Winpak Reports Third Quarter Earnings

WINNIPEG, MANITOBA, Oct 23 (MARKET WIRE) --
Winpak Ltd. (WPK)(TSX: WPK) today reports consolidated results in US
dollars for the third quarter of 2008, which ended on September 28, 2008.

September 28 September 30
Year-To-Date Ended 2008 2007
------------------ ------------- -------------

(thousands of US dollars, except
per share amounts)

Sales 382,347 339,984
------------- -------------
------------- -------------
Net earnings 20,470 17,801
------------- -------------
------------- -------------

Minority interest 171 (79)
Provision for income taxes 10,157 8,831
Interest 916 1,492
Depreciation and amortization 19,297 17,629
------------- -------------
EBITDA(1) 51,011 45,674
------------- -------------
------------- -------------
Basic and fully diluted net earnings per
share (cents) 31 27
------------- -------------
------------- -------------

September 28 September 30
Third Quarter Ended 2008 2007
------------------- ------------- -------------

(thousands of US dollars, except
per share amounts)

Sales 131,419 116,745
------------- -------------
------------- -------------
Net earnings 7,288 5,073
------------- -------------
------------- -------------

Minority interest 92 2
Provision for income taxes 3,559 2,221
Interest 244 450
Depreciation and amortization 6,565 6,218
------------- -------------

EBITDA(1) 17,748 13,964
------------- -------------
------------- -------------
Basic and fully diluted net earnings
per share (cents) 11 7
------------- -------------
------------- -------------

Winpak Ltd. manufactures and distributes high-quality packaging
materials and related packaging machines. The Company's products are used
primarily for the protection of perishable foods, beverages and in health
care applications.

(1) EBITDA is not a recognized measure under Canadian GAAP. Management
believes that in addition to net earnings, this measure provides useful
supplemental information to investors including an indication of cash
available for distribution prior to debt service, capital expenditures
and income taxes. Investors should be cautioned, however, that this
measure should not be construed as an alternative to net earnings,
determined in accordance with GAAP, as an indicator of the Company's
performance. The Company's method of calculating this measure may differ
from other companies, and, accordingly, the results may not be
comparable.

Management's Discussion and Analysis (presented in US dollars)

Forward-looking statements: Certain statements made in the following
Management's Discussion and Analysis contain forward-looking statements
including, but not limited to, statements concerning possible or assumed
future results of operations of the Company. Forward-looking statements
represent the Company's intentions, plans, expectations and beliefs, and
are not guarantees of future performance. Such forward-looking statements
represent our current views based on information as at the date of this
report. They involve risks, uncertainties and assumptions and the
Company's actual results could differ, which in some cases may be
material, from those anticipated in these forward-looking statements.
Unless otherwise required by applicable securities law, we disclaim any
intention or obligation to publicly update or revise this information,
whether as a result of new information, future events or otherwise. The
Company cautions investors not to place undue reliance upon
forward-looking statements.

Results of Operations

Net earnings for the third quarter of 2008 were 11 cents per share
compared to 7 cents per share in the corresponding period of 2007. The
43.7 percent increase in net earnings was attributable to enhanced sales
volumes, higher selling prices, improved manufacturing efficiencies,
reductions in expenses and the favorable impact of foreign exchange.

Net earnings per share for the first nine months of 2008 were 31 cents
compared to 27 cents in the same period of 2007, an increase in net
earnings of 15.0 percent. The improvement was primarily a result of
higher sales volumes, manufacturing efficiencies and lower expenses
offset in part by higher raw material costs and the unfavorable effect of
foreign exchange.

Sales

Sales in the third quarter of 2008 continued the strong growth exhibited
in the first half of the year, increasing by $14.7 million or 12.6
percent in relation to the third quarter of 2007. Greater sales volumes
accounted for nearly half of the increase, followed closely by advances
in selling prices. A slightly stronger Canadian dollar provided only a
marginal increase in reported sales. One-third of the improvement in
sales volume in the quarter was due to the acquisition of the film
packaging business of Walsroder Packaging LLC on June 30, 2008. Except
for specialty films and lidding, all other business units experienced
volume growth, with the highest percentage increases evident in machinery
as well as rigid container sales. Selling prices increased in response to
increments in raw material costs.

In the first nine months of 2008, sales grew by $42.4 million or 12.5
percent. Greater sales volumes accounted for nearly 60 percent of this
increase. Biaxially oriented nylon film and rigid containers demonstrated
robust growth during this period while only moderate growth was seen in
modified atmosphere packaging and lidding. Sales of specialty films and
machinery fell short of the prior year levels, while less than 10 percent
of the volume growth was due to the Walsroder acquisition. Improvements
in selling prices and product mix favorably impacted reported sales,
accounting for nearly 25 percent of the increase while the balance of the
sales growth was due to the stronger Canadian dollar.

