WINPAK LTD.
TSX : WPK

WINPAK LTD.

October 25, 2007 13:31 ET

Winpak Reports Third Quarter Earnings

WINNIPEG, MANITOBA--(Marketwire - Oct. 25, 2007) - Winpak Ltd. (TSX:WPK) (WPK) today reports consolidated results in US dollars for the third quarter of 2007, which ended on September 30, 2007.



September 30 October 1
Year-To-Date Ended 2007 2006
------------- ----------

(thousands of US dollars, except per share amounts)

Sales 339,984 334,032
------------- ----------
------------- ----------
Net earnings 17,801 25,997
------------- ----------
------------- ----------
Minority interest (79) 239
Provision for income taxes 8,831 10,186
Interest 1,492 1,700
Depreciation and amortization 17,629 15,470
------------- ----------
EBITDA (1) 45,674 53,592
------------- ----------
------------- ----------
Basic and fully diluted net earnings per share
(cents) 27 40
------------- ----------
------------- ----------

September 30 October 1
Third Quarter Ended 2007 2006
------------- ----------

(thousands of US dollars, except per share amounts)

Sales 116,745 111,638
------------- ----------
------------- ----------

Net earnings 5,073 7,841
------------- ----------
------------- ----------

Minority interest 2 35
Provision for income taxes 2,221 1,956
Interest 450 514
Depreciation and amortization 6,218 5,326
------------- ----------

EBITDA (1) 13,964 15,672
------------- ----------
------------- ----------

Basic and fully diluted net earnings per share
(cents) 7 12
------------- ----------
------------- ----------


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 in the third quarter of 2007 were 7 cents per share, or 5 cents lower than in 2006. Excluding the gain of 2.5 cents per share recorded in the third quarter of 2006 due to the enactment of lower future rates of income tax, net earnings in the current period fell 20 percent, or 2.5 cents per share. Lower gross profit margins drove the decline, with the benefit of organic growth offset by the impact of the strengthened Canadian dollar.

Excluding certain gains from comparative net earnings in 2006, year-to-date net earnings in 2007 retreated 4 cents per share, or 13 percent, due to lower gross profit margins and higher expenses. Comparative net earnings in 2006 amounted to 31 cents per share, after deducting 9 cents from reported earnings for reduced future income tax expense and a gain on sale of property.

Sales

Third quarter sales increased 4.6 percent compared to the same period last year, substantially due to greater volume of product sold. Shipments of filling machines and modified atmosphere packaging products were particularly strong. Modest increases of specialty films and rigid container shipments were offset by lower sales of lidding products. Together, pricing and foreign exchange had little bearing on Winpak's sales. Positive foreign exchange was offset by lower average pricing.

Year-to-date sales were 1.8 percent higher than in the comparative period of 2006, reflecting the 2007 third quarter increase. Modified atmosphere packaging and specialty film products led sales growth. Lidding and biaxially oriented nylon products lost ground this year consequent to aggressive competitor pricing and alternate products offered by other suppliers. Winpak's average pricing has not changed. Raw material related selling price increases for lidding products were countered by a greater proportion of sales of lower-priced modified atmosphere packaging products.

Margins and net earnings

Compared to 2006, gross profit margins in the third quarter of 2007 narrowed by 2.7 percentage points and year-to-date, by 1.1 percentage points. The stronger Canadian dollar triggered 1.3 and 0.3 percentage points, respectively, of those gross profit margin declines. The remaining margin contraction originated in higher manufacturing costs largely associated with the start-up of certain major capital projects. The startup phase of each project was either recently completed or will be finalized in the near future and accordingly, manufacturing performance should improve. Incremental sales facilitated by these projects are expected to contribute to future earnings.

Higher expenses in the nine months ended September 30, 2007 include higher freight costs and temporarily elevated expense levels associated with the startup of certain major capital projects. These were research and technical as well as selling, general and administrative expenses such as new product development and costs associated with additional employees.

