 Restricted Stock Bonus Plan on October 16, 2002. Pursuant to the terms of this plan, the Company has reserved 5,450 shares for issuance of which options to acquire 1,000 shares were granted at a nominal per share price. The options vest over a period from 0-10 years at the discretion of the Board of Directors. During the year certain employees exercised options to acquire 300 shares of common stock. Each of the above referenced plans require the Company, subject to certain limitations, to repurchase the shares issued under the plans at a price based upon a book value computation. The $2,395,000 adjustment to retained earnings as of October 31, 1999 represents the stipulated value of the shares underlying the awards at that date. Increases in the per share redemption value in 2000, 2001 and 2002, of $187,000, $273,000 and $776,000, respectively, associated with the 1,379 shares referred to above are treated as a reduction of retained earnings and an increase to obligations under stock bonus plans. Included in general and administrative expenses for the year ended November 3, 2002 is $2,387,530 representing the excess of the redemption value over the exercise price for options granted during the year and the increase in redemption value associated with unexercised options. Amounts expensed approximate that which would have been expensed had the value of the options granted been computed under the provisions of FAS 123. 45 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOVEMBER 2, 2002, NOVEMBER 3, 2001 AND OCTOBER 28, 2000 NOTE M -- SALARY CONTINUATION PLAN Packaging sponsors a nonqualified salary continuation plan that provides for the payment of normal retirement and death benefits, and in some cases early retirement benefits, to participants, as specified in the participant's adoption agreement. An adoption agreement between the participant and Packaging sets forth the age, years of service and other requirements a participant must attain in order to receive a particular benefit. The plan provides a monthly benefit, as defined by the participants' contract for a stated period of time, upon reaching the age of 65. This Plan is noncontributory, although certain life insurance policies have been acquired for the purpose of funding these benefits. The life insurance policies are not assets of the Plan. The accumulated postretirement obligation for the periods ended November 2, 2002 and November 3, 2001 was approximately $3,088,000 and $2,680,000, respectively. NOTE N -- CHANGE IN ACCOUNTING PRINCIPLE Through October 30, 1999, Plastipak expensed parts and supplies utilized in its manufacturing facilities. Effective during the year ended October 28, 2000, these items are inventoried and are charged to expense when used. Due to the increased volume of purchases of such items, management believes that this method is preferable and it provides for a better matching of revenues and expenses. The effect of this change in accounting principle in 2000 was to increase earnings before cumulative effect of change in accounting principle by approximately $1,836,000. NOTE O -- LEGAL PROCEEDINGS The Company is a party to various litigation matters arising in the ordinary course of business. The ultimate legal and financial liability of this litigation cannot be estimated with certainty, but management believes, based on their examination of these matters, experience to date and discussions with counsel, that the ultimate liability will not be material to the Company's business, financial condition or results of operations. NOTE P -- GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS AND REPORTABLE SEGMENTS The Senior Notes are unsecured, and guaranteed by each of Plastipak's current and future material domestic subsidiaries. The following condensed consolidating financial information presents: (1) Condensed consolidating financial statements as of November 2, 2002 and November 3, 2001 and the three years in the period ending November 3, 2002, of (a) Plastipak the parent; (b) the guarantor subsidiaries; (North American Operating Segment) (c) the nonguarantor subsidiaries (South American Operating Segment); (d) Plastipak on a consolidated basis, and (2) Elimination entries necessary to consolidate Plastipak Holdings, Inc., the parent, with the guarantor (North American operating segment) and nonguarantor (South American operating segment) subsidiaries. Each subsidiary guarantor is wholly-owned by Plastipak, all guarantees are full and unconditional; and all guarantees are joint and several. 46 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOVEMBER 2, 2002, NOVEMBER 3, 2001 AND OCTOBER 28, 2000 NOTE P -- GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS AND REPORTABLE SEGMENTS (CONTINUED) CONDENSED CONSOLIDATING BALANCE SHEET AS OF NOVEMBER 2, 2002

47 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOVEMBER 2, 2002, NOVEMBER 3, 2001 AND OCTOBER 28, 2000 NOTE P -- GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS AND REPORTABLE SEGMENTS (CONTINUED) CONDENSED CONSOLIDATING BALANCE SHEET - CONTINUED AS OF NOVEMBER 2, 2002

48 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOVEMBER 2, 2002, NOVEMBER 3, 2001 AND OCTOBER 28, 2000 NOTE P -- GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS AND REPORTABLE SEGMENTS (CONTINUED) CONDENSED CONSOLIDATING BALANCE SHEET AS OF NOVEMBER 3, 2001

49 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOVEMBER 2, 2002, NOVEMBER 3, 2001 AND OCTOBER 28, 2000 NOTE P -- GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS AND REPORTABLE SEGMENTS (CONTINUED) CONDENSED CONSOLIDATING BALANCE SHEET - CONTINUED AS OF NOVEMBER 3, 2001

50 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOVEMBER 2, 2002, NOVEMBER 3, 2001 AND OCTOBER 28, 2000 NOTE P -- GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS AND REPORTABLE SEGMENTS (CONTINUED) CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS - CONTINUED FOR THE YEAR ENDED NOVEMBER 2, 2002

51 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOVEMBER 2, 2002, NOVEMBER 3, 2001 AND OCTOBER 28, 2000 NOTE P -- GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS AND REPORTABLE SEGMENTS (CONTINUED) CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS - CONTINUED FOR THE YEAR ENDED NOVEMBER 3, 2001

52 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOVEMBER 2, 2002, NOVEMBER 3, 2001 AND OCTOBER 28, 2000 NOTE P -- GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS AND REPORTABLE SEGMENTS (CONTINUED) CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS - CONTINUED FOR THE YEAR ENDED OCTOBER 28, 2000

53 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOVEMBER 2, 2002, NOVEMBER 3, 2001 AND OCTOBER 28, 2000 NOTE P -- GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS AND REPORTABLE SEGMENTS (CONTINUED) CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS - CONTINUED FOR THE YEAR ENDED NOVEMBER 2, 2002

54 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOVEMBER 2, 2002, NOVEMBER 3, 2001 AND OCTOBER 28, 2000 NOTE P -- GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS AND REPORTABLE SEGMENTS (CONTINUED) CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS - CONTINUED FOR THE YEAR ENDED NOVEMBER 3, 2001

55 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOVEMBER 3, 2001, OCTOBER 28, 2000 AND OCTOBER 30, 1999 NOTE P -- GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS AND REPORTABLE SEGMENTS (CONTINUED) CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS - CONTINUED FOR THE YEAR ENDED OCTOBER 28, 2000

56 PLASTIPAK HOLDINGS, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOVEMBER 2, 2002, NOVEMBER 3, 2001 AND OCTOBER 28, 2000 NOTE Q -- QUARTERLY FINANCIAL DATA (UNAUDITED)

57 SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS

(1) Includes $2,168,000 decrease attributable to remeasurement of allowance for doubtful accounts in South America. (2) Includes $1,019,000 decrease attributable to remeasurement of allowance for doubtful accounts in South America.