Gross profit margins

Gross profit margins advanced to 24.9 percent of sales in the third
quarter of 2008, up substantially from 22.7 percent of sales recorded in
the corresponding quarter in 2007 and improved slightly from the 24.4
percent recorded in the second quarter of this year. Improvements in
manufacturing performance contributed to an increase of over 3 percentage
points in gross profit margins and the effect of foreign exchange also
had a favorable impact. The improvement would have been much greater had
it not been for the continued escalation in raw material costs, which
were not offset enough by higher selling prices to further augment
margins.

For the first nine months, gross profit margins were virtually identical
to the corresponding 2007 period, falling just short by 0.1 percentage
points. The improvements in gross profit margins due to manufacturing
performance of nearly 2.5 percentage points was overshadowed by the
inability to pass through the full extent of raw material and other
related cost escalations to the customer base.

For reference, the following presents the weighted indexed purchased cost
of Winpak's eight primary raw materials in the reported quarter and each
of the preceding eight quarters, where base year 2001 equals 100. The
index was rebalanced as of December 31, 2007 to reflect the mix of the
eight primary raw materials purchased in 2007.

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

Quarter and
Year 3/06 4/06 1/07 2/07 3/07 4/07 1/08 2/08 3/08
----------------------------------------------------------------------------
Purchase
Price Index 155.4 148.8 146.0 152.5 158.3 161.8 167.9 174.6 190.7
----------------------------------------------------------------------------

The index in the third quarter was at the highest point in the
Company's history after surpassing the previous record set in the prior
quarter. The increase in raw materials of 9.2 percent in the third
quarter alone and the year-over-year increase of 20.5 percent are
unprecedented in recent history. Fortunately, recent sharp drops in both
petroleum and natural gas markets should help to reverse this trend going
forward.

Expenses and Other

For the third quarter and year-to-date, efficiencies gained through
volume growth resulted in operating expenses increasing at a
significantly lower rate than sales when compared to the prior year.
However, this was offset by foreign exchange losses occurring on the
translation of the Company's net monetary assets. Interest costs also
declined due to the reduction in both long-term and short-term debt and
significantly lower interest rates in comparison to a year ago. Capital
Resources, Cash Flow and Liquidity

The Company utilized cash resources of $2.7 million in the third quarter.
The $15.2 million in cash generated from operating activities before
changes in working capital was offset in part by $10.6 million utilized
for working capital requirements and $0.5 million for defined benefit
plan payments. The cash utilized for working capital requirements was
influenced by the acquisition of inventories related to the Walsroder
acquisition as well as the significant increases in both the cost of
materials and selling prices in the quarter, which boosted the value of
inventories and accounts receivable. Cash resources of $4.3 million were
utilized for the current year's plant and equipment expenditure program,
$1.9 million for dividends and $0.8 million for the purchase of
intangibles related to the Walsroder acquisition. There was also a small
foreign exchange adjustment on cash of $0.2 million.

Year-to-date, Winpak's cash position improved by $2.9 million due
primarily to cash flow generated from operating activities. Cash was used
to fund additional working capital requirements, capital equipment
additions, dividends, defined benefit plan payments, intangibles and
repayment of long-term debt. Winpak is confident that sufficient
financial resources are in place to fund cash requirements for the
foreseeable future and with its strong balance sheet, is poised to take
advantage of any acquisition opportunities that would be beneficial to
the long-term interests of the Company.

Business Acquisition

On June 30, 2008 the Company acquired the film packaging business of
Walsroder Packaging LLC, a subsidiary of The Dow Chemical Company. The
transaction involved the purchase of inventory, production equipment and
intangibles. The acquisition will expand Winpak's extensive sales and
distribution network and should result in the addition of approximately
$10 million in sales to the Company on an annual basis as well as being
immediately accretive to earnings in 2008.

Summary of Quarterly Results Thousands of U.S. dollars,
---------------------------- except per share amounts (U.S. cents)

Quarter Ended
-----------------------------------------------------------------------
Sept- Dec- Sept- Dec-
ember 28 June 29 March 30 ember 30 ember 30 July 1 April 1 ember 31
2008 2008 2008 2007 2007 2007 2007 2006
-----------------------------------------------------------------------

Sales 131,419 127,582 123,346 126,638 116,745 114,479 108,760 113,088
Net
earn-
ings 7,288 7,231 5,951 6,157 5,073 5,224 7,504 6,579
EPS 11 11 9 10 7 8 12 10
----------------------------------------------------------------------

Looking Forward

The Company is optimistic that the fourth quarter will continue to
exhibit improved results over 2007. Sales should continue to outpace the
prior year by a healthy margin although one has to be somewhat cautious
given the current state of the US and worldwide economies. With the
recent downturn in the price of petroleum and natural gas, this should
eventually result in a reduction in raw material prices experienced by
the Company. This favorable effect on costs, however, has been delayed
somewhat due to the impact of Hurricane Ike on resin production. Much of
North America's resin production occurs in Texas and surrounding states
along the Gulf of Mexico and the hurricane flooded quite a number of
resin plants in the region. As a result, a number of suppliers have
restricted shipments and it will require some very careful planning and
execution on the part of the Company to ensure that customers are not
adversely affected. Should the recent trend in the strengthening of the
US dollar continue, this too should have a positive impact on the future
earnings of the Company. Additionally, Winpak's solid financial condition
puts it in a position to take advantage of any investment opportunities
that would be beneficial to the long-term interests of the Company.
Overall, the future looks bright but is clouded somewhat by the uncertain
economic environment that currently faces all businesses.