Capital resources, cash flow and liquidity

The Company's cash position decreased by $1.6 million in the third quarter and by $11.8 million, year-to-date. Nine-month expenditures include the current year's investments in plant and equipment, certain related payments deferred from the fourth quarter of 2006, higher dividends, and an additional $4.4 million funding of defined benefit pension plans.

Capital investments in 2007 should approximate those in 2006. Winpak announced on April 24, 2007, that the quarterly dividend rate was doubled from 1.5 Canadian cents per share to 3.0 cents per share. The first dividend at the new rate was paid on July 12, 2007. During 2007, the Company voluntarily addressed a significant portion of the total underfunded benefit obligations within its defined benefit pension plans. No further such contributions are expected this year.

Winpak is confident that sufficient financial resources are in place to fund cash needs for the foreseeable future.

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 3855, 3861, 3865, 1530 and 3251. The changes were adopted prospectively from January 1, 2007, except for the retroactive change to the cumulative currency translation adjustments account, which is now included in accumulated other comprehensive income. These new standards had no significant impact on the Company's financial statements and none on the Consolidated Statement of Earnings.

Raw materials index

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 = 100. Typically, the purchased index cost in one quarter impacts cost of sales in the subsequent quarter.



----------------------------------------------------------------------------
Quarter
and Year 3/05 4/05 1/06 2/06 3/06 4/06 1/07 2/07 3/07
----------------------------------------------------------------------------
Purchase
Price Index 135.4 153.0 149.5 146.8 155.4 148.8 146.0 152.5 158.3
----------------------------------------------------------------------------


The 3.8 percent uplift in the index for the third quarter 2007 when compared
to the immediately preceding quarter included increases primarily in the
average prices of polyethylene.


Summary of quarterly Thousands of U.S. dollars, except earnings per
results share ("EPS") in U.S. cents
Quarter Ended
----------------------------------------------------------------------------
September July 1 April 1 December October July 2 April 2 January
30 2007 2007 2007 31 2007 1 2006 2006 2006 1 2006
----------------------------------------------------------------------------

Sales 116,745 114,479 108,760 113,088 111,638 109,325 113,069 109,666
Net
earnings 5,073 5,224 7,504 6,579 7,841 11,711 6,445 6,192
EPS 7 8 12 10 12 18 10 10
----------------------------------------------------------------------------


General comment

At least two market and industry-wide trends have impaired Winpak's financial performance in recent years. Winpak does not make forecasts of changes in these trends and therefore does not assume performance will improve or worsen consequent to any such changes. Nevertheless, the Company continually implements strategies designed to mitigate these conditions.

Since 2002, the U.S. dollar has steadily depreciated against the Canadian currency from an average of 63.6 US cents to approximate parity at the current date. Winpak has estimated the impact on earnings per share should the two currencies remain at parity through the end of 2008, at today's business level. With that extent of U.S. dollar depreciation, by 2008, annual net earnings would be nearly 10 cents per share less when compared to 2002. This includes 1.1 cents per share in 2007 and 2.3 cents in 2008, with the Canadian dollar at an average of 92 US cents in 2007 and parity in 2008. Winpak's strategies to reduce foreign currency exposure continue to include the maximization of natural hedging.

Secondly, intense price competition continues to compress margins earned from certain less sophisticated product lines. For the most part, the steady rise of raw material prices over the same period of time has been passed through to customers, but competitive pressures have prevented that in certain cases. To the extent possible, Winpak continues to follow industry-wide trends involving the pass-through of raw material costs.

The Company continually implements initiatives involving new technology geared to reducing costs and increasing efficiencies while adding sophisticated new products to the Company's portfolio. Recent such major capital investments, despite minor delays in implementation, represent significant new capacity and technology. Temporary start-up expenditures incurred within the current financial year for these capital projects are expected to abate during the remainder of 2007. Related contributions to future sales and earnings should reach full potential over the next few years.