58 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The following table sets forth certain information with respect to the executive officers, directors and certain key employees of Plastipak and its subsidiaries.

WILLIAM C. YOUNG has been the Chairman of the Board, President and the Chief Executive Officer of Plastipak since its inception in 1998, and has been Chairman and Chief Executive Officer of Packaging, Whiteline and Clean Tech since he founded each company. Mr. Young has been the sole Manager of TABB since its inception in 1999. Mr. Young is a Trustee of the University of Detroit -- Mercy, where he serves as chairman of the Enrollment Committee. He is also a Director of Midwest Guaranty Bank. WILLIAM A. SLAT has been our Vice President-- Operations and Manufacturing since 1982. Prior to that he was Manufacturing Manager. He has been with us for 31 years and served in various capacities ranging from customer service to plant and regional management. Mr. Slat holds more than 30 domestic patents with corresponding international patents. Mr. Slat is a senior member of Society of Plastic Engineers. MICHAEL J. PLOTZKE, CPA has served as our Chief Financial Officer, Vice President of Finance and Treasurer since 1988. Throughout his 18 years with us, Mr. Plotzke has served in many capacities including his current role as Treasurer for Packaging, Whiteline, Clean Tech and TABB, all of which he has held since 1992. Mr. Plotzke serves on the President's Advisory Council of Walsh College. Prior to joining us, Mr. Plotzke worked for Deloitte & Touche and KPMG -- Peat Marwick where he served as a Manager in the Financial Services division of the consulting practice. GENE W. MUELLER joined us in February 1997 and has served as our Vice President -- Sales and Marketing since 1999. Before coming to us, Mr. Mueller worked for Constar, a subsidiary of Crown, Cork & Seal for 18 years, where he served as the Vice President of Sales until 1997. THOMAS BUSARD is President-- Clean Tech and has served in that position since 1989. Mr. Busard has been with us for over 26 years. Mr. Busard is a member of the Board of the Michigan Recycling Coalition and is our representative to the Council on Plastics and Packaging in the Environment. Mr. Busard is a member of the Michigan Plastic Recycling Development Fund Consortium. 59 PRADEEP MODI has been our Vice President -- Controller and Strategic Operation Planning since 1999. Prior to that he was Vice-President/Controller since 1993. He has been with us for 18 years and has served in various capacities. Prior to joining us, Mr. Modi was a partner with Ampee Marble. Prior to that he worked for Southland Corporation, a retail chain. FRANK POLLOCK has served as our Vice President -- International Sales/Marketing since 1997. He has been with us for seven years. Prior to joining us, Mr. Pollock worked for Constar International, a subsidiary of Crown, Cork and Seal, for 18 years, where he held positions as Sales Representative, District Sales Manager and Regional Sales Manager, the latter until 1994, when he began his career with us. RICHARD DARR, our Vice President -- Packaging Development since 1993, is our chief design and packaging engineer. He has worked in research and development during his 23-year tenure with us. J. RONALD OVERBECK, our Vice President -- Product Supply, has worked in that position since 1999 and has been with us for over 26 years. Prior to joining us, Mr. Overbeck worked for Anchor Glass where he served as a Marketing Manager. LEANN M. UNDERHILL, J.D., has served as our Corporate Legal Counsel since 1985 and, since 1999, has served as Secretary to Plastipak, Packaging, Whiteline, and TABB. She has been with us since 1984. Prior to joining us, Ms. Underhill was in private law practice. DAVID DAUGHERTY has served as our Chief Information Officer since February 2000. Prior to joining us, from 1977 to January 2000, Mr. Daugherty was Manager of Data Processing for both Earle Equipment Corporation and Safran Printing Corporation. He was IT Manager for Mohawk Liqueur Company, Director of the New York Data Center for McKesson Corporation and held several positions with Allied Domecq Spirits and Wine of Windsor, Ontario, Canada, including Director of ADSW Global I.T. Development and Director of Global I.T. Architecture. JOHN MICHEL, has been our Vice President -- Transportation since 1998. He has been with us for eight years. Prior to joining us he owned his own business. THOMAS L. SCHELLENBERG has been a Director of Plastipak since its inception and has served as a Director of Packaging since 1996, of Whiteline since 1999 and of Clean Tech since 1998. Mr. Schellenberg is a tax attorney, certified public accountant and President of Schellenberg & Associates, P.C., a tax and business consulting firm. Prior to founding Schellenberg & Associates, Mr. Schellenberg worked for Deloitte & Touche for over 8 years. He is also a director of The Private Bank, Bloomfield Hills, Michigan. ITEM 11. EXECUTIVE COMPENSATION The following table sets forth a summary of compensation paid to the Chief Executive Officer and the four other most highly compensated executives of Plastipak (the "Named Executives") for services rendered in all capacities to Plastipak and its subsidiaries during the last three fiscal years. 60 SUMMARY COMPENSATION TABLE

---------- (a) Salary includes amounts deferred, if any, under our 401(k) plan. (b) Other Annual Compensation for fiscal 2000 consists of payments we made to Mr. Young to satisfy his income tax liability for S corporation and limited liability company income that we and our affiliates attributed to him. OPTION GRANTS IN FISCAL 2002 The following table sets forth information concerning options granted to Gene W. Mueller, the only Named Executive who was granted options in fiscal 2002. These options were granted under the 2002 Restricted Stock Bonus Plan.