Accounting Policy Changes

As more fully described in Note 2 to the Consolidated Financial
Statements, the Company adopted the Canadian Institute of Chartered
Accountants' Handbook Sections 3031, 3862, 3863 and 1535. The changes
were adopted prospectively from December 31, 2007. These new standards
had no significant impact on the Company's Consolidated Financial
Statements.

Future Accounting Standards

International Financial Reporting Standards

In February 2008, the Canadian Accounting Standards Board confirmed that
Publicly Accountable Enterprises will be required to adopt International
Financial Reporting Standards ("IFRS") for interim and annual financial
statements relating to fiscal years beginning on or after January 1,
2011. The transition from Canadian generally accepted accounting
principles ("GAAP") to IFRS will be applicable for the Company's first
quarter of 2011, at which time the Company will prepare both its fiscal
2011 and fiscal 2010 comparative financial information using IFRS. The
Company expects the transition to IFRS to impact financial reporting,
business processes, disclosure controls, internal controls over financial
reporting and information systems.

The Company formally commenced its IFRS conversion project in the second
quarter of 2008 and has engaged the services of an external advisor with
IFRS expertise to work with management. Regular reporting is provided to
the Company's senior management and Audit Committee of the Board of
Directors. The Company's conversion project consists of three phases:
diagnostic assessment, design and development, and implementation. To
date, the initial diagnostic assessment phase of the plan has been
completed and a high level IFRS implementation plan has been developed
with a more detailed plan to be finalized by the end of fiscal 2008. A
high level review of the major differences between Canadian GAAP and
current IFRS has been undertaken and at this time, the Company cannot
reasonably estimate the impact of adopting IFRS on the consolidated
financial statements. Winpak will continue to invest in training and
external advisor resources throughout the transition to facilitate a
timely conversion.

Goodwill, Intangible Assets and Financial Statement Concepts

In February 2008, the CICA issued Section 3064 Goodwill and Intangible
Assets, replacing Section 3062 Goodwill and Other Intangible Assets and
Section 3450 Research and Development Costs. The new Section establishes
standards on the recognition, measurement, presentation and disclosure
for goodwill and intangible assets subsequent to their initial
recognition. The standard requires retroactive application to prior
period financial statements and will apply commencing with the Company's
2009 fiscal year. While the Company is currently assessing the impact of
this new standard on its consolidated financial statements, management
does not expect the standard to have a significant impact on the
Company's consolidated financial results.

Controls and Procedures

Disclosure Controls

Management is responsible for establishing and maintaining disclosure
controls and procedures in order to provide reasonable assurance that
material information relating to the Company is made known to them in a
timely manner and that information required to be disclosed is reported
within time periods prescribed by applicable securities legislation.
There are inherent limitations to the effectiveness of any system of
disclosure controls and procedures, including the possibility of human
error and the circumvention or overriding of the controls and procedures.
Accordingly, even effective disclosure controls and procedures can only
provide reasonable assurance of achieving their control objectives. Based
on management's evaluation of the design and effectiveness of the
Company's disclosure controls and procedures, the Company's Chief
Executive Officer and Chief Financial Officer have concluded that these
controls and procedures are designed and operating effectively as of
September 28, 2008 to provide reasonable assurance that the information
to be disclosed is recorded, summarized and reported as required.

Internal Controls Over Financial Reporting

Management is responsible for establishing and maintaining adequate
internal controls over financial reporting to provide reasonable
assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance
with Canadian generally accepted accounting principles. Management has
designed the internal controls over financial reporting as of the end of
the period covered by the interim filings, and believes the design is
sufficient to provide such reasonable assurance with respect to financial
reporting. Internal control systems, no matter how well designed, have
inherent limitations and therefore can only provide reasonable assurance
with respect to financial reporting. During the third quarter ended
September 28, 2008, there have been no changes in the design of the
Company's internal controls over financial reporting that have materially
affected, or are reasonably likely to materially affect, its internal
controls over financial reporting.

Winpak Ltd.
Interim Consolidated Financial Statements
Third Quarter Ended: September 28, 2008

These interim consolidated financial statements have not been audited or
reviewed by the Company's independent external auditors,
PricewaterhouseCoopers LLP.