Winpak Ltd.
Interim Consolidated Financial Statements
Third Quarter Ended: September 30, 2007

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



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

September 30 December 31
2007 2006
------------- ------------

Assets

Current Assets:
Cash $ - $ 2,994
Accounts receivable 56,942 53,656
Inventories 79,229 69,469
Prepaid expenses 2,912 1,747
Future income taxes 2,842 2,869
------------- ------------
141,925 130,735

Property, plant and equipment (net) 258,873 225,113

Other assets 11,204 5,105

Intangible assets (net) 7,108 8,707

Goodwill 17,719 16,336

------------- ------------
$ 436,829 $ 385,996
------------- ------------
------------- ------------

Liabilities and Shareholders' Equity

Current Liabilities:
Bank indebtedness (unsecured) $ 8,790 $ -
Accounts payable and accrued
liabilities 35,507 40,950
------------- ------------
44,297 40,950

Long-term debt 22,000 22,000

Deferred credits 12,353 10,896

Future income taxes 30,118 25,781

Postretirement benefits 1,507 1,481
------------- ------------
110,275 101,108

Minority interest 11,060 11,139

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

Retained earnings 224,302 211,139
Accumulated other comprehensive income
(note 6) 61,997 33,415
------------- ------------
286,299 244,554
------------- ------------
315,494 273,749
------------- ------------

------------- ------------
$ 436,829 $ 385,996
------------- ------------
------------- ------------

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 30 October 1 September 30 October 1
2007 2006 2007 2006
------------- ---------- ------------- ----------
Sales $ 116,745 $ 111,638 $ 339,984 $ 334,032
Cost of sales 90,197 83,331 256,040 247,803
------------- ---------- ------------- ----------
Gross profit 26,548 28,307 83,944 86,229

Expenses
Selling, general &
administrative (note 3) 16,240 15,622 47,480 46,171
Research and technical 2,337 2,241 7,670 6,627
Pre-production 225 98 749 656
Gain on sale of assets
(note 4) - - - (5,347)
------------- ---------- ------------- ----------
Earnings from operations 7,746 10,346 28,045 38,122
Interest 450 514 1,492 1,700
------------- ---------- ------------- ----------
Earnings before income taxes
and minority interest 7,296 9,832 26,553 36,422
Provision for income taxes
(note 5) 2,221 1,956 8,831 10,186
Minority interest 2 35 (79) 239
------------- ---------- ------------- ----------
Net earnings $ 5,073 $ 7,841 $ 17,801 $ 25,997
------------- ---------- ------------- ----------
------------- ---------- ------------- ----------

Retained earnings, beginning
of period $ 221,189 $ 198,110 $ 211,139 $ 181,319
Net earnings 5,073 7,841 17,801 25,997
Dividends declared (1,960) (693) (4,638) (2,058)
------------- ---------- ------------- ----------
Retained earnings, end of
period $ 224,302 $ 205,258 $ 224,302 $ 205,258
------------- ---------- ------------- ----------
------------- ---------- ------------- ----------

Earnings per share
Basic and fully diluted
earnings per share (cents) 7 12 27 40
------------- ---------- ------------- ----------
------------- ---------- ------------- ----------
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 30 October 1 September 30 October 1
2007 2006 2007 2006
------------- ---------- ------------- ----------
Net earnings $ 5,073 $ 7,841 $ 17,801 $ 25,997
------------- ---------- ------------- ----------
Unrealized gains (losses) on
translation of financial
statements of subsidiaries
with CDN dollar functional
currency to US dollar
reporting currency 12,817 13 28,370 5,282
Unrealized gains (losses) on
derivatives designated as
cash flow hedges, net of
income tax ($200 and $339) 372 - 631 -
Realized (gains) losses on
derivatives designated as
cash flow hedges in prior
periods transferred to
net earnings in the current
period, net of income
tax ($225 and $225) (419) - (419) -
------------- ---------- ------------- ----------
Other comprehensive income
- net of income tax 12,770 13 28,582 5,282
------------- ---------- ------------- ----------
Comprehensive income $ 17,843 $ 7,854 $ 46,383 $ 31,279
------------- ---------- ------------- ----------
------------- ---------- ------------- ----------