AGGREGATE OPTION EXERCISES IN FISCAL 2002 AND 2002 FISCAL YEAR-END OPTION VALUES During fiscal 2002, Michael Plotzke, Gene Mueller and Thomas Busard exercised 45, 200 and 118 options. The following table sets forth, for each of the Named Executives holding unexercised options, certain information regarding the value of options held at November 2, 2002:

(a) None of Plastipak's common stock is currently publicly traded. The values reflect the adjusted per share book value of Plastipak's common stock (as defined in the Restricted Stock Bonus Plan under which these options were granted) at November 2, 2002, less the exercise price. (b) None of Plastipak's common stock is currently publicly traded. The values reflect the adjusted per share book value of Plastipak's common stock (as defined in the 2002 Restricted Stock Bonus Plan under which the options were granted) at November 2, 2002, less the exercise price. 61 RESTRICTED STOCK BONUS PLAN The board of directors of Plastipak adopted the Restricted Stock Bonus Plan (the "Restricted Stock Bonus Plan") effective as of October 30, 1999,which was amended and restated effective July 31, 2002 and subsequently amended effective August 15, 2002. All of our employees are eligible to participate in the Restricted Stock Bonus Plan, subject to the board's discretion. The board makes all administrative decisions under the Restricted Stock Bonus Plan. The board has reserved 5,450 shares of Plastipak's common stock for distribution under the Restricted Stock Bonus Plan. As of November 2, 2002, 3,450 of the 5,450 reserved shares had been allocated to our employees and 2,000 shares remain available for allocation. Once the board has allocated restricted shares to an employee, the employee must satisfy all of the following terms and conditions prior to receiving certificates representing bonus shares: - The period of time specified by the board, in its sole discretion, not to exceed five years, must have lapsed since the date that the board allocated the shares to the employee; - The employee must have remained in continuous employment with us or one of our affiliates during this period; - The employee must have paid us $1.00 for each bonus share; and - If required, we must have received the written consent of our secured creditors. Shares issued under the Restricted Stock Bonus Plan are non-transferable and, once received, the difference between the price paid for the shares and the adjusted book value of the shares are taxed to the employee as non-qualified deferred compensation. Employees who have received certificates representing restricted stock pursuant to the Restricted Stock Benefits Plan are required to sell those shares back to us upon the occurrence of certain "trigger events". These "trigger events" include the employee's death and the employee's employment termination, whether because of resignation, retirement, dismissal or otherwise. The redemption price is based upon our per share book value, subject to certain adjustments. The amendment and restatement of the Restricted Stock Bonus Plan in 2002 effected the following material changes in the Plan: - A "change in control" provision was added, which provides that all bonus shares vest immediately upon change in control, subject to the golden parachute payment limitations of Code Section 280G. - "Bring along" and "come along" provisions were added so that holders of the restricted stock are (1) entitled to participate in any voluntary sale of our capital stock; and (2) required to participate in certain voluntary sales of our capital stock. - A covenant not to compete and a confidentiality agreement were added as a condition to participation in the Restricted Stock Bonus Plan. - A provision was added granting employees who are issued bonus shares under the plan certain "piggy back" registration rights in the event we initiate an SEC registered public offering of our common stock. 62 2002 RESTRICTED STOCK BONUS PLAN The board of directors of Plastipak adopted the 2002 Restricted Stock Bonus Plan (the "2002 Plan") on October 16, 2002. All of our employees (including employees who are directors, as well as non-employees who serve as directors or who otherwise provide services to us) are eligible to participate in the 2002 Plan. The Plan is administered by the board (or any committee established by the board for that purpose). The board has reserved 5,450 shares of Plastipak's common stock for grant under the 2002 Plan. There are 1,000 of the 5,450 reserved shares that have been granted to our employees, and 4,450 shares remain available for grant. Participants in the 2002 Plan are required to pay us a per share purchase price, as set by the board from time to time, for each restricted share. The vested percentage of a participant's restricted stock award will be no more restrictive than as follows:

The restrictions on outstanding restricted stock awards immediately lapse (except as may be provided in the participant's restricted stock agreement with us) in the event of a change of control, subject to the golden parachute payment limitations of Code Section 280G. In addition, a participant's restricted stock award becomes 100% vested in the event of his or her retirement at or after age 65, death or disability. During the restriction period, participants holding shares of restricted stock granted under the 2002 Plan are entitled to exercise full voting rights with respect to such shares, and to receive all dividends and other distributions paid with respect to such shares. Prior to the issuance of any common stock certificates under the 2002 Plan, participants are required to enter into a shareholder agreement with us with ""bring along" and ""come along" provisions which (1) entitle the participant to participate in any voluntary sale of our capital stock, and (2) require the participant to participate in certain voluntary sales of our capital stock. In addition, we may require a participant to enter into a confidentiality agreement and/or a noncompetition agreement as a condition precedent to any award of restricted stock under the 2002 Plan. A participant's restricted stock award is subject to forfeiture if the participant is "terminated for cause" as defined in the 2002 Plan. Participants who have received certificates for restricted shares issued under the 2002 Plan are required to sell those shares back to us upon the occurrence of certain ""trigger events." These trigger events include: termination of employment; death; disability; institution of certain litigation against us; and the breach or threatened breach of the participant's non-competition or confidentiality agreement. The redemption price is based on our per share book value, subject to certain adjustments; provided, however, that if the participant is ""terminated for cause" or if the participant institutes certain litigation against us, the redemption price will be reduced to $1.00 per share. A participant's obligation to sell his/her restricted stock to us, and our obligation to purchase such restricted stock, terminates upon an initial public offering of our common stock. SALARY CONTINUATION PLAN The board of directors of Packaging adopted a Salary Continuation Plan effective September 1985, which has been amended from time to time (the "Salary Continuation Plan"). The Salary Continuation Plan is a non-qualified deferred compensation plan administered by an administrative committee comprised of William C. Young and Michael J. Plotzke. All of Packaging's employees are eligible to participate in the Salary Continuation Plan, subject to selection by the administrative committee. 63 The Salary Continuation Plan provides for the payment of normal retirement and death benefits, and in some cases early retirement benefits, to participants, as specified in the participant's adoption agreement. An adoption agreement between the participant and Packaging sets forth the age, years of service and other requirements a participant must attain in order to receive a particular benefit. In general, a participant must have participated in the Salary Continuation Plan for at least 10 years, and must have attained the age of at least 59, but not age 65, in order to receive early retirement benefits. A participant generally must have participated in the Salary Continuation Plan for at least 10 years, and must have attained the age of 65, in order to receive normal retirement benefits. The Salary Continuation Plan does not specify minimum age or years of service requirements for death benefits. Following satisfaction of all eligibility requirements and a notice by the participant or his or her representative requesting the payment of benefits, we are required to pay the early retirement, normal retirement or death benefits specified in the participant's adoption agreement. Participants do not vest ratably in any benefit over the term of their employment with Packaging. Participants are entitled to receive only one benefit (early retirement, normal retirement or death), and each benefit is payable on a monthly basis for a period of 180 months. Packaging's obligation to pay benefits to a participant ceases if the participant violates the terms of a non-competition agreement contained in his or her adoption agreement. Packaging may amend or terminate the Salary Continuation Plan at any time, unless a participant has fully vested in his or her benefits. All benefits payable under the Salary Continuation Plan are paid out of Packaging's general assets, and Packaging has purchased life insurance to fund death benefits for the participants. Named Executives William A. Slat, Michael J. Plotzke, Gene W. Mueller and Thomas Busard are participants in the Salary Continuation Plan, and Messrs. Slat, Plotzke and Busard have each participated in the Salary Continuation Plan for over 10 years and therefore are fully vested for purposes of retirement benefits. Mr. Mueller began his 10-year vesting requirement for retirement benefits in February 1997. The monthly early retirement and pre-retirement death benefits for Messrs. Plotzke, Mueller and Busard currently are $5,292, $3,967 and $3,967, respectively, and the monthly pre-retirement death benefits for Mr. Slat are $5,292. The monthly normal retirement and post-retirement death benefits for Messrs. Slat, Plotzke, Mueller and Busard currently are $8,333, $8,333, $6,250 and $6,250, respectively. DIRECTOR COMPENSATION Mr. Young receives no cash consideration for serving on the board of directors of any of our companies. Mr. Schellenberg receives compensation in the amount of $245 per hour for his service on the board of directors of our companies, plus out-of-pocket expenses incurred in connection with his duties as a director. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION For the year ended November 2, 2002, compensation for our Named Executives was determined by William C. Young, our President and Chief Executive Officer. For information regarding transactions between us and Mr. Young, his affiliates and entities he controls, see "Certain Relationships and Related Transactions." ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information regarding the ownership of the outstanding capital stock of Plastipak with respect to the following: - each person known by Plastipak to own more than 5% of its outstanding capital stock; - each director; - each Named Executive; and - the directors and executive officers of Plastipak, as a group. 64 Each shareholder has sole voting and investment power with respect to the shares beneficially owned. The address for each shareholder is c/o Plastipak Holdings, Inc., 9135 General Court, P.O. Box 2500C, Plymouth, Michigan 48170-0907.