Winpak Ltd.
Consolidated Balance Sheets
(thousands of US dollars)
(September 28, 2008 Unaudited)
September 28 December 30
2008 2007
-------------- -------------

Assets

Current Assets:
Accounts receivable (note 8) $ 65,029 $ 57,308
Income taxes receivable 1,557 6,292
Inventory (note 4) 83,309 74,742
Prepaid expenses 2,429 1,945
Future income taxes 3,391 2,702
-------------- -------------
155,715 142,989

Property, plant and equipment (net) 250,232 263,328

Other assets 12,462 10,739

Intangible assets (net) 6,205 6,690

Goodwill 17,379 17,854

-------------- -------------
$ 441,993 $ 441,600
-------------- -------------
-------------- -------------

Liabilities and Shareholders' Equity

Current Liabilities:
Bank indebtedness (unsecured) $ 2,108 $ 5,037
Accounts payable and accrued liabilities 37,529 38,061
-------------- -------------
39,637 43,098

Long-term debt 17,000 22,000

Deferred credits 12,974 12,603

Future income taxes 29,090 28,640

Postretirement benefits 1,584 1,596
-------------- -------------
100,285 107,937

Minority interest 14,176 11,065

Shareholders' Equity:
Share capital 29,195 29,195

Retained earnings 242,721 228,470
Accumulated other comprehensive
income (note 5) 55,616 64,933
-------------- -------------
298,337 293,403
-------------- -------------
327,532 322,598
-------------- -------------

-------------- -------------
$ 441,993 $ 441,600
-------------- -------------
-------------- -------------

See accompanying notes to consolidated financial statements.

Winpak Ltd.
Consolidated Statements of Earnings and Retained Earnings
(thousands of US dollars, except per share amounts) (unaudited)

Third Quarter Ended Year-To-Date Ended
----------------------------- -----------------------------
----------------------------- -----------------------------
September 28 September 30 September 28 September 30
2008 2007 2008 2007
-------------- -------------- -------------- --------------
Sales $ 131,419 $ 116,745 $ 382,347 $ 339,984
Cost of sales 98,631 90,197 288,428 256,040
-------------- -------------- -------------- --------------
Gross profit 32,788 26,548 93,919 83,944

Expenses
Selling,
general &
administrative
(note 6) 18,923 16,240 53,679 47,480
Research
and
technical 2,682 2,337 7,737 7,670
Pre-production - 225 789 749
-------------- -------------- -------------- --------------
Earnings from
operations 11,183 7,746 31,714 28,045
Interest 244 450 916 1,492
-------------- -------------- -------------- --------------
Earnings before
income taxes
and minority
interest 10,939 7,296 30,798 26,553
Provision for
income taxes 3,559 2,221 10,157 8,831
Minority interest 92 2 171 (79)
-------------- -------------- -------------- --------------
Net earnings $ 7,288 $ 5,073 $ 20,470 $ 17,801
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------

Retained
earnings,
beginning of
period
As previously
reported $ 237,321 $ 221,189 $ 228,470 $ 211,139
Change in
accounting
policy -
(note 2 (c)) - - (492) -
-------------- -------------- -------------- --------------
Restated 237,321 221,189 227,978 211,139
Net earnings 7,288 5,073 20,470 17,801
Dividends
declared (1,888) (1,960) (5,727) (4,638)
-------------- -------------- -------------- --------------
Retained
earnings, end
of period $ 242,721 $ 224,302 $ 242,721 $ 224,302
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Earnings per
share
Basic and fully
diluted earnings
per share
(cents) 11 7 31 27
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------

Average number
of shares
outstanding
(000's) 65,000 65,000 65,000 65,000
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------

Consolidated Statements of Comprehensive Income
(thousands of US dollars) (unaudited)

Third Quarter Ended Year-To-Date Ended
----------------------------- -----------------------------
----------------------------- -----------------------------
September 28 September 30 September 28 September 30
2008 2007 2008 2007
-------------- -------------- -------------- --------------
Net earnings $ 7,288 $ 5,073 $ 20,470 $ 17,801

Unrealized
(losses) gains
on translation
of financial
statements of
operations
with CDN
dollar
functional
currency to US
dollar
reporting
currency (3,709) 12,817 (9,233) 28,370
Unrealized
gains (losses)
on derivatives
designated as
cash flow
hedges, net of
income tax
(2008 - $9 and
$(57)) (2007 -
$200 and $339) 18 372 (103) 631
Realized losses
(gains) on
derivatives
designated as
cash flow hedges
in prior periods
transferred to
net earnings in
the current period,
net of income tax
(2008 - $15 and
$10) (2007 - $(225)
and $(225)) 27 (419) 19 (419)
-------------- -------------- -------------- --------------
Other
comprehensive
(loss) income
- net of income
tax (note 5) (3,664) 12,770 (9,317) 28,582
-------------- -------------- -------------- --------------
Comprehensive
income $ 3,624 $ 17,843 $ 11,153 $ 46,383
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------

See accompanying notes to consolidated financial statements.