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 30 October 1 September 30 October 1
2007 2006 2007 2006
------------- ---------- ------------- ----------
Cash provided by (used in):

Operating activities:
Net earnings for the period $ 5,073 $ 7,841 $ 17,801 $ 25,997
Items not involving cash:
Depreciation 5,715 4,773 16,030 13,803
Amortization - intangible
assets 503 553 1,599 1,667
Defined benefit plan costs 884 964 2,594 2,844
Future income taxes 815 (1,552) 1,286 (1,387)
Foreign exchange loss (gain)
on long-term debt - 130 - (395)
Minority interest 2 35 (79) 239
Gain on sale of assets
(note 4) - - - (5,347)
Other 94 625 289 986
------------- ---------- ------------- ----------
Cash flow from operating
activities before the
following 13,086 13,369 39,520 38,407
Change in working capital:
Accounts receivable 234 (2,171) 793 (6,107)
Inventories (279) (2,198) (2,679) (723)
Prepaid expenses 546 (303) (872) (1,108)
Accounts payable and accrued
liabilities (2,813) 1,425 (7,772) (649)
Defined benefit plan payments (3,249) (2,296) (7,205) (4,425)
------------- ---------- ------------- ----------
7,525 7,826 21,785 25,395
------------- ---------- ------------- ----------

Investing activities:
Acquisition of property,
plant and equipment (6,646) (10,505) (27,755) (27,054)
Proceeds from sale of assets
(note 4) - - - 8,632
------------- ---------- ------------- ----------
(6,646) (10,505) (27,755) (18,422)
------------- ---------- ------------- ----------

Financing activities:
Repayments of long-term debt - (15,000) - (15,000)
Dividends paid (1,830) (871) (3,511) (2,545)
------------- ---------- ------------- ----------
(1,830) (15,871) (3,511) (17,545)
------------- ---------- ------------- ----------
Foreign exchange translation
adjustment on cash (683) (116) (2,303) (130)
------------- ---------- ------------- ----------
Change in cash position (1,634) (18,666) (11,784) (10,702)
(Bank indebtedness) cash,
beginning of period (7,156) 12,906 2,994 4,942
------------- ---------- ------------- ----------
Bank indebtedness, end of
period $ (8,790) $ (5,760) $ (8,790) $ (5,760)
------------- ---------- ------------- ----------
------------- ---------- ------------- ----------

Supplemental disclosure of
cash flow information:
--------------------------
Cash paid during the period
for:
Interest expense $ 834 $ 1,060 $ 2,300 $ 2,638
Income tax expense 3,447 2,005 7,925 9,824

See accompanying notes to consolidated financial statements.

Notes to Consolidated Financial Statements
For the periods ended September 30, 2007 and October 1, 2006
(thousands of US dollars) (Unaudited)
----------------------------------------------------------------------------


1. Basis of presentation:

The unaudited consolidated interim financial statements have been prepared in accordance with Canadian Generally Accepted Accounting Principles "GAAP". They have been prepared using the same accounting policies and methods of application as disclosed in the Company's audited consolidated financial statements for the year ended December 31, 2006 except as described in Note 2.

These unaudited consolidated interim 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 31, 2006.

2. Accounting policy changes:

Financial instruments, comprehensive income and hedges:

Effective January 1, 2007, the Company adopted the Canadian Institute of Chartered Accountants (CICA) handbook section 3855, Financial instruments - recognition and measurement; section 3861, Financial instruments - disclosure and presentation; section 3865, Hedges; section 1530, Comprehensive income and section 3251, Equity. The adoption of these new standards resulted in changes in the accounting policies for financial instruments and hedges. The comparative interim consolidated financial statements have not been restated, except for the retroactive restatement of the unrealized foreign exchange gains or losses on the translation of the financial statements of subsidiaries with the Canadian dollar as the functional currency to US dollar reporting (note 6).