---------- (a) Represents 21,414 shares held by the Revocable Trust Agreement of William C. Young dated 12/23/88, as amended. (b) Multi-Investments Limited Partnership is a Michigan limited partnership that is owned by the Young family. The partnership is comprised of one General Partner and four Limited Partners. The General Partner is William C. Young, Trustee of the Revocable Trust Agreement of William C. Young dated 12/23/88. The Limited Partners are: (i) W.C. Young Trust FBO W. Patrick Young dated 12/23/89, or successors in trust, W.C. Young and W. Patrick Young, Trustees; (ii) W.C. Young Trust FBO Amy L. Young dated 12/23/89, or successors in trust, W.C. Young and Amy L. Morgan, Trustees; (iii) W.C. Young Trust FBO Tracey L. Young dated 12/23/89, or successors in trust, W.C. Young and Tracey L. Deal, Trustees; and (iv) W.C. Young Trust FBO Brittany M.G. Young dated 12/29/92, or successors in interest, W. Patrick Young, Amy L. Morgan and Tracey L. Deal, Trustees. (c) Includes options to acquire 500 shares which are presently exercisable. (d) Includes options to acquire 100 shares which are presently exercisable. (e) Includes options to acquire 300 shares which are presently exercisable. (f) Includes the shares and presently exercisable options described in footnotes (a), (b), (c), (d) and (e) above. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS REORGANIZATION On October 30, 1999, Packaging, Clean Tech, Whiteline, TABB and Plastipak Brazil were placed under a holding company structure and became subsidiaries of Plastipak, a newly organized corporation (the "Reorganization"). In the Reorganization, TABB Investment, Inc. ("TABB Investment") and W.P. Young Marketing, Inc. ("Marketing"), both of which were formerly Michigan corporations, were merged into Packaging. Immediately prior to the Reorganization, each of Packaging, Clean Tech, Whiteline, TABB, Plastipak Brazil, TABB Investment and Marketing were owned by William C. Young and members of his immediate family, with no outside investors other than certain other security holders of Packaging, as described below. Packaging is our principal operating company, which began operations in 1967 as a division of Absopure Water Company. Beatrice Foods acquired Absopure in 1973, and retained William C. Young to manage Absopure and Packaging as divisions of Beatrice Foods. In 1982, the Young family reacquired Absopure and Packaging from Beatrice Foods. Later in 1982, Packaging was incorporated in the State of Delaware as a separate entity. 65 As a result of the Reorganization, all of the outstanding shares of Packaging common stock, as well as all outstanding options to acquire shares of Packaging common stock, were exchanged for shares and options of Plastipak. Clean Tech had outstanding 5,000 shares of common stock, all of which were held by the William C. Young Trust prior to the Reorganization. These shares were exchanged for 856 shares of the common stock of Plastipak. Whiteline had outstanding 10,000 shares of common stock, all of which were held by the William C. Young Trust prior to the Reorganization. These shares were exchanged for 122 shares of the common stock of Plastipak. TABB's limited liability company membership interests were owned 51% by the William C. Young Trust and 49% by the W.P. and M.E. Young Trust prior to the Reorganization. Prior to the Reorganization, TABB redeemed the 49% membership interest owned by the W.P. and M.E. Young Trust. As partial consideration for the membership interest, TABB issued to the W.P. and M.E. Young Trust a promissory note in the principal amount of $6,024,000 (the "TABB Note"). The TABB Note accrued interest at a rate of 6.4% per annum and was payable in monthly installments of $37,680.72. Although the maturity date was October 1, 2009, the TABB Note was paid in full on August 20, 2001. In connection with the Reorganization, the remaining outstanding membership interest held by the William C. Young Trust was exchanged for 4,489 shares of Plastipak common stock. Plastipak Brazil was owned 80% by Multi-Investment Limited Partnership, a Michigan limited partnership ("Multi-Investment"), and 20% by Packaging, prior to the Reorganization. William C. Young is the general partner of Multi-Investment and members of the Young family own all of the limited partnership interests in this company. In connection with the Reorganization, Multi-Investment exchanged its 80% equity in Plastipak Brazil for 3,936 shares of the common stock of Plastipak. Marketing had outstanding 50,000 shares of common stock, 25,000 of which were held by the William C. Young Trust and 25,000 of which were held by the W.P. and M.E. Young Trust, prior to the Reorganization. Before the Reorganization occurred, the W.P. and M.E. Young Trust sold their shares in Marketing to the William P. and Mary E. Young Irrevocable Trust, dated October 27, 1999 (the "Irrevocable Trust"). Following this sale, Marketing redeemed all of the shares held by the Irrevocable Trust. As partial consideration for these shares, Marketing issued to the Irrevocable Trust its promissory note in the principal amount of $1,226,244.62 (the "Marketing Note"). The Marketing Note also accrued interest at a rate of 6.4% per annum and was payable in monthly installments of $7,670. Although the maturity date for the Marketing Note was October 2009, the Marketing Note was paid in full on August 20, 2001. The amount of the payoff was $1,205,470, including principal and interest. As part of the Reorganization, Marketing was merged with and into Packaging, with Packaging as the surviving entity. As consideration for its 25,000 shares, the William C. Young Trust was issued 2,175 shares of the common stock of Packaging. These 2,175 shares were subsequently exchanged for shares of Plastipak at an exchange ratio of .9175 to 1. TABB Investment had outstanding 5,000 shares of common stock, all of which were held by the William C. Young Trust, prior to the Reorganization. In connection with the Reorganization, TABB Investment was merged with and into Packaging, with Packaging as the surviving entity. As consideration for its 5,000 shares, the William C. Young Trust was given 1,076 shares of the common stock of Packaging. These 1,076 shares were subsequently exchanged for shares of Plastipak at an exchange ratio of .9175 to 1. BUSINESS RELATIONSHIPS AND TRANSACTIONS We have maintained business relationships and entered into business transactions with companies owned or controlled by Mr. William C. Young or managed by members of his immediate family (each an "affiliate" and collectively "affiliates"). A brief summary of the agreements, leases, and arrangements between the affiliates and us follows. We believe, based on our general awareness of market pricing and standards, that transactions with our affiliates are on terms no less favorable to us than those that would be available to us in arm's-length transactions with unaffiliated third parties for similar products