Winpak Ltd.
Consolidated Statements of Cash Flows
(thousands of US dollars) (unaudited)

Third Quarter Ended Year-To-Date Ended
----------------------------- -----------------------------
----------------------------- -----------------------------
September 28 September 30 September 28 September 30
2008 2007 2008 2007
-------------- -------------- -------------- --------------
Cash provided by
(used in):

Operating
activities:
Net earnings for
the period $ 7,288 $ 5,073 $ 20,470 $ 17,801
Items not
involving cash:
Depreciation 6,127 5,715 18,032 16,030
Amortization
- intangible
assets 438 503 1,265 1,599
Defined
benefit plan
costs 625 884 1,909 2,594
Future income
taxes 226 815 1,035 1,286
Foreign
exchange
loss on
long-term debt 378 - 911 -
Minority
interest 92 2 171 (79)
Other 16 94 (168) 289
-------------- -------------- -------------- --------------
Cash flow from
operating
activities
before the
following 15,190 13,086 43,625 39,520

Change in
working capital:
Accounts
receivable (3,935) 234 (9,104) 793
Income taxes
receivable 3,010 (1,969) 4,493 (2,746)
Inventory (6,794) (279) (11,435) (2,679)
Prepaid
expenses 170 546 (561) (872)
Accounts
payable and
accrued
liabilities (2,974) (844) (138) (5,026)
Defined benefit
plan payments (499) (3,249) (4,149) (7,205)
-------------- -------------- -------------- --------------
4,168 7,525 22,731 21,785
-------------- -------------- -------------- --------------

Investing
activities:
Acquisition of
property, plant
and equipment (4,332) (6,646) (11,564) (27,755)
Acquisition of
intangibles (780) - (780) -
-------------- -------------- -------------- --------------
(5,112) (6,646) (12,344) (27,755)
-------------- -------------- -------------- --------------

Financing
activities:
Repayments of
long-term debt - - (5,000) -
Dividends paid (1,930) (1,830) (5,828) (3,511)
Investment by
minority
shareholder
in subsidiary - - 2,940 -
-------------- -------------- -------------- --------------
(1,930) (1,830) (7,888) (3,511)
-------------- -------------- -------------- --------------
Foreign exchange
translation
adjustment on
cash 208 (683) 430 (2,303)
-------------- -------------- -------------- --------------
Change in cash
position (2,666) (1,634) 2,929 (11,784)
Cash (bank
indebtedness),
beginning of
period 558 (7,156) (5,037) 2,994
-------------- -------------- -------------- --------------
Bank
indebtedness,
end of period $ (2,108) $ (8,790) $ (2,108) $ (8,790)
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------

Supplemental
disclosure of
cash flow
information:
Cash paid during
the period for:
Interest
expense $ 289 $ 834 $ 1,359 $ 2,300
Income tax
expense 474 3,447 3,752 7,925

See accompanying notes to consolidated financial statements.

Notes to Consolidated Financial Statements
For the periods ended September 28, 2008 and September 30, 2007
(thousands of US dollars) (Unaudited)
----------------------------------------------------------------------------

1. Basis of Presentation

The unaudited interim consolidated financial statements have been
prepared by the Company in accordance with Canadian Generally Accepted
Accounting Principles (GAAP) and have been prepared on a basis consistent
with the same accounting policies and methods of application as disclosed
in the Company's audited consolidated financial statements for the year
ended December 30, 2007 except as described in Note 2.

These unaudited interim consolidated financial statements do not include
all of the information and notes to the financial statements required by
GAAP for annual financial statements and therefore should be read in
conjunction with the audited consolidated financial statements and notes
included in the Company's Annual Report for the year ended December 30,
2007.

The preparation of the interim consolidated financial statements in
accordance with GAAP requires management to make estimates and
assumptions that affect: the reported amounts of assets and liabilities;
the disclosure of contingent assets and liabilities at the date of the
consolidated financial statements; and the reported amounts of revenue
and expenses in the reporting period. Management believes that the
estimates and assumptions used in preparing its interim consolidated
financial statements are reasonable and prudent, however, actual results
could differ from these estimates.

2. Accounting Policy Changes

Effective December 31, 2007, the Company adopted the following new
Canadian Institute of Chartered Accountants (CICA) accounting standards.

(a) Financial Instruments - Disclosures and Presentation:

Section 3862 Financial Instruments - Disclosure, describes the required
disclosures related to the significance of financial instruments on the
Company's financial position and performance and the nature and extent of
risks arising from financial instruments to which the Company is exposed
and how the Company manages those risks and Section 3863 Financial
Instruments - Presentation, describes the standards for presentation of
financial instruments and non-financial derivatives and carries forward,
unchanged, the presentation requirements of Section 3861 Financial
Instruments - Disclosure and Presentation (notes 7 and 8).

(b) Capital Management:

Section 1535 Capital Disclosures, establishes standards for disclosing
information about a Company's capital and how it is managed to enable
users of financial statements to evaluate the Company's objectives,
policies and processes for managing capital, quantitative data about what
the Company regards as capital and whether the Company has complied with
any externally imposed capital requirements (note 9).

The above noted new standards have no impact on the classification and
valuation of the Company's interim consolidated financial instruments.