The principal changes in accounting policies, financial statement reporting and disclosure recommendations for comprehensive income and its components and the presentation of equity are described below.

Financial instruments - recognition and measurement:

The Company initially recognizes all financial assets and liabilities and non-financial derivatives at fair value unless exempted from derivative treatment. Subsequently, financial assets are measured at either amortized cost or fair value depending on the type of instrument and any optional designations by the Company. Financial liabilities are subsequently measured at amortized cost, or at fair value if they are classified as held for trading purposes. Derivative financial instruments are measured at fair value, even when they are part of a hedging relationship. All changes in fair value are recorded in earnings unless cash flow hedge accounting is used, in which case changes in fair value are recorded in other comprehensive income.

The Company has selected January 1, 2003 as its transition date to apply fair value accounting for all embedded derivatives. An embedded derivative is a component of a financial instrument or another contract of which the characteristics are similar to a derivative. The Company has determined that all of its embedded derivatives are exempt from fair value accounting.

Comprehensive income:

Comprehensive income is comprised of net earnings and other comprehensive income and is now disclosed by the Company in the consolidated statements of comprehensive income. Comprehensive income is the change in a Company's net assets resulting from transactions or events from sources other than the Company's shareholders. Other comprehensive income includes unrealized foreign exchange gains or losses on translation of the financial statements of subsidiaries with the Canadian dollar as the functional currency to US dollar reporting and gains or losses on the effective portion of derivatives designated as cash flow hedges, net of income taxes.

Hedge accounting:

Newly adopted section 3865 replaces and expands upon Accounting Guideline 13 - Hedging Relationships. At the inception of a hedging relationship, the Company documents the relationship between the hedging instrument and the hedged item, which includes linking all derivatives to specific assets and liabilities or to specific firm commitments or forecasted transactions. The Company operates principally in Canada and the United States, which gives rise to risks that its earnings and cash flows may be adversely impacted by fluctuations in foreign exchange rates. The Company enters into foreign currency forward contracts to hedge certain foreign exchange exposures on anticipated sales.

Hedges must be designated as either fair value or cash flow hedges or as a hedge of a net investment in a subsidiary with the Canadian dollar as the functional currency. For a fair value hedge, the gain or loss on the hedging item is recognized in earnings in the period of change together with the offsetting change attributable to the hedged risk. For a cash flow hedge, as well as a hedge of a net investment in a subsidiary with the Canadian dollar as the functional currency, the effective portion of the gain or loss on the hedging item is initially accumulated in other comprehensive income and subsequently recognized in earnings (recorded within selling, general & administrative expenses) when the hedged item affects earnings.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in other comprehensive income at that time remains in other comprehensive income as long as the forecasted transaction may occur and would be recognized in the consolidated statement of earnings in the period the hedged transaction impacts earnings. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was reported in other comprehensive income is immediately transferred to the consolidated statement of earnings.



Financial instruments - valuation:

The following table presents the carrying value and fair value of financial
instruments and non-financial derivatives as at September 30, 2007:

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

Carrying Fair Carrying
Assets (Liabilities) Value Value Value
----------------------------------------------------------------------------
Accounts receivable 56,616 56,616
Cash flow hedging derivative 326
Bank indebtedness (8,790) (8,790)
Accounts payable and accrued liabilities (40,125) (40,125)
Long-term debt (22,000) (22,000)


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) Derivatives are valued based on closing market quotations.

Risk management policies:

The Company manages risk and risk exposures through a combination of insurance, derivative financial instruments, a system of internal and disclosure controls and sound business practices. The Company may use certain derivative financial instruments to manage risks of fluctuation in interest rates and foreign exchange rates. 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. The Company may enter into foreign currency forward and option (floor and cap) contracts to limit exposure on certain anticipated future U.S. dollar cash flows in Canadian dollar functional currency companies. The Company is exposed to credit risk from its customers primarily in relation to accounts receivable. This risk is minimized by the Company's diverse customer base. The Company regularly performs credit assessments of its customers and provides allowances for potentially uncollectible accounts receivable.