and services, with the exception of extended payment terms afforded to Absopure Water Company (as discussed below). As a result of the Reorganization, certain transactions which would formerly have been transactions with affiliates are now intercompany transactions among our 66 subsidiaries, which are eliminated in consolidation in our consolidated financial statements and are not disclosed separately in this Form 10K. FACILITIES, EQUIPMENT RENTAL AND MANUFACTURING, AND RELATED SERVICES TABB owns and leases to us most of our manufacturing locations and some warehouse facilities. Prior to the Reorganization, the real estate we now lease from TABB had been owned by either William P. Young (William C. Young's father) and William C. Young as partners, or by William C. Young individually. All of these properties were transferred to TABB in anticipation of the Reorganization. Written leases with terms expiring on April 1 and December 31, 2003 are currently in effect (the "Affiliate Real Estate Leases") for all of the properties now leased from TABB (now an intercompany transaction eliminated in consolidation in our consolidated financial statements). In addition, we lease a warehouse in Westland, MI from WCY Realty, LLC, a limited liability company which is wholly owned by a trust that is controlled by William C. Young, our chief executive officer and largest shareholder. William C. Young is also the manager (chief executive officer) of WCY Realty, LLC. In fiscal 1999, Packaging made lease payments of $2,998,110 to TABB (now an intercompany transaction eliminated in consolidation in our consolidated financial statements), $2,376,103 to William P. and William C. Young (now an intercompany transaction eliminated in consolidation in our consolidated financial statements), and $106,500 to William C. Young. In fiscal 2000, 2001 and 2002, Packaging made lease payments to WCY Realty, LLC of $120,000, $144,000 and $144,000, respectively. Packaging subleased warehouse space in Plymouth, Michigan to Absopure Water Company on a rent pass-through basis for monthly rental payments of $11,500. Recently, Whiteline has assumed the warehouse lease. Absopure is a corporation owned by William C. Young, members of his immediate family and trusts they control. William C. Young serves as President and a director of Absopure. Members of his immediate family also serve as officers and directors of Absopure. WPY Co. is owned by the William C. Young family. William C. Young serves as President and as a director of WPY Co. Pursuant to an agreement among WPY Co., Packaging, Whiteline and Clean Tech, WPY Co. provides engineering, planning, design, equipment manufacturing, marketing consultation, logistic services and equipment rental on a project-by-project basis. The fees WPY Co. charges Packaging, Whiteline and Clean Tech for services are comparable to those it charges unaffiliated third parties. WPY Co. invoiced Packaging $6,673,081, $2,385,435 and $5,530,880 for engineering and machine services in fiscal 2000, 2001 and 2002, respectively. WPY Co. invoiced Clean Tech $53,332 for equipment and services in fiscal 2000. TABB Investment (which was merged into Packaging in connection with the Reorganization) purchased equipment and entered into month-to-month operating leases for the equipment with Packaging (now an intercompany transaction eliminated in consolidation in our consolidated financial statements). Packaging paid equipment rent expense to TABB Investment in fiscal 1999 in the amount of $6,776,241. Marketing (which was also merged into Packaging in connection with the Reorganization) provided equipment leasing and outside sales services to Packaging (now an intercompany transaction eliminated in consolidation in our consolidated financial statements). Packaging paid equipment rent expense and sales commissions to Marketing in fiscal 1999 in the amount of $7,472,817. TRANSPORTATION SERVICES Whiteline, a fully licensed ICC common carrier, operates a fleet of approximately 275 trucks and 900 trailers and is Packaging's primary supplier of trucking and shipping services. Whiteline services approximately 70% of Packaging's trucking needs, and also leases trucks and provides empty trailers under a "drop trailer" arrangement with Packaging to facilitate distribution and transportation services to Packaging's customers. Whiteline also supplies trucking and other transportation-related personnel to Packaging on an as-requested basis. Whiteline invoiced Packaging $26,401,484 for services in fiscal 1999 (now an intercompany transaction eliminated in consolidation in our consolidated financial statements). Whiteline also provides shipping services to Clean Tech. Whiteline invoiced Clean Tech $161,689 for services in fiscal 1999 (now an intercompany transaction eliminated in consolidation in our consolidated financial statements). 67 Whiteline also provides shipping services to affiliates Absopure and Buffalo Don's Artesian Wells, Ltd. Buffalo Don's is a corporation owned by William C. Young, members of his immediate family and trusts they control. William C. Young serves as Chairman and a director of Buffalo Don's. Members of his immediate family are also officers and directors of Buffalo Don's. Whiteline has entered into a transportation contract with each of Buffalo Don's and Absopure under which it provides shipping services at standard rates comparable to those it charges unaffiliated third parties. These transportation contracts are terminable by either party upon 30 days' notice. Whiteline invoiced Buffalo Don's $583,351, $516,499 and $609,316 for services in fiscal 2000, 2001 and 2002, respectively. Whiteline invoiced Absopure $3,258,211, $3,331,100 and $4,406,686 for services in fiscal 2000, 2001 and 2002, respectively. RECYCLING SERVICES Clean Tech recycles post-consumer plastics and provides Packaging with post-consumer recycled materials for use in its products. Approximately 90% of Packaging's post-consumer recycled material needs are supplied by Clean Tech. Clean Tech invoiced Packaging $9,180,300 for products and recycling services in fiscal 1999 (now an intercompany transaction eliminated in consolidation in our consolidated financial statements). PLASTIC CONTAINER SALES Packaging sells plastic containers to affiliate Absopure for its bottled water business. The sales by Packaging to Absopure are not covered by a written agreement; however, sales to Absopure are at prices no less favorable to Packaging than those with unaffiliated third parties. Packaging invoiced Absopure for containers in the amounts of $9,016,227, $8,302,489 and $8,497,662 in fiscal 2000, 2001 and 2002, respectively. There is currently an outstanding balance of $3,162,598 due from Absopure to Packaging, out of which $1,452,227 was over 90 days old at November 2, 2002. Packaging also sells plastic containers to affiliate Buffalo Don's under a sales agreement dated February 2, 1993. The sales agreement has a term of four years with automatic