(c) Inventory:

Section 3031 Inventories, which replaced Section 3030 Inventories,
establishes standards on the definition of 'cost' to include all costs of
purchase (net of supplier payment discounts), costs of conversion and
other costs incurred in bringing the inventories to their present
location and condition. As a result, companies are required to
systematically allocate variable and fixed production overhead costs that
are incurred in converting materials into finished goods. The allocation
of fixed production overheads is based on normal production capacity of
the production facilities. In addition, the standard requires companies
to assess the recoverability of inventory costs in comparison to net
realizable value. Declines in replacement cost below carrying values for
raw material inventories do not require write downs if the finished goods
in which they will be utilized are expected to be sold at or above cost.
The standard requires disclosing, in the current period, the amount
recognized as an expense and the amount recognized as a reversal of
previous write-downs (note 4).

The Company has adopted Section 3031 effective December 31, 2007 and
restated 2008 opening retained earnings. As a result of this change,
inventory was reduced by $746, current future income tax assets were
increased by $254 and retained earnings were reduced by $492. The
comparative interim consolidated financial statements have not been
restated.

3. Future Accounting Standards

The CICA has issued the following handbook section, which applies
commencing with the Company's 2009 fiscal year.

(a) Goodwill, Intangible Assets and Financial Statement Concepts:

In February 2008, the CICA issued Section 3064 Goodwill and Intangible
Assets, replacing Section 3062 Goodwill and Other Intangible Assets and
Section 3450 Research and Development Costs. The new Section establishes
standards on the recognition, measurement, presentation and disclosure
for goodwill and intangible assets subsequent to their initial
recognition. The standard requires retroactive application to prior
period financial statements.

While the Company is currently assessing the impact of this new standard
on its consolidated financial statements, management does not expect the
standard to have a significant impact on the Company's consolidated
financial results.

(b) International Financial Reporting Standards:

In January 2006, the CICA Accounting Standards Board (ASB) adopted a
strategic plan for the direction of accounting standards in Canada. As
part of that plan, accounting standards for Public Accountable
Enterprises would be required to converge with International Financial
Reporting Standards (IFRS) for fiscal years beginning on or after January
1, 2011 with comparative figures presented for 2010 on the same basis. In
February 2008, the CICA ASB confirmed the effective date of the initial
adoption of IFRS. The Company has completed the initial diagnostic
assessment, which involved a high level review of the major differences
between Canadian GAAP and current IFRS. Currently, the Company has
determined that the differences with the highest potential impact to the
Company's accounting policies are related to: property, plant and
equipment, financial instruments and hedges, impairments, employee
defined benefit plans, income taxes, financial statement disclosures, as
well as the initial adoption of IFRS under the provisions of IFRS 1,
First-Time Adoption of IFRS. We have commenced the detailed diagnostic
assessment phase of the project and started to evaluate the accounting
policy differences based on management's current understanding of the
IFRS. The impact of these changes on the Company's future financial
position and results of operations has yet to be determined as accounting
policy choices under IFRS are subject to a number of accounting
alternatives which have not been evaluated by the Company.

4. Inventory

Inventory is comprised of the following: September 28
2008
--------------
Raw materials 32,593
Work-in-process 13,611
Finished goods 33,835
Spare parts 3,270
--------------
83,309
--------------

During the third quarter of 2008, the Company recorded inventory write-downs
of $1,112 (Year-to-date- $4,149) and reversals of previously written-
down amounts of $12 (Year-to-date- $509).

5. Accumulated Other Comprehensive Income

Third Quarter Ended Year-To-Date Ended
----------------------------- -----------------------------
----------------------------- -----------------------------
September 28 September 30 September 28 September 30
2008 2007 2008 2007
-------------- -------------- -------------- --------------
Balance,
beginning of
period 59,280 49,227 64,933 33,415
Other
comprehensive
(loss) income (3,664) 12,770 (9,317) 28,582
-------------- -------------- -------------- --------------
Balance, end of
period 55,616 61,997 55,616 61,997
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------

The accumulated balances for each component
of other comprehensive income, net of
income taxes, are comprised of the following:
---------------------------------------------
Unrealized gains on translation of financial
statements of subsidiaries with Canadian
dollar functional currency to US dollar
reporting currency 55,624 61,785
Unrealized (losses) gains on derivatives
designated as cash flow hedges (8) 212
-------------- --------------
Balance, end of period 55,616 61,997
-------------- --------------

6. Selling, General & Administrative Expenses

Included within selling, general & administrative expenses are the following
amounts:

Third Quarter Ended Year-To-Date Ended
----------------------------- -----------------------------
September 28 September 30 September 28 September 30
2008 2007 2008 2007
-------------- -------------- -------------- --------------

Foreign exchange
translation loss
(gain) 630 (519) 909 (1,447)
Defined benefit
plan costs 625 884 1,909 2,594

Foreign exchange translation gains and losses represent the realized
and unrealized foreign exchange differences recognized upon translation
of monetary assets and liabilities, including long-term debt. The amounts
include realized foreign exchange gains (losses) on cash flow hedges
arising from transfers of these amounts from other comprehensive income
to net earnings.