3. Selling, general & administrative expenses:

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

Third Quarter Ended Year-To-Date Ended
------------------- -------------------
September October September October
30 2007 1 2006 30 2007 1 2006
---------- -------- --------- ---------
Foreign exchange translation
(gain) loss (519) 44 (1,447) (307)
Defined benefit plan costs 884 964 2,594 2,844


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.

4. Sale of property, business, related assets and associated costs:

In June 2006, Winpak sold the premises formerly occupied by the converting operating unit at Laird Drive, Toronto, Ontario. Net cash proceeds for the premises of $8,303 generated a pre-tax gain of $5,463 and net earnings of $4,266. In 2005, the Company ceased normal operations at the aforementioned premises. Consequently, in 2005 the Company incurred employee termination and pension plan curtailment and settlement costs. The Company made employee termination payments totaling $243 during the third quarter of 2007 (Year-to-date 2007- $718), leaving a liability of $266, a majority of which is to be paid by the end of fiscal 2007. The pension plan curtailment and settlement cost liability of $1,061 should also be paid by the end of fiscal 2007, assuming that final approval is obtained from the Financial Services Commission of Ontario.

5. Provision for income taxes:

In the last two years the Canadian Federal government substantively enacted legislation that cover a period of several years progressively reducing the future federal corporate income tax rate. As a result, the Company was required to re-measure its future income tax assets and liabilities using the newly enacted income tax rates, taking into account the tax rates anticipated to be in effect when the related future income tax assets are realized and liabilities are settled. This resulted in a non-cash reduction in future income taxes and an income tax recovery in the third quarter of $298 (2006 - $1,483).



6. Accumulated other comprehensive income:

Third Quarter Ended Year-To-Date Ended
------------------- -------------------
September October September October
30 2007 1 2006 30 2007 1 2006
---------- -------- --------- ---------
Balance, beginning of period, as
previously reported 49,227 40,595 - -
Unrealized gains on translation of
financial statements of subsidiaries
with Canadian dollar functional
currency to US dollar reporting
currency - - 33,415 35,326
Unrealized gains (losses) on
derivatives designated as cash
flow hedges - - - -
---------- -------- --------- ---------
Restated balance, beginning of period 49,227 40,595 33,415 35,326
Other comprehensive income 12,770 13 28,582 5,282
---------- -------- --------- ---------
Balance, end of period 61,997 40,608 61,997 40,608
---------- -------- --------- ---------
---------- -------- --------- ---------

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 61,785 40,608
Unrealized gains (losses) on derivatives designated as
cash flow hedges 212 -
--------- ---------
Balance, end of period 61,997 40,608
--------- ---------
--------- ---------


7. Future accounting standards:

The CICA has issued four handbook sections, which apply commencing with the Company's 2008 fiscal year. The Company is currently evaluating the impact of these standards on the consolidated financial statements.

Financial instruments - disclosures:

Section 3862 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 for financial instruments to which the entity is exposed and how the entity manages those risks. This section complements existing handbook section 3855, Financial instruments - recognition and measurement, section 3863, Financial instruments - presentation and 3865, Hedges.

Financial instruments - presentation:

Section 3863 establishes standards for presentation of financial instruments and non-financial derivatives. This section complements the existing handbook section 3861, Financial instruments - disclosure and presentation.

Capital disclosures:

Section 1535 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 procedures for managing capital.

Inventories:

Section 3031 establishes standards on the determination of the cost components of inventory including all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. The section requires inventory to be measured at the lower of cost and net realizable value including a possible reversal of an original write-down to net realizable value. The section also establishes expanded financial statement disclosure and presentation standards for the carrying amounts of inventories and classifications appropriate to the Company.

8. Seasonality:

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

9. Comparative interim amounts:

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








Contact Information

  • Winpak Ltd.
    B.J. Berry
    President and CEO
    (204) 831-2216
    or
    Winpak Ltd.
    M.G. Johnston
    Vice President and CFO
    (204) 831-2254