annual extensions, subject to a 90-day cancellation notice. Sales to Buffalo Don's under the sales agreement are on terms no less favorable to Packaging than those with unaffiliated third parties. Packaging invoiced Buffalo Don's $2,372,164, $2,173,748 and $2,091,965 in fiscal 2000, 2001 and 2002, respectively. Buffalo Don's currently owes Packaging $682,972, out of which $62,251 was over 90 days old at November 2, 2002. Packaging sells plastic containers to Waters of America, LLC for its bottled water business under a five-year product supply agreement dated July 1, 2000. The agreement is a full requirements contract for all of Waters' HDPE and PET container needs. Sales to Waters are on terms are no less favorable to Packaging than those with unaffiliated third parties. Waters of America is a Delaware limited liability company that was organized in 2000. Fifty percent of the ownership interests of Waters of America is held by the Clean Drink Company, a Michigan limited liability company, which is in turn 100% owned by members of William C. Young's immediate family, or by trusts controlled by William C. Young. Packaging invoiced Waters for plastic containers in the amounts of $791,151, $3,019,466 and $2,227,885 in fiscal 2000, 2001 and 2002, respectively. There is currently an outstanding balance due of $361,403. ADMINISTRATIVE SERVICES AND INSURANCE Packaging provided administrative services (i.e., marketing, accounting, legal services) to the companies that became subsidiaries of Plastipak in the Reorganization. Packaging billed each of these companies according to a formula based upon the company's use of these services and for their share of items such as insurance. Packaging invoiced Whiteline $150,000 for administrative services in fiscal 1999 (now an intercompany transaction eliminated in consolidation in our consolidated financial statements). Packaging invoiced Clean Tech $99,600 for administrative services in fiscal 1999 (now an intercompany transaction eliminated in consolidation in our consolidated financial statements). 68 Plastipak and Packaging provided and continue to provide administrative services to several affiliated companies. Packaging invoiced Absopure $60,000 for administrative services in each of fiscal 2000, 2001 and 2002, pursuant to a service agreement dated September 12, 1994. The service agreement continues until written notice of cancellation by either party. There is currently outstanding a balance of $15,000 due to us from Absopure. Packaging invoiced Buffalo Don's $30,000, for administrative services in each of fiscal 2000, 2001 and 2002, pursuant to a service agreement dated September 12, 1994. The service agreement continues until written notice of cancellation by either party. There is currently outstanding a balance of $10,000 due to us from Buffalo Don's. Packaging purchased and provided insurance to all of the companies which became subsidiaries of Plastipak in the Reorganization. Packaging billed each company for the amounts due from them for their coverage, and purchased insurance for these companies (together with affiliated companies). We believe that combining our insurance buying power with that of the affiliated companies helps us to get lower premiums. Whiteline reimbursed Packaging for insurance premiums in the amount of $1,512,721 for fiscal 1999 (now an intercompany transaction eliminated in consolidation in our consolidated financial statements). Clean Tech reimbursed Packaging for insurance premiums in the amount of $171,194 for fiscal 1999 (now an intercompany transaction eliminated in consolidation in our consolidated financial statements). Plastipak and Packaging provided and continue to provide insurance to several affiliated companies. Plastipak and/or Packaging invoiced Absopure for insurance premiums in the amounts of $1,093,301, $1,229,591 and $1,183,978 in fiscal 2000, 2001 and 2002, respectively. Absopure currently owes us $625,690 for insurance premiums. Plastipak and/or Packaging invoiced Buffalo Don's for insurance premiums in the amounts of $164,750, $182,523 and $172,471 in fiscal 2000, 2001 and 2002, respectively. Buffalo Don's currently owes us $71,842 for insurance premiums. Plastipak and/or Packaging invoiced WPY Co. for insurance premiums in the amounts of $51,936, $61,707 and $61,097 for fiscal 2000, 2001 and 2002, respectively. CERTAIN FINANCING TRANSACTIONS In June 2001, Dresdner Bank loaned Plastipak Brazil $4.9 million for working capital purposes. This loan was backed by a letter of credit guaranteed by William C. Young. This loan was repaid with the net proceeds of our 2001 offering of 10.75% Senior Notes due 2011, and the related letter of credit and guarantee were extinguished. At various dates from December 1991 to December 1993, Whiteline issued to a trust controlled by William C. Young several demand notes (the "Whiteline Notes"), which accrued interest at annual rates ranging from 6 to 7% per annum. Interest only was payable in quarterly installments. The loan proceeds were used by Whiteline for working capital purposes. The Whiteline Notes were paid in full in December 2001, and the amount of the payoff was $740,000. In 1994, Packaging redeemed 7,680 shares of common stock that were owned by the W.P. and M.E. Young Trust. As partial consideration for the shares, Packaging issued a secured promissory note in the principal amount of $13,289,472 (the "Packaging Note"). The Packaging Note accrued interest at a rate of 6.55% per annum and was payable in monthly installments of $84,436. Although the maturity date of the Packaging Note was March 31, 2009, a portion of the net proceeds from our offering of 10.75% Senior Notes due 2011 was used to pay the Packaging Note in full. The amount of the payoff was $12,014,871. The Packaging Note was secured by the pledge of the shares acquired from the W.P. and M.E. Young Trust. Since the Packaging Note was paid in full, these shares have been canceled. In March 2001, Madras Packaging, L.L.C., a Delaware limited liability company, redeemed Packaging's 49% membership interest. In connection with the redemption, Packaging sold certain equipment to Madras. As partial consideration for this equipment, Madras issued to Packaging a secured promissory note in the principal amount of $3,000,000 (the "Madras Note"). The Madras Note accrues interest at a rate of 8% per annum and is payable in monthly installments of $25,000 with a balloon payment of $2,400,000 due in March 2003. Currently, Madras is in arrears in the amount of approximately $142,000 on this Note and approximately $259,00 on other obligations. We are in the process of discussing a restructuring of their obligations to us. 69 OTHER Packaging sold pallets to Absopure and to certain of the companies that became subsidiaries of Plastipak in the Reorganization. Packaging invoiced Clean Tech $28,303 for pallets in fiscal 1999 (now an intercompany transaction eliminated in consolidation in our consolidated financial