7. Financial Instruments

The following table presents the carrying value and fair value of
financial instruments and non-financial derivatives as at September 28,
2008:

(Carried at Cost / Amortized Cost) (Carried at Fair Value)

Assets Carrying Fair Carrying
(Liabilities) Value Value Value
----------------------------------------------------------------------------
Accounts receivable 65,029 65,029
Bank indebtedness (2,108) (2,108)
Accounts payable and
accrued liabilities (37,516) (37,516)
Cash flow hedging
derivative (13)
Long-term debt (17,000) (17,000)

Fair value is based on quoted market prices when available. However,
when financial instruments lack an available trading market, fair value
is determined using management's estimates and is calculated using market
factors with similar characteristics and risk profiles. These amounts
represent point-in-time estimates and may not reflect fair value in the
future. These calculations are subjective in nature, involve
uncertainties and are a matter of judgment.

The following summarizes the methods and assumptions used in estimating
the fair value of the Company's financial instruments:

a) Short-term financial instruments approximate their carrying amount due
to the relatively short period to maturity. These include cash, accounts
receivable, bank indebtedness and accounts payable and accrued
liabilities.

b) Long-term debt with a variable interest rate is carried at cost, which
reflects fair value as the interest rate is the current market rate
available to the Company.

c) Foreign exchange forward contracts, designated as a cash flow hedge,
have been determined by valuing those contracts to market against
prevailing forward foreign exchange rates as at the reporting date.

8. Financial Risk Management

The Company's risk management program focuses on the unpredictability of
financial markets and seeks to minimize potential adverse effects on the
Company's financial performance. The Company manages its risks and risk
exposures through a combination of derivative financial instruments,
insurance, a system of internal and disclosure controls and sound
business practices. The Company does not purchase any derivative
financial instruments for speculative purposes.

Risk management is primarily the responsibility of the Company's
corporate finance function. Significant risks are regularly monitored and
actions are taken, when appropriate, according to the Company's approved
policies, established for that purpose. In addition, as required, these
risks are reviewed with the Company's Board of Directors.

Foreign Exchange Risk

The Company operates primarily in Canada and the Unites States. The
functional currency of the parent company is CDN dollars and the
reporting currency is U.S. dollars. All operations in the United States
and American Biaxis Inc. operate with the U.S. dollar as the functional
currency, while all Canadian operations, excluding American Biaxis Inc.,
operate with the CDN dollar as the functional currency. Most of the
Company's business is conducted in U.S. dollars. However, approximately
20 percent of sales are invoiced in CDN dollars and approximately 28
percent of costs are incurred in the same currency, resulting in a net
outflow of costs in CDN dollars. Consequently, the Company records
foreign currency differences on transactions.

In addition, translation differences arise when foreign currency monetary
assets and liabilities are translated at foreign exchange rates that
change over time. These foreign exchange gains and losses are recorded in
selling, general & administrative expenses. A one-cent strengthening /
weakening in the September 28, 2008 period end foreign exchange rate from
CDN dollars to U.S. dollars would have increased / decreased net earnings
by $93 for the third quarter of 2008.

The Company's Foreign Exchange Policy requires that between 50 and 80
percent of the Company's net requirement of CDN dollars for the ensuing 9
to 15 months will be hedged at all times with a combination of cash on
hand and forward or zero-cost option foreign exchange contracts.
Transactions are only conducted with certain approved Schedule 1 Canadian
financial institutions. All foreign exchange contracts are designated as
cash flow hedges. Certain foreign currency forward contracts matured
during the third quarter of 2008 and the Company realized pre-tax foreign
exchange losses of $42 (year-to-date - realized pre-tax foreign exchange
losses of $29). These foreign exchange losses were recorded in selling,
general & administrative expenses. As at September 28, 2008, the Company
had foreign currency forward contracts outstanding of $10.0 million US at
an average exchange rate of 1.03 (US to CDN dollars), maturing between
October 2008 and April 2009 and the fair value of these contracts was
$9.987 million US as of September 28, 2008. An unrealized foreign
exchange gain during the quarter of $27 (pre-tax) (year-to-date -
unrealized foreign exchange loss of $160 (pre-tax)) was recorded in other
comprehensive income.

Interest Rate Risk

The Company's interest rate risk arises from its floating rate bank
indebtedness and long-term debt. The Company's policy regarding interest
expense is to fix interest rates on between one-and two-thirds of
long-term debt outstanding. The Company may enter into interest rate swap
agreements in order to limit exposure to increases in interest rates and
fix interest rates on certain portions of long-term debt. For the current
period, the Company elected to have all long-term debt at a floating
interest rate due to the relatively low level of debt outstanding. As
such, no interest rate swap instruments were entered into during the
third quarter of 2008, and none were outstanding as at September 28, 2008.

Regarding the September 28, 2008 long-term debt balance of $17.0 million,
a 1% increase / decrease in floating interest rates would decrease /
increase earnings before tax by $170 annually. Commodity Price Risk

Manufacturing costs for the Company's products are affected by the price
of raw materials, namely petroleum-based and natural gas-based plastic
resins and aluminum. In order to manage its risk, the Company has entered
into selling price-indexing programs with certain customers. Changes in
raw material prices for these customers are not immediately reflected in
selling price adjustments, there is a slight time lag. For the three
months ended September 28, 2008, 41% (year-to-date - 40%) of sales were
to customers with formal selling price-indexing agreements. For all other
customers, the Company's preferred practice is to match raw material cost
changes with selling price adjustments, albeit with a slight time lag.
This matching is not always possible as customers react to selling price
pressures related to raw material cost fluctuations according to
conditions pertaining to their markets.