statements). Packaging invoiced Whiteline $97,560 for pallets in fiscal 1999 (now an intercompany transaction eliminated in consolidation in our consolidated financial statements). Packaging invoiced Absopure $231,000 for pallets in each of fiscal 1999 and 2000, $277,000 in fiscal 2001 and $112,000 in fiscal 2002. PART IV ITEM 14. CONTROLS AND PROCEDURES Our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) of the Securities and Exchange Act of 1934, as amended) within 90 days prior to filing this report, have concluded that as of such date the disclosure controls and procedures were adequate and effective in ensuring that material information relating to Plastipak would be made known to them by others in the company. There were no significant changes in internal controls or other factors that could significantly affect Plastipak's disclosure controls and procedures subsequent to the date of their evaluation, nor were there any significant deficiencies or material weaknesses in Plastipak's internal controls. As a result, no corrective actions were required or undertaken. ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a)(1) Financial Statements Consolidated Balance Sheets as of November 2, 2002 and November 3, 2001 Consolidated Statements of Earnings for the years ended November 2, 2002, November 3, 2001 and October 28, 2000 Consolidated Statements of Stockholders' Equity for the years ended November 2, 2002, November 3, 2001 and October 28, 2000 Consolidated Statements of Cash Flows for the years ended November 2, 2002, November 3, 2001 and October 28, 2000 Notes to the Consolidated Financial Statements (a)(2) Financial Statement Schedules All schedules are inapplicable or have been disclosed in the Notes to the Consolidated Financial Statements and, therefore, have been omitted. (a)(3) Exhibits EXHIBIT NO. DESCRIPTION OF EXHIBIT 3.1(a) Articles of Incorporation of Plastipak Holdings, Inc. (incorporated by reference to Exhibit 3.1(a) to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 3.1(b) Bylaws of Plastipak Holdings, Inc. (incorporated by reference to Exhibit 3.1(b) to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 3.2(a) Certificate of Incorporation of Plastipak Packaging, Inc. (incorporated by reference to Exhibit 3.2(a) to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 3.2(b) Bylaws of Plastipak Packaging, Inc. (incorporated by reference to Exhibit 3.2(b) to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 3.3(a) Certificate of Incorporation of Whiteline Express, Ltd. (incorporated by reference to Exhibit 3.3(a) to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 3.3(b) Bylaws of Whiteline Express, Ltd. (incorporated by reference to Exhibit 3.3(b) to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 70 3.4(a) Articles of Incorporation of Clean Tech, Inc. (incorporated by reference to Exhibit 3.4(a) to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 3.4(b) Bylaws of Clean Tech, Inc. (incorporated by reference to Exhibit 3.4(b) to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 3.5(a) Articles of Organization of TABB Realty, LLC (incorporated by reference to Exhibit 3.5(a) to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 3.5(b) Bylaws of TABB Realty, LLC (incorporated by reference to Exhibit 3.5(b) to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 4.1 Indenture dated as of August 20, 2001, by and among Plastipak Holdings, Inc., Plastipak Packaging, Inc., Whiteline Express, Ltd., TABB Realty, LLC and Wells Fargo Bank Minnesota, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 4.2 Form of 10.75% Senior Note due 2011 and annexed guaranty incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-4 (File No. 333-101098) as filed on November 8, 2002) 4.3 Exchange and Registration Rights Agreement dated August 20, 2001 among Plastipak Holdings, Inc., Plastipak Packaging, Inc., Whiteline Express, Ltd., Clean Tech, Inc., TABB Realty, LLC, Goldman, Sachs & Co., ABN AMRO Incorporated, Fleet Securities, Inc. and NatCity Investments, Inc. (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 4.4 Exchange and Registration Rights Agreement dated September 25, 2002 among Plastipak Holdings, Inc., Plastipak Packaging, Inc., Whiteline Express, Ltd., Clean Tech, Inc., TABB Realty, LLC and Goldman, Sachs & Co. (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form S-4 (File No. 333-101098) as filed on November 8, 2002) 10.1 Fourth Amended and Restated Credit Agreement dated as of August 20, 2001 by and among Plastipak Holdings, Inc., Plastipak Packaging, Inc., Clean Tech, Inc., Whiteline Express, Ltd., TABB Realty, LLC, various banks, Comerica Bank (as Lead Arranger and Administrative Agent), Bank One Michigan (as Syndications Agent), Standard Federal Bank (as Syndications Agent) and Fleet National Bank (as Documentation Agent) (incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 10.2 First Amendment to Fourth Amended and Restated Revolving Credit Agreement dated as of November 16, 2001 (incorporated by reference to Exhibit 10.4 to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 10.3 Second Amendment to Fourth Amended and Restated Revolving Credit Agreement dated as of September 18, 2002 (incorporated by reference to Exhibit 10.5 to the Registration Statement on Form S-4 (File No. 333-101098) as filed on November 8, 2002) 10.4* Restricted Stock Bonus Plan of Plastipak Holdings, Inc. (incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 10.5* Amended and Restated Restricted Stock Bonus Plan of Plastipak Holdings, Inc. (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended August 3, 2002 as filed on September 17, 2002) 10.6* First Amendment to Amended and Restated Restricted Stock Bonus Plan of Plastipak Holdings, Inc. 71 10.7* 2002 Restricted Stock Bonus Plan of Plastipak Holdings, Inc. 10.8* Plastipak Packaging, Inc. Amended and Restated Salary Continuation Plan (incorporated by reference to Exhibit 10.3 to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 21 List of subsidiaries of the registrants (incorporated by reference to Exhibit 21 to the Registration Statement on Form S-4 (File No. 333-101098) as filed on November 8, 2002) 99.1 Chief Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 99.2 Chief Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ---------------- * Management contract or compensatory plan or arrangement required to be filed as an exhibit to Form 10-K pursuant to Item 15(c). (b) Current reports on Form 8-K. During the fourth quarter of 2002, we filed one Form 8-K Report dated September 19, 2002. The Report, made under cover of Item 5, discusses an amendment to our Amended Credit Agreement. 72 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PLASTIPAK HOLDINGS, INC. By: /s/ Michael J. Plotzke ------------------------ Michael J. Plotzke, Treasurer and Chief Financial Officer Dated: January 31, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities on the dates indicated below.

73 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 AND SECURITIES AND EXCHANGE COMMISSION RELEASE 34-46427 I, William C. Young, the principal executive officer of Plastipak Holdings, Inc., certify that: 1. I have reviewed this annual report on Form 10-K of Plastipak Holdings, Inc.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. Plastipak's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for Plastipak and we have: (a) designed such disclosure controls and procedures to ensure that material information relating to Plastipak, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; (b) evaluated the effectiveness of Plastipak's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and (c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. Plastipak's other certifying officers and I have disclosed, based on our most recent evaluation, to our auditors and the audit committee of Plastipak's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect Plastipak's ability to record, process, summarize and report financial data and have identified for Plastipak's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in Plastipak's internal controls; and 6. Plastipak's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: January 31, 2003 /s/ William C. Young ---------------------------- William C. Young Chief Executive Officer Plastipak Holdings, Inc. 74 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 AND SECURITIES AND EXCHANGE COMMISSION RELEASE 34-46427 I, Michael J. Plotzke, the principal financial officer of Plastipak Holdings, Inc., certify that: 1. I have reviewed this annual report on Form 10-K of Plastipak Holdings, Inc.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. Plastipak's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for Plastipak and we have: (d) designed such disclosure controls and procedures to ensure that material information relating to Plastipak, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; (e) evaluated the effectiveness of Plastipak's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and (f) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. Plastipak's other certifying officers and I have disclosed, based on our most recent evaluation, to our auditors and the audit committee of Plastipak's board of directors (or persons performing the equivalent functions): (c) all significant deficiencies in the design or operation of internal controls which could adversely affect Plastipak's ability to record, process, summarize and report financial data and have identified for Plastipak's auditors any material weaknesses in internal controls; and (d) any fraud, whether or not material, that involves management or other employees who have a significant role in Plastipak's internal controls; and 6. Plastipak's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: January 31, 2003 /s/ Michael J. Plotzke -------------------------------- Michael J. Plotzke Chief Financial Officer Plastipak Holdings, Inc. 75 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION OF EXHIBIT 3.1(a) Articles of Incorporation of Plastipak Holdings, Inc. (incorporated by reference to Exhibit 3.1(a) to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 3.1(b) Bylaws of Plastipak Holdings, Inc. (incorporated by reference to Exhibit 3.1(b) to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 3.2(a) Certificate of Incorporation of Plastipak Packaging, Inc. (incorporated by reference to Exhibit 3.2(a) to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 3.2(b) Bylaws of Plastipak Packaging, Inc. (incorporated by reference to Exhibit 3.2(b) to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 3.3(a) Certificate of Incorporation of Whiteline Express, Ltd. (incorporated by reference to Exhibit 3.3(a) to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 3.3(b) Bylaws of Whiteline Express, Ltd. (incorporated by reference to Exhibit 3.3(b) to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 3.4(a) Articles of Incorporation of Clean Tech, Inc. (incorporated by reference to Exhibit 3.4(a) to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 3.4(b) Bylaws of Clean Tech, Inc. (incorporated by reference to Exhibit 3.4(b) to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 3.5(a) Articles of Organization of TABB Realty, LLC (incorporated by reference to Exhibit 3.5(a) to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 3.5(b) Bylaws of TABB Realty, LLC (incorporated by reference to Exhibit 3.5(b) to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 4.1 Indenture dated as of August 20, 2001, by and among Plastipak Holdings, Inc., Plastipak Packaging, Inc., Whiteline Express, Ltd., TABB Realty, LLC and Wells Fargo Bank Minnesota, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 4.2 Form of 10.75% Senior Note due 2011 and annexed guaranty incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-4 (File No. 333-101098) as filed on November 8, 2002) 4.3 Exchange and Registration Rights Agreement dated August 20, 2001 among Plastipak Holdings, Inc., Plastipak Packaging, Inc., Whiteline Express, Ltd., Clean Tech, Inc., TABB Realty, LLC, Goldman, Sachs & Co., ABN AMRO Incorporated, Fleet Securities, Inc. and NatCity Investments, Inc. (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 4.4 Exchange and Registration Rights Agreement dated September 25, 2002 among Plastipak Holdings, Inc., Plastipak Packaging, Inc., Whiteline Express, Ltd., Clean Tech, Inc., TABB Realty, LLC and Goldman, Sachs & Co. (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form S-4 (File No. 333-101098) as filed on November 8, 2002) 10.1 Fourth Amended and Restated Credit Agreement dated as of August 20, 2001 by and among Plastipak Holdings, Inc., Plastipak Packaging, Inc., Clean Tech, Inc., Whiteline Express, Ltd., TABB Realty, LLC, various banks, Comerica Bank (as Lead Arranger and Administrative Agent), Bank One Michigan (as Syndications Agent), Standard Federal Bank (as Syndications Agent) and Fleet National Bank (as Documentation Agent) (incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 10.2 First Amendment to Fourth Amended and Restated Revolving Credit Agreement dated as of November 16, 2001 (incorporated by reference to Exhibit 10.4 to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 10.3 Second Amendment to Fourth Amended and Restated Revolving Credit Agreement dated as of September 18, 2002 (incorporated by reference to Exhibit 10.5 to the Registration Statement on Form S-4 (File No. 333-101098) as filed on November 8, 2002) 10.4 Restricted Stock Bonus Plan of Plastipak Holdings, Inc. (incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 10.5 Amended and Restated Restricted Stock Bonus Plan of Plastipak Holdings, Inc. (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended August 3, 2002 as filed on September 17, 2002) 10.6 First Amendment to Amended and Restated Restricted Stock Bonus Plan of Plastipak Holdings, Inc. 10.7 2002 Restricted Stock Bonus Plan of Plastipak Holdings, Inc. 10.8 Plastipak Packaging, Inc. Amended and Restated Salary Continuation Plan (incorporated by reference to Exhibit 10.3 to the Registration Statement on Form S-4 (File No. 333-73552) as filed on February 19, 2002) 21 List of subsidiaries of the registrants (incorporated by reference to Exhibit 21 to the Registration Statement on Form S-4 (File No. 333-101098) as filed on November 8, 2002) 99.1 Chief Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 99.2 Chief Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

PLASTIPAK HOLDINGS INC 10-K