Credit Risk

Credit risk arises from cash held with banks, derivative financial
instruments (foreign exchange forward and option contracts and interest
rate swaps with positive fair values), as well as credit exposure to
customers, including outstanding accounts receivable. The maximum
exposure to credit risk is equal to the carrying value of the financial
assets.

The objective of managing counter-party credit risk is to prevent losses
on financial assets. The Company assesses the credit quality of counter-
parties, taking into account their financial position, past experience
and other factors. Management regularly monitors customer credit limits,
performs credit reviews, and in certain cases insures accounts receivable
balances against credit losses. As at September 28, 2008, 23% of the
Company's total accounts receivable balance was insured against credit
losses.

The Company's exposure to individual customers is limited and the ten
largest customers as at September 28, 2008, on aggregate, accounted for
23% of the Company's total accounts receivable balance.

The carrying amount of accounts receivable are reduced through the use of
an allowance account and the amount of the loss is recognized in the
earnings statement within selling, general, & administrative expenses.
When a receivable balance is considered uncollectible, it is written off
against the allowance for accounts receivable. Subsequent recoveries of
amounts previously written off are credited against selling, general, &
administrative expenses in the earnings statement.

The following table details the aging of the Company's September 28
receivables and related allowance for doubtful accounts: 2008
--------------

Current 51,025
Past due amounts:
-----------------
1 - 60 days 14,534
Greater than 60 days 1,285
Less: Allowance for doubtful accounts (1,815)
--------------
Total accounts receivable, net 65,029
--------------
--------------

Liquidity Risk

Investments to drive growth can require significant financial resources.
A range of funding alternatives is available to the Company including
cash flow provided by operations, additional debt, the issuance of equity
or a combination thereof. The moderate level of outstanding debt and an
informal investment grade credit rating allow the Company to enjoy
relatively low interest rates. Under the terms of the Company's bank
credit facilities currently in place, the $17 million of long-term debt
outstanding is revolving, although the Company retains the right to
repay, without penalty, amounts as deemed appropriate. The Company has
determined that total current credit facilities of $68 million
(unsecured), including operating lines of $48 million and term-debt lines
of $20 million, are adequate. Of the total credit facilities, $38 million
was unused as at September 28, 2008. The Company has remained within all
bank debt covenants and foresees no change in its ability to meet these
covenants in 2008.

The 2008 requirements for capital expenditures, working capital and debt
repayments can be financed from cash flow provided by operating
activities and unused credit facilities. Unless unexpected circumstances
occur in 2008, the Company expects to repay a portion of the $17 million
of long-term debt outstanding by the end of the 2008 fiscal year.

The Company enters into contractual obligations in the normal course of
business operations. As at September 28, 2008, these obligations have not
changed significantly from the amounts reported in the Company's 2007
Annual Report.

9. Capital Management

The Company's objectives in managing capital are to ensure sufficient
liquidity to pursue its strategy of organic growth combined with
strategic acquisitions and to deploy capital to provide an appropriate
return on investment to its shareholders. The Company also strives to
maintain an optimal capital structure to reduce the overall cost of
capital.

In the management of capital, the Company includes bank indebtedness,
long-term debt and shareholders' equity. The Board of Directors has
established quantitative return on capital criteria for management and
year-over-year sustainable earnings growth targets. The Board of
Directors also reviews, on a regular basis, the level of dividends paid
to the Company's shareholders.

The Company has externally imposed capital requirements as governed
through its bank credit facilities. The Company monitors capital on the
basis of funded debt to EBITDA (earnings before, interest, income taxes,
depreciation and amortization) and debt service coverage. Funded debt is
defined as the sum of long-term debt and bank indebtedness less cash. The
funded debt to EBITDA is calculated as funded debt, as at the financial
reporting date, over the twelve month rolling EBITDA. This ratio is to be
maintained under 3.00:1. As at September 28, 2008, the ratio was 0.30:1.
Debt service coverage is calculated as a twelve month rolling earnings
from operations over debt service. Debt service is calculated as the sum
of one-sixth long-term debt outstanding plus annualized interest expense
and dividends. This ratio is to be maintained over 1.50:1. As at
September 28, 2008, the ratio was 3.15:1.

There were no changes in the Company's approach to capital management
during the current period.

10. Seasonality

The Company experiences seasonal variation in sales, with sales typically
being the highest in the second and fourth quarters, and lowest in the
first quarter.

11. Comparative Interim Amounts

Certain comparative interim amounts have been reclassified to conform
with the presentation in the current period.

Contacts:
Winpak Ltd.
K.P. Kuchma
Vice President and CFO
(204) 831-2254

Winpak Ltd.
B.J. Berry
President and CEO
(204) 831